ASSET PURCHASE AGREEMENT
[WEST VIRGINIA MARKET]
THIS ASSET PURCHASE AGREEMENT, dated as of September 30, 1998, by and among
APPLE SOUTH, INC., a Georgia corporation ("Seller") and NEIGHBORHOOD
HOSPITALITY, INC., a Kentucky corporation ("Purchaser").
W I T N E S S E T H :
WHEREAS, Seller owns and operates a number of ▇▇▇▇▇▇▇▇'▇ Neighborhood Grill
& Bar ("Applebee's") franchise restaurants; and
WHEREAS, Seller desires to sell to Purchaser certain Applebee's restaurants
and related property, and Purchaser desires to purchase such assets, all on the
terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, and intending to be legally bound, the parties hereby agree as
follows:
ARTICLE I - DEFINITIONS
1.1 Definitions. For purposes of this Agreement, the following terms shall
have the meanings set forth below:
"Action" shall mean any action, suit, litigation, complaint, counterclaim,
claim, petition, mediation contest, or administrative proceeding, whether at
law, in equity, in arbitration or otherwise, and whether conducted by or before
any Government or other Person.
"ADI's" shall mean Arbitron Rating Areas of Dominant Influence.
"ADI Personnel" shall have the meaning set forth in Section 4.4.
"Assets" shall mean all of Seller's rights and interests in, to, or under
the following:
(i) all tangible personal property of any kind located in the Restaurants
or on the Real Property, including, but not limited to, equipment, appliances,
machinery, tables, chairs, other furniture, bars, tableware, cookware, utensils,
furnishings, signage, leasehold improvements, fixtures, uniforms, supplies, food
and beverage inventory (including beer, liquor, and wine inventory), and
advertising and promotional materials;
(ii) $1,500 cash in each Restaurant;
(iii) all prepaid items relating exclusively to the Business;
(iv) all assignable Permits;
(v) all assignable rights under express or implied warranties of
manufacturers, distributors, or retailers relating to the Assets;
(vi) all of Seller's supplier lists, demographic, statistical, and other
information related exclusively to the Business;
(vii) copies of Seller's employee records of those current employees of
Seller who are employed by Purchaser as of the Closing (subject to execution of
a release by each affected employee allowing for the disclosure of such files);
(viii) the Contracts and Leases;
(ix) the Owned Real Property; and
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(x) all records and files related to the Real Property and Development
Sites (which Purchaser elects to pursue under Section 6.5 and pays Seller the
Development Costs thereof) such as rent calculations, landlord correspondence,
purchase agreements, deeds, construction documents, title reports, environmental
and engineering reports, appraisals, surveys, etc.
"Assets" shall not include cash in the Restaurants in excess of $1,500 per
Restaurant, bank accounts, or any other property, tangible or intangible, real
or personal, not described above.
"Assumed Liabilities" shall mean (i) all obligations of Seller that accrue
after the Closing under the terms of the Contracts and Leases, (ii) all
obligations of Seller under the Contracts and Leases that accrue prior to the
Closing but which are not due for payment until after the Closing and which are
taken into account in computing the Purchase Price pursuant to Section 2.3,
(iii) obligations arising after the Closing under any Permits which are assigned
to Purchaser, (iv) all Property Taxes and all other obligations with respect to
the Assets that accrue prior to the Closing but which are not due for payment
until after the Closing and which are taken into account in computing the
Purchase Price pursuant to Section 2.3, (v) all Property Taxes and all other
obligations with respect to the Assets that accrue after the Closing, (vi) gift
certificates issued by Seller prior to Closing, (vii) accrued but unvested
vacation of ADI Personnel assumed pursuant to Section 6.3(c), and (viii) all
obligations with respect to Seller's development activities of the Development
Restaurants and Development Sites (which Purchaser elects to pursue under
Section 6.5) not otherwise assumed hereunder or covered by an increase in the
purchase price pursuant to Section 2.3. Assumed Liabilities shall not include
any liability, obligation, payment, duty, or responsibility of any nature except
as expressly described above and specifically shall not include (i) liabilities
or obligations of Seller arising out of any breach by Seller of any of the
Contracts or Leases; (ii) except as provided in clauses (ii) or (iv) above,
liabilities or obligations of Seller under any of the Contracts or Leases or
with respect to the Owned Real Property or other Assets that accrue in any such
case prior to the Closing; (iii) any liabilities or obligations of Seller under
the Franchise Agreements; (iv) any liability of Seller for product liability,
personal injury, property damage, or otherwise based on any tort claim or
statutory liability (including but not limited to any "dram shop" liability);
(v) any federal, state, or local tax liability of Seller except to the extent
expressly assumed hereunder, (vi) any contractual claim based on any lease,
contract, or agreement other than the Contracts and Leases; (vii) any liability,
obligation, or responsibility of Seller to Seller's employees, agents, or
independent contractors with respect to wages, salaries, bonuses, or other
compensation or benefits earned or accrued prior to the Closing (except for
accrued but unvested vacation assumed pursuant to Section 6.3(c)); and (viii)
any liability or obligation of Seller arising out of the negotiation, execution,
or performance of this Agreement, including fees and expenses of attorneys and
accountants, except as otherwise expressly provided herein.
"▇▇▇▇ of Sale and Assignment Agreement" shall mean an instrument in
substantially the form of Exhibit A hereto pursuant to which the Assets (except
for the Owned Real Property and Leases) will be transferred and assigned to
Purchaser at the Closing and pursuant to which Purchaser will assume the Assumed
Liabilities.
"Business" shall mean the business of owning and operating the Restaurants
and developing and opening new ▇▇▇▇▇▇▇▇'▇ Neighborhood Grill & Bar restaurants
in the Territory, as conducted prior to the Closing by Seller pursuant to the
Franchise Agreements.
"Closing" shall have the meaning set forth in Section 2.6 hereof.
"Closing Date" shall mean the time and date that the Closing occurs.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended, and all regulations thereunder. Any reference herein to a specific
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section or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
"Consents" shall mean all consents, approvals, and estoppels of others
which are required to be obtained in order to effect the valid assignment,
transfer, and conveyance to Purchaser of the Material Contracts and the Leases
without resulting in any default thereunder.
"Contracts" shall mean all contracts, agreements, and leases of equipment
or other personal property that relate exclusively to the Business; provided,
however, that the Franchise Agreements are not included within the meaning of
"Contracts."
"Deeds" shall mean special warranty deeds, limited warranty deeds or other
appropriate instruments to convey good and marketable fee simple title to the
Owned Real Property, with the warranty of title contained therein limited to the
claims of Persons claiming by, through or under Seller, but not otherwise.
"Development Costs" shall mean all of Seller's costs paid in connection
with the identification and development of the Development Sites which are
listed on Schedule 4.7.
"Development Restaurants" shall mean the Restaurants designated as such on
Schedule 1.1A.
"Development Sites" shall have the meaning set forth in Section 4.7.
"Disclosure Memorandum" shall mean the set of numbered schedules
referencing Sections of this Agreement delivered by Seller and dated of even
date herewith, as supplemented by new or amended schedules delivered by Seller
prior to the Closing.
"Effective Time" shall have the meaning set forth in Section 2.5 hereof.
"Environmental Laws" shall mean all federal, state, municipal, and local
laws, statutes, ordinances, rules, regulations, conventions, and decrees
relating to the environment, including without limitation, those relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic, or Hazardous Materials or wastes
of every kind and nature into the environment (including without limitation
ambient air, surface water, ground water, soil, and subsoil), or otherwise
relating to the manufacture, generation, processing, distribution, application,
use, treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic, or hazardous substances or
wastes, and any and all laws, rules, regulations, codes, directives, orders,
decrees, judgments, injunctions, consent agreements, stipulations, provisions,
and conditions of Environmental Permits, licenses, injunctions, consent
agreements, stipulations, certificates of authorization, and other operating
authorizations, entered, promulgated, or approved thereunder.
"Environmental Permits" shall mean all permits, licenses, certificates,
approvals, authorizations, regulatory plans or compliance schedules required by
applicable Environmental Laws, or issued by a Government pursuant to applicable
Environmental Laws, or entered into by agreement of the party to be bound,
relating to activities that affect the environment, including without
limitation, permits, licenses, certificates, approvals, authorizations,
regulatory plans and compliance schedules for air emissions, water discharges,
pesticide and herbicide or other agricultural chemical storage, use or
application, and Hazardous Material or Solid Waste generation, use, storage,
treatment and disposal.
"Forum" shall mean any federal, state, local, municipal, or foreign court,
governmental agency, administrative body or agency, tribunal, private
alternative dispute resolution system, or arbitration panel.
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"Financing Commitment" shall have the meaning set forth in Section 6.4.
"Franchise Agreements" shall mean those development agreements, franchise
agreements, and other agreements between Seller and Franchisor relating
exclusively to the Territory.
"Franchisor" shall mean ▇▇▇▇▇▇▇▇'▇ International, Inc.
"Financial Statements" shall have the meaning set forth in Section 3.8.
"Government" shall mean any federal, state, local, municipal, or foreign
government or any department, commission, board, bureau, agency,
instrumentality, unit, or taxing authority thereof.
"Hazardous Material" shall mean all substances and materials designated as
hazardous or toxic as of the date hereof pursuant to any applicable
Environmental Law.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"Knowledge of Seller" (or words of like effect) when used to qualify a
representation, warranty, or other statement shall mean the actual knowledge of
Sellers' vice president of operations for the Territory and all management of
Seller senior thereto.
"Lease Assignments" shall mean an instrument pursuant to which the Leases
will be transferred and assigned to Purchaser at Closing and pursuant to which
Purchaser will assume the Assumed Liabilities related thereto.
"Leases" shall mean the leases of real property and improvements described
on Schedule 1.1B.
"Material Contracts" shall mean all Contracts that involve monetary
obligations of Seller of more than $12,000 per year and that are not cancelable
by Seller upon thirty days notice or less, a list of which are set forth on
Schedule 1.1D.
"Minor Contracts" shall mean all Contracts that are not Material Contracts.
"Orders" shall mean all applicable orders, writs, judgments, decrees,
rulings, consent agreements, and awards of or by any Forum or entered by consent
of the party to be bound.
"Owned Real Property" shall mean those tracts and parcels of land owned by
Seller on which a Restaurant is located or which is being held for Development
Restaurants (all of which tracts and parcels are described in Schedule 1.1C ),
and all buildings, fixtures, signs, parking facilities, and other improvements
located thereon and appurtenances thereto.
"Permits" shall mean all rights of Seller under any liquor, alcoholic
beverage, beer and wine licenses, other licenses of every kind, certificates of
occupancy, and permits or approvals of any nature, from any Government which
relate exclusively to the Business, the Restaurants, or the Real Property.
"Permitted Encumbrances" shall mean, (i) such easements, restrictions,
covenants, and other such encumbrances which are shown as exceptions on the
Title Commitments and any other encumbrances of record as of the effective date
of the Title Commitments, (ii) ordinances (municipal and zoning), (iii) survey
matters, and (iv) such easements, restrictions, covenants, and other
encumbrances which become matters of public record after the effective date of
the Title Commitments and before the Closing, in each such case, to the extent
that such encumbrances could not reasonably be expected to materially interfere
with or impair Purchaser's use of the Real Property for ▇▇▇▇▇▇▇▇'▇ Neighborhood
Grill & Bar Restaurants or that are waived, or deemed to be waived, by Purchaser
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pursuant to Section 7.1(a). Permitted Encumbrances shall include in the case of
both Real Property and personal property all liens for taxes not yet due and
payable. In the case of Assets pertaining to Development Restaurants, Permitted
Encumbrances shall include all mechanic's, materialman's, and other liens
relating to Assumed Liabilities.
"Person" shall include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization, a government, and any other legal entity.
"Property Taxes" shall mean all ad valorem, real property, and personal
property taxes, all general and special private and public assessments, all
other property taxes, and all similar obligations pertaining to the Assets.
"Purchase Price Adjustment Schedule" shall have the meaning set forth in
Section 2.3.
"Real Property" shall mean the land and improvements comprising the Owned
Real Property and all land and improvements subject to Leases.
"Restaurants" shall mean the thirteen (13) ▇▇▇▇▇▇▇▇'▇ Neighborhood Grill &
Bar restaurants operated by Seller at the locations set forth on Schedule 1.1A,
including the Development Restaurants.
"Schedules" shall mean the numbered sections of the Disclosure Memorandum.
"Seller Plans" shall have the meaning set forth on Schedule 3.15.
"Solid Waste" shall mean any garbage, refuse, sludge from a waste treatment
plant, water supply treatment plant, or air pollution control facility, and
other discarded material, including solid, liquid, semisolid, or contained
gaseous material resulting from industrial, commercial, mining, and agricultural
operations, and from community activities.
"Termination Date" shall mean December 31, 1998.
"Territory" shall mean those ADI's set forth on Schedule 1.1E.
"Title Commitments" shall have the meaning set forth in Section 4.12(a).
"Title Policies" shall mean the Owner's Title Policies and the Lessee's
Title Policies as defined in Section 4.12(a).
ARTICLE II - PURCHASE AND SALE
2.1 Purchase and Sale. Upon the terms and subject to the conditions set
forth in this Agreement, at the Closing Seller shall sell, transfer, and assign
to Purchaser all of Seller's right, title, and interest in and to the Assets
free and clear of any mortgage, security interest, lien, charge, claim, or other
encumbrance of any nature except the Permitted Encumbrances, and Purchaser shall
purchase the Assets from Seller for the Purchase Price set forth in Section 2.3.
2.2 Assumption of Liabilities. As of the Effective Time, Purchaser shall
assume all of the Assumed Liabilities. Except for the Assumed Liabilities,
Purchaser does not hereby assume or agree to assume or pay any obligations,
liabilities, indebtedness, duties, responsibilities, or commitments of Seller or
any other Person, of any nature whatsoever, whether known or unknown, absolute
or contingent, due or to become due.
2.3 Purchase Price. The purchase price for the Assets (the "Purchase
Price") shall be $24,100,000 adjusted as follows:
(a) The amount of the purchase price shall be increased by (i) all Property
Taxes accruing with respect to the Assets after the Closing that have been paid
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by Seller prior to Closing; (ii) all amounts paid by Seller under the Contracts
and Leases that pertain to periods after the Closing; (iii) any other prepaid
expenses pertaining to the Business (such as telephone expenses, advertising
expenses, utility charges, and the like) to the extent that the same will
benefit Purchaser after the Closing; (iv) an amount equal to Seller's cost of
those Assets consisting of food, beverage (including beer, wine, and liquor),
new uniforms, paper, and supplies inventory as determined by the parties' joint
inventory at the close of business on the day prior to the Closing Date; and (v)
the Development Costs for each Development Restaurant and, if the Purchaser
elects under Section 6.5 to pursue the acquisition or lease of the Development
Sites and such sites are still available at such time, the amount of Seller's
Development Costs for each such Development Site.
(b) The amount of the purchase price shall be decreased by (i) all Property
Taxes accruing with respect to the Assets prior to the Closing that are due and
payable after the Closing and that have not been paid as of the Closing, (ii)
all amounts payable under the Contracts and Leases that pertain to periods
before the Closing but are due and payable after the Closing and that have not
been paid as of the Closing, and (iii) the estimated cost of vacation accrued
but unvested as of the Closing Date by ADI Personnel hired by Purchaser the cost
of which is being assumed by Purchaser pursuant to Section 6.3(c).
(c) The amount of the purchase price shall be further adjusted to reflect
any expense paid by one party which the other party has agreed to pay or share
pursuant to Section 10.1 or otherwise pursuant to this Agreement.
The foregoing adjustments shall be calculated by the parties and set forth
on a Purchase Price adjustment schedule (the "Purchase Price Adjustment
Schedule") which shall be signed by both parties at Closing. The Purchase Price
shall be paid by Purchaser on the Closing Date by wire transfer of immediately
available funds to an account designated by Seller. As soon as possible after
the Closing (but not later than the first anniversary thereof), the parties
shall reconcile the actual amount of prorations that were estimated at Closing
as well as the accrued but unvested vacation time of Seller's employees assumed
by Purchaser hereunder that has actually vested with the estimated amounts
thereof. To the extent that the actual amounts differ from the amounts estimated
on the Purchase Price Adjustment Schedule or prorations or adjustments other
than those reflected on the Purchase Price Adjustment Schedule are discovered
after the Closing, the parties agree to remit the correct amount of such items
to the appropriate party as and when same are determined.
2.4 Deliveries at the Closing. (a) At the Closing, Seller shall deliver to
Purchaser the following:
(i) A certificate executed by Seller, dated as of the Closing Date,
certifying in such detail as Purchaser may reasonably request that subject to
the matters disclosed in the Disclosure Memorandum, as it may be supplemented by
Seller from time to time, all representations and warranties of Seller in this
Agreement are true in all material respects as of the Closing Date;
(ii) A certificate of the Secretary or an Assistant Secretary of Seller,
dated as of the Closing Date, certifying in such detail as Purchaser may
reasonably request (A) that attached thereto is a true and complete copy of
resolutions adopted by the Board of Directors of Seller authorizing the
execution, delivery, and performance of this Agreement, the ▇▇▇▇ of Sale and
Assignment Agreement, and the Deeds, and that all such resolutions are still in
full force and effect and are all the resolutions adopted in connection with the
transactions contemplated by this Agreement, and (B) as to the incumbency and
specimen signature of each officer of Seller executing this Agreement, the ▇▇▇▇
of Sale and Assignment Agreement, the Deeds, and any certificate or instrument
furnished pursuant hereto, and a certification by another officer of Seller as
to the incumbency and signature of the officer signing such certificate;
(iii) The opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, counsel to Seller, in
substantially the form of Exhibit B hereto;
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(iv) The ▇▇▇▇ of Sale and Assignment Agreement, duly executed by Seller;
(v) The Lease Assignments, duly executed by Seller;
(vi) The Consents;
(vii) The Deeds, duly executed by Seller;
(viii) A Cross-Receipt, duly executed by Seller; and
(ix) Any other documents that Purchaser may reasonably request at least
three days prior to the Closing in order to effectuate the transactions
contemplated hereby.
(b) At the Closing Purchaser shall deliver to Seller the following:
(i) A certificate executed by Purchaser, dated as of the Closing Date,
certifying in such detail as Seller may reasonably request that all
representations and warranties of Purchaser in this Agreement are true in all
material respects as of the Closing Date;
(ii) A certificate of the Secretary or an Assistant Secretary of Purchaser,
dated as of the Closing Date, certifying in such detail as Seller may request
(A) that attached thereto is a true and complete copy of resolutions adopted by
the Board of Directors of Purchaser authorizing the execution, delivery and
performance of this Agreement and the ▇▇▇▇ of Sale and Assignment Agreement, and
that all such resolutions are still in full force and effect and are all the
resolutions adopted in connection with the transactions contemplated by this
Agreement, and (B) as to the incumbency and specimen signature of each officer
of Purchaser executing this Agreement, and any certificate or instrument
furnished pursuant hereto or to be furnished in connection herewith as of the
Closing Date, and a certification by another officer of Purchaser as to the
incumbency and signature of the officer signing such certificate;
(iii) The funds constituting the Purchase Price;
(iv) The ▇▇▇▇ of Sale and Assignment Agreement, duly executed by Purchaser;
(v) The Lease Assignments, duly executed by Purchaser;
(vi) The opinion of ▇▇▇▇▇ ▇. ▇▇▇▇▇, counsel to Purchaser, in substantially
the form of Exhibit C hereto;
(vii) A Cross-Receipt, duly executed by Purchaser; and
(viii) Any other documents that Seller may reasonably request at least
three days prior to the Closing.
2.5 Transfer of Operations. Purchaser shall be entitled to immediate
possession of, and to exercise all rights arising under, the Assets from and
after the time that the Restaurants open for business on the Closing Date, and
operation of the Restaurants shall transfer at such time (the "Effective Time").
Except as expressly provided in this Agreement, all profits, losses,
liabilities, claims, or injuries arising before the Effective Time shall be
solely to the benefit or the risk of Seller. All such occurrences after the
Effective Time shall be solely to the benefit or the risk of Purchaser. The risk
of loss or damage by fire, storm, flood, theft, or other casualty or cause shall
be in all respects upon Seller prior to the Effective Time and upon the
Purchaser thereafter.
2.6 Closing. The closing of the transactions described in this Article II
(the "Closing") shall take place at the offices of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
Suite 2800, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, at 10:00 a.m. on December
14, 1998, or on such other date and time as may be mutually agreed upon by the
parties hereto.
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2.7 Allocation of Purchase Price. The Purchase Price shall be allocated
among the various Assets as set forth on Exhibit D hereof. Each party hereby
agrees that it will not take a position on any income tax return, before any
governmental agency charged with the collection of any income tax, or in any
judicial proceeding that is inconsistent with the terms of this Section 2.7.
2.8 Further Assurances. From time to time after the Closing at Purchaser's
request and expense, Seller shall execute, acknowledge, and deliver to Purchaser
such other instruments of conveyance and transfer and shall take such other
actions and execute and deliver such other documents, certifications, and
further assurances as Purchaser may reasonably require to vest more effectively
in Purchaser, or to put Purchaser more fully in possession of, any of the
Assets, or to better enable Purchaser to complete, perform and discharge the
Assumed Liabilities. Each party hereto will cooperate with the other and execute
and deliver to the other party hereto such other instruments and documents and
take such other actions as may be reasonably requested from time to time by any
other party hereto as necessary to carry out, evidence, and confirm the intended
purpose of this Agreement.
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to the limitations and exceptions set forth in the Disclosure
Memorandum dated of even date hereof, as supplemented or amended from time to
time by Seller prior to the Closing Date, regardless of whether any Schedule
constituting a part of the Disclosure Memorandum is referenced in any specific
provision below, Seller hereby represents and warrants to Purchaser as follows:
3.1 Organization, Qualifications and Corporate Power. Seller is a
corporation duly incorporated and organized, validly existing, and in good
standing under the laws of the State of Georgia. Seller has the corporate power
and authority to execute, deliver, and perform this Agreement, the ▇▇▇▇ of Sale
and Assignment Agreement, the Deeds, and all other agreements, documents,
certificates, and other papers contemplated to be delivered by Seller pursuant
to this Agreement.
3.2 Authorization. The execution, delivery, and performance by Seller of
this Agreement, the ▇▇▇▇ of Sale and Assignment Agreement, the Deeds, and all
other agreements, documents, certificates, and other papers contemplated to be
delivered by Seller pursuant to this Agreement have been duly authorized by the
Board of Directors of Seller.
3.3 Non-Contravention. Subject to obtaining the consents to assignment of
the Leases and Material Contracts set forth on Schedule 3.3, the execution,
delivery and performance of this Agreement will not violate or result in a
breach of any term of Seller's Articles of Incorporation or Bylaws, result in a
breach of any agreement or other instrument to which Seller is a party (except
for defaults under Minor Contracts where the consent of the other party or
parties to such contract to the assignment thereof will not be obtained) or
violate any law or any order, rule, or regulation applicable to Seller of any
Forum having jurisdiction over Seller; and will not result in the creation or
imposition of any lien, charge, or encumbrance of any nature whatsoever upon any
of the Assets. Except as set forth on Schedule 3.3 and except for consents
required under Minor Contracts, the execution, delivery and performance of this
Agreement and the other documents executed in connection herewith, and the
consummation of the transactions contemplated hereby and thereby do not require
any filing with, notice to or consent, waiver or approval of any third party,
including but not limited to, any Forum other than any filing required under the
HSR Act and the expiration of any applicable waiting period thereunder. Schedule
3.3 identifies separately each notice, consent, waiver, or approval by reference
to each Lease and to each Material Contract to which it is applicable.
3.4 Validity. This Agreement has been duly executed and delivered by the
Seller and constitutes the legal, valid, and binding obligation of Seller,
enforceable in accordance with its terms, subject to general equity principles
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and to applicable bankruptcy, insolvency, reorganization, moratorium, and
similar laws from time to time in effect affecting the enforcement of creditors'
rights. When the ▇▇▇▇ of Sale and Assignment Agreement has been executed and
delivered in accordance with this Agreement, it will constitute the legal,
valid, and binding obligation of Seller, enforceable in accordance with its
terms, subject to general equity principles and to applicable bankruptcy,
insolvency, reorganization, moratorium, and similar laws from time to time in
effect affecting the enforcement of creditors' rights.
3.5 Assets. (a) Seller has good and valid title to all of the Assets
constituting personal property, free and clear of any and all mortgages,
pledges, security interests, liens, charges, conditional sales agreements, and
other encumbrances except Permitted Encumbrances.
(b) The Assets located at each Restaurant constitute all tangible personal
property required on site to operate the Restaurant in accordance with the
Franchise Agreements.
(c) There are no assets or property of any nature which is not being
transferred to Purchaser hereunder that has been customarily used exclusively in
the operation or ownership of the Restaurants other than Permits and software
licenses that are not assignable.
(d) Each Asset constituting tangible personal property having a fair market
value of $10,000 or more is in good operating condition consistent with its age,
subject to normal wear and tear.
3.6 Contracts and Leases. (a) Each Material Contract and Lease is a valid
and subsisting agreement, without any material default of Seller thereunder, and
to the knowledge of Seller, without any default on the part of any other party
thereto. To the knowledge of Seller, no event or occurrence has transpired which
with the passage of time or giving of notice or both will constitute a default
under any Material Contract or Lease. A true and correct list of each Material
Contract and Lease and every amendment thereto or other agreement or document
relating thereto is set forth as Schedule 3.6 to this Agreement. True and
correct copies of the Material Contracts and Leases (and any amendments thereto)
have been provided to Purchaser. At the time of Closing, Seller shall have made
all payments and performed all obligations due through the Closing Date under
each Contract and Lease, except to the extent that any payment due is set forth
on the Purchase Price Adjustment Schedule and deducted in calculating the
Purchase Price pursuant to Section 2.3.
(b) No Contract or Lease has been assigned by Seller or any interest
granted therein by Seller to any third party, or is subject to any mortgage,
pledge, hypothecation, security interest, lien, or other encumbrance or claim.
(c) Seller's possession of property subject to the Leases has not been
disturbed, nor has any claim been asserted against Seller adverse to its rights
in such leasehold interests.
(d) The Contracts have been entered into in the ordinary course of Seller's
business and, to Seller's knowledge, contain commercially reasonable terms.
3.7 Real Property. (a) Schedule 3.7(a) sets forth with respect to each
Restaurant, its location, whether it is located on Owned Real Property or is on
a site subject to a Lease, and whether the improvements are owned or leased.
(b) The water, electric, gas, and sewer utility services, and storm
drainage facilities currently available to each parcel of Real Property are
adequate for the operation of the Restaurants as presently operated, and to
Seller's knowledge, there is no condition which will result in the termination
of the present access from each parcel of Real Property to such utility services
and other facilities.
(c) Seller has obtained all authorizations and rights-of-way which are
9
necessary to ensure vehicular and pedestrian ingress and egress to and from the
site of each Restaurant, all of which are assignable and shall be assigned to
Purchaser at the Closing.
(d) Seller has received no notice that any Government having the power of
eminent domain over any parcel of Real Property has commenced or intends to
exercise the power of eminent domain or a similar power with respect to any part
of the Real Property.
(e) The Real Property and the present uses thereof comply in all material
respects with all material laws and regulations (including zoning laws and
ordinances) of each Government having jurisdiction over the Real Property, and
Seller has received no notice from any Government alleging that the Real
Property or any improvements erected or situated thereon, or the uses conducted
thereon or therein, violate any regulations of any Government having
jurisdiction over the Real Property.
(f) To the knowledge of Seller, no work for municipal improvements has been
commenced on or in connection with any parcel of Real Property or any street
adjacent thereto and no such improvements are contemplated. No assessment for
public improvements has been made against the Real Property which remains
unpaid. No notice from any Government has been served upon the Real Property or
received by Seller, or to the knowledge of Seller received by any owner of any
of the Real Property subject to a Lease, requiring or calling attention to the
need for any work, repair, construction, alteration, or installation on or in
connection with the Real Property which has not been complied with.
(g) Except as set forth on Schedule 3.7(g), Seller holds all Environmental
Permits necessary for conducting the Business and has conducted, and is
presently conducting, the Business in material compliance with all applicable
Environmental Laws and Environmental Permits held by it, including, without
limitation, all record keeping and filing requirements. Except as set forth on
Schedule 3.7(g), to the Seller's knowledge, all Hazardous Materials and Solid
Waste, on, in, or under Real Property have been properly removed and disposed
of, and to the Seller's knowledge no past or present disposal, discharge, spill,
or other release of, or treatment, transportation, or other handling of
Hazardous Materials or Solid Waste on, in, under, or off-site from any Real
Property will subject the Purchaser, or any subsequent owner, occupant, or
operator of the Real Property to corrective or compliance action or any other
liability. Except as set forth on Schedule 3.7(g), there are no presently
pending, or to Seller's knowledge, threatened Actions or Orders against or
involving Seller relating to any alleged past or ongoing violation of any
Environmental Laws or Environmental Permits with respect to the Real Property,
nor to Seller's knowledge is Seller subject to any liability for any such past
or ongoing violation.
3.8 Financial Statements. Schedule 3.8 contains for each Restaurant
unaudited statements of operations as of the end of the 1997 fiscal year and for
the three (3) fiscal months most recently ended prior to the date hereof for
which such statements are available (the "Financial Statements"). The Financial
Statements have been prepared in accordance with Seller's historical practices
and fairly present the operations of the Restaurants for the periods presented
and as of their respective dates.
3.9 Taxes. All Property Taxes relating to the Assets have been fully paid
for 1997 and all prior tax years and there are no delinquent property tax liens
or assessments. Seller has also timely filed (or will timely file) all other tax
returns and reports of whatever kind pertaining to the Assets and required to be
filed by Seller up to the Closing Date. Seller has paid (or will timely pay) all
taxes of whatever kind, including any interest, penalties, governmental charges,
duties, fees, and fines imposed by all governmental entities or taxing
authorities, which are due and payable prior to the Closing Date or for which
assessments relating to any period prior to the Closing Date have been received,
the nonpayment of which would result in lien on any of the Assets. There are no
audits, suits, actions, claims, investigations, inquiries, or proceedings
10
pending or, to Seller's knowledge, threatened against Seller with respect to
taxes, interest, penalties, governmental charges, duties, or fines, nor are any
such matters under discussion with any governmental authority, nor have any
claims for additional taxes, interest, penalties, charges, fines, fees, or
duties been received by assessed against Seller that in any such case affect the
Assets.
3.10 Litigation. Except as set forth on Schedule 3.10, there is no material
Action or Order pending or, to the knowledge of Seller, threatened against or
affecting Seller that pertains to the Restaurants, or any of the Assets before
any Forum.
3.11 Permits. Seller has all material Permits as are necessary to operate
the Restaurants. Seller has fulfilled and performed all of its material
obligations with respect to such Permits and, to the knowledge of Seller, no
event has occurred which allows, nor after notice or lapse of time or both would
allow, revocation or termination thereof or would result in any other impairment
of the rights of the holder of any such Permits.
3.12 Health and Safety Requirements. To the knowledge of Seller, Seller is
in compliance with all laws, governmental standards, rules and regulations
applicable to Seller or to any of the Assets in respect to the Americans with
Disabilities Act and similar state laws and occupational health and safety laws.
3.13 Employment Contracts, Etc. Seller is not is a party to any written
employment agreements related to the employees at the Restaurants (or any oral
agreements providing for employment other than employment "at will") or any
deferred compensation agreements.
3.14 Labor Matters. Seller is not and never has been a party to any
collective bargaining or other labor agreement affecting the Business. To the
knowledge of Seller, there is no pending or threatened labor dispute, strike,
work stoppage, union representation, election, negotiation of collective
bargaining agreement, or similar labor matter affecting the Business. Seller is
not involved in any controversy with any group of its employees or any
organization representing any employees involved in the Business, and to the
knowledge of Seller, Seller is in compliance with all applicable federal and
state laws and regulations concerning the employer/employee relationship,
including but not limited to wage/hour laws, laws prohibiting discrimination,
and labor laws. Seller is in compliance with all of its agreements relating to
the employment of its employees, including, without limitation, provisions
thereof relating to wages, bonuses, hours of work and the payment of Social
Security taxes, and Seller is not liable for any unpaid wages, bonuses, or
commissions or any tax, penalty, assessment, or forfeiture for failure to comply
with any of the foregoing.
3.15 Employee Benefits. (a) Schedule 3.15 hereto contains a true and
complete list of all the following agreements or plans of Seller which are
presently in effect and which pertain to any of the ADI Personnel:
(i) "employee welfare benefit plans" and "employee pension benefit plans,"
as defined in Sections 3(1) and 3(2), respectively, of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA");
(ii) any other pension, profit sharing, retirement, deferred compensation,
stock pur chase, stock option, incentive, bonus, vacation, severance,
disability, health, hospitalization, medical, life insurance, vision, dental,
prescription drug, supplemental unemployment, layoff, automobile, apprenticeship
and training, day care, scholarship, group legal benefits, fringe benefits, or
other employee benefit plan, program, policy, or arrangement, whether written or
unwritten, formal or informal, which Sellers maintains or to which Seller has
any outstanding, present, or future obligation to contribute to or make payments
under, whether voluntary, contingent, or otherwise (the plans, programs,
policies, or arrangements described in clauses (i) or (ii) are herein
collectively referred to as the "Seller Plans").
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(b) Seller does not presently contribute and/or has never contributed or
been obligated to contribute to a multiemployer plan as defined in section
3(37)(A) of ERISA.
(c) No Seller Plan is subject to Title IV of ERISA.
3.16 Accuracy of Schedules, Certificates and Documents. All information
concerning Seller contained in any certificate furnished to Purchaser pursuant
to this Agreement or in the Disclosure Memorandum is or will be when furnished
both complete and accurate in all material respects; and all documents furnished
to Purchaser pursuant to this Agreement which are documents described in this
Agreement or in the Disclosure Memorandum are true and correct copies of the
documents which they purport to represent.
ARTICLE IV - COVENANTS OF SELLER
4.1 Performance of Real Property Leases and Contracts. Seller shall,
through the Closing Date, continue to faithfully and diligently perform each and
every continuing obligation of Seller, if any, under each of the Leases and
Contracts, where the failure to do so would have a material adverse effect on
the operations of a Restaurant.
4.2 Transfer of Licenses and Permits. Seller shall use commercially
reasonable efforts to assist Purchaser with the assumption, transfer, or
reissuance of any and all Permits required for the operation of the Restaurants.
4.3 Liabilities of Seller. All liabilities of Seller related to the
Business or the Assets that are not Assumed Liabilities will be promptly paid by
Seller as they come due.
4.4 Agreements Respecting Employees of Seller.
(a) Prior to the Effective Time without the prior written approval of
Purchaser, Seller shall not transfer or reassign to operations outside the
Business any employee exclusively involved in the operation or supervision of
the Restaurants ("ADI Personnel"). At the Effective Time, Seller shall terminate
the employment of all ADI Personnel. For a period of twelve months following the
Closing, Seller shall not solicit for employment any person who is a salaried
employee of Purchaser.
(b) Seller shall be solely responsible for any severance amounts due or
granted by Seller to any ADI Personnel.
(c) Seller and Purchaser shall cooperate in the transition of coverage of
ADI Personnel from Seller's health, medical, life insurance, and other welfare
plans to plans maintained by Purchaser.
4.5 Conduct of Business. (a) From the date hereof until Closing, Seller
shall (i) operate the Restaurants as they are currently being operated and in
the ordinary course of business and in compliance with all terms and conditions
of the Franchise Agreements, using commercially reasonable efforts in keeping
with Seller's historical practices to preserve and maintain the services of its
employees and its relationships with suppliers and customers, (ii) pay all bills
and debts incurred by it related to the Business promptly as they become due,
and (iii) consult in advance with Purchaser on all decisions outside the
ordinary course of business relating to the Assets or the Restaurants.
(b) In particular, and without limiting the foregoing, with respect to the
Business, Seller shall:
(i) maintain the Assets consistent with past practices;
(ii) continue to purchase and maintain inventories for each Restaurant in
such quantities and quality as necessary to operate the Restaurants in
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accordance with Seller's historical practice; and
(iii) continue to operate the Restaurants in accordance with all material
applicable local, state, and federal laws and regulations;
(c) Further, with respect to the Restaurants, Seller shall not, without the
express prior written approval of Purchaser.
(i) change in any material manner the ownership of the Assets;
(ii) increase the rate of compensation to ADI Personnel beyond the usual
and customary annual merit increases or bonuses under established compensation
plans, except for payments under the stay-bonus plan providing for payment of
bonuses upon the Closing;
(iii) mortgage, pledge, or subject to lien (except in connection with
development efforts of Development Restaurants pursuant to Section 4.7 in the
ordinary course of business) any of the Assets;
(iv) sell or otherwise dispose of any Asset except in the ordinary course
of business;
(v) enter into, terminate, or modify any Material Contract except in the
ordinary course of business; or
(vi) cancel or terminate or consent to or accept any cancellation or
termination of any Lease, amend or otherwise modify any of its material terms or
waive any breach of any of its material terms or provisions or take any other
action in connection with any Lease that would materially impair the interests
or rights of Seller to be transferred to Purchaser hereunder.
4.6 Access to Information. Seller shall afford Purchaser, its counsel,
financial advisors, auditors, lenders, lenders' counsel and other authorized
representatives reasonable access for any purpose consistent with this Agreement
from the date hereof until the Closing, during normal business hours, to the
offices, properties, books, and records of Seller with respect to the Assets and
the Restaurants and shall furnish to Purchaser such additional financial and
operating data and other information as Seller may possess and as Purchaser may
reasonably request, subject to Purchaser's obligations regarding the
confidentiality of such information as set forth in Section 6.2 hereof;
provided, however, that such access shall be arranged in advance by Purchaser
with Seller and will be scheduled in a manner and with a frequency calculated to
cause the minimum disruption of the business of Seller.
4.7 Development Efforts. Schedule 4.7 lists the restaurant sites which
Seller has identified for potential development (the "Development Sites ").
Seller shall use commercially reasonable efforts to maintain through Closing the
current results of its development activities for the Development Sites, for the
benefit of Purchaser, until Purchaser's election pursuant to Schedule 6.5
hereto; provided, however, that Purchaser acknowledges that Seller does not own
or have any contractual right to acquire the Development Sites.
4.8 Reporting Requirements. Through the Closing Date, Seller shall furnish
to Purchaser:
(a) Promptly after the occurrence, or failure to occur, of any such event,
information with respect to any event which has materially adversely affected
the Assets or the operations of the Restaurants.
(b) As soon as available and in any event within four weeks after the end
of each calendar month, the statement of operations of each Restaurant for such
fiscal month in the Seller's regularly prepared format.
(c) Promptly after the commencement of each such matter, notice of all
Actions, Orders, or other directives affecting the Business or any Restaurant
13
that, if adversely determined, could materially adversely affect the Assets, the
operations, business, prospects or condition (financial or otherwise) of the
Restaurant or the ability of Seller to perform its obligations hereunder;
(d) Such other information respecting the Assets or the operations,
business prospects, or condition (financial or otherwise) of the Restaurants as
the Purchaser may from time to time reasonably request.
4.9 Cooperation. Insofar as such conditions are within its reasonable
control or influence, Seller will use commercially reasonable efforts to cause
the conditions set forth in Article VII to be satisfied and to facilitate and
cause the consummation of the transactions contemplated hereby, including
obtaining the Consents. The parties acknowledge that no consents will be sought
with respect to any Minor Contract even if the failure to so obtain a consent to
assignment may result in a default or termination thereunder. Seller shall bear
any expenses associated with obtaining the Consents; however, Seller shall not
be required to make any payment to any party (other than reimbursement of
expenses), guarantee any Material Contract or Lease or remain liable for the
payment thereof following the Closing, or agree to any concessions or amendment
to other contracts, leases or arrangements with such party in order to obtain
such consents.
4.10 Subsequent Contracts. From the date of this Agreement to the Closing
Date, Seller shall use commercially reasonable efforts (a) to include in any
Material Contracts entered into by Seller ("Subsequent Contracts") a provision
permitting the assignment of any such Subsequent Contract to Purchaser and
providing that upon such assignment, Purchaser shall succeed to all of Seller's
rights, title, and interests thereunder subject to the Purchaser's assumption of
all of Seller's duties, powers, and obligations under such Subsequent Contract,
and (b) to ensure that no Subsequent Contract contains any provision which would
limit in any way the rights, title, and interests of Seller in the Assets.
4.11 Transition Services. (a) For a period of three months after the
Closing, if and to the extent requested in writing by Purchaser, Seller agrees
to provide to Purchaser restaurant accounting, POS system support, and other
services related to the Restaurants as mutually agreed upon between Seller and
Purchaser (the "Services"). Purchaser shall give Seller forty-five (45) days
advance written notice of the Services requested. The Services shall be provided
promptly as requested and shall be provided in substantially the same manner and
with the same or similar personnel as Seller previously utilized; provided,
however, that if Seller no longer has the personnel to provide such Services,
Seller may outsource such services to a third party.
(b) Purchaser will pay for the Services on a monthly basis, after receipt
of an invoice from Seller, at Seller's direct personnel cost incurred in
connection with providing the requested Service or Seller's out-of-pocket cost
(if such Services are outsourced), plus an amount of reasonable overhead not to
exceed 85% of the base salaries of the personnel providing the Services or
overseeing such Services (if the Services are outsourced). Seller's invoice
shall detail the personnel used, the amount of time spent, and its calculation
of the cost thereof. Direct personnel cost shall include only base salary and
benefits normally paid to Seller employees in such capacities.
(c) Seller is not required to maintain the employment of any specific
personnel in connection with providing the Services; provided, however, that if
requested by Purchaser, Seller shall offer to specifically designated personnel
a bonus incentive to remain for the three month period. The amount of such bonus
shall be at the discretion of Purchaser. Such bonus, if accepted by the
employee, shall be paid by Purchaser at the end of the three-month period, or
for such shorter period as Purchaser may determine.
4.12 Delivery of Real Estate Documents. (a) Seller shall provide Purchaser,
promptly upon receipt, (i) current surveys and title insurance commitments with
respect to the Owned Real Property ("Owner's Title Commitments") pursuant to
which the Title Company will agree to issue at Closing to Purchaser and its
14
lender (if requested by Purchaser) owner's policies of title insurance ("Owner's
Title Policies") on American Land Title Association standard Form B-1990,
without exceptions except as shown in the Owner's Title Commitments, to be
issued by Commonwealth Land & Title Insurance Company ("Title Company") in an
amount in the case of each parcel equal to the purchase price allocated to such
parcel of the Owned Real Property pursuant to Section 2.7, and (ii) current
surveys (collectively with the surveys of the Owned Real Property, the
"Surveys") and title insurance commitments with respect to the Real Property
subject to a Lease (collectively, the "Leased Real Property") (the "Lessee Title
Commitments", and collectively with the Owner's Title Commitments, the "Title
Commitments") pursuant to which the Title Company will agree to issue at Closing
lessee's policies of title insurance ("Lessee's Title Policies") on American
Land Title Association standard form of leasehold owner's policy to insure
leasehold estates, showing no exceptions except as shown in the Lessee Title
Commitments. The Owner's Title Policies shall insure the Purchaser that, upon
consummation of the purchase and sale herein contemplated, Purchaser will be
vested with good, fee simple, marketable, and insurable title to the Owned Real
Property, subject only to the Permitted Encumbrances or arising out of acts of
the insured. The Lessee's Title Policies shall insure the Purchaser that, upon
consummation of the transactions herein contemplated, Purchaser will be vested
with a good, valid, marketable and insurable leasehold estate in and to the
Leased Real Property, subject only to the Permitted Encumbrances.
Notwithstanding anything to the contrary contained herein, while Lessee Title
Commitments will be delivered for all Leased Real Property, no surveys will be
delivered and no Lessee's Title Policies will be issued for Leases unless such
Leases are for Free Standing Premises (as defined in Section 7.1).
(b) No later than five business days after the date hereof, Seller shall
provide to Purchaser copies of all environmental reports pertaining to the Owned
Real Property in Seller's possession.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
5.1 Organization, Corporate Power, Authorization. Purchaser is a
corporation duly organized, validly existing, and in good standing under the
laws of the State of Kentucky and in each other jurisdiction in which it is
lawfully required to qualify to conduct business. Purchaser has the corporate
power and authority to execute and deliver this Agreement and the ▇▇▇▇ of Sale
and Assignment Agreement, and to consummate the transactions contemplated
hereby. All corporate action on the part of Purchaser necessary for the
authorization, execution, and delivery of this Agreement and the ▇▇▇▇ of Sale
and Assignment Agreement, and performance of all obligations of Purchaser
thereunder has been duly taken.
5.2 Non-Contravention. The execution and delivery of this Agreement and the
▇▇▇▇ of Sale and Assignment Agreement by Purchaser do not and the consummation
by Purchaser of the transactions contemplated hereby and thereby will not
violate any provision of its articles of incorporation or bylaws.
5.3 Validity. This Agreement has been duly executed and delivered by
Purchaser, and constitutes the legal, valid, and binding obligation of
Purchaser, enforceable against it in accordance with its terms, subject to
general equity principles and to applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws from time to time in effect
affecting the enforcement of creditors' rights. When the ▇▇▇▇ of Sale and
Assignment Agreement has been executed and delivered in accordance with this
Agreement, it will constitute the legal, valid, and binding obligation of
Purchaser, enforceable in accordance with its terms, subject to general equity
principles and to applicable bankruptcy, insolvency, reorganization, moratorium,
and similar laws from time to time in effect affecting the enforcement of
creditors' rights.
5.4 Litigation Relating to the Agreement. Purchaser is not a party to, or
subject to any judgment, decree, or order entered in any lawsuit or proceeding
brought by any governmental agency or instrumentality or other party seeking to
prevent the execution of this Agreement or the consummation of the transactions
contemplated hereby.
ARTICLE VI - COVENANTS OF PURCHASER
6.1 Purchaser Performance. After the Closing Date, Purchaser shall promptly
pay as they become due and otherwise perform all obligations of Seller under the
Assumed Liabilities and otherwise perform and fulfill all other obligations with
respect to the Assets pertaining to the period after the Closing Date.
6.2 Confidentiality. In connection with the negotiation of this Agreement,
Seller may disclose Confidential Information, as defined below, to Purchaser.
Purchaser agrees that if the transactions contemplated herein are not
consummated, it will return to Seller all documents and other written
information furnished to it. Purchaser further agrees to maintain the
confidentiality of any and all Confidential Information of Seller and not
disclose any Confidential Information to any Person other than such Person to
whom Confidential Information must be disclosed to effect the transactions and
15
who are bound by appropriate non-disclosure agreements or obligations. Purchaser
shall not use such Confidential Information for financial gain or in any manner
adverse to Seller, except that Purchaser may use such Confidential Information
in connection with the ordinary course of operation of the Restaurants after
Closing. The foregoing obligations shall not apply to (i) any information which
was known by Purchaser prior to its disclosure by Seller; (ii) any information
which was in the public domain prior to the disclosure thereof; (iii) any
information which comes into the public domain through no fault of Purchaser;
(iv) any information which is disclosed to Purchaser by a third party, other
than an affiliate, having the legal right to make such disclosure; or (iv) any
information which is required to be disclosed by Order of any Forum. For
purposes of this Section, "Confidential Information" shall mean any and all
technical, business, and other information which is (a) possessed or hereafter
acquired by Seller and disclosed to Purchaser and (b) derives economic value,
actual or potential, from not being generally known to Persons other than
Seller, including, without limitation, technical or nontechnical data,
compositions, devices, methods, techniques, drawings, inventions, processes,
financial data, financial plans, product plans, lists of actual or potential
customers or suppliers, information regarding the business plans and operations
of Seller, and the existence of discussions and negotiations between the parties
hereto relating to the terms hereof. The restrictions of this Section shall
expire three years from the date hereof with respect to any confidential
business information that does not constitute a trade secret under applicable
law.
6.3 Seller Employees. (a) Purchaser shall offer employment to all ADI
Personnel upon terms and conditions substantially equivalent to those provided
by Seller; however, Purchaser shall not be required to provide stock options or
any stock purchase rights. For a period of twelve months following the Closing,
Purchaser shall not solicit for employment any person who is a salaried employee
of Seller or any subsidiary of Seller.
(b) Purchaser shall maintain employee records transferred to Purchaser
hereunder for a period of not less than four years and during that period will
afford Seller reasonable access to such records during Purchaser's normal
business hours. Purchaser shall maintain the confidentiality of such records and
limit access thereto in a manner consistent with Purchaser's treatment of its
employee records.
(c) Purchaser agrees with respect to ADI Personnel hired by Purchaser: (i)
to give such employees credit under Purchaser's benefits plans, programs, and
arrangements (including credit for accrued but unvested vacation which has been
charged to Seller under Section 2.3) for such employees' period of service with
Seller, provided that such credit shall only be taken into account under any
tax-qualified plan maintained by Purchaser for purposes of determining such
employees' eligibility for participation and eligibility to satisfy any hours of
service requirement in order to receive an allocation of an employer
contribution; (ii) to provide coverage to such employees who are eligible under
Purchaser's health, medical, life insurance, and other welfare plans (A) without
the need to undergo a physical examination or otherwise provide evidence of
insurability; (B) any pre-existing condition or similar limitations or
exclusions will be applied by taking into account the period of coverage under
Seller's plan; (C) by applying and giving credit for amounts paid for the plan
year in which the Closing Date occurs as deductibles, out of pocket expenses,
and similar amounts paid by individuals and their beneficiaries.
6.4 Cooperation. Insofar as such conditions are within its reasonable
control or influence, Purchaser shall use commercially reasonable efforts to
cause the conditions set forth in Article VII to be satisfied and to facilitate
and cause the consummation of the transactions contemplated hereby.
Specifically, but not by way of limitation, Purchaser will (i) use commercially
reasonable efforts to obtain a commitment letter for financing the transactions
contemplated hereby on substantially the terms set forth in Exhibit E (the
"Financing Commitment") and to obtain financing on such terms, (ii) promptly
provide Franchisor with all information required by Franchisor to determine
16
whether Purchaser will be approved as a franchisee with respect to the
Territory, (iii) actively pursue an agreement with Franchisor as to the
principal terms of franchise and development agreements with respect to the
Territory, and (iv) file all documents required to obtain approval of the
transactions contemplated hereby under the HSR Act within 15 days of the date
hereof.
6.5 Development Sites. Purchaser shall notify Seller no later than thirty
(30) days after the date hereof of its election (if any) to pursue the
acquisition or lease of any or all of the Development Sites. If Purchaser so
elects and the particular Development sites are still available, (i) Seller will
reasonably cooperate with Purchaser's efforts to acquire or lease the
Development Site(s) both before and after Closing (at no expense to Seller),
(ii) Seller's records and files related to each such Development Site shall be
deemed to be part of the "Assets" to be assigned to Purchaser at Closing, and
(iii) Purchaser shall pay Seller for the Development Costs associated with such
Development Sites at Closing under Section 2.3(a)(v).
ARTICLE VII - CONDITIONS PRECEDENT TO THE CLOSING
7.1 Title Examination and Property Inspection. (a) Purchaser shall have 30
days following receipt of the documents referred to in Section 4.12(a) (the
"Title Inspection Period") to review same and furnish Seller a written statement
of reasonable objections to exceptions which, in Purchaser's reasonable
judgment, would materially interfere with or impair Purchaser's use of the Real
Property for the operation of Applebee's restaurants ("Material Objections").
Seller shall have until the Termination Date to satisfy such Material Objections
(but with no obligation to do so) in all material respects, and if Seller fails
to satisfy all Material Objections in all material respects on or prior to the
Termination Date, then Purchaser's sole right and remedy shall be to either (i)
waive the objections and elect to close, or (ii) terminate this Agreement by
giving written notice of such termination to Seller. If Purchaser fails to
furnish Seller a written statement of Material Objections by the end of the
Title Inspection Period with respect to any matter appearing as an exception on
a Title Commitment, such matter along with all other encumbrances of record as
of the effective date of the Title Commitments not objected to by Purchaser
shall be deemed waived by Purchaser and shall be a Permitted Encumbrance. The
parties acknowledge that some of the Leased Real Property may be located in
shopping centers, and as such, unless the leased premises are a free standing
building located on a separate pad with its own legal description ("Free
Standing Premises") the Lessee Title Commitments for such Leased Real Property
will contain encumbrances for entire shopping centers. Purchaser may not object
to title encumbrances for such Leased Real Property that do not affect the
premises leased under the Leases, which such encumbrances shall be deemed to be
Permitted Encumbrances.
(b) Property Inspection.
(A) Between the date of this Agreement and the Closing Date, Purchaser and
Purchaser's agents, employees, contractors, representatives and other designees
(hereinafter collectively called "Purchaser's Designees") shall have the right
to enter the Real Property for the purposes of inspecting the Real Property,
conducting soil tests, conducting surveys, mechanical and structural engineering
studies, environmental studies, and conducting any other investigations,
examinations, tests, and inspections as Purchaser may reasonably require to
assess the condition of the Real Property; provided, however, that (i) any
activities by or on behalf of Purchaser, including, without limitation, the
entry by Purchaser or Purchaser's Designees onto the Real Property, or the other
activities of Purchaser or Purchaser's Designees with respect to the Real
Property (hereinafter called "Purchaser's Activities") shall not damage the Real
Property in any manner whatsoever or disturb or interfere with the rights of any
lessor of Leased Real Property; (ii) in the event the Real Property is altered
or disturbed in any manner in connection with any Purchaser's Activities,
Purchaser shall immediately return the Real Property to the condition existing
17
prior to Purchaser's Activities; (iii) Purchaser shall in no event without
Seller's prior written consent disclose the results of any of its
investigations, examinations, tests, or inspections to any party (including any
Government unless required by law) other than to its lenders, attorneys,
consultants, and investors; and (iv) Purchaser shall indemnify, defend, and hold
Seller harmless from and against any and all claims, liabilities, damages,
losses, costs, and expenses of any kind or nature whatsoever (including, without
limitation, attorneys' fees, and expenses and court costs) suffered, incurred or
sustained by Seller as a result of, by reason of, or in connection with any
Purchaser's Activities. Notwithstanding any provision of this Agreement to the
contrary, Purchaser shall not have the right to undertake any environmental
studies or testing beyond the scope of a standard "Phase I" evaluation without
the prior written consent of Seller and, if applicable, the lessor of any Leased
Real Property.
(B) Purchaser shall have until the date which is thirty days after the date
of this Agreement (hereinafter called the "Due Diligence Date"), to perform such
investigations, examinations, tests and inspections as Purchaser shall deem
necessary or desirable to determine whether the Real Property is suitable and
satisfactory to Purchaser and can be used for Applebee's franchise restaurants.
In the event Purchaser shall determine that the Real Property is not reasonably
suitable and satisfactory to Purchaser, Purchaser shall have the right to
terminate this Agreement by giving written notice to Seller on or before the Due
Diligence Date. If Purchaser does not terminate this Agreement in accordance
with this Section 7.1(b) on or before the Due Diligence Date, Purchaser shall
have no further right to terminate this Agreement pursuant to this Section
7.1(b).
(C) Prior to any entry by Purchaser or any of Purchaser's Designees onto
the Real Property, Purchaser shall: (i) procure a policy of commercial general
liability insurance, issued by an insurer reasonably satisfactory to Seller,
covering all Purchaser's Activities, with a single limit of liability (per
occurrence and aggregate) of not less than $1,000,000.00; and (ii) deliver to
Seller a Certificate of Insurance, evidencing that such insurance is in force
and effect, and evidencing that Seller has been named as an additional insured
thereunder with respect to any Purchaser's Activities. Such insurance shall be
written on an "occurrence" basis, and shall be maintained in force until the
earlier of (i) the termination of this Agreement and the conclusion of all
Purchaser's Activities; or (ii) Closing.
(D) Purchaser acknowledges that Seller may deliver to Purchaser certain
documents and information in possession of Seller or Seller's agents with regard
to the Real Property (hereinafter called the "Due Diligence Materials"). The Due
Diligence Materials will be provided to Purchaser without any representation or
warranty of any kind or nature whatsoever and are merely provided to Purchaser
for Purchaser's informational purposes. Until Closing, Purchaser and Purchaser's
Designees shall maintain all Due Diligence Materials as Confidential
Information.
7.2 Purchaser's Conditions to Closing. The obligations of Purchaser
hereunder are subject to satisfaction of each of the following conditions at or
before Closing, the occurrence of which may, at the option of Purchaser, be
waived:
(a) Subject to the matters disclosed in the Disclosure Memorandum as
supplemented by Seller from time to time, all representations and warranties of
Seller in this Agreement shall be true in all material respects on and as of the
Closing.
(b) Any supplement to the Disclosure Memorandum delivered by Seller shall
not reflect in Purchaser's reasonable judgment any material adverse change in
the Assets or the Business.
(c) Seller shall have performed and complied in all material respects with
all of its obligations under this Agreement which are to be performed or
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complied with by Seller prior to or on the Closing Date.
(d) Seller shall have obtained and delivered to Purchaser all consents
necessary to transfer and assign the Assets (except for Minor Contracts) to
Purchaser.
(e) Purchaser and Franchisor shall have entered into a franchise agreement
with respect to each Restaurant and development agreements with respect to each
ADI in the Territory.
(f) Purchaser shall have obtained, either from Seller or directly from the
issuing authority, all permits, licenses, including liquor licenses, and
approvals of all governmental and quasi-governmental authorities necessary for
the operation of the Restaurants in accordance with franchise requirements;
provided, however, that if Purchaser is unable to obtain from local municipal or
county authorities a permit necessary for such operation of the Restaurants, and
Purchaser reasonably believes that it will be able to obtain such a permit
within two months of the Closing Date, Closing of the transactions contemplated
hereunder will not be delayed if Seller delivers to Purchaser a duly executed
liquor license management agreement or agreements.
(g) The waiting period under the HSR Act shall have expired or a
notification of early termination of the waiting period shall have been received
by Purchaser.
(h) Purchaser shall have obtained the financing described on Exhibit E upon
terms and conditions reasonably acceptable to Purchaser or other financing
reasonably acceptable to Purchaser.
(i) Purchaser shall have been issued the Title Policies.
(j) Seller shall have delivered the items required by Section 2.4(a).
7.3 Seller's Conditions to Closing. The obligations of Seller hereunder are
subject to satisfaction of each of the following conditions at or before
Closing, the occurrence of which may, at the option of Seller, be waived:
(a) All representations and warranties of Purchaser in this Agreement shall
be true on and as of the Closing, and Purchaser shall have delivered to Seller a
certificate to such effect dated as of the Closing Date.
(b) Purchaser shall have performed and complied in all material respects
with all of its obligations under this Agreement which are to be performed or
complied with by Purchaser prior to or on the Closing Date.
(c) Franchisor shall have agreed to terminate the Franchise Agreements
effective as of the Closing.
(d) Seller shall have obtained all the Consents.
(e) The waiting period under the HSR Act shall have expired or a
notification of early termination of the waiting period shall have been received
by Seller.
(f) Purchaser shall have delivered the items required by Section 2.4(b).
ARTICLE VIII - INDEMNIFICATION
8.1 Purchaser Claims. (a) Seller shall indemnify and hold harmless P
urchaser, its successors and assigns, against, and in respect of:
(i) Any and all damages, losses, liabilities, costs, and expenses incurred
or suffered by Purchaser that result from, relate to, or arise out of:
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(A) any and all liabilities and obligations of Seller of any nature
whatsoever, except for the Assumed Liabilities;
(B) any failure by Seller to carry out any covenant or agreement contained
in this Agreement;
(C) any misrepresentation or breach of warranty by Seller contained in this
Agreement, the Disclosure Memorandum, or any certificate, furnished to Purchaser
by Seller pursuant hereto; or
(D) any claim by any Person for any brokerage or finder's fee or commission
in respect of the transactions contemplated hereby as a result of Seller's
dealings, agreement, or arrangement with such Person.
(ii) Any and all actions, suits, claims, proceedings, investigations,
demands, assessments, audits, fines, judgments, costs, and other expenses
(including, without limitation, reasonable legal fees and expenses) incident to
any of the foregoing including all such expenses reasonably incurred in
mitigating any damages resulting to Purchaser from any matter set forth in
subsection (i) above.
(b) Notwithstanding the foregoing, Seller shall have no liability for
indemnification or otherwise with respect to Section 8.1(a)(i)(C) (and Section
8.1(a)(ii) to the extent the items covered thereby relate back to Section
8.1(a)(i)(C)) until the aggregate liability of Seller thereunder exceeds
$241,000 and then only to the extent that the aggregate liability of Seller
thereunder exceeds such amount; provided, however, that liabilities arising with
respect to Sections 3.1 through 3.4 hereof shall not be subject to the foregoing
threshold and any liabilities arising with respect to such matters shall not be
taken into account in computing aggregate liabilities for the purpose of
applying such threshold amount to liabilities arising under other Sections
subject thereto. In no event shall the aggregate liability of Seller under
Section 8.1(a)(i)(C) (and Section 8.1(a)(ii) to the extent the items covered
thereby relate back to Section 8.1(a)(i)(C)) exceed $2,410,000.
(c) The amount of any liability of Seller under this Section 8.1 shall be
computed net of any tax benefit to Purchaser from the matter giving rise to the
claim for indemnification hereunder and net of any insurance proceeds received
by Purchaser with respect to the matter out of which such liability arose.
(d) The representations and warranties of Seller contained in this
Agreement, the Disclosure Memorandum, or any certificate delivered by or on
behalf of Seller pursuant to this Agreement or in connection with the
transactions contemplated herein shall survive the consummation of the
transactions contemplated herein and shall continue in full force and effect for
the periods specified below ("Survival Period"):
(i) the representations and warranties contained in Section 3.5(d) shall be
of no further force and effect after thirty days from the date of the Closing;
(ii) the representations and warranties contained in Sections 3.1 through
3.4 and Section 3.7(g) shall survive until the expiration of any applicable
statues of limitation provided by law; and
(iii) all other representations and warranties of Seller shall be of no
further force and effect after one year from the date of the Closing.
Anything to the contrary notwithstanding, the Survival Period shall be
extended automatically to include any time period necessary to resolve a written
claim for indemnification which was made in reasonable detail before expiration
of the Survival Period but not resolved prior to its expiration, and any such
extension shall apply only as to the claims so asserted and not so resolved
within the Survival Period. Liability for any such item shall continue until
such claim shall have been finally settled, decided, or adjudicated.
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(e) Purchaser may not assert any claim against Seller for breach of any
covenant contained in Article IV (except for Sections 4.1, 4.3, 4.4, and 4.11)
and all such claims shall be deemed to be waived as a result of the Closing. The
other covenants contained in Article IV and liability therefor shall survive the
Closing.
(f) Purchaser shall provide written notice to Seller of any claim for
indemnification under this Article as soon as practicable; provided, however,
that failure to provide such notice on a timely basis shall not bar Purchaser's
ability to assert any such claim except to the extent that Seller is actually
prejudiced thereby. Purchaser shall make commercially reasonable efforts to
mitigate any damages, expenses, etc. resulting from any matter giving rise to
liability of Seller under this Article VIII.
(g) Notwithstanding any other provision of this Article VIII, the aggregate
principal amount of the obligation of Seller under this Article VIII shall not
exceed the gross proceeds actually received by the Seller in connection with
this Agreement and the transaction contemplated hereby.
8.2 Defense of Third Party Claims. With respect to any claim by Purchaser
under Section 8.1, relating to a third party claim or demand, Purchaser shall
provide Seller with prompt written notice thereof in accordance with Section
10.4 and Seller may defend, in good faith and at its expense, by legal counsel
chosen by it and reasonably acceptable to Purchaser any such claim or demand,
and Purchaser, at its expense, shall have the right to participate in the
defense of any such third party claim. So long as Seller is defending in good
faith any such third party claim, Purchaser shall not settle or compromise such
third party claim. In any event Purchaser shall cooperate in the settlement or
compromise of, or defense against, any such asserted claim.
8.3 Seller Claims. Purchaser shall indemnify and hold harmless Seller
against, and in respect of, any and all damages, claims, losses, liabilities,
and expenses, including without limitation, legal, accounting and other
expenses, which may arise out of: (i) any breach or violation by Purchaser of
any covenant set forth herein or any failure to fulfill any obligation set forth
herein, including, but not limited to, the obligation to satisfy the Assumed
Liabilities; (ii) any breach of any of the representations or warranties made in
this Agreement by Purchaser; or (iii) any claim by any Person for any brokerage
or finder's fee or commission in respect of the transactions contemplated hereby
as a result of Purchaser's dealings, agreement, or arrangement with such Person.
8.4 Exclusive Remedies. The rights and remedies of the parties under this
Article VIII shall be the sole and exclusive rights and remedies that either
party may seek for any misrepresentation, breach of warranty, or failure to
fulfill any covenant or agreement under this Agreement, except that either party
may seek specific performance or injunctive relief.
8.5 Settlement of Disputes. (a) Arbitration. All disputes with respect to
any claim for indemnification under this Article VIII and all other disputes and
controversies of every kind and nature between the parties hereto arising out of
or in connection with this Agreement shall be submitted to arbitration pursuant
to the following procedures:
(i) After a dispute or controversy arises, either party may, in a written
notice delivered to the other party, demand such arbitration. Such notice shall
designate the name of the arbitrator appointed by such party demanding
arbitration, together with a statement of the matter in controversy;
(ii) Within 30 days after receipt of such demand, the other party shall, in
a written notice delivered to the other party, name such party's arbitrator. If
such party fails to name an arbitrator, then the second arbitrator shall be
named by the American Arbitration Association ("AAA"). The two arbitrators so
selected shall name a third arbitrator within 30 days, or in lieu of such
agreement on a third arbitrator by the two arbitrators so appointed, the third
arbitrator shall be appointed by the AAA;
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(iii) The arbitration hearing shall be held in Lexington, Kentucky (in the
case of arbitration initiated by Seller) or in Atlanta, Georgia (in the case of
arbitration initiated by Purchaser) at a location designated by a majority of
the arbitrators. The Commercial Arbitration Rule of the AAA shall be used and
the substantive laws of the State of Georgia (excluding conflict of laws
provisions) shall apply;
(iv) An award rendered by a majority of the arbitrators appointed pursuant
to this Agreement shall be final and binding on all parties to the proceeding,
shall deal with the question of costs of the arbitration and all related
matters, shall not award punitive damages, and judgment on such award may be
entered by either party in a court of competent jurisdiction; and
(v) Except as set forth in subsection (b) below, the parties stipulate that
the provisions of this Section 8.5 shall be a complete defense to any suit,
action or proceeding instituted in any federal, state, or local court or before
any administrative tribunal with respect to any controversy or dispute arising
out of this Agreement. The arbitration provisions hereof shall, with respect to
such controversy or dispute, survive the termination or expiration of this
Agreement.
(b) Emergency Relief. Notwith standing anything in this Section 8.5 to the
contrary, either party may seek from a court any provisional remedy that may be
necessary to protect any rights or property of such party pending the
establishment of the arbitral tribunal or its determination of the merits of the
controversy.
ARTICLE IX - TERMINATION
9.1 Termination.
(a) This Agreement may be terminated as follows:
(i) At any time by the mutual consent of Seller and Purchaser;
(ii) By Purchaser pursuant to Section 7.1;
(iii) By Seller if Purchaser shall not (i) have obtained and provided a
copy of the Financing Commitment to Seller within fifteen (15) days from the
date hereof, (ii) been approved hereof as a franchisee with respect to the
Territory by Franchisor within forty five (45) days of the date hereof, (iii)
reached agreement with Franchisor as to a development schedule and other
material terms of franchise and development agreements with respect to the
Territory within forty five (45) days from the date hereof; or
(iv) By either Seller or Purchaser, at its sole election, at any time after
the Termination Date, if the Closing shall not have occurred on or prior to such
date.
(b) In the event of the termination of this Agreement pursuant to
subparagraph (a)(iv) above because Seller or Purchaser, as the case may be,
shall have willingly failed to fulfill its obligations hereunder, the other
party shall, subject to Section 8.5, be entitled to pursue, exercise, and
enforce any and all remedies, rights, powers, and privileges available to it at
law or in equity.
(c) Section 6.2, Article VIII, and Article X hereof shall survive the
termination of this Agreement.
ARTICLE X - MISCELLANEOUS
10.1 Expenses. (a) Each party hereto shall pay its own legal, accounting,
and similar expenses incidental to the preparation of this Agreement, the
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carrying out of the provisions of this Agreement, and the consummation of the
transactions contemplated hereby.
(b) Purchaser shall pay all filing fees required under the HSR Act.
(c) Purchaser shall pay (or reimburse Seller for) the costs of obtaining
the Title Commitments, Owner's Title Policies and Lessee's Title Policies with
respect to the Real Property and all transfer, intangible, recording, and
documentary taxes, stamps, and fees with respect to the transfer of the Owned
Real Property and the Leases. Purchaser shall also pay the cost of the Surveys
and all other surveys, environmental investigations, studies, and reports, and
all other costs of any investigation of the Assets, the Restaurants, or the
Business by Purchaser.
(d) Purchaser shall pay any costs associated with the transfer of any
Permits and the cost of obtaining liquor licenses or other Permits that are not
assignable.
(e) The parties shall split equally the cost of any sales taxes, transfer
taxes, documentary stamp taxes, or other taxes imposed with respect to the
transfer of any Assets constituting personal property.
(f) Seller shall pay the costs of obtaining any Consents subject to Section
4.9.
(g) Following the Closing, Seller shall pay to Purchaser on a monthly basis
as billed the amount of all gift certificates issued by Seller prior to the
Closing and redeemed thereafter.
10.2 Contents of Agreement; Parties in Interest; etc. This Agreement sets
forth the entire understanding of the parties hereto with respect to the
transactions contemplated hereby and constitutes a complete statement of the
terms of such transaction. This Agreement shall not be amended or modified
except by written instrument duly executed by each of the parties hereto. Any
and all previous agreements and understandings between the parties regarding the
subject matter hereof, whether written or oral, are superseded by this
Agreement. Neither party has been induced to enter into this Agreement in
reliance on, and has not relied upon, any statement, representation, or warranty
of the other party not set forth in this Agreement, the Disclosure Memorandum,
or any certificate delivered pursuant to this Agreement.
10.3 Assignment and Binding Effect. Purchaser may assign the right to
receive any of the Assets at Closing to any affiliate or other third party
reasonably acceptable to Seller and acceptable to Franchisor, provided that no
such assignment shall affect Purchaser's liability hereunder. Subject to the
foregoing, all of the terms and provisions of this Agreement shall be binding
upon and inure to the benefit of and be enforceable by the successors and
assigns of Seller and Purchaser.
10.4 Notices. Any notice, request, demand, waiver, consent, approval, or
other communication which is required or permitted hereunder shall be in writing
and shall be deemed given only if delivered personally or sent by telecopy or by
first class registered or certified United States Mail, with proper postage
prepaid, as follows:
If to Seller, to: With a required copy to:
Apple South, Inc. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇▇▇▇ at Washington ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. (Dusty) Profumo Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Fax: ▇▇▇-▇▇▇-▇▇▇▇
If to Purchaser: With a required copy to:
Neighborhood Hospitality, Inc. ▇▇▇▇▇ ▇. ▇▇▇▇▇
Highway 15 1832 South ▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, President Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
23
or to such other address or person as the addressee may have specified in a
notice duly given to the sender as provided herein. Such notice, request,
demand, waiver, consent, approval or other communication will be deemed to have
been given as of the date actually delivered, or if mailed, four days after
deposit in the U. S. Mail properly addressed with adequate postage affixed.
10.5 GEORGIA LAW TO GOVERN. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA
WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES.
10.6 Headings. All section headings contained in this Agreement are for
convenience of reference only, do not form a part of this Agreement, and shall
not affect in any way the meaning or interpretation of this Agreement.
10.7 Schedules and Exhibits. All Exhibits and Schedules referred to herein
are intended to be and hereby are specifically made a part of this Agreement.
10.8 Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
10.9 Public Announcements. Purchaser and Seller will coordinate with each
other all press releases relating to the transactions contemplated by this
Agreement and, except to the extent required by law, refrain from issuing any
press release, publicity statement, or other public notice relating to this
Agreement or the transactions contemplated hereby without providing the other
party reasonable opportunity to review and comment thereon.
10.10 Construction. The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event that any ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties hereto and no presumption or burden of
proof shall arise favoring or disfavoring any party hereto by virtue of the
authorship of any of the provisions of this Agreement.
10.11 Disclaimer of Warranties. PURCHASER WILL CONDUCT SUCH INSPECTIONS AND
INVESTIGATIONS OF THE ASSETS (INCLUDING, BUT NOT LIMITED TO, THE PHYSICAL AND
ENVIRONMENTAL CONDITION THEREOF) AND RELY UPON SAME AND, UPON CLOSING, EXCEPT TO
THE EXTENT OF SELLER'S EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN,
SHALL ASSUME THE RISK THAT ADVERSE MATTERS MAY NOT HAVE BEEN REVEALED BY
PURCHASER'S INSPECTIONS AND INVESTIGATIONS. EXCEPT TO THE EXTENT OF SELLER'S
EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN, SELLER SHALL SELL AND
CONVEY TO PURCHASER, AND PURCHASER SHALL ACCEPT, THE ASSETS "AS IS", "WHERE IS",
AND WITH ALL FAULTS, AND THERE ARE NO ORAL AGREEMENTS, WARRANTIES OR
REPRESENTATIONS, COLLATERAL TO OR AFFECTING THE ASSETS BY SELLER OR ANY THIRD
PARTY. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT TO THE EXTENT OF
SELLER'S EXPRESS REPRESENTATIONS AND WARRANTIES CONTAINED HEREIN, SELLER MAKES,
AND SHALL MAKE, NO EXPRESS OR IMPLIED WARRANTY OF SUITABILITY OR FITNESS OF ANY
OF THE ASSETS FOR ANY PURPOSE, OR AS TO THE MERCHANTABILITY, ENVIRONMENTAL
CONDITION, TITLE, VALUE, QUALITY, QUANTITY, CONDITION OR SALABILITY OF ANY OF
THE ASSETS, OR AS TO THE PRESENCE ON OR ABSENCE FROM THE ASSETS OF ANY HAZARDOUS
MATERIAL. THE TERMS AND CONDITIONS OF THIS SECTION 10.11 SHALL SURVIVE THE
CONSUMMATION OF THE PURCHASE AND SALE OF THE ASSETS ON THE CLOSING DATE WITHOUT
REGARD TO ANY GENERAL LIMITATIONS UPON SURVIVAL SET FORTH IN THIS AGREEMENT.
10.12 Time. Time is and shall be of the essence of this Agreement.
[Signatures Located on Following Pages]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first written above.
SELLER:
APPLE SOUTH, INC.
By:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President--
Planning and Acquisitions
PURCHASER:
NEIGHBORHOOD HOSPITALITY, INC.
By:
▇▇▇▇▇ ▇▇▇▇▇▇▇, President
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EXHIBIT TABLE OF CONTENTS
EXHIBIT TITLE
A ▇▇▇▇ of Sale and Assignment Agreement
B Opinion of Seller's Counsel
C Opinion of Purchaser's Counsel
D Allocation of Purchase Price
E Financing Terms
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DISCLOSURE MEMORANDUM
Table of Contents
Schedule Title
1.1A Restaurants by Address
1.1B Leases
1.1C Legal Description of Owned Real Property
1.1D Material Contracts
1.1E Territory
3.3 Consents Required to Assign Leases and
Material Contracts
3.6 List of Material Contract and Leases and
amendments thereto
3.7(a) Location and Ownership of Restaurants
3.7(g) List of Environmental Reports and Matters
3.8 Financial Statements
3.10 Litigation
3.15 Seller Plans
4.7 Development Sites
Exhibits and schedules to this agreement are not filed pursuant to Item
601(b)(2) of SEC Regulation S-K. By the filing of this Form 8-K, the Registrant
hereby agrees to furnish supplementally a copy of any omitted exhibit or
schedule to the Commission upon request.
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