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RIO BRAVO INTERNATIONAL, INC.,
INNOVATIVE RESTAURANT CONCEPTS, INC.,
SUMMIT RESTAURANTS, INC.,
AND
SPECIALTY RESTAURANT DEVELOPMENT, L.L.C.
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ASSET PURCHASE AGREEMENT
February 8, 1999
TABLE OF CONTENTS
Page
ARTICLE I PURCHASE AND SALE OF ASSETS.................................................... 1
Section 1.1 Assets......................................................................... 1
Section 1.2 Excluded Assets................................................................ 2
ARTICLE II PURCHASE PRICE OF ASSETS....................................................... 2
Section 2.1 Purchase Price................................................................. 2
Section 2.2 Form of Payment................................................................ 2
Section 2.3 Statement of Reimbursements and Purchase Price Adjustments..................... 2
Section 2.4 Obligations Assumed by Buyer................................................... 2
Section 2.5 Obligations Satisfied by Seller................................................ 3
Section 2.6 Allocation of Purchase Price................................................... 3
ARTICLE III CLOSING........................................................................ 3
Section 3.1 Date, Time and Place of Closing................................................ 3
Section 3.2 Deliveries by Seller at Closing................................................ 4
Section 3.3 Deliveries by Buyer at Closing................................................. 4
Section 3.4 Transfer of Operations; Risk of Loss........................................... 5
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLER
AND RIO..........................................................................5
Section 4.1 Existence...................................................................... 5
Section 4.2 Power and Authority............................................................ 5
Section 4.3 Execution and Delivery Permitted............................................... 5
Section 4.4 Litigation..................................................................... 5
Section 4.5 Restaurant Locations........................................................... 5
Section 4.6 Year 2000 Issues............................................................... 6
Section 4.7 Contracts...................................................................... 6
Section 4.8 Payment of Obligations......................................................... 6
Section 4.9 Permits........................................................................ 6
Section 4.10 Title to Assets................................................................ 7
ARTICLE V COVENANTS OF SELLER............................................................ 7
Section 5.1 Conduct of Business............................................................ 7
Section 5.2 Agreements Respecting Employees of Seller...................................... 7
Section 5.3 Access to Information and Properties........................................... 8
Section 5.4 No Sale Negotiations........................................................... 8
Section 5.5 Inspections; No Warranty....................................................... 8
Section 5.6 Surveys and Environmental Assessments.......................................... 8
Section 5.7 Nonsolicitation; Nonhiring..................................................... 9
Section 5.8 Leaseholds..................................................................... 9
Section 5.9 Point of Sale System........................................................... 9
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF BUYER........................................ 9
Section 6.1 Existence...................................................................... 9
Section 6.2 Power and Authority............................................................ 9
Section 6.3 Execution and Delivery Permitted............................................... 9
Section 6.4 Capitalization................................................................. 10
Section 6.5 Ownership...................................................................... 10
Section 6.6 Accuracy of Representations and Warranties..................................... 10
ARTICLE VII COVENANTS OF BUYER................................................................... 10
Section 7.1 Buyer's Performance............................................................ 10
Section 7.2 Confidentiality................................................................ 10
Section 7.3 Noncompetition................................................................. 10
Section 7.4 Name Change.................................................................... 11
Section 7.5 Nonsolicitation; Nonhiring..................................................... 11
ARTICLE VIII PURCHASE PRICE ADJUSTMENT; CONDITIONS TO CLOSING.....................................11
Section 8.1 Purchase Price Adjustments..................................................... 11
Section 8.2 Inventory Adjustment........................................................... 12
Section 8.3 Store Cash..................................................................... 12
Section 8.4 Gift Certificates.............................................................. 12
Section 8.5 Conditions of Seller to Closing................................................ 12
Section 8.6 Conditions of Buyer to Closing................................................. 13
ARTICLE IX INDEMNIFICATION AGAINST LOSS................................................... 14
Section 9.1 Indemnification by Buyer....................................................... 14
Section 9.2 Indemnification by Seller...................................................... 14
Section 9.3 Indemnification Procedure...................................................... 15
Section 9.4 Exclusive Remedies............................................................. 15
ARTICLE X MISCELLANEOUS.................................................................. 15
Section 10.1 Notices........................................................................ 15
Section 10.2 Applicable Law................................................................. 16
Section 10.3 Binding on Successors; Assignment.............................................. 16
Section 10.4 Payment of Costs............................................................... 16
Section 10.5 Closing Not to Prejudice Claim for Damages..................................... 17
Section 10.6 Survival of Representations, Warranties, and Covenants......................... 17
Section 10.7 Additional Documents........................................................... 17
Section 10.8 Interpretation................................................................. 17
Section 10.9 Entire Agreement............................................................... 17
Section 10.10 Counterparts................................................................... 17
Section 10.11 Termination.................................................................... 17
Section 10.12 Public Announcements........................................................... 18
LIST OF EXHIBITS AND SCHEDULES
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and entered
into this 8th day of February, 1999, by and among RIO BRAVO INTERNATIONAL, INC.,
a Kansas corporation ("Rio"), INNOVATIVE RESTAURANT CONCEPTS, INC., a Georgia
corporation ("IRC"), and SUMMIT RESTAURANTS, INC., a Georgia corporation
("Summit") (IRC and Summit are referred to herein individually and collectively
as "Seller"), and SPECIALTY RESTAURANT DEVELOPMENT, L.L.C., a Missouri limited
liability company ("Buyer").
RECITALS
A. Seller owns various items of personal property and owns or leases
interests in real property used in the operation of the restaurants identified
on Exhibit 1.1(a) to this Agreement (the "Restaurants") at the locations set
forth on Exhibit 1.1(a) (the "Restaurant Locations").
B. Seller desires to sell, and Buyer desires to purchase, such property
and interests pursuant to the terms and conditions of this Agreement.
AGREEMENT
In consideration of the premises hereof, the mutual promises made
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1 Assets. At the Closing (as defined in Section 3.1 below)
and subject to the terms and conditions set forth in this Agreement, Seller
hereby agrees to sell, transfer, convey, and assign to Buyer, and Buyer hereby
agrees to purchase and accept from Seller, free and clear of all mortgages,
liens, security interests, pledges and encumbrances, the following assets
(collectively, the "Assets"):
(a) All of Seller's right, title, and interest in and to the
Restaurant Locations, including all of Seller's interest in the
buildings, fixtures, signs, parking facilities, trash facilities,
fences, or other leasehold improvements, appurtenances, and
hereditaments located thereon;
(b) All of Seller's right, title, and interest in and to the
Real Property Leases, Material Contracts and Minor Contracts (each as
defined below and collectively referred to herein as the "Assumed
Contracts");
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(c) All of Seller's right, title and interest in and to the
equipment used in the normal and customary operations of the
Restaurants, including but not limited to the furniture, fixtures,
machinery, equipment, tables, chairs, cash registers, ovens,
refrigerators, display cases, shelves, utensils, tools, pans, lights,
uniforms, curtains, signs, menus, tablecloths, glasses, plates, dishes,
silverware, pitchers, books, cabinets, racks, towels, ornaments, bars,
and bar equipment (collectively, the "Equipment") located at the
Restaurant Locations;
(d) All personnel files in respect of the Restaurants (to
which, however, Seller will continue to have access upon request during
business hours);
(e) All of Seller's right, title, and interest in and to the
inventories of foodstuffs, beverages, paper products, cleaning supplies
and other supplies (collectively, the "Inventory") which are in the
Restaurants;
(f) All of Seller's right, title and interest in the
tradenames and registered trademarks listed on Exhibit 1.1(f) to this
Agreement; and
(g) All of Seller's other rights and property interests of any
nature which are customarily used in the operation of the Restaurants,
including but not limited to transferable licenses, rights to use
existing telephone numbers, and rights arising under equipment or other
warranties.
Section 1.2 Excluded Assets. Excluded from sale under this Agreement
are the Assets listed on Exhibit 1.2 to this Agreement.
ARTICLE II
PURCHASE PRICE OF ASSETS
Section 2.1 Purchase Price. Except as otherwise provided in Sections
8.2 and 8.3 below as to the Inventory and cash on hand in the Restaurants at
Closing, the purchase price for the Assets (the "Purchase Price") shall be
Twelve Million Dollars ($12,000,000), adjusted pursuant to Article VIII below,
and shall be paid at Closing in accordance with Section 2.2 below.
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Section 2.2 Form of Payment. At the Closing, Buyer shall pay Seller the
Purchase Price in cash, by wire transfer of funds, or in such other manner
reasonably acceptable to Seller.
Section 2.3 Statement of Reimbursements and Purchase Price Adjustments.
At the Closing, Seller shall deliver to Buyer an itemized statement of all
reimbursable costs and purchase price adjustments and prorations determined in
accordance with Article VIII below.
Section 2.4 Obligations Assumed by Buyer. In addition to the payment of
the Purchase Price, Buyer assumes and agrees to perform all of Seller's
obligations with respect to the Assumed Contracts; however, except as herein
provided, Buyer shall not assume or be responsible for (a) any liability,
indebtedness, or other obligation of Seller occurring prior to the date of
Closing or (b) any obligation under any agreements, whether written or oral,
other than the Assumed Contracts.
Section 2.5 Obligations Satisfied by Seller. Seller shall promptly pay
all trade payables, accounts payable, utility payments, and similar operating
expenses which are incurred before the date of Closing.
Furthermore, in no case shall Buyer be required to assume any obligation which:
(a) Is to be paid by Seller under Article VIII of this
Agreement;
(b) Arises from an event (including any action or inaction on
the part of Seller) occurring prior to the date of Closing which, with
notice, the passage of time, or both, would result in an event of
default occurring under any lease or agreement to which Seller is a
party;
(c) Except as set forth in Section 5.2(b), relates to any (i)
"employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, (ii) pension,
thrift or other retirement plan, (iii) life insurance or other death
benefit plan, (iv) medical, hospitalization or dental insurance;
sickness or accident insurance, disability insurance or similar plan,
or (v) any vacation, tuition reimbursement, deferred compensation,
severance or other plan, practice or custom of Seller providing
compensation or economic benefits to any current or former employee (or
beneficiary of such current or former employee) of Seller; or
(d) Any other liability of Seller not expressly assumed by
Buyer hereunder.
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Section 2.6 Allocation of Purchase Price. Buyer and Seller agree that
the Purchase Price will be allocated to the Assets (a) in a manner agreed to by
them on or prior to the date of the Closing or (b) absent such agreement, by
Seller in a reasonable manner. Such allocation shall be binding on Buyer and
Seller for all purposes, including the reporting of gain or loss and the
determination of basis for income tax purposes, and each of the parties agrees
that it will file a statement setting forth such allocation with its federal
income tax returns and take such further actions as may be necessary to comply
with the Treasury Regulations that have been promulgated pursuant to Section
1060 of the Internal Revenue Code of 1986, as amended.
ARTICLE III
CLOSING
Section 3.1 Date, Time and Place of Closing. The consummation of the
transactions contemplated hereby (the "Closing") shall be held on the third day
(or if such day is not a business day, then on the next business day following
such third day) after all conditions to Closing listed in Sections 8.5 and 8.6
have been met, beginning at 10:00 a.m. Central Standard Time, or at such other
date and time, and at such place as the parties hereto shall mutually agree;
provided, however, that by mutual agreement of the parties, the Closing may be
accomplished by delivery of the documents required to be delivered hereunder
into escrow with the release of such documents from escrow to be accomplished
pursuant to the parties' oral or written instructions. The parties acknowledge
that the targeted date of Closing is March 28, 1999 and agree to use
commercially reasonable efforts to close by such date.
Section 3.2 Deliveries by Seller at Closing. At the Closing and
thereafter as may be reasonably requested by Buyer, Seller shall convey,
transfer, assign, and deliver all of its interest in the Assets to Buyer and
shall, at its expense, also deliver to Buyer the following:
(a) Such bills of sale, assignments, lease assignments and
acceptances, consents to lease assignments (if consent to assignment is
required under the terms of an existing lease), leasehold estoppels and
other appropriate instruments of transfer as Buyer may have reasonably
requested, all in recordable form, of content reasonably acceptable to
Buyer and its counsel and sufficient to vest in Buyer title to all of
the Assets which is free and clear of all liens, security agreements,
charges, or other encumbrances;
(b) Certificates of good standing for IRC and Summit dated
within thirty (30) days of the date of the Closing from the state of
Georgia;
(c) A Cross-Receipt;
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(d) An Assignment of the tradenames listed on Exhibit 1.1(f)
in form and substance reasonably satisfactory to Buyer;
(e) A limited license to use the name "Rio Bravo" in the form
of Exhibit 3.2(e) (which Exhibit 3.2(e) will be delivered within
fifteen (15) days after execution of this Agreement);
(f) Wire transfer instructions, if any, regarding delivery of
the Purchase Price; and
(g) Assignment and acceptances of the Assumed Contracts.
Section 3.3 Deliveries by Buyer at Closing. At the Closing, Buyer
shall, at its expense, deliver to Seller the following:
(a) The Purchase Price in the amount, form, and manner
specified in Sections 2.1 and 2.2 above;
(b) Assignments and acceptances of the Assumed Contracts;
(c) Certificate of good standing for Buyer dated within thirty
(30) days of the date of the Closing from the state of Missouri;
(d) Releases of all guarantees by Xxxxxxxx'x International,
Inc. ("AII"), Rio, IRC and Summit of any lease or other obligation with
respect to the Restaurant Locations and, if required by the lessor or
other party thereto, evidence satisfactory to Seller that Xxx Xxxxxx
has agreed to guarantee such lease or other obligation; and
(e) A Cross-Receipt.
Section 3.4 Transfer of Operations; Risk of Loss. Buyer shall be
entitled to immediate possession of, and to exercise all rights arising under,
the Assets from and after the time that the Restaurants open for business on the
date of the Closing, and operation of the Restaurant Locations shall transfer at
such time (the "Effective Time"). Except as provided hereby, all profits,
losses, liabilities, claims, or injuries arising before the Effective Time shall
be solely to the benefit or the risk of Seller. All such occurrences from and
after the Effective Time shall be solely to the benefit or the risk of Buyer.
The risk of loss or damage by fire, storm, flood, theft, or other casualty or
cause shall be in all respects upon Seller prior to the Effective Time and upon
Buyer thereafter.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER AND RIO
As an inducement to Buyer to enter this Agreement and to consummate the
transactions contemplated hereby, Seller and Rio represent and warrant to Buyer
as follows:
Section 4.1 Existence. IRC and Summit are each validly existing and in
good standing under the laws of the state of Georgia.
Section 4.2 Power and Authority. Seller has the power and authority to
own its properties and assets, specifically including but not limited to the
Assets, to carry on its business as now conducted, and to convey, assign, and
transfer the Assets as set forth in this Agreement.
Section 4.3 Execution and Delivery Permitted. The execution, delivery,
and performance of this Agreement will not (a) violate or result in a breach of
any term of Seller's Articles of Incorporation or Bylaws, (b) result in a breach
of or constitute a default under any term in any material agreement or other
instrument to which it is a party, such default having not been previously
waived by the other party to any such agreement, or (c) to the best of Seller's
knowledge, violate any law or any order, rule, or regulation applicable to it,
of any court or of any regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over it or its properties. The
respective Boards of Directors of Rio, IRC and Summit and their respective
shareholders have taken (or prior to Closing will take) all action required by
law and by their Articles of Incorporation and Bylaws to authorize the execution
and delivery of this Agreement and the sale of the Assets to Buyer hereunder.
Section 4.4 Litigation. There is no action, suit, proceeding, or
investigation pending or, to the best of Seller's knowledge, threatened against
Seller which questions the validity of this Agreement or the right of Seller to
enter into this Agreement or to consummate the transactions contemplated hereby.
Section 4.5 Restaurant Locations. Seller has valid leasehold interests
in the Restaurant Locations and, to the best of Seller's knowledge, the Real
Property Leases (as defined in Section 4.7(a)) in respect of the Restaurant
Locations are valid and in full force and effect. To Seller's knowledge and
except as Xxx Xxxxxx has knowledge, no lessor of any of the Restaurant Locations
intends to cancel, terminate or refuse to renew any lease of a Restaurant
Location or to exercise or decline to exercise any option or right thereunder.
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Section 4.6 Year 2000 Issues. Seller and Rio disclaim all warranties,
express or implied, and make no representations that any date-sensitive assets
sold hereunder, whether hardware or software, will accurately recognize and
process dates through and beyond January 1, 2000. Buyer accepts the
date-sensitive assets "as-is" with respect to their ability to accurately
recognize and process dates through and beyond January 1, 2000.
Section 4.7 Contracts.
(a) Attached hereto as Schedule 4.7(a) is a complete and
accurate list of all agreements or documents, under which Seller claims
or holds a leasehold or other interest or right to the use of the
Restaurant Locations (the "Real Property Leases");
(b) Attached hereto as Schedule 4.7(b) is a complete and
accurate list of all material leases of personal property used in the
operation of the Restaurants (the "Equipment Leases"); and
(c) When delivered as set forth below, Schedule 4.7(c) shall
be a complete and accurate list of all other contracts, agreements,
commitments or other understandings or arrangements to which Seller is
a party that relate only to the Restaurants and by which any of the
Assets are bound or affected (other than (i) the "Minor Contracts"
which are such contracts, agreements or commitments terminable on
thirty (30) days' notice or having annual payment obligations of less
than $20,000 per contract and (ii) those contracts which relate to
goods or services also supplied to Seller's or AII's other restaurant
concepts or which were obtained as a result of a relationship with
Seller or AII which may not be assigned to Buyer on the same terms (the
"Non Assumed Contracts")). Schedule 4.7(c)(ii) shall list those Non
Assumed Contracts with annual payment obligations in excess of $20,000.
Schedules 4.7(c) and 4.7(c)(ii) shall be delivered to Buyer on the
earlier of thirty (30) days after execution of this Agreement or ten
(10) days prior to Closing. The contracts listed on Schedules 4.7(b)
and 4.7(c) are the "Material Contracts," which will be transferred to
Buyer hereunder and Sellers will make available to Buyer, at the time
Schedule 4.7(c) is delivered, a copy of the Material Contracts.
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Section 4.8 Payment of Obligations. Seller has paid in full or will
arrange for payment in full of all withholding, Social Security, unemployment
insurance, sales tax and any other tax liability due and owing which arises out
of its ownership and operation of the Restaurants prior to the Effective Time.
Except as set forth in Section 5.2(b), Seller will pay in full all salaries,
wages and other amounts due or accrued in connection with the employment of
employees of the Restaurants (whether full or part time) through the Effective
Time.
Section 4.9 Permits. Seller has all necessary licenses and permits to
operate the Restaurants as they are currently being operated, except those
licenses and permits the failure of Seller to obtain would not have a material
adverse effect on Restaurant operations. Seller shall transfer to Buyer any such
licenses and permits at the Closing, to the extent such licenses and permits are
transferable.
Section 4.10 Title to Assets. Seller will transfer the Assets to Buyer
free and clear of any liens, claims or other encumbrances.
ARTICLE V
COVENANTS OF SELLER
Seller covenants and agrees as follows:
Section 5.1 Conduct of Business. From the execution of this Agreement
until the Closing, Rio and Seller shall operate the Restaurants in accordance
with reasonable business practice in the ordinary course including, without
limitation, (i) maintaining in full force and effect all policies of insurance
currently in effect relating to the business of the Restaurants, the Assets or
the employees of the Restaurants, and (ii) using its commercially reasonable
efforts to retain the services of its present Restaurant employees and the
goodwill of its suppliers, customers and other persons having business relations
with any of the Restaurants. Further, with respect to the Assets and each
Restaurant, neither Seller nor Rio shall, without the prior written approval of
Buyer:
(a) Increase the overall Restaurant work force or increase the
rate of compensation to Restaurant employees beyond the usual and
customary staffing levels and annual merit increases or bonuses under
established compensation plans except for (1) bonuses for Seller's
corporate employees who do not become employees of Buyer, and (2)
increases related to Seller's benefit plans which will take effect on
March 1, 1999;
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(b) Incur any capital expenditure obligations for, or acquire
by purchase, lease, or otherwise, any material capital assets;
(c) Incur any material corporate obligations, expenses, or
liabilities except in the usual and ordinary course of business;
(d) Mortgage, pledge, or otherwise encumber any of the Assets;
(e) Sell or otherwise dispose of any Asset except in the
ordinary course of business; or
(f) Defer any repairs or maintenance necessary for the
operation of the Restaurants in the ordinary course.
Section 5.2 Agreements Respecting Employees of Seller.
(a) Immediately prior to the Closing, Seller shall terminate
its employees employed at the Restaurant Locations.
(b) At the Closing, Seller and Buyer shall prorate any accrued
bonus and accrued but unused vacation pay due any Restaurant employees
as of the date of Closing, as set forth in Section 8.1, and Buyer will
thereafter assume the financial obligations of the same. Buyer agrees
to pay bonuses to Restaurant employees for the month in which the
Closing occurs under Seller's existing bonus plan. Except as provided
in this Section 5.2, Buyer will not assume any profit sharing or
retirement plan, welfare benefit plan, or salary or bonus plan of
Seller or any other employment-related liabilities.
Section 5.3 Access to Information and Properties. Rio and Seller shall
afford Buyer and its counsel, financial advisors, auditors, and other authorized
representatives reasonable access for any purpose consistent with this Agreement
from the date hereof until the Closing, during normal business hours, to the
offices, properties, books, and records of Seller with respect to the Assets and
the Restaurants, and shall furnish to Buyer such additional financial and
operating data and other information as Seller and Rio may possess and as Buyer
may reasonably request, subject to Buyer's obligations regarding the
confidentiality of such information as set forth in Section 7.2 hereof;
provided, however, that such access shall be arranged in advance by Buyer with
Seller and will be scheduled in a manner and with a frequency calculated to
cause the minimum disruption of Seller's business.
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Section 5.4 No Sale Negotiations. From the date of this Agreement until
its termination pursuant to the terms hereof, neither Seller nor Rio shall
solicit, entertain, or undertake any negotiations, discussions, or contact with
any party other than Buyer and its representatives with respect to the sale,
transfer, or other disposition of any of the Assets (other than in the ordinary
course of Restaurant operations).
Section 5.5 Inspections; No Warranty. Buyer may, at its expense, cause
inspections to be made of the Restaurants, including environmental or
engineering inspections, to determine the compliance with applicable law and the
operating condition of the Assets. Seller shall cooperate in the performance of
these inspections, but the cost of correcting any deficiencies identified by
said inspections will be borne by Buyer. Buyer shall supply Seller with copies
of all such inspections, reports or memoranda as soon as obtained by Buyer.
EXCEPT AS SET FORTH IN ARTICLE IV, SELLER MAKES NO WARRANTY AS TO THE CONDITION
OF THE ASSETS AND BUYER ACKNOWLEDGES THAT IT SHALL ACCEPT THE ASSETS "AS IS,
WHERE IS."
Section 5.6 Surveys and Environmental Assessments.
(a) Seller shall, at its expense, provide Buyer with original
copies of any surveys of the Restaurant Locations in Seller's
possession and received by it from a surveyor licensed in the state of
Georgia. If Buyer should require any further survey work with respect
to this transaction, such work shall be at Buyer's sole cost and
expense.
(b) Seller shall, at its expense, provide Buyer with copies of
any environmental assessments of the Restaurant Locations in Seller's
possession; provided, however, that Seller makes no representation or
warranty as to the completeness or accuracy of any such assessment,
other than that Seller, without having made (or engaged a third party
to make) an investigation thereof, has no reason to doubt the
completeness or accuracy thereof.
Section 5.7 Nonsolicitation; Nonhiring. For a period of one year after
the date of Closing, neither Seller nor any of Seller's affiliated companies
shall solicit or hire any employees of Buyer at the level of assistant manager
or above. Buyer acknowledges that Seller may hire employees of Buyer below the
level of assistant manager without violating this Section 5.7.
Section 5.8 Leaseholds. Seller shall not modify or amend any lease
governing any of the Restaurant Locations without Buyer's prior written consent.
Seller shall cooperate and assist Buyer in obtaining all necessary consents to
assignment of such leases on or prior to the Closing.
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Section 5.9 Point of Sale System. To the extent that any of the
Restaurants use the HSI-based Point of Sale System (the "POS System") as of the
Effective Time, for a period of six months after the date of Closing, Seller
will cause AII to provide POS System software upgrades, including Year 2000
compliance upgrades, as such upgrades are supplied in the normal course to AII
franchisees and AII company-owned restaurants. For a period of six months after
the date of Closing, AII will provide Buyer standard help desk technical support
for the POS System. Seller is not obligated to provide any additional POS System
software releases or any feature enhancements, or provide any further support
(such as back office, food cost or menu maintenance) of the POS System, nor is
Seller required to provide any support of any system other than the POS System.
Neither Seller nor AII is required to conform or customize to the specific
operations of the Restaurants any POS System upgrades or help desk technical
support provided to Buyer. Seller is giving no warranty of any kind to Buyer as
to the POS System.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Seller to enter into this Agreement and to
consummate the transactions contemplated hereby, Buyer represents and warrants
to Seller as follows:
Section 6.1 Existence. Buyer is a limited liability company validly
existing and in good standing under the laws of the state of Missouri.
Section 6.2 Power and Authority. Buyer has the requisite power and
authority to own its properties and assets and to carry on the business in which
it is now engaged. Buyer has the power and authority to perform its covenants
set forth in this Agreement.
Section 6.3 Execution and Delivery Permitted. The execution, delivery,
and performance of this Agreement will not (a) violate or result in a breach of
any term of Buyer's Articles of Organization or of its Operating Agreement, (b)
result in a breach of or constitute a default under any term in any agreement or
other instrument to which Buyer is a party, such default having not been
previously waived by the other party to such agreements, or (c) to the best of
Buyer's knowledge, violate any law or any order, rule, or regulation applicable
to Buyer, of any court or of any regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over Buyer or its properties.
Buyer has taken all action required by law, its Articles of Organization, its
Operating Agreement, and otherwise to authorize the execution and delivery of
this Agreement and the purchase of the Assets purchased by it in accordance with
this Agreement.
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Section 6.4 Capitalization. Buyer's principals shall contribute an
aggregate of $6,000,000 in cash to the combined purchase and operation of the
Assets hereunder and the purchase and operation of the Orlando, Florida
Xxxxxxxx'x Neighborhood Grill & Bar franchise (the "Orlando Franchise") as
follows: (i) $4,000,000 shall be applied to the combined purchase price for the
Assets and the Orlando Franchise and (ii) $2,000,000 shall be used for working
capital purposes for the Restaurants and the Orlando Franchise. The remainder of
the Purchase Price is to be funded through outside financing consistent with
terms and projections provided by Buyer to AII.
Section 6.5 Ownership. Buyer's only equity owners are Xxx Xxxxxx, Xxxx
Xxxxxx and Xxx Xxxxxx, any immediate family members who own joint interests with
any of the foregoing and minority interests owned by Xxxx X. Xxxxxxx and Xxxx
Xxxxxx. No other person or entity owns or has an option or right to purchase any
equity interest in Buyer.
Section 6.6 Accuracy of Representations and Warranties. All
representations and warranties made by Buyer in this Agreement, any schedule or
exhibit hereto, or in any certificate or other document furnished by Buyer
pursuant to this Agreement are true and correct in all material respects on and
as of the date hereof, and Buyer will have performed and complied in all
material respects with all covenants, agreements, and conditions contained in
this Agreement on its part required to be performed or complied with at or prior
to the date of Closing.
ARTICLE VII
COVENANTS OF BUYER
Section 7.1 Buyer's Performance. Buyer hereby covenants and agrees to
accept conveyance of the Assets and to assume and perform the obligations of
Seller under the Assumed Contracts as provided in this Agreement on and after
the date of Closing.
Section 7.2 Confidentiality. Buyer shall maintain all information
relating to the transactions contemplated by this Agreement (including the
existence and terms of this Agreement or any negotiations relating hereto) or
gained from Seller in connection with Buyer's evaluation of the transactions
contemplated by this Agreement (the "Confidential Information") in strict
confidence, and shall take all precautions necessary to prevent disclosure,
access to, or transmission of the Confidential Information, or any part thereof,
to any third party, except for the exclusive purpose of evaluating the Assets
and the business of Seller. In the event the Closing does not occur for any
reason, Buyer shall, immediately upon the request of Seller, return all copies
and recordings of the Confidential Information in its possession or under its
control and delete all records thereof in any data storage system maintained by
or for Buyer.
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Section 7.3 Noncompetition.
(a) Taking into consideration the nature, scope and volume of the
operations of Rio and AII, Buyer agrees that during the period of two
years after the date of Closing, it will not, within the United States,
modify the current methods of operation or menu of any of the
Restaurants such that they would be "casual dining restaurants" similar
to Xxxxxxxx'x Neighborhood Grill & Bar or Rio Bravo Cantina
Restaurants. Buyer also acknowledges that it is bound by the
noncompetition provisions of its franchise agreements with AII, and
Seller acknowledges that AII's consent to the sale to Buyer of the
Assets hereunder is a condition to Closing. Notwithstanding the
foregoing, the Restaurants as currently operated including those items
offered on the current Restaurant menus, do not violate the
noncompetition provisions referenced above.
(b) Neither Buyer nor any affiliate of Buyer shall license, grant
franchises to, or otherwise grant any right to use the trademarks,
tradenames, menus or methods of operation currently used, or as may be
used in the future, in the operation of the Restaurants, including
without limitation the trademarks, tradenames, menus and methods of
operation of Green Hills Grille and Ray's on the River, to any AII
franchisee or prospective franchisee with whom AII is in active
negotiations to become a franchisee of AII, without AII's prior written
consent.
Section 7.4 Name Change. Buyer acknowledges that continued use of the
name "Rio Bravo" will conflict with Rio's xxxx "Rio Bravo Cantina" and hereby
agrees that no later than ninety (90) days after the date of Closing, Buyer (i)
will take all steps necessary to change the name of the Rio Bravo Grill
Restaurant sold to Buyer hereunder to a name that does not include the words
"Rio Bravo" or that is similar to "Rio Bravo" or the translation thereof and
that is approved by AII in advance and (ii) will cease using all signage and
other printed materials using the name "Rio Bravo" or such similar name by such
date. Rio shall grant Buyer a limited license in the form of Exhibit 3.2(e) to
use the name "Rio Bravo" in connection with the operation of such Rio Bravo
Grill Restaurant at its current location through such date.
Section 7.5 Nonsolicitation; Nonhiring. For a period of one year after
the date of Closing, Buyer shall not solicit or hire any employees of Seller or
any of Seller's affiliated companies at the level of assistant manager or above.
Seller acknowledges that Buyer may hire (i) employees who are working in the
Restaurants immediately prior to the Effective Time and (ii) employees of Seller
or Seller's affiliated companies below the level of assistant manager, without
in either case violating this Section 7.5.
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ARTICLE VIII
PURCHASE PRICE ADJUSTMENT;
CONDITIONS TO CLOSING
Section 8.1 Purchase Price Adjustments. The items listed below shall be
paid by the party indicated and if not paid prior to the Closing shall
constitute an adjustment to the Purchase Price.
(a) Seller shall pay all ad valorem, real and personal property taxes,
general and special public and private assessments, and any other
property taxes on the Assets for the tax year in which the Closing
occurs, prorated for the current year up to the date of Closing;
however, if the amount of such tax for tax year is not determinable, it
shall be prorated on the basis of the tax for the immediately preceding
tax year;
(b) Buyer shall pay all rentals or other amounts paid with respect to the
Real Property Leases which apply to periods past the date of Closing,
including prepaid rentals, percentage rents, and common area
maintenance charges;
(c) Buyer shall pay any amounts paid with respect to the Minor Contracts
and Material Contracts for services extending beyond the date of
Closing;
(d) Buyer shall pay any prepaid expenses including deposits, associated
with the operation of a Restaurant which were paid by Seller in the
ordinary course of business, including telephone expenses, billboard
advertising expenses, cooperative fees, advertising expenses, and
utility charges, but only to the extent of appropriate documentation of
the transfer of the benefit of such item to Buyer;
(e) Seller shall pay its share of accrued bonus and vacation pay for the
period prior to the date of Closing, which Buyer is assuming pursuant
to Section 5.2(b); and
(f) Buyer shall withhold payments on outstanding loans from Seller to
Restaurant employees and Seller's corporate employees who are hired by
Buyer (subject to such employees' written authorization to withhold
such payments) and shall promptly remit such payments to Seller.
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Section 8.2 Inventory Adjustment. The Purchase Price includes up to
$65,000 for the aggregate Inventory at the Restaurants on the date of the
Closing. At the request of Seller at Seller's expense, on the date of the
Closing, Buyer and Seller shall conduct a physical audit of the Inventory at the
Restaurants, and if such audit indicates that the aggregate cost of the
Inventory at the Restaurants on such date exceeds such amount, Buyer agrees to
reimburse Seller in cash for such excess on a dollar-for-dollar basis.
Section 8.3 Store Cash. On the date of the Closing, Seller shall ensure
that the Restaurants will have an aggregate of $10,000 cash on hand, and Buyer
agrees to reimburse Seller in cash for cash on hand at Closing in excess of such
amount on a dollar-for dollar basis.
Section 8.4 Gift Certificates. On a monthly basis after the date of
Closing, Buyer shall account to Seller the amount of Restaurant gift
certificates issued by Seller prior to the date of Closing which Buyer has
honored. Seller shall promptly reimburse Buyer for such amount. Buyer agrees to
honor such gift certificates after the date of Closing and to change the form of
gift certificates issued at the Restaurants on and after the date of Closing.
Section 8.5 Conditions of Seller to Closing. The obligations of Seller
hereunder are subject to satisfaction of each of the following conditions at or
before Closing, the occurrence of which may, at the option of Seller, be waived:
(a) All representations and warranties of Buyer in this
Agreement shall be true on and as of the Closing, and Buyer shall have
delivered to Seller a certificate to such effect dated as of the date
of Closing;
(b) Buyer shall have performed and complied with all of
Buyer's obligations under this Agreement which are to be performed or
complied with by Buyer prior to or on the date of Closing;
(c) Buyer shall deliver all of the documents required to be
delivered by it by this Agreement;
(d) Seller and its counsel shall have approved the form and
substance of the documents delivered by Buyer pursuant to this
Agreement, which approval shall not be unreasonably withheld;
(e) There shall be no claims, actions, or suits pending or
threatened regarding the Assets or the Restaurants or that otherwise
would restrict or prohibit Seller or Buyer from consummating the
transactions contemplated herein;
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(f) Buyer shall have fully complied with the provisions of
Section 6.4 and shall have obtained financing sufficient to allow it to
consummate the transactions contemplated by this Agreement upon such
terms as will not, in the sole reasonable judgment of Rio's parent,
AII, impair Buyer's operation as an AII franchisee, and Buyer agrees to
act in good faith and use its best efforts to timely obtain such
financing;
(g) AII shall have obtained all lender consents necessary for
it to allow the sale of the Assets hereunder; and
(h) AII shall have obtained from an investment banker selected
by AII a fairness opinion with respect to the sale of the Assets as
contemplated hereunder.
Section 8.6 Conditions of Buyer to Closing. The obligations of Buyer
hereunder are subject to satisfaction of each of the following conditions at or
before Closing, the occurrence of which may, at the option of Buyer, be waived:
(a) All representations and warranties of Seller, as
applicable, in this Agreement shall be true on and as of the Closing,
and Seller shall have delivered to Buyer a certificate to such effect
dated as of the date of Closing;
(b) Seller shall have performed and complied with all of its
obligations under this Agreement which are to be performed or complied
with by it prior to or on the date of Closing;
(c) Seller shall deliver all of the documents required to be
delivered by it by this Agreement;
(d) Buyer and its counsel shall have approved the form and
substance of the documents delivered by Seller pursuant to this
Agreement, which approval shall not be unreasonably withheld;
(e) There shall be no claims, actions, or suits pending or
threatened regarding the Assets or the Restaurants or that otherwise
would restrict or prohibit Seller or Buyer from consummating the
transactions contemplated herein; and
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(f) Buyer shall have obtained all material consents, estoppels
and licenses necessary to operate the Restaurants in the ordinary
course, which are in form and substance reasonably satisfactory to
Buyer; provided that Buyer shall have used its best efforts to obtain
such items.
ARTICLE IX
INDEMNIFICATION AGAINST LOSS
Section 9.1 Indemnification by Buyer. Buyer agrees to defend,
indemnify, and hold harmless Seller and its successors or assigns, respectively,
against and in respect of any and all causes of action, claims, suits, loss,
liability, lien, damage, cost, expense, and fees, including reasonable
attorneys' fees, incurred or resulting from:
(a) Any misrepresentation, breach of warranty, or
nonfulfillment of any covenant on the part of Buyer in connection with
this Agreement; and
(b) Operation of the Restaurants (including without
limitation, with respect to employment-related matters) after the
Effective Time.
Section 9.2 Indemnification by Seller. Seller agrees to defend,
indemnify, and hold harmless Buyer and its successors or assigns, respectively,
against and in respect of any and all causes of action, claims, suits, loss,
liability, lien, damage, cost, expense and fees, including reasonable attorneys'
fees, incurred or resulting from:
(a) Any misrepresentation, breach of warranty, or
nonfulfillment of any covenant on the part of Seller in connection with
this Agreement; or
(b) Operation of the Restaurants (including without
limitation, with respect to employment-related matters) before the
Effective Time.
Seller acknowledges that following the Effective Xxxx Xxxxxx may be liable to
third parties under local, state, or federal statutes, laws, rules, or
regulations pertaining to the environment (collectively, "Environmental Laws")
as a result of Seller's ownership of the Assets prior to the Effective Time.
Buyer acknowledges, however, that Seller does not indemnify Buyer for any
liabilities or obligations of Buyer under any of the Environmental Laws arising
from Buyer's ownership of the Assets following the Effective Time.
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IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT THE ASSETS ARE BEING
PURCHASED BY BUYER "AS IS, WHERE IS" AND THAT SELLER HAS NOT MADE ANY
REPRESENTATION OR WARRANTY CONCERNING THE CONDITION OR FITNESS FOR ANY
PARTICULAR PURPOSE OF THE ASSETS (OTHER THAN THE REPRESENTATIONS MADE IN ARTICLE
IV OF THIS AGREEMENT). ACCORDINGLY, NO INDEMNIFICATION IS MADE HEREUNDER FOR ANY
CLAIM ARISING OUT OF THE CONDITION OR NATURE OF THE ASSETS FROM AND AFTER THE
EFFECTIVE TIME.
Section 9.3 Indemnification Procedure. Promptly after the receipt by an
indemnified party hereunder of notice of any action, or the making of any claim,
such indemnified party, if a claim in respect thereof is to be made against an
indemnifying party under this Article IX, shall notify the indemnifying party of
the assertion of the claim or the commencement of the action, and the
indemnifying party shall thereafter assume the costs and liability of the
defense of such claim; provided, however, that the indemnified party shall be
entitled, to the extent it wishes and at its own expense, to participate in the
defense of the action. If, however, the indemnifying party, after notice of a
claim or notice of the commencement of an action, breaches its obligation to
defend the indemnified party, said indemnified party shall be entitled to defend
itself, and the indemnifying party shall remain liable for breach of its
indemnity agreement.
Section 9.4 Exclusive Remedies. Except as set forth in Section 10.11
below, the rights and remedies of the parties under this Article IX shall be the
sole and exclusive rights and remedies that either party may seek for any
misrepresentation, breach of warranty, or failure to fulfill any covenant or
agreement under this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.1 Notices. Except as otherwise expressly provided, all
notices, consents, requests, demands, and other communications hereunder shall
be in writing and shall be deemed to have been duly given if delivered
personally, sent by facsimile transmission with confirmation of receipt, or if
mailed by certified mail, return receipt requested, with first class postage
prepaid, addressed as follows:
(a) If to Seller: Rio Bravo International, Inc.
0000 Xxxx 000xx Xx., Xxxxx. 000
Xxxxxxxx Xxxx, XX 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
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With a copy to: Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
(b) If to Buyer: Specialty Restaurant Development, L.L.C.
0000 Xxxxx Xxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxx Xxxxxx
Facsimile No.: (000) 000-0000
With a copy to: Polsinelli, White, Xxxxxxxx et al.
000 X. 00xx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other address or facsimile number as Buyer or Seller shall have last
designated by notice to the other party.
Section 10.2 Applicable Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the internal laws of the state of
Kansas.
Section 10.3 Binding on Successors; Assignment. All of the terms,
provisions, and conditions of this Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors,
permitted assigns, and legal representatives. Notwithstanding anything in this
Agreement to the contrary, Buyer may not assign this Agreement or any rights or
obligations hereunder without Seller's prior written consent.
Section 10.4 Payment of Costs.
(a) Seller shall pay:
(i) All of Seller's legal expenses; and
(ii) All other costs and expenses incurred by Seller
in negotiating this Agreement and in consummating the
transactions contemplated hereby, including any fees or
commissions payable to any party representing Seller in
connection with arranging or negotiating this Agreement and
the transactions contemplated hereby.
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(b) Buyer shall pay:
(i) All of Buyer's legal expenses;
(ii) All fees, costs, and expenses incurred in
recording all real estate documents related to the
transactions contemplated hereby;
(iii) All fees, costs, and expenses incurred in
connection with Buyer's inspection of the Assets or the making
of any survey or environmental assessment of the Restaurant
Locations;
(iv) All sales, transfer, or other taxes arising from
the transactions contemplated hereby arising under state law;
and
(v) All other costs and expenses incurred by Buyer in
negotiating this Agreement and in consummating the
transactions contemplated hereby, including any fees or
commissions payable to any party representing Buyer in
connection with arranging or negotiating this Agreement and
the transactions contemplated hereby.
Section 10.5 Closing Not to Prejudice Claim for Damages. Subject to
Section 9.4 above, the consummation of the transactions contemplated by this
Agreement shall not prejudice any claim for damages which either party may have
hereunder, in law or in equity, due to a material default in the due and timely
performance of any of the covenants and agreements herein contained or for the
breach of any warranty or representation hereunder, unless such performance,
warranty, or representation is specifically waived in writing by the party
making such claim.
Section 10.6 Survival of Representations, Warranties, and Covenants.
All of the representations, warranties, and covenants of the parties hereto
shall survive the execution of this Agreement and the Closing.
Section 10.7 Additional Documents. After Closing, each party agrees to
furnish such additional documents as are necessary to complete the transactions
contemplated hereby.
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Section 10.8 Interpretation. The title of the sections of this
Agreement are for convenience of reference only, and are not to be considered in
construing this Agreement. Whenever required by the context of this Agreement,
the singular shall include the plural and the masculine shall include the
feminine and vice versa.
Section 10.9 Entire Agreement. This Agreement and the exhibits and
schedules attached hereto and incorporated herein by this reference contain the
entire Agreement of the parties hereto with respect to the transactions
contemplated hereby and supersede any and all prior agreements, arrangements,
and understandings between the parties. No inducements contrary to the terms of
this Agreement exist. No waiver of any term, provision, or condition of this
Agreement, whether by conduct or otherwise, in any one or more instances shall
be deemed to be construed as a further or continuing waiver of any such term,
provision or condition or any other term, provision or condition of this
Agreement. This Agreement may not be modified orally and may only be amended in
a writing executed by all parties hereto.
Section 10.10 Counterparts. This Agreement may be executed in one or
more counterparts which in the aggregate shall comprise one Agreement.
Section 10.11 Termination. This Agreement may be terminated prior to
the Closing as follows:
(a) At any time by the mutual consent of Seller and Buyer;
(b) By Seller if any condition set forth in Section 8.5 above
shall not have been met as of the Closing;
(c) By Buyer if any condition set forth in Section 8.6 above
shall not have been met as of the Closing; or
(d) By Seller on or after May 31, 1999, if the Closing has not
occurred before such date.
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In the event of the termination of this Agreement pursuant to subparagraph (b)
above because Buyer shall have willingly or in bad faith failed to satisfy a
condition to the Closing, Seller shall be entitled to pursue, exercise, and
enforce any and all remedies, rights, powers, and privileges available to it at
law or in equity.
Section 10.12 Public Announcements. Neither Buyer nor any of its
representatives, agents, or affiliates shall make any public announcement or
other disclosure with respect to this Agreement or the transactions contemplated
hereby without the prior review of and consent to such disclosure by Seller.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day, month, and year first above written.
RIO BRAVO INTERNATIONAL, INC.
By:
Name:
Title:
INNOVATIVE RESTAURANT CONCEPTS, INC.
By:
Name:
Title:
SUMMIT RESTAURANTS, INC.
By:
Name:
Title:
SPECIALTY RESTAURANT DEVELOPMENT, L.L.C.
By:
Name:
Title:
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LIST OF EXHIBITS AND SCHEDULES
Exhibits
1.1(a) Restaurant Locations
1.1(f) Tradenames and Trademarks
1.2 Excluded Assets
3.2(e) License Agreement
Schedules
4.7(a) Real Property Leases
4.7(b) Material Equipment Leases
4.7(c) Material Contracts
4.7(c)(ii) Non Assumed Contracts
