ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of May 4, 1998, by and among APPLE
SOUTH, INC., a Georgia corporation ("Seller"), FLORIDA APPLE NORTH, L.L.C., a
Florida limited liability company, FLORIDA APPLE SOUTH, L.L.C., a Florida
limited liability company, FLORIDA APPLE WEST, L.L.C., a Florida limited
liability company, and WIGEL PARTNERSHIP, a general partnership organized under
the laws of the State of New York (collectively, the "Purchasers" and
individually a "Purchaser"),
W I T N E S S E T H :
WHEREAS, Seller owns and operates a number of Xxxxxxxx'x Neighborhood Grill
& Bar franchise restaurants ("Applebee's");and
WHEREAS, Seller desires to sell to Purchasers certain Applebee's and
related property, and Purchasers desire to purchase such assets, all on the
terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound, the parties hereby agree as
follows:
ARTICLE I - DEFINITIONS
1.1 Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below:
"Action" shall mean any action, suit, litigation, complaint, counterclaim,
claim, petition, mediation contest, or administrative proceeding, whether at
law, in equity, in arbitration or otherwise, and whether conducted by or before
any Government or other Person.
"ADI's" shall mean Arbitron Rating Areas of Dominant Influence.
"ADI Personnel" shall have the meaning set forth in Section 4.4.
"Assets" shall mean the following:
(i) all tangible personal property of any kind located in the Restaurants
or on the Real Property, including, but not limited to, equipment, appliances,
machinery, tables, chairs, other furniture, bars, tableware, cookware, utensils,
furnishings, signage, leasehold improvements, fixtures, uniforms, supplies, food
and beverage inventory (including beer, liquor, and wine inventory), and
advertising and promotional materials;
(ii) $1,500 cash in each Restaurant;
(iii) all prepaid items relating exclusively to the Business;
(iv) all assignable Permits;
(v)all assignable rights under express or implied warranties of
manufacturers, distributors, or retailers relating to the Assets;
(vi) all of Seller's supplier lists, demographic, statistical, and other
information related exclusively to the Business;
(vii) copies of Seller's employee records of those current employees of
Seller who will be employed by Purchasers as of the Closing (subject to
execution of a release by each affected employee allowing for the disclosure of
such files).
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(viii) the Contracts and Leases;
(ix) the Owned Real Property; and
(x) All records and files related to the Real Property such as rent
calculations, landlord correspondence, purchase agreements, deeds, construction
documents, title reports, environmental and engineering reports, appraisals,
surveys, etc.
"Assets" shall not include cash in the Restaurants in excess of $1,500 per
Restaurant, bank accounts, or any other property, tangible or intangible, real
or personal, not described above.
"Assumed Liabilities" shall mean (i) all obligations of Seller that accrue
after the Closing under the terms of the Contracts and Leases, (ii) all
obligations of Seller under the Contracts and Leases that accrue prior to the
Closing but which are not due for payment until after the Closing and which are
taken into account in computing the Purchase Price pursuant to Section 2.3,
(iii) obligations arising after the Closing under any Permits which are assigned
to Purchasers, (iv) all Property Taxes and all other obligations with respect to
the Assets that accrue prior to the Closing but which are not due for payment
until after the Closing and which are taken into account in computing the
Purchase Price pursuant to Section 2.3, (v) all Property Taxes and all other
obligations with respect to the Assets that accrue after the Closing, (vi) gift
certificates issued by Seller prior to Closing, (vii) accrued vacation of ADI
Personnel assumed pursuant to Section 6.3(c), and (viii) all Development Costs
with respect to Seller's development activities under Section 4.7. Assumed
Liabilities shall not include any liability, obligation, payment, duty, or
responsibility of any nature except as expressly described above and
specifically shall not include (i) liabilities or obligations of Seller arising
out of any breach by Seller of any of the Contracts or Leases; (ii) except as
provided in clauses (ii) or (iv) above, liabilities or obligations of Seller
under any of the Contracts or Leases or with respect to the Owned Real Property
or other Assets that accrue in any such case prior to the Closing; (iii) any
liabilities or obligations of Seller under the Franchise Agreements; (iv) any
liability of Seller for product liability, personal injury, property damage, or
otherwise based on any tort claim or statutory liability (including but not
limited to any "dram shop" liability); (v) any federal, state, or local tax
liability of Seller except to the extent expressly assumed hereunder, (vi) any
contractual claim based on any lease, contract, or agreement other than
liabilities assumed hereunder with respect to the Contracts and Leases; (vii)
any liability, obligation, or responsibility of Seller to Seller's employees,
agents, or independent contractors with respect to wages, salaries, bonuses, or
other compensation or benefits earned or accrued prior to the Closing (except
for accrued vacation assumed pursuant to Section 6.3(c)); and (viii) any
liability or obligation of Seller arising out of the negotiation, execution, or
performance of this Agreement, including fees and expenses of attorneys and
accountants, except as otherwise expressly provided herein.
"Xxxx of Sale and Assignment Agreement" shall mean an instrument in
substantially the form of Exhibit A hereto pursuant to which the Assets (except
for the Owned Real Property) will be transferred and assigned to Purchasers at
the Closing and pursuant to which Purchasers will assume the Assumed
Liabilities.
"Business" shall mean the business of owning and operating the Restaurants
and developing and opening new Applebee's in the Territory, as conducted prior
to the Closing by Seller pursuant to the Franchise Agreements.
"Closing" shall have the meaning set forth in Section 2.6 hereof.
"Closing Date" shall mean the time and date that the Closing occurs.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended, and all regulations thereunder. Any reference herein to a specific
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section or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
"Consents" shall mean all consents, approvals, and estoppels of others
which are required to be obtained in order to effect the valid assignment,
transfer, and conveyance to Purchasers of the Material Contracts and the Leases
without resulting in any default thereunder.
"Contracts" shall mean all contracts, agreements, and leases of equipment
or other personal property that relate exclusively to the Business; provided,
however, that the Franchise Agreements and, except as otherwise expressly
provided herein, contracts relating to employee benefits are not included within
the meaning of "Contracts."
"Deeds" shall mean special warranty deeds, limited warranty deeds or other
appropriate instruments to convey good and marketable fee simple title to the
Owned Real Property, with the warranty of title contained therein limited to the
claims of Persons claiming by, through or under Seller, but not otherwise.
"Development Costs" shall mean all of Seller's out-of-pocket costs paid in
connection with the development of the restaurant listed on Schedule 4.7 and
capitalized in accordance with generally accepted accounting principles
including, but not limited to, the purchase price paid for real estate;
acquisition and closing costs, such as legal fees, engineering fees, surveys,
transfer taxes, title policies, and the like; costs of obtaining leases, such as
legal fees, surveys, title policies, and the like; environmental investigation
costs; the cost of permits, approvals, variances, or rezonings; land development
costs; construction costs; the cost of equipment and other personal property
acquired for the restaurants; and construction period insurance. Seller's
internal costs and Seller's pre-opening expenses shall not constitute
Development Costs.
"Disclosure Memorandum" shall mean the set of numbered schedules
referencing Sections of this Agreement delivered by Seller and dated of even
date herewith.
"Effective Time" shall have the meaning set forth in Section 2.5 hereof.
"Environmental Laws" shall mean all federal, state, municipal, and local
laws, statutes, ordinances, rules, regulations, conventions, and decrees
relating to the environment, including without limitation, those relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic, or Hazardous Materials or wastes
of every kind and nature into the environment (including without limitation
ambient air, surface water, ground water, soil, and subsoil), or otherwise
relating to the manufacture, generation, processing, distribution, application,
use, treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic, or hazardous substances or
wastes, and any and all laws, rules, regulations, codes, directives, orders,
decrees, judgments, injunctions, consent agreements, stipulations, provisions,
and conditions of Environmental Permits, licenses, injunctions, consent
agreements, stipulations, certificates of authorization, and other operating
authorizations, entered, promulgated, or approved thereunder.
"Environmental Permits" shall mean all permits, licenses, certificates,
approvals, authorizations, regulatory plans or compliance schedules required by
applicable Environmental Laws, or issued by a Government pursuant to applicable
Environmental Laws, or entered into by agreement of the party to be bound,
relating to activities that affect the environment, including without
limitation, permits, licenses, certificates, approvals, authorizations,
regulatory plans and compliance schedules for air emissions, water discharges,
pesticide and herbicide or other agricultural chemical storage, use or
application, and Hazardous Material or Solid Waste generation, use, storage,
treatment and disposal.
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"Excluded Restaurants" shall mean those Restaurants designated as such in
accordance with Section 4.9(e), Section 7.1(a), or Section 7.1(b).
"Forum" shall mean any federal, state, local, municipal, or foreign court,
governmental agency, administrative body or agency, tribunal, private
alternative dispute resolution system, or arbitration panel.
"Financing Commitment" shall have the meaning set forth in Section 6.4.
"Franchise Agreements" shall mean those development agreements, franchise
agreements, and other agreements between Seller and Franchisor relating
exclusively to the Territory.
"Franchisor" shall mean Xxxxxxxx'x International, Inc.
"Financial Statements" shall have the meaning set forth in Section 3.8.
"Government" shall mean any federal, state, local, municipal, or foreign
government or any department, commission, board, bureau, agency,
instrumentality, unit, or taxing authority thereof.
"Hazardous Material" shall mean all substances and materials designated as
hazardous or toxic as of the date hereof or as of the Closing Date pursuant to
any applicable Environmental Law.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Knowledge of Seller" (or words of like effect) when used to qualify a
representation, warranty, or other statement shall mean the actual knowledge of
Seller's district operators in the Territory (after a diligent review with the
general manager of each Restaurant of each matter herein subject to a knowledge
qualifier and after obtaining a completed and signed questionnaire from each
general manager relating to such matters in a form approved by Purchasers) and
all management of Seller senior thereto.
"Leases" shall mean the leases of real property and improvements described
on Schedule 1.1B and any leases subsequently entered into and pertaining to new
restaurants being developed pursuant to Section 4.7.
"Material Contracts" shall mean all Contracts that involve monetary
obligations of Seller of more than $12,000 per year and that are not cancelable
by Seller upon sixty days notice or less.
"Minor Contracts" shall mean all Contracts that are not Material Contracts.
"Note" shall mean a promissory note of Purchasers in the form of Exhibit E
attached hereto payable to Seller in the principal amount of $537,760 and
bearing interest at the rate of 2.5% per quarter simple interest. The Note shall
be payable in eight equal quarterly installments of $75,000 each, with each such
installment to be applied first to accrued interest and the remainder to
principal.
"Orders" shall mean all applicable orders, writs, judgments, decrees,
rulings, consent agreements, and awards of or by any Forum or entered by consent
of the party to be bound.
"Owned Real Property" shall mean those tracts and parcels of land owned by
Seller on which a Restaurant is located or which is being held for development
pursuant to Section 4.7 (all of which tracts and parcels are described in
Schedule 1.1C) or which is acquired by Seller prior to Closing for development
pursuant to Section 4.7, together with all buildings, fixtures, signs, parking
facilities, and other improvements located thereon and all tenements,
hereditaments, easements, rights, ways, powers, privileges, immunities, and
opportunities belonging or in any way pertaining thereto.
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"Permits" shall mean all rights of Seller under any liquor, alcoholic
beverage, beer and wine licenses, other licenses of every kind, certificates of
occupancy, and permits or approvals of any nature, from governmental and
regulatory authorities which relate exclusively to the Business, the
Restaurants, or the Real Property.
"Permitted Encumbrances" shall mean, in the case of all Real Property, (i)
such easements, restrictions, covenants, and other such encumbrances which are
shown as exceptions on the Title Commitments and any other encumbrances of
record as of the effective date of the Title Commitments, (ii) ordinances
(municipal and zoning), (iii) survey matters, and (iv) such easements,
restrictions, covenants, and other encumbrances which become matters of public
record after the date of the Title Commitments and before the Closing, in each
case of items (i) through (iii) above solely to the extent that such
encumbrances would not unreasonably interfere with the marketability of such
Real Property for either restaurant or any commercial use (except as limited by
restrictions of record when Seller acquired the Real Property) or that are
waived, or deemed to be waived, by Purchasers pursuant to Section 7.1(a).
Permitted Encumbrances shall include in the case of both Real Property and
personal property all pending liens for taxes not yet due and payable. In the
case of Assets pertaining to Applebee's under development pursuant to Section
4.7, Permitted Encumbrances shall include all mechanic's, materialman's, and
other liens relating to Assumed Liabilities.
"Person" shall include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization, a government, and any other legal entity.
"Property Taxes" shall mean all ad valorem, real property, and personal
property taxes, all general and special private and public assessments, all
other property taxes, and all similar obligations pertaining to the Assets.
"Real Property" shall mean the land and improvements comprising the Owned
Real Property and all land and improvements subject to Leases.
"Restaurants" shall mean the 34 Applebee's operated by Seller at the
locations set forth on Schedule 1.1A and any additional Applebee's completed
prior to Closing pursuant to Section 4.7.
"Schedules" shall mean the numbered sections of the Disclosure Memorandum.
"Seller Plans" shall have the meaning set forth on Schedule 3.15.
"Solid Waste" shall mean any garbage, refuse, sludge from a waste treatment
plant, water supply treatment plant, or air pollution control facility, and
other discarded material, including solid, liquid, semisolid, or contained
gaseous material resulting from industrial, commercial, mining, and agricultural
operations, and from community activities.
"Termination Date" shall mean July 31, 1998.
"Territory" shall mean those ADI's consisting of (i) Ft. Xxxxx-Naples,
Florida ADI (Glades, Charlotte, Lee, Hendry, and Xxxxxxx Counties), (ii) Xxxx
Xxxx Xxxxx - Xx. Xxxxxx-Xxxx Xxxxx, Xxxxxxx ADI (Indian River, Okeechohee, St.
Lucie, Martin, and Palm Beach Counties), (iii) that portion of Tampa-St.
Petersburg ADI consisting of Sarasota County, Florida, and (iv) Jacksonville,
Florida ADI (Xxxxxxxx, Suwanee, Columbia, Xxxxx, Union, Bradford, Putnam, Clay,
Duval, St. Xxxxx, and Nassau Counties, Florida and Camden, Glynn, Brantley,
Charlton, Ware, and Clinch Counties, Georgia).
"Title Commitments" shall have the meaning set forth in Section 7.1(a).
"Title Policies" shall mean the Owner's Title Policies and the Lessee's
Title Policies as defined in Section 7.1(a).
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ARTICLE II - PURCHASE AND SALE
2.1 Purchase and Sale. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing Seller shall sell, transfer, and assign
to Purchasers the Assets (divided among the Purchasers as they may direct Seller
in writing) free and clear of any mortgage, security interest, lien, charge,
claim, or other encumbrance of any nature except the Permitted Encumbrances, and
Purchasers shall purchase the Assets from Seller for the Purchase Price set
forth in Section 2.3.
2.2 Assumption of Liabilities. As of the Effective Time, Purchasers shall
assume all of the Assumed Liabilities. Except for the Assumed Liabilities,
Purchasers do not hereby assume or agree to assume or pay any obligations,
liabilities, indebtedness, duties, responsibilities, or commitments of Seller or
any other Person, of any nature whatsoever, whether known or unknown, absolute
or contingent, due or to become due.
2.3 Purchase Price. The purchase price for the Assets (the "Purchase
Price") shall be $65,006,760 adjusted as follows:
(a) The amount of the purchase price shall be increased by (i) all Property
Taxes accruing with respect to the Assets after the Closing that have been paid
by Seller prior to Closing; (ii) all amounts paid by Seller under the Contracts
and Leases with respect to periods after the Closing; (iii) any other prepaid
expenses pertaining to the Business (such as telephone expenses, advertising
expenses, utility charges, and the like) with respect and relating to periods
after the Closing; and (iv) the amount of Seller's Development Costs for 5055 X.
Xxxxxx Xxxxxx Blvd., Jacksonville, Florida.
(b) The amount of the purchase price shall be decreased by (i) all Property
Taxes accruing with respect to the Assets prior to the Closing that are due and
payable after the Closing and that have not been paid as of the Closing, (ii)
all amounts payable under the Contracts and Leases that pertain to periods
before the Closing but are due and payable after the Closing and that have not
been paid as of the Closing, (iii) the cost of unused vacation accrued as of the
Closing Date by ADI Personnel hired by Purchasers the cost of which is being
assumed by Purchasers pursuant to Section 6.3(c), and (iv) the amount of any
Purchase Price adjustment for any Excluded Restaurant and attendant Assets
pursuant to Section 2.8.
(c) The amount of the purchase price shall be further adjusted to reflect
any expense paid by one party which the other party has agreed to pay or share
pursuant to Section 10.1 or otherwise pursuant to this Agreement.
Schedule 2.3 sets forth the items expected to require an adjustment
pursuant to subparagraphs (a) and (b) above, whether each such adjustment is
expected to result in an increase or decrease in the Purchase Price, and the
estimated amount of each such adjustment. At the Closing the foregoing
adjustments shall be calculated by the parties and set forth on a schedule which
shall be signed by both parties. To the extent that Property Taxes or other
items are not known at the time of Closing, the parties shall estimate the
amounts in good faith and adjust the same at such time as such amounts are
finally known. The Purchase Price shall be paid by Purchasers on the Closing
Date by delivery of the Note duly executed by Purchasers and by wire transfer to
an account designated by Seller of immediately available funds in an amount
equal to the remainder of the Purchase Price.
2.4 Deliveries at the Closing. (a) At the Closing, Seller shall deliver to
Purchasers the following:
(i) A certificate executed by Seller, dated as of the Closing Date,
certifying in such detail as Purchasers may reasonably request that (A) subject
to the matters disclosed in the Disclosure Memorandum, all representations and
warranties of Seller in this Agreement are true in all material respects as of
the Closing Date, and (B) Seller has performed and complied in all material
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respects with all of its obligations under this Agreement which are to be
performed or complied with by the Seller prior to or on the Closing Date;
(ii) A certificate of the Secretary or an Assistant Secretary of Seller,
dated as of the Closing Date, certifying in such detail as Purchasers may
reasonably request (A) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of Seller authorizing the
execution, delivery, and performance of this Agreement, the Xxxx of Sale and
Assignment Agreement, and the Deeds, and that all such resolutions are still in
full force and effect and are all the resolutions adopted in connection with the
transactions contemplated by this Agreement, and (B) as to the incumbency and
specimen signature of each officer of Seller executing this Agreement, the Xxxx
of Sale and Assignment Agreement, the Deeds, and any certificate or instrument
furnished pursuant hereto, and a certification by another officer of Seller as
to the incumbency and signature of the officer signing such certificate;
(iii) The opinion of Xxxxxxxxxx Xxxxxxxx LLP, counsel to Seller, in
substantially the form of Exhibit B hereto;
(iv) The Xxxx of Sale and Assignment Agreement, duly executed by Seller;
(v) The Consents (except with respect to any Excluded Restaurant);
(vi) The Deeds (except with respect to any Excluded Restaurant), duly
executed by Seller;
(vii) A Cross-Receipt, duly executed by Seller; and
(viii) Any other documents that Purchasers may reasonably request prior to
the Closing to effectuate the transactions contemplated hereby.
(b) At the Closing Purchasers shall deliver to Seller the following:
(i) A certificate executed by Purchasers, dated as of the Closing Date,
certifying in such detail as Seller may reasonably request to the fulfillment of
the conditions specified in Sections 7.3(a) and (b) hereof;
(ii) A certificate of a manager (or in the case of WIGEL Partnership, a
partner) of each Purchaser, dated as of the Closing Date, certifying in such
detail as Seller may request (A) that attached thereto is a true and complete
copy of resolutions adopted by the members of Purchasers authorizing the
execution, delivery and performance of this Agreement, the Xxxx of Sale and
Assignment Agreement, and the Note and that all such resolutions are still in
full force and effect and are all the resolutions adopted in connection with the
transactions contemplated by this Agreement, and (B) as to the incumbency and
specimen signature of each manager (or in the case of WIGEL Partnership, each
partner) of a Purchaser executing this Agreement, and any certificate or
instrument furnished pursuant hereto or to be furnished in connection herewith
as of the Closing Date, and a certification by another manager (or in the case
of WIGEL Partnership, another partner) of each Purchaser as to the incumbency
and signature of the officer signing such certificate;
(iii) The funds constituting the cash portion of the Purchase Price;
(iv) The Xxxx of Sale and Assignment Agreement, duly executed by
Purchasers;
(v) The opinion of Chopin, Xxxxxx & Yudenfreund, counsel to Purchasers, in
substantially the form of Exhibit C hereto;
(vi) A Cross-Receipt, duly executed by Purchasers;
(vii) The Note, duly executed by Purchasers; and
(viii) Any other documents that Seller may reasonably request prior to the
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Closing to effectuate the transactions contemplated hereby.
2.5 Transfer of Operations. Purchasers shall be entitled to immediate
possession of, and to exercise all rights arising under, the Assets from and
after the time that the Restaurants open for business on the Closing Date, and
operation of the Restaurants shall transfer at such time (the "Effective Time").
Except as expressly provided in this Agreement, all profits, losses,
liabilities, claims, or injuries arising before the Effective Time shall be
solely to the benefit or the risk of Seller. All such occurrences after the
Effective Time shall be solely to the benefit or the risk of Purchasers. The
risk of loss or damage by fire, storm, flood, theft, or other casualty or cause
shall be in all respects upon Seller prior to the Effective Time and upon the
Purchasers thereafter.
2.6 Closing. The closing of the transactions described in this Article II
(the "Closing") shall take place at the offices of Xxxxxxxxxx Xxxxxxxx LLP,
Suite 2800, 0000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxxxx, at 10:00 a.m. on June 26,
1998, or on such other date and time as may be mutually agreed upon by the
parties hereto.
2.7 Allocation of Purchase Price. The Purchase Price shall be allocated
among the various Assets as set forth on Schedule 2.7 hereof. Each party hereby
agrees that it will not take a position on any income tax return, before any
governmental agency charged with the collection of any income tax, or in any
judicial proceeding that is inconsistent with the terms of this Section 2.7.
2.8 Excluded Restaurants. If any Restaurants are designated as Excluded
Restaurants in accordance with Sections 4.9(e), 7.1(a) or 7.1(b), then the Lease
or the Owned Real Property and all other Assets relating exclusively to such
Excluded Restaurants shall not be transferred to Purchasers hereunder, Assumed
Liabilities pertaining to such Excluded Restaurants shall not be assumed by
Purchasers hereunder, and the Purchase Price shall be reduced by the amounts
allocated to such Excluded Restaurants and attendant Assets on Schedule 2.7.
2.9 Further Assurances. From time to time after the Closing at Purchasers'
request and expense, Seller shall execute, acknowledge, and deliver to
Purchasers such other instruments of conveyance and transfer and shall take such
other actions and execute and deliver such other documents, certifications, and
further assurances as Purchasers may reasonably require to vest more effectively
in Purchasers, or to put Purchasers more fully in possession of, any of the
Assets, or to better enable Purchasers to complete, perform and discharge the
Assumed Liabilities. Each party hereto will cooperate with the other and execute
and deliver to the other party hereto such other instruments and documents and
take such other actions as may be reasonably requested from time to time by any
other party hereto as necessary to carry out, evidence, and confirm the intended
purpose of this Agreement.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to the limitations and exceptions set forth in the Disclosure
Memorandum dated of even date hereof and attached to and incorporated herein,
Seller hereby represents and warrants to Purchasers as follows:
3.1 Organization, Qualifications and Corporate Power. Seller is a
corporation duly incorporated and organized, validly existing, and in good
standing under the laws of the State of Georgia. Seller has the corporate power
and authority to execute, deliver, and perform this Agreement, the Xxxx of Sale
and Assignment Agreement, the Deeds, and all other agreements, documents,
certificates, and other papers contemplated to be delivered by Seller pursuant
to this Agreement.
3.2 Authorization. The execution, delivery, and performance by Seller of
this Agreement, the Xxxx of Sale and Assignment Agreement, the Deeds, and all
other agreements, documents, certificates, and other papers contemplated to be
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delivered by Seller pursuant to this Agreement have been duly authorized by the
Board of Directors of Seller.
3.3 Non-Contravention. Subject to obtaining the consents to assignment of
the Leases and Material Contracts set forth on Schedule 3.3, the execution,
delivery and performance of this Agreement will not violate or result in a
breach of any term of Seller's Articles of Incorporation or Bylaws, result in a
breach of any agreement or other instrument to which Seller is a party (except
for defaults under Minor Contracts where the consent of the other party or
parties to such contract to the assignment thereof will not be obtained) or
violate any law or any order, rule, or regulation applicable to Seller of any
court or of any regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over Seller; and will not result in the
creation or imposition of any lien, charge, or encumbrance of any nature
whatsoever upon any of the Assets. Except as set forth on Schedule 3.3 and
except for consents required under Minor Contracts, the execution, delivery and
performance of this Agreement and the other documents executed in connection
herewith, and the consummation of the transactions contemplated hereby and
thereby do not require any filing with, notice to or consent, waiver or approval
of any third party, including but not limited to, any governmental body or
entity other than any filing required under the HSR Act and the expiration of
any applicable waiting period thereunder. Schedule 3.3 identifies separately
each notice, consent, waiver, or approval by reference to each Lease and to each
Material Contract to which it is applicable.
3.4 Validity. This Agreement has been duly executed and delivered by the
Seller and constitutes the legal, valid, and binding obligation of Seller,
enforceable in accordance with its terms, subject to general equity principles
and to applicable bankruptcy, insolvency, reorganization, moratorium, and
similar laws from time to time in effect affecting the enforcement of creditors'
rights. When the Xxxx of Sale and Assignment Agreement has been executed and
delivered in accordance with this Agreement, it will constitute the legal,
valid, and binding obligation of Seller, enforceable in accordance with its
terms, subject to general equity principles and to applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws from time to time in
effect affecting the enforcement of creditors' rights.
3.5 Assets. (a) Seller has good and valid title to all of the Assets
constituting personal property, free and clear of any and all mortgages,
pledges, security interests, liens, charges, conditional sales agreements, and
other encumbrances except Permitted Encumbrances.
(b) The Assets located at each Restaurant as of the date hereof constitute
all tangible personal property required on site to operate the Restaurant
generally and in accordance with the Franchise Agreements specifically.
(c) There are no assets or property of any nature which is not being
transferred to Purchasers hereunder that has been customarily used exclusively
in the operation or ownership of the Restaurants other than Permits and software
licenses that are not assignable.
(d) Each Asset constituting tangible personal property having a cost or a
fair market value of $2,000 or more is in good operating condition consistent
with its age, subject to normal wear and tear.
3.6 Contracts and Leases.
(a) Each Material Contract and Lease is a valid and subsisting agreement,
without any material default of Seller thereunder, and to the knowledge of
Seller, without any default on the part of any other party thereto. To the
knowledge of Seller, no event or occurrence has transpired which with the
passage of time or giving of notice or both will constitute a default under any
Material Contract or Lease. A true and correct list of each Material Contract
and Lease and every amendment thereto or other agreement or document relating
thereto is set forth as Schedule 3.6 to this Agreement. True and correct copies
9
of the Material Contracts and Leases (and any amendments thereto) have been
provided to Purchasers. At the time of Closing, Seller shall have made all
payments and performed all obligations due through the Closing Date under each
Contract and Lease, except to the extent that any payment due is set forth on
Schedule 2.3 and deducted in calculating the Purchase Price pursuant to Section
2.3.
(b) No Contract or Lease has been assigned by Seller or any interest
granted therein by Seller to any third party, or is subject to any mortgage,
pledge, hypothecation, security interest, lien, or other encumbrance or claim.
(c) Seller's possession of property subject to the Leases has not been
disturbed, nor has any claim been asserted against Seller's rights in such
leasehold interests.
(d) The Contracts have been entered into in the ordinary course of Seller's
business and, to Seller's knowledge, contain commercially reasonable terms.
3.7 Real Property.
(a) Schedule 3.7(a) sets forth with respect to each Restaurant, its
location, whether it is located on Owned Real Property or is on a site subject
to a Lease, and whether the improvements are owned or leased.
(b) The water, electric, gas, and sewer utility services, and storm
drainage facilities currently available to each parcel of Real Property are
adequate for the operation of the Restaurants as presently operated, and there
is no condition which will result in the termination of the present access from
each parcel of Real Property to such utility services and other facilities.
(c) Seller has obtained all authorizations and rights-of-way which are
necessary to ensure vehicular and pedestrian ingress and egress to and from the
site of each Restaurant, all of which are assignable and shall be assigned to
Purchasers at the Closing.
(d) Except as shown on Schedule 3.7(d)/(f), Seller has received no notice
that any governmental body having the power of eminent domain over any parcel of
Real Property has commenced or intends to exercise the power of eminent domain
or a similar power with respect to any part of the Real Property.
(e) The Real Property and the present uses thereof comply in all material
respects with all laws and regulations (including zoning laws and ordinances) of
all Governments having jurisdiction over the Real Property, and Seller has
received no notice from any Government alleging that the Real Property or any
improvements erected or situated thereon, or the uses conducted thereon or
therein, violate any regulations of any Government having jurisdiction over the
Real Property.
(f) Except as shown on Schedule 3.7(d)/(f), no work for municipal
improvements has been commenced on or in connection with any parcel of Real
Property or any street adjacent thereto and to the knowledge of Seller, no such
improvements are contemplated. No assessment for public improvements has been
made against the Real Property which remains unpaid. No notice from any
Government has been served upon the Real Property or the Seller, or received by
any owner of any of the Real Property subject to a Lease, requiring or calling
attention to the need for any work, repair, construction, alteration, or
installation on or in connection with the Real Property which has not been
complied with.
(g) Seller holds all Environmental Permits necessary for conducting the
Business and has conducted, and is presently conducting, the Business in
material compliance with all applicable Environmental Laws and Environmental
Permits held by it, including, without limitation, all record keeping and filing
requirements. To the Seller's knowledge, all Hazardous Materials and Solid
Waste, on, in, or under Real Property have been properly removed and disposed
10
of, and to the Seller's knowledge no past or present disposal, discharge, spill,
or other release of, or treatment, transportation, or other handling of
Hazardous Materials or Solid Waste on, in, under, or off-site from any Real
Property will subject the Purchasers, or any subsequent owner, occupant, or
operator of the Real Property to corrective or compliance action or any other
liability. There are no presently pending, or to Seller's knowledge, threatened
Actions or Orders against or involving Seller relating to any alleged past or
ongoing violation of any Environmental Laws or Environmental Permits with
respect to the Real Property, nor to Seller's knowledge is Seller subject to any
liability for any such past or ongoing violation. The foregoing representations
exclude the matters disclosed in the environmental reports referenced in
Schedule 3.7(g).
3.8 Financial Statements. Schedule 3.8 contains for each Restaurant
unaudited statements of operations as of the end of the 1997 fiscal year and for
each fiscal month ended thereafter through the date hereof for which such
statements are available, prepared in accordance with generally accepted
accounting principles, except for the absence of explanatory notes and except as
otherwise expressly described therein (the "Financial Statements"). The
Financial Statements fairly present the operations of the Restaurants for the
periods presented and as of their respective dates.
3.9 Taxes. All Property Taxes relating to the Assets have been fully paid
for 1997 and all prior tax years and there are no delinquent Property Tax liens
or assessments. Seller has also timely filed (or will timely file) all other tax
returns and reports of whatever kind pertaining to the Assets and required to be
filed by Seller up to the Closing Date. Seller has paid (or will timely pay) all
taxes of whatever kind, including any interest, penalties, governmental charges,
duties, fees, and fines imposed by all governmental entities or taxing
authorities, which are due and payable prior to the Closing Date or which relate
to any period prior to the Closing Date, the nonpayment of which would result in
lien on any of the Assets. There are no audits, suits, actions, claims,
investigations, inquiries, or proceedings pending or, to Seller's knowledge,
threatened against Seller with respect to taxes, interest, penalties,
governmental charges, duties, or fines, nor are any such matters under
discussion with any governmental authority, nor have any claims for additional
taxes, interest, penalties, charges, fines, fees, or duties been received by or
assessed against Seller that in any such case affect the Assets.
3.10 Litigation. (a) Except as set forth on Schedule 3.10, there is no
material action, suit, investigation, or proceeding pending or, to the knowledge
of Seller, threatened against or affecting Seller that pertains to the
Restaurants, or any of the Assets before any Forum.
(b) Seller is not a party to, or subject to any Order entered in any Action
brought by any Government or Person seeking to prevent the execution of this
Agreement or the consummation of the transactions contemplated hereby.
3.11 Permits. Seller has all material Permits as are necessary to operate
the Restaurants. Seller has fulfilled and performed all of its material
obligations with respect to such Permits and no event has occurred which allows,
nor after notice or lapse of time or both would allow, revocation or termination
thereof or would result in any other impairment of the rights of the holder of
any such Permits.
3.12 Health and Safety Requirements. To the knowledge of Seller, Seller is
in compliance with all laws, governmental standards, rules and regulations
applicable to Seller or to any of the Assets in respect to the Americans with
Disabilities Act and similar state laws, occupational health and safety laws,
and Environmental Laws except as shown on Schedule 3.12.
3.13 Employment Contracts, Etc. Seller is not a party to any written
employment agreements related to the employees at the Restaurants (or any oral
agreements providing for employment other than employment "at will") or any
deferred compensation agreements.
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3.14 Labor Matters. Seller is not and never has been a party to any
collective bargaining or other labor agreement affecting the Business. There is
no pending or threatened labor dispute, strike, work stoppage, union
representation, election, negotiation of collective bargaining agreement, or
similar labor matter affecting the Business. Seller is not involved in any
controversy with any group of its employees or any organization representing any
employees involved in the Business, and to the knowledge of Seller, Seller is in
compliance with all applicable Government laws and regulations concerning the
employer/employee relationship, including but not limited to wage/hour laws,
laws prohibiting discrimination, and labor laws. Seller is in compliance with
all laws relating to the employment of its employees, including, without
limitation, provisions thereof relating to wages, bonuses, hours of work and the
payment of Social Security taxes, and Seller is not liable for any unpaid wages,
bonuses, or commissions or any tax, penalty, assessment, or forfeiture for
failure to comply with any of the foregoing.
3.15 Employee Benefits.
(a) Schedule 3.15 hereto contains a true and complete list of all the
following agreements or plans of Seller which are presently in effect and which
pertain to any of the employees engaged in the Business:
(i) "employee welfare benefit plans" and "employee pension benefit plans,"
as defined in Sections 3(1) and 3(2), respectively, of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA");
(ii) any other pension, profit sharing, retirement, deferred compensation,
stock purchase, stock option, incentive, bonus, vacation, severance, disability,
health, hospitalization, medical, life insurance, vision, dental, prescription
drug, supplemental unemployment, layoff, automobile, apprenticeship and
training, day care, scholarship, group legal benefits, fringe benefits, or other
employee benefit plan, program, policy, or arrangement, whether written or
unwritten, formal or informal, which Sellers maintains or to which Seller has
any outstanding, present, or future obligation to contribute to or make payments
under, whether voluntary, contingent, or otherwise (the plans, programs,
policies, or arrangements described in clauses (i) or (ii) are herein
collectively referred to as the "Seller Plans").
(b) Seller does not presently contribute, nor has it ever contributed or
been obligated to contribute, to a multiemployer plan as defined in section
3(37)(A) of ERISA.
(c) No Seller Plan is subject to Title IV of ERISA.
3.16 Accuracy of Schedules, Certificates and Documents. All information
concerning Seller contained in any certificate furnished to Purchasers pursuant
to this Agreement or in the Disclosure Memorandum is or will be when furnished
both complete and accurate in all material respects; and all documents furnished
to Purchasers pursuant to this Agreement which are documents described in this
Agreement or in the Disclosure Memorandum are true and correct copies of the
documents which they purport to represent.
ARTICLE IV - COVENANTS OF SELLER
4.1 Performance of Real Property Leases and Assumed Contracts. Seller
shall, through the Closing Date, continue to faithfully and diligently perform
each and every continuing obligation of Seller, if any, under each of the Leases
and Material Contracts.
4.2 Transfer of Licenses and Permits. Seller shall use its reasonable best
efforts to assist Purchasers with the assumption, transfer, or reissuance of any
and all Permits.
4.3 Liabilities of Seller. All liabilities of Seller related to the Assets
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that do not constitute Assumed Liabilities will be promptly paid by Seller as
they come due.
4.4 Agreements Respecting Employees of Seller.
(a) Prior to the Effective Time without the prior written approval of
Purchasers, Seller shall not transfer or reassign to operations outside the
Business (i) any employee exclusively involved in the operation or supervision
of the Restaurants or (ii) any of Seller's district operators for the Territory
(collectively, "ADI Personnel"). For a period of twelve months following the
Closing, Seller shall not employ any ADI Personnel (or former employee of Seller
who would have been an ADI Personnel but for a transfer by Seller or termination
of employment with Seller on or before April 1, 1998) or for a period of
eighteen months following the Closing solicit any such person for employment.
(b) Seller shall be solely responsible for any severance amounts due or
granted by Seller to any ADI Personnel.
(c) Seller and Purchasers shall cooperate in the transition of coverage of
ADI Personnel from Seller's health, medical, life insurance and other welfare
plans to plans maintained by Purchasers.
4.5 Conduct of Business. From the date hereof until Closing:
(a) Seller shall (i) operate the Restaurants as they are currently being
operated and in the ordinary course of business and in compliance with all terms
and conditions of the Franchise Agreements, using its reasonable best efforts in
keeping with Seller's historical practices to preserve and maintain the services
of its employees and its relationships with suppliers and customers, (ii) pay
all bills and debts incurred by it related to the Business promptly as they
become due, and (iii) consult in advance with Purchasers on all decisions
outside the ordinary course of business relating to the Assets or the
Restaurants.
(b) In particular, and without limiting the foregoing, with respect to the
Business, Seller shall:
(i) continue to conduct the advertising activities and efforts as set forth
on Schedule 4.5;
(ii) maintain the Assets consistent with past practices and in accordance
with the maintenance capital expenditure budget set forth on Schedule 4.5;
(iii) continue to conduct on a timely basis all Restaurant remodeling and
refurbishments as set forth on Schedule 4.5, which Schedule shows the remodel
and refurbishment activities for Seller with respect to the Territory as
budgeted by Seller;
(iv) continue to purchase and maintain inventories for each Restaurant in
such quantities and quality as necessary to operate the Restaurants in
accordance with Seller's historical practice;
(v) continue to operate the Restaurants in accordance with all material
applicable local, state, and federal laws and regulations; and
(c) Further, with respect to the Restaurants, Seller shall not, without the
express prior written approval of Purchasers:
(i) change the ownership of the Assets;
(ii) increase the rate of compensation to ADI Personnel beyond the usual
and customary annual merit increases or bonuses under established compensation
plans, except for payments under the stay-bonus plan described on Schedule 4.5;
(iii) mortgage, pledge, or subject to lien (except in connection with
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development efforts pursuant to Section 4.7 in the ordinary course of business)
any of the Assets;
(iv) sell or otherwise dispose of any Asset described in Section 3.5(d)
except replacement of such Asset in the ordinary course of business;
(v) enter into any Material Contract except in the ordinary course of
business;
(vi) other than in the ordinary course of business, cancel or terminate or
consent to or accept any cancellation or termination of any Material Contract or
Lease, amend or otherwise modify any of its material terms or waive any breach
of any of its material terms or provisions or take any other action in
connection with any Material Contract or Lease that would materially impair the
interests or rights of Seller to be transferred to Purchasers hereunder.
4.6 Access to Information. Seller shall afford Purchasers, their counsel,
financial advisors, auditors, lenders, lenders' counsel and other authorized
representatives reasonable access for any purpose consistent with this Agreement
from the date hereof until the Closing, during normal business hours, to the
offices, properties, books, and records of Seller with respect to the Assets and
the Restaurants and shall furnish to Purchasers such additional financial and
operating data and other information as Seller may possess and as Purchasers may
reasonably request, subject to Purchasers' obligations regarding the
confidentiality of such information as set forth in Section 6.2 hereof;
provided, however, that such access shall be arranged in advance by Purchasers
with Seller and will be scheduled in a manner and with a frequency calculated to
cause the minimum disruption of the business of Seller.
4.7 Development Efforts. Seller shall use its reasonable best efforts to
continue up to the Closing the development of the new Applebee's listed on
Schedule 4.7 in accordance with the timetable and budget set forth on such
Schedule.
4.8 Reporting Requirements. Through the Closing Date, Seller shall furnish
to Purchasers:
(a) Promptly after the occurrence, or failure to occur, of any such event,
information respect to any event which has materially affected, adversely or
otherwise, the Assets or the operations of the Restaurants.
(b) As soon as available and in any event within fifteen business days
after the end of each fiscal month, the statement of operations of each
Restaurant for such month in the Seller's regularly prepared format.
(c) Promptly after the commencement of each such matter, notice of all
actions, charges, orders or other directives affecting the Business or any
Restaurant that could materially affect the Assets, the operations, business,
prospects or condition (financial or otherwise) of the Restaurant or the ability
of Seller to perform its obligations hereunder;
(d) Such other information respecting the Assets or the operations,
business prospects, or condition (financial or otherwise) of the Restaurants as
the Purchasers may from time to time reasonably request.
4.9 Cooperation. (a) Insofar as such conditions are within its reasonable
control or influence, Seller will use its reasonable best efforts to cause the
conditions set forth in Article VII to be satisfied and to facilitate and cause
the consummation of the transactions contemplated hereby, including obtaining
the Consents.
(b) The parties acknowledge that no consents will be sought with respect to
any Minor Contract even if the failure to so obtain a consent to assignment may
result in a default or termination thereunder.
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(c) Seller will use its reasonable best efforts to obtain required consents
of landlords to the assignment of the Leases and shall bear any expenses
associated with obtaining such consents; however, Seller shall not be required
to make any payment to a landlord (other than reimbursement of expenses or as
provided in subparagraph (d) below) or agree to any concessions or amendment to
other leases or arrangements with such landlord in order to obtain such
consents. If required in order to obtain a landlord's required consent to
assignment of a Lease, Seller shall agree to remain liable on the Lease (but not
on any extension obtained pursuant to Section 4.13). Seller shall not be
required to guarantee any Lease.
(d) If necessary to obtain a landlord's required consent to the assignment
of a Lease, Seller and Purchasers shall spend up to a total of $100,000 (such
cost to be paid one-half by Seller and one-half by Purchasers) for payment to
the landlord, to fund legal action to obtain the consent, or for other similar
purposes; provided that such expenditures shall not be required for more than
three Leases.
(e) If Seller is unable to obtain required consents to the assignment of
three or fewer Leases, then such Leases shall not be assigned hereunder and the
Restaurants located on the premises subject to such Leases shall constitute
Excluded Restaurants.
4.10 Subsequent Contracts. From the date of this Agreement to the Closing
Date, Seller shall use its reasonable best efforts (a) to include in any
Material Contracts entered into by Seller ("Subsequent Contracts") a provision
permitting the assignment of any such Subsequent Contract to Purchasers and
providing that upon such assignment, Purchasers shall succeed to all of Seller's
rights, title, and interests thereunder subject to the Purchasers' assumption of
all of Seller's duties, powers, and obligations under such Subsequent Contract,
and (b) to ensure that no Subsequent Contract contains any provision which would
limit in any way the rights, title, and interests of Seller or, prospectively,
the Purchasers in the Assets.
4.11 Transition Services.
(a) For a period of three months after the Closing, if and to the extent
requested in writing by Purchasers, Seller agrees to provide to Purchasers
restaurant accounting, POS system support, and other services related to the
Restaurants as mutually agreed upon between Seller and Purchasers (the
"Services"). Purchasers shall give Seller thirty days advance written notice of
the Services requested. The Services shall be provided promptly as requested and
shall be provided in the same manner and with the same or similar personnel as
Seller previously utilized.
(b) Purchasers will pay for the Services on a monthly basis, after receipt
of an invoice from Seller. The price for the Services shall be mutually agreed
upon by the parties.
(c) Seller is not required to maintain the employment of any specific
personnel in connection with providing the Services; provided, however, that if
requested by Purchasers, Seller shall offer to specifically designated personnel
a bonus incentive to remain for the three-month period. The amount of such bonus
shall be at the discretion of Purchasers. Such bonus, if accepted by the
employee, shall be paid by Purchasers at the end of the three-month period, or
for such shorter period as Purchasers may determine.
4.12 Delivery of Real Estate Documents. Within two days of the date hereof
Seller shall provide to Purchasers legal descriptions of the Owned Real Property
and copies of all surveys, title policies, and environmental reports pertaining
to the Owned Real Property in Seller's possession.
4.13 Leases. Seller shall use its reasonable best efforts to obtain
extensions or options to extend so that each Lease (excluding the Leases for the
Boynton Beach and the Sarasota Restaurants) designated by Purchasers will have a
15
remaining term after Closing (including any term for which a Purchaser shall
have the right to extend) of at least fifteen years on terms acceptable to
Purchasers; however, Seller shall not be required to make any payment to obtain
any such extension or agree to remain liable during any such extension period.
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchasers hereby represent and warrant to Sellers as follows:
5.1 Organization, Corporate Power, Authorization. Each Purchaser other than
WIGEL Partnership is a limited liability company duly organized, validly
existing, and in good standing under the laws of the State of Florida and in
each other jurisdiction in which it is lawfully required to qualify to conduct
business. WIGEL Partnership is a general partnership duly organized under the
laws of the State of New York. Each Purchaser has the power and authority to
execute and deliver this Agreement, the Note, and the Xxxx of Sale and
Assignment Agreement, and to consummate the transactions contemplated hereby.
All company or partnership action on the part of each Purchaser necessary for
the authorization, execution, and delivery of this Agreement, the Note, and the
Xxxx of Sale and Assignment Agreement, and performance of all obligations of
each Purchaser thereunder has been duly taken.
5.2 Non-Contravention. The execution and delivery of this Agreement, the
Note, and the Xxxx of Sale and Assignment Agreement by each Purchaser does not
and the consummation by each Purchaser of the transactions contemplated hereby
and thereby will not violate any provision of its articles of organization or
operating agreement or other organizational documents.
5.3 Validity. This Agreement has been duly executed and delivered by each
Purchaser, and constitutes the legal, valid, and binding obligation of each
Purchaser, enforceable against it in accordance with its terms, subject to
general equity principles and to applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws from time to time in effect
affecting the enforcement of creditors' rights. When each of Note and the Xxxx
of Sale and the Assignment Agreement has been executed and delivered in
accordance with this Agreement, it will constitute the legal, valid, and binding
obligation of each Purchaser, enforceable in accordance with its terms, subject
to general equity principles and to applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws from time to time in effect
affecting the enforcement of creditors' rights.
5.4 Litigation Relating to the Agreement. No Purchaser is a party to, or
subject to any Order entered in any Action brought by any Government or other
Person seeking to prevent the execution of this Agreement or the consummation of
the transactions contemplated hereby.
ARTICLE VI - COVENANTS OF PURCHASER
6.1 Purchaser Performance. After the Closing Date, Purchasers shall
promptly pay as they become due and otherwise perform all obligations of Seller
under the Assumed Liabilities and otherwise perform and fulfill all other
obligations with respect to the Assets pertaining to the period after the
Closing Date.
6.2 Confidentiality. In connection with the negotiation of this Agreement,
Seller may disclose Confidential Information, as defined below, to Purchasers.
Purchasers agree that if the transactions contemplated herein are not
consummated, they will return to Seller all documents and other written
information furnished to it. Purchasers further agree to maintain the
confidentiality of any and all Confidential Information of Seller and not
disclose any Confidential Information to any Person other than such Person to
whom Confidential Information must be disclosed to effect the transactions and
who are bound by appropriate non-disclosure agreement or obligations. Purchasers
shall not use such Confidential Information for financial gain or in any manner
16
adverse to Seller. The foregoing obligations shall not apply to (i) any
information which was known by Purchasers prior to its disclosure by Seller;
(ii) any information which was in the public domain prior to the disclosure
thereof; (iii) any information which comes into the public domain through no
fault of Purchasers; (iv) any information which is disclosed to Purchasers by a
third party, other than an affiliate, having the legal right to make such
disclosure; or (iv) any information which is required to be disclosed by Order
of or legal process issued by any Forum. For purposes of this Section,
"Confidential Information" shall mean any and all technical, business, and other
information which (a) is possessed or hereafter acquired by Seller and disclosed
to Purchasers and (b) derives economic value, actual or potential, from not
being generally known to Persons other than Seller, including, without
limitation, technical or nontechnical data, compositions, devices, methods,
techniques, drawings, inventions, processes, financial data, financial plans,
product plans, lists of actual or potential customers or suppliers, information
regarding the business plans and operations of Seller, and the existence of
discussions and negotiations between the parties hereto relating to the terms
hereof. The restrictions of this Section shall expire three years from the date
hereof with respect to any confidential business information that does not
constitute a trade secret under applicable law.
6.3 Seller Employees.
(a) Purchasers shall offer employment to all ADI Personnel upon terms and
conditions substantially equivalent to those provided by Seller; however,
Purchasers shall not be required to provide stock options or any stock purchase
rights. For a period of twelve months following the Closing, Purchasers shall
not employ any person who was an employee of Seller or any subsidiary of Seller
on or after April 1, 1998 (other than ADI Personnel), and for a period of
eighteen months following the Closing, Purchasers shall not solicit for
employment any such person.
(b) Purchasers shall maintain employee records transferred to Purchasers
hereunder for a period of not less than four years and during that period will
afford Seller reasonable access to such records during Purchasers' normal
business hours. Purchasers shall maintain the confidentiality of such records
and limit access thereto in a manner consistent with Purchasers' treatment of
its employee records.
(c) Purchasers agree with respect to ADI Personnel hired by Purchasers: (i)
to give such employees credit under Purchasers' benefits plans, programs, and
arrangements, including credit for accrued vacation which has been charged to
Seller under Section 2.3, for such employees' period of service with Seller,
provided that such credit shall only be taken into account under any
tax-qualified plan maintained by Purchasers for purposes of determining such
employees' eligibility for participation and eligibility to satisfy any hours of
service requirement in order to receive an allocation of an employer
contribution; (ii) to provide coverage to such employees who are eligible under
Purchasers' health, medical, life insurance, and other welfare plans (A) without
the need to undergo a physical examination or otherwise provide evidence of
insurability; (B) any pre-existing condition or similar limitations or
exclusions will be applied by taking into account the period of coverage under
Seller's plan; (C) by applying and giving credit for amounts paid for the plan
year in which the Closing Date occurs as deductibles, out of pocket expenses,
and similar amounts paid by individuals and their beneficiaries.
6.4 Cooperation. Insofar as such conditions are within their reasonable
control or influence, Purchasers shall use their reasonable best efforts to
cause the conditions set forth in Article VII to be satisfied and to facilitate
and cause the consummation of the transactions contemplated hereby.
Specifically, but not by way of limitation, Purchasers will (i) use their
reasonable best efforts to obtain a commitment letter for financing the
transactions contemplated hereby on substantially the terms set forth in Exhibit
D (the "Financing Commitment") and to obtain financing on such terms, (ii)
promptly provide Franchisor with all information required by Franchisor to
17
determine whether Purchasers will be approved as franchisees with respect to the
Territory, (iii) actively pursue an agreement with Franchisor as to the
principal terms of franchise and development agreements with respect to the
Territory, and (iv) if necessary, file all documents required to obtain approval
of the transactions contemplated hereby under the HSR Act within 15 days of the
date hereof.
ARTICLE VII - CONDITIONS PRECEDENT TO THE CLOSING
7.1 Title Examination and Property Inspection. (a) Purchasers shall have 45
days following receipt of the documents referred to in Section 4.12 (the "Title
Inspection Period") to obtain and review (i) current surveys and title insurance
commitments with respect to the Owned Real Property ("Owner's Title
Commitments") pursuant to which the Title Company will agree to issue at Closing
owner's policies of title insurance ("Owner's Title Policies") on American Land
Title Association standard Form B-1990, without exceptions except as shown in
the Owner's Title Commitments, to be issued by Lawyers Title Insurance
Corporation ("Title Company") in an amount in the case of each parcel equal to
the purchase price allocated to such parcel of the Owned Real Property pursuant
to Section 2.7, and (ii) current surveys and title insurance commitments with
respect to the Real Property subject to a Lease (collectively, the "Leased Real
Property") (the "Lessee Title Commitments", and collectively with the Owner's
Title Commitments, the "Title Commitments") pursuant to which the Title Company
will agree to issue at Closing lessee's policies of title insurance ("Lessee's
Title Policies") on American Land Title Association standard form of leasehold
owner's policy to insure leasehold estates, showing no exceptions except as
shown in the Lessee Title Commitments. The Owner's Title Policies shall insure
the Purchasers that, upon consummation of the purchase and sale herein
contemplated, a Purchaser will be vested with good, fee simple, marketable and
insurable title to the Owned Real Property, subject only to the Permitted
Encumbrances or arising out of acts of the insured. The Lessee's Title Policies
shall insure the Purchasers that, upon consummation of the transactions herein
contemplated, Purchasers will be vested with a good, valid, marketable and
insurable leasehold estate in and to the Leased Real Property, subject only to
the Permitted Encumbrances. Purchasers shall have until the end of the Title
Inspection Period in which to furnish Seller a written statement of reasonable
objections to exceptions which, in Purchasers' reasonable judgment, would
unreasonably interfere with the marketability of the Real Property for
restaurant or any commercial use (except as limited by restrictions of record
when Seller acquired the Real Property) ("Material Objections"). Seller shall
have until the Termination Date to satisfy such Material Objections in all
material respects, but Seller shall have no obligation to do so. Seller shall,
however, be obligated to remove any liens that can be satisfied by the payment
of money or to bond over any liens that can be bonded over. If Seller fails to
satisfy all Material Objections in all material respects on or prior to the
Termination Date, then Purchasers' sole right and remedy shall be to (i) waive
the objections and elect to close, (ii) if no more than two Restaurant sites are
subject to unresolved Material Objections, designate one or both of such
Restaurants as Excluded Restaurants (provided that no more than two Restaurants
collectively under this subsection (a) and under subsection (b) below may be
designated as Excluded Restaurants), or (iii) if more than two Restaurant sites
are subject to unresolved Material Objections, terminate this Agreement by
giving written notice of such termination to Seller. If Purchasers fail to
furnish Seller a written statement of Material Objections by the end of the
Title Inspection Period with respect to any matter appearing as an exception on
a Title Commitment, such matter shall be deemed waived by Purchasers and shall
be a Permitted Encumbrance. The parties acknowledge that some of the Leased Real
Property may be located in shopping centers, and as such, unless the leased
premises are a free standing building located on a separate pad with its own
legal description ("Free Standing Premises") the Lessee Title Commitments for
such Leased Real Property will contain encumbrances for entire shopping centers.
Notwithstanding anything to the contrary contained herein, while Lessee Title
Commitments will be delivered for such Leased Real Property, no surveys will be
delivered and no Lessee's Title Policies will be issued for Leases unless such
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Leases are for Free Standing Premises. Purchasers may not object to title
encumbrances for such Leased Real Property that do not affect the premises
leased under the Leases, which such encumbrances shall be deemed to be Permitted
Encumbrances.
(b) Property Inspection.
(A) Between the date of this Agreement and the Closing Date, Purchasers and
Purchasers' agents, employees, contractors, representatives and other designees
(hereinafter collectively called "Purchasers' Designees") shall have the right
to enter the Real Property for the purposes of inspecting the Real Property,
conducting soil tests, conducting surveys, mechanical and structural engineering
studies, environmental studies, and conducting any other investigations,
examinations, tests, and inspections as Purchasers may reasonably require to
assess the condition of the Real Property; provided, however, that (i) any
activities by or on behalf of Purchasers, including, without limitation, the
entry by Purchasers or Purchasers' Designees onto the Real Property, or the
other activities of Purchasers or Purchasers' Designees with respect to the Real
Property (hereinafter called "Purchasers' Activities") shall not damage the Real
Property in any manner whatsoever or disturb or interfere with the rights of any
lessor of Leased Real Property; (ii) in the event the Real Property is altered
or disturbed in any manner in connection with any Purchasers' Activities,
Purchasers shall immediately return the Real Property to the condition existing
prior to Purchasers' Activities; (iii) Purchasers shall in no event without
Seller's prior written consent disclose the results of any of its
investigations, examinations, tests, or inspections to any party (including any
Government unless required by law) other than to its lenders, attorneys,
consultants, and investors; and (iv) Purchasers shall indemnify, defend, and
hold Seller harmless from and against any and all claims, liabilities, damages,
losses, costs, and expenses of any kind or nature whatsoever (including, without
limitation, attorneys' fees, and expenses and court costs) suffered, incurred or
sustained by Seller as a result of, by reason of, or in connection with any
Purchasers' Activities. Notwithstanding any provision of this Agreement to the
contrary, Purchasers shall not have the right to undertake any environmental
studies or testing beyond the scope of a standard "Phase I" evaluation without
the prior written consent of Seller and, if applicable, the lessor of any Leased
Real Property.
(B) Purchasers shall have until the Closing Date to perform such
investigations, examinations, tests and inspections as Purchasers shall deem
necessary or desirable to determine whether the Real Property is subject to any
defect that would unreasonably interfere with its use as a restaurant ("Property
Defect"). In the event Purchasers shall reasonably determine that the Real
Property is subject to a Property Defect, Purchasers shall give written notice
to Seller on or before the 45th day following the date hereof (the "Due
Diligence Date") except for Property Defects that arise after the Due Diligence
Date, notice of which may be given through the Closing Date. If notice of a
Property Defect is not timely given, it shall be deemed waived by Purchasers.
Upon the receipt of such notice timely given, Seller shall have until the
Termination Date to cure any Property Defect (but with no obligation to do so)
in all material respects, and if Seller fails to do so, then Purchasers' sole
right and remedy shall be to (i) waive such Property Defect and elect to close,
(ii) if no more than two Restaurant sites are subject to unresolved Property
Defects, designate one or both of the Restaurants located on the site as
Excluded Restaurants (provided that no more than two Restaurants collectively
under this subsection (b) and subsection (a) above may be designated as Excluded
Restaurants), or (iii) if more than two Restaurant sites are subject to
unresolved Property Defects terminate this Agreement by giving written notice to
Seller.
(C) Prior to any entry by Purchasers or any of Purchasers' Designees onto
the Real Property, Purchasers shall: (i) procure a policy of commercial general
liability insurance, issued by an insurer reasonably satisfactory to Seller,
covering all Purchasers' Activities, with a single limit of liability (per
occurrence and aggregate) of not less than $1,000,000.00; and (ii) deliver to
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Seller a Certificate of Insurance, evidencing that such insurance is in force
and effect, and evidencing that Seller has been named as an additional insured
thereunder with respect to any Purchasers' Activities. Such insurance shall be
written on an "occurrence" basis, and shall be maintained in force until the
earlier of (i) the termination of this Agreement and the conclusion of all
Purchasers' Activities; or (ii) Closing.
(D) Purchasers acknowledge that Seller may deliver to Purchasers certain
documents and information in possession of Seller or Seller's agents with regard
to the Real Property (hereinafter called the "Due Diligence Materials"). The Due
Diligence Materials will be provided to Purchasers without any representation or
warranty of any kind or nature whatsoever and are merely provided to Purchasers
for Purchasers' informational purposes. Until Closing, Purchasers and
Purchasers' Designees shall maintain all Due Diligence Materials as Confidential
Information.
7.2 Purchasers' Conditions to Closing. The obligations of Purchasers
hereunder are subject to satisfaction of each of the following conditions at or
before Closing, the occurrence of which may, at the option of Purchasers, be
waived:
(a) Subject to the matters disclosed in the Disclosure Memorandum, all
representations and warranties of Seller in this Agreement shall be true in all
material respects on and as of the Closing.
(b) Seller shall have performed and complied in all material respects with
all of its obligations under this Agreement which are to be performed or
complied with by Seller prior to or on the Closing Date.
(c) Seller shall have obtained and delivered to Purchasers all consents
necessary to transfer and assign the Assets (except for Minor Contracts and
those consents relating to Excluded Restaurants) to Purchasers.
(d) Purchasers and Franchisor shall have entered into a franchise agreement
with respect to each Restaurant and development agreements with respect to each
ADI in the Territory.
(e) Purchasers shall have obtained, either from Seller or directly from the
issuing authority, all permits, licenses, including liquor licenses, and
approvals of all governmental and quasi-governmental authorities necessary for
the operation of the Restaurants in accordance with franchise requirements;
provided, however, that if Purchasers are unable to obtain from local municipal
or county authorities a permit necessary for such operation of the Restaurants,
and Purchasers reasonably believe that they will be able to obtain such a permit
within two months of the Closing Date, Closing of the transactions contemplated
hereunder will not be delayed if Seller delivers to Purchasers a duly executed
liquor license management agreement or agreements.
(f) If applicable, the waiting period under the HSR Act shall have expired
or a notification of early termination of the waiting period shall have been
received by Purchasers.
(g) Purchasers shall have obtained the financing described on Exhibit D
upon terms and conditions reasonably acceptable to Purchasers or other financing
reasonably acceptable to Purchasers.
(h) Purchasers shall have been issued the Title Policies.
(i) Seller shall have delivered the items required by Section 2.4(a).
7.3 Seller's Conditions to Closing. The obligations of Seller hereunder are
subject to satisfaction of each of the following conditions at or before
Closing, the occurrence of which may, at the option of Seller, be waived:
(a) All representations and warranties of Purchasers in this Agreement
20
shall be true on and as of the Closing, and Purchasers shall have delivered to
Seller a certificate to such effect dated as of the Closing Date.
(b) Purchasers shall have performed and complied in all material respects
with all of their obligations under this Agreement which are to be performed or
complied with by Purchasers prior to or on the Closing Date.
(c) Franchisor shall have agreed to terminate the Franchise Agreements, or
release the Seller of all its obligations thereunder, effective as of the
Closing.
(d) Seller shall have obtained all the Consents (except those relating to
Excluded Restaurants).
(e) If applicable, the waiting period under the HSR Act shall have expired
or a notification of early termination of the waiting period shall have been
received by Seller.
(f) Purchasers shall have delivered the items required by Section 2.4(b).
ARTICLE VIII - INDEMNIFICATION
8.1 Purchaser Claims.
(a) Seller shall indemnify and hold harmless Purchasers, their successors
and assigns, against, and in respect of:
(i) Any and all damages, claims, losses, liabilities, costs, and expenses
incurred or suffered by Purchasers that result from, relate to, or arise out of:
(A) any and all liabilities and obligations of Seller of any nature
whatsoever, except for the Assumed Liabilities;
(B) any failure by Seller to carry out any covenant or agreement contained
in this Agreement;
(C) except as otherwise provided in Section 9.1, any misrepresentation or
breach of warranty by Seller contained in this Agreement, the Disclosure
Memorandum, or any certificate, furnished to Purchasers by Seller pursuant
hereto; or
(D) any claim by any Person for any brokerage or finder's fee or commission
in respect of the transactions contemplated hereby as a result of Seller's
dealings, agreement, or arrangement with such Person.
(ii) Any and all actions, suits, claims, proceedings, investigations,
demands, assessments, audits, fines, judgments, costs, and other expenses
(including, without limitation, reasonable legal fees and expenses) incident to
any of the foregoing including all such expenses reasonably incurred in
mitigating any damages resulting to Purchasers from any matter set forth in
subsection (i) above.
(b) Notwithstanding the foregoing, Seller shall have no liability (for
indemnification or otherwise) with respect to Section 8.1(a)(i)(C) (and Section
8.1(a)(ii) to the extent the items covered thereby relate back to Section
8.1(a)(i)(C)) unless and until the aggregate liability of Seller thereunder
exceeds $500,000, whereupon Seller shall have liability for such indemnification
from the first dollar as if such threshold did not exist; provided, however,
that liabilities arising with respect to Sections 3.1 through 3.4, 3.5(a),
3.5(b), 3.5(c), 3.7(g), and 3.8 through 3.10 hereof shall not be subject to the
foregoing threshold and any liabilities arising with respect to such matters
shall not be taken into account in computing aggregate liabilities for the
purpose of applying such threshold amount to liabilities arising under other
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Sections subject thereto.
(c) The amount of any liability of Seller under this Section 8.1 shall be
computed net of any tax benefit to Purchasers from the matter giving rise to the
claim for indemnification hereunder and net of any insurance proceeds received
by Purchasers with respect to the matter out of which such liability arose.
(d) The representations and warranties of Seller contained in this
Agreement, the Disclosure Memorandum, or any certificate delivered by or on
behalf of Seller pursuant to this Agreement or in connection with the
transactions contemplated herein shall survive the consummation of the
transactions contemplated herein and shall continue in full force and effect for
the periods specified below ("Survival Period"):
(i) the representations and warranties contained in Section 3.5(d) shall be
of no further force and effect after sixty days from the date of the Closing;
(ii) the representations and warranties contained in Sections 3.1, through
3.4, 3.5(a), 3.5(b), and 3.5(c) and Section 3.7(g) and any obligations arising
pursuant to the Deeds shall survive until the expiration of any applicable
statues of limitation provided by law; and
(iii) all other representations and warranties of Seller shall be of no
further force and effect after two years from the date of the Closing.
Anything to the contrary notwithstanding, the Survival Period shall be
extended automatically to include any time period necessary to resolve a written
claim for indemnification which was made in reasonable detail before expiration
of the Survival Period but not resolved prior to its expiration, and any such
extension shall apply only as to the claims so asserted and not so resolved
within the Survival Period. Liability for any such item shall continue until
such claim shall have been finally settled, decided, or adjudicated.
(e) The covenants contained in Section 4.1 through 4.4 and 4.11 and
liability therefor shall survive the Closing. After the Closing, Purchasers may
not assert any claim against Seller for breach of any covenant contained in any
other Section of Article IV and all such claims shall be deemed to be waived as
a result of the Closing.
(f) Purchasers shall provide written notice to Seller of any claim for
indemnification under this Article as soon as practicable; provided, however,
that failure to provide such notice on a timely basis shall not bar Purchasers'
ability to assert any such claim except to the extent that Seller is actually
prejudiced thereby. Purchasers shall use their reasonable best efforts to
mitigate any damages, expenses, etc. resulting from any matter giving rise to
liability of Seller under this Article.
8.2 Seller Claims. (a) Purchasers shall jointly and severally indemnify and
hold harmless Seller against, and in respect of, any and all damages, claims,
losses, liabilities, and expenses, including without limitation, legal
accounting and other expenses, which may arise out of: (i) any breach or
violation by Purchasers of any covenant set forth herein or any failure to
fulfill any obligation set forth herein, including, but not limited to, the
obligation to satisfy the Assumed Liabilities; (ii) except as otherwise provided
in Section 9.1, any breach of any of the representations or warranties made in
this Agreement by Purchasers; (iii) any claim by any Person or any brokerage or
finder's fee or commission in respect of the transactions contemplated hereby as
a result of Purchasers' dealings, agreement, or arrangement with such Person.
(b) The amount of any liability of Purchasers under this Section 8.2 shall
be computed net of any tax benefit to Seller from the matter giving rise to the
claim for indemnification hereunder and net of any insurance proceeds received
by Seller with respect to the matter out of which such liability arose.
8.3 Defense of Third Party Claims. With respect to any claim by Seller or
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Purchasers under Section 8.1 or 8.2, respectively, relating to a third party
claim or demand, the indemnitee shall provide the indemnitor with prompt written
notice thereof in accordance with Section 10.4 and the indemnitor shall defend,
in good faith and at its expense, by legal counsel chosen by it and reasonably
acceptable to the indemnitee any such claim or demand, and the indemnitee, at
its expense, shall have the right to participate in the defense of any such
third party claim. So long as the indemnitor is defending in good faith any such
third party claim, the indemnitee shall not settle or compromise such third
party claim. In any event the indemnitee shall cooperate in the settlement or
compromise of, or defense against, any such asserted claim.
8.4 Exclusive Remedies. The rights and remedies of the parties under this
Article VIII shall be the sole and exclusive rights and remedies that either
party may seek for any misrepresentation, breach of warranty, or failure to
fulfill any covenant or agreement under this Agreement, except that either party
may seek specific performance or injunctive relief.
8.5 Settlement of Disputes.
(a) Arbitration. All disputes with respect to any claim for indemnification
under this Article VIII and all other disputes and controversies of every kind
and nature between the parties hereto arising out of or in connection with this
Agreement shall be submitted to arbitration pursuant to the following
procedures:
(i) After a dispute or controversy arises, either party may, in a written
notice delivered to the other party, demand such arbitration. Such notice shall
designate the name of the arbitrator appointed by such party demanding
arbitration, together with a statement of the matter in controversy;
(ii) Within 30 days after receipt of such demand, the other party shall, in
a written notice delivered to the other party, name such party's arbitrator. If
such party fails to name an arbitrator, then the second arbitrator shall be
named by the American Arbitration Association ("AAA"). The two arbitrators so
selected shall name a third arbitrator within 30 days, or in lieu of such
agreement on a third arbitrator by the two arbitrators so appointed, the third
arbitrator shall be appointed by the AAA;
(iii) The arbitration hearing shall be held in Orlando, Florida. The
Commercial Arbitration Rule of the AAA shall be used and the substantive laws of
the State of Florida (excluding conflict of laws provisions) shall apply;
(iv) An award rendered by a majority of the arbitrators appointed pursuant
to this Agreement shall be final and binding on all parties to the proceeding,
shall deal with the question of costs of the arbitration and all related
matters, including the award of attorneys' fees to the prevailing party as
determined by majority decision of the arbitrators, and judgment on such award
may be entered by either party in a court of competent jurisdiction; and
(v) Except as set forth in subsection (b) below, the parties stipulate that
the provisions of this Section 8.5 shall be a complete defense to any suit,
action or proceeding instituted in any federal, state, or local court or before
any administrative tribunal with respect to any controversy or dispute arising
out of this Agreement. The arbitration provisions hereof shall, with respect to
such controversy or dispute, survive the termination or expiration of this
Agreement.
(b) Emergency Relief. Notwithstanding anything in this Section 8.5 to the
contrary, either party may seek from a court any provisional remedy that may be
necessary to protect any rights or property of such party pending the
establishment of the arbitral tribunal or its determination of the merits of the
controversy.
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ARTICLE IX - TERMINATION
9.1 Termination.
(a) This Agreement may be terminated as follows:
(i) At any time by the mutual consent of Seller and Purchasers;
(ii) By Purchasers pursuant to Section 7.1;
(iii) By Seller if Purchasers shall not have (i) obtained and provided a
copy of a Financing Commitment to Seller within 30 days from the date hereof,
(ii) been approved hereof as franchisees with respect to the Territory by
Franchisor within 45 days of the date hereof, (iii) reached agreement with
Franchisor as to a development schedule and other material terms of franchise
and development agreements with respect to the Territory within 45 days from the
date hereof; or
(iv) By either Seller or Purchasers, at their sole election, at any time
after the Termination Date, if the Closing shall not have occurred on or prior
to such date.
(b) In the event of the termination of this Agreement pursuant to
subparagraph (a)(iv) above because Seller or any Purchaser, as the case may be,
shall have willingly failed to fulfill its obligations hereunder, the other
party shall, subject to Section 8.5, be entitled to pursue, exercise, and
enforce any and all remedies, rights, powers, and privileges available to it at
law or in equity.
(c) If any of the warranties made in this Agreement:
(i) will be or would be, at Closing (as if they had been given again at
Closing) not complied with or otherwise untrue or inaccurate in any material
respect (but was when given not so untrue or inaccurate), then the party in
receipt of that warranty (the "Warrantee") shall be entitled by notice in
writing to the party giving that warranty (the "Warrantor") to terminate this
Agreement, but shall not be entitled to any other rights or remedies, including
the right to claim damages, and failure to exercise this right shall constitute
a waiver of any other rights of the Warrantee arising out of any breach of such
warranty; or
(ii) was, when given, untrue or inaccurate in a material respect, then the
Warrantee shall be entitled by notice in writing to the Warrantor to terminate
this Agreement (in addition to and without prejudice to all other rights and
remedies available to it including the right to claim damages), and failure to
exercise this right shall not constitute a waiver of any other rights of the
Warrantee arising out of any breach of such warranty.
(d) Section 6.2, Article VIII, and Article X hereof shall survive the
termination of this Agreement.
ARTICLE X - MISCELLANEOUS
10.1 Expenses. (a) Each party hereto shall pay its own legal, accounting,
and similar expenses incidental to the preparation of this Agreement, the
carrying out of the provisions of this Agreement, and the consummation of the
transactions contemplated hereby.
(b) Purchasers shall pay all filing fees required under the HSR Act, if
applicable.
(c) Seller shall pay the costs of obtaining title insurance with respect to
the Real Property (provided that Florida properties are insured by a single
24
policy for an aggregate value of no more than $35,000,000) and all transfer,
intangible, recording, and documentary taxes, stamps, and fees with respect to
the transfer of the Owned Real Property and the Leases. Purchasers shall pay the
cost of all surveys, and all environmental investigations, studies, and reports,
and all other costs of any investigation of the Assets, the Restaurants, or the
Business by Purchasers.
(d) Purchasers shall pay any costs associated with the transfer of any
Permits and the cost of obtaining liquor licenses or other Permits that are not
assignable.
(e) The parties shall split equally the cost of any sales taxes, transfer
taxes, documentary stamp taxes, or other taxes imposed with respect to the
transfer of any Assets constituting personal property.
(f) Seller shall pay the cost of performing the physical inventory at
Closing.
(g) Seller shall pay the costs of obtaining any Consents, except as
provided in Section 4.9(d).
(h) Following the Closing, Seller shall pay to Purchasers on a monthly
basis as billed the amount of all gift certificates issued by Seller prior to
the Closing and redeemed thereafter.
10.2 Contents of Agreement; Parties in Interest; etc. This Agreement sets
forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby and constitutes a complete statement of the
terms of such transaction. This Agreement shall not be amended or modified
except by written instrument duly executed by each of the parties hereto. Any
and all previous agreements and understandings between the parties regarding the
subject matter hereof, whether written or oral, are superseded by this
Agreement. Neither party has been induced to enter into this Agreement in
reliance on, and has not relied upon, any statement, representation, or warranty
of the other party not set forth in this Agreement, the Disclosure Memorandum,
or any certificate delivered pursuant to this Agreement.
10.3 Assignment and Binding Effect. This Agreement may not be assigned
prior to the Closing by any party hereto without the prior written consent of
the other party. Subject to the foregoing, all of the terms and provisions of
this Agreement shall be binding upon and inure to the benefit of and be
enforceable by the successors and assigns of Seller and Purchasers.
10.4 Notices. Any notice, request, demand, waiver, consent, approval, or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by telecopy or by
first class registered or certified United States Mail, with proper postage
prepaid, as follows:
If to Seller, to: With a required copy to:
Apple South, Inc. Xxxxxxxxxx Xxxxxxxx LLP
Xxxxxxx at Washington 0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000 Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. (Dusty) Profumo Attention: Xxxxx X. Xxxxxxxxx, Esq.
Fax: 000-000-0000 Fax: 000-000-0000
If to Purchasers: With a required copy to:
Florida Apple North, L.L.C. Chopin, Xxxxxx & Yudenfreund
000 Xxxxxxx Xxxxxx 440 Royal Xxxx Xxx
0xx Xxxxx Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000 Xxxx Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx Attention: L. Xxxxx Xxxxxx
Fax: 000-000-0000 Fax: 000-000-0000
25
or to such other address or person as the addressee may have specified in a
notice duly given to the sender as provided herein. Such notice, request,
demand, waiver, consent, approval or other communication will be deemed to have
been given as of the date actually delivered, or if mailed, four days after
deposit in the U. S. Mail properly addressed with adequate postage affixed.
10.5 FLORIDA LAW TO GOVERN. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA
WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
10.6 Headings. All section headings contained in this Agreement are for
convenience of reference only, do not form a part of this Agreement, and shall
not affect in any way the meaning or interpretation of this Agreement.
10.7 Schedules and Exhibits. All Exhibits and Schedules referred to herein
are intended to be and hereby are specifically made a part of this Agreement.
10.8 Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
10.9 Public Announcements. Seller will prepare and, subject to Purchasers'
review and approval, release all press announcements relating to this Agreement
and the transaction contemplated herein as Seller may find necessary. Except to
the extent required by law, Purchasers shall refrain from issuing any press
release, publicity statement, or other public notice relating to this Agreement
or the transaction contemplated hereby without Seller's prior written approval.
10.10 Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event that any ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party hereto by virtue of the
authorship of any of the provisions of this Agreement.
10.11 Disclaimer of Warranties. OTHER THAN TO THE EXTENT OF ANY EXPRESS
REPRESENTATIONS AND WARRANTIES OF SELLER SET FORTH IN THIS AGREEMENT OR IN ANY
OTHER DOCUMENTS DELIVERED PURSUANT TO SECTION 2.4(a), SELLER DOES NOT, BY THE
EXECUTION AND DELIVERY OF THIS AGREEMENT, MAKE ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, OF ANY KIND OR NATURE WHATSOEVER, WITH RESPECT TO THE
ASSETS, AND ALL SUCH WARRANTIES ARE HEREBY DISCLAIMED. PURCHASER WILL CONDUCT
SUCH INSPECTIONS AND INVESTIGATIONS OF THE ASSETS (INCLUDING, BUT NOT LIMITED
TO, THE PHYSICAL AND ENVIRONMENTAL CONDITION THEREOF) AND RELY UPON SAME AND,
UPON CLOSING, SHALL ASSUME THE RISK THAT ADVERSE MATTERS MAY NOT HAVE BEEN
REVEALED BY PURCHASERS' INSPECTIONS AND INVESTIGATIONS EXCEPT TO THE EXTENT OF
REPRESENTATIONS AND WARRANTIES MADE BY SELLER HEREIN. SELLER SHALL SELL AND
CONVEY TO PURCHASERS, AND PURCHASER SHALL ACCEPT, THE ASSETS "AS IS", "WHERE
IS", AND WITH ALL FAULTS EXCEPT TO THE EXTENT OF REPRESENTATIONS AND WARRANTIES
MADE BY SELLER HEREIN, AND THERE ARE NO ORAL AGREEMENTS, WARRANTIES OR
REPRESENTATIONS, COLLATERAL TO OR AFFECTING THE ASSETS BY SELLER. EXCEPT TO THE
EXTENT OF REPRESENTATIONS AND WARRANTIES MADE BY SELLER HEREIN, SELLER MAKES,
AND SHALL MAKE, NO EXPRESS OR IMPLIED WARRANTY OF SUITABILITY OR FITNESS OF ANY
OF THE ASSETS FOR ANY PURPOSE, OR AS TO THE MERCHANTABILITY, ENVIRONMENTAL
CONDITION, TITLE, VALUE, QUALITY, QUANTITY, CONDITION OR SALABILITY OF ANY OF
THE ASSETS, OR AS TO THE PRESENCE ON OR ABSENCE FROM THE ASSETS OF ANY HAZARDOUS
MATERIAL. THE TERMS AND CONDITIONS OF THIS SECTION 10.11 SHALL SURVIVE THE
CONSUMMATION OF THE PURCHASE AND SALE OF THE ASSETS ON THE CLOSING DATE WITHOUT
REGARD TO ANY GENERAL LIMITATIONS UPON SURVIVAL SET FORTH IN THIS AGREEMENT. THE
LIMITATIONS SET FORTH IN THIS SECTION SHALL IN NO WAY LIMIT ANY WARRANTY FROM
ANY THIRD PARTY.
10.12 Time. Time is and shall be of the essence of this Agreement.
[Signatures Located on Following Pages]
26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
SELLER:
APPLE SOUTH, INC.
By:
Name:
Title:
PURCHASERS:
FLORIDA APPLE NORTH, L.L.C.
By:
Name:
Title:
FLORIDA APPLE SOUTH, L.L.C.
By:
Name:
Title:
FLORIDA APPLE WEST, L.L.C.
By:
Name:
Title:
WIGEL PARTNERSHIP
By:
Name:
Title:
27
EXHIBIT TABLE OF CONTENTS
EXHIBIT TITLE
A Xxxx of Sale and Assignment Agreement
B Opinion of Seller's Counsel
C Opinion of Purchaser's Counsel
D Terms of Financing Commitment
E Form of Note
Exhibits to this agreement are not filed pursuant to Item 601(b)(2) of SEC
Regulation S-K. By the filling of this Form 10-Q, the Registrant hereby agrees
to furnish supplementally a copy of any omitted schedule to the Commission upon
request.
28
