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EXHIBIT 10.24
CONTRACT OF SALE
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CONTRACT OF SALE
TABLE OF CONTENTS
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SECTION 1 REAL AND PERSONAL PROPERTY BEING SOLD........................... 1
1.1 Land............................................................ 1
1.2 Improvements.................................................... 1
1.3 Leaseholds...................................................... 1
1.4 Personal Property............................................... 1
SECTION 2 BUSINESS ASSETS BEING SOLD...................................... 2
2.1 Governmental Permits............................................ 2
2.2 Operating Contracts............................................. 2
2.3 Other Miscellaneous and Intangible Personal Property............ 2
2.4 Leaseholds...................................................... 3
SECTION 3 CLOSING......................................................... 3
SECTION 4 PURCHASE PRICE.................................................. 4
4.1 General Terms................................................... 4
4.2 Allocation of Purchase Price.................................... 4
SECTION 5 DEFAULT......................................................... 4
5.1 Default......................................................... 4
SECTION 6 DUE DILIGENCE................................................... 4
6.1 Physical Inspections............................................ 4
6.2 Examine Records................................................. 5
SECTION 7 TERMS OF LEASEHOLDS............................................. 5
SECTION 8 TITLE COMMITMENT AND SURVEY..................................... 5
8.1 Title........................................................... 5
8.1.1 Title to the Properties.................................. 5
8.1.2 Title to Personal Property............................... 6
8.1.3 Contract Rights.......................................... 6
8.1.4 Defects of Title and Cure................................ 6
8.1.5 Defects of Title - Termination........................... 6
8.2 UCC Search...................................................... 7
8.3 Surveys......................................................... 7
8.4 Non-Disturbance Agreements...................................... 7
SECTION 9 SELLER'S DELIVERIES............................................. 7
9.1 Plans........................................................... 7
9.2 Taxes........................................................... 8
9.3 Contracts....................................................... 8
9.4 Licenses........................................................ 8
9.5 Utility Deposits................................................ 8
9.6 Historical Capital Expenditure Budgets.......................... 8
9.7 Leasehold Items................................................. 8
9.8 Miscellaneous Restaurant Assets................................. 9
9.9 Landlords' Estoppels............................................ 9
9.10 Payroll Summary................................................. 9
9.11 Title Report.................................................... 9
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9.12 Casualty Insurance.............................................. 9
9.13 Miscellaneous Leasehold Items................................... 9
SECTION 10 SELLER'S REPRESENTATIONS, WARRANTIES, AND COVENANTS............ 9
10.1 General Terms................................................... 9
10.2 Due Authorization............................................... 10
10.3 Authority and Capacity.......................................... 10
10.4 Foreign Entity Status........................................... 10
10.5 No Conflicts by Consummation of Agreement....................... 10
10.6 No Undisclosed Interest......................................... 11
10.7 No Untrue Statement............................................. 11
10.8 Further Assurances.............................................. 11
10.9 No Further Entrance Into Binding Agreements..................... 11
10.10 Continued Operation............................................. 11
10.10.1 Repairs and Maintenance................................ 12
10.10.2 Personal Property...................................... 12
10.10.3 Taxes.................................................. 12
10.10.4 Insurance.............................................. 12
10.11 Licenses and Permits............................................ 12
10.11.1 ....................................................... 12
10.11.2 ....................................................... 13
10.11.3 ....................................................... 13
10.12 Contracts....................................................... 13
10.13 Leases.......................................................... 13
10.13.1 ....................................................... 13
10.13.2 ....................................................... 14
10.13.3 ....................................................... 14
10.14 Subleases and Tenancies......................................... 14
10.15 Employee-Related Representations................................ 15
10.15.1 ....................................................... 15
10.15.2 ....................................................... 15
10.16 No Outstanding Litigation or Outstanding Conflicts.............. 15
10.17 Eminent Domain/Condemnation Actions............................. 15
10.18 Title Matters................................................... 15
10.19 Mortgages and Bankruptcy........................................ 16
10.20 Zoning.......................................................... 16
10.21 Environmental Conditions........................................ 16
10.22 Violations...................................................... 17
10.23 Limitations on Seller's Representations, Warranties, and
Covenants..................................................... 17
10.24 Survival of Contract............................................ 17
10.25 Non-Competition................................................. 18
10.26 Ownership of Decatur Restaurant ................................ 18
SECTION 11 REPRESENTATIONS AND WARRANTIES OF PURCHASER.................... 19
11.1 General Terms................................................... 19
11.2 Due Organization................................................ 19
11.3 No Conflict..................................................... 19
11.4 No Pending Litigation........................................... 19
11.5 Alteration Plans................................................ 20
SECTION 12 PRORATIONS AND ADJUSTMENTS..................................... 20
12.1 Accounts Payable................................................ 20
12.2 Liabilities Not Assumed......................................... 20
12.3 Rents........................................................... 20
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12.4 Utilities....................................................... 21
12.5 Real Estate and Personal Property Taxes......................... 21
12.6 Sales Taxes..................................................... 21
12.7 Payroll......................................................... 22
12.8 Telephone Charges............................................... 22
12.9 Lease Security Deposits......................................... 22
12.10 Prepaid Deposits................................................ 22
12.11 Vending Machines................................................ 23
12.12 Purchaser's Waiver and Termination Right........................ 23
SECTION 13 CLOSING DOCUMENTS AND PROCEDURE................................ 23
13.1 Title Deed...................................................... 23
13.2 Lease Assignments............................................... 24
13.3 Bill of Sale.................................................... 24
13.4 Assignment of Permits........................................... 24
13.4.1 Liquor Permits.......................................... 24
13.5 Assignment of Intangible Personal Property...................... 24
13.6 Assignment of Operating Contracts............................... 25
13.7 Original Documents.............................................. 25
13.8 Keys............................................................ 25
13.9 Title Policy.................................................... 25
13.10 Resolutions and Certificates.................................... 25
13.11 Closing Statement............................................... 25
13.12 Records......................................................... 26
13.13 Certificate of Non-Foreign Status............................... 26
13.14 Affidavits and Indemnities...................................... 26
13.14.1 Affidavit of Title..................................... 26
13.15 Sub-Tenant Estoppel and Consent................................. 26
13.16 Warranty Assignment............................................. 26
13.17 Landlord's Consents............................................. 26
13.18 Non-Disturbance Agreements...................................... 27
13.19 Transfer Tax Returns ........................................... 27
13.20 Other Documents................................................. 27
13.21 Purchase Price.................................................. 27
13.22 Assumption of Leases............................................ 27
13.23 Closing Statement............................................... 28
13.24 Assumption of Operating Contracts............................... 28
13.25 Resolutions..................................................... 28
13.26 Affidavits...................................................... 28
13.27 Other Documents................................................. 28
SECTION 14 CLOSING EXPENSES............................................... 28
14.1 Closing Expenses................................................ 28
14.2 Brokerage Fees.................................................. 28
SECTION 15 EMINENT DOMAIN AND RISK OF LOSS................................ 29
15.1 Eminent Domain.................................................. 29
15.2 Risk of Loss.................................................... 29
SECTION 16 ASSIGNMENT, SUCCESSORS, AND HEIRS.............................. 29
SECTION 17 GENERAL CLAUSES................................................ 30
17.1 Benefit......................................................... 30
17.2 Binding Agreement............................................... 30
17.3 Business Day.................................................... 30
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17.4 Controlling Law................................................. 30
17.5 Entire Agreement................................................ 30
17.5.1 ....................................................... 30
17.5.2 ....................................................... 31
17.5.3 Waiver.................................................. 31
17.6 Hold Harmless and Indemnity..................................... 31
17.7 Notices......................................................... 31
17.7.1 Notice Deemed Served.................................... 32
17.7.2 ....................................................... 32
SECTION 18 PUBLICITY...................................................... 32
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CONTRACT OF SALE
Contract of Sale (sometimes hereinafter referred to as "Contract" or
"Agreement") dated June 28, 1996 between The Ground Round, Inc. ("Seller") as
seller and Lone Star Steakhouse & Saloon, Inc. ("Purchaser") as purchaser of the
"Ground Round" restaurants described on Schedule A hereto and related assets.
SECTION 1 REAL AND PERSONAL PROPERTY BEING SOLD
Seller agrees to sell and convey the Restaurants (as such term is defined
in Section 1.4 below) to Purchaser and Purchaser agrees to purchase the
Restaurants from Seller, for the purchase price and upon the terms and
conditions herein set forth, which Restaurants consist of the following
property:
1.1 LAND
With respect to the three (3) Restaurants identified as "fee" properties on
Schedule A, the tracts of land described in Schedules 1.1(a) through 1.1(c)
attached hereto and made a part hereof together with all rights, easements, and
interests appurtenant thereto, including, but not limited to, any streets or
other public ways adjacent to said real property and any water or mineral rights
owned by or leased to Seller (all of such property being hereinafter referred to
as the "Land").
1.2 IMPROVEMENTS
All improvements located on the Land, including the buildings, together
with the number of parking spaces set forth on Schedule 1.2 and any and all
amenities and other improvements located on the Land (all such improvements
being hereinafter referred to as the "Improvements"). The Improvements shall
also include any buildings owned by Seller on the Leaseholds (as such term is
defined in Section 1.3 below). The Land and the Improvements are collectively
referred to as the "Real Properties".
1.3 LEASEHOLDS
The tenant's interest in the leaseholds for the thirteen (13) Restaurants
identified as "leaseholds" on Schedule A together with all rights, easements and
interests appurtenant thereto (all of such leasehold interests being hereinafter
referred to as the "Leaseholds").
1.4 PERSONAL PROPERTY
All personal property, fixtures and equipment presently owned by Seller
which are located on or in the Real Properties or
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Leaseholds or used in connection with the operation and maintenance of the
Restaurants, including, without limitation, all HVAC systems, refrigerators and
refrigeration systems; china, glassware, and silverware; engineering,
maintenance and housekeeping supplies, including soap and cleaning materials;
draperies, material, and carpeting; and other supplies of all kinds including
such resupplies as shall occur and be made in a normal course of business, but
excluding food, liquor, smaller items in existence on the Contract Date consumed
in the ordinary course of business, uniforms, stationary and printing and
"Ground Round" signage. All items included in the sale and marked with Seller's
tradenames shall be modified by Purchaser to remove or paint over the
tradenames. All items of personal property and fixtures and equipment referred
to above which are included in the sale are the "Personal Property" and the Real
Properties, Leaseholds and Personal Property are collectively the "Properties"
or the "Restaurants".
SECTION 2 BUSINESS ASSETS BEING SOLD
In recognition of the fact that the value of the businesses as specified
herein is dependent upon the use of each of the Properties as a restaurant,
Seller hereby agrees to transfer to Purchaser at the Closing (as such term is
defined in Section 3 below) the following items:
2.1 GOVERNMENTAL PERMITS
All rights of Seller and all governmental licenses and permits used in
connection with the conduct of any business on the Properties to the extent
assignable (collectively, "Government Permits"), including but without
limitation, the license or licenses to sell alcoholic beverages in the
Restaurants.
2.2 OPERATING CONTRACTS
All operating leases, executory contracts, service contracts, and repair
agreements (collectively, "Operating Contracts") with respect to the Properties
but only (i) if assignment is permitted by the terms thereof and (ii) to the
extent Purchaser elects to assume one or more of the Operating Contracts.
2.3 OTHER MISCELLANEOUS AND INTANGIBLE PERSONAL PROPERTY
(a) All customer lists and records owned or possessed by Seller pertaining
to the transaction of business at the Restaurants, together with the
architectural plans provided that Seller may keep any original documents
required by law in
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connection with the filing of Seller's tax returns or other governmental
filings.
(b) All other intangible property not described above owned by Seller or GR
of Minn Inc. and used or useful in connection with the ownership and operation
of the Restaurants, including, without limitation, contract rights, guarantees,
warranties, and goodwill, but only to the extent that such are assignable by
their own terms or under law but specifically excluding any rights to the
trademark "Ground Round" (collectively the "Intangible Property").
(c) All current sales records and information with respect to the
Restaurants provided that Seller may keep any original documents required by law
in connection with the filing of Seller's tax returns or other governmental
filings.
2.4 LEASEHOLDS
The Leaseholds shall be assigned by Seller to Purchaser effective as of the
Closing Date in form attached as Schedule 2.4 or the form required by the
landlord provided such form is substantially similar to Schedule 2.4; provided
that Seller shall proceed in good faith to comply with its obligations with
respect to the Leaseholds under the terms of this Contract.
SECTION 3 CLOSING
The closing (the "Closing") of title hereunder in respect to the
Restaurants and payment of the consideration thereof shall occur on or before
the later of (i) forty-five (45) days after the Contract Date or (ii) five (5)
business days after the issuance or approved assignments of the liquor permits
as required under Section 13.4.1, subject only to the provisions relating to the
extension of time to close. If not all of the liquor permits are obtained prior
to the scheduled Closing Date, Purchaser agrees to close in two (2) separate
groups of Restaurants as follows: the first eleven (11) Restaurants for which
Purchaser obtains the liquor permits and all other conditions of this Contract
are satisfied shall comprise the first group which shall close on the scheduled
Closing Date or as soon as practicable thereafter; the second group shall
consist of the balance of the Restaurants to be purchased hereunder which shall
close within five (5) business days after the satisfaction of all closing
conditions as to such Restaurants. If no Closing occurs on or before November
30, 1996 for any Restaurant or Restaurants because of a failure of condition
hereunder after compliance by each of the parties with their respective
obligations hereunder, this Contract may be terminated by either party as to the
Restaurant or Restaurants which have not closed (or in its entirety if the first
group of Restaurants has not closed) by that date upon written notice to the
other given at any time
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after November 30, 1996 and thereafter neither party shall have any further
liability for the Restaurants not purchased. For purposes of this Contract, each
of the dates on which the two groups of Restaurants close shall be referred to
as a "Closing" or "Closing Date". The Closing shall occur at the offices of
Olshan Grundman Frome & Rosenzweig LLP, 505 Park Avenue, New York, New York. The
date on which Purchaser receives a fully executed copy of this Contract shall be
the "Contract Date".
At Closing, the Purchase Price as defined in Section 4 shall be delivered
to Seller in the manner provided and title to each of the Real Properties and
assignments of each of the Leaseholds, to the extent Purchaser has elected to
purchase each of such Real Properties and Leaseholds pursuant to the terms
hereof, together with all other documents to be delivered by Seller to
Purchaser, shall be delivered and conveyed to Purchaser. Legal possession and
physical occupancy of the Properties shall be given to Purchaser at 12:01 P.M.
on the Closing Date.
SECTION 4 PURCHASE PRICE
4.1 GENERAL TERMS
The purchase price ("Purchase Price") for the Restaurants shall be Sixteen
Million Dollars ($16,000,000.00), subject to the adjustments as expressly
provided in this Contract and shall be payable in the manner set forth herein.
4.2 ALLOCATION OF PURCHASE PRICE
The Purchase Price shall be allocated among the assets acquired by
Purchaser as set forth on Schedule 4.2.
SECTION 5 DEFAULT
5.1 DEFAULT
If the Closing fails to occur due to the default of either party, the
non-defaulting party may have such remedies as provided in law or equity.
SECTION 6 DUE DILIGENCE
6.1 PHYSICAL INSPECTIONS. Purchaser may enter upon any of the Properties,
on at least 24 hours' notice to Seller's resident manager of the Restaurant to
be inspected, to perform such inspections and tests of the Restaurant,
including, without limitation, all leased areas and structural and mechanical
systems within the Improvements and the environmental condition of the land
underlying the Improvements (provided Purchaser shall not drill test holes
without Seller's prior written consent), as
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Purchaser shall, in its sole discretion, deem appropriate. Purchaser shall
minimize interference with Seller's business.
6.2 EXAMINE RECORDS. Purchaser and Purchaser's accountants may examine and
copy any and all books and records maintained by Seller or its agents relating
to the ownership and operation of the Restaurants (the "Records") for the three
(3) most recent full calendar years and the current calendar year.
SECTION 7 TERMS OF LEASEHOLDS
Purchaser shall be entitled to contact the landlords of the Leaseholds
identified on Schedule 7 (the "Renegotiated Leaseholds") in order to obtain a
written amendment modifying the terms of such Leaseholds as of the Closing Date
so as to have terms acceptable to Purchaser.
To the extent Purchaser is unable to obtain such modifications, Purchaser
may either accept the Renegotiated Leaseholds "as is" or, notwithstanding
Section 12.12, elect to terminate this Contract as to not more than two (2) of
the Renegotiated Leaseholds for which Purchaser is unable to obtain
modifications and receive a credit against the Purchase Price in an amount equal
to the portion of the Purchase Price allocated in Schedule 4.2 to the
Renegotiated Leaseholds not being assumed by Purchaser provided that Purchaser
may not terminate this Contract with respect to both the Poughkeepsie, NY and
Rochester (Greece), NY Restaurants, i.e., Purchaser may terminate as to either
of such locations but not both.
Seller shall execute all assignment and modification documents ("Assignment
Documents") reasonably requested by the landlords to confirm the transfer of the
Leaseholds and the modification of the Renegotiated Leaseholds.
SECTION 8 TITLE COMMITMENT AND SURVEY
8.1 TITLE
8.1.1 TITLE TO THE PROPERTIES. Purchaser shall arrange for the delivery to
Purchaser, at Purchaser's sole cost and expense, of title commitments, dated on
or after the Contract Date (the "Title Commitments"), issued by a title company
of Purchaser's choice (the "Title Company") (a) committing to issue to Purchaser
an American Land Title Association ("ALTA") (or local equivalent) owner's policy
of title insurance in the amount of the allocated Purchase Price for the Real
Properties and an ALTA leasehold policy of title insurance in the amount of the
allocated Purchase Price for the Leaseholds, showing fee simple title to each of
the Real Properties and leasehold title to each of the Leaseholds, in Seller,
and such endorsements and affirmative insurance requested by Purchaser to
deliver good and
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marketable title in accordance with the terms of this Contract and (b)
containing true and correct copies of all documents, whether recorded or
unrecorded referred to in the Title Commitments. Purchaser shall order the Title
Commitments within five (5) business days of receipt of evidence of Seller's
lenders' consent to this transaction.
8.1.2 TITLE TO PERSONAL PROPERTY. At Closing, Seller shall warrant that
Seller has good title to the Personal Property.
8.1.3 CONTRACT RIGHTS. At Closing, Seller shall warrant to Purchaser that
Seller has good title to the Operating Contracts to be assumed by Purchaser and
the Intangible Properties that Seller has no knowledge of any material defect or
unmerchantable title thereto, and that Seller has not created or suffered any
lien, encumbrances, attachment, security interest, or other outstanding interest
or right that would diminish, affect, or reduce title thereto.
8.1.4 DEFECTS OF TITLE AND CURE. In the event the Title Commitments
disclose any matters which render title unmarketable or which do (or could in
the future) materially interfere with the current use or operation of any of the
Restaurants, Purchaser shall notify Seller promptly of any such items. Seller
then shall have the right for a period of thirty (30) days to take all
reasonable steps to cure or remove such matters of record that have been
objected to by Purchaser, provided, however, that Seller shall have no
obligation to commence litigation or spend in excess of $100,000 per Property or
$500,000 in the aggregate to cure such matters except that Seller shall cure and
the Purchase Price may be used at Closing to satisfy all monetary liens created
or suffered by Seller. Any items not objected to by Purchaser are the "Permitted
Exceptions". The failure to record the Leasehold Documentation for a Leasehold
because of an express provision in the lease prohibiting recordation or
landlord's refusal to execute the Leasehold Documentation in recordable form
shall not be a defect provided Seller requests that the landlord so execute.
8.1.5 DEFECTS OF TITLE - TERMINATION. If, at the expiration of said thirty
(30) day period, Seller shall then be unable to convey good or marketable title
free and clear of all such encumbrances and defects or obtain affirmative
insurance that Purchaser shall not suffer loss or damage because of the
encumbrance or defect, Purchaser, nevertheless, may (i) elect to accept such
title as Seller may be able to convey, with a credit against the monies payable
at the Closing equal to the reasonably estimated costs to cure the same up to
$100,000 per Property or $500,000 in the aggregate, but without any other credit
or liability on the part of Seller, (ii) terminate this Contract as to the
non-complying Property or Properties and receive a credit
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against the Purchase Price for the amount allocated to that Restaurant or
Restaurants on Schedule 4.2, or (iii) if Seller is unable to convey title to
three (3) or more Properties in accordance with the terms hereof, then Purchaser
may terminate this Contract in its entirety.
8.2 UCC SEARCH
Seller at Seller's sole expense, shall be responsible for obtaining a UCC
search of the records of the local and state offices pertaining to Seller and
Properties. Seller warrants to discharge any liens or encumbrances at Closing.
8.3 SURVEYS
No later than twenty (20) days after the Contract Date, Seller will deliver
to Purchaser, at Seller's sole cost and expense, a print of an as-built survey
of each of the Restaurants (the "Surveys"). Prior to Closing, the Surveys will
be updated, will be certified by the surveyor to have been prepared in
accordance with minimum detail requirements of the ALTA land survey standards
(or local equivalent), and will be recertified to the Title Company, Purchaser
and Purchaser's lender(s), if any. In the event the Surveys show any
encroachment over a lot line, a prohibited encroachment over any easement, or
any other matter that, renders title unmarketable or does (or could, in the
future) materially interfere with the current use or operation of the particular
Property or render the fee or leasehold title thereto unmarketable, such matter
shall be considered a defect of title hereunder unless the Title Company will
affirmatively insure that Purchaser shall suffer no loss or damage as a result
of the matter in question.
8.4 NON-DISTURBANCE AGREEMENTS
After receipt by Purchaser of the Title Commitments for the Leaseholds,
Purchaser shall notify Seller to the extent it requires Seller to request
non-disturbance agreements for any Leasehold.
SECTION 9 SELLER'S DELIVERIES
Seller shall deliver the following within ten (10) business days of the
Contract Date (unless a different time period is expressly referred to with
respect to a specific item):
9.1 PLANS
Copies of all environmental condition reports, engineering and
architectural plans and specifications, drawings, soil reports, studies,
certificates of occupancy, and surveys
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relating to the construction of each of the Restaurants in Seller's possession
or control.
9.2 TAXES
Copies of the bills issued for the three (3) most recent years for which
bills have been issued for all real estate taxes and personal property taxes and
with copies of any and all notices pertaining to real estate taxes or
assessments applicable to each of the Restaurants.
9.3 CONTRACTS
Copies of all leasing, maintenance, repair service, pest control, and
supply contracts (including without limitation janitorial, elevator, scavenger,
laundry, and landscaping agreements) and any other contracts or agreements
relating to or affecting the Restaurants that will be binding upon the
Restaurants or Purchaser subsequent to Closing, all as amended. Purchaser shall
notify Seller within ten (10) business days of receipt of the Operating
Contracts delivered pursuant to this Contract if it elects to assume any of such
Contracts. If no notice is given by Purchaser, the Operating Contracts shall not
be assumed.
9.4 LICENSES
All licenses of Seller for the benefit of the Restaurants or of third
parties burdening the Restaurants other than Ground Round trademarks.
9.5 UTILITY DEPOSITS
A list of deposits held by the providers of utilities to the Restaurants.
9.6 HISTORICAL CAPITAL EXPENDITURE BUDGETS
A summary of all capital expenditures made by Seller during last three (3)
years.
9.7 LEASEHOLD ITEMS
Copies of all inspection reports, deficiency letters, improvement
requirements, default notices and similar communications received or sent by
Seller in connection with the Leaseholds during the past twenty-four (24)
calendar months and shall promptly deliver to Purchaser such communications
received by Seller on or after the Contract Date.
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9.8 MISCELLANEOUS RESTAURANT ASSETS
A complete listing of all miscellaneous Restaurant assets having a value of
$1,000 or more on or before the Closing.
9.9 LANDLORDS' ESTOPPELS
Seller shall provide Purchaser with estoppel letters from all landlords
under the Leaseholds or Personal Property and from the fee owner at the
Wilmington, Delaware Restaurant, to be furnished not less than fifteen (15) days
prior to Closing. The Leasehold estoppels shall be in the form attached as
Schedule 9.9 or in the landlord's or fee owner's form provided such form is
substantially similar to Schedule 9.9.
9.10 PAYROLL SUMMARY
A list of all employees presently employed by Seller or by the managers of
the Restaurants with respect to the Properties, except those employees being
retained by Seller for other business, indicating, in each case, the name of
each such employee, the position occupied by such employee, such employee's rate
of compensation and any agreement relating to any increase thereof or bonus to
be paid to such employee, term of employment, contract agreement, if any, and
any other relevant information with respect to such employee.
9.11 TITLE REPORT
A copy of the most recent title report in Seller's possession for each of
the Properties.
9.12 CASUALTY INSURANCE
A schedule of casualty insurance in place with respect to each of the
Properties.
9.13 MISCELLANEOUS LEASEHOLD ITEMS
Copies of all correspondence, non-disturbance agreements, prior estoppels
and other miscellaneous documents with respect to the Leaseholds and contained
in Seller's files.
SECTION 10 SELLER'S REPRESENTATIONS, WARRANTIES, AND COVENANTS
10.1 GENERAL TERMS
In order to induce Purchaser to purchase the Restaurants and to consummate
the other transactions contemplated herein, Seller hereby represents and
warrants to Purchaser that the following are true statements as of the date
hereof and
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agrees that the following shall be true statements as of the Closing.
10.2 DUE AUTHORIZATION
The performance of this Contract and the transactions contemplated
hereunder by Seller and each officer of Seller have been duly authorized by all
necessary action on the part of Seller and by its shareholders and board of
directors, and this Agreement is binding on and enforceable against Seller in
accordance with its terms. Seller shall simultaneously with the execution of
this Contract and immediately prior to the Closing Date, furnish Purchaser with
certified resolutions evidencing that Seller's officers have been duly
authorized to enter into and perform this Contract on behalf of Seller and the
transactions contemplated hereunder. Except as set forth in the side letter
dated the date hereof, no further consent of any shareholder, subtenant,
creditor, investor, judicial or administrative bonds, governmental authority, or
other party to such execution, delivery, and performance is required.
10.3 AUTHORITY AND CAPACITY
Seller warrants that Seller is the sole owner of the Real Properties in fee
simple and the sole owner of the Leaseholds and has the right and power to enter
into this Contract and to carry out the terms hereof. All persons signing as
Seller agree to execute Seller's deeds and assignments required hereunder.
10.4 FOREIGN ENTITY STATUS
At the Closing, Seller shall deliver to Purchaser such documents as may be
required by the Internal Revenue Service pursuant to Section 1445 of the
Internal Revenue Code of 1986, as amended, or the regulations issued pursuant
thereto certifying as to the non-foreign status of Seller.
10.5 NO CONFLICTS BY CONSUMMATION OF AGREEMENT
Seller represents that neither the execution of this Contract nor the
consummation of the transactions contemplated hereby will (a) result in a breach
of, default under, acceleration of, or imposition of any lien or encumbrance
against the Restaurants under any agreement to which Seller is a party or by
which Seller or the Properties (or any portion thereof) are bound or (b) violate
any restriction, court order, judgment, law, regulation, charter, bylaw,
instrument, or agreement to which Seller or the Properties (or any portion
thereof) are subject.
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10.6 NO UNDISCLOSED INTEREST
To the extent any of the Real Properties are comprised of more than one
parcel, such parcels are contiguous with respect to the respective Restaurant.
Seller neither owns nor leases nor has any other interest in any real property
adjoining, adjacent, or otherwise connected with the operation of the
Properties.
10.7 NO UNTRUE STATEMENT
The representations and warranties of Seller contained herein, in the
Schedules and the other deliveries made simultaneously herewith were true in all
material respects when made and are, or as to deliveries to be made after the
Contract Date, will be true in all material respects at the Closing or such
later date and Seller shall deliver to Purchaser a certificate dated the Closing
Date signed by the President of Seller to that effect and indicating any
material changes.
Seller shall notify Purchaser promptly if Seller becomes aware of any
transaction or occurrence prior to the Closing Date which would make any of the
covenants, representations, and warranties of Seller contained herein not true
in any material respect with the same force and effect as if made on and as of
the date on which Seller becomes aware of such transaction or occurrence.
10.8 FURTHER ASSURANCES
The parties hereto agree to execute, acknowledge, deliver, and record such
certificates, amendments, instruments, and documents and to take such other
action as may be necessary to carry out the intent and purposes of this
Agreement.
10.9 NO FURTHER ENTRANCE INTO BINDING AGREEMENTS
Seller will not enter into any new Operating Contracts or agreements of any
kind (whether written or oral) affecting any Properties or cancel, modify, or
renew any existing Operating Contracts without Purchaser's prior written consent
unless such Operating Contract shall be terminable on or before the Closing.
10.10 CONTINUED OPERATION
Seller shall continue to operate and manage the Restaurants, maintaining
present services (including pest control), shall maintain the Restaurants in
good repair and working order; shall keep on hand sufficient materials,
supplies, equipment, and other personal property for the operation and
management of the Restaurants; and shall maintain in full force and effect and
make all payments, and perform, when due, all of Seller's obligations under the
Operating Contracts to be assumed
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by Purchaser, the Governmental Permits, and all mortgages, restrictions, and
other agreements affecting or relating to the Restaurants and otherwise in
accordance with applicable laws, ordinances, rules, and regulations affecting or
relating to the Restaurants. Seller shall deliver the Restaurants at Closing in
substantially the same condition as on the Contract Date, reasonable wear and
tear excepted. Except as otherwise provided herein, Seller shall terminate, as
of the Closing Date, those of the Operating Contracts that by their terms are
not assignable or those which Purchaser has elected not to assume. None of the
Personal Property or fixtures shall be removed from the Properties unless
replaced by personal property or fixtures of equal or greater utility value.
10.10.1 REPAIRS AND MAINTENANCE. All repairs and replacements necessary to
maintain the Properties in their current condition will be made in the regular
course of business up to the Closing Date at the expense of Seller.
10.10.2 PERSONAL PROPERTY. Each Restaurant has and will at Closing have in
place HVAC and refrigeration systems as well as all other equipment and fixtures
in good working order sufficient to maintain and operate a full service
restaurant, said HVAC and refrigeration systems and other equipment and fixtures
to be maintained in accordance with all applicable laws and regulations,
including, without limitation, local health code regulations with respect to
proper temperature maintenance of said equipment. To the knowledge of Seller,
there are no major structural, electrical or mechanical defects with respect to
any of the Restaurants.
10.10.3 TAXES. Seller is current in the payment of all taxes affecting the
Properties or operation thereof and Seller shall continue to make timely
payments of all such taxes when due.
10.10.4 INSURANCE. Seller carries insurance upon or in connection with the
Properties of the kind customarily maintained and in the amounts as required by
any mortgagee, and said insurance is in full force and effect on the date hereof
and no notices of cancellation or suspension have been received with respect
thereto.
10.11 LICENSES AND PERMITS
10.11.1 Seller owns and holds all licenses, permits, certificates,
concessions, franchises, rights, approvals, and other authorizations
(collectively the "Permits"), all unencumbered and subject to no challenge or
revocation, as are required to carry out and conduct the business carried out
and conducted at the Restaurants and each and every aspect thereof and to own,
use, and operate the business thereon carried on and
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conducted; and all such Permits will pass to Purchaser at Closing without
creating the right of termination or revocation on the part of any third party
granting such Permit. With respect to the Properties and their use and
operation, Seller is not obligated or under any liability to make any payments
by way of royalties or fees or otherwise pursuant to any license, royalty,
franchise, or other agreement to any owner of, licensor of, or claimant to a
patent, trademark, trade name, copyright, or other intangible asset with respect
to the use thereof or in connection with the conduct of its business or
otherwise and except for payments under the Leasehold Documentation (as such
term is defined in Section 10.13.1). All such Permits are listed on Schedule
10.11.1.
10.11.2. Seller will execute and, where necessary, Purchaser will join in
the execution of all applications and instruments required in connection with
the transfer of the Permits in order to transfer the benefits of the Permits to
Purchaser on the Closing Date to the extent a Permit is transferable. Seller
shall preserve in force all existing Permits and shall timely file proper
applications for renewal of any Permit expiring prior to the Closing Date. If
any such Permit shall be suspended or revoked, Seller shall promptly so notify
Purchaser and shall take all measures necessary to cause the reinstatement of
such Permit without any additional limitation or condition.
10.11.3 Seller holds valid licenses under local law permitting the sale of
alcoholic beverages and all permits as are required in order for Seller to sell
alcoholic beverages on the Properties in the places and in the manner in which
Seller has heretofore sold such alcoholic beverages.
10.12 CONTRACTS
Other than the Leasehold Documentation, there are no service contracts,
maintenance contracts, or any other contracts, or any other contracts or
agreements in connection with the operation of the Real Properties or Personal
Property which shall survive Closing, and there are no actions pending or, to
Seller's knowledge, threatened between Seller, as landlord, and any tenant on
the Real Properties, to reduce any of their rentals.
10.13 LEASES
10.13.1 Annexed hereto as Schedule 10.13.1 is a list of all of the
documentation constituting the Leaseholds including without limitation, the
lease, amendments and agreements relating thereto, and all assignments thereof
(the "Leasehold Documentation"), true and complete copies of which Documentation
have been delivered to Purchaser prior to execution of this Contract. The
Documentation (i) has not been modified, amended, supplemented or
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changed in any manner, (ii) and the Leaseholds are valid, binding, and in full
force and effect. No written notice of any default has been given by any of the
landlords under the Leaseholds which default remains uncured and no non-monetary
defaults on the part of Seller or any other party thereto the cure for which
will cost more than $10,000 exist under the Leaseholds; all rent and additional
rent and other payments under the Leaseholds, including, without limitation,
fixed payments and percentage payments, have been paid to date. There are no
other modifications or agreements relating to the Leaseholds not heretofore
delivered to Purchaser. Except for the Friendly's Sublease at the Philadelphia
(Red Lion) Restaurant (see Section 10.14), there are no subleases or tenancies.
Seller shall deliver to Purchaser at the Closing and thereafter all reports,
statements, and financial information necessary or appropriate to enable Seller
to calculate rent, additional rent and other sums payable to the landlords, and
otherwise to file required financial and other statements pursuant to the
Leasehold Documentation. The security deposits listed on Schedule 10.13.1 are
true and correct and have not been used by the landlords under the Leaseholds to
cure any defaults by Seller.
10.13.2 To the extent required by the Leasehold Documentation, Seller shall
diligently use all reasonable efforts to obtain the approval from the landlords
thereunder for the assumption of the existing Leaseholds or the issuance of a
new lease agreement directly with Purchaser provided any such new lease shall be
on terms substantially similar to the present terms.
10.13.3 There are no outstanding requirements or recommendations by any
insurance company issuing a policy with respect to the Properties or by any
board of fire underwriters or by any other bodies exercising similar functions
requiring or recommending any repair or ameliorative work to be done in, at, or
about the Restaurants.
10.14 SUBLEASES AND TENANCIES. There are no subleases or tenancies
(collectively "Tenancies") under the Leaseholds except for the sublease for a
Friendly's Restaurant ("Friendly's") at the Philadelphia (Red Lion), PA location
granted by that certain Sublease Agreement dated September 9, 1981 (the
"Friendly's Sublease"):
10.14.1 The Friendly's Sublease is in full force and effect and has not
been modified, amended, or extended.
10.14.2 No renewal or extension options have been granted to Friendly's
except as set forth in the Friendly's Sublease.
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10.14.3 There are no other agreements with Friendly's which will be binding
on Purchaser.
10.14.4 The rent under the Friendly's Sublease is being collected on a
current basis and there are no arrearages in excess of ten (10) days.
10.14.5 Friendly's is not entitled to rental concessions or abatements for
any period subsequent to the scheduled date of closing.
10.14.6 There are no material defaults by either party under the Friendly's
Sublease.
10.14.7 There are no security deposits for the Friendly's Sublease other
than those set forth in such Sublease.
10.15 EMPLOYEE-RELATED REPRESENTATIONS
10.15.1 There are no labor disputes pending or threatened, and Seller has
no knowledge or reason to believe such disputes are threatened.
10.15.2 There are no collective bargaining agreements covering persons
employed at the Restaurants.
10.16 NO OUTSTANDING LITIGATION OR OUTSTANDING CONFLICTS
Seller represents and warrants that there are no suits, arbitration
proceedings, other proceedings, or governmental investigations pending against
it or, to the knowledge of Seller, threatened that adversely and materially
affect its right or ability to enter into this Contract or to consummate the
sale of the Restaurants in accordance with the terms of this Contract, or that
materially affect the Restaurants except as set forth on Schedule 10.16.
10.17 EMINENT DOMAIN/CONDEMNATION ACTIONS
Seller represents and warrants that, there are no pending condemnation
actions of any nature with respect to the Restaurants that would materially
impair the economic viability of any of the Restaurants, and Seller has not
received any notice of any such threatened or contemplated condemnation actions.
10.18 TITLE MATTERS
Seller has good and marketable title to the Personal Property and all
Personal Property has been fully paid for.
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10.19 MORTGAGES AND BANKRUPTCY
All mortgages encumbering the Real Properties are in good standing, and
Seller shall keep all such mortgages in good standing through the Closing Date.
There are no other liens, attachments, executions, assignments for the
benefit of creditors, or voluntary or involuntary proceedings in bankruptcy
pending against Seller or contemplated by Seller, and to the knowledge of Seller
no such action has been threatened against it.
10.20 ZONING
The Properties and the current operation of the Restaurants comply in all
material respects with all zoning and use laws and regulations.
Except as required by law, Seller shall not seek or consent to any
amendment to any Permit or Government Permit that would alter the existing
permissible uses of the Restaurants or any part thereof.
Seller has not made nor shall Seller make any applications before any
zoning board or commission seeking to modify or change the present zoning of the
Real Properties.
10.21 ENVIRONMENTAL CONDITIONS
Except as disclosed in Schedule 10.21: (i) to the knowledge of Seller, no
Hazardous Substances (as hereinafter defined) have been released, treated,
stored or disposed of, or otherwise deposited in or on, or migrated to, any of
the Properties, including without limiting the generality of the foregoing, the
surface waters and subsurface waters of the Properties; (ii) to the knowledge of
Seller there are no substances or conditions (including asbestos or
asbestos-containing materials) in or on the Properties or any other parcels
which may materially adversely affect the Properties or use thereof or which
would be reasonably likely to support a claim or cause of action under any
existing federal, state or local environmental statute, regulation, ordinance or
other environmental regulatory requirement (hereinafter collectively called
"Applicable Environmental Laws"), including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
as amended 42 U.S.C. ss.ss.6901 et seq. and the Resource Conservation and
Recovery Act ("RCRA"), as amended, 42 U.S.C. [Sections]6901 et seq., which terms
shall also include, whether or not included in the definitions contained in
Applicable Environmental Laws, petroleum, solvents, or polychlorinated
biphenyls; (iii) there are no underground tanks at the Properties and no part of
any of the Properties
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constitutes "wetlands"; (iv) there are no liens under Applicable Environmental
Laws affecting the Properties and no government actions have been taken or, to
the knowledge of Seller, are in process, which could subject any portion of the
Properties to such liens. As used herein, "Hazardous Substances" shall mean any
hazardous materials, hazardous waste, hazardous and toxic substances, pollutants
and contaminants, as those terms are defined by any Applicable Environmental
Laws. For purposes of this Section 10.21, Hazardous Substances shall not include
(x) substances properly used by Seller in the ordinary maintenance of the
Properties, and (z) petroleum released in de minimis amounts and typically
associated with the use of portions of the Properties for driving and parking
motor vehicles. For the purposes of this subsection, only the knowledge of
Seller's officers and regional managers shall be imputed to Seller. Any suit or
action by Purchaser against Seller with regard to a breach of the
representations in this Section 10.21 must be commenced within three (3) years
after the Closing Date.
10.22 VIOLATIONS
Seller shall cure all violations of record of any governmental agency
having jurisdiction including any violations issued under the Americans with
Disabilities Act and shall deliver the Restaurants free of all violations of
record provided that if Purchaser files alteration plans with the local
municipality for any Restaurant which filing causes the municipality to inspect
the Restaurant for which the plans were filed prior to Closing and such
inspection results in the filing of a violation prior to Closing, then Seller
shall not be required to cure the violation if the filed plans that provide
Purchaser will be replacing, repairing or otherwise curing the item cited.
10.23 LIMITATIONS ON SELLER'S REPRESENTATIONS, WARRANTIES, AND COVENANTS
Purchaser acknowledges that except as otherwise expressly set forth in this
Contract, Purchaser is acquiring the Restaurants "as is".
10.24 SURVIVAL OF CONTRACT
All warranties, representations and covenants of Seller made in this
Contract shall survive the Closing provided that, except as provided in Section
10.21, any action or suit must be commenced by Purchaser within eighteen (18)
months after the Closing Date.
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10.25 NON-COMPETITION
Seller covenants and warrants that it and its affiliates, and their
successors and assigns, shall not, in any capacity, including, without
limitation, as owner, shareholder, director, agent, employee, consultant,
advisor, investor, or partner, operate, in any capacity, either directly or
indirectly, including, without limitation, as owner, lessor, lessee, manager,
franchisor, or franchisee any type of restaurant, bar or saloon within five (5)
miles from any of the purchased Restaurants, for a period of five (5) years from
the Closing Date.
Seller and Purchaser believe that the restrictions contained in this
Section are reasonable. However, in case any one or more of the provisions of
this Section shall be invalid, illegal or unenforceable in any respect, any such
provision shall be ineffective to the extent of such invalidity, illegality or
unenforceability and the validity, legality and enforceability of the remaining
provisions contained herein shall not in any way be affected thereby.
Seller recognizes that Purchaser will suffer irreparable damage if the
terms of this restriction are violated and that it will be difficult, if not
impossible, to compute Purchaser's actual damages resulting from such violation.
Therefore, in addition to any other rights and remedies which Purchaser may have
under this Contract or otherwise, Purchaser and any Successor (as hereinafter
defined) shall have the right to have the provisions of this Section
specifically enforced by a court having equity jurisdiction and the right to
require Seller to account for and pay over to Purchaser all profits and payments
derived or received by Seller as a result of Seller's breach of this Section.
For purposes of this Section, "Successor" means any direct or indirect assignee
or transferee of Purchaser to this Contract, any successor to Purchaser
including, without limitation, any successor by merger or consolidation or by
acquisition of all or substantially all of the assets, property, or business of
Purchaser.
10.26 OWNERSHIP OF DECATUR RESTAURANT
Seller represents that Ground Round Holdings Inc. owns title to the
Decatur, IL Restaurant, and that such title holder is a wholly owned subsidiary
of Seller. By its signature below, such subsidiary joins in all warranties,
representations and covenants of Seller and shall be deemed a party to this
Contract for all purposes relating to the Decatur Restaurant. Seller
unconditionally guarantees all of such subsidiary's obligations under this
Contract.
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SECTION 11 REPRESENTATIONS AND WARRANTIES OF PURCHASER
11.1 GENERAL TERMS
In order to induce Seller to sell the Restaurants and to consummate the
other transactions contemplated herein, Purchaser hereby represents and warrants
to Seller that the following are true statements as of the date hereof and
agrees that the following shall be true statements as of the Closing. The
representations, warranties and covenants of Purchaser herein shall survive the
Closing but any action or suit must be commenced by Seller within eighteen (18)
months after the Closing Date.
11.2 DUE ORGANIZATION
Purchaser is duly organized, validly existing, and in good standing under
the laws of the state of its formation, and has all requisite power and
authority to execute this Contract and the documents referred to herein to be
executed by Purchaser. Prior to the closing, Purchaser shall have taken all
actions required for the consummation of the transaction contemplated by this
Contract or any document delivered or to be delivered in connection with this
Contract.
At Closing, if this Contract is assigned to a subsidiary corporation or
limited liability company, the assignee will be duly organized, validly
existing, in good standing under the laws of a State chosen by Purchaser and
authorized to enter into the transactions contemplated by this Contract.
11.3 NO CONFLICT
Neither the execution, delivery, and performance of this Contract or any
other agreement contemplated hereunder nor the carrying out by Purchaser of the
transactions contemplated hereby or thereby will conflict with, result in a
breach of, constitute a default under, or accelerate the maturity of (a) any
applicable provisions of Purchaser's charter or by-laws or other governing
instrument, (b) any applicable legal requirements, or (c) any other agreement,
indenture, or instrument to which Purchaser is a party or by which Purchaser is
or may be bound or affected. No consent of any third party is required in order
for Purchaser to enter into this Contract or any other agreement contemplated
hereunder or for Purchaser to carry out the transactions contemplated hereby or
thereby.
11.4 NO PENDING LITIGATION
The individuals and the entity comprised by Purchaser represent and warrant
that as of the Contract Date, there are no suits, arbitration proceedings, other
proceedings, or
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governmental investigations that are pending against them or to their knowledge
threatened that adversely and materially affect their right or ability to enter
into this Contract or to consummate the purchase of the Restaurants in
accordance with the terms of this Contract.
11.5 ALTERATION PLANS
Purchaser may file alteration plans for the Restaurants with any municipal
office prior to the Closing Date but shall not cause a permit to be issued until
after the Closing. Purchaser shall deliver a copy of all filed plans to Seller.
SECTION 12 PRORATIONS AND ADJUSTMENTS
12.1 ACCOUNTS PAYABLE
All accounts receivable arising out of the operation of the Restaurants
from and after the date of Closing shall belong to Purchaser. Purchaser assumes
no responsibility or liability for any accounts payable, obligations, or
indebtedness of Seller or the Restaurants, except those obligations assumed by
Purchaser hereunder, and Seller shall hold Purchaser harmless and indemnify
Purchaser from any claim by any party relating to any accounts payable,
obligation, or indebtedness of any nature that was incurred prior to the Closing
except those obligations assumed by Purchaser.
12.2 LIABILITIES NOT ASSUMED
The purchase and sale of the Restaurants shall be a transfer of assets
only, and no liabilities or obligations of Seller, whether incurred prior to or
after the date hereof, shall be assigned by Seller or assumed by Purchaser, with
the exception of the following: any liability under the Leaseholds and Operating
Contracts actually assumed by Purchaser, relating to obligations arising from
and after the Closing Date. Except as specifically provided herein, Purchaser
shall not be responsible for any liabilities arising from acts or omissions of
Seller prior to the Closing Date, even though the claim with respect thereto may
be brought after the Closing Date.
12.3 RENTS
Base Rents, additional rents and other charges payable under the Leaseholds
shall be prorated as of midnight of the day prior to the Closing Date. To the
extent any percentage rent or other additional rent or charges are payable in
arrears, then Seller shall deliver satisfactory documentary evidence of the
calculation of such additional rent, the parties shall apportion such amount
based on the amounts due as of midnight of the date prior to the Closing Date
and Seller shall deliver to Purchaser
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all documentation and affidavits required under the terms of the Leasehold
Documentation or reasonably required by Purchaser in connection therewith.
12.4 UTILITIES
Seller shall be responsible for all water, sewer, and all other utility
charges through the date prior to Closing hereunder, and Seller will use its
best efforts to have meters for such utility services read on the Closing Date
and thereafter Purchaser shall be responsible for such utility services in its
own name commencing with the Closing Date and thereafter. Seller agrees not to
terminate utility services. All deposits ("Utility Deposits") held by utility
providers, including the provider of telephone service, shall not be adjusted,
but shall become the property of Purchaser because the amounts of the Utility
Deposits are included in the Purchase Price provided however any charges for
utilities which are prepaid shall be adjusted. If any of the Utility Deposits
are refunded to Seller, then the amount of said deposit shall be credited or
paid to Purchaser.
12.5 REAL ESTATE AND PERSONAL PROPERTY TAXES
Real estate taxes, personal property taxes, and assessments shall be
prorated to the date of Closing, using the last available tax bill. Accrued
general real estate, personal property, and ad valorem taxes for the current
year shall be prorated on the basis of actual bills therefor, if available prior
to closing. If such bills are not available, then such taxes shall be prorated
on the basis of one hundred three percent (103%) of the most currently available
information for the Real Properties and promptly reprorated upon the issuance of
final bills therefor (and any amounts due from one party by reason of such
reproration to the other shall be paid in cash at that time). Prior to or at
Closing, Seller shall pay or have paid all such bills that are due and payable
prior to or on the Closing Date and shall furnish evidence of such payment to
Purchaser and the Title Company.
12.6 SALES TAXES
There shall be no apportionment with respect to sales tax charged to
customers of the Restaurants subject to such taxes. After the Closing, Seller
shall file final sales and occupancy tax returns with the appropriate taxing
authority and pay to the appropriate taxing authority sales charged to customers
and others during the period of time prior to the Closing Date.
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12.7 PAYROLL
Seller will pay all employees for all services performed through 12:01 A.M.
of the date of Closing, together with all contributions to welfare, pension,
fringe benefit, and other such programs required to be made on their behalf, and
the employer's share of payroll taxes, social security, unemployment
compensation taxes, and disability insurance incident to such salaries, wages,
or other benefits. Seller shall terminate all employees of the Restaurants on or
prior to Closing and shall be solely responsible for all payments and claims
incurred in connection therewith. Purchaser shall have the right but not the
obligation to hire those of Seller's employees who are not retained by Seller in
other businesses.
12.8 TELEPHONE CHARGES
Purchaser and Seller shall obtain and determine all telephone charges
applicable to the telephone system in use at the Restaurants, and Seller shall
execute any and all forms required in order to transfer the existing telephone
numbers, and any and all rights thereto, to Purchaser.
12.9 LEASE SECURITY DEPOSITS
All security deposits on Schedule 10.13.1 shall not be adjusted but shall
become the property of Purchaser, subject to the terms of the Leaseholds,
because the amount of such deposits are included in the Purchase Price.
12.10 PREPAID DEPOSITS
All prepaid amounts under Operating Contracts actually assumed by Purchaser
shall be adjusted.
Three (3) business days before the Closing Date, Seller shall provide
Purchaser with a complete schedule (the "Reservation Schedule") of post-closing
customer reservations, which Reservation Schedule shall list (a) the party for
whose benefit the reservation was made and the date and time therefor; (b) the
amount of any other deposits made for advance banquets and/or future services to
be provided after the Closing Date. Purchaser may elect to receive a credit for
such deposits and arrange with the depositor for the banquets or other service.
If Purchaser does not so elect, Seller shall refund such deposits and pay all
claims or damages related thereto. Seller shall accept no reservations or
deposits for services to be rendered after the Closing Date.
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12.11 VENDING MACHINES
All revenues from vending machines and commissions, if any, payable by the
telephone company in respect of public telephones in the Properties and long
distance telephone calls made from the Properties shall accrue to the benefit of
Purchaser for periods after the Closing and to Seller for the periods prior to
the Closing.
12.12 PURCHASER'S WAIVER AND TERMINATION RIGHT
Purchaser may waive any failure of a particular Restaurant to comply with
the terms of this Contract only in writing. In addition to any right of
Purchaser to terminate this Contract in its entirety (including, without
limitation, the right arising because of the inability of Seller to obtain the
consents and estoppels of the landlords under the Leaseholds or the failure to
obtain liquor permits), Purchaser may also terminate this Contract with respect
to a certain Restaurant or Restaurants only, if such Restaurant does not comply
with the terms of this Contract or Purchaser otherwise is entitled to terminate
this Contract and Purchaser shall receive a credit against the Purchase Price
for the amount allocated on Schedule 4.2 to the terminated Restaurant or
Restaurants provided that Purchaser may not terminate this Contract as to more
than five (5) Restaurants in the aggregate because of the failure to obtain
either liquor permits or landlord consents and estoppels. If either the liquor
permits or the landlord consents and estoppels are not obtained for more than
five (5) Restaurants, Purchaser may (i) only terminate as to five (5) of such
Restaurants of its choice and waive the failure of the balance to comply or (ii)
terminate this Contract in its entirety.
SECTION 13 CLOSING DOCUMENTS AND PROCEDURE
Not later than twenty (20) days prior to the Closing, the parties shall
deliver copies of certain documents, set forth below, to the other parties as
specified; the original of said documents shall be executed and delivered at the
Closing together with such other documents as are contemplated by this Contract.
13.1 TITLE DEED
Special warranty deeds for all of the Real Properties (except for the New
York Restaurant which shall be a bargain and sale deed with covenant) in
recordable form, executed by Seller, conveying the Real Properties to Purchaser
free and clear of all claims, liens, and encumbrances except for the Permitted
Exceptions and items approved by Purchaser. Any action or suit on any covenant
contained in the deed must be commenced within eighteen (18) months after the
Closing Date.
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13.2 LEASE ASSIGNMENTS
Warranty assignments in the form required under Section 2.4 executed by
Seller, assigning the Leaseholds to Purchaser free and clear of all claims,
liens and encumbrances except for the Permitted Exceptions.
13.3 BILL OF SALE
A warranty assignment and bill of sale, executed by Seller, assigning,
conveying, and warranting to Purchaser title to the Personal Property, free and
clear of all encumbrances, other than items approved by Purchaser in writing.
13.4 ASSIGNMENT OF PERMITS
To the extent any Governmental Permits or Permits are assignable, an
assignment, executed by Seller, to Purchaser of all of Seller's right, title and
interest in and to the Governmental Permits or Permits, together with executed
copies, applications, forms, and other documents as may be necessary to fully
effectuate the transfer of the same to Purchaser as herein contemplated and
provided that Purchaser shall have all permits and licenses required to operate
the Restaurants.
13.4.1 LIQUOR PERMITS. Among the permits and licenses to be assigned and
transferred with respect to the operation of the Properties and the conduct of
Seller's business are the liquor permits issued to Seller by the local liquor
authorities. At the Closing, Seller shall cause to be executed and delivered to
Purchaser or Purchaser's nominee an instrument in form reasonably satisfactory
to Purchaser that issues, assigns, conveys, or transfers to Purchaser all of
Seller's rights and interests in, under, and to each of the liquor permits and
such written authorization or consent from any governmental agency having
jurisdiction recognizing and approving such transfer. If liquor permits for all
of the Properties are not lawfully transferred or issued to Purchaser on or
prior to Closing, Purchaser shall have the rights set forth in Section 12.12.
Purchaser shall proceed promptly and diligently and use reasonable efforts to
obtain approval of the transfer of the existing liquor permits or issuance of
new permits in accordance with law and Purchaser's past practices. Purchaser
shall deliver a copy of all liquor permit filings to Seller.
13.5 ASSIGNMENT OF INTANGIBLE PERSONAL PROPERTY
An assignment executed by Seller, to Purchaser of all right, title, and
interest of Seller and its agents in and to the Intangible Properties executed
by Seller.
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13.6 ASSIGNMENT OF OPERATING CONTRACTS
An Assignment executed by Seller to Purchaser of those of the Operating
Contracts that are to be assumed by Purchaser, in which Seller agrees to
indemnify, protect, defend, and hold Purchaser harmless from and against any and
all claims, damages, losses, costs, and expenses (including attorney fees) that
arise in connection with the Operating Contracts and relate to the time period
prior to Closing.
13.7 ORIGINAL DOCUMENTS
To the extent not previously delivered to Purchaser, original copies of the
Operating Contracts, Governmental Permits and Permits.
13.8 KEYS
All keys used in connection with the Properties, tagged for identification.
13.9 TITLE POLICY
The title policy (or a "marked-up" Title Commitment) issued by the Title
Company, dated as of the Closing Date, in such amounts and containing
non-imputation, creditor's rights exception, zoning and such other endorsements
as may be reasonably requested by Purchaser in order to obtain the benefits of
the title insurance, ownership, current use and occupancy of the Properties.
13.10 RESOLUTIONS AND CERTIFICATES
A certified resolution authorizing Seller to enter into and perform this
Agreement and to perform Seller's obligations hereunder.
At Closing, a certificate of Seller signed by a senior officer, dated the
Closing Date, certifying that all of the representations and warranties of
Seller contained in this Agreement are true and correct on and as of the Closing
Date with the same force and effect as if made on and as of the Closing Date.
13.11 CLOSING STATEMENT
A counterpart, executed by Seller, of a closing statement conforming to the
proration and other relevant provisions of this Agreement.
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13.12 RECORDS
To the extent not previously delivered to Purchaser, original copies of all
Records (including, without limitation, all ledgers) pertaining to the
Restaurants.
13.13 CERTIFICATE OF NON-FOREIGN STATUS
Seller shall deliver a Certificate of Non-Foreign Status in form
satisfactory to Purchaser's counsel.
13.14 AFFIDAVITS AND INDEMNITIES
Affidavits and indemnities reasonably required by Purchaser or the Title
Company to establish the authority and capacity of Seller to consummate the
transaction described herein and to cause the Title Company to issue the
policies including endorsements.
13.14.1 AFFIDAVIT OF TITLE. By Seller to Purchaser, Seller's affidavit of
title in form and content as customary in the county in which the Properties is
located.
13.15 SUB-TENANT ESTOPPEL AND CONSENT.
By Seller to Purchaser, an estoppel from Friendly's in the form of Schedule
9.9. with the following additional paragraph: "Friendly's has no right to
consent to the assignment to Lone Star nor to any further assignment of the
lease."
13.16 WARRANTY ASSIGNMENT
By Seller to Purchaser, a general assignment to Purchaser of all warranties
that exist as to equipment, Personal Property, or structural components of the
building that have not expired by lapse of time.
13.17 LANDLORD'S CONSENTS
By Seller to Purchaser, a consent signed and delivered by each of the
landlords for the Leaseholds, or if in Purchaser's judgment such consent is not
required by the terms of the lease, then a copy of a written notice to such
landlord signed and sent by Seller given within the time requirements of the
lease but not less than thirty (30) days prior to Closing and such other
evidence reasonably requested by Purchaser to comply with the terms of each of
the Leaseholds governing assignments. If all of the landlord consents are not
obtained prior to Closing, Purchaser shall have the rights set forth in Section
12.12. Purchaser's assignee shall represent to each landlord that the assignee
(i) shall spend at least $750,000 in improving and
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renovating the Restaurant located on such landlord's premises and (ii) shall
have a minimum net worth of $1,000,000 at closing.
13.18 NON-DISTURBANCE AGREEMENTS
By Seller to Purchaser, a written agreement executed by each of the
landlords of the Leaseholds and any holder of a mortgage on the real property
demised under the Leaseholds for which Purchaser directs Seller to request such
an agreement from the landlord, in which such mortgagee agrees not to disturb
Purchaser's tenancy in the event of foreclosure in form and on terms
satisfactory to Purchaser provided that to the extent any existing
non-disturbance agreement is satisfactory to Purchaser and is assignable by its
terms, then a new agreement shall not be required and further provided that it
shall not be a condition to Closing to obtain such non-disturbance agreements
and Seller shall be required to deliver such agreements only to the extent the
landlord complies with the request.
13.19 TRANSFER TAX RETURNS
Each party shall execute and deliver such transfer tax returns as may be
required for the transfer of the Real Properties or the Leaseholds. The parties
agree that the allocations to the real property portion of the Purchase Price on
Schedule 4.2 approximates the fair market value of the interest in realty
transferred.
13.20 OTHER DOCUMENTS
Such other documents and instruments as are contemplated hereunder or as
may reasonably be required by Purchaser, its counsel, or the Title Company and
necessary to consummate this transaction and to otherwise effect the agreements
of the parties hereto.
PURCHASER'S RESPONSIBILITIES
At Closing, Purchaser shall deliver to Seller:
13.21 PURCHASE PRICE
The full Purchase Price, plus or minus prorations and other adjustments
hereunder, in the amount provided in this agreement by certified check or wire
transfer.
13.22 ASSUMPTION OF LEASES
By Purchaser to Seller, an assumption of the lessee's interest under the
Leaseholds in the form attached as Schedule 2.4.
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13.23 CLOSING STATEMENT
A counterpart, executed by Purchaser, of a closing statement conforming to
the proration and other relevant provisions of this Agreement.
13.24 ASSUMPTION OF OPERATING CONTRACTS
An assumption executed by Purchaser in which Purchaser agrees to assume the
Operating Contracts to be assumed by it, subject to the agreement of Seller to
indemnify, protect, defend, and hold Seller harmless from and against any and
all claims, damages, losses, costs and expenses (including attorney fees) that
arise in connection with the assigned Operating Contracts and relate to the time
period before the Closing.
13.25 RESOLUTIONS
Certified resolution authorizing Purchaser to enter into and perform this
Agreement and to perform Purchaser's obligations hereunder.
13.26 AFFIDAVITS
Affidavits reasonably required by the Title Company to establish the
authority or capacity of Purchaser to consummate the transaction described
herein.
13.27 OTHER DOCUMENTS
Such other documents and instruments as are contemplated hereunder or as
may reasonably be required by Seller, its counsel, or the Title Company and
necessary to consummate this transaction and to otherwise effect the agreements
of the parties hereto.
SECTION 14 CLOSING EXPENSES
14.1 CLOSING EXPENSES
Seller shall pay the survey costs, recording fees, all escrow fees, any
transfer, stamp or documentary taxes and fees to the landlords of the Leaseholds
except for the reasonable fees charged by the landlords of the Renegotiated
Leaseholds. Purchaser shall pay the cost of the sales tax on the Personal
Property, title policy, and the reasonable fees charged by the landlords of the
Renegotiated Leaseholds.
14.2 BROKERAGE FEES
Seller and Purchaser each warrant to the other that each has dealt with no
broker, salesman, finder, or consultant
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with respect to this Contract or the sale contemplated herein. Each party shall
be responsible for the costs of their respective financial advisors. Except as
provided above, each shall indemnify, protect, defend, and hold the other
harmless from and against all claims, losses, costs, expenses, and damages
(including attorney fees) resulting from a breach of the foregoing warranty.
SECTION 15 EMINENT DOMAIN AND RISK OF LOSS
15.1 EMINENT DOMAIN
In the event of the institution of any proceedings, judicial,
administrative, or otherwise, relating to the taking of a portion of any of the
Properties by eminent domain, or condemnation, prior to closing, which taking
materially interferes with the current use or operation of the Property,
Purchaser shall have the right (a) to terminate this Contract, which right shall
be exercised within fifteen (15) days after notice of condemnation or proposed
taking is received by Purchaser, whereupon the parties shall be released from
any further obligations hereunder, or (b) elect to close this transaction, in
which event there shall be no reduction in the Purchase Price, except that
Purchaser shall be entitled to receive the award as a result of such taking.
15.2 RISK OF LOSS
If any of the Properties or any part thereof shall be damaged or destroyed
by fire or other casualty prior to the Closing, and such damage shall not have
been repaired or reconstructed prior to Closing in a good and workmanlike manner
to the reasonable satisfaction of Purchaser, and the cost of repair of such
damage exceeds $75,000, Purchaser may, at its option, (a) receive the proceeds
of any insurance payable in connection therewith, under Seller's insurance
policy or policies, and thereupon remain obligated to perform this Agreement, or
(b) terminate this Contract, which option shall be exercised within fifteen (15)
days after notice of the fire or other casualty is received by Purchaser,
whereupon the parties shall be released from any further obligations hereunder.
Seller agrees to advise Purchaser of the present insurance coverage upon each of
the Properties, to keep said policy or policies in full force and effect through
the Closing Date, and to advise Purchaser promptly of any damage to any of the
Properties by any loss or casualty.
SECTION 16 ASSIGNMENT, SUCCESSORS, AND HEIRS
This Contract may not be assigned prior to the Closing Date by either party
without the prior written consent of the other, except that Purchaser shall have
the right to assign its
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interest in this Contract to one or more corporations or limited liability
companies organized by Purchaser or Purchaser's affiliates. Such assignments by
Purchaser shall not relieve Purchaser of its obligations hereunder. Purchaser
specifically agrees that notwithstanding any assignment, Purchaser shall
indemnify Seller from any default under the Leaseholds arising from and after
the Closing Date and shall guaranty the assignee's obligations under the
assumption agreement to be executed and delivered by the assignee. Subject to
the foregoing provisions, this Contract shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
SECTION 17 GENERAL CLAUSES
17.1 BENEFIT
This Agreement is for the benefit only of the parties hereto or their
nominees, successors, beneficiaries, and assigns, and no other person or entity
shall be entitled to rely hereon, receive any benefit herefrom, or enforce
against any party hereto any provision hereof.
17.2 BINDING AGREEMENT
This Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective heirs, personal representatives, successors,
and assigns, and shall constitute the entire agreement among the parties.
17.3 BUSINESS DAY
If any date herein set forth for the performance of any obligations by
Seller or Purchaser or for the delivery of any instrument or notice as herein
provided should be on a Saturday, Sunday, or legal holiday, the compliance with
such obligations or delivery shall be deemed acceptable on the next business day
following such Saturday, Sunday, or legal holiday. As used herein, the term
"legal holiday" means any state or federal holiday for which financial
institutions or post offices are generally closed in the States of Texas or New
York.
17.4 CONTROLLING LAW
This Contract shall be interpreted in accordance with the laws of the State
of New York. New York law shall govern the marketability standard referred in
Section 8.1.5.
17.5 ENTIRE AGREEMENT
17.5.1 This Contract constitutes the entire understanding between the
parties with respect to the transaction contemplated herein, and all prior or
contemporaneous oral
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agreements, understandings, representations, and statements are merged into this
Agreement. Neither this Contract nor any provisions hereof may be waived,
modified, amended, discharged, or terminated except by an instrument in writing
signed by the party against which the enforcement of such waiver, modification,
amendment, discharge, or termination is sought, and then only to the extent set
forth in such instrument.
17.5.2 This Contract may be executed in one or more counterparts, and all
so executed shall constitute one contract, binding on all the parties hereto,
notwithstanding that all of the parties are not signatory to the same
counterpart.
17.5.3 WAIVER. No modification or amendment of this Contract shall be of
any force or effect unless it is in writing and executed by both Seller and
Purchaser.
17.6 HOLD HARMLESS AND INDEMNITY
Seller agrees to indemnify and hold harmless Purchaser from and against all
claims, damages, losses, and expenses, including reasonable legal fees and other
costs, arising from any and all liability, loss, or damage Purchaser may suffer
as a result of claims, demands, costs, or judgments against it arising from or
in any way connected with any accident, action, or incident of whatever nature
occurring during the period of Seller's ownership of the Properties or from a
breach of a representation, warranty or covenant by Seller contained herein; and
Purchaser agrees to indemnify and hold harmless Seller from and against all
claims, damages, losses, and expenses, including reasonable legal fees and other
costs, arising from any and all liability, loss, or damage Seller may suffer as
a result of claims, demands, costs, or judgments against it arising from or in
any way connected with any accident, action, or incident of whatever nature
during the period of Purchaser's ownership of the Properties or from a breach of
a representation, warranty or covenant by Purchaser contained herein.
17.7 NOTICES
Any notice or election that may be or is required to be given pursuant to
the provisions of this Agreement shall be sufficiently served if sent by
certified or registered U.S. Mails, postage prepaid, return receipt requested
and addressed as follows:
As to Purchaser: Lone Star Steakhouse & Saloon, Inc.
224 East Douglas, Suite 700
Wichita, Kansas 67202
Attn: Gerald Aaron
Vice President and General Counsel
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with a copy to:
Olshan Grundman Frome
& Rosenzweig LLP
505 Park Avenue
New York, NY 10022
Attn: Steven Wolosky, Esq.
As to Seller: The Ground Round, Inc.
35 Braintree Hill Office Park
Braintree, Massachusetts 02184-9078
Attn: Michael Jorgensen or
Robin L. Moroz, Esq.
With a copy to: Kane Kessler P.C.
1350 Avenue of the Americas
New York, New York 10019
Attn: Jeffrey S. Tullman, Esq.
17.7.1 NOTICE DEEMED SERVED. Any properly mailed notice shall be deemed to
have been served as of its posting for purposes of establishing that the sending
party complied with this Contract's applicable time limitations.
17.7.2 The attorney for a party may send notices on behalf of such party.
SECTION 18 PUBLICITY
Simultaneously with the execution of this Contract the parties have
approved the text of a press release to be issued by each of the parties.
Thereafter each party may issue press releases as may be required by law. Copies
of all press releases shall be given to the other party promptly after issuance.
GROUND ROUND HOLDINGS, INC.
By:
------------------------------
THE GROUND ROUND, INC. LONE STAR STEAKHOUSE &
SALOON, INC.
By: By:
------------------------------ ------------------------------
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SCHEDULE A - THE RESTAURANTS
LOCATION STORE NO. FEE OR LEASEHOLD
Decatur, IL 21782 Fee
Danvers, MA 99768 Fee
Rochester 99796 Fee
(Henrietta), NY
Saugus, MA 36771 Leasehold
Voorhees, NJ 86745 Leasehold
West Chester, PA 99831 Leasehold
Wilmington, DE 99838 Leasehold
Mentor, OH 99856 Leasehold
Erie, PA 99877 Leasehold
Philadelphia (Red 99889 Leasehold
Lion), PA
Bel Air, MD 35753 Leasehold
Natick, MA 86754 Leasehold
(Framingham-Speen)
Albany-Colonie, NY 99765 Leasehold
(Wolf Road)
Latham, NY 99808 Leasehold
Poughkeepsie, NY 99871 Leasehold
Rochester (Greece), 99874 Leasehold
NY
39
SCHEDULE 1.1(A)
(LEGAL DESCRIPTION - DECATUR RESTAURANT)
Lot Two (2) of the Resurvey of Lots 2, 3, 4 and 5 of North Point
Addition, as per Plat recorded in Book 1832, Page 186 of the Records in the
Recorder's Office of Macon County, Illinois.
40
SCHEDULE 1.2 - NUMBER OF PARKING SPACES
LOCATION STORE NO. NO. OF PARKING SPACES
Decatur, IL 21782 92
Danvers, MA 99768 95
Rochester 99796 91
(Henrietta), NY
Saugus, MA 36771 93
Voorhees, NJ 86745 113
West Chester, PA 99831 110
Wilmington, DE 99838 119
Mentor, OH 99856 103
Erie, PA 99877 131
Philadelphia (Red 99889 181
Lion), PA
Bel Air, MD 35753 Mall
Natick, MA 86754 118
(Framingham-Speen)
Albany-Colonie, NY 99765 50
Latham, NY 99808 69
Poughkeepsie, NY 99871 90
Rochester (Greece), 99874 44
NY
41
SCHEDULE 2.4 - FORM OF ASSIGNMENT AND ASSUMPTION OF LEASE
ASSIGNMENT and ASSUMPTION OF LEASE made and dated as of _________ ___, 1996
between The Ground Round, Inc., a [__________] corporation having its principal
place of business at [_______________________________,] Massachusetts [_____]
("Ground Round") and [Lone Star assignee], a ________________ ___________ having
its principal place of business at ______________________, ________________,
______________ ("Lone Star").
W I T N E S S E T H:
--------------------
WHEREAS, Ground Round leases the building commonly known as
[__________________], [________], [___________] (the "Building") and is the sole
owner of the leasehold improvements therein (collectively the "Premises")
pursuant to a lease (the "Lease") described in Schedule A attached hereto;
WHEREAS, pursuant to a Contract of Sale (the "Contract of Sale") by and
among Ground Round, Lone Star (as assignee of Lone Star Steakhouse & Saloon,
Inc.) dated June __, 1996, Lone Star is purchasing from Ground Round certain
assets of Ground Round, including Ground Round's interest as tenant under the
Lease;
NOW, THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties hereto agree as follows:
1. Effective as of [_______] ___, 1996 (the "Effective Date"), Ground Round
assigns, sets over and transfers to Lone Star all right, title and interest of
Ground Round in, to and under the Lease and Lone Star assumes and agrees to
perform any and all of the obligations to be performed by the tenant under the
Lease (as if Lone Star executed the Lease originally as tenant thereunder)
accruing from and after the Effective Date.
2. Ground Round and its successors and assigns do each hereby agree to
indemnify and hold and defend Lone Star free and harmless from and against any
and all claims, actions, suits, proceedings, demands, assessments, judgments,
liabilities, costs, fees and/or expenses arising out of or in connection with
any and all claims of any kind whatsoever under the Lease arising prior to the
Effective Date and Lone Star does hereby agree to indemnify and hold and defend
Ground Round free and harmless from and against any and all claims, actions,
suits, proceedings, demands, assessments, judgments, liabilities, costs, fees
and/or expenses arising out of or in connection with any and all claims under
the Leases in respect of any obligation assumed hereunder and arising from and
after the Effective Date.
42
3. Ground Round and Lone Star each represents to the other that it has
dealt with no broker in connection with this transaction. Ground Round and Lone
Star each agree to indemnify and hold the other harmless for and from any claim
or damage arising out of the breach of the above representation.
4. This Assignment may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which, taken together, shall
constitute but one and the same instrument.
5. This Assignment and the obligations of the parties hereunder shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, shall be governed and construed in accordance with the
laws of the State of New York, without regard to conflict of law rules and may
not be modified or amended in any manner other than by a written agreement
signed by the party to be charged.
IN WITNESS WHEREOF, Ground Round and Lone Star have caused this Assignment
to be executed as of the date and year first above set forth.
THE Ground Round, INC.
By:
--------------------------------
Name:
Title:
[Assignee]
By:
--------------------------------
Name:
Title:
43
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, 1996, before me personally came
________________, to me known, who, being by me duly sworn, did depose and say
that he resides at _____________________________________, that he is the
_________ of The Ground Round, Inc., the corporation described in and which
executed the foregoing instrument; and that he signed his name thereto by order
of the Board of Directors of said corporation.
----------------------------
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of _________, 1996, before me personally came
_______________, to me known, who, being by me duly sworn, did depose and say
that he resides at __________________________, that he is the _________ of
[assignee], the corporation described in and which executed the foregoing
instrument; and that he signed his name thereto by order of the Board of
Directors of said Corporation.
----------------------------
Notary Public
44
SCHEDULE 4.2 - ALLOCATION OF PURCHASE PRICE AMONG ASSETS ACQUIRED
FEE/ PERSONAL
LOCATION STORE NO. LEASEHOLD PROPERTY TOTAL
Decatur, IL 21782 641,306 $113,694 $ 755,000
Danvers, MA 99768 1,713,170 82,830 1,796,000
Rochester 99796 1,504,922 72,078 1,577,000
(Henrietta), NY
Saugus, MA 36771 845,755 209,245 1,055,000
Voorhees, NJ 86745 1,307,882 240,118 1,548,000
West Chester, PA 99831 1,318,168 127,832 1,446,000
Wilmington, DE 99838 854,515 149,485 1,004,000
Mentor, OH 99856 1,010,562 92,438 1,103,000
Erie, PA 99877 334,938 73,062 408,000
Philadelphia (Red 99889 1,004,223 98,777 1,103,000
Lion), PA
Bel Air, MD 35753 597,768 218,232 816,000
Natick, MA 86754 756,544 95,456 852,000
(Framingham-Speen)
Albany-Colonie, NY 99765 441,504 130,496 572,000
Latham, NY 99808 663,698 79,302 743,000
Poughkeepsie, NY 99871 563,999 94,001 658,000
Rochester (Greece), 99874 501,231 62,769 564,000
----------- ---------- -----------
NY
$14,060,185 $1,939,815 $16,000,000
45
SCHEDULE 7 - LEASEHOLDS NEEDING RENEGOTIATION
LOCATION STORE NO.
West Chester, PA 99831
Bel Air, MD 35753
Natick, MA 86754
(Framingham-Speen)
Albany-Colonie, NY 99765
Latham, NY 99808
Poughkeepsie, NY 99871
Rochester (Greece), 99874
NY
46
SCHEDULE 9.9
LANDLORD'S ESTOPPEL CERTIFICATE
, 1996
----
Re: Lease Dated:
Commencement Date:
Termination Date:
Tenant:
("Tenant")
Premises: Approximately _______ sq. feet
located at ___________________
______________ (the "Premises")
Ladies and Gentlemen:
The undersigned, the Landlord under the above-described lease (the
"Lease"), hereby confirms to [insert name of Lone Star assignee], a Delaware
corporation ("Purchaser"), as of the date hereof, the following:
1. Any improvements and space required to be furnished by the undersigned
pursuant to the terms of the Lease have been completed.
2. The Lease is in full force and effect and is a binding obligation of the
undersigned; and there are no existing or claimed defaults on the part of
Tenant or the undersigned under the terms thereof.
3. Subsequent to the date of the Lease, the Lease has not been amended,
modified or supplemented or superseded, except as follows:
______________________ (if none, so state). A fully executed copy of the
Lease, as amended, is attached hereto as Exhibit A (if none, so state).
47
4. No security, rental, cleaning or other deposits have been made by Tenant
that are presently held by Landlord, except as follows:
____________________________ (if none, so state).
5. The undersigned has received no notice of prior sale, transfer, assignment,
hypothecation or pledge of the Lease, except to Purchaser; and the
undersigned has not assigned, sublet, hypothecated or otherwise transferred
all or any portion of its interest under the Lease.
6. The rents provided in the Lease commenced to accrue on the ____ day of
______________, 19___, the expiration date of the lease is _____________,
19__ and the amount of the monthly basic rent is currently $__________.
7. The undersigned has no first right of refusal with respect to the Premises,
except as follows: _________________________ (if none, so state).
8. The undersigned acknowledges that:
(a) Purchaser is purchasing from Tenant, certain assets of, including
Tenant's interest in the Premises and, in connection with the
purchase, will be receiving an assignment of Tenant's interest under
the Lease; and
(b) The undersigned consents to the assignment of Tenant's interest in the
Lease to Purchaser.
9. The above statements are made with the understanding that Purchaser will
rely on them in connection with the above-mentioned purchase of certain
assets of the Tenant. This letter shall not be deemed to alter or to modify
any of the terms, covenants or obligations of the Lease, except to the
extent, if any, specifically set forth herein.
By:
Its:
48
SCHEDULE 10.11.1 - LICENSES AND PERMITS
LOCATION TYPE OF LICENSE LICENSE NUMBER
Decatur, IL (21782) State Liquor 96-1A-0016435
City Liquor 900-A
Danvers, MA (99768) Common Victualer 026400006
& All Alcoholic
Rochester (Henrietta), NY On-Premises Monroe
(99796) Liquor 97-3-MONRO-
OP-01560-252
Saugus, MA (36771) Common Victualer 107800016
& All Alcoholic
Voorhees, NJ (86745) Plenary Retail 0434-36-016-
Consumption 016-022
West Chester, PA (99831) Restaurant R-19520
Liquor
Wilmington, DE (99838) All Alcoholic No License #
Mentor, OH (99856) Full Alcoholic 3408450-0065
Erie, PA (99877) Restaurant R-19189
Liquor Amusement
Permit
Philadelphia (Red Lion), PA Restaurant R-9068
(99889) Liquor
Amusement Permit
Bel Air, MD (35753) Beer, Wine, 505
Liquor
Natick, MA (Framingham- Common Victualer 042800036
Speen) (86754) & All Alcoholic
Albany-Colonie, NY (99765) On-Premises Albany 97-2-ALBA-
Liquor OP-01056-252
Latham, NY (99808) On-Premises Albany
Liquor 97-2-ALBA
OP-01054-252
Poughkeepsie, NY (99871) On-Premises Dutchess
Liquor 97-2-DUTC-
OP-00624-252
Rochester (Greece), NY On-Premises Monroe
(99874) Liquor 97-3-MONRO-
OP-01558-252
49
SCHEDULE 10.13.1 - LEASEHOLD DOCUMENTATION
Location and Document Type Parties Date
Store Number
(if any)
Saugus, MA Ground Lease Wal-Mart 7/9/93
# 36771 Stores/ Ground
Round
Voorhees, NJ Ground Lease White Horse 2/5/93
#86745 Agreement Associates/
Ground
Declaration of Voorhees Hotel 5/26/93
Reciprocal Associates/
Access and Ground Round/
Parking White Horse
Easement
Letter US Industries/ 5/21/96
Montgomery
Securities
West Chester, Lease Byblos/Howard 6/9/77
PA Johnson
# 99831
Addendum * 6/9/77
Assignment and Ground 11/13/85
Assumption of Round/Howard
Lease Johnson
Wilmington, DE Ground Lease Woodlawn 4/30/92
# 99838 Trustee/High-
Field
Partnership
Land Sublease HighField 12/3/92
Partnership/
Ground Round
Letter HighField 12/4/92
Partnership/
Ground Round
- - - --------
* If Parties are left blank, Parties are the same as those from the first
document listed for each location.
99236.13
50
Mentor,OH Indenture of Ryska/ Howard 10/15/80
# 99856 Lease Johnson
Declaration of Ryska/Howard 10/15/80
Lease Johnson
Assignment and Ground Round/ 11/13/85
Assumption of Howard Johnson
Lease
Erie, PA Lease Dewart 11/30/78
#99877 Agreement Development/
Howard Johnson
Amended 11/30/78
Declaration of
Lease
License P & J Mack's/ 2/7/79
Agreement Howard Johnson
Indenture Tops/ Family 3/30/79
Restaurant
Enterprises
Declaration of 5/2/79
Lease
Amendment to 5/2/79
Lease
Second 6/19/79
Amendment to
Lease
Amended 6/19/79
Declaration of
Lease
Assignment and Ground Round/ 11/13/85
Assumption of Howard Johnson
Lease
Philadelphia Lease City of 2/27/81
(Red Lion), PA Agreement Philadelphia/
# 99889 PAID
Agreement of PAID/ Howard 2/27/81
Sublease Johnson
Declaration of PAID/ Howard 2/27/81
Lease Johnson
Sublease Howard 9/9/81
Agreement Johnson/
Friendly Ice
Cream
51
Guaranty Howard 10/13/81
Johnson/
Hershey Foods
Memorandum of Howard 1/15/82
Sublease Johnson/
Friendly Ice
Cream
Consent to Howard 9/13/85
Assignment Johnson/
Ground Round
Assignment and Howard 11/13/85
Assumption of Johnson/
Lease Ground Round
Bel Air, MD Lease Bel Air South/ 7/22/93
# 35753 Agreement/ Ground Round
Addendum
Natick SubLease Mr. Hamburg, 3/12/73
(Framingham - Incorporated/
Speen), MA Howard Johnson
# 86754
Albany- Lease Lester 4/25/73
Colonie, NY Agreement Kommit/Wolf
# 99765 Road
Restaurant
Corp.
Assignment and Wolf Road 12/31/74
Assumption Restaurant
Agreement Corp./Howard
Johnson
Assignment and Lester Kommit/ 5/19/75
Assumption Wolf Road
Agreement Restaurant
Corp./Howard
Johnson
Amendment to Lester Kommit/ 5/19/75
Lease Howard Johnson
Assignment and Ground 11/13/85
Assumption of Round/Howard
Lease Johnson
Second Kommit 8/24/95
Amendment to Partners/
Lease Ground Round
52
Latham, NY Indenture Latham 10/5/56
# 99808 Enterprises/
Howard Johnson
Lease Plaza at 3/8/76
Latham
Associates/
Howard Johnson
Amendment to 8/31/76
Lease
Agreement
Assignment and Ground Round/ 11/13/85
Assumption of Howard Johnson
Lease
Amendment to Plaza at 7/6/95
Lease Latham
Associates/
Ground Round
Poughkeepsie, Indenture Charleon 4/19/56
NY Estates/
# 99871 Howard Johnson
Amendment of 6/6/57
Lease
Loan Agreement Brooklyn 6/9/57
Savings Bank/
Howard Johnson
Assignment of Brooklyn 6/27/57
Lease Savings Bank/
Howard Johnson
Amendment of 11/21/60
Lease
Amendment of 5/31/61
Lease
Agreement (re: 12/6/63
Travelers
Insurance
Company)
Indenture 2/?/66
Amendment to Po'Keepsie 4/15/66
Lease Motor Hotel
Inc/ Howard
Johnson
Agreement (re: Poughkeepsie 2/19/71
Amendment to Associates/
Lease) Howard Johnson
53
Memorandum of Poughkeepsie 2/19/71
Modification Associates/
Lease Howard Johnson
Assignment of Po'keepsie 9/8/77
Lease Associates/
Bradmar Motel
Sixth Bradmar Motel/ 10/24/78
Amendment To Howard Johnson
Lease
Consent to Ground Round/ 9/13/85
Assignment Howard Johnson
Assignment and Ground Round/ 11/13/85
Assumption of Howard Johnson
Lease
Rochester Lease Ralph 10/2/78
(Greece), NY DeStephano/
# 99874 Howard Johnson
Amendment to 7/12/79
Lease
Amendment to 11/4/83
Lease
Assignment and Ground Round/ 11/13/85
Assumption of Howard Johnson
Lease
54
SCHEDULE 10.16 - OUTSTANDING LITIGATION
LOCATION STORE NO. SUITS OR OTHER PROCEEDINGS PENDING OR
THREATENED THAT ADVERSELY AFFECT
RESTAURANTS OR SELLER'S RIGHT TO
CONSUMMATE SALE
Decatur, IL 21782 None
Danvers, MA 99768 None
Rochester 99796 None
(Henrietta), NY
Saugus, MA 36771 None
Voorhees, NJ 86745 None
West Chester, PA 99831 Sexual Harassment Suit
Wilmington, DE 99838 None
Mentor, OH 99856 None
Erie, PA 99877 None
Philadelphia (Red 99889 None
Lion), PA
Bel Air, MD 35753 None
Natick, MA 86754 None
(Framingham-Speen)
Albany-Colonie, NY 99765 None
Latham, NY 99808 None
Poughkeepsie, NY 99871 None
Rochester (Greece), 99874 None
NY
55
SCHEDULE 10.21 - ENVIRONMENTAL CONDITIONS
LOCATION STORE NO. DESCRIPTION
Decatur, IL 21782 NONE
Danvers, MA 99768 NONE
Rochester (Henrietta), NY 99796 NONE
Saugus, MA 36771 NONE
Voorhees, NJ 86745 NONE
West Chester, PA 99831 NONE
Wilmington, DE 99838 NOTE 1
Mentor, OH 99856 NONE
Erie, PA 99877 NONE
Philadelphia (Red Lion), PA 99889 NONE
Bel Air, MD 35753 NONE
Natick, MA (Framingham- 86754 NONE
Speen)
Albany-Colonie, NY 99765 NONE
Latham, NY 99808 NOTE 2
Poughkeepsie, NY 99871 NONE
Rochester (Greece), NY 99874 NONE
Note 1: There is an existing violation for grease in the sewer system.
Seller at its expense shall cure violation and have violation removed
of record prior to Closing. Seller shall indemnify Purchaser from
liability accruing prior to the Closing.
Note 2: Seller suspects that water heater may be insulated with
asbestos. Seller shall remove such insulation prior to Closing in
accordance with law.