SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of earliest event reported): October 17, 2002
THE KRYSTAL COMPANY
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(Exact name of registrant as specified in its charter)
Tennessee 000-20040 62-0264140
-------------- --------------------- --------------------
(State of (Commission File No.) (IRS Employer
incorporation) Identification No.)
One Union Square, Chattanooga, Tennessee 37402
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(Address of principal executive offices, including zip code)
(423) 757-1550
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(Registrant's telephone number, including area code)
ITEM 2. DISPOSITION OF ASSETS
On October 17, 2002, The Krystal Company (the "Company") completed the
previously announced sale of substantially all of the assets of its fixed
based hangar operation ("FBO") located in Chattanooga, Tennessee to Truman
Arnold Companies for a sales price of $10,786,000.
ITEM 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
(b) Unaudited Pro Forma Financial Information
Unaudited Pro Forma Consolidated Balance Sheet with notes
Unaudited Pro Forma Consolidated Statements of Operations with
Notes
UNAUDITED PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma consolidated balance sheet was prepared as
if the sale of the FBO described in Item 2 occurred on June 30, 2002. The
following unaudited pro forma consolidated statements of operations for the
year ended December 30, 2001 and for the six months ended June 30, 2002 give
effect to the sale as if it had occurred at the beginning of the respective
periods.
The unaudited pro forma financial information is based on the historical
financial statements of the Company and the adjustments described in the
accompanying notes. The pro forma information does not purport to represent
what the Company's results of operations actually would have been if the sale
had occurred as of such dates or what such results will be for future periods.
THE KRYSTAL COMPANY AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
JUNE 30, 2002
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
----------- ---------- -----------
Current Assets:
Cash and temporary investments $ 13,022 $ 8,576 (a) $ 21,598
Receivables, net 1,593 -- 1,593
Inventories 1,729 -- 1,729
Deferred income taxes 2,877 -- 2,877
Prepayments and other 965 -- 965
-------- ------- --------
Total current assets 20,186 8,576 28,762
-------- ------- --------
Net property, buildings, and equipment 97,360 (2,223)(b) 95,137
-------- ------- --------
Leased Properties, net 6,038 -- 6,038
-------- ------- --------
Other Assets:
Goodwill, net 40,759 (2,791)(c) 37,968
Prepaid pension asset 8,374 -- 8,374
Deferred financing costs, net 2,435 -- 2,435
Other 1,041 1,041
-------- ------- --------
Total other assets 52,609 (2,791) 49,818
-------- ------- --------
Total Assets $176,193 $ 3,562 $179,755
======== ======= ========
Current Liabilities:
Accounts payable $ 5,523 $ -- $ 5,523
Accrued liabilities 26,595 3,236 (d) 29,831
Current portion of long-term debt 1,479 -- 1,479
Current portion of capital lease
obligations 1,214 -- 1,214
-------- ------- --------
Total current liabilities 34,811 3,236 38,047
-------- ------- --------
Long Term Debt, excluding current 87,820 (2,427)(e) 85,393
-------- ------- --------
Capital Lease Obligations, excluding
current portion 5,813 -- 5,813
-------- ------- --------
Deferred Income Taxes 7,471 464 (f) 7,935
-------- ------- --------
Other Long-Term Liabilities 5,475 -- 5,475
-------- ------- --------
Shareholder's Equity:
Common Stock 35,000 -- 35,000
Retained Earnings (deficit) ( 197) 2,289 (g) 2,092
-------- ------- --------
Total shareholder's equity 34,803 2,289 37,092
-------- ------- --------
Total Liabilities and Shareholder's
Equity $176,193 $ 3,562 $179,755
======== ======= ========
Notes to unaudited pro forma consolidated balance sheet:
(a) Reflects the receipt of cash proceeds from the asset sale of
$10.8 million, less amounts used to reduce the Company's senior
indebtedness.
(b) Reflects the disposal of buildings and equipment included in the
sale of the FBO.
(c) Reflects the disposal of goodwill allocated to the FBO in
connection with the acquisition of the Company in November, 1997.
(d) Reflects income tax and other liabilities associated with the sale
of the FBO.
(e) Reflects the application of a portion of the net cash proceeds to
repay a portion of the Company's senior indebtedness.
(f) Reflects the deferred income taxes associated with the net assets sold.
(g) Reflects the resulting after tax gain on the sale of the FBO and
reduction of debt.
THE KRYSTAL COMPANY AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2002
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
-------- ------- --------
Revenues:
Restaurant sales $123,937 $ -- $123,937
Franchise fees 597 -- 597
Royalties 3,340 -- 3,340
Other 3,349 ( 3,349)(a) --
-------- ------- --------
Total revenues 131,223 ( 3,349) 127,874
-------- ------- --------
Cost and Expenses:
Cost of restaurant sales 100,697 -- 100,697
Advertising expense 5,205 -- 5,205
Depreciation and amortization
expense 5,539 ( 94)(b) 5,445
General and administrative
expenses 9,100 ( 200)(b) 8,900
Other expenses, net 2,072 (2,319)(b) ( 247)
-------- ------- --------
Total operating expenses 122,613 (2,613) 120,000
-------- ------- --------
Operating income 8,610 ( 736) 7,874
Gain on sale of assets 11 ( 11)(c) --
Interest expense, net (4,901) ( 125)(d) ( 4,776)
-------- ------- --------
Income before provision for income
taxes and extraordinary item 3,720 ( 622) 3,098
Provision for income taxes ( 1,067) ( 225)(e) ( 842)
-------- ------- --------
Income before extraordinary item $ 2,653 $( 397) $ 2,256
======== ======= ========
Notes to unaudited pro forma consolidated statement of operations:
(a) Represents the historical revenues directly attributable to the FBO.
(b) Represents the historical expenses directly attributable to the FBO.
(c) Represents the historical gain on sale of assets directly
attributable to the FBO.
(d) Reflects the pro forma reduction of interest expense resulting from
the use of a portion of the net proceeds to reduce senior indebtedness.
(e) Reflects the income tax expense on the pro forma adjustments.
THE KRYSTAL COMPANY AND SUBSIDIARY
UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 30, 2001
PRO FORMA
HISTORICAL ADJUSTMENTS PRO FORMA
-------- ------- --------
Revenues:
Restaurant sales $246,898 $ -- $246,898
Franchise fees 1,041 -- 1,041
Royalties 5,958 -- 5,958
Other 6,781 (6,781)(a) --
-------- ------- --------
Total revenues 260,678 (6,781) 253,897
-------- ------- --------
Cost and Expenses:
Cost of restaurant sales 206,498 -- 206,498
Advertising expense 10,370 -- 10,370
Depreciation and amortization
expense 14,457 ( 309)(b) 14,148
General and administrative
expenses 15,760 ( 360)(b) 15,400
Other expenses, net 6,272 (4,650)(b) 1,622
-------- ------- --------
Total operating expenses 253,357 (5,319) 248,038
-------- ------- --------
Operating income 7,321 (1,462) 5,859
Gain on sale of assets 483 -- 483
Interest expense, net (13,018) ( 253)(c) (12,765)
-------- ------- --------
Loss before benefit from income taxes ( 5,214) (1,209) ( 6,423)
Benefit from income taxes 1,613 ( 435)(d) 2,048
-------- ------- --------
Net loss $( 3,601) $ ( 774) $( 4,375)
======== ======= ========
Notes to unaudited pro forma consolidated statement of operations:
(a) Represents the historical revenues directly attributable to the FBO.
(b) Represents the historical expenses directly attributable to the FBO.
The Company adopted Statement of Financial Accounting Standards
No. 142, Goodwill and other Intangible Assets (SFAS 142), effective
December 31, 2001. As a result, the Company ceased amortization of
its goodwill on the effective date. Amortization of goodwill for the
year ended December 30, 2001 amounted to $2.0 million. Had the
Company adopted SFAS 142 at the beginning of fiscal 2001, adjusted
pro forma net loss reflecting the nonamortization of goodwill would
have been $2.4 million.
(c) Reflects the pro forma reduction of interest expense resulting from the
use of a portion of the net proceeds to reduce senior indebtedness.
(d) Reflects the income tax expense on the pro forma adjustments.
(c) Exhibits-
2.1 Purchase Agreement for Purchase and Sale dated October 17, 2002
between Krystal Aviation Co. and Truman Arnold Companies.
Exhibit 2.1
PURCHASE AGREEMENT
FOR PURCHASE AND SALE
OF
THE CHATTANOOGA, TENNESSEE FBO FACILITIES OF
KRYSTAL AVIATION CO.
BETWEEN
KRYSTAL AVIATION CO.
"Seller"
AND
TRUMAN ARNOLD COMPANIES
"Buyer"
October 17, 2002
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is entered into as of 17th day of
October, 2002 by and between KRYSTAL AVIATION CO., a Tennessee corporation
with offices at One Union Square, Chattanooga, Tennessee 37402 ("Seller") and
TRUMAN ARNOLD COMPANIES, a Texas corporation with offices at 2900 St. Michael
Drive, Fifth Floor, Texarkana, Texas 75503 ("Buyer"). The Krystal Company, the
sole shareholder of the Seller, joins in this agreement for the limited
purposes described in Sections 3.3(d) and 15.3.
WITNESSETH:
WHEREAS, Seller currently operates fixed base operations at Lovell Field in
Chattanooga, Tennessee; and
WHEREAS, Buyer desires to purchase and acquire from Seller and Seller
desires to sell, transfer, assign and convey to Buyer, certain assets utilized
by Seller to conduct business at its fixed base operation under the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of these premises, the mutual promises,
representations and covenants set forth herein, and for other good and
valuable consideration the receipt and adequacy of which are hereby
acknowledged, the parties hereto, intending to be legally bound, agree as
follows:
ARTICLE I
Particular Terms and Definitions
As used in this Agreement, the following terms shall have the respective
meanings indicated opposite each of them. Certain other capitalized terms are
defined where they appear in this Agreement.
1.1. "Affiliate" means any person or entity of any nature whatsoever
directly or indirectly controlling or controlled by or under direct or
indirect common control with, the person specified.
1.2. "Agreement" means this Purchase Agreement between Seller and Buyer.
1.3. "Airport" means Lovell Field in Chattanooga, Tennessee.
1.4. "Assumed Obligations" shall have the meaning ascribed to such term
in Section 5.3 hereof.
1.5. "Authority" means the Chattanooga Metropolitan Airport Authority.
1.6. "Claim" shall have the meaning ascribed to such term in Section 15.5
hereof.
1.7. "Closing" shall have the meaning ascribed to such term in Section
2.3 hereof.
1.8. "Closing Date" means the date on which the Closing occurs.
1.9. "Code" means the Internal Revenue Code of 1986, as amended.
1.10. "Contracts" shall have the meaning ascribed to such term in
Section 5.1(a) hereof.
1.11. "Damages" shall have the meaning ascribed to such term in
Section 15.1 hereof.
1.12. "Environmental Claim" means any allegation, notice of violation,
claim, demand, or order or direction by any governmental authority, agency,
court, or any Person for personal injury or death, property damage, damage
to the environment, pollution, contamination or other adverse effects on the
environment, or for fines, penalties or restrictions, resulting from or based
upon (i) the existence or release, or continuation of any release (including,
without limitation, accidental or non-accidental leaks or spills), of, or
exposure to, any Hazardous Substances, chemical, material, pollutant,
contaminant, or other release or emission in, into or onto the environment
(including, without limitation, the air, ground, water or any surface) at,
in, by, from, or related to the FBO, (ii) the environmental aspects of the
use, generation, transportation, storage, treatment, recycling, or disposal of
materials in connection with, or originating from, the operation of the FBO,
or (iii) the violation, or alleged violation, of any statute, ordinance,
order, rule, regulation, permit or license of or from any governmental
authority, agency or court relating to environmental matters connected with
the FBO.
1.13. "Lovell Field" means Lovell Airfield in Chattanooga, Tennessee
operated by the Authority.
1.14. "Excluded Assets" shall have the meaning ascribed to such term
in Section 2.2 hereof.
1.15. "FBO" means the fixed base operations of Seller at Lovell Field,
which fixed base operations are the subject of this Agreement.
1.16. "FBO Leases" mean the three leases entered into between Authority
and Seller or its predecessors dated October 10, 1991, October 21, 1991 and
January 1, 1993 with all amendments which are in effect as of the date of this
Agreement.
1.17. "FBO Subleases" mean the subleases of portions of the Leasehold
Estate subleased by Seller or its predecessors to Star Avionics, Inc. dated
October 15, 1996, to Provident Companies, Inc., dated April 10, 1997, to U.S.
Xpress Enterprises, Inc., dated July 17, 2000, to The Dixie Group, Inc., dated
October 15, 1999, and to Olan Mills, Inc. dated October 1, 1982, and the First
Amendment thereto dated October 1, 1991, as assigned by Olan Mills, Inc. to
Astec Industries, Inc. by an Assignment and Assumption Agreement dated
September 18, 2001, and any standard hangar lease arrangements and to The
Lupton Co., LLC dated September 26, 1986 (John T. Lupton, the original tenant)
together with an Assignment and Assumption Agreement dated January 11, 1996
and Lease Modification Agreement dated March 12, 2002.
1.18. "Fuel, Oil and De-Icing Fluid Inventory" means all fuel, oil and
de-icing fluid on hand at the FBO as of the Closing Date.
1.19. "Hazardous Substance" means those substances which are regulated by
or form the basis of liability under any federal, state or local environmental,
health, or safety statute, ordinance, order, rule, regulation, permit or
license, including, without limitation, solvents, petroleum products,
polychlorinated biphenyls, and radioactive substances, or any other substance
which constitutes a known health, safety, or environmental hazard to the
person or property.
1.20. "Intangible Personal Property" shall have the meaning ascribed to
such term in Section 2.1 hereof.
1.21. "Leasehold Estate" means the property subject to the FBO Leases.
1.22. "Marks" shall have the meaning ascribed to such term in Section 2.2
(f) hereof.
1.23. "Permitted Encumbrances" shall have the meaning ascribed to such
term in Section 6.1(r) hereof.
1.24. "Person" means any state agency, any municipality, governmental
subdivision of the state or the United States, public or private corporation,
individual, partnership, association, limited liability company, or other
entity.
1.25. "Personal Property" shall have the meaning ascribed to such term in
Section 2.1(c) hereof.
1.26. "Purchased Assets" shall have the meaning ascribed to such term in
Section 2.1 hereof.
1.27. "Purchase Price" shall have the meaning ascribed to such term in
Section 3.1 hereof.
1.28. "Receivables" means all service, repair and guest ledger
receivables, credit card charge invoices, and other accounts and notes
receivable related to the FBO existing on the Closing Date.
1.29. "Seller's Knowledge," "Seller has no Knowledge" or words of
similar import means the actual knowledge of Larry Bentley, Terry McDowell,
and Bob Kincaid.
ARTICLE II
Sale of Chattanooga FBO
2.1. Agreement to Sell and Purchase Assets. On the terms and conditions
set forth in this Agreement, and subject to the provisions of Section 2.2
hereof, Seller agrees to sell, transfer, assign and convey to Buyer, and Buyer
agrees to purchase, acquire and accept from Seller all of Seller's rights,
title and interest in and to the following (collectively, the "Purchased
Assets"):
(a) The FBO Leases;
(b) Seller's personal property and fixtures located on the Leasehold
Estate including, without limitations, all leasehold and other improvements
relating to the Leasehold Estate;
(c) Substantially all operating assets of Seller at the FBO, as shown on
the asset schedule attached as Schedule 2.1(c), (the "Asset Schedule"),
including, but not limited to, all shop and maintenance equipment, vehicles
(provided, that Fuel, Oil and De-Icing Fluid Inventory, are to be priced and
paid for separately as hereinafter provided in Sections 3.2(a) and all other
tangible personal property owned by Seller as of the Closing Date and used in
the ownership, operation and maintenance of the FBO (collectively, the
"Personal Property");
(d) All intangible personal property owned by Seller and used in the
ownership, operation and maintenance of the FBO (the "Intangible Personal
Property"), including, without limitation, all assignable executory Contracts
relating to the FBO, including the FBO Subleases, except as provided in
Section 2.2 of this Agreement;
(e) All assignable permits and licenses, in the name of Seller, used or
required in connection with the operation, occupancy or carrying on of the
business of the FBO listed on Schedule 2.1(e) hereto;
(f) All lists of Seller's current customers at the FBO (including name,
address, telephone number and name and title of contact person, to whom
Seller provides services and/or sells goods); and
(g) All telephone numbers used by Seller exclusively in connection with
the FBO.
2.2. Excluded Assets. Anything in Section 2.1 of this Agreement to the
contrary notwithstanding, the Purchased Assets do not include and Seller
reserves and retains all rights, title and interest in and to:
(a) Aircraft;
(b) Cash;
(c) The Receivables;
(d) All of Seller's corporate, accounting and tax books and records
other than those relating to the business operations of the FBO;
(e) Any and all choses in action, claims and litigation arising prior to
the Closing;
(f) Any and all trade marks owned by Seller or The Krystal Company
related to the name or mark "Krystal Aviation Co.," "Krystal" or other name
the FBO is currently using; and
(g) The assets described in Schedule 2.2(g).
2.3. Closing. The closing of the purchase and sale contemplated herein
at which all of the Purchased Assets Seller shall transfer, assign, convey and
deliver to Buyer, and at which Buyer shall deliver the Purchase Price to
Seller and assume the Assumed Obligations (the "Closing"), shall be held at
the offices of Miller & Martin LLP, 1000 Volunteer Bldg., 832 Georgia Ave.,
Chattanooga, Tennessee, 37402, local time, on or before October 17, 2002, or
at such other earlier or later time or other place as the parties may mutually
agree (the actual date of the closing being herein referred to as the "Closing
Date").
ARTICLE III
Purchase Price
3.1. Purchase Price. For and in consideration of the transfer and
assignment of the Purchased Assets and the Covenants Not To Compete set forth
in Section 3.4 hereof, Buyer shall pay to Seller the sum of Ten Million Seven
Hundred Fifty Thousand Dollars ($10,750,000), plus an additional amount equal
to the value of the Fuel, Oil and De-Icing Fluid Inventories, (collectively,
the "Purchase Price"). The price for Fuel, Oil and De-Icing Fluid Inventory
shall be determined in accordance with Sections 3.2(a) hereof. The Purchase
Price shall be allocated among the Purchased Assets as shown on Schedule 3.1
hereto.
3.2 Additional Purchase Price.
(a) Fuel, Oil and De-Icing Fluid Inventory. Prior to the Closing Date,
Buyer and Seller will mutually conduct a physical inventory of all fuel, oil
and de-icing fluid on hand at the FBO as of the Closing Date. Buyer shall pay
Seller at the Closing an amount equal to Seller's actual, out-of-pocket cost,
as evidenced by invoices paid by Seller, of Fuel, Oil and De-Icing Fluid
Inventory. Any and all fuel flowage fees and taxes paid, or due to be paid,
with respect to Fuel, Oil and De-Icing Fluid Inventory shall be prorated as of
the Closing Date. Seller shall be responsible for payment of all flowage
fees and taxes applicable to the Fuel, Oil and De-Icing Fluid Inventory
conveyed to Buyer at Closing to the extent of Buyer's payment thereof to
Seller.
(b) Receivables. Receivables relating to products or services sold or
performed prior to the Closing shall be retained by Seller, whether or not the
party purchasing such product or service shall have actually signed the
appropriate charge slip or invoice relating to such purchase at the Closing
Date.
(c) Implementation of Prorations and Other Payments. Not less than five
(5) business days prior to the Closing Date, Seller and Buyer shall undertake
in good faith to mutually agree upon a closing statement setting forth the
determination of the items to be prorated and accounted for hereunder, and the
net amount due to Buyer shall be paid at the Closing.
(d) Contracts. Contracts (as hereinafter defined) having payments due
less frequently than monthly shall be prorated as of the Closing Date.
3.3. Payment of Purchase Price. The Purchase Price and prorated items
shall be paid in cash or by wire transfer at the Closing as follows:
(a) Escrow. The parties hereto and Century Bank, N.A., Texarkana, Texas
(the "Escrow Agent") have previously entered into an Escrow Agreement (the
"Escrow Agreement"), pursuant to which Buyer tendered and the Escrow Agent is
now holding the sum of One Hundred Thousand Dollars ($100,000) (the "Escrow
Fund"), pending the consummation of the transactions contemplated herein and
therein. The Escrow Fund shall be paid only as provided in Section 5 of the
Escrow Agreement.
(b) Cash Purchase Price. At the Closing, the Escrow Agent shall disburse
the Escrow Fund, plus any income, interest or other amounts received thereon
(the "Total Escrow Fund") to Seller, to be credited by it against payment of
the Purchase Price, and Buyer shall pay to Seller the remainder of the
Purchase Price.
(c) Other Amounts. Any other amounts due to Seller in accordance with
the terms of Article IV hereof shall be paid at the Closing.
(d) Covenants Not To Compete.
(i) Term and Area. In consideration of allocating the sum of One Hundred
Thousand Dollars ($100,000) out of the Purchase Price to the Covenants Not To
Compete contained in this Section 3.4, The Krystal Company, the sole
shareholder of Seller ("Covenanting Shareholder)," and Seller will execute at
Closing agreements ("Covenants Not To Compete") covenanting and agreeing that
for a period of five (5) years from the Closing Date, they will not, directly
or indirectly, within and upon the area known as Lovell Field, engage in, or
own (excluding passive investment interests of less than five percent (5%) of
the voting stock of publicly-traded securities registered under Section 12 of
the Securities Exchange Act of 1934, as amended), manage, operate, control or
participate in the ownership, management, operation or control of or otherwise
be connected in any manner with any business which engages in any activity
that is directly or indirectly competitive with the FBO.
(ii) Invalidity in Whole or Part. The Covenants Not To Compete will
provide that if, in any judicial proceeding, the duration or scope of any
covenant or agreement of Seller or the Covenanting Shareholder contained
therein shall be adjudicated to be invalid or unenforceable, the parties
agree that the Covenants Not To Compete shall be deemed amended to reduce such
duration or scope to the extent necessary to permit enforcement of such
covenant or agreement, such amendment to apply only with respect to the
operation of such covenant or agreement in the particular jurisdiction in
which such adjudication is made. Upon any such adjudication of invalidity or
unenforceability, Buyer shall be entitled to a refund of all of the
consideration paid by Buyer for the Covenants Not To Compete.
(iii) Covenants Specifically Enforceable. The Covenants Not To
Compete will also provide that the parties thereto acknowledge and agree that
money damages would not constitute an adequate remedy in the event of a
breach of the Covenants Not To Compete and that, in addition to any other
remedies which may be available to Buyer, the obligations of Seller or the
Covenanting Shareholder under the Covenants Not To Compete shall be
specifically enforceable. Notwithstanding the foregoing, no remedy conferred
under the Covenants Not To Compete, or otherwise available at law or in
equity, is intended to be exclusive of any other such available remedies, but
each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or existing at law, in equity or by statute.
(iv) Summary Provisions. The foregoing subparagraphs relating to the
Covenants Not To Compete are summary in nature and reference is made to the
Covenants Not To Compete themselves for the entire agreements among the
parties relating thereto.
ARTICLE IV
Other Payments
4.1. Prorations and Other Payments. Operation of the FBO until 12:01 a.m.
on the Closing Date shall be for the account of Seller, and thereafter for the
account of Buyer. Those items of revenue and expense of the FBO and other
items hereinafter described shall be prorated and adjusted between Seller and
Buyer as of the Closing Date as follows:
(a) General Adjustment. Real estate taxes, possessory interest taxes and
personal property taxes for the current year, lease payments and rents, and
any other receipts and expenses attributable to any lease by Seller, as lessor
or lessee of the Leasehold Estate, and other operating income and expenses
relating to the Leasehold Estate for the month in which the Closing occurs,
shall be prorated as of the Closing Date between Buyer and Seller pursuant to
the standards applicable in Hamilton County, Tennessee. All business,
license, occupation, sales, use, withholding or similar taxes, or any other
taxes of any kind (other than real estate and personal property taxes which
shall be prorated as herein provided) relating to the FBO or the Purchased
Assets and attributable to the period prior to the Closing Date shall be paid
by Seller, and all such taxes attributable to the period on and after the
Closing Date shall be paid by Buyer.
(b) Utilities. Buyer shall make appropriate arrangements for transfer of
all necessary utility and other services in its own name to be effective as of
the Closing Date. In lieu of prorating power, gas and water bills, the
appropriate utilities will be requested by Seller to take meter readings as
close to the Closing Date as possible and to bill Seller for service prior to
such readings and to bill Buyer for service thereafter. The readings may
occur before or after the Closing Date. With respect to telephone services,
upon receiving a copy of the billing for telephone service following the
Closing, Seller will either pay directly or reimburse Buyer within ten (10)
business days after receipt thereof for those charges attributable to calls
made prior to the Closing Date. General monthly charges reflected by such
billing for telephone service to the FBO will be prorated on the basis of the
number of days Seller owned the FBO during the period covered by the billing.
4.2. Costs. Costs and expenses relating to the transactions contemplated
by this Agreement shall be borne and paid as follows:
(a) Transfer Fees. Transfer fees (if any) related to the transactions
contemplated herein shall be borne and paid by the parties as follows:
Seller:
(i) for the sale, assignment and conveyance of the Purchased Assets;
(ii) for all excise taxes; and
(iii) for assignment of the FBO Lease and the FBO Subleases, or other
specified leases.
Buyer: motor vehicle transfer taxes and vehicle registration fees relating
to the purchase and sale of the Purchased Assets.
Any documentary stamp or transfer taxes relating to the purchase and sale
of the Purchased Assets shall be borne and paid by the parties in equal
proportion.
(b) Parties to Bear Their Own Expenses. Except as otherwise specifically
provided in this Agreement, Seller and Buyer shall bear their own costs and
expenses arising out of, and otherwise related to, the negotiation, execution,
delivery and performance of this Agreement and the consummation of the
transactions herein contemplated, including, without limitation, legal and
accounting fees and expenses.
ARTICLE V
Contracts, FBO Leases and Assumption of Obligations
5.1. Contracts
(a) Contracts Defined. For purposes of this Agreement, the term
"Contracts" shall mean and include: (i) all contracts, existing on the date
hereof, referenced on Schedule 5.1 hereto, including the FBO Leases and the
FBO Subleases, fuel supply trucks and other vehicle leases, radio station
licenses, if any, and such other licenses and permits as are necessary to
continue the business of the FBO; (ii) all other contracts and agreements
incurred in connection with the FBO and which are entered into in the ordinary
course of Seller's operations at the FBO, after the date hereof and prior to
the Closing, provided that Seller shall secure Buyer's approval of any such
contract or agreement which calls for the owner of the FBO to provide services
or sell parts or equipment, which services, parts or equipment have a value in
excess of Ten Thousand Dollars ($10,000); (iii) all purchase orders for
non-capital expenditures outstanding on the Closing Date incurred in the
ordinary course of operating the FBO; (iv) all oral contracts or agreements in
the nature of those described in Sections 5.1(a)(i) or (ii) above that are
currently existing and are listed on Schedule 5.1, or (v) all oral contracts
or agreements that (A) are entered into after the date hereof and prior to
Closing in the ordinary course of business, (B) contain terms and conditions
which are not materially less favorable than those which would have been
available for such product or services as of the date of execution of such
oral agreements, (C) are not between Seller and any Affiliate of Seller,
and (D) which have been approved by Buyer if such approval is required by
(ii) above; and (vi) any other contracts and agreements entered into by Seller
with the consent of Buyer after the date hereof in connection with the FBO.
Seller shall provide an updated Schedule 5.1 at the Closing to include
Contracts entered into after the date hereof.
(b) Assignment and Assumption. At the Closing, Seller shall assign and
transfer to Buyer all of Seller's rights, title and interest in and to the
Contracts.
5.2 FBO Lease. Seller and Buyer agree to use commercially reasonable
efforts to obtain the authorization of the Authority on or prior to Closing,
to extend the FBO Leases for an additional term of ten (10) years.
5.3. Assumption of Obligations by Buyer. At the Closing, Seller shall
assign to Buyer, and Buyer shall assume, pay, perform and discharge, the
following obligations of Seller, except for such obligations, including
without limitation obligations to pay money, which, pursuant to the terms of
the Contracts, were to be performed by Seller prior to Closing (collectively,
the "Assumed Obligations"):
(a) The FBO Leases and all lessee obligations and liabilities thereunder
and the FBO Subleases and all lessor obligations and liabilities thereunder
(but excluding any and all environmental and other obligations or liabilities
as of the Closing Date, either as set forth or in any way related to the FBO
Leases or FBO Subleases or otherwise, including, but not limited to, any
environmental obligations or liabilities which are related to the current fuel
storage facilities located on the premises of the FBO), but only to the extent
that such obligations and liabilities occur subsequent to the Closing and
(b) All of the other Contracts and Seller's obligations and liabilities
thereunder, but only to the extent that such obligations and liabilities arise
subsequent to the Closing.
(c) All debts, obligations, or liabilities arising out of or resulting
from the operation of the FBO by Buyer on or after the Closing Date.
5.4. No Other Liabilities or Obligations Assumed. Notwithstanding
anything to the contrary provided in this Agreement, Buyer shall not assume
nor be obligated to pay, perform or discharge, any debt, obligation,
Environmental Claim, expense or liability of Seller, whether absolute or
contingent, arising out of, resulting from, or in any manner connected with
operation of the FBO prior to the Closing Date.
5.5. Employees. A list of employees employed by Seller at the FBO
(collectively, the "Employees," and, individually, an "Employee") is attached
hereto as Schedule 6.1(e)(i). Buyer may interview each such Employee for the
purpose of determining whether Buyer desires to offer employment to such
Employee as of the Closing. In the event that Buyer hires any such Employee,
Seller will terminate such Employee(s) and will pay such Employee(s) all
wages, salaries, commissions, bonuses, accrued vacation pay, and any other
benefit or claim, which is due or owing to Employee up to but not including
the Closing Date. Buyer shall have no responsibility for any of such
Employees to which it does not extend an offer of employment, nor for any
payment to any Employees employed by Buyer relating to or arising out of
(i) any such Employee's prior service with Seller, or (ii) the separation from
Seller of any such Employee, and Seller shall indemnify, defend and hold Buyer
harmless from any claims asserted under any plant closing or similar state or
federal laws, or by any of Seller's Employees arising out of such Employee's
employment by Seller. Buyer shall give Seller reasonable notice of the date,
time and place where it proposes to interview any Employees.
Notwithstanding the foregoing, to the extent Buyer elects not to offer
employment to any Employees, Buyer shall reimburse Seller for one-half of the
severance costs for such Employees within five days following delivery by
Seller of a calculation of the amount of such severance expense.
ARTICLE VI
Representations and Warranties
6.1. Representations and Warranties of Seller. Seller represents and
warrants to Buyer, that:
(a) Due Organization. Seller is a corporation duly formed, validly
existing and in good standing under the laws of the state of Tennessee, is
qualified to do business in such other states where the nature of its business
requires it to be so qualified, and has all requisite corporate power and
authority to enter into, perform and carry out all of its duties and
obligations in the transactions contemplated by this Agreement.
(b) Due Authorization; Binding Effect. The execution, delivery and
performance of this Agreement and the consummation of the transactions on the
part of Seller contemplated hereunder have been duly authorized by all
necessary corporate action on the part of Seller. This Agreement and the
other documents to be executed and delivered by Seller pursuant to this
Agreement constitute the legal, valid and binding obligations of Seller,
enforceable in accordance with their respective terms.
(c) Financial Statements. Attached hereto as Exhibit 1 are true and
complete copies of the unaudited financial statements of Seller for the
fiscal years ended January 2, 2000, December 31, 2000 and December 30, 2001,
which are the financial statements for Seller that are included in the audited
consolidated financial statements for The Krystal Company for those same
periods and the unaudited interim financial statements of Seller for the
period from December 31, 2001 through September 29, 2002. Except as disclosed
on Schedule 6.1(c), such financial statements have been prepared in accordance
with generally accepted accounting principles ("GAAP") in all material
respects, have been applied on a consistent basis, and present fairly the
financial position and results of operations for the periods covered.
(d) Liabilities and Obligations. Since December 30, 2001, Seller has not
incurred any liabilities or obligations (whether direct or indirect, known or
unknown, absolute, accrued, matured or unmatured, contingent or otherwise) of
any nature, which would cause Seller, either before or after the consummation
of the transaction contemplated by this Agreement, to be insolvent as that sum
is defined by the Bankruptcy Code of the United States or any fraudulent
conveyance law of the State of Tennessee.
(e) Employees.
(i) Except as disclosed on Schedule 6.1(e)(i), all Employees are
employees-at-will and are employed for an indefinite term. Except as
disclosed on Schedule 6.1(e)(i), there are no employment contracts for the
benefit of any Employee or other person relating to operation of the FBO.
Schedule 6.1(e)(i) is a list of all Employees and, for each such Employee,
his or her current title, position, salary or wage, and dates of hire,
whether employee is on leave under the Family Medical Leave Act or similar
state law and sex. Except as disclosed on Schedule 6.1(e)(i), Seller has no
written or enforceable oral employment contracts with any Employees, and there
are no individual or collective bargaining agreements or other labor, union or
similar agreements or arrangements currently in effect covering or affecting
any Employees or for which Seller has any ongoing liability or obligation
whatsoever.
(ii) Except as disclosed by Seller on Schedule 6.1(e)(ii):
(A) Since January 1, 1999, there has not been, nor is there
pending, threatened or anticipated, any strike, material dispute, slowdown,
picketing or work stoppage by any union or other group of employees against
Seller or any of their premises or products, or similar labor trouble;
(B) No certification or decertification question or
organizational drive exists or has existed since January 1, 1999, respecting
any employees of Seller;
(C) No grievance proceeding or arbitration proceeding arising
out of or under any collective bargaining agreement is pending or threatened
against Seller, and, no basis for any claim therefor exists; and
(D) No agreement (including, but not limited to any collective
bargaining agreement), arbitration or court decision or governmental order
which is binding on Seller in any way limits or restricts its operations or
the transactions contemplated herein.
(f) Tax Returns and Taxes. All tax returns, information returns and
reports of Seller required by federal law or the laws of any state or local
jurisdiction or authority or under the laws of any foreign country have been
duly filed and all taxes (whether or not shown on the return) and assessments
(other than those taxes and assessments presently payable without interest or
penalty which are reflected on the balance sheet as an accrued liability)
upon, or measured by, any of the properties, franchises, income or receipts of
Seller have been paid by, or for the benefit of, Seller or will be paid by, or
for the benefit of, Seller for all periods prior to the Closing Date. All
property tax returns pertaining to Purchased Assets covering the period prior
to the Closing Date due to be filed by Seller prior to the Closing Date have
been filed by Seller, or will be filed by Seller, prior to the Closing Date,
and all such property taxes and assessments for the period prior to the
Closing Date have been or will be paid or accrued by Seller prior to the
Closing Date.
..
(g) Employee Retirement Income Security Act of 1974, as amended ("ERISA").
Seller does not maintain, nor has it maintained, any "Employee Welfare Benefit
Plan," as such term is defined in Section 3(1) of ERISA, or any "Employee
Pension Benefit Plan", as such term is defined in Section 3(2) of ERISA, or is
or has been a contributing employer to any multi-employer plans, as defined in
Section 3(37) or Section 4001(a)(3) of ERISA, other than those plans
identified on Schedule 6.1(g) (complete and correct copies of which have been
furnished by Seller to Buyer) and medical and dental benefit plans identified
on Schedule 6.1(g) (complete and correct copies of which have been furnished
by Seller to Buyer). Seller has done nothing, nor failed to do anything,
which would cause Buyer to be liable to Seller's employees, former employees,
retirees, their beneficiaries or any other person, government or government
agency, because of or arising out of any such plans or any other employee
beneficiary of plans of Seller whatsoever.
(h) Absence of Certain Changes. Except as set forth on Schedule 6.1(h),
since September 29, 2002 Seller and the FBO have not, except in each case as
approved in writing by Buyer:
(i) suffered any material adverse change in their assets, properties,
operating or net income, liabilities, financial or other condition, business
or prospects;
(ii) suffered any damage, destruction or loss (whether or not covered by
insurance) materially adversely affecting its business or prospects;
(iii) incurred any obligations or liabilities, absolute or contingent,
for money borrowed or otherwise except obligations not exceeding in the
aggregate Thirty Thousand Dollars ($30,000.00) entered into in the ordinary
course of business;
(iv) made any material additions to or sold, transferred or otherwise
disposed of, any assets, including cash accounts, other than in the
ordinary course of business not exceeding in the aggregate Thirty Thousand
Dollars ($30,000.00);
(v) incurred, assumed or become subject to or agreed to incur, assume
or become subject to any liability under or in respect to any guarantee or
endorsement;
(vi) increased directly or indirectly (other than by normal labor
contract negotiation, bonus, cost of living and merit increases) the
compensation payable to any management or other employee or entered into
any agreement regarding employment with any person or in respect of
compensation with any employee, or paid any bonus or any unusual
compensation to any management or other employee during fiscal year 2001 or
subsequently except as set forth as an accrued liability on the
September 29, 2002 Balance Sheet, or paid any bonus or any unusual
compensation to any management or other employee from September 29, 2002
to Closing not accrued prior to September 29, 2002.
(vii) made any single capital expenditure or commitment therefor
exceeding Ten Thousand Dollars ($10,000) other than in ordinary course of
business;
(viii) entered into any contract or commitment with respect to the sale,
purchase or lease of supplies, equipment or services other than in the
ordinary course of business and which do not exceed in the aggregate Thirty
Thousand Dollars ($30,000.00);
(ix) entered into or agreed to enter into any agreement or arrangement,
other than in the ordinary course of business, with respect to the purchase by
a third party of any of the Purchased Assets;
(x) entered into any other transaction other than in the ordinary
course of business and which do not exceed in the aggregate Thirty Thousand
Dollars ($30,000.00);
(xi) failed to discharge any of its obligations or liabilities in
accordance with their terms or make any payments required in connection
therewith as and when due and payable;
(xii) waived any material rights;
(xiii) made any offer for the sale or purchase of any goods or services
which offer is outstanding as of the Closing Date and is significant in the
context of the FBO; or
(xiv) suffered any other event or condition of any character materially
adversely affecting the FBO or the Purchased Assets.
(i) Books and Records. The books and records of Seller relating to
the Purchased Assets and the FBO operations accurately reflect in all material
respects all transactions to which Seller is a party or by which its
respective assets are subject or bound, and such books and records have been
properly kept and maintained in all material respects.
(j) Franchises, Licenses, Permits, etc. Except as set forth on
Schedule 6.1(j), Seller owns or possesses in the operation of the FBO, all
material licensor authorizations that are necessary for the operation, and all
other authorizations that are material to the conduct of its business as now
conducted. Except as disclosed on Schedule 6.1(j), Seller has operated in
compliance, is not in default, and has not received any notice of any claim of
default, in each case in any material respect, with respect to any such
authorization, or has no Knowledge of any other claim or proceeding or
threatened proceeding relating to any such authorization or claimed lack of
any necessary authorization. Other than conditions and requirements relating
to such franchises, licenses, and permits that are within the sole control of
Buyer, except as set forth in Schedule 6.1(j), there is no reason why the
authorizations will not be kept fully in force or, if required under the terms
of the specific authorization, not be transferred to Buyer or otherwise not
continue so that Buyer, upon acquisition of the assets, can operate the FBO
and conduct the business of Seller relating to the FBO as fully as it is now
operated and conducted. Where joint application for consents relating to the
licensor authorizations is required by any licensor company, Seller will join
in the joint application.
(k) Major Customers. Schedule 6.1(k) sets forth a complete, true and
correct list of Seller's ten (10) largest customers for fuel in terms of
dollar volume the year ended December 30, 2001 and for the nine months ended
September 29, 2002. Except as set forth on Schedule 6.1(k), Seller has no
Knowledge that any of such customers for the nine months ended
September 29, 2002 intends to terminate or materially reduce its customer
relationship with the FBO, whether by reason of the transactions contemplated
hereby or otherwise, and none of such customers is otherwise involved in a
material dispute with Seller.
(l) Notice and Approvals; No Violation of Agreements. Except as set
forth on Schedule 6.1(l) hereto, including for consents which are required to
permit Seller's assignment to Buyer of the FBO Leases, and certain of the
Contracts, licenses, and permits described in Section 6.1(j) above, (i) no
notice to, or approval or consent of, any court or governmental authority or
other person or entity is required in connection with the execution, delivery
and performance of this Agreement by Seller; and (ii) neither the execution
and delivery of the Agreement, nor the consummation of the transactions herein
contemplated, nor compliance by Seller with any of the provisions hereof, will
(A) conflict with any provision of the articles of incorporation or bylaws of
Seller, or (B) materially violate, conflict with, result in a breach of or
constitute a material default under or pursuant to any statute, agreement,
judicial or administrative order, injunction, award, judgment or decree to
which Seller is a party or by which Seller is bound, which violation,
conflict, breach or default would have a materially adverse effect on Seller
or the FBO.
(m) Assets. The Asset Schedule attached hereto as Schedule 2.1(c) is
complete and accurate in all material respects as of the date thereof. Except
as disclosed in Section 6.1(h) and the schedules thereto, there has been no
change in the financial condition, results of operations, properties,
prospects or assets of the FBO since the December 30, 2001 Balance Sheet that
is materially adverse to the operations of the FBO.
(n) Compliance With Laws. Except as disclosed on Schedule 6.1(n)
hereto, Seller is in material compliance with the requirements of all
applicable laws, rules, regulations, licenses, permits, orders, judgments
and decrees of federal, state or local judicial or governmental authorities
that are applicable to ownership or operation of the FBO.
(o) Contracts. As of the date of execution of this Agreement, other than
as set forth in Schedule 5.1 hereto,
(i) there are no contracts material to the ownership and operation
of the FBO to which Seller is a party;
(ii) all Contracts material to the ownership and operation of the
FBO, including the FBO Leases and the FBO Subleases, other than Contracts
that, prior to the Closing, in accordance with their respective terms shall
terminate or expire, are in full force and effect;
(iii) Seller has paid all amounts due on or before Closing and
unpaid under the Contracts at Closing and has satisfied all other material
obligations accrued to date, therewith;
(iv) Seller has not received any written notice of default in any
material respect under the Contracts and no fees are payable to any party on
account of or as a condition of the assignment of such Contracts pursuant to
the transactions herein contemplated; and
(v) To Seller's Knowledge, no party to any of the Contracts is in default
in any material respect under any Contract.
(p) Litigation. Except for matters set forth on Schedule 6.1(p) hereto,
neither Seller, nor the FBO, are a party to (and Seller has no Knowledge that
Seller or the FBO are threatened to become a party to) any legal or
governmental actions, claims, suits, administrative or other proceedings or
investigations before or by any governmental department, commission, board
regulatory authority, bureau or agency, whether foreign, federal, state or
municipal, or any court, arbitrator or grand jury which would (i) prevent or
materially interfere with the consummation of the transactions contemplated by
this Agreement, or (ii) which, individually or in the aggregate, if decided
adversely to Seller, would impair or interfere in any material respect with
the ownership of the Purchased Assets by Buyer or operation by Buyer of
the FBO.
(q) Eminent Domain or Other Proceedings. Seller has received no written
notice of any initiated or pending condemnation or eminent domain proceedings,
or contemplated sales in lieu thereof, and has no Knowledge of any threatened
proceedings involving a partial or total taking of the Purchased Assets or
otherwise affecting the FBO.
(r) Properties. Except as set forth on Schedule 6.1(r) hereto, on the
Closing Date, Seller shall have good and marketable title to all of the
Purchased Assets, free and clear of any and all liens, security interests,
mortgages, pledges, claims, options, leases, imperfections of title, building
use restrictions, reservations, limitations, easements, or other encumbrances
or rights of third parties or imposed by statute or regulation or governmental
decree or order, except only for (i) liens for current taxes which are not
delinquent and other constitutional or statutory inchoate liens; (ii) such
liens and other imperfections of title as do not materially detract from the
value or impair the use of the Purchased Assets; and (iii) claims based on or
included in the Assumed Obligations (the excepted items referenced in (i),
(ii) and (iii) of this Section 6.1(r) being herein referred to, collectively,
as the "Permitted Encumbrances"). The fixed assets comprising a part of the
Purchased Assets are structurally sound, in normal operating condition and
repair, and sufficient and adequate to carry on the business conducted at the
FBO as presently conducted and meet in all material respects applicable
contractual and federal, state, and local governmental, statutory, regulatory
and other requirements.
(s) Insurance. Schedule 6.1(s) hereto sets forth a true, complete and
correct list of all policies of fire and liability coverage, and other forms
of insurance maintained by or for Seller or with respect to the Purchased
Assets and the FBO as of the date of execution of this Agreement. All such
policies are in full force and effect, the premiums therefor have been fully
paid for periods through the Closing Date and Seller has received no notice
of intent to cancel, reduce or not renew such policies.
(t) Presence of Hazardous Substances. Except as set forth on Schedule
6.1(t) hereto, otherwise disclosed in Buyer's environmental audit or as may be
lawfully present, to Seller's Knowledge no Hazardous Substances are present or
stored at the FBO, and the substances, chemicals, fuels and lubricants
described on Schedule 6.1(t) are stored in the containers in which they were
delivered to Seller or otherwise in material compliance with applicable law
and regulations.
(u) Environmental Claims. Except as otherwise disclosed in Buyer's
environmental audit, there are no Environmental Claims pending, nor to the
Seller's Knowledge is there any basis for the assertion of an Environmental
Claim, in any manner connected with the operation of the FBO or because of
prior use of the property constituting the Leasehold Estate.
(v) Disclosure. No representation, warranty, undertaking or agreement
of Seller made under this Agreement and no statement, certificate, exhibit,
schedule, list, or other document furnished or to be furnished to Buyer
pursuant to this Agreement or in connection with the transactions
contemplated hereby contains any untrue statement of a material fact, or omits
a material fact necessary to make the statements contained therein not
misleading.
6.2. Representations and Warranties of Buyer. Buyer hereby represents
and warrants to Seller that:
(a) Due Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the state of Texas, is
qualified to do business in all states where the nature of its business
requires it to be so qualified, and has all requisite corporate power and
authority to enter into, perform and carry out all of its duties and
obligations in connection with the transactions contemplated by this Agreement.
(b) Due Authorization; Binding Effect. The execution, delivery and
performance of this Agreement and the consummation of the transactions on the
part of Buyer contemplated hereunder have been duly authorized by all
necessary corporate action on the part of Buyer. This Agreement, and the
other documents to be executed and delivered by Buyer pursuant hereto,
constitute the legal, valid and binding obligations of Buyer, enforceable in
accordance with their terms.
(c) Notices and Approvals; No Violation of Agreements. Except as set
forth on Schedule 6.2(c) hereto: (i) no notice to, or approval or consent of,
any court or governmental authority or other person or entity is required in
connection with the execution, delivery and performance of this Agreement by
Buyer; and (ii) neither the execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor compliance by Buyer
with any of the provisions hereof, will (A) conflict with any provision of
Buyer's articles of incorporation or bylaws, or (B) violate, conflict with,
result in a breach of or constitute a default under or pursuant to any
statute, agreement, judicial or administrative order, injunction, award,
judgment or decree to which Buyer is a party, or by which it is bound, which
violation, conflict, breach or default would have a material adverse effect on
the assets, business or financial condition of Buyer.
(d) Litigation. Except for the matters set forth on Schedule 6.2(d)
hereto, on the date hereof Buyer is not a party to any legal or governmental
actions, claims, suits, administrative or other proceedings or investigations
before or by any governmental department, commission, board, regulatory
authority, bureau or agency, whether foreign, federal, state or municipal or
any court arbitrator or grand jury which would materially interfere with the
consummation of the transactions contemplated by this Agreement and to Buyer's
knowledge, no such proceedings are threatened or contemplated by any
governmental authority or any other person or entity.
(e) Disclosure. No representation, warranty, undertaking or agreement
of Buyer made under this Agreement and no statement, certificate, exhibit,
schedule, list, or other document furnished or to be furnished to Seller
pursuant to this Agreement or in connection with the transactions contemplated
hereby 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 therein not misleading.
6.3. Representations and Warranties of Seller and Buyer as of the Closing.
The representations and warranties of Seller and Buyer contained in Sections
6.1 and 6.2 of this Agreement shall be true and correct in all material
aspects at the Closing as though such representations and warranties were made
at such time.
ARTICLE VII
Conditions Precedent to Closing
7.1. Buyer's Conditions. The obligations of Buyer to purchase the FBO
and the Purchased Assets and to make payment of the Purchase Price for the
FBO and the Purchased Assets at the Closing are subject only to:
(a) Compliance with Terms and Conditions. All terms, covenants,
agreements and conditions of this Agreement to be complied with and performed
by Seller on or prior to the Closing shall have been complied with and
performed in all material respects, and all of the representations and
warranties of Seller contained in Section 6.1 hereof shall be true and correct
in all material respects on the Closing Date as if made on and as of such
date, and Seller shall have delivered to Buyer a certificate, executed by
Chief Executive Officer and its Chief Financial Officer, dated as of the
Closing Date, to that effect.
(b) Consents Received. All third parties, including but not limited to
the Authority, and any other governmental units or authorities, required to
consent to and/or approve the transactions herein described including, without
limitation, consent to the assignment of the FBO Leases, the FBO Subleases, or
any other leases, and the Contracts, to the extent required by a particular
contract, and any other required consents, approvals and/or waivers shall have
granted such consent, approval, and/or waiver in writing at or prior to the
Closing.
(c) Consent to Assignment. Buyer and the Authority shall have entered
into or agreed to enter into a consent to the assignment to Buyer of the FBO
Leases.
(d) Delivery of Documents. Seller shall have delivered to Buyer the
instruments, documents, certificates and other matters described in
Section 12.1 hereof at or prior to Closing.
(e) Permits and Licenses. The permits and licenses listed on Schedule
2.1(e) required for Buyer to operate the FBO shall have been assigned to
Buyer and such assignments shall have been received at or prior to the Closing.
(f) Absence of Litigation. There shall be no investigation, action,
suit, or pending or threatened litigation or legal proceedings, brought by a
third party, seeking to enjoin the consummation of the transaction
contemplated herein, or which seeks to restrain, prohibit or otherwise
challenge or interfere with the consummation of the transactions contemplated
hereby, or which is capable of having a materially adverse effect on the FBO,
the Purchased Assets or Buyer's operation of the FBO using the Purchased
Assets.
(g) Environmental Matters. Buyer shall have received such environmental
audits and other assurances that it may reasonably require and in form and
substance acceptable to Buyer that the FBO and the Purchased Assets are in
compliance in all material respects with all applicable environmental laws and
do not contain any Hazardous Substances in violation of applicable law, or
assurances reasonably acceptable to Buyer that appropriate remediation will be
accomplished in a manner which is reasonably acceptable to Buyer.
(h) Title Evidence. Buyer, at its expense, shall have received an
appropriate policy of leasehold title insurance, assuring that, upon the
Closing, the only entity having an interest in the FBO and the Purchased
Assets other than the Buyer is the Authority.
(i) Opinion of Counsel. Buyer shall have received the favorable opinion
of Miller & Martin LLP, counsel to Seller, which shall be in the form of
Exhibit 2 hereto.
(j) No Material Adverse Change. There shall have been no materially
adverse change since the date of this Agreement in the financial condition,
results of operation, properties, Purchased Assets, liabilities to be assumed
or the business of the FBO.
(k) Covenants Not To Compete. The Seller and the Covenanting
Shareholder shall have executed and delivered the Covenants Not To Compete.
7.2. Seller's Conditions. The obligation of Seller to deliver the
Purchased Assets to Buyer at the Closing is subject only to:
(a) Compliance with Terms and Conditions. All terms, covenants,
agreements and conditions of this Agreement to be complied with and performed
by Buyer on or prior to the Closing shall have been complied with and
performed in all material respects, and all of the representations and
warranties of Buyer contained in Section 6.2 hereof shall be true and correct
in all material respects on the Closing Date as if made on and as of such
date, and Buyer shall have delivered to Seller a certificate, executed by its
Chief Executive Officer, President, or a Vice President of Buyer, dated as of
the Closing Date, to that effect.
(b) Consents Received. All third parties, including but not limited to
the Authority, and any other governmental units or required to consent to
and/or approve the transactions herein described including, without
limitation, consent to the assignment of the FBO Leases or any other leases,
and the Contracts, to the extent required by a particular Contract, and any
other required consents, approvals and/or waivers, shall have granted such
consent, approval, and/or waiver in writing at or prior to the Closing.
(c) Delivery of Documents. Buyer shall have delivered to Seller the
instruments, documents, certificates and other matters described in
Section 12.2 hereof.
(d) Absence of Litigation. There shall be no pending or threatened
litigation or legal proceedings, brought by a third party, seeking to enjoin
the consummation of the transaction contemplated hereby, capable of having a
materially adverse effect on the FBO, the Purchased Assets or Buyer's
operation of the FBO using the Purchased Assets.
(e) Opinion of Counsel. Seller shall have received the favorable opinion
of Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., counsel for Buyer,
which shall be in the form of Exhibit 3 hereto.
ARTICLE VIII
Conduct of Business Pending Closing
8.1. Seller's Covenants. Seller covenants and agrees that, after the
execution hereof and prior to the Closing (unless Buyer consents in writing
otherwise):
(a) Operation in Ordinary Course. Seller will operate the FBO in the
ordinary course and will use all reasonable efforts to preserve intact the
present business operations of the FBO and the relationships with the
Authority, employees, suppliers and customers at the FBO.
(b) Customary Maintenance and Repairs. Seller will make such repairs and
replacements and perform such maintenance operations as are necessary to
maintain and keep the Purchased Assets in substantially the same repair,
working order and condition as the Purchased Assets are in on the date hereof
(reasonable wear and tear excepted). Except as otherwise set forth in this
Agreement, Seller will not commit to make any capital expenditure relating to
the Purchased Assets which would be required to be paid or assumed by Buyer
after the Closing.
(c) No Sales Out of Ordinary Course. Seller will not voluntarily sell
or otherwise dispose of (i) any of the Leasehold Estate; (ii) except in the
ordinary course of business which will not in the aggregate exceed Thirty
Thousand Dollars ($30,000.00), any of the other Purchased Assets.
(d) Maintenance of Insurance. Seller will maintain in full force and
effect the existing insurance covering the FBO and the Purchased Assets.
(e) No Termination or Modification of Contracts. Seller will not
terminate (other than for cause) or waive any material rights under any
Contract to be assigned to and assumed by Buyer hereunder, nor shall Seller
modify or exercise any option under any such Contract.
(f) COBRA. Seller shall comply with the applicable provisions of the
Consolidated Omnibus Budget Reconciliation Act of 1985 in connection with the
termination of the employment of any persons as a result of or as a
consequence of the transactions contemplated by this Agreement.
(g) Update of Schedules. Seller will update any and all exhibits and
schedules accompanying this Agreement upon any material change(s) in the
information contained therein, so that all exhibits and schedules shall
reflect the most current information as of the date of Closing.
(h) Access to Information and Documents. Seller will (i) afford to
Buyer and its representatives reasonable access during normal business hours
and as reasonably requested at other times, to tax returns, books and records
and to Employees of Seller and to Seller's offices, plants and properties,
(ii) permit Buyer and its accounting representatives to inspect Seller's
accountants' work papers and other records relating to the business and
operations of Seller and the FBO, (iii) furnish or cause to be furnished to
Buyer such additional financial and operating data and other information
regarding the assets, properties, goodwill and business included in the FBO
and the Purchased Assets as Buyer from time to time shall reasonably request
and (iv) consult and upon mutual consent cause the Employees to consult with
Buyer regarding all significant developments, transactions and proposals
relating to Seller in connection with the FBO's business and operations.
8.2. Cooperation. Each party shall make or file all required
notifications and use all reasonable efforts to obtain all consents,
approvals, permits, licenses and authorizations which must be obtained,
and shall fulfill all conditions which must be fulfilled, by such party in
order to consummate the transactions herein contemplated. Each party shall
render to the other party its full and complete cooperation in giving such
notices or obtaining such consents, approvals and authorizations, and shall
promptly notify the other party upon receiving oral or written communications
concerning such consents, approvals and authorizations and furnish a copy of
such written communication to the other party. Each party covenants and
agrees promptly to furnish to the other all information and data in the
furnishing party's possession requested in writing by the requesting party
which is reasonable and necessary in order to assist the requesting party to
give the necessary notices or secure any permits, licenses and approvals
required as contemplated by this Agreement.
ARTICLE IX
Notice of Litigation
Each party covenants and agrees promptly to notify the other of any claim,
action, suit, proceeding or third party investigation which is commenced or
threatened and becomes known to either of them after the date of this
Agreement and on or prior to the Closing relating to or affecting the FBO
or the Purchased Assets or which challenges in any manner the transactions
contemplated by this Agreement.
ARTICLE X
Risk of Loss
10.1. Fire or Other Casualty. In the event that, prior to the Closing,
there is Material Damage to the Purchased Assets, Buyer shall have the right
to terminate this Agreement by reason thereof. For the purpose of this Section
10.1, the term "Material Damage" shall mean damage to Purchased Assets having
an estimated cost of repair in excess of One Hundred Fifty Thousand Dollars
($150,000), such determination to be made by the adjuster for the insurance
carrier or carriers providing the Fire and Casualty coverage for the damaged
Purchased Assets. In the event of damage to Purchased Assets having an
estimated cost of repair in an amount less than One Hundred Fifty Thousand
Dollars ($150,000) ("Non-material Damage"), Buyer shall not have the right to
terminate this Agreement, but, in such event, the Purchase Price shall be
reduced by the amount of such Non-material Damage, and Seller shall retain
all rights to receive any and all insurance proceeds or payments with respect
to any such damage or destruction, and the sale of the Purchased Assets shall
otherwise be consummated as though such destruction or damage had not occurred.
10.2. Condemnation. In the event that Seller is notified of the intent
of any municipal authority or body to commence condemnation of all or any part
of the Leasehold Estate prior to the Closing Date, Buyer shall have the right
to terminate this Agreement by reason thereof.
10.3. Leasehold Estate. Notwithstanding any provision contained in
Sections 10.1 and 10.2 hereof to the contrary, if an event of loss,
destruction or damage occurs on or with respect to the Leasehold Estate (and
other property leased thereunder, if any), Seller before the Closing shall
take such steps as are required to comply with the requirements imposed on the
lessee under the FBO Lease.
ARTICLE XI
Termination; Remedies
11.1. Termination. Subject to the provisions of Section 11.2 hereof,
this Agreement may be terminated:
(a) On the mutual written agreement of Seller and Buyer;
(b) On Seller's notice to Buyer at any time on or prior to the Closing
(i) if any of the representations, warranties, covenants or other agreements
of Buyer contained herein prove to be false or shall have been breached in
any material respect, (ii) if Buyer shall fail to deliver the Purchase Price
at or before the Closing; or (iii) if Buyer otherwise commits a material
default under the terms of this Agreement.
(c) On Buyer's notice to Seller at any time on or prior to the Closing
if (i) any of the representations, warranties, covenants or other agreements
of Seller contained herein prove to be false or shall have been breached in
any material respect, (ii) if Seller shall fail to deliver the documents
required hereunder at or before the Closing, or (iii) for any of the reasons
allowing Buyer to terminate pursuant to Sections 10.1 or 10.2 hereof, or
(iv) all of Buyer's conditions to the Closing set forth in Section 7.1 hereof
have not been met or waived by Buyer.
(d) On notice of either party to the other if the Closing does not
occur for any other reason on or before October 31, 2002 (or such later date
as the parties hereto may mutually agree in writing).
If this Agreement is terminated for any of the foregoing reasons (other than
termination by the Seller pursuant to Section 11.1(b) hereof), the Total
Escrow Fund is to be returned by the Escrow Agent to Buyer.
11.2. Rights and Remedies on Termination. If this Agreement terminates
on account of the breach of either party, any additional obligations of the
non-breaching party shall cease, and such non-breaching party shall have the
right to exercise all rights and remedies available both at law and in equity.
Upon termination for any other reason, neither party hereto shall have any
liabilities to the other party except as may be provided for herein.
ARTICLE XII
Deliveries at Closing
12.1. Deliveries by Seller. At the Closing, Seller shall deliver or
cause to be delivered to Buyer, in form and substance satisfactory to Buyer,
the following:
(a) Bill of Sale, Assignment and Assumption Agreement. A confirmatory
bill of sale, assignment and assumption agreement for the Purchased Assets.
(b) Delivery of Contracts. The Contracts, and the books and records
relating to the FBO except to the extent previously delivered to Buyer or
located at the FBO.
(c) Miscellaneous. Such other agreements, notices, certificates or
other instruments as are required to be delivered by Seller hereunder or which
Buyer reasonably requests.
(d) Board Resolution. A certified copy of a resolution of Seller's
Board of Directors approving the execution and delivery of this Agreement and
consummation of the transactions herein contemplated.
(e) Assignment of FBO Leases. The executed assignments of Seller to
the FBO Leases and the consents to such assignments of the Authority required
by this Agreement.
(f) Covenants Not To Compete. The executed Covenants Not To Compete.
12.2. Deliveries by Buyer. At the Closing, Buyer shall deliver or cause
to be delivered to Seller, in form and substance satisfactory to Seller, the
following:
(a) Purchase Price. The Purchase Price pursuant to Section 3.3 hereof.
(b) Miscellaneous. Such other agreements, notices, certificates and
other instruments as are required to be delivered by Buyer hereunder or which
Seller reasonably requests.
(c) Board Resolution. A certified copy of a resolution of Buyer's
Board of Directors approving the execution and delivery of this Agreement
and consummation of the transactions herein contemplated.
12.3. Possession. Possession of the Purchased Assets shall be delivered
to Buyer as of the Closing Date.
ARTICLE XIII
Post-Closing Documents and Agreements
13.1. Further Assurances. Each party shall, at the reasonable request
of the other, at any time and from time to time following the Closing, execute
and deliver to the requesting party all such further instruments as may be
reasonably necessary or appropriate in order to more effectively (a) assign,
transfer and convey to Buyer, or to perfect or record Buyer's title to or
interest in the Purchased Assets, (b) evidence and confirm the assumption by
Buyer of the Assumed Obligations, or (c) otherwise confirm or carry out the
provisions of this Agreement.
13.2. Cooperation; Retention of Records. Each party acknowledges that
the other may be a party to legal proceedings following the Closing which
relate to the FBO and covenants to maintain and make available to the other
party, on reasonable request and at the expense of the requesting party,
(a) any and all files and business records in its custody or control relating
(b) to the FBO or the Purchased Assets, and (b) any and all individuals
(c) employed by the other party hereto whose testimony or knowledge, in the
(d) reasonable opinion of the other party's counsel, is necessary or useful to
(e) it with respect to the issues involved in such litigation or preparation
(f)
(g) therefor.
13.3 Collection of Receivables. Buyer will provide Seller with
reasonable assistance in the collection of receivables retained by Seller.
Collections from customers of the FBO shall be first applied to the oldest
outstanding invoices.
ARTICLE XIV
Brokerage Fees
Each of the parties hereto agrees to indemnify and hold and save the other
party harmless from any brokerage or finder's fees to any person, firm or
corporation in connection with the transactions contemplated by this
Agreement (including reasonable attorneys' fees and other expenses incurred
in connection with any such claim) which may be due or asserted by reason of
any agreement or purported agreement by the indemnifying party or any of its
directors, officers, or agents to pay such fees. This Article shall survive
the Closing.
ARTICLE XV
Survival of Representations and Warranties; Indemnification
15.1. Seller's General Indemnity. Seller covenants and agrees to
indemnify, release, defend and save and hold Buyer harmless at all times
after the Closing with respect to any and all claims, liabilities, loss,
cost, damage and expense, including reasonable attorneys' fees and expenses
(collectively, "Damages") arising from, by reason of or in connection with
(h) its operations and conduct of its business at the FBO prior to Closing,
(i) (ii) any environmental claim arising out of or resulting from the
(j) operation of the FBO prior to the Closing Date or (iii) any untruth,
(k) breach or inaccuracy in any material respect of any representation,
(l) warranty, covenant or other agreement; (a) on the part of Seller under
(m) Section 6.1 or 8.1 of this Agreement, or (b) in any certificate or other
(n) instrument provided by Seller pursuant to this Agreement.
15.2. Buyer's Indemnity. Buyer covenants and agrees to release, defend,
indemnify, save and hold Seller harmless at all times after the Closing with
respect to any and all Damages arising from, by reason of or in connection
with (i) its operation and conduct of its business at the FBO after the
Closing, (ii) any environmental claim arising out of or resulting from its
operation of the FBO on or after the Closing Date (iii) any untruth, breach
or inaccuracy in any material respect of any representation or warranty (a)
on the part of Buyer under Section 6.2 of this Agreement, or (b) in any
certificate or other instrument provided for in this Agreement, and (iv) the
Assumed Obligations.
15.3 Guaranty of Parent. In the event of the dissolution and
liquidation of Seller or if Seller is unable to satisfy any of its indemnity
obligations arising in this Article XV, then The Krystal Company, as the
parent corporation of Seller (the "Parent"), guarantees the payment of such
indemnity obligations of Seller.
15.4. Survival of Representations, Etc. The representations, warranties,
covenants, and agreements and indemnities of Seller and Buyer contained herein
shall survive the consummation of the transactions contemplated hereby and the
Closing Date. Except as provided in this sentence, all such representations,
warranties, covenants, agreement and indemnities and all claims and causes of
action with respect thereto (other than the provisions of Section 6.1(a), (b)
and (f) and Sections 7.1(a) and (b) and subsections (i) and (iii) of Section
15.2 and all claims and causes of action with respect thereto) shall terminate
upon the expiration of three (3) years after the Closing Date. The
representations and warranties in Section 6.1(a) and (b) and Sections 7.1(a)
and (b) and subsections (i) and (iii) of the Buyer's Indemnity of Section 15.2
shall not terminate. The representations and warranties of Section 6.1(f)
shall survive until the expiration of the applicable statute of limitations
(with extensions) with respect to the matter addressed in such section. The
termination of the representations and warranties, covenants, agreements and
indemnities provided herein shall not affect the rights of a party in respect
to any Claim (hereafter defined) made by such party in a writing received by
the other party prior to the expiration of the applicable survival period
provided herein.
15.5. Procedure for Indemnification. Notwithstanding any other
provision of this Articles XV, the indemnifying party shall not have any
indemnification obligations for Damages under Sections 15.1 or 15.2 unless
and to the extent the total amount of all such Damages exceeds $30,000, in
which case the indemnifying party will be liable to the indemnified party for
all such amounts, including the first $30,000. The amount of any Damages for
which indemnification is provided under Sections 15.1 and 15.2 shall be net
of (i) any amounts recovered by the indemnified party pursuant to any
indemnification by or indemnification agreement with any third party and
(ii) any insurance proceeds or other funds received as an offset against such
Damages. Promptly after receipt by an indemnified party under Sections 15.1
or 15.2 of notice of the commencement of any action in or before any court or
administrative agency or of facts which give rise to a claim for
indemnification under Sections 15.1 or 15.2 (collectively, a "Claim") against
it, such indemnified party shall, if a claim in respect thereof is to be made
against an indemnifying party under such Section, give notice in writing to
the indemnifying party of the commencement thereof describing the Damages, the
amount or estimated amount thereof, and the method of computation of such
Damages, all with reasonable particularity and containing a reference to the
provisions of this Agreement in respect of which such Damages shall have
occurred, but the failure so to notify the indemnifying party shall not
relieve it of any liability that it may have to any indemnified party except
to the extent the defense of such action is prejudiced thereby. In case any
such Claim shall be brought against an indemnified party and if notice shall
be given to the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish (unless the indemnifying party is also a party to
such Claim and the indemnified party determines in good faith that joint
representation would be inappropriate) to assume the defense thereof with
counsel satisfactory to such indemnified party and, after notice from the
indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party shall not be liable to such
indemnified party under such Sections 15.1 or 15.2, as the case may be, for
any fees of other counsel or any other expenses with respect to the defense of
such Claim, in each case subsequently incurred by such indemnified party in
connection with the defense thereof, other than reasonable costs of
investigation. If an indemnifying party assumes the defense of such a Claim,
(a) no compromise or settlement thereof may be effected by the indemnifying
party without the indemnified party's consent unless (i) there is no finding
of admission of any violation of legal requirements applicable to the
operation of a fixed base operation under federal, state or local laws and/or
regulations or any effect on any other claims that may be made against the
indemnified party and (ii) the sole relief provided is monetary damages that
are paid in full by the indemnifying party and (b) the indemnifying party
shall have no liability with respect to any compromise or settlement thereof
effected without its consent. If notice is given to an indemnifying party of
the commencement of any Claim and it does not, within fifteen (15) days after
the indemnified party's notice is given, give notice to the indemnified party
of its election to assume the defense thereof, the indemnifying party shall be
bound by any determination made in such Claim or any compromise or settlement
thereof effected by the indemnified party.
ARTICLE XVI
Notices
All notices, consents, waivers or other communications which are required or
permitted hereunder shall be sufficient if given in writing and delivered
personally, by confirmed telefacsimile, or by prepaid overnight delivery
service for next day delivery, proof of delivery required:
(a) to Buyer, addressed as follows:
Truman Arnold Companies
2900 St. Michael Drive, Fifth Floor
Texarkana, Texas 75504
Attn: James H. Day,
Administrative Vice President
Fax: (903) 334-8987
with a copy to:
John S. Selig, Esq.
Mitchell, Williams, Selig,
Gates & Woodyard, P.L.L.C.
425 West Capitol Avenue, Suite 1800
Little Rock, Arkansas 72201
Fax: (501) 688-8807
(b) to Seller and Parent as addressed as follows:
The Krystal Company
One Union Square
Chattanooga, Tennessee 37402
Attn: Larry D. Bentley
Vice President and Chief Financial Officer
Fax: (423) 757-5773
with a required copy to:
Hugh F. Sharber, Esq.
Miller & Martin LLP
Volunteer Bldg. Suite 1000
832 Georgia Avenue
Chattanooga, Tennessee 37402
Fax: (432) 785-8480
(or such other address of Buyer or Seller as shall be set forth in a notice
given in the same manner). All such notices shall be deemed given on the date
personally delivered or the date the telefacsimile is confirmed or the day
following delivery to the overnight delivery service.
ARTICLE XVII
Miscellaneous
17.1. Governing Law. This shall be interpreted, construed and governed
in accordance with the laws of the State of Tennessee, including its statutes
of limitation but without regard to its rules governing conflict of laws.
17.2. Assignment; Binding Effect. Buyer may not assign, transfer or
convey any of its rights herein or hereunder to any person or entity
whatsoever other than one of its Affiliates without the prior written consent
of Seller, which consent shall not be unreasonably withheld. This Agreement
shall be binding upon the parties hereto and their successors and permitted
assigns.
17.3. Partial Invalidity. If any term, provision, covenant or condition
of this Agreement, or any application thereof, should be held by a court of
competent jurisdiction to be invalid, void or unenforceable, then the
remaining terms, provisions, covenants and conditions of this Agreement shall
continue in full force and effect and shall in no way be affected, impaired or
invalidated.
17.4. Time of Essence. Time is of the essence of this Agreement and all
of the terms, provisions, covenants and conditions hereof.
17.5. Captions. The captions appearing at the commencement of the
Articles and Sections hereof are descriptive only and for convenience in
reference to this Agreement and in no way whatsoever define, limit or
describe the scope or intent of this Agreement.
17.6. Pronouns. Masculine or feminine pronouns shall be substituted
for the neuter form and vice versa in any place or places herein in which
the context requires such substitution or substitutions.
17.7. Entire Agreement; Amendment; Waiver. Except for the
Confidentiality Agreement dated August 27, 2002, which shall remain binding
and in effect, this Agreement and any other documents executed concurrently
herewith constitutes the entire agreement between the parties pertaining to
he subject matter contained herein and supersedes all prior agreements,
informational memoranda, representations and understandings of the parties.
No amendment or modification of this Agreement shall be binding unless
executed in writing by the parties. Except as may be otherwise provided in
this Agreement, no waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or not
similar, nor shall any waiver constitute a continuing waiver, and no waiver
shall be binding unless evidenced by an instrument in writing executed by the
party against whom the waiver is sought to be enforced.
17.8. No Third Party Beneficiary. This Agreement is for the benefit
of, and may be enforced only by, Seller and Buyer and their respective
successors and permitted assigns, and is not for the benefit of, and may not
be enforced by, any third party.
17.9. Counterparts. This Agreement may be executed in any number of
counterparts, with each such counterpart being deemed to be an original
instrument.
17.10 Attorneys' Fees. If any action is brought by any party thereto
concerning a breach of any of the provision of this Agreement, the
prevailing party shall be entitled to recover from the other party the
reasonable attorneys' fees and expenses of the prevailing party incurred
in connection therewith.
[Signature on the following page]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the 17th day of October, 2002.
SELLER:
KRYSTAL AVIATION COMPANY
a Tennessee Corporation
By:
------------------------------------
Larry D. Bentley
Vice President and Chief Financial Officer
BUYER:
TRUMAN ARNOLD COMPANIES,
a Texas corporation
By:
-----------------------------------
Greg Arnold,
President and Chief Operating Officer
Solely for the purposes described in Sections 3.3(d)
and 15.3 of the Agreement, the undersigned joins in
this Agreement:
THE KRYSTAL COMPANY
Tennessee Corporation
By:
--------------------------------------
Larry D. Bentley
Vice President and Chief Financial Officer
List of Exhibits and Schedules
Exhibit 1 Seller's Financial Statements (see Section 6.1(c))
Exhibit 2 Form of Seller's Counsel's Opinion Letter
Exhibit 3 Form of Buyer's Counsel's Opinion Letter
Schedule 2.1(c) Asset Schedule
All Assets and Equipment Related to the
Operation of the FBO Location
Schedule 2.1(e) All assignable permits and licenses used or
required at the FBO
Schedule 2.2(g) Specific Excluded Assets
Schedule 3.1 Allocation of Purchase Price
Schedule 5.1 All Contracts
Schedule 6.1(c) Exceptions to Balance Sheets shown on Financial
Statements
Schedule 6.1(e)(i) List of all employees, including name, title,
position, salary, dates of hire, whether employee
is on leave under the Family Medical Leave Act or
similar state law and sex
Schedule 6.1(e)(ii) All pending, threatened or anticipated strikes,
work stoppage, labor action, certification or
decertification question, grievance procedure,
arbitration or collective bargaining agreement
Schedule 6.1(g) Medical and Dental Benefit Plans, ERISA plans,
Employee Pension Benefit Plans currently in effect
Schedule 6.1(h) Since September 29, 2002 any material adverse
change in assets or properties
Schedule 6.1(j) Franchises, licenses and permits, etc.
Schedule 6.1(k) List of 10 largest customers for fuel in terms of
dollar volume for the year ended December 30, 2001
and the eight months ended September 29, 2002
Schedule 6.1(l) Required notices and approvals; no violation of
agreements
Schedule 6.1(n) Compliance with laws
Schedule 6.1(p Litigation
Schedule 6.1(r) Exceptions - good and marketable title to all
properties
Schedule 6.1(s) Fire and liability coverage in place
Schedule 6.1(t) Hazardous Substances
Schedule 6.2(c) Required notices and approvals; no violation of
agreements
Schedule 6.2(d) Litigation
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorize.
November 1, 2002 THE KRYSTAL COMPANY
By: /s/ Larry D. Bentley
----------------------------
Larry D. Bentley
Vice President and Chief
Financial Officer