Exhibit 2
STOCK PURCHASE AGREEMENT
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THIS STOCK PURCHASE AGREEMENT (the "Agreement") is made on this 15th day
of May, 2001, by and between COI ACQUISITION COMPANY, a Tennessee corporation
("Buyer"), and SHONEY'S, INC., a Tennessee corporation ("Seller").
WITNESSETH:
WHEREAS, Seller owns all of the one thousand (1,000) issued and
outstanding shares of no par value common stock (the "Shares") of Commissary
Operations, Inc., a Tennessee corporation (the "Company"); and
WHEREAS, Buyer is a newly formed entity organized and owned in part by
individuals who are key members of Management (as defined below) of the
Company and who are familiar with and responsible for the day-to-day
operations of the Company; and
WHEREAS, Seller desires to sell, and Buyer desires to purchase, all of
the Shares, for the consideration and on the terms set forth in this
Agreement; and
WHEREAS, Seller has received from First Tennessee Securities Corp.
("Seller's Financial Advisor") its opinion (the "Fairness Opinion") that the
sale of the Shares to Buyer, upon the terms and conditions set forth in this
Agreement, is fair to Seller and its shareholders from a financial
perspective
NOW, THEREFORE, in consideration of the covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is agreed as follows:
1. DEFINITIONS
For purposes of this Agreement, in addition to the terms defined
elsewhere herein, unless the context otherwise requires, the following terms
shall have the meanings indicated:
"AAA" means the American Arbitration Association.
"Action" means any action, suit, litigation, complaint, counterclaim,
claim, petition, mediation, contest or administrative proceeding, whether at
law, in equity, in arbitration or otherwise, and whether conducted by or
before any Government or other Person.
"Affiliate" means, when used with respect to a specific Person, another
Person that directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Person
specified.
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"Agreement" shall have the meaning set forth in the preamble hereof.
"Buyer" shall have the meaning set forth in the preamble to this
Agreement.
"Buyer's Counsel" means Harwell Howard Hyne Gabbert & Manner, P.C.
"Captain D's Distribution Agreement" means that certain distribution
agreement by and between Captain D's, Inc. and the Company dated as of
November 18, 1999.
"Closing" means the consummation of the purchase and sale of the Shares
as provided in this Agreement on the Closing Date.
"Closing Date" means June 11, 2001, or such other date upon which the
parties may mutually agree.
"COI Meat Plant" means that parcel of land located in Nashville,
Davidson County, Tennessee, which is more specifically described in Exhibit
A attached hereto.
"Company" shall have the meaning set forth in the first recital of this
Agreement.
"Company Real Estate" shall have the meaning set forth in Section 4.17.
"Consents" means all consents, approvals, ratifications, waivers, or
other authorization (including any Governmental Authorization) of any third
party that are required to be obtained in order to effectuate the
transactions contemplated by this Agreement.
"Existing Credit Facility" means that certain Loan and Security
Agreement dated as of August 31, 2000 by and between the Company and Bank of
America, N.A.
"Forum" means any federal, state, local or municipal court, governmental
agency, administrative body or agency, tribunal, private alternative dispute
resolution system or arbitration panel.
"Government" means any federal, state, local or municipal government or
any department, commission, board, bureau, agency, instrumentality, unit or
taxing authority thereof.
"Governmental Authorization" means any approval, consent, license,
permit, waiver or other authorization issued, granted, given or otherwise
made available by or under the authority of any Government.
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"Indemnification Agreement" means the indemnification agreement
substantially in the form attached hereto as Exhibit B.
"Knowledge of Seller" or "Seller's Knowledge" or words of like effect,
when used to qualify a representation, warranty or other statement contained
herein, means the actual knowledge (after reasonable inquiry) of J. Michael
Bodnar, James M. Beltrame, David L. Gilbert, Richard K. Arras, Ronald P.
Walker, Donna M. Adams, V. Michael Payne, Richard D. Schafstall, F. E.
McDaniel, Jr. and Jennifer Martin.
"Management" means Haney A. Long, Jr., President and Chief Operating
Officer of Company; Lloyd W. Baldridge, Jr., Chief Financial Officer and Vice
President of Company; and Daniel E. Staudt, Vice President of Company, each
individually and collectively.
"Material Adverse Effect" means a change or changes in the financial
condition of the Company that occurs or occur after the date of this
Agreement and prior to the Closing Date which causes a diminution in the
value thereof (the value of the Company being assumed to be, for purposes of
this definition, the Purchase Price) of more than Two Hundred Fifty Thousand
and 00/100 dollars ($250,000.00); provided, however, that the following shall
be deemed not to constitute or cause a Material Adverse Effect: (1) any
actual or expected loss of revenue or profit resulting from decreased sales
to Seller's restaurants (including decreased sales resulting from restaurant
closures prior to Closing that have been disclosed in writing to Management
prior to execution of this Agreement); or (2) the Company's inability to
enter into a distribution agreement with Roadhouse Grill, provided that such
inability to enter into a distribution agreement with Roadhouse Grill is not
because of Seller's breach of this Agreement.
"Orders" means all applicable orders, writs, judgments, decrees,
rulings, consent agreements and awards of or by any Forum or entered by
consent of the party to be bound.
"Permitted Encumbrances" means those items described in Schedule 1.1.
"Person" means an individual, partnership, corporation, trust or other
similar entity, or any Government.
"Purchase Price" shall have the meaning set forth in Section 2.2.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor law, and regulations and rules issued pursuant to the Securities
Act or any successor law.
"Seller" shall have the meaning set forth in the preamble of this
Agreement.
"Seller's Counsel" means Dinsmore & Shohl LLP.
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"Seller's Liability Limit" shall have the meaning set forth in Section
10.5.
"Shares" shall have the meaning set forth in the first recital of this
Agreement.
"Shoney's Distribution Agreement" means that certain distribution
agreement by and between Shoney's Restaurant, a division of Seller, and the
Company dated as of October 23, 2000.
"Tax" or "Taxes" means any federal, state, local or foreign income,
sales, property, excise, payroll, gross receipts, use, transfer, value added,
capital stock, franchise or other tax of any kind whatsoever, including any
interest, penalty or addition thereto, whether disputed or not.
"Tax Sharing Agreement" means the tax sharing arrangement effective as
of the 2000 fiscal year and for subsequent periods among Seller and Seller's
Affiliates, including the Company.
"Tax Return" means any return, declaration, report, claim for refund or
information return or statement relating to Taxes, including any amendment
thereto.
"Termination Date" means June 18, 2001, or such other date as is
determined pursuant to Section 9.1 of this Agreement.
"Transition Services Agreement" means a transition services agreement
pursuant to which Seller agrees to provide certain administrative services to
Buyer for the term and upon the terms and conditions set forth therein in
such form and substance as is mutually acceptable to the parties.
All references herein to "Sections," "Schedules" and "Exhibits" shall,
unless otherwise indicated, refer to the sections, schedules and exhibits
which (through attachment or incorporation by reference) are a part of this
Agreement.
2. SALE AND PURCHASE OF SHARES
2.1. Purchased Shares. For the Purchase Price and upon and subject to
the terms and conditions of this Agreement, Seller agrees to sell, transfer
and deliver to Buyer, and Buyer agrees to purchase from Seller, at the
Closing all of Seller's right, title and interest in and to the Shares.
2.2. Purchase Price. The purchase price to be paid by Buyer to Seller
for the Shares shall be Nine Million ($9,000,000.00) Dollars (the "Purchase
Price").
3. CLOSING
The purchase and sale of the Shares (the "Closing") provided for in this
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Agreement shall take place at the offices of Seller's Counsel at Bank of
America Plaza, Suite 1100, 414 Union Street, Nashville, Tennessee 37219, at
10:00 a.m. (local time) on June 11, 2001, or at such other time and place as
the parties may mutually agree. Subject to the provisions of Section 9.1,
failure to consummate the purchase and sale provided for in this Agreement on
the date and time and at the place determined pursuant to this Section 3,
will not result in the termination of this Agreement and will not relieve any
party of any obligation under this Agreement.
4. SELLER'S REPRESENTATIONS AND WARRANTIES
In order to induce Buyer to enter into this Agreement and to induce
Buyer to consummate the transactions contemplated hereby, Seller represents
and warrants to Buyer as follows:
4.1. General. The statements contained in Section 4.1 through Section
4.18 are true and correct.
4.2. Good Standing of Seller. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Tennessee.
4.3. Good Standing of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Tennessee. The Company is duly authorized to conduct business and is in
good standing under the laws of the State of Georgia, the State of Kansas and
the State of West Virginia and, to Seller's Knowledge, is not required to be
qualified to do business as a foreign corporation in any other jurisdiction.
The Company has all requisite corporate power and authority to own, operate
and lease its property and to carry on its business as it is now being
conducted.
4.4. Authorization. The approval of this Agreement from Seller's board
of directors (which is required by Section 7.2.12 to occur on or before May
22, 2001) constitutes all necessary corporate action required by Seller. The
individuals executing this Agreement on behalf of and in the name of Seller
are duly authorized and empowered to so act.
4.5. Noncontravention; Consents. Subject to obtaining any Consents,
the execution, delivery and performance of this Agreement does not and will
not , after the giving of notice, the lapse of time or otherwise conflict
with, result in a breach of, or constitute a default under (in a manner that
would result in a Material Adverse Effect) Seller's or the Company's
respective charter or bylaws, or, violate any material law, Order, rule or
regulation applicable to Seller or the Company of any Forum having
jurisdiction over Seller or the Company, as the case may be, if such
violation would result in a Material Adverse Effect. Except as contemplated
by this Agreement, the execution, delivery and performance of this Agreement
and any other documents executed in connection herewith, and the consummation
of the transactions
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contemplated hereby and thereby, do not require any filing by Seller or, to
Seller's Knowledge, the Company with, notice to or consent, waiver or
approval of, any Government.
4.6. Legality and Enforceability. This Agreement has been duly
executed and delivered by Seller and is the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance with its
terms, subject to general principles of equity and to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws from time to time in
effect affecting the enforcement of creditors' rights generally.
4.7. Capitalization. The authorized equity securities of the Company
consist of Two Thousand (2,000) shares of common stock, no par value per
share, of which One Thousand (1,000) shares are issued and outstanding as of
the date of this Agreement and constitute the Shares. Seller is the record
and beneficial owner and holder of the Shares, free and clear of all liens,
charges, security interests, pledges, encumbrances or any other restrictions
whatsoever, except as set forth on Schedule 1.1. The Shares have been duly
authorized and validly issued and are fully paid and nonassessable. With the
exception of this Agreement, there are no contracts, subscriptions,
agreements or arrangements relating to the issuance, sale, transfer or
modification of any equity securities or other securities of the Company.
The Shares were issued in accordance with all applicable federal and state
securities laws.
4.8. Company Charter and Bylaws. Schedule 4.8 contains true and
correct copies of the Company's charter and bylaws.
4.9. Litigation. There is no pending, or, to Seller's Knowledge,
threatened Action relating to the transaction contemplated hereby. Seller is
not a party to any pending Action, nor is Seller in receipt of any inquiry,
notice, citation, investigation or complaint from any Government that would
materially and adversely affect Seller's ability to perform its obligations
under this Agreement.
4.10. Tax Matters. To Seller's Knowledge, the Company timely has filed
or received extensions with respect to all Tax Returns required to be filed
by or with respect to the Company, and the Company has paid all Taxes
indicated on such Tax Returns to be required, in whole or in part, to be paid
by or with respect to the Company. To Seller's Knowledge, the Company is not
a party to any pending action or proceeding nor is there any threatened
action or proceeding for assessment or collection of Taxes against the
Company. Additionally, to Seller's Knowledge, the reserves for Taxes
reflected in the Company's audited financial statements accurately reflect
the Company's Tax liability as of the date of such financial statements.
4.11. Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried on directly by Seller with
Buyer without the intervention of any broker or other Person so as to afford
a basis for any
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claim for brokerage or other commissions or fees made by any brokers engaged
by Seller.
4.12. Schedules; Knowledge of Breach. Notwithstanding the fact that
the disclosure schedules attached hereto are numbered and have been prepared
to relate to specific representations and warranties contained in this
Article 4, each of the representations and warranties made herein is modified
and supplemented by each of the disclosures in the disclosure schedules.
Also, the parties agree that Seller shall have no liability for the untruth
or breach of any representations or warranties contained in this Article 4 to
the extent that Buyer, Management or any of their respective Affiliates, as
of the Closing Date, have knowledge of information that would render such
representation or warranty untrue, false or misleading in any respect.
4.13. Insurance. Seller has maintained for a period of three (3) years
prior to the Closing Date policies of insurance, which policies are described
on Schedule 4.13 attached hereto, to cover Company's business, assets and
properties from loss by fire, windstorm and extended coverage as well as
insurance for general liability, automobile and workers' compensation.
Neither Seller nor, to Seller's Knowledge, Company, has been notified as to
a default under or a threatened cancellation of any such policy of insurance.
There are no pending claims against such insurance by Company as to which any
insurer is defending under reservation of rights or has denied liability and,
to Seller's Knowledge, there exists no claim under such insurance that has
not been properly filed by Seller or Company.
4.14. Fairness Opinion. Seller's Financial Advisor has delivered the
Fairness Opinion.
4.15. Material Contracts. To the Knowledge of Seller, there exist no
contracts to which Company is a party or by which the Company is bound that
are material to the Company or its business that have not been disclosed to
Management prior to the date hereof. The material contracts of Company that
have been disclosed to Management are referred to herein as the "Material
Contracts".
4.16. No Undisclosed Liabilities. To the Knowledge of Seller, the
Company has no material liabilities except those that are (a) reflected or
disclosed pursuant to this Agreement; (b) disclosed on the Company's audited
financial statements; or (c) liabilities that have arisen in the ordinary
course of business since the date of the Company's audited financial
statements. There are no expenses or liabilities of Seller or any of
Seller's Affiliates other than the Company for which the Company is liable,
whether primarily or otherwise.
4.17. Assets. (a) Schedule 4.17 sets forth a complete and accurate
list and description of all the real property that Company owns or leases,
has agreed (or has an option) to purchase, sell or lease, or may be obligated
to purchase, sell or lease (the
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"Company Real Estate").
(b) As to each parcel of Company Real Estate, Seller has furnished to
Buyer any (i) title policies; (ii) surveys and (iii) environmental reports
that are in the possession of Seller.
(c) To Seller's Knowledge, except for the Permitted Encumbrances, there
are no mortgages, security interests or other liens or encumbrances affecting
Company's assets.
4.18. No Omissions or Misstatements. Copies of all documents referred
to in any Exhibit or Schedule hereto have been delivered or made available to
Buyer and constitute true, correct and complete copies thereof and include
all amendments, exhibits, schedules, appendices, supplements or modifications
thereto or waivers thereunder.
5. BUYER'S REPRESENTATIONS AND WARRANTIES
In order to induce Seller to enter into this Agreement and consummate
the transactions contemplated hereby, Buyer represents and warrants to Seller
as follows:
5.1. General. The statements contained in Sections 5.1 through 5.10
are true and correct.
5.2. Good Standing. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Tennessee.
Buyer has all requisite corporate power and authority to own, operate and
lease its properties and to carry on its businesses as now being conducted
and to enter into and perform its obligations under this Agreement and under
all other agreements contemplated by this Agreement.
5.3. Board and Shareholder Authorization. The execution, delivery and
performance of this Agreement and any and all other agreements contemplated
by this Agreement have been duly authorized by the Board of Directors of
Buyer. The individuals executing this Agreement and all other agreements
contemplated by this Agreement on behalf of and in the name of Buyer are duly
authorized and empowered to so act. There is no requirement that the
execution or performance of this Agreement be authorized or approved by
Buyer's shareholders.
5.4. Non-contravention; Consents. The execution, delivery and
performance of this Agreement does not and will not , after the giving of
notice, the lapse of time or otherwise conflict with, result in a breach of,
or constitute a default under Buyer's charter or bylaws, or, violate any
material law, Order, rule or regulation applicable to Buyer of any Forum
having jurisdiction over Buyer. Except as contemplated by this Agreement,
the execution, delivery and performance of this Agreement and any other
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documents executed in connection herewith, and the consummation of the
transactions contemplated hereby and thereby, do not require any filing by
Buyer with, notice to or consent, waiver or approval of, any Government.
5.5. Legality and Enforceability. This Agreement has been duly
executed and delivered by Buyer and is the legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance with its terms,
subject to general principles of equity and to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws from time to time in
effect affecting the enforcement of creditors' rights generally.
5.6. Litigation. There is no pending or, to Buyer's Knowledge,
threatened Action relating to the transaction contemplated hereby. Buyer is
not a party to any pending Action, nor is Buyer in receipt of any inquiry,
notice, citation, investigation or complaint from any Government that would
materially and adversely affect Buyer's ability to perform its obligations
under this Agreement.
5.7. No Restrictions. Buyer is not a party to, subject to or bound by
any agreement or Order of any Forum or Government which could prevent the
consummation of the transactions contemplated herein.
5.8. No Broker. With the exception of 2nd Generation Capital, LLC,
whose fees will be paid by Buyer, all negotiations relative to this Agreement
and the transactions contemplated hereby have been carried on directly by
Buyer with Seller without the intervention of any broker or other person
engaged by Buyer so as to afford a basis for any claim for brokerage or other
commissions or fees relative to this Agreement or the transactions
contemplated hereby.
5.9. Securities Matters.
5.9.1. Buyer and Management acknowledge that they know and
understand the following: (1) that Company is a wholly-owned
subsidiary of Seller; (2) that Company has been operated and managed
directly under the management and leadership of Management; (3) that
Management has been and continues to be responsible for the day-to-
day operations of Company; (4) that Management has the day-to-day
decision making authority for the operations of Company; (5) that the
members of Management are experts in the foodservice industry, and
have negotiated and are completely familiar with all of the Material
Contracts of Company, including those with Captain D's, Inc. and
Seller's "Shoney's" Restaurant division and all other current and
potential customers of Company; (6) that they have complete access
to and familiarity with the business operations and financial and
other matters relative to Company; and (7) have entered into this
Agreement with knowledge of certain strategic initiatives of Seller
as they apply to the operations of Company that are disclosed in a
letter from Seller to
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Management dated May 15, 2001.
5.9.2. Buyer and each of the individuals and entities providing
equity financing to Buyer are an "accredited investor" as that term
is defined in Rule 501 of Regulation D, 15 C.F.R. Sec. 230.501 et seq.,
promulgated under the Securities act, and have such knowledge and
experience in financial and business matters so as to be capable of
evaluating the merits and risks of an investment in the Company.
5.9.3. Buyer is acquiring the Shares for Buyer's own account
for investment and not with a view to, or for resale in connection
with, any distribution of the Shares within the meaning of the
Securities Act. The Buyer agrees that such Shares may not be sold,
transferred, offered for sale, pledged, hypothecated or otherwise
disposed of without registration under the Securities Act, as
amended, except pursuant to an exemption from registration available
under such Securities Act. Buyer will not sell, offer for sale or
solicit offers to buy any of the Shares in violation of the
Securities Act or the securities laws of any state. Buyer
understands that the Shares have not been registered under federal
or any state securities laws.
5.10. Schedules; Knowledge of Breach. Notwithstanding the fact that
the disclosure schedules attached hereto are numbered and have been prepared
to relate to specific representations and warranties contained in this
Article 5, each of the representations and warranties made herein is modified
and supplemented by each of the disclosures in the disclosure schedules.
Also, the parties agree that Buyer shall have no liability for the untruth or
breach of any representations or warranties contained in this Article 5 to
the extent that Seller, as of the Closing Date, has knowledge of information
that would render such representation or warranty untrue, false or misleading
in any respect.
6. COVENANTS
6.1. Covenants of Seller. From the date hereof to the Closing Date,
Seller shall:
(a) cause the Company to not change the Company's authorized or issued
capital stock, grant any stock option or right to purchase shares of capital
stock of the Company, issue any security convertible into such capital stock;
grant any registration rights; purchase, redeem, retire, or otherwise acquire
any shares of any such capital stock; or declare or pay any dividend or other
distribution or payment in respect of shares of capital stock;
(b) cause the Company to not amend any of its organizational documents;
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(c) cause the Company not to make a dividend or distribution except as
permitted under the Existing Credit Facility;
(d) cause the Company not to incur any borrowings under the Existing
Credit Facility without the consent of Management;
(e) not and shall cause the Company not to assign, make or enter into
any lease or other agreement for the use, sale, occupancy or possession all
or any part of the COI Meat Plant, and Seller shall not and shall cause the
Company not to encumber, by mortgage, deed of trust or otherwise, all or any
part of the COI Meat Plant;
(f) not otherwise cause the Company to take any action that is not
consistent with past practices and in the ordinary course of Company's
business;
(g) cause the Company to not agree, whether orally or in writing, to do
any of the foregoing contained in this Section 6.1;
(h) use its best efforts to remove Company from any litigation or
claims involving Seller or its Affiliates but does not involve Company;
(i) use its best efforts to remove Company as a party to any contract
or agreement involving Seller or its Affiliates and not relating to Company's
business; and
(j) for a reasonable period of time after the Closing, upon the request
of and reasonable advance notice from Buyer, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, all such
further deeds, assignments, transfers and conveyances as may reasonably be
necessary to effect the sale, assignment, grant, transfer and conveyance of
any or all of the Company Real Estate in accordance with and as contemplated
by the terms and conditions of this Agreement.
6.2. Covenants of Management. From the date hereof to the Closing
Date, Management shall:
(a) cause the Company to operate only in the usual, regular and
ordinary manner and use reasonable efforts (without entering into any written
employment agreements) to preserve intact the Company's present business
organization and not remove (other than for repair and/or replacement) from
the premises occupied by the Company any assets other than inventories sold
in the ordinary course of business;
(b) cause the Company to replenish and maintain inventories at regular
or normal intervals in accordance with its past practice through the Closing
Date;
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(c) cause the Company to preserve and maintain the relations and
goodwill of the Company's suppliers, customers, landlords, creditors,
employees, agents and others having business relationships with the Company;
(d) cause the Company to maintain its assets (except inventories, which
may be used and replenished by the Company in accordance with Section 6.2(b)
above) in their current condition of repair, ordinary wear and tear excepted;
(e) cause the Company to maintain the books of account and records
relating to the operations of the Company in the usual, regular and ordinary
manner on a basis consistent with current practices; and
(f) cause the Company not to enter into any contract or agreement
(whether written or verbal) that would be reasonably expected to require
either payments to or payments from the Company in an amount in excess of
$100,000 during any twelve-month period, other than the contemplated
agreement with Roadhouse Grill (the terms and conditions of which are subject
to Seller's consent, not to be unreasonably withheld) and agreements in the
ordinary course of Company's business to which Seller consents under current
Company practices.
6.3. Notice of Certain Events. From the date hereof to the Closing
Date, Seller shall notify Buyer in writing as soon as possible if the Seller
becomes aware of any fact or condition that causes or constitutes a breach of
any of Seller's representations and warranties as of the date of this
Agreement, or if Seller becomes aware of the occurrence after the date of
this Agreement of any fact or condition that would (except as expressly
contemplated by this Agreement) cause or constitute a breach of any such
representation or warranty had such representation or warranty been made as
of the time of occurrence or discovery of such fact or condition. From the
date hereof to the Closing Date, Buyer shall notify Seller in writing as soon
as possible if the Buyer becomes aware of any fact or condition that causes
or constitutes a breach of any of Buyer's representations and warranties as
of the date of this Agreement, or if Buyer becomes aware of the occurrence
after the date of this Agreement of any fact or condition that would (except
as expressly contemplated by this Agreement) cause or constitute a breach of
any such representation or warranty had such representation or warranty been
made as of the time of occurrence or discovery of such fact or condition.
7. CONDITIONS OF CLOSING
7.1. Conditions for the Benefit of Buyer. The obligations of Buyer to
consummate the transactions provided for herein shall be subject to the
satisfaction, on or before the Closing Date, or such earlier date as may be
specified herein, of the following conditions, in addition to such other
conditions as may be provided for in this Agreement:
7.1.1. Seller has made all of the deliveries required by
Section 8.1.
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7.1.2. Seller has transferred to the Company by special
warranty deed, as a capital contribution, the fee simple title in
and to the COI Meat Plant and executed and delivered mutually
acceptable cross easements for ingress/egress and parking with
respect to the property of Seller that is adjacent to the COI Meat
Plant.
7.1.3. The representations and warranties of Seller contained
herein shall have been true and correct in all material respects as
of the date hereof and shall be true, and correct in all material
respects as of and at the Closing Date with the same effect as if
made at and as of such dates, except as provided or permitted
hereunder, and Seller shall have performed and complied in all
material respects with all agreements, covenants and conditions
required by this Agreement to be performed and complied with by them,
at or prior to the Closing Date.
7.1.4. All Consents necessary for the Buyer to consummate the
transactions contemplated by this Agreement shall have been obtained.
7.1.5. No Action to prohibit, delay or otherwise materially and
adversely affect the consummation of this Agreement or to subject
Buyer to any liability resulting directly or indirectly from the
transactions contemplated hereby shall have been instituted or
threatened.
7.1.6. Buyer shall have received the opinion, dated as of the
Closing Date, of Seller's Counsel, in substantially the form set
forth on Exhibit C attached hereto.
7.1.7. Buyer shall have received financing sufficient to fund
the Purchase Price.
7.1.8. Seller shall have entered into the Transition Services
Agreement.
7.1.9. Seller has executed amendments to the Shoney's
Distribution Agreement and the Captain D's Distribution Agreement in
the forms attached hereto collectively as Exhibit D.
7.1.10. Seller shall have delivered to Buyer a certificate,
dated as of the Closing Date, certifying to the fulfillment of the
foregoing conditions. Seller may, conditioned upon prior receipt
of the written approval of Buyer, amend the Schedules attached
hereto for the purpose of making immaterial corrections and
clarifications thereon applicable to Seller and consistent with the
terms and agreements contained herein which amendments shall be
attached to the certificate delivered pursuant to this Section
7.1.10. Unless otherwise agreed to in writing by the parties
hereto, if the Closing occurs, Buyer shall be deemed to
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waive any rights for breach of representation or warranty by Seller
to the extent that such amendment corrects such representation or
warranty. Nothing in this Section 7.1.10 shall impose any
obligation on Buyer either to accept any material amendment to the
Schedules provided for herein or to close the transaction
notwithstanding such amendment, unless Buyer elects to do so in its
sole and absolute discretion.
7.1.11. Buyer shall have received or obtained title policies,
surveys and environmental reports for the Company Real Estate that
are in the possession of Seller.
7.1.12. On or before May 22, 2001, Seller's board of directors
has approved this Agreement.
7.2. Conditions for the Benefit of Seller. The obligations of Seller
to consummate the transactions provided for herein shall be subject to the
satisfaction, on or before the Closing Date, of the following conditions, in
addition to such other conditions as may be provided for in this Agreement:
7.2.1. Buyer has made all of the deliveries required by Section
8.2.
7.2.2. The representations and warranties of Buyer contained
herein shall have been true and correct in all material respects as
of the date hereof and shall be true and correct at and as of the
Closing Date with the same effect as if made on and as of such dates,
except as otherwise provided or permitted hereunder, and Buyer shall
have performed and complied in all material respects with all
agreements, covenants and conditions required by this Agreement to
be performed and complied with by it, at or prior to the Closing
Date.
7.2.3. All Consents necessary for the Seller to consummate the
transactions contemplated by this Agreement shall have been obtained.
7.2.4. No Action to prohibit, delay or otherwise materially and
adversely affect the consummation of this Agreement or to subject
Seller to any liability resulting directly or indirectly from the
transactions contemplated hereby shall have been instituted or
threatened.
7.2.5. Seller shall have received an opinion, dated as of the
Closing Date from Buyer's Counsel, in substantially the form set
forth in Exhibit E attached hereto.
7.2.6. Seller's Financial Advisor shall not have withdrawn the
Fairness Opinion.
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7.2.7. Seller shall have received a termination and release
agreement signed by a duly authorized signatory for the Tift County,
Georgia Development Authority, stating that a certain Guaranty
Agreement dated as of July 7, 1999 by and between Seller and Tift
County, Georgia Development Authority with respect to the Company's
facility in Tift County, Georgia has been terminated without cost,
penalty or expense to Seller of any kind or nature and that Seller
has been fully released from any and all liabilities and obligations
with respect to such Guaranty Agreement and a certain Contract for
Construction and Lease of Commercial Facility dated as of July 7,
1999 by and between the Company and Tift County, Georgia Development
Authority.
7.2.8. Buyer shall have delivered to Seller a certificate, dated
as of the Closing Date, certifying to the fulfillment of the
foregoing conditions. Buyer may, conditioned upon prior receipt of
the written approval of Seller, amend the Schedules attached hereto
for the purpose of making immaterial corrections and clarifications
thereon applicable to Buyer and consistent with the terms and
agreements contained herein, which amendments shall be attached to
the certificate delivered pursuant to this Section 7.2.8. Unless
otherwise agreed to in writing by the parties hereto, if the Closing
occurs, Seller shall be deemed to waive any rights for breach of
representation or warranty by Buyer to the extent that such amendment
corrects such representation or warranty. Nothing in this Section
7.2.8 shall impose any obligation on Seller either to accept any
material amendment to the Schedules provided for herein or to close
the transaction notwithstanding such amendment, unless Seller elects
to do so in its sole and absolute discretion.
7.3. Best Efforts and Right to Perform. Seller and Buyer each shall use
their best efforts to fulfill all of their respective pre-Closing obligations
under this Agreement; provided, however, that, unless otherwise required by
this Agreement, no party shall be required to make any out-of-pocket payments
(other than customary fees and charges and salary and travel expenses) or
incur any additional obligations to satisfy such obligations or conditions.
Seller and Buyer shall have the right, but not the obligation (unless
otherwise required by this Agreement), to assist the other in performing any
pre-closing obligations or conditions precedent of the other party.
7.4. Waiver of Conditions. Seller or Buyer, as the case may be, may
waive any condition precedent to their respective obligations under this
Agreement; provided, however, that such waiver can be granted only on the
waiving party's behalf and only to the extent that it does not affect any
other party's rights hereunder.
8. DELIVERIES AT THE CLOSING
8.1. Seller's Deliveries to Buyer. At the Closing, Seller shall
deliver to Buyer, in addition to any and all other instruments required
hereunder to be so delivered by Seller, the following:
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8.1.1. Certificates representing the Shares, duly endorsed (or
accompanied by duly executed stock powers) for transfer to the Buyer;
8.1.2. Copies of the charter and bylaws of Seller and of
resolutions adopted by the Board of Directors of Seller authorizing
and approving the execution and performance of this Agreement and all
other agreements contemplated by this Agreement and the sale and
transfer of the Shares, all as certified by an appropriate officer
of Seller as of the Closing Date;
8.1.3. A certificate as to the incumbency of each person
executing this Agreement and all other agreements contemplated by
this Agreement on behalf of Seller;
8.1.4. A current certificate of corporate good standing for
Seller issued by the Tennessee Secretary of State;
8.1.5. A current certificate of corporate good standing for the
Company issued by the Georgia Secretary of State, the Kansas
Secretary of State, the Tennessee Secretary of State and the West
Virginia Secretary of State;
8.1.6. The opinion of Seller's counsel referred to in Section
7.1.6;
8.1.7. The certificate of Seller required by Section 7.1.10;
8.1.8. Written resignations from all directors and officers of
the Company, except those directors and officers of Company
designated in writing by Buyer prior to the Closing;
8.1.9. The Transition Services Agreement duly executed by
Seller;
8.1.10. All corporate minute books and stock transfer records;
8.1.11. All assets of the Company in the possession or control
of Seller or its Affiliates;
8.1.12. An amendment to the Tax Sharing Agreement, duly signed
by an authorized signatory of Seller, providing that the Company
shall be removed as a party from the Tax Sharing Agreement, effective
as of the Closing Date; and
8.1.13. Such additional instruments and documents as Buyer's
Counsel may reasonably request in order to fulfill the terms and
conditions of this Agreement.
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8.2. Buyer's Deliveries to Seller. At the Closing, Buyer shall deliver
to Seller, in addition to any and all other instruments required hereunder to
be so delivered to Seller by Buyer, the following:
8.2.1. The Purchase Price by wire transfer to an account
specified by Seller;
8.2.2. Copies of the charter and bylaws of Buyer and of
resolutions adopted by the Board of Directors of Buyer authorizing
execution and performance by Buyer of this Agreement and all other
agreements contemplated by this Agreement and the purchase of the
Shares, all as certified by appropriate officers of Buyer as of the
Closing Date;
8.2.3. A certificate as to the incumbency of each person
executing this Agreement and all other agreements contemplated by
this Agreement on behalf of Buyer;
8.2.4. Current certificates of corporate good standing and
qualification to do business of Buyer as certified by the Secretary
of State or other appropriate officer of the State of Tennessee;
8.2.5. The opinion of Buyer's Counsel referred to in Section
7.2.5;
8.2.6. The certificate of Buyer required by Section 7.2.8;
8.2.7. Termination agreement, in form and substance
satisfactory to Seller, duly executed by Haney A. Long, Jr. ("Long"),
evidencing the termination of a certain Management Retention
Agreement dated as of June 21, 2000 by and between Seller and Long,
and providing a general release by Long of any and all claims that
he then has or thereafter may have against Seller for compensation
or benefits arising out of the course and scope of his employment
with either Seller or the Company;
8.2.8. Termination agreement, in form and substance satisfactory
to Seller, duly executed by Lloyd W. Baldridge, Jr. ("Baldridge"),
evidencing the termination of a certain Agreement dated as of July
15, 1997 by and between Seller and Baldridge relating to Baldridge's
rights upon a change in control of Seller, and providing a general
release by Baldridge of any and all claims that he then has or
thereafter may have against Seller for compensation or benefits
arising out of the course and scope of his employment with either
Seller or the Company;
8.2.9 Release agreement, in form and substance satisfactory to
Seller, duly executed by Daniel E. Staudt ("Staudt"), providing a
general release by Staudt for the benefit of Seller and its
Affiliates of any and all claims that he then has or thereafter may
have against Seller for compensation or benefits
17
arising out of the course and scope of his employment with either the Seller
or the Company;
8.2.10. A letter of credit shall be issued from the Buyer
Financing in an amount and in such form as Seller shall determine to
cover all insurance-related claims of the Company;
8.2.11. The Indemnification Agreement duly executed by Company
and Buyer;
8.2.12. Certificates from Management that each of them has read
this Agreement and all schedules and is not aware of any misstatement
with respect to any of the representations and warranties being made
by Seller; and
8.2.13. Such additional instruments and documents as Seller's
Counsel may reasonably request in order to fulfill the terms and
conditions of this Agreement.
8.3. Other Deliveries. At the Closing, all other consents, permits,
licenses and administrative approvals required to be obtained as conditions
precedent to the consummation of the transactions provided for herein shall
be delivered.
9. TERMINATION
9.1. Termination Events. This Agreement may be terminated:
(a) By mutual consent of all parties hereto;
(b) Upon written notice by Buyer if any of the conditions to
Buyer's obligations to consummate the transactions contemplated in
this Agreement shall not have been satisfied, or waived by Buyer, on
or prior to the Termination Date (or such earlier date as may be
specified in this Agreement); or
(c) Upon written notice by Seller if any of the conditions to
Seller's obligations to consummate the transactions contemplated in
this Agreement shall not have been satisfied, or waived by Seller,
on or prior to the Termination Date;
(d) Upon written notice by Buyer if Seller breaches any of its
agreements or covenants hereunder or if any of Seller's
representations or warranties were false when made;
(e) Upon written notice by Seller if Buyer breaches any of its
agreements or covenants hereunder or if any of Buyer's
representations or warranties were false when made; or
18
(f) Upon written notice by either Buyer or Seller if the Closing
has not occurred (other than through the failure of any party seeking
to terminate this Agreement to comply fully with its obligations
under this Agreement) on or before the Termination Date, or such
later date upon which the parties may agree in writing.
9.2. Effect of Termination. Upon termination pursuant to Section 9.1,
this Agreement shall be of no further force or effect, and there shall be no
further obligations or restrictions on the future activities on the part of
Buyer or Seller and their respective directors, officers, employees, agents
and shareholders, except that: the confidentiality provisions of this
Agreement set forth in Section 13.2 hereof shall survive and remain in full
force and effect; provided, however, that termination will not in any way
release a breaching party from liability for any willful breach of this
Agreement giving rise to such termination. Any such right of termination
shall not preclude any legal or equitable remedies that may be available to
any non-defaulting party hereto arising out of any default hereunder by the
other party hereto.
9.3 Specific Performance. Seller and Buyer each acknowledge that their
respective rights to consummate the transactions contemplated in this
Agreement are special, unique and of extraordinary character and that in the
event either party violates or fails and refuses to perform any covenant made
by it herein, the other party may be without adequate remedy at law.
Accordingly, each of Seller and Buyer agrees that in the event of a default
by either party, the non-defaulting party shall have such remedies against
the defaulting party as may be available to the non-defaulting party either
pursuant to this Agreement and/or at law or in equity, including the right to
recover all costs, expenses or damages resulting to such non-defaulting party
from such default and the right to specifically enforce this Agreement.
10. INDEMNIFICATION, ARBITRATION, AND COOPERATION
10.1. Indemnification by Seller. Seller will indemnify, defend and
hold Buyer harmless after the Closing Date from and against any costs
(including, without limitation, reasonable attorneys' fees and court costs
and costs of investigation), losses, damages, liabilities or expenses
incurred by Buyer as a result of any of the following (the "Seller
Indemnified Claims"):
(1) The breach of any of Seller's representations and
warranties made under or pursuant to this Agreement or any of the
other agreements contemplated by this Agreement;
(2) The non-fulfillment of any covenant, agreement or
obligation to be performed by Seller under or pursuant to this
Agreement or any of the other agreements contemplated by this
Agreement; and
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(3) Any claim for brokerage, finders fees or other commissions
relative to this Agreement or any of the other agreements
contemplated by this Agreement asserted by or on behalf of any broker
or finder claiming to have been retained by Seller or to have
rendered services on Seller's behalf.
10.2. Indemnification by Buyer. Buyer will indemnify and hold Seller
harmless and will cause the Company to indemnify and hold Seller harmless
from and after the Closing Date from and against all losses, damages,
liabilities or expenses incurred by Seller as a result of any of the
following (the "Buyer Indemnified Claims"):
(1) The breach of any of representations and warranties by
Buyer made under or pursuant to this Agreement or any of the other
agreements contemplated by this Agreement;
(2) The non-fulfillment of any covenant, agreement or
obligation to be performed by Buyer under or pursuant to this
Agreement or any of the other agreements contemplated by this
Agreement; and
(3) Any claim or claims for brokerage, finders fees or other
commissions relative to this Agreement or any of the other agreements
contemplated by this Agreement asserted by or on behalf of any broker
or finder claiming to have been retained by Buyer or to have rendered
services on Buyer's behalf.
10.3. Participation. Should any claim be made by a person not a party
to this Agreement with respect to any matter to which either of the foregoing
indemnities relates, the indemnified party (the "Indemnitee") shall promptly
notify the indemnifying party (the "Indemnitor") thereof. The Indemnitee, on
not less than thirty (30) days' written notice to the Indemnitor containing
the terms of the proposed settlement, may make settlement of such claim and
such settlement shall be binding on both parties hereto for the purposes of
this Section; provided, however, that if within such thirty (30) day period
the Indemnitor shall have requested the Indemnitee to contest any such claim
at the expense of the Indemnitor, the Indemnitee shall promptly comply, and
the Indemnitor shall have the right to direct the defense of such claim or
any litigation based thereon at its own expense through counsel of it own
choosing. The Indemnitee shall also have the right to participate in the
settlement of any such claim or in any such litigation so long as its
participation is at its own expense and with the understanding that the
Indemnitor may settle in its own discretion. Any payment or settlement made
by the Indemnitor in such contest, together with the total expense thereof,
shall be binding on the Indemnitee and the Indemnitor for the purposes only
of this Section. Notwithstanding anything herein to the contrary, an
Indemnitor shall not, without the prior written consent of the indemnified
party, settle any claim in any manner which adversely affects the Indemnitee.
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10.4. Time Limitations. The Indemnitor will have no liability to the
Indemnitee under or in connection with: any Seller Indemnified Claim or Buyer
Indemnified Claim under this Agreement unless written notice asserting an
indemnification claim based thereon is given to the Indemnitor (i) in the
case of claims relating to breaches of the representations and warranties
contained in Section 4.10, prior to the expiration of the applicable statute
of limitations for such claim(s) or (ii) in the case of all other claims,
prior to the date which is the later of: (a) eighteen (18) months after the
Closing Date or (b) eighteen (18) months after the date on which a covenant
or agreement is to be performed hereunder; provided, however, the liability
of either party relating to, arising out of or based upon any covenants,
agreements, representations and warranties relating to Seller's title to the
Shares or to the due authorization of this Agreement may be asserted by the
other party at any time.
10.5. Seller's Liability Limit. Notwithstanding the foregoing, the
aggregate liability of Seller pursuant to Section 10.1 hereof shall not
exceed the Purchase Price (the "Seller's Liability Limit"). In addition,
Seller shall have no liability for indemnification or otherwise with respect
to Section 10.1 hereof until the aggregate liability of Seller thereunder
exceeds One Hundred Fifty Thousand and 00/100 Dollars ($150,000.00) and then
only to the extent that the aggregate liability of Seller thereunder exceeds
such amount. The amount of any liability of Seller under this Section 10
shall be computed net of any insurance proceeds received by Buyer with
respect to the matter out of which such liability arose. Notwithstanding
anything to the contrary contained herein, Seller's Liability Limit shall not
apply to (a) any litigation or claim made against Seller or its Affiliates
which does not involve in any manner the Company (other than as a named
defendant) and (b) any contract or agreement involving Seller or its
Affiliates which does not relate in any manner to the Company's business
(other than the Company being named as a party thereto), and Seller agrees to
indemnify and hold Buyer harmless against any loss, damage or liability in
connection with a claim made against Buyer in respect thereof.
10.6. Settlement of Disputes. (a) Arbitration. All disputes with
respect to any claim for indemnification under this Article 10 and all other
disputes and controversies of every kind and nature arising out of or in
connection with this Agreement shall be submitted to arbitration pursuant to
the following procedures:
(i) After a dispute or controversy arises, either party may, in
a written notice delivered to the other party, demand such
arbitration. Such notice shall designate the name of the arbitrator
appointed by such party demanding arbitration, together with a
statement of the matter in controversy;
(ii) Within thirty (30) days after receipt of such demand, the
other party shall, in a written notice delivered to the other party,
name such party's arbitrator. If such party fails to name an
arbitrator, then the second arbitrator shall be named by the AAA.
The two arbitrators so selected shall name a third
21
arbitrator within thirty (30) days, or in lieu of such agreement on
a third arbitrator by the two arbitrators so appointed, the third
arbitrator shall be appointed by the AAA;
(iii) The arbitration hearing shall be held in Nashville,
Tennessee, at a location designated by a majority of the arbitrators.
The Commercial Arbitration Rules of the AAA shall be used;
(iv) The substantive laws of the State of Tennessee (excluding
conflict of laws provisions) shall apply in any arbitration
proceeding hereunder;
(v) An award rendered by a majority of the arbitrators appointed
pursuant to this Agreement shall be final and binding on all parties
to the proceeding, shall deal with the question of costs of the
arbitration and all related matters and shall not award punitive
damages. A judgment on such award may be entered by either party in
a court of competent jurisdiction; and
(vi) Except as set forth in Section 10.6(b) hereof, Seller and
Buyer stipulate that the provisions of this Section 10.6(a) shall be
a complete defense to any suit, action or proceeding instituted in
any federal, state or local court or before any administrative
tribunal with respect to any controversy or dispute arising out of
this Agreement. The arbitration provisions hereof shall, with
respect to such controversy or dispute, survive the termination or
expiration of this Agreement.
(b) Notwithstanding anything in this Section 10.6 to the contrary,
either party may seek from a court any provisional remedy that may be
necessary to protect any rights or property of such party pending the
establishment of the arbitral tribunal or its determination of the merits of
the controversy.
11. SURVIVAL OF TERMS
The representations, warranties, covenants, indemnities and agreements
of the respective parties hereto, as contained herein, in the Schedules
hereto, or any certificate or other document delivered pursuant hereto, shall
survive the Closing Date and shall continue thereafter in full force and
effect only for such period of time as set forth in Section 10.4
notwithstanding any investigation heretofore or hereafter made by or on
behalf of the parties hereto.
12. WAIVER AND AMENDMENT
Any of the provisions of this Agreement may be waived in writing at any
time, by the party or parties which is or are entitled to the benefit of such
provision. Any of the provisions of this Agreement may be amended at any
time by written agreement of all parties.
22
13. NONCOMPETE RESTRICTIONS; CONFIDENTIAL INFORMATION; RETENTION OF
DOCUMENTS; PUBLICITY
13.1. (a) Covenant Not To Compete. Seller agrees that, during the Non-
Compete Period (as such term is defined below) and within the Non-Compete
Area (as such term is defined below), except on behalf of the Company or the
Buyer, Seller shall not and will cause its Affiliates existing on the date of
this Agreement (including, without limitation, Captain D's, Inc.) not to,
directly or indirectly, own or operate a food distribution company that would
seek to provide food distribution services to restaurants operated under the
"Shoney's" or "Captain D's" restaurant concepts. The "Non-Compete Period"
shall commence at the Closing and, with respect to the Shoney's restaurant
concept, terminate upon the expiration of the Shoney's Distribution
Agreement, and, with respect to the Captain D's restaurant concept, terminate
one (1) year after the expiration of the Captain D's Distribution Agreement.
The "Non-Compete Area" shall mean the United States of America. Ownership of
less than five (5%) percent of the stock of a publicly held company shall not
be deemed a breach of this covenant.
(b) Covenant Not To Solicit. Seller and Buyer both covenant and
agree to not solicit, without the prior written consent of the other, within
the Non-Compete Area for a period of three (3) years following the Closing
Date any person for employment or employ any person who, at Closing, is
employed by the other, unless such person has not been employed with either
Seller or Buyer, as the case may be, for at least six (6) months.
(c) In the event of a breach of this Section 13.1, the parties
hereto acknowledge that (i) monetary damages shall be inadequate to
compensate the non-breaching party and (ii) the non-breaching party shall be
entitled, without the posting of a bond or similar security and
notwithstanding the arbitration provisions contained in Article 10, to an
injunction restraining such breach. Nothing contained herein shall be
construed as prohibiting the non-breaching party from pursuing any other
remedy available at law or in equity. The parties hereto acknowledge that
(i)the necessity of protection against the competition of Seller (and its
Affiliates existing on the date of this Agreement) as provided in Section
13.1(a) above and the solicitation of the Seller and Buyer as provided in
Section 13.1(b) above and that (ii) the nature and scope of such protection
has been carefully considered by the parties hereto. The period provided and
the area covered are expressly represented and agreed to be fair, reasonable
and necessary. The consideration provided for herein is deemed to be
sufficient and adequate to compensate the non-breaching party for agreeing to
the restrictions contained in this Section 13.1. If, however, any court
determines that the foregoing restrictions are not reasonable, such
restrictions shall be modified, rewritten or interpreted to include as much
of their nature and scope as will render them enforceable.
23
13.2. Confidential Information. All information given by any party
hereto to any other party shall be used only for the purposes of this
Agreement and the transactions contemplated in this Agreement and shall be
treated as confidential and not disclosed to others except the parties'
attorneys, accountants, agents, affiliates and lenders and, in addition, as
to Buyer, and except insofar as such data or information is published or is
a matter of public knowledge or is required to be disclosed by applicable law
or legal process. In the event that Buyer does not consummate the
transactions provided for herein for any reason whatsoever, Buyer shall
return to Seller all copies of data supplied by Seller and its
representatives to Buyer or its representatives.
13.3. Retention of Documents. Seller agrees that, after the Closing
Date, all of Seller's documents relating to the ownership and operation of
the Company during the period prior to the Closing Date shall be open for
inspection by representatives of Buyer at any time during regular business
hours of Seller for any proper purpose until such time as such documents are
destroyed or possession thereof is given to Buyer as provided for in the
following sentences, and that Buyer, at its sole expense, may during such
period make such copies thereof as it may reasonably request. Without
limiting the generality of the foregoing, for a period commencing on the
Closing Date and ending on the sixth anniversary of the Closing Date, Seller
shall not destroy or give up possession of any document referred to in the
preceding sentence without first offering to Buyer the opportunity, at
Buyer's sole expense, to obtain the same. Thereafter, Seller shall be free
to dispose of such documents as it deems fit.
13.4. Inspection of Documents. Buyer agrees that, after the Closing
Date, documents relating to the ownership and operation of the Company prior
to the Closing Date shall be open for inspection by representatives of the
Seller if needed in the course of an audit, claim or litigation involving
such operations at any time during regular business hours of Seller for any
proper purpose until such time as such documents are destroyed or possession
thereof is given to Seller as provided for in the following sentences, and
that Seller, at its sole expense, may during such period make such copies
thereof as it may reasonably request. Without limiting the generality of the
foregoing, for a period commencing on the Closing Date and ending on the
sixth anniversary of the Closing Date, Buyer shall not and shall not allow
Company to destroy or give up possession of any document referred to in the
preceding sentence without first offering to Seller the opportunity, at
Seller's sole expense, to obtain the same. Any documents shall be held in
confidence in accordance with Section 13.2. Thereafter, Seller shall be free
to dispose of such documents as it deems fit.
13.5. Publicity. It is the intention of the parties to use reasonable
efforts to reach agreement on the wording of any news releases or other
public announcements by Seller or Buyer, or any of their respective
affiliates, pertaining to this Agreement. In the absence of circumstances
requiring otherwise, any such releases or public announcements shall be
submitted to the other party for its comment and consent prior to issuance.
Neither party shall unreasonably withhold or delay its consent to a
24
news release or other public announcement.
14. RIGHT OF FIRST REFUSAL
So long as Seller owns the property contiguous to the COI Meat Plant, if
Buyer (or any Affiliate of Buyer) receives a bona fide offer from a third
party (the "Third Party Offer") to purchase or acquire whether directly or
indirectly ("Acquire") the COI Meat Plant or any portion thereof, and Buyer
(or its Affiliate(s)) desires to sell or transfer ownership of the COI Meat
Plant or any portion thereof whether directly or indirectly ("Convey"), then
Buyer (its Affiliate(s)) agrees that Seller shall have the exclusive right to
match the Third Party Offer and Acquire the COI Meat Plant or any portion
thereof in accordance with these terms. Accordingly, Buyer (or its
Affiliate(s)) must, upon receipt of the Third Party Offer, send a written
notice to Seller which contains all of the material terms and conditions of
the Third Party Offer, along with a complete bona fide copy of the Third
Party Offer (and all related documents). If Seller agrees to match the Third
Party Offer in its material commercial respects within thirty (30) days after
receipt of Buyer's (or its Affiliate(s)) notice thereof, then Buyer (or its
Affiliate(s)) shall Convey the COI Meat Plant or any portion thereof solely
to Seller. If Seller does not agree to match the Third Party Offer in its
material commercial respects within thirty (30) days after its receipt of
such notice, then Buyer (or its Affiliate(s)) shall have the right to accept
the Third Party Offer, provided that any Conveyance to such third party must
be consummated not prior to 31 days, but not later than 90 days after
Seller's receipt of the Third Party Offer and notice, and the Conveyance to
such third party may only be consummated upon the same terms and conditions
as contained in the Third Party Offer. If such Conveyance to such third
party is not so consummated, then Buyer (or its Affiliate(s)) shall not
Convey the COI Meat Plant or any portion thereof without again offering to
Convey the COI Meat Plant or any portion thereof to Seller as provided above.
Notwithstanding the foregoing, the provisions of this Section 14 shall not
apply in the event that Buyer receives an offer from a third party to
purchase from Buyer all or substantially all of the assets of Buyer nor shall
it apply to any sale-leaseback of the COI Meat Plant undertaken as part of a
bona fide plan of financing.
15. INSURANCE CLAIMS COOPERATION
Seller shall, from time-to-time, reasonably cooperate and assist Buyer
in processing claims covered under each policy of insurance described in
Section 4.13 of this Agreement. Buyer shall pay any out-of-pocket expenses
(including, but not limited to, reasonable attorneys fees and expenses) of
Seller and of Seller's employees and agents reasonably incurred in connection
with providing such cooperation, but Buyer shall not be responsible to
reimburse Seller for the salaries or costs of fringe benefits or other
similar expenses paid by Seller to its employees and agents while assisting
in the processing of any such claims.
16. FEES AND EXPENSES
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Except as otherwise specifically provided in this Agreement, Seller and
Buyer, respectively, shall each bear their own costs and expenses incurred in
connection herewith and with the transactions contemplated hereby, whether or
not the sale of the Shares hereunder shall be consummated or this Agreement
subsequently shall be terminated.
17. NOTICES
Any notice which any party hereto may desire or may be required
hereunder to give to the other parties hereto shall be in writing and shall
be deemed to be duly given when received (or when first refused, if that be
the case) by personal delivery, by overnight delivery service which provides
return receipts, or by express, registered or certified U.S. mail, postage
prepaid, return receipt requested, addressed to such other party as follows:
SELLER: Shoney's, Inc.
1727 Elm Hill Pike
Nashville, Tennessee 37210
Attn: Mr. James Beltrame
Copy to: Dinsmore & Shohl LLP
Bank of America Plaza, Suite 1100
414 Union Street
Nashville, Tennessee 37219
Attn: Gary M. Brown, Esq.
BUYER: COI Acquisition Company
2629 Eugenia Avenue
Nashville, Tennessee 37211
Attn: Haney A. Long, Jr.
Copy to: Harwell Howard Hyne Gabbert & Manner, P.C.
1800 First American Center
315 Deaderick Street
Nashville, Tennessee37238
Attn: Mark Manner
or to such other address as a party hereto hereafter may designate to the
other parties in writing.
18. CONSTRUCTION
As herein used, the singular number shall include the plural, the plural
the singular, and the use of any gender shall be applicable to all genders,
unless the
26
context would clearly not admit such construction. This instrument shall be
construed and interpreted in accordance with the laws of the State of
Tennessee. Section or paragraph headings are employed herein solely for
convenience of reference, and such headings shall not be used in construing
any terms or provisions of this instrument.
19. SUCCESSORS AND ASSIGNS
This Agreement and all of the provisions hereof shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
heirs, successors and assigns, provided, however, that neither this Agreement
nor any of the rights or obligations of any party hereto may be assigned
without the prior written consent of the other party hereto. Nothing
expressed or referred to in this Agreement will be construed to give any
Person other than the parties to this Agreement any legal or equitable right,
remedy, or claim under or with respect to this Agreement or any provision of
this Agreement. This Agreement and all of its provisions and conditions are
for the sole and exclusive benefit of the parties to this Agreement and their
permitted successors and assigns.
20. SEVERABILITY
Whenever possible, each provision and term of this Agreement shall be
interpreted in such manner as to be valid and enforceable; provided, however,
that in the event any provision or term of this Agreement should be
determined to be invalid or unenforceable, all other provisions and terms of
this Agreement and the application thereof to all persons and circumstances
subject thereto shall remain unaffected to the extent permitted by law. If
any application of any provision or term of this Agreement to any person or
circumstances should be determined to be invalid or unenforceable, the
application of such provision or term to other persons and circumstances
shall remain unaffected to the extent permitted by law.
21. COUNTERPARTS
This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original hereto and all of which together shall
constitute but one Agreement.
22. ENTIRE AGREEMENT
This Agreement and the Exhibits and Schedules hereto constitute the
entire agreement among the parties hereto and supersede all prior and
contemporaneous agreements and undertakings of the parties pertaining to the
subject matter hereof
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and there are no representations or warranties, express or implied, that have
been relied upon by either of the parties other that those contained in this
Agreement.
SIGNATURES CONTAINED ON NEXT PAGE
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
SHONEY'S, INC.
By: /s/ J. Michael Bodnar
--------------------------------------
Name: J. Michael Bodnar
------------------------------------
Title: President and CEO
-----------------------------------
COI ACQUISITION COMPANY
By: /s/ Haney Long, Jr.
--------------------------------------
Name: Haney A. Long, Jr.
------------------------------------
Title: President and CEO
-----------------------------------
JOINDER
The undersigned have joined in the execution of this Agreement for the
sole purpose of acknowledging and agreeing to Sections 5.9 and 6.2 of this
Agreement:
HANEY A. LONG, JR.
/s/ Haney A. Long, Jr.
- --------------------------------
LLOYD W. BALDRIDGE, JR.
/s/ Lloyd W. Baldridge, Jr.
- --------------------------------
DANIEL E. STAUDT
/s/ Daniel E. Staudt
- --------------------------------
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Exhibits and Schedules omitted due to immateriality.