Exhibit 10.26
ASSET PURCHASE AGREEMENT
BETWEEN
BANNER BUFFETS, LLC
as Buyer
and
EACO CORPORATION
as Seller
* * * * * * * * * * * * * * * *
February 22, 2005
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is entered
into as of the 22nd day of February, 2005, by and between Banner
Buffets, LLC, a Delaware limited liability company (the
"Buyer"), and EACO Corporation, a Florida corporation, (the
"Seller").
WHEREAS, Seller presently owns and operates six (6) Ryan's
franchise restaurants (the "Ryan's Restaurants"), four (4)
Whistle Junction restaurants (the "WJ Restaurants") and six (6)
Florida Buffet restaurants (the "FB Restaurants") (the Ryan's
Restaurants, WJ Restaurants and FB Restaurants are collectively
referred to as "Restaurants" and individually as a
"Restaurant"), as further identified on Schedule 1 attached
hereto;
WHEREAS, Seller desires to sell, transfer and assign to
Buyer, and Buyer desires to purchase and acquire from Seller,
the Restaurants together with all rights and interests of Seller
in, to and under all agreements, contracts and other assets
relating to the business of owning and operating the Restaurants
(the "Business") on the terms and subject to the conditions set
forth in this Agreement (the "Acquisition").
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set
forth, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the
parties agree as follows:
ARTICLE I. PURCHASE AND SALE OF ASSETS
Section 1.1 Assets to be Transferred. Upon the terms and
subject to the conditions set forth in this Agreement, on the
Closing Date Seller shall sell, transfer and assign to the Buyer
all of Seller's right, title, and interest in and to the
business, property, and assets (excepting only the assets
specifically identified as "Excluded Assets" in Section 1.2
hereof) used in or relating to the operation of the Restaurants
(the "Assets"), including, but not limited to:
(a) All fixtures, equipment, machinery, trade
fixtures, leasehold improvements, point of sale hardware and
software, telephone equipment, service, replacement and spare
parts, and service and replacement equipment located at the
Restaurants or stored off site for use at any of the
Restaurants, and all other personal property not included in
Inventory (as hereinafter defined) owned, utilized or held for
use by Seller on the Closing Date located at the Restaurants and
all dishes, glassware, utensils and other smallwares located at
the Restaurants (the "Equipment"), all of which are set forth on
Schedule 1.1(a) attached hereto;
(b) All intangible personal property, business
records (including pictures, historical records and archived
business records related to the Restaurants and their respective
brands), customer lists (to the extent of their existence) and
all goodwill of the Restaurants (the "Intangible Property");
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(c) All of the real property owned by the Seller,
which real property includes all buildings, fixtures, parking
facilities and other improvements located thereon and easements
and appurtenances thereto (the "Real Property"), which
properties are identified and legally described in Schedule
1.1(c) attached hereto;
(d) All of Seller's interest in all real property
leases to which Seller is party that are used by or associated
with the Restaurants (the "Real Property Leases"), all of which
leases are set forth in Schedule 1.1(d) attached hereto, which
shall be assumed in accordance with Section 1.3 hereof;
(e) All rights under leases affecting any personal
property with Seller as lessee, and all contracts, advertisement
contracts, books of account, files, papers, and all records
located at the Restaurants, in each case listed on Schedule
1.1(e) attached hereto (the "Contracts"), which shall be assumed
at the option of Buyer in accordance with Section 1.3 hereof;
(f) All cash in the cash drawers and safes of each
Restaurant (the "Cash Drawers") at the close of business on the
Closing Date, not to exceed $1,500 per Restaurant;
(g) [RESERVED]
(h) All rights and benefits of Seller under and
pursuant to all licenses, permits, and approvals of Seller
relating to the Restaurants or the operation thereof, to the
extent transferable with or without consent of a third party;
(i) All Seller's inventory for the Restaurants which
shall include food and beverage inventory, uniforms, supplies,
paper goods and products, and promotional items that are
marketable and useable as of the Closing Date (the "Inventory");
(j) All deposits, receivables and prepaid expenses
related to the Restaurants agreed to be acquired by Purchaser
(collectively, the "Prepaid Expenses") all of which expenses are
set forth in Schedule 1.1(j) attached hereto;
(k) All trademarks, service marks, trade names,
copyrights, trade secrets, know-how associated with the
Restaurants, (including, but not limited to, the names "Whistle
Junction" and "Florida Buffet," any prototype plans, memos,
other work products of consultants or architects and trade
secrets such as recipes (including such recipes or formulas
currently in the name of the Seller used exclusively in the
Restaurants), operating systems and manuals or other tangible
materials embodying technology, proprietary information or other
intellectual property rights of Seller and used in connection
with the Restaurants) and other proprietary confidential
information related to the Restaurants ("Intellectual
Property"), except that Seller does not have the right to and
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will not transfer any Intellectual Property relating to the
trademark "Ryan's" or any Intellectual Property related to the
operation of the Ryan's Restaurants;
(l) Any memorabilia used for decor in the
Restaurants owned by Seller and located in the Restaurants;
(m) The current telephone listings of the
Restaurants and the right to use the telephone and facsimile
numbers currently being used at the Restaurants; and
(n) All of Seller's books, records and other
documents and information relating to the Assets or the business
of the Restaurants, including, without limitation, inventory
records, purchase orders and invoices, sale orders and sales
order log books, customer and marketing information and records,
correspondence, employee payroll and personnel records, and
product and merchandise data, all floor plans and construction
and architectural drawings and conversion plans, and material
lists in the possession of Seller which relate to the FB
Restaurants and WJ Restaurants to the extent transferable.
Section 1.2 Excluded Assets. Notwithstanding any
provision of this Agreement to the contrary, Buyer does not
purchase, and the Seller does not sell, any of the following
assets (i) all bank balances, sales and income tax reserves and
store receipts up to (but not including) the Closing Date; (ii)
all contracts, arrangements and understandings which are not
capable of being transferred or assigned; (iii) tax and
insurance refunds relating to actions or time periods prior to
the Closing Date, and (iv) assets of the Seller unrelated to the
Restaurants or the business conducted at the Restaurants
(collectively, the "Excluded Assets").
Section 1.3 Assumption of Liabilities. Buyer will
assume, pay, perform in accordance with their terms or otherwise
satisfy, from and after the Closing Date: (i) the Real Property
Leases, (ii) all utility, telephone, yellow page and advertising
expenses, taxes, and other fees and costs, (collectively, the
"Expenses" or singularly, an "Expense"), whether prepaid or yet
to be charged, related to obligations and time periods
subsequent to the Closing Date; and (iii) the Contracts, to the
extent that Buyer elects to assume such Contracts in its sole
discretion and (iv) all obligations that relate to ownership or
tenancy of the Real Property.
Section 1.4 Excluded Liabilities.
(a) Other than as set forth in Section 1.3, Seller
shall retain, and Buyer shall not assume, and nothing contained
in this Agreement shall be construed as an assumption by Buyer
of, any liabilities, obligations or undertakings of Seller of
any nature whatsoever, whether accrued, absolute, fixed or
contingent, known or unknown due or to become due, unliquidated
or otherwise. Seller shall be responsible for all of the
liabilities, obligations and undertakings of Seller not assumed
by Buyer pursuant to Section 1.3 hereof.
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(b) Seller shall be responsible for all Expenses
incurred prior to the Closing Date and Buyer shall be
responsible for all Expenses incurred from and after the Closing
Date. Seller shall use reasonable efforts to determine Expenses
as of the Closing Date and shall submit its estimation of such
Expenses to the Buyer not less than five (5) days prior to the
Closing Date. If any Expense cannot be determined as of the
Closing Date, Buyer and Seller agree to prorate such Expense
based on the number of days of Buyer's and Seller's respective
occupation of the Restaurants during the month in which the
Closing occurs compared to the total number of days in the
month. Any party required to pay an adjustment amount for
prorated Expenses shall pay such amount not later than fifteen
(15) days after presentation to such party of a statement
prepared by the party to whom the adjustment amount is owed.
Seller further agrees to execute any document required to
transfer any account related to any Expense to Buyer, including
the transfer of any deposits in connection with such Expenses.
(c) Seller shall be responsible for and shall pay
when due all sales and use taxes, any applicable transfer taxes,
franchise fees and any other costs, fees and expenses associated
with the sale, transfer and assignment of the Assets or any
portion of the same to Buyer, but not any other taxes associated
with Buyer's financing.
Section 1.5 Purchase Price and Payment.
(a) Purchase Price. The purchase price (the
"Purchase Price") for the Restaurants and the Assets shall be
the amount set forth below plus the value of the liabilities
assumed by Buyer pursuant to Section 1.3.
(b) Payment of Purchase Price. The Purchase Price
shall be paid at the Closing as follows:
(i) Twenty-Five Million Four Hundred Fifty
Thousand Dollars and No/100 ($25,450,000.00) in cash; plus
(ii) The Deposit in cash; plus
(iii) One-half of the aggregate sum of the
Prepaid Expenses set forth on Schedule 1.1(j) attached
hereto; plus
(iv) An additional cash payment of up to Two
Hundred Fifty Thousand Dollars and No/100 ($250,000.00) for
each Ryan's Restaurant converted to a WJ Restaurant
from February 1, 2005, through the Closing (such actual
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amount to be equal to all out-of-pocket costs incurred by
Seller in connection with the conversion based on
documentation reasonably required by Buyer to support such
expenditures;
(v) Four Million Dollars and No/100
($4,000,000.00) paid by delivery of a secured promissory
note (the "Note") in form and substance identical to the
form attached hereto as Exhibit 1.5 which contains the
following terms:
(A) The principal balance of the Note
shall be secured by the assets identified on Schedule
1.5 attached hereto and shall bear simple interest at
the fixed rate of eight (8.0%) per annum and shall be
payable in monthly installments of interest only, with
principal payments in accordance with the following
schedule:
(1) Seller shall have received the
sum of $1,500,000.00 twenty-four (24) months
following the Closing Date;
(2) Seller shall have received the sum
of $1,500,000.00 thirty-six (36) months following
the Closing Date; and
(3) All principal and accrued but
unpaid interest thereon shall be due forty-eight
(48) months following the Closing Date.
(B) The principal amount of the Note will
be credited with $173,333.00 if Buyer exercises its
right to purchase the DeLand Restaurant within 30 days
following the Closing and consummates the purchase
within 9 months from the Closing.
(vi) The additional consideration, if any,
described on Schedule 1.5 attached hereto.
(c) Escrow Deposit. Concurrently with Buyer's
execution of this Agreement, Buyer shall deliver to Lawyers
Title Insurance Corporation (the "Title Company") in cash by
wire transfer, the sum of Five Hundred Thousand Dollars and
No/100 ($500,000.00) as the escrow deposit ("Deposit") pursuant
to the Escrow Agreement attached hereto as Exhibit 1.5(c).
Section 1.6 Allocation of Purchase Price. On or before
the Closing Date, the parties shall mutually agree on the
allocation of the Purchase Price among the Assets. Seller and
Buyer shall execute and file any of their respective tax returns
and other tax information on a basis that is consistent with the
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allocations made pursuant to this Section 1.6. Seller shall
provide Buyer with any information reasonably required by Buyer
to prepare its tax return or to otherwise comply with any
federal, state or local tax rules or regulations. Each party
shall duly and timely file Form 8594 with its appropriate tax
returns.
ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into this Agreement and
to consummate the transactions contemplated hereby, Seller
represents and warrants to Buyer as follows, which
representations and warranties are true and correct on the date
hereof and shall remain true and correct on the Closing Date:
Section 2.1 Organization and Qualification. EACO
Corporation is a corporation duly organized, validly existing
and in good standing under the laws of the State of Florida. The
nature of the Restaurants' business or the Assets does not
require Seller to be licensed or qualified in any other
jurisdiction.
Section 2.2 Subsidiaries. The Assets do not include any
stock, partnership interest, joint venture interest or any other
security or ownership interest issued by any other corporation,
organization or entity. Seller has no subsidiaries.
Section 2.3 Power and Authority. Seller has the
requisite corporate power and authority and all authorizations,
permits, licenses and certifications necessary to own, lease and
operate the Assets and to carry on the business of the
Restaurants as now being conducted.
Section 2.4 Execution, Delivery; Valid and Binding
Agreement. The execution, delivery and performance of this
Agreement by Seller and the consummation of the transactions
contemplated hereby have been duly and validly authorized by
the Board of Directors of Seller, and, except for approval by
Seller's shareholders, no other proceedings on its part are
necessary to authorize the execution, delivery and performance
of this Agreement. This Agreement constitutes, and when
executed and delivered, the other documents and instruments to
be executed and delivered by Seller pursuant hereto (the
"Ancillary Agreements") will constitute, the valid and binding
obligations of Seller, enforceable in accordance with their
terms.
Section 2.5 No Violation. Neither the execution and
delivery of this Agreement or the Ancillary Agreements, the
consummation of the transactions contemplated hereby or thereby,
nor the performance of the Seller's obligations hereunder and
thereunder will (i) violate, conflict with or result in any
breach of any trust agreement, Articles of Incorporation,
bylaws, judgment, decree, order, statute or regulation
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applicable to Seller, (ii) violate, conflict with or result in a
material breach, material default or termination or give rise to
any right of termination, cancellation or acceleration of the
maturity of any payment date of any of the obligations of Seller
or increase or otherwise materially affect the obligations of
Seller under any law, rule, regulation or any judgment, decree,
order, governmental permit, license or order or any of the
terms, conditions or provisions of any mortgage, indenture,
note, license, agreement or other instrument or obligation
related to Seller or to Seller's ability to consummate the
transactions contemplated hereby or thereby, except that
landlords' consent may be required for assignment of Real
Property Leases, (iii) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Seller or (iv)
result in the creation of any claim or lien upon the Assets.
Section 2.6 Title to Properties.
(a) The Real Property owned by Seller and the real
property demised by the Real Property Leases (the "Leased
Parcels") constitutes all of the real property owned, used or
occupied by Seller used in connection with operation of the
Restaurants. The Real Property and Leased Parcels have access,
sufficient for the operation of the Restaurants as now
conducted, to public roads and to all utilities, including
electricity, sanitary and storm sewer, potable water, natural
gas and other utilities, used in the operation of the Restaurant
at that location. To Seller's actual knowledge without inquiry,
there is not (i) any claim of adverse possession involving any
of the Restaurants, (ii) any building or other structure which
encroaches on the boundaries of any of the Real Property or
Leased Parcels except as may be shown by the Surveys, or (iii)
any structure of any other party which encroaches on the
boundaries of any of the Restaurants except as may be shown by
the Surveys.
(b) The Real Property Leases are in full force and
effect, and Seller holds a valid and existing leasehold interest
under each of the Real Property Leases for the term set forth in
Schedule 2.6(b) attached hereto. Seller has delivered to Buyer
complete and accurate copies of each of the Real Property
Leases, and none of the Real Property Leases has been modified
in any respect, except to the extent that such modifications are
disclosed by the copies delivered to Buyer. To the best of
Seller's knowledge, Seller is not in default beyond applicable
cure periods, and no circumstances exist which, if unremedied,
would, either with or without notice or the passage of time or
both, result in such default under any of the Real Property
Leases; nor, to the knowledge of Seller, is any other party to
any of the Real Property Leases in default. Seller has not, and
to the knowledge of Seller, the lessors under any of the Real
Property Leases have not (i) subleased or assigned any of its
rights and obligations under the Real Property Leases to any
other party, or (ii) granted any possessory right in any of the
Assets to any other person. Seller is in sole possession, use
and quiet enjoyment of the Real Property and the Leased Parcels.
(c) Seller owns good and marketable title to the
Assets, including each parcel of Real Property and each of the
tangible properties and tangible assets reflected on the Latest
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Balance Sheet (as defined in Section 2.12 hereof) or acquired
since the date thereof, free and clear of all liens and
encumbrances, except for (i) liens for current taxes not yet due
and payable, (ii) liens set forth on Schedule 2.6(c) attached
hereto, (iii) the properties subject to the Real Property
Leases, (iv) assets disposed of since the date of the Latest
Balance Sheet in the ordinary course of business, (v) liens
imposed by law and incurred in the ordinary course of business
for obligations not yet due to carriers, warehousemen, laborers
and materialmen and (vi) liens in respect of pledges or deposits
under workers' compensation laws, all of which liens aggregate
less than $5,000, and (vii) matters shown on the Title
Commitment. The Assets comprise all of the property and assets
(except for Excluded Assets) necessary to permit Buyer to
operate the Restaurants as they are presently operated.
(d) Schedule 2.6(d)(1) attached hereto sets forth a
description of all the Assets which constitute equipment,
machinery, motor vehicles, furniture, fixtures, furnishings and
leasehold improvements. Except as otherwise described in
Schedule 2.6(d)(2), all of the buildings, machinery, equipment
and other tangible assets necessary for the operation of the
Restaurants are in good condition and repair, ordinary wear and
tear excepted, and are usable in the ordinary course of
business. The parties agree that Seller shall pay up to, but
not exceeding, One Hundred Thousand Dollars ($100,000.00) for
repairs to the items described on Schedule 2.6(d)(2), provided
that each claim for repair shall equal or exceed the sum of One
Thousand Dollars ($1,000.00). The parties agree that such
repairs shall not be included in the Damages described in
Section 10.2. To Seller's knowledge there are no defects in
such assets or other conditions relating thereto which, in the
aggregate, materially adversely affect the operation of the
Restaurants. Seller owns, or leases under valid leases, all
buildings, machinery, equipment and other tangible assets
necessary for operation of the Restaurants.
(e) To the best of Seller's knowledge, Seller is not
in violation of any applicable zoning ordinance or other law,
regulation or requirement relating to the operation of any
properties used in the operation of the Restaurants, and Seller
has not received any notice of any such violation, or the
existence of any condemnation proceeding with respect to any of
the Real Property or Leased Parcels, except, in each case, with
respect to violations the potential consequences of which do not
or will not have a material adverse effect on the Restaurants.
(f) Seller has no knowledge of improvements made or
contemplated to be made by any public or private authority, the
costs of which are to be assessed as special taxes or charges
against any of the Real Property or Leased Parcels, and there
are no present assessments.
Section 2.7 Labor and Employee Relations. Except as set
forth in Schedule 2.7 attached hereto, and only with respect to
employees of Seller who perform functions in connection with the
Business: (a) to the knowledge of Seller, no employee of Seller
and no group of the Seller's employees has any plans to
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terminate his, her or its employment; (b) Seller has complied
with all laws relating to the employment of labor, including
provisions thereof relating to wages, hours, equal opportunity,
collective bargaining and the payment of social security and
other taxes; (c) Seller has no material labor relations problem
pending and its labor relations are satisfactory; (d) there are
no workers' compensation claims pending against Seller nor is
Seller aware of any facts that would give rise to such a claim;
(e) to the knowledge of Seller, no employee of Seller is subject
to any secrecy or noncompetition agreement or any other
agreement or restriction of any kind that would impede in any
way the ability of such employee to carry out fully all
activities of such employee in connection with the Restaurants;
and (f) no employee or former employee of Seller has any claim
with respect to any Intellectual Property or Seller's rights
therein. Schedule 2.7 attached hereto lists, as of the date of
this Agreement, each employee of Seller who performs functions
in connection with the Restaurants and the position, title,
remuneration (including any scheduled salary or remuneration
increases), date of employment and accrued vacation pay of each
such employee. Seller shall update Schedule 2.7 attached hereto
as of the Closing Date. All Employees are employees-at-will and
are employed for an indefinite term.
Section 2.8 Governmental Approvals. Except for the
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder (the "HSR Act") and the
Securities Exchange Act of 1934 and the regulations promulgated
thereunder (the "Exchange Act"), the Seller is not required to
submit any notice, report or other filing with any governmental
authority in connection with the execution or delivery by it of
this Agreement or the consummation of the transactions
contemplated hereby. Except as set forth on Schedule 2.8
attached hereto, no consent, approval, authorization or other
action by any governmental or regulatory authority is required
to be obtained by Seller in connection with its execution,
delivery and performance of this Agreement. Seller acknowledges
that Buyer is not familiar with the HSR Act or any other
approvals which Seller may be required to obtain.
Section 2.9 Compliance with Law; Licenses; Permits.
(a) To Seller's knowledge, Seller has complied in
all material respects with all applicable laws, regulations and
other requirements, including, but not limited to, federal,
state, local and foreign laws, ordinances, rules, regulations
and other requirements pertaining to product labeling, consumer
products safety, equal employment opportunity, employee
retirement, the Americans with Disabilities Act, affirmative
action and other hiring practices, occupational safety and
health, workers' compensation, unemployment and building and
zoning codes, which are applicable to the Restaurants or the
Assets and to which Seller is or may be subject, and no claims
have been filed against Seller alleging a violation of any such
laws, regulations or other requirements. Except as set forth on
Schedule 2.9 attached hereto, Seller has no knowledge of any
action, pending or threatened, to change the zoning or building
ordinances or any other laws, rules, regulations or ordinances
affecting the Restaurants or the Assets. Seller is not relying
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on any exemption from or deferral of any such applicable law,
regulation or other requirement that would not be available to
Buyer after it acquires the Assets.
(b) Seller has, in full force and effect, all
licenses, permits and certificates, from federal, state, local
and foreign authorities (including, without limitation, federal
and state agencies regulating occupational health and safety)
necessary to operate the Restaurants and to own and operate the
Assets (other than Environmental Permits, as such term is
defined in Section 2.19(c) hereof) (collectively, the
"Permits"). A true, correct and complete list of all Permits is
set forth in Schedule 2.9(b) attached hereto, with an indication
as to whether the Permit is assignable to Buyer. Seller has
conducted its business in compliance with all material terms and
conditions of the Permits.
(c) Seller has not violated and has no liability,
and has not received a notice or charge asserting any violation
of or liability under, the federal Occupational Safety and
Health Act of 1970 or any other federal or state acts (including
rules and regulations thereunder) regulating or otherwise
affecting employee or consumer health and safety in connection
with the Restaurants or the Assets.
Section 2.10 Employee Benefits.
(a) Except as set forth in Schedule 2.10(a) attached
hereto, with respect to all employees and former employees of
Seller who perform or performed functions in connection with
the Restaurants and all dependents and beneficiaries of such
employees and former employees: (i) Seller does not maintain or
contribute to any nonqualified deferred compensation or
retirement plans, contracts or arrangements; (ii) Seller does
not maintain or contribute to any qualified defined contribution
plans (as defined in Section 3(34) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), or Section
414(i) of the Code; (iii) Seller does not maintain or contribute
to any qualified defined benefit plans (as defined in Section
3(35) of ERISA or Section 414(j) of the Code); and (iv) Seller
does not maintain or contribute to any employee welfare benefit
plans (as defined in Section 3(1) of ERISA).
(b) To the extent required (either as a matter of
law or to obtain the intended tax treatment and tax benefits),
all employee benefit plans (as defined in Section 3(3) of ERISA)
which Seller does maintain or to which it does contribute
(collectively, the "Plans") comply in all material respects with
the requirements of ERISA and the Code. With respect to the
Plans, (i) all required contributions which are due have been
made and a proper accrual has been made for all contributions
due in the current fiscal year; (ii) there are no actions, suits
or claims pending, other than routine uncontested claims for
benefits; and (iii) there have been no prohibited transactions
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(as defined in Section 406 of ERISA or Section 4975 of the
Code).
(c) Buyer has received true and complete copies of
(i) the most recent determination letter, if any, received by
Seller from the Internal Revenue Service regarding the Plans
which Seller maintains or to which it contributes and any
amendment to any Plan made subsequent to any Plan amendments
covered by any such determination letter; (ii) the most recent
financial statements and annual report or return for the Plans;
and (iii) the most recently prepared actuarial valuation
reports.
(d) Seller does not contribute (and has not ever
contributed) to any multi-employer plan, as defined in Section
3(37) of ERISA. Seller has no actual or potential liabilities
under Section 4201 of ERISA for any complete or partial
withdrawal from a multi-employer plan. Seller has no actual or
potential liability for death or medical benefits after
separation from employment, other than (i) death benefits under
the employee benefit plans or programs (whether or not subject
to ERISA) set forth in Schedule 2.10(d) attached hereto and (ii)
health care continuation benefits described in Section 4980B of
the Code.
(e) Neither Seller nor any of its directors,
officers, employees or other "fiduciaries", as such term is
defined in Section 3(21) of ERISA, has committed any breach of
fiduciary responsibility imposed by ERISA or any other
applicable law with respect to the Plans which would subject
Seller, Buyer, Buyer's subsidiaries or any of their respective
officers, members, managers or employees to any liability under
ERISA or any applicable law.
(f) Seller has not incurred any liability for any
tax or civil penalty or any disqualification of any employee
benefit plan (as defined in Section 3(3) of ERISA) imposed by
Sections 4980B and 4975 of the Code and Part 6 of Title I and
Section 502(i) of ERISA.
Section 2.11 Contracts. The Contracts identified on
Schedule 1.1(e) attached hereto and on Schedule 2.11 attached
hereto (Contracts not assigned), together with the Real Property
Leases, comprise a true, correct and complete list of all
material leases, contracts and commitments necessary for the
operation of the Restaurants. Seller has delivered to Buyer true
and complete copies of all Contracts on Schedules 1.1(e) and
2.11 attached hereto (including all amendments and modifications
thereto) and has provided to Buyer a complete description of all
Contracts which are not in writing. Except as set forth in
Schedule 2.11 attached hereto each Contract is valid and
enforceable, and is full force and effect. Seller has performed
all the obligations required to be performed by it, has not
received any notice of default and is not in default, with due
notice or lapse of intention of not fully performing all its
obligations under each of the Contracts, and Seller has no
knowledge of any breach of or anticipated breach by the other
party to any of the Contracts to which Seller is a party. None
of the Contracts has been terminated. To Seller's knowledge, no
notice has been given by any party thereto of any alleged
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default by any party thereunder, and Seller is not aware of any
intention or right of any party to declare another party to any
of the Contracts to be in default.
Section 2.12 Financial Statements. Seller has delivered
to Buyer copies of (a) the unaudited balance sheet, as of
November 30, 2004, of the Restaurants (the "Latest Balance
Sheet") and the unaudited statements of earnings, shareholders'
equity and cash flows of the Business for the nine month period
ended September 30, 2004 (such statements and the Latest
Balance Sheet being herein referred to as the "Latest Financial
Statements") and (b) the audited balance sheets, as of December
31, 2001, 2002 and 2003 of the Restaurants and the audited
statements of earnings, shareholders' equity and cash flows of
the Business for each of the years ended December 31, 2001, 2002
and 2003 (collectively, the "Annual Financial Statements"). The
Latest Financial Statements and the Annual Financial Statements
are based upon the information contained in the books and
records of Seller and fairly present the financial condition of
the business as of the dates thereof and results of operations
for the periods referred to therein. The Annual Financial
Statements have been prepared in accordance with generally
accepted accounting principles, consistently applied throughout
the periods indicated. The Latest Financial Statements have
been prepared in accordance with generally accepted accounting
principles applicable to unaudited interim financial statements
(and thus may not contain all notes and may not contain prior
period comparative data which are required to be prepared in
accordance with generally accepted accounting principles)
consistently with the Annual Financial Statements and reflect
all adjustments necessary to a fair statement of the results for
the interim period(s) presented.
Section 2.13 Absence of Undisclosed Liabilities. With
respect to the Assets or the operations of the Restaurants,
Seller has no liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise, whether due or to become
due, whether known or unknown, and regardless of when asserted)
arising out of transactions or events heretofore entered into,
or any action or inaction, or any state of facts existing, with
respect to or based upon transactions or events heretofore
occurring, except (i) as reflected in the Latest Balance Sheet,
(ii) liabilities which have arisen after the date of the Latest
Balance Sheet in the ordinary course of business (none of which
is a material uninsured liability for breach of contract, breach
of warranty, tort, infringement, claim or lawsuit), or (iii) as
otherwise set forth in Schedule 2.13 attached hereto.
Section 2.14 No Material Adverse Changes. Since the date
of the Latest Balance Sheet (the "Balance Sheet Date"), there
has been no material adverse change in the assets, financial
condition, operating results, customer, employee or supplier
elations, business condition or prospects of Seller.
Section 2.15 Absence of Certain Developments. Since the
Balance Sheet Date, Seller has not in each case, with respect to
the Restaurants or the Assets:
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(a) borrowed any amount or incurred or become
subject to any liability in excess of $5,000, except (i) current
liabilities incurred in the ordinary course of business and (ii)
liabilities under contracts entered into in the ordinary course
of business;
(b) mortgaged, pledged or subjected to any lien,
charge or any other encumbrance, any of the Assets except (i)
liens for current property taxes not yet due and payable, (ii)
liens imposed by law and incurred in the ordinary course of
business for obligations not yet due to carriers, warehousemen,
laborers, materialmen and the like, (iii) liens in respect of
pledges or deposits under workers' compensation laws, (iv) liens
set forth in Schedule 2.15(b) attached hereto, or (v) items
shown on Title Commitments.;
(c) discharged or satisfied any lien or encumbrance
or paid any liability, in each case with a value in excess of
$5,000, other than current liabilities paid in the ordinary
course of business;
(d) sold, assigned or transferred (including,
without limitation, transfers to any employees, affiliates or
shareholders) any tangible assets of the Restaurants (except the
sale/leaseback of the DeLand Restaurant) or canceled any debts
or claims, in each case, except in the ordinary course of
business;
(e) sold, assigned or transferred (including,
without limitation, transfers to any employees, affiliates or
shareholders) any Intellectual Property or other intangible
assets used in or held for use with respect to the Restaurants;
(f) disclosed, to any person other than Buyer and
authorized representatives of Buyer, any proprietary
confidential information of the Business or otherwise related to
the Restaurants or the Assets, other than pursuant to (i)
reports and filings required under the Securities Act of 1933,
as amended, and rules and regulations promulgated thereunder,
(ii) the Securities and Exchange Act of 1934, as amended, and
rules and regulations promulgated thereunder, or (iii) a
confidentiality agreement prohibiting the use or further
disclosure of such information, which agreement is identified in
Schedule 2.15(f) attached hereto and is in full force and effect
on the date hereof;
(g) waived any rights of material value or suffered
any extraordinary losses or adverse changes in collection loss
experience, whether or not in the ordinary course of business or
consistent with past practice;
(h) taken any other action or entered into any other
transaction other than in the ordinary course of business and in
accordance with past custom and practice, or entered into any
13
transaction with any "insider" (as defined in Section 2.16
hereof) other than employment arrangements otherwise disclosed
in the schedules to this Agreement;
(i) suffered any material theft, damage, destruction
or loss of or to any property or properties owned or used by it
in connection with the Restaurants, whether or not covered by
insurance;
(j) made or granted any bonus or any wage, salary or
compensation increase to any officer or employee or consultant
other than in the normal course of business consistent with past
practices, or made or granted any increase in any employee
benefit plan or arrangement, or amended or terminated any
existing employee benefit plan or arrangement, or adopted any
new employee benefit plan or arrangement or made any commitment
or incurred any liability to any labor organization; or
(k) made any single capital expenditure or
commitment therefor in excess of $5,000, except as shown
Schedule 2.15(k) attached hereto.
Section 2.16 Transactions with Affiliates. Except as
disclosed in Schedule 2.16 attached hereto, no officer, director
or employee of Seller or any member of the immediate family of
any such officer, director or employee, or any entity in which
any of such persons owns any beneficial interest (other than any
publicly-held corporation whose stock is traded on a national
securities exchange or in the over-the-counter market and less
than one percent of the stock of which is beneficially owned by
any of such persons) (collectively "insiders"), has any
agreement with Seller (other than normal employment
arrangements) or any interest in any property, real, personal or
mixed, tangible or intangible, used in or pertaining to the
operation of the Restaurants or to the Assets. None of the
insiders has any direct or indirect interest in any competitor,
supplier or customer of Seller or in any person, firm or entity
from whom or to whom Seller leases any property, or in any other
person, firm or entity with whom Seller transacts business of
any nature. For purposes of this Section 2.16, the members of
the immediate family of an officer, director or employee shall
consist of the spouse, parents, children, siblings, mothers- and
fathers-in-law, sons- and daughters-in-law, and brothers- and
sisters-in-law of such officer, director or employee.
Section 2.17 Taxes.
(a) Each of Seller and any subsidiary, any
affiliated, combined or unitary group of which the Seller or any
subsidiary is or was a member, any "Plans" (as defined in
Section 2.10(b) hereof), as the case may be (each, a "Tax
Affiliate" and, collectively, the "Tax Affiliates"), has: (i)
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timely filed (or has had timely filed on its behalf) all
returns, declarations, reports, estimates, information returns,
and statements ("Returns") required to be filed or sent by it in
respect of any "Taxes" (as defined in subsection (p) below) or
required to be filed or sent by it by any taxing authority
having jurisdiction; (ii) timely and properly paid (or has had
paid on its behalf) all Taxes shown to be due and payable on
such Returns; (iii) established on its Latest Balance Sheet, in
accordance with generally accepted accounting principles,
reserves that are adequate for the payment of any Taxes not yet
due and payable; (iv) complied with all applicable laws, rules,
and regulations relating to the withholding of Taxes and the
payment thereof (including, without limitation, withholding of
Taxes under Sections 1441 and 1442 of the Internal Revenue Code
of 1986, as amended (the "Code"), or similar provisions under
any foreign laws), and timely and properly withheld from
individual employee wages and paid over to the proper
governmental authorities all amounts required to be so withheld
and paid over under all applicable laws.
(b) There are no liens for Taxes upon any of the
assets, except liens for Taxes not yet due and payable.
(c) No deficiency for any Taxes has been proposed,
asserted or assessed against Seller or the Tax Affiliates that
has not been resolved and paid in full. No waiver, extension or
comparable consent given by Seller or the Tax Affiliates
regarding the application of the statute of limitations with
respect to any Taxes or Returns is outstanding, nor is any
request for any such waiver or consent pending. There has been
no Tax audit or other administrative proceeding or court
proceeding with regard to any Taxes or Returns, nor is any such
Tax audit or other proceeding pending, nor has there been any
notice to Seller by any Taxing authority regarding any such Tax,
audit or other proceeding, or, to the knowledge of Seller, is
any such Tax audit or other proceeding threatened with regard to
any Taxes or Returns. Seller does not expect the assessment of
any additional Taxes on Seller or the Tax Affiliates and is not
aware of any unresolved questions, claims or disputes concerning
the liability for Taxes on Seller or the Tax Affiliates which
would exceed the estimated reserves established on its books and
records.
(d) Neither Seller nor any Tax Affiliate is a party
to any agreement, contract or arrangement that would result,
separately or in the aggregate, in the payment of any "excess
parachute payments" within the meaning of Section 280G of the
Code and the consummation of the transactions contemplated by
this Agreement will not be a factor causing payments to be made
by Seller or any Tax Affiliate that are not deductible (in whole
or in part) under Section 280G of the Code.
(e) Neither Seller nor any Tax Affiliate has
requested any extension of time within which to file any Return,
which Return has not since been filed.
(f) No Asset is property that Seller or any Tax
Affiliates is or will be required to treat as being owned by
another person under the provisions of Section 168(f)(8) of the
Code (as in effect prior to amendment by the Tax Reform Act of
1986) or is "tax-exempt use property" within the meaning of
Section 168 of the Code.
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(g) Neither Seller nor any Tax Affiliate is required
to include in income any adjustment under Section 481(a) of the
Code by reason of a voluntary change in accounting method
initiated by Seller or any Tax Affiliate as a result of the Tax
Reform Act of 1986 and neither Seller nor any Tax Affiliate has
knowledge that the Internal Revenue Service has proposed any
such adjustment or change in accounting method.
(h) All transactions that could give rise to an
understatement of federal income tax (within the meaning of
Section 6661 of the Code as it applied prior to repeal) or an
underpayment of tax (within the meaning of Section 6662 of the
Code) were reported in a manner for which there is substantial
authority or were adequately disclosed (or, with respect to
Returns filed before the Closing Date, will be reported in such
a manner or adequately disclosed) on the Returns required in
accordance with Sections 6661(b)(2)(B) and 6662(d)(2)(B) of the
Code.
(i) Neither Seller nor any Tax Affiliate has engaged
in any transaction that would result in a deemed election under
Section 338(e) of the Code, and neither Seller nor any Tax
Affiliate will engage in any such transaction within any
applicable "consistency period" (as such term is defined in
Section 338 of the Code).
(j) All deductions claimed or reported on all
Returns of Seller and any Tax Affiliate on account of royalties
or similar fees payable with respect to any intellectual
property of Seller or any other party are allowable in full.
(k) For purposes of this Agreement, the term "Tax"
or "Taxes" means all taxes, charges, fees, levies, or other
assessments, including, without limitation, all net income,
gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, withholding, payroll, employment,
social security, unemployment, excise, estimated, severance,
stamp, occupation, property, or other taxes, customs duties,
fees, assessments, or charges of any kind whatsoever, including,
without limitation, all interest and penalties thereon, and
additions to tax or additional amounts imposed by any taxing
authority, domestic or foreign, upon Seller or any Tax
Affiliate.
Section 2.18 Litigation. Except as set forth on Schedule
2.18 attached hereto, there is no (i) action, suit, claim,
proceeding or investigation pending or, to the knowledge of
Seller, threatened against or affecting Seller (whether or not
Seller is a party or prospective party thereto), at law or in
equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) arbitration
proceeding pending relating to Seller or (iii) governmental
inquiry pending or to Seller's knowledge, threatened against or
involving Seller, and there is no basis for any of the
foregoing. Seller has not received any opinion or memorandum or
legal advice from legal counsel to the effect that it is
exposed, from a legal standpoint, to any liability or
disadvantage which may be material and adverse to the business,
16
prospects, financial condition, operations, property or affairs
of Seller. There are no outstanding, orders, writs, judgments,
injunctions, or decrees served upon Seller by any court,
governmental agency or arbitration tribunal against Seller. To
Seller's knowledge, there are no facts or circumstances which
may result in institution of any action, suit, claim or legal,
administrative or arbitration proceeding or investigation
against, involving or affecting any Seller or the transactions
contemplated hereby. Seller is not in default with respect to
any order, writ, injunction or decree known to or served upon it
from any court or of any federal, state, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign. There is no action or suit
by Seller pending or threatened against others.
Section 2.19 Environmental Matters.
(a) As used in this Section 2.19, the following
terms shall have the following meanings:
(i) "Hazardous Materials" means any dangerous,
toxic or hazardous pollutant, contaminant, chemical, waste,
material or substance as defined in or governed by any
federal, state or local law, statute, code, ordinance,
regulation, rule or other requirement relating to such
substance or otherwise relating to the environment or human
health or safety, including without limitation any waste,
material, substance, pollutant or contaminant that might
cause any injury to human health or safety or to the
environment or might subject Seller to any imposition of
costs or liability under any Environmental Law.
(ii) "Environmental Laws" means all applicable
federal, state, local and foreign laws, rules, regulations,
codes, ordinances, orders, decrees, directives, permits,
licenses and judgments relating to pollution, contamination
or protection of the environment (including, without
limitation, all applicable federal, state, local and
foreign laws, rules, regulations, codes, ordinances,
orders, decrees, directives, permits, licenses and
judgments relating to Hazardous Materials in effect as of
the date of this Agreement).
(iii) "Release" shall mean the spilling, leaking,
disposing, discharging, emitting, depositing, ejecting,
leaching, escaping or any other release or threatened
release, however defined, whether intentional or
unintentional, of any Hazardous Material.
(b) To the best of Seller's actual knowledge, Seller,
with respect to the Restaurants and the Assets, is in material
compliance with all applicable Environmental Laws.
(c) Seller has obtained, and maintained in full
force and effect, all environmental permits, licenses,
certificates of compliance, approvals and other authorizations
necessary to operate the Restaurants and to own or operate the
Assets, including the Real Property and real property demised by
17
the Real Property Leases (collectively, the "Environmental
Permits"). A copy of each such Environmental Permit shall be
provided by Seller to Buyer at least fourteen (14) days prior to
the Closing. Seller has operated the Restaurants and owned and
operated the Assets in compliance with all terms and conditions
of the Environmental Permits. Seller has filed all reports and
notifications required to be filed under and pursuant to all
applicable Environmental Laws with respect to the Business and
the Assets.
(d) Except as set forth in Schedule 2.19(d) attached
hereto, to Seller's knowledge,: (i) no Hazardous Materials have
been generated, treated, contained, handled, located, used,
manufactured, processed, buried, incinerated, deposited, stored,
or released on, under or about any part of the Real Property or
real property demised by the Real Property Leases, (ii) the Real
Property and the Leased Parcels and any improvements thereon,
contain no asbestos, urea, formaldehyde, radon at levels above
natural background, polychlorinated biphenyls (PCBs) or
pesticides, and (iii) no aboveground or underground storage
tanks are located on, under or about the Real Property or the
Leased Parcels, or have been located on, under or about such
real property and then subsequently been removed or filled. To
Seller's knowledge, if any such storage tanks exist on, under or
about the Real Property or the Leased Parcels, such storage
tanks have been duly registered with all appropriate
governmental entities and are otherwise in compliance with all
applicable Environmental Laws.
(e) Except as set forth in Schedule 2.19(e) attached
hereto, Seller has not received notice alleging in any manner
that Seller is, or might be potentially responsible for, any
Release of Hazardous Materials, or any costs arising under or
violation of Environmental Laws with respect to the Restaurants
or the Assets.
(f) To Seller's knowledge, no expenditure will be
required in order for Buyer to comply with any Environmental
Laws in effect at the time of the Closing in connection with the
operation or continued operation of the Restaurants or the
Assets in a manner consistent with the current operation thereof
by Seller.
(g) Neither Seller, the Real Property nor the Leased
Parcels are, and to Seller's knowledge, have not been listed on
the United States Environmental Protection Agency National
Priorities List of Hazardous Waste Sites, or any other list,
schedule, law, inventory or record of hazardous or solid waste
sites maintained by any federal, state or local agency.
(h) Seller has disclosed and delivered to Buyer all
environmental reports and investigations which Seller has
obtained with respect to the Real Property and the Leased
Parcels.
(i) To Seller's knowledge, no part of the Real
Property or the Leased Parcels have been used as a landfill,
dump or other disposal, storage, transfer, handling or treatment
area for Hazardous Materials, or as a gasoline service station
or a facility for selling, dispensing, storing, transferring,
disposing or handling petroleum and/or petroleum products.
18
(j) No lien has been attached or filed against
Seller or any of the Assets in favor of any governmental or
private entity for (i) any liability or imposition of costs
under or violation of any applicable Environmental Law; or (ii)
any Release of Hazardous Materials.
(k) Seller, on behalf of itself and its successors
and assigns, hereby waives, releases and agrees not to bring any
claim, demand, cause of action or proceeding, including without
limitation any cost recovery action, against Buyer under any
Environmental Law in connection with the Buyer's purchase,
ownership or operation of the Restaurants and the Assets.
Section 2.20 Insurance. Schedule 2.20 attached hereto
lists and briefly describes each insurance policy maintained by
Seller with respect to the Assets and operations of the
Restaurants and sets forth the date of expiration of each such
insurance policy. All of such insurance policies are in full
force and effect and are issued by insurers of recognized
responsibility. Seller is not in default with respect to its
obligations under any of any insurance policies relating to the
Assets or the Restaurants.
Section 2.21 Intellectual Property. The Intellectual
Property constitutes all such property needed or used in the
operation of the Restaurants. Schedule 2.21 attached hereto
describes all Intellectual Property and whether such
Intellectual Properties are owned or licensed and registered or
unregistered. Except as set forth on Schedule 2.21 attached
hereto Seller is not a party to, either as a licensor or
licensee, and is not bound by or subject to, any license
agreement for any Intellectual Property. Except as set forth on
Schedule 2.21 attached hereto there are no rights of third
parties with respect to any Intellectual Property which would
have an adverse effect on the operations of the Restaurants. To
its knowledge, Seller has not interfered with, infringed upon,
or misappropriated, or otherwise come into conflict with any
intellectual property rights of any other person, and Seller has
not received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement, misappropriation,
or violation. To Seller's knowledge, no person has interfered
with, infringed upon, misappropriated, or otherwise come into
conflict with Intellectual Property which are owned or used in
the operation of the Restaurants.
Section 2.22 Broker's or Finder's Fees. Except for the
services rendered by Xxx Xxxxx of Florida Growth Realty, Inc.,
the fees of which shall be paid by Seller, no agent, broker,
person or firm acting on behalf of any Seller is, or will be,
entitled to any commission or broker's or finder's fees from any
Seller or from any person controlling, controlled by or under
common control with any Seller in connection with any of the
transactions contemplated herein.
Section 2.23 Disclosure. Neither this Agreement, the
Ancillary Agreements, the schedules and exhibits attached hereto
nor any other documents prepared by Seller nor any of the
financial statements referred to in Section 2.12 hereof, contain
19
any untrue statement of a material fact regarding Seller, the
Restaurants or any of the Assets or other matters dealt with in
this Article II. This Agreement, the Ancillary Agreements, the
schedules and exhibits attached hereto. any other documents
delivered to Buyer by or on behalf of Seller and the financial
statements referred to in Section 2.12 hereof, do not omit any
material fact necessary to make the statements contained herein
or therein, in light of the circumstances in which they were
made, not misleading, and to Seller's knowledge, there is no
fact which has not been disclosed to Buyer of which any officer
of Seller is aware which materially affects adversely or could
reasonably be anticipated to materially affect adversely the
Assets or the Restaurants, including operating results, assets,
customer relations, employee relations and business prospects.
Section 2.24 No Existing Acquisition Proposals. Seller
has not received any proposals to acquire the Restaurants, the
Assets or any portion thereof, and Seller is not a party to any
letter of intent, contract, agreement of sale, merger or
business combination agreement, or other agreements relating to
the sale of all or any portion of the Assets or the Restaurants.
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Seller to enter into this Agreement and
to consummate the transactions contemplate hereby, Buyer
represents and warrants to Seller as follows:
Section 3.1 Organization. Buyer is a limited liability
company duly organized, validly existing and in good standing
under the laws of the State of Delaware. Buyer is duly licensed
and in good standing in each jurisdiction where it is required
to be registered as a foreign limited liability company.
Section 3.2 Power and Authority. Seller has the
requisite corporate power and authority and all authorizations,
permits, licenses and certifications necessary to own, lease and
operate the Assets and to carry on the business of the
Restaurants as now being conducted.
Section 3.3 Execution, Delivery; Valid and Binding
Agreement. The execution, delivery and performance of this
Agreement by Buyer and the consummation of the transactions
contemplated hereby have been duly and validly authorized by
the Board of Managers [and members] of Buyer, and no other
proceedings on its part are necessary to authorize the
execution, delivery and performance of this Agreement. This
Agreement constitutes, and when executed and delivered will
constitute, the valid and binding obligation of Buyer,
enforceable in accordance with its terms.
Section 3.4 No Violation. Neither the execution and
delivery of this Agreement or the Ancillary Agreements to which
Buyer is a party, the consummation of the transactions
contemplated hereby or thereby, nor the performance of Buyer's
20
obligations hereunder and thereunder will (i) violate, conflict
with or result in any breach of any trust agreement, Certificate
of Organization, limited liability company agreement, judgment,
decree, order, statute or regulation applicable to Buyer, (ii)
violate, conflict with or result in a material breach, material
default or termination or give rise to any right of termination,
cancellation or acceleration of the maturity of any payment date
of any of the obligations of Buyer or increase or otherwise
materially affect the obligations of Buyer under any law, rule,
regulation or any judgment, decree, order, governmental permit,
license or order or any of the terms, conditions or provisions
of any mortgage, indenture, note, license, agreement or other
instrument or obligation related to Buyer or to Buyer's ability
to consummate the transactions contemplated hereby or thereby,
or (iii) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to Buyer.
Section 3.5 Broker's or Finder's Fees. No agent, broker,
person or firm acting on behalf of Buyer is, or will be,
entitled to any commission or broker's or finder's fees from
Buyer, or from any person controlling, controlled by or under
common control with Buyer, in connection with any of the
transactions contemplated herein and Buyer shall indemnify
Seller for any damages arising from a breach of this
representation.
Section 3.6 Disclosure. Neither this Agreement nor any
Ancillary Agreement to which Buyer is a party contain any untrue
statement of a material fact regarding Buyer. This Agreement
and the Ancillary Agreements to which Buyer is a party do not
omit any material fact necessary to make the statements
contained herein or therein, in light of the circumstances in
which they were made, not misleading, and there is no fact which
has not been disclosed to Seller of which any officer or
director of Buyer is aware which materially affects adversely or
could reasonably be anticipated to materially affect adversely
Buyer's ability to consummate the transactions contemplated
hereby.
Section 3.7 Governmental Approvals. Except for the
applicable requirements of the HSR Act, Buyer is not required to
submit any notice, report or other filing with any governmental
authority in connection with the execution or delivery by it of
this Agreement or the consummation of the transactions
contemplated hereby. No consent, approval or authorization of
any governmental or regulatory authority or any other party or
person is required to be obtained by Buyer in connection with
its execution, delivery and performance of this Agreement or the
transactions contemplated hereby.
ARTICLE IV. COVENANTS OF SELLER
Section 4.1 Conduct of the Business. In connection with
the Assets and the Restaurants, Seller agrees that, from the
date hereof until the Closing Date, unless otherwise consented
to by Buyer in writing:
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(a) The Restaurants shall be operated only in, and Seller
shall not take any action except in, the ordinary course of
Seller's business, on an arm's-length basis and in accordance in
all material respects with all applicable laws, rules and
regulations and Seller's past custom and practice;
(b) Seller shall not, directly or indirectly, do or
permit to occur any of the following insofar as they relate to
Restaurants or the Assets: (i) sell, pledge, dispose of or
encumber any of the Assets, except in the ordinary course of
business; (ii) acquire (by merger, exchange, consolidation,
acquisition of stock or assets or otherwise) any corporation,
partnership, joint venture or other business organization or
division or material assets thereof; (iii) incur any
indebtedness for borrowed money or issue any debt securities
except the borrowing of working capital in the ordinary course
of business and consistent with past practice; (iv) permit any
accounts payable owed to trade creditors to remain outstanding
more than 60 days; (v) accelerate, beyond the normal collection
cycle, collection of accounts receivable; or (vi) enter into or
propose to enter into, or modify or propose to modify, any
agreement, arrangement or understanding with respect to any of
the matters set forth in this Section 4.1(b);
(c) Seller shall not, directly or indirectly, in the case
of employees, take any action with respect to the grant of any
bonuses, salary increases, severance or termination pay or with
respect to any increase of benefits payable in effect on the
date hereof except as otherwise in the ordinary course of
business consistent with past practices;
(d) Seller shall not adopt or amend any bonus, profit
sharing, compensation, pension, retirement, deferred
compensation, employment or other employee benefit plan, trust,
fund or group arrangement for the benefit or welfare of any
employees or affiliates;
(e) Seller shall not cancel or terminate its current
insurance policies covering the Assets and the Restaurants, or
cause any of the coverage thereunder to lapse, unless
simultaneously with such termination, cancellation or lapse,
replacement policies providing coverage equal to or greater than
the coverage under the canceled, terminated or lapsed policies
for substantially similar premiums are in full force and effect;
(f) Seller shall (i) use its best efforts to preserve
intact the organization and goodwill associated with the
Restaurants, keep available the services of Seller's employees
as a group and maintain satisfactory relationships with
suppliers, distributors, customers and others having business
relationships with Seller in connection with the Restaurants;
(ii) confer on a regular and frequent basis with representatives
of Buyer to report operational matters and the general status of
ongoing operations with respect to the Restaurants; (iii) not
intentionally take any action which would render, or which
reasonably may be expected to render, any representation or
warranty made by it in this Agreement untrue at the Closing;
(iv) notify Buyer of any emergency or other change in the normal
22
course of the Restaurants' businesses or in the operation of the
properties of the Restaurants and of any governmental or third
party complaints, investigations or hearings (or communications
indicating that the same may be contemplated) if such emergency,
change, complaint, investigation or hearing would be material,
individually or in the aggregate, to the business, operations or
financial condition of Seller or to Seller's or Buyer's ability
to consummate the transactions contemplated by this Agreement;
and (v) promptly notify Buyer in writing if Seller shall
discover that any representation or warranty made by it in this
Agreement was when made, or has subsequently become, untrue in
any respect;
(g) Seller shall (i) file any Returns, elections or
information statements with respect to any liabilities for Taxes
of Seller or other matters relating to Taxes of Seller which
affect the Assets and pursuant to applicable law must be filed
prior to the Closing Date; (ii) promptly upon filing provide
copies of any such Returns, elections or information statements
to Buyer; (iii) make any such Tax elections or other
discretionary positions with respect to Taxes taken by or
affecting Seller only upon prior consultation with and consent
of Buyer; and (iv) not amend any Return;
(h) Neither Seller nor any of its affiliates shall make
any election without respect to Taxes, change an annual
accounting period, adopt or change any accounting method or file
any amended return, report or form, if such election, adoption,
change or filing would have the effect of increasing the Tax
liability of the Buyer with respect to any period ending after
the Closing Date; and
(i) Seller shall not perform any act referenced by (or
omit to perform any act which omission is referenced by) the
terms of Section 2.15 hereof; and
(j) Seller shall continue to convert its Ryan's
Restaurants to the WJ Restaurant and FB Restaurant concepts as
further described on Schedule 4.1(j) attached hereto.
Section 4.2 Access to Books and Records. Between the
date hereof and the Closing Date, Seller shall afford to Buyer
and its authorized representatives (the "Buyer's
Representatives") full access at all reasonable times and upon
reasonable notice to the offices, properties, books, records,
officers, employees and other items relating to the business of
the Restaurants, and the work papers of Deloitte & Touche LLP,
Seller's independent accountants, relating to work done by
Deloitte & Touche LLP for Seller (insofar as the work relates to
the Restaurants or the Assets) for each of the fiscal years
ended December 31, 2001, 2002 and 2003, and otherwise provide
such assistance as is reasonably requested by Buyer in order
that Buyer may have a full opportunity to make such
investigation and evaluation as it shall reasonably desire to
make of the Restaurants and the Assets. In addition, Seller and
its officers and directors shall cooperate fully (including
providing introductions where necessary) with Buyer to enable
Buyer to contact such third parties, including customers,
prospective customers, specifying agencies, vendors or suppliers
of the Restaurants, as Buyer deems reasonably necessary to
23
complete its due diligence; provided that Buyer agrees not to
initiate such contacts without the prior approval of Seller,
which approval will not be unreasonably withheld.
Section 4.3 Regulatory Filings. As promptly as
practicable after the execution of this Agreement, Seller shall
make or cause to be made all filings and submissions under the
HSR Act and any other laws or regulations applicable to Seller
on connection with consummation of the transactions contemplated
herein. Seller will coordinate and cooperate with Buyer in
exchanging such information, will not make any such filing
without providing to Buyer a final copy thereof for its review
and consent at least two full business days in advance of the
proposed filing and will provide such reasonable assistance as
Buyer may request in connection with all of the foregoing.
Section 4.4 Conditions. Seller shall take all
commercially reasonable actions necessary or desirable to cause
the conditions set forth in Article VI to be satisfied and to
consummate the transactions contemplated herein as soon as
reasonably possible after the satisfaction thereof (but in any
event within three business days of such date).
Section 4.5 Payment of Liabilities. Except for the
liabilities assumed pursuant to Section 1.3 hereof, Seller shall
pay and satisfy in full all of its other obligations and
liabilities relating to the Restaurants and the Assets, of any
nature whatsoever, due or accrued prior or subsequent to the
Closing Date.
Section 4.6 Electronic Data Transfer. Seller shall use
its best efforts to make an electronic data transfer to Buyer of
information, data and records used or useful in the record
keeping associated with the Restaurants.
Section 4.7 Use of Corporate Offices. Seller agrees to
allow Buyer to use its corporate offices located at 0000 Xxxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx, 00000, free of charge for a
period of sixty (60) days after the Closing Date.
Section 4.8 Employees and Employee Benefits.
(a) As of the Closing Date, Seller shall terminate
and/or accept the resignations of employment from all employees
who are currently employed by any Seller in the Restaurants.
Buyer shall have the option, but not the obligation, to extend
offers of employment to the Restaurant employees of Seller on
such terms and conditions as Buyer shall determine in its sole
discretion.
(b) Seller shall not increase the compensation of or
benefits for any employee employed at the Restaurants or hire
24
any employee at any of the Restaurants other than in the
ordinary course of business and consistent with past practices.
Seller will use reasonable efforts to maintain substantially all
of the current Restaurant employees in a manner consistent with
Seller's normal business practices.
Section 4.9 Necessary Actions. At any time and from time
to time after the Closing Date, at the request of Buyer and
without further consideration, Seller shall execute and deliver
such other instruments of sale, transfer, conveyance, assignment
and confirmation as may be reasonably requested in order to more
effectively carry out the transactions contemplated by this
Agreement.
Section 4.10 Non-Competition Agreement.
(a) Seller and its principal shareholder will not,
at any time during the five (5) year period following the
Closing Date, directly or indirectly, own, manage, operate,
control, participate in the ownership, management, operation or
control of, engage in or be connected with or have any interest
in, any person, firm, corporation, limited liability company,
partnership, or other business entity (whether as a stockholder,
member, agent, security holder, creditor, independent
contractor, consultant, or otherwise) that engages in any
restaurant business activity which is the same as, similar to,
or competitive with, the business currently engaged in by Buyer
or Seller within thirty (30) miles of any Restaurant (each a
"Location"). If any of the provisions of this paragraph is held
to be unenforceable because of the scope, duration or area of
its applicability, the court or arbitrator making such
determination shall have the power to modify such scope,
duration or area so that this covenant shall remain enforceable,
and such provision shall then be applicable in modified form.
(b) Seller acknowledges and understands that the
covenants contained in this Section 4.10 shall be construed as a
series of separate covenants, one for each Location. Except for
geographic coverage, each such separate covenant shall be deemed
identical in terms to the covenants contained in this Section
4.10. If, in any judicial proceeding, a court shall refuse to
enforce any of the separate covenants deemed included in this
section, then such unenforceable covenant shall be deemed
eliminated from these provisions for the purpose of those
proceedings to the extent necessary to enable the remaining
separate covenants to be enforced.
(c) Seller expressly agrees that Buyer shall be entitled
to injunctive and/or other equitable relief to prevent a breach
by Seller of this covenant and to secure the enforcement of the
terms and conditions herein in addition to any other legal or
equitable remedy which may be available. This Section 4.10
shall survive the closing for a period of five (5) years from
the Closing Date.
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Section 4.11 No Negotiations, etc. Seller shall not
directly or indirectly, through any officer, director, agent or
otherwise, solicit, initiate or encourage submission of any
proposal or offer from any person or entity (including any of
its or their officers or employees) relating to any liquidation,
dissolution, recapitalization, merger, consolidation or
acquisition or purchase of all or a material portion of the
assets of, or any equity interest in, Seller or other similar
transaction or business combination involving Seller or, unless
Seller's Board of Directors is advised by Seller's outside
counsel in writing to the effect that there would be a material
risk of liability on the part of the members of Seller's Board
of Directors to Seller's shareholders for failure to do so,
participate in any negotiations regarding, or furnish to any
other person any information with respect to, or otherwise
cooperate in any way with, or assist or participate in,
facilitate or encourage, any effort or attempt by any other
person or entity to do or seek any of the foregoing. Seller
shall promptly notify Buyer if any such proposal or offer, or
any inquiry from or contact with any person with respect
thereto, is made and shall promptly provide Buyer with such
information regarding such proposal, offer, inquiry or contact
as Buyer may request.
ARTICLE V: COVENANTS OF THE BUYER
Section 5.1 Investigation by Buyer. Buyer shall have
until the date which is thirty (30) days after the date of this
Agreement (the "Diligence Period") to complete its due
diligence investigation ("Review") of Seller, the Restaurants
and the Assets. Upon Buyer's request, Buyer shall be given
reasonable access to Seller's management personnel associated
with the Restaurants, which access shall be coordinated through
and arranged by Seller. Buyer shall conduct its Review at such
times and in such a manner as to minimize any disruption to the
operation of the Restaurants. Buyer shall identify any Assets
which are not in good serviceable or working condition, ordinary
wear and tear excepted, and Seller shall repair or replace such
Assets prior to the Closing Date. Seller shall furnish to Buyer
any additional financial and operating data and other
information as Buyer and its counsel, accountants, and other
authorized representatives shall from time to time reasonably
request with respect to the same. Until the conclusion of the
Diligence Period, Buyer shall have the right, in its sole
discretion, to terminate this Agreement if the Review reveals
any information that would have a material adverse effect on
Buyer's ability to consummate the Acquisition, Seller, the
Restaurants or the Assets which cannot be reasonably cured by
the Closing. For purposes of this Agreement, "material adverse
effect" shall be defined as an effect that prevents Buyer,
through no fault of Buyer, from having the ability to operate
the Restaurants in a profitable manner consistent with Seller's
operations thereof prior to the Closing Date.
Section 5.2 Regulatory Filings.
(a) As promptly as practicable after the conclusion
of the Diligence Period, Buyer shall make or cause to be made
26
all filings and submissions under the HSR Act and any other laws
or regulations applicable to Buyer for the consummation of the
transactions contemplated herein. Buyer will coordinate and
cooperate with Seller in exchanging such information, will not
make any such filing without providing to Seller a final copy
thereof for its review and consent at least two full business
days in advance of the proposed filing and will provide such
reasonable assistance as Seller may request in connection with
all of the foregoing.
(b) Upon execution of this Agreement, Seller shall
promptly prepare and file with the Securities and Exchange
Commission an Information Statement under the Exchange Act
describing the transactions contemplated by this Agreement.
Buyer will cooperate with Seller in providing information
necessary or appropriate to be included in the Information
Statement and Seller will keep Buyer advised as to the progress
of the review by the Securities and Exchange Commission.
Following completion of the review by the Securities and
Exchange Commission, Seller shall promptly mail the Information
Statement to its shareholders so that the shareholders may
approve the transactions contemplated by this Agreement.
Section 5.3 Conditions. Buyer shall take all
commercially reasonable actions necessary or desirable to cause
the conditions set forth in Article VII to be satisfied and to
consummate the transactions contemplated herein as soon as
reasonably possible after the satisfaction thereof (but in any
event within three business days of such date).
ARTICLE VI. CONDITIONS TO THE BUYER'S OBLIGATION
Section 6.1 Conditions to Buyer's Obligation. The
obligation of Buyer to consummate the transactions contemplated
by this Agreement is subject to the satisfaction of the
following conditions on or before the Closing Date (unless a
shorter time is provided):
(a) The representations and warranties set forth in
Article II hereof shall be true and correct in all material
respects at and as of the Closing Date as though then made and
as though the Closing Date had been substituted for the date of
this Agreement throughout such representations and warranties
(without taking into account any disclosures by Seller of
discoveries, events or occurrences arising on or after the date
hereof), except that any such representation or warranty made as
of a specified date (other than the date hereof) shall only need
to have been true on and as of such date;
(b) Seller shall have performed in all material
respects all of the covenants and agreements required to be
performed and complied with by it under this Agreement prior to
the Closing;
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(c) Seller shall have assigned to Buyer the
agreements and permits specified in Schedule 2.9(b) attached
hereto to the extent they are assignable;
(d) Seller shall have obtained, or caused to be
obtained, each consent and approval necessary in order that the
transactions contemplated herein not constitute a breach or
violation of, or result in a right of termination or
acceleration of, or creation of any encumbrance on any of the
Assets pursuant to the provisions of, any agreement, arrangement
or undertaking of or affecting Seller or any license, franchise
or permit of or affecting Seller, regardless of whether assigned
to Seller pursuant to Section 1.3 hereof;
(e) Seller's shareholders shall have approved this
Agreement and the transactions contemplated hereby;
(f) The applicable waiting periods under the HSR Act
shall have expired or been terminated, and all other material
governmental filings, authorizations and approvals that are
required for the consummation of the transactions contemplated
hereby will have been duly made and obtained;
(g) There shall not be threatened, instituted or
pending any action or proceeding, before any court or
governmental authority or agency, domestic or foreign, (i)
challenging or seeking to make illegal, or to delay or otherwise
directly or indirectly restrain or prohibit, the consummation
of the transactions contemplated hereby or seeking to obtain
material damages in connection with such transactions, (ii)
seeking to prohibit direct or indirect ownership or operation by
Buyer of all or a material portion of the Assets, or to compel
Buyer or any of its subsidiaries to dispose of or to hold
separately all or a material portion of the business or assets
of Buyer and its subsidiaries, as a result of the transactions
contemplated hereby, (iii) seeking to invalidate or render
unenforceable any material provision of this Agreement or (iv)
otherwise relating to and materially adversely affecting the
transactions contemplated hereby;
(h) There shall not be any action taken, or any
statute, rule, regulation, judgment, order or injunction
enacted, entered, enforced, promulgated, issued or deemed
applicable to the transactions contemplated hereby by any
federal, state or foreign court, government or governmental
authority or agency, which would reasonably be expected to
result, directly or indirectly, in any of the consequences
referred to in subsection (g) above;
(i) Buyer shall not have discovered any fact or
circumstance existing as of the date of this Agreement which has
not been disclosed to Buyer as of the date of this Agreement
regarding the Restaurants or Assets, which is, individually or
in the aggregate with other such facts and circumstances,
materially adverse to the value of the Assets or the
Restaurants, as determined by the Buyer in its reasonable
discretion;
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(j) There shall have been no damage, destruction or
loss of or to any of the Assets, whether or not covered by
insurance, which, in the aggregate, has, or would be reasonably
likely to have, a material adverse effect on the Assets or the
Restaurants;
(k) Buyer shall have received from counsel for Seller
a written opinion, dated as of the Closing Date, addressed to
Buyer and satisfactory to Buyer's counsel, in form and substance
substantially as set forth in Exhibit A attached hereto;
(l) By the conclusion of the Diligence Period, Buyer
shall have received a commitment for financing (a "Financing
Commitment") in an amount sufficient to enable Buyer to
consummate the transactions contemplated by this Agreement;
(m) On the Closing Date, Seller shall have delivered
to Buyer all of the following:
(i) an executed Xxxx of Sale and such other
instruments of conveyance, transfer, assignment and
delivery as Buyer shall reasonably request;
(ii) appropriate assignment documents assigning
Seller's right, title and interest in and to the Real
Property Leases and Contracts to Buyer;
(iii) special warranty deed for each parcel of
Real Property transferring the Real Property to Buyer;
(iv) certificates of the officers of Seller or
other persons satisfactory to Buyer in form and substance
satisfactory to Buyer, dated the Closing Date and stating
that the conditions precedent set forth in subsections (a)
and (b) above have been satisfied;
(v) copies of the third party and governmental
consents and approvals referred to in subsections (c) and
(d) above.;
(vi) estoppel certificates from each lessor
under the Real Property Leases, dated the Closing Date,
stating that Seller is in compliance with all terms of the
Real Property Leases and containing such other information
as Buyer shall reasonably request;
(vii) each of the Real Property Leases shall have
a minimum of fifteen (15) years remaining, including
options;
(viii) the aggregate annual rent under all Real
Property Leases shall not exceed $1,300,000.00, and contain
provisions limiting increases in rent such that the
29
aggregate annual rent under all Real Property Leases does
not escalate in excess of two percent (2.0%) annually over
the life of the Lease (including options);
(ix) a copy of the text of the resolutions
adopted by the Board of Directors and shareholders of
Seller authorizing the execution, delivery and performance
of this Agreement and the consummation of all of the
transactions contemplated by this Agreement; along with a
certificate executed on behalf of Seller, by its corporate
secretary certifying to Buyer that such copy is a true,
correct and complete copy of such resolutions, and that
such resolutions were duly adopted and have not been
amended or rescinded;
(x) incumbency certificates executed on behalf
of Seller by its corporate secretary certifying the
signature and office of each officer executing this
Agreement or any of the Related Agreements;
(xi) Seller shall have completed conversion of
the Ryan's Restaurant located at 0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, X., Xxxxxxxxxxxx, Xxxxxxx, into a WJ Restaurant
(which restaurant shall be deemed a "Restaurant" for
purposes of this Agreement); and
(xii) such other certificates, documents and
instruments as Buyer reasonably requests related to the
transactions contemplated hereby.
ARTICLE VII. CONDITIONS TO THE SELLER'S OBLIGATIONS
Section 7.1 Conditions to Seller's Obligation. The
obligation of Seller to consummate the transactions contemplated
by this Agreement is subject to the satisfaction, on or prior to
the Closing Date, of the following conditions:
(a) The representations and warranties set forth in
Article III hereof will be true and correct in all material
respects at and as of the Closing as though then made and as
though the Closing Date had been substituted for the date of
this Agreement throughout such representations and warranties,
except that any such representation or warranty made as of a
specified date (other than the date hereof) shall only need to
have been true on and as of such date;
(b) Buyer shall have performed in all material
respects all the covenants and agreements required to be
performed by it under this Agreement prior to the Closing;
(c) The applicable waiting periods under the HSR Act
shall have expired or been terminated and all other material
30
governmental filings, authorizations and approvals that are
required for the consummation of the transactions contemplated
hereby will have been duly made and obtained;
(d) Seller shall receive the requisite approval of
its shareholders with respect to the transaction contemplated by
this Agreement;
(e) There shall not be threatened, instituted or
pending any action or proceeding, before any court or
governmental authority or agency, domestic or foreign, (i)
challenging or seeking to make illegal, or to delay or otherwise
directly or indirectly restrain or prohibit, the consummation
of the transactions contemplated hereby or seeking to obtain
material damages in connection with such transactions, (ii)
seeking to invalidate or render unenforceable any material
provision of this Agreement, or (iii) otherwise relating to and
materially adversely affecting the transactions contemplated
hereby;
(f) There shall not be any action taken, or any
statute, rule, regulation, judgment, order or injunction,
enacted, entered, enforced, promulgated, issued or deemed
applicable to the transactions contemplated hereby by any
federal, state or foreign court, government or governmental
authority or agency, which would reasonably be expected to
result, directly or indirectly, in any of the consequences
referred to in subsection (d) above;
(g) Seller shall have received from counsel for
Buyer a written opinion, dated as of the Closing Date, addressed
to Seller and satisfactory to Seller's counsel, in form and
substance substantially as set forth in Exhibit B attached
hereto; and
(h) On the Closing Date, Buyer will have delivered
to Seller:
(i) a wire transfer in immediately available
funds in the amount described in Sections 1.5(b)(i), (ii)
and (iii);
(ii) the executed Note;
(iii) a certificate of the appropriate officer(s)
of Buyer in form and substance satisfactory to Seller,
dated the Closing Date, stating that the conditions
precedent set forth in subsections (a) and (b) above have
been satisfied,
(iv) appropriate assignment documents assuming
Seller's obligations under the Real Property Leases and
Contracts;
(v) a copy of the text of the resolutions adopted
by the Board of Managers of Buyer authorizing the
31
execution, delivery and performance of this Agreement
and the consummation of all of the transactions
contemplated by this Agreement, along with a certificate
executed on behalf of Buyer by its corporate secretary
certifying to Seller that such copy is a true, correct and
complete copy of such resolutions, and that such
resolutions were duly adopted and have not been amended or
rescinded, and
(vi) an incumbency certificate executed on
behalf of Buyer by its corporate secretary certifying the
signature and office of each officer executing this
Agreement or any of the Related Agreements.
(i) Seller shall have obtained landlords' consents
to the assignment of the Real Estate Leases.
(j) Seller shall have received an opinion from its
investment adviser that the consideration to be received by the
Seller in the transactions contemplated by the Agreement is
fair, from a financial point of view.
ARTICLE VIII. THE CLOSING
Section 8.1 Time and Place of Closing. The closing of
the transactions contemplated by this Agreement (the "Closing")
shall take place at the offices of McGuireWoods LLP, Bank of
America Tower, 00 Xxxxx Xxxxx Xxxxxx, Xxx 0000, Xxxxxxxxxxxx,
Xxxxxxx, at 10:00 a.m. (local time) on or prior to April 18,
2005 (such date the "Closing Date"), or on such other date and
time as mutually agreed upon by the parties.
ARTICLE IX. TITLE MATTERS
Section 9.1 Title Commitments and Objections.
(a) Seller will, at its expense, within twenty (20)
days from the date hereof, deliver commitments for title
insurance (collectively, the "Title Commitments") to Buyer,
together with copies of all exceptions to title (collectively,
the "Title Exceptions") appearing in Schedule B of each of the
Title Commitments, whereby the Title Company agrees to issue to
Buyer an owner's policy of title insurance, including
endorsements for access, survey and such other endorsements as
Buyer deems reasonably necessary (individually, an "Owner's
Policy," and collectively, the "Owners' Policies") with respect
to each parcel of Real Property and a leasehold owner's policy
of title insurance, including endorsements for access, survey
and such other endorsements as Buyer deems reasonably necessary
(individually, a "Leasehold Owner's Policy," and collectively,
the "Leasehold Owners' Policies") ("Owners' Policies" and
"Leasehold Owners' Policies" collectively referred to herein as
"Title Policies") with respect to each Leased Parcel on American
Land Title Association standard Form B10-17-92 with Florida
32
modifications. The Owners' Policies will insure the Buyer that,
upon consummation of the purchase and sale herein contemplated,
Buyer will be vested with good, fee simple, marketable and
insurable title to the Real Property. The Leasehold Owners'
Policies will insure the Buyer that, upon consummation of the
transactions herein contemplated, Buyer will be vested with
good, valid and insurable leasehold estates in and to the Leased
Parcels. Buyer, shall, at its expense obtain any mortgagee's
title insurance policies which may be required by Buyer's
lenders.
(b) Notwithstanding the time limit prescribed by
Section 5.1, Buyer shall have twenty (20) days from the date of
its receipt of the last to be received of the: (i) Title
Commitments and the Title Exceptions; or (ii) the Surveys (the
"Title Inspection Period") to furnish Seller a written statement
of title and survey objections ("Title Objections"). Seller
shall have until April 13, 2005 ("Title Objection Cure Date") to
satisfy such Objections (but with no obligation to do so), and
if Seller fails to satisfy all Objections on or prior to the
Title Objection Cure Date, then Buyer's sole right and remedy
shall be to either (i) waive the objections and elect to close,
or (ii) terminate this Agreement by giving written notice of
such termination to Seller within five (5) days after the Title
Objection Cure Date. Buyer will be deemed to have waived its
right to terminate due to the Objections if no such notice of
termination is so given to Seller.
Section 9.2 Surveys, Plans and Permits. Seller shall, at
its expense, within thirty (30) days after the date hereof,
furnish to Buyer or to Buyer's permitted assigns, a current ALTA
survey of each parcel of Real Property and Leased Parcels (the
"Surveys") and copies of any and all drawings and plans of the
buildings, structures, improvements, underground storage tanks
and piping installations located on the Real Property and Leased
Parcels to the extent the same are in Seller's possession.
Seller shall provide to Buyer copies of the building permits,
certificates of occupancy and all other material permits and
certificates issued by any governmental organizations or
agencies which relate to the construction, occupancy or use of
the Real Property and Leased Parcels and the buildings and
improvements located thereon.
Section 9.3 Tests and Studies. Buyer and its employees
and representatives shall have the right at reasonable times to
enter upon the Real Property and Leased Parcels, and into the
buildings and improvements thereon, for the purpose of
inspecting the physical condition of the respective buildings
and improvements. Buyer shall, at Buyer's expense, also have
the right to conduct an asbestos inspection other tests or
inspections on the Real Property and Leased Parcels. All such
tests or inspections shall be at Buyer's sole expense and
conducted by persons acceptable to Buyer. Buyer shall give
Seller reasonable advance notice of the time of all such tests
and inspections, and Seller shall have the right to be present
during such tests.
Section 9.4 Buyer's Duty as to Tests and Inspections.
All tests, studies, inspections and examinations conducted
33
pursuant to this Agreement by Buyer, Buyer's employees, agents
and representatives shall be done in a manner so as not to
unreasonably impede the normal operation of the Business or
unreasonably interfere with Seller's occupancy of same. Buyer
shall reimburse Seller for any damages arising from the conduct
of any such tests, studies, inspections or examinations by or on
behalf of Buyer and caused solely by the negligence or
misconduct of Buyer or its agents; but Buyer shall not be liable
for any consequential damages of such tests. Buyer agrees to
indemnify Seller for any loss, cost, damage or expense incurred
by Seller as a result of Buyer's tests or inspections.
Section 9.5 Environmental Reports. Seller shall, within
thirty (30) days after the date hereof, furnish to Buyer or to
Buyer's permitted assigns, copies of all environmental reports
pertaining to the Real Property and the Leased Parcels (the
"Environmental Reports") in Seller's possession as of the date
of this Agreement (the "Environmental Reports"). Seller shall
provide Buyer or Buyer's permitted assigns, copies of all
Environmental Reports received after the date of this Agreement
immediately after such reports have been delivered to Seller.
Seller shall have no duty to order new or additional
Environmental Reports and Seller makes no representation as to
the accuracy of Environmental Reports delivered.
ARTICLE X. SURVIVAL; INDEMNIFICATION
Section 10.1 Survival. All representations, warranties,
and covenants contained in this Agreement and the Ancillary
Agreements shall survive the closing of the transactions
contemplated by this Agreement and any investigation at any time
made by or on behalf of any party for a period of eleven (11)
months, except that the covenant not to compete described in
Section 4.10 shall survive the closing of the transactions
contemplated by this Agreement and for a period of five (5)
years thereafter.
Section 10.2 Indemnification by Seller. Seller shall
indemnify, defend, and hold Buyer and the respective officers,
directors, shareholders, members, managers, employees and agents
of Buyer, and their successors and assignees (the "Buyer
Indemnified Parties") harmless from, against and with respect to
any claim, liability, obligation, loss, damage, assessment,
judgment, legal fee, cost and expense of any kind or character
("Damages"), arising out of or in any manner incident, relating
or attributable to:
(a) Any material inaccuracy in any representation or
material breach of any material warranty of Seller contained in
this Agreement;
34
(b) Any failure by Seller to perform or observe, or
to have performed or observed, in full any covenant, agreement
or condition to be performed or observed by it under this
Agreement;
(c) Reliance by Buyer on any books or records of
Seller or written information prepared by Seller in the event
that such books and records or written information are false in
some material respect or materially inaccurate;
(d) Liabilities or obligations of, or claims
against, Buyer (whether absolute, accrued, contingent or
otherwise) relating to, or arising out of, the operation of the
Restaurants or the Assets prior to the Closing Date (excluding
any liabilities assumed pursuant to Section 1.3 hereof); or
(e) Claims of employees of Seller, general creditor
claims, vendor claims, product liability, warranty refund or
customer injury or damage claims arising out of or in any way
relating to circumstances existing or events occurring prior to
the Closing Date, but asserted after the Closing Date.
Notwithstanding the foregoing, Seller shall not be
obligated to indemnify any Buyer Indemnified Party under this
Section 10.2 until Damages exceed Twenty-five Thousand Dollars
and No/100 ($25,000) and then only to the extent of aggregated
Damages in excess of Twenty-five Thousand Dollars and No/100
($25,000). Damages are to be calculated separate from the
Purchase Price and not to be an addition to or deduction from
the disbursement of the Purchase Price.
Section 10.3 Notice to Seller. If any of the matters as
to which a Buyer Indemnified Party is entitled to receive
indemnification under Section 10.2 should entail litigation with
or claims asserted by parties other than Seller, Seller shall be
given prompt notice thereof and shall have the right, at its
expense, to control such claim or litigation upon prompt notice
to Buyer of its election to do so. To the extent requested by
Seller, Buyer shall cooperate with and assist Seller in
connection with such claim or litigation. Buyer shall have the
right to appoint counsel to consult with and remain advised by
Seller in connection with such claim or litigation. Seller shall
have final authority to determine all matters in connection with
such claim or litigation; provided, however, that Seller shall
not settle any third party claim without the consent of Buyer,
which shall not be unreasonably denied or delayed.
Section 10.4 Indemnification by Buyer. Buyer shall
indemnify, defend, and hold Seller and its successors and
assigns (the "Seller Indemnified Parties") harmless from,
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against and with respect to any Damages arising out of or in any
manner incident, relating or attributable to:
(a) Any material inaccuracy in any material
representation or material breach of material warranty of Buyer
contained in this Agreement;
(b) Any material failure by Buyer to perform or
observe, or to have performed or observed, in full, any material
covenant, material agreement or material condition to be
performed or observed by it under any of the Ancillary
Agreements;
(c) Reliance by Seller on any books or records of
Buyer or reliance by Seller on any written information furnished
to Seller pursuant to this Agreement by or on behalf of Buyer in
the event that such books and records or written information are
false in some material respect or inaccurate; or
(d) The failure of Buyer to pay or perform the
Contracts, Real Property Leases and other liabilities assumed
pursuant to Section 1.3 hereof subsequent to the Closing Date.
(e) Notwithstanding the foregoing, Buyer shall not
be obligated to indemnify any Seller Indemnified Party under
this Section 10.4 until Damages exceed One Thousand Dollars and
No/100 ($1,000) and then only to the extent of aggregated
Damages in excess of One Thousand Dollars and No/100 ($1,000).
Section 10.5 Notice to the Buyer. If any of the matters
as to which a Seller Indemnified Party is entitled to receive
indemnification under Section 10.4 should entail litigation with
or claims asserted by parties other than Buyer, Buyer shall be
given prompt notice thereof and shall have the right, at its
expense, to control claim or litigation upon prompt notice to
Seller of its election to do so. To the extent requested by
Buyer, Seller, at its expense, shall cooperate with and assist
Buyer, in connection with such claim or litigation. Seller shall
have the right to appoint counsel to consult with and remain
advised by Buyer in connection with such claim or litigation.
Buyer shall have final authority to determine all matters in
connection with such claim or litigation; provided, however,
that Buyer shall not settle any third party claim without the
consent of Seller entitled to indemnity, which shall not be
unreasonably denied or delayed.
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ARTICLE XI. TERMINATION
Section 11.1 Termination. This Agreement may be
terminated at any time prior to the Closing:
(a) by the mutual consent of Buyer and Seller;
(b) by either Buyer or Seller if there has been a
material misrepresentation, breach of warranty or breach of
covenant on the part of the other in the representations,
warranties and covenants set forth in this Agreement;
(c) by either Buyer or Seller if the transactions
contemplated hereby have not been consummated by May 31, 2005;
provided that, neither Buyer nor Seller will be entitled to
terminate this Agreement pursuant to this Section 11.1(c) if
such party's willful breach of this Agreement has prevented the
consummation of the transactions contemplated hereby;
(d) by Buyer if, after the conclusion of the
Diligence Review, there shall have been a material adverse
change in the financial condition or business of the Restaurants
or Assets which change was not reasonably foreseeable during the
Diligence Review; or
(e) by Buyer at any time, if any of the Schedules
prepared by Seller and delivered to Buyer after execution of the
Agreement reveals any information not previously disclosed to
Buyer that would have a "material adverse effect" (as defined in
Section 5.1) on Buyer's ability to consummate the Acquisition or
operate the Restaurants in a profitable manner consistent with
Seller's operations thereof prior to the Closing Date;
(f) by Buyer as provided in Section 5.1; or
(g) by Seller if Buyer fails to obtain a Financing
Commitment by the conclusion of the Diligence Period.
Section 11.2 Effect of Termination. In the event of
termination of this Agreement by either Buyer or Seller as
provided in Section 11.1, the Deposit shall be returned to Buyer
and this Agreement shall become void and there shall be no
liability on the part of either Buyer or Seller, or their
respective stockholders, officers, or directors, except that
Articles X and XI shall survive indefinitely, and except with
respect to willful breaches of this Agreement prior to the time
of such termination, and except for termination pursuant to
Section 11.1(g), Buyer shall be entitled to retain of one-half
(1/2) of the Deposit.
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ARTICLE XII. MISCELLANEOUS
Section 12.1 Knowledge of Seller. Where any
representation or warranty contained in this Agreement is
expressly qualified by reference to "Seller's knowledge",
"Seller's knowledge" shall mean the actual knowledge of its
board of directors or officers of Seller, or the knowledge they
should have acquired in the prudent and reasonable exercise of
their duties as to the matters that are the subject of such
representations and warranties.
Section 12.2 "Person" Defined. "Person" shall mean and
include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a
government or other department or agency thereof.
Section 12.3 Notices. All notices, requests, consents
and other communications hereunder shall be in writing, shall be
addressed to the receiving party's address set forth below or to
such other addresses as a party may designate by notice
hereunder, and shall be either (i) delivered by hand, (ii) sent
by recognized overnight courier, (iii) sent by registered or
certified mail, return receipt requested, postage prepaid, or
(iv) sent via facsimile with confirmation of receipt.
If to the Buyer: Banner Buffets, LLC
1000 X. Xxxxxxx, Ste. 000
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxx
Facsimile No. (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxx XX, Esq.
XXXXX XXXXXX & XXXXX PLC
000 Xxxxx Xxxxxx
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxx, XX 00000-0000
Facsimile No. (000) 000-0000
Xxxxxxx X. Xxxxxx, Esq.
XXXXX XXXXXX, P.A.
0000 Xxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxxxxx, XX 00000
Facsimile No. (000) 000-0000
38
If to the Seller: EACO Corporation
Xx. Xxxx X. Xxxxxx, Chairman
0000 X. Xxxxxxxx Xxx.
Xxxxxxx, XX 00000
Facsimile No. (000) 000-0000
With a copy to: Halcyon X. Xxxxxxx, Esq.
McGuireWoods LLP
Bank of America Tower
00 Xxxxx Xxxxx Xxxxxx, Xxx. 0000
Xxxxxxxxxxxx, XX 00000-0000
Facsimile No. (000)000-0000
All notices, requests, consents and other communications
hereunder shall be deemed to have been given (i) if by hand, at
the time of the delivery thereof to the receiving party at the
address of such party set forth above, (ii) if sent by overnight
courier, on the next business day following the day such notice
is delivered to the courier service, or (iii) if sent by
registered or certified mail, on the fifth business day
following the day such mailing is sent. The address of any party
herein may be changed at any time by written notice to the
parties.
Section 12.4 Entire Agreement. This Agreement and the
Ancillary Agreements embody the entire agreement and
understanding between the parties hereto with respect to the
subject matter hereof and supersede all prior oral or written
agreements and understandings relating to the subject matter
hereof. No statement, representation, warranty, covenant or
agreement of any kind not expressly set forth in the Ancillary
Agreements shall affect, or be used to interpret, change or
restrict, the express terms and provisions of this Agreement.
Section 12.5 Modification and Amendments. The terms and
provisions for this Agreement may be modified or amended only by
written agreement executed by all parties hereto.
Section 12.6 Assignment/Binding Effect. Seller shall not
assign this Agreement, nor any rights or obligations hereunder,
without the prior written consent of Buyer. Buyer shall be
permitted to assign its rights and obligations hereunder to its
39
subsidiaries or affiliated entities, and shall be permitted to
assign its obligation to purchase the Real Property and rights
attendant therewith under this Agreement to a third party,
without the consent of Seller. This Agreement shall be binding
upon, and inure to the benefit of, the parties hereto and their
respective heirs, personal representatives, successors and
permitted assigns.
Section 12.7 Parties in Interest. Nothing in this
Agreement, express or implied, is intended to confer upon any
other person any rights or remedies of any nature whatsoever
under or by reason of this Agreement. Nothing in this Agreement
shall be construed to create any rights or obligations except
among the parties hereto, and no person or entity shall be
regarded as a third-party beneficiary of this Agreement.
Section 12.8 Governing Law. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF FLORIDA WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLE THEREOF.
Section 12.9 Severability. In the event that any
arbitrator shall finally determine that any provision, or any
portion thereof, contained in this Agreement shall be void or
unenforceable in any respect, then such provision shall be
deemed limited to the extent that such arbitrator determines it
enforceable, and as so limited shall remain in full force and
effect. In the event that such arbitrator shall determine any
such provision, or portion thereof, wholly unenforceable, the
remaining provisions of this Agreement shall nevertheless remain
in full force and effect.
Section 12.10 Interpretation. The parties hereto
acknowledge and agree that: (i) the rule of construction to the
effect that any ambiguities are resolved against the drafting
party shall not be employed in the interpretation of this
Agreement, and (ii) the terms and provisions of this Agreement
shall be construed fairly as to all parties hereto and not in
favor of or against any party, regardless of which party was
generally responsible for the preparation of this Agreement.
Section 12.11 Headings and Captions. The headings and
captions of the various subdivisions of this Agreement are for
convenience of reference only and shall in no way modify, or
affect, or be considered in construing or interpreting the
meaning or construction of any of the terms or provisions
hereof.
Section 12.12 Reliance. The parties hereto agree that,
notwithstanding any right of any party to the Agreement to
investigate the affairs of any other party of this Agreement,
the party having such right to investigate shall have the right
to rely fully upon the representations and warranties of the
other party expressly contained herein.
40
Section 12.13 Expenses. Except as otherwise
specifically provided herein, each party shall pay its own fees
and expenses (including the fees of any attorneys, accountants,
appraisers or others engaged by such party) incurred in
connection with this Agreement and the transactions contemplated
hereby whether or not the transaction contemplated hereby are
consummated.
Section 12.14 Gender. All pronouns and any variation
thereof shall be deemed to refer to the masculine, feminine,
neuter, singular, or plural as the identity of the person or
entity or the context may require.
Section 12.15 Publicity. Except by the mutual agreement
between Seller and Buyer, no party shall issue any press release
or otherwise make any public statement with respect to the
execution of, or the transactions contemplated by, this
Agreement except as may be required by law.
Section 12.16 Counterparts. This Agreement may be
executed in one or more counterparts, and by different parties
hereto on separate counterparts, each of which shall be deemed
an original, but all of which together shall constitute one and
the same instrument.
Section 12.17 Further Assurances. Seller and Buyer
shall execute and deliver all such other instruments and take
all such other action as any party may reasonably request from
time to time, before or after the Closing, in order to
effectuate the transactions provided for herein. The parties
shall cooperate with each other and with their respective
counsel and accountants in connection with any steps to be taken
as a part of their respective obligations under this Agreement.
IN WITNESS WHEREOF, Buyer and Seller have each caused this
Agreement to be executed by its duly authorized officer all as
of the day and year first above written.
BUYER: BANNER BUFFETS, LLC
By:_________________________________
Xxxxxx X. Xxxxxx, Authorized Member
SELLER: EACO CORPORATION
By:_________________________________
Xxxx X. Xxxxxx, Chairman
41
SCHEDULE 1
RESTAURANTS
Florida Buffet #108 Florida Buffet #127
0000 X. Xxxxxx Xxxxxxx Xxxx. 0000 XX Xxxxxxx 00X
Xxxxx, XX 00000 Xxxx Xxxx, XX 00000
Fee Property Fee Property
Ryan's #000 Xxxxxxx Xxxxxxxx #000
0000 Xxxxxxxx Xxxxx Xxxx. 00000 Xxxxxx Xxxx.
Xxxxxxxx, XX 00000 Xxxxxxxxxxx, XX 00000
Fee Property Leased Property
Florida Buffet #000 Xxxxxxx Xxxxxxxx #000
0000 XX Xxxxxxx 00 Xxxxx 000 X. Xxxxxxxxxxxxx Xxxxxxxx Xxxx.
Xxxxxxxx, XX 00000 Xxxxxx, XX 00000
Fee Property Leased Property
Ryan's #112 Ryan's #134
0000 Xxxx Xxxxxx Xx. 0000 00xx Xx.
Xxxxxx Xxxxx, XX 00000 Xx. Xxxxx, XX 00000
Fee Property Fee Property
Florida Buffet #113 Ryan's #135
0000 X. Xxxx Xx. 0000 Xxxxxxxx Xxxx.
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX00000
Fee Property Fee Property
Ryan's #119 Ryan's #136
0000 X. Xxxxxxxxx Xxx. 0000 Xxxxxxx Xx. Xxxx. X.
Xxxxxxx Xxxxx, XX 00000 Xxxxxxxxxxxx, XX 00000
Fee Property Fee Property
Ryan's #000 Xxxxxxx Xxxxxxxx #000
0000 Xxxxxxxxxxxxxxx Tr. 0000 Xxxxxx Xxx.
Xxxxxxx, XX 00000 Xxxxx, XX 00000
Fee Property Leased Property
Florida Buffet #000 Xxxxxxx Xxxxxxxx #000
3299 X. Xxxxxxx St. 0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000 Xxxxxxx, XX 00000
Fee Property Leased Property
42
