Exhibit 10.16
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made and entered
into as of the 2nd day of February, 1998, by and between Champps Entertainment,
Inc., a Minnesota corporation (the "Seller"), and Xxxx X. Xxxxxx (the "Buyer").
RECITALS
WHEREAS, Seller presently operates a restaurant and on-sale beverage
business (collectively, the "Restaurant") located at 0000 Xxxxxxxx Xxxx,
Xxxxxxxxxx, Xxxxxxxxx 00000 (the "Location").
WHEREAS, Seller owns furniture, fixtures, equipment and leasehold
improvements, goodwill and other general intangibles at the Location. Buyer
desires to purchase and have assigned and transferred to it such assets.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, it is hereby agreed by and between the parties
as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section I.1 Definitions. For purposes of this Agreement, the following
terms shall have the meanings set forth below:
(a) "Assumed Obligations" means all claims, debts, liabilities and
obligations of any type kind or nature accruing from and after the Effective
Time (as defined in Section 6.1 hereof) related to the Restaurant, including
without limitation obligations arising under:
(i) The Lease and the other leases, contracts, purchase
agreements, permits, licenses and other obligations described on Schedule I
attached hereto and other similar or replacement agreements entered into by
Seller in the ordinary course of business of operating the Restaurant in
accordance with past practice between the date hereof and the Effective Time,
including, without limitation, all base rent, common area charges, operating
expenses and other similar costs, expenses, obligations and liabilities accruing
under such agreements from and after the Effective Time.
(ii) All Taxes (as defined below) incurred by or on behalf of
Buyer from and after the Effective Time in connection with the operation of the
Restaurant from and after the Effective Time.
(iii) The fees and expenses payable by Buyer under Section
14.8 below.
(iv) Any and all debts, liabilities and obligations which
arise, result from, or relate in any way to the operation of the Restaurant by
Buyer following the Effective Time, including all amounts due any employees
employed in connection with the operation of business conducted on the Location
from and after the Effective Time, including, without limitation, all salaries,
wages and other amounts due such employees and all employee payroll deductions
such as FICA, state and federal withholding taxes, unemployment compensation
taxes, union or other required payments or deductions and all vacation or sick
leave benefits or pay.
(b) "Lease" means the Lease Agreement for Bonaventure dated as of June
2, 1989, as amended through the date hereof, between Bonaventure Associates
Limited partnership, as Landlord (the "Lessor") and Champps of Minnetonka, as
Tenant.
(c) "Retained Obligations" means all claims, debts, liabilities and
obligations of any type kind or nature which arose, result from or relate in any
way to the operation of the Restaurant prior the Effective Time, including
without limitation obligations arising under:
(i) The Lease and the other leases, contracts, purchase
agreements, permits, licenses and other obligations described on Schedule I
attached hereto and other similar or replacement agreements entered into by
Seller in the ordinary course of business of operating the Restaurant in
accordance with past practice between the date hereof and the Effective Time,
including, without limitation, all base rent, common area charges, operating
expenses and other similar costs, expenses, obligations and liabilities accruing
under such agreements prior to the Effective Time.
(ii) All Taxes (as defined below) incurred by or on behalf of
Seller prior to the Effective Time in connection with the operation of the
Restaurant prior to the Effective Time.
(iii) The fees and expenses payable by Seller under Section
14.8 below.
(v) Except as otherwise provided in Section 7.4 hereof, any
and all debts, liabilities and obligations which arise, result from, or relate
in any way to the operation of the Restaurant by Seller before the Effective
Time, including all amounts due any employees employed in connection with the
operation of business conducted on the Location prior to the Effective Time,
including, without limitation, all salaries, wages and other amounts due such
employees and all employee payroll deductions such as FICA, state and federal
withholding taxes, unemployment compensation taxes, union or other required
payments or deductions and all vacation or sick leave benefits or pay.
(d) "Taxes" means all federal, state, local, foreign, and other taxes,
including, without limitation, income taxes, estimated taxes, alternative
minimum taxes, excise taxes, sales taxes, use taxes, value-added taxes, gross
receipts taxes, franchise taxes, capital stock taxes, employment and
payroll-related taxes, withholding taxes, stamps taxes, transfer taxes and
windfall profit taxes, whether or not measured in whole or in part by net
income, and all deficiencies, or other additions, including interest, fines and
penalties
ARTICLE II
SALE AND PURCHASE OF ASSETS
Section II.1 Property to be Sold. Seller, in consideration of the
covenants and agreements of Buyer hereinafter set forth, does hereby agree to
sell, transfer, assign and convey unto Buyer, its successors and assigns, the
business and goodwill of the Restaurant and the tangible operating assets
located at the Location and used in the operation of the Restaurant
(collectively, the "Assets") (exclusive, however, of the assets described in
Section 2.3 below), including, but not limited to the following:
(a) The furniture fixtures and equipment described on Schedule II
attached hereto and all furniture, fixtures, equipment, furnishings, maintenance
equipment and leasehold improvements, all trade fixtures, furnishings, machinery
and equipment, cooking utensils, glassware, dishes, silverware, and supplies and
other personal property located on or about the Location which is owned by
Seller.
(b) Vendor lists, operating paper goods and business forms, rights to
telephone numbers and directory listings and goodwill associated with the
Restaurant.
(c) The Seller's interest, if any, in the service and maintenance
contracts, real estate and equipment leases, permits and licenses and other
contracts, permits and licenses pertaining to the operation of the Restaurant at
the Location and described on Schedule I hereto.
Section II.2 "AS-IS" PURCHASE. IT IS EXPRESSLY UNDERSTOOD AND AGREED
THAT BUYER HAS FULLY EXAMINED THE ASSETS AND HAS RELIED ON ITS OWN DISCRETION
AND JUDGMENT WITH REGARD TO THE TRANSACTIONS CONTEMPLATED HEREUNDER. EXCEPT AS
EXPRESSLY PROVIDED HEREIN, THE ASSETS HAVE BEEN SOLD ON AN "AS IS" AND "WHERE
IS" BASIS, WITH NO REPRESENTATIONS OR WARRANTIES OF SELLER OF ANY KIND, TYPE OR
NATURE, INCLUDING, WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY REGARDING
THE VALUE, PAST, PRESENT OR FUTURE INCOME, COMPLIANCE WITH SPECIFICATIONS, SIZE,
LOCATION, AGE, USE, MERCHANTABILITY, DESIGN, QUALITY, DESCRIPTION, DURABILITY,
OPERATION OR CONDITIONS OF THE ASSETS, WHETHER VISIBLE OR NOT.
Section II.3 Excluded Assets. Buyer and Seller expressly understand and
agree that Seller has not agreed to sell, assign, transfer or convey (a)
Seller's corporate minute book, stock books, accounts receivable and other
rights to payment, bonds and savings certificates and bank accounts, (b) all
trade names, trademarks, service marks, symbols, logos, copyrights and other
proprietary materials or trade rights used by Seller in the operation of the
Restaurant and all registrations, applications and licenses for any of the
foregoing, it being understood that Buyer and Seller will, on the Date of
Closing, enter into a Franchise Agreement in the form attached hereto as Exhibit
A (the "Franchise Agreement") whereby Buyer will obtain certain rights to use
the foregoing in the operation of the Restaurant under the terms and conditions
set forth in the Franchise Agreement, and (c) all cash and cash equivalents
except as otherwise provided in Article IV hereof.
Section II.4 Assets to be Transferred Free and Clear. The Assets to be
transferred by Seller to Buyer shall be transferred free and clear of all
liabilities, obligations, security interests, and encumbrances, except for the
security interests and encumbrances ("Permitted Encumbrances") set forth on
Schedule III attached hereto.
Section II.5 Assumption of Liabilities. Buyer, in consideration of the
covenants and agreements of Seller hereinafter set forth, does hereby agree to
assume and perform the Assumed Obligations.
ARTICLE III
PURCHASE PRICE
Section III.1 Purchase Price and Payment. Buyer, in consideration of
the covenants and agreements of Seller, hereby agrees to pay to Seller as and
for the purchase price for the Assets (exclusive of the price of inventory and
cash-on-hand as provided in Article IV hereof) the sum of ONE MILLION FIVE
HUNDRED THOUSAND AND NO/100 DOLLARS ($1,500,000) (the "Purchase Price"):
(a) The entire sum of $1,500,000 shall be due and payable by wire
transfer on the Date of Closing.
Section III.2 Allocation of Purchase Price. Buyer and Seller shall
attempt in good faith to reach an agreement on or before the Date of Closing
with regard to the allocation of the Purchase Price between the Assets to be
acquired hereunder. The Purchase Price shall be allocated among the Assets in
accordance with the agreement of the parties. Seller and Buyer shall prepare
their federal, state, local and foreign tax returns in a manner which is
consistent with allocation to be prepared in accordance with this Agreement,
and, to the extent applicable, shall comply with, and furnish information
required by, Section 1060 of the Tax Code of 1986 and the treasury regulations
thereunder.
ARTICLE IV
INVENTORY AND CASH-ON-HAND
(a) Buyer shall purchase, and Seller shall sell, all of Seller's
inventory of food, miscellaneous saleable products and beverages (which may or
may not include alcoholic beverages, which shall be sold at such time in
accordance with applicable laws) (the "Inventory") located within the Location
as of the Effective Time (as defined in Section 6.1), based on an inventory
taken after the close of business on the Date of Closing by representatives of
Buyer and Seller. Such inventory of assets and supplies shall be in writing and
shall describe the quantity of each item constituting a part of the Inventory.
The Inventory shall be valued at the Seller's invoice prices. The price of the
Inventory, as determined in accordance with this Article IV, shall be paid by
Buyer, in cash, not later than thirty (30) days after the Date of Closing.
(b) In addition to the foregoing, the Buyer shall tender cash to Seller
on the Date of Closing in the amount of $15,000, which amount shall be equal to
the Restaurant's cash-on-hand (consisting of so-called "change funds" at the
Location) as of the Effective Time, which cash-on-hand shall be transferred to
Buyer as of the Effective Time.
ARTICLE V
PRORATION
The following items relating to the Assets will be prorated between
Buyer and Seller as of the Effective Time:
(a) Pre-paid lease and service contracts and other items assumed by
Buyer.
(b) Water and other utility charges, assignable deposits, rent and all
other common area maintenance charges due under the Lease.
(c) Prepaid liquor and food license fees and other fees and other
charges for licenses and permits assigned by Seller to Buyer (but only to the
extent that such licenses and permits are assignable by Seller to Buyer under
applicable law).
(d) Vacation pay and employee wages.
(e) All other items customarily prorated and adjusted in connection
with the sale of property of the type contemplated by this Agreement.
All prorations required under this Article V shall be allocated so that
items relating to time periods prior to the Effective Time will be allocated to
Seller and items relating to time periods beginning on or after the Effective
Time will be allocated to Buyer (but only to the extent that such assets are
part of the Assets acquired by Buyer hereunder and such liabilities are part of
the Assumed Obligations assumed by Buyer).
Seller shall provide Buyer with its written estimate of the amount
payable by Buyer to Seller under this Article V within twenty (20) days after
the Date of Closing. Buyer shall pay the prorations within thirty (30) days
after the Date of Closing. In the event Buyer disputes a proration, Buyer and
Seller shall negotiate in good faith to resolve any disagreements concerning the
adjustments contemplated under this Article V prior to the Date of Closing. In
the event that the parties are unable to resolve any such disagreement within
fifteen (15) days following delivery to Buyer of Seller's estimate, then, in
such event, the parties shall submit the dispute to a mutually accepted
independent accountant (the "Reviewing Accountant") to resolve such
disagreement. Any determination by the Reviewing Accountant shall be completed
by no later than ninety (90) days following the submission of the matter and
shall be final, binding and conclusive with respect to the matters in dispute,
absent fraud or manifest error. The fees of the Reviewing Accountant shall be
proportioned equally between Buyer and Seller.
In the event these matters are submitted to the Reviewing Accountant,
the party owing money in accordance with the Reviewing Accountant's decision
shall pay such sum within five (5) days following receipt of the report of the
Reviewing Accountant.
If any terms prorated as of the Date of Closing are based on estimates
(including, without limitation, percentage rents and common area charges under
the Lease) such proration shall be adjusted at such time as the final
adjustments of such payments are made and any amounts due Seller or Buyer, as
the case may be, on account thereof shall be paid in cash within ten (10) days
following such adjustment.
ARTICLE VI
CLOSING
Section VI.1 Date of Closing. The closing of the transactions
contemplated hereby shall occur at 9:00 a.m. on February 3, 1998 ("Date of
Closing" or "Closing Date"). The closing shall take place at the offices of
Xxxxxxx, Procter & Xxxx LLP, Exchange Place, Boston, Massachusetts, or at such
other place as the parties may agree. Seller shall keep control of and operate
the Restaurant through the close of business on the Date of Closing. Immediately
after the Restaurant closes for business on the Date of Closing (the "Effective
Time"), Buyer shall assume possession of the Restaurant and Assets at the
Location and shall control and operate the Restaurant beginning as of the
opening of business on the day after the Date of Closing.
Section VI.2 Deliveries of Seller. At the closing, Seller shall deliver
the following documents to Buyer:
(a) An executed Xxxx of Sale, Assumption of Liabilities and Assignment
Agreement substantially in the form of Exhibit B..
(b) An executed Franchise Agreement, substantially in the form of
Exhibit A, as soon as practicable after approval of the franchise offering
circular by the State of Minnesota.
Section VI.3 Deliveries of Buyer. At the closing, the Buyer shall
deliver to Seller the following:
(a) The Franchise Agreement duly executed by Buyer.
(b) Consent to Assignment of Lease and Unconditional Release of Seller
from the Lease, in the form of Exhibit C attached hereto, duly executed by the
Landlord of the Lease.
(c) Such other documents, certificates and instruments as may be
reasonably requested by Seller in connection with the transactions contemplated
hereby.
ARTICLE VII
CONDUCT OF BUSINESS
Section VII.1 Conduct of Business up to Effective Time. During the
period between the date hereof and the Effective Time, Seller agrees that it
will continue to operate the Restaurant diligently and only in the ordinary
course of business. Seller will not take any action which will cause any
material change in the operations of the Restaurant or in the properties
utilized in its operations, other than changes in the ordinary course of
business.
Section VII.2 Authorization from Others. Prior to the Effective Time,
Seller and Buyer will use their best efforts, but without cost to Seller, to
obtain the consent of the Lessor to the Assignment of Lease contemplated under
sub-paragraph (d) of Section 6.2 above and all other authorizations, consents
and permits of others required to permit the consummation by Seller of the
transactions contemplated by this Agreement.
Section VII.3 Consummation of Agreement. Seller shall use its best
efforts, but without cost to Seller, to perform and fulfill all conditions and
obligations on its part to be performed and fulfilled under this Agreement, to
the end that the transactions contemplated by this Agreement shall be fully
carried out.
Section VII.4 Employees.
(a) Seller shall terminate the employment of all of its employees
employed at the Location with respect to the Restaurant (the "Subject
Employees") as of the Effective Time. The Buyer shall hire all Subject Employees
as of the Effective Time on terms and conditions equivalent (including without
limitation identical salary or hourly compensation rates) to those of Seller
immediately prior to the Effective Time. Except as may be otherwise agreed by
the parties as a result of good faith negotiation, Seller shall use its best
efforts, but without cost to Seller, to insure that all Subject Employees shall
accept such employment by Buyer following the Effective Time. As between Seller
and the Buyer, it is agreed that the Subject Employees will become employees of
the Buyer as of the Effective Time. The parties acknowledge and agree that the
Buyer shall not acquire any rights or interests of Seller in, or assume or have
any obligations or liabilities of Seller under, any employee benefit plans of
Seller with the exception of vacations accrued but not taken as of the Effective
Time, for which Buyer shall be liable after the Effective Time. However, Buyer
shall not be obligated to continue the employment of any Subject Employees for a
fixed term or any guaranteed length of time following the Effective Time.
(b) Buyer acknowledges that Seller has not provided the Subject
Employees with a notice of employment loss under the Worker Adjustment and
Retraining Notification Act, 29 U.S.C. ss.2101, et. seq. on the basis of the
understanding and agreement of the parties that the transaction contemplated
hereunder will not result in an "employment loss" within the meaning of such
statute.
Section VII.5 Removal of Assets. Seller shall not remove from the
Location any of the physical Assets to be purchased hereunder (except for items
replaced in the ordinary course of business with items of equivalent value).
Section VII.6 Access. Seller shall permit the Buyer, and its agents or
employees, to have access to the Restaurant during ordinary business hours for
the purpose of observing the operation of the Restaurant and reviewing the books
and records of the Restaurant, all at the sole cost and expense of Buyer. Under
no circumstances shall Buyer participate in the management of the Restaurant
prior to closing.
ARTICLE VIII
ASSUMPTION OF LIABILITIES
Buyer shall assume as of the Effective Time all obligations, duties and
liabilities arising under or with respect to any of the Assumed Obligations.
Seller and Buyer acknowledge and agree that Buyer has not agreed to
assume any of Seller's liabilities and obligations except for the Assumed
Obligations. The assumption of the Assumed Obligations by Buyer hereunder shall
not enlarge any rights of third parties under contracts or arrangements with
Buyer or Seller and nothing herein shall prevent any party from contesting in
good faith with any third party any of said liabilities.
ARTICLE IX
CONDITIONS
Section IX.1 Conditions to Obligations of Seller. Unless waived by
Seller in writing, the obligations of Seller to sell the Assets are subject to
the satisfaction on or prior to the Closing Date of each of the following
conditions:
(a) Buyer shall have delivered to Seller the documents and items
identified in Section 6.3 hereof.
(b) Buyer shall have complied in all material respects with the
covenants, agreements and conditions of Buyer contained herein to be performed
at or prior to the closing.
(c) The representations and warranties of Buyer contained herein shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as though made on and as of the Closing Date and all actions,
proceedings, instruments and documents required to carry out this Agreement and
the transactions contemplated hereby and all related legal matters contemplated
by this Agreement shall have been approved by counsel for Seller, and such
counsel shall have received on behalf of Seller such other certificates, and
documents in form satisfactory to counsel for Seller, as Seller may reasonably
require from Buyer to evidence compliance with the terms and conditions hereof
as of the closing and the correctness as of the closing of the representations
and warranties of Buyer. Seller shall also have received all required
authorizations, waivers, consents and permits to permit the transactions
contemplated by this Agreement, in form and substance reasonably satisfactory to
Seller, from all third parties, including without limitation applicable
governmental authorities, regulatory agencies, Seller's lessors, lenders and
contract parties, required in connection with the transfer of Assets or Seller's
contracts, permits, leases, licenses and franchises, to avoid a breach, default,
termination, accelerations or modification of any agreement, contract,
instruments, mortgage, lien, lease, permit, authorization, order, writ,
judgment, injunction, decree, determination or arbitration award binding on
Seller or otherwise applicable to the Restaurant as a result of, or in
connection with, the execution and performance of this Agreement or as a result
of any action taken by any party holding a mortgage, lien or other encumbrance
on the Location. Seller shall diligently and in good faith undertake to obtain
the approvals, licenses and other matters referred to in subsection (c) of this
Section 9.1. Buyer shall reasonably cooperate with the Seller in the performance
by the Seller of its obligations hereunder.
Section IX.2 Conditions to Obligations of Buyer. Unless waived by Buyer
in writing, the obligations of Buyer to purchase the Assets are subject to the
satisfaction on or prior to the Closing Date of each of the following
conditions:
(a) Seller shall have delivered to Buyer the documents and items
identified in Section 6.2 hereof.
(b) Seller shall have complied in all material respects with the
covenants, agreements and conditions of Seller contained herein to be performed
at or prior to the closing.
(c) The representations and warranties of Seller contained herein shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as though made on and as of the Closing Date and all actions,
proceedings, instruments and documents required to carry out this Agreement and
the transactions contemplated hereby and all related legal matters contemplated
by this Agreement shall have been approved by counsel for Buyer, and such
counsel shall have received on behalf of Buyer such other certificates, and
documents in form satisfactory to counsel for Buyer, as Buyer may reasonably
require from Seller to evidence compliance with the terms and conditions hereof
as of the closing and the correctness as of the closing of the representations
and warranties of Seller.
(d) Except as provided in Section 9.3 below, Buyer shall have received
(i) all health, restaurant, food, liquor and other governmental licenses,
permits and approvals necessary or appropriate, in the reasonable judgment of
the Buyer, to the continued operation and management of the Restaurant, and (ii)
all required authorizations, waivers, consents and permits to permit the
continuation of the business of the Restaurant and the transactions contemplated
by this Agreement, in form and substance reasonably satisfactory to Buyer, from
all third parties, including, without limitations, applicable governmental
authorities, regulatory agencies, Seller's lessors, lenders, the holders of any
mortgages or other liens on the Location and contract parties, required in
connection with the transfer of Assets or Seller's contracts, permits, leases,
licenses and franchises, to avoid a breach, default, termination, accelerations
or modification of any agreement, contract, instruments, mortgage, lien, lease,
permit, authorization, order, writ, judgment, injunction, decree, determination
or arbitration award binding on Seller or otherwise applicable to the Restaurant
as a result of, or in connection with, the execution and performance of this
Agreement or as a result of any action taken by any party holding a mortgage,
lien or other encumbrance on the Location. Buyer shall use its best efforts to
obtain the approvals, licenses and other matters referred to in subsection (e)
of this Section 9.2. Seller shall reasonably cooperate with the Buyer in the
performance by the Buyer of its obligations hereunder.
Section IX.3 Liquor License.
(a) This transaction shall be submitted to the appropriate licensing
authorities of Minnetonka, Minnesota (and any other governmental authority
responsible for the issuance of first-class on-sale food and liquor licenses,
collectively the "City") and Buyer and Seller shall each use their best efforts
and utmost good faith and use all diligence to secure such licenses. Pending
issuance of the food and liquor license referred to in this Section 9.3, the
Buyer shall operate the Restaurant under authority of Seller's existing licenses
under the terms of an interim management agreement (the "Interim Management
Agreement") in substantially the form of Exhibit D attached hereto.
Notwithstanding anything to the contrary contained in the Interim Management
Agreement, Seller shall not be obligated to provide Buyer with overhead,
corporate, accounting, legal and other similar services following the Effective
Time.
(b) In the event that (i) either party is notified that the City will
not permit the parties to continue operation of the Restaurant on the terms of
the Interim Management Agreement, (ii) Seller's existing food and beverage
license for the Restaurant (the "Existing Licence") shall become subject to any
proceeding for the revocation of such license, (iii) the Existing License should
not be renewed or (iv) a new food and beverage license for the Restaurant in
Buyer's name is not issued by the City on or before the first anniversary of the
Date of Closing such that the Interim Management Agreement can be terminated,
then, in any such event:
(i) The instruments of transfer referred to in Section 6.2
shall be returned by Buyer to Seller and Buyer shall execute and deliver to
Seller (or cause to be executed and delivered) all documents and instruments
necessary to revest Seller with good and marketable title to the Assets (subject
to the Permitted Encumbrances and such other liens and encumbrances incurred by
or on behalf of Seller).
(ii) Seller shall return to Buyer all payments made by Buyer
hereunder, together with interest on such amount from the date of payment by
Buyer to Seller, until repaid by Seller, at an annual rate of six (6) percent,
less the actual net profit recovered by Buyer for the operation of the
Restaurant and payable to Buyer under the Interim Management Agreement for the
period beginning on the Effective Time and ending on the date of retransfer
contemplated under this Section 9.3. (c) In the event of a dispute or
controversy with regard to the payments to be made or received in accordance
with Section 9.3(b) above, then, in any such event, such a dispute or
controversy shall be submitted to a final, binding and conclusive arbitration
pursuant to Minn. Stat. 572.08 et. seq. to be conducted in accordance with the
rules and procedures of the American Arbitration Association ("AAA"). Three
independent arbitrators, one to be approved each of the parties and third by the
two so chosen shall be selected, either based on mutual agreement or from the
panel submitted by the AAA. The panel shall have authority, within its
discretion to award, as part of its decision such additional amounts for actual
damages, expenses, costs and attorney fees if it finds bad faith as to one of
the parties. Additional, the panel may award interest at the annual rate of six
percent (6%) from the date determined by the panel until such payments are paid.
The decision of the arbitrators shall be final and binding, and for the purpose
of entering any award, the decision may be reduced to a judgment of any court of
appropriate jurisdiction.
(d) Notwithstanding the foregoing, Buyer or Seller or both shall be
entitled to seek injunctive action against the City to enjoin the non-renewal or
termination of the Existing License as a result of the transaction contemplated
herein. If such injunction is granted, Section 9.3(a) shall not be implemented
until final adjudication is exhausted.
(e) Notwithstanding anything to the contrary contained herein, or in
any instrument of transfer delivered hereunder, the Buyer shall not acquire a
pecuniary interest in the Restaurant prior to the issuance of the new food and
liquor licenses referred to in Section 9.3(a) in violation of any applicable
state or local law or ordinance.
ARTICLE X
TERMINATION OF AGREEMENT
Section X.1 Termination. This Agreement and the transactions
contemplated hereby may be terminated at any time prior to the Closing Date:
(a) By mutual written consent of Seller and Buyer.
(b) By either Buyer or by Seller if the closing shall not have occurred
prior to the close of business on February 15, 1998, provided, however, that the
party seeking to terminate this Agreement pursuant to this Section 10.1(b) may
do so only if the failure to close shall not have resulted from the failure of
such party to comply with any of the terms of this Agreement or from the
inaccuracy of any representation or warranty of such party.
ARTICLE XI
SELLER REPRESENTATIONS
As an integral part of this Agreement, and in order to induce Buyer to
enter into this Agreement and purchase the Assets, Seller hereby covenants,
represents and warrants to Buyer:
Section XI.1 Execution and Delivery; Effect of Agreement. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Minnesota with full corporate power and authority to own or
lease its properties and to conduct its business in the manner and in the places
where such properties are owned or leased or such business is currently
conducted or proposed to be conducted.
Section XI.2 Authority of Seller.
(a) Seller has full right, authority and power to enter into this
Agreement and each agreement, document and instrument to be executed and
delivered by Seller pursuant to this Agreement and to carry out the transactions
contemplated hereby. The execution, delivery and performance by Seller of this
Agreement and each such other agreement, documents and instrument have been duly
authorized by all necessary action of Seller and no other action on the part of
Seller is required in connection therewith.
(b) This Agreement and each agreement, document and instrument executed
and delivered by Seller pursuant to this Agreement constitutes, or when executed
and delivered will constitute, valid and binding obligations of Seller
enforceable in accordance with their terms. The execution, delivery and
performance by Seller of this Agreement and each such agreement, document and
instrument:
(i) Does not and will not violate any provision of the
Articles of Incorporation or by-laws of Seller.
(ii) Does not and will not violate any laws of the United
States, or any state or other jurisdiction applicable to Seller or require
Seller to obtain any approval, consent or waiver of, or make any filing with,
any person or entity (governmental or otherwise) that has not been obtained or
made (except that certain governmental consents and authorizations are required
in connection with the operation of a bar and restaurant business at the
Location). (c) Seller owns the Assets free and clear of all liabilities,
obligations, security interests, and encumbrances, except for Permitted
Encumbrances.
Section XI.3 Conduct of Business. To the knowledge of Seller, except as
disclosed on Schedule III:
(a) Seller is currently in possession of the Location pursuant to the
Lease; Seller has not defaulted in the payment of performance of any obligation
of Seller under the Lease.
(b) There are no collective bargaining agreements in effect with any of
Seller's employees.
(c) There is no claim, action, suit, proceeding, arbitration,
investigation or inquiry pending before any Federal, probate, municipal, or
other court, or any governmental administrative or self-regulatory body or
agency, or self or any private arbitration tribunal, or to the Seller's
knowledge threatened against, or relating to affecting Seller by reason of the
Restaurant or the transactions contemplated by this Agreement.
Section XI.4 No Brokers. Neither Seller nor any of its affiliates has
employed any broker, finder or agent in connection with the transactions
contemplated by this Agreement, and neither Seller nor any of its affiliates has
otherwise become obligated for any broker's, finder's, agent's or similar fee
with respect to the transactions contemplated by this Agreement
ARTICLE XII
REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to Seller
that:
Section XII.1 Authority of Buyer.
(a) Buyer has full right, authority and power to enter into this
Agreement and each agreement, document and instrument to be executed and
delivered by Buyer pursuant to this Agreement and to carry out the transactions
contemplated hereby. The execution, delivery and performance by Buyer of this
Agreement and each such other agreement, document and instrument have been duly
authorized by all necessary action of Buyer and no other action on the part of
Buyer is required in connection therewith.
(b) This Agreement and each agreement, document and instrument executed
and delivered by Buyer pursuant to this Agreement constitutes, or when executed
and delivered will constitute, valid and binding obligations of Buyer
enforceable in accordance with their terms. The execution, delivery and
performance by Buyer of this Agreement and each such agreement, document and
instrument:
(i) Does not and will not violate any laws of the United States, or any
state or other jurisdiction applicable to Buyer or require Buyer to obtain any
approval, consent or waiver of, or make any filing with, any person or entity
(governmental or otherwise) that has not been obtained or made (except that
certain governmental consents and authorizations are required in connection with
the operation of a bar and restaurant business at the Location).
Section XII.2 Consents. No consent, approval or authorization of, or
exemption by, or filing with, any governmental or regulatory authority or any
other third party is required to be obtained by Buyer in connection with the
execution, delivery or performance by Buyer of this Agreement or the taking by
Buyer of any other action contemplated hereby.
Section XII.3 Availability of Funds. Buyer will have available at the
closing sufficient funds to enable it to consummate the transactions
contemplated by this Agreement.
Section XII.4 Solvency. The present fair saleable value of the assets
of the Buyer will, immediately following the Effective Time, exceed the amount
that will be required to be paid on or in respect of its debts and other
liabilities (including contingent liabilities) as they mature. The assets of the
Buyer do not, and immediately following the Effective Time will not, constitute
unreasonably small capital to carry out its business as conducted or as proposed
to be conducted. The Buyer does not intend to, or believe that it will, incur
debts beyond its ability to pay such debts as they mature (taking into account
the timing and amounts of cash to be received by the Buyer and the amounts to be
payable on or in respect of its obligations).
Section XII.5 Litigation. There is no litigation pending or, to Buyer's
knowledge, threatened by or against or affecting Buyer, which seeks to enjoin,
challenge the validity of this Agreement or obtain damages or other relief in
respect of the consummation of the transaction contemplated hereby.
Section XII.6 Representation by Counsel. Buyer has been represented by
legal counsel in connection with the transaction contemplated in this Agreement
and has relied upon such independent counsel with respect to all legal and tax
consequence of the transaction contemplated herein.
Section XII.7 Sophisticated Investor. Buyer is a knowledgeable and
sophisticated investor in assets of the type to be conveyed under this
Agreement.
Section XII.8 No Brokers. Neither Buyer nor any of its affiliates has
employed any broker, finder or agent in connection with the transactions
contemplated by this Agreement, and neither Buyer nor any of its affiliates has
otherwise become obligated for any broker's, finder's, agent's or similar fee
with respect to the transactions contemplated by this Agreement.
ARTICLE XIII
SURVIVAL AND INDEMNIFICATION
Section XIII.1 Survival of Warranties. All representations, warranties,
agreements, covenants and obligations herein or in any schedule, exhibit,
certificate or financial statement delivered by any party to the other party
incident to the transactions contemplated hereby are material, shall be deemed
to have been relied upon by the other party and shall survive the closing
regardless of any investigation and shall not merge in the performance of any
obligation by either party hereto; provided, however, that such representations,
warranties, agreements, covenants and obligations shall expire on the same dates
as and to the extent that the rights to indemnification with respect thereto
under this Article XIII shall expire.
Section XIII.2 Indemnification by Seller. Seller shall indemnify and
hold Buyer and its respective subsidiaries and affiliates and persons servings
as shareholders, officers, directors, partners or employees thereof
(individually a "Buyer Indemnified Party" and collectively the "Buyer
Indemnified Parties") harmless from and against any damages, liabilities,
losses, taxes, fines, penalties, costs, and expenses (including, without
limitation, reasonable fees of counsel) of any kind or nature whatsoever
(whether or not arising out of third-party claims and including all amounts paid
in investigation, defense or settlement of the foregoing pursuant to this
Article XIII) (hereafter, "Losses") which may be sustained or suffered by any of
them arising out or based upon any of the following matters:
(a) Fraud, intentional misrepresentation or a deliberate or wilful
breach by Seller of any of their representations, warranties or covenants under
this Agreement or in any certificate, schedule or exhibit delivered pursuant
hereto.
(b) Any other breach of any representations, warranty or covenant of
Seller under this Agreement or in any certificate, schedule or exhibit delivered
pursuant hereto, or by reason of any claim, action or proceeding asserted or
instituted growing out of any matter or thing constituting a breach of such
representations, warranties or covenants.
(c) Any liability of Seller for Taxes owed by it payable for any period
prior to the Effective Time.
(d) All Retained Obligations.
(e) The claim of any broker, finder or other agent employed by or on
behalf of Seller.
Section XIII.3 Limitations on Indemnification by Seller.
Notwithstanding the foregoing, the right of Buyer Indemnified Parties to
indemnification under Section 13.1 shall be subject to the following provisions:
(a) No indemnification shall be payable pursuant to Section 13.2(b)
above to any Buyer Indemnified Party, until Losses for which the Buyer may be
indemnified hereunder exceed $20,000, whereupon the full amount of such Losses
in excess of $20, 000 shall be recovered in accordance with the terms hereof;
provided, however, that under no circumstances shall the aggregate amount
recovered or payable pursuant to Section 13.2 (b) to any and all of the Buyer
Indemnified Parties exceed the sum payable under Section 3.1 hereof.
(b) No indemnification shall be payable to a Buyer Indemnified Party
with respect to claims asserted pursuant to Section 13.2(b) (exclusive of claims
for indemnification for Taxes or tax related matters) after expiration of
eighteen (18) months from the Date of Closing, plus such further period
necessary to resolve any claim for indemnification made prior to such date (the
"Indemnification Cut-Off Date").
Section XIII.4 Indemnification by Buyer. Buyer agrees to indemnify and
hold Seller harmless from and against any damages, liabilities, losses and
expenses (including, without limitation, reasonable fees of counsel) of any kind
or nature whatsoever (whether or not arising out of third-party claims and
including all amounts paid in investigation, defense or settlement of the
foregoing pursuant to this Article XIII) (hereafter, "Losses") which may be
sustained or suffered by any of them arising out of or based upon any of the
following matters:
(a) A breach of any representations or warranties made by Buyer in this
Agreement or in any certificate delivered by Buyer hereunder, or by reason of
any claims, action or proceeding asserted or instituted growing out of any
matter or thing constituting such a breach.
(b) Any and all failures of the Buyer to pay or to perform and
discharge any of the Assumed Obligations or to perform any covenants made by
Buyer in this Agreement.
(c) Any and all employment practices, decisions, actions or proceedings
undertaken by Buyer following the Effective Time in connection with the
operation of the Restaurant.
Section XIII.5 Limitation on Indemnification by Buyer. Notwithstanding
the foregoing, the right of Seller to Indemnification under Section 13.4 shall
be subject to the following provisions:
(a) No indemnification shall be payable pursuant to Section 13.4(a)
above to Seller, until Losses for which the Seller may be indemnified hereunder
exceed $20,000, whereupon the full amount of such Losses in excess of $20,000
shall be recovered in accordance with the terms hereof; provided, however, that
under no circumstances shall the aggregate amount recovered or payable pursuant
to Section 13.3(a) to Seller exceed the sum payable under Section 3.1 hereof.
(b) No indemnification shall be payable to Seller with respect to
claims asserted pursuant to Section 13.4 above after the Indemnification Cut-Off
Date, plus such further period necessary to resolve any claim for
indemnification made prior to such date.
Section XIII.6 Notice; Defense of Claims. Promptly after receipt by an
indemnified party of notice of any claim, liability or expense to which the
indemnification obligations hereunder would apply, the indemnified party shall
give notice thereof in writing to the indemnifying party, but the omission to so
notify the indemnifying party promptly will not relieve the indemnifying party
from any liability except to the extent that the indemnifying party shall have
been prejudiced as a result of the failure or delay in giving such notice. Such
notice shall state the information then available regarding the amount and
nature of such claim, liability or expense and shall specify the provision or
provisions of this Agreement under which the liability or obligation is
asserted. If within 20 days after receiving such notice the indemnifying party
gives written notice to the indemnified party stating that it disputes and
intends to defend against such claim, liability or expense at its own cost and
expense, then counsel for the defense shall be selected by the indemnifying
party (subject to the consent of the indemnified party which consent shall not
be unreasonably withheld) and the indemnified party shall make no payment on
such claim, liability or expense as long as the indemnifying party in conducting
a good faith and diligent defense. Notwithstanding anything herein stated, the
indemnified party shall at all times have the right to fully participate in such
defense at its own expense directly or through counsel; provided, however, if
the named parties to the action or proceeding include both the indemnifying
party and the indemnified party and representations of both parties by the same
counsel would be inappropriate under applicable standard of professional
conduct, the expense of separate counsel for the indemnified party shall be paid
by the indemnifying party. If no such notice of intent to dispute and defend is
given by the indemnifying party, or if such diligent good faith defense is not
being or ceases to be conducted, the indemnified party shall, at the expense of
the indemnifying party, undertake the defense of such claim, liability or
expense (with counsel selected by the indemnified party), and shall have the
right to compromise or settle the same (exercising reasonable business
judgment). If such claim, liability or expense is one that by its nature cannot
be defended solely by the indemnify party, then the indemnified party shall make
available all information and assistance that the indemnify party may reasonably
request and shall cooperate with the indemnify party in such defense.
Section XIII.7 Calculation of Losses. In calculating the amount of any
Losses under this Agreement, the parties shall take into account, and reduce the
Losses by an amount equal to the amount of any claim or recovery available under
any insurance policies or against any third parties. Subject to the provisions
of Sections 13.3 and 13.5, Losses for which a person is required to indemnify
another person hereunder shall be calculated on a dollar for dollar basis.
ARTICLE XIV
MISCELLANEOUS
Section XIV.1 Entire Agreement. This Agreement (including the Exhibits
and Schedules attached hereto) constitutes the entire understanding of the
parties with respect to the matters provided for herein and supersedes any
previous agreements and understanding between the parties with respect to the
subject matter hereof. Matters disclosed by Seller to Buyer pursuant to any
Section of this Agreement shall be deemed to be disclosed with respect to all
sections of this Agreement. No amendment, modification or alteration of the
terms or provisions of this Agreement shall be binding unless the same shall be
in writing and duly executed by the parties hereto. If and to the extent that
the provisions hereof or of any agreement or instrument contemplated hereby
conflict with or may be construed to constitute a breach of that certain
Agreement and Plan of Merger among CEI, DAKA International, Inc. and CEI
Acquisition Corp. dated as of October 10, 1995 or any agreement or instrument
contemplated thereby or executed in connection therewith, the provisions of this
Agreement or the applicable agreement or instrument contemplated hereby shall
prevail so as to eliminate such potential conflict or breach.
Section XIV.2 Successors and Assigns. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
successors and permitted assigns of the parties hereto. This Agreement may not
be assigned, in whole or in part, by any party without the prior written consent
of the other party hereto. Notwithstanding the foregoing, no assignment of this
Agreement or any of the rights or obligations hereof shall release the assignor
of his or its obligations under this Agreement and, upon any such assignment,
the representations, warranties, covenants and agreements contained in this
Agreement, plus any other representations, warranties, covenants and agreements
reasonably required as a result of such assignment, shall be deemed to have been
made by the assignee as well as by the assignor.
Section XIV.3 Risk of Loss.
(a) Until this transaction is consummated the entire risk of loss with
respect to the Assets and business of Seller shall be borne by Seller which
shall, in all events, keep the Assets fully insured against loss, damage or
destruction. From and after the closing of this transaction, risk of loss shall
be borne by Buyer.
(b) In the event that prior to the Effective Time the Assets, or any
portion thereof, are materially destroyed or damaged by fire or other casualty
or loss, or the premises or buildings in which the Restaurant are located are so
damaged or destroyed, Seller shall promptly notify Buyer in writing, and Buyer
shall have ten (10) days after receipt of such notice to elect to (i) cancel and
terminate this Agreement, or (ii) consummate the purchase contemplated hereby.
(c) In the event of such damage or destruction as described in Section
14.3(b) above, and Buyer elects to consummate the transaction contemplated
hereby, Seller shall assign to Buyer all of Seller's rights under, and interest
in, all of Seller's insurance policies, insurance proceeds and contracts and all
other rights of Seller to seek indemnification for such loss or damage, all
amounts recovered thereunder or thereby by Buyer to remain the sole property of
Buyer.
(d) In the event of the damage or destruction referred to in Section
14.3(b) of this Agreement, and Buyer shall not elect to consummate the
transactions contemplated by this Agreement, then upon termination and
cancellation of this Agreement, Seller shall refund to Buyer, together with
interest thereon, the xxxxxxx money, if any, paid by Buyer to Seller under this
Agreement.
Section XIV.4 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall constitute the same instrument.
Section XIV.5 No Construction Against Author. This Agreement shall not
be construed more strictly against one party than against the other by virtue of
the fact that it may have been drafted or prepared by counsel for one of the
parties, it being recognized that Buyer and Seller have each contributed
substantially and materially to the preparation of this Agreement.
Section XIV.6 Headings. The headings of the Articles and Sections of
this Agreement are included for convenience only and shall not be deemed to
constitute part of this Agreement or to affect the construction hereof.
Section XIV.7 Modifications and Waivers. Any of the terms or conditions
of this Agreement may be waived in writing at any time by the party which is
entitled to the benefits thereof. No waiver of any of the provisions of this
Agreement shall be deemed to or shall constitute a waiver of any other
provisions hereof (whether or not similar).
Section XIV.8 Fees and Expenses.
(a) Each of the parties will bear its own expenses in connection with
the negotiation and the consummation of the transactions contemplated by this
Agreement, and, except as expressly provided herein, no expenses of Seller
relating in any way to the purchase and sale of the Assets hereunder and the
transactions contemplated hereby, including, without limitation legal,
accounting or other professional expenses of Seller, shall be charged or paid by
Buyer or included in any of the Assumed Obligations.
(b) Buyer will pay all costs incurred, whether at or subsequent to the
Effective Time, in connection with any sales, use, excise, real property and
transfer taxes and charges applicable to such transfer, all recording charges
and title company fees and premiums applicable to the recordation of deeds and
mortgages and other instruments of transfer and the issuance of the title
insurance contemplated hereunder, and all costs of obtaining or transferring
permits, registrations, applications and other tangible and intangible
properties. Buyer will pay all premiums, charges and costs of obtaining and
providing surveys, appraisals, UCC and title searches for the benefit of Buyer
with respect to the Assets.
(c) Notwithstanding anything to the contrary contained herein, the
prevailing party in any litigation commenced hereunder shall be entitled to such
parties fees and expenses, including reasonable attorneys fees and
disbursements.
Section XIV.9 Publicity and Disclosures. No press releases or public
disclosure, either written or oral, of the transactions contemplated by this
Agreement, shall be made by a party to this Agreement without the prior written
consent of Buyer and Seller.
Section XIV.10 Notices. Any notice, request, instruction or other
document to be given hereunder by any party hereto to any other party shall be
in writing and delivered personally or sent by registered or certified mail,
postage prepaid, addressed as follows:
If to Seller: c/o Champps Entertainment, Inc.
0 Xxxxxxxxx Xxxxx
00 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxxxxxx
With copy to:
Xxxxxxx, Xxxxxxx & Xxxx, LLP
Exchange Place
Boston, Massachusetts 02109
Attention: Xxxxxx X. Xxxxxxxx, P.C.
If to Buyer: Xxxx X. Xxxxxx
00 Xxxxxxx Xxxxx Xxxx
Xxxxx Xxx, XX 00000
With copy to:
Xxxxxx, Xxxxxxxx and Xxxxxx, P.A.
0000 Xxxxxxx Xxxxxx
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx, Esquire
or at such other address for a party as shall be specified by like notice. Any
notice which is delivered personally in the manner provided herein shall be
deemed to have been duly given to the party to whom it is directed upon actual
receipt by such party (or its agent for notices hereunder). Any notice which is
addressed and mailed in the manner herein provided shall be conclusively
presumed to have been duly given to the party to which it is addressed at the
close of business, local time of the recipient, on the third day after the day
it is so placed in the mail.
Section XIV.11 Governing Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of Minnesota applicable to
agreements made and to be performed in such jurisdiction and without giving
effect to the principles of conflicts of law of such jurisdiction.
Section XIV.12 Further Assurances. At any time or from time to time
after the Effective Time, either party shall, at the request of the other party,
and at such other party's expense, execute and deliver any further instruments
or documents and take all such further action as such party reasonably may
request in order to consummate and make effective the transactions contemplated
by this Agreement.
Section XIV.13 Severability. If any provision hereof shall be held by
any court of competent jurisdiction to be illegal, void or unenforceable, such
provision shall be of no force and effect, but the illegality, voiding or
unenforceability of any such provision shall have no effect upon and shall not
impair the enforceability of any other provision of this Agreement.
Section XIV.14 Survival. Except as set forth in Article XIII above, the
representations, warranties, covenants and agreements set forth in this
Agreement or in any writing delivered by Buyer or Seller hereunder shall survive
the closing contemplated hereunder.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered on the day and year first above written.
SELLER:
CHAMPPS ENTERTAINMENT, INC., a Minnesota corporation
By:
Its
BUYER:
Xxxx X. Xxxxxx
---------------------------------
EXHIBIT A
FRANCHISE AGREEMENT
EXHIBIT B
XXXX OF SALE, ASSUMPTION OF LIABILITES AND ASSIGNMENT AGREEMENT
EXHIBIT C
ASSIGNMENT OF LEASE AND UNCONDITIONAL RELEASE
EXHIBIT D
INTERIM MANAGEMENT AGREEMENT
