Exhibit 10.34
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STOCK PURCHASE AGREEMENT
AMONG
PJ AMERICA, INC.,
PJ LOUISIANA, INC.,
AND
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XXXXXXX X. XXXXXXXX, XXXXXX X. XXXXXX, XX.
XXXXXXX X. XXXXXXXXX, XXXXXX XXXXXXX,
XXXXXXXX XXXXXXX, XXXXXXX X. XXXXXXX,
XXXXX X. XXXXXX, AND XXXXXXX X. XXXXXXXX
May 13, 1998
TABLE OF CONTENTS
Section Page
1. Purchase and Sale of Shares................................................1
1.1 Purchase and Sale of Shares............................................1
1.2 The Closing; Effective Date............................................1
2. Purchase Price; 338 Election; Allocation of Purchase Price.................2
2.1 Purchase Price........................................................2
2.2 Payment of Purchase Price.............................................2
2.3 338 Election; Purchase Price Allocation...............................2
3. Certain Representations and Warranties of Shareholders.....................2
3.1 Title to Shares; Share Restrictions...................................2
3.2 Authority.............................................................2
3.3 Completeness of Statements............................................3
4. Representations and Warranties of the Company and the Shareholders.........3
4.1 Organization and Standing of the Company..............................3
4.2 Subsidiaries..........................................................3
4.3 Authority.............................................................3
4.4 No Violations; Consents...............................................3
4.5 Capitalization; Stock Ownership and Rights............................4
4.6 Financial Statements..................................................4
4.7 Absence of Undisclosed Liability......................................5
4.8 Absence of Certain Events.............................................5
4.9 Properties............................................................7
4.10 Assets Necessary to Business.........................................8
4.11 Bank Accounts, etc...................................................8
4.12 Absence of Other Business Operations; Restrictive Covenants..........8
4.13 Contracts; Contract Status...........................................8
4.14 Copyrights, Trademarks, Trade Names, Etc.............................9
4.15 Current Employees and Compensation; Officers and Directors...........9
4.16 Employee Benefits...................................................10
4.17 Environmental Matters...............................................11
4.18 Indebtedness to or from Officers, Directors, Etc....................12
4.19 Insider Interests...................................................12
4.20 Insurance...........................................................12
4.21 Labor Matters.......................................................12
4.22 Leases..............................................................13
4.23 Licenses and Permits................................................13
4.24 Litigation..........................................................13
4.25 Real Property.......................................................14
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TABLE OF CONTENTS
Section Page
4.26 Payments............................................................14
4.27 Tax Returns; Tax Elections..........................................14
4.28 Compliance..........................................................16
4.29 Books and Records...................................................16
4.30 Completeness of Statements..........................................16
5. Representations and Warranties of PJAM....................................16
5.1 Incorporation; Corporate Power.......................................16
5.2 Authorization; No Violation..........................................17
6. Covenants of the Parties..................................................17
6.1 Operation of the Company Pending Closing.............................17
6.2 Non-Competition Agreement............................................18
6.3 Release and Resignation..............................................18
6.4 Compliance with Conditions...........................................18
6.5 Payment of Certain Loans.............................................19
6.6 Further Actions......................................................19
6.7 Continuation of Insurance Coverage...................................19
7. Conditions to the Obligations of PJAM.....................................19
7.1 Representations and Warranties Correct...............................19
7.2 Compliance with Covenants............................................20
7.3 Necessary Consents...................................................20
7.4 No Material Adverse Change...........................................20
7.5 No Litigation........................................................20
8. Conditions to Obligations of the Shareholders.............................20
8.1 Representatives and Warranties Correct...............................20
8.2 Compliance with Covenants............................................20
8.3 Necessary Consents...................................................20
9. Termination...............................................................20
9.1 Termination Events...................................................20
9.2 Effect of Termination................................................21
10. Deliveries and Actions Taken at Closing..................................22
10.1 Deliveries by the Shareholders......................................22
10.2 Deliveries by PJAM..................................................22
10.3 Deliveries by PJAM and the Shareholders.............................23
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TABLE OF CONTENTS
Section Page
11. Survival of Representations and Warranties; Indemnities............... 23
11.1 Survival........................................................ 23
11.2 General Indemnities of the Shareholders......................... 23
11.3 Additional Indemnities of the Shareholders...................... 24
11.4 Indemnity by PJAM............................................... 24
11.5 Exclusive Remedy................................................ 24
11.6 Limitations on Shareholder's Indemnification Obligations........ 25
11.7 Claims Procedure................................................ 25
11.8 Defense of Third Party Claim.................................... 26
11.9 Arbitration..................................................... 27
11.10 Contingent Amount; Certain Agreements of the Parties........... 27
12. Miscellaneous Provisions.............................................. 27
12.1 Appointment of Shareholders' Agents; Actions of
Shareholders Following the Closing.............................. 27
12.2 Expenses........................................................ 28
12.3 Notice.......................................................... 28
12.4 Exhibits; Entire Agreement...................................... 29
12.5 Amendment; Waiver............................................... 29
12.6 Binding Effect; Assignment...................................... 29
12.7 Captions........................................................ 29
12.8 Severability of Provisions...................................... 30
12.9 Confidentiality................................................. 30
12.10 Governing Law.................................................. 30
12.11 Publicity; No Disclosure....................................... 30
12.12 Post-Closing Access............................................ 30
12.13 Counterparts................................................... 31
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EXHIBITS
Description Exhibit
Ownership of Shares....................................................... A
Purchase Price Allocation................................................. B
Equipment, Property and Other Assets...................................... C
Non-Competition Agreements................................................ D
Release Letter............................................................ E
Shareholder Loans......................................................... F
SCHEDULES
Description Schedule
Ownership of Shares....................................................... 3.1
Organization and Good Standing............................................ 4.1
No Violations; Consents................................................... 4.4
Capitalization; Stock Ownership........................................... 4.5
Financial Statements...................................................... 4.6
Liabilities Not Disclosed on Acquisition Balance Sheet.................... 4.7
Absence of Certain Events................................................. 4.8
Properties................................................................ 4.9
Bank Accounts............................................................. 4.11
Absence of Other Business Activities...................................... 4.12
Contracts................................................................. 4.13
Current Employees and Compensation, Directors and Officers................ 4.15
Employee Benefits......................................................... 4.16
Environmental Matters..................................................... 4.17
Indebtedness.............................................................. 4.18
Insider Interests......................................................... 4.19
Insurance................................................................. 4.20
Labor Matters............................................................. 4.21
Leases.................................................................... 4.22
Litigation................................................................ 4.24
Taxes..................................................................... 4.27
Buyer's Required Authorizations........................................... 5.2
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is entered into as of May 13, 1998, by and
among (i) PJ America, Inc., a Delaware corporation ("PJAM"), (ii) PJ Louisiana,
Inc., a Louisiana corporation ("Company"), and (ii) Xxxxxxx X. Xxxxxxxx, Xxxxxx
X. Xxxxxx, Xx. (each an Alabama resident), Xxxxxxx X. Xxxxxxxxx, Xxxxxx Xxxxxxx
(each a Kentucky resident), Xxxxxxxx Xxxxxxx, Xxxxxxx X. Xxxxxxx (each a Florida
resident), Xxxxx X. Xxxxxx (a Tennessee resident), and Xxxxxxx X. Xxxxxxxx (an
Indiana resident) (individually, a "Shareholder" and collectively, the
"Shareholders").
Recitals:
A. The Company owns, operates and manages restaurants as a franchisee of Papa
John's International Inc. ("PJI"). The Shareholders own all of the issued and
outstanding capital stock of the Company.
B. PJAM desires to purchase from Shareholders, and Shareholders desire to
sell to PJAM, for the consideration and pursuant to the terms, conditions and
covenants of this Agreement (as defined in Section 12.4), all of the issued and
outstanding capital stock of the Company.
Agreement:
Now, Therefore, the parties hereby agree as follows:
1. Purchase and Sale of Shares.
1.1 Purchase and Sale of Shares. Upon the terms set forth herein, each
Shareholder, individually, agrees to sell, transfer, convey, assign and deliver
to PJAM at the "Closing" (as defined in Section 1.2), and PJAM agrees to
purchase and accept delivery from each of the Shareholders at the Closing, all
the "Shares" (as defined in Section 4.5) owned by such Shareholder.
1.2 The Closing; Effective Date.
(a) The Closing. The closing of the purchase and sale of the Shares
shall take place at the offices of Xxxxxxxxxx Xxxx & XxXxxxxx, PLLC, 0000
Xxxxxxxx Xxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx 00000, 10:00 a.m., local time. The
Closing shall occur on May 12, 1998, if all the conditions set forth in Sections
7.3 and 8.3 have been fulfilled by such date. If all such conditions have not
been fulfilled by such date, then the Closing shall take place on such other
date which is two business days after the party obligated to fulfill such
conditions shall have notified the other party that the last of such conditions
has been satisfied or waived, or such other date as the parties may agree,
provided that the date of Closing ("Closing Date") shall in no event be later
than June 29, 1998.
(b) Effective Date. Pursuant to an agreement of the parties, dated
April 21, 1998, the Closing of the purchase and sale of the Shares shall, for
all purposes, be effective as of 12:01 a.m., local time, on April 27, 1998
("Effective Date").
2. Purchase Price; 338 Election; Allocation of Purchase Price.
2.1 Purchase Price. The purchase price ("Purchase Price") for the Shares
shall be $4,350,000.
2.2 Payment of Purchase Price. The Purchase Price shall be paid to the
Shareholders, in accordance with each Shareholders percentage ownership of the
Shares, set forth on Exhibit A ("Shareholder's Percentage Interest") attached
hereto, and in the following manner:
(a) the amount of $1,000,000 (the "Contingent Amount") shall be paid by
Buyer to Shareholders subject to the contingencies, and at the times, described
in Section 11.10;
(b) the amount of $3,350,000 shall be paid by Buyer to the Shareholders
at the Closing in immediately available funds to an account designated by each
Shareholder.
2.3 338 Election; Purchase Price Allocation. The parties agree to make
such election required under Section 338(h)(10) of the Internal Revenue Code of
1986, as amended, so as to treat the purchase and sale of the Shares as a
purchase and sale of the assets of the Company. The Purchase Price shall be
allocated among the assets and liabilities of the Company as set forth on
Exhibit B attached hereto. The parties shall report the transaction
consistently with such allocation for all income tax purposes.
3. Certain Representations and Warranties of Shareholders. Each of the
Shareholders hereby severally represents and warrants to PJAM as follows:
3.1 Title to Shares; Share Restrictions. The Shareholder is the sole
record, lawful and beneficial owner of that number of Shares set forth opposite
such Shareholder's name on Exhibit B, and has good and marketable title to such
Shares. Except as disclosed on Schedule 31, the Shareholder owns such Shares
free and clear of all "Encumbrances" (which, as used in this Agreement, shall
mean any charge, claim, community property interest, condition, equitable
interest, lien, mortgage, easement, servitude, right-of-way, option, pledge,
security interest, right of first refusal or restriction of any kind, including
any restriction on use, voting, transfer, receipt of income or exercise of any
other attribute of ownership), other than restrictions on transfer under
applicable state and federal securities laws, and any restrictions under any
shareholder or similar agreement among the Shareholders and the Company, or any
of them (the "Shareholders' Agreement"), which the Shareholder's agree shall be
deemed waived as of Closing.
3.2 Authority. The Shareholder has full right, power, authority and
capacity to execute, deliver and perform this Agreement in accordance with its
terms. This Agreement and each and every agreement, document and instrument to
be executed, delivered and performed by the Shareholder in connection herewith
or in connection therewith constitutes, or will, when executed and delivered,
constitute, the valid and legally binding obligation of the Shareholder,
enforceable against the Shareholder in accordance with their respective terms,
except as enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally.
3.3 Completeness of Statements. To the knowledge of the Shareholder,
no representation or warranty of the Shareholder in this Section 3 contains any
untrue statement of a material fact, any misstatement of a material fact, or
omits to state a material fact necessary to make the statements herein or
therein not misleading in light of the circumstances under which they were made.
4. Representations and Warranties of the Company and the Shareholders.
The Company and each of the Shareholders, jointly and severally, hereby make the
following representations and warranties to PJAM.
4.1 Organization and Standing of the Company. The Company is duly
organized, validly existing and in good standing under the laws of the state of
Louisiana. Neither the nature of the business of the Company nor the character
or location of the properties of the Company requires the Company to be
qualified as a foreign corporation in any jurisdiction. The Company has full
power and authority, corporate or otherwise, to own and lease its properties as
such properties are now owned and leased and to conduct its business as and
where such business is conducted. Schedule 41 contains true and complete copies
of the articles of incorporation and by-laws of the Company, as amended through
the date hereof.
4.2 Subsidiaries. The Company does not, directly or indirectly, own any
capital stock of, nor does it have any interest or investment (whether debt or
equity) of any nature in, any other corporation, partnership, business trust,
joint venture, association or other business organization.
4.3 Authority. The Company has all necessary corporate power and
authority to execute, deliver and perform this Agreement in accordance with its
terms. This Agreement and each and every agreement, document and instrument to
be executed, delivered and performed by the Company in connection herewith has
been duly and validly authorized, executed and delivered by the Company and
constitutes or will, when executed and delivered, constitute, the valid and
binding obligation of the Company, enforceable against the Company in accordance
with their terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally.
4.4 No Violations; Consents. Except as set forth on Schedule 4.4, and
except for the consent of PJI with respect to the transfer of the Shares (the
"PJI Consent"), the execution, delivery and performance of this Agreement the
consummation of the transactions described in this
Agreement, and the fulfillment of and compliance with the terms and provisions
of this Agreement, do not and will not: (i) conflict with or violate the terms
or conditions of, result in the breach of or constitute a default under, (A) any
law, rule or regulation of any government or agency or department of any
government, or any material judgment, order, writ, award, decree, permit or
license of any court or other agency of any government to which the Company, or
any of its properties or assets, may be subject, (B) any agreement, instrument,
mortgage, commitment, franchise or restriction to which the Company is a party
or by which the Company, or any of its properties or assets, is bound or
committed, except for the "Amsouth Loan" (as hereafter defined), or (C) the
charter, bylaws or any other organizational documents of the Company; (ii)
constitute an event which could, or with the lapse of time or action by a third
party could, result in any manner in any default under or modify any of the
foregoing, provide any third party the right to cancel any of the foregoing, or
result in the creation of any Encumbrance upon any of the Company's assets or
properties that could have a material adverse effect on its business, assets,
financial condition or results of operations; (iii) constitute an event which
could, or with the lapse of time or action by a third party could, result in the
creation of any Encumbrance upon any of the issued and outstanding capital stock
of the Company; or (iv) require any consent, authorization or approval of any
federal, state or local court, governmental authority or regulatory body, or of
any creditor or any party to any such agreement, instrument, mortgage, contract
or commitment, or any other person or entity; or (v) give any party with rights
under any agreement, instrument, mortgage, franchise, commitment, judgment,
order, writ, award, decree, permit, license or other restriction to which the
Company or any of its properties or assets are subject or bound the right to
terminate, accelerate, modify or otherwise alter the rights or obligations of
the Company thereunder.
4.5 Capitalization; Stock Ownership and Rights.
(a) The authorized capital stock of the Company consists of 1000 shares
of no par value voting common stock, all of which are issued and outstanding
(the "Shares"). The Shareholders are the sole record and beneficial owners of
the Shares in the amounts set forth on Exhibit A attached hereto. Each
outstanding Share is duly authorized, validly issued, fully-paid and non-
assessable.
(b) As of the date of this Agreement, (i) the Company has no outstanding
class of capital stock other than the Shares, and (ii) except as identified on
Schedule 4.5, there are no, nor is there any arrangement not yet fully performed
which would result in any, outstanding options, warrants, conversion or exchange
rights, subscriptions, agreements or other commitments of any kind obligating
the Company to issue or sell, or to redeem, purchase or otherwise acquire,
directly or indirectly, any Shares or other capital stock of the Company or any
outstanding restrictions, agreements or commitments of any kind to which the
Company is a party or by which the Company is bound, which relate to or restrict
in any way the issuance or sale, or purchase, redemption or other acquisition,
of any Shares.
(c) None of the issued and outstanding Shares has been issued in
violation of any federal, state or other law pertaining to the issuance of
securities, or in violation of any rights,
preemptive or otherwise, of the Company or any present Shareholder or past
shareholder of the Company.
4.6 Financial Statements. Included as Schedule 46 are the following
selected financial statements of the Company (collectively, the "Company
Financial Statements"), all of which have been prepared by PJAM for the Company:
(i) the unaudited balance sheet of the Company as of December 28, 1997, together
with a statement of income for the period ending December 28, 1997 (the "Year
End Financials"); and (ii) the unaudited interim balance sheet of the Company as
of April 26, 1998 (the "Acquisition Balance Sheet"), together with a statement
of income for the period commencing on December 29, 1997 and ending April 26,
1998 (the "Stub Period Financials"). The Company Financial Statements have been
prepared from the books and records of the Company, represent actual, bona fide
transactions and were prepared in conformity with generally accepted accounting
principles applied on a consistent basis. The balance sheets included in the
Company Financial Statements present fairly the financial condition of the
Company as of the respective dates of the Company Financial Statements, and the
statements of income included in the Company Financial Statements present fairly
the results of operation of the Company for the respective periods covered
thereby.
4.7 Absence of Undisclosed Liability. As of the date of the
Acquisition Balance Sheet, the Company had no debts, obligations (including, but
not limited to, obligations as a guarantor) or liabilities of any nature,
secured or unsecured (including, but not limited to, debts, obligations or
liabilities which are fixed, absolute, accrued or contingent), whether known or
unknown to the Shareholders, except (a) as shown (and in the amounts shown) on
the Acquisition Balance Sheet, or (b) for those obligations or liabilities which
are not required to be disclosed on the Acquisition Balance Sheet under
generally accepted accounting principles, or are otherwise disclosed to PJAM in
any other provision of this Agreement or the Schedules attached hereto, (c)
obligations under contracts not required to be disclosed pursuant to this
Agreement, and (d) current obligations and debts arising out of the ordinary
course of the Company's business and operations. Except as disclosed on
Schedule 47, since the date of the Acquisition Balance Sheet, the Company has
not incurred any debts, obligations (including, but not limited to, obligations
as a guarantor) or liabilities of any nature, secured or unsecured (including,
but not limited to, debts, obligations or liabilities which are fixed, absolute,
accrued or contingent), other than (a) obligations under contracts not required
to be disclosed pursuant to this Agreement, (b) debts, obligations and
liabilities incurred in the ordinary course of business consistent with past
practices, and none of which (i) is inconsistent with the representations,
warranties and covenants of the Company and the Shareholders contained herein or
in any other provisions of this Agreement, (ii) has had or may be expected to
have any material adverse effect on the business, assets, financial condition or
prospects of the Company, or (iii) constitutes a guarantee of any form or type.
4.8 Absence of Certain Events. Since the date of the Acquisition
Balance Sheet, the Company has not, except as set forth on Schedule 4.8:
(a) issued, sold, purchased or redeemed any stocks, bonds, debentures,
notes, partnership interests or other securities or interests, or issued, sold
or granted any option, warrant or right to acquire any thereof;
(b) waived or released any debts, claims, rights of value or suffered
any extraordinary loss or written down the value of any inventories or other
assets, or written down or off any receivable, in excess of $100,000, in the
aggregate;
(c) declared, set aside or paid any dividend or distributions on any of
the Shares;
(d) made any change in its operations, other than changes in the lawful
and ordinary course of business, none of which has, and which in the aggregate
have not had, a material adverse effect on its business, operations, financial
condition, or results of operations or prospects;
(e) suffered any casualty, damage, destruction or loss to any of its
assets in excess of $10,000 for any one event or in excess of $100,000 in the
aggregate;
(f) suffered any material adverse change in its revenues or expenses,
financial position, assets, results of operations, business or cash flow, or
experienced any occurrence or event which alone or together with other
occurrences or events experienced by it has had or might reasonably be expected
to have a material adverse effect upon its revenues or expenses, financial
position, assets, results of operations, business or cash flow;
(g) terminated, placed on probation, disciplined, warned, or experienced
any resignation of any executive officer or experienced any resignations of, or
had any disputes involving the employment relationship with, any store manager
or operating partner of the Company ("Management Employee");
(h) paid or obligated itself to pay any bonuses or extraordinary
compensation to, or made any increase (except increases in the ordinary course
of business) in the compensation payable (or to become payable by it) to, any
officer, director or employee, or entered into any contract of employment not
terminable by it without notice, penalty or termination payment;
(i) terminated or amended or suffered the termination or amendment of
(i) any material lease, bids, contracts, commitments and other agreements of the
Company, or (ii) any permits, licenses, concessions, authorizations, franchises
(including any PJI franchises) or similar rights granted to or held by the
Company, which are necessary or are material and related to its operations;
(j) incurred any indebtedness for borrowed money or subjected any of its
properties or assets to any Encumbrances or to any other similar charge of any
nature whatsoever;
(k) made any loan or advance to any person or entity (except normal
travel or other reasonable expense advance to its employees);
(l) made any material change in accounting principles, methods or
practices;
(m) adopted, modified or amended any material plan, contract or
arrangement providing for management or consulting services, severance, employee
insurance, bonuses, pension, profit sharing, stock purchase, deferred
compensation or other employee benefits;
(n) entered into any material agreement, arrangement or transaction
(other than transactions involving the sale of the Company's products in the
ordinary course of business) with any of the Shareholders, or any of the
officers, directors, agents or representatives of the Company, or any family
members of any of the foregoing, or any business or entity in which any of the
foregoing has a direct or indirect interest, except with respect to arrangements
with Xxxxxxxxxx Xxxx & XxXxxxxx PLLC ("GD&M"), to provide legal services to the
Company;
(o) merged or consolidated with, or acquired all or any substantial
portion of the business or property of, any other entity, or entered into any
transactions other than in the ordinary course of business;
(p) entered into any agreement, contract, lease or license (or series of
related agreements, contracts, leases or licenses) involving more than $10,000,
other than in the ordinary course of business or in connection with the
development, construction or operation of its restaurants;
(q) entered into any agreement or commitment (whether or not in writing)
to do any of the above;
and the Company has:
(r) continued its operations in the ordinary course consistent with its
past practices and maintained its operations, assets, books of account, records
and files in substantially the same manner as before the date of the Acquisition
Balance Sheet;
(s) used its reasonable efforts to preserve its business.
4.9 Properties. The Company has good and marketable title to all of its
properties, interests in properties, and assets, tangible and intangible,
(excluding leased real properties for which the Company has good and valid
leasehold title), free and clear of all Encumbrances of any nature whatsoever,
except for statutory or similar governmental liens securing payments of ad
valorem property taxes or local taxes on income or profits not yet due and
payable by the Company, any inchoate landlord's liens, and those items set forth
in Schedule 4.9. Except as set forth on Schedule 4.9, each store owned or
operated by the Company is equipped in all material respects with equipment and
other property and assets in material compliance with the specifications of the
"Papa John's Franchise Agreements" (defined in Section 4.13(e)) and the Papa
John's Operations Manual, including the assets listed on Exhibit C, and such
equipment will be in operating
condition on the Closing Date subject to ordinary wear and tear. Except for the
foregoing representation, the Company and the Shareholders make no
representation as to the condition, quality, fitness for use or merchantability
or state of repair of any of the tangible personal property of the Company.
Neither the whole nor any material portion of such assets has been condemned or
otherwise taken by public authority, and the Company and the Shareholders have
no knowledge that any such condemnation or taking is threatened.
4.10 Assets Necessary to Business. The Company owns or leases all
properties and assets, real, personal and mixed, tangible and intangible; has
area development rights or franchise rights relating to operation of the Papa
John's pizza delivery and carry-out restaurants operated or under development by
it; and is party to all other contracts and agreements necessary and appropriate
to permit it to carry on its business as presently conducted and at the
locations where presently conducted.
4.11 Bank Accounts, etc. Included as Schedule 4.11 is a true and complete
list of the name of each bank, brokerage firm or other financial institution
with which the Company has a depository, trading, margin, purchase, lending or
similar account, a line of credit, or from which the Company is authorized to
effect loans, or any safe deposit box, and the names of all persons authorized
by the Company to draw on such accounts, effect such loans or to have access to
such safe deposit box.
4.12 Absence of Other Business Operations; Restrictive Covenants. The only
business activity in which the Company has ever engaged has been the business of
owning, developing and operating Papa John's pizza delivery and carry-out
restaurants. Neither the Company nor any of its Shareholders is a party to, or
subject to, any contract, arrangement or commitment containing covenants not to
compete in the business of owning, developing or operating restaurants with any
person or entity or restricting the area in which it may own, operate or
franchise restaurants, except as set forth on Schedule 4.12, and except for non-
competition agreements with PJI.
4.13 Contracts; Contract Status. Schedule 4.13 contains a list and
description of the Company's franchise and development agreements with PJI
(collectively, the "Papa John's Franchise Agreements"). The Company is not
currently a party to, or subject to, any of the following, whether written or
oral, except with respect to the Papa John's Franchise Agreements and except as
otherwise set forth on Schedule 4.13:
(a) any management or employment contract or agreement, or any contract,
arrangement or commitment with any director, officer, employee, shareholder or
representative;
(b) any contracts, arrangements or commitments for capital expenditures
in excess of $10,000 as to any single expenditure or in excess of $25,000 for
all expenditures, except with respect to development and construction of
restaurants;
(c) any contract, arrangement or commitment relating to borrowed money
or creating or providing for long-term debt or continuing credit or any
guaranty, indemnity or suretyship obligation with respect thereto or power of
attorney;
(d) any contract, arrangement or commitment in which it or any of its
employees or officers has covenanted to keep any information confidential (other
than the Papa John's Franchise Agreements);
(e) any franchise, development or license agreement with any person or
entity other than the Papa John's Franchise Agreements; or
(f) any other material contract, arrangement or commitment, or contract
agreement of commitment not made in the ordinary course of business.
The Company is not in default under the Papa John's Franchise Agreements, or any
other material contract, arrangement or commitment described on Schedule 4.13
(collectively, the "Material Contracts"), nor has any event occurred which, with
notice or passage of time, or both, would constitute a default by the Company
or, to the knowledge of the Company and the Shareholders, any other party, under
any of the Material Contracts, and (A) there is no basis for any of the other
parties to the Material Contracts to assert that the Company is in default
thereunder and (B) to the knowledge of the Company and the Shareholders, the
other parties to such Material Contracts are not in default thereunder. There
are no existing disputes between the Company and any other party to a Material
Contract. Except as set forth on Schedule 4.13, neither this Agreement nor the
consummation of the transactions contemplated by this Agreement will cause a
default under any Material Contract (other than the Amsouth Loan) and, following
consummation of the transactions contemplated by this Agreement, the Company
(and its successors) will continue to be entitled to the full benefit of all the
Material Contracts. The Company has delivered to PJAM a true and complete copy
of each of the Material Contracts.
4.14 Copyrights, Trademarks, Trade Names, Etc. The Company does not own or
use any trade names, trademarks, trade dress, copyrights, service marks,
registrations or applications therefor, and other similar rights
("Intangibles"), except for its corporate name and such Intangibles as the
Company is authorized and licensed to use pursuant to the Papa John's Franchise
Agreements ("PJI Intangibles"). The Company is not and has not been in violation
or infringement of any Intangible owned by any person or entity other than the
Company or in which any person or entity other than the Company has any right,
and there are no actual or threatened claims pending or, to the knowledge of the
Company and the Shareholders, contemplated against the Company relating thereto;
provided, with respect to matters arising out of the Company's duly authorized
use of the PJI Intangibles, the foregoing representations shall be limited to
the knowledge of the Company and the Shareholders. The Company has not agreed to
indemnify any person (other than PJI and its affiliates) for or against
infringement of any Intangibles. No Intangible owned or used by the Company is
subject to any outstanding order, award, writ, injunction, decree, or judgment
of which the Company or any Shareholder has knowledge.
4.15 Current Employees and Compensation; Officers and Directors.
(a) Set forth on Schedule 4.15 is a complete list of the Company's
directors, officers, and Management Employees on the date who are presently
projected to receive more than $50,000 per year in compensation, along with the
amount of the current annual salaries or hourly rate for each Management
Employee listed. Except as disclosed on Schedule 4.15, the Company has not,
because of past practices or previous commitments with respect to its Management
Employees, established any rights on the part of such employees to receive
additional compensation inconsistent with past practices with respect to any
period after the date hereof or established any rights on the part of such
employees or officers to continued employment.
(b) Except as set forth on Schedule 4.15, neither the execution and
delivery of this Agreement nor the consummation of the transactions described
herein will (a) result in any payment (whether severance pay, unemployment
compensation or otherwise) becoming due from the Company to any employee,
director or officer or former employee, director or officer of the Company, (b)
increase any benefits otherwise payable to any employee, director or officer or
former employee, director or officer of the Company, or (c) result in the
acceleration of the time of payment or vesting of any such benefits.
(c) Except as set forth on Schedule 4.15, to the knowledge of the Company
and the Shareholders, no Management Employee or officer of the Company is a
party to or subject to any contract, arrangement or commitment containing
covenants by such employee or officer not to compete in the business conducted
by the Company with any Person other than PJI or the Company, or restricting the
customers from whom or the area in which the Management Employee or officer may
solicit or conduct business.
4.16 Employee Benefits.
(a) Except as set forth on Schedule 4.16, the Company does not maintain
or contribute to, and has never maintained or contributed to, (a) any "employee
pension benefit plans" ("Pension Plans") or any "employee welfare benefit plans"
("Welfare Plans") (as described in sections 3(2) and 3(1), respectively, of
Title I of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or (b) any other form of plan or agreement with any of its present or
former employees, officers, directors, agents or representatives providing for
present or future employee benefits or deferred compensation of any nature
whatsoever, any golden parachute or other severance protection agreement, or
similar agreement, or any plans or agreements providing stock options, stock
purchase or any other employee benefits of any nature whatsoever ("Compensation
Plans").
(b) Each of the Welfare Plans has been administered in compliance with
the requirements of the Code and ERISA, and all reports required by any
governmental agency for each of such plans have been timely filed, except as
identified on Schedule 4.16.
(c) On and after January 1, 1975, neither the Company nor any of its
employees who is a fiduciary of any Welfare Plan, has engaged in any transaction
in violation of Section 406(a)
or Section 406(b) of ERISA (for which no exemption exists under Section 408 of
ERISA) or any "prohibited transaction" (as defined in Section 4975(c)(1) of the
Code) for which no exemption exists under Sections 4975(c)(2) or 4975(d) of the
Code.
(d) On or after July 1, 1986, each group health plan (as defined in
Section 5000(b)(1) of the Code) maintained by the Company has been administered
in compliance with the continuation coverage and notice requirements of Title I,
Subtitle B, Part 6 of ERISA and Section 4980B of the Code (and the regulations
thereunder).
(e) The Company is not presently required to contribute to, or during
the period of five years ending on the date hereof has not been required to
contribute to, any multi-employer plan (as defined in Section 4001(a)(3) of
ERISA) which does or did cover any employee of the Company and the Company is
not, and will not be on account of the consummation of the transactions
described in this Agreement, subject to any withdrawal or partial withdrawal
liability within the contemplation of Section 4201 of ERISA.
4.17 Environmental Matters. Except as set forth on Schedule 4.17, to the
actual knowledge of the Company and the Shareholders:
(a) there are no toxic, hazardous or carcinogenic substances or wastes
disposed of, stored, or are present on, in or under, any real property owned or
leased by the Company or utilized by the Company in the conduct of its business,
nor have any such substances or wastes been sent by the Company for storage,
treatment, reuse or recycling, or disposal to any other sites prior to the date
hereof;
(b) there are no releases or threats of releases of any toxic, hazardous
or carcinogenic substances or wastes to the environment from or at any store or
other facility owned or operated by the Company, including, without limitation,
any migration or any release or threatened release of such substances or wastes
from one environmental medium to another environmental medium;
(c) the Company is in compliance with all applicable federal, state, and
local statutes, rules, ordinances and other laws and regulations relating to
protection of the environment, including, without limitation, the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act, 42
U.S.C. (S)6901, et seq.; the Clean Air Act, 42 U.S.C. (S)7401, et seq.; the
Clear Xxxxx Xxx, 00 X.X.X. (X)0000, et seq.; the Safe Drinking Water Act, 42
U.S.C. (S)300f, et seq.; the Toxic Substances Control Act, 15 U.S.C. (S)2601, et
seq.; the Federal Insecticide, Fungicide, and Xxxxxxxxxxx Xxx, 0 X.X.X. (X)000,
et seq.; the Emergency Planning and Community Right-To-Know Act, 42 U.S.C.
(S)11001, et seq.; and the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, 42 U.S.C. (S)9601, et seq. ("CERCLA"), and any
foreign laws, statutes, rules, orders, ordinances and other laws and regulations
thereunder, relating to or regulating hazardous or toxic substances or air,
water or land quality, waste, or other similar environmental matters
("Environmental Laws");
(d) no conditions exist at the stores or other facilities owned, leased
or used by the Company which would necessitate remedial action under CERCLA or
any other Environmental Law;
(e) no conditions exist on any other property for which the Company is,
or may be, responsible for all or any portion of costs or expenses associated
with the reclamation or clean-up of such property under CERCLA or any other
Environmental Laws;
(f) no liens have been asserted against any assets of the Company, for
all or any portion of the costs or expenses associated with the reclamation or
clean-up of any waste disposal site or other property under CERCLA or any other
Environmental Laws; and
(g) there are no pending or threatened claims, assessments, or
litigation against the Company with respect to any alleged noncompliance with
any Environmental Laws.
4.18 Indebtedness to or from Officers, Directors, Etc. Except as set
forth on Schedule 4.18, none of the Shareholders nor any of the directors,
officers or employees of the Company, nor any family member of any of them, is
now indebted to the Company, nor is the Company indebted or obligated to any of
them (except with respect to legal services provided the Company by GD&M) except
for accrued salary and wages and normal employee benefits arising in the
ordinary course of its business. For purposes of this Agreement, the term
"family members" shall mean the current spouse, parents, siblings and children
of any persons, officers or employees of the Company.
4.19 Insider Interests. Except as set forth on Schedule 4.19, no
Shareholder, nor any family member of any of them:
(a) owns, directly or indirectly, any interest in, or is an officer,
director, employee or principal of any corporation, partnership, firm,
association or other person or entity which is a competitor in the pizza
delivery and carry out business or a supplier of the Company, other than PJI;
(b) has any interest, directly or indirectly, in any contract,
arrangement, commitment or property material to the business, operations,
property or assets of the Company; or
(c) has, directly or indirectly, within the two-year period immediately
prior to the date hereof, engaged in any transaction with the Company except
transactions inherent in the capacity of such person as a shareholder, or the
purchase of the Company's products in the ordinary course of the Company's
business.
4.20 Insurance. Attached to Schedule 4.20 are certificates or other
information evidencing each insurance policy (including policies providing
property, casualty, liability, health and workers' compensation coverage and
bond and surety arrangements but excluding policies of
insurance insuring the life of any Shareholder) to which the Company is a party,
a named insured, or otherwise the beneficiary of coverage.
With respect to each such insurance policy: (1) the policy is in full force and
effect; (2) the Company is not in breach or default (including with respect to
the payment of premiums or the giving of notices) under the policy; and (3) the
policy (or any other policy to which the Company has been a party) does not
provide for any retrospective premium adjustment or other experience-based
liability on the part of the Company. Schedule 4.20 describes any self-insurance
arrangements affecting the Company. Also attached to Schedule 4.20 are loss runs
describing workers' compensation claims and claims made against the Company's
property and casualty insurance during the three year period prior to the date
hereof.
4.21 Labor Matters. The Company is not a party to, or negotiating, any
collective-bargaining agreement. There are no union organizational or
representation efforts underway or threatened, nor are there any existing or
threatened labor strikes, slow downs, disputes, grievances, or disturbances
involving the Company's employees which might have a material adverse affect on
the Company's business or operations. Except as set forth on Schedule 4.21, the
Company has complied with the National Labor Relations Act, as amended, Title
VII of the Civil Rights Act of 1964, as amended, the Occupational Safety and
Health Act, Executive Order 11246, the regulations under such acts and all other
federal, state and local statutes, rules, orders, regulations, ordinances, codes
and other laws relating to employment; and no proceedings before any court,
governmental agency or instrumentality or arbitrator relating to such matters,
including any unfair labor practice claims, are pending, or to the knowledge of
the Company and the Shareholders, threatened.
4.22 Leases. Schedule 4.22 includes a true and complete list of all
leases of real and personal property and all options to lease such property
(oral or written) to which the Company is a party, as lessor, lessee or
otherwise (the "Leases"), and addresses of the real property so leased. True and
correct copies of the Leases (each as amended through the date hereof) have been
delivered to PJAM, and each of the Leases is in good standing, valid, binding,
in full force and effect, and enforceable in accordance with its terms against
the lessor, except to the extent that such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally. Except as disclosed on
Schedule 4.22 of the Company, subject to the landlord's or lessor's rights set
forth in the Leases and their mortgage lenders, the rights of the Company in the
property covered thereby (including any improvements and appurtenances thereto)
are, to the knowledge of the Company and the Shareholders, paramount to the
rights of any other person or entity. The Company is not in default under any of
such Leases, nor is there any material dispute between the Company and any other
party to any of such Leases, nor, to the knowledge of the Company or the
Shareholders, is any other party to any of such Leases in default thereunder. No
event has occurred which, with the passage of time, notice, or both, could give
the lessor or landlord under any of the Leases the right to claim a default
thereunder. Except as disclosed on Schedule 4.22, neither the execution and
delivery of this Agreement, nor the consummation of the transactions
contemplated by this Agreement will cause a default under any of the Leases.
4.23 Licenses and Permits. The Company possesses all permits,
concessions, licenses, franchises (including Papa John's Franchise Agreements),
certificates of compliance, consents, approvals, orders, certificates and
authorizations required or necessary to permit the Company to carry on its
business or operations at the locations where such business is conducted,
without material interference or interruption (the "Licenses"). The Company has
furnished PJAM a true and complete copy of each of the Licenses. To the
knowledge of the Company and the Shareholders no suspension or cancellation of
any License is threatened, and the consummation of the transactions contemplated
by this Agreement will not cause the suspension or cancellation of any License.
4.24 Litigation. Except as set forth on Schedule 4.24, and except for
garnishments of employee's wages, there are no investigations, actions, suits,
claims, arbitrations or proceedings, either judicial, administrative or
otherwise, pending or, to the knowledge of the Company or the Shareholders,
threatened against or affecting (a) the Company, or any Shareholder concerning
the Company, or any of the properties, business, assets, or operations of the
Company, (b) any employee, officer or director of the Company (in his capacity
as such), (c) the transactions contemplated hereunder, or (d) the ownership of
any securities of the Company, by or before any court, governmental department,
commission, board, bureau, agency, mediator, arbitrator or other person or
instrumentality that would have a material adverse effect on the business or
operations of the Company.
4.25 Real Property. To the actual knowledge of the Company and the
Shareholders:
(a) the Company's operations on and use of the real property owned
and leased by the Company under the Leases (the "Real Property") conforms to
applicable zoning regulations, including use, set-back and area requirements,
and other restrictions and covenants on the use thereof;
(b) All improvements to the Real Property are adequate and sufficient
for the operation of the Papa John's pizza and delivery restaurants thereon, and
comply in all material respects with the standards and specifications of PJI;
(c) All applicable zoning ordinances, building codes and other
federal, state and local laws with respect to the Real Property, and the
improvements thereon, permit the existence of the presently existing
improvements and the continuation of the operation of the Papa John's pizza and
delivery restaurants as presently conducted; and
(d) The Real Property and all improvements located thereon comply
with all other applicable municipal, county and other governmental laws, orders,
regulations and restrictions, and neither the Company nor any of the
Shareholders has any knowledge or information which would lead it or any of them
to believe that the use of any of the Real Property will be adversely affected
by any pending or proposed zoning or use changes.
4.26 Payments. Neither the Company nor any of the Shareholders has,
directly or indirectly, paid or delivered any fees, commissions or other sums of
money or items of property, however characterized, to any finders, agents,
customers, suppliers, governmental officials or other parties that in any manner
are related to the business or operations of the Company and which the
Shareholder or any officer or director of the Company knows, or had reason to
believe, were illegal under any federal, state or local laws.
4.27 Tax Returns; Tax Elections.
(a) Except as set forth on Schedule 4.27, the Company has prepared,
signed and filed all federal, state, local and other tax returns and reports
required to be filed by all applicable statutes, laws, rules and regulations on
or before the date hereof, and has paid all taxes or installments thereof,
interest, penalties, assessments and deficiencies of every kind and nature
whatsoever which were due and owing by the Company on such tax returns and
reports or which were or are otherwise due and owing by the Company under all
applicable statutes, laws, rules and regulations for any periods for which
returns or reports were due. The provisions for taxes in the Acquisition Balance
Sheet are sufficient for the payment of all federal, state, local, foreign and
other taxes that are owed by the Company and attributable to all periods ended
on or before the date of the Acquisition Balance Sheet, and adequate and proper
accruals have been made by the Company for all liabilities for taxes accruing
since the date of the Acquisition Balance Sheet. The Company and the
Shareholders have elected to be taxed as an "S-Corporation" under subchapter S
of the Internal Revenue Code of 1986, as amended, which election shall terminate
as of the Effective Date. Except as set forth on Schedule 4.27, the Company has
timely paid in full all ad valorem property taxes and other assessments levied
on its assets and properties which have heretofore become due and payable. There
are in effect no agreements, waivers or other arrangements providing for an
extension of time with regard to the assessment of any tax, or any deficiency
with respect thereto, against the Company. Except as set forth on Schedule 4.27
of the Company, there are no actions, suits, proceedings, arbitrations,
examinations, investigations or claims now pending, nor, to the knowledge of the
Company and the Shareholders, proposed, against the Company, nor are there any
matters under discussion between the Company and the Internal Revenue Service,
or other federal, state, local or other governmental authority, relating to any
taxes or assessments, or any claims or deficiencies with respect thereto. The
Company has never received notice of an audit, review or examination of any of
its federal income tax returns by the Internal Revenue Service or any other
governmental agency of the federal government, nor have its federal income tax
returns been audited by the Internal Revenue Service. The Company has never
received notice of an audit, review or examination of any of its state income
tax returns, ad valorem property tax returns, license tax returns, employee
withholding returns, sales tax returns or any and all other returns filed with
states in which the Company is doing business, nor have any such returns been
audited by any department or agency, whether local or state, charged with
revenue and taxation, except as set forth on Schedule 4.27 of the Company.
(b) Except for the election under Section 1362 of the Code to be
taxed as a Subchapter S corporation, there are no material elections or
consents filed with the Internal Revenue Service or any other taxing authorities
affecting the Company. The Company has delivered
to PJAM true and complete copies of all federal and state income tax returns
filed by the Company since January 1, 1995.
(c) The Company has withheld proper and accurate amounts from its
employees in full and complete compliance with the tax withholding provisions of
the Code and other applicable federal, state, local and other statutes, laws,
rules and regulations, and has filed proper and accurate federal, state, local
and other returns and reports for all years and periods (and portions thereof)
for which any such returns and reports were due with respect to employee income
taxes, withholding taxes, social security taxes and unemployment taxes. Except
as set forth on Schedule 4.27 of the Company, all payments due from the Company
on account of employee income tax withholding, social security taxes or
unemployment taxes in respect of all periods (and portions thereof) ended on or
prior to the date hereof have been properly paid within the time allowed,
without extension.
(d) None of the assets of the Company are subject to any lien or levy
or other manner of collection by a taxing authority for any tax deficiency or
liability of the Company (other than statutory and similar governmental liens
securing payment of sales taxes, ad valorem property taxes or local taxes on
income or profits not yet due and payable by the Company but reflected on the
"Records" (as defined in Section 4.29), nor will the assets become subject to
any such lien or levy as a result of this Agreement or consummation of the
transactions contemplated hereby.
4.28 Compliance. The Company has complied with all applicable laws,
regulations, rules and orders of Federal, state and local governments and all
agencies thereof applicable to its business, business practices (including, but
not limited to, the marketing, sales and distribution of its products and
services) and assets and properties owned or leased by it. No claims have been
filed in writing against the Company alleging a violation of any such laws or
regulations and neither the Company nor any of the Shareholders has received any
written notice of, or claim alleging, any violation of such laws or regulations.
4.29 Books and Records. Prior to the execution of this Agreement, the
Company furnished to PJAM for its examination the minute and stock books of the
Company or complete copies thereof, which documents contained a complete record
of any and all proceedings and actions at all meetings of the shareholders and
the board of directors of the Company required to be set forth in said minutes
or for which minutes were prepared. Except for actions required or necessitated
by this Agreement, no changes or additions to the minutes or stock books of the
Company have been made since the date such books were so furnished, and no
proceeding or action required to be set forth in said books has occurred since
the date such books were last furnished to PJAM, except with respect to this
Agreement.
4.30 Completeness of Statements. The Company and the Shareholders have
disclosed, in writing, all material facts known to them relating to the
representations and warranties made by them in this Section 4. To the knowledge
of the Company and the Shareholders, no representation or warranty of the
Company and the Shareholders in this Agreement contains any untrue statement of
a material fact, any misstatement of a material fact, or omits to state a
material fact necessary
to make the statements herein or therein not misleading in light of the
circumstances under which they were made. Any matter disclosed on any schedules
referred to in this Section 4 shall be deemed to be disclosed on all such
schedules; provided, however, that nothing in the schedules shall be deemed
adequate to disclose an exception to any representation or warranty made herein
unless the schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail; and provided further, the
mere listing (or inclusion of a copy) of a document or other item shall not be
deemed adequate to disclose an exception to a representation or warranty made
herein (unless the representation or warranty has to do with the existence of
the document or other item itself).
5. Representations and Warranties of PJAM. PJAM represents and warrants to
the Company and the Shareholders as follows:
5.1 Incorporation; Corporate Power. PJAM is duly organized validly
existing and in good standing under the laws of the State of Delaware. PJAM has,
and at all times has had, full power and authority, corporate or otherwise, to
own and lease its properties as such properties are now owned and leased and to
conduct its business as and where the businesses have and are now being
conducted.
5.2 Authorization; No Violation.
(a) This Agreement has been duly executed and delivered by PJAM and
constitutes its legal, valid and binding obligation, enforceable in accordance
with the terms of this Agreement. PJAM has full power and authority, corporate
and otherwise, to enter into and to deliver this Agreement and perform the
transactions described herein.
(b) Except as set forth in Schedule 5.2, all consents, approvals,
resolutions, authorizations, actions or orders, including those which must be
obtained from Governmental Body, required of PJAM for the authorization,
execution and delivery of, and for the consummation of the transactions
described in, this Agreement have been obtained.
(c) Except as disclosed in Schedule 5.2, the execution and delivery
of this Agreement, the consummation of the transactions described in this
Agreement, and the fulfillment of and compliance with its terms and provisions
do not (1) conflict with or violate (a) any judicial or administrative order,
award, judgment or decree applicable to PJAM or (B) any term, condition or
provision of PJAM's Certificate of Incorporation or By-Laws, or any agreement,
instrument, mortgage, contract, or restriction to which it is a party, or by
which it is bound or which is applicable to its properties, or (2) require the
approval, consent or authorization of any other Person.
6. Covenants of the Parties.
6.1 Operation of the Company Pending Closing. From the date hereof
through the Closing Date, the Company and the Shareholders shall, except as
otherwise provided herein and except as otherwise consented to by PJAM:
(a) continue the Company's business and operations substantially in
the same manner as heretofore, not undertake any transactions or enter into any
contracts, commitments or arrangements other than in the ordinary course of
business consistent with its past practices, and use their reasonable efforts to
preserve the Company's present business and organization;
(b) refrain from disposing of or encumbering or agreeing to dispose
of or encumber any of the Company's assets other than (1) inventory sold in the
ordinary course of business consistent with past practices and (2) disposition
of worn out or obsolete assets which will be replaced with assets of equal or
greater value.
(c) maintain the Licenses and not take any action, or refrain from
taking any action, which could cause any of the Licenses to be revoked,
restricted or suspended;
(d) not make any commitment for capital expenditure in excess of
$100,000, except in connection with the construction and development of
restaurants;
(e) take all commercially reasonable efforts necessary to maintain
its tangible assets for the Company's use and benefit after the Closing Date
(normal wear and tear excepted);
(f) maintain its existing insurance coverage, subject to variations
in amounts required by ordinary operations;
(g) not terminate or amend, or suffer the termination or amendment
of, any Material Contract or License except in the ordinary course of business;
(h) not knowingly take or omit to take any action which would cause
any of the representations and warranties made by it herein to be untrue or
incorrect;
(i) not declare or pay any dividend on, or make any distribution to
the holders of, any of the Shares;
(j) not change its Articles of Incorporation or By-Laws;
(k) not terminate the Company's existence;
(l) not authorize for issue or issue any additional shares of capital
stock or securities or change or otherwise adjust the number of shares of
capital stock outstanding;
(m) not make any investment in any other Person;
(n) not increase the rate or change the nature of the compensation
payable to the Company's Management Employees; and
(o) not incur or agree to incur any indebtedness for borrowed money.
6.2 Non-Competition Agreement. The Shareholders shall execute and deliver
at the Closing a Non-Competition Agreement in the form of Exhibit D attached
hereto (the "Non-Competition Agreement") pursuant to which they agree not to
compete with PJAM or the Company in the pizza business in the Louisiana DMA
during the two-year period following the Closing Date.
6.3 Release and Resignation. Each Shareholder shall execute and deliver
at the Closing a letter in the form of Exhibit E attached hereto containing (1)
his or her resignation from all offices as an officer, director and employee
with the Company effective as of the Closing Date, and (2) a general release of
claims releasing the Company from all liabilities and obligations that any of
them may owe such Shareholder for events arising on or before the Closing Date
(other than with respect to obligations expressly provided in this Agreement and
the Company's obligation to indemnify its officers and directors).
6.4 Compliance with Conditions. All parties hereto agree to cooperate
fully with each other in order to meet the conditions set forth in Sections 7
and 8. All parties further agree to use their respective best efforts, and to
act in good faith, to consummate the transactions described in this Agreement as
promptly as possible.
6.5 Payment of Certain Loans.
(a) The Company is maker of that certain Note for Business and
Commercial Loans, dated May 13, 1997, in the original principal amount of
$1,500,000, payable to Amsouth (the "Amsouth Loan"). The approximate amount due
under such Amsouth Loan, as of the Effective Date, was $1,283,770.
Simultaneously with the Closing, PJAM shall pay or cause the Company to pay, and
fully discharge, all amounts due under the Amsouth Loan.
(b) The Company is indebted to certain of the Shareholders with
respect to loans made by such Shareholders to the Company, in the aggregate
principal amount of $100,000, as such loans are described on Exhibit F attached
hereto ("Shareholder Loans"). Simultaneously with the Closing, PJAM shall cause
the Company to pay to such Shareholders all amounts due such Shareholders under
the Shareholder Loans.
6.6 Further Actions. Each of the parties hereto agrees that it will, at
any time, and from time to time, after the date hereof, upon the reasonable
request of the appropriate party, do, execute, acknowledge and deliver, or will
cause to be done, executed, acknowledged and delivered, all such further acts,
deeds, assignments, transfers, conveyances, powers of attorney and assurances as
may be required to complete the transactions and carry out the obligations
described in this Agreement. From the date hereof to the Closing Date, each
party will promptly notify each other party in writing if it becomes aware that
any of the representations or warranties made by any party (including such
party) in this Agreement become inaccurate or is breached, or may become
inaccurate or be breached, or if such party is unable to perform any agreement,
covenant or condition required of such party under this Agreement.
6.7 Continuation of Insurance Coverage. PJAM agrees that, during the 18-
month period following the Closing, it will maintain commercial general
liability and automobile liability insurance coverage (the "Coverage"), insuring
the Company for occurrences occurring prior to the Closing, with coverage limits
and deductibles no less favorable than the coverage limits and deductibles
presently provided by the Company's existing Coverage. Without limiting the
generality of the foregoing, in the event PJAM or the Company replace the
Company's existing policies of Coverage, then, if any of such existing insurance
policies are "claims made policies," PJAM shall cause the Company to obtain tail
coverage insuring such pre-closing occurrences during such 18-month period
following the Closing with limits and deductibles no less favorable then those
of the existing Coverage.
7. Conditions to the Obligations of PJAM. The obligations of PJAM to
consummate the transactions described in this Agreement are subject to the
fulfillment, prior to or at the Closing, of the conditions precedent that:
7.1 Representations and Warranties Correct. All representations and
warranties of the Company and the Shareholders in this Agreement shall be true
and correct in all material respects on and as of the Closing Date as though
made on such date.
7.2 Compliance with Covenants. The Company and the Shareholders shall
have performed and complied with all the covenants, agreements and conditions
required by this Agreement to be performed or complied with by them prior to or
at the Closing.
7.3 Necessary Consents. The Company and the Shareholders shall have
received all consents, in the form and substance reasonably satisfactory to
PJAM, to the purchase and sale of the Shares from the other parties to the
Contracts and Licenses, to the extent such consent is expressly required under
such Contracts and Licenses or otherwise deemed necessary in the reasonable
judgment of PJAM.
7.4 No Material Adverse Change. Between the date hereof and the Closing
Date, there shall have been no material adverse change in the business,
financial condition, operations or assets of the Company.
7.5 No Litigation. No action or proceeding before any court or any
governmental body shall be pending or threatened pursuant to which an
unfavorable judgment, decree, injunction or order would (a) prevent the carrying
out of this Agreement or any of the transactions contemplated hereby, (b)
declare unlawful the transactions described in this Agreement, (c) cause such
transactions to be rescinded or (d) adversely affect the right of PJAM to
operate or control the business, operations or assets of the Company.
8. Conditions to Obligations of the Shareholders. The obligations of the
Shareholders to consummate this Agreement and the transactions herein described
are subject to the fulfillment prior to or at the Closing of the conditions
precedent that:
8.1 Representatives and Warranties Correct. All representations and
warranties of PJAM in this Agreement shall be true and correct in all material
respects on and as of the Closing Date as though made on such date.
8.2 Compliance with Covenants. PJAM shall have performed and complied
with all the covenants, agreements and conditions required by this Agreement to
be performed or complied with by them prior to or at the Closing.
8.3 Necessary Consents. The Company and the Shareholders shall have
received all consents, in form and substance reasonably satisfactory to them, to
the purchase and sale of the Shares from the other parties to the Contracts and
Licenses, to the extent such consent is expressly required under such Contracts
and Licenses.
9. Termination.
9.1 Termination Events.
(a) PJAM may terminate this Agreement by delivery of notice of
termination to the Shareholders and the Company if at anytime prior to the
Closing Date:
(1) Any representation or warranty of Shareholders or the
Company in this Agreement or any other agreement or instrument delivered in
connection therewith becomes materially untrue;
(2) Shareholders or the Company fail or refuse to perform any
obligation or covenant required of them by this Agreement to be performed by
any of them prior to the Closing Date;
(3) Any of the conditions in Section 7 has not been satisfied as
of the Closing Date or if satisfaction of such a condition is or becomes
impossible (other than through the failure of PJAM to comply with its
obligations under this Agreement) and PJAM has not waived such condition on or
before the Closing Date.
(b) Shareholders (by action of Shareholders holding a majority of
Shares) and the Company may terminate this Agreement by delivery of notice of
termination to PJAM if at anytime prior to the Closing Date:
(1) Any representation or warranty of PJAM in this Agreement or
any other agreement or instrument delivered in connection therewith becomes
materially untrue;
(2) PJAM fails or refuses to perform any obligation or covenant
required of it by this Agreement to be performed by it prior to the Closing
Date; or
(3) Any of the conditions in Section 8 has not been satisfied as
of the Closing Date or if satisfaction of such a condition is or becomes
impossible (other than through the failure of Shareholders or the Company to
comply with their respective obligations under this Agreement) and
Shareholders and the Company have not waived such condition on or before the
Closing Date;
(c) The parties may terminate this Agreement at any time prior to the
Closing Date by mutual consent.
(d) Any party (in the case of the Shareholders, by action of
Shareholders holding a majority of Shares) may terminate this Agreement by
delivery of notice of termination to the other parties if the Closing has not
occurred (other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on or
before June 29, 1998, or such later date as the parties may agree.
9.2 Effect of Termination. Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 91, all further
obligations of the parties under this Agreement will terminate, except that the
obligations in Sections 12.2 and 12.9 will survive; provided, however, that if
this Agreement is terminated by a party because of the breach of the Agreement
by the other party or because one or more of the conditions to the terminating
party's obligations under this Agreement is not satisfied as a result of the
other party's failure to comply with its obligations under this Agreement, the
terminating party's right to pursue all legal remedies will survive such
termination unimpaired.
10. Deliveries and Actions Taken at Closing.
10.1 Deliveries by the Shareholders. At the Closing, the Shareholders
shall deliver to PJAM the following (duly executed and notarized where
appropriate):
(a) Copies of resolutions of the Board of Directors of the Company
which shall be in full force and effect as of the Closing Date authorizing the
execution and delivery of this Agreement and the consummation of the transaction
contemplated hereby, certified by the Secretary of the Company;
(b) The resignations of and release of claims by those officers and
directors of the Company designated by PJAM;
(c) Certificate of Good Standing from the Secretary of State of the
State of Louisiana for the Company;
(d) A certificate signed by each Shareholder and an executive officer of
the Company certifying as to the fulfillment of the conditions set forth in
Sections 7.1 through 7.4 (as applicable to it); and
(e) Certificates representing the Shares, duly endorsed for transfer on
the books of the Company;
(f) Such other documents as may be reasonably requested by PJAM, that it
deems reasonably necessary, to effect the Closing.
10.2 Deliveries by PJAM. At the Closing, PJAM shall deliver to the
Shareholders the following (duly executed where appropriate):
(a) Immediately available funds in the amount provided for in Section
2.2(b);
(b) A certificate signed by an officer of PJAM certifying as to the
fulfillment of the conditions set forth in Section 8;
(c) Copies of the resolutions of the Board of Directors of PJAM or the
Executive Committee of PJAM's Board of Directors, acceptable in form and
substance to Shareholder's counsel, authorizing the execution, delivery and
performance of this Agreement, certified by the secretary or assistance
secretary of PJAM; and
(d) Such other documents and instruments as may be reasonably necessary
to effect the closing of the transactions contemplated hereby as they are
contemplated in this Agreement.
10.3 Deliveries by PJAM and the Shareholders. At the Closing, the
Shareholders and PJAM shall execute and deliver the Non-Competition Agreements.
11. Survival of Representations and Warranties; Indemnities.
11.1 Survival. The representations and warranties contained in this
Agreement shall survive the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, and shall continue to be
binding for a period of 18 months from and after the Closing Date, except for
(a) the representations and warranties contained in Sections 3.1 (Title to
Shares; Share Restrictions), 3.2 (Authority) and 4.5 (Capitalization; Stock
Ownership and Rights), which shall not expire, and (b) the representations and
warranties contained in Section 4.27 (Tax Returns; Tax Elections), which shall
survive until the applicable limitations period has run; provided, if a claim is
brought within the applicable period set forth above, the representations and
warranties which are the subject of such claim shall not expire until a final
resolution or non-appealable determination is made of such claim.
Notwithstanding the foregoing, the parties acknowledge that PJAM, since October,
1996, has operated and managed the business of the Company for the Company and
the Shareholders, in consideration of fees paid by the Company to PJAM (the
"Management Relationship"), and that as a result of such Management
Relationship, PJAM is intimately familiar with the Company and its operations
and, in fact, has much more
knowledge regarding the details regarding the Company's business, assets and
liabilities than do the Shareholders. Consequently, in the event that any of
Xxxxx Xxxxxx, Xxxx Xxxxxxx, Xxxxx Xxxxxx or Xxxxxx Xxxxxx (who are all employees
of PJAM) or any employee of PJAM employed in its accounts payable department,
shall have actual knowledge that any representation or warranty of the Company
or the Shareholders contained in this Agreement is untrue as of the date hereof
or as of the Closing Date, then PJAM shall have no right to rely on such
representation or warranty and shall have no claim against the Company or the
Shareholders for a breach of non-performance of such representation or warranty.
Additionally, in the event that any covenant or agreement of the Shareholders or
the Company contained in this Agreement shall be breached due to actions of PJAM
during its course of operation and management of the business of the Company,
then neither the Company nor any of the Shareholders shall have any liability
therefor.
11.2 General Indemnities of the Shareholders. Each of the Shareholders
shall defend and indemnify PJAM, and hold PJAM harmless from and against, the
following (collectively, the "General Indemnified Liabilities," individually a
"General Indemnified Liability"):
(a) all liabilities, debts, obligations, losses, damages, deficiencies,
penalties, claims, actions, suits, proceedings, investigations, demands,
assessments, orders and judgments (whether fixed, contingent, accrued, absolute
or otherwise) incurred by PJAM or the Company resulting from, arising out of, or
in connection with (i) any inaccurate representation or warranty or the breach
or non-fulfillment of any representation or warranty of the Company and the
Shareholders, or any of them, contained in this Agreement, except for those
representations and warranties specifically identified in Section 11.3, (ii) any
breach or default in the performance by the Company or the Shareholders, or any
of them, of any covenant or agreement contained herein, (iii) any tax deficiency
or assessment of the Company relating to a period ended on or prior to the
Closing Date (regardless of any disclosures set forth in this Agreement), (iv)
matters described on Schedule 4.24; or (v) any acts, omissions, events,
conditions or circumstances occurring or existing on or prior to the Closing
which results in any claim or investigation by any governmental authority or any
law claim or suit against the Company; and
(b) any and all costs and expenses incident to any of the foregoing,
including, but not limited to, reasonable attorneys' and accountants' fees.
11.3 Additional Indemnities of the Shareholders. Each Shareholder shall
defend and indemnify PJAM and shall hold PJAM and the Company harmless, from and
against the following (collectively the "Additional Indemnified Liabilities,"
individually an "Additional Indemnified Liability"):
(a) all liabilities, debts, obligations, losses, damages, deficiencies,
penalties, claims, actions, suits, proceedings, investigations, demands,
assessments, orders and judgments (whether fixed, contingent, accrued, absolute
or otherwise) incurred by PJAM or the Company resulting from, arising out of, or
in connection with any misrepresentation or breach of a representation or
warranty of such Shareholder contained in Section 3 (a "Section 3 Indemnity")
(which shall be the
sole and exclusive obligation of the Shareholder who has misrepresented or
breached the representation or warranty giving rise to the Section 3 Indemnity,
and no other Shareholder); and
(b) any and all costs and expenses incident to any of the foregoing,
including, but not limited to, reasonable attorneys' and accountants' fees.
11.4 Indemnity by PJAM. PJAM shall defend and indemnify the Shareholders
and hold them harmless from and against the following (collectively "PJAM
Indemnified Liabilities," individually a "PJAM Indemnified Liability"):
(a) all liabilities, debts, obligations, losses, damages, deficiencies,
penalties, claims, actions, suits, proceedings, investigations, demands,
assessments, orders and judgments (whether fixed, contingent, accrued, absolute
or otherwise) incurred by the Shareholders resulting from, arising out of, or in
connection with (i) any inaccurate representation or warranty or the breach of
any representation or warranty of PJAM contained in this Agreement, or (ii) any
breach or default in the performance by PJAM of any agreement, covenant or
undertaking which it is to perform under this Agreement or (iii) any breach by
the Company of the Leases following the Closing; and
(b) any and all costs and expenses incident to any of the foregoing,
including, but not limited to, reasonable attorneys' and accountants' fees.
11.5 Exclusive Remedy. From and after the Closing, the indemnification
provided for in this Section 11 shall be the exclusive remedy in any action
seeking damages or any other form of monetary relief brought by any party to
this Agreement (other than the Non-Competition Agreements) against another party
hereto or thereto, including any action brought by any such party for any
damages or other form of monetary relief that is predicated upon or otherwise
relates to, or arises out of, the transactions provided for in this Agreement,
but which is otherwise not a General Indemnified Liability or Additional
Indemnified Liability as such terms are defined herein ("Associated
Liabilities"); provided, that nothing herein shall be construed to limit the
right of a party, in a proper case, to seek injunctive or other equitable relief
for a breach of this Agreement.
11.6 Limitations on Shareholder's Indemnification Obligations.
(a) In no event shall the aggregate liability of the Shareholders with
respect to claims for indemnification for General Indemnified Liabilities and
Associated Liabilities exceed $1,000,000 (the "Indemnification Cap").
Additionally, in no event shall the aggregate liability of any individual
Shareholder for General Indemnified Liabilities and Associated Liabilities
exceed an amount equal to (i) the Indemnification Cap multiplied by (ii) such
Shareholder's Percentage Interest. Further, in no event shall the aggregate
liability of any individual Shareholder for Additional Indemnified Liabilities
exceed an amount equal to (i) the Purchase Price multiplied by (ii) such
Shareholder's Percentage Interest. Further, in no event shall the aggregate
liability of
any individual Shareholder for indemnification pursuant to this Section 11
exceed an amount equal to (i) the Purchase Price multiplied by (ii) such
Shareholder's Percentage Interest.
(b) PJAM shall not be entitled to indemnification for General Indemnified
Liabilities or Associated Liabilities until the aggregate amount of claims with
respect to such indemnified liabilities equals or exceeds $25,000, at which time
PJAM shall be entitled to indemnification for indemnified liabilities in excess
of such amount.
11.7 Claims Procedure. Any party (the "Indemnified Party") may assert a
claim (a "Claim") against the other party (the "Indemnifying Party") with
respect to any matter which it believes is subject to indemnification pursuant
to this Agreement by giving written notice (a "Claim Notice") to the
Indemnifying Party. The Claim Notice shall be given by the Indemnified Party
promptly, but in no event later than 10 days before a responsive pleading is
required to be filed in a third party action or otherwise no later than 30 days,
after (i) it has knowledge of a Claim under this Agreement or (ii) the
commencement of any legal proceeding against such Indemnified Party, whichever
occurs first. The Claim Notice shall state the basis for the Claim and the
dollar amount thereof and shall be accompanied by any documents or information
relevant thereto. The party receiving the Claim Notice shall have 45 days (or
such shorter period of time as is reasonable when the Indemnified Party must
respond to a pleading filed by a third party or any other type of "Third Party
Claim" (defined in Section 11.8)) after receipt within which to pay the amount
thereof to the Indemnified Party or to discharge such liability, or otherwise to
respond to the Claim Notice (the "Response Period"). If the party does not pay
the amount set forth in the Claim, discharge such liability or respond to the
Claim Notice within the Response Period, the party bringing the Claim may
institute arbitration (as required by Section 11.9) or, in the case of PJAM, may
offset the amount of the Claim against payment of the Contingent Amount. If the
Indemnifying Party does not pay or discharge the Indemnified Liability, but
otherwise responds to the Claim Notice within the Response Period, except for a
Third Party Claim, the parties shall in good faith attempt to resolve the Claim
short of arbitration or litigation during the 45 days following the expiration
of the Response Period. If the parties are unable to resolve the dispute within
such 45 day period, then and only then may the party bringing the Claim
institute arbitration or litigation.
11.8 Defense of Third Party Claim. If the Indemnifying Party responds to a
Claim that is made by a third party ("Third Party Claim") within the Response
Period, the Indemnifying Party shall have the right to assume, at such party's
expense, the defense of any Third Party Claim and to control the Third Party
Claim and any settlement thereof if the Indemnifying Party acknowledges in
writing that the Third Party Claim constitutes an enforceable liability for
which such party is obligated to indemnify the Indemnified Party; provided, the
assumption and control of the defense by Shareholders of any Third Party Claim
involving a General Indemnified Liability or an Associated Liability shall be
dependent upon the amount of the Claim being less than the Indemnification Cap
minus any amounts of Claims already subject to or paid out of the
Indemnification Cap. If the Indemnifying Party is not entitled to assume and
control the defense of the Third Party Claim, the Indemnifying Party, at its
expense, may participate in the defense of the Third Party Claim if it has an
economic stake in the third Party Claim. The Indemnified
Party, at such party's expense, may assume or participate in the defense of any
Third Party Claim which may have a material impact on its business or the
business relationship between the Indemnified Party and a substantial portion of
its business customers; provided that if the Indemnified Party assumes the
defense in such circumstances, the Indemnifying Party will not be bound by any
compromise or settlement effected without its consent (which shall not be
unreasonably withheld). The party that defends any Third Party Claim, shall use
its best efforts to defend same or to effect a satisfactory settlement thereof,
and shall provide the other party all information and copies of all pleadings
and other documents and correspondence relating to its defense or attempts to
effect a settlement thereof. The Indemnifying Party shall not, in the defense or
settlement of any Third Party Claim, consent to any injunctive or other
equitable relief or consent to or enter into any order, judgment or settlement
with respect thereto, without the prior written consent of the other party
hereto, such consent not to be unreasonably withheld; provided, however, if such
consent to the settlement is withheld, then the Indemnifying Party shall
thereafter have no further obligation to defend the Third Party Claim and the
Indemnifying Party's obligation for the Indemnified Liability which results from
such Third Party Claim shall be limited to the amount proposed by the
Indemnifying Party in the settlement offer. If an Indemnifying Party has the
right to assume and defend any Third Party Claim under this Section 11.8, but
shall fail to assume the defense of such Third Party Claim, the Indemnified
Party may in its sole discretion defend, settle or compromise such Third Party
Claim, without prejudice to its right to indemnification by the Indemnifying
Party hereunder. The parties hereto agree to cooperate fully with each other in
connection with the defense, negotiation or settlement of any Third Party Claim
in order to minimize the indemnified liability associated therewith and to
preserve the Parties' respective goodwill and business relationships. The
Indemnifying Party shall not, in the defense of such Third Party Claim, consent
to entry of any judgment (except with the prior written consent of the
Indemnified Party) or enter into any settlement (except with the prior written
consent of the Indemnified Party) which does not include as an unconditional
term thereof the giving by all claimants therein of a full and complete release
from all liability in respect of such Third Party Claim to the Indemnified
Party.
11.9 Arbitration. Any controversy or claim arising out of or relating to
this Agreement between any of the parties hereto shall be determined by means of
arbitration by a single arbitrator before the American Arbitration Association
in Louisville, Kentucky. All claims for arbitration must be submitted to
arbitration within 60 days after the expiration of the Response Period, but in
no event sooner than 15 days after the Response Period if the Indemnifying Party
has responded to the Claim within the Response Period. The rules of the American
Arbitration Association, as the same may be amended from time to time, shall be
applicable in the arbitration, including the demand therefor. Any decision or
award of the arbitrator shall be final and binding upon the parties. Judgment
upon the decision or award rendered by the arbitrator may be entered in any
state or federal court having jurisdiction, or application may be made to such
state or federal court for a judicial acceptance of the decision, award or any
order of enforcement, as the case may be.
11.10 Contingent Amount; Certain Agreements of the Parties.
(a) The parties acknowledge that the Company presently has in operation
9 Papa John's restaurants ("Restaurants"), and has under construction, or has
designated sites (but not have them under lease) on which to construct, 5
additional restaurants (the "Additional Restaurants"). The parties also
acknowledge that the Purchase Price has been computed on the assumption that the
Additional Restaurants will be completed and opened by the Company at its sole
expense within 12 months after the Closing (the "Termination Date"). Pending
completion and opening of the Additional Restaurants, PJAM has withheld from
payment of the Purchase Price the Contingent Amount. Until paid to the
Shareholders as provided herein, the Contingent Amount shall accrue interest,
from the date of the Closing, at an annual rate of 5.5% ("Interest").
(b) PJAM agrees to use its best efforts to cause the Company to
construct and open each Additional Restaurant as soon as practicable following
the Closing. Within 30 days following the opening of an Additional Restaurant,
PJAM shall pay to the Shareholders, in those proportions set forth on Exhibit B,
$200,000 plus all accrued and unpaid Interest as of the date of such payment.
(c) In the event that, despite the best efforts of PJAM, the Company is
unable to construct and open all of the Additional Restaurants by the
Termination Date due to circumstances beyond its control, then the Shareholders'
entitlement to any amounts of the Contingent Amount or Interest with respect to
Additional Restaurants that have not been opened as of such Termination Date
shall terminate; provided if any Additional Restaurant is actually under
construction as of the Termination Date, then PJAM shall remain obligated to the
Shareholders for the payments described herein upon completion of such
Additional Restaurant in construction as of the Termination Date.
12. Miscellaneous Provisions.
12.1 Appointment of Shareholders' Agents; Actions of Shareholders
Following the Closing. Each of the Shareholders hereby appoints Xxxxxxx X.
Xxxxxxxx and Xxxxxxx X. Xxxxxxxxx (each an "Agent" and collectively the
"Agents") as their agents and attorneys-in-fact for purposes of communicating
and dealing with PJAM and the Company with respect to matters contemplated by
this Agreement following the Closing, and agree that PJAM and the Company may
rely on any such communication from either of such Agents. Notwithstanding the
foregoing, each of the Agents and Shareholders agree that neither such Agent
shall consent to any matter which may result in liability to any Shareholder for
indemnification pursuant to Section 11 or otherwise affecting any Shareholder's
entitlement to such Shareholder's proportionate share of the Holdback Amount,
without first obtaining the consent of those Shareholders holding a majority of
the Shares prior to the Closing. Neither of the Agents shall be liable to any
Shareholder for any action or omission, except to the extent that such action or
omission constitutes willful misconduct by such Agent, and the Shareholders
shall indemnify and hold each Agent from and against any and all liabilities,
claims, actions and causes of action arising out of, or connected with, directly
or indirectly, any actions or omissions of such Agents, except to the extent
such actions or omissions constitute willful misconduct by such Agent.
12.2 Expenses. Except as otherwise expressly provided in this Agreement,
the fees and expenses incurred by PJAM and the Shareholders in connection with
the preparation, execution and performance of this Agreement shall be paid one-
half by PJAM and one-half by the Shareholders (in the case of the Shareholders,
in accordance with each Shareholder's Percentage Interest).
12.3 Notice. All notices, requests, demands and other communications
required or permitted to be given or made under this Agreement shall be in
writing and shall be deemed delivered on (a) the date of personal delivery or
facsimile transmission, (b) the first business day after the date of delivery to
a nationally recognized overnight courier service, or (c) the third business day
after the date of deposit in the United States mail, postage prepaid, by
registered or certified mail, return receipt requested in each case, addressed
as follows, or to such other address, person or entity as either party shall
designate by notice to the other in accordance herewith:
If to PJAM: PJ America, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attn: D. Xxxx Xxxxxxx,
Chief Financial Officer
FAX: (000) 000-0000
With copy to: C. Xxxxxx Xxxxxxxxx
Xxxxx, Xxxx & Xxxxxxx PLLC
000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxxxx, XX 00000-0000
FAX: (000) 000-0000
If to the Company or Xxxxxxx X. Xxxxxxxx
the Shareholders: 0000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
FAX: (000) 000-0000
and
Xxxxxxx X. Xxxxxxxxx
Xxxxxxxxxx Xxxx & XxXxxxxx PLLC
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, XX 00000
FAX: (000) 000-0000
With copy to: Xxxxxxx X. Xxxxx, Esq.
Xxxxxxxxxx Xxxx & XxXxxxxx, pllc
0000 Xxxxxxxx Xxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
FAX: (000) 000-0000
12.4 Exhibits; Entire Agreement. All Exhibits and Schedules to this
Agreement shall be deemed to be incorporated herein by reference and made a part
hereof as if set out in full at the place where first mentioned. As used herein
the term "Agreement" shall mean this Stock Purchase Agreement and the Exhibits
and Schedules hereto which are incorporated herein in their entirety. This
Agreement embodies the entire agreement and understanding of the parties hereto
regarding its subject matter and supersedes all prior agreements,
correspondence, arrangements and understandings relating to the subject matter
hereof. No representation, promise, inducement or statement of intention has
been made by any party which has not been embodied in this Agreement.
12.5 Amendment; Waiver. This Agreement may be amended, modified,
superseded, or canceled only by a written instrument signed by all of the
parties hereto, and any of the terms, provisions, and conditions hereof may be
waived, only by a written instrument signed by the waiving party. Failure of any
party at any time or times to require performance of any provision hereof shall
not be considered to be a waiver of any succeeding breach of such provision by
any party.
12.6 Binding Effect; Assignment. All the terms, provisions and
conditions of this Agreement shall be binding upon and shall inure to the
benefit of and be enforceable by the parties hereto and their respective heirs,
legal representatives, successors and assigns, provided, however, that this
Agreement shall not be assigned by PJAM without the prior written consent of the
Shareholders.
12.7 Captions. The captions in this Agreement are included for purposes
of convenience only and shall not be considered a part of the Agreement in
construing or interpreting any provision hereof.
12.8 Severability of Provisions. If any provision of this Agreement or
the application thereof to any person or circumstance shall to any extent be
held in any proceeding to be invalid or unenforceable, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those to which it was held to be invalid or unenforceable, shall not
be affected thereby, and shall be valid and be enforceable to the fullest extent
permitted by law, but only if and to the extent such enforcement would not
materially and adversely frustrate the parties' essential objectives as
expressed herein.
12.9 Confidentiality.
(a) Failure to xxxx any of the Information as non-public, proprietary or
confidential information shall not affect its status as part of the Information
under the terms of this Agreement.
(b) None of the parties nor their respective agents or employees shall,
without the prior consent of the other party, disclose or use any such
Information, in whole or in part, except in connection with the performance of
the transactions described in this Agreement, and except as may be required by
law or applicable regulatory law or exchange requirements.
(c) Unless otherwise required by law, each of the parties agrees that
neither of them shall disclose any Information acquired as a result of this
Agreement, to any person or entity, other than its respective counsel and other
representatives, and such other third parties, such as bankers and lessors, with
whom it must communicate to consummate the transactions described by this
Agreement.
(d) PJAM's obligation of confidence with respect to any Information
relating to the Company shall cease upon consummation of the transactions
described herein. If the parties do not consummate the transactions described
herein, each party shall promptly upon termination of this Agreement redeliver
to each other all copies, notes, compilations, extracts and other records or
written material relating to the Information.
12.10 Governing Law. This Agreement shall be governed by, and shall be
construed and enforced in accordance with, the laws of the State of Delaware.
12.11 Publicity; No Disclosure. Before the Closing, no party to this
Agreement shall make any press release or make any other public announcement
regarding the existence of this Agreement or the transactions described in this
Agreement, without prior consultation with and consent of the other parties to
this Agreement, except as may be required to comply with applicable securities
laws or exchange regulations.
12.12 Post-Closing Access. Following the Closing, PJAM shall cause the
Company to provide each of the Shareholders reasonable access to the books and
records of the Company related to periods prior to Closing for purposes of
preparing such Shareholder's federal, state and local income tax returns and for
such other purposes as may be reasonably requested by such Shareholder.
12.13 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
In Witness Whereof, the parties have entered into this Agreement as of the
date first written above.
PJ America, Inc.
By:______________________________
Title:___________________________
("PJAM")
PJ Louisiana, Inc.
By:____________________________
Title:_________________________
("Company")
-------------------------------
Xxxxxxx X. Xxxxxxxx
-------------------------------
Xxxxxx X. Xxxxxx, Xx.
-------------------------------
Xxxxxxx X. Xxxxxxxxx
-------------------------------
Xxxxxx Xxxxxxx
-------------------------------
Xxxxxxxx Xxxxxxx
-------------------------------
Xxxxxxx X. Xxxxxxx
-------------------------------
Xxxxx X' Xxxxxx
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Xxxxxxx X. Xxxxxxxx
