ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of March 16, 1998, by and between
APPLE SOUTH, INC., a Georgia corporation ("Seller") and QUALITY RESTAURANT
CONCEPTS, L.L.C., an Alabama limited liability company ("Purchaser"),
W I T N E S S E T H :
WHEREAS, Seller owns and operates a number of Xxxxxxxx'x Neighborhood Grill
& Bar ("Applebee's") franchise restaurants; and
WHEREAS, Seller desires to sell to Purchaser certain Applebee's restaurants
and related property, and Purchaser desires to purchase such assets, all on the
terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound, the parties hereby agree as
follows:
ARTICLE I - DEFINITIONS
1.1 Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below:
"Action" shall mean any action, suit, litigation, complaint, counterclaim,
claim, petition, mediation contest, or administrative proceeding, whether at
law, in equity, in arbitration or otherwise, and whether conducted by or before
any Government or other Person.
"ADI's" shall mean Arbitron Rating Areas of Dominant Influence.
"ADI Personnel" shall have the meaning set forth in Section 4.5.
"Assets" shall mean all of Seller's rights and interests in, to, or under
the following:
(i) all tangible personal property of any kind
located in, or customarily located in, the Restaurants or on
the Real Property, including, but not limited to (A)
equipment, computer hardware (including the laptop computers
used by the regional managers), fax machines, appliances,
machinery, tables, chairs, other furniture, bars, tableware,
cookware, utensils, furnishings and signage (including,
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but not limited to, any of the foregoing property currently
held by Seller pursuant to equipment leases, all of which
leased property will be purchased by Seller prior to Closing
at its sole cost and expense pursuant to Section 4.13); (B)
leasehold improvements and fixtures; (C) uniforms, supplies,
food and beverage inventory (including beer, liquor, and wine
inventory); and (D) advertising and promotional materials;
(ii) $1,500 cash in each Restaurant;
(iii) all prepaid items to the extent such items
relate exclusively to the Business;
(iv) all assignable Permits;
(v) all assignable rights under express or implied
warranties of manufacturers, distributors, retailers, or other
third parties relating to the Assets;
(vi) all of Seller's supplier lists, demographic,
statistical, and other information related exclusively to the
Business;
(vii) copies of Seller's employee records of those
current employees of Seller who are employed by Purchaser as
of the Closing (subject to execution of a release by each
affected employee allowing for the disclosure of such files);
(viii) the Contracts and Leases;
(ix) the Owned Real Property;
(x) all records and files related to the Real
Property such as rent calculations, landlord correspondence,
purchase agreements, deeds, construction documents, title
reports, environmental and engineering reports, appraisals,
surveys, etc.; records of all service and maintenance
histories, if any, of the Assets; all records relating to
warranties, service agreements, or similar agreements
pertaining to the Assets; and copies of any other records and
files that contain information material to the Business or the
Assets, in whatever media such records or files are kept;
(xi) any written information related to any pending
or proposed litigation, ordinance, or regulation in any state,
county, municipality, or other governmental unit affecting the
Business;
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(xii) rights to existing Restaurant telephone
numbers;
(xiii) all of Seller's other rights and property
interests of any nature which are customarily and exclusively
used in the operation of the Restaurants; and
(xiv) in the circumstances and to the extent
specified in Section 10.14, the Building Materials.
"Assets" shall not include cash in the Restaurants in excess of $1,500 per
Restaurant, bank accounts, or any other property, tangible or intangible, real
or personal, not described above. In the circumstances and to the extent
specified in Section 10.15, "Assets" shall not include the Real Property upon
which the Bristol, Tennessee Restaurant is located.
"Assumed Liabilities" shall mean (i) all obligations of Seller that accrue
after the Closing under the terms of the Contracts and Leases, (ii) all
obligations of Seller under the Contracts and Leases that accrue prior to the
Closing but which are not due for payment until after the Closing and which are
taken into account in computing the Purchase Price pursuant to Section 2.3,
(iii) obligations arising after the Closing under any Permits which are assigned
to Purchaser, (iv) all Property Taxes and all other obligations with respect to
the Assets that accrue prior to the Closing but which are not due for payment
until after the Closing and which are taken into account in computing the
Purchase Price pursuant to Section 2.3, (v) all Property Taxes and all other
obligations with respect to the Assets that accrue after the Closing, (vi) gift
certificates issued by Seller prior to Closing, and (vii) accrued vacation of
ADI Personnel assumed pursuant to Section 6.3(e). Assumed Liabilities shall not
include any liability, obligation, payment, duty, or responsibility of any
nature except as expressly described above and specifically shall not include
(i) liabilities or obligations of Seller arising out of any breach by Seller of
any of the Contracts or Leases; (ii) except as provided in clauses (ii) or (iv)
above, liabilities or obligations of Seller under any of the Contracts or Leases
or with respect to the Owned Real Property or other Assets that accrue in any
such case prior to the Closing or are attributable to the period prior to
Closing, including, without limitation, base rent, percentage rent, common area
maintenance or similar charges, other items of additional rent, and any
adjustments with respect to such items of rent and other charges; (iii) any
liabilities or obligations of Seller under the Franchise Agreements; (iv) any
liability of Seller for product liability, personal injury, property damage, or
otherwise based on any tort claim or statutory liability (including but not
limited to any "dram shop" liability); (v) any federal, state, or local tax
liability of Seller except to the extent expressly assumed hereunder, (vi) any
contractual claim based on any lease, contract, or agreement other than the
Contracts and Leases; (vii) any liability, obligation, or responsibility of
Seller to Seller's employees, agents, or independent contractors with respect to
wages, salaries, bonuses, or other compensation or benefits earned or accrued
prior to the Closing (except for accrued vacation assumed pursuant to Section
6.3(e)); and (viii) any liability or obligation of Seller arising out of the
negotiation, execution, or performance of this Agreement, including fees and
expenses of
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attorneys and accountants, except as otherwise expressly provided herein.
"Xxxx of Sale and Assignment Agreement" shall mean an instrument in
substantially the form of Exhibit A hereto pursuant to which the Assets (except
for the Owned Real Property) will be transferred and assigned to Purchaser at
the Closing and pursuant to which Purchaser will assume the Assumed Liabilities.
"Building Materials" shall have the meaning set forth in Section 10.14
hereof.
"Business" shall mean the business of owning and operating the Restaurants
and developing and opening new Applebee's restaurants in the Territory, as
conducted prior to the Closing by Seller pursuant to the Franchise Agreements.
"Closing" shall have the meaning set forth in Section 2.6 hereof.
"Closing Date" shall mean the time and date that the Closing occurs.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended, and all regulations thereunder. Any reference herein to a specific
section or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
"Consents" shall mean all consents, approvals, waivers, and estoppels of
others which are required to be obtained in order to effect the valid
assignment, transfer, and conveyance to Purchaser of the Material Contracts and
the Leases without resulting in any default or penalty thereunder.
"Contracts" shall mean all contracts, agreements, and leases of equipment
or other personal property that relate exclusively to the Business; provided,
however, that the Franchise Agreements are not included within the meaning of
"Contracts."
"Deeds" shall mean special warranty deeds, limited warranty deeds or other
appropriate instruments to convey good and marketable fee simple title to the
Owned Real Property, with the warranty of title contained therein limited to the
claims of Persons claiming by, through or under Seller, but not otherwise, in
the form attached hereto as Exhibit "B" (a separate form being attached for each
state in which Owned Real Property is located.)
"Disclosure Memorandum" shall mean the set of numbered schedules
referencing Sections of this Agreement delivered by Seller and dated of even
date herewith, as supplemented by new or amended schedules delivered by Seller
prior to the Closing.
"Effective Time" shall have the meaning set forth in Section 2.5 hereof.
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"Environmental Laws" shall mean all federal, state, municipal, and local
laws, statutes, ordinances, rules, regulations, conventions, and decrees
relating to the environment, including without limitation, those relating to
emission, discharge, release, or threatened release of pollutants, contaminants,
chemicals, or industrial, toxic, or hazardous materials or wastes of every kind
and nature into the environment (including without limitation ambient air,
surface water, ground water, soil and subsoil), or otherwise relating to the
manufacture, generation, processing, distribution, application, use, treatment,
storage, disposal, presence, management, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic, or hazardous substances or
wastes, and any and all laws, rules, regulations, codes, directives, orders,
decrees, judgments, injunctions, consent agreements, stipulations, provisions,
and conditions of Environmental Permits, licenses, injunctions, consent
agreements, stipulations, certificates of authorization, and other operating
authorizations, entered, promulgated, or approved thereunder.
"Environmental Permits" shall mean all permits, licenses, certificates,
approvals, authorizations, regulatory plans or compliance schedules required by
applicable Environmental Laws, or issued by a Government pursuant to applicable
Environmental Laws, or entered into by agreement of the party to be bound,
relating to activities that affect the environment, including without
limitation, permits, licenses, certificates, approvals, authorizations,
regulatory plans and compliance schedules for air emissions, water discharges,
pesticide and herbicide or other agricultural chemical storage, use or
application, and Hazardous Material or Solid Waste generation, use, storage,
treatment and disposal.
"Forum" shall mean any federal, state, local, municipal, or foreign court,
governmental agency, administrative body or agency, tribunal, private
alternative dispute resolution system, or arbitration panel.
"Financing Commitment" shall have the meaning set forth in Section 6.4.
"Franchise Agreements" shall mean those development agreements, franchise
agreements, and other agreements between Seller and Franchisor relating
exclusively to the Territory.
"Franchisor" shall mean Xxxxxxxx'x International, Inc.
"Financial Statements" shall have the meaning set forth in Section 3.8.
"Government" shall mean any federal, state, local, municipal, or foreign
government or any department, commission, board, bureau, agency,
instrumentality, unit, or taxing authority thereof.
"Hazardous Material" shall mean all substances and materials designated as
hazardous or toxic as of the date hereof pursuant to any applicable
Environmental Law.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indemnification Agreement" shall mean an agreement in the form attached
hereto as Exhibit "C".
"Knowledge of Seller" (or words of like effect) when used to qualify a
representation, warranty, or other statement shall mean the actual knowledge of
Sellers' directors of operations for the Territory and all management of Seller
senior thereto.
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"Leases" shall mean the leases of real property and improvements described
on Schedule 1.1A.
"Material Contracts" shall mean all Contracts that involve monetary
obligations of Seller of more than $12,000 per year and that are not cancelable
by Seller upon thirty days notice or less, a list of which is set forth in
Schedule 1.1B.
"Minor Contracts" shall mean all Contracts that are not Material Contracts.
"Note" shall have the meaning set forth in Section 2.3.
"Orders" shall mean all applicable orders, writs, judgments, decrees,
rulings, consent agreements, and awards of or by any Forum or entered by consent
of the party to be bound.
"Owned Real Property" shall mean those tracts and parcels of land owned by
Seller on which a Restaurant is located and the parcel located at 00000 Xxxxxxxx
Xxxx, Xxxxxxxx, Tennessee, which is being held for development (all of which
tracts and parcels are described in Schedule 1.1C) and all buildings, fixtures,
signs, parking facilities, and other improvements located thereon.
"Permits" shall mean all rights of Seller under any liquor, alcoholic
beverage, beer and wine licenses, other licenses of every kind, certificates of
occupancy, and permits or approvals of any nature, from governmental and
regulatory authorities which relate exclusively to the Business, the
Restaurants, or the Real Property.
"Permitted Encumbrances" shall mean, in the case of all Real Property, (i)
such easements, restrictions, covenants, and other such encumbrances which are
shown as exceptions on the Title Commitments, (ii) any other encumbrances of
record as of the effective date of the Title Commitments, (iii) ordinances
(municipal and zoning), (iv) survey matters, and (v) such easements,
restrictions, covenants, and other encumbrances which become matters of public
record after the effective date of the Title Commitments and before the Closing,
in each such case described in items (i) through (v) hereof, to the extent that
such encumbrances are waived, or deemed to be waived, by Purchaser pursuant to
Section 7.1(a). Permitted Encumbrances shall include in the case of both Real
Property and personal property all liens for taxes not yet due and payable
subject to pro ration in accordance with Section 3.9.
"Person" shall include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization, a government, and any other legal entity.
"Property Taxes" shall mean all ad valorem, real property, and personal
property taxes, all general and special private and public assessments, all
other property taxes, and all similar obligations pertaining to the Assets.
"Real Property" shall mean the land and improvements comprising the Owned
Real Property and all land and improvements subject to Leases.
"Restaurants" shall mean the 26 Xxxxxxxx'x Neighborhood Grill & Bar
restaurants operated by Seller at the locations set forth on Schedule 3.7.
"Schedules" shall mean the numbered sections of the Disclosure Memorandum.
"Seller Plans" shall have the meaning set forth on Schedule 3.15.
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"Solid Waste" shall mean any garbage, refuse, sludge from a waste treatment
plant, water supply treatment plant, or air pollution control facility, and
other discarded material, including solid, liquid, semisolid, or contained
gaseous material resulting from industrial, commercial, mining, and agricultural
operations, and from community activities.
"Termination Date" shall mean April 30, 1998; provided that if prior to
April 30, 1998, Purchaser shall have certified to Seller in writing that (i) the
only contingencies precluding the Closing from occurring are Purchaser's
obtaining any material Permits required for it to operate the Business or any
Restaurant and/or the failure of Purchaser's lender to be ready to close
Purchaser's financing for the purchase of the Assets and (ii) Purchaser has used
its reasonable best efforts to cause such contingencies to have been satisfied
by April 30, 1998, then the Termination Date shall be extended to a date five
business days after any of the contingencies referenced above are satisfied, but
in no event later than May 31, 1998.
"Territory" shall mean those ADI's consisting of Knoxville, Tennessee;
Bristol/Kingsport, Tennessee; Chattanooga, Tennessee; Columbus/Tupelo,
Mississippi; Jackson, Mississippi; Meridian, Mississippi; Hattiesburg,
Mississippi; and Biloxi/Gulfport, Mississippi, including the counties set forth
on Schedule 1.1D.
"Title Commitments" shall have the meaning set forth in Section 7.1(a).
"Title Policies" shall mean the Owner's Title Policies and the Lessee's
Title Policies as defined in Section 7.1(a).
ARTICLE II - PURCHASE AND SALE
2.1 Purchase and Sale. Upon the terms and subject to the conditions set
forth in this Agreement, and based upon the representations and warranties
contained herein, at the Closing Seller shall sell, transfer, assign, and
deliver to Purchaser all of Seller's right, title, and interest in and to the
Assets free and clear of any mortgage, security interest, lien, charge, claim,
or other encumbrance of any nature except the Permitted Encumbrances, and
Purchaser shall purchase the Assets from Seller for the Purchase Price set forth
in Section 2.3.
2.2 Assumption of Liabilities. As of the Effective Time, Purchaser shall
assume all of the Assumed Liabilities. Except for the Assumed Liabilities,
Purchaser does not hereby assume or agree to assume or pay any obligations,
liabilities, indebtedness, duties, responsibilities, or commitments of Seller or
any other Person, of any nature whatsoever, whether known or unknown, absolute
or contingent, due or to become due.
2.3 Purchase Price. The purchase price for the Assets (the "Purchase
Price") shall be $47,955,000 as adjusted as follows:
(a) The amount of the Purchase Price shall be increased by (i) all Property
Taxes accruing with respect to the Assets after the Closing that have been paid
by Seller prior to Closing; (ii) all amounts paid by Seller under the Contracts
and Leases with respect to periods after the Closing; (iii) any other prepaid
expenses pertaining to the Business (such as telephone expenses, advertising
expenses, utility charges, and the like) to the extent that the same will
benefit Purchaser afte the Closing; and (iv) an amount equal to Seller's cost of
those Assets consisting of food, beverage (including beer, wine, and liquor),
and paper inventory as determined by the parties' joint inventory at the close
of business on the day prior to the Closing Date.
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(b) The amount of the purchase price shall be decreased by (i) all Property
Taxes accruing with respect to the Assets prior to the Closing that are due and
payable after the Closing and that have not been paid as of the Closing, (ii)
all amounts payable under the Contracts and Leases that pertain to periods
before the Closing but are due and payable after the Closing and that have not
been paid as of the Closing, (iii) the cost of unused vacation accrued as of the
Closing Date by AD Personnel hired by Purchaser the cost of which is being
assumed by Seller pursuant to Section 6.3(e), (iv) the amounts specified in
Section 10.14, if applicable pursuant to the terms of such section, and (iv) the
amounts specified in Section 10.15, if applicable pursuant to the terms of such
section.
(c) The amount of the purchase price shall be further adjusted to reflect
any expense paid by one party which the other party has agreed to pay or share
pursuant to Section 10.1 or otherwise pursuant to this Agreement.
(d) Not less than three days prior to Closing, the parties hereto will
prepare a draft of a closing statement setting forth the adjustments to the
Purchase Price made pursuant to this Section 2.3.
The foregoing adjustments shall be calculated by the parties and set forth
on Schedule 2.3 which shall be signed by both parties at Closing. The Purchase
Price shall be paid by Purchaser by wire transfer on the Closing Date of
$47,000,000 in immediately available funds to an account designated by Seller
and by delivery at the Closing of a promissory note duly executed by Seller in
the form attached to as Exhibit "D" (the "Note") in an amount equal to the
remainder of the Purchase Price.
2.4 Deliveries at the Closing. (a) At the Closing, Seller shall deliver to
Purchaser the following:
(i) A certificate executed by Seller, dated as of the Closing Date,
certifying in such detail as Purchaser may reasonably request that subject to
the matters disclosed in the Disclosure Memorandum, as it may be supplemented by
Seller from time to time, all representations and warranties of Seller in this
Agreement are true in all material respects as of the Closing Date and such
certificate shall also include the representations and warranties set forth on
Exhibit "E";
(ii) A certificate of the Secretary or an Assistant Secretary of Seller,
dated as of the Closing Date, certifying in such detail as Purchaser may
reasonably request (A) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of Seller authorizing the
execution, delivery, and performance of this Agreement, the Xxxx of Sale and
Assignment Agreement, and the Deeds, and that all such resolutions are still in
full force and effect and are all the resolutions adopted in connection with the
transactions contemplated by this Agreement, and (B) as to the incumbency and
specimen signature of each officer of Seller executing this Agreement, the Xxxx
of Sale and Assignment Agreement, the Deeds, and any certificate or instrument
furnished pursuant hereto, and a certification by another officer of Seller as
to the incumbency and signature of the officer signing such certificate;
(iii) The opinion of Xxxxxxxxxx Xxxxxxxx LLP, counsel to Seller, in
substantially the form of Exhibit "F" hereto;
(iv) The Xxxx of Sale and Assignment Agreement, duly executed by Seller;
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(v) The Consents;
(vi) The Deeds, duly executed by Seller;
(vii) An affidavit executed by or on behalf of Seller and dated as of the
Closing Date acknowledging that no bills for labor or materials furnished to the
Real Property are due and owing to any Person;
(viii) A waiver, duly executed by Franchisor, releasing Seller from all
obligations with respect to the development of additional restaurants in the
Territory as required by the terms of any agreement between Franchisor and
Seller;
(ix) Any management agreements entered into pursuant to Section 7.2(f),
duly executed by Seller;
(x) The Indemnification Agreement, duly executed by Seller;
(xi) Copies of all operating manuals, recipes, and other documents provided
by Franchisor;
(xii) A Cross-Receipt, duly executed by Seller; and
(xiii) Any other documents that Purchaser may reasonably request prior to
the Closing in order to effectuate the transactions contemplated hereby;
provided, however, that Seller shall have the right to delay the Closing up to
three business days to respond to any such request.
(b) At the Closing Purchaser shall deliver to Seller the following:
(i) A certificate executed by Purchaser, dated as of the Closing Date,
certifying in such detail as Seller may reasonably request to the fulfillment of
the conditions specified in Sections 7.3(a) and (b) hereof;
(ii) A certificate of the Secretary or an Assistant Secretary of Purchaser,
dated as of the Closing Date, certifying in such detail as Seller may request
(i) that attached thereto is a true and complete copy of resolutions adopted by
the Board of Directors of Purchaser authorizing the execution, delivery and
performance of this Agreement and the Xxxx of Sale and Assignment Agreement, and
that all such resolutions are still in full force and effect and are all the
resolutions adopted in connection with the transactions contemplated by this
Agreement, and (ii) as to the incumbency and specimen signature of each officer
of Purchaser executing this Agreement, and any certificate or instrument
furnished pursuant hereto or to be furnished in connection herewith as of the
Closing Date, and a certification by another officer of Purchaser as to the
incumbency and signature of the officer signing such certificate;
(iii) The funds constituting the cash portion of the Purchase Price;
(iv) The Note, duly executed by Purchaser;
(v) The Xxxx of Sale and Assignment Agreement, duly executed by Purchaser;
(vi) The opinion of Berkowitz, Lefkovits, Xxxx & Xxxxxxx, A Professional
Corporation, counsel to Purchaser, in substantially the form of Exhibit "G"
hereto;
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(vii) A waiver, duly executed by Franchisor, releasing Seller from all
obligations with respect to the development of additional restaurants in the
Territory as required by the terms of any agreement between Franchisor and
Seller;
(viii) Any management agreements entered into pursuant to Section 7.2(f),
duly executed by Purchaser.
(ix) The Indemnification Agreement, duly executed by Purchaser;
(x) A Cross-Receipt, duly executed by Purchaser; and
(xi) Any other documents that Seller may reasonably request at least three
days prior to the Closing.
2.5 Transfer of Operations. Purchaser shall be entitled to immediate
possession of, and to exercise all rights arising under, the 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 expressly provided in this Agreement, all profits, losses,
liabilities, claims, or injuries arising before the Effective Time shall be
solely to the benefit or the risk of Seller. All such occurrences after the
Effective Time shall be solely to the benefit or the risk of Purchaser. The risk
of loss or damage by fire, storm, flood, theft, or other casualty or cause shall
be in all respects upon Seller prior to the Effective Time and upon the
Purchaser thereafter.
2.6 Closing. The closing of the transactions described in this Article II
(the "Closing") shall take place at the offices of Xxxxxxxxxx Xxxxxxxx LLP,
Suite 2800, 0000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx, at 10:00 a.m. on April 30,
1998, or on such other date and time as may be mutually agreed upon by the
parties hereto. Purchaser may delay the Closing for up to three business days
following receipt of any amendment to the Disclosure Memorandum.
2.7 Allocation of Purchase Price. The Purchase Price shall be allocated
among the various Assets as set forth on Schedule 2.7 hereof. Each party hereby
agrees that it will not take a position on any income tax return, Internal
Revenue Service Form 8594, before any governmental agency charged with the
collection of any income tax, or in any judicial proceeding that is inconsistent
with the terms of this Section 2.7.
2.8 Further Assurances. From time to time after the Closing at Purchaser's
request and expense, Seller shall execute, acknowledge, and deliver to Purchaser
such other instruments of conveyance and transfer and shall take such other
actions and execute and deliver such other documents, certifications, and
further assurances as Purchaser may reasonably require to vest more effectively
in Purchaser, or to put Purchaser more fully in possession of, any of the
Assets, or to better enable Purchaser to complete, perform and discharge the
Assumed Liabilities. Each party hereto will cooperate with the other and execute
and deliver to the other party hereto such other instruments and documents and
take such other actions as may be reasonably requested from time to time by any
other party hereto as necessary to carry out, evidence, and confirm the intended
purpose of this Agreement.
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ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to the limitations and exceptions set forth in the Disclosure
Memorandum dated of even date hereof, as supplemented or amended from time to
time by Seller prior to the Closing Date to reflect any event or occurrence
after the date hereof, regardless of whether any Schedule constituting a part of
the Disclosure Memorandum is referenced in any specific provision below, Seller
hereby represents and warrants to Purchaser as follows:
3.1 Organization, Qualifications and Corporate Power. Seller is a
corporation duly incorporated and organized, validly existing, and in good
standing under the laws of the State of Georgia and has all requisite authority
to own, lease, and operate its properties and assets and to carry on its
business as it is now being conducted and is duly qualified or licensed as a
foreign corporation in good standing to do business in Tennessee and
Mississippi. Seller has the corporate power and authority to execute, deliver,
and perform this Agreement, the Xxxx of Sale and Assignment Agreement, the
Deeds, the Indemnification Agreement, and all other agreements, documents,
certificates, and other papers contemplated to be delivered by Seller pursuant
to this Agreement.
3.2 Authorization. The execution, delivery, and performance by Seller of
this Agreement, the Xxxx of Sale and Assignment Agreement, the Deeds, the
Indemnification Agreement, and all other agreements, documents, certificates,
and other papers contemplated to be delivered by Seller pursuant to this
Agreement have been duly authorized by all necessary corporate actions or
proceedings on the part of Seller, including approval by the Board of Directors
of Seller and no other corporate actions or proceedings on the part of Seller
are necessary under its Articles of Incorporation, its Bylaws, by law, or
otherwise to authorize the execution and delivery by the Seller of this
Agreement, the performance by Seller of its obligations hereunder, and the
consummation by Seller of the transactions contemplated herein.
3.3 Non-Contravention. The execution, delivery and performance of this
Agreement will not violate or result in a breach of any term of Seller's
Articles of Incorporation or Bylaws, subject to obtaining the consents to
assignment of the Leases and Material Contracts set forth on Schedule 3.3,
result in a breach of any agreement (including, without limitation, any Leases)
or other instrument to which Seller is a party (except for defaults under Minor
Contracts where the consent of the other party or parties to such contract to
the assignment thereof will not be obtained), result in any penalty, or violate
any law or any order, rule, or regulation applicable to Seller of any court or
of any regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over Seller; and will not result in the
creation or imposition of any lien, charge, or encumbrance of any nature
whatsoever upon any of the Assets. Except as set forth on Schedule 3.3 and
except for consents required under Minor Contracts, the execution, delivery and
performance of this Agreement and the other documents 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 other than any filing required under the HSR Act and the expiration of
any applicable waiting period thereunder. Schedule 3.3 identifies separately
each notice, consent, waiver, or approval by reference to each Lease and to each
Material Contract to which it is applicable.
3.4 Validity. This Agreement has been duly executed and delivered by the
Seller and constitutes the legal, valid, and binding obligation of Seller,
enforceable in accordance with its terms, subject to general equity principles
and to applicable bankruptcy, insolvency, reorganization, moratorium, and
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similar laws from time to time in effect affecting the enforcement of creditors'
rights. When the Xxxx of Sale, Assignment Agreement, and the Indemnification
Agreement have been executed and delivered in accordance with this Agreement,
they will constitute the legal, valid, and binding obligation of Seller,
enforceable in accordance with its terms, subject to general equity principles
and to applicable bankruptcy, insolvency, reorganization, moratorium, and
similar laws from time to time in effect affecting the enforcement of creditors'
rights. The documents delivered by Seller at Closing will be sufficient to
transfer to Purchaser all of Seller's right, title, and interest in and to the
Assets.
3.5 Assets. (a) Seller has good and valid title to all of the Assets
constituting personal property, free and clear of any and all mortgages,
pledges, security interests, liens, charges, conditional sales agreements, and
other encumbrances except Permitted Encumbrances, or except for personal
property held subject to equipment or other personal property leases that will
be purchased by Seller on or before the Closing Date pursuant to Section 4.13
below, whereupon Seller shall have good title to such property free and clear of
any and all mortgages, pledges, security interests, liens, charges, conditional
sales agreements, and other encumbrances except Permitted Encumbrances.
(b) The Assets located at each Restaurant constitute all tangible personal
property required on site to operate the Restaurant in accordance with the
Franchise Agreements.
(c) There are no assets or property of any nature which are not being
transferred to Purchaser hereunder that has been customarily used exclusively in
the operation or ownership of the Restaurants other than Permits and software
licenses that are not assignable.
(d) Each Asset constituting tangible personal property having a fair market
value of $2,000 or more is in good operating condition consistent with its age,
subject to normal wear and tear. As to each Restaurant, the maximum replacement
cost of Assets constituting tangible personal property which are not in good
operating condition consistent with their age, subject to normal wear and tear,
is less than $10,000.
3.6 Contracts and Leases.
(a) Each Material Contract and Lease is a valid and subsisting agreement,
without any material default of Seller thereunder, and to the knowledge of
Seller, without any default on the part of any other party thereto. To the
knowledge of Seller, no event or occurrence has transpired which with the
passage of time or giving of notice or both will constitute a default under any
Material Contract or Lease. A true and correct list of each Material Contract
and Lease and every amendment thereto or other agreement or document relating
thereto is set forth as Schedules 1.1A and 1.1B to this Agreement. True and
correct copies of the Material Contracts and Leases (and any amendments thereto)
have been provided to Purchaser. The summary of certain terms of the Leases and
any amendments thereto set forth on Schedule 1.1A is true and correct. At the
time of Closing, Seller shall have made all payments and performed all
obligations due through the Closing Date under each Contract and Lease, except
to the extent that any payment due is set forth on Schedule 2.3 and deducted in
calculating the Purchase Price pursuant to Section 2.3.
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(b) No Contract or Lease has been assigned by Seller or is subject to any
mortgage, pledge, hypothecation, security interest, lien, or other encumbrance
or claim, nor has any interest therein been granted by Seller to any third
party.
(c) Seller's possession of property subject to the Leases has not been
disturbed, nor has any claim been asserted against Seller adverse to its rights
in such leasehold interests.
(d) The Contracts have been entered into in the ordinary course of Seller's
business and, in Seller's opinion, contain commercially reasonable terms.
3.7 Real Property.
(a) Schedule 3.7(a) sets forth with respect to each Restaurant, its
location, whether it is located on Owned Real Property or is on a site subject
to a Lease, and whether the improvements are owned or leased.
(b) The water, electric, gas, and sewer utility services, and storm
drainage facilities currently available to each parcel of Real Property are
adequate for the operation of the Restaurants as presently operated, and to
Seller's knowledge, there is no condition which will result in the termination
of such utility services and other facilities or of the present access from each
parcel of Real Property to such utility services and other facilities.
(c) Seller has obtained all authorizations and rights-of-way which are
necessary to ensure vehicular and pedestrian ingress and egress to and from the
site of each Restaurant, all of which are assignable and shall be assigned to
Purchaser at the Closing. Except as set forth in Schedule 3.7(c), to the
knowledge of Seller, there is no fact or condition which would or could result
in a termination or reduction of the current access of the real property to
existing roads.
(d) Except as set forth in Schedule 3.7(c), Seller has received no notice
that any governmental body having the power of eminent domain over any parcel of
Real Property has commenced or intends to exercise the power of eminent domain
or a similar power with respect to any part of the Real Property.
(e) The Real Property and the present uses thereof comply in all material
respects with all material laws and regulations (including zoning laws and
ordinances) of all governmental bodies having jurisdiction over the Real
Property, and Seller has received no notice from any governmental body alleging
that the Real Property or any improvements erected or situated thereon, or the
uses conducted thereon or therein, violate any regulations of any governmental
body having jurisdiction over the Real Property.
(f) To the knowledge of Seller and except as set forth in Schedule 3.7(c),
no work for municipal improvements has been commenced on or in connection with
any parcel of Real Property or any street adjacent thereto and no such
improvements are contemplated. No assessment for public improvements has been
made against the Real Property which remains unpaid and Seller has received no
notice and has no knowledge of any pending improvement liens or special
assessments to be made against the Real Property by any governmental authority,
and the Real Property is not subject to any current use assessment or possible
"roll-back" taxes. No notice from any county, township, or other governmental
body has been served upon the Real Property or received by Sellers, or to the
knowledge of Seller received by any owner of any of the Real Property subject to
a Lease, requiring or calling attention to the need for any work, repair,
construction, alteration, or installation on or in connection with the Real
Property which has not been complied with.
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(g) Seller holds all Environmental Permits necessary for conducting the
Business and has conducted, and is presently conducting, the Business in
material compliance with all applicable Environmental Laws and Environmental
Permits held by it, including, without limitation, all record keeping and filing
requirements. Seller has not taken or omitted to take any action relating to the
Real Property that would result in any liability to Seller or any subsequent
owner or lessee of the Real Property under any Environmental Law. Except as set
forth in Schedule 3.7(g), to the Seller's knowledge, all Hazardous Materials and
Solid Waste, on, in, or under Real Property have been properly removed and
disposed of, and to the Seller's knowledge no past or present disposal,
discharge, spill, or other release of, or treatment, transportation, or other
handling of Hazardous Materials or Solid Waste on, in, under, or off-site from
any Real Property will subject the Purchaser, or any subsequent owner, occupant,
or operator of the Real Property to corrective or compliance action or any other
liability. There are no presently pending, or to Seller's knowledge, threatened
Actions or Orders against or involving Seller relating to any alleged past or
ongoing violation of any Environmental Laws or Environmental Permits with
respect to the Real Property, nor to Seller's knowledge is Seller subject to any
liability for any such past or ongoing violation. To Seller's knowledge there
are no underground storage tanks located on the Owned Real Property.
(h) To the knowledge of Seller, there are no disputes concerning the
location of property lines or corners of the Owned Real Property.
(i) To the knowledge of Seller, there are no mineshafts or sinkholes under
the Real Property.
3.8 Financial Statements. Schedule 3.8 contains for each Restaurant
unaudited statements of operations as of the end of the 1997 fiscal year and for
each fiscal month ended thereafter through the date hereof for which such
statements are available, prepared in accordance with generally accepted
accounting principles, except for the absence of explanatory notes and except as
otherwise expressly described therein (the "Financial Statements"). The
Financial Statements have been prepared in accordance with Seller's historical
practices and fairly present the operations of the Restaurants for the periods
presented and as of their respective dates.
3.9 Taxes. All Property Taxes relating to the Assets have been fully paid
for 1997 and all prior tax years and there are no delinquent property tax liens
or assessments. Seller has also timely filed (or will timely file) all other tax
returns and reports of whatever kind pertaining to the Assets and required to be
filed by Seller up to the Closing Date. Seller has paid (or will timely pay) all
Taxes of whatever kind, including any interest, penalties, governmental charges,
duties, fees, and fines imposed by all governmental entities or taxing
authorities, which are due and payable prior to the Closing Date or for which
assessments relating to any period prior to the Closing Date have been received,
the nonpayment of which would result in lien on any of the Assets. There are no
audits, suits, actions, claims, investigations, inquiries, or proceedings
pending or, to Seller's knowledge, threatened against 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 assessed against Seller that in any such case affect the
Assets. "Taxes" shall mean all taxes, charges, fees, levies, or other
assessments, including, without limitation, all net income, gross income, gross
receipts, sales, excise and ad valorem, transfer, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation,
property, or other taxes, customs, duties, fees, assessments, or charges of any
nature whatsoever, together with any interest, penalties, addition to tax, or
additional amounts imposed by any taxing authority, domestic, or foreign.
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3.10 Litigation. Except as set forth on Schedule 3.10, there is no material
action, suit, investigation, or proceeding pending or, to the knowledge of
Seller, threatened against or affecting Seller that pertains to the Restaurants,
any of the Assets or, to Seller's knowledge, the Real Property subject to Leases
before any court or by or before any governmental body or arbitration board or
tribunal nor is Seller aware of any facts which are likely to result in any such
action, suit, investigation, or proceeding. Seller is not in violation of any
term of any judgment, decree, injunction, or order outstanding against it.
3.11 Permits. Seller has all material Permits as are necessary to operate
the Restaurants. Seller has fulfilled and performed all of its material
obligations with respect to such Permits and, to the knowledge of Seller, no
event has occurred which allows, nor after notice or lapse of time or both would
allow, revocation or termination thereof or would result in any other impairment
of the rights of the holder of any such Permits. Except as set forth of Schedule
3.11, to the knowledge of Seller, there is no pending or proposed modification
of any Permit or other regulation or ordinance in any state, county, municipal,
or other government unit affecting the Business in any material respect.
3.12 Health and Safety Requirements. To the knowledge of Seller, Seller is
in compliance with all laws, governmental standards, rules and regulations
applicable to Seller or to any of the Assets in respect to the Americans with
Disabilities Act and similar state laws, occupational health and safety laws,
and environmental laws.
3.13 Employment Contracts, Etc. Seller is not is a party to any written
employment agreements related to the employees at the Restaurants, (or any oral
agreements providing for employment other than employment "at will") or any
deferred compensation agreements.
3.14 Labor Matters. Seller is not and never has been a party to any
collective bargaining or other labor agreement affecting the Business. To the
knowledge of Seller, there is no pending or threatened labor dispute, strike,
work stoppage, union representation, election, negotiation of collective
bargaining agreement, or similar labor matter affecting the Business. Seller is
not involved in any controversy with any group of its employees or any
organization representing any employees involved in the Business, and to the
knowledge of Seller, Seller is in compliance with all applicable federal and
state laws and regulations concerning the employer/employee relationship,
including but not limited to wage/hour laws, laws prohibiting discrimination,
and labor laws. Seller is in compliance with all of its agreements relating to
the employment of its employees, including, without limitation, provisions
thereof relating to wages, bonuses, hours of work and the payment of Social
Security taxes, and Seller is not liable for any unpaid wages, bonuses, or
commissions or any tax, penalty, assessment, or forfeiture for failure to comply
with any of the foregoing.
3.15 Employee Benefits.
(a) Schedule 3.15 hereto contains a true and complete list of all the
following agreements or plans of Seller which are presently in effect and which
cover or benefit any of the employees engaged in the Business:
(i) "employee benefit plans," as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA");
(ii) any other pension, profit sharing, retirement, deferred compensation,
stock purchase, stock option, incentive, bonus, vacation, severance, disability,
health, hospitalization, medical, life insurance, vision, dental, prescription
drug, supplemental unemployment, layoff, automobile, apprenticeship and
training, day care, scholarship, group legal benefits, fringe benefits, or other
employee benefit plan, program, policy, or arrangement, whether written or
unwritten, forma or informal, which Sellers maintains or to which Seller has any
outstanding, present, or future obligation to contribute to or make payments
under, whether voluntary, contingent, or otherwise (the plans, programs,
policies, or arrangements described in clauses (i) or (ii) are herein
collectively referred to as the "Seller Plans").
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(b) Seller has provided to Purchaser copies of all Seller Plans.
(c) All Seller Plans have been operated, administered, and funded in
compliance with the applicable provisions of ERISA, the Code, and all applicable
regulations promulgated thereunder (including the minimum funding requirements
of Section 302 of ERISA and Section 412 of the Code). Without limiting the
generality of the foregoing:
(i) No "reportable event" (as such term is defined in Section 4043(a) of
ERISA) and no transaction described in Section 406 of ERISA has occurred with
respect to any of the Seller Plans.
(ii) There are no pending, threatened, or anticipated claims by, against,
or on behalf of the Seller Plans other than uncontested routine claims by
participants and beneficiaries for benefits due and owing under the Seller
Plans.
(iii) None of the Assets is subject to a lien pursuant to Section 302(f) or
Section 4068 of ERISA and no event has occurred which could subject any of the
Assets to any such lien.
(iv) Neither the Seller nor any of its affiliates has engaged in any
transaction or is a successor to or parent corporation of any party which has
engaged in any transaction which could subject it to liability under Section
4069 of ERISA.
(d) Seller has never sponsored, maintained, made, or been required to make
contributions to a multi-employer plan as defined in Section 3(37) of ERISA.
(e) No Seller Plan is subject to Title IV of ERISA.
3.16 Employees. Seller has not made any statements to its employees which
are inconsistent with the provisions of Sections 6.3(a), 6.3(b) or 6.3(c).
3.17 Inventory. The inventory (including food, beverage, and liquor and all
paper products) in each Restaurant consists of a quality which is usable and
saleable in the ordinary course of business. Stocks of new uniforms and supplies
(including carbon dioxide, matches, filters, balloons, crayons, and other
children's novelties and menus) are of a quantity and quality customary to
Seller's past practice. All inventory, uniforms, and supplies are of a nature
and quality which complies with the Franchise Agreements.
3.18 Accuracy of Schedules, Certificates, and Documents. No representation,
warranty, or covenant by Seller in this Agreement (including the Exhibits
attached hereto and the Disclosure Memorandum) contains or will contain any
untrue statement of material fact or omits or will omit to state any material
fact required to be stated herein or therein necessary in order to make the
statements herein or therein not misleading. All documents furnished to
Purchaser pursuant to this Agreement which are documents described in this
Agreement or in the Disclosure Memorandum are true and correct copies of the
documents which they purport to represent.
ARTICLE IV - COVENANTS OF SELLER
4.1 Performance of Real Property Leases and Assumed Contracts. Seller
shall, through the Closing Date, continue to faithfully and diligently perform
each and every continuing obligation of Seller, if any, under each of the Leases
and Material Contracts, where the failure to do so would have a material adverse
affect on the operations of a Restaurant.
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4.2 Lease Options. Seller shall, through the Closing Date, exercise any
option becoming exercisable under a Lease to extend the term of such Lease.
4.3 Transfer of Licenses and Permits. Seller shall use reasonable best
efforts to cooperate in assisting Purchaser with the assumption, transfer, or
reissuance of any and all Permits required for the operation of the Restaurants.
4.4 Liabilities of Seller. All liabilities of Seller related to the Assets
which are not Assumed Liabilities will be promptly paid by Seller as they come
due.
4.5 Agreements Respecting Employees of Seller.
(a) Prior to the Effective Time without the prior written approval of
Purchaser, Seller shall not transfer or reassign to operations outside the
Business any employee exclusively involved in the operation or supervision of
the Restaurants ("ADI Personnel") At the Effective Time, Seller shall terminate
the employment of all ADI Personnel. For a period of twelve months following the
Closing, Seller shall not hire any person who was an employee of Purchaser
within the previous three months. For a period of eighteen months following the
Closing, Seller shall not solicit for employment any person who is an employee
of Purchaser.
(b) Seller shall be solely responsible for any severance amounts due or
granted by Seller to any ADI Personnel.
(c) Seller shall cooperate with Purchaser in the transition of coverage of
ADI Personnel from Seller's health, medical, life insurance and other welfare
plans to plans maintained by Purchaser.
4.6 Conduct of Business. (a) From the date hereof until Closing, Seller
shall (i) operate the Restaurants as they are currently being operated and in
the ordinary course of business and in compliance with all terms and conditions
of the Franchise Agreements, using reasonable best efforts in keeping with
Seller's historical practices to preserve and maintain the services of its
employees and its relationships with suppliers and customers, (ii) pay all bills
and debts incurred by it related to the Business promptly as they become due,
and (iii) consult in advance with Purchaser on all decisions outside the
ordinary course of business relating to the Assets or the Restaurants.
(b) In particular, and without limiting the foregoing, with respect to the
Business, Seller shall:
(i) continue to conduct the advertising activities and efforts as set forth
on Schedule 4.6;
(ii) maintain the Assets consistent with past practices and in accordance
with the maintenance capital expenditure budget set forth on Schedule 4.6;
(iii) continue to conduct on a timely basis all Restaurant remodeling and
refurbishments as set forth on Schedule 4.6, which Schedule shows the remodeling
and refurbishment activities of Seller with respect to the Territory as budgeted
by Seller;
(iv) continue to purchase and maintain inventories for each Restaurant in
such quantities and quality as necessary to operate the Restaurants in
accordance with Seller's historical practice;
(v) continue to operate the Restaurants in accordance with all material
applicable local, state, and federal laws and regulations; and
(c) Further, with respect to the Restaurants, Seller shall not, without the
express prior written approval of Purchaser:
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(i) change in any material manner the ownership of the Assets;
(ii) increase the rate of compensation to ADI Personnel beyond the usual
and customary annual merit increases or bonuses under established compensation
plans, except for payments under the stay-bonus plan described on Schedule 4.6,
which has been approved;
(iii) mortgage, pledge, or subject to lien any of the Assets;
(iv) sell or otherwise dispose of any Asset except in the ordinary course
of business;
(v) enter into any Material Contract except in the ordinary course of
business and consistent with past practices;
(vi) establish or adopt any new "employee benefit plan" as defined in
Section 3(3) of ERISA; or
(vii) other than in the ordinary course of business, cancel or terminate or
consent to or accept any cancellation or termination of any Material Contract or
Lease, amend or otherwise modify any of its material terms or waive any breach
of any of its material terms or provisions or take any other action in
connection with any Material Contract or Lease that would materially impair the
interests or rights of Seller to be transferred to Purchaser hereunder.
4.7 Access to Information. Seller shall afford Purchaser, 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 Seller with respect to the Assets and
the Restaurants and shall furnish to Purchaser such additional financial and
operating data and other information as Seller may possess and as Purchaser may
reasonably request, subject to Purchaser's obligations regarding the
confidentiality of such information as set forth in Section 6.2 hereof;
provided, however, that such access shall be arranged in advance by Purchaser
with Seller and will be scheduled in a manner and with a frequency calculated to
cause the minimum disruption of the business of Seller.
4.8 Reporting Requirements. Through the Closing Date, Seller shall furnish
to Purchaser:
(a) Promptly after the occurrence, or failure to occur, of any such event,
information respect to any event which has materially adversely affected the
Assets or the operations of the Restaurants.
(b) As soon as available and in any event within fifteen business days
after the end of each fiscal month, the statement of operations of each
Restaurant for such month in the Seller's regularly prepared format.
(c) Promptly after the commencement of each such matter, notice of all
actions, charges, orders or other directives affecting the Business or any
Restaurant that, if adversely determined, could materially adversely affect the
Assets, the operations, business, prospects or condition (financial or
otherwise) of the Restaurant or the ability of Seller to perform its obligations
hereunder;
(d) Such other information respecting the Assets or the operations,
business prospects, or condition (financial or otherwise) of the Restaurants as
the Purchaser may from time to time reasonably request.
4.9 Cooperation. Insofar as such conditions are within its reasonable
control or influence, Seller will use reasonable best efforts to cause the
conditions set forth in Article VII to be satisfied and to facilitate and cause
the consummation of the transactions contemplated hereby, including obtaining
the Consents. The parties acknowledge that no consents will be sought with
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respect to any Minor Contract even if the failure to so obtain a consent to
assignment may result in a default or termination thereunder. Seller will use
reasonable best efforts to obtain required consents of landlords to the
assignment of the Leases and shall bear any expenses associated with obtaining
such consents; however, Seller shall not be required to make any payment to a
landlord (other than reimbursement of expenses), guarantee any Lease or remain
liable for the payment thereof following the Closing, or agree to any
concessions or amendment to other leases or arrangements with such landlord in
order to obtain such consents.
4.10 Subsequent Contracts. From the date of this Agreement to the Closing
Date, Seller shall use reasonable best efforts (a) to include in any Material
Contracts entered into by Seller ("Subsequent Contracts") a provision permitting
the assignment of any such Subsequent Contract to Purchaser and providing that
upon such assignment, Purchaser shall succeed to all of Seller's rights, title,
and interests thereunder subject to the Purchaser's assumption of all of
Seller's duties, powers, and obligations under such Subsequent Contract, and (b)
to ensure that no Subsequent Contract contains any provision which would limit
in any way the rights, title, and interests of Seller in the Assets.
4.11 Transition Services.
(a) For a period of three months after the Closing, if and to the extent
requested in writing by Purchaser, Seller agrees to provide to Purchaser
restaurant accounting, POS system support, and/or other services related to the
Restaurants as mutually agreed upon between Seller and Purchaser (the
"Services"). Purchaser shall give Seller notice of the Services requested at
least thirty days prior to Closing. The Services shall be provided promptly as
requested and shall be provided i the same manner and with the same or similar
personnel as Seller previously utilized. Purchaser may extend the period for
which the Services will be provided for up to sixty days by giving at least
forty-five days prior written notice to Seller.
(b) Purchaser will pay for the Services on a monthly basis. The Services
will be provided for an agreed upon fixed fee.
4.12 Delivery of Real Estate Documents. Within five business days of the
date hereof Seller shall provide to Purchaser legal descriptions of the Owned
Real Property and copies of all surveys, title policies, and environmental
reports pertaining to the Owned Real Property in Seller's possession.
4.13 Equipment Leases and Liens. (a) Prior to or at the Closing, Seller
shall purchase all equipment and other tangible personal property customarily
located in the Restaurants or on the Real Property or used exclusively with
respect to the Business that is subject to any equipment or other personal
property lease (other than immaterial personal property such as a postage meter
or copying machine separately subject to a Minor Contract). Title to all such
property so acquired shall be transferred to Purchaser at Closing free and clear
of any lien, security interest, claim, or other encumbrance.
(b) Seller shall satisfy any and all claims for mechanic's or materialmen's
liens against the Real Property or any part thereof on or prior to Closing.
(c) Prior to or at the Closing, Seller shall cause to be removed any
security deed, deed of trust, security interest, lien, or other encumbrance upon
the Owned Real Property or any other Asset that secures any loan, debt, or other
financing obligation.
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ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers as follows:
5.1 Organization, Corporate Power, Authorization. Purchaser is a limited
liability company duly organized, validly existing, and in good standing under
the laws of the State of Alabama and in each other jurisdiction in which it is
lawfully required to qualify to conduct business. Purchaser has the power and
authority to execute and deliver this Agreement, the Xxxx of Sale and Assignment
Agreement, and the Indemnification Agreement and to consummate the transactions
contemplated hereby. All action on the part of Purchaser necessary for the
authorization, execution, and delivery of this Agreement, the Xxxx of Sale and
Assignment Agreement, and the Indemnification Agreement, and performance of all
obligations of Purchaser thereunder has been duly taken.
5.2 Non-Contravention. The execution and delivery of this Agreement, the
Xxxx of Sale and Assignment Agreement, and the Indemnification Agreement by
Purchaser do not and the consummation by Purchaser of the transactions
contemplated hereby and thereby will not violate any provision of its articles
of organization or operating agreement.
5.3 Validity. This Agreement has been duly executed and delivered by
Purchaser, and constitutes the legal, valid, and binding obligation of
Purchaser, enforceable against it in accordance with its terms, subject to
general equity principles and to applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws from time to time in effect
affecting the enforcement of creditors' rights. When the Xxxx of Sale and
Assignment Agreement, and the Indemnification Agreement have been executed and
delivered in accordance with this Agreement, they will constitute the legal,
valid, and binding obligation of Purchaser, enforceable in accordance with their
terms, subject to general equity principles and to applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws from time to time in
effect affecting the enforcement of creditors' rights.
5.4 Litigation Relating to the Agreement. Purchaser is not a party to, or
subject to any judgment, decree, or order entered in any lawsuit or proceeding
brought by any governmental agency or instrumentality or other party seeking to
prevent the execution of this Agreement or the consummation of the transactions
contemplated hereby.
ARTICLE VI - COVENANTS OF PURCHASER
6.1 Purchaser Performance. After the Closing Date, Purchaser shall promptly
pay as they become due and otherwise perform all obligations of Seller, subject
to Purchaser's right, in good faith, to contest the amount or validity of such
obligation under the Assumed Liabilities and otherwise perform and fulfill all
other obligations with respect to the Assets pertaining to the period after the
Closing Date; provided, however, that this Agreement is intended only for the
benefit of the parties hereto and neither this Agreement, nor any of the rights,
interests, or obligations hereunder, is intended for the benefit of any other
Person.
6.2 Confidentiality. In connection with the negotiation of this Agreement,
Seller may disclose Confidential Information, as defined below, to Purchaser.
Purchaser agrees that if the transactions contemplated herein are not
consummated, it will return to Seller all documents and other written
information furnished to it. Purchaser further agrees to maintain the
confidentiality of any and all Confidential Information of Seller and not
disclose any Confidential Information to any Person othe than its employees,
agents, attorneys, lenders, and accountants in connection with the transactions
contemplated hereby or use such Confidential Information for financial gain or
in any manner adverse to Seller; provided, however, the foregoing obligations
shall not apply to (i) any information which was known by Purchaser prior to its
disclosure by Seller; (ii) any information which was in the public domain prior
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to the disclosure thereof; (iii) any information which comes into the public
domain through no fault of Purchaser; (iv) any information which is disclosed to
Purchaser by a third party, other than an affiliate, having the legal right to
make such disclosure; or (iv) any information which is required to be disclosed
by Order of any Forum. For purposes of this Section, "Confidential Information"
shall mean any and all technical, business, and other information which is (a)
possessed or hereafter acquired by Seller and disclosed to Purchaser and (b)
derives economic value, actual or potential, fro not being generally known to
Persons other than Seller, including, without limitation, technical or
nontechnical data, compositions, devices, methods, techniques, drawings,
inventions, processes, financial data, financial plans, product plans, lists of
actual or potential customers or suppliers, information regarding the business
plans and operations of Seller, and the existence of discussions and
negotiations between the parties hereto relating to the terms hereof. The
restrictions of this Section shall expire three years from the date hereof with
respect to any confidential business information that does not constitute a
trade secret under applicable law.
6.3 Seller Employees.
(a) Purchaser shall offer employment to all ADI Personnel as to whom
Purchaser has been furnished all employment records at Closing upon terms and
conditions substantially equivalent to those provided by Seller; however,
Purchaser shall not be required to provide stock options or any stock purchase
rights. For a period of twelve months following the Closing, Purchaser shall not
hire any person who was an employee of Seller or any subsidiary of Seller within
the previous three month (other than ADI Personnel) and for a period of eighteen
months following the Closing. Purchaser shall not solicit for employment any
person who is an employee of Seller or any subsidiary of Seller.
(b) Each of the ADI Personnel offered employment pursuant to Section 6.3(a)
shall be offered employment by Purchaser as an "at will" employee of Purchaser
to perform such duties as Purchaser may assign to such employee from time to
time. Each such employee shall be subject to the same rules and policies
applicable to Purchaser's current employees with respect to all employment
related matters including retention, disciplinary action, termination,
promotion, compensation, and except as otherwise provided in this Agreement,
benefits. Each party hereby represents to the other party that neither such
party nor any of its officers or directors has made any representation to any
such employee which is materially inconsistent with the foregoing.
(c) The covenants of Purchaser contained in this Section are made solely to
Seller. Nothing contained in this Section gives or shall be construed as giving
any employee of Seller, including ADI Personnel, any right to be employed by
Purchaser in any capacity, for any rate of compensation or for any period of
time. No employee of Seller, including ADI Personnel, shall be considered a
third party beneficiary of the covenants of Purchaser contained in this Section
and Purchaser shall have no liability to any employee on account of its breach
of any such covenants.
(d) Purchaser shall maintain employee records transferred to Purchaser
hereunder for a period of not less than four years and during that period will
afford Seller reasonable access to such records during Purchaser's normal
business hours. Purchaser shall maintain the confidentiality of such records and
limit access thereto in a manner consistent with Purchaser's treatment of its
employee records.
(e) Purchaser agrees with respect to ADI Personnel hired by Purchaser: (i)
to give such employees credit under Purchaser's benefits plans, programs, and
arrangements, including credit for accrued vacation which has been charged to
Seller under Section 2.3, for such employees' period of service with Seller,
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provided that such credit shall only be taken into account under any
tax-qualified plan maintained by Purchaser for purposes of determining such
employees' eligibility for participation and eligibility to satisfy any hours of
service requirement in order to receive an allocation of an employer
contribution; (ii) to provide coverage to such employees who are eligible under
Purchaser's health, medical, life insurance, and other welfare plans (A) without
the need to undergo a physical examination or otherwise provide evidence of
insurability; (B) any pre-existing condition or similar limitations or
exclusions will be applied by taking into account the period of coverage under
Seller's plan; (C) by applying and giving credit for amounts paid for the plan
year in which the Closing Date occurs as deductibles, out of pocket expenses,
and similar amounts paid by individuals and their beneficiaries.
6.4 Cooperation. Insofar as such conditions are within its reasonable
control or influence, Purchaser shall use reasonable best efforts to cause the
conditions set forth in Article VII to be satisfied and to facilitate and cause
the consummation of the transactions contemplated hereby. Specifically, but not
by way of limitation, Purchaser will (i) use its reasonable best efforts to
obtain a signed commitment letter for financing in substantially the form
attached hereto as Exhibit "H" from the lender referenced therein ("Financing
Commitment") and to obtain financing from such lender on the terms set forth
therein, (ii) promptly provide Franchisor with all information required by
Franchisor to determine whether Purchaser will be approved as a franchisee with
respect to the Territory, (iii) actively pursue an agreement with Franchisor as
to the principal terms of franchise and development agreements with respect to
the Territory, and (iv) file all documents required to obtain approval of the
transactions contemplated hereby under the HSR Act within 15 days of the date
hereof.
ARTICLE VII - CONDITIONS PRECEDENT TO THE CLOSING
7.1 Title Examination and Property Inspection. (a) Purchaser shall have 30
days following the later of the date of this Agreement or the receipt of the
documents referred to in Section 4.12 (the "Title Inspection Period") to obtain
and review (i) current ALTA/ASCM as-built surveys and title insurance
commitments with respect to the Owned Real Property ("Owner's Title ALTA
Commitments") pursuant to which the Title Company will agree to issue at Closing
owner's policies of title insurance ("Owner's Title Policies") on American Land
Title Association standard Form B-1970, without exceptions except as shown in
the Owner's Title ALTA Commitments, to be issued by a reputable title insurance
company of Purchaser's choice and reasonably acceptable to Seller ("Title
Company") in an amount in the case of each parcel equal to the purchase price
allocated to such parcel of the Owned Real Property pursuant to Section 2.7, and
(ii) current ALTA/ASCM as-built surveys and title insurance commitments wit
respect to the Real Property subject to a Lease (collectively, the "Leased Real
Property") (the "Lessee Title Commitments", and collectively with the Owner's
Title ALTA Commitments, the "Title Commitments") pursuant to which the Title
Company will agree to issue at Closing lessee's policies of title insurance
("Lessee's Title Policies") on American Land Title Association standard form of
leasehold owner's policy to insure leasehold estates, showing no exceptions
except as shown in the Lessee Title Commitments. The Owner's Title Policies
shall insure the Purchaser that, upon consummation of the purchase and sale
herein contemplated, Purchaser will be vested with good, fee simple, marketable
and insurable title to the Owned Real Property, subject only to the Permitted
Encumbrances or encumbrances arising out of acts of the insured. The Lessee's
Title Policies shall insure the Purchaser that, upon consummation of the
transactions herein contemplated, Purchaser will be vested with a good, valid,
marketable and insurable leasehold estate in and to the Leased Real Property,
subject only to the Permitted Encumbrances. Seller and Purchaser shall take such
steps as may be necessary to cause the deletion of all the standard exceptions
within the Title Policies for mechanic's and materialmen's liens and the survey
22
exceptions. Purchaser shall have until the end of the Title Inspection Period in
which to furnish Seller a written statement of objections to any title,
ordinance, zoning, or survey matter ( Material Objections"). Any requirements of
Schedule B-1 of the Title Commitments, to the extent not within the control of
Purchaser, shall automatically be considered as Material Objections. Seller
shall have until the Termination Date to satisfy such Material Objections (but
with no obligation to do so) in all material respects, and if Seller fails to
satisfy all Material Objections in all material respects on or prior to the
Termination Date, then Purchaser's sole right and remedy shall be to either (i)
waive the Material Objections and elect to close (in which case the subject of
such Material Objections shall be deemed Permitted Encumbrances), or (ii)
terminate this Agreement by giving written notice of such termination to Seller.
If Purchaser fails to furnish Seller a written statement of Material Objections
by the end of the Title Inspection Period with respect to any matter appearing
as an exception on a Title Commitment, such matter along with all other
encumbrances of record as of the effective date of the Title Commitments not
objected to by Purchaser shall be deemed waived by Purchaser and shall be a
Permitted Encumbrance. Any easement, restriction, covenant, and other
encumbrance which becomes an exception to title after the date of the Title
Commitments and prior to the Closing shall upon notice to Seller in writing be
considered a Material Objection. The parties acknowledge that some of the Leased
Real Property may be located in shopping centers, and as such, unless the leased
premises are a free standing building located on a separate pad with its own
legal description ("Free Standing Premises") the Lessee Title Commitments for
such Leased Real Property will contain encumbrances for entire shopping centers.
Notwithstanding anything to the contrary contained herein, while Lessee Title
Commitments will be delivered for such Leased Real Property, no surveys will be
delivered for Leases unless such Leases are for Free Standing Premises. With
respect to Leased Real Property other than Free Standing Premises, Purchaser may
not object to title encumbraces for such Leased Real Property that do not affect
the premises leased under the Leases or tenant's rights under such Leases, which
such encumbrances shall be deemed to be Permitted Encumbrances.
(b) Property Inspection.
(i) Between the date of this Agreement and the Closing Date, Purchaser and
Purchaser's agents, employees, contractors, representatives and other designees
(hereinafter collectively called "Purchaser's Designees") shall have the right
to enter the Real Property for the purposes of inspecting the Real Property,
conducting soil tests, conducting surveys, mechanical and structural engineering
studies, environmental studies, and conducting any other investigations,
examinations, tests, and inspections as Purchaser may reasonably require to
assess the condition of the Real Property; provided, however, that (A) any
activities by or on behalf of Purchaser, including, without limitation, the
entry by Purchaser or Purchaser's Designees onto the Real Property, or the other
activities of Purchaser or Purchaser's Designees with respect to the Real
Property (hereinafter called "Purchaser's Activities") shall not damage the Real
Property in any manner whatsoever or disturb or interfere with the rights of any
lessor of Leased Real Property; provided, however, that Seller agrees and
acknowledges that Purchaser's activities may, upon reasonable notice to Seller,
involve soil borings and samplings and similar invasive procedures that will not
adversely affect operations of the Restaurants or affect the structural
integrity of the Real Property; (B) in the event the Real Property is altered or
disturbed in any manner in connection with any Purchaser's Activities, Purchaser
shall promptly return the Real Property t the condition existing prior to
Purchaser's Activities; (C) Purchaser shall in no event without Seller's prior
written consent disclose the results of any of its investigations, examinations,
tests, or inspections to any party (including any Government unless required by
law) other than to its lenders, attorneys, consultants, and investors; and (D)
Purchaser shall indemnify, defend, and hold Seller harmless from and against any
and all claims, liabilities, damages, losses, costs, and expenses of any kind or
nature whatsoever (including, without limitation, attorneys' fees, and expenses
23
and court costs) suffered, incurred or sustained by Seller as a result of, by
reason of, or in connection with any Purchaser's Activities. Notwithstanding any
provision of this Agreement to the contrary, Purchaser shall not have the right
to undertake any environmental studies or testing beyond the scope of a standard
"Phase I" evaluation without the prior written consent of Seller and, if
applicable, the lessor of any Leased Real Property; provided, however, that
Purchaser shall have the right to undertake and conduct a "Phase II" evaluation
or other evaluation Purchaser deems necessary on the Real Property on which the
Bristol, Tennessee Restaurant is located.
(ii) Purchaser shall have until the date which is thirty (30) days after
the date of this Agreement (hereinafter called the "Due Diligence Date"), to
perform such investigations, examinations, tests and inspections as Purchaser
shall deem necessary or desirable to determine whether the Real Property is
suitable and satisfactory to Purchaser and can be used for Applebee's franchise
restaurants. In the event Purchaser shall in good faith determine that the Real
Property is not suitable and satisfactory to Purchaser, Purchaser shall have the
right to terminate this Agreement by giving written notice to Seller on or
before the Due Diligence Date If Purchaser does not terminate this Agreement in
accordance with this Section 7.1(b) on or before the Due Diligence Date,
Purchaser shall have no further right to terminate this Agreement pursuant to
this Section 7.1(b).
(iii) Prior to any entry by Purchaser or any of Purchaser's Designees onto
the Real Property, Purchaser shall: (A) procure a policy of commercial general
liability insurance, issued by an insurer reasonably satisfactory to Seller,
covering all Purchaser's Activities, with a single limit of liability (per
occurrence and aggregate) of not less than $1,000,000.00; and (B) deliver to
Seller a Certificate of Insurance, evidencing that such insurance is in force
and effect, and evidencing that Selle has been named as an additional insured
thereunder with respect to any Purchaser's Activities. Such insurance shall be
written on an "occurrence" basis, and shall be maintained in force until the
earlier of (A) the termination of this Agreement and the conclusion of all
Purchaser's Activities; or (B) Closing.
(iv) Purchaser acknowledges that Seller may deliver to Purchaser certain
documents and information in possession of Seller or Seller's agents with regard
to the Real Property (hereinafter called the "Due Diligence Materials"). The Due
Diligence Materials will be provided to Purchaser without any representation or
warranty of any kind or nature whatsoever and are merely provided to Purchaser
for Purchaser's informational purposes. Until Closing, Purchaser and Purchaser's
Designees shall maintain all Due Diligence Materials as Confidential
Information.
7.2 Purchaser's Conditions to Closing. The obligations of Purchaser
hereunder are subject to satisfaction of each of the following conditions at or
before Closing, the occurrence of which may, at the option of Purchaser, be
waived:
(a) Subject to the matters disclosed in the Disclosure Memorandum as
supplemented by Seller from time to time to reflect any event or occurrence
after the date hereof, all representations and warranties of Seller in this
Agreement shall be true in all material respects on and as of the Closing.
(b) Any supplement to the Disclosure Memorandum delivered by Seller shall
not reflect in Purchaser's reasonable judgment any material adverse change in
the Assets or the Business.
(c) Seller 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 Seller prior to or on the Closing Date.
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(d) Seller shall have obtained and delivered to Purchaser all consents
necessary to transfer and assign the Assets (except for Minor Contract) to
Purchaser.
(e) Purchaser and Franchisor shall have entered into a franchise agreement
with respect to each Restaurant and development agreements with respect to each
ADI in the Territory.
(f) Purchaser shall have obtained, either from Seller 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 in accordance with franchise requirements;
provided, however, that if Purchaser is unable to obtain from local municipal or
county authorities a permit necessary for such operation of the Restaurants, and
Purchaser reasonably believes that it will be able to obtain such a permit
within two months of the Closing Date, Closing of the transactions contemplated
hereunder will not be delayed if Seller delivers to Purchaser a duly executed
liquor license management agreement or agreements.
(g) The waiting period under the HSR Act shall have expired or a
notification of early termination of the waiting period shall have been received
by Purchaser.
(h) Purchaser shall have obtained the financing described on Exhibit "H" or
other financing reasonably acceptable to Purchaser and the lender providing such
financing shall be prepared and willing to fund.
(i) Purchaser shall have been issued the Title Policies.
(j) Seller shall have delivered the items required by Section 2.4(a).
(k) There shall be no material adverse change in the Assets or the
operations of the Seller at the Restaurants or the business prospects or
financial condition of the Business from the date hereof to the Closing Date;
provided that (i) any such adverse change must affect more than 5% of the
Restaurants or must result in a decrease in the aggregate monthly sales of all
the Restaurants taken as a group by 10% or more when compared to the average
monthly sales for the last three full calendar months ended immediately prior to
the date of this Agreement, and (ii) any adverse change in the business and
financial condition of the Restaurants resulting from national and regional
economic conditions, events, or other factors affecting the casual dining
restaurant industry in general, or the Applebee's system in particular, shall
not be deemed to be a material adverse change hereunder.
7.3 Seller's Conditions to Closing. The obligations of Seller hereunder are
subject to satisfaction of each of the following conditions at or before
Closing, the occurrence of which may, at the option of Seller, be waived:
(a) All representations and warranties of Purchaser in this Agreement shall
be true on and as of the Closing, and Purchaser shall have delivered to Seller a
certificate to such effect dated as of the Closing Date.
(b) Purchaser 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 Purchaser prior to or on the Closing Date.
(c) Franchisor shall have agreed to terminate the Franchise Agreements
effective as of the Closing.
(d) Seller shall have obtained all the Consents; provided, however, that
this condition shall not apply if Purchaser shall indemnify Seller for any
liability in excess of $25,000 resulting from the failure to receive any
Consent.
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(e) The waiting period under the HSR Act shall have expired or a
notification of early termination of the waiting period shall have been received
by Seller.
(f) Purchaser shall have delivered the items required by Section 2.4(b).
ARTICLE VIII - ARBITRATION
8.1 Settlement of Disputes.
(a) Arbitration. All disputes and controversies of every kind and nature
between the parties hereto arising out of or in connection with this Agreement
or the transactions contemplated hereby shall be submitted to arbitration
pursuant to the following procedures:
(i) After a dispute or controversy arises, either party may, in a written
notice delivered to the other party, demand such arbitration. Such notice shall
designate the name of the arbitrator appointed by such party demanding
arbitration, together with a statement of the matter in controversy;
(ii) Within 30 days after receipt of such demand, the other party shall, in
a written notice delivered to the other party, name such party's arbitrator. If
such party fails to name an arbitrator, then the second arbitrator shall be
named by the American Arbitration Association ("AAA"). The two arbitrators so
selected shall name a third arbitrator within 30 days, or in lieu of such
agreement on a third arbitrator by the two arbitrators so appointed, the third
arbitrator shall be appointed by the AAA;
(iii) The arbitration hearing shall be held in Birmingham, Alabama (in the
case of arbitration initiated by Seller) or in Atlanta, Georgia (in the case of
arbitration initiated by Purchaser) at a location designated by a majority of
the arbitrators. The Commercial Arbitration Rule of the AAA shall be used and
the substantive laws of the State of Georgia (excluding conflict of laws
provisions) shall apply;
(iv) An award rendered by a majority of the arbitrators appointed pursuant
to this Agreement shall be final and binding on all parties to the proceeding,
shall deal with the question of costs of the arbitration and all related
matters, and judgment on such award may be entered by either party in a court of
competent jurisdiction; and
(v) Except as set forth in subsection (b) below, the parties stipulate that
the provisions of this Section 8.1 shall be a complete defense to any suit,
action or proceeding instituted in any federal, state, or local court or before
any administrative tribunal with respect to any controversy or dispute arising
out of this Agreement. The arbitration provisions hereof shall, with respect to
such controversy or dispute, survive the termination or expiration of this
Agreement.
(b) Emergency Relief. Notwithstanding anything in this Section 8.1 to the
contrary, either party may seek from a court any provisional remedy that may be
necessary to protect any rights or property of such party pending the
establishment of the arbitral tribunal or its determination of the merits of the
controversy.
ARTICLE IX - TERMINATION
9.1 Termination.
(a) This Agreement may be terminated as follows:
(i) At any time by the mutual consent of Seller and Purchaser;
26
(ii) By Purchaser pursuant to Section 7.1;
(iii) By Seller if Purchaser shall not (i) have obtained and provided a
copy of an executed Financing Commitment to Seller within ten days from the date
hereof; provided however that such ten day period shall not apply to financing
with respect to the Real Property upon which the Bristol, Tennessee Restaurant
is located, (ii) been approved hereof as a franchisee with respect to the
Territory by Franchisor within twenty days from the date hereof, (iii) reached
agreement with Franchisor as to a development schedule and other material terms
of franchise and development agreements with respect to the Territory within
twenty days from the date hereof; or
(iv) By either Seller or Purchaser, at its sole election, at any time after
the Termination Date, if the Closing shall not have occurred on or prior to such
date.
(b) In the event of the termination of this Agreement pursuant to Section
9.1 (a)(iv) above because Seller or Purchaser, as the case may be, shall have
willingly failed to fulfill its obligations hereunder, the other party shall,
subject to Article VIII, be entitled to pursue, exercise, and enforce any and
all remedies, rights, powers, and privileges available to it at law or in
equity.
(c) If this Agreement is terminated as provided herein, then except for the
provisions of Section 6.2, Article VIII, and Article X hereof which shall
survive termination of this Agreement, no party shall have any liability or
further obligation to any other party hereto, except that nothing contained in
this Section 9.1 shall relieve any party from liability for any breach of this
Agreement. The provisions of Article VIII hereof shall be applicable with
respect to any such breach o claimed breach.
ARTICLE X - MISCELLANEOUS
10.1 Expenses. (a) Each party hereto shall pay its own legal, accounting,
and similar expenses incidental to the preparation of this Agreement, the
carrying out of the provisions of this Agreement, and the consummation of the
transactions contemplated hereby.
(b) Purchaser shall pay all filing fees required under the HSR Act.
(c) Purchaser shall pay the costs of obtaining title insurance with respect
to the Real Property and all transfer, intangible, recording, and documentary
taxes, stamps, and fees with respect to the transfer of the Owned Real Property
and the Leases. Purchaser shall also pay the cost of all surveys, and all
environmental investigations, studies, and reports, and all other costs of any
investigation of the Assets, the Restaurants, or the Business by Purchaser.
(d) Purchaser shall pay any costs associated with the transfer of any
Permits and the cost of obtaining liquor licenses or other Permits that are not
assignable.
(e) The parties shall split equally the cost of any sales taxes, transfer
taxes, documentary stamp taxes, or other taxes imposed with respect to the
transfer of any Assets constituting personal property.
(f) Seller shall pay the costs of obtaining any Consents.
(g) Following the Closing, Seller shall pay to Purchaser on a monthly basis
as billed the amount of all gift certificates issued by Seller prior to the
Closing and redeemed thereafter.
10.2 Contents of Agreement; Parties in Interest; etc. This Agreement sets
27
forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby and together with the Indemnification Agreement
constitutes a complete statement of the terms of such transaction. This
Agreement shall not be amended or modified except by written instrument duly
executed by each of the parties hereto. Any and all previous agreements and
understandings between the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement. Neither party has been
induced to enter into this Agreement in reliance on, and has not relied upon,
any statement, representation, or warranty of the other party not set forth in
this Agreement, the Disclosure Memorandum, or any certificate delivered pursuant
to this Agreement.
10.3 Assignment and Binding Effect. This Agreement may not be assigned
prior to the Closing by any party hereto without the prior written consent of
the other party. Subject to the foregoing, all of the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the successors and assigns of Seller and Purchaser.
10.4 Notices. Any notice, request, demand, waiver, consent, approval, or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by telecopy or by
first class registered or certified United States Mail, with proper postage
prepaid, as follows:
28
If to Seller, to: With a required copy to:
Apple South, Inc. Xxxxxxxxxx Xxxxxxxx LLP
Xxxxxxx at Washington 0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000 Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. (Dusty) Profumo Attention: Xxxxx X. Xxxxxxxxx, Esq.
Fax: 000-000-0000 Fax: 000-000-0000
If to Purchaser: With a required copy to:
Quality Restaurant Concepts, L.L.C. Berkowitz, Lefkovits, Xxxx &
Xxxxxxx, A Professional Corporation
000 Xxxxxxxxxx Xxxx Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000 000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxx: Xxxx Xxxxxx Xxxxxxxxxx, Xxxxxxx 00000
Fax: 000-000-0000 Attention: Xxxxx X. Xxxxx, Esq.
Fax: 000-000-0000
or to such other address or person as the addressee may have specified in a
notice duly given to the sender as provided herein. Such notice, request,
demand, waiver, consent, approval or other communication will be deemed to have
been given as of the date actually delivered, or if mailed, four days after
deposit in the U. S. Mail properly addressed with adequate postage affixed.
10.5 GEORGIA LAW TO GOVERN. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA
WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
29
10.6 Headings. All section headings contained in this Agreement are for
convenience of reference only, do not form a part of this Agreement, and shall
not affect in any way the meaning or interpretation of this Agreement.
10.7 Schedules and Exhibits. All Exhibits and Schedules referred to herein
are intended to be and hereby are specifically made a part of this Agreement.
10.8 Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
10.9 Public Announcements. Purchaser and Seller will coordinate with each
other all press releases relating to the transactions contemplated by this
Agreement and, except to the extent required by law, refrain from issuing any
press release, publicity statement, or other public notice relating to this
Agreement or the transactions contemplated hereby without providing the other
party reasonable opportunity to review and comment thereon.
10.10 Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event that any ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party hereto by virtue of the
authorship of any of the provisions of this Agreement.
10.11 Disclaimer of Warranties. OTHER THAN TO THE EXTENT OF ANY EXPRESS
REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH IN THIS AGREEMENT AND IN THE
CLOSING CERTIFICATE REQUIRED BY SECTION 2.4(a)(i), SELLER DOES NOT, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, AND SELLER SHALL NOT, BY THE EXECUTION
AND DELIVERY OF ANY DOCUMENT OR INSTRUMENT EXECUTED AND DELIVERED IN CONNECTION
WITH THE CLOSING, MAKE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF
ANY KIND OR NATURE WHATSOEVER, WITH RESPECT TO THE ASSETS, AND ALL SUCH
WARRANTIES ARE HEREBY DISCLAIMED. PURCHASER WILL CONDUCT SUCH INSPECTIONS AND
INVESTIGATIONS OF THE ASSETS (INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL AND
ENVIRONMENTAL CONDITION THEREOF) AND RELY UPON SAME AND, UPON CLOSING, SHALL
ASSUME THE RISK THAT ADVERSE MATTERS MAY NOT HAVE BEEN REVEALED BY PURCHASER'S
INSPECTIONS AND INVESTIGATIONS. SELLER SHALL SELL AND CONVEY TO PURCHASER, AND
PURCHASER SHALL ACCEPT, THE ASSETS "AS IS", "WHERE IS", AND WITH ALL FAULTS, AND
THERE ARE NO ORAL AGREEMENTS, WARRANTIES OR REPRESENTATIONS, COLLATERAL TO OR
AFFECTING THE ASSETS BY SELLER OR ANY THIRD PARTY. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, SELLER MAKES, AND SHALL MAKE, NO EXPRESS OR IMPLIED
WARRANTY OF SUITABILITY OR FITNESS OF ANY OF THE ASSETS FOR ANY PURPOSE, OR AS
TO THE MERCHANTABILITY, ENVIRONMENTAL CONDITION, TITLE, VALUE, QUALITY,
QUANTITY, CONDITION OR SALABILITY OF ANY OF THE ASSETS, OR AS TO THE PRESENCE ON
OR ABSENCE FROM THE ASSETS OF ANY HAZARDOU MATERIAL, OR THAT THE USE OR SALE OF
ANY OF THE ASSETS WILL NOT VIOLATE THE COPYRIGHT, TRADEMARK OR PATENT RIGHTS OF
ANY PERSON. THE TERMS AND CONDITIONS OF THIS SECTION 10.11 SHALL SURVIVE THE
CONSUMMATION OF THE PURCHASE AND SALE OF THE ASSETS ON THE CLOSING DATE WITHOUT
REGARD TO ANY GENERAL LIMITATIONS UPON SURVIVAL SET FORTH IN THIS AGREEMENT.
10.12 Purchaser's Right to Rely. NOTWITHSTANDING ANYTHING IN THE FORGOING
TO THE CONTRARY, PURCHASER'S INSPECTIONS AND INVESTIGATIONS OF THE ASSETS SHALL
NOT IN ANY WAY OBVIATE OR HAVE ANY EFFECT ON SELLER'S REPRESENTATIONS,
WARRANTIES, AND COVENANTS MADE HEREIN. FURTHER, ANY DISCLOSURE BY SELLER OR
SELLER'S EMPLOYEES OR AGENTS, OTHER THAN A DISCLOSURE APPEARING ON THE
DISCLOSURE MEMORANDUM SHALL NOT IN ANY WAY OBVIATE OR HAVE ANY EFFECT ON
SELLER'S REPRESENTATIONS, WARRANTIES, AND COVENANTS MADE HEREIN.
10.13 Time. Time is and shall be of the essence of this Agreement.
30
10.14 Steel Building Materials. If Seller is unable to cancel without
penalty its obligation to purchase the steel building materials which Seller has
ordered for a future Jackson, Mississippi restaurant (the "Building Materials"),
Seller shall sell, transfer, assign, and deliver to Purchaser all of Seller's
right, title, and interest in the Building Materials at the Closing for no
additional payment, and the Building Material shall be deemed to constitute
"Assets" for all purposes of this Agreement. If Seller is able to cancel its
contract for the Building Materials, the Purchase Price payable pursuant to
Section 2.3 hereof will be decreased by the amount of $10,000 and the Building
Materials shall not be deemed to constitute "Assets" for purposes hereof.
10.15 Bristol Restaurant. If (i) Purchaser shall have obtained the
financing described on Exhibit H or other financing reasonably acceptable to
Purchaser by or prior to the Closing Date but (ii) such financing does not
include financing for the purchase of the Real Property upon which the Bristol,
Tennessee Restaurant is located and Purchaser, after exercising reasonable
commercial efforts, is unable to obtain financing for the purchase of such Real
Property upon terms at least as favorable to Purchaser as the financing obtained
in item (i) of this sentence, at the Closing each of the following shall occur:
(a) The definitions of "Assets" and "Owned Real Property" in Section 1.1
shall be modified to exclude the Real Property (but not the improvements) on
which the Bristol Restaurant is located, and every other definition, provision,
exhibit, and schedule of this Agreement shall be modified to the extent
necessary to reflect such exclusion of the Bristol Restaurant Real Property from
the definitions of "Assets" and "Owned Real Property;" provided however, that
(i) the definition of "Restaurants shall not be modified, (ii) the definition of
"Real Property" shall continue to include the real property upon which the
Bristol Restaurant is located, and (iii) solely for purposes of the
representations and warranties contained in Sections 3.9, 3.10, and 3.12 hereof,
"Assets" shall continue to include the Real Property upon which the Bristol
Restaurant is located.
(b) The Purchase Price payable pursuant to Section 2.3 shall be decreased
by the amount of $374,000.
(c) Seller shall, or shall arrange for another Person having fee ownership
of the Bristol Restaurant to, enter into a ground lease with Purchaser for the
Real Property on which the Bristol Restaurant is located at the Closing. Such
ground lease shall: (i) be for a term of twenty years, (ii) have rent payable
thereunder at the rate of $31,790 per year, payable monthly in advance, (iii)
contain a purchase option for Purchaser for an initial purchase price of
$374,000, such purchase price to be increased by 2% per year for each year
subsequent to the fifth year of the term of the lease, (iv) permit the Seller or
other landlord thereof to freely assign the property subject to the
nondisturbance of Purchaser's leasehold interest, (v) contain such other terms
and conditions as are customary for a ground lease in the State of Tennessee,
and (vi) require Seller, or such other Person constituting the ground lessor, to
consent to the assignment of such ground lease by the Purchaser to Purchaser's
lender or lenders as security for Purchaser's financing and to take such further
actions in connection with such consent as Purchaser may reasonably request.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
SELLER:
APPLE SOUTH, INC.
By:
Name:
Title:
PURCHASER:
QUALITY RESTAURANT CONCEPTS, L.L.C.
By:
By:
Name:
Title:
32
Apple South agrees to supplementally furnish to the Commission a copy of
any omitted exhibit or schedule to this Agreement upon the request of the
Commission. The following is a list briefly identifying the contents of all
omitted exhibits and schedules:
EXHIBIT TABLE OF CONTENTS
EXHIBIT TITLE
A Xxxx of Sale and Assignment Agreement
B Deeds (Mississippi and Tennessee)
C Form of Indemnification Agreement
D Form of Note
E Language for Closing Certificate
F Opinion of Seller's Counsel
G Opinion of Purchaser's Counsel
H Lender's Commitment Letter
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DISCLOSURE MEMORANDUM
Table of Contents
Schedule Title
1.1A Description of Leases
1.1B Material Contracts
1.1C Legal Description
1.1D Territory
2.3 Adjustment to Purchase Price
2.7 Allocation of Purchase Price
3.3 Leases and Material Contracts acquiring
consents of third parties
3.7 Location and Ownership of Restaurants
3.8 Financial Statements
3.10 Litigation
3.11 Pending modifications to Permits or Laws
3.15 Seller Plans
4.6 Advertising, Maintenance Capital Expenditure Budget,
Remodeling and Refurbishing Budget, Stay-Bonus Plan
34
