ASSET PURCHASE AGREEMENT
AMONG
THE QUIZNO'S ACQUISITION COMPANY,
BAIN'S DELI FRANCHISE ASSOCIATES,
THROUGH ITS GENERAL PARTNER, GEMINI ENTERPRISES, LTD.,
GEMINI ONE, INC.,
AND
JOLLES #4 PARTNERSHIP
Dated November 12, 1997
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TABLE OF CONTENTS
Page
1. PURCHASE AND SALE OF ASSETS 1
1.1 CONVEYANCE OF ASSETS 1
1.2 LIABILITIES OF SELLER 2
1.3 ACCOUNTS RECEIVABLE 3
1.4 CONSENTS 3
1.5 NAME CHANGE 3
1.6 EXCLUDED ASSETS 3
1.7 BAIN'S DELI FRANCHISE AGREEMENTS 3
2. CONSIDERATION FOR ASSETS 4
2.1 PURCHASE PRICE AND PAYMENT 4
2.2 PURCHASE PRICE ADJUSTMENTS 5
2.3 PRORATIONS 6
2.4 SECURITY 6
3. INSPECTION OF EQUIPMENT. 7
4. ALLOCATION 7
5. RESTAURANT LEASES 7
6. CLOSING 7
7. CLOSING OBLIGATIONS 7
8. EMPLOYEES AND EMPLOYMENT MATTERS 8
8.1 NO OBLIGATIONS ASSUMED 8
8.2 INFORMATION REGARDING EMPLOYEES 8
9. REPRESENTATIONS AND WARRANTIES OF SELLER 8
9.1 ORGANIZATION, GOOD STANDING, AND QUALIFICATION 9
9.2 AUTHORIZATION; BINDING OBLIGATION 9
9.3 ASSETS 9
9.4 NO VIOLATION 9
9.5 GOVERNMENT CONSENTS 10
9.6 LEGAL PROCEEDINGS 10
9.7 NO BROKERS 10
9.8 TAXES 10
9.9 CONTRACTS AND OTHER AGREEMENTS 10
9.10 RESTAURANT LEASES 11
9.11 RECORDS 11
9.12 FRANCHISE AGREEMENTS 11
9.14 EQUIPMENT 13
9.15 OBLIGATIONS AND LIABILITIES 13
9.16 FULL DISCLOSURE 13
9.17 CONDUCT OF BUSINESS 13
9.18 LICENSES 14
9.19 ENVIRONMENTAL MATTERS 14
9.20 INTELLECTUAL PROPERTY 14
9.21 SUPPLIERS 15
9.22 INVENTORIES 15
10. SECURITIES LAWS REPRESENTATIONS AND WARRANTIES OF SELLER. 15
10.1 ACQUISITION INTENT. 15
10.2 INFORMATION. 15
10.3 SOPHISTICATION. 15
10.4 RESTRICTED STOCK. 15
10.5 UNDERWRITER. 16
11. REPRESENTATIONS AND WARRANTIES OF BUYER 16
11.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION 16
11.2 AUTHORIZATION; BINDING AGREEMENT 16
11.3 NO VIOLATION 16
11.4 CONSENTS 16
11.5 LEGAL PROCEEDINGS 16
11.6 BROKERS 17
11.7 TAXES 17
11.8 FULL DISCLOSURE 17
12. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS 17
12.1 ACCURACY OF SELLER'S REPRESENTATIONS AND WARRANTIES 17
12.2 PERFORMANCE BY SELLER 17
12.3 DELIVERY OF DOCUMENTS 17
12.4 GOVERNMENTAL AND OTHER CONSENTS 17
12.5 CLOSING OBLIGATIONS 18
13. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS 18
13.1 ACCURACY OF BUYER'S REPRESENTATIONS AND WARRANTIES 18
13.2 PERFORMANCE BY BUYER 18
13.3 DELIVERY OF DOCUMENTS 18
13.4 CLOSING OBLIGATIONS 18
14. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS 18
15. INDEMNIFICATION AND SETOFF. 18
15.1 INDEMNIFICATION BY SELLER. 18
15.2 INDEMNIFICATION BY BUYER 19
15.3 OTHER INDEMNIFICATION PROVISIONS 19
15.4 RIGHT OF SETOFF 19
16. MISCELLANEOUS 19
16.1 EXPENSES 19
16.2 ENTIRE SUBJECT MATTER; AMENDMENT 19
16.3 SUCCESSORS AND ASSIGNS 20
16.4 COUNTERPARTS 20
16.5 NOTICES 20
16.6 HEADINGS 21
16.7 GOVERNING LAW AND JURISDICTION 21
16.8 ATTORNEYS' FEES 21
16.9 SCHEDULES 21
16.10 FURTHER ASSURANCES 21
SCHEDULES
SCHEDULES:
1.1(A) COMPANY UNITS
1.1(B) EQUIPMENT
1.1(E) CONTRACTS (OTHER THAN FRANCHISE AGREEMENTS)
1.1(F) RESTAURANT LEASES
1.1(H) FRANCHISE AGREEMENTS
1.1(I) INTELLECTUAL PROPERTY
2.1(B)(IV) FORM OF NOTE
2.1(C) FORM OF NONCOMPETITION AGREEMENT
2.2(B) BAIN'S FRANCHISEES
2.4 FORM OF SECURITY AGREEMENT
4 ALLOCATION OF PURCHASE PRICE
9.1 SELLERS' FORM OF ENTITY AND OWNERSHIP
9.3 LIENS
9.6 LEGAL PROCEEDINGS
9.18 LICENSES
9.21 SUPPLIERS
ASSET PURCHASE AGREEMENT
THIS AGREEMENT ("AGREEMENT") is made and entered into as of the ______
day of November, 1997, in Denver, Colorado by and between THE QUIZNO'S
ACQUISITION COMPANY, a Colorado corporation ("BUYER"), BAIN'S DELI FRANCHISE
ASSOCIATES ("BAIN'S"), THROUGH ITS GENERAL PARTNER GEMINI ENTERPRISES, LTD.;
GEMINI ONE, INC. ("GEMINI"), and JOLLES #4 PARTNERSHIP ("JOLLES PARTNERSHIP")
(Bain's and the Jolles Partnership are collectively referred to herein as
"SELLER").
WHEREAS, Seller owns certain assets, property and other matter as
described in this Agreement ("ASSETS") that it has the right to, and does,
operate, utilize and possess on an ongoing basis in con-ducting its franchise
system ("FRANCHISE SYSTEM") and restaurant business known as Bain's Deli
(collectively, the "BUSINESS"); and
WHEREAS, Buyer desires to purchase from Seller, and Seller desires to
sell to Buyer, subject to the terms and conditions set forth in this Agreement
and for the consideration as hereinafter specified, the Assets and Business of
Seller as hereinafter set forth.
NOW, THEREFORE, the parties agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1 CONVEYANCE OF ASSETS. At the "Closing" (as defined below),
Seller agrees to convey, transfer, assign and sell to Buyer and Buyer
agrees to acquire, accept and purchase from Seller, all of Seller's Assets,
including without limitation those Assets specifically listed below, as of
the Closing Date (as defined below); provided that Gemini and the Jolles
Partnership will sell only such assets as relate to the Business.
Seller will convey to Buyer at the Closing good and marketable
title to all of the Assets, free and clear of all liens or encumbrances,
except as specifically provided otherwise herein. The Assets shall include
without limitation:
(a) The restaurants owned and operated by Seller (the "COMPANY OWNED
UNITS") more specifically set forth on Schedule 1.1(a);
(b) All of Seller's equipment, furniture, materials and supplies and
all other tangible personal property used in or incidental to the Business,
including all of the equipment, furniture, materials and supplies listed on
Schedule 1.1(b) ("EQUIPMENT") (which Schedule will be provided by Seller, with
Buyer's reasonable cooperation, within 10 days following Closing);
(c) All of Seller's inventory held by or offered for sale through the
Business, whether located at the company-owned units or elsewhere
("INVENTORY"); provided that Buyer will pay Seller an inventory allowance of
$3,000 for each Company Owned Unit;
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(d) All of Seller's employment and personnel records; past and
present client records, files, documents and instruments; and all other books,
records, instruments and documents arising out of or in connection with the
Business ("RECORDS"); provided the Records will be made available to Seller
for tax and other reporting purposes;
(e) All of Seller's prepaid assets related to the Business and all of
Seller's rights, powers and remedies under all contracts to which Seller is a
party or by or to which Seller or any of the Assets is subject or bound and
that relate to the Business other than franchise agreements ("CONTRACTS") as
listed on Schedule 1.1(e);
(f) All of Seller's right, title and interest in and to any real
property lease, including leases for the Company Owned Units (the "RESTAURANT
LEASES"), as listed on Schedule 1.1(f);
(g) All of Seller's claims and choses in action arising out of or in
connection with the Business, all warranties, rights and claims of Seller
under all existing warranties relating to any and all of the Assets
("CLAIMS"), including without limitation and warranties or indemnification
rights from Restaurant Systems International, Inc. ("RSI"), and all rights and
claims in and to the security deposits held by third parties including the
landlords under the Restaurant Leases ("DEPOSITS");
(h) The rights of Seller under any franchise or license agreement
between Seller and any third-party, including rights under Seller's Franchise
Agreements (as defined in Section 9.12), as listed on Schedule 1.1(h);
(i) All of Seller's rights in intangibles related to the operation of
the Business ("INTANGIBLES"), including without limitation Seller's
Intellectual Property (as defined in Section 9.20);
(j) All of Seller's goodwill relating to the Business, including good
will relating to the Franchise System ("GOODWILL");
(k) All of Seller's accounts receivables ("ACCOUNTS RECEIVABLES")
including any notes receivables owed by Bain's Franchisees.
1.2 LIABILITIES OF SELLER.
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(a) Buyer does not assume any of Seller's liabilities or obligations,
whether arising from contract or otherwise, and whether known or unknown,
incurred prior to the Closing Date ("SELLER'S LIABILITIES"). Anything
contained in this Agreement to the contrary notwithstanding, Seller shall be
and remain solely liable and responsible for all of Seller's Liabilities
regardless of whether any such debt, obligation, duty or liability arises
under any contract, agreement, lease, practice, arrangement, statute, law,
ordinance, rule, regulation or otherwise, and nothing in this Agreement or
otherwise is intended, or shall be construed, to the contrary; provided
however that Buyer shall assume post-Closing obligations under the Franchise
Agreements (including any amendments thereto except as provided in Section
1.2(b) with respect to net profit guaranties) and the Restaurant Leases upon
assignment of the Restaurant Leases to Buyer.
(b) Buyer with assume the net profit guarantees listed on Schedule
1.1(e) to the extent such guarantees allow the franchisee to withhold
royalties; Buyer does not assume any obligation under the net profit
guarantees with respect to any payments or other obligations due to the
franchisee from Seller, and Seller will indemnify Buyer to the extent Buyer is
required to make such payments.
1.3 ACCOUNTS RECEIVABLE. Buyer shall have the sole right to
collect all Accounts Receivable arising from or out of the Business
operations prior to the Closing date for Buyer's account. Accounts
Receivable shall include all receivables of Seller as of the Closing Date
whether billed or unbilled; provided that Buyer will reimburse Seller for any
royalties actually received by Buyer for gross sales of the franchisee for the
period of October 1, 1997, through the Closing Date; such payment to be made
within 30 days following receipt by Buyer.
1.4 CONSENTS. In addition to those items set forth in Section 12
and Section 13, the obligations of the Buyer under this Agreement are subject
to the consent, in a form acceptable to Buyer, of the transactions
contemplated hereunder by the following parties:
(a) RSI; and
(b) The Jolles Corporation ("JOLLES").
1.5 NAME CHANGE. At Closing or within 30 days of Closing,
each Seller shall take all action necessary to remove "Bain's Deli"
from its name.
1.6 EXCLUDED ASSETS. The Assets shall not include cash
(except for cash on hand at the Company Owned Units), intercompany
accounts receivable not related to royalties, and past due
royalties or other amounts owed by Dark Star Enterprises, Inc., and Robert
O'Conner ("DARK STAR") if that amount is waived pursuant to a binding
settlement agreement between Seller and Dark Star; except as specifically
stated herein, the Assets include all past due Accounts Receivable.
1.7 BAIN'S DELI FRANCHISE AGREEMENTS. In the event that any
Bain's Franchisee has not converted to a Quizno's restaurant, and signed a
Quizno's franchise agreement, within twelve months following Closing,
Buyer will extend the Bain's Deli franchise agreement for that
franchisee for a term of ten years following Closing and will waive any
renewal fee mandated by such franchise agreement so long as such franchisee
is otherwise in compliance with the Bain's Deli franchise agreement
(including royalty payment requirements)
2. CONSIDERATION FOR ASSETS. As consideration for the sale,
assignment, transfer and conveyance of the Assets,-Buyer hereby agrees to
the following:
2.1 PURCHASE PRICE AND PAYMENT.
(a) Purchase Price: The total purchase price for the Assets is
$1,235,000 (subject to adjustments as set forth herein).
(b) Payment of Purchase Price: Buyer will pay or cause to be
issued to Bain's the following:
(i) Cash: Buyer will pay Seller $555,490 at Closing;
(ii) Stock: Buyer will cause $100,000 in nonregistered common stock
("STOCK") of The Quizno's Corporation ("QUIZNO'S") to be issued to Seller, the
number of shares of Stock to be based on the closing price of Quizno's
publicly traded common stock on the NASDAQ SmallCap Market on the trading day
previous to the Closing Date, as follows:
A. Gemini: $50,000
B. Jolles Partnership: $50,000;
(iii) Area Development Rights. Buyer will cause Quizno's to offer
Seller the exclusive area franchise development rights for the Philadelphia,
Pennsylvania market in accordance with Quizno's standard area director
marketing agreement ("ADA"), which rights may be retained by Seller or its
nominee or resold by Seller to a third party (subject to the provisions of the
ADA) ("AREA DEVELOPMENT RIGHTS"); and
(iv) Note. A six-year promissory note from Buyer bearing 10%
interest per annum (simple interest) for the balance for the Purchase Price in
the amount of $579,510 (subject to adjustments or set-offs as set forth
herein) payable in monthly payments of $10,735.91 ("PROMISSORY NOTE") in a
form substantially the same as Schedule 2.1(b)(iv). Promissory Note
obligations shall be secured by a perfected first lien security interest on
the Assets. The Promissory Note will provide that prepayments will apply, at
Buyer's discretion, to the next installment or last installment due
under the Promissory Note.
(c) Consulting and Noncompetition Agreement. At Closing, Jordan A.
Katz ("KATZ") will enter into a consulting and noncompetition agreement with
Quizno's ("CONSULTING AND NONCOMPETITION AGREEMENT") in the form attached as
Schedule 2.1(c).
2.2 PURCHASE PRICE ADJUSTMENTS PURCHASE PRICE ADJUSTMENTS.
(a) In addition to any other rights Buyer may have, Buyer shall have
the right to setoff any damages it incurs that arise from (i) a breach by
Seller of this Agreement including without limitation Seller's Representations
and Warranties; or (ii) Seller's indemnification obligations set forth in
Section 15.1; or (iii) any prorated rental or personal property tax amounts
that are Seller's obligation but that are billed to Buyer post-Closing. The
setoff will be made by reducing the original principal amount and will be
deemed a prepayment of principal of the Promissory Note.
(i) For purposes of any single claim giving rise to a setoff in
excess of $2,000 under Section 2.2(a), Buyer will notify Seller of Buyer's
intent to setoff and the specific detail of such setoff. In the event Seller
disputes the setoff, Seller shall, within 10 days of the date on which the
Seller received Buyer's notice, deliver to Buyer a written statement setting
forth each dispute and the reasons therefor in reasonable detail (the
"SELLER'S DISPUTE NOTICE"). If Seller and Buyer have not resolved all of the
Seller's disputes within 15 days of the date on which Buyer received Seller's
Dispute Notice, then Seller shall, within 20 days of the date on which the
Buyer received Seller's Dispute Notice, submit any such unresolved dispute to
binding arbitration (the "ARBITRATION") pursuant to the rules of the American
Arbitration Association in Denver, Colorado, and the decision of the
arbitrator shall be final, conclusive and binding on Seller and Buyer, and
judgment may be entered thereon in any court of competent jurisdiction. The
setoff amount shall be held in a trust account at Buyer's outside counsel,
Moye, Giles, O'Keefe, Vermeire & Gorrell, until resolution of any disputes,
and such counsel shall not disburse those funds to either party until
resolution of the dispute or Arbitration. The prevailing party in an
Arbitration will be entitled to an award of reasonable costs and attorney's
fees. This Section 2.2(a)(i) will not, however, apply to any payments
required to be made to third-parties (such as payments to release liens);
provided that Buyer will notify Seller that such a payment has been made and
setoff, and Seller will have the right to dispute the obligation and seek a
refund of such payment directly from the payee, and Buyer will reasonably
cooperate with Seller with respect thereto.
(b) Schedule 2.2(b) lists all of Seller's franchisees and licensees
as of Closing ("BAIN'S FRANCHISEES").
(i) Royalties and license fees from Bain's Franchisees will be at
least $90,000 (as adjusted by this Section) per calendar quarter from the
Closing Date until the Promissory Note is paid in full (including royalties or
notes receivables collected from Bain's Franchisees not paying royalties to
Seller as of Closing less out of pocket collection expenses; Buyer will use
its best efforts to collect such amounts) ("MINIMUM ROYALTIES").
(ii) Within 20 days following the end of each quarter, Buyer will
calculate the royalties and license fees paid by Bain's Franchisees in the
prior quarter. The Purchase Price will be increased (decreased) by an amount
equal to three times the difference between the royalties and license fees
actually received by Buyer from Bain's Franchisees during the prior quarter
and the Minimum Royalties. The Purchase Price adjustment will be reflected by
increasing (decreasing) the principal balance of the Promissory Note, and
reamortizing the Promissory Note payments. The royalty amount collected in
the prior quarter will become the "ADJUSTED MINIMUM ROYALTIES."
(iii) In the next quarter and each quarter thereafter, the Purchase
Price will be adjusted using the same procedure except that the adjustment in
each quarter will be based on the Adjusted Minimum Royalties for that quarter.
(iv) Royalties for any Bain's Franchisee who converts to a Quizno's
Restaurant using the Quizno's trademarks will be calculated as the royalties
paid by that Bain's Franchisee for the 90-day period prior to the conversion
date.
(v) If the Closing Date is a day other than the first day of a
calendar quarter, Buyer shall adjust the Purchase Price prorated on a per diem
basis to the last day of such quarter.
(vi) Notwithstanding this Section 2.2, the Purchase Price will not in
any event exceed $1,700,000.
2.3 PRORATIONS. At Closing, Buyer shall pay prorated amounts for
personal property taxes, real estate taxes, rent and other amounts due under
the Restaurant Leases, and any amounts due under other third-party leases,
for amounts that Seller paid in advance relating to charges to be
incurred by the Business operations on or after the Closing Date. The adjusted
amount will be reflected in a settlement statement at Closing, and the final
payment pursuant to Section 2.1(b)(i) will be credited or debited accordingly;
provided that any such amounts charged after the Closing Date will be a
Purchase Price adjustment as set forth in Section 2.2(a).
2.4 SECURITY. The obligations of Buyer under this
Agreement shall be secured by a security interest in the Assets under a
security agreement substantially in the form attached hereto as Schedule 2.4
("SECURITY AGREEMENT"); provided that Buyer may transfer certain Assets (such
company-owned units) to Quizno's franchisees or other third parties and Seller
agrees to subordinate its lien to a third-party lender for any such
transferred Assets.
3. INSPECTION OF EQUIPMENT. Seller agrees that during the period
between the Closing Date and 30 days after the Closing Date, Buyer may
notify Seller in writing of any Equipment which shall need repair to be in
proper working order. Within 10 days after receipt of such notice, Seller
shall either cause such repairs to be made to the Equipment or shall
replace the Equipment, at Seller's sole cost and expense. In the event that
Seller fails to repair or replace the Equipment as provided in this Section,
Buyer shall be entitled to repair or replace such Equipment, the cost and
expense of which shall reduce the principal amount of the
Promissory Note as of the date such costs or expenses were paid by Buyer as a
prepayment thereof.
4. ALLOCATION. The parties agree that the Purchase Price is
properly allocable and shall be allocated among the Assets in
accordance with Schedule 4.
5. RESTAURANT LEASES. All parties shall cooperate and pursue
obtaining consent to assignment of each Restaurant Lease to Buyer, and an
offer by landlord that includes a minimum of a new 5-year term at the
prevailing market rent for that mall and the right of Buyer to convert the
unit to a Quizno's restaurant. For any Restaurant Lease in which such an
assignment cannot be obtained, the Purchase Price will be reduced
$75,000 by reducing the principal balance of the Promissory Note and
reamortizing the payments thereunder; provided that Buyer must notify Seller
of such adjustment within 90 days of Closing or Buyer's right to reduce the
Purchase Price under this Section 5 will terminate. If a Restaurant Lease is
not assigned to Buyer and Buyer elects to reduce the Purchase Price hereunder,
Buyer shall transfer title to that Company-Owned Unit back to Seller.
6. CLOSING. The closing of the sale and purchase of the
Assets ("CLOSING") shall take place at the offices of Buyer, 1099 18th Street,
Suite 2850, Denver, Colorado 80202 at 9:00 a.m. local time, on November 12,
1997 ("CLOSING DATE"), or at such other location, time or date as may be
agreed to by Seller and Buyer.
7. CLOSING OBLIGATIONS. The following obligations will be
satisfied at Closing ("CLOSING OBLIGATIONS"):
(a) At Closing, Seller shall deliver to Buyer, properly executed and
acknowledged:
(i) a Bill of Sale for all the purchased Assets;
(ii) the Settlement Statement pursuant to Section 2.3;
(iii) resolutions of Seller approving the transactions contemplated
under this Agreement, duly adopted and authorized by the
directors, shareholders, and partners thereof;
(iv) such other instruments of sale, transfer, conveyance and
assignment as Buyer may reasonably request;
(v) an agreement with Jolles allowing use of the Bain's Deli
trademark for current franchisees and the transactions
contemplated hereby;
(vi) Consent of RSI; and
(vii) Consulting and Noncompetition Agreement with Katz.
(b) At Closing, Buyer shall deliver to Seller:
(i) the Purchase Price as specified in Section 2.1 (subject to adjustments
as set forth herein);
(ii) resolutions of Buyer approving the transactions contemplated under
this Agreement, duly adopted and authorized by the directors
thereof; and
(iii) such other instruments of sale, transfer, conveyance and assignment
as Seller may reasonably request.
Satisfaction with each Closing Obligation is a condition to the parties'
obligations hereunder and under the other related closing documents. In the
event that any Closing Obligation is not satisfied or waived by mutual
agreement of the parties, this Agreement and the related closing documents
shall terminate.
8. EMPLOYEES AND EMPLOYMENT MATTERS.
8.1 NO OBLIGATIONS ASSUMED. Buyer does not assume any
liabilities, duties or obligations of Seller with respect to
any current or past employees of Seller, any of Seller's employee benefits or
benefit plans or any other employment-related liability, duty or obligation of
Seller whatsoever. Seller shall terminate the employment of all of Seller's
employees whose employment Seller does not wish to extend beyond the Closing
Date effective as of the close of business on the day immediately preceding
the Closing Date. Buyer may but is not obligated to hire any of Seller's
former employees. Seller shall be responsible for all severance or accrued
vacation (or time loss) benefits payable.
8.2 INFORMATION REGARDING EMPLOYEES. Seller shall
cooperate with Buyer's reasonable requests for information regarding
Seller's past and present employees and candidly discuss the performance,
conduct and attitude of Seller's employees with Buyer.
9. REPRESENTATIONS AND WARRANTIES OF SELLER.
Each Seller hereby represents and warrants to Buyer that as of the
Closing:
9.1 ORGANIZATION, GOOD STANDING, AND QUALIFICATION. Each Seller's
form of entity and ownership is set forth on Schedule 9.1. Each Seller is
duly organized, validly existing and in good standing under the laws of the
State of Pennsylvania. Each Seller has all requisite power and authority to
own and operate its properties and to carry on its business as now
conducted, to enter into this Agreement and to carry out and perform its
obligations under this Agreement.
9.2 AUTHORIZATION; BINDING OBLIGATION. The execution and delivery by
Seller of this Agreement and all of the documents and instruments required
hereby and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all requisite action on the part of
each Seller. This Agreement and each of the other documents and
instruments required hereby have been fully executed and delivered
by Seller and constitute the valid and binding obligations of
Seller, enforceable against Seller in accordance with their respective terms.
9.3 ASSETS. Schedule 1.1 sets forth all tangible and
intangible personal property owned by, in the possession of or used by each
Seller in connection with the Business and such personal property constitutes
all such personal property necessary for the conduct of the Business of each
Seller as now conducted. Schedule 9.3 lists all of the liens that encumber the
Assets ("LIENS"). Buyer agrees to purchase the Assets subject to any lien
recorded by Proctor & Gamble; otherwise, any Lien in which Katz or Meridian
Bank is the secured party will be released at Closing or as a post-closing
obligation. Seller agrees to indemnify Buyer for any claims brought by
secured parties for the Katz or Meridian Lien, or any other Lien (or any
undisclosed lien) other than the Proctor & Gamble Lien. Except for the Liens,
each Seller has good and marketable title to each and, collectively, all of
the Assets, free and clear of any and all liens, agreements, restrictions,
claims, security interest, pledges, charges, equities and other encumbrances,
subject to the rights of the landlords under the Restaurant Leases. The
Assets are all the assets used in the Business.
9.4 NO VIOLATION. The execution, delivery and compliance with
and performance by Seller of this Agreement and each of the other documents
and instruments required hereby do not and will not (i) violate the
articles of incorporation, bylaws, certificate of limited
partnership or partnership agreements of each Seller or any law, statute,
rule, regulation, order, judgment or decree to which Seller is subject, (ii)
conflict with or result in a breach of or constitute a default under any
contract, agreement or other instrument to which Seller is a party or by which
Seller or any of Seller's assets or properties are bound or to which Seller or
any of Seller's assets or properties are subject, (iii) result in or require
the creation of any lien upon Seller's capital stock, partnership intent or
upon any of Seller's properties or assets, (iv) require any approval or
consent of any person or entity incorporation which was not provided under
Section 1.4 and Section 7(a), or (v) require any approval or consent of any
person or entity under any contract, agreement or other instrument to which
Seller is a party or by which Seller or any of Seller's assets or properties
are bound or to which Seller or any of Seller's assets or properties are
subject, other than the consents specifically set forth herein.
9.5 GOVERNMENT CONSENTS. The execution, delivery, and
performance by Seller of this Agreement and each of the other
documents and instruments required hereby and the consummation of the
transactions contemplated hereby and thereby do not and will not require any
authorization, consent, approval, permit, filing, registration or exemption or
other action by or notice to any court or administrative or governmental body
other than applicable amendments to franchise registrations (if any).
9.6 LEGAL PROCEEDINGS. Except as disclosed on
Schedule 9.6, there are no actions, suits, litigation, proceedings or
investigations pending or threatened against Seller (or, to the best of
Seller's knowledge, facts that would give rise to such actions or proceedings)
that relate to, arise out of, or would affect the Business, the Assets, the
consummation of the transactions contemplated by this Agreement or which could
result in any lien being placed on the Assets.
9.7 NO BROKERS. Seller has not employed, either
directly or indirectly, or incurred any liability to, any broker, finder or
other agent in connection with the transactions contemplated by this
Agreement. Seller agrees to indemnify Buyer for any claims brought by any
broker, finder or other agent claiming to have acted on behalf of Seller in
connection with this sale.
9.8 TAXES. Seller has duly filed or will file when due all
federal, state and local tax returns and reports, and all returns and reports
of other governmental units having jurisdiction with respect to taxes imposed
upon any of the Assets or taxes imposed on Seller which might create a lien on
any of the Assets, and Seller has paid or will pay when due all such taxes,
including without limitation ad valorem taxes and employment taxes, for all
years up to and including all periods through the date immediately preceding
the Closing Date, which the failure to file or pay would result in a valid and
subsisting lien on the Assets after transfer thereof to Buyer. Seller will
indemnify Buyer against any claims arising from failure to comply with any
Bulk Sales Act requirements including without limitation the Bulk and Action
Sales Act (72 P.S. 7240).
9.9 CONTRACTS AND OTHER AGREEMENTS. Except as listed on
Schedule 1.1(e), there are no contracts and other agreements (other than
franchise agreements listed in Schedule 1.1(h)
and Restaurant Leases listed on Schedule 1.1(f)) to which Seller is a party or
to which it or its assets or properties are bound or subject with respect to
the Business, including without limitation licenses, employment contracts,
personal or real property leases or purchase contracts. Each Contract is a
valid and binding obligation of Seller and there is no current default under
or, to the best of Seller's knowledge, no conditions exist that would
constitute a breach of any contract, except as specifically listed on Schedule
9.9.
9.10 RESTAURANT LEASES. Schedule 1.1(f) lists
the Restaurant Leases. The Restaurant Leases are in full force and effect and
Seller is not in default thereunder. The leasehold interest of Seller is
subject to no lien or encumbrance and entitles the lessee to the right of
quiet possession. There are no modifications or amendments to the Restaurant
Leases or any other agreements altering, modifying or supplementing the terms
of the Restaurant Leases. Seller has not assigned, mortgaged or otherwise
transferred, amended or encumbered, voluntarily or involuntarily, the
Restaurant Leases or its interest therein except as specifically stated
herein. Seller is current on all rent payments and other sums due to the
landlords under each Restaurant Lease through the Closing Date and there is no
current default under or, to the best of Seller's knowledge, no conditions
exist that would constitute a breach of any Restaurant Lease.
9.11 RECORDS. Subject to Section 9.12, to the best of
Katz's knowledge, the Records delivered to Buyer by Seller are true, complete
and correct.
9.12 FRANCHISE AGREEMENTS.
(a) Schedule 1.1(h) lists the following:
(i) All of the franchise or license agreements or arrangements
("FRANCHISE AGREEMENTS") existing as of the date of this Agreement between
Seller and the Bain's Franchisees, including the name of the franchisee, the
location of the franchise, the date upon which the franchise was granted, and
the termination date of the franchise;
(ii) All of the franchises which have been terminated for any reason
whatsoever during the two year period prior to the date of this Agreement,
including the name of the franchisee, the location of the franchise, the date
upon which the franchise was granted, the date upon which the franchise was
terminated, and the reasons for termination and description of all franchise
documents;
(iii) All of the persons to whom Seller has forwarded franchise
offering circulars and who is currently under consideration by Seller to sell
a franchise; and
(iv) All franchises, either existing or terminated, which have given
rise to any claims or disputes which are presently unresolved.
(b) Seller, using Seller's best efforts, has provided Buyer copies of
all current franchise documents or leases and all current franchise filings in
Seller's custody and control (or in the custody or control of RSI) as well as
all current operating manuals and similar documents customarily delivered to
franchisees or which set forth guidelines with respect to the operation of a
franchise; provided that Buyer acknowledges that Seller does not have and has
not provided, and makes no representation concerning, any such materials not
in Seller's custody and control. To the best of Seller's knowledge, the
materials provided to Buyer are accurate and complete.
(c) Except as disclosed on Schedule 1.1(h), Seller is currently, and
has been at all times in the past from the date when such entity was required
to file or furnish any documents in accordance with franchise related laws, in
material compliance with any and all federal, state, local, and foreign laws
and regulations which govern the offer, sale, operation, advertisement,
renewal, termination, and similar laws of franchises, including, without
limitation thereby, the Federal Trade Commission Rule entitled "Disclosure
Requirements and Prohibition Concerning Franchising and Business Opportunity
Ventures" and all state franchise disclosure acts, franchise termination laws
and franchisee rights laws. Without limiting the generality of the preceding
sentence, the Seller is, as of the date of this Agreement, current with
respect to the filing of all required disclosure statements, amendments,
reports and other documents required under such franchise related laws and
regulations.
(d) Each Seller further represents and warrants to Buyer that, to the
best of Katz's knowledge:
(i) Except as otherwise set forth on Schedule 1.1(h), to the best of
Katz's knowledge, after due inquiry, no existing franchisee is in material
breach or default under any franchise document and no franchisee, existing or
terminated (i.e., those Franchise Agreements which were terminated within the
two-year period prior to the date of this Agreement), has claimed in writing
that Seller is in material breach or default thereunder or has asserted a
claim against Seller or any of its Assets;
(ii) In developing, establishing and entering into each Franchise
Agreement, Seller has received all licenses, permits and other authorizations
from all governmental authorities as are necessary for the development,
establishment and the grant of such franchise and has complied with, and is
currently complying with, all other laws, statutes or ordinances or
regulations of any applicable governmental authority;
(iii) Except as set forth on Schedule 1.1(h), Seller has not received
any notice which has not previously been fully resolved, and Seller knows of
no circumstances which would give rise to any notice, from any governmental
authority with respect to any violation or alleged violation of any franchise
related laws; and
(iv) The transactions contemplated hereby will not result in or
constitute, with or without the passage of time or the giving of notice, a
breach or default under any Franchise Agreement pertaining to an existing
franchise and will neither cause the termination of such Franchise Agreement
nor permit any party to such Franchise Agreement to cause it to be terminated.
9.13 FINANCIAL INFORMATION; DISCLOSURE, ETC.
-----------------------------------------
(a) Bain's has furnished Buyer with audited financial statements for
its fiscal years 1995 and 1996, and unaudited financial statements for the
eight month period ended August 31, 1997, and certain unaudited financial
statements for the Company-Owned Units (collectively, the "FINANCIAL
STATEMENTS"). The Financial Statements have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis and
fairly present the financial position and results of operations as of the
dates and for the periods indicated subject to normal year-end adjustments in
the case of the 1997 eight-month financial statements. Since the end of the
most recent fiscal period shown in such Financial Statements, there has not
been any material adverse change in the business, operations, properties or
financial position of Sellers, there have been no dividends declared or paid
or any other distributions to stockholders of any nature, Seller has made no
loans to stockholders, officers, employees, or Affiliates, and Seller has
carried on business only in the ordinary course.
(b) Seller shall cause Seller's inside and independent auditors and
accountants to cooperate with Buyer with respect to any accounting or
financial statement matters related to the transactions contemplated hereby;
such cooperation includes without limitation consent by Seller's independent
auditors for use of any audited financial statements and opinion letters for
filings with the Securities and Exchange Commission or equivalent state
agencies. Seller will provide audited financials for the Company-Owned Units
within 45 days of Closing or, if such financials have not been provided, will
pay and allow Buyer's independent auditors to perform such audit.
9.14 EQUIPMENT. To the best of Seller's knowledge,
each piece of Equipment is in good working order and repair subject to
reasonable wear and tear.
9.15 OBLIGATIONS AND LIABILITIES.
Except as disclosed in this Agreement, the Financial Statements, or Schedules
attached hereto, to the best of Seller's knowledge, Seller has no direct or
indirect liabilities or obligations (whether accrued, unaccrued, liquidated,
contingent, or otherwise) related to the Business or the Assets, including
taxes, that have not been fully satisfied by Seller on or before the Closing.
9.16 FULL DISCLOSURE. This Agreement, the
Schedules hereto and statements and documents furnished by Seller in
connection herewith do not include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein and herein, in light of the circumstances under which they were made,
not misleading.
9.17 CONDUCT OF BUSINESS. Seller has
conducted the Business from August 31, 1997, to the Closing Date in the usual
and ordinary course of business, including without limitation purchasing
inventory, supplies and materials, and during the same period, Seller has
conducted and will continue to conduct the Business operations in accordance
with all applicable local, state and federal ordinances, laws, rules and
regulations.
9.18 LICENSES. Schedule 9.18 attached hereto accurately
and completely lists all material authorizations, licenses and permits of any
public or governmental regulatory body granted or assigned to Seller and the
same constitute the only material authorizations, licenses, and permits of any
public or governmental regulatory body which are necessary for the conduct of
the Business ("LICENSES"). All of such Licenses are validly issued and in
full force and effect in all material respects and Seller has fulfilled and
performed all of its material obligations with respect thereto and has full
power and authority to operate thereunder.
9.19 ENVIRONMENTAL MATTERS. Neither Seller
nor, to Seller's knowledge, any prior user or owner of real estate owned, used
or leased by Seller or any predecessor of Seller, or any business which Seller
has acquired or become a successor to (the "PROPERTY"), or any third party,
has ever caused or permitted any Hazardous Material to be disposed of on or
under the Property, and the Property has never been used (either by Seller or,
to Seller's knowledge by any prior user or owner of the Property, or any third
party) as (a) a disposal site or permanent storage site for any Hazardous
Material or (b) a temporary storage site for any Hazardous Material. To the
best of Seller's knowledge, there have been no releases of Hazardous Materials
at, from, or to the Property. Seller has been issued and is in compliance
with all material permits, certificates, licenses, approvals and other
authorizations relating to environmental matter and necessary for its
business, and has filed all notifications and reports relating to chemical
substances, air emissions, underground storage tanks, effluent discharges and
Hazardous Material waste storage, treatment and disposal required in
connection with the operation of its business, the failure to have or comply
with which would, individually or in the aggregate, have a material adverse
effect on Seller. All Hazardous Materials used or generated by Seller have
been generated, accumulated, stored, transported, treated, recycled and
disposed of in compliance with all applicable laws and regulations, the
violation of which has any reasonable likelihood of having a material adverse
effect on Seller. Seller has no liabilities with respect to Hazardous
Materials, and to the knowledge of Seller, no facts or circumstances exist
which could give rise to liabilities with respect to Hazardous Materials,
which could have any reasonable likelihood of having a material adverse effect
on Seller.
9.20 INTELLECTUAL PROPERTY. The Assets
include all patents, trademarks, service marks, tradenames, copyrights, trade
secrets, licenses, information and proprietary rights and processes
("INTELLECTUAL PROPERTY") that are directly or indirectly owned, licenses,
used, required for use, or controlled in whole or in part by Seller. Except
with respect to the ownership interest in the "Bain's Deli" trademark held by
Jolles (if any), to the best of its knowledge, Seller owns without an
obligation to pay royalties, all Intellectual Property necessary for its
business as conducted and proposed to be conducted without any conflict with,
or infringement of the rights of others. Seller has not received any
communications alleging that it has violated or, by conducting business as
proposed, would violate the Intellectual Property rights of any other person
or entity. Other than as provided in the Franchise Agreements, Seller has not
licensed or granted rights to others in any of its Intellectual Property or
granted rights to manufacture, produce, assemble, license, market or sell any
of its products to any other person.
9.21 SUPPLIERS. Schedule 9.21 lists the ten largest
suppliers to Seller during the nine-month period ended September 30, 1997
(stating for each the dollar volume of the purchases).
9.22 INVENTORIES. All inventories (including
restaurant supplies and non-perishable food items) of Seller as of the Closing
Date are in good condition, not obsolete, nondefective and useable and, to the
best of Seller's knowledge, 100% saleable in the usual and ordinary course of
business of Seller as conducted as of the date hereof.
10. SECURITIES LAWS REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller (or any transferee who has signed an investment letter
containing the same representations and warranties) represents and
warrants to Buyer that:
10.1 ACQUISITION INTENT. Seller is
acquiring the Stock for Seller's own account, for investment purposes only,
with no present intention of dividing the Stock with others or of reselling or
otherwise disposing of all or any portion of the Stock.
10.2 INFORMATION. Seller has received, carefully
reviewed, and is familiar with Quizno's Form 10-KSB for 1996, the Quizno's
Proxy Statement for its Annual Meeting of Shareholders held June 6, 1997, the
Quizno's Annual Report to Shareholders, the Quizno's Form 10-QSB for its third
quarter 1997, and any current reports filed by Quizno's on Form 8-Ks
("QUIZNO'S INFORMATION"). Seller has had the opportunity to ask, and has
asked, questions of Buyer and Quizno's and has received the answers thereto,
concerning the transactions contemplated by this Agreement and Quizno's
Information.
10.3 SOPHISTICATION. Seller is aware of the
risks involved in an investment in Quizno's and Seller has the knowledge and
experience in financial and business matters sufficient to enable Seller to
evaluate the merits and risks of an investment in Quizno's and to make an
informed investment decision. Seller has the financial means to make an
investment in Quizno's, is able to bear the economic risk of an investment in
Quizno's, and Seller's present financial condition is such that Seller is
under no present or contemplated future need to dispose of the Stock to
satisfy any existing or contemplated undertaking, need or indebtedness.
10.4 RESTRICTED STOCK. Seller acknowledges that the offer
and sale of the Stock are being made to it in a private placement of
securities and that the Stock will be held by it as "restricted
securities" as that term is defined in Rule 144 issued under the Act, and
the resale of the Stock by it will be restricted for the periods
provided for in Rule 144. Any stock certificate representing the Stock shall
bear a legend to the effect that the Stock has been so acquired. The
foregoing restriction on the transfer of the Stock shall not apply if (a)
Quizno's is furnished with an opinion of counsel satisfactory in form and
substance to Quizno's to the effect that such transfer will be in compliance
with the Act and other applicable securities laws; or (b) the Stock has been
duly registered in compliance with the Act and other applicable securities
laws.
10.5 UNDERWRITER. Seller shall not take, or cause
to be taken, any action with respect to the Stock which would cause Seller to
be deemed an "underwriter," as defined in Section 2(11) of the Act.
11. REPRESENTATION AND WARRANTIES OF BUYER.
Buyer hereby represents, warrants and covenants to Seller that as of
Closing:
11.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Buyer is a
Colorado corporation duly organized, validly existing and in good standing
under the laws of the State of Colorado. Buyer has all requisite power and
authority to own and operate each of its properties and to carry on its
business as now conducted, to enter into this Agreement and to carry out
and perform its obligations under this Agreement.
11.2 AUTHORIZATION; BINDING AGREEMENT. The execution and delivery
by Buyer of this Agreement and all of the documents and instruments required
hereby and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all requisite action on the part of
Buyer. This Agreement and each of the other documents and instruments
required hereby have been duly executed and delivered by Buyer and
constitute the valid and binding obligations of Buyer, enforceable
against Buyer in accordance with their respective terms.
11.3 NO VIOLATION. The execution, delivery,
compliance with and performance by Buyer of this Agreement and each of the
other documents and instruments required hereby do not and will not (i)
violate the articles of incorporation or bylaws of Buyer or any law, statute,
rule, regulation, order, judgment or decree to which Buyer is subject, or (ii)
conflict with or result in a breach of or constitute a default under any
contract, agreement or other instrument to which Buyer is a party or by which
Buyer or any of its assets or properties are bound or to which Buyer or any of
its assets or properties are subject.
11.4 CONSENTS. The execution, delivery and
performance by Buyer of this Agreement and each of the other documents and
instruments required hereby and the consummation of the transactions
contemplated hereby and thereby do not and will not require any authorization,
consent, approval, permit, filing, registration or exemption or other action
by or notice to any court or administrative or governmental body.
11.5 LEGAL PROCEEDINGS. There are no
actions, suits, litigation, proceedings or investigations pending or
threatened against Buyer which could materially adversely affect Buyer's
ability to perform its obligations under this Agreement or the consummation of
the transactions contemplated by this Agreement.
11.6 BROKERS. Other than Myles Bruckal ("BRUCKAL"),
Buyer has not employed, either directly or indirectly, or incurred any
liability to, any broker, finder or other agent in connection with the
transactions contemplated by this Agreement. Buyer agrees to (a) be solely
liable for any payments owed to Bruckal out of the transaction contemplated
hereby; and (b) indemnify Seller for any claims brought by any broker, finder
or other agent claiming to have acted on behalf of Buyer in connection with
this sale.
11.7 TAXES. Buyer shall file when due all federal,
state and local tax returns and reports, and all returns and reports of other
governmental units having jurisdiction with respect to taxes imposed upon any
of the Assets or taxes imposed on Buyer which might create a lien on any of
the Assets, and will pay when due all such taxes, including without limitation
ad valorem and employment taxes, which arise on or after the Closing Date.
11.8 FULL DISCLOSURE. This Agreement, the
Schedules hereto and statements and documents furnished by Buyer in connection
herewith do not include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein and
herein, in light of the circumstances under which they were made, not
misleading.
12. CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS.
The obligations of Buyer under this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions, all or
any of which may be waived in writing by Buyer:
12.1 ACCURACY OF SELLER'S REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by Seller in this Agreement and in
any written statement delivered to Buyer by Seller under this Agreement shall be
true and correct as of the Closing.
12.2 PERFORMANCE BY SELLER. Seller
shall have performed and complied with all its respective obligations required
by this Agreement to be performed or complied with by it at or prior to the
Closing.
12.3 DELIVERY OF DOCUMENTS. All
documents required to be delivered by Seller at or prior to the Closing shall
have been properly executed by Seller and delivered to Buyer in form and
substance reasonably satisfactory to Buyer.
12.4 GOVERNMENTAL AND OTHER CONSENTS. All necessary
approvals, consents and clearances from governmentalauthorities and others
in connection with the transactions contemplated by this Agreement shall
have been obtained at or prior to the Closing, including
without limitation consents to the assignment of the Restaurant Leases by the
landlords and those consents required by Section 1.4.
12.5 CLOSING OBLIGATIONS. All Closing
Obligations to be performed by Seller have been satisfied or waived in writing
by Buyer.
13. CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS.
The obligations of Seller under this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions, all or
any of which may be waived in writing by Seller:
13.1 ACCURACY OF BUYER'S REPRESENTATIONS AND WARRANTIES. All
representations and warranties made by Buyer in this Agreement and in any
written statements delivered to Seller by Buyer under this Agreement shall be
true and correct as of the Closing.
13.2 PERFORMANCE BY BUYER. Buyer shall
have performed and complied with all obligations of Buyer required by this
Agreement to be performed or complied with by it at or prior to the Closing.
13.3 DELIVERY OF DOCUMENTS. All
documents required to be delivered by Buyer at or prior to the Closing shall
have been properly executed by Buyer and delivered to Seller in form and
substance reasonably satisfactory to Seller.
13.4 CLOSING OBLIGATIONS. All Closing
Obligations to be performed by Buyer have been satisfied or waived in writing
by Seller.
14. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
covenants, agreements, representations, warranties and conditions of the
Closing contained in this Agreement that are intended to be made or performed
at or prior to the Closing shall survive after the Closing.
15. INDEMNIFICATION AND SETOFF.
15.1 INDEMNIFICATION BY SELLER.
Each Seller jointly and severally agrees to indemnify and hold harmless Buyer
and any of its affiliates, officers, shareholders, directors, agents and
representatives from and against any and all loss, claim, liability,
obligation and expense (including attorneys' fees) which arise from (a) the
breach by Seller of any of its covenants, agreements, representations or
warranties as set forth in this Agreement, or (b) any liability, obligation or
commitment of any nature relating to the Assets or Business based on events
occurring prior to the Closing Date (including legal actions whether disclosed
or not herein, and whether known or unknown); provided, however, that, to
qualify for such defense and indemnification, Buyer must give Seller prompt
written notice of any such claim and allow Seller, at its sole expense, to
operate and control the defense of such claim and all related settlement
negotiations except that Buyer will have the right to approve counsel (in its
reasonable discretion) and may withdraw such approval if Buyer later
reasonably believes such counsel is inadequate, and provided further that if
the claim alleges equitable relief against the Buyer or its affiliates, Buyer
shall have the right to conduct and control the defense of such equitable
claims and related settlement negotiations
15.2 INDEMNIFICATION BY BUYER. Buyer
agrees to indemnify and hold harmless Seller and any of Seller's affiliates,
officers, managers, members, agents and representatives from and against any
and all loss, claim, liability, obligation and expense (including attorneys'
fees) which arise from (a) the breach by Buyer of any of its covenants,
agreements, representations, or warranties as set forth in this Agreement, or
(b) any liability, obligation or commitment of any nature relating to the
Assets or the Business based on events occurring on or after the Closing Date;
provided, however, that, to qualify for such defense and indemnification,
Seller must give Buyer prompt written notice of any such claim and allow
Buyer, at its sole expense, to operate and control the defense of such claim
and all related settlement negotiations. Seller shall reasonably cooperate
with Buyer in such defense.
15.3 OTHER INDEMNIFICATION
PROVISIONS. The foregoing indemnification provisions are in additional to,
and not in derogation of, any statutory or common law remedy any party may
have for breach of representation, warranty, covenant or contract.
15.4 RIGHT OF SETOFF. In addition to any other
rights it may have, Buyer shall have and is hereby granted an express right of
setoff against any sums which might otherwise be due and payable to Seller
under this Agreement of any amounts which are due by Seller to Buyer under
this Agreement, including under Section 15.1, provided that such setoff will
be in accordance with Section 2.2.
16. MISCELLANEOUS.
16.1 EXPENSES. Each of the parties hereto shall pay its
own fees, costs and expenses incurred in connection with the negotiation,
preparation, execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby.
16.2 ENTIRE SUBJECT MATTER; AMENDMENT.
This Agreement and the other documents referred to herein contain
the entire understanding of the parties with respect to the subject matter
hereof and supersede all prior agreements, either oral or written. This
Agreement may not be amended, or any term or condition waived, except by a
writing signed by each of the parties hereto.
16.3 SUCCESSORS AND ASSIGNS. Except as
otherwise expressly provided herein, this Agreement shall be binding upon and
inure to the benefit of the respective successors and assigns of the parties
hereto, whether so expressed or not. Buyer may assign or transfer the Assets
in the ordinary course of business (but not Accounts Receivables or rights
under the Bain's Deli Franchise Agreements), and may transfer or assign all or
substantially all of the Assets to an affiliate or to (i) any person or entity
which may acquire all or substantially all of the Buyer's assets and business;
(ii) any entity with or into which Buyer may be consolidated or merged; or
(iii) any entity that is a successor entity of Buyer in an exchange.
16.4 COUNTERPARTS. This Agreement may be executed
in one or more counterparts and sent via facsimile, any one of which need not
contain the signatures of all parties, but all of which counterparts when
taken together will constitute one and the same Agreement.
16.5 NOTICES. Any notice and similar communications
concerning this Agreement ("NOTICE") shall be in writing and shall be either
(a) delivered in person; or (b) sent to the other party by certified mail with
return receipt requested; or (c) by facsimile, electronically confirmed.
Notices shall be delivered or sent as follows or to such other address as a
party may hereafter establish by Notice given in the manner prescribed in this
Section.
If to Seller:
Gemini Enterprises, Ltd.
Suite 110, 100 Four Falls Corporate Center
West Conshohocken, Pennsylvania 19428
With a copy to:
Kaplin Stewart Meloff Reiter & Stein
William K. Stewart, Jr., Esq.
350 Sentry Parkway, Building 640
PO Box 3037
Blue Bell, PA 19422-0765
(Fax) 610-260-1240
If to Buyer:
The Quizno's Acquisition Company
1099 18th Street
Suite 2850
Denver, Colorado 80202
Fax: (303) 291-0909
Attention: Patrick E. Meyers
A Notice shall be considered given when delivered.
16.6 HEADINGS. The titles and headings herein are for
convenience only. In case of ambiguity or inconsistency, the text rather than
the titles or headings shall control.
16.7 GOVERNING LAW AND JURISDICTION. This Agreement shall be
governed by and interpreted in accordance with the laws of the State of
Colorado. Except as governed by Section 2.2(a)(i), the parties hereto consent
to venue and jurisdiction in the District Court in and for the City and County
of Denver, Colorado, or in the United States District Court for the
District of Colorado, in any action commenced relating to this Agreement or the
transactions contemplated hereby. The parties agree that any action or
proceeding arising out of this Agreement shall be heard by a court sitting
without a jury and thus hereby waive all rights to a trial by jury.
16.8 ATTORNEYS' FEES. In the event of any
dispute hereunder, or any default in the performance of any term or condition
of this Agreement, the prevailing party shall be entitled to recover all costs
and expenses associated therewith, including reasonable attorneys' fees.
16.9 SCHEDULES. The Schedules are incorporated by reference into
this Agreement.
16.1 FURTHER ASSURANCES. Each of the parties
hereto shall, from time to time after the Closing, upon the request of any
other party hereto, duly execute, acknowledge and deliver all such further
instruments and documents reasonably required to further effectuate the
interests and purposes of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement themselves
or by their authorized representatives.
SELLER: BUYER:
BAIN'S DELI FRANCHISE ASSOCIATES, THE QUIZNO'S ACQUISITION
THROUGH ITS GENERAL PARTNER COMPANY
GEMINI ENTERPRISES, LTD.
By: /s/ Jordan A. Katz By: /s/ Patrick E. Meyers
Its: President Its: Vice President and
General Counsel
GEMINI ONE, INC. JOLLES #4 PARTNERSHIP
By: /s/ Jordan A. Katz By: /s/ Jordan A. Katz
Its: President Its: President of Gemini
Enterprises, Ltd.(GP)
President of Gemini One,
Inc. (GP)
Jordan A. Katz, being financially and otherwise familiar with Seller, joins
with Seller in making each and every representation, warranty, covenant and
indemnification in this Agreement (provided Katz's liability hereunder shall
be limited to the amount of the Purchase Price actually paid to Seller).
By: /s/ Jordan A. Katz
Jordan A. Katz
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November 12, 1997 (12:33pm)