ASSET PURCHASE AGREEMENT
--------------------------
THIS AGREEMENT, made and entered into by and between XXXXXX RESTAURANT
GROUP, INC., d/b/a XXXXXX FOOD SERVICES, INC., SUB & STUFF, INC. and SPAGHETTI
JACK'S, INC. (hereinafter collectively referred to as the "Sellers"), and
QUIZNO'S KANSAS LLC, (hereinafter referred to as the "Buyer").
WHEREAS, the Parties have reached an understanding with respect to the
sale by the Sellers and the purchase by the Buyer of certain of the assets of
the Sellers.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises, covenants and Agreements hereinafter contained, and other good and
valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the Parties hereto, intending legally to be bound, hereby
mutually agree as follows:
1. SALE OF ASSETS. The Sellers agree they will sell, transfer and
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deliver to the Buyer and the Buyer agrees that it will buy subject to the
terms and conditions of this Agreement, for the consideration herein provided,
the Sellers' assets, real, personal and mixed as described below. The Assets
to be sold by Sellers hereunder shall include all of the assets listed on the
attached Exhibit A. With specific reference to the patents, licenses,
trademarks, and other proprietary rights described in Exhibit "A" (the
"Intellectual Property"), Sellers acknowledge that the transfer of the
Intellectual Property to Buyer precludes Sellers from offering or licensing
the Intellectual Property or any part thereof to any franchisee or licensee.
At closing, the Sellers shall transfer, sell, assume and assign, or
convey the assets to the Buyer by executing and delivering to the Buyer good
and sufficient documents necessary to vest marketable title thereto in the
Buyer free and clear of liabilities, obligations, security interests, liens,
taxes and encumbrances whatsoever.
2. PURCHASE PRICE. Subject to the terms and conditions of this
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Agreement and in reliance on their representation and warranties of the
Sellers, along with the approval of the Bankruptcy Court and the Bankruptcy
Court's granting of clear titles free of all encumbrances, Buyer shall
purchase the assets to be conveyed hereunder and in full consideration
therefore, shall pay a total purchase price of Five Hundred Thousand
($500,000) for all the assets.
3. CLOSING AND PAYMENT OF PURCHASE PRICE. The closing of this
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transaction shall be held and the closing date shall be as may be mutually
agreed by the Parties. The Buyer's obligations to close hereunder are
expressly contingent upon the contingencies herein stated and the accuracy of
the representations and warranties of the Sellers contained herein. Upon
receipt of such instruments of transfer, so long as Sellers have timely
performed each and every obligation, covenant, representation or warranty
contained herein, along with receipt of the approval of the Bankruptcy Court
and the Bankruptcy Court's granting of clear titles free of all encumbrances,
in exchange thereof, the Buyer agrees and to pay the purchase price of Five
Hundred Thousand ($500,000) in cash by certified or cashier's check on the
closing date for all of the assets described above. From time to time, at
Buyer's request, the Sellers will execute and deliver such further instruments
of conveyance and transfer and take such other action as the Buyer may
reasonably require to effectively convey and transfer ownership and possession
of the assets purchased hereunder to the Buyer.
4. TITLE TO ASSETS. The Sellers will have good and marketable
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title to all of the assets and shall convey said assets to the Buyer free and
clear of all liens, interests, taxes and encumbrances of every kind and
description, with the approval of the Bankruptcy Court. All leases or other
agreements to be assumed and assigned hereunder shall be pursuant to a final,
nonappealable order more fully described on Addendum A-I hereto.
5. COMPLIANCE WITH LAW. None of the assets nor the manner in
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which any of said assets is being operated or maintained, nor the sale of the
assets to Buyer is in violation of any restrictive covenant, Agreement or
provision of any law or ordinance or governmental regulation or zoning
regulation or encroached upon property owned by others.
6. BUYER HAS NO OBLIGATIONS TO EMPLOYEES OF SELLERS. The Buyer is
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assuming no liability, nor shall Buyer have any liability as a matter of law,
for any past due or accrued obligations relating to Sellers' employees,
including, but not limited to wages, vacation, sick leave, pensions,
retirement plans, or withholding taxes. Buyer shall have the right, but not
the obligation, to employ any or all employees of the Sellers and the Sellers
will not directly or indirectly encourage any employees to leave the employee
of the Buyer or finance them in connection with any enterprise which is in
competition with Buyer or the business acquired by it hereunder. Sellers
represent and warrant that there are no employee unions operating with any of
Sellers' employees at any of Sellers' business locations.
7. OTHER CHANGES. Between the date hereof and the closing date,
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the assets to be sold by the Sellers hereunder shall not have been materially
and adversely affected (whether or not covered by insurance) as a result of
casualty, act of God or the public enemy, or any labor dispute or civil
disturbance.
8. VALIDITY OF DOCUMENTS. This Agreement and the documents to be
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executed pursuant to this Agreement are, and the other documents herein
contemplated when delivered will be valid, binding and enforceable in
accordance with their respective terms.
9. COMPLETENESS OF REPRESENTATIONS. No representation or warranty
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by the Sellers in this Agreement, and no written statement or certificate
furnished or to be furnished to Buyer pursuant hereto or in connection with
the transaction contemplated hereby, contains or will contain any untrue
statement of a material fact or will omit to state a material fact necessary
to make the statements contained therein not misleading.
10. CONTINUATION OF OPERATION. Sellers will use their best effort
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to cause the Sellers to preserve their business organizations intact and to
keep available for Buyer all key employees and to preserve the present
relationship with all suppliers and customers and others having business
relations with it and to conduct their business only in the ordinary course
prior to closing.
11. INSURANCE. The Sellers have carried insurance which is
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adequate in character and in amount, with reputable insurers in respect to its
properties, assets and business, including public liability insurance, and all
such other insurance was then and is now in full force and effect, and shall
remain in effect until closing.
12. BUYER'S CONTINGENCIES. The Buyer's obligations pursuant to
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this Agreement are contingent upon the following:
(A) TITLE TO ASSETS. Buyer's obligations hereunder are contingent upon
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the Sellers conveying to the Buyer title to said assets free and clear of all
liens, interests, taxes, debts and encumbrances pursuant to an order of the
Bankruptcy Court under 11 U.S.C. 363 and 365.
(B) SELLERS' PERFORMANCE. The complete and timely performance by the
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Sellers of all of the terms, obligations, representations, warranties and
conditions set forth in this Agreement.
(C) ADJUSTMENTS FOR INVENTORY. Seller covenants that, on the date of
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closing, current inventory at cost will be not less than $38,454.64. In the
event said inventory is less, Seller will grant to Buyer a dollar for dollar
credit on the Purchase price in an amount equal to the difference between
$38,454.64 and the value of the current inventory on hand on the date of
closing. Buyer shall have 5 business days after closing in which to assess
and request the payment of such credit.
(D) APPROVAL OF SALE BY BANKRUPTCY COURT. Buyer's obligations under
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this Agreement are specifically contingent upon the approval of this sale
including assumptions and assignments as specified herein, by an order entered
by the Bankruptcy Court in Case No. 98-20602, Case No. 98-20603 and Case No.
98-20601 pursuant to 11 U.S.C. 363(b), (f), and (m). If the Bankruptcy Court
fails to issue an order granting the companies leave to convey to Buyer free
and clear of all liens and encumbrances all of the Assets, Buyer shall be
released from this Agreement with no further obligation. Buyer and Seller
agree to make all reasonable good faith effort to secure the entry of such an
order. In the event that this condition is not met, neither Buyer nor Sellers
shall disclose any proprietary information which either party has obtained
from the other, in whole or in part, as a direct or indirect result of their
negotiation of or due diligence in connection with this Agreement.
(E) The contents of Addendum I, attached hereto, are incorporated herein
by reference as if set out in full.
13. GOVERNING LAW. This Agreement shall be governed by, construed
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and enforced in accordance with the laws of the State of Kansas. Any suit or
action for the enforcement of any obligation under this Agreement shall be
instituted and the venue and jurisdiction of such suit shall be proper, in the
Bankruptcy Court.
14. NO BROKERAGE FEE. The parties each represent and warrant to
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one another that neither of them has employed any broker or real estate agent
in connection with the negotiations relating to this Agreement.
15. AFFIRMATIVE COVENANTS. The Sellers covenant, promise and
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agree that from the date hereof and until the closing date, the Sellers shall:
(A) Continue to operate the businesses of the Sellers diligently; and not
take any action, omit to take any action or engage in any transaction other
than in acts or transaction in the ordinary course of business;
(B) Preserve the assets;
(C) Cooperate with the Buyer to achieve an orderly transfer of the assets
from the Sellers to the Buyer;
(D) Assist and cooperate in obtaining all necessary permits and approvals;
(E) Fully perform and timely comply with all covenants, promises and
Agreements hereunder which are required to be performed or complied with by
the Sellers prior to or at the closing date and exert Sellers' best efforts to
completely satisfy and fulfill all conditions precedent to Buyer's obligations
to close hereunder; including but not limited to the assumption (including
cure) and assignment of leases required hereunder.
(F) To take no action which is or would cause a violation of any laws of
any government or governmental agencies or would in any way adversely affect
any of the assets.
16. LIMITED SURVIVAL. The representations and warranties made
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herein shall survive the execution and closing of this Agreement until one
month after closing at which time they shall expire.
17. RISK OF LOSS. All risks of loss or damage to or destruction
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of the assets, in whole or in part, shall be and remain with the Sellers until
the closing date and all transactions contemplated hereby shall have been
consummated.
18. WAIVER. No waiver by Buyer of any provision of this Agreement
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shall be deemed a waiver of any other provision of this Agreement or any
subsequent breach by Buyer of the same provision.
19. LIABILITIES OF SELLERS. Buyer is neither purchasing nor
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assuming any liabilities of Sellers, except as specifically set forth herein.
Specifically, Buyer is not liable nor will it become liable in the future, for
any liability, debt, tax (property tax, sales tax or withholding tax),
accounts payable, surcharges, levies, encumbrances or the like, lawsuits and
claims owed, incurred or accrued by Sellers prior to the closing date of this
Agreement. In the event Buyer receives food or other inventory as a result of
the closing of this Agreement, Buyer shall not assume any trade indebtedness
of Seller pertaining thereto. Buyer is not, and shall not be construed as, a
"successor" to any Seller in any respect.
20. SELLERS' STOCK. Buyer is not purchasing any of Sellers'
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stock.
21. CONSTRUCTION OF TERMS. In all cases, the language in all
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parts of this Agreement shall be construed simply, according to its fair
meaning, and not strictly for or against either party, it being agreed that
both the parties have participated in the preparation of this Agreement. In
addition, counsel being available to both parties, the rule that the document
shall be construed most strictly against the drafter, shall not apply to this
Agreement.
22. TIME IS OF THE ESSENCE. It is understood and agreed that
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because of the commitments of the parties, time is of the essence to this
Agreement.
23. SEVERABILITY. Wherever possible, each provision of this
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Agreement shall be interpreted in a manner as to be effective and valid under
applicable law, but if any provision of this Agreement shall be prohibited or
invalid under applicable law, such provisions shall be ineffective to the
extent to such prohibition or validity without invalidating the remainder of
such provisions of this Agreement.
24. AUTHORITY. Sellers and Buyer each represent and warrant to
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each other that the person or persons executing this Agreement on behalf of
such party are duly authorized to sign the respective party to the terms and
conditions of this Agreement.
25. POSSESSION. Possession of the assets shall be delivered by
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Sellers to the Buyer at the closing date to this transaction.
26. ADDITIONAL TERMS. Additional terms of this Agreement are set
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forth on Addendum I, attached hereto and incorporated herein.
27. COUNTERPARTS. This Agreement may be executed in counterparts and
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the counterpart signatures transmitted by facsimile.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate this 14th day of August, 1998.
"Sellers"
XXXXXX RESTAURANT GROUP, INC.
By:______________________________
Xxxxx Xxxxxx, President
SUB & STUFF, INC.
By:______________________________
Xxxxx Xxxxxx, President
SPAGHETTI JACK'S, INC.
By:______________________________
Xxxxx Xxxxxx, President
September 1, 1998 (9:17AM)
"Buyer"
QUIZNO'S KANSAS, L.L.C.
By:______________________________
Its duly authorized officer or agent
ADDENDUM TO ASSET PURCHASE AGREEMENT
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This addendum I ("Addendum") sets forth additional terms to that certain
Asset Purchase Agreement between Xxxxxx Restaurant Group, Inc., d/b/a
Xxxxxx Food Services, Inc., Sub & Stuff, Inc., and Spaghetti Jack's, Inc.
(collectively, "Sellers") and Quiznos Kansas LLC ("Buyer") dated the
14th day of August 1998. To the extent any term of this Addendum is found
to be inconsistent with any term of the remainder of the Agreement, the term
of this Addendum shall prevail.
Paragraph 12(F) Closing Conditioned on Assumptions and Assignments of
Designated Leases, and Rejection of Designated Licenses. Norwithstanding any
other provision of this Agreement to the contrary, Buyer's obligation to close
this transaction shall be conditioned on entry of a final, nonappealable order
by the Bankruptcy Court which shall be binding upon all creditors, lessors, and
other parties to executory contracts in the Sellers' bankruptcy cases, which
order: (i) approves, pursuant to 11 U.S.C. ss365(a), (b), and (f), Sellers'
assumption (including cure) and assignment to Buyer of each of the leases
listed as a lease to be assumed and assigned on page A-1 of Exhibit A hereto;
(ii) declares that, for each lease being assumed and assigned hereunder, any
provision in such lease that restricts Buyer's right to install its own signage
and store fixtures in the leasehold is an unenforceable restriction or
condition on assignment under 11 U.S.C. ss 365(f). The above described
assumptions (including cures) and assignments, shall occur and be completed by
closing.
Paragraph 26 Additional Terms
(A) Order Approving Sale If Buyer is the successful bidder at the auction
sale to be held before the Bankruptcy Court on August 12, 1998, Buyer,
Sellers, and the Creditors' Committee shall cooperate promptly to prepare
and present to the Bankruptcy Court a mutually-agreed form of order
approving the sale on the terms set forth in this Agreement, including
all assumptions, assignments and rejections required hereunder.
(B) Video Inventory of Store Contents If Buyer is the successful bidder at
the auction sale to be held before the Bankruptcy Court on August 12, 1998,
Buyer shall have the right immediately to send its agent(s) into each
leasehold location as "To Be Acquired" on Exhibit A hereto for the purpose
of conducting a video inventory of the furniture, fixtures, equipment
and other property located in such leasehold.
Approval Initials:
Sellers:_________
Buyer:___________
EXHIBIT A
ASSET SCHEDULES
This Exhibit A was originally provided by Sellers. It has been modified
by Buyer as follows:
(i) Page A-1, added by Buyer, indicates in Section I the Sub & Stuff, Inc.
leasehold locations which Seller shall assume and assign to Buyer
pursuant to the terms of paragraph 12(F) of the Agreement, and indicates
in Section II the leasehold locations that Buyer shall not acquire from
Seller.
(ii) The remaining pages of Exhibit A (pages A-2 through A-14) have been
interlineated to indicate the assets which Buyer is not acquiring under
the Agreement, and which therefore shall remain the property of the
Sellers.
QUIZNO'S KANSAS LLC
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I. Sub & Stuff Leaseholds to be Assumed and Assigned to Buyer
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Store No. Address/Description of Asset
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21 602 X. Xxxxx, Wichita, Kansas
3 0000 X. Xxxxxx, Xxxxxxx, Xxxxxx
6 000 X. 00xx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxx
2 0000 X. 00xx., Xxxxxxx, Xxxxxx
4 0000 X. Xxxx Xxxx, Xxxxxxx, Xxxxxx
22 0000 X. Xxxxx, Xxx. 00, Xxxxxxx, Xxxxxx
7 000 X. Xxxx, Xxxxxxx, Xxxxxx
25 0000 X. Xxxxxxx, Xx Xxxxxx, Xxxxxx
Included with the foregoing are all trade names, trademarks, service marks
and other goodwill of Seller Sub & Stuff, Inc.
II. Leaseholds Not to be Acquired by Buyer
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Store No. Address/Description of Asset
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5 0000 X. Xxxx Xxxx, Xxxxxxx Xxxxxx
10 000 X. Xxxxxxxx, Xxxxxx, Xxxxxx
23 000 X. Xxxxxxx, Xxxxxxx, Xxxxxx
26 0000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxxxxx
SECURITY DEPOSITS
n.b. Many deposits have been applied or returned and become a part of
debtors' cash flow
Approximate Current Market
Description of Property Location Value (at date of filing)
----------------------- --------------------- -----------------------------
Last month prepaid on two Business Systems, Inc. $426.89
(2) copiers and one (1) X.X. Xxx 000000 W.
fax machine * Xxxxxxx
Xxxxxxx, Xxxxxx 00000
Landlord Deposit * Woodman Accident & Life $2,200.00
Company
X.X. Xxx 00000
Xxxxxxx, XX 00000
Last months rent Xxxxxxxx Properties $1,900.00
prepaid * Tulsa, Oklahoma
Security Deposit Xxx & Xxxxxxxxx Xxxxxxxx $2,000.00
Sub & Stuff #25
Security Deposit LNS Investments of Kansas $2,704.54
Sub & Stuff #2
Last months rent prepaid Xxxx Xxxx $1,310.41
Xxxx Properties
Sub & Stuff #22
Security Deposit PAC Investments, L.L.C. $1,687.00
Sub & Stuff #3
Last months rent prepaid Tyler Properties $1,800.00
Sub & Stuff #21
Security Deposit Xxxx Enterprises, Inc. $1,283.33
Sub & Stuff #6
* Only if, and to the extent, related to an assumed lease or a purchased asset
VEHICLES
Approximate
Description of Property Location Current Market Value
----------------------- ----------------------- ---------------------
Utility trailer Wichita, Kansas $0
OFFICE EQUIPMENT
Approximate
Description of Property Location Current Market Value
----------------------- ------------------------- --------------------
Mailing Machine Xxxxxx Restaurant Group N/A
Corporate Offices
Canon 6030 Copier and Xxxxxx Restaurant Group N/A
Accessories Corporate Offices
Canon CN6030 Copier Xxxxxx Restaurant Group N/A
Corporate Offices
Canon Fax CX700 Xxxxxx Restaurant Group N/A
Corporate Offices
Various Office Equipment Xxxxxx Restaurant Group $
Corporate Offices
MACHINERY AND FIXTURES
Description of Property Location
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Various Sub & Stuff Equipment Accent Moving & Storage
000 X. Xxxxxx Xxxxxx
Xxxxx, XX 00000
Equipment in place Sub & Stuff #16
Kitchen Equipment, Signage Sub & Stuff #2, 3, 4, 5, 6, 7
and Dining Room Furnishings 10, 21, 22, 23, 25 and 26
Various Sub & Stuff Equipment Underground Vault & Storage
and Office Supplies 0000 X. Xxxx, Xxxxxxx, Xxxxxx 00000
Kitchen Equipment, Inside Signs Spaghetti Jack's #3, 4 and 12
Outside Signs and Dining Room
Furnishings
INVENTORY
Description of Property Location
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Food Sub & Stuff #2, 3, 4, 5, 6,
10, 21, 22, 23, 25 and 26
Food Spaghetti Jack's #3
PATENTS/TRADEMARKS
Approximate
Descripton of Property Location Current Market Value
---------------------- -------------------- --------------------
"Sub & Stuff Design" N/A
Registered 4/5/80
Serial No. 1,133,359
"Sub & Stuff" N/A
Registered 10/12/82
Serial No. 1,212,799
"Spaghetti Jack's N/A
Fast Italian"
& Design
(Horizontal Box Logo)
Registered 10/27/92
Serial No. 1,728,436
"Spaghetti Jack's N/A
Fast Italian"
& Design
(Vertical Box Logo)
Registered 9/1/92
Serial No. 1,712,547
"Spaghetti Jack's" N/A
(Word Xxxx Only)
Registered 4/28/92
Serial No. 1,684,756
XXXX & Figure Design N/A
Registered 8/11/92
Serial No. 1,707,520
