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EXHIBIT 10.1
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STOCK PURCHASE AGREEMENT
among
IMASCO HOLDINGS, INC.,
HARDEE'S FOOD SYSTEMS, INC.
and
CKE RESTAURANTS, INC.
Dated as of April 27, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I
Section 1.1 Specific Definitions.......................................................1
Section 1.2 Other Terms................................................................8
Section 1.3 Other Definitional Provisions..............................................8
ARTICLE II
Purchase and Sale of Shares
Section 2.1 Purchase and Sale of Shares................................................8
Section 2.2 Note Amount................................................................8
Section 2.3 Closing; Delivery and Payment..............................................9
Section 2.4 Post-Closing Adjustment...................................................10
ARTICLE III
Representations and Warranties of Seller
Section 3.1 Organization and Authority of Seller......................................12
Section 3.2 Organization, Authority and Qualification of the Company..................13
Section 3.3 Capitalization of the Company.............................................14
Section 3.4 Subsidiaries of the Company...............................................15
Section 3.5 Financial Statements......................................................15
Section 3.6 Absence of Certain Changes or Events......................................16
Section 3.7 Title to Properties; Absence of Liens and Encumbrances, Etc...............17
Section 3.8 Litigation................................................................18
Section 3.9 Compliance with Law.......................................................18
Section 3.10 Contracts.................................................................18
Section 3.11 Consents and Approvals....................................................19
Section 3.12 Tax Matters...............................................................20
Section 3.13 Intellectual Property.....................................................20
Section 3.14 Labor Matters.............................................................21
Section 3.15 Employee Benefits.........................................................21
Section 3.16 Environmental Matters.....................................................23
Section 3.17 Insurance.................................................................24
Section 3.18 Brokers and Finders.......................................................24
Section 3.19 Securities Act............................................................24
Section 3.20 No Other Representations or Warranties....................................25
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ARTICLE IV
Representations and Warranties of Buyer
Section 4.1 Organization and Authority of Buyer.......................................25
Section 4.2 Brokers and Finders.......................................................26
Section 4.3 Financial Capability......................................................26
Section 4.4 Securities Act............................................................26
Section 4.5 Consents and Approvals....................................................26
Section 4.6 Commitment Letters........................................................27
Section 4.7 Validity of Note and Authorization of Shares..............................27
Section 4.8 Registration Rights Agreement.............................................27
Section 4.9 No Other Representations or Warranties....................................27
ARTICLE V
Tax Matters
Section 5.1 Section 338(h)(10)........................................................28
Section 5.2 Liability for Taxes and Related Matters...................................28
Section 5.3 Transfer Taxes............................................................31
Section 5.4 Information to be Provided by Buyer.......................................31
Section 5.5 Assistance and Cooperation................................................32
Section 5.6 Tax Sharing Agreements....................................................32
Section 5.7 Survival of Obligations...................................................32
ARTICLE VI
Certain Covenants and
Agreements of Seller and Buyer
Section 6.1 Access and Information....................................................33
Section 6.2 Registrations, Filings and Consents.......................................34
Section 6.3 Conduct of Business.......................................................35
Section 6.4 Restructuring Transactions................................................36
Section 6.5 Certain Buyer and Seller Obligations and Agreements.......................37
Section 6.6 Employee Benefit Plans....................................................37
Section 6.7 Nominee to Board of Directors.............................................39
Section 6.8 Note and Buyer Common Stock...............................................40
Section 6.9 Supply Agreement and Distribution Agreement...............................40
Section 6.10 Financing.................................................................40
Section 6.11 Receivables of HED........................................................40
Section 6.12 Retention of Books and Records............................................41
Section 6.13 Closing Date Financial Statements.........................................41
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Section 6.14 Delivery of Corporate Minutes and Bank Signature Cards....................42
Section 6.15 Further Assurances........................................................42
ARTICLE VII
Conditions to Closing
Section 7.1 Conditions to Obligations of Buyer........................................42
Section 7.2 Conditions to Obligations of Seller.......................................43
Section 7.3 Conditions to Obligations of Buyer and Seller.............................44
ARTICLE VIII
Termination
Section 8.1 Termination...............................................................44
Section 8.2 Effect of Termination.....................................................45
ARTICLE IX
Survival And Indemnification
Section 9.1 Survival of Representations, Warranties, Covenants and Agreements;
Knowledge of Breach.......................................................45
Section 9.2 Indemnification by Buyer..................................................47
Section 9.3 Indemnification by Seller.................................................48
Section 9.4 Indemnification as Sole Remedy............................................49
Section 9.5 Method of Asserting Claims, Etc...........................................49
ARTICLE X
Miscellaneous
Section 10.1 Amendment and Waiver......................................................51
Section 10.2 Expenses..................................................................51
Section 10.3 Public Disclosure.........................................................51
Section 10.4 Assignment................................................................52
Section 10.5 Entire Agreement..........................................................52
Section 10.6 Fulfillment of Obligations................................................52
Section 10.7 Parties in Interest; No Third Party Beneficiaries.........................52
Section 10.8 Schedules.................................................................52
Section 10.9 Counterparts..............................................................53
Section 10.10 Section Headings.........................................................53
Section 10.11 Notices..................................................................53
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SECTION 10.12 GOVERNING LAW; SUBMISSION TO JURISDICTION; SELECTION OF FORUM...........54
Section 10.13 Severability............................................................56
SCHEDULES
Schedule 2.4 Post-Closing Adjustment
Schedule 3.4 Subsidiaries of the Company
Schedule 3.5 Financial Statements
Schedule 3.6 Certain Changes or Events
Schedule 3.7 Title to Properties; Liens, Encumbrances, Etc.
Schedule 3.8 Litigation
Schedule 3.9 Compliance With Law
Schedule 3.10 Contracts
Schedule 3.11 Consents and Approvals
Schedule 3.12 Tax Matters
Schedule 3.13 Intellectual Property
Schedule 3.14 Collective Bargaining Agreements
Schedule 3.15 Employee Benefits
Schedule 3.16 Environmental Matters
Schedule 3.17 Insurance Policies
Schedule 4.5 Consents and Approvals
Schedule 4.6 Commitment Letter
Schedule 6.3 Conduct of Business
Schedule 6.11 Receivables of HED
Schedule 7.1 Conditions to Obligations of Buyer
Schedule 9.1 Survival of Representations, Warranties,
Covenants and Agreements; Knowledge of Breach
ANNEXES
Annex 2.2 Form of Note
Annex 4.8 Form of Registration Rights Agreement
Annex 6.4(c) Form of Roy Rogers Agreement
Annex 6.9(a) Form of FFM Supply Agreement
Annex 6.9(b) Form of GVS Supply Agreement
Annex 6.9(c) Form of Distribution Agreement
Annex 7.2(b) Form of Opinion of Counsel of Buyer
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STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of April
27, 1997, among IMASCO HOLDINGS, INC., a Delaware corporation ("Seller"),
HARDEE'S FOOD SYSTEMS, INC., a North Carolina corporation (the "Company"), and
CKE RESTAURANTS, INC., a Delaware corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller owns all of the issued and outstanding shares
of capital stock of the Company;
WHEREAS, Seller desires to sell and transfer to Buyer, and
Buyer desires to purchase from Seller, all of the issued and outstanding shares
of capital stock of the Company, as more specifically provided herein; and
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and conditions
herein set forth, the par ties hereto agree as follows:
ARTICLE I
Section 1.1 Specific Definitions. As used in this Agreement,
the following terms shall have the meanings set forth or referenced below:
"Affiliate", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by or under common control with
such Person.
"Agreement" shall mean this Agreement and all Schedules
hereto.
"Airport Property" shall have the meaning set forth in
Section 6.4(d).
"Alex. Brown" shall have the meaning set forth in Section 4.2.
"Antitrust Division" shall mean the Antitrust Division of the
United States Department of Justice.
"Applicable Rate" shall mean the prime rate of Citibank, N.A.
on the Closing Date.
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"Assignee" shall have the meaning set forth in Section 6.11.
"Business Day" shall mean any day other than a Saturday, a
Sunday or a day on which banks in The City of New York are authorized or
obligated by law or executive order to close.
"Buyer" shall have the meaning set forth in the recitals.
"Buyer Common Stock" shall have the meaning set forth in
Section 4.7.
"Buyer Indemnified Parties" shall have the meaning set forth
in Section 9.3.
"Chosen Courts" shall have the meaning set forth in Section
10.12.
"Claim Notice" shall have the meaning set forth in Section
9.5.
"Closing" shall have the meaning set forth in Section 2.3(a).
"Closing Date" shall have the meaning set forth in Section
2.3(a).
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"Company" shall have the meaning set forth in the recitals.
"Company Plans" shall have the meaning set forth in Section
3.15.
"Confidentiality Agreement" shall have the meaning set forth
in Section 6.1(c).
"Contracts" shall have the meaning set forth in Section 3.1.
"CPA Firm" shall have the meaning set forth in Section 2.4(d).
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"Deductible" shall have the meaning set forth in Section
9.1(a).
"Distribution Agreement" shall have the meaning set forth in
Section 6.9.
"Encumbrances" shall have the meaning set forth in Section
3.3.
"Environmental Law" means any law, regulation, code, license,
permit, order, judgment, decree or injunction of the United States, any State or
political subdivision thereof (including any court thereof and any Governmental
Entity) relating primarily to the protection of the environment (including air,
water, soil and natural resources) or the use, storage, handling, release or
disposal of any hazardous or toxic substance as in effect on the date hereof.
"Equity Offering" shall mean the sale of equity securities
referred to in Section 6.10.
"ERISA" shall have the meaning set forth in Section 3.15.
"ERISA Affiliate" shall have the meaning set forth in Section
3.15.
"FFM" shall mean Fast Food Merchandisers, Inc., a Colorado
corporation.
"Financial Statements" shall have the meaning set forth in
Section 3.5.
"Franchise Offering Material" shall mean the Uniform Franchise
Offering Circular currently in use by the Company.
"FTC" shall mean the Federal Trade Commission.
"GAAP" shall mean United States generally accepted accounting
principles.
"Governmental Entity" shall mean any governmental or
regulatory authority, agency, commission, body or other governmental entity of
the United States of America or any State or political subdivision thereof.
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"Hardee's Division" shall mean, collectively, the Hardee's
Restaurant Division of the Company and HED.
"Hazardous Substance" means any substance listed, defined,
designated or classified as hazardous, toxic or radioactive under any applicable
Environmental Law, including petroleum and any derivative or by-products
thereof.
"HED" shall mean the restaurant equipment sales and leasing
business conducted by the Company under the name "Hardee's Equipment Division."
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indemnified Party" shall have the meaning set forth in
Section 9.3.
"Indemnifying Party" shall have the meaning set forth in
Section 9.5.
"Intellectual Property" shall mean trademarks, service marks,
brand names, certification marks, trade dress, assumed names, trade names and
other indications of origin, the goodwill associated with the foregoing and
registrations in the United States of, and applications in the United States to
register, the foregoing, including any extension, modification or renewal of any
such registration or application; inventions, discoveries and ideas, whether
patentable or not in the United States; patents, applications for patents
(including, without limitation, divisions, continuations, continuations in-part
and renewal applications), and any renewals, extensions or reissues thereof, in
the United States; non-public information, trade secrets and confidential
information and rights in the United States to limit the use or disclosure
thereof by any Person; writings and other works, whether copyrightable or not in
the United States; registrations or applications for registration of copyrights
in the United States, and any renewals or extensions thereof; any similar
intellectual property or proprietary rights; and any claims or causes of action
arising out of or related to any infringement or misappropriation of any of the
foregoing.
"IRS" shall mean the Internal Revenue Service.
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"Knowledge", with respect to any Person, shall mean the actual
knowledge of such Person, arising after due inquiry of such Person's senior
executive officers but without the conduct by such Person of any independent
investigation with respect to the facts or matters specified.
"Law" shall have the meaning set forth in Section 3.1.
"Leased Real Property" shall have the meaning set forth in
Section 3.7(a).
"Losses" shall have the meaning set forth in Section 9.2(a).
"Major Marks" shall have the meaning set forth in Section
3.13(b)(i).
"Material Adverse Effect" shall mean a material adverse effect
on the business, financial condition, properties, operations or results of
operations of the Restructured Business.
"Merrill Lynch" shall have the meaning set forth in Section
4.2.
"Morgan Stanley" shall have the meaning set forth in Section
3.18.
"Net Assets of the Restructured Business" shall mean the net
assets of the Restructured Business as determined in accordance with Annex 2.4.
"Note" shall have the meaning set forth in Section 2.2.
"Note Amount" shall have the meaning set forth in Section 2.2.
"Notice Period" shall have the meaning set forth in Section
9.5.
"Owned Real Property" shall have the meaning set forth in
Section 3.7(a).
"Pension Plan" shall have the meaning set forth in Section
3.15.
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"Permitted Encumbrances" shall have the meaning set forth in
Section 3.7(a).
"Person" means any individual, corporation, partnership, firm,
joint venture, association, joint-stock company, trust, unincorporated
organization or Governmental Entity.
"Post-Closing Adjustment" shall have the meaning set forth in
Section 2.4(e).
"Purchase Price" shall have the meaning set forth in Section
2.1.
"Receivables of HED" shall have the meaning set forth in
Section 6.11.
"Registration Rights Agreement" shall have the meaning set
forth in Section 4.8.
"Report" shall have the meaning set forth in Section 6.2.
"Resolution Period" shall have the meaning set forth in
Section 2.4(c).
"Restructured Business" shall mean the business of the Company
and its Subsidiaries, assuming and giving effect to the consummation of the
Restructuring Transactions.
"Restructured Business Entities" shall mean the Company and
those of its Subsidiaries that will comprise the Restructured Business.
"Restructuring Transactions" shall mean the transactions
described in Section 6.4.
"Retained Employee" shall have the meaning set forth in
Section 6.6(a).
"Retirement Plan" shall have the meaning set forth in Section
6.6(e).
"Roy Rogers Agreement" shall have the meaning set forth in
Section 6.4(c).
"Securities Act" shall mean the Securities Act of 1933, as
amended.
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"Seller" shall have the meaning set forth in the Preamble.
"Seller Indemnified Parties" shall have the meaning set forth
in Section 9.2(a).
"Seller's Group" shall mean any "affiliated group" (as defined
in Section 1504(a) of the Code without regard to the limitations contained in
Section 1504(b) of the Code) that includes Seller and the Company.
"Severance Benefits" shall have the meaning set forth in
Section 6.6(a).
"Shares" shall have the meaning set forth in Section 2.1.
"Statement of Net Assets" shall have the meaning set forth in
Section 2.4(a).
"Subsidiary" shall have the meaning set forth in Section 3.4.
"Supply Agreement" shall have the meaning set forth in
Section 6.9.
"Tax Package" shall have the meaning set forth in Section 5.4.
"Tax Returns" shall mean all federal, state, local or foreign
tax returns, tax reports, and declarations of estimated tax, including without
limitation consolidated federal income tax returns of Seller's Group.
"Taxes" shall mean all federal, state, local or foreign
income, gross receipts, windfall or excess profits, severance, property,
production, sales, use, license, excise, franchise, employment, withholding or
similar taxes, together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties.
"Third Party Claim Notice" shall have the meaning set forth
in Section 9.5.
"Unresolved Changes" shall have the meaning set forth in
Section 2.4(d).
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"WARN" shall mean the Worker Adjustment and Retraining
Notification Act.
Section 1.2 Other Terms. Other terms may be defined elsewhere
in the text of this Agreement and, unless otherwise indicated, shall have such
meaning indicated throughout this Agreement.
Section 1.3 Other Definitional Provisions. (a) The words
"hereof", "herein", and "hereunder" and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United
States Dollars.
ARTICLE II
Purchase and Sale of Shares
Section 2.1 Purchase and Sale of Shares. Subject to the terms
and conditions of this Agreement, Buyer agrees to purchase from Seller, and
Seller agrees to sell to Buyer, all of the issued and outstanding shares of
Common Stock, no par value (the "Shares"), of the Company for an aggregate
purchase price of $327,000,000 (the "Purchase Price").
Section 2.2 Note Amount. If the net proceeds of the equity
offering referred to in Section 7.1(c) are less than $150,000,000, Buyer may
satisfy in part its obligation pursuant to Section 2.1 to pay Seller the
Purchase Price by issuing to Seller a convertible promissory note to Seller in
the form of Annex 2.2 (the "Note") in a principal amount (such principal amount,
the "Note Amount") equal to the difference between $150,000,000.00 and the net
proceeds of such equity offering that have been received by the Company on or
before the Closing Date; provided that the Note Amount shall not exceed
$50,000,000.00. Buyer shall deliver to Seller a written notice specifying the
Note Amount not less than three (3) Business Days prior to the Closing Date.
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Section 2.3 Closing; Delivery and Payment.
(a) The delivery of the Shares and payment therefor (the
"Closing") shall take place at the offices of Sullivan & Cromwell, 125 Broad
Street, New York, New York 10004 at 10:00 A.M. local time, on June 30, 1997, or
at such other time and place as the parties hereto may mutually agree. The date
on which the Closing occurs is called the "Closing Date".
(b) At the Closing:
(i) Seller shall deliver to Buyer certificates
representing the Shares, duly endorsed and in form for transfer to
Buyer;
(ii) Buyer shall pay to Seller, by wire transfer, to
an account designated by Seller not less than two (2) Business Days
prior to the Closing, immediately available funds equivalent to (A) the
Purchase Price minus (B) the Note Amount; and
(iii) If Buyer has elected to issue the Note pursuant
to Section 2.2, Buyer shall execute and deliver to Seller the Note in
principal amount equivalent to the Note Amount.
(c) Except as provided in Section 2.3(d), on the Closing Date
all intercompany accounts between the Restructured Business Entities, on the one
hand, and Seller or its Affiliates (other than the Restructured Business
Entities), on the other hand, shall be canceled, and the respective amounts
shall be recorded as contributions to capital; provided, however, that all such
accounts which represent obligations of Seller and its Affiliates (excluding
FFM) to the Restructured Business Entities shall be paid in full on or prior to
the Closing Date.
(d) On and after the Closing Date, Seller shall cause FFM, and
Buyer shall cause the Restructured Business Entities, to pay all accounts
receivable and repay all indebtedness between FFM, on the one hand, and the
Restructured Business Entities, on the other hand, in each case in accordance
with the respective terms thereof.
(e) If the Note shall have been delivered pursuant to this
Agreement and the net proceeds from the equity offering referred to in Section
7.1(c) shall increase
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within 30 days subsequent to the Closing Date, either through the exercise by
the underwriters of an over-allotment option or otherwise, then Buyer shall
promptly redeem, at a redemption price equal to 100% of the principal amount
redeemed, a principal amount of the Note equivalent to the amount of such
increase, and shall pay such redemption price to Seller together with the
accrued and unpaid interest on such principal amount to the date of such
redemption upon the written demand by Seller therefor. The parties agree to
execute such documents as may be necessary to evidence such redemption.
(f) If the Note shall have been delivered pursuant to this
Agreement, Buyer shall be entitled to redeem the Note, in whole but not in part,
within 90 days after the Closing, at the aggregate principal amount thereof. The
parties agree to execute such documents as may be necessary to evidence such
redemption.
Section 2.4 Post-Closing Adjustment. (a) As soon as
practicable, but in no event later than 30 days following the Closing Date,
Seller shall prepare and deliver a Statement of Net Assets of the Restructured
Business, as of the Closing, certified by Deloitte & Touche prepared in
accordance with Schedule 2.4 hereto (the "Statement of Net Assets").
(b) During the preparation of the Statement of Net Assets as
provided in Section 2.4(a) and the period of any review or dispute as provided
in this Section 2.4, Buyer shall, and shall cause the Company to, (1) provide
Seller and Seller's authorized representatives with full access to the books,
records, facilities and employees of the Company and its Subsidiaries, and (2)
cooperate fully with Seller and Seller's authorized representatives, including
the provision on a timely basis of all necessary or useful information.
(c) After receipt of the Statement of Net Assets, Buyer shall
have 30 days to review the Statement of Net Assets, together with the workpapers
used in the preparation thereof. Buyer and its authorized representatives shall
have full access to (1) all relevant books, records and employees of Seller and
(2) Seller's accountants and their relevant supporting workpapers. Unless Buyer
delivers written notice to Seller on or prior to the 30th day after Buyer's
receipt of the Statement of Net Assets stating that Buyer has objections to the
Statement of Net Assets and
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describing any such objections with particularity, Buyer shall be deemed to have
accepted and agreed to the Statement of Net Assets. If on or prior to the 30th
day after Buyer's receipt of the Statement of Net Assets, Buyer notifies Seller
of its objections to the Statement of Net Assets, Buyer and Seller shall, within
10 days (or such longer period as the parties may agree) following such notice
(the "Resolution Period"), attempt to resolve their differences, and any
resolution by them as to any disputed amounts shall be final, binding and
conclusive.
(d) Any amounts remaining in dispute at the conclusion of the
Resolution Period ("Unresolved Changes") shall be submitted to a nationally
recognized firm of independent accountants independent of Seller, Buyer and
their respective Affiliates (such firm being referred to as the "CPA Firm"),
within 10 days after the expiration of the Resolution Period. Each party agrees
to execute, if requested by the CPA Firm, an engagement letter containing
reasonable terms. All fees and expenses relating to the work, if any, to be
performed by the CPA Firm shall be borne pro rata by Seller and Buyer in
proportion to the allocation of the dollar amount of the Unresolved Changes
between Buyer and Seller made by the CPA Firm, such that the prevailing party
shall pay the lesser proportion of the fees and expenses. The CPA Firm shall act
as an arbitrator to determine, based on the provisions of this Section 2.4, only
the Unresolved Changes and the determination of each amount in the Unresolved
Changes shall be no less than the lesser of the amount claimed by either Buyer
or Seller and shall be no greater than the greater amount claimed by either
Buyer or Seller. The CPA Firm's determination of the Unresolved Changes shall be
made within 30 days of the submission of the Unresolved Changes thereto, shall
be set forth in a written statement delivered to Seller and Buyer and shall be
final, binding and conclusive on the parties for all purposes.
(e) In the event that Buyer and Seller agree to the Statement
of Net Assets, then within five (5) Business Days following such agreement
Seller shall pay to Buyer the amount, if any, by which the Purchase Price
exceeds the net assets set forth in the Statement of Net Assets, or Buyer shall
pay to Seller the amount, if any, by which the net assets set forth in the
Statement of Net Assets exceeds the Purchase Price (the "Post-Closing
Adjustment"). In the event that there are Unresolved Changes at the end of the
Resolution Period, then (1) if Buyer and Seller agree that a
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Post-Closing Adjustment is owed to one Party regardless of the ultimate
resolution of any Unresolved Changes, then the minimum amount which Buyer and
Seller agree is owed to such Party shall be paid within five (5) Business Days
after the end of the Resolution Period and any additional amounts owing to such
Party with respect to the Unresolved Changes shall be paid within five (5)
Business Days after resolution thereof by the CPA Firm or (2) in all other
cases, any and all payments shall be made within five (5) Business Days after
resolution of the Unresolved Changes by the CPA Firm.
(f) Any payments made pursuant to this Section 2.4 shall be
accompanied by interest at the Applicable Rate from the Closing Date up to and
including the date of payment.
(g) Any payments made in respect of the Post-Closing
Adjustment or Unresolved Changes shall be deemed to be adjustments to the
Purchase Price for all Tax purposes.
ARTICLE III
Representations and Warranties of Seller
The Company (except with respect to Sections 3.1 and 3.11) and
Seller represent and warrant to Buyer as of the date hereof and as of the
Closing Date (except that representations and warranties that are made as of a
specific date need be true only as of such date) as follows:
Section 3.1 Organization and Authority of Seller. Seller is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, has all requisite corporate or similar power and
authority, and has taken all corporate action necessary in order, to execute,
deliver and perform its obligations under this Agreement. This Agreement is a
legal, valid and binding obligation of Seller, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles. The execution,
delivery and performance of this Agreement by Seller do not, and the
consummation by the Seller of the transactions contemplated hereby will not,
constitute or result in (A) a breach or violation of, or a default under, the
certificate of incorporation or by-laws of the Seller, (B) a breach or
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violation of, or a default under, the acceleration of any obligations or the
creation of a lien, pledge, security interest or other encumbrance on the assets
of Seller (with or without notice, lapse of time or both) pursuant to, any
agreement, lease, contract, note, mortgage, indenture, arrangement or other
obligation ("Contracts") binding upon the Seller, (C) to the Knowledge of
Seller, assuming compliance with the matters referred to in Sections 3.11 and
4.5, a violation of any law, rule, regulation, judgment, injunction, order,
decree or other restriction of any court or Governmental Entity ("Law") or any
governmental or non-governmental permit or license to which Seller is subject or
(D) any change in the rights or obligations of any party under any of the
Contracts, except, in the case of clause (B), (C) or (D) above, for any breach,
violation, default, acceleration, creation or change that, individually or in
the aggregate, is not reasonably likely to prevent, materially delay or
materially impair the ability of the Seller to consummate the transactions
contemplated by this Agreement.
Section 3.2 Organization, Authority and Qualification of the
Company. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of North Carolina, has all requisite
corporate or similar power and authority, and has taken all corporate action
necessary in order, to execute, deliver and perform its obligations under this
Agreement. This Agreement is a legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles. The execution, delivery and performance of this Agreement by
the Company do not, and the consummation by the Company of the transactions
contemplated hereby will not, constitute or result in (A) a breach or violation
of, or a default under, the articles of incorporation or by-laws of the Company,
(B) a breach or violation of, or a default under, the acceleration of any
obligations or the creation of a lien, pledge, security interest or other
encumbrance on the assets of the Restructured Business Entities (with or without
notice, lapse of time or both) pursuant to, any Contracts binding upon the
Restructured Business Entities, (C) to the Knowledge of the Company, assuming
compliance with the matters referred to in Sections 3.11 and 4.5, a violation of
any Law or governmental or non-governmental permit or
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license to which the Restructured Business Entities is subject or (D) any change
in the rights or obligations of any party under any of the Contracts, except, in
the case of clause (B), (C) or (D) above, for any breach, violation, default,
acceleration, creation or change that, individually or in the aggregate, is not
reasonably likely to cause a Material Adverse Effect or to prevent, materially
delay or materially impair the ability of the Company to consummate the
transactions contemplated by this Agreement.
Section 3.3 Capitalization of the Company. The authorized
capital stock of the Company consists of 10,000 shares of Common Stock, no par
value, of which only 225 Shares are issued and outstanding, and 1,000,000 shares
of Preferred Stock, no par value, with a stated value of $12.50 per share, of
which no shares are issued and outstanding. The Shares have been duly authorized
and validly issued, are fully paid and nonassessable and are owned by Seller
free and clear of any lien, pledge, security interest, claim or other
encumbrances (collectively, "Encumbrances"), other than such Encumbrances which
were incurred by Buyer or caused to be incurred by the Company or any Subsidiary
by Buyer as a result of the transactions contemplated by this Agreement. There
are no preemptive or other outstanding rights, options, warrants, conversion
rights, stock appreciation rights, redemption rights, agreements, arrangements
or commitments to issue or sell any shares of capital stock or other securities
of the Company or any of its Subsidiaries or any securities or obligations
convertible or exchangeable into or exercisable for, or giving any Person a
right to subscribe for or acquire, any securities of the Company or any of its
Subsidiaries, and no securities or obligations evidencing such rights are
authorized, issued or outstanding. The Company does not have outstanding any
bonds, debentures, notes or other obligations the holders of which have the
right to vote (or convertible into or exercisable for securities having the
right to vote) with the stockholders of the Company on any matter.
Section 3.4 Subsidiaries of the Company. Schedule 3.4 hereto
lists the name of each Person (other than natural persons) comprising the
Restructured Business of which the Company owns, beneficially and of record,
securities representing 50 percent (50%) or more of the aggregate voting power
(each, a "Subsidiary," and,
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collectively, the "Subsidiaries"), together with the jurisdiction of its
organization and the record and beneficial holder of the shares of such
Subsidiary. All shares of capital stock of each Subsidiary are owned by the
Company or a Subsidiary, as the case may be, are free and clear of all
Encumbrances, other than such Encumbrances which were incurred by Buyer or
caused to be incurred by the Company or any Subsidiary by Buyer as a result of
the transactions contemplated by this Agreement, and all such capital stock is
duly authorized, validly issued, fully paid and nonassessable. Each Subsidiary
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization, has the power and authority to own or
lease its assets and to carry on its business substantially as it is now being
conducted, and is duly qualified as a foreign corporation to do business, and is
in good standing, in each jurisdiction where the ownership or operation of its
properties and assets or the conduct of its business requires such
qualification, except where the failure to be so qualified would not be
reasonably likely to have a Material Adverse Effect. The Company does not own,
directly or indirectly, an equity or other ownership interest in any Person
other than the Subsidiaries.
Section 3.5 Financial Statements. Attached hereto as Schedule
3.5 is a copy of the balance sheets of the Hardee's Division as of December 31,
1995 and December 31, 1996 and the statements of operations, stockholder's
equity and cash flows for the Hardee's Division for each of the fiscal years
ended December 31, 1994, 1995 and 1996 (collectively, with the notes thereto,
the "Financial Statements"). The Financial Statements have been prepared in
accordance with GAAP applied on a consistent basis (except as may be noted
therein), and present fairly, in all material respects, the financial position
of the Hardee's Division as of December 31, 1995 and December 31, 1996,
respectively, and the statements of operations, stockholder's equity and cash
flows, respectively, of the Hardee's Division for each of the fiscal years ended
December 31, 1994, 1995 and 1996. Except as disclosed in the Financial
Statements and except for liabilities incurred in the ordinary course of
business by the Restructured Business Entities after December 31, 1996, none of
the Restructured Business Entities have incurred any liability (contingent or
otherwise) that would be required
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by GAAP to be reflected on a balance sheet of the Restructured Business Entities
or described in the notes thereto.
Section 3.6 Absence of Certain Changes or Events. Except in
connection with the Restructuring Transactions or as set forth in Schedule 3.6,
since December 31, 1996 the Company and the Subsidiaries have conducted their
businesses only in, and have not engaged in any material transaction other than
according to, the ordinary and usual course of such businesses consistent with
past practice and there has not been (i) any change, except for changes
resulting from the Restructuring Transactions, in the financial condition,
properties, business or results of operations of the Company and the
Subsidiaries, except those changes that, individually or in the aggregate, are
not reasonably likely to have a Material Adverse Effect; (ii) any material
damage, destruction or other casualty loss with respect to any material asset or
property owned, leased or otherwise used by the Company or any of the
Subsidiaries not covered by insurance; (iii) any declaration, setting aside or
payment of any dividend or other distribution in respect of the capital stock of
the Company, except for dividends or other distributions on its capital stock
disclosed in a Schedule hereto; (iv) any change by the Company in accounting
principles, practices or methods; (v) any labor dispute, other than routine
matters which have not had a Material Adverse Effect; (vi) except for increases
or amendments in the ordinary and usual course of business consistent with past
practice or as required by law, any material increase in the compensation
payable or to become payable by the Company or any Subsidiary to any of their
directors, officers or employees or any increase in the benefits under, or
adoption or amendment of, any bonus, insurance, pension or other employee
benefit plan, payment or arrangement, for or with any such directors, officers
or employees; or (vii) any transactions between any of the Restructured Business
Entities and FFM other than in the ordinary course of business consistent with
past practices.
Section 3.7 Title to Properties; Absence of Liens and
Encumbrances, Etc. (a) Schedule 3.7(a)(i) hereto lists all leases and subleases
of real property entered into by the Company or its Subsidiaries at the
locations described thereon as of the date hereof other than those leases and
subleases that are not material, individually or
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in the aggregate, to the Company and the Subsidiaries considered as a whole or
will not be retained by the Restructured Business (the "Leased Real Property").
Schedule 3.7(a)(ii) hereto lists all properties owned by the Company or its
Subsidiaries as of the date hereof other than those properties that are not
material, individually or in the aggregate, to the Company and the Subsidiaries
considered as a whole and those properties that will not be retained by the
Restructured Business (the "Owned Real Property"). Except as set forth on
Schedule 3.7(a)(iii) hereto, each of the Company and the Subsidiaries has good
and, in the case of the Owned Real Property, marketable title to, or a valid and
binding leasehold interest in, all of the Leased Real Property and Owned Real
Property free and clear of any Encumbrances, except for: (i) any Encumbrances
reflected in the Financial Statements; (ii) any Encumbrances incurred or created
since December 31, 1996 in the ordinary and usual course of business consistent
with past practice and which, alone or in the aggregate, would not be reasonably
likely to have a Material Adverse Effect; (iii) any Encumbrances which, alone or
in the aggregate, would not have a Material Adverse Effect; (iv) any
Encumbrances for taxes, assessments and other governmental charges not yet due
and payable or due but not delinquent or being contested in good faith by
appropriate proceedings; (v) any mechanics', workmen's, repairmen's,
warehousemen's, carriers' or other like liens and encumbrances imposed by
operation of law arising in the ordinary and usual course of business consistent
with past practice or being contested in good faith by appropriate proceedings;
and (vi) easements, rights of way or other similar matters of title to real
property that do not materially effect the title to, or the use of, such real
property (the "Permitted Encumbrances").
(b) Neither the Company nor any such Subsidiary is in default
under any leases under which the Company or any Subsidiary is the lessee of real
or personal property, except defaults which, alone or in the aggregate, would
not be reasonably likely to have a Material Adverse Effect.
Section 3.8 Litigation. Except as set forth in Schedule 3.8
hereto, there are no claims, actions, suits, proceedings or investigations
pending or, to the Knowledge of the Seller and the Company, threatened against
the Company or any Subsidiary at law, in equity or otherwise, in, before, or by,
any court or Governmental Entity or
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authority which, individually or in the aggregate, would be reasonably likely to
have a Material Adverse Effect. None of the Company or any of its Subsidiaries
or their respective assets or properties is subject to any order, writ,
judgment, injunction, decree or award that would be reasonably likely to have a
Material Adverse Effect.
Section 3.9 Compliance with Law. Except as set forth in
Schedule 3.9, the Restructured Business is not being conducted in violation of
any applicable Law, and all governmental approvals, permits and licenses
required to conduct the Restructured Business have been obtained, except for any
noncompliance which, alone or in the aggregate, do not and would not be
reasonably likely to have a Material Adverse Effect; it being understood that
nothing in this representation is intended to address any compliance issue that
is (x) related to any Environmental Law or (y) the subject of any other
representation or warranty set forth herein.
Section 3.10 Contracts. (a) Schedule 3.10(a) lists the
following Contracts to which the Company or any Subsidiary is a party on the
date hereof:
(i) any agreement the performance of which is expected to
involve consideration in excess of $200,000 per annum;
(ii) any agreement which restricts or contains limitations
on the ability of any of the Company or its Subsidiaries to freely conduct
business in the United States;
(iii) any collective bargaining agreement;
(iv) any agreement with the Seller or its Affiliates (other
than the Company and the Subsidiaries);
(v) any employment agreement;
(vi) any agreement which relates to indebtedness owed by
any Restructured Business Entity having a principal amount of $200,000.00 or
more, or the guarantee thereof; and
(vii) any agreement or commitment to purchase, sell or
dispose of, subsequent to the date hereof, any
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restaurant unit owned by the Company or any of its Subsidiaries, except for the
agreements specified in Section 6.4.
(b) Schedule 3.10(b) lists each franchisee of the Company and
the number of restaurants for which the Company has granted such franchisee
franchises, and such Schedule is true and complete as of the date hereof.
(c) Seller has made available to Buyer a correct and complete
copy of each Contract listed in Schedule 3.10(a), together with any and all
amendments or modifications thereto. Subject to such exceptions that,
individually or in the aggregate, would not have a Material Adverse Effect, each
such Contract is valid, binding, enforceable, and in full force and effect, none
of the Company or any of its Subsidiaries is in breach or default under any such
Contract and no event has occurred which, with notice or lapse of time or both,
would constitute a breach or default, or permit termination, modification, or
acceleration, under such Contract.
Section 3.11 Consents and Approvals. Other than the filings
and/or notices (A) set forth in Schedule 3.11, (B) under the HSR Act or (C) in
connection with any Leased Real Property, no notices, reports or other filings
are required to be made by Seller, the Company or any of the Subsidiaries with,
nor are any consents, registrations, approvals, permits or authorizations
required to be obtained by Seller, the Company or any Subsidiary from, any
Person, in connection with the execution and delivery of this Agreement by
Seller and the Company and the consummation by Seller and the Company of the
transactions contemplated hereby, except those that the failure to make or
obtain are not, individually or in the aggregate, reasonably likely to have a
Material Adverse Effect or prevent, materially delay or materially impair the
ability of Seller to consummate the transactions contemplated by this Agreement.
Section 3.12 Tax Matters. Except as set forth in Schedule
3.12, (i) all Tax Returns that are required to be filed by or with respect to
the Seller's Group, the Company and its Subsidiaries, have been duly filed, or,
where not so filed, are covered under an extension that has been obtained
therefor, (ii) to the Seller's Knowledge, all such Tax Returns are true,
complete and correct, (iii) to
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the Seller's Knowledge, all Taxes due and payable by the Seller's Group, the
Company and its Subsidiaries have been paid in full, (iv) none of the Tax
Returns referred to in Schedule 3.12(a) has been examined by the IRS or the
appropriate state, local or foreign taxing authority, (v) all deficiencies
asserted or assessments made as a result of such examinations have been paid in
full, (vi) no issues that have been raised by the relevant taxing authority in
connection with the examination of any of the Tax Returns referred to in clause
(i) are currently pending, (vii) no waivers of statutes of limitation have been
given by or requested with respect to any Taxes of the Seller's Group, the
Company or its Subsidiaries, (viii) to the Seller's Knowledge, there is no claim
or assessment threatened against Seller, the Company or its Subsidiaries, (ix)
to the Seller's Knowledge, each of the Company and its Subsidiaries has withheld
and timely paid to the appropriate taxing authority the required amounts in
compliance with all tax withholding provisions of applicable federal, state,
local and foreign Laws (including, without limitation, income, social security
and employment tax withholding), (x) to the Seller's Knowledge, neither the
Company nor any of its Subsidiaries has made any payments, and is not a party to
any agreement that could obligate it to make any payments that would not be
deductible, in whole or in part, under Section 280G or 162(m) of the Code, (xi)
Seller is not a foreign person subject to withholding under Section 1445 of the
Code, and (xii) none of the Company and its Subsidiaries was part of an
affiliated group (within the meaning Section 1504(a) of the Code) other than one
in which the Seller is the common parent.
Section 3.13 Intellectual Property.
(a) Schedule 3.13(a) sets forth a list and brief description
(including where applicable the country of registration) of (i) all patents,
patent applications, registered trademarks, trademark applications, registered
copyrights and copyright applications that are owned by the Company or the
Subsidiaries and used in the Restructured Business and (ii) all agreements under
which the Company or the Subsidiaries are licensed or otherwise permitted to use
patents, trademarks and copyrights which are material to the Restructured
Business.
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(b) To the Knowledge of the Company (i) except as set forth in
Schedule 3.13(b)(i), with respect to Intellectual Property of the Company and
the Subsidiaries other than trademarks, no product (or component thereof or
process) used, sold or manufactured by the Restructured Business infringes on or
otherwise violates the valid and enforceable patents of any other Person or any
confidentiality obligation enforceable against the Company, (ii) with respect
to the trademarks listed in Schedule 3.13(b)(ii) (the "Major Marks"), except as
set forth in Schedule 3.13(b)(iii), there are no restrictions that would
materially impair the use of the Major Marks in connection with the Restructured
Business and the Major Marks do not infringe upon or otherwise violate the valid
and registered trademarks of any other Person, and (iii) no Person is
challenging or, to the Knowledge of the Company, infringing or otherwise
violating the Intellectual Property of the Company and the Subsidiaries
(excluding trademarks included on Schedule 3.13(b)(ii)), except in each case for
challenges, infringements or violations, which alone or in the aggregate, would
not be reasonably likely to materially adversely affect the Company's ability to
conduct the Restructured Business substantially as heretofore conducted.
Section 3.14 Labor Matters. Except as set forth in Schedule
3.14, neither the Company nor any Subsidiary is a party to any material
collective bargaining agreement respecting its employees, nor is there pending,
or to the Knowledge of the Company threatened, any strike, walkout or other work
stoppage or any union organizing effort by or respecting the employees.
Section 3.15 Employee Benefits.
(i) Schedule 3.15(i) hereto contains a list of each
employee benefit, stock purchase, stock option, severance, change-in-control,
fringe benefit, bonus, incentive and deferred compensation plan, agreement,
program, policy or other arrangement for current or former employees of the
Company or the Subsidiaries which is maintained, sponsored or contributed to by
the Company or the Subsidiaries. All such plans, agreements, programs, policies
and arrangements shall be collectively referred to as the "Company Plans". The
Company has furnished to Buyer all employment agreements maintained by the
Company or any of its Subsidiaries, and there are no more than two such
agreements.
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(ii) There are no "multiemployer plans", within the meaning
of Section 3(37) of ERISA, covering employees of the Company or the
Subsidiaries.
(iii) With respect to each Company Plan, the Company has
delivered or made available to Buyer a complete copy (or, to the extent no such
copy exists, a summary description) thereof and, to the extent applicable: (A)
any related trust agreement or other funding instrument; (B) the most recent
determination letter; (C) any summary plan description; and (D) for the most
recent plan year (I) the Form 5500 and attached schedules, (II) audited
financial statements and (III) actuarial valuation reports.
(iv) All Company Plans are in substantial compliance with
all applicable laws, including the Code and the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"). The Company has received a favorable
determination letter from the IRS with respect to the qualified status of each
Company Plan which is an "employee pension benefit plan" within the meaning of
Section 3(2) of ERISA (a "Pension Plan") and which is intended to be qualified
under Section 401(a) of the Code and the Company is not aware of any
circumstances which are reasonably likely to cause the revocation of such
letter. There is no material pending or, to the Knowledge of the Company,
threatened action, suit or claim relating to the Company Plans. Neither the
Company nor any of the Subsidiaries has engaged in any transactions with respect
to any Company Plan that, assuming the "taxable period" (as defined in Section
4975(f) of the Code) with respect to such transaction expired as of the date
hereof, could be reasonably likely to subject the Company or any of the
Subsidiaries to a material tax or penalty imposed by Section 4975 of the Code.
(v) As of the date hereof, no liability under
Title IV of ERISA has been or is expected to be incurred by the Company or any
of the Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of ERISA,
currently or formerly maintained by any of them, or the single-employer plan of
any entity which is considered one employer with the Company under Section 4001
of ERISA or Section 414 of the Code (an "ERISA Affiliate"), other than the
payment of premiums to the Pension Benefit Guaranty Corporation contributed to
by the Company or any of the Subsidiaries or
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any ERISA Affiliate. Neither the Company nor any of the Subsidiaries has
contributed, or been obligated to contribute, to a "multiemployer plan" (within
the meaning of Section 3(37) of ERISA) at any time during the six-year period
prior to the date hereof.
(vi) All contributions required to be made by the Company
or any of the Subsidiaries under the terms of any Company Plan have been timely
made or have been reflected in the Financial Statements. Neither any Pension
Plan nor any single employer plan of an ERISA Affiliate has an "accumulated
funding deficiency" (within the meaning of Section 412 of the Code or Section
302 of ERISA) whether or not waived. Neither the Company nor any of the
Subsidiaries has provided, or is required to provide, security to any Pension
Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section
401(a)(29) of the Code.
(vii) Except as set forth on Schedule 3.15(vi), neither the
Company nor any of the Subsidiaries has any obligations for retiree health and
life benefits under any Company Plan.
(viii) Except as set forth on Schedule 3.15(vii), the
consummation of the transactions contemplated by this Agreement will not (x)
entitle any of the employees of the Company or any of the Subsidiaries to
severance pay or (y) accelerate or provide any other rights or credits under, or
increase the amount payable or trigger any other obligation pursuant to, any of
the Company Plans.
Section 3.16 Environmental Matters. Except as disclosed in
Schedule 3.16, or as would not be reasonably likely to have a Material Adverse
Effect, the Company and each of its Subsidiaries (i) is to its Knowledge in
substantial compliance with applicable Environmental Laws; (ii) has not
received any written notices from any Government Entity alleging the violation
of any applicable Environmental Law and, to the Knowledge of Seller and the
Company, no such allegations have been raised by any Person; (iii) is not the
subject of any court order, administrative order or decree arising under any
Environmental Law; and (iv) to its Knowledge has not generated, stored, used,
emitted, discharged or disposed of any Hazardous Substance except as permitted
under applicable Environmental Laws.
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Section 3.17 Insurance. Schedule 3.17 hereto lists all
insurance policies maintained by or on behalf of the Company or any of the
Subsidiaries. The Company has insured against the same risks covered by the
policies listed in Schedule 3.17 at all times during the four-year period prior
to the date of this Agreement, in policy amounts and with policy limits
substantially similar, in the aggregate, to the policies listed in Schedule
3.17.
Section 3.18 Brokers and Finders. Other than Morgan Stanley &
Co. Incorporated ("Morgan Stanley"), Seller, the Company and the Subsidiaries
have not employed any broker, finder, consultant or intermediary in connection
with the transactions contemplated by this Agreement who would be entitled to a
broker's, finder's or similar fee or commission in connection therewith or upon
the consummation thereof, or if the Closing does not occur. Seller agrees to
bear all costs it incurs, including fees and expenses of Morgan Stanley, in
connection with the transactions contemplated by this Agreement unless otherwise
expressly provided herein.
Section 3.19 Securities Act. If the Note is issued and
delivered pursuant to this Agreement, Seller is acquiring the Note solely for
the purpose of investment and not with a view to, or for sale in connection
with, any distribution thereof in violation of the Securities Act. Buyer
acknowledges that the Note, and the shares of Buyer's Common Stock issuable upon
conversion thereof, have not been registered under the Securities Act or any
applicable state securities law, and that such Note and such shares may not be
transferred or sold except pursuant to the registration provisions of the
Securities Act or pursuant to an applicable exemption therefrom and pursuant to
state securities laws and regulations as applicable.
Section 3.20 No Other Representations or Warranties. Except
for the representations and warranties contained in this Article III, neither
Seller, the Company, any Subsidiary nor any other Person makes any other express
or implied representation or warranty on behalf of Seller, the Company or any
Subsidiary.
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ARTICLE IV
Representations and Warranties of Buyer
Buyer represents and warrants to Seller as of the date hereof
and as of the Closing Date (except that representations and warranties that are
made as of a specific date need be true only as of such date) as follows:
Section 4.1 Organization and Authority of Buyer. Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, has all requisite corporate or similar power and
authority, and has taken all corporate action necessary in order, to execute,
deliver and perform its obligations under this Agreement. This Agreement is a
legal, valid and binding obligation of Buyer, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditor's rights and to general equity principles. The execution, delivery and
performance of this Agreement by Buyer do not, and the consummation by Buyer of
the transactions contemplated hereby will not, constitute or result in (A) a
breach or violation of, or a default under, the certificate of incorporation or
by-laws of Buyer, (B) a breach or violation of, or a default under, the
acceleration of any obligations or the creation of a lien, pledge, security
interest or other encumbrance on the assets of Buyer (with or without notice,
lapse of time or both) pursuant to, any Contracts binding upon Buyer, (C) to the
Knowledge of Buyer, assuming compliance with the matters referred to in Sections
3.11 and 4.5, violate any Law or governmental or non-governmental permit or
license to which Buyer is subject or (D) any change in the rights or obligations
of any party under any of the Contracts to which Buyer is party, except, in the
case of clause (B), (C) or (D) above, for any breach, violation, default,
acceleration, creation or change that, individually or in the aggregate, is not
reasonably likely to materially delay or materially impair the ability of Buyer
to consummate the transactions contemplated by this Agreement.
Section 4.2 Brokers and Finders. Other than Merrill Lynch,
Pierce, Fenner & Smith Incorporated ("Merrill Lynch") and Alex. Brown & Sons
Incorporated ("Alex. Brown"),
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Buyer has not employed any broker, finder, consultant or intermediary in
connection with the transactions contemplated by this Agreement who would be
entitled to a broker's, finder's or similar fee or commission in connection
therewith or upon the consummation thereof, or if the Closing does not occur.
Buyer agrees to bear all costs it incurs, including fees and expenses of Merrill
Lynch and Alex. Brown, in connection with the transactions contemplated by this
Agreement unless otherwise expressly provided herein.
Section 4.3 Financial Capability. On the Closing Date,
assuming satisfaction of the condition set forth in Section 7.1(c), Buyer will
have sufficient funds to purchase the Shares on the terms and conditions
contemplated by this Agreement.
Section 4.4 Securities Act. Buyer is acquiring the Shares
solely for the purpose of investment and not with a view to, or for sale in
connection with, any distribution thereof in violation of the Securities Act.
Buyer acknowl edges that the Shares are not registered under the Securities Act
or any applicable state securities law, and that such Shares may not be
transferred or sold except pur suant to the registration provisions of the
Securities Act or pursuant to an applicable exemption therefrom and pursu ant to
state securities laws and regulations as applicable.
Section 4.5 Consents and Approvals. Other than the filings
and/or notices (A) set forth in Schedule 4.5 and (B) under the HSR Act, no
notices, reports or other filings are required to be made by Buyer with, nor are
any consents, registrations, approvals, permits or authorizations required
to be obtained by Buyer from, any Person, in connection with the execution and
delivery of this Agreement by Buyer and the consummation by Buyer of the
transactions contemplated hereby, except those that the failure to make or
obtain are not, individually or in the aggregate, reasonably likely to prevent,
materially delay or materially impair the ability of Buyer to consummate the
transactions contemplated by this Agreement.
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Section 4.6 Commitment Letter. Buyer has delivered to Seller
the letter from Banque Paribas attached as Schedule 4.6 hereto. Such letter
remains in full force and effect and has not been amended, supplemented,
modified or withdrawn.
Section 4.7 Validity of Note and Authorization of Shares. The
Note has been duly authorized and, if issued and delivered pursuant to this
Agreement, shall have been duly executed, authenticated, issued and delivered
and will constitute a valid and legally binding obligation of Buyer, enforceable
in accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles. The shares of
Common Stock, par value $0.01 per share, of Buyer ("Buyer Common Stock")
initially issuable upon conversion of the Note have been duly and validly
authorized and reserved for issuance and, when issued and delivered in
accordance with the provisions of the Note, will be duly and validly issued,
fully paid and non-assessable.
Section 4.8 Registration Rights Agreement. The Registration
Rights Agreement in the form attached hereto as Annex 4.8 (the "Registration
Rights Agreement") has been duly authorized and, if executed and delivered
pursuant to this Agreement, shall have been duly executed and delivered and
shall constitute a valid and legally binding obligation of Buyer, enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equity principles.
Section 4.9 No Other Representations or Warranties. Except for
the representations and warranties contained in this Article IV, neither Buyer
nor any other Person makes any other express or implied representation or
warranty on behalf of Buyer.
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ARTICLE V
Tax Matters
Section 5.1 Section 338(h)(10).
(a) Election. Seller and Buyer shall make a joint election
under Section 338(h)(10) of the Code with respect to the purchase of the Shares
and under any similar provisions of state law. Seller represents that its sale
of the Shares is eligible for, and Buyer represents that it is qualified to
make, such election. Seller and Buyer agree to prepare and file IRS Form 8023,
required schedules thereto, and any similar state forms in a timely fashion in
accordance with the rules under Section 338 of the Code or under a similar
provision of state law, as the case may be. If any changes are required in these
forms subsequent to their filing, the parties will promptly agree on such
changes.
(b) Allocation of Purchase Price. Seller and Buyer will cause
their respective accountants to negotiate in good faith, on their behalf, and
agree to a purchase price and an allocation of that price among the assets of
the Restructured Business Entities that are deemed to have been acquired
pursuant to Section 338(h)(10) of the Code or state law equivalent. Buyer and
Seller shall use the asset values determined from such allocation for purposes
of all reports and returns with respect to Taxes, including IRS Form 8594 or any
equivalent statement.
Section 5.2 Liability for Taxes and Related Matters.
(a) Seller's Indemnification of Buyer. Seller shall be liable
for and indemnify Buyer for all Taxes (including, without limitation, any
obligation to contribute to the payment of a tax determined on a consolidated,
combined or unitary basis with respect to a group of corporations that includes
or included the Restructured Business Entities and Taxes resulting from the
Restructured Business Entities ceasing to be a member of the Seller's Group, or
attributable to the election to be made under Section 338(h)(10) of the Code and
any state law equivalent) (i) imposed on Seller's Group (other than the
Restructured
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Business Entities) for any taxable year and (ii) imposed on the
Restructured Business Entities or for which the Restructured Business Entities
may otherwise by liable for any taxable year or period that ends on or before
the Closing Date and, with respect to any taxable year or period beginning
before and ending after the Closing Date, the portion of such taxable year
ending on and including the Closing Date. Seller shall also indemnify, defend
and hold harmless Buyer from all costs and expenses incurred by Buyer (including
reasonable attorneys' fees and expenses) in connection with any liability to, or
claim by, any taxing authority, for Taxes for which Seller is required to
indemnify Buyer under this Article V. Except as set forth in Section 5.2(e),
Seller shall be entitled to any refund of Taxes of the Restructured Business
Entities received for such periods.
(b) Buyer's Indemnification of Seller. Buyer shall be liable
for and indemnify Seller for the Taxes of the Restructured Business Entities for
any taxable year or period that begins after the Closing Date and, with respect
to any taxable year or period beginning before and ending after the Closing
Date, the portion of such taxable year beginning after the Closing Date. Buyer
shall also indemnify, defend and hold harmless Seller from all costs and
expenses incurred by Seller (including reasonable attorneys' fees and expenses)
in connection with any liability to, or claim by, any taxing authority, for
Taxes for which Buyer is required to indemnify Seller under this Article V.
Buyer shall be entitled to any refund of Taxes of the Restructured Business
Entities received for such periods.
(c) Taxes for Short Taxable Year. For purposes of paragraphs
(a) and (b), whenever it is necessary to determine the liability for Taxes of
the Restructured Business Entities for a portion of a taxable year or period
that begins before and ends after the Closing Date, the determination of the
Taxes of the Restructured Business Entities for the portion of the year or
period ending on, and the portion of the year or period beginning after, the
Closing Date shall be determined by assuming that the Restructured Business
Entities had a taxable year or period which ended at the close of the Closing
Date, except that exemptions, allowances or deductions that are calculated on
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an annual basis, such as the deduction for depreciation, shall be apportioned on
a time basis.
(d) Adjustment to Purchase Price. Any payment by Buyer or
Seller under this Article V will be an adjustment to the Purchase Price.
(e) Refunds from Carrybacks. If Seller becomes entitled to a
refund or credit of Taxes for any period for which it is liable under Section
5.2(a) to indemnify Buyer and such Taxes are attributable solely to the
carryback of losses, credits or similar items attributable to the Restructured
Business Entities and from a taxable year or period that begins after the
Closing Date, Seller shall promptly pay to Buyer the amount of such refund or
credit together with any interest thereon. In the event that any refund or
credit of Taxes for which a payment has been made is subsequently reduced or
disallowed, Buyer shall indemnify and hold harmless Seller for any tax
liability, including interest and penalties, assessed against Seller by reason
of the reduction or disallowance.
(f) Tax Returns. Seller shall file or cause to be filed when
due all Tax Returns that are required to be filed by or with respect to the
Restructured Business Entities for taxable years or periods ending on or before
the Closing Date and shall pay any Taxes due in respect of such Tax Returns, and
Buyer shall file or cause to be filed when due all Tax Returns that are required
to be filed by or with respect to the Restructured Business Entities for taxable
years or periods ending after the Closing Date and shall remit any Taxes due in
respect of such Tax Returns. Seller shall pay Buyer the Taxes for which Seller
is liable pursuant to Section 5.2(a) but which are payable with Tax Returns to
be filed by Buyer pursuant to the previous sentence within 10 days prior to the
due date for the filing of such Tax Returns.
(g) Contest Provisions. Buyer shall promptly notify Seller in
writing upon receipt by Buyer, any of its affiliates or the Restructured
Business Entities of notice of any pending or threatened federal, state, local
or foreign income or franchise tax audits or assessments which may materially
affect the tax liabilities of the Restructured Business Entities for which
Seller would be required to indemnify Buyer pursuant to Section 5.2(a), provided
that
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failure to comply with this provision shall not affect Buyer's right to
indemnification hereunder. Seller shall have the sole right to represent the
Restructured Business Entities' interests in any tax audit or administrative or
court proceeding relating to taxable periods ending on or before the Closing
Date, and to employ counsel of its choice at its expense. Notwithstanding the
foregoing, Seller shall not be entitled to settle, either administratively or
after the commencement of litigation, any claim for Taxes which would adversely
affect the liability for Taxes of Buyer or the Restructured Business Entities
for any period after the Closing Date to any extent (including, but not limited
to, the imposition of income tax deficiencies, the reduction of asset basis or
cost adjustments, the lengthening of any amortization or depreciation periods,
the denial of amortization or depreciation deductions, or the reduction of loss
or credit carryforwards) without the prior written consent of Buyer. Such
consent shall not be unreasonably withheld, and shall not be necessary to the
extent that Seller has indemnified Buyer against the effects of any such
settlement.
Seller shall be entitled to participate at its expense in the
defense of any claim for Taxes for a year or period ending after the Closing
Date which may be the subject of indemnification by Seller pursuant to Section
5.2(a) and, with the written consent of Buyer, and at its sole expense, may
assume the entire defense of such tax claim. Neither Buyer nor the Company and
nor any of its Subsidiaries may agree to settle any tax claim for the portion of
the year or period ending on the Closing Date which may be the subject of
indemnification by Seller under Section 5.2(a) without the prior written consent
of Seller, which consent shall not be unreasonably withheld.
Section 5.3 Transfer Taxes. All transfer taxes which may be
imposed or assessed as a result of Buyer's acquisition of the Shares shall be
borne equally by Seller and Buyer.
Section 5.4 Information to be Provided by Buyer. With respect
to the taxable period in 1997 prior to the Closing Date, Buyer shall promptly
cause the Restructured Business Entities to prepare and provide to Seller a
package of tax information materials (the "Tax Package"), which shall be
completed in accordance with past
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practice of the Restructured Business Entities including past practice as to
providing the information, schedules and work papers and as to the method of
computation of separate taxable income or other relevant measure of income.
Buyer shall cause the Tax Package for the portion of the taxable period ending
on the Closing Date to be delivered to Seller within one hundred twenty (120)
days after the Closing Date.
Section 5.5 Assistance and Cooperation. After the Closing
Date, each of Seller and Buyer shall:
(a) assist (and cause their respective affiliates to assist)
the other party in preparing any Tax Returns or reports which such other party
is responsible for preparing and filing in accordance with this Article V;
(b) cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns of the Restructured
Business Entities;
(c) make available to the other and to any taxing
authority as reasonably requested all information, records,
and documents relating to Taxes of the Restructured Business
Entities;
(d) provide timely notice to the other in writing of any
pending or threatened tax audits or assessments of the Restructured Business
Entities for taxable periods for which the other may have a liability under this
Article V, provided, that failure to comply with this provision shall not affect
the other party's rights to indemnification hereunder; and
(e) furnish the other with copies of all correspondence
received from any taxing authority in connection with any tax audit or
information request with respect to any such taxable period.
Section 5.6 Tax Sharing Agreements. Any and all tax sharing,
tax indemnity, or tax allocation agreements with respect to which the Company or
any of its Subsidiaries was a party at any time prior to the Closing shall
terminate upon the Closing. No further amounts shall be payable by the Company
or any of its Subsidiaries under such agreements following the Closing.
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Section 5.7 Survival of Obligations. The obligations of the
parties set forth in this Article V shall be unconditional and absolute and
shall remain in effect without limitation as to time.
ARTICLE VI
Certain Covenants and
Agreements of Seller and Buyer
Section 6.1 Access and Information. (a) Seller shall permit
Buyer and its representatives after the date of execution of this Agreement to
have reasonable access, during regular business hours and upon reasonable
advance notice, to the real property owned or leased by the Company and the
Subsidiaries and to the officers of the Company and the Subsidiaries, and shall
furnish, or cause to be furnished, to Buyer any financial and operating data and
other information that is available with respect to the business and properties
of the Restructured Business as Buyer shall from time to time reasonably
request, provided that the foregoing shall not require Seller to permit any
inspection, or to disclose any information, that in its reasonable judgment
would result in the disclosure of any trade secrets of third parties or violate
any of Seller's, the Company's or any of the Subsidiaries' obligations with
respect to confidentiality if Seller shall have used reasonable best efforts to
obtain the consent of such third party to such inspection or disclosure. Seller
shall cause the Company to provide to Buyer such assistance and other
information, including, without limitation, information concerning the
Restructured Business Entities, the Restructured Business and the historical
consolidated financial statements of the Company, of the type and nature that
would be required to be included in a registration statement under the
Securities Act in connection with an underwritten public offering of the
Company's equity securities, for inclusion in any public filing by Buyer under
or pursuant to the Securities Act or the Securities Exchange Act of 1934, as
amended. Disclosure of such financial statements and information in any such
filing shall not constitute a violation of the confidentiality
provisions of this Agreement or the Confidentiality Agreement. Seller will
assist Buyer and its representatives
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in gaining access to the franchisees of the Company and the Subsidiaries.
(b) In the event of the termination of this Agreement, Buyer
at its own expense shall promptly deliver (without retaining any copies thereof)
to Seller, or (at Seller's option) confirm in writing to Seller that it has
destroyed, all information furnished to Buyer or its representatives by Seller,
the Company, the Subsidiaries or any of their respective agents, employees or
representatives as a result hereof or in connection herewith, whether so
obtained before or after the execution hereof, and all analyses, compilations,
forecasts, studies or other documents prepared by Buyer or its representatives
which contain or reflect any such information. Buyer shall at all times prior to
the Closing Date, and in the event of termination of this Agreement, cause any
information so obtained to be kept confidential and will not use, or permit the
use of, such information in its business or in any other manner or for any other
purpose except as contemplated hereby.
(c) All information provided or obtained pursuant to clause
(a) above shall be held by Buyer in accordance with and subject to the terms of
the Confidentiality Agreement, dated February 3, 1997, between Buyer and Seller
(the "Confidentiality Agreement").
Section 6.2 Registrations, Filings and Consents. Seller and
Buyer will cooperate and use their respective best efforts to fulfill the
conditions precedent to the other party's obligations hereunder, including but
not limited to, securing as promptly as practicable all consents, approvals,
waivers and authorizations required, necessary or desirable in connection with
the transactions contemplated hereby. Buyer and Seller will promptly file
documentary materials required by the HSR Act and each of the items listed in
Schedule 3.11 and promptly file any additional information requested as soon as
practicable after receipt of request thereof; provided that each party shall
duly file with the FTC and the Antitrust Division the notification and report
form (the "Report") required under the HSR Act with respect to the sale and
purchase of Shares and the potential conversion of the Note no later than three
(3) Business Days after the date hereof. Buyer and Seller shall use their
respective best efforts to promptly take, or
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cause to be taken, all other action and do, or cause to be done, all other
things necessary, proper or appropriate under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement as
soon as practicable.
Section 6.3 Conduct of Business. (a) Prior to the Closing, and
except as otherwise expressly provided for by this Agreement or consented to or
approved by Buyer in writing, Seller covenants and agrees that the Company and
the Subsidiaries shall, and Seller shall cause the Company and the Subsidiaries
to, operate their business only in the ordinary and usual course consistent with
past practice. Except as otherwise provided herein and except as provided in
Schedule 6.3, Seller agrees that, between the date of this Agreement and the
Closing Date and without the prior written consent of Buyer, it will not permit
the Company or any of its Subsidiaries to:
(i) sell or otherwise dispose of all or substantially all
of its assets or merge or consolidate with or into any other Person;
(ii) incur any indebtedness or other obligations for money
borrowed, other than in the ordinary course of business consistent
with past practice;
(iii) increase the compensation payable or to become
payable by the Company or any of its Subsidiaries to any of its
directors, officers or employees, other than in the ordinary course of
business consistent with past practice, or increase the benefits
under, or adopt or amend, any bonus, severance, insurance, pension or
other employee benefit plan, payment or arrangement for or with, or
lend or advance any sum or extend credit to, any such director,
officer or employee;
(iv) settle or compromise any material claim or
litigation, or amend, modify or materially alter any franchise
agreements;
(v) enter into any transaction with FFM other than in the
ordinary course of business consistent with past practice; or
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(vi) change its accounting methods, principles or
practices (except as required by GAAP).
(b) Prior to the Closing, Seller shall cause the Company to
give Buyer reasonable advance notice of any planned or proposed transfer,
disposition, purchase or sale by the Company or any of its Subsidiaries of any
restaurant units and shall confer and consult with Buyer prior to the
consummation of any such transfer disposition or sale; provided, however, that
prior to Closing Seller shall retain absolute discretion as to whether to effect
any such sale.
Section 6.4 Restructuring Transactions. Prior to or
contemporaneously with the Closing:
(a) Seller shall cause the Company to transfer, by dividend,
sale or otherwise, all of the capital stock of MRO Mid-Atlantic Corp. and FFM,
held directly or indirectly by the Company, to Seller or an Affiliate of Seller.
(b) Seller shall cause FFM to transfer to the Company, by
dividend or otherwise, the net assets of Hardee's Equipment Division owned by
FFM.
(c) Seller shall cause the Company and MRO-Mid Atlantic Corp.
to execute and deliver, and shall itself execute and deliver or shall cause an
Affiliate of Seller to execute and deliver, an agreement in substantially the
form set forth in Annex 6.4(c) (the "Roy Rogers Agreement").
(d) Seller shall cause the Company to transfer to Seller, by
quitclaim deed or the equivalent (i) all of its right, title and interest in and
to the real property and all improvements thereon located at the airport across
the street from the Company's headquarters (the "Airport Property") and (ii) all
of its rights under any agreements related to the Airport Property, including,
without limitation, any agreements providing for the sharing of any Losses
related to the Airport Property; and Seller shall assume all liabilities arising
out of, or in connection with, the ownership of the Airport Property.
(e) The Company shall increase its insurance reserve to an
amount agreed by the parties in good faith based on an actuarial review
performed by a nationally recognized firm of actuaries.
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(f) Seller shall cause MRO Mid-Atlantic Corp. to transfer to
the Company all of its ownership or equity interest in Leased Restaurant Partner
Partnership such that the Restructured Business Entities shall thereafter own
100% of all ownership or equity interests in such partnership.
(g) Seller shall (i) cause the Company to sell, transfer and
assign to Persons specified by Seller any and all assets not reflected on the
December 31, 1996 balance sheet included in the Financial Statements and (ii)
shall cause its Affiliates to sell, transfer and assign to the Company any and
all assets reflected on such balance sheet.
(h) Seller, MRO and the Company shall enter into a management
agreement, in a form reasonably acceptable to Seller and Buyer, under which the
Company will manage and operate, for its own profit or loss, the restaurants set
forth on Schedule 6.4(h) (the "MRO Restaurants"). The Company will be
responsible for all expenses and obligations relating to the operations of the
MRO Restaurants, including rent, taxes, insurance and related charges. With
respect to each MRO Restaurant, the terms of such management agreement will
extend through the earlier of (i) the termination or expiration of the lease
relating to such MRO Restaurant or other disposition by MRO of the real property
interest, or (ii) the date of written notice of termination of such management
agreement for such MRO Restaurant by Seller.
Section 6.5 Certain Buyer and Seller Obligations and
Agreements. (a) Buyer shall cause the Company, promptly following the Closing,
to amend the Franchise Offering Materials, as amended, to reflect the purchase
and sale of the Shares.
(b) Seller shall cause FFM and the Company, prior to the
Closing, to enter into a Transitional Services Agreement, for a term of one year
from the Closing Date, which shall provide FFM and the Restructured Business
Entities with the right to use and have access to each other's informational
systems in the same manner and to the same extent as of the date hereof and
shall include such reasonable confidentiality provisions as the parties shall
mutually agree.
(c) Buyer, Seller and the Company hereby agree that the
Company and FFM shall, prior to the Closing, enter
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into a one year, rent free, real estate tax free, "no services" lease for the
facilities and offices currently occupied by FFM and its employees on the date
hereof.
Section 6.6 Employee Benefit Plans. (a) Any severance plans
maintained by the Company or any of the Subsidiaries as of the Closing Date
shall remain in effect without any modification adverse to the participants
thereunder for at least eighteen (18) months after the Closing Date, and any
participant in such plan whose employment is terminated and is otherwise
eligible for severance benefits shall be entitled to severance benefits (the
"Severance Benefits") based upon base pay and employment position at levels at
least equal to those applicable as of the Closing Date (other than on account of
any reduction in position voluntarily agreed to in writing by any participant);
provided, that if the Company and any employee (each a "Retained Employee")
agree to any different compensation and benefit arrangement with respect to such
Retained Employee, the Company shall have the right to modify such severance
plans in a manner adverse to such Retained Employee. "Severance Benefits" shall
include severance benefits payable pursuant to the agreements referred to in
Section 3.10(a)(v).
(b) Buyer and Seller agree that Buyer shall cause the Company
to promptly pay all Severance Benefits as they become due. Seller shall promptly
reimburse Buyer for fifty percent (50%) of the Adjusted Severance Cost, upon
written notice containing appropriate information concerning the payment of such
amount by the Buyer or any of its Affiliates. For purposes of this Agreement,
Adjusted Severance Cost shall be equal to the aggregate amount of Severance
Benefits, other than Severance Benefits paid to Retained Employees, paid by the
Company or its Affiliates within one year of the Closing Date, to the extent and
only to the extent such amount exceeds $2,500,000. The maximum amount that
Seller shall be liable to reimburse under this Section 6.6(b) shall be
$5,300,000.
(c) Employees of the Company and the Subsidiaries shall be
given credit for all service with the Company, the Subsidiaries and Seller and
its Affiliates (including any other service credited for purposes of the Company
Plans) under all employee benefits plans, programs and policies of Buyer in
which they become participants for purposes of
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eligibility, vesting and benefit accrual (other than benefit accrual under
tax-qualified defined benefit pension plans where such accrual would result in a
duplication of benefits). If employees of the Company and the Subsidiaries
become participants in a medical, dental and health plan maintained by Buyer or
any of its subsidiaries in the calendar year in which the Closing Date occurs,
Buyer shall cause such plan to (i) waive any preexisting condition limitations
for conditions covered under the applicable medical, health or dental plan of
the Company and the Subsidiaries and (ii) honor any deductible and out of pocket
expenses incurred by such employees and their beneficiaries under the applicable
medical, health or dental plans of the Company and the Subsidiaries during the
portion of such calendar year preceding the Closing Date. If employees of the
Company and the Subsidiaries become eligible to participate in a group term life
insurance plan maintained by Buyer or any of its subsidiaries in the year in
which the Closing Date occurs, Buyer shall cause such plan to waive any medical
certification for such employees up to the amount of coverage the employees had
under the life insurance plan of the Company and the Subsidiaries (but subject
to any limits on the maximum amount of coverage under Buyer's life insurance
plan).
(d) On and after the Closing Date, Buyer shall cause the
Company to honor and discharge its obligations pursuant to the employment
agreements referred to in Section 3.10(a)(v).
(e) On or before the Closing Date, the Company shall amend the
Company's Retirement Plan (the "Retirement Plan") to make Seller the "plan
sponsor" (as such term is defined in Section 3(16) of ERISA) thereof. The
Company shall also make appropriate amendments to the Retirement Plan and the
trust agreement thereunder to implement such change of plan sponsor. The Company
shall take all other actions necessary to enable Seller to assume, and Seller
hereby agrees to assume, all benefit liabilities and obligations with respect to
the Retirement Plan.
(f) Seller shall retain all liability for the amounts payable
to employees of the Company pursuant to the Imasco and Affiliated Companies
Officer Pension Supplement.
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(g) Buyer hereby agrees to comply with any applicable notice
requirements under WARN or other similar Law of any jurisdiction relating to any
plant closing or mass layoffs or as otherwise required by any such Law.
Section 6.7 Nominee to Board of Directors. If the Note Amount
is $25,000,000 or more, Buyer shall, as soon as practicable following the
Closing, if so notified by Seller, cause one individual nominated by Seller and
approved by Buyer, which approval shall not be unreasonably withheld, to be
elected to Buyer's board of directors, and shall use its best efforts to cause
such nominee (or, in the event of the earlier death, incapacity or resignation
of such nominee, a successor nominee nominated by Seller and approved by Buyer,
which approval shall not be unreasonably withheld) to be reelected to such board
for so long as the sum of the unpaid principal amount of the Note and the market
value of the shares of Buyer Common Stock issued upon conversion of the Note
held by Seller and its Affiliates, collectively (each calculated as of the last
trading day of any calendar quarter following the Closing Date on each national
securities exchange or automatic dealer quotation system on which the Buyer
Common Stock may then be listed or traded) equals or exceeds $15,000,000;
provided that the rights granted pursuant to this Section 6.7 shall not be
assignable by Seller or its Affiliates, except to Seller or any such Affiliate.
Section 6.8 Note and Buyer Common Stock. Seller hereby agrees
that if it receives the Note as part of the Purchase Price, it will not transfer
such Note, or the Common Stock issuable upon conversion of such Note, to Persons
other than its Affiliates (who shall agree to hold the Note subject to this
Section 6.8) or Buyer for a period of 90 days following the Closing Date.
Section 6.9 Supply Agreement and Distribution Agreement.
Buyer, Seller and the Company hereby agree that (i) the Company and FFM shall
prior to the Closing enter into a Supply Agreement, effective as of Closing for
a term of at least five years, in substantially the form attached hereto as
Annex 6.9(a) (the "FFM Supply Agreement"), (ii) the Company and QVS, Inc. shall
prior to Closing enter into a Supply Agreement, effective as of Closing for a
term of at least five years, in substantially the form attached hereto as
Schedule 6.9(b) (the "QVS Supply Agreement" and,
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collectively with the FFM Supply Agreement, the "Supply Agreements"), and (iii)
the Company and FFM shall prior to Closing enter into a Distribution Agreement,
effective as of Closing for a term of at least seven years, in substantially the
form attached hereto as Annex 6.9(c) (the "Distribution Agreement").
Section 6.10 Financing. Buyer shall use its best efforts to
complete a public offering of its equity securities such that Buyer receives net
proceeds of at least $100,000,000 therefrom.
Section 6.11 Receivables of HED. Immediately prior to Closing,
the Company shall, or shall cause its Subsidiary to, assign to Seller or an
Affiliate of Seller (the "Assignee"), without recourse, all of the Company's
right to payment under the accounts receivable comprising the line item
"Receivables" on the balance sheet of HED set forth in Schedule 6.11 (the
"Receivables of HED"). Immediately following Closing, and continuing until such
time as at least 97% of such accounts receivable have been paid in full, Buyer
shall cause the Company, as agent for the Assignee, to use commercially
reasonable efforts to collect the Receivables of HED as they become due;
provided, however, that Buyer shall have no obligation to cause the Company to
initiate any litigation or other proceedings in order to collect any of the
Receivables or to resolve any dispute with any account debtor with respect to
any of the Receivables of HED; provided, further, that Buyer shall cooperate in
any litigation or other proceedings initiated by Seller to collect any of the
Receivables or to resolve any dispute with any account debtor with respect to
any of the Receivables of HED. Buyer shall cause the Company to pay over such
receipts to the Assignee, promptly upon the receipt thereof and to comply with
reasonable collection and payment allocation policies which Seller and Buyer
shall agree upon in good faith.
Section 6.12 Retention of Books and Records. Buyer shall cause
the Company and the Subsidiaries to retain, until all applicable tax statutes of
limitations (including periods of waiver) have expired, all books, records and
other documents pertaining to the Company and the Subsidiaries in existence on
the Closing Date that are required to be retained under current retention
policies and to make the same available after the Closing Date for
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inspection and copying by Seller or its agents at Seller's expense, during
regular business hours and upon reasonable request and upon reasonable advance
notice. After the expiration of such period, no such books and records shall be
destroyed by Buyer without first advising the tax director of Seller in writing
detailing the contents thereof and giving Seller at least 120 days to obtain
possession thereof. Seller agrees that such records will be kept strictly
confidential and used only for tax purposes.
Section 6.13 Closing Date Financial Statements. For a period
of one year from and after the Closing Date, to the extent reasonably necessary
for Seller or its Affiliates to prepare consolidated financial statements or any
governmental permits, licenses or required filings and to comply with reporting
obligations in respect thereof, upon written request of Seller, the Company and
the Subsidiaries will provide, and Buyer shall use its best efforts to cause the
Company and the Subsidiaries to provide, to Seller and its accountants within
twenty (20) business days of such request with such computer support, access to
employees and Buyer's accountants and financial information of the Company or
the Subsidiaries as of the Closing Date as Seller may reasonably request in the
format customarily required by Seller or its Affiliates of subsidiaries and,
upon Seller's request, it will be accompanied by supplemental financial
schedules customarily required by Seller or its Affiliates of subsidiaries in
support of such financial information. Seller agrees that such records will be
kept strictly confidential and used only for tax purposes.
Section 6.14 Delivery of Corporate Minutes and Bank Signature
Cards. At the Closing, Seller shall deliver to Buyer the minutes and stock books
of the Company and each of the Subsidiaries, and promptly following the Closing
shall deliver signature cards from all banks or financial institutions with
which the Company or any Subsidiary has any account designating signatures
approved by Buyer.
Section 6.15 Further Assurances. At any time after the Closing
Date, Seller and Buyer shall, and Buyer shall cause the Company or any
Subsidiary to, promptly execute, acknowledge and deliver any other assurances or
documents reasonably requested by Buyer or Seller, as the case
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may be, and necessary for Buyer or Seller, as the case may be, to satisfy its
obligations hereunder or obtain the benefits contemplated hereby.
ARTICLE VII
Conditions to Closing
Section 7.1 Conditions to Obligations of Buyer. The obligation
of Buyer to consummate the transactions contemplated by this Agreement shall be
subject to the satisfaction or waiver by Buyer in writing on or prior to the
Closing Date of each of the following conditions:
(a) Each of the representations and warranties of Seller
contained in this Agreement shall be true in all material respects when
made and as of the Closing Date, in each case with the same effect as
though such representations and warranties had been made on and as of
the Closing Date (except that representations and warranties that are
made as of a specific date need be true in all material respects only
as of such date); each of the covenants and agreements of Seller to be
performed on or prior to the Closing Date shall have been duly
performed in all material respects; and Buyer shall have received at
the Closing certificates to the foregoing effect, dated as of the
Closing Date and executed on behalf of Seller by its President or any
of its Vice Presidents and its Secretary or any of its Assistant
Secretaries.
(b) Seller shall have delivered to Buyer resignations of all
directors of the Company and the Subsidiaries and all officers of the
Company and the Subsidiaries who are not also employees of the Company
or a Subsidiary.
(c) Buyer shall have completed a public offering of its equity
securities with net proceeds of at least $100,000,000.00.
(d) Upon consummation of the Closing, there shall not occur an
Event of Default, or any event which with the lapse of time or the
giving of notice or both would become an Event of Default under the
documents listed on Schedule 7.1.
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Section 7.2 Conditions to Obligations of Seller. The
obligation of Seller to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver in writing by Seller on
or prior to the Closing Date of each of the following conditions:
(a) Each of the representations and warranties of Buyer
contained in this Agreement shall be true in all material respects when
made and as of the Closing Date, in each case with the same effect as
though such representations and warranties had been made on and as of
the Closing Date (except that representations and warranties that are
made as of a specific date need be true in all material respects only
as of such date); each of the covenants and agreements of Buyer to be
performed on or prior to the Closing Date shall have been duly
performed in all material respects; and Seller shall have received at
the Closing certificates to the foregoing effect, dated as of the
Closing Date and executed on behalf of Buyer by its President or any of
its Vice Presidents and its Secretary or any of its Assistant
Secretaries.
(b) If the Note is issued and delivered pursuant to this
Agreement, Seller shall have received from Stradling, Yocca, Carlson &
Rauth, counsel to Buyer, an opinion, dated as of the Closing Date,
substantially in
the form of Annex 7.2(b) hereof.
(c) If the Note is issued and delivered pursuant to this
Agreement, Buyer shall have executed and delivered the Registration
Rights Agreement.
(d) Upon consummation of the Closing, there shall not occur an
Event of Default, or any event which with the lapse of time or the
giving of notice or both would become an Event of Default under the
documents listed on Schedule 4.5.
Section 7.3 Conditions to Obligations of Buyer and Seller. The
obligations of the parties to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction or waiver by both parties on or
prior to the Closing Date of the following conditions:
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(a) Each party shall have duly filed with the FTC and the
Antitrust Division the Report required under the HSR Act with respect
to the sale and purchase of the Shares and the waiting period required
by the HSR Act, and any extensions thereof obtained by request or other
action of the FTC and/or the Antitrust Division, shall have expired or
been earlier terminated by the FTC or the Antitrust Division.
(b) No court or governmental authority of competent
jurisdiction shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, or non-appealable judgment,
decree, injunction or other order which is in effect on the Closing
Date and prohibits the consummation of the Closing.
(c) The Restructuring Transactions shall have been
consummated.
(d) The Company and FFM or QVS, as the case may be, shall have
entered into the Supply Agreements.
(e) The Company and FFM shall have entered into the
Distribution Agreement.
ARTICLE VIII
Termination
Section 8.1 Termination. This Agreement may be terminated at
any time prior to the Closing:
(a) by either Buyer or Seller, by giving written notice of
such termination to the other party, if such other party shall breach any of its
material obligations or agreements under this Agreement and such breach shall be
incapable of cure or has not been cured within sixty (60) days following the
giving of written notice of such breach to the breaching party; or
(b) by either Buyer or Seller, by giving written notice of
such termination to the other party, if there shall be in effect any law or
regulation that prohibits the consummation of the Closing or if consummation of
the
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Closing would violate any non-appealable final order, decree or judgment of
any court or governmental body having competent jurisdiction; or
(c) by Seller, by giving written notice of such termination to
Buyer, if Buyer shall not have satisfied the condition set forth in Section
7.1(c) on or prior to the date one year subsequent to the date hereof; or
(d) by Seller or Buyer, by giving written notice of such
termination to the other party, if the Closing shall not have occurred on or
prior to the date one year subsequent to the date hereof.
Section 8.2 Effect of Termination. In the event of the
termination of this Agreement in accordance with Section 8.1 hereof, this
Agreement shall thereafter become void and have no effect, and no party hereto
shall have any liability to the other party hereto or their respective
Affiliates, directors, officers or employees, except for the obligations of the
parties hereto contained in this Section 8.2 and in Sections 10.2, 10.3 and
10.11 hereof, and except that nothing herein will relieve any party from
liability for any breach of this Agreement prior to such termination.
ARTICLE IX
Survival And Indemnification
Section 9.1 Survival of Representations, Warranties, Covenants
and Agreements; Knowledge of Breach. (a) Notwithstanding any otherwise
applicable statute of limitations, the representations and warranties included
or provided for herein shall survive the Closing until one year after the
Closing Date; provided, however, that (i) any representation or warranty
contained in Sections 3.12, 3.18, 4.2 and 4.4 and Article V hereof shall survive
the Closing until the expiration of the applicable statute of limitations
(including any waivers or extensions thereof) with respect to such matters, (ii)
the representations and warranties contained in Section 3.16 shall survive the
Closing until fifteen (15) months after the Closing Date and (iii) the
representations and warranties contained in Sections 3.1, 3.2 and 3.3 shall
survive the Closing
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indefinitely. The covenants and other agreements contained in this Agreement to
be performed on or after Closing shall survive the Closing until the date or
dates specified therein or (except as to Section 6.5(a)) the expiration of the
applicable statute of limitations (including any waivers or extensions thereof)
with respect to such matters, whichever is later. Except with respect to (i)
any liabilities assumed by Seller pursuant to Sections 6.4 (including the
agreements described therein), 6.6(b), 6.6(f) and the last sentence of Section
6.6(e), (ii) any Losses arising out of the use or operation of the Airport
Property, including any Losses arising under or pursuant to any Environmental
Law, notwithstanding whether any such Losses arise out of a breach of any
representation or warranty hereunder, and (iii) the representations, warranties,
covenants and agreements contained in Sections 3.18 and 4.2 and Article V
hereof, in no event shall Buyer be liable to Seller or Seller be liable to
Buyer, as the case may be, for any breach of the representations, warranties,
covenants and agreements included or provided for herein or in any schedule or
certificate or other document delivered pursuant to this Agreement, unless and
until all Losses for which damages are recoverable hereunder by Buyer or Seller,
as the case may be, exceed $5,000,000 (the "Deductible"), in which case Buyer or
Seller, as the case may be, shall be entitled to damages in an amount up to the
sum of (i) thirty-three percent (33%) of the Purchase Price in the aggregate,
less (ii) amounts actually paid by Seller pursuant to the documents listed in
Schedule 9.1; provided, however, that Buyer or Seller, as the case may be, shall
be liable only for the amount by which all such recoverable damages exceed the
Deductible.
(b) No party hereto shall be deemed to have breached any
representation, warranty, covenant or agreement if (i) such party shall have
notified the other parties hereto in writing, on or prior to the Closing Date,
of the breach of, or inaccuracy in, or of any facts or circumstances
constituting or resulting in the breach of or inaccuracy in, such
representation, warranty, covenant or agreement, specifically referring to the
provisions of this Agreement so breached or rendered inaccurate, and (ii) such
other parties have permitted the Closing to occur and, for purposes of this
Agreement, are thereby deemed to have waived such breach or inaccuracy;
provided, however, that a disclosure pursuant to this Section 9.1(b) shall not
preju-
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dice the rights of the parties pursuant to Article VII hereof not to consummate
the transactions contemplated by this Agreement or to recover damages incurred
as a result of such breach or inaccuracy.
Section 9.2 Indemnification by Buyer.
(a) For the period commencing on the Closing Date and ending,
as the case may be, upon the expiration of the periods specified in Section
9.1(a) hereof Buyer shall, subject to the limitations set forth in Sections
9.1(a) and 9.1(b) hereof, indemnify, defend and hold harmless Seller and its
Affiliates, and their respective directors, officers, employees, shareholders,
attorneys, accountants and agents ("Seller Indemnified Parties") against and in
respect of all losses, damages, liabilities, costs and expenses (including
reasonable attorneys' fees and expenses incurred in investigating, preparing or
defending any claims covered hereby) (collectively, "Losses") sustained or
incurred arising out of any breaches of Buyer's representations, warranties,
covenants and agreements set forth in this Agreement (other than
representations, warranties, covenants and agreements set forth in Article V, as
to which the indemnification provisions set forth in Article V shall govern).
(b) For the period commencing on the Closing Date, Buyer shall
indemnify, defend and hold harmless the Seller Indemnified Parties against and
in respect of (i) all Losses sustained or incurred, or otherwise arising in
connection with the Restructured Business and (ii) any liabilities assumed by
Buyer pursuant to Section 6.6(b); provided, however, Buyer shall have no
obligation hereunder in respect of (i) any liabilities assumed by Seller
pursuant to Sections 6.4 (including the agreements described therein), 6.6(b),
6.6(f) and the last sentence of Section 6.6(e), (ii) any Losses arising out of
the use or operation of the Airport Property, including any Loss arising under
any Environmental Law, notwithstanding whether any such Loss arises out of a
breach of any representation or warranty hereunder, or (iii) any Losses for
which Seller is otherwise obligated to indemnify Buyer pursuant to Section 9.3.
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(c) Any payments pursuant to this Section 9.2 or
Article V shall be treated as an adjustment to the Purchase
Price for all Tax purposes.
Section 9.3 Indemnification by Seller. (a) For the period
commencing on the Closing Date and ending, as the case may be, upon the
expiration of the periods specified in Section 9.1(a) hereof Seller shall,
subject to the limitations set forth in Sections 9.1(a) and 9.1(b) hereof,
indemnify, defend and hold harmless Buyer and its Affiliates, and their
respective directors, officers, employees, shareholders, attorneys, accountants
and agents ("Buyer Indemnified Parties" and, collectively with the Seller
Indemnified Parties, the "Indemnified Parties") against and in respect of all
Losses sustained or incurred arising out of any breaches of Seller's or the
Company's representations, warranties, covenants and agreements set forth in
this Agreement (other than representations, warranties, covenants and agreements
set forth in Article V, as to which the indemnification provisions set forth in
Article V shall govern).
(b) For the period commencing on the Closing Date, Seller
shall indemnify, defend and hold harmless the Buyer Indemnified Parties against
and in respect of (i) all Losses sustained or incurred in connection with any
liabilities assumed by Seller pursuant to Sections 6.4 (including the agreements
described therein), 6.6(b), 6.6(f) and the last sentence of Section 6.6(e), and
(ii) all Losses arising out of the use or operation of the Airport Property,
including any Loss arising under any Environmental Law, notwithstanding whether
any such Loss described by this clause (ii) arises out of a breach of any
representation or warranty hereunder; provided, however, Seller shall have no
obligation hereunder in respect of any liabilities assumed by Buyer pursuant to
Section 6.6(b) or any Losses for which Buyer is otherwise obligated to indemnify
Seller pursuant to Section 9.2.
(c) Any payments pursuant to this Section 9.3 or
Article V shall be treated as an adjustment to the Purchase
Price for all Tax purposes.
Section 9.4 Indemnification as Sole Remedy. The indemnity
provided herein and in Article V hereof as it relates to this Agreement and the
transactions contemplated
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by this Agreement shall be the sole and exclusive remedy of the parties hereto,
their Affiliates, successors and assigns with respect to any and all claims for
losses, damages, liabilities, costs and expenses sustained or incurred arising
out of this Agreement and the transactions contemplated by this Agreement,
except for the right of the parties hereto to seek specific performance of the
obligations set forth in Article II and Sections 6.2, 6.4, 6.5, 6.6, 6.7, 6.8
and 6.9 of this Agreement.
Section 9.5 Method of Asserting Claims, Etc. All claims for
indemnification by the Indemnified Parties hereunder shall be asserted and
resolved as set forth in this Section 9.5 except for claims pursuant to Article
V hereof (as to which the provisions of Article V shall be applicable). In the
event that any written claim or demand for which Buyer or Seller, as the case
may be (the "Indemnifying Party") would be liable to any Indemnified Party
hereunder is asserted against or sought to be collected from any Indemnified
Party by a third party, such Indemnified Party shall promptly, but in no event
more than fifteen (15) days following such Indemnified Party's receipt of such
claim or demand, notify the Indemnifying Party of such claim or demand and the
amount or the estimated amount thereof to the extent then feasible (which
estimate shall not in any manner prejudice the right of the Indemnified Party to
indemnification to the fullest extent provided hereunder) (the "Third Party
Claim Notice") and in the event that an Indemnified Party shall assert a claim
for indemnity under this Article IX, not including a third party claim, the
Indemnified Party shall notify the Indemnifying Party promptly following its
discovery of the facts or circumstances giving rise thereto (together, with a
Third Party Claim Notice, a "Claim Notice"); provided, that no such notice need
be provided to an Indemnifying Party if the Deductible has not been exceeded and
will not be exceeded by such claim or demand; and provided, further, that the
failure to notify on the part of the Indemnified Party in the manner set forth
herein shall not foreclose any rights otherwise available to such Indemnified
Party hereunder, except to the extent that the Indemnifying Party is prejudiced
by such failure to notify. The Indemnifying Party shall have thirty (30) days
from the personal delivery or mailing of the Third Party Claim Notice (except
that such a period shall be decreased to a time ten (10) days before a scheduled
appearance date in a litigated matter) (the
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"Notice Period") to notify the Indemnified Party (i) whether or not the
Indemnifying Party disputes the liability of the Indemnifying Party to the
Indemnified Party hereunder with respect to such claim or demand and (ii)
whether or not it desires to defend the Indemnified Party against such claim or
demand, which it shall not be entitled to do until the Deductible is exceeded.
All costs and expenses incurred by the Indemnifying Party in defending such
claim or demand shall be a liability of, and shall be paid by, the Indemnifying
Party; provided, however, that the amount of such expenses shall be a liability
of the Indemnifying Party hereunder, subject to the limitations set forth in
Section 9.1 hereof. In the event that the Indemnifying Party notifies the
Indemnified Party within the Notice Period that it desires to defend the
Indemnified Party against such claim or demand, which it shall not be entitled
to do until the Deductible is exceeded and except as hereinafter provided, the
Indemnifying Party shall have the right to defend the Indemnified Party by
appropriate proceedings and by counsel reasonably acceptable to the Indemnified
Party. If any Indemnified Party desires to participate in, but not control, any
such defense or settlement it may do so at its sole cost and expense. The
Indemnified Party shall not settle a claim or demand without the consent of the
Indemnifying Party. The Indemnifying Party shall not, without the prior written
consent of the Indemnified Party, settle, compromise or offer to settle or
compromise any such claim or demand on a basis which would result in the
imposition of a consent order, injunction or decree which would restrict the
future activity or conduct of, or which would otherwise have a material adverse
effect on, the Indemnified Party or any subsidiary or Affiliate thereof. If the
Indemnifying Party elects not to defend the Indemnified Party against such claim
or demand, whether by not giving the Indemnified Party timely notice as provided
above or otherwise, then the amount of any such claim or demand, or, if the same
be contested by the Indemnified Party, then that portion of any such claim or
demand as to which such defense is unsuccessful (and all reasonable costs and
expenses pertaining to such defense) shall be the liability of the Indemnifying
Party hereunder, subject to the limitations set forth in Section 9.1 hereof. To
the extent the Indemnifying Party shall control or participate in the defense or
settlement of any third party claim or demand, the Indemnified Party will give
to the Indemnifying Party and its counsel reasonable access to all business
records and other docu-
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ments relevant to such defense or settlement, and shall permit them to consult
with the employees and counsel of the Indemnified Party. The Indemnified Party
shall use its best efforts in the defense of all such claims, and in connection
therewith shall be entitled to reimbursement by the Indemnifying Party of
expenses directly related to efforts undertaken at the specific request of the
Indemnifying Party.
ARTICLE X
Miscellaneous
Section 10.1 Amendment and Waiver. Any provision of this
Agreement may be amended or waived if, and only if, such amendment or waiver is
in writing and signed, in the case of an amendment, by Seller and Buyer, or in
the case of a waiver, by the party against whom the waiver is to be effective.
No failure or delay by any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege.
Section 10.2 Expenses. Except as otherwise expressly provided
in this Agreement, whether or not the transactions contemplated by this
Agreement are consummated, the parties shall bear their own respective expenses
(including, but not limited to, all compensation and expenses of counsel,
financial advisors, consultants, actuaries and independent accountants)
incurred in connection with this Agreement and the transactions contemplated
hereby.
Section 10.3 Public Disclosure. Each of the parties to this
Agreement hereby agrees with the other parties hereto that, except as may be
required to comply with the requirements of applicable law or the rules and
regulations of each stock exchange upon which the securities of one of the
parties or its Affiliates is listed, no press release or similar public
announcement or communication will be made or caused to be made concerning the
execution or performance of this Agreement unless specifically approved in
advance by all parties hereto; provided, however, that to the extent that either
party to this Agreement is required
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by law or the rules and regulations of any stock exchange upon which the
securities of one of the parties or its Affiliates is listed to make such a
public disclosure, such public disclosure shall only be made after prior
consultation with the other party to this Agreement.
Section 10.4 Assignment. No party to this Agreement may assign
any of its rights or obligations under this Agreement without the prior written
consent of the other party hereto; provided, however, that Seller shall have the
right to assign any of its rights under this Agreement to any of its Affiliates,
so long as Seller remains liable for such Affiliate's obligations hereunder.
Section 10.5 Entire Agreement. This Agreement (including all
Annexes and Schedules hereto) contains the entire agreement between the parties
hereto with respect to the subject matter hereof and supersedes all prior
agreements and understandings, oral or written, with respect to such matters,
except for the Confidentiality Agreement which will remain in full force and
effect for the term provided for therein.
Section 10.6 Fulfillment of Obligations. Any obligation of any
party to any other party under this Agreement, which obligation is performed,
satisfied or fulfilled by an Affiliate of such party, shall be deemed to have
been performed, satisfied or fulfilled by such party.
Section 10.7 Parties in Interest; No Third Party
Beneficiaries. This Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted assigns.
Nothing in this Agreement, express or implied, is intended to confer upon any
Person other than Buyer, Seller, or their successors or permitted assigns, any
rights or remedies under or by reason of this Agreement.
Section 10.8 Schedules. The inclusion of any matter in any
schedule to this Agreement shall be deemed to be an inclusion for all purposes
of this Agreement, including each representation and warranty to which it may
relate, but inclusion therein shall expressly not be deemed to constitute an
admission by Seller, or otherwise imply, that any such matter is material or
creates a measure for materiality for the purposes of this Agreement.
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Section 10.9 Counterparts. This Agreement and any amendments
hereto may be executed in one or more coun terparts, each of which shall be
deemed to be an original by the parties executing such counterpart, but all of
which shall be considered one and the same instrument.
Section 10.10 Section Headings. The section and paragraph
headings and table of contents contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation of
this Agreement.
Section 10.11 Notices. All notices hereunder shall be deemed
given if in writing and delivered personally or sent by facsimile or by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other addresses as shall be specified by like
notice):
(a) if to Seller or, prior to Closing, the
Company, to:
Imasco Holdings, Inc.
c/o Imasco Limited
600 de Maisonneuve Blvd. West
20th Floor
Montreal, Canada H3A 3K7
Attention: Roy R. Schwartz
With a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: David M. Kies
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(b) if to Buyer or, after the Closing, the
Company, to:
CKE Restaurants, Inc.
1200 North Harbor Boulevard
Anaheim, California 92803
Attention: Andrew F. Puzder
With a copy to:
Stradling, Yocca, Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660
Attention: C. Craig Carlson
Any notice given by mail shall be effective when received.
SECTION 10.12 GOVERNING LAW; SUBMISSION TO JURISDICTION;
SELECTION OF FORUM. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO THE
CHOICE OF LAW PRINCIPLES THEREOF. EACH PARTY HERETO AGREES THAT IT SHALL BRING
ANY ACTION OR PROCEEDING IN RESPECT OF ANY CLAIM ARISING OUT OF OR RELATED TO
THIS AGREEMENT OR THE TRANSACTIONS CONTAINED IN OR CONTEMPLATED BY THIS
AGREEMENT, WHETHER IN TORT OR CONTRACT OR AT LAW OR IN EQUITY, EXCLUSIVELY IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK OR THE
SUPREME COURT OF THE STATE OF NEW YORK FOR THE COUNTY OF NEW YORK (THE "CHOSEN
COURTS") AND (I) IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE CHOSEN
COURTS, (II) WAIVES ANY OBJECTION TO LAYING VENUE IN ANY SUCH ACTION OR
PROCEEDING IN THE CHOSEN COURTS, (III) WAIVES ANY OBJECTION THAT THE CHOSEN
COURTS ARE AN INCONVENIENT FORUM OR DO NOT HAVE JURISDICTION OVER ANY PARTY
HERETO AND (IV) AGREES THAT SERVICE OF PROCESS UPON SUCH PARTY IN ANY SUCH
ACTION OR PROCEEDING SHALL BE EFFECTIVE IF NOTICE IS GIVEN IN ACCORDANCE WITH
SECTION 10.11 OF THIS AGREEMENT.
Section 10.13 Severability. The provisions of this Agreement
shall be deemed severable and the invalidity or unenforceability of any
provision shall not affect the validity or enforceability of the other
provisions hereof.
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If any provision of this Agreement, or the application thereof to any person or
entity or any circumstance, is invalid or unenforceable, (a) a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of such invalid or
unenforceable provision and (b) the remainder of this Agreement and the
application of such provision to other persons, entities or circumstances shall
not be affected by such invalidity or unenforceability.
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IN WITNESS WHEREOF, this Agreement has been signed on behalf
of each of the parties hereto as of the date first written above.
IMASCO HOLDINGS, INC.
By: /s/ LLOYD SCHNELL
------------------------------------
Name: Lloyd Schnell
Title: President
HARDEE'S FOOD SYSTEMS, INC.
By: /s/ RICHARD HALL
------------------------------------
Name: Richard Hall
Title: Executive Vice President and
Chief Financial Officer
CKE RESTAURANTS, INC.
By: /s/ ANDREW F. PUZDER
----------------------------------
Name: Andrew F. Puzder
Title: Executive Vice President