STOCK PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement") is made as of the 12th day of
January, 1998, by and among RUBY TUESDAY, INC., a Georgia corporation
(the "Seller"), TIMOTHY P. KALIHER (the "Buyer"), RT COLORADO, INC., a
Colorado corporation (the "Company"), and RT DENVER FRANCHISE, L.P., a
Delaware limited partnership (the "Partnership").
WHEREAS, Seller owns 100 shares of the capital stock, $.01 par
value, of the Company, which constitutes all of the issued and
outstanding capital stock of the Company (the "Stock"); and
WHEREAS, the Company is the General Partner of the Partnership
pursuant to that certain Limited Partnership Agreement of the
Partnership, dated as of the date hereof (the "Partnership Agreement");
and
WHEREAS, Seller is now conducting the business of operating
restaurants under the trade name Ruby Tuesday at each of the locations
listed on Exhibit A attached hereto (individually, a "Restaurant" and
collectively the "Restaurants"); and
WHEREAS, the parties have agreed that it is in their mutual best
interests for the Buyer to purchase the Stock on the terms and conditions
set forth herein and for the parties to enter into the other arrangements
and agreements described herein;
NOW, THEREFORE, for and in consideration of the mutual
representations, warranties and covenants contained herein, the parties
agree as follows:
1. Purchase and Sale of the Stock
(a) For and in consideration of the sum of One Hundred Thousand
Dollars ($100,000) (the "Purchase Price") to be paid to Seller in
accordance with Section 1(b) below, subject to the terms and conditions
herein set forth, on the Closing Date (as hereinafter defined), Seller
shall sell, assign, convey, transfer and deliver the Stock to Buyer, and
Buyer shall purchase, accept and acquire the Stock from Seller.
(b) Payment of the Purchase Price shall be made by Buyer to Seller
at the Closing (as hereinafter defined) by delivery to Seller of Buyer's
promissory note in the form of Exhibit B attached hereto (the "Note") in
the principal amount of the Purchase Price. The obligations of Buyer
under the Note shall be secured by a pledge of the Stock in favor of
Seller, to be evidenced by a stock pledge agreement in the form of
Exhibit C attached hereto (the "Stock Pledge Agreement").
2. Closing
The closing (the "Closing") of this transaction shall take place
immediately after the occurrence of the events set forth in Section 4
(the "Closing Date"), or such later date as may the parties may agree in
writing, at the a location designated by Seller, or such other location
as the parties may agree in writing. At the Closing, Seller shall
deliver to Buyer the certificate(s) representing the Stock, duly endorsed
in blank for the transfer of the Stock to Buyer, free and clear of any
liens, claims, pledges, charges or other encumbrances.
3. Closing Documents
(a) At the Closing, the following documents (the "Closing
Documents") shall be delivered as follows:
(i) the Note, to be delivered by Buyer to Seller;
(ii) the Stock Pledge Agreement to be delivered by Buyer to
Seller;
(iii) a guaranty in the form of Exhibit D attached hereto, to
be delivered by Buyer to Seller;
(iv) an amended operating agreement for each of the
Restaurants contributed to Partnership pursuant to the Contribution
Agreement (as defined herein), in the form of Exhibit E attached hereto
(collectively, the "Amended Operating Agreements"), to be executed by
Seller, Partnership and Buyer (as Controlling Principal) and delivered to
the other parties thereto; and
(v) such other related documents as Seller or Buyer may have
reasonably requested on or prior to the Closing Date.
(b) Seller and Buyer hereby agree, from time to time after the
Closing (but without obligation separate from the obligations expressly
provided by this Agreement), to execute, acknowledge and deliver to each
other such instruments of conveyance and transfer, and will take such
other actions and execute and deliver such other documents,
certifications and further assurances, as either party may reasonably
request with respect to the assignment, transfer and delivery of the
Stock, in order to consummate in full the transactions provided for
herein.
4. Other Events
Seller and Buyer acknowledge and agree that each of the following
events (the "Other Events") shall have occurred prior to the Closing:
(a) The contribution of certain assets to the Partnership relating
to the Restaurants pursuant to that certain Contribution Agreement among
Seller, Company and Partnership, dated the date hereof (the "Contribution
Agreement") shall have occurred. (Hereinafter, capitalized terms used
but not defined herein shall have the meanings ascribed to them in the
Contribution Agreement.)
(b) Seller and Partnership shall have entered into the Development
Agreement and the Standard Operating Agreement and the Support Services
Agreement (as described in Section 1 of the Contribution Agreement).
(c) The Partnership shall have made a one-time distribution of
capital in an amount of $18,809,000 (the "Distributed Capital") to the
Company.
(d) The Company shall have declared and paid a one-time dividend to
Seller, as its sole shareholder in the amount of the Distributed Capital.
5. Representations and Warranties of Seller and Company
Each of Seller and Company represents and warrants to Buyer that the
following is true as of the date hereof and will be true as of the
Closing:
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia. Company is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Colorado and has all requisite corporate power
to own, lease and operate its properties and assets, to carry on its
business as conducted and to carry out the transactions provided for in
this Agreement and the Partnership Agreement.
(b) The execution and delivery of this Agreement and performance
under this Agreement have been duly authorized by all necessary action on
the part of each of Seller and Company, do not violate the terms of their
respective articles of incorporation or bylaws and do not violate or
constitute a breach of any material agreement, instrument, order or
judgment to which either of them is a party or by which either of them is
bound.
(c) This Agreement has been, and on the Closing Date each of
Closing Documents will have been, duly executed and delivered by a duly
authorized signatory of each of Seller or Company, as applicable, and
constitutes the valid and binding agreement of each of Seller and
Company, as applicable, enforceable against each such party in accordance
with its terms, subject to the effect of applicable bankruptcy and
insolvency laws and general equitable principles.
(d) Company is authorized to issue 1000 shares of capital stock,
$.01 par value. No shares of capital stock of Company are currently
issued and outstanding except for the Stock. The Stock is owned by
Seller, free and clear of any liens, claims and encumbrances. Seller has
full right, power and authority to sell, assign, transfer and convey to
Buyer the Stock as herein provided. Upon transfer of the Stock to Buyer
at the Closing, Buyer will receive good and valid title to the Stock,
free and clear of any liens, claims, pledges, charges or other
encumbrances.
(e) There is no litigation pending or, to the knowledge of Seller
or Company, threatened against it seeking to enjoin or challenge any of
the transactions contemplated by this Agreement
6. Representations and Warranties of Buyer
Buyer represents and warrants to Seller and Company that the
following is true as of the date hereof and will be true as of the
Closing:
(a) He has the capacity and power to enter into this Agreement.
(b) The execution and delivery of this Agreement and performance of
this Agreement have been duly authorized by all necessary action on his
part and do not violate or constitute a breach of any material agreement,
instrument, order or judgment to which he is a party or by which he is
bound.
(c) This Agreement has been duly executed and delivered and
constitutes his valid and binding agreement, enforceable against him in
accordance with its terms, subject to the effect of applicable bankruptcy
and insolvency laws and general equitable principles.
(d) There is no litigation pending or, to his knowledge,
threatened, against him seeking to enjoin or challenge any of the
transactions contemplated by this Agreement.
(e) Buyer (i) is acquiring the Stock solely for his own account,
for investment, and the Stock is not being purchased with a view to
resale or distribution, in whole or in part, (ii) has no contract,
undertaking, understanding, agreement or arrangement, formal or informal,
with any person or sell, transfer or pledge all or any portion of the
Stock, and (iii) has no plans to enter into any such contract,
undertaking, understanding, agreement or arrangement. Buyer represents
that he has knowledge and experience in business and financial matters,
is able to evaluate the risks and benefits of investment in the Stock and
in the Partnership, has received all information concerning Seller,
Company, Partnership and the Special Limited Partner (as defined in the
Partnership Agreement) as he deems relevant and has had the opportunity
to obtain additional information as desired in order to evaluate the
merits of and the risks inherent in acquiring the Stock and otherwise
performing his obligations under this Agreement and the transactions
contemplated hereby, including, without limitation, causing the Company
to perform its obligations under the Partnership Agreement. Buyer has
had full opportunity to inspect the Businesses and the Assets and to ask
all questions of Seller, Company and Partnership regarding the Businesses
and the Assets. Buyer has had the opportunity to conduct its own
independent investigation relating to all aspects of the Businesses and
to obtain whatever opinions of specialists and experts it has deemed
necessary in making the decisions to enter into this Agreement and the
Closing Documents and to consummate the transactions contemplated hereby
and thereby. In making such decisions, (i) Buyer has not relied on
information received by it from Seller, Company or Partnership regarding
the past or present earnings of the Businesses as a determinant or
indicator of future earnings of the Businesses, and (ii) Buyer has not
relied on information received from Seller, Company or Partnership
regarding the prospects of future earnings of the Businesses.
(f) Condition of Assets. BUYER ACKNOWLEDGES AND AGREES THAT ALL
ASSETS TO BE CONTRIBUTED TO PARTNERSHIP PURSUANT TO THE CONTRIBUTION
AGREEMENT SHALL BE CONTRIBUTED ON AN "AS IS, WHERE IS" BASIS, AND THAT,
EXCEPT AS EXPRESSLY SET FORTH IN SECTION 5 OF THIS AGREEMENT, NONE OF
SELLER, COMPANY OR PARTNERSHIP HAS MADE, IS MAKING, OR SHALL MAKE, ANY
REPRESENTATION OR WARRANTY OF ANY KIND, EXPRESS OR IMPLIED, RESPECTING
ANY OF THE ASSETS, AS TO MERCHANTABILITY, FITNESS FOR A PARTICULAR
PURPOSE OR ANY OTHER MATTER. FURTHER, BUYER ACKNOWLEDGES THAT BUYER HAS
INFORMED ITSELF AS TO THE BUSINESSES, AND BUYER FURTHER ACKNOWLEDGES AND
AGREES THAT NONE OF SELLER, COMPANY OR PARTNERSHIP HAS MADE, MAKES, OR
SHALL MAKE, ANY REPRESENTATION OR WARRANTY OF ANY KIND WITH RESPECT TO
THE BUSINESSES.
7. Representations and Warranties regarding the Assets.
Each of Seller and Company represents and warrants to Partnership
the following, as of the closing of the contribution of the Assets
pursuant to the Contribution Agreement (the "Contribution Closing"):
(a) Organization and Authority. Each of Seller and Company
possesses all requisite corporate power and authority to own the Assets
and operate the Businesses and to enter into and perform the Contribution
Agreement and the documents contemplated thereby (the "Contribution
Documents"). The execution and delivery and performance of each of the
Contribution Documents have been duly authorized by all necessary
corporate action.
(b) Compliance with Laws and Instruments. Except as set forth on
Schedule I, the execution, delivery and performance by Seller and Company
of the Contribution Documents will not result in any material violation
of or be in conflict with or constitute a material default under any
applicable statute, regulation, order, rule, writ, injunction or decree
of any court or governmental authority or of the Articles of
Incorporation or Bylaws of Seller or Company or of any material agreement
or other material instrument to which Seller or Company is a party or is
a subject, or constitute a default thereunder.
(c) Title to Assets. The Assets have been contributed to
Partnership, free and clear of all mortgages, liens, pledges, security
interests, charges, claims, restrictions and other encumbrances and
defects of title of any nature whatsoever, except for the liens described
on Schedule II (the "Permitted Encumbrances"). There are no existing
agreements, options, commitments or rights with, of or to any person
(other than Buyer) to acquire any of Seller's interests in the Assets.
(d) Condition of Assets. Each of Seller and Company makes no
representation or warranty as to the condition of the Assets, which have
been contributed to Partnership on an AS IS, WHERE IS basis.
8. Conditions to Closing.
(a) Conditions to Obligations of Buyer. All obligations of Buyer
under this Agreement are subject to the fulfillment or satisfaction,
prior to or at the Closing, of each of the following conditions
precedent:
(i) The representations and warranties of Seller and Company
contained in this Agreement shall have been true on the date hereof in
all material respects, and shall be true in all material respects as of
the Closing as if made at the Closing.
(ii) Seller shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement to
be performed or complied with by or prior to or at the Closing.
(iii) The Other Events shall have occurred.
(iv) As of the Closing, no suit, action or other proceeding,
or any injunction or final judgment relating thereto, shall be threatened
or be pending before any court or governmental or regulatory official,
body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no
investigation that might result in any such suit, action or proceeding
shall be pending or threatened.
(v) The documents to be delivered by Seller, Company and
Partnership at Closing pursuant to Section 3(a) shall have been executed
and delivered.
(vi) Buyer shall have received a certificate from Seller,
dated the Closing Date and certifying in such detail as Buyer may
reasonably request, that the conditions specified in Section 8(b) have
been fulfilled.
(b) Conditions to Obligations of Seller. All obligations of Seller
under this Agreement are subject to the fulfillment or satisfaction prior
to or at the Closing, of each of the following conditions precedent:
(i) The representations and warranties of Buyer contained in
this Agreement shall have been true on the date hereof in all material
respects, and shall be true in all material respects as of the Closing if
made at the Closing.
(ii) Buyer shall have performed and complied in all material
respects with all agreements and conditions required by this Agreement to
be performed or complied with by it prior to or at the Closing.
(iii) The Other Events shall have occurred.
(iv) As of the Closing, no suit, action or other proceedings,
or any injunction or final judgment relating thereto, shall be threatened
or be pending before any court or governmental or regulatory official,
body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no
investigation that might result in any such suit, action or proceeding
shall be pending or threatened.
(v) The documents to be delivered by Buyer at Closing pursuant
to Section 3(a) shall have been executed and delivered.
(vi) Seller shall have received a certificate from Buyer dated
the Closing Date and certifying in such detail as Seller may reasonably
request, that the conditions specified in Section 8(a).
9. Covenants of Buyer
Buyer covenants with Seller that, for so long as any obligations
under the Note remain unpaid:
(a) Company will not issue any new stock or other securities of
Company.
(b) Company will not repurchase or redeem any stock or other
securities of Company.
(c) None of Company's assets will be diverted to the use or benefit
of any other person or entity other than in the ordinary course of
business.
(d) No dividends will be declared with respect to the shares of
Company.
10. Term and Termination.
This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time prior to the Closing:
(a) by mutual consent of the parties hereto;
(b) by either Seller or Buyer, if such terminating party is not
otherwise in default in this Agreement and if the Closing shall not have
occurred on or before March 31, 1998, or such other extended date, if
any, mutually agreed to by the parties in writing; and
(c) by Buyer or Seller if there has been a material breach of any
representation, warranty, covenant or agreement by another party that has
not been cured or for which adequate assurance (reasonably acceptable to
such terminating party) of cure has not been given, in either case within
fifteen (15) business days following receipt of notice of such breach.
If any party terminates this Agreement pursuant to the provisions
hereof, such termination shall be effected by notice to the other party
specifying the provision hereof pursuant to which such termination is
made. Except for any liability for the breach of this Agreement, upon
the termination of this Agreement pursuant to this Section 10, this
Agreement shall forthwith become null and void and there shall be no
further liability or the obligation on the part of any party hereunder or
with respect hereto.
11. Miscellaneous.
(a) Survival. Unless this Agreement is terminated pursuant to
Section 10(a) or Section 10(b) hereof, all representations, warranties,
covenants and agreements made in this Agreement or in a certificate
delivered pursuant hereto by the parties hereto shall survive the
termination of this Agreement or the consummation of the transactions
contemplated hereby for a period of one (1) year after the Closing Date.
(b) Notices. All notices, requests, or other communications
hereunder shall be in writing and shall be deemed to have been duly given
when delivered or refused, if delivered personally, or, if delivered by
overnight carrier, such as Federal Express, when delivered as follows:
If delivered to Seller or Partnership at any time or to Company
prior to Closing:
c/o Ruby Tuesday, Inc.
Attention: Legal Department
4721 Morrison Drive
Mobile, Alabama 36609-3350
If delivered to Buyer or Partnership at any time or to Company after
Closing:
c/o Timothy P. Kaliher
1403 East Briar Circle
Highland Ranch, CO 80126
(c) Expenses. Except as otherwise provided in this Agreement, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring
such expenses.
(d) Sales, Transfer, Documentary and Other Taxes. Buyer shall
pay all federal, state and local sales, documentary, transfer or other
taxes or recording fees, if any, due as a result of the purchase, sale or
transfer of the Stock hereunder, whether imposed by law on Seller or
Buyer, and Buyer shall indemnify, reimburse and hold harmless Seller in
respect of the liability for payment of or failure to pay any such taxes
or the filing of or failure to file any reports required to be filed in
connection therewith.
(e) Entire Agreement. This Agreement, together with the Closing
Documents, sets forth the entire understanding of the parties hereto with
respect to the transactions contemplated hereby, and 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 or among the parties regarding the subject matter hereof, whether
written or oral, are superseded by this Agreement, together with the
Closing Documents.
(f) Assignment and Binding Effect. This Agreement may not be
assigned by either party hereto without the prior written consent of the
other party. Subject to the foregoing, all of the terms and provisions
of this Agreement shall be binding upon and inure to the benefit of and
be enforceable by the successors and assigns of each party, but shall not
be construed as conferring any other rights on any other person.
(g) Waiver. Any term or provision of this Agreement may be waived
at any time by the party entitled to the benefit thereof by a written
instrument duly executed by such party.
(h) Construction. All headings contained in this Agreement are for
convenience of reference only, and do not form a part of this Agreement
and shall not affect in any way the meaning or interpretation of this
Agreement.
(i) Exhibits and Schedules. All Exhibits and Schedules referred to
herein are intended to and hereby are specifically made part of this
Agreement.
(j) Severability. Any provision of this Agreement that is invalid
or enforceable in any jurisdiction shall be ineffective to the extent of
such invalidity or unenforceability without invalidating or rendering
unenforceable the remaining provisions hereof, and any such invalidity or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provisions in any other jurisdiction.
(k) Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed
to be an original, and all of which counterparts taken together shall
constitute one and the same instrument.
(l) Applicable Law. This Agreement shall be construed in
accordance with the laws of the State of Georgia.
(m) Restructuring for Tax Purposes. If after review by counsel it
is determined that the present structure of this transaction will have
significant adverse tax consequences, and that such consequences can be
lawfully avoided by restructuring this transaction, the parties agree to
restructure the transaction and execute all necessary documents on or
prior to the Closing Date to effect such re-characterization.
[THE REMAINDER OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK.]
IN WITNESS WHEREOF, the parties have duly executed and delivered
this Agreement as of the date first above written.
SELLER:
RUBY TUESDAY, INC.
By: /s/ J. Russell Mothershed
Name: J. Russell Mothershed
Title: Senior Vice President
BUYER:
/s/ Timothy P. Kaliher
TIMOTHY P. KALIHER
COMPANY:
RT COLORADO, INC.
By: /s/J. Russell Mothershed
Name: J. Russell Mothershed
Title: Vice President
PARTNERSHIP:
RT DENVER FRANCHISE, L.P.
By: RT COLORADO, INC., its general partner
By: /s/ J. Russell Mothershed
Name: J. Russell Mothershed
Title: Vice President
LIST OF SCHEDULES AND EXHIBITS
Schedules
Schedule I Consents, Approvals and Compliance
Schedule II Permitted Encumbrances
Schedule III Legal Description of Owned Real Property
Exhibits
Exhibit A List of Restaurant Locations
Exhibit B Form of Note
Exhibit C Form of Stock Pledge Agreement
Exhibit D Form of Guaranty
Exhibit E Form of Amended Operating Agreement
Schedule I
CONSENTS, APPROVALS AND COMPLIANCE
1. All consents and approvals required or necessary to transfer to
Partnership all licenses or permits currently held by Seller or the
Businesses with respect to the sale or consumption of alcoholic beverages
on the premises at which the Businesses are conducted.
2. All consents required or necessary from any third party (or third
parties) with respect to the Sublease(s) or the Contracts.
3. Approval by the Board of Directors of each of Seller and Company.
4. Seller and Company make no representation with respect to compliance
with the requirements of the Americans with Disabilities Act of 1990.
Schedule II
PERMITTED ENCUMBRANCES
1. Liens for current real, personal or other property taxes not yet due
and payable.
2. Liens that are immaterial in character, amount or extent, and that do
not materially affect the value, or do not materially interfere with the
present use, of the Assets.
3. UCC-1 Financing Statements:
[LIST APPLICABLE FINANCING STATEMENTS]
4. The Second Mortgages.
Schedule III
LEGAL DESCRIPTION OF OWNED REAL PROPERTY