Exhibit 10.1
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
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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");
(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
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.
(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 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
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
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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 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 OF 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 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
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 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 (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 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
relations, 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:
(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
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) 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.
(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,
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 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.
(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
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 OF 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
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:
(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 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 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 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 Sellers
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.
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 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;
(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;
(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
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 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 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 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
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;
(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, 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.
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.
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
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 MODIFICATIONS 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
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.
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:/s/ Xxxxxx X. Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx, Authorized Member
SELLER: EACO CORPORATION
By:/s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx, Chairman
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
Xxxxx #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
Xxxxxxxx, XX 00000 Blvd.
Fee Property XxXxxx, XX 00000
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 #114 Ryan's #135
0000 X. Xxxx Xx. 0000 Xxxxxxxx Xxxx.
Xxxxxxxxxx, XX 00000 Xxxxxxxxxx, XX 00000
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
The remaining Exhibits and Schedules to this Asset Purchase
Agreement are not filed as part of this Exhibit 10.1.
