FINAL
Greenville, Spartanburg
PURCHASE AND SALE AGREEMENT
Among
CARROLS CORPORATION
(as Purchaser)
And
OMEGA FOOD SERVICES, INC.
(as Seller)
And
HAROLD W. HOBGOOD
(as the Seller's Agent)
Dated as of January 15, 1997
TABLE OF EXHIBITS
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Exhibit A Form of Assignment and Assumption of Lease
Exhibit B Form of Lease Consent and Estoppel Certificate
Exhibit C Form of Assumption Agreement
Exhibit D Form of Opinion of Purchaser's Counsel
Exhibit E Form of Bill of Sale and Assignment
Exhibit F Form of Opinion of Seller's Counsel
Exhibit G Lease Amendments
The Exhibits to this Purchase and Sale Agreement are not filed as exhibits
to this report. We will furnish supplementally a copy of any of the omitted
Exhibits to the Commission upon request.
TABLE OF SCHEDULES
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A Sellers and Restaurants operated by them
1.1(a) Restaurant Equipment
1.1(e) Leased Assets
1.2(c) Allocation of Purchase Price Among Separate Classes of Assets
1.3(a)(ii) Base Rent and Percentage Rent for each Lease
1.3(d) Parking and Easements Agreements
2.5 Required Consents
2.6(b) Events or items not reflected in Financial Statements
2.7(a) Non-Conforming Assets
2.9(a) Liens on Real Properties
2.10(b) TRA's
2.10(c) Development Rights
2.11(b) Compliance with Employment Laws, etc.
2.11(c) Sellers' Employees and Wages
2.12 Other Contracts
2.13(a) Employee Pension Benefit Plans
2.13(b) Employee Welfare Benefit Plans
2.14(a) Litigation
2.14(c) Required Licenses
2.15 Environmental Matters
The Schedules to this Purchase and Sale Agreement are not filed as exhibits
to this report. We will furnish supplementally a copy of any of the omitted
Schedules to the Commission upon request.
PURCHASE AND SALE AGREEMENT
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THIS PURCHASE AND SALE AGREEMENT (the "Agreement") made as of January
___, 1997 by and between CARROLS CORPORATION, a Delaware corporation, with its
principal office at 968 James Street, Syracuse, New York 13203
("Purchaser");Omega Food Services [Management], Inc. a Georgia corporation
having its principal office at 21 North End Circle, Travelers Rest, South
Carolina 29690] ("Seller") and Harold W. Hobgood, an individual resident of
DeKalb County, Georgia as agent for the Sellers (the "Seller's Agent") and
William R. Collins, Jr., ("Collins") an individual resident of Fulton County,
Georgia, and Jacks B. Jingle ("Tingle") an individual resident of Greenville
County, South Carolina. (Seller's Agent, Collins and Tingle are sometimes
collectively referred to herein as the "Principals"):
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Seller operates Burger King restaurants located in Greenville,
N.C. and Spartenberg, S.C. respectively identified by address and Burger King
Franchise number on Schedule A annexed hereto (each restaurant is hereinafter
sometimes referred to individually as a "Restaurant" and collectively as the
"Restaurants");
WHEREAS, Seller is the owner or lessee of certain personal property used
or held for use in or in connection with the conduct of business at the
Restaurants and Seller is the owner or lessee of certain buildings, other real
property and land upon and in which the Restaurants are located (individually,
the "Real Property" and collectively, the "Real Properties");
WHEREAS, Seller proposes to sell, and Purchaser proposes to purchase,
the Assets (as hereinafter defined) of Seller;
WHEREAS, Seller occupies the Real Properties, pursuant to a lease
agreement (each, a "Lease" and, collectively, the " Leases") and proposes to
assign to Purchaser, and Purchaser proposes to accept such assignment of
Seller's leasehold interest with respect to the Real
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties agree as
follows:
ARTICLE I
PURCHASE AND SALE; CLOSING
SECTION 1.1 Assets To Be Conveyed. Subject to the terms, provisions and
conditions contained in this Agreement, and on the basis of the representations
and warranties hereinafter set forth, Seller agrees to sell, assign, transfer,
convey and deliver to Purchaser at Closing (as hereinafter defined), and
Purchaser agrees to purchase and accept the assignment, transfer, conveyance and
delivery from Seller at Closing of, all of the following assets used or located
in or held for use in connection with the Restaurant operated by Seller
(collectively, the "Assets") free and clear of all mortgages, liens, security
interests, encumbrances, equities, claims, pledges, charges, liabilities and
other obligations of whatever kind and character (collectively referred to
herein as "Liens"), except for such liens as are specifically permitted as
provided herein:
(a) Restaurant Equipment. All of the machinery, equipment,
furnishings, supplies, spare equipment parts and all other personal property
(other than Inventory, as hereinafter defined) owned by Seller and used or held
for use in, or in connection with, the operation of the Restaurants, including
but not limited to the assets set forth in
Schedule 1.1 (a) annexed hereto (collectively, "Restaurant Equipment");
(b) Leasehold Improvements. All fixtures and other leasehold
improvements owned by Seller in the Restaurants ("Leasehold Improvements");
(c) Franchise Agreements. The Burger King franchise agreements
for the Restaurants (the "Franchise Agreements") and Target Reservation
Agreements ("TRA's") or other territorial or development rights with Burger
King;
(d) Inventories. All of the food, related paper products,
uniforms and promotional items owned by Seller or otherwise used or held for use
in or in connection with the business being conducted at the Restaurants
including cash in store banks at closing, (collectively, "Inventory");
(e) Leased Assets. All of the right, title and interest of
Seller in any item of personal property which is not owned by it but is leased
by it or otherwise is used or held for use, in or in connection with the
business being conducted at the Restaurants, including but not limited to, the
assets set forth on Schedule 1.1(e) annexed hereto (collectively the "Leased
Assets");
(f) Miscellaneous Assets. All of the right, title and interest
of Seller in any other asset or property owned, leased, subleased, used or held
for use in, or in connection with the business being operated at the Restaurants
including, but not limited to, contract rights and other general intangibles.
Specifically excluded from the assets sold are all office equipment, furniture,
fixtures, land and -building located at 21 North End Circle, Travelers Rest,
South Carolina.
(g) Additional Development Sites. All of the rights, title and
interest in any additional site, currently being developed as a Burger King
restaurant by Seller ("New Sites").
SECTION 1.2 Purchase Price for Assets.
(a) The Purchase Price less the Escrow Fund (as such terms are
hereinafter defined,) for the Assets shall be payable at the Closing to Seller's
Agent (on behalf of Seller) either (i) by Federal funds bank wire transfer to an
account designated by Seller's Agent or (ii) by delivery of one or more
certified checks; except, however, the Purchase Price to be paid for the
Inventory shall be paid in the manner set forth in Section 1.2(b)(ii) below.
(b) As used herein, "Purchase Price" shall mean:
(i) For the Assets of Seller, exclusive of the
Inventory, the aggregate sum of Sixteen Million Dollars ($16,000,000.00);
(ii) For the Inventory, the amount equal to the cost
therefor as charged to Seller by its unaffiliated supplier or vendor. The cost
of the Inventory of Seller shall be determined by physical inventories to be
taken on the Closing Date in the Restaurants or the evening prior to the Closing
Date after the Restaurants have closed for business and in any other location
where Inventory may be located. Seller and Purchaser shall each have the right
to have at least one of its representatives present at the taking of such
inventories. The representatives shall submit a written report of the results of
such inventories promptly after Closing to both Sellers' Agent and Purchaser.
Promptly after receiving such report Seller's Agent shall then price the
inventories shown on such report by multiplying the physical items by their
cost, determined as aforesaid, and Seller's Agent shall submit such priced
inventory (the "Priced Inventory Report") to Purchaser. If Purchaser and
Seller's Agent are unable to agree upon the Priced Inventory Report within 10
days after Seller's Agent and Purchaser have received the Priced Inventory
Report, the Priced Inventory Report shall be determined an independent
accounting firm selected by Seller and Purchaser, whose determination shall be
final and binding upon Seller and Purchaser. Within 30 days after the final
determination of the purchase price for the Inventory, Purchaser shall pay said
amount by check to Seller's Agent.
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(c) With respect to the Assets being sold by Seller, the
Purchase Price therefor shall be allocated among the separate classes of assets
comprising the Assets of Seller in the manner set forth on Schedule 1.2(c)
annexed hereto and the Seller and Purchaser shall prepare and file their
respective tax allocation forms consistent with such allocations.
(d) For the New Sites, Purchaser shall pay to Seller all of
Seller's reasonable third party hard and soft construction costs relating to New
Sites, less any construction allowances or rebates received by Seller from the
landlord on such sites.
SECTION 1.3 Real Properties: Sale of Real Properties, Assignment of
Leases; Easements and Parking Agreements. Subject to the terms, provisions and
conditions contained in this Agreement and on the basis of the representations
and warranties hereinafter set forth, at the Closing, Seller shall assign to
Purchaser all of its leasehold interest in the Real Properties and shall assign,
sublease or otherwise transfer to Purchaser all of its right, title and interest
in and to all parking and other access agreements or arrangements relating to
the Real Properties, as follows:
(a) Assignment of Leases. (i) At Closing, Seller shall assign to
Purchaser all of Seller's right, title and interest as tenant under the Leases
pursuant to the form of Assignment and Assumption of Lease (the "Lease
Agreement") annexed hereto as Exhibit A. The Lease Assignment shall be executed
and delivered at Closing by Seller and Purchaser.
(ii) The expiration dates, monetary terms and renewal
terms for each of the Leases are as set forth in Schedule 1.3(a)(ii).
(b) Lease Assignment Consent. At Closing, Seller shall deliver
to Purchaser a Consent to Assignment and Estoppel Certificate in the form
annexed hereto as Exhibit B (the "Lease Assignment Consent") pursuant to which
the respective landlords shall: (i) acknowledge and consent to the applicable
Lease Assignment, and (ii) confirm all of the information set forth in the first
and last sentences of Section 2.9(b).
(c) Parking, Easements and Related Agreements. Schedule 1.3(c)
annexed hereto with respect to Seller sets forth all written or oral parking
leases, easements, agreements, grants, licenses, options and any other agreement
(collectively referred to herein as "Easements") pursuant to which Seller is
granted, for use in connection with the Restaurants, parking privileges or
rights, current or prospective, and/or rights of access of any kind or nature in
and to the applicable Real Property. At Closing Seller shall deliver to
Purchaser such documentation in form and substance satisfactory to Purchaser and
its counsel which effectively assigns or transfers Seller's rights under both
recorded and unrecorded Easements to Purchaser (hereinafter individually
referred to as an "Easement Assignment", and, collectively, as the "Easement
Assignments").
(d) Nondisturbance Agreements. With respect to the Leases which
are "subleases", Seller shall deliver to Purchaser "nondisturbance" agreement(s)
from the underlying lessor(s) in form and substance reasonably acceptable to
Purchaser. With respect to Real Properties which are owned, in whole or in
party, by the Principals, or any Affiliates, Seller will deliver lender
"nondisturbance" agreements from any lenders holding mortgages, deeds of trust
or similar instruments on such Real Properties. Seller shall use best efforts to
deliver, at closing, lender "nondisturbance" agreements with respect to Real
Properties which are not owned, in whole or in part, by the Principals or
Affiliates. All "nondisturbance" agreements referred to in this Section 1.3(d)
are hereinafter referred to as the "Nondisturbance Agreements".
(e) Seller shall deliver to Purchaser a Memorandum of Lease for
each Lease (collectively the "Memoranda of Leases") which shall set forth the
material terms of the Lease, and confirm the assignment to Purchaser, which
Memoranda of Leases shall be in form to permit the recording thereof with the
local register of deeds of the respective counties where the Real Properties are
located.
(iii) The leases for Restaurant Nos. 6153, 6873, and
7932 shall be amended as set forth
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in the Lease Amendments attached as Exhibit G.
(f) With respect to New Sites, where Seller has executed a lease
agreement, such lease agreement will be assigned to Purchaser at closing. In the
event Seller has acquired the real estate relating to such New Sites, Seller
shall convey at Closing to Purchaser said real estate, at Seller's cost. Seller
shall assign to Purchaser, any letters of intent or purchase contracts with
respect to any other New Sites.
SECTION 1.4 Assumption of Liabilities
(a) No Assumption by Purchaser. The parties hereto hereby agree
and acknowledge that Seller is not selling, transferring, assigning, delivering
or otherwise conveying, and Purchaser is not purchasing, receiving, acquiring or
otherwise assuming, any liabilities of Seller, or any of its Affiliates except
as specifically set forth in Section 1.4(b) hereof. Purchaser shall neither be
liable for any liability or obligation of Seller, or any of its Affiliates nor
shall it be required to indemnify Seller, or any of its Affiliates against any
liability or obligation other than those so specifically assumed or indemnified,
as the case may be.
Without limiting the generality of the foregoing, Purchaser is not
assuming and shall not indemnify Seller, or any of its Affiliates against any
liability, obligation, duty or responsibility of Seller, or any of its
Affiliates:
(i) arising from, or out of, the ownership or operations
or use of, or incurred in connection with, or incurred as a result of any claim
made against Seller, or any of its Affiliates in connection with, any
Restaurant, Asset, Real Property, Real Property Lease or Assumed Contract (as
hereinafter defined) on or prior to, or relating to any time period prior to
6:00 A.M. on the Closing Date;
(ii) any Federal, state or local income taxes, transfer
taxes, sales taxes or any other kind of tax of whatever kind including, without
limitation, any such tax that may arise from or by reason of the transactions
contemplated by this Agreement;
(iii) with respect to any wages, vacation, severance or
sick pay or any rights under any stock option, bonus or other incentive
arrangement that have accrued as of the Closing Date;
(iv) with respect to any employment, consulting or
similar arrangement to which Seller is a party or for which Seller is
responsible;
(v) with respect to any Plan (as hereinafter defined)
whether arising before, on or after the Closing Date; or
(vi) under any Laws (as hereinafter defined) relating to
public health and safety and pollution or protection of the environment,
including, without limitation, those relating to emissions, discharges, releases
or threatened releases of pollutants, contaminants, or hazardous or toxic
materials or wastes into ambient air, surface water, ground water, or land, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling of pollutants, contaminants or
hazardous or toxic materials or wastes or any materials defined or categorized
by any of the above as "Hazardous Materials", "Hazardous Substances", or similar
or related designations (collectively referred to herein as "Environmental
Laws").
(b) Assumption of Assumed Contracts. Seller shall assign to, and
Purchaser shall accept assignment of and assume from and after the Closing Date,
all of the rights, obligations and liabilities of Seller attributable to the
period after the Closing Date, under the Franchise Agreements, Real Property
Leases, Easements and the Other Contracts (as hereinafter defined)
(collectively, the "Assumed Contracts").
SECTION 1.5 Closing; Deliveries.
(a) Date. The closing of the transactions contemplated hereby
(the "Closing") shall take place at the
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offices of the Seller, (or such other location as shall be agreed upon by the
parties) on a date which shall be mutually agreed upon by the parties, but in no
event more than 90 days after Burger King Corporation ("Burger King") shall have
granted its consent to this transaction (the "BKC Consent Date"), provided,
however, that if, through no fault of the parties hereto, all of the conditions
to the parties' obligations to close hereunder are not satisfied or waived on
the date so designated, the Closing shall be adjourned to a subsequent mutually
agreeable date not later than 60 days after the BKC Consent Date unless further
extended by mutual agreement by the parties. The "Closing Date" is the date
Closing actually takes place.
(b) Delivery of Documents. At the Closing, Seller's Agent and
Purchaser shall deliver to each other the respective documents and other items
set forth in Article V.
SECTION 1.6 Adjustments.
(a) All customary prorations with respect to (i) the Real
Properties; (ii) obligations under the Assumed Contracts; (iii) utility charges
and (iv) personal property taxes, shall be adjusted between the parties as of
6:00 A.M. on the Closing Date. Payment, if any, owed by Purchaser to Seller or
by Seller to Purchaser by reason of such adjustments shall be made at the
Closing (by adjustment of the Purchase Price, if practicable) or as soon as
reasonably practicable thereafter.
(b) Seller shall pay all sales taxes, and transfer taxes, if
any, including, without limitation, any transfer taxes relating to the
conveyance of the Real Properties, applicable to its transaction at the Closing.
Seller shall be responsible for all franchise assignment fees owed to Burger
King in connection with the assignment of the Franchise Agreements to Purchaser.
(c) All "minimum" or "fixed rentals" and any other monetary
obligations accruing under Leases shall be adjusted for the month in which the
Closing occurs. In the event the period used in computing and/or adjusting
percentage rental (hereinafter referred to as the "Adjustment Lease Year") under
any of the Leases commences before the Closing Date and ends after the Closing
Date, such percentage rental shall be adjusted at the end of the Adjustment
Lease Year for such Leases so affected as follows:
(i) Seller shall be required to pay to Purchaser, within
ten days after the expiration of the Adjustment Lease Year, an amount equal to
the lesser of (1) the amount of percentage rental due for such Adjustment Lease
Year or (2) the "Percentage Rent Contribution" determined by the following
formula:
(A - B) x C x D = Percentage Rent Contribution
---------------
365
in which:
A = Total net sales or similar term as defined in such
Lease used in determining such percentage rental during
such Adjustment Lease Year;
B = The "sales break point" for such Lease;
C = Number of days during the Adjustment Lease Year prior
to, but not including, the Closing Date; and
D = Percentage rent factor for such Lease.
provided, however, that, in the event the above formula yields a negative amount
as the Percentage Rent Contribution, the Percentage Rent Contribution shall be
deemed equal to zero; and
(ii) Purchaser shall be required to pay directly to the
lessor under the Lease
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the percentage rental, if any, due for the Adjustment Lease Year.
(iii) In the event Percentage Rent is paid quarterly,
the formula shall be adjusted to provide for a quarterly calculation in lieu of
an annual calculation.
(d) Seller shall pay to Purchaser the value of Seller's employee
benefit matters pursuant to Section 4.11 below.
SECTION 1.7 Appointment of Seller's Agent. Seller irrevocably appoints
and authorizes Seller's Agent to do all such acts and things as agent on its
behalf and to exercise all such rights, powers and privileges in relation to
this Agreement as fully and completely as Seller could on its own behalf,
together with all such powers as are reasonably incidental thereto. Seller
agrees that the foregoing appointment and powers are coupled with an interest
and every party acting hereunder shall be entitled to rely on any action taken
or omitted by Seller's Agent on behalf of Seller.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
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Seller, jointly and severally, represent, warrant, covenant and agree to
and with Purchaser as follows:
SECTION 2.1 Organization and Corporate Power. Seller is a corporation
duly organized, validly existing and in good standing under the Laws of the
State of Georgia and is duly qualified and licensed to do business in the States
of North Carolina and South Carolina which is the only jurisdiction wherein the
character of the Real Properties and other Assets owned or leased or the nature
of the business of Seller makes such licensing or qualification to do business
necessary. Seller has full power and authority (corporate or otherwise) to own
its assets, or hold under lease the real property it presently holds under lease
including, without limitation, the Real Properties, and to carry on the business
in which it is engaged at all locations at which it is presently located
including, without limitation, operation of the Restaurants at the Real
Properties and to execute and deliver this Agreement and the other documents and
instruments to be executed and delivered by Seller, as the case may be, pursuant
hereto or in connection herewith (this Agreement and all other agreements,
documents and instruments to be entered into pursuant to this Agreement or in
connection herewith including all exhibits and schedules annexed hereto and
thereto are collectively referred to herein as the "Transaction Documents") and
to consummate the transactions contemplated hereby and thereby.
SECTION 2.2 Governing Instruments. The copies of the Governing
Instruments (as defined in Section 10.6) of Seller, and all amendments thereto
to date, as certified by the secretary of Seller have heretofore been delivered
to Purchaser, and are complete and correct. Seller is not in default in the
performance, observance or fulfillment of any of the provisions, terms or
conditions of its Governing Instruments.
SECTION 2.3 Due Authorization. All requisite authorizations for the
execution, delivery and performance of this Agreement and the other Transaction
Documents by Seller have been duly obtained. The execution and delivery of this
Agreement and the other Transaction Documents and the consummation of the
transactions contemplated hereby and thereby have been duly authorized by the
Board of Directors and shareholders of Seller, and no other corporate acts or
proceedings on the part of Seller or its shareholders are necessary to authorize
the execution and delivery of this Agreement or any of the other Transaction
Documents or the consummation of the transactions contemplated hereby or
thereby. This Agreement and each of the other Transaction Documents, upon
execution and delivery by Seller, will be the legal, valid and binding
obligation of Seller enforceable against it in accordance with its terms, except
as enforcement thereof may be limited by bankruptcy, insolvency and other laws
affecting creditors rights (collectively "Bankruptcy Laws") and subject to
general principles of equity affecting the right to specific performance and
injunctive relief.
SECTION 2.4 No Violation. The execution, delivery and performance of
this Agreement and the other
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Transaction Documents by Seller and the consummation by Seller of the
transactions contemplated hereby and thereby, do not and at Closing will not:
(a) violate its Governing Instruments; (b) violate or conflict with or
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under any agreement, indenture, instrument or
understanding to which Seller is a party or by which it is bound; (c) violate
any judgment, decree, law, rule or regulation to which Seller is a party or by
which it is bound; (d) result in the creation of, or give any party the right to
create any encumbrance upon the property and assets of Seller; (e) terminate or
modify, or give any third party the right to terminate or modify, the provisions
or terms of any agreement or commitment to which Seller is a party or by which
Seller is subject or bound; or (f) result in any suspension, revocation,
impairment, forfeiture or non-renewal of any permit, license, qualification,
authorization or approval applicable to Seller.
SECTION 2.5 Consents. Schedule 2.5 sets forth a list of all consents,
approvals or other authorizations which Seller is required to obtain from, and
any filing which Seller is required to make with, any governmental authority or
agency or any other Person including, but not limited to, consents required from
Burger King (the "Burger King Consents") in connection with the execution,
delivery and consummation of this Agreement and the other Transaction Documents
and the consummation of the transactions contemplated hereby or thereby
(collectively, the "Required Consents").
SECTION 2.6 Financial Statements.
(a) Seller has delivered to Purchaser its audited balance sheet
as at December 31, 1994 and December, 31, 1995 and the related statements of
income, shareholders equity and cash flows for the 12 months ended December 31,
1994 and 1995, respectively, together with the unqualified opinion of Seller's
accountants that such financial statements present fairly the financial position
of Seller and its subsidiaries (if any) as of the dates thereof and present
fairly the results of operations of the Restaurants for the periods covered
thereby, in each case in conformity with generally accepted accounting
principles consistently applied.
(b) The financial statements of Seller referred to in Section
2.6(a) (collectively, the "Financial Statements") are true, correct and
complete, have been prepared in accordance with generally accepted accounting
principles consistently applied and accurately present the results of operations
of the Restaurants for the periods covered thereby. There has not been any
change between the date of the Financial Statements and the date of this
Agreement which has materially affected the financial condition, assets,
liabilities, results of operations of the Restaurants and, except as set forth
in Schedule 2.6(b), no fact or condition exists or is contemplated or threatened
which may cause any such change at any time in the future.
Without limiting the foregoing since December 31, 1995 with
respect to the Restaurants:
(i) Seller has not incurred any obligation or liability
(absolute or contingent) except current liabilities incurred in the ordinary
course of conduct of business and obligations under Contracts entered in the
ordinary course of business; and
(ii) Seller has not paid, loaned or advanced any amounts
to, or sold, transferred, leased, subleased or licensed any Real Properties or
Assets to, or entered into any agreement or arrangements with, any Affiliate or
associate (and any of such transactions shall have been terminated on or before
the Closing Date).
SECTION 2.7 Assets.
(a) Seller owns, and will transfer to Purchaser at Closing, good
and marketable title to all of its Assets and Assumed Contracts free and clear
of all Liens except as otherwise expressly stated herein. The Assets of Seller
include all of the operating assets used or held for use in or in connection
with the business being conducted by Seller at the Restaurants. To the best
knowledge of Seller, all the Assets (with the exception of Restaurant # 206
which is in need of repair and is sold "as is"): (i) are, and on the Closing
Date will be, in good operating condition and repair, capable of performing the
functions for which such items are currently and normally used, normal wear and
tear excepted; and (ii) except as set forth in Schedule 2.7(a) annexed hereto,
conform, and on the Closing Date will
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conform, to the standards of Burger King under the terms and conditions set
forth in the applicable Franchise Agreements. On the Closing Date, each
Restaurant, together with its related Assets and Real Property, taken as a
whole, will constitute a fully operable "turn-key" Burger King restaurant
sufficient to permit Seller to obtain the unconditional consent of Burger King
to the transfer of the Restaurants to Purchaser and to permit Purchaser to
immediately operate the business at such Restaurant as presently being conducted
therein subject to Purchaser's retention of the employees.
(b) Seller will transfer and/or assign to Purchaser at Closing
all warranties, if any, with respect to its Assets.
SECTION 2.8 Inventory. The Inventory of Seller consists, and at Closing
will consist, of items of quality and quantity usable or salable in the ordinary
course of business. The present quality and quantities of all Inventory of
Seller are, and the qualities and quantities of all Inventory outstanding at the
Closing will be, reasonable in accordance with the current specifications of
Burger King. At Closing, the Inventory at each Restaurant shall be sufficient
for the operation of such Restaurant for at least 48 hours after the Closing
Date, and in no event will there be excess inventory in relation to normal
usage.
SECTION 2.9 Real Properties.
(a) Seller has delivered to Purchaser true and complete copies
of the Leases, together with all amendments thereto. To the best of Seller's
knowledge, each applicable owner of the Real Properties has good record and
marketable title in fee simple to such real property free and clear of all Liens
except as set forth in Schedule 2.9(a). Seller has no knowledge or information
of any facts, circumstances or conditions which do or would in any way adversely
affect the Real Properties or the operation thereof or business thereon as
presently conducted or as intended to be conducted. At or prior to Closing,
Seller shall cause to be discharged of record all Liens against Seller or
Seller's interest affecting the Real Properties. Each Lease is valid and binding
in full force and effect and enforceable in accordance with its terms. There are
no existing defaults or offsets which any of the applicable landlords has
against the enforcement of its Lease by the Seller and neither Seller nor such
landlord is in default under the applicable Lease, nor have any events under any
such Lease occurred which, with the giving of notice or passage of time or both,
would constitute a default thereunder by either party thereto.
(b) To the best of Seller's knowledge, the Real Properties and
all improvements located thereon and the present use thereof comply with,
constitute a valid non-conforming use, or are operating pursuant to the
provisions of a valid variance under all zoning laws, ordinances and regulations
of governmental authorities having jurisdiction thereof and, to the best of
Seller's knowledge, the construction, use and operation of the Real Properties
by Seller are in substantial compliance with all Laws. On or prior to Closing,
Seller shall deliver to Purchaser true and complete copies of each certificate
of occupancy for each Restaurant and all amendments thereto to date. In the
event Seller is unable to provide copies of said certificates, Seller shall
deliver documentation from the appropriate municipalities indicating that such
certificates are not required or no longer exist in their records. Seller also
agrees to indemnify and hold Purchaser harmless for all costs, expenses and
damage incurred by Purchaser as a result of Seller's inability to provide
Purchaser with said certificates of occupancy. Except as set forth in Section
2.7 to the best of Seller's knowledge, the Real Properties and the Restaurants
located thereon are in a state of good maintenance and repair and are in good
operating condition, normal wear and tear excepted, and (i) Seller is not aware
of any material, physical or mechanical defects in any of the Real Properties
and or Restaurants, including, without limitation, the structural portions of
the Real Properties and Restaurants and the plumbing, heating, air conditioning,
electrical, mechanical, life safety and other systems therein and all such
systems are in good operating condition and repair (normal wear and tear
excepted); and (ii) there are no ongoing repairs to the Real Properties or
Restaurants located thereon being made by or on behalf of Seller or being made
by or on behalf of any landlord. All necessary occupancy and other certificates
and permits, municipal and otherwise, for the lawful use and occupancy of the
Real Properties for the purposes for which they are intended and to which they
are presently devoted including, without limitation, for the operation of a
Burger King restaurant thereon, have been issued and remain valid. There are no
pending or threatened actions or proceedings that might prohibit, restrict or
impair such use and occupancy or result in the suspension, revocation,
impairment, forfeiture or non-renewal of any such certificates or permits. All
notes or notices of violation of any Laws, against or affecting
8
any such Real Properties have been complied with. There are no outstanding
correcting work orders from any Federal, State, county, municipal or local
government, or the owner of the Real Properties or any insurance company with
respect to any such Real Properties.
(c) There are no condemnation or eminent domain proceedings of
any kind whatsoever or proceedings of any other kind whatsoever for the taking
of the whole or any part of the Real Properties for public or quasi-public use
pending or, to the knowledge of Seller, threatened against the Real Properties.
(d) The Real Properties and all improvements thereon represent
all of the locations at which the Seller conducts business relating to the
Restaurants and are, now, and at Closing will be, the only locations where any
of the Assets are or will be located.
(e) All water, sewer, gas, electric, telephone and drainage
facilities, and all other utilities required by any Law or by the normal use and
operation of the Real Properties and the Restaurants located thereon are
installed to the property lines of the respective Real Properties, are connected
pursuant to valid permits, are fully operable and are adequate to service the
Real Properties and the Restaurants located thereon and to permit full
compliance with all Laws and normal utilization of the Real Properties and the
Restaurants located thereon.
(f) All licenses, permits, certificates, including, without
limitation, proof of dedication, required from all governmental agencies having
jurisdiction over the Real Properties, and from any other Persons, for the
normal use and operation of the Real Properties and the Restaurants located
thereon and to ensure adequate vehicular and pedestrian ingress to and egress
from the Real Properties and the Restaurants located thereon have been obtained.
The Easements are valid and binding, in full force and effect and enforceable in
accordance with their respective terms.
SECTION 2.10 Franchise Agreements.
(a) Seller has delivered to Purchaser a true, complete and
correct copy of the Franchise Agreements and all amendments thereto. Seller
owns, and at Closing will transfer to Purchaser, its right, title and interest
in the Franchise Agreements, free and clear of all Liens. Subject to the written
consent of Burger King, which Seller shall obtain and deliver to Purchaser at or
prior to the Closing, Seller has the absolute right and authority to sell,
assign, transfer and convey the Franchise Agreements, and Seller does not know
or has no reason to know of any event which would give rise to a violation or
default under the Franchise Agreements.
(b) Assignment of TRA's. Schedule 2.10(b) hereto sets forth all
rights Seller or any of its Affiliates may have to TRA's with Burger King.
Seller shall use best efforts to assist Purchaser in obtaining Burger King's
consent to the assignment or transfer to the Purchaser of Seller's rights under
the TRA's set forth on Schedule 2.10(b).
(c) Assignment of Development Rights. Schedule 2.10(c) hereto
sets forth all territorial and development rights Seller or any of its
Affiliates may have from Burger King regarding the exclusive right to develop
any Burger King restaurant within a specified territory (the "Development
Rights"). Seller shall use best efforts to obtain Burger King's consent to the
assignment or transfer to Purchaser of the Development Rights.
SECTION 2.11 Employment Arrangements.
(a) Except as required by Law, Seller has no obligation,
contingent or otherwise, under any employment agreement, collective bargaining
or other labor agreement, any agreement containing severance or termination pay
arrangements, retainer or consulting arrangements, or purchase plan or other
employee contract or nonterminable (whether with or without penalty)
arrangement.
(b) Except as set forth on Schedule 2.11(b), within the last
five years Seller has not experienced any labor disputes, union organization
attempts or any work stoppage due to labor disagreements. Except as set forth on
Schedule 2.11(b), (i) to the best knowledge of Seller, Seller is in substantial
compliance with all applicable Laws
9
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor practice;
(ii) there is no unfair labor practice, charge or complaint against Seller
pending or threatened before the National Labor Relations Board; (iii) there is
no labor strike, dispute, request for representation, slowdown or stoppage
actually pending or threatened against or affecting Seller; (iv) no question
concerning representation has been raised or is threatened respecting the
employees of Seller; and (v) no grievance which might have an adverse affect on
Seller or the conduct of its business nor any arbitration proceeding arising out
of or under collective bargaining agreements is pending and no claims therefor
exist.
(c) Schedule 2.11(c) sets forth a true and complete list of (i)
the names of all manager and assistant managers employed by Seller at the
Restaurants as of the date hereof, the date such individuals were first employed
by Seller, how long such individuals have been at the particular Restaurants and
the salary payable to such persons and (ii) the names of all other persons
employed by Seller at the Restaurants as of the date hereof, and the salary or
hourly wage payable to each such person, and (iii) the total number of vacation
days accrued by all persons employed by Seller and the total monetary value of
such accrued vacation for all such persons. From and after the date hereof,
Seller, the Principals or any of their respective Affiliates will not remove any
management personnel (manager and assistant managers) from the Restaurants or
relocate such management personnel to any other restaurants owned or operated by
Seller, the Affiliates or their respective Affiliates and at Closing the
Restaurants in accordance with Burger King standards.
SECTION 2.12 Contracts and Arrangements.
(a) Except for the Franchise Agreements, Leases, Easements, and
the Contracts set forth on Schedule 2.12 hereto (the Contracts set forth on
Schedule 2.12 being referred to herein, collectively, as the "Other Contracts"),
Seller has no Contract relating to the Restaurants, Assets or Real Properties,
including, without limiting the generality of the foregoing, any (i) Contract
for the purchase or sale of Inventory; (ii) Contract for the purchase or sale of
supplies, services or other items; (iii) Contract for the purchase, sale or
lease of any Restaurant Equipment; (iv) Franchise Agreement or license
agreement; and (v) employment or consulting agreement or pension, disability,
profit sharing, bonus, incentive, insurance, retirement or other employee
benefit agreement.
(b) Seller has delivered to Purchaser a true, complete and
correct copy of each Other Contract applicable to it together with all
amendments (if oral, a written description of the terms thereof) thereto.
(c) Seller has performed all obligations required to be
performed under each Other Contract relating to its business and is not in
breach or default or in arrears in any respect under the terms thereof. Seller
has received no notice of the termination of any such Other Contract prior to
the expiration of the scheduled term thereof or has knowledge of the intent of a
party to any such Other Contract to do the same, nor has any event occurred
which, with notice or the passage of time or both, would constitute a default
under any such Other Contract. Seller has the right, under the terms of each
Other Contract, to assign such Other Contract to Purchaser.
(d) Except for powers of attorney granted to attorneys and
accountants for representation before taxing authorities, Seller has not given
any power of attorney (revocable or irrevocable) to any Person for any purpose
whatsoever.
SECTION 2.13 ERISA.
(a) Schedule 2.13(a) Contains a true and complete list of all
"employee pension benefit plans" (as defined in section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), including all
"multi-employer plans" (as defined in ERISA section 3(37)), and any other stock
bonus, pension, or profit sharing plans described in section 401a of the
Internal Revenue Code of 1986, as amended (the "Code"), that Seller or any other
entity which would be considered in a controlled group or under common control
or as a single employer with Seller under ERISA sections 4001(a)(14) or (b) or
Code sections 414(b), (c), (m), or (o) presently maintains or is obligated to
contribute or had maintained or had an obligation to contribute at any time
within the past five years.
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(b) Schedule 2.13(b) contains a true and complete list of all
"employee welfare benefit plans" as defined in ERISA section 3(1) and all
deferred compensation, stock purchase, stock option, incentive, bonus, vacation,
severance (including, without limitation, benefits in the event of a change of
ownership in whole or in part, of Seller), disability, hospitalization, medical
insurance, child care, educational assistance, or other employee benefit plan,
program or arrangement currently maintained by any Seller or to which any Seller
has an obligation to contribute.
(c) Seller has delivered or made available to Purchaser true and
complete copies of all documents, as they may have been amended to the date
hereof, embodying or relating to the plans, programs or arrangements described
in Section 2.13(a) and (b) (collectively the "Plans").
(d) There are no actions, audits, suits, or claims pending
(other than routine claims for benefits) or, to the knowledge of Seller,
threatened, against any Plan or any fiduciary of any Plan or against the assets
of any Plan.
(e) Seller has no obligation to any retired or former employee
with respect to, nor made any oral or written representation or communication to
any retired or former employee regarding, the provisions of any disability (long
or short term), hospitalization, medical, dental or life insurance plans
(whether insured or self-insured) or any other "employee welfare benefit" plan
as defined in ERISA section 3(1).
SECTION 2.14 Litigation, Compliance with Laws and Consents.
(a) Except as set forth on Schedule 2.14(a), there are no suits,
grievances, complaints, charges, inquiries, proceedings, hearings, demands,
notices, demand letters, claims, actions, causes of action or investigations
before any court, tribunal, governmental or regulatory authority or any other
Person (each an "Action" and, collectively, "Actions") now pending, or, to the
knowledge of Seller, in prospect or threatened against, Seller or any of its
respective officers, directors or partners, at law or in equity, whether or not
fully covered by insurance, in connection with the Assets, Leases, Assumed
Contracts, Real Properties, Restaurants, business, affairs, properties or assets
of Seller.
(b) To the best knowledge of Seller, Seller at all times during
the past has been, and at Closing, will be, in substantial compliance in all
respects with all laws (whether statutory or otherwise) rules, regulations,
orders, ordinances, judgments, injunctions, demands, or decrees of any
governmental authority (Federal, state, local or otherwise) (collectively
"Laws") applicable to its business, affairs, properties or assets. Neither
Seller, nor any officer, director or authorized agent of Seller is in default
with respect to, and has not been charged or to its knowledge threatened with,
nor is under investigation with respect to any violation of any Laws relating to
any aspect of its business, affairs, properties or assets including, but not
limited to, the Restaurants, Assets, Leases, Assumed Contracts, and the Real
Properties.
(c) Set forth on Schedule 2.14(c) hereto is a list of all
licenses, permits, approvals, permissions, qualifications, consents and other
authorizations (collectively "Licenses") which are required to be obtained in
connection with the ownership, use or operation of the Restaurants, the Assets,
Leases or the Real Properties ("Required Licenses"). Except as set forth in
Schedule 2.14(c), Seller has obtained each of the Required Licenses and each
such Required License is and on the Closing Date will be, validly issued and in
full force and effect and there are not now, and at Closing shall not be any
Actions pending, and to Seller's knowledge, any Actions in prospect or
threatened, challenging the Required Licenses.
SECTION 2.15 Environmental Matters. Except as set forth in Schedule 2.15
annexed hereto: (i) Seller has obtained all Licenses which are required under
any Environmental Laws; (ii) to the best of Seller's knowledge, Seller is in
substantial compliance with all terms and conditions of the Required Licenses
and is also in substantial compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in any Environmental Laws or code, plan, order, decree or
judgment relating to public health and safety and pollution or protection of the
environment or any notice or demand letter issued, entered, promulgated or
approved thereunder; (iii) there are no civil, criminal or administrative
Actions pending, or to Sellers' knowledge threatened, against Seller relating in
any way to any Environmental Law or any regulation, code, plan, order, decree,
judgment, injunction, notice or demand letter issued, entered, promulgated or
approved thereunder; and
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(iv) Seller does not know or has any reason to know of, nor has Seller received
any notice of any facts, events or conditions which would interfere with or
prevent continued compliance with, or give rise to any common law or legal
liability under any Environmental Law.
SECTION 2.16 Insurance Policies. Seller has maintained with financially
sound and reputable insurers insurance with respect to its properties and
business against loss or damage of the kinds customarily insured against by
reputable companies in the same or similar business, of such types and in such
amounts (with such deductible amounts) as is customary for such companies under
similar circumstances. All of the applicable insurance policies are valid and
enforceable and in full force and effect and will be continued in full force and
effect up to and including the Closing Date.
SECTION 2.17 Tax Returns. Seller has filed all Federal income tax
returns and all state and local income, franchise and sales tax returns and all
real property tax returns and any other tax return which was required to be
filed as of the date of this Agreement, and will timely file or obtain
extensions of time to file all returns which were not required to be filed prior
to the date hereof. As of the date hereof, no taxes are past due, no tax
liabilities have been assessed or proposed which remain unpaid and all current
payroll taxes have been paid. Seller is not aware of any basis upon which any
assessment of additional Federal, state or local income or other taxes could be
made, and Seller has not signed any extension agreement with the Internal
Revenue Service or any other governmental agency or given waiver of a statute of
limitations with respect to the payment of taxes for periods for which the
statute of limitations has not expired. Seller shall be liable for all tax
liabilities in connection with the operation of the Restaurants, the Assets, the
Leases, the Easements and Assumed Contracts, which cover periods prior to the
Closing Date. Seller shall be liable for all transfer, sales and similar tax
liabilities, if any, in connection with the assignment of the Leases and Assumed
Contracts, and the transfer of any rights under the Easements. All taxes which
Seller is required by law to withhold or collect have been duly withheld or
collected and to the extent required have been paid over to the proper
governmental authorities on a timely basis or reflected as an obligation on the
current Financial Statements of the Seller.
SECTION 2.18 Adverse Restrictions. Seller is not subject to any charter,
by-law, Lien, lease, agreement, instrument, order, judgment or decree, or any
other restriction of any kind or character, or, any law rule or regulation,
which now is or in the future could be burdensome or which could affect
materially adversely the Restaurants or the business conducted therein, Assets,
Real Properties, Leases, the Easements or Assumed Contracts. The execution and
delivery of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereunder and thereby will not
result in the violation or breach of, default or the creation of any Lien under
any of the aforesaid.
SECTION 2.19 Brokers. No broker, finder or selling agent has had a part
in bringing about any of the transactions contemplated by this Agreement or the
other Transaction Documents (including, but not limited to, the conveyance of
the Owned Real Properties and the assignment of the Leases) and no commission or
other fee is due to any party in connection with the transactions contemplated
by this Agreement or the other Transaction Documents.
SECTION 2.20 Material Information. The Financial Statements, this
Agreement, the other Transaction Documents and any exhibit, schedule,
certificate, or other information, representation, warranty or other document
furnished or to be furnished by Seller to Purchaser pursuant to or in connection
with any of the foregoing, do not (i) contain, nor will the same contain, any
untrue statement of a material fact; or (ii) omit, nor will the same omit, or
fail to state, a material fact required to be stated herein or therein or which
is necessary to make the statements herein or therein not misleading.
SECTION 2.21 Continuing Representations. The representations and
warranties of Seller herein contained shall be true and correct on and as of the
Closing Date with the same force and effect as if made on and as of that date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
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Purchaser represents, warrants, covenants and agrees to and with Seller
that:
SECTION 3.1 Organization and Corporate Power. Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware. Purchaser has full power and authority (corporate and other)
to execute and deliver this Agreement and the other Transaction Documents to be
executed and delivered by Purchaser pursuant hereto or in connection herewith
and to consummate the transactions contemplated hereby and thereby.
SECTION 3.2 Certificate of Incorporation and By-Laws. Copies of the
Certificate of Incorporation and By-Laws of Purchaser and all amendments thereto
to date, as certified by the Secretary of Purchaser, have heretofore been
delivered to Seller's Agent by Purchaser, and are complete and correct as of the
date of this Agreement and will be complete and correct as of the Closing Date.
Purchaser is not in default in the performance, observance or fulfillment of any
of the terms or conditions of its Certificate of Incorporation or By-Laws.
SECTION 3.3 Due Authorization. All requisite authorizations for the
execution, delivery, performance and satisfaction of this Agreement and the
other Transaction Documents by Purchaser have been duly obtained. The execution
and delivery of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by the Board of Directors of Purchaser and no other corporate acts or
proceedings on the part of Purchaser or its shareholders are necessary to
authorize the execution and delivery of this Agreement or any of the other
Transaction Documents or the consummation of the transactions contemplated
hereby or thereby. This Agreement and each of the other Transaction Documents,
upon execution and delivery by Purchaser, will be the legal, valid and binding
obligation of Purchaser, enforceable against Purchaser in accordance with its
terms, except as enforcement thereof may be limited by Bankruptcy Laws and
subject to the general principles of equity affecting the right to specific
performance and injunctive relief.
SECTION 3.4 No Violation. The execution, delivery and performance of
this Agreement and the other Transaction Documents by Purchaser and the
consummation by Purchaser of the transactions contemplated hereby and thereby
will not (a) violate its Certificate of Incorporation or By-Laws; (b) violate or
conflict with or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under any agreement, indenture,
instrument or understanding to which Purchaser is a party or by which it is
bound; (c) violate any judgment, decree, law, rule or regulation to which
Purchaser is a party or by which it is bound; (d) terminate or modify, or give
any third party the right to terminate or modify, the provisions or terms of any
agreement or commitment to which Purchaser is a party or by which Purchaser is
subject or bound; or (e) result in any suspension, revocation, impairment,
forfeiture or non-renewal of any license, qualification, authorization or
approval applicable to Purchaser.
SECTION 3.5 Consents. Except for the Burger King Consents, the consent
of Purchaser's senior lender and any filings that Purchaser may be required to
make with the Securities and Exchange Commission, Purchaser is not required to
obtain any consents, approvals or other authorizations or to make any filing
with any governmental authority or agency or any other Person in connection with
the execution, delivery and consummation of this Agreement and other Transaction
Documents and the consummation of the transactions contemplated hereby and
thereby.
SECTION 3.6 Brokers. No broker, finder or selling agent has had a part
in bringing about any of the transactions contemplated by this Agreement or the
other Transaction Documents (including, but not limited to, the conveyance of
the Real Properties and the assignment of the Leases) and no commission or other
fee is due to any party in connection with the transactions contemplated by this
Agreement or the other Transaction Documents.
SECTION 3.7 Material Information. This Agreement, the other Transaction
Documents and any exhibit, schedule, certificate or other information
representation, warranty or other document furnished or to be furnished by
Purchaser to Seller do not (a) contain, nor will the same contain, any untrue
statement of a material fact; or (b) omit, nor will the same omit or fail to
state, a material fact required to be stated herein or therein or which is
necessary to make the statements herein or therein not misleading.
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SECTION 3.8 Continuing Representations. The representations and
warranties of Purchaser herein contained shall be true and correct on and as of
the Closing Date with the same force and effect as if made on and as of that
date.
ARTICLE IV
COVENANTS OF THE PARTIES
------------------------
SECTION 4.1 Access to Records and Properties Prior to the Closing Date.
Between the date of this Agreement and the Closing Date, Seller shall give
Purchaser, its directors, officers, employees, accountants, counsel and other
representatives and agents ("Representatives") reasonable access to the
premises, properties, books, financial statements, Contracts, records of Seller,
relating to the Restaurants, the Assets, Real Properties, Leases, the Easements
and Assumed Contracts, and shall furnish Purchaser with such financial and
operating data and other information with respect to the business and properties
of Seller as Purchaser shall from time to time reasonably request for such
purposes as Purchaser shall require. Any such investigation or examination shall
be conducted at reasonable times and upon reasonable notice to Seller's Agent.
Notwithstanding inspections, audits or other studies undertaken by or on behalf
of Purchaser hereunder or any other due diligence investigation undertaken by or
on behalf of Purchaser, Seller shall not be relieved in any way of
responsibility for their warranties, representations and covenants set forth in
this Agreement.
SECTION 4.2 Operation of the Business of Seller.
(a) Between the date of this Agreement and the Closing Date,
Seller shall conduct the operation of the Restaurants in the ordinary and usual
course of business, consistent with past practices and will use its best efforts
to preserve intact the present business organization with respect to the
Restaurants, to keep available the services of its officers and employees, and
to maintain satisfactory relationships with landlords, franchisors, dealers,
licensors, licensees, suppliers, contractors, distributors, customers and others
having business relations with it and the Restaurants and will maintain the
Restaurants, Real Properties, and Assets in a condition conducive to the
operation of the business currently carried on therein.
(b) Without limiting the generality of the foregoing, and except
as otherwise expressly provided in this Agreement or with the prior written
consent of Purchaser, Seller will not:
(i) Keep and maintain its books of account and records
other than in accordance with generally accepted accounting principles
consistent with past practices;
(ii) Amend or restate any Governing Instrument, the
Leases, the Franchise Agreements Development Rights or any other material
Contract;
(iii) (A) Increase in any manner the compensation of any
of the employees at any of the Restaurants other than in the ordinary course of
business, consistent with past practices; (B) pay or agree to pay any pension,
retirement allowance or other employee benefit not required or permitted by any
Plan, whether past or present; or (C) commit itself in relation to the
Restaurants, the employees at the Restaurants or the Real Properties, to any new
or renewed Plan with or for the benefit of any Person, or to amend any of such
Plans or any of such agreements in existence on the date hereof;
(iv) Permit any of its insurance policies to be canceled
or terminated or any of the coverage thereunder to lapse, unless simultaneously
with such termination, cancellation or lapse, replacement policies are in full
force and effect providing coverage, in form, substance and amount equal to or
greater than the coverage under those canceled, terminated or lapsed for
substantially similar premiums;
(v) Enter into any other Contracts whether written or
oral which, individually or in the
14
aggregate, would be material to the Restaurants, Assets, Real Properties,
Leases, the Easements or the Assumed Contracts, except Contracts for the
purchase, sale or lease of goods or services in the ordinary course of business
consistent with past practice and not in excess of current requirements, or
otherwise make any material change in the conduct of the businesses or
operations of Seller;
(vi) Take any action which would result in any of the
representations or warranties contained in this Agreement or the other
Transaction Documents not being true at and as of the time immediately after
such action at and as of the Closing Date, or in any of the covenants contained
in this Agreement or other Transaction Documents becoming unperformable or which
would have a materially adverse impact on the transactions contemplated hereby
or thereby;
(vii) Operate the Restaurants or otherwise engage in any
practices which would materially affect sales at the Restaurants; or
(viii) Agree (in writing or otherwise) to do any of the
foregoing.
SECTION 4.3 Supplements to Disclosures. Prior to the Closing Date,
Seller will promptly supplement or amend the information set forth herein and in
the Schedules and Exhibits referred to herein with respect to any matter
hereafter arising which, if existing or occurring at or prior to the date of
this Agreement, would have been required to be set forth or described herein or
in a Schedule or Exhibit or which is necessary to correct any information herein
or in a Schedule or Exhibit or in any representation and warranty, which has
been rendered inaccurate thereby.
SECTION 4.4 No Other Asset Sales. From the date hereof until the Closing
Date, Seller shall not, directly or indirectly and whether by means of a sale of
assets, sale of stock, merger or otherwise:
(a) sell, transfer, assign or dispose of, or offer to, or enter
into any Contract to sell, transfer assign or dispose, of the Assets or any
interest therein, except for normal operations in the ordinary course of
business; or
(b) encourage, initiate or solicit any inquiries or proposals
by, or engage in any discussions or negotiations with, or furnish any non-public
information to any Person concerning any such transaction and Seller's Agent
shall promptly communicate to Purchaser the substance of any inquiry or proposal
concerning any such transaction which may be received.
SECTION 4.5 Regulatory Filings and Consents. From the date hereof until
the Closing Date, each of the parties hereto shall furnish to the other party
hereto such necessary information and reasonable assistance as such other party
may reasonably request in connection with its preparation of necessary filings
or submissions to any governmental agency and Seller shall use its best efforts
to obtain all Licenses and Required Consents from third parties necessary to
consummate the transactions contemplated by this Agreement and the other
Transaction Documents. Each party shall furnish to the other copies of all
correspondence, filings or communications (or memoranda setting forth the
substance thereof) between Purchaser, Seller, or any of their respective
Representatives and agents, on the one hand, and any government agency or
authority or third party, on the other hand, with respect to this Agreement and
the other Transaction Documents and transactions contemplated hereby and
thereby.
SECTION 4.6 Announcements; Confidentiality.
(a) From the date of this Agreement until Closing, except as
required by Laws, no announcement of the existence or terms of this Agreement or
the other Transaction Documents or the transactions contemplated hereby and
thereby shall be made publicly or to the employees or customers of Seller, by
any party to this Agreement or any of its respective Representatives without the
advance written approval of the other parties.
(b) Purchaser, on the one hand, and Seller and the Principals, on
the other hand, each shall hold in strict confidence, and shall use their best
efforts to cause all their representatives to hold in strict confidence, unless
15
compelled to disclose by judicial or administrative process, or by other
requirements of law, all confidential and proprietary information (collectively,
"Confidential Information") concerning Seller and the Principals (in the case of
Purchaser) and Purchaser (in the case of Seller and the Principals) which is
created or obtained prior to, on or after the date hereof in connection with the
transactions contemplated hereby, and Purchaser, Seller and the Principals each
shall not use or disclose to others, or permit the use or disclosure of, any
such information created or obtained except to the extent that such information
can be shown to have been (i) previously known by Purchaser, and Seller or the
Principals, as the case may be; and (ii) in the public domain through no fault
of a party or any of its Representatives, and will not release or disclose such
information to any other Person, except its officers, directors, employees,
Representatives and lending institutions who need to know such information in
connection with this Agreement.
(c) If the transactions contemplated by this Agreement are not
consummated, such confidence shall be maintained except (i) as required by law
or (ii) to the extent such information comes into the public domain through no
fault of a party or any of its Representatives.
SECTION 4.7 [INTENTIONALLY OMITTED].
SECTION 4.8 Bulk Sales.
(a) Purchaser hereby waives compliance by Seller with the
provisions of the South Carolina and North Carolina Uniform Commercial Code Bulk
Sales laws. Seller and the Principals hereby agree to pay and discharge,
promptly when due, all claims of creditors which may be asserted against
Purchaser by reason of such noncompliance. Purchaser also hereby waives
compliance by Seller with the provisions of any applicable bulk sales state or
local tax laws on effect in the States of South Carolina and North Carolina. The
bulk sales laws referred to in Section 4.8 hereof are referred to herein,
collectively, as the "Bulk Sales Laws". Seller and the Principals shall hold a
sufficient amount of net cash proceeds in trust to pay all its creditors as and
when their claims come due and hold and save Purchaser harmless against any
loss, damage or expense, including reasonable attorney's fees and costs incurred
by Purchaser as a result of or attributable to the parties' failure to comply
with such provisions.
SECTION 4.9 Financial Statements and Reports. Between the date hereof
and the Closing Date, Seller's Agent shall deliver to Purchaser:
(a) within five business days after the end of each calendar
month, a written statement, certified by Seller's Agent, of the Gross Sales of
each Restaurant for that month; and
(b) within five business days of their availability, such
financial statements relating to each Restaurant as may be prepared by Seller,
which shall be prepared on a basis consistent with past practices.
SECTION 4.10 Environmental Matters. (a)Within 5 days after receipt of
approval of the transaction by Burger King and waiver of Burger King's right of
first refusal, Purchaser shall, at its sole cost and expense, obtain current
"Level-One" or "Phase I" environmental site assessments (hereinafter "Phase
I's") for each of the Real Properties, which shall be conducted by a reputable,
licensed environmental services company (the "Environmental Company"). The
Environmental Company shall be selected by Purchaser.
(b) In the event any of the Phase I's shall recommend that a
"Level-Two" or "Phase II" environmental site assessment (hereinafter "Phase
II's") be performed, or shall disclose any environmental conditions which
Purchaser, in its reasonable discretion, believes should be investigated
further, Seller, at its sole cost and expense, shall promptly cause Phase II's
for each Real Property so affected to be performed by the Environmental Company.
(c) In the event that a Phase II shall identify a Real Property
which is affected by an environmental condition which requires abatement or
remediation (an "Environmentally Damaged Restaurant"), Purchaser shall have the
option, to be exercised within ten days of receipt of such Phase II, to: (i)
require Seller to promptly perform the remediation at Seller's sole cost and
expense; or (ii) elect to have the Environmentally Damaged Restaurant and the
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Real Property upon which such Restaurant is located, and all other Assets
relating to such Restaurant, withdrawn from this transaction, whereupon the
purchase price for the Assets shall be reduced by an amount (referred to herein
as the "Damage Credit") which shall be determined by Purchaser and Seller's
Agent by taking into account the sales, profitability and location of such
Restaurant, as well as any other relevant material facts or factors related to
the value of such Restaurant, the Assets related thereto or the Real Property
upon which it is located. In the event Purchaser and Seller's Agent are unable
to agree upon the Damage Credit, such dispute shall be submitted to arbitration
pursuant to Section 10.15 of this Agreement. In the event Purchaser elects to
require the Seller to perform the necessary remediation at such Restaurant, the
Closing shall occur pursuant to this Agreement except a portion of the purchase
price equal to the Damage Credit shall be held in escrow by the attorneys for
Purchaser pending completion of such remediation. In the event such remediation
is not completed within 90 days after the date Purchaser has elected to have the
Seller proceed with such remediation, Purchaser shall have an additional option
to withdraw the Environmentally Damaged Restaurant from this transaction,
exercisable within 30 days from date Purchaser's additional option shall arise,
whereupon the Damage Credit shall immediately be paid to Purchaser.
Notwithstanding the foregoing, if the reasonable estimated cost to remediate an
Environmentally Damaged Restaurant exceeds $25,000, Seller may also elect to
have such Restaurant withdrawn from the transaction, whereupon the Purchase
Price shall be reduced by the Damage Credit.
(d) In the event that the Phase II's shall identify 5 or more
Real Properties affected by environmental conditions requiring remediation or
abatement, Purchaser shall have the option to terminate this Agreement, which
option shall be exercisable within 20 days from the date Purchaser shall have
received the Phase II's disclosing such conditions. In the event Purchaser shall
not elect to terminate this Agreement, the provisions of Section 4.10(c) above
shall apply to each Restaurant so affected.
SECTION 4.11 Employee Benefit Matters. Seller shall pay to Purchaser, at
Closing, the value of any liabilities it may have with respect to any wages,
vacation, severance or sick pay, or any rights under any stock option, bonus or
other incentive arrangements of its respective employees which shall have
accrued as of the Closing Date. For the purposes hereof, such accrued
liabilities shall be determined as if Seller does not terminate the employment
of their respective employees on the Closing Date.
(b) Seller shall assume full responsibility and liability for
offering and providing "continuation coverage" to any employee of Seller, and to
"qualified beneficiaries" of any employee of Seller or to any qualified
beneficiary who incurs a multiple qualifying event after the Closing Date
provided that the employee or "qualified beneficiary" incurs a "qualifying
event" prior to the Closing Date. The continuation coverage shall be provided
under a group health plan of Seller or an affiliate of Seller. The type of
coverage shall be that described in Section 4980B(f)(2)(A) of the Code. The
continuation coverage shall be provided for the period described in Section
4980B(f)(2)(A) of the Code. "Continuation coverage", "qualified beneficiaries",
and "qualifying event" have the meanings given such terms under Section 4980B of
the Code. Seller hereby agrees to indemnify, defend and hold Purchaser harmless
from and against any "Damages" (as defined in Section 7.2(a) below) arising out
of Seller's failure to offer the continuation coverage described herein.
SECTION 4.12 Access to Restaurants Prior to Closing. Within 48 hours
prior to the Closing Date, Seller shall give Purchaser and its Representatives
access to the Restaurants for the purposes of facilitating Purchaser's
conversion of the cash register systems. Such access by Purchaser shall be upon
reasonable prior notice and Purchaser agrees to use best efforts to conduct said
activities in such manner so as not to unreasonably interfere with the operation
of Seller's business. To the extent there is storage space available at the
Restaurants and the same shall not cause undue burden on Seller, Purchaser may
also, at its sole risk, store its register equipment at the Restaurants. To
further facilitate the Purchaser's integration of the Restaurant's systems, the
Selling Persons hereby covenant and agree to close the Restaurants to business
at 8:00 p.m. on the date immediately preceding the Closing Date.
SECTION 4.13 Covenants of the Principals. By their respective signatures
at the end of this Agreement, the Principals agree to observe and be bound by
the provisions of Sections 4.2, 4.3, 4.4, 4.5, 4.6, 4.8, 4.11, 4.14, 10.1, 10.8,
10.11 and Articles VII and VIII hereof.
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SECTION 4.14 No Solicitation. During the term of this Agreement, Seller
of the Principals and any party acting through or on behalf of Seller or
Principals shall not (i) solicit, initiate or encourage any inquiries, proposals
or offers from any Person for, or enter into any discussions or agreements with
any Person with respect to, the acquisition of any equity interest in the
business of Seller, or all, or substantially all, of the assets of Seller (an
"Acquisition Transaction"), (ii) furnish or cause to be furnished any non-public
information concerning the business and operations of Seller and the Principals,
to any Person (other than any of the parties hereto and their officers,
directors, employees, consultants and agents) or (iii) otherwise cooperate in
any way with, or assist or participate in, facilitate or encourage, any effort
or attempt by any Person to do or seek any of the foregoing. The Seller and the
Principals shall promptly notify the Purchaser of any inquiry or proposal
received by the Seller with respect to any such Acquisition Transaction.
SECTION 4.15 HSR Act Filing.
(a) The Seller shall timely and promptly make all filings which
are required under the HSR Act. Seller shall supply the Purchaser with copies of
all correspondence, filings or communications (or memoranda setting forth the
substance thereof) between the Seller or its counsel, on the one hand, and the
Federal Trade Commission (the "FTC"), the Antitrust Division of the United
States Department of Justice (the "Antitrust Division") or any other foreign,
federal, state, county, or local government or any other governmental,
regulatory or administrative agency or authority or members of their respective
staffs, on the other hand, with respect to this Agreement and the transactions
contemplated hereby. The Purchaser shall have the right to review and approve
all such correspondence, filings and communications and shall have the right to
participate in any discussions or negotiations with the FTC, the Antitrust
Division and any other governmental, regulatory or administrative agency or
authority or members of their respective staffs.
(b) The Purchaser will cause its "ultimate parent" (as such term
defined in the HSR Act) to timely and promptly make all filings which are
required under the HSR Act. The Purchaser will supply the Seller with copies of
all correspondence, filings or communications (or memoranda setting forth the
substance thereof) between the Purchaser or its "ultimate parent" or their
respective counsel, on the one hand, and the FTC, the Antitrust Division or any
other foreign, federal, state, county or local government or any other
governmental, regulatory or administrative agency or authority or members of
their respective staffs, on the other hand, with respect to this Agreement and
the transactions contemplated hereby.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF PARTIES
------------------------------------
SECTION 5.1 Conditions to the Obligations of Seller and Purchaser. The
obligations of Purchaser and Seller to consummate the transactions contemplated
by the Transaction Documents are subject to the satisfaction at or prior to the
Closing of the following conditions, except to the extent that any such
condition may have been waived in writing by both Seller's Agent and Purchaser
at or prior to the Closing:
(a) Impediments to Closing. No Actions shall have been
instituted or shall be pending or threatened which questions the validity or
legality of this Agreement and the other Transaction Documents and the
transactions contemplated hereby and thereby and which could reasonably be
expected to damage materially the business or assets of Seller if the
transactions contemplated hereby or thereby are consummated. No injunction,
decree or order shall be in effect prohibiting consummation of the transactions
contemplated by this Agreement or the other Transaction Documents or which would
make the consummation of such transactions unlawful and no Actions shall have
been instituted and remain pending to restrain or prohibit the transactions
contemplated by this Agreement and the other Transaction Documents.
(b) Burger King Corporation shall have granted its consent to
this transaction and shall not have exercised its right of first refusal.
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SECTION 5.2 Conditions to the Obligations of Seller. The obligations of
Seller to consummate the transactions contemplated hereby and by the other
Transaction Documents are subject to the satisfaction at or prior to the Closing
of the following conditions, except to the extent that any such condition may
have been waived in writing by Seller's Agent at or prior to the Closing:
(a) Representations, Warranties and Performance. The
representations, warranties, covenants and agreements of Purchaser contained in
this Agreement and the other Transaction Documents or otherwise made in writing
by it or on its behalf pursuant hereto or otherwise made in connection with the
transactions contemplated hereby or thereby shall be true and correct at and as
of the Closing Date, with the same force and effect as if made at and as of the
Closing Date; the Purchaser shall have performed or complied with all agreements
and conditions required by this Agreement and the other Transaction Documents to
be performed or complied with by it on or prior to the Closing Date; and
Seller's Agent shall have received a certificate to the foregoing effect dated
the Closing Date in form satisfactory to him signed by an officer of Purchaser.
(b) Governing Instruments, etc. Seller's Agent shall have
received a certificate, dated the Closing Date, of the Secretary or Assistant
Secretary of Purchaser certifying, among other things, that attached or appended
to such certificate (i) is a true and correct copy of its Certificate of
Incorporation and all amendments, if any, thereto as of the date thereof; (ii)
is a true and correct copy of its By-Laws; (iii) is a true copy of all corporate
actions taken by it, including resolutions of its board of directors authorizing
the execution and delivery of this Agreement and each other Transaction Document
to be delivered by it pursuant hereto and the consummation of the transactions
contemplated hereby and thereby; and (iv) are the names, the signatures of its
duly elected or appointed officers who are authorized to execute and deliver
this Agreement, and any certificate, document or other instrument in connection
herewith.
(c) Payment of Purchase Price. Purchaser shall have tendered to
Seller's Agent the Purchase Price payable at Closing in accordance with Section
1.2(a).
(d) Assumption of Assumed Contracts. Seller shall have received
from Purchaser an Assumption Agreement substantially in the form annexed as
Exhibit C hereto.
(e) Opinion of Counsel. Seller's Agent shall have received an
opinion of counsel for Purchaser, as of the Closing Date, substantially in the
form annexed as Exhibit D hereto.
SECTION 5.3 Conditions to Obligations of Purchaser. The obligations of
Purchaser to consummate the transactions contemplated hereby and by the other
Transaction Documents are subject to the satisfaction at or prior to the Closing
of the following additional conditions, except to the extent that any such
condition may have been waived in writing by Purchaser at or prior to the
Closing:
(a) Representations, Warranties and Covenants. The
representations, warranties, covenants and agreements of Seller contained in
this Agreement and the other Transaction Documents, or otherwise made in writing
by it or on its behalf pursuant hereto or otherwise made in connection with the
transactions contemplated hereby or thereby shall be true and correct at and as
of the Closing Date with the same force and effect as though made on and as of
the Closing Date; Seller and the Principals shall have performed or complied
with all agreements and conditions required by this Agreement and the other
Transaction Documents to be performed or complied with by it on or prior to the
Closing Date; and Purchaser shall have received certificates to the foregoing
effect dated the Closing Date in form satisfactory to Purchaser signed by the
Chief Executive Officer of Seller.
(b) Governing Instruments, etc. Purchaser shall have received a
certificate, dated the Closing Date, of the Secretary or Assistant Secretary of
Seller certifying, among other things, that attached or appended to such
certificate (i) is a true and correct copy of each Governing Instrument and all
amendments if any thereto as of the date thereof; (ii) is a true copy of all
corporate actions taken by it, including resolutions of its board of directors
and shareholders authorizing the execution and delivery of this Agreement and
each other Transaction Document to be delivered by it pursuant hereto and the
consummation of the transactions contemplated hereby and thereby; and (iii) are
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the names and signatures of its duly elected or appointed officers who are
authorized to execute and deliver this Agreement and any certificate, document
or other instrument in connection herewith.
(c) Instruments of Transfer. Seller shall have delivered to
Purchaser a bill of sale and assignment ("Bill of Sale") substantially in the
form annexed as Exhibit E hereto, a Lease Assignment (if applicable) and any
other documents of transfer which Purchaser reasonably shall request in order to
evidence and effectuate the sale and assignment to Purchaser of the Assets, the
Real Property Leases, the Assumed Contracts and the consummation of all other
transactions contemplated by this Agreement and the other Transaction Documents.
(d) Consents. Seller shall have obtained, and delivered to
Purchaser, copies of the Required Consents applicable to it in form and
substance satisfactory to Purchaser.
(e) Opinion of Counsel. Purchaser shall have received an opinion
or opinions of counsel for Seller, as of the Closing Date, substantially in the
form attached hereto as Exhibit F.
(f) No Material Adverse Change. There shall have been no
material adverse change, nor any events which could have a material adverse
change, in the business, operations, prospects or financial or other condition
of any Restaurant or in the respective Assets or Real Properties from the date
hereof to the Closing Date (the "Interim Period") nor shall have there been, for
all Restaurants in the aggregate, a decrease of five percent or more in Gross
Sales or Gross Profit during the Interim Period, as compared with the same
period during the prior calendar year. For purposes hereof, "Gross Profit" shall
mean total Gross Sales reduced by the sum of food and other goods. At Closing,
Purchaser shall have received a certificate dated the Closing Date in form
satisfactory to Purchaser signed by the Chief Executive Officer of Seller, and
attested to by the Secretary of Seller, to the foregoing effect.
(g) Environmental Due Diligence. Purchaser shall have completed
its environmental due diligence of the Restaurants, Real Property and Assets and
have received results which are satisfactory to Purchaser in its sole
discretion.
(h) Title and Property Due Diligence. Purchaser shall have
inspected the physical condition of the Restaurants and completed its title due
diligence of the Real Properties and shall be satisfied with the condition of
the Restaurants and the state of title of the Real Properties in its sole
discretion.
(i) Financial Due Diligence. Purchaser shall have completed it's
due diligence of Seller's Financial Statements and shall be satisfied with the
results thereof.
(i) Other Documents. Seller shall have delivered to Purchaser:
(i) the Assignment of the Leases, each Assumed Contract
and the Lease Assignment Consents;
(ii)The Easement Assignments;
(iii) a fully executed original counterpart of the Real
Property Leases;
(iv) receipts for funds paid to Seller's Agent by
Purchaser;
(v) certificates dated no earlier than 30 days prior to
the Closing Date, from appropriate authorities in the State of its jurisdiction
of incorporation, as to the good standing of Seller;
(vi) the Nondisturbance Agreements;
(vii) the Memoranda of Leases;
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(viii) The modifications to the leases for Restaurants
Nos. 6153, 6873, and 7932 have been entered into between Seller and Purchaser.
(ix) all other documents, instruments and agreements
required to be delivered by Seller to Purchaser pursuant to this Agreement and
the other Transaction Documents.
(i) Senior Lender's Consent. Purchaser shall have received, if
necessary, the written consent of its senior lender to the transactions
contemplated hereby.
ARTICLE VI
DAMAGE OR DESTRUCTION
---------------------
SECTION 6.1 Damage to or Destruction of One Restaurant. If prior to the
Closing Date, one of the Restaurants (hereafter referred to as a "Damaged
Restaurant") incurs substantial damage or is destroyed by fire or other casualty
(whether or not such destruction is covered by insurance) Purchaser shall have
the option, to be exercised within 30 days of the date of such fire or casualty,
to: (i) require the applicable Seller to promptly repair, rebuild and/or replace
such Damaged Restaurant at such Seller's sole cost and expense; or (ii) elect to
have the Damaged Restaurant and the Real Property upon which such Restaurant is
located, and all other Assets relating to such Restaurant, withdrawn from this
transaction, whereupon the purchase price for the Assets shall be reduced by an
amount equal to the Damage Credit. In the event Purchaser and Seller's Agent are
unable to agree upon the Damage Credit, such dispute shall be submitted to
arbitration pursuant to Section 10.15 of this Agreement. In the event Purchaser
elects to require the Seller to rebuild and/or replace such Restaurant, the
Closing shall occur pursuant to this Agreement except a portion of the purchase
price equal to the Damage Credit shall be held in escrow by the attorneys for
Purchaser pending completion of the repair and/or restoration of the Damaged
Restaurant. In the event such restoration or repair is not completed within 90
days after the date Purchaser has elected to have the Seller proceed with the
repair and/or restoration, Purchaser shall have an additional option to withdraw
the Damaged Restaurant from this transaction, exercisable within 30 days from
date Purchaser's additional option shall arise, whereupon the Damage Credit
shall immediately be paid to Purchaser.
SECTION 6.2 Damage to or Destruction of 5 or More Restaurants. In the
event 5 or more Restaurants are destroyed or incur substantial damage prior to
the Closing, Purchaser shall have the option to terminate this Agreement, which
option shall be exercisable within 30 days from the date the option to terminate
shall arise. In the event Purchaser shall not elect to terminate this Agreement,
the provisions of Section 6.1 above shall apply to each Restaurant so affected.
SECTION 6.3 Notification of Damage or Destruction. Seller's Agent shall
immediately notify Purchaser of any destruction or damage to any of the Real
Properties or Assets.
ARTICLE VII
INDEMNIFICATION
---------------
SECTION 7.1 Survival of Representations. All representations,
warranties, covenants and other agreements made by each party hereto in this
Agreement shall survive the Closing.
SECTION 7.2 Agreement to Indemnify. Subject to the conditions of this
Article VII:
(a) Purchaser hereby agrees to indemnify, defend and hold
harmless Seller and the Principals from and against all demands, claims, actions
or causes of action, assessments, losses, damages, liabilities, costs and
expenses, including, without limitation, interest, penalties and reasonable
attorney's fees, costs and disbursements and
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expenses (collectively, "Damages"), asserted against, resulting to, imposed upon
or incurred by Seller directly or indirectly, arising out of or resulting from
(i) a breach of any representation, warranty, covenant or agreement of Purchaser
contained in or made pursuant to this Agreement (including but not limited to
enforcement of this Article VII), the other Transaction Documents or the
transactions contemplated hereby or thereby or any facts or circumstances
constituting such a breach; and (ii) any indebtedness, obligation or liability
assumed by Purchaser pursuant to Section 1.4(b) hereof and (iii) the operation,
use or ownership of the Restaurants, Assets, Real Property Leases, Real
Properties, the Easements and Assumed Contracts, during, or which have otherwise
accrued from or otherwise relate to, the period of time after the Closing Date;
and
(b) Seller and the Principals, jointly and severally, hereby
agree to indemnify, defend and hold harmless Purchaser and its officers,
directors and shareholders from and against all Damages asserted against or
incurred by Purchaser or such officers, directors and shareholders, directly or
indirectly, arising out of or resulting from: (i) a breach of any
representation, warranty, covenant or agreement of Seller contained in or made
pursuant to this Agreement (including but not limited to enforcement of this
Article VII, the other Transaction Documents or any facts or circumstances
constituting such a breach; (ii) any indebtedness, obligations or liabilities of
Seller including, but not limited to, any liability or obligation set forth in
Section 1.4(a), and the tax liabilities set forth in Section 2.17 other than
those expressly assumed by Purchaser hereunder, (iii) a breach of or otherwise
arising under any Environmental Law to the extent the same arises out of any
condition or state of facts or otherwise relates to the period of time
commencing on the date of possession by the Seller of the Real Property in
question and ending on the Closing Date; (iv) the operation, use or ownership of
the Restaurants, Assets, Real Properties, Leases, the Easements and Assumed
Contracts during, or which have otherwise accrued from or otherwise relate to
the period of time prior to the Closing Date; (v) Seller's failure to pay and
discharge all claims of creditors which may be asserted against Purchaser by
reason of Purchaser's waiver of compliance by Seller of the Bulk Sales Laws; and
(vi) any claims made with respect to any Plan.
SECTION 7.3 Conditions of Indemnification. The obligations and
liabilities of an indemnifying party under Section 7.2 with respect to Damages
for which it must indemnify another party hereunder (collectively, the
"Indemnifiable Claims") shall be subject to the following terms and conditions:
(a) The indemnified party shall give the indemnifying party
notice of any such Indemnifiable Claim which notice shall set forth in
reasonable detail the basis for and amount of the Indemnifiable Claim, and the
circumstances giving rise thereto. If the Indemnifiable Claim is a third-party
claim, the notice must contain a copy of any papers served on the indemnified
party.
(b) If the Indemnifiable Claim is not a third-party claim,
unless within 30 days of receipt by the indemnifying party of notice of the
Indemnifiable Claim the indemnifying party sends written notice to the
indemnified party disputing the facts giving rise to the Indemnifiable Claim or
the amount of Damages stated in the notice, the Damages stated in the notice
shall become due and payable upon the expiration of such 30 day period. If,
however, the indemnifying party disputes the facts, giving rise to the
Indemnifiable Claim or the amount of Damages stated in the notice within such 30
day period and the dispute cannot be resolved within the following 90 days, the
dispute shall be submitted to arbitration pursuant to Section 10.15 of this
Agreement.
(c) If the Indemnifiable Claim is a third-party claim, the
indemnifying party may undertake the defense thereof at its own expense by
representatives of its own choosing reasonably satisfactory to the indemnified
party and will consult with the indemnified party concerning such defense during
the course thereof. If the indemnifying party, within 30 days after receipt of
notice of any Indemnifiable Claim (or such shorter period as is necessary to
prevent prejudice to the indemnified party, if such 30 day period would
prejudice the rights of the indemnified party), fails to defend, the indemnified
party will (upon further notice to the indemnifying party) have the right to
undertake the defense, compromise or settlement of such Indemnifiable Claim on
behalf of and for the account and risk of and at the expense of the indemnifying
party. In addition, if there is a reasonable probability that a third-party
Indemnifiable Claim may materially and adversely affect an indemnified party,
the indemnified party shall have the right, at its own cost and expense, to
defend, compromise or settle such Indemnifiable Claim.
(d) Anything in this Section 7.3 to the contrary
notwithstanding, neither the indemnifying party nor
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the indemnified party, as the case may be, may settle or compromise any
Indemnifiable Claim or consent to entry of any judgment in respect thereof,
without the written consent of the other, which consent may not be unreasonably
withheld or delayed.
SECTION 7.4 Remedies Cumulative. The remedies provided in this Article
VII shall be cumulative and shall not preclude the assertion by any party hereto
of any other rights or the seeking of any other remedies against the other
parties hereto. Either party may, among its other remedies, offset the amount of
any Indemnifiable Claim which becomes due and payable to it or to its
shareholders, officers or directors, against any payments to be made or
consideration to be paid to the other pursuant to this Agreement or any of the
other Transaction Documents including, but not limited to, the Leases.
ARTICLE VIII
COVENANT NOT TO COMPETE
-----------------------
SECTION 8.1 Covenant Not to Compete. (a) Seller and the Principals
jointly and severally covenant and agree that it, he or she will not, directly
or indirectly, for its, his or her own account or as an employee, officer,
director, partner, joint venturer, shareholder, investor, consultant or
otherwise:
(i) for a period of two years from the Closing Date own,
operate, manage, develop, or otherwise engage in any "fast service hamburger
restaurant business" or operation, in any of the counties where the Restaurants
are located, or any counties in which Purchaser presently operates Burger King
restaurants (the "Restricted Area"). For the purposes of this Agreement, a "fast
service hamburger restaurant business" is deemed to be a fast food, or fast
service restaurant, in which at least 30% of the sales are derived from the sale
of hamburgers or hamburger related products. By way of example, fast service
hamburger businesses shall include, but shall not be limited to: McDonald's,
Hardee's, Wendy's, Johnny Rockets and Checkers; Examples of businesses not
considered fast service hamburger businesses include: Shoney's, Denny's, Chili's
and Steak & Shake.
(ii)for a period of five years from the Closing date,
own, manage, develop or otherwise engage in the operation of a Burger King
restaurant within three miles of any of the Restaurants or within three miles of
a restaurant that Purchaser develops pursuant to a TRA which BKC allows Seller
to assign or otherwise transfer to Purchaser; or
(iii) for a period of three years following the closing
Date, employ or solicit the employment or engagement by others of any executive
or management level employees of the Restaurants who are employed by or in any
of the Restaurants as of the date of this Agreement.
(b) The provisions of Section 8.1(a) shall not preclude Seller,
the Principals or any Affiliate of Seller or from owning and operating any
Burger King restaurant which is owned or operated by Seller, the Principals or
any Affiliate of Seller as of the date of this Agreement. Seller and the
Principals shall not, however, be restricted from hiring such individuals after
180 days after the date such individuals are no longer employed by Purchaser.
SECTION 8.2 Geographic Area Reasonable; Reduction of Geographical Area
and Time. Seller and the Principals acknowledge that the restricted period of
time and geographical area specified in Section 8.1 hereof are reasonable.
Notwithstanding anything herein to the contrary, if the period of time or the
geographical area specified under Section 8.1 hereof should be determined to be
unreasonable in any judicial proceeding, then the period of time and territory
of the restriction shall be reduced so that this Agreement may be enforced in
such area and during such period of time as shall be determined to be
reasonable.
SECTION 8.3 Effect of Breach. The parties acknowledge that any breach of
this Section 8 will cause Purchaser irreparable harm for which there is no
adequate remedy at law, and as a result, Purchaser shall be entitled to the
issuance by an arbitrator or court of competent jurisdiction of an injunction,
restraining order or other equitable relief in favor of itself restraining
Seller or the Principals , as the case may be, from committing or continuing any
such violation. Any right to obtain an injunction, restraining order or other
equitable relief hereunder shall not be deemed a
23
waiver of any right to assert any other remedy Purchaser may have at law or in
equity.
ARTICLE IX
TERMINATION
-----------
SECTION 9.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
(a) By mutual written consent of Seller's Agent and Purchaser;
(b) By Seller's Agent on behalf of Seller, if (i) there has been
a material misrepresentation or breach of warranty on the part of Purchaser in
the representations and warranties contained herein and such material
misrepresentation or breach of warranty, if curable, is not cured within 15 days
of written notice thereof from Seller's Agent; (ii) Purchaser has committed a
material breach of any covenant imposed upon it hereunder and fails to cure such
breach within 15 days of written notice thereof from Seller's Agent; or (iii)
any condition to Seller's obligations hereunder becomes incapable of fulfillment
through no fault of such parties and is not waived by such parties;
(c) By Purchaser, if (i) there has been a material
misrepresentation or breach of warranty on the part of Seller in the
representations and warranties contained herein and such material
misrepresentation or breach of warranty, if curable, is not cured within 15 days
of written notice thereof from Purchaser; (ii) Seller has committed a material
breach of any covenant imposed upon it hereunder and fails to cure such breach
within 15 days of written notice thereof, from Purchaser; or (iii) any condition
to Purchaser's obligations hereunder becomes incapable of fulfillment through no
fault of Purchaser and is not waived by Purchaser;
(d) By Purchaser in the circumstances provided in Section
4.10(d) or 6.2;
(e) By Seller's Agent on behalf of Seller, if the Closing shall
not have occurred on or before the Outside Date; provided that Seller's Agent
shall not be entitled to terminate this Agreement pursuant to this clause if the
failure of Seller or Seller's Agent to fulfill any of its obligations under this
Agreement shall have been the reason that the Closing shall not have occurred on
or before said date;
(f) By Purchaser, if the Closing shall not have occurred on or
before the Outside Date; provided that Purchaser shall not be entitled to
terminate this Agreement pursuant to this clause if the failure of Purchaser to
fulfill any of its obligations under this Agreement shall have been the reason
that the Closing shall not have occurred on or before said date; and
(g) By Seller's Agent on behalf of Seller, or by Purchaser, if
there shall be any law or regulation that makes consummation of the transactions
contemplated hereby illegal or otherwise prohibited or if any judgment,
injunction, order or decree enjoining Purchaser, or Seller, from consummating
the transactions contemplated hereby is entered and such judgment, injunction,
order or decree shall become final and nonappealable.
SECTION 9.2 Effect of Termination; Right to Proceed. In the event that a
party wishes to terminate this Agreement pursuant to Section 9.1, it shall give
written notice thereof whereupon all further obligations of the parties under
the Agreement shall terminate without further liability of any party hereunder
except (i) to the extent that a party has made a material misrepresentation
hereunder or committed a breach of the material covenants and agreements imposed
upon it, hereunder; (ii) to the extent that any condition to a party's
obligations hereunder became incapable of fulfillment because of the breach by a
party of its obligations hereunder and (iii) that the agreements contained in
Sections 4.6, 10.3 and 10.4 and Article VII shall survive the termination
hereof. In the event that a condition precedent to its obligation is not met,
nothing contained herein shall be deemed to require any party to terminate this
Agreement, rather than to waive such condition precedent and proceed with the
transactions contemplated hereby. Notwithstanding anything to the contrary
contained herein, no party shall have any obligation to the other hereunder
arising out of the occurrence of an event or circumstance not within the control
of such party which
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event or circumstance resulted in a representation or warranty of such party
ceasing to be true.
ARTICLE X
MISCELLANEOUS
-------------
SECTION 10.1 Further Assurances. Each of the parties hereto shall
without further consideration execute and deliver to any other party hereto such
other instruments of transfer and take such other action as any party may
reasonably request to carry out the transactions contemplated by this Agreement
and the other Transaction Documents.
SECTION 10.2 Waiver and Amendment. No provisions of this Agreement may
be amended, supplemented or waived at any time except by a written instrument
executed by the parties hereto, or in the case of a waiver, by the waiving
party. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
SECTION 10.3 Remedies. In the event of a default under this Agreement or
the Transaction Documents, the aggrieved party may proceed to protect and
enforce its rights by a suit for damages, suit in equity action at law or other
appropriate proceeding, whether for specific performance, or for an injunction
against a violation of any terms hereof or thereof or in aid of the exercise of
any right, power or remedy granted thereby or by law, equity, statute or
otherwise. The foregoing shall include, but shall not be limited to, allowance
for recovery by the aggrieved party of all of its fees and expenses and
disbursements incurred by it in connection with the transactions contemplated
hereby and in the Transaction Documents, including, without limitation, the
reasonable fees and expenses of its counsel, accountants, agents and
representatives employed by it. No course of dealing and no delay on the part of
any party in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such party's rights, powers or remedies. No
right, power or remedy conferred hereby shall be exclusive of any other right,
power or remedy referred to herein or now or hereafter available at law, in
equity, by statute, or otherwise.
SECTION 10.4 Expenses.
Except as expressly otherwise provided for in this Agreement, all expenses
incurred by or on behalf of the parties hereto in connection with the
authorization, preparation and consummation of this Agreement and the other
Transaction Documents, including without limitation all fees and expenses of
agents, representatives, counsel and accountants employed by the parties hereto
in connection with the authorization, preparation, execution and consummation of
this Agreement, shall be borne solely by the party who shall have incurred the
same.
SECTION 10.5 Entire Agreement. This Agreement and the other Transaction
Documents and the Exhibits and Schedules referred to herein and therein contain
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior arrangements or understandings with respect thereto.
SECTION 10.6 Definitions. For the purposes of this Agreement:
(i) "Affiliate" shall mean, with respect to any Person,
any other Person that has a relationship with the designated Person whereby
either of such Persons directly or indirectly controls or is controlled by or is
under common control with the other of such Persons.
(ii) "Contract" shall mean any contract, agreement,
purchase order, sales order, guaranty, option, mortgage, promissory note,
assignment, lease, franchise, commitment, understanding or other binding
arrangement, whether written, oral, express or implied.
(iii) The term "Control", with respect to any Person,
shall mean the power to direct the
25
management and policies of such Person, directly or indirectly, by or through
stock ownership, agency or otherwise, or pursuant to or in connection with a
Contract with one or more other Persons by or through stock ownership, agency or
otherwise; and the terms "controlling" and "controlled" shall have meanings
correlative to the foregoing.
(iv) The term "Governing Instruments" shall mean, with
respect to any Person, the certificate of incorporation, articles of
incorporation, bylaws, code of regulations or other organizational or governing
documents howsoever denominated of such Person.
(v) "Person" shall mean an individual, partnership,
corporation, joint venture, unincorporated organization, cooperative, or a
governmental entity or agency thereof.
SECTION 10.7 Interpretation. The article and section headings contained
in this Agreement are solely for the purpose of reference, are not part of the
Agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement.
SECTION 10.8 Notices. All notices, consents, requests, instructions,
approvals and other communications provided for herein shall be validly given,
made or served in writing and delivered personally, sent by telecopier, Federal
Express or other reputable overnight courier or sent by certified or registered
mail, postage prepaid, return receipt requested, at the addresses set forth
below:
(a) if to Purchaser, to:
Carrols Corporation
968 James Street
Syracuse, New York 13203-6969
Telecopier Number: (315) 475-9616
Attention: Daniel T. Accordino, President; and
Joseph A. Zirkman, Esq.
(b) if to Seller or Seller's Agent, to:
Harold W. Hobgood
450 Covington Cove
Alphoretta, GA 30202
with a copy to:
Albert Daykin
861 Holcomb Bridge Road
Suite 209
Roswell, Georgia 30076
or such other address as any party hereto may, from time to time, designate in a
written notice given in a like manner (which change of address shall only be
effective upon actual receipt of same by the other party). Notices shall be
deemed delivered: (i) three days after the date the same is postmarked if sent
by registered or certified mail; (ii) on the date the same is delivered
personally; (iii) the next business day after delivery to the courier service,
if sent by Federal Express or other reputable overnight courier and (iv) upon
receipt by the sender of telecopier confirmation, if sent by telecopier.
SECTION 10.9 Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of and be enforceable by the heirs,
executor, personal representatives, legal representatives, successors and
assigns of the parties hereto, and shall not be assignable by either party
without the prior written consent of the other
26
party.
SECTION 10.10 Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Georgia
without giving effect to such state's conflict of laws rules.
SECTION 10.11 Consent to Jurisdiction; Service of Process. (a) Except
with respect to disputes wherein the parties have expressly agreed herein to
submit such dispute to arbitration, the parties hereto irrevocably submit to the
jurisdiction of the United States District Court for the Northern District of
Georgia over any dispute arising out of or relating to this Agreement or any
agreement or instrument contemplated hereby or entered into in connection
herewith or any of the transactions contemplated hereby or thereby, and each
party hereby irrevocably agrees that all claims in respect of such dispute or
proceeding shall be heard and determined in such court.
(b) Each of the parties hereto consents to process being served
by any party to this Agreement in any suit action or proceeding of the nature
specified in subsection 10.8 (a) above by mailing a copy thereof in accordance
with the provisions of Section 10.8 of this Agreement or in any other manner
provided by law.
SECTION 10.12 Severability. Whenever possible, each provision in this
Agreement shall be interpreted in such a manner as to be effective and valid
under applicable law. If any provision of this Agreement shall be prohibited or
invalid under applicable law, such provision shall be ineffective to the extent
of such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Agreement.
SECTION 10.13 Purchaser's Designated Affiliate. Purchaser may designate
one or more of its wholly-owned subsidiaries or Affiliates to carry out all or
part of the transactions contemplated hereby to be carried out by Purchaser.
SECTION 10.14 Counterparts. This Agreement may be executed in one or
more counterparts each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
SECTION 10.15 Alternative Dispute Resolution (ADR)
(a) A meeting shall be held promptly between the parties,
attained by representatives of each party having decision-making authority
regarding the dispute, to attempt in good faith to negotiate a resolution of the
dispute.
(b) If within thirty (30) days after such meeting the parties
have not succeeded in reaching a settlement of the dispute, they shall submit
the dispute to mediation in accordance with the procedures of a mutually
acceptable neutral ADR provider. The parties shall select through the ADR
provider a trained neutral mediator, agree upon a place, date and time for the
mediation not exceeding thirty (30) days from the initial negotiation meeting of
paragraph 1 above. The parties agree to participate in good faith in the
mediation to its conclusion and shall share equally the costs of mediation.
(c) If the Parties are not successful in resolving the dispute
within thirty (30) days after the last mediation session, then it shall be
submitted to binding arbitration under the rules of a mutually agreed to
organization not affiliated with either party to the dispute. The parties shall
select through the ADR provider a single arbitrator, agree upon a place, date
and time for the arbitration not exceeding sixty (60) days from the last
mediation session of paragraph 2 above. The arbitration process shall include an
internal appeal rule which provides an appeal process, if requested by one of
the parties, within ten (10) days following the date of the arbitrator's award.
The parties shall share equally the costs of the arbitration process. The
appealing party shall pay the costs of the appeal process, if used.
27
IN WITNESS WHEREOF, the parties hereto have caused this Purchase and Sale
Agreement to be executed as of the date first written above.
CARROLS CORPORATION
By: /s/ JOSEPH ZIRKMAN
------------------------------
Name: Joseph Zirkman
Title: Vice President
OMEGA FOOD SERVICES, INC.
By: /s/ JACKS B. TINGLE
------------------------------
Name: Jacks B. Tingle
Title: President
-----------------------
The undersigned are signing
this Agreement in their
individual capacities solely
to agree to the provisions
of Section 4.13 hereof.
/s/ HAROLD W. HOBGOOD
- -----------------------------
Harold W. Hobgood
/s/ JACKS B. TINGLE
- -----------------------------
Jacks B. Tingle
/s/ WILLIAM R. COLLINS
- -----------------------------
William R. Collins
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