ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated as of June 7, 2001, by and among Avado
Brands, Inc., a Georgia corporation ("Avado"), XxXxxxxxx & Xxxxxxx Holding
Corp., a Georgia corporation ("MSHC"), each of the MSHC Subsidiaries (as defined
below) (Avado, MSHC and the MSHC Subsidiaries are collectively referred to
herein as the "Sellers"), and XxXxxxxxx & Xxxxxxx Acquisition Corp., a Delaware
corporation ("Purchaser"),
W I T N E S S E T H :
WHEREAS, Sellers own and operate a chain of upscale seafood restaurants
under the name "XxXxxxxxx & Xxxxxxx(R)" and certain other trade names; and
WHEREAS, Sellers desire to sell, and Purchaser desires to purchase, all of
the Acquired Assets, for the consideration and on the terms set forth in this
Agreement; and
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:
"Accountants" shall have the meaning set forth in Section 2.6(b).
"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.
"Acquired Assets" shall mean all of Sellers' rights, title and interest in
and to any and all assets and properties of Sellers reflected in the Reference
Balance Sheet and all other properties and assets relating to the operations of
the Restaurants and the Development Restaurant or otherwise necessary in
connection with, material to, or used primarily in the conduct of the Business
as currently being operated by Sellers and as operated by Sellers during the
period covered by the Financial Statements, including, without limitation, the
following:
(i) all tangible personal property of any kind located in the Restaurants
or on the Real Property and reflected on the Reference Balance Sheet,
including, but not limited to, equipment, appliances, computers,
machinery, tables, chairs, other furniture, bars, tableware, cookware,
utensils, furnishings, signage, leasehold improvements, fixtures,
uniforms, supplies and food and beverage inventory (including without
limitation beer, liquor, and wine inventory);
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(ii) all personal property of any kind located in the Restaurants or
otherwise used in the Business which is currently leased by Sellers
pursuant to the Master Equipment Lease Agreement;
(iii) xxxxx cash in the aggregate amount of $200,000;
(iv) all prepaid items relating to the Business, including without
limitation all assets and deposits relating to the Development
Restaurant;
(v) all assignable Permits;
(vi) all assignable rights under express or implied warranties of
manufacturers, distributors, or retailers relating to the Acquired
Assets;
(vii) the Contracts and Leases;
(viii) the Business Intellectual Property;
(ix) all accounts receivable relating to goods delivered or services
rendered prior to the Closing Date;
(x) choses in action, causes of action, suits, proceedings, claims and
demands, whether known or unknown, matured or unmatured, accrued or
contingent, against third parties which relate or pertain to the MS
Division, any Acquired Asset or Assumed Liability;
(xi) telephone and facsimile numbers, post office boxes, stationary, forms,
labels, shipping material, supplies, catalogs, brochures, art work,
photographs and advertising and promotional materials; and
(xii)all records and files related to the MS Division, Real Property,
Development Restaurant and Development Sites such as rent
calculations, landlord correspondence, construction documents, title
reports, environmental and engineering reports, appraisals, surveys,
etc.
Notwithstanding the foregoing, "Acquired Assets" shall specifically not
include the Excluded Assets.
"Adjustment Amount" shall mean the dollar amount (which may be a positive
or negative number) equal to (a) the Working Capital of the MS Division as of
the Closing Date, minus (b) ($12,911,000).
"Assumed Liabilities" shall mean all liabilities of Sellers directly
relating to or arising out of the Acquired Assets or Sellers' ownership and
operation of the Restaurants and the Development Restaurant including, without
limitation, the following:
(i) liabilities under the Contracts, Leases and Permits comprising
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Acquired Assets and any and all deferred revenue;
(ii) liabilities for Taxes to the extent reflected as a current liability
on the Closing Balance Sheet;
(iii)liabilities for accrued vacation and sick time with respect to MS
Personnel;
(iv) liabilities to MS Personnel under the Sellers' short term incentive
bonus plan for Xxxxxxx X. XxXxxxxxx, Xxxxxxx Xxxxxxx, Xxxx Xxxxxxx,
Xxxxxx X. Xxxxxx and Xxxxx Xxxxx (the "STIP bonus program") and the
Sellers' other short term incentive bonus plan for executive managers,
senior managers and restaurant managers, in each case to the extent
reflected as a current liability on the Closing Balance Sheet;
(v) obligations of Sellers with respect to the Development Restaurant and
Development Sites to the extent they are on the budget attached hereto
as Schedule 5.4(a) or the facts, events or occurrences giving rise to
such obligations arise after Closing; and
Notwithstanding the foregoing, "Assumed Liabilities" shall specifically not
include any of the Excluded Liabilities.
"Business" shall mean the business of owning and operating the Restaurants
and developing and opening new restaurants using the XxXxxxxxx & Xxxxxxx
concept, including but not limited to those operated under the trade names
listed on Schedule 1.1A, in each case, including without limitation activities
related and incidental thereto and as conducted by the MS Division on the
Reference Date and immediately prior to the Closing.
"Business Intellectual Property" shall mean the Owned Intellectual Property
and the Licensed Intellectual Property.
"Closing" shall have the meaning set forth in Section 2.3 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
section or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
"Company Group" shall mean any "affiliated group" (as defined in Section
1504(a) of the Code without regard to the limitations contained in Section
1504(b) of the Code) that, at any time on or before the Closing Date, includes
or has included any of the Sellers, or any other group of corporations that, at
any time on or before the Closing Date, files or has filed any Tax Return on a
combined, consolidated, affiliated or unitary basis with any of the Sellers.
"Consents" shall mean all consents, waivers, orders, registrations,
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declarations, notices, releases, authorizations, approvals, and estoppels of
others (including without limitation the Sellers' stockholders, other security
holders and lenders) which are required to be sent or obtained prior to or in
order to effect the transactions contemplated herein, including without
limitation the valid assignment, transfer, and conveyance from Sellers to
Purchaser of the Material Contracts, Intellectual Property Contracts, Leases and
assignable Permits which constitute Acquired Assets to which any Seller is a
party, in each case without resulting in any default, breach or loss of rights
under any of the Material Contracts, Intellectual Property Contracts, Leases and
Permits.
"Contracts" shall mean all existing written and oral agreements and
commitments of or relating to any of the constituent entities of the MS
Division, including without limitation all employment and consulting contracts,
union contracts, agreements with suppliers and customers, leases, licenses,
deferred compensation agreements, indentures, notes, bonds, mortgages, security
agreements, loan agreements, guarantees and franchise agreements.
"Development Restaurant" shall have the meaning set forth in Section
5.4(a).
"Development Sites" shall have the meaning set forth in Section 5.4(b).
"Disclosure Memorandum" shall mean the set of numbered schedules
referencing Sections of this Agreement delivered by Sellers and dated of even
date herewith, as supplemented in accordance with the terms hereof by new or
amended schedules delivered by Sellers prior to the Closing.
"Environmental Claims" refers to any written complaint, summons, citation,
notice, directive, order, claim, litigation, investigation, notice of violation,
judicial or administrative proceeding, judgment, letter or other written
communication from any Government or third party involving Remedial Actions,
violations of Environmental Laws or Releases of Hazardous Materials from or onto
(i) any Real Property or other assets, properties or businesses of any of the
constituent entities of the MS Division or any of their respective predecessors
in interest, or (ii) any facilities which received Hazardous Materials generated
by and of any constituent entity of the MS Division or any of their respective
predecessors in interest.
"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.
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"Environmental Liabilities" means any monetary obligations, losses,
liabilities (including without limitation strict liability), damages, punitive
damages, consequential damages, treble damages, costs and expenses (including
without limitation all reasonable out-of-pocket fees, disbursements and expenses
of counsel, out-of-pocket expert and consulting fees and out-of-pocket costs for
environmental site assessments, remedial investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any
Environmental Claim or threatened Releases of Hazardous Materials.
"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.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" shall mean First Union National Bank, or another bank
mutually agreeable to Avado and Purchaser.
"Escrow Agreement" and "Escrow Amount" shall have the meanings set forth in
Section 2.5.
"Excluded Assets" shall mean (i) inventories and other immaterial assets
which have been disposed of in the ordinary course of business since the
Reference Date; (ii) cash in the Restaurants in excess of $200,000, (iii) any
right, title or interest of Sellers under or related to this Agreement and the
other Purchaser Transaction Documents, including, without limitation, the
Purchase Price; (iv) the corporate seals, minute books, stock books, blank share
certificates, tax returns and other records relating to the corporate
organization or Tax reporting of the Sellers; (v) the rights to the Sellers'
claims for any federal, state, local or foreign Tax refunds; (vi) any Permits
that are not transferable under applicable laws; (vii) Sellers' bank accounts
and deposits therein; and (viii) Material Contracts set forth on Schedule 1.1C
which are not being assigned to Purchaser hereunder.
"Excluded Liabilities" shall mean the following liabilities of Sellers:
(i) any liability of Sellers arising under or which Sellers agree to pay
under this Agreement or any other Seller Transaction Document or which
relates in part to any asset of Sellers that is not an Acquired Asset;
(ii) any liability of Sellers or any of their affiliates for Taxes except
to the extent that the amount of such Tax is reflected as a current
liability on the Closing Balance Sheet;
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(iii)any liability, obligation or responsibility of Sellers or any of their
affiliates arising under the Seller Plans (except to the extent stated
in subsections (iii) and (iv) of the definition of "Assumed
Liabilities") including without limitation liabilities arising under
Sellers' long term incentive bonus plan (the "LTIP bonus program");
(iv) any liability (contingent or otherwise) to Sellers' lenders including,
without limitation, any liability to Xxxxxx Guaranty Trust Company of
New York;
(v) any liability (contingent or otherwise) with respect to the Lease
Agreement dated June 14, 1995 between Tamal Vista Investors and the
Mallard Group, Inc. which was assigned to XxXxxxxxx & Xxxxxxx'x SCP
VIII on or about July 13, 1996;
(vi) any liability to holders of Ownership Interests or shareholders or
debtholders of Avado;
(vii)any liability (including without limitation intercompany debt) to
Seller or any of their affiliates (except for obligations of Purchaser
arising under this Agreement);
(viii) any liability of Sellers for the unauthorized installation,
duplication or use of licensed software in excess of $10,000;
(ix) any liability of Sellers under the Master Equipment Lease Agreement;
(x) any liability of Sellers relating to the Material Contracts set forth
on Schedule 1.1C which are not being assigned to Purchaser (including
without limitation, liabilities to Wachovia Bank, N.A. and liabilities
to SunTrust Bank, Atlanta);
(xi) any liability of Sellers with respect to the Development Restaurant
and Development Sites if the facts, events or occurrences giving rise
to such obligations arise prior to Closing and such liabilities are
not included on (or are in excess of the applicable amounts set forth
in) the budget attached hereto as Schedule 5.4(a); and
(xii)any liability for worker's compensation, general liability and
employment practice claims relating to the operation of the Business
prior to the Closing Date.
"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.
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"Financial Statements" shall have the meaning set forth in Section 3.6.
"GAAP" shall mean generally accepted accounting principles as in effect on
the date hereof, consistently applied.
"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, without regard to amount and/or
concentration (a) any element, compound, or chemical that is defined, listed or
otherwise classified as a contaminant, pollutant, toxic pollutant, toxic or
hazardous substances, extremely hazardous substance or chemical, hazardous
waste, medical waste, biohazardous or infectious waste, special waste, or solid
waste under Environmental Laws; (b) petroleum, petroleum-based or
petroleum-derived products; (c) polychlorinated biphenyls; (d) any substance
exhibiting a hazardous waste characteristic including but not limited to
corrosivity, ignitibility, toxicity or reactivity as well as any radioactive or
explosive materials; and (e) any raw materials, building components and
manufactured products containing Hazardous Materials.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Intellectual Property" shall mean all foreign and domestic (i) trademarks,
service marks, brand names, certification marks, collective marks, d/b/a's,
Internet domain names, logos, symbols, trade dress, assumed names, fictitious
names, trade names, and other indicia of origin, all applications and
registrations for all of the foregoing, and all goodwill associated therewith
and symbolized thereby, including without limitation all extensions,
modifications and renewals of same (collectively, "Trademarks"); (ii)
inventions, discoveries and ideas, whether patentable or not, and all patents,
registrations, and applications therefor, including without limitation
divisions, continuations, continuations-in-part and renewal applications, and
including without limitation renewals, extensions and reissues (collectively,
"Patents"); (iii) confidential and proprietary information, trade secrets and
know-how, including without limitation processes, schematics, databases,
formulae, drawings, prototypes, models, designs and customer lists
(collectively, "Trade Secrets"); (iv) published and unpublished works of
authorship, whether copyrightable or not, copyrights therein and thereto, and
registrations and applications therefor, and all renewals, extensions,
restorations and reversions thereof (collectively, "Copyrights"); and (v) all
other intellectual property or proprietary rights and claims or causes of action
arising out of or related to any infringement, misappropriation or other
violation of any of the foregoing, including without limitation rights to
recover for past, present and future violations thereof (collectively, "Other
Proprietary Rights").
"Intellectual Property Contracts" shall mean all agreements concerning the
Business Intellectual Property, including without limitation agreements granting
any constituent entity of the MS Division rights to use the Licensed
Intellectual Property, agreements granting rights to use Owned Intellectual
Property, confidentiality agreements, Trademark coexistence agreements,
Trademark consent agreements and nonassertion agreements.
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"Knowledge of Sellers" (or words of like effect) shall mean the actual
knowledge, after due inquiry, of Xxxxxxx X. XxXxxxxxx, Xxxxxxx Xxxxxxx, Xxxx
Xxxxxxx, Xxxxxx X. Xxxxxx, Xxxxx Xxxxx, Xxxxx X. Xxxxx, Xxx X. XxXxxx, Xx.,
Xxxxxxxx X. Xxxxxxx and, only with respect to the representations in Section
3.9, Xxxx Xxxx.
"Law" shall mean all federal, state, provincial, local, municipal or
foreign constitutions, statutes, rules, regulations, ordinances, acts, codes,
legislation, treaties, conventions, judicial decisions, and similar laws and
legal requirements, whether of the United States of America or any other
jurisdiction as in effect from time to time.
"Leases" shall mean any and all leases or subleases of real property and
improvements of the MS Division (all of which are described on Schedule 1.1B)
and any leases or subleases subsequently entered into and pertaining to the
Development Restaurant.
"Licensed Intellectual Property" shall mean Intellectual Property that any
of the constituent entities of the MS Division is licensed or otherwise
permitted by other Persons to use.
"Liens" shall mean any and all mortgages, pledges, security interests,
liens, changes, conditional sales agreements and other encumbrances.
"Liquor Permits" shall mean all Permits required for the sale of beer, wine
or other alcoholic beverages at the Restaurants.
"LTIP bonus program" shall have the meaning set forth in the definition of
"Excluded Liabilities."
"Master Equipment Lease Agreement" is defined in Schedule 1.1C.
"Material Contracts" shall mean all Contracts that involve monetary
obligations of or to any constituent entity of the MS Division of more than
$100,000 per year, a list of which are set forth on Schedule 1.1C.
"Minor Contracts" shall mean all Contracts that are not Material Contracts.
"MS Division" shall mean Avado (but only with respect to the operations of
the Restaurants and Development Restaurant conducted by Avado as of the
Reference Date and immediately prior to Closing and the assets and liabilities
directly related thereto), MSHC and the MSHC Subsidiaries.
"MSHC" shall mean XxXxxxxxx & Xxxxxxx Holding Corp., a Georgia corporation.
"MSHC Subsidiaries" shall mean the direct and indirect subsidiaries of
MSHC, all of which are listed on Schedule 1.1D.
"MS Personnel" means (i) all employees of MSHC and the MSHC Subsidiaries,
(ii) any employee of Avado exclusively involved in the operation or supervision
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of the Restaurants and/or the Development Restaurant, or (iii) any person who
any Seller intends (as of the date hereof) will become an employee of the MS
Division prior to or as of the Closing, who in the case of clauses (ii) and
(iii) are set forth on Schedule 1.1E hereto.
"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 Intellectual Property" shall mean Intellectual Property owned by any
constituent entity of the MS Division.
"Ownership Interests" shall have the meaning set forth in Section 3.5.
"Permits" shall mean all licenses, franchises or concessions of every kind,
certificates of occupancy, and permits, approvals, franchises, other
certificates or authorizations of any nature (including without limitation those
related to Intellectual Property), from any Government which relate to or are
used in or are necessary for the Business, the Restaurants, the Development
Restaurant, or the Real Property or any other Acquired Assets.
"Permitted Encumbrances" shall mean such easements, restrictions,
covenants, defects in title, survey matters and other encumbrances to the extent
that they could not reasonably be expected to materially interfere with or
impair Purchaser's use of the Real Property for the operation of the
Restaurants. Permitted Encumbrances shall include in the case of both Real
Property and personal property all liens for taxes not yet due and payable. In
the case of assets pertaining to the Development Restaurant, prior to the
opening of such Development Restaurant, Permitted Encumbrances shall include all
mechanic's and materialman's liens.
"Person" shall include an individual, a partnership of any kind, a joint
venture, a corporation, a limited liability company, a trust, an unincorporated
organization, a government, and any other legal entity.
"Purchaser Indemnitees" shall have the meaning set forth in Section 7.1.
"Purchaser's Activities" and "Purchaser's Designees" shall have the
meanings set forth in Section 5.3.
"Purchaser Transaction Documents" shall have the meaning set forth in
Section 4.1.
"Real Property" shall mean the land and improvements subject to Leases.
"Reference Balance Sheet" shall have the meaning set forth in Section 3.6.
"Reference Date" shall have the meaning set forth in Section 3.6.
"Registered" shall mean issued, registered, renewed or the subject of a
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pending application.
"Relative" shall mean (i) the spouse of a Person or (ii) any sibling,
parent, grandparent, child, or grandchild of a Person or such Person's spouse
and any spouse of any of the foregoing Persons.
"Release" means any spilling, leaking, pumping, emitting, emptying,
discharging, injecting, escaping, leaching, migrating, dumping, or disposing of
Hazardous Materials (including without limitation the abandonment or discarding
of barrels, containers or other closed receptacles containing Hazardous
Materials) into the environment.
"Remedial Action" means all actions taken to (i) clean up, remove,
remediate, contain, treat, monitor, assess, evaluate or in any other way address
Hazardous Materials in the indoor or outdoor environment; (ii) prevent or
minimize a Release or threatened Release of Hazardous Materials so they do not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; (iii) perform pre-remedial studies and
investigations and post-remedial operation and maintenance activities; or (iv)
any other actions authorized by 42 U.S.C. 9601.
"Report" shall have the meaning set forth in Section 2.6.
"Restaurants" shall mean the 33 restaurants and 1 catering/cafe business
operated by the MS Division under the trade names and at the locations as set
forth on Schedule 1.1A, and the additional Development Restaurant if completed
prior to Closing.
"Schedules" shall mean the numbered sections of the Disclosure Memorandum.
"Seller Indemnitees" shall have the meaning set forth in Section 7.3.
"Seller Plans" shall have the meaning set forth in Section 3.20.
"Seller Transaction Documents" shall have the meaning set forth in Section
3.1.
"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 without limitation solid, liquid, semisolid,
or contained gaseous material resulting from industrial, commercial, mining, and
agricultural operations, and from community activities.
"STIP bonus program" shall have the meaning set forth in the definition of
"Assumed Liabilities."
"Taxes" shall mean any past, present or future taxes, levies, imposts,
duties, fees, assessments, deductions, withholdings or other charges of whatever
nature, including without limitation income, gross receipts, excise, property,
sales, use, customs, value added, consumption, transfer, license, payroll,
employee income, withholding, social security, and franchise taxes, imposed or
levied by the United States of America or any Government or by any department,
agency or other political subdivision or taxing authority thereof or therein,
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all deposits required in connection therewith, and all interests, penalties,
additions to tax, and other similar liabilities with respect thereto.
"Tax Return" shall mean any federal, state, local or foreign return,
report, statement or form required to be filed under the Code or applicable
state, local or foreign Tax laws.
"Termination Date" shall mean July 31, 2001; provided, however, that either
party may extend the Termination Date to August 21, 2001 by sending the other
party written notice on or prior to July 27, 2001, provided that the conditions
to Closing have not been satisfied despite such requesting party's good faith
efforts.
"Working Capital" shall mean as of any date of determination, the amount
equal to (a) the sum of (1) credit card accounts receivable, (2) other accounts
receivable, (3) inventory and (4) prepaid expenses, minus (b) the sum of (1)
trade accounts payable, (2) sales tax accounts payable, (3) accrued payroll and
payroll taxes, (4) accrued bonuses (including without limitation the STIP: bonus
program calculated in a manner consistent with past practice), and (5) other
accrued liabilities; provided, that in no event shall the calculation of working
capital include (i) accounts payable (or other accrued liabilities) for costs of
construction, (ii) liabilities related to the overaccruals in the STIP bonus
program and LTIP bonus program for fiscal years 1999 and 2000 which at April 28,
2001 was $502,000, (iii) liabilities related to the LTIP bonus program, or (iv)
Excluded Assets or Excluded Liabilities. The calculation of Working Capital
shall be made in accordance with GAAP and in a manner consistent with the
Financial Statements.
ARTICLE II - PURCHASE AND SALE; CLOSING
2.1 Assets. Subject to the terms and conditions of this Agreement, at the
Closing, Sellers will sell, transfer and deliver to Purchaser all of their
rights, title and interest in and to the Acquired Assets (free and clear of any
Liens except Permitted Encumbrances), and Purchaser will purchase the Acquired
Assets from Sellers.
2.2 Purchase Price. The purchase price (the "Purchase Price") for the
Acquired Assets shall be $123,500,000, subject to adjustment pursuant to
Sections 2.6 and subject to the Earn-Out Amount, if any, payable under Section
2.8.
2.3 Closing. The closing of the transactions described in this Agreement,
including without limitation the sale of the Acquired Assets (the "Closing"),
shall take place at the offices of Xxxxxxx Xxxx & Xxxxx LLP on the date that is
two business days after the satisfaction or waiver of all conditions to Closing
set forth in Article VI, or at such other time and place as the parties may
agree. Subject to the provisions of Article VIII, failure to consummate the
purchase and sale provided for in this Agreement on the date and time and at the
place determined pursuant to this Section 2.3 will not result in the termination
of this Agreement and will not relieve any party of any obligation under this
Agreement. The Closing shall be effective as of the close of business on the
Closing Date.
2.4 Deliveries at the Closing. (a) At the Closing, Sellers shall deliver to
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Purchaser the following:
(i) bills of sales and instruments of assignment, pursuant to which the
Acquired Assets will be transferred and assigned to Purchaser,
executed by the Sellers, in the form reasonably satisfactory to both
parties;
(ii) A certificate executed by the chief executive officer or chief
financial officer of Avado, dated as of the Closing Date, certifying
in such detail as Purchaser may reasonably request that, subject to
the matters disclosed in the Disclosure Memorandum as it may be
supplemented by Sellers from time to time in accordance with the terms
hereof, all representations and warranties of Sellers in this
Agreement are true in all material respects (other than
representations and warranties qualified as to materiality which shall
be true and correct in all respects, after giving effect to the
materiality qualifier(s) contained therein) and all covenants required
to be performed by Sellers (and the other constituent entities of the
MS Division to the extent applicable) prior to or on the Closing Date
have been performed in all material respects or waived by Purchaser in
writing, in each case as of the Closing Date;
(iii)A certificate of the Secretary or an Assistant Secretary of each
Seller, dated as of the Closing Date, certifying in such detail as
Purchaser may reasonably request with respect to the resolutions
adopted by the governing body and owners (to the extent applicable) of
each Seller authorizing the execution, delivery, and performance of
this Agreement and the incumbency of the officers executing this
Agreement and any agreement, certificate, document or instrument
furnished pursuant hereto;
(iv) The opinion of Xxxxxxxxxx Xxxxxxxx LLP, counsel to Sellers, in the
form reasonably satisfactory to the parties and their counsel;
(v) The Escrow Agreement, duly executed by Avado and the Escrow Agent;
(vi) A Cross-Receipt, duly executed by Avado;
(vii)Certificates from the Secretaries of State of the respective
jurisdictions of incorporation and foreign qualification to the effect
that each of the Sellers is in good standing in such jurisdictions, in
each case, dated as of a date not more than sixty days prior to the
Closing Date, and an oral or written confirmation from a national
records search company as of the Closing Date that, based on
telephonic or internet confirmations from the respective Secretaries
of State, Sellers are still in good standing in such jurisdictions;
(viii) Copies of all Consents (other than those required under Minor
Contracts, unless such Consents are listed on Schedule 3.3);
(ix) Releases of all Liens on any of the Acquired Assets, except Permitted
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Encumbrances;
(x) Copies of documents evidencing the transfer of the Acquired Assets
subject to the Master Equipment Lease Agreement to Sellers at or prior
to Closing, in such form reasonably satisfactory to Purchaser; and
(xi) Any other documents that Purchaser may reasonably request at least
three days prior to the Closing in order to effectuate the
transactions contemplated hereby.
(b) At the Closing, Purchaser shall deliver to Sellers the following:
(i) The funds constituting the Purchase Price by wire transfer of
immediately available funds to an account(s) designated by Avado prior
to Closing, less the Escrow Amount, which Purchaser shall deliver by
wire transfer of immediately available funds to the Escrow Agent;
(ii) An instrument of assumption, pursuant to which Purchaser will assume
the Assumed Liabilities, executed by the Purchaser, in the form
reasonably satisfactory to the parties;
(iii)A certificate executed by Purchaser, dated as of the Closing Date,
certifying in such detail as Avado may reasonably request, that all
representations and warranties of Purchaser in this Agreement are true
in all material respects as of the Closing Date (other than
representations and warranties qualified as to materiality which shall
be true and correct in all respects, after giving effect to the
materiality qualifier(s) contained therein) and all covenants required
to be performed by Purchaser prior or on the Closing Date have been
performed in all material respects or waived by Avado in writing, in
each case as of the Closing Date;
(iv) A certificate of the Secretary or an Assistant Secretary of Purchaser,
dated as of the Closing Date, certifying in such detail as Avado may
reasonably request with respect to the resolutions adopted by the
Board of Directors of Purchaser reasonably authorizing the execution,
delivery, and performance of this Agreement and the incumbency of the
officers executing this Agreement and any agreement, certificate,
document or instrument furnished pursuant hereto;
(v) The opinion of Xxxxxxx Xxxx & Xxxxx LLP, counsel to Purchaser, in the
form reasonably satisfactory to the parties and their counsel;
(vi) The Escrow Agreement, duly executed by Purchaser and the Escrow Agent;
(vii) A Cross-Receipt, duly executed by Purchaser; and
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(viii) Any other documents that Avado may reasonably request at least three
days prior to the Closing in order to effectuate the transactions
contemplated hereby.
2.5 Escrow. At the Closing, the Purchaser shall deliver to the Escrow Agent
$2,000,000 (the "Escrow Amount") in respect of the earn out contemplated by
Section 2.8 hereof, such amount to be held by the Escrow Agent for the periods
set forth in Section 2.8 and disbursed by it in accordance with the terms of an
Escrow Agreement in the form reasonably satisfactory to the parties hereto and
the Escrow Agent (the "Escrow Agreement"). At the time of final disbursement of
the Escrow Amount, any earnings on the Escrow Amount shall be disbursed to the
parties pro rata in proportion to the ultimate distribution of the Escrow
Amount.
2.6 Adjustment Amount. (a) Within ninety (90) days after the Closing Date,
Purchaser will deliver to Avado a report (the "Report") which (i) contains a
balance sheet of the MS Division at the close of business on the Closing Date
prepared in accordance with GAAP and in a manner consistent with the Financial
Statements (the "Closing Balance Sheet"), and (ii) sets forth in a separate
calculation (A) the Working Capital of the MS Division as of the close of
business on the Closing Date (the "Closing Working Capital"), and (B)
Purchaser's calculation of the Adjustment Amount. The Report shall include an
audit opinion by PricewaterhouseCoopers LLP (or another accounting firm of
national standing) stating that the Report presents fairly, in all material
respects, the financial position, Closing Working Capital, and Adjustment Amount
of the MS Division in accordance with the provisions of this Agreement.
Purchaser shall use its commercially reasonable efforts to cause its accountants
and shall cause those personnel employed by Purchaser and its affiliates after
the Closing who have previously prepared internal financial statements of the MS
Division to be reasonably available to Avado to discuss the Report. In
connection with the preparation of the Report, Sellers shall provide Purchaser
and its accountants with access to the accountants, accounting records and all
audit work papers of the MS Division and other customary assistance and
cooperation and shall provide such representations as are required under
PricewaterhouseCoopers LLP's standard policies. Purchaser agrees that if
PricewaterhouseCoopers LLP so requests, Purchaser shall provide the same
representations. If, within thirty days following delivery of the Report (the
"Review Period"), Avado has not given Purchaser notice of its objection to the
Adjustment Amount, then the Adjustment Amount as stated in the Report will be
final.
(b) If Avado gives such notice of objection (such notice must contain a
statement in reasonable detail of the basis of Avado's objection and the total
amount which Avado disputes), then Avado and Purchaser will attempt to resolve
the issues in dispute. Any items not identified in such notice of objection will
be deemed accepted by Avado. In the event that the issues are not resolved
within 30 days after the date of the notice, the issues in dispute will be
submitted to Xxxxxxxx, certified public accountants, for resolution (the
"Accountants"). If issues in dispute are submitted to the Accountants for
resolution, (i) each party will furnish to the Accountants such workpapers and
other documents and information relating to the disputed issues as the
Accountants may request and are available to that party or its subsidiaries (or
its independent public accountants), and will be afforded the opportunity to
present to the Accountants one position paper relating to the determination
within 15 days of the submission of the dispute to the Accountants and to
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respond to the Accountants' questions regarding the dispute; (ii) the
determination by the Accountants, as set forth in a notice delivered to both
parties by the Accountants, will be binding and conclusive on the parties; (iii)
Sellers will pay an amount of the fees incurred by the Accountants for such
determination equal to the amount of the fees multiplied by a fraction, the
numerator of which is the amount of the dispute which is awarded in favor of
Purchaser, and the denominator of which is the total amount in dispute; and (iv)
Purchaser shall pay the balance of such fees. Purchaser and Avado shall request
that the Accountants render a determination within 30 days after the Accountants
are retained.
(c) If the Adjustment Amount is a positive number, Purchaser shall pay
Sellers such amount. If the Adjustment Amount is a negative number, Sellers
shall pay Purchaser such amount. Such payments shall be made within ten days
following the final determination of the Adjustment Amount. Payments to Sellers
shall be made pursuant to Section 2.4(b)(i), and payments to Purchaser shall be
made pursuant to Section 2.10 or, at Purchaser's option, from the Escrow Amount,
subject to the procedures contained herein.
2.7 Assumption of Liabilities. At Closing, Purchaser shall assume all of
the Assumed Liabilities.
2.8 Earn-Out. (a) Purchaser shall pay to Sellers additional Purchase Price
in an aggregate amount equal to $2,000,000, $1,200,000 of which shall be payable
to Sellers on April 30, 2002 and $800,000 of which shall be payable to Sellers
on the first anniversary of the Closing Date, subject in each case to adjustment
as provided herein (collectively, the "Earn-Out Amount"). Pending payment to
Sellers or application against any Losses incurred by any Purchaser Indemnitee
or as set forth in the second sentence of Section 2.6(c), as provided in this
Section 2.8, the Earn-Out Amount shall be held by the Escrow Agent pursuant to
the Escrow Agreement in accordance with the terms thereof.
(b) Notwithstanding Section 2.8(a) above, the Earn-Out Amount shall be
reduced by any Losses which Sellers are obligated to pay to any Purchaser
Indemnitee under Article VII. The Escrow Amount shall be reduced by any such
Losses and the amount thereof shall be disbursed from the escrow to Purchaser.
(c) To the extent that any claim has been made by a Purchaser Indemnitee
under Section 7.1 in respect of any Loss that has not been finally determined on
or prior to the date of which a disbursement of the Earn-Out Amount is due under
Section 2.8(a) above, the payment of that portion of the Earn-Out Amount, if
any, equal to the amount of the Loss claimed by the Purchaser Indemnitee, shall
not be due and payable to Sellers until such time as the amount of such Loss is
finally determined. Promptly thereafter, the actual amount of the Loss shall be
disbursed from the escrow to Purchaser, and the balance, if any, shall be
disbursed to Sellers.
(d) Until such time as monies held in escrow are paid to Sellers in respect
of additional Purchase Price in accordance with this Section 2.8, all such
monies shall constitute assets of Purchaser and not of Sellers, and Purchaser
shall, until such time as the monies are paid to Sellers, retain title to such
monies.
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2.9 Allocation of Purchase Price. Prior to the Closing Date, Avado and
Purchaser shall mutually agree on the allocation of the Purchase Price among the
Acquired Assets, and such allocation shall be signed by both parties and
attached hereto as Exhibit A hereof. To the extent that an Adjustment Amount is
paid under Section 2.6 or any portion of the Earn-Out Amount is paid under
Section 2.8, such amounts will be considered to be an increase or decrease to
the Purchase Price, as the case may be, and shall be considered an adjustment to
the portion of the Purchase Price allocated and being paid for the intangible
assets. 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 relating to income tax matters that is
inconsistent with the terms of this Section 2.9.
2.10 Payments. All payments which Purchaser is required to make to Sellers
under this Agreement or any Purchaser Transaction Document shall be made to
Avado by wire transfer to an account designated by Avado or as Avado otherwise
directs. Avado shall allocate the payment among the various Sellers in
accordance with the allocation agreed to by the parties under Section 2.9. All
payments which Sellers are required to make to Purchaser under this Agreement or
any Seller Transaction Document shall be made to Purchaser by wire transfer to
an account designated by Purchaser or as Purchaser otherwise directs.
2.11 Bulk Transfer Laws. The parties hereto agree and acknowledge that
Sellers shall not be required to comply with the bulk transfer laws of any
jurisdiction. Sellers shall jointly and severally indemnify Purchaser and hold
it harmless from and against any and all claims, costs, losses and damages which
may be incurred by it with respect to any claim made by any creditors of Sellers
against or in respect of Purchaser or any of the Acquired Assets arising out of
the failure to comply with any bulk transfer or bulk sales laws in connection
with the transactions contemplated herein (except to the extent that a claim
relates to an Assumed Liabilities not paid by Purchaser).
2.12 Excluded Restaurants. If prior to Closing Purchaser is unable to
obtain a Liquor Permit or Consent for the Liquor Permit for the Restaurant Unit
Numbers 57, 38 and 44 (as set forth on Schedule 1.1A) and management agreements
will not be effective to allow the continued operation of the Restaurants after
the Closing Date (as described in the last sentence to Section 6.1), Sellers and
Purchaser will designate at Closing each of the affected Restaurant as an
"Excluded Restaurant". If any Restaurant is designated as an Excluded Restaurant
in accordance with this section, then the Lease and all other Acquired Assets
relating exclusively to such Excluded Restaurant shall not be transferred to
Purchaser hereunder, Assumed Liabilities pertaining to such Excluded Restaurant
shall not be assumed by Purchaser hereunder, and the Purchase Price shall be
reduced by an amount equal to the original capitalized amount of the
construction cost for such Excluded Restaurant as reflected on the books and
records of the MS Division. Within 3 business days following the receipt by
Purchaser of the Liquor Permit or Consent for the Liquor Permit for a particular
Excluded Restaurant, the parties will complete the Closing with respect to such
Excluded Restaurant.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
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Subject to the limitations and exceptions set forth in the Disclosure
Memorandum dated of even date hereof, which may be supplemented or amended from
time to time by Avado in accordance with the terms hereof for changes or
developments which occur between the date hereof and the Closing Date (but which
may only be amended or supplemented to rectify errors or omissions with the
prior written consent of Purchaser, which consent may be withheld in Purchaser's
sole discretion), Sellers hereby jointly and severally represent and warrant to
Purchaser as follows:
3.1 Organization, Qualifications and Corporate Power. Avado is a
corporation duly incorporated and organized, validly existing, and in good
standing under the laws of the State of Georgia. Each of MSHC and the MSHC
Subsidiaries is a corporation or limited partnership duly incorporated (in the
case of corporations) and organized, validly existing, and in good standing
under the laws of its State of organization as listed on Schedule 1.1X. Xxxxxxx
have the corporate power and authority to execute and deliver, and perform their
obligations under this Agreement and all other agreements, documents,
certificates, and other papers contemplated to be delivered by Sellers pursuant
to this Agreement (collectively, the "Seller Transaction Documents"). Avado has
full corporate power and authority and is entitled to operate that portion of
the Business operated by it and to own, lease and operate those assets and
properties (including without limitation all Real Property) of the Business
owned or leased by it. MSHC and the MSHC Subsidiaries have full corporate (in
the case of corporations) power and authority and are entitled to own, lease and
operate their respective assets and properties (including without limitation all
Real Property) of the Business owned or leased by them. Set forth on Schedule
3.1 is a list of states and jurisdictions where Avado (but only with respect to
the MS Division), MSHC and each of the MSHC Subsidiaries (i) has an office or a
Restaurant and/or (ii) is qualified to transact business as a foreign
corporation. Except as set forth on Schedule 3.1 (which exceptions will be
corrected prior to Closing), Avado (but only with respect to the MS Division),
MSHC and each of the MSHC Subsidiaries is qualified to transact business, and is
in good standing, in those states and jurisdictions in which the character of
the properties owned, operated or leased or the nature of their activities
require them to so qualify.
3.2 Authorization. The execution, delivery, and performance by Sellers of
the Seller Transaction Documents have been duly authorized by all necessary
action (corporate or otherwise).
3.3 Non-Contravention; Consents. (a) The execution, delivery and
performance of this Agreement and the other Seller Transaction Documents, 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 Forum, stockholder, lessor or creditor
except for (i) the filing of the pre-merger notification report under the HSR
Act and the expiration of the waiting period thereunder; (ii) Consents under the
Permits (including, without limitation, the Liquor Permits), (iii) the Consents
under Minor Contracts which are either listed on Schedule 3.3 or which will not
be obtained, or (iv) the Consents listed on Schedule 3.3. Except as set forth on
Schedule 3.3, no Consent is required under any Minor Contract which, if such
Consents are not obtained, individually or in the aggregate, would result in any
material adverse change in or effect on the business, financial condition,
17
results of operations, properties or assets of the MS Division or the Business.
Schedule 3.3 also lists Consents required under all Minor Contracts that involve
monetary obligations of or to any constituent entity of the MS Division of more
than $25,000 per year.
(b) Except as set forth in subsection (a) above, the execution and delivery
of this Agreement does not, the execution and delivery of the other Seller
Transaction Documents will not, and the consummation by Sellers of the
transactions contemplated hereby and thereby will not (i) conflict with or
violate or result in a breach of any term of the Articles of Incorporation,
Bylaws or other organizational documents of Sellers, (ii) constitute (with or
without notice or lapse of time, or both) a default (or give rise to any right
of termination, cancellation or acceleration of any obligation or loss of any
benefit) under, result in a violation of or result in a breach of any Contract,
Lease or any agreement or other instrument to which Avado or any other Seller is
a party, (iii) violate any law or any order, rule, regulation or Permit
applicable to Avado or any other Seller or (iv) result in the creation or
imposition of any Lien upon any of the assets of any constituent entity of the
MS Division.
3.4 Validity. This Agreement has been duly executed and delivered by the
Sellers and constitutes the legal, valid, and binding obligation of Sellers,
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 each of the other Seller Transaction Documents has been executed
and delivered in accordance with this Agreement, each will constitute the legal,
valid, and binding obligation of Sellers, 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 Capitalization. The total authorized, issued and outstanding capital
stock and limited partnership interests of MSHC and the MSHC Subsidiaries
(collectively, "Ownership Interests") are as set forth in Schedule 3.5. All of
the issued and outstanding Ownership Interests are owned of record and
beneficially by Avado or the other Sellers as set forth on Schedule 3.5, except
as otherwise noted on such Schedule.
3.6 Financial Statements. (a)Prior to the date hereof, Avado has delivered
to Purchaser copies of the unaudited consolidated balance sheet of the MS
Division (the "Reference Balance Sheet") dated March 31, 2001 ("Reference
Date"), the unaudited consolidated balance sheet of the MS Division dated
December 31, 2000, and the unaudited consolidated statements of earnings and
cash flow of the MS Division for the three month period ended March 31, 2001 and
the fiscal year ended December 31, 2000 (such financial statements being
hereafter collectively referred to as the "Financial Statements"). Except as set
forth on Schedule 3.6, the Financial Statements have been prepared in accordance
with GAAP consistently applied, present fairly the financial condition of the MS
Division as at the date thereof and the results of their operations and cash
flows for the periods then ended, and are consistent with the books and records
of the MS Division, which books and records are true and complete in all
material respects, except that the Financial Statements do not contain footnote
disclosures and Financial Statements for interim periods are subject to normal
18
year end adjustments.
(b) The audited consolidated financial statements of the MS Division for
the fiscal years ended on December 31, 2000 and December 31, 1999 to be
delivered by Avado under Section 5.11 will have been prepared in accordance with
GAAP consistently applied, will present fairly the financial condition of the MS
Division as at the date thereof and the results of their operations and cash
flows for the periods then ended, and will be consistent with the books and
records of the MS Division.
(c) Prior to the date hereof, Avado has delivered to Purchaser a copy of
the trial balances for the MS Division as of April 28, 2001, and at Closing
Avado will deliver to Purchaser a copy of the most recent trial balances of the
MS Division then available, all of which are and will be true and correct in all
material respects.
3.7 Liabilities. Except for (i) liabilities incurred in the ordinary course
of business since the Reference Date consistent with past experience of the MS
Division during the period covered by the Financial Statements, (ii) liabilities
reflected in the Reference Balance Sheet, (iii) liabilities described on
Schedule 3.7, and (iv) liabilities incurred in the ordinary course of business
consistent with past experience of the MS Division of the type not required to
be disclosed on the Reference Balance Sheet in accordance with GAAP and which
are not material individually or in the aggregate to the business, financial
condition, results of operations, properties or assets of the MS Division or the
Business, no constituent entity of the MS Division has any liability and there
are no liabilities directly relating to or arising out of the Acquired Assets or
Sellers' ownership and operation of the Restaurants and the Development
Restaurant (in each case, whether known or unknown, whether asserted or
unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, or whether due or to become due). Except as
will be set forth on the books and records of the MS Division at Closing,
Sellers will have satisfied in full any and all obligations to the MS Personnel
due and payable on or before Closing. Sellers have no current liabilities other
than current liabilities specifically included in or excluded from the
definition of "Working Capital."
3.8 Events Subsequent to Reference Date. Since the Reference Date, except
as set forth on Schedule 3.8, no constituent entity of the MS Division has:
(i) issued, redeemed or entered into any binding contract to issue or
redeem any stock, bond, options, warrants, rights, or other
securities;
(ii) borrowed any amount or incurred any obligations or liabilities
(absolute or contingent), except as permitted by or disclosed in
accordance with Section 3.7 and except for current obligations and
liabilities incurred in the ordinary course of business of the type
and in the amounts consistent with the period covered by the Reference
Balance Sheet;
(iii)sold, assigned, mortgaged, pledged, subjected to Lien or otherwise
transferred or disposed of any interest in any of the assets (other
than inventory sold in the ordinary course of business and consistent
19
with prior practices and other than dispositions as a result of wear
and tear in the ordinary course of business) of the MS Division
including without limitation those reflected in the Financial
Statements, or canceled any debts or claims;
(iv) suffered any casualty losses in excess of $50,000, or waived any
rights in excess of $50,000 in value;
(v) made any changes in employee compensation generally or in compensation
of any executive officer (other than increases in compensation of
individual employees who are not directors or officers in the ordinary
course of business consistent with prior practices);
(vi) materially written down the value or reduced its level of inventory or
supplies in a manner inconsistent with past practice;
(vii) materially changed the number of employees or management personnel;
(viii) canceled, entered into, or amended any Material Contract or Lease
except in the ordinary course of business and consistent with past
practice;
(ix) materially changed the manner in which its business is operated;
(x) adopted a plan of liquidation or resolutions providing for the
liquidation, dissolution, merger, consolidation or other
restructuring, recapitalization or reorganization of any of the
entities of the MS Division or engaged in any of the foregoing, or
voluntarily declared bankruptcy or sought the appointment of a
receiver, trustee or custodian;
(xi) made any change in its accounting methods, principles or practices or
made any change in depreciation or amortization policies or rates
adopted by it;
(xii)revalued any portion of its assets, properties or businesses
including without limitation any write-down of the value of the
inventory in excess of $25,000 in the aggregate or any write-off of
notes or accounts receivable in excess of $10,000 in the aggregate;
(xiii) changed any of its advertising, pricing, purchasing, personnel,
returns, budget or product acquisition policies, other than to account
for seasonal variations in a manner consistent with past practices;
(xiv)made any loan or advance to any of its officers, directors,
employees, consultants, agents or other representatives (other than
travel advances made in the ordinary course of business in a manner
consistent with past practice);
(xv) made any payment or binding commitment to pay severance or termination
pay to any of its officers, directors, employees, consultants, agents
or other representatives;
20
(xvi)made any capital expenditures other than capital expenditures made in
the ordinary course of business and which have been paid for in full
or are reflected as a current liability on the books and records of
the MS Division;
(xvii) made any acquisition of all or any part of the assets, properties,
capital stock or business of any other Person;
(xviii) made any material change in its cash management policies; and
(xx) agreed in writing to do any of the foregoing.
In addition, since the Reference Date, Sellers have not taken any action
contemplated in any clause of the preceding sentence to the extent such action
is related to any constituent entity of the MS Division, whether to the Business
or any of their respective properties, assets, personnel, customers, suppliers
or otherwise. Since the Reference Date, the Business has been conducted in the
ordinary course consistent with past practice and there has not been any change
in the business, financial condition, results of operations, properties or
assets of the MS Division that has had, individually or in the aggregate, a
material adverse effect on the Acquired Assets, Business or the MS Division.
3.9 Taxes. (a) Except as described on Schedule 3.9:
(i) All Tax Returns required to be filed by any constituent entity of the
MS Division and by each Company Group up to the Closing Date have been
timely filed (or will be timely filed) and each such tax return is
true, correct, and complete.
(ii) All Taxes imposed by all Governments, which are due and payable by any
of the constituent entities of the MS Division or any Company Group
through the Closing Date, have been paid or will be paid prior to
Closing.
(iii)There are no Actions pending or, to Sellers' Knowledge, threatened
against any constituent entity of the MS Division or any Company Group
with respect to Taxes, nor are any such matters under discussion with
any Government, nor have any claims for additional Taxes been received
or assessed against any constituent entity of the MS Division or any
Company Group.
(iv) No Tax liens are outstanding and, to Seller's Knowledge, no claims are
being asserted with respect to any Taxes of any Seller or any Company
Group.
(v) Each Seller has complied with all applicable Laws relating to the
payment and withholding of Taxes.
(b) There are no federal income Tax audits with respect to any member of
the Company Group pending or that have ended within three years of the date of
this Agreement.
21
3.10 Legal Compliance. None of the constituent entities of the MS Division
is in default under, in violation of or not in compliance with (a) its articles
of incorporation or bylaws or other applicable constituent documents, or (b) any
Order. The operations of the MS Division and their respective predecessors, if
any, have been conducted in all material respects in compliance with all
applicable Laws (for purposes of this sentence, any violation of applicable Law
that could result in imposition of a fine or other monetary penalty, a loss of
any Permit or that would require any constituent entity of the MS Division to
terminate or refrain from any business activity shall be deemed to be a material
non-compliance). No constituent entity of the MS Division has received any
notification of any asserted past or present failure to comply with any
applicable Law.
3.11 Permits. Each constituent entity of the MS Division has all Permits
and such Permits are in full force and effect. Each constituent entity of the MS
Division has fulfilled and performed all of its material obligations with
respect to such Permits and no event has occurred which allows or will result
in, nor after notice or lapse of time or both would allow or result in,
suspension, modification, revocation or termination thereof or would result in
any other impairment of the rights of the holder of any such Permits. Each
constituent entity of the MS Division holds and, immediately following Closing
(assuming that the Permits are assignable and that any required Consent is
obtained), the Purchaser will hold, such Permits free of any claims or
restrictions (other than any restrictions in existence at the time such Permits
were issued pursuant to the terms thereof). No constituent entity of the MS
Division has received any notice of any suspension, modification, revocation or
termination of any Permit. No proceeding is pending or, to the Knowledge of
Sellers, is threatened, to modify, suspend or cancel any Permit. Schedule 3.11
lists all Permits, including without limitation all Liquor Permits. There have
been no such proceedings relating to any of the Liquor Permits.
3.12 Assets. (a) The constituent entities of the MS Division have, and
immediately following the Closing the Purchaser will have, good title to all
Acquired Assets, free and clear of Liens, except (i) for Permitted Encumbrances,
(ii) for Liens which will be released at Closing, and (iii) that certain
Acquired Assets are currently leased by Sellers under the Master Equipment Lease
Agreement, which Acquired Assets will be transferred to Purchaser at Closing so
that following the Closing Purchaser will have good title to such assets free
and clear of the Master Equipment Lease Agreement and all Liens (except for
Permitted Encumbrances). The Acquired Assets constitute all properties and
assets necessary in connection with, material to or used primarily in the
conduct of the Business as currently being conducted and as conducted during the
period covered by the Financial Statements (other than the Excluded Assets and
leased property for which Sellers have, and at Closing assuming that any
required Consent is obtained, the Purchaser will have, a valid leasehold
interest).
(b) Each Acquired Asset constituting tangible personal property having a
fair market value of $10,000 or more is in good operating condition consistent
with its age, subject to normal wear and tear.
3.13 Real Property. (a) Schedule 1.1A sets forth the location of each
Restaurant. All Real Property is leased. No constituent entity of the MS
22
Division owns any Real Property and the Acquired Assets do not include any real
property. Except as set forth on Schedule 3.13, (i) Sellers have, and (assuming
that any required Consent is obtained) immediately following the Closing the
Purchaser will have, good and valid leasehold estates or interests in and to all
of the Real Property, free and clear of all Liens and encumbrances, except for
Permitted Encumbrances, (ii) no Seller has assigned, transferred, conveyed,
mortgaged, deeded in trust, encumbered or subleased all or any portion of any
Real Property leased by any Seller and (iii) possession by the MS Division of
the Real Property subject to the Leases has not been disturbed, nor has any
claim been asserted adverse to Sellers' rights in such leasehold interests.
(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 to the
Knowledge of Sellers, 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) The constituent entities of the MS Division have obtained, or, to the
Knowledge of Sellers, landlords have obtained on their behalf, 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.
(d) No constituent entity of the MS Division has received any notice that
any Government 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 material Laws (including without limitation zoning laws and
ordinances) of each Government having jurisdiction over the Real Property, and
no constituent entity of the MS Division has received any 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) To the Knowledge of Sellers, no work for municipal improvements has
been commenced on or in connection with any parcel of Real Property or any
street adjacent thereto and no such improvements are contemplated. No assessment
for public improvements has been made against the Real Property which remains
unpaid. No notice from any lessor under any Lease or any Government has been
served upon the Real Property or received by any constituent entity of the MS
Division, or to the Knowledge of Sellers, 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.
3.14 Intellectual Property Rights. Schedule 3.14 sets forth a true and
complete list of all (i) Registered or material Owned Intellectual Property
(each identified as a Patent, Trademark, Trade Secret, Copyright or Other
Proprietary Right, as the case may be), and (ii) Intellectual Property
23
Contracts. Except for those items listed on Schedule 3.14 under the heading
"Exceptions" :
(a) Sellers own or otherwise hold and, immediately following Closing
(assuming that the Consents listed on Schedule 3.14 are obtained with respect to
Licensed Intellectual Property), the Purchaser will own or otherwise hold, valid
rights to use all Intellectual Property used or contemplated to be used in the
Business.
(b) All Business Intellectual Property is valid, subsisting and
enforceable. No Owned Intellectual Property or, to Sellers' Knowledge, Licensed
Intellectual Property, has been abandoned, canceled or adjudicated invalid
(excepting any expirations in the ordinary course), or is subject to any
outstanding Order restricting its use or adversely affecting or reflecting the
rights thereto of any of the Sellers. To Sellers' Knowledge, no Person is
violating any Business Intellectual Property.
(c) No Action is pending or, to Sellers' Knowledge, threatened, concerning
any claim or position that any of the Sellers or any of their officers or
directors have violated any Intellectual Property rights of other Persons. No
constituent entity of the MS Division is violating or has violated any
Intellectual Property rights of other Persons.
(d) No Action is pending or, to Seller's Knowledge, threatened, concerning
any Intellectual Property Contract, including without limitation any Action
concerning a claim or position that any Seller or, to Sellers' Knowledge,
another Person has breached any Intellectual Property Contract or that any
Intellectual Property Contract is invalid or unenforceable. Sellers are in
compliance with, and have conducted the Business so as to comply with, all
material terms of all Intellectual Property Contracts. There exists no event,
condition or occurrence which, with the giving of notice or lapse of time, or
both, would constitute a breach or default by any of the Sellers or, to Sellers'
Knowledge, another Person under any Intellectual Property Contract. To Sellers'
Knowledge, each Person who is a party to any Intellectual Property Contract had
and has all rights, power and authority necessary to enter into, be bound by and
fully perform such Intellectual Property Contract. No party to any Intellectual
Property Contract has given any Seller notice of its intention to cancel,
terminate or fail to renew any Intellectual Property Contract.
(e) No Action is pending or, to Sellers' Knowledge, threatened, concerning
the Owned Intellectual Property, including without limitation any Action
concerning a claim or position that the Owned Intellectual Property has been
violated or is invalid, unenforceable, unpatentable, unregisterable, cancelable,
not owned or not owned exclusively by the Sellers. To Sellers' Knowledge, no
valid basis for any such Actions exists.
(f) To Sellers' Knowledge, no Action is pending concerning the Licensed
Intellectual Property, including without limitation any Action concerning a
claim or position that the Licensed Intellectual Property has been violated or
is invalid, unenforceable, unpatentable, unregisterable, cancelable, not owned
or not owned exclusively by the licensor of such Intellectual Property. No
Action is pending or, to Sellers' Knowledge, threatened, concerning the right of
the Sellers to use the Licensed Intellectual Property, including without
24
limitation any Action concerning a claim or position that such right has been
violated or is invalid, unenforceable, not owned or not owned exclusively by
such entities.
3.15 Contracts and Leases. (a) All Material Contracts and Leases are valid
and enforceable in all material respects in accordance with their terms and will
continue to be valid and enforceable and in full force and effect immediately
following Closing. All Material Contracts and Leases are free of all Liens
except for Permitted Encumbrances. There are (a) no existing defaults, events of
default or events which, with the giving of notice or lapse of time or both,
would constitute a material default by any Seller or would give rise to any
right of termination, acceleration, damages or any other remedy under any
Material Contract or Lease or (b) to the Knowledge of Sellers or as otherwise
set forth on Schedule 3.15, no existing defaults by any other party to any
Material Contract or Lease, or event of default or events which, with the giving
of notice or lapse of time or both, would constitute a default by any other
party or would give rise to any right of termination, acceleration, damages or
any other remedy under a Material Contract or Lease. A true and correct list of
each Lease and Material Contract and every amendment thereto or other agreement
or document relating thereto is set forth as Schedules 1.1B and 1.1C,
respectively, and there are no other Contracts which are material to the
financial condition, results of operations, properties or assets of the Business
or the MS Division, except for those which are listed in such Schedules or in
other Schedules in the Disclosure Memorandum. True, complete and correct copies
of (i) the Material Contracts, (ii) all other written Contracts, and (iii) all
Leases (and any amendments thereto) have been provided or, with respect to (ii),
made available to Purchaser. The MS Division has entered into the Contracts and
Leases in the ordinary course of business and, to Sellers' Knowledge, the
Contracts and Leases contain commercially reasonable terms.
(b) From and after the Closing, no Seller or any affiliate of any Seller
(other than the constituent entity of the MS Division which is the primary party
to a Contract or Lease prior to the Closing) shall be a guarantor or obligor
under any Contract or Lease constituting an Acquired Asset (unless the
bankruptcy or insolvency of such guarantor or obligor does not constitute a
default under such Lease), other than with respect to a maximum of two of the
Leases listed on Schedule 3.15.
3.16 Insurance. Schedule 3.16 lists the types, carriers, amounts of
coverage and deductibles of all insurance policies maintained by the MS
Division, and true, correct, and complete copies thereof have been delivered or
made available to Purchaser. All premiums on such policies due prior to the date
hereof have been paid. No constituent entity of the MS Division has received any
notice of cancellation with respect thereto. All of such policies will continue
in full force and effect (without modification) with respect to the constituent
entities of the MS Division through the Closing.
3.17 Litigation. Except as set forth on Schedule 3.17, there is no Action
or Order pending or, to the Knowledge of Sellers, threatened against or
affecting the MS Division before any Forum, nor is any Seller a party or subject
to any Action or Order seeking to prevent the execution of this Agreement, the
other Seller Transaction Documents or the consummation of the transactions
contemplated hereby or thereby, nor to the Knowledge of Sellers, has any such
25
Action or Order been threatened.
3.18 Environmental Matters. (a) The operations of the MS Division have been
in full compliance with Environmental Laws.
(b) The MS Division holds all Environmental Permits necessary for
conducting its Business and has conducted, and is presently conducting, its
Business in material compliance with all Environmental Permits held by it,
including, without limitation, all record keeping and filing requirements, and
all such Environmental Permits will be held by the MS Division at Closing.
(c) There has been no Release at any of the Real Property owned or operated
by the MS Division or any predecessor in interest or, to the Knowledge of the
Sellers, at any disposal or treatment facility which received Hazardous
Materials generated by the MS Division or any predecessor in interest which is
reasonably likely to result in Environmental Liabilities.
(d) No Environmental Claims have been asserted against the MS Division or
any predecessor in interest or, to the Knowledge of the Sellers, against any
facilities which received Hazardous Materials generated by the MS Division or
any predecessor in interest, nor do the Sellers have Knowledge of any threatened
or pending Environmental Claim against the MS Division or any predecessor in
interest or any such facility which is reasonably likely to result in
Environmental Liabilities.
(e) Avado has delivered to Purchaser true and complete copies of all
environmental reports, studies, investigations or correspondence in possession
of any constituent entity of the MS Division or any of their agents regarding
any Environmental Liabilities of any constituent entity of the MS Division or
any environmental conditions at any of the Real Property.
3.19 Labor Matters. No constituent entity of the MS Division is or has ever
been a party to any collective bargaining or other labor agreement related to
the Business. There is no pending or, to the Knowledge of Sellers, threatened
labor dispute, strike, work stoppage, union representation, election,
negotiation of collective bargaining agreement, or similar labor matter. No
constituent entity of the MS Division is involved in any controversy with any of
its employees or any organization representing any employees (except for
matters, if any, listed on Schedule 3.17), and each constituent entity of the MS
Division is in compliance with all applicable Laws concerning the
employer/employee relationship, including but not limited to wage/hour Laws,
Laws prohibiting discrimination, and labor Laws. Each constituent entity of the
MS Division is in compliance with all of its Contracts 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 no constituent entity of the MS Division is liable for any unpaid
wages, bonuses, or commissions or any tax, penalty, assessment, or forfeiture
for failure to comply with any of the foregoing.
3.20 Employee Benefits. (a) Schedule 3.20 hereto contains a true and
complete list of all the following agreements or plans of any constituent entity
of the MS Division which are presently in effect and which pertain to any of the
MS Personnel:
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(i) "employee welfare benefit plans" and "employee pension benefit plans,"
as defined in Sections 3(1) and 3(2), respectively, of 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 any Seller maintains or to which any 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) No constituent entity of the MS Division presently contributes or has
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.
(d) There are no written or filed claims or grievances outstanding against
the MS Division under any Seller Plans other than in the normal course of
business.
(e) With respect to each Seller Plan, (i) a favorable determination letter
has been obtained from the Internal Revenue Service, and a copy thereof
delivered to the Purchaser, for any such Seller Plan that is an "employee
pension benefit plan" within the meaning of Section 3(2) of ERISA and that is
intended to be qualified within the meaning of Section 401(a) of the Code, and
since such determination letter, no event has occurred that would disqualify
such Seller Plan; and (ii) there has been no "prohibited transaction" within the
meaning of Section 4975(c) of the Code or Section 406 of ERISA involving the
assets of any Seller Plan.
(f) Avado has previously delivered to Purchaser with respect to each Seller
Plan, true and correct copies of the following, to the extent applicable (i) the
most recent annual report (Form 5500 Series), and (ii) the most recent summary
plan description, as described in Section 102(a)(1) of ERISA. The most recent
annual report (Form 5500 Series) including without limitation required
schedules, and all previous annual reports are accurate in all material respects
and have been filed with the IRS for each Seller Plan in accordance with the
timely filing requirements of ERISA.
(g) Except as required by Section 4980B of the Code, no Seller Plan or
other arrangement provides Postemployment or Postretirement benefits, as defined
under the Financial Accounting Standards Board Statement of Accounting Standards
Numbers 112 and 106, respectively, (whether or not insured) with respect to
current or former employees of the MS Division beyond their retirement or other
termination of employment. Any continuation coverage provided under any welfare
benefit plans complies with Section 4980B of the Code and is at the expense of
the participant or beneficiary.
27
(h) No Seller's purpose for engaging in the transactions contemplated
hereby is for the evasion of liability under Title IV of ERISA.
(i) No Seller Plan or agreement, program, policy or other arrangement by or
to which any constituent entity of the MS Division is a party, is bound or is
otherwise liable, by its terms or in effect would reasonably be expected to
require any payment or transfer of money, property or other consideration on
account of or in connection with the sale, lease, exchange or transfer of the
Shares (whether or not any such payment would constitute a "parachute payment"
or "excess parachute payment" within the meaning of Section 280G of the Code).
(j) All contributions required to be made under any Seller Plan (including
without limitation any reserves for incurred but not reported claims, to the
extent applicable) has been made or accrued on the Financial Statements and all
benefits accrued under any unfunded Seller Plan will have been paid, accrued or
otherwise adequately reserved in accordance with GAAP.
3.21 Certain Employees. Schedule 3.21 sets forth all of the officers, key
employees, and managers (except assistant managers) of each of the constituent
entities of the MS Division. Except as set forth in Schedule 3.21, no Seller has
received written notice that any of such officers, key employees or managers
intends to resign or retire as a result of the transactions contemplated hereby
or otherwise. No Seller shall hire any senior executive of the MS Division prior
to the Closing Date.
3.22 Affiliate Transactions. Immediately following Closing, except pursuant
to this Agreement or any other Purchaser Transaction Document, no Seller nor any
Person owned or controlled by any Seller shall be a lessor, lessee, customer or
supplier of or otherwise have any other contractual or commercial relationship
with Purchaser (or with respect to any Acquired Asset) and Purchaser shall not
have any liability, obligation or commitment to any Seller or any such other
Person. The Assumed Liabilities do not include any liabilities or obligations to
any Seller or any affiliate of any Seller. Except as set forth on Schedule 3.22,
no constituent entity of the MS Division is directly or indirectly a party to,
and the Acquired Assets do not include, any Contract with, or any other
commitment or obligation to, (a) any director or officer of any Seller, (b) any
Relative or affiliate of any director or officer of any Seller, (c) any Person
in which any of the foregoing Persons has, directly or indirectly, at least a 5%
beneficial interest in the capital stock or other type of equity interest of
such Person, or (d) any partnership in which any of the foregoing Persons is a
general partner or has at least a 5% beneficial interest (any or all of the
foregoing being referred to herein as "Related Parties"). Without limiting the
generality of the foregoing, no Related Party, directly or indirectly, engages
in or has any significant interest in or in connection with any business which
is or which within the last three years has been a supplier of the MS Division
or has done business with the MS Division.
3.23 Brokers. No banker, finder, agent or similar intermediary has acted
for or on behalf of any of the Sellers in connection with this Agreement or the
transactions contemplated hereby, and no broker, finder, agent or similar
intermediary is entitled to any broker's, finder's or similar fee or other
commission in connection herewith based on any agreement with any of the
Sellers, except that Avado has retained Credit Suisse First Boston in connection
28
with this Agreement and will be solely responsible for the fees and expenses of
such firm.
3.24 Full Disclosure. No representation, warranty or covenant of any Seller
contained in this Agreement or in the Disclosure Memorandum or in any other
written statement or certificate delivered by any Seller pursuant to this
Agreement or in connection with the transactions contemplated herein contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein not misleading. All documents furnished to Purchaser 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 - REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Sellers as follows:
4.1 Organization, Corporate Power, Authorization. Purchaser is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Delaware and in each other jurisdiction in which it is
lawfully required to qualify to conduct business. Purchaser has the corporate
power and authority to execute and deliver this Agreement and all other
agreements, documents, certificates and other papers contemplated to be
delivered by Purchaser hereunder (collectively, the "Purchaser Transaction
Documents") and to consummate the transactions contemplated hereby and thereby.
All corporate action on the part of Purchaser necessary for the authorization,
execution, and delivery of the Purchaser Transaction Documents and performance
of all obligations of Purchaser hereunder and thereunder has been duly taken.
4.2 Non-Contravention. The execution and delivery of this Agreement by
Purchaser does not, the execution and delivery of the Purchaser Transaction
Documents will not, and the consummation by Purchaser of the transactions
contemplated hereby and thereby will not violate any provision of its articles
of incorporation or bylaws or any Law.
4.3 Validity. This Agreement has been duly executed and delivered by
Purchaser, and constitutes the legal, valid, and binding obligation of
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 the other Purchaser
Transaction Documents have been executed and delivered in accordance with this
Agreement, each will constitute the legal, valid, and binding obligation of
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.
4.4 Litigation Relating to the Agreement. Purchaser is not a party to or
subject to any Action or Order seeking to prevent the execution of this
Agreement, the other Purchaser Transaction Documents or the consummation of the
transactions contemplated hereby or thereby, nor, to Purchaser's knowledge is
any such Action or Order threatened.
29
4.5 Financing. Attached hereto as Exhibit B are true and correct copies of
letters from Purchaser's lenders, pursuant to which Purchaser's lenders have
agreed to finance the portion of the Purchase Price as described and subject to
the conditions and limitations therein. Such letters are in full force and
effect. Such letters do not contain any obligations to be performed by Purchaser
prior to the date hereof which Purchaser has not performed.
ARTICLE V - ADDITIONAL COVENANTS
5.1 Business in the Ordinary Course. Sellers agree that, except as may
otherwise be provided herein, without the written consent of Purchaser, between
the date hereof and the Closing Date, Sellers shall ensure that the Business of
the MS Division is conducted only in the ordinary course and consistent with its
prior practices. Without limiting the generality of the foregoing, between the
date hereof and the Closing Date:
(a) Each constituent entity of the MS Division shall protect, preserve, and
maintain all its assets (including without limitation Permits) consistent with
past practice (including without limitation through the addressing of
maintenance requests), and shall use commercially reasonable best efforts to
maintain in full force and effect all insurance coverage described on Schedule
3.16;
(b) The books, records, and accounts of each constituent entity of the MS
Division shall be maintained in the ordinary course of business on a basis
consistent with prior practices and, as applicable, in accordance with GAAP
(except as otherwise disclosed on Schedule 3.6);
(c) All compensation and other benefits payable to employees of the MS
Division (other than bonuses with respect to the LTIP bonus program) will
continue to be paid consistent with the normal practices of the MS Division;
(d) With respect to the LTIP bonus program, a payment in the amount of
$194,000 shall be made to MS Personnel and the balance of the accruals for the
LTIP bonus program shall be reversed, and with respect to the STIP bonus program
and other short term bonus programs referred to under subsection (iv) of the
definition of "Assumed Liabilities," subject to the following sentence, the
accruals for such programs shall remain on the books and records of the MS
Division. Amounts representing overaccruals in the LTIP bonus program and the
STIP bonus program totaling $502,000 will be reversed;
(e) Each constituent entity of the MS Division shall use its commercially
reasonable best efforts to preserve its business and assets, including, without
limitation, its Contracts and Leases (subject to any expiration date contained
in any such Contract or Lease), and the goodwill of suppliers, customers, and
others having business relations with it which relate to the Business, and
subject to existing performance standards applied by the constituent entity of
the MS Division, to retain the services of its employees, agents and
contractors;
(f) Each constituent entity of the MS Division shall continue to replenish
its inventories in the ordinary course and consistent with prior practices;
30
(g) All Tax Returns for sales and use Taxes required to be filed for
periods ending prior to Closing will be filed and all sales and use Taxes (and
all related penalties and interest) due and payable by any constituent entity of
the MS Division prior to the Closing Date will be paid;
(h) No constituent entity of the MS Division shall take, or agree to take,
any action that would make any representation or warranty of Sellers contained
herein, untrue, incorrect, or misleading in any material respect (or, if already
qualified by materiality, in any respect, after giving effect to materiality
qualifier(s) contained therein) as of the date when made or at any time through
Closing, or that would cause any covenant by Sellers contained herein not to be
fulfilled in any material respect;
(i) No constituent entity of the MS Division shall pay any compensation
other than in the ordinary course of business, or increase any compensation of
any director, officer or employee, other than increases in compensation of
individual employees who are not directors or officers as may be made in the
ordinary course of business consistent with prior practices of the constituent
entity; and
(j) No constituent entity of the MS Division shall enter into any
contractual obligation to do, or authorize, recommend, propose or announce an
intention to do, any of the actions referred to in this Section 5.1.
5.2 No Material Changes. Except as expressly provided in this Agreement,
without the prior written consent of Purchaser, no Seller shall take any action
which shall materially alter or affect the practices, operations, assets,
business or condition (financial or otherwise) of the Business or of the MS
Division.
5.3 Access. (a) Between the date of this Agreement and the Closing Date,
Sellers shall afford Purchaser, its counsel, financial advisors, auditors,
lenders, lenders' counsel and other authorized representatives (hereinafter
collectively called "Purchaser's Designees") access for any purpose consistent
with this Agreement, during normal business hours, to the documents,
Restaurants, offices, properties, books, and records (including without
limitation work papers of Sellers' accountants) of the MS Division and to the
Sellers' directors, officers, employees, accountants, attorneys and
representatives and shall furnish to Purchaser such additional financial and
operating data and other information relating to the MS Division as the Sellers
may possess and as any Purchaser Designee may reasonably request; provided,
however, that (i) any activities by or on behalf of Purchaser, including,
without limitation, the entry by Purchaser or Purchaser's Designees onto the
Real Property, or the other activities of Purchaser or Purchaser's Designees
with respect to the Real Property (hereinafter called "Purchaser's Activities")
shall not damage the Real Property in any manner whatsoever or disturb or
interfere with the rights of any lessor of Real Property; (ii) in the event the
Real Property is altered or disturbed in any manner in connection with any
Purchaser's Activities, Purchaser shall immediately return the Real Property to
the condition existing prior to Purchaser's Activities; and (iii) unless
required by Law or any Forum Purchaser shall in no event without Avado's prior
written consent disclose the results of any of its investigations, examinations,
31
tests, or inspections to any party (including without limitation any
Government), other than to its lenders, attorneys, consultants, investors or
other Purchaser Designees. Avado will keep Purchaser informed as to the affairs
of the MS Division and arrange for meetings with personnel of the MS Division
and any third parties (including without limitation vendors and landlords, but
excluding lenders other than any lender's lending part of the Purchase Price)
from time to time upon Purchaser's request on reasonable notice; provided,
however, that Purchaser's Designees shall be permitted to contact the secured
creditors of any Seller with respect to obtaining payoff letters, lien releases,
etc. Notwithstanding any provision of this Agreement to the contrary, Purchaser
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 Avado and the lessor of the Real Property. All information provided
to Purchaser hereunder shall remain subject to Purchaser's obligations regarding
the confidentiality of such information as set forth in the confidentiality
agreement between Avado and Xxxxxx Xxxxxx, Inc. dated December 16, 2000;
provided, that the parties agree that such confidentiality agreement will expire
at Closing with respect to information regarding the MS Division but will
survive in accordance with its terms with respect to information regarding Avado
(except information related to the MS Division). Access shall be arranged in
advance by Purchaser with Avado and will be scheduled in a manner and with a
frequency calculated so as to not cause undue disruption of the business of the
MS Division. Notwithstanding any right of Purchaser to fully investigate the
affairs of the MS Division, and notwithstanding any knowledge of facts,
determined or determinable by Purchaser pursuant to such investigation or right
of investigation, Purchaser shall be entitled to rely fully on the
representations, warranties, covenants and agreements of Sellers contained in
this Agreement.
(b) Following the Closing Date, Purchaser shall afford Avado and its
financial advisors, auditors and other authorized representatives (at Avado's
sole cost and expense) access to all files, books and records related to the
Business and all MS Personnel previously employed by Sellers to the extent
necessary to close the books and records of the MS Division and to reasonably
assist Sellers in defending litigation matters relating to the operation of the
Business prior to Closing. Following the Closing Date, Sellers will upon the
reasonable request of Purchaser from time to time, provide Purchaser (at
Purchaser's sole cost and expense) copies of tax returns and other records
relating to the Tax reporting of the Sellers related to the operation of the MS
Division.
5.4 Development Efforts. (a) Schedule 5.4(a) lists the restaurant which is
being developed by the MS Division (the "Development Restaurant"). Sellers shall
use commercially reasonable best efforts up to the Closing to cause the
development of the Development Restaurant to continue in accordance with the
timetable and budget set forth on such Schedule. Sellers shall be responsible
for all costs and expenses associated with the Development Restaurant; provided,
however, that as soon as possible after the Closing Date but in no event more
than four business days following the Closing Date, Purchaser shall, upon
receipt of supporting documentation, reimburse Sellers for all out-of-pocket
expenditures paid by Sellers to third party vendors incurred prior to the
Closing Date (net of amounts reimbursed by third parties) in connection with the
construction of the Development Restaurant so long as such expenses are included
in the budget attached hereto as Schedule 5.4(a).
32
(b) Schedule 5.4(b) lists the restaurant sites which the MS Division has
identified for potential development (the "Development Sites"). Sellers shall
use commercially best reasonable efforts up to the Closing to continue the
development activities of the MS Division in the ordinary course for the
Development Sites; provided, however, that Purchaser acknowledges that no Seller
owns or has any contractual right to acquire the Development Sites; and
provided, further, that, no Seller shall enter into any binding obligation with
respect to a Development Site or any development activity without the prior
written consent of the Purchaser, which may be withheld in its sole discretion.
5.5 Reporting Requirements. Through the Closing Date, Avado shall furnish
to Purchaser:
(a) Within two business days (but in any event at least two business days
prior to Closing) after the occurrence, or failure to occur, of any such event,
information with respect to any event which has or could reasonably be expected
to materially adversely alter or affect the organization, capitalization,
financial structure, practices, operations, assets, business or condition
(financial or otherwise) of the Business or the ability of any Seller to perform
its obligations hereunder.
(b) As soon as available (but in any event prior to the next month's end),
the statement of operations of each Restaurant for such fiscal month in the MS
Division's regularly prepared format.
(c) Within two business days (but in any event at least two business days
prior to Closing) after the threat or commencement of each such matter, notice
of all Actions, Orders, or other directives affecting the Business or any
Restaurant that, if adversely determined, could reasonably be expected to
materially adversely affect the assets, the operations, business, prospects or
condition (financial or otherwise) of the Business or the ability of any Seller
to perform its obligations hereunder;
(d) Such other information respecting the assets or properties of the MS
Division or the operations, business, prospects, or condition (financial or
otherwise) of the Restaurants or the Business, or otherwise relating to the MS
Division as the Purchaser may from time to time reasonably request; and
(e) Within two business days (but in any event at least two business days
prior to Closing) after any Seller becomes aware of any changes or developments
which result in any change or amendment to the Disclosure Memorandum,
information with respect to such changes or developments and an amended
Disclosure Memorandum.
5.6 Cooperation. (a) Insofar as such conditions are within their control or
influence, Sellers will use commercially reasonable best efforts to cause the
conditions to Closing set forth in Section 6.1 and 6.2(d) to be satisfied and to
facilitate and cause the consummation of the transactions contemplated hereby,
including without limitation obtaining the Consents. The parties acknowledge
that no Consents will be sought with respect to any Minor Contract (unless such
Consents are listed on Schedule 3.3) even if the failure to so obtain a consent
33
to assignment may result in a default or termination thereunder, provided that
any such default or termination would not have a material adverse effect on the
MS Division or the Business. Sellers will be responsible for the costs of
obtaining the Consents as set forth in Section 9.1(d); provided, however, that
no Seller shall be required to make any payment to any party to a Contract or
Lease unless then due and payable or required in connection with such Consent
pursuant to the terms of the Contract or Lease (unless Purchaser agrees in
writing in advance to reimburse Sellers), guarantee any Material Contract or
Lease or remain liable for the payment thereof following the Closing (except to
the extent that a Seller already is a guarantor thereof and the guaranteed party
is unable or unwilling to terminate such guarantee), or agree to any concessions
or amendment to other contracts, leases or arrangements with such party, in each
case in order to obtain such Consents.
(b) Insofar as such conditions are within its control or influence,
Purchaser shall use commercially reasonable best efforts to cause the conditions
set forth in Section 6.2 to be satisfied and to facilitate and cause the
consummation of the transactions contemplated hereby. Specifically, but not by
way of limitation, Purchaser will file all documents required to obtain approval
of the transactions contemplated hereby under the HSR Act within 15 days of the
date hereof; provided, that Avado agrees to pay the HSR fee at the time of
filing and Purchaser will reimburse Avado for such fee at Closing.
(c) Sellers and Purchaser agree to use their commercially reasonable best
efforts to comply promptly with and, where appropriate, to respond in
cooperation with each other to, all requests or requirements which applicable
Law or any Government or Forum may impose on them with respect to the
transactions which are the subject of this Agreement. Without limiting the
foregoing, Sellers shall cooperate with Purchaser in obtaining all Consents, or
completing any filings, necessary in connection with any Liquor Permits or other
Permits, consents or authorizations in connection with the transactions
contemplated hereby as may be requested by Purchaser from time to time.
(d) In the event that Purchaser determines that Consents other than those
listed on Schedule 3.3 are required under Leases due to the fact that Purchaser
desires that the Leases be assigned to more than one entity at Closing,
Purchaser may at its option obtain such additional Consents and, in such event,
shall be responsible for all costs thereof. Sellers will reasonably cooperate
with Purchaser (excluding the payment of money, unless Purchaser agrees in
writing in advance to reimburse Sellers) to obtain such Consents. It is
understood that the obtaining of such additional Consents shall not be a
condition to Closing.
5.7 Releases. (a) The parties will use their commercially reasonable best
efforts (excluding the payment of money) to obtain the release of Sellers and
their post-Closing affiliates from any guarantee obligations with respect to the
Assumed Liabilities. To the extent that such releases are not obtained,
Purchaser shall not extend the term of any guaranteed Assumed Liabilities or
increase the liability guaranteed thereunder, unless the guarantee or obligation
of Sellers and their affiliates is released as to any extended or modified
liability obligations (but not the original obligations in the case of modified
obligations) or Avado otherwise consents in writing.
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(b) With respect to Contracts or Leases for which Sellers may have
contingent liability following the assignment thereof to Purchaser at Closing
(other than Assumed Liabilities which have been guaranteed by Sellers which is
addressed in subsection (a) above), Purchaser will reasonably cooperate with
Sellers (excluding the payment of money) to obtain the release of Sellers from
any obligations under such Contracts or Leases. To the extent that such releases
are not obtained, Purchaser shall not extend the term of any such Contracts or
Leases or increase the liability thereunder, unless the contingent obligation of
Sellers is released as to any extended or modified liability obligations (but
not the original obligations in the case of modified obligations) or Avado
otherwise consents in writing.
5.8 Employees. Purchaser shall offer all MS Personnel employment with
Purchaser after Closing, in each case upon terms and conditions substantially
equivalent in the aggregate to those provided immediately prior to Closing;
however, Purchaser shall not be required to provide stock options or any stock
purchase rights. Nothing contained herein shall be construed to affect or limit
any right Purchaser or its affiliates may have after the Closing with respect to
the terms and conditions of employment of any MS Personnel (including but not
limited to the right of Purchaser to subsequently change employee benefits or to
terminate the employment of any employee at any time).
5.9 Assistance with On-Going Relationships. Between the date hereof and the
Closing Date, Sellers shall, to the extent requested by Purchaser, assist
Purchaser with retaining employees and suppliers and maintaining other
third-party relationships of the MS Division.
5.10 Non-Solicitation. For a period of one year from the Closing Date, none
of the Sellers (nor any of their post-Closing affiliates), on the one hand, nor
Purchaser (nor any of its post-Closing affiliates), on the other hand, will
directly or indirectly solicit or induce a management level employee of the
other party or any of their post-Closing affiliates to leave such employment or
solicit or induce a consultant or other independent contractor to sever that
person's relationship with such party.
5.11 Preparation of Historical Financials. Not later than 5 business days
prior to the Closing Date, Avado will deliver to Purchaser audited consolidated
balance sheets of the MS Division dated December 31, 2000 and December 31, 1999,
and the audited consolidated statements of operations and cash flow of the MS
Division for the fiscal years ended December 31, 2000 and December 31, 1999 (in
each case with related footnote disclosures), or other named financial
statements containing the equivalent information. Following Closing, Avado will
cooperate, and use its reasonable best efforts to cause its accountants to
cooperate, with Purchaser in respect of the preparation of historical financial
statements (whether audited or unaudited) that relate in whole or in part to the
MS Division.
5.12 Other Transactions. Prior to the earlier of the Closing or the
termination of this Agreement, Sellers shall not, and Sellers shall cause their
respective directors, officers, employees, agents, representatives, affiliates,
stockholders and other persons acting on their behalf not to, directly or
indirectly, (i) solicit offers, inquiries or proposals for, or entertain any
offer, inquiry or proposal from any potential purchaser to enter into, any
35
transaction that has as a purpose a business combination or merger of Avado or
any entity of the MS Division, a sale of a substantial portion of the assets of
any constituent entity of the MS Division, the sale of Ownership Interests of
any Seller other than Avado, or a transaction comparable to or similar to the
transaction contemplated by this Agreement or that otherwise would render
impractical or that would delay the transactions contemplated by this Agreement
(any of the foregoing, a "Competing Transaction"), (ii) provide information to
any other Person regarding any constituent entity of the MS Division (except in
the ordinary course of business), or (iii) conduct any discussions or
negotiations, or enter into any agreement, arrangement or understanding,
regarding a Competing Transaction. Avado will promptly notify Purchaser in
writing if it or their financial advisors receives any such offer, inquiry or
proposal and it will provide the details thereof, and keep Purchaser informed
with respect to each such offer, inquiry or proposal. Avado will provide
Purchaser with copies of all such offers, inquiries or proposals that are in
writing.
5.13 Name Changes. Within 60 days after Closing, Sellers will change their
legal names to names which do not include any Business Intellectual Property.
5.14 Loss Experience. Following Closing, Sellers will provide Purchaser
with copies of or access to Seller's historical insurance loss data with respect
to the MS Division, to the extent reasonably requested by Purchaser.
5.15 Reimbursement for Claims. Following delivery from Sellers of
supporting documentation regarding claims made for general liability, workers
compensation or employment practice claims, Purchaser will reimburse Sellers for
out-of-pocket costs and expenses (including without limitation reasonable
attorneys' fees) incurred by Sellers after the Closing for general liability,
workers compensation or employment practice claims that result from, relate to,
or arise out of the operation of the MS Division prior to the Closing; provided,
however, that Purchaser's reimbursement obligation under this Section 5.15 shall
(i) be limited to $750,000 in the aggregate, (ii) be limited to $50,000 per
month, and (iii) expire on the second anniversary of the Closing Date.
5.16 Sellers Plans. Sellers will take all action which is required with
respect to the Avado Brands, Inc. Profit Sharing Plan and Trust 401(k) Plan
pursuant to applicable Laws and the terms of such plan as a result of the
consummation of the transactions contemplated herein.
5.17 Transfer Taxes. Sellers shall pay when due any sales taxes, use taxes,
transfer taxes, documentary stamp taxes, or other taxes imposed with respect to
the transfer of the Acquired Assets to Purchaser and the consummation of the
transactions contemplated herein.
ARTICLE VI - CONDITIONS PRECEDENT TO THE CLOSING
6.1 Purchaser's Conditions to Closing. The obligations of Purchaser
hereunder are subject to satisfaction of each of the following conditions at or
before Closing, the occurrence of which may, at the option of Purchaser, be
waived:
(a) Subject to the matters disclosed in the Disclosure Memorandum, all
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representations and warranties of Sellers in this Agreement, as supplemented by
Sellers from time to time in accordance with the terms hereof, shall be true in
all material respects on and as of the Closing (other than representations and
warranties qualified as to materiality which shall be true and correct in all
respects, after giving effect to the materiality qualifier(s) contained
therein).
(b) Any supplement to the representations and warranties delivered by
Sellers in accordance with the terms hereof shall not in Purchaser's reasonable
judgment be material. Without limiting the foregoing, for purposes of this
clause (b) only, any supplement that, individually or in the aggregate, together
with other supplements, could reasonably be expected to involve a cost,
liability, obligation or claim (not covered by insurance) exceeding $250,000
shall be deemed to be material.
(c) Sellers 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 Sellers prior to or on the Closing Date.
(d) 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 Purchaser.
(e) Sellers shall have delivered the items required by Section 2.4(a).
(f) The Escrow Agreement shall be duly executed by the Escrow Agent and
Avado.
(g) Purchaser shall have obtained the cash proceeds of financing on terms
and conditions acceptable to Purchaser (it being understood that the terms and
conditions specifically set forth in the letters attached hereto as Exhibit C
are acceptable to Purchaser).
(h) Purchaser shall have obtained, either from Sellers or directly from the
issuing authority, all Permits necessary for the operation of the Restaurants
and the continued development of the Development Restaurant.
(i) There shall not have been any material adverse change, nor any event
which could reasonably be expected to constitute a material adverse change, in
the business, financial condition, results of operations, properties or assets
of the MS Division or the Business from the date hereof to the Closing Date.
(j) Since the date of this Agreement, there shall not have been commenced
or threatened against Purchaser, or against any Person affiliated with
Purchaser, any Action (i) involving any challenge to, or seeking damages or
other relief in connection with, any of the transactions contemplated hereunder,
or (ii) that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with any of the transactions contemplated hereunder.
(k) The audited consolidated balance sheet of the MS Division dated
December 31, 2000, and the audited consolidated statements of operations,
stockholders' equity, and cash flow of the MS Division for the fiscal year ended
December 31, 2000, shall not reflect any changes which, in the aggregate, result
37
in a material deviation from the corresponding Financial Statements (after
giving affect to the variances to GAAP listed on Schedule 3.6).
(l) At Closing, there will be no more than two Leases that contain a
default provision which would be triggered by the bankruptcy or insolvency of
Avado.
Notwithstanding anything to the contrary set forth in clause (h) above, the
failure to obtain a Permit or Consent for a Permit listed on Schedule 3.11
(other than Liquor Permits and Permits related to the Business Intellectual
Property) shall constitute a condition to the obligations of Purchaser hereunder
only to the extent that the failure to obtain such Permit or Consent (alone or
together with any other such Permits or Consents for such Permits that are not
obtained) would have a material adverse effect on the business, financial
condition, results of operations, properties or assets of the MS Division, any
Restaurant or the Development Restaurant. Further, if the Purchaser is unable to
obtain a Permit or a Consent under a Permit necessary for the continued
operation of the Restaurants and the continued development of the Development
Restaurant after the Closing Date, and the Purchaser reasonably believes that it
will be able to obtain such a Permit or Consent within two months of the Closing
Date, Closing of the transactions contemplated hereunder will not be delayed if
Sellers deliver a duly executed management agreement or agreements which allows
the continued operation of the Restaurants or the continued development of the
Development Restaurant after the Closing Date for the benefit of the Purchaser;
provided that (i) each such management agreement shall be on such terms and
conditions as are acceptable to Purchaser and its financing sources, and (ii)
Purchaser receives the same economic benefit under the management agreement as
it would have received had Purchaser held, as of the Closing Date, the Permit
that is subject to the management agreement.
6.2 Sellers' Conditions to Closing. The obligations of Sellers hereunder
are subject to satisfaction of each of the following conditions at or before
Closing, the occurrence of which may, at the option of Sellers, be waived:
(a) All representations and warranties of Purchaser in this Agreement shall
be true in all material respects on and as of the Closing.
(b) Purchaser 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 Purchaser prior to or on the Closing Date.
(c) 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 Sellers.
(d) Sellers shall receive Consents from their lenders and debt holders as
listed on Schedule 3.3, and Avado's credit facilities and debt instruments shall
be restructured on terms satisfactory to Avado.
(e) Purchaser shall have delivered the items required by Section 2.4(b).
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(f) The Escrow Agreement shall be duly executed by the Escrow Agent and the
Purchaser.
(g) Since the date of this Agreement, there shall not have been commenced
or threatened against any Seller, or against any Person affiliated with any
Seller, any Action (i) involving any challenge to, or seeking damages or other
relief in connection with, any of the transactions contemplated hereunder, or
(ii) that may have the effect of preventing, delaying, making illegal, or
otherwise interfering with any of the transactions contemplated hereunder.
ARTICLE VII - INDEMNIFICATION
7.1 Purchaser Claims. (a) Sellers shall jointly and severally indemnify and
hold harmless Purchaser, its stockholders and affiliates, their respective
officers, directors, employees and agents, and the successors and assigns of
each of the foregoing, against, and in respect of:
(i) Any and all claims, damages, losses, liabilities, costs, and expenses
(collectively, "Losses") incurred or suffered by Purchaser,
Purchaser's stockholders and affiliates, and their respective
officers, directors, employees and agents, and the successors and
assigns of each of the foregoing (collectively, the "Purchaser
Indemnitees") that result from, relate to, or arise out of (A) any
breach of or failure by any Seller to carry out any covenant or
agreement contained in any Seller Transaction Document; (B) any breach
of a representation or warranty by any Seller contained in any Seller
Transaction Document; (C) 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 the dealings, agreement, or arrangement of any
Seller or any of their respective affiliates; (D) any liability of any
Seller that is not an Assumed Liability; and (E) any asset of any
Seller that is not an Acquired Asset.
(ii) Any and all actions, suits, claims, proceedings, investigations,
demands, assessments, audits, fines, judgments, costs, and other
expenses (including, without limitation, amounts paid in settlement
and reasonable legal and accounting fees and expenses) incident to any
of the foregoing, including without limitation all such expenses
reasonably incurred in mitigating any damages resulting to the
Purchaser Indemnitees from any matter set forth in subsection (i)
above.
(b) Sellers shall have no liability for indemnification or otherwise with
respect to a breach of the representation contained in Section 3.15(b) in
connection with a particular Lease to the extent that the Purchaser has waived
compliance with the closing condition under Section 6.1(l) with respect to such
Lease. Sellers shall have no liability for indemnification or otherwise with
respect to Section 7.1(a)(i)(B) (and Section 7.1(a)(ii) to the extent the items
covered thereby relate back to Section 7.1(a)(i)(B)) until the aggregate
liability of the Sellers thereunder exceeds $250,000 and then only to the extent
that the aggregate liability of the Sellers hereunder exceeds such amount;
provided, however, that liabilities arising with respect to Sections 3.1 through
39
3.5, 3.9 and 3.12(a) hereof shall not be subject to the foregoing deductible. In
no event shall the aggregate liability of Sellers under Section 7.1(a)(i)(B)
(and Section 7.1(a)(ii) to the extent the items covered thereby relate back to
Section 7.1(a)(i)(B)) exceed an amount equal to 10% of the Purchase Price, as
the Purchase Price may be adjusted after the Closing Date; provided, however,
that liabilities arising with respect to Sections 3.1 through 3.5, 3.9 and
3.12(a) shall not be subject to the foregoing cap.
(c) The amount of any liability of Sellers under this Section 7.1 shall (i)
include any amount necessary to hold the Purchaser Indemnitees harmless from any
Tax or tax detriment arising from the matter giving rise to the claim for
indemnification or the receipt or accrual of any indemnity payment in respect of
such claim and (ii) be computed net of any tax benefit to the Purchaser
Indemnitees from the matter giving rise to the claim for indemnification
hereunder and net of any cash insurance proceeds actually received by the
Purchaser Indemnitees with respect to the matter out of which such liability
arose.
(d) The representations, warranties and covenants of Sellers contained in
this Agreement, the Disclosure Memorandum, any other Seller Transaction
Documents or any certificate delivered by or on behalf of any 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 3.12(b) shall
be of no further force and effect after thirty days from the date of
the Closing;
(ii) the representations and warranties contained in Sections 3.1 through
3.5, 3.9, 3.12(a), 3.18 and 3.20 shall survive until the expiration of
any applicable statute of limitations provided by law;
(iii)all other representations and warranties of Seller shall be of no
further force and effect after the first anniversary of the Closing
Date; and
(iv) subject to clause (e) below, all covenants shall survive the Closing
(unless expressly limited in duration).
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 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 Purchaser Indemnitees may not assert any claim against Sellers
post-Closing for a breach of Section 5.3(a) (Access), Section 5.5 (Reporting
Requirements) (unless Avado failed to disclose, prior to Closing, information
required to be disclosed thereunder prior to Closing), Section 5.6(a) and (b)
(Cooperation), Section 5.9 (Assistance With Ongoing Relationships), and the
40
first sentence of Section 5.11 (Preparation of Historical Financials).
(f) The Purchaser Indemnitees shall provide written notice to Avado, on
behalf of all Sellers, 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 the Purchaser Indemnitees' ability to assert any such
claim except to the extent that Sellers are actually prejudiced thereby. The
Purchaser Indemnitees shall make commercially reasonable efforts to mitigate any
damages, expenses, etc. resulting from any matter giving rise to liability of
Sellers under this Article, to the extent that such efforts are not detrimental
to the Business; provided, however, that the Purchaser Indemnitees shall not be
required to take any action or omit to take any action or otherwise engage in
any course of conduct or refrain therefrom, in each case to the extent
determined by it to be prejudicial to it.
(g) Notwithstanding any other provision of this Article VII, the aggregate
principal amount of the obligation of Sellers under this Article VII shall not
exceed the aggregate gross proceeds actually received by the Sellers in
connection with this Agreement and the transaction contemplated hereby.
7.2 Defense of Third Party Claims. With respect to any claim by any
Purchaser Indemnitee under Section 7.1, relating to a third party claim or
demand, Purchaser shall provide Avado, on behalf of all Sellers, with prompt
written notice thereof in accordance with Section 9.4. The failure of any
Purchaser Indemnitee to notify Avado of such claim shall not relieve Sellers of
any liability that Sellers may have with respect to such claim, except and only
to the extent that such failure shall result in any material prejudice to
Sellers. Sellers shall have the right to defend the third party claim, at
Sellers' expense and with counsel of its choice reasonably satisfactory to the
Purchaser Indemnitee, provided that Avado so notifies the Purchaser Indemnitee
within thirty (30) days, or such earlier date as a response to any proceeding
may be required, after receipt of such notice, and provided further that the
indemnified and indemnifying parties do not have materially conflicting or
different interests (a "Disqualifying Conflict"). So long as Sellers are
conducting the defense of such third party claim as provided in the previous
sentence, the Purchaser Indemnitee may retain separate co-counsel at its sole
cost and expense and may participate in the defense of such third party claim.
In such cases where a Disqualifying Conflict exists, the costs and reasonable
expenses of the Purchaser Indemnitee's separate legal co-counsel (but not more
than one firm plus one local counsel in each relevant jurisdiction) will be
borne by Sellers. The Sellers will not consent to the entry of any judgment or
enter into any settlement with respect to such third party claim unless such
judgment or settlement contains an unconditional term providing for a release to
be given by the claimant in question or plaintiff to the Purchaser Indemnitee of
and from all liability in respect of such third party claim. In the event the
Sellers do not assume the defense of such third party claim as so provided, (x)
the Purchaser Indemnitee shall defend against such third party claim and (y)
Sellers will remain responsible for any Losses the Purchaser Indemnitee may
suffer as a result of such third party claim to the full extent provided in this
Section 7.2. If the Sellers assume the defense of a third party claim, the
Purchaser Indemnitees shall cooperate in the settlement or compromise of, or
defense against, such claim. Regardless of which party shall assume the defense
of such third party claim, the Purchaser Indemnitee shall provide to Avado on
41
request all information and documentation reasonably necessary to support and
verify any Losses that give rise to any claim for indemnification and shall
provide reasonable access to all books, records and personnel in their
possession or under their control that would have a bearing on such claim.
7.3 Seller Claims. (a) Purchaser shall indemnify and hold harmless Sellers,
their respective stockholders and affiliates, and their respective officers,
directors, employees, agents, and the successors and assigns of each of the
foregoing (collectively, the "Seller Indemnitees") against, and in respect of:
(i) any and all Losses, incurred or suffered by the Seller Indemnitees
that result from, relate to, or arise out of: (A) any breach by
Purchaser of any covenant set forth in any of the Purchaser
Transaction Documents; (B) any breach of any of the representations or
warranties made by Purchaser in any of the Purchaser Transaction
Documents; (C) any Assumed Liability, 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 Purchaser'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, amounts paid in settlement
and reasonable legal and accounting fees and expenses) incident to any
of the foregoing, including without limitation all such expenses
reasonably incurred in mitigating any damages resulting to the Seller
Indemnitees from any matter set forth in subsection (i) above.
In no event shall the aggregate liability of Purchaser under Section
7.3(a)(i)(B) (and Section 7.3(a)(ii) to the extent the items covered thereby
relate back to Section 7.3(a)(i)(B)) exceed an amount equal to 10% of the
Purchase Price, as the Purchase Price may be adjusted after the Closing Date;
provided, however, that liabilities arising with respect to Sections 4.1 - 4.3
shall not be subject to the foregoing cap.
(b) Seller Indemnitees shall provide written notice to Purchaser of any
claim (including without limitation any claim relating to a third party claim or
demand) for indemnification under this Section 7.3 as soon as practicable. The
failure of a Seller Indemnitee to so notify the Purchaser of any such claim
shall not relieve Purchaser of any liability that Purchaser may have with
respect to such claim, except and only to the extent that such failure shall
result in any material prejudice to Purchaser. Purchaser shall have the right to
defend any claim, at Purchaser's expense and with counsel of its choice
reasonably satisfactory to the Seller Indemnitee, provided that Purchaser so
notify the Seller Indemnitee within thirty (30) days, or such earlier date as a
response to any proceeding may be required, after receipt of such notice, and
provided further that there is no Disqualifying Conflict. So long as Purchaser
is conducting the defense of any claim as provided in the previous sentence, the
Seller Indemnitee may retain separate co-counsel at its sole cost and expense
and may participate in the defense of claim. In such cases where a Disqualifying
Conflict exists, the costs and reasonable expenses of the Seller Indemnitee's
42
separate legal co-counsel (but not more than one firm plus one local counsel in
each relevant jurisdiction) will be borne by Purchaser. Purchaser will not
consent to the entry of any judgment or enter into any settlement with respect
to any third party claim unless such judgment or settlement contains an
unconditional term providing for a release to be given by the claimant in
question or plaintiff to the Seller Indemnitee of and from all liability in
respect of such third party claim. In the event Purchaser does not assume the
defense of any third party claim as so provided, (x) the Seller Indemnitee shall
defend against such third party claim and (y) the Purchaser will remain
responsible for any Losses the Indemnitee may suffer as a result of such third
party claim to the full extent provided in this Section 7.3. If the Purchaser
assumes the defense of a third party claim, the Seller Indemnitees shall
cooperate in the settlement or compromise of, or defense against, such claim.
Regardless of which party shall assume the defense of such third party claim,
Sellers shall provide to the Purchaser on request all information and
documentation reasonably necessary to support and verify any Losses that give
rise to any claim for indemnification and shall provide reasonable access to all
books, records and personnel in their possession or under their control that
would have a bearing on such claim. In any event, the Seller Indemnitees shall
provide reasonable cooperation in the settlement or compromise of, or defense
against, any such asserted claim.
7.4 Exclusive Remedies. The rights and remedies of the parties under this
Article VII 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 the
foregoing shall not limit the right of either party to bring an action based on
fraud (or other equivalent state law claim) or to seek specific performance or
injunctive relief.
7.5 Arbitration of Disputes. (a) All 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 Commercial
Arbitration Rules (the "Rules") of the American Arbitration Association ("AAA").
The Rules are hereby modified for such arbitration as set forth below:
(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. Such notice shall also be given to the AAA in
accordance with its Rules;
(ii) Within 30 days after receipt of such demand, the other party shall, in
a written notice delivered to the demanding party and to the AAA, name
such party's arbitrator. If such party fails to name an arbitrator,
then the second arbitrator shall be named by the 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;
43
(iii)The arbitration hearing shall be held in New York, New York at a
location designated by a majority of the arbitrators. The Rules and
the Federal Arbitration Act 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, shall not award punitive damages, and
judgment on such award may be entered by either party in a court of
competent jurisdiction; and
(b) Notwithstanding anything in this Section 7.5 to the contrary, either
party may seek from a court any provisional remedy (including without limitation
specific performance or injunctive relief) 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. Suits filed by
Sellers pursuant to this Section 7.5(b) may be filed in a Federal or state court
located in Atlanta, Georgia, and suits filed by Purchaser pursuant to this
Section 7.5(b) may be filed in a Federal or state court located in New York, New
York, and the parties hereby consent to the jurisdiction of such Courts for such
suits.
ARTICLE VIII - TERMINATION
8.1 Termination. (a) This Agreement may be terminated as follows:
(i) At any time by the mutual consent of Avado (on behalf of the Sellers)
and Purchaser; or
(ii) By either Avado (on behalf of the Sellers) or Purchaser, at its sole
election, at any time after the Termination Date, if the Closing shall
not have occurred on or prior to such date, unless the failure of the
Closing to have occurred is solely due to the fault of such party or
parties desiring to terminate.
(b) In the event of the termination of this Agreement pursuant to
subparagraph (a)(ii) above because Sellers or Purchaser, as the case may be,
shall have willingly failed to fulfill their respective obligations hereunder,
the other party shall, subject to Section 7.5, be entitled to pursue, exercise,
and enforce any and all remedies, rights, powers, and privileges available to it
at law or in equity. In the event of the termination of this Agreement by
Sellers due to the failure of the Closing condition set forth in Section 6.2(d)
to be satisfied, Sellers shall pay Purchaser a fee of $2,000,000 in cash
contemporaneously with the termination of this Agreement.
(c) Articles VII (and, to the extent that a claim is make under Article
VII, any covenant under Article V which would need to survive for purposes of
making the claim), VIII and IX hereof shall survive the termination of this
Agreement.
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ARTICLE IX - MISCELLANEOUS
9.1 Expenses. (a) Except as provided below, 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) Avado shall advance the filing fees required under the HSR Act, but
Purchaser shall reimburse Avado for such fees at Closing.
(c) Purchaser shall pay the costs of all surveys, environmental
investigations, studies, and reports, and all other costs of any investigation
of the assets, the Restaurants, or the Business by Purchaser.
(d) Sellers shall be responsible for all costs incurred in obtaining any
and all Consents required hereunder (other than Liquor Permits) as a result of
the transactions contemplated hereunder (subject to the limitations in Section
5.6(a)), and Purchaser shall be responsible for all costs incurred in obtaining
Consents under the Liquor Permits or in obtaining new Liquor Permits, as
required by applicable Laws.
9.2 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 or other document delivered pursuant to or in connection with
this Agreement.
9.3 Assignment and Binding Effect. Purchaser may assign this Agreement or,
in whole or in part, the right to receive the Acquired Assets at Closing to (i)
any affiliate or affiliates of Purchaser, (ii) any other third party reasonably
acceptable to Avado, or (iii) any of its lenders for collateral assignment
purposes, provided that no such assignment shall affect Purchaser's liability
hereunder. 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 Sellers and Purchaser.
9.4 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:
45
If to Sellers, to: With a required copy to:
Avado Brands, Inc. Xxxxxxxxxx Xxxxxxxx LLP
Xxxxxxx at Washington 0000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000 Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxx X. Xxxxx Attention: Xxxxx X. Xxxxxxxxx, Esq.
Fax: 000-000-0000 Fax: 000-000-0000
If to Purchaser: With required copies to:
XxXxxxxxx & Xxxxxxx Acquisition Xxxxxxx Xxxx & Xxxxx LLP
Corp., Inc. 000 Xxxxx Xxxxxx
c/o Xxxxxx Xxxxxx Partners, III, L.P. XX, XX 00000
000 Xxxx 00xx Xx., XX, XX 00000 Attention: Xxxx Xxxxxxxxxx
Attention: Xxxxx X. Xxxxxxxx Xxxxxxx X. Xxxxxxxxxx
Xxxxxx Xxxxxx Fax: (000) 000-0000
Fax: (000) 000-0000
and to: and to:
Bruckmann, Xxxxxx, Xxxxxxxx & Co., Inc. Xxxxxxxx & Xxxxx
000 Xxxx 00xx Xxxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000 000 Xxxx 00xx Xxxxxx
Attention: Xxxxxx X. Xxxxxx Xxx Xxxx, XX 00000-0000
Rice Xxxxxxx Attn: Xxx Xxxxxx
Xxxxx Xxxxx Fax: 000-000-0000
Fax: 000-000-0000
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 business days
after deposit in the U. S. Mail properly addressed with adequate postage
affixed.
9.5 New York Law To Govern. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
9.6 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.
9.7 Schedules and Exhibits. All Exhibits and Schedules (including without
limitation the Disclosure Memorandum) referred to herein are intended to be and
hereby are specifically made a part of this Agreement.
46
9.8 Severability. Any portion of 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 (of portions of provisions) hereof, and
any such invalidity or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision (or portion thereof) in any other
jurisdiction.
9.9 Public Announcements. Purchaser and Avado will coordinate with each
other all press releases relating to the transactions contemplated by this
Agreement and no party hereto, nor any affiliates thereof, shall issue any press
release, publicity statement, or other public notice relating to this Agreement
or the transactions contemplated hereby without providing the other party
reasonable opportunity to review and comment thereon.
9.10 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.
9.11 Time. Time is and shall be of the essence of this Agreement.
9.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
9.13 Waiver. Any term or condition of this Agreement may be waived at any
time by the party which is entitled to the benefit thereof, but only if such
waiver is evidenced by a writing signed by such party. No failure on the part of
any party hereto to exercise, and no delay in exercising any right, power, or
remedy created hereunder, shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power, or remedy by any party preclude
any other or further exercise thereof or the exercise of any other right, power,
or remedy. No waiver by any party hereto of any breach of or default in any term
or condition of this Agreement shall constitute a waiver of or assent to any
succeeding breach of or default in the same or any other term or condition
hereof.
9.14 Further Assurances. From time to time after the Closing, 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.
9.15 Sellers' Representative. MSHC and the MSHC Subsidiaries hereby
irrevocably appoint Avado as their representative for all purposes under this
Agreement and authorize Avado, on their behalf and in their name, to (i) receive
all notices or documents given or to be given to the Sellers by Purchaser
pursuant to this Agreement or in connection herewith and to receive and accept
service of legal process in connection with any suit or proceeding arising under
47
this Agreement; (ii) take such action on behalf of the Sellers as Avado may deem
appropriate in respect of waiving any inaccuracies in the representations or
warranties of Purchaser contained in this Agreement or in any other Purchaser
Transaction Document or waiving the fulfillment of any of the conditions
precedent to the Sellers' obligations under this Agreement; (iii) take such
other action as Avado is authorized to take under this Agreement; (iv) enter
into amendments to this Agreement; (v) receive all documents or certificates and
make all determinations, on behalf of the Sellers, required under this
Agreement; (vi) execute and deliver all documents or certificates required under
this Agreement, and (vii) take all such action as may be necessary after the
date hereof to carry out any of the transactions contemplated by this Agreement.
[Signatures Located on Following Pages]
48
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
PURCHASER:
XXXXXXXXX & XXXXXXX ACQUISITION
CORP.
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
SELLERS:
AVADO BRANDS, INC.
By:
--------------------------------------------
Xxx X. XxXxxx, Xx., Chief Executive Officer
XXXXXXXXX & XXXXXXX HOLDING CORP.
By:
--------------------------------------------
Xxxxxxxx X. Xxxxxxx, Senior Vice President
XXXXXXXXX & XXXXXXX OF XXXXXXXXXX COUNTY, INC.
By:
--------------------------------------------
Xxxxxxxx X. Xxxxxxx, Senior Vice President
XXXXXXXXX & XXXXXXX OPERATING CORP.
By:
--------------------------------------------
Xxxxxxxx X. Xxxxxxx, Senior Vice President
XXXXXXXXX & XXXXXXX'X SCP VIII, INC.
By:
--------------------------------------------
Xxxxxxxx X. Xxxxxxx, Secretary
XXXXXXXXX & XXXXXXX'X RMP III, INC.
By:
--------------------------------------------
Xxxxxxxx X. Xxxxxxx, Secretary
XXXXXXXXX & XXXXXXX TX GENERAL, INC.
By:
--------------------------------------------
Xxxxxxxx X. Xxxxxxx, Senior Vice President
XXXXXXXXX & XXXXXXX LIMITED, INC.
By:
--------------------------------------------
Xxxxxxxx X. Xxxxxxx, Senior Vice President
XXXXXXXXX & XXXXXXX OF TEXAS, LP
By: XxXxxxxxx & Xxxxxxx TX General, Inc.,
its General Partner
By:
--------------------------------------------
Xxxxxxxx X. Xxxxxxx, Senior Vice
President
XXXXXXXXX & XXXXXXX TX LIQUOR INC.
By:
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
EXHIBIT TABLE OF CONTENTS
EXHIBIT TITLE
A Purchase Price Allocation
B Financing Commitment Letters
DISCLOSURE MEMORANDUM
Table of Contents
Schedule Title
1.1A Restaurants by Name and Address
1.1B Leases
1.1C Material Contracts
1.1D MSHC and MSHC Subsidiaries
1.1E MS Personnel
3.1 Foreign Qualifications
3.3 Consents
3.5 Ownership Interests of MSHC and MSHC
Subsidiaries
3.6 Financial Statements
3.7 Liabilities
3.8 Events Subsequent to Reference Date
3.9 Taxes
3.11 Permits
3.13 Real Property
3.14 Intellectual Property Rights
3.15 Contracts and Leases
3.16 Insurance
3.17 Litigation
3.20 Employee Benefits
3.23 Key Employees
DISCLOSURE MEMORANDUM (cont.)
Table of Contents
Schedule Title
5.4(a) Development Efforts
5.4(b) Development Sites
Exhibits and schedules to this agreement are not filed pursuant to Item
601(b)(2) of SEC Regulation S-K. By the filing of this Form 8-K, the Registrant
hereby agrees to furnish supplementally a copy of any omitted exhibit or
schedule to the Commission upon request.
