ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT ("Agreement") is made and entered into as
of January 5, 2001, by and among MOUNTAIN RANGE RESTAURANTS, LLC, an Arizona
limited liability company ("Buyer"), and PHOENIX RESTAURANT GROUP, INC., a
Georgia corporation ("Seller").
A. Seller conducts the business of the ownership and operation of
restaurants, including those 24 Denny's restaurants operated under franchises
from Denny's Inc. and/or DFO, Inc., which restaurants are more particularly
described on Schedule A to be attached hereto (the "Restaurants").
B. The principals of Buyer have extensive experience in the
management and operation of Denny's restaurants and are intimately familiar
with the operation of Denny's restaurants and with the type of assets to be
purchased and liabilities to be assumed under this Agreement.
C. Seller desires to sell to Buyer, and Buyer desires to purchase
from Seller, the Restaurants and certain of the assets associated with the
Restaurants, on an "as is" basis, and Buyer desires to assume certain
obligations associated with the Restaurants, all upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
SECTION 1. SALE AND PURCHASE
1.1 ASSETS AND PROPERTIES TO BE SOLD AND PURCHASED. At the Closing
(as defined in Section 11), Seller shall sell to Buyer and Buyer shall
purchase from Seller, subject to all the terms and conditions of this
Agreement, the following assets and properties of Seller with respect to the
Restaurants (the "Purchased Assets") free and clear of all personal property
leases, liens, claims, and encumbrances, except as set forth in Schedule 4.2
(the "Permitted Exceptions"):
(a) LEASED PROPERTIES AND IMPROVEMENTS. All of the right,
title and interest of Seller in and to the use of the real estate and
buildings associated with the Restaurants (the "Leased Properties") and all
other improvements, fixtures and structure (collectively, the "Improvements")
located on, affixed to and/or appurtenant to the Restaurants or the Leased
Properties and are subject to the real property leases (the "Leases") listed
on Schedule 1.1(a).
(b) PERSONAL PROPERTY. All right, title and interest of
Seller in and to any and all personal property utilized by Seller in
connection with the businesses conducted in the Restaurants, including, but
not limited to the (i) mechanical systems, fixtures, and equipment owned or
leased by Seller comprising a part of or attached to or located at the
Restaurants; (ii) pylons and other signs, silverware, glassware, dishes, and
other utensils, tables, chairs, chandeliers, lamps, stained or leaded glass,
marble tops, fans, televisions, clocks, carpets, drapes, art work,
memorabilia, paintings, posters, graphics, and other furnishings owned by
Seller and
comprising a part of or attached to or located in the Restaurants including
without limitation, any furnishings located in business offices or party
rooms; (iii) maintenance equipment and tools owned or leased by Seller and
used in connection with the Restaurants; and (iv) stoves, ovens,
refrigerators, walk-in cold storage boxes and other kitchen equipment, and
other machinery, equipment, fixtures, keys, and personal property of every
kind and character owned or leased by Seller and held at the Restaurants and
which are presently located in, on or used in connection with the Restaurants
or the operations thereof or hereafter acquired in the ordinary course of
business (collectively, the "Personal Property").
(c) FRANCHISE AGREEMENTS. All right, title, and interest of
Seller in, to, and under the franchise agreements with respect to the
Restaurants between Seller and Denny's, Inc. and/or DFO, Inc. (the "Franchise
Agreements") as set forth on Schedule 1.1(c), provided that (i) Seller on the
one hand, and Buyer, on the other hand, shall each be responsible for and
shall pay the costs and fees of its counsel incurred in connection with the
assignment of the Franchise Agreements, and (ii) Seller shall be solely
responsible for and shall pay any and all transfer fees to be paid to
Denny's, Inc. and/or DFO, Inc. in connection with the assignment of the
Franchise Agreements.
(d) CONTRACTS. Except as provided in Section 1.2, all rights
and interests of Seller in, to, and under all agreements and contracts
relating to the Restaurants other than the Franchise Agreements, including
all management, maintenance, supply or service contracts, or any other
contracts, arrangements or agreements affecting the Restaurants, the Personal
Property, the Leased Properties or the Improvements pursuant to which
equipment, goods, services, supplies or any other items whatsoever are
furnished and/or are to be furnished in connection with the Restaurants, or
the repair, maintenance or operation thereof, and all warranties relating to
the Restaurants, the Personal Property, the Leased Properties, or the
Improvements, together with all other representations, contract rights, and
transferable intangible property, miscellaneous rights, benefits or
privileges of any kind or character with respect to the Restaurants
(collectively, the "Contracts"), including, but not limited to, those set
forth on Schedule 1.1(d); provided, however, that Buyer shall not be
obligated to assume or perform any obligation or liability of Seller pursuant
to any Contract or agreement except as specifically provided in Section 2 or
pursuant to the Lease Assignments/Subleases (as defined in Section 9.3).
(e) INVENTORY. All inventory located at the Restaurants,
including, without limitation, all food items, food preparation items, and
guest checks, and replacements of inventory or consumables used in the
ordinary course of business, including inventories of food, beverages,
spirits, china, silver, glassware, paper goods, food preparation items,
uniforms, guest checks, and other inventory and supplies in such quality and
levels reasonably commensurate with levels as customarily maintained by
Seller.
(f) COMPUTER SOFTWARE AND HARDWARE. All point-of-sale
computer software and all hardware located at the Restaurants and owned,
leased or licensed by or to Seller and used by Seller in connection with the
operation of the Restaurants that is not otherwise prohibited from transfer
by contract between Seller and the owner or licensee thereof.
(g) TELEPHONE NUMBERS. All of Seller's telephone and
facsimile numbers presently used in connection with the operation of the
Restaurants.
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(h) ANCILLARY ASSETS. All permits, licenses, equipment
warranties, certificates of occupancy, governmental approvals, site plans,
surveys, plans and specifications, marketing materials and floor plans in the
possession of Seller that specifically and only relate to the Restaurants,
the Leased Properties, the Improvements or the Personal Property, to the
extent transferable (the "Ancillary Assets").
(i) DOCUMENTS. Copies of all information and documentation in
Seller's possession regarding the Restaurants, including, but not limited to,
the Leases, surveys, tax assessment records, engineering plans and
specifications, as-built drawings, development plans, plats, site plans,
zoning materials, and combinations to all locks on or in the Restaurants
(collectively, the "Documents").
(j) BOOKS AND RECORDS. All of Seller's books, records
(including those relating to financial matters involving the Purchased
Assets, the Restaurants, and the employees at the Restaurants),
correspondence and files pertaining to the ownership, management, and/or
operation of the Restaurants or to the Purchased Assets, but excluding
Seller's corporate minute books and stock books and records and any
confidential or proprietary information regarding Seller's business and not
directly related to ownership and operation of the Restaurants.
(k) ▇▇▇▇▇ CASH. ▇▇▇▇▇ cash at each Restaurant that will be an
amount of $1,000.00 at 3:00 p.m. local time on the Closing Date (the "▇▇▇▇▇
Cash").
(l) GOODWILL. All of Seller's goodwill that relates to the
Restaurants.
1.2 ASSETS AND PROPERTIES NOT TO BE PURCHASED AND SOLD.
Notwithstanding anything to the contrary contained in this Agreement, there
is excluded from the Purchased Assets to be transferred pursuant to this
Agreement the following:
(a) Except for ▇▇▇▇▇ Cash in the amount of $1,000 at each
Restaurant location at 3:00 p.m. local time on the Closing Date, all cash,
bank accounts, notes receivable, loans receivable, certificates of deposit,
investment securities, credit card accounts receivable from sales generated
from the Restaurants prior to 3:00 p.m. local time on the Closing Date,
deposits and prepaid expenses (including utility deposits), and allowances or
credits due from vendors, suppliers, or service providers accrued prior to
3:00 p.m. local time on the Closing Date.
(b) Except as set forth in Section 13.3 to this Agreement, the
Vending Commissions (as defined in Section 13.3).
(c) All insurance policies, including, but not limited to,
real property insurance, liability insurance, and workmen's compensation
insurance, held by Seller.
(d) Any corporate records, trademarks, service marks, trade
names and copyrights and other intellectual property rights not explicitly
transferred pursuant to Section 1.1 of this Agreement.
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(e) Any escrow and impound accounts for real estate and
personal property taxes relating to the Restaurants.
(f) Subject to Section 4.2, any other assets or properties of
Seller used in or with respect to Seller's business that are not explicitly
to be transferred to Buyer pursuant to Section 1.1 of this Agreement.
SECTION 2. LIABILITIES
2.1 LIABILITIES TO REMAIN WITH SELLER. Seller shall be responsible
for and shall promptly pay or satisfy all liabilities, obligations, or
accruals relating to the operation of the Restaurants or the ownership of the
Purchased Assets that have not been expressly assumed by the Buyer, whether
such liabilities, obligations or accruals are known or discovered prior to or
after the Closing Date.
2.2 LIABILITIES TO BE ASSUMED BY BUYER. Upon the conveyance,
transfer and assignment of the Purchased Assets to Buyer in accordance with
this Agreement, Buyer shall assume, and shall thereafter pay or satisfy, as
they become due, all non-delinquent liabilities, obligations, or accruals
first arising and relating to the operation of the Restaurants in the
ordinary course of business or the ownership of the Purchased Assets after
3:00 p.m. local time on the Closing Date (the "Assumed Liabilities") pursuant
to the terms and provisions of the Franchise Agreements, the Contracts and
the Lease Assignments/Subleases; provided that the Franchise Agreements and
Contracts have been validly assigned to Buyer.
In addition, Buyer shall assume (a) Seller's liability arising
after the Closing Date with respect to the capitalized leases described on
Schedule 2.2 for the Tremonton, Utah Restaurant (Unit 6710) and Pavilions-
Scottsdale, Arizona Restaurant (Unit 6348) (collectively, the "Capitalized
Leases"), and (b) up to $8.6 million of the Seller's debt secured by the
Restaurants to CNL American Properties Fund and/or its affiliates. (the "CNL
Debt").
Buyer shall not deemed by anything contained herein to have
assumed: (a) any obligation or liability of Seller arising from any tort
claims made by a third party arising from actions or failures to act by the
Seller or otherwise relating to the Restaurant prior to the Closing; or (b)
any obligation or liability of Seller relating to employees or independent
contractors accruing on or prior to the Closing Date, including, but not
limited to, accrued salaries, other compensation or benefits, severance
payments, accrued vacations, pensions, retirement plans, distributions or
bonuses accruing on or prior to 3:00 p.m. on the Closing Date; it being
understood that, at or prior to the Closing, any employment agreements
between Seller and any employees relating to the operation of the Restaurants
will be terminated on or before the Closing Date and none of the same will
prevent any of such employees from becoming employees of Buyer after the
Closing; it being further understood that Seller shall fulfill any
obligations relating to employees for accrued vacations within five days
after the Closing Date.
2.3 ALLOCATIONS. At the Closing Date and/or within a reasonable
period of time after the Closing Date, as the case may be, and effective as
of 3:00 p.m. local time on the Closing Date, to the extent not otherwise
provided for by any other provision of this Agreement, Buyer and Seller shall
allocate any obligations or liabilities relating to the Restaurants (such as
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equipment and other operating lease payments, real estate and personal
property tax payments, and the like) consistent with the terms of this
Agreement.
SECTION 3. PURCHASE PRICE.
3.1 AMOUNT AND PAYMENT. As full and complete payment for the
Purchased Assets, Buyer shall pay Seller the aggregate sum of Twenty Million
Eight Hundred Fifty Seven Thousand Two Hundred Seventy Five Dollars
($20,857,275.00) (the "Purchase Price"), payable by Buyer at the Closing, by
Buyer delivering to Seller cash (via wire transfer) in the amount of Twenty
Million Eight Hundred Fifty Seven Thousand, Two Hundred Seventy Five Dollars
($20,857,275.00), less (a) the unamortized balance of the Capitalized Leases
(estimated to be $900,000) as of the Closing, (b) the amount of the CNL Debt
(of up to $8.6 million) as of the Closing, and (c) the principal amount of a
subordinated promissory note and warrant (the "Subordinated Note and
Warrant") from the Buyer to the Seller substantially in the form attached
hereto as Exhibit A.
3.2 ALLOCATION OF PURCHASE PRICE. Buyer and Seller agree that the
total Purchase Price (including liabilities assumed) shall be allocated as
set forth in Schedule 3.2 to be attached hereto, and Buyer and Seller agree
that the allocation set forth in Schedule 3.2 has been made in accordance
with the requirements of Section 1060 of the Internal Revenue Code of 1986,
as amended, and any applicable Treasury Regulations promulgated thereunder.
Buyer and Seller, each at its own expense, also agree to file appropriate
forms with the Internal Revenue Service setting forth the information
required to be furnished to the Internal Revenue Service by Section 1060 and
the applicable Treasury Regulations thereunder in a manner that is consistent
with Schedule 3.2.
SECTION 4. SELLER'S REPRESENTATIONS AND WARRANTIES. Seller represents
and warrants as follows:
4.1 CORPORATE STATUS AND AUTHORITY. Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State
of Georgia, has the requisite corporate power and authority to own, operate
and lease its assets and properties with respect to the Restaurants and to
carry on its business with respect to the Restaurants as now being conducted
in all jurisdictions in which the Restaurants are located. The execution and
delivery of this Agreement, the consummation of the transactions contemplated
hereby and the fulfillment of the terms hereof have been validly authorized
by all necessary corporate action of Seller and this Agreement constitutes
the valid, legal and binding obligation of Seller enforceable in accordance
with its terms.
4.2 OWNERSHIP OF ASSETS AND PROPERTIES. Seller has good and
marketable title to all of the Purchased Assets. Except as set forth in
Schedule 4.2 to be attached hereto, all of the Purchased Assets are owned (or
will be owned as of the Closing Date) by Seller, and will be transferred by
Seller to Buyer, free and clear of all liens, mortgages, pledges, security
interests, personal property leases, restrictions, prior assignments,
encumbrances and claims. The Purchased Assets constitute all of the assets
used by Seller in the ownership, operation and maintenance of the
Restaurants.
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4.3 CONDITION OF ASSETS AND PROPERTIES. Except as set forth in
Schedule 4.3 to be attached hereto, the buildings, equipment, fixtures,
furniture, furnishings, office equipment and all other tangible personal
assets and properties of Seller (including the Leased Properties, the
Improvements, and the Personal Property) presently used in, or necessary to
the operation of, the Restaurants, are in operating condition and the
Restaurants are operable as a going business.
4.4 LEASES, CONTRACTS, AGREEMENTS AND OTHER COMMITMENTS. Except as
listed on Schedule 4.4, all leases, contracts, agreements and other
obligations (including the Leases, Franchise Agreement, Contracts and
Documents) with respect to the Restaurants to which Seller is a party or by
which Seller is bound are valid, binding and enforceable in accordance with
their terms, subject only to applicable bankruptcy, insolvency, or similar
laws of general application, and Seller is not in default or in arrears any
such lease, contract, agreement or other obligation.
4.5 COMPLIANCE WITH LAW AND OTHER REGULATIONS. Except as set forth
in Schedule 4.5, Seller has operated the Restaurants in material compliance
with all requirements (including, to Seller's knowledge, those relating to
environmental matters) of federal, state and local law, and all requirements
of all governmental bodies and agencies having jurisdiction over it with
respect to the Restaurants, the operation of the Restaurants, the use of the
Purchased Assets, and all premises occupied by Seller with respect to the
Restaurants.
4.6 LIABILITIES. Seller does not have any obligations or
liabilities with respect to the Purchased Assets or the Restaurants, whether
related to tax or non-tax matters, known or unknown, matured or unmatured,
liquidated or unliquidated, fixed or contingent, or otherwise, except and to
the extent disclosed in this Agreement or any schedule or exhibit hereto
other than obligations or liabilities incurred in the ordinary course of its
business or otherwise disclosed to the extent required by this Agreement.
4.7 AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS AFFECTING SELLER.
Except as set forth in Schedule 4.7, the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby, and the
fulfillment of the terms hereof, will not violate any provision of, or result
in the breach of any term or provision of, or result in the termination or
modification of, or constitute a default under, or conflict with, or cause
the acceleration of any obligation under, or permit any party to modify or
terminate, the articles of incorporation or bylaws of Seller, or any loan
agreement, note, debenture, indenture, mortgage, deed of trust, lease,
contract, agreement or other obligation of any description (including any
Lease, Contract, and Document) to which Seller is bound, or any judgment,
decree, order, or award of any court, governmental body, or arbitrator or any
applicable law, rule or regulation.
4.8 LITIGATION. Except as set forth in Schedule 4.9, there is no
legal action, suit, arbitration, or other legal, administrative, or
governmental investigation, inquiry, or proceeding (whether federal, state,
local or foreign) pending or, to Seller's knowledge, threatened against
Seller with respect to the Restaurants or the assets being transferred
pursuant to this Agreement.
4.9 STATEMENTS AND OTHER DOCUMENTS NOT MISLEADING. Neither this
Agreement, nor any schedule or exhibit hereto, contains any untrue statement
of material fact with respect to Seller or the Restaurants or omits to state
a material fact with respect to Seller or
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the Restaurants required to be stated in order to make such statement,
document or other instrument not materially misleading.
SECTION 5. BUYER'S REPRESENTATIONS, WARRANTIES, AND AGREEMENTS. Buyer
represents, warrants, and agrees as follows:
5.1 ENTITY STATUS AND AUTHORITY. Buyer is a limited liability
company duly organized, validly existing and in good standing under the laws
of the State of Arizona, has the requisite limited liability company power
and authority to own, operate, and lease the Restaurants and the Purchased
Assets, subject to assignment of the Franchise Agreements, Contracts and
execution and delivery of the Lease Assignments/Subleases, and is duly
qualified to conduct the business of operating the Restaurants in all
jurisdictions in which the Restaurants are located. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been validly authorized by all appropriate action of
Buyer, and this Agreement constitutes the valid and binding obligation of
Buyer enforceable in accordance with its terms.
5.2 KNOWLEDGE REGARDING THE BUSINESS. Buyer hereby acknowledges
that its principals ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇ (individually and
collectively, the "Principals") have extensive experience in the management
and operation of Denny's restaurants and have been responsible for the
operations of the Restaurants. Principals are therefore familiar with the
operation of the Restaurants and with the type of assets to be purchased and
liabilities to be assumed under this Agreement, and that as a result Buyer
possesses sufficient knowledge of and information pertaining to the
Restaurants to enable it to make an informed decision regarding the purchase
of the Purchased Assets and assumption of the Assumed Liabilities pursuant to
this Agreement.
5.3 CONDITION OF ASSETS. Seller has provided Buyer with copies of
all contracts and other agreements with respect to the Purchased Assets and
access to or copies of all personal property leases, books and records,
financial information, and all other information regarding the Restaurants
that Buyer believes is necessary to enable it to review the financial
condition, assets, liabilities, and results of operations of the Restaurants.
Buyer acknowledges and agrees that (a) Buyer has reviewed the financial
condition, assets, liabilities and results of operations pertaining to the
operations of the Restaurants, (b) Buyer has reviewed all materials and
information reasonably requested by Buyer and provided by Seller with respect
to the Restaurants; and (c) Buyer has conducted its own independent physical
examination and inspection of the Restaurants and the Purchased Assets
(including a review of the books, Contracts, documents, and records related
to the operation of the Restaurants provided by Seller or to which Seller
provided access) and made its own independent determination of the value
thereof. BUYER UNDERSTANDS THAT, EXCEPT TO THE EXTENT EXPLICITLY SET FORTH
HEREIN, (A) SELLER MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, REGARDING THE PURCHASED ASSETS, INCLUDING, WITHOUT LIMITATION, THEIR
MERCHANTABILITY OR THEIR FITNESS FOR ANY PARTICULAR PURPOSE, AND (B) THE
PURCHASED ASSETS ARE BEING SOLD ON AN "AS IS, WHERE IS" BASIS.
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5.4 FINANCIAL CAPACITY. Buyer has the financial capacity to
consummate the transactions contemplated herein.
5.5 AGREEMENT NOT IN BREACH OF OTHER INSTRUMENTS. The execution
and delivery of this Agreement, the consummation of the transactions
contemplated hereby, and the fulfillment of the terms hereof, will not
violate any provision of the articles of organization and operating agreement
of Buyer nor will they result in the breach of any term or provision of, or
constitute a default under, or conflict with, or cause the acceleration of
any obligation under, any loan agreement, note, debenture, indenture,
mortgage, deed of trust, lease, contract, agreement or other obligation of
any description to which Buyer is a party or by which it is bound, or any
judgment, decree, order, or award of any court, governmental body or
arbitrator, or any applicable law, rule or regulation.
5.6 STATEMENTS AND OTHER DOCUMENTS NOT MISLEADING. Neither this
Agreement, nor any schedule or exhibit hereto, contains any untrue statement
of material fact with respect to Buyer or omits to state a material fact with
respect to Buyer required to be stated in order to make such statement,
document or other instrument not materially misleading.
SECTION 6. CONTINUATION AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Each of the representations and warranties contained in this Agreement shall
be true and correct on the date hereof and as of the Closing Date with the
same force and effect as if made on and as of that date, except as expressly
provided otherwise in this Agreement. All such representations and
warranties shall survive the consummation of the transactions contemplated by
this Agreement.
SECTION 7. SELLER'S COVENANTS
7.1 OPERATION OF THE RESTAURANTS PRIOR TO THE CLOSING DATE.
Between the date of this Agreement and the Closing Date, Seller shall:
(a) Operate the Restaurants only in the regular, ordinary, and
usual course and manner of Seller's general business practices;
(b) Maintain its existing insurance (or similar coverage)
covering the Purchased Assets and maintain its liability insurance coverage
with respect to the Restaurants and the operations conducted therein;
(c) Maintain supplies, inventory and consumables at levels
reasonably commensurate with the levels customarily maintained by Seller in
its ordinary course of business. d. Maintain, replace when required to
continue the regular operations of the Restaurants, and keep in repair and
regular working order, except for ordinary wear and tear, the Personal
Property included in the Purchased Assets;
(d) Use its commercially reasonable best efforts to keep
available the services of its current employees at each of the Restaurants;
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(e) Use its commercially reasonable best efforts to maintain
and preserve the good will of the suppliers, customers, employees, and others
having business relations with the Restaurants;
(f) Use its commercially reasonable best efforts to cooperate
with Buyer to obtain the consent and estoppel of the lessors of the
Restaurants, their ground lessors, or fee lenders, if applicable, including
non-disturbance agreements from such lessors' lenders, to the extent such
consents, estoppels, or non-disturbance agreements may be required in
connection with the Lease Assignments/Subleases or requested by Buyer or
Buyer's lender; and
(g) Materially comply with all of its agreements, licenses,
permits and authorizations.
7.2 ACCESS TO BOOKS, RECORDS, AND RESTAURANTS. Within five business
days after the date hereof, Seller shall deliver to Buyer all Schedules
required to be delivered under this Agreement
7.3 PROHIBITED TRANSACTIONS PRIOR TO THE CLOSING DATE. Between the
date of this Agreement and the Closing Date or the earlier termination of
this Agreement pursuant to Section 17, Seller shall not, directly or
indirectly, contract, initiate, enter into, or conduct any discussions or
negotiations, or enter into any agreements, whether written or oral, with any
person or entity other than Buyer with respect to the sale or lease of any of
the Purchased Assets.
7.4 NOTIFICATION TO DENNY'S FRANCHISOR. Promptly after the
execution and delivery of this Agreement, Seller shall provide a copy of this
Agreement to Denny's Inc. and/or DFO, Inc., as franchisors of the
Restaurants, and seek waivers from those entities' of their rights of first
refusal under the Franchise Agreements and consent to the assignment of the
Franchise Agreements to Buyer or the execution of new franchise agreements
between Denny's, Inc. and/or DFO, Inc., as franchisor, and the Buyer as
franchisee.
7.5 CASUALTY LOSS. If one or more of the Restaurants is damaged
prior to Closing, then either (a) if such damage is $50,000 or less, then at
Seller's option, Seller shall either repair such damage or assign to Buyer
the insurance proceeds due to Seller to repair such damage plus an amount
equal to any applicable deductible, or (b) if such damage exceeds $50,000,
Buyer and Seller shall use their commercially best efforts to determine the
manner of repairs and mode of payment for such repairs. If Buyer and Seller
do not agree on such manner of repairs and mode of payment or Buyer's lender
does not consent to Buyer's acquisition of damaged property, such damaged
Restaurant shall not be purchased by Buyer pursuant to this Agreement and the
Purchase Price for the Purchased Assets shall be reduced by an amount that is
equal to five times the net cash flow from such damaged Restaurant for the
trailing 12 month period ended August 31, 1999.
7.6 INABILITY TO SELL RESTAURANT(S). If the Seller is unable to
sell one or more Restaurants to the Buyer in accordance with the terms of
this Agreement, such Restaurant shall not be purchased by Buyer pursuant to
this Agreement and the Purchase Price for the Purchased Assets shall be
reduced by an amount that is equal to five times the net cash flow from such
Restaurants for the one year period ended August 31, 1999.
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SECTION 8. BUYER'S COVENANTS
8.1 LENDER COMMITMENTS. Buyer shall deliver to Seller a copy of
the proposed lender's approval of the proposed financing.
8.2 APPROVAL OF DENNY'S FRANCHISORS. Buyer shall seek from
Denny's, Inc. and/or DFO, Inc. approval of the assignment of the Franchise
Agreements to Buyer. Buyer shall promptly provide to Seller copies of any
and all correspondence, agreements, and documents received from or provided
by Buyer to ▇▇▇▇▇'▇ Inc., DFO, Inc. or their affiliates relating to the
transactions contemplated by this Agreement.
SECTION 9. BUYER'S CONDITIONS PRECENT TO THE CLOSING. The obligations of
Buyer hereunder and its obligations to consummate the Closing provided for
herein shall be subject to the following conditions precedent, any one or
more of which may be waived in writing by Buyer:
9.1 COMPLIANCE WITH AGREEMENTS AND COVENANTS. Seller shall have
performed and complied with each of its agreements, covenants, and
obligations to be performed on or prior to the Closing Date, except those
calling for performance after the Closing Date.
9.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller contained in this Agreement shall be
true and correct in all material respects at the Closing Date, with the same
force and effect as if made on and as of that date.
9.3 REAL ESTATE MATTERS. At the Closing, Buyer and Seller shall
have entered into a Lease Assignment in the form attached hereto as Exhibit
B with respect to each Leased Property set forth on Schedule 9.3.A (the
"Lease Assignment") and a Sublease in the form attached hereto as Exhibit C
with respect to each Leased Property set forth on Schedule 9.3.B (the
"Sublease") (the Lease Assignment and Sublease collectively, the "Lease
Assignment/Sublease). Each Assignment shall include a full release of Seller
from all obligations and liability under the related Lease. Each Sublease
shall be substantially the same as the terms of the related Lease. To the
extent required by the Leases or reasonably requested by Buyer or Buyer's
lender, Seller shall have obtained landlord consents with respect to each
Lease Assignment/Sublease. To the extent reasonably required by or requested
by Buyer or Buyer's lender, Seller shall have obtained landlord estoppel
certificates in connection with the transactions contemplated by the Lease
Assignments/Subleases.
9.4 BUYER FINANCING. Buyer shall have obtained all third party
financing necessary in order to consummate the transactions contemplated by
this Agreement.
9.5 ENTITY APPROVALS. All necessary limited liability company
action on the part of the members and managers of Buyer adopting this
Agreement and approving the transactions contemplated hereby shall have been
taken.
9.6 CONSENTS AND APPROVALS. Buyer shall have obtained all
necessary consents and approvals from its lenders or creditors whose consent
or approval is necessary to the performance by Buyer of the transactions
contemplated by this Agreement. To the extent
10
required under the Franchise Agreements, Denny's, Inc. and/or DFO, Inc. shall
have approved the transactions contemplated hereby, including the transfer of
the Franchise Agreements to Buyer, and shall have waived their right of first
refusal under the Franchise Agreements. Seller and Buyer shall use their
respective best efforts to obtain such approval and waiver of the rights of
first refusal from ▇▇▇▇▇'▇, Inc. and/or DFO, Inc. Seller shall have obtained
the consents of any owners of any of the Personal Property that are leased to
Seller to the assignment of such leases to Buyer and the release of Seller
from any liabilities or obligations thereunder except the liabilities Seller
has agreed to pay as provided in this Agreement. All consents, approvals,
orders and authorizations of any governmental authorities required in
connection with the completion of the transactions contemplated by this
Agreement shall have been obtained on or before the Closing Date. Buyer
shall cooperate in obtaining any such consents. Seller shall pay all costs
and expenses associated with the assignment of any such leases of Purchased
Assets.
9.7 PROCEEDINGS AND INSTRUMENTS SATISFACTORY. All proceedings,
corporate or other, to be taken in connection with the transactions
contemplated by this Agreement, and all documents, schedules, and exhibits
hereto and thereto shall be reasonably satisfactory in form and substance to
Buyer and Buyer's counsel. At or prior to the Closing, Seller shall have
made available to Buyer for examination the originals or true and correct
copies of all documents that Buyer may reasonably request in connection with
the transactions contemplated by this Agreement.
9.8 LITIGATION. No investigation, suit, action, or other
proceeding shall be threatened or pending before any court or governmental
agency that seeks restraint, prohibition, damages, or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.
9.9 DELIVERY OF DOCUMENTS. All agreements and documents required
to be delivered at the Closing by Seller under Section 11.1 shall have been
delivered or tendered at the Closing.
9.10 PAYOFF OF DFO NOTE, ETC. On or prior to the Closing, the
Seller shall either (a) pay in full the entire balance of its Note to DFO
Inc. dated May 27, 1999, in the original amount of $1,747,498.05 (the "DFO
Note"), and shall deliver to Buyer evidence of the satisfaction of the DFO
Note, or (b) provide Buyer with Denny's written agreement to release any
encumbrance on the Restaurants with respect to the DFO Note.
SECTION 10. SELLER'S CONDITIONS PRECEDENT TO THE CLOSING. The
obligations of Seller hereunder and its obligations to consummate the Closing
provided for herein shall be subject to the following conditions precedent,
any one or more of which may be waived in writing by Seller:
10.1 COMPLIANCE WITH AGREEMENTS AND COVENANTS. Buyer shall have
performed and complied with each of its agreements, covenants and obligations
to be performed hereunder on or prior to the Closing Date, except those
calling for performance after the Closing Date.
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10.2 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer contained in this Agreement shall
have been true and correct in all material respects at the Closing Date, with
the same force and effect as if made on and as of that date.
10.3 BUYER FINANCING. Buyer shall have delivered to Seller a copy
of the commitment of Buyer's lender of the proposed financing for the
transactions contemplated by this Agreement.
10.4 CORPORATE APPROVALS. All necessary corporate action on the
part of the directors of Seller adopting this Agreement and approving the
transactions contemplated hereby shall have been taken.
10.5 CONSENTS AND APPROVALS. Seller shall have obtained all
necessary consents and approvals from any of Seller's lenders or creditors
whose consent or approval is necessary to the performance by Seller of the
transactions under this Agreement. To the extent required under the
Franchise Agreements, Denny's, Inc. and/or DFO, Inc. shall have approved the
transactions contemplated hereby, including the transfer of the Franchise
Agreements to Buyer, and shall have waived their right of first refusal under
the Franchise Agreements. Seller and Buyer shall use their respective best
efforts to obtain such approval and waiver of the rights of first refusal
from ▇▇▇▇▇'▇, Inc. and/or DFO, Inc. Seller shall have obtained such landlord
consents as may be required in connection with the Lease
Assignments/Subleases and the consummation of the other transactions
contemplated by this Agreement, provided that Buyer has cooperated with
Seller in obtaining such consents. Seller shall have obtained the consents
of any owners of any of the Purchased Assets that are leased to Seller to the
assignment of such personal property leases to Buyer and the release of
Seller from any liabilities or obligations thereunder except the liabilities
Seller has agreed to pay as provided in this Agreement. Buyer shall
cooperate in obtaining any such consents.
10.6 PROCEEDINGS AND INSTRUMENTS SATISFACTORY. All proceedings,
corporate or other, to be taken in connection with the transactions
contemplated by this Agreement, and all documents, schedules, and exhibits
hereto and thereto shall be reasonably satisfactory in form and substance to
Seller and Seller's counsel. At or prior to the Closing, Buyer shall have
made available to Seller for examination the originals or true and correct
copies of all documents that Seller may reasonably request in connection with
the transactions contemplated by this Agreement.
10.7 LITIGATION. No investigation, suit, action, or other
proceeding shall be threatened or pending before any court or governmental
agency that seeks restraint, prohibition, damages, or other relief in
connection with this Agreement or the consummation of the transactions
contemplated by this Agreement.
10.8 DELIVERY OF DOCUMENTS. All documents required to be delivered
by Buyer at the Closing under Section 11.2 shall have been delivered or shall
be tendered at the Closing.
SECTION 11. THE CLOSING. The closing under this Agreement (the
"Closing") shall take place at the offices of the title company issuing the
lender's policy with respect to the Closing,
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no later than 5:00 p.m., local time, on January 22, 2001 (subject to the
right of either Buyer, on the one hand, or Seller, on the other hand, if it
has satisfied all of its conditions precedent to the Closing, to extend the
Closing until January 29, 2001 in the event that the other party has not
satisfied all of its conditions precedent to the Closing), or at such other
date, time and place as may be agreed upon by Seller and Buyer (the "Closing
Date").
11.1 DELIVERIES BY SELLER. At the Closing, Seller shall deliver:
(a) Such deeds, bills of sale, instruments of assignment, and
other instruments and documents as may be necessary to convey to Buyer title
to all the applicable assets and properties to be transferred hereunder,
including a ▇▇▇▇ of Sale, Assignment and Assumption Agreement (the "▇▇▇▇ of
Sale") and Assignment of Franchise Agreements (the "Franchise Assignments")
in such form as shall be mutually agreed upon by Seller and Buyer prior to
the Closing Date, and subject only to the Permitted Exceptions.
(b) The Lease Assignments/Subleases.
(c) The certificate of the Secretary of Seller certifying to
the resolutions constituting all necessary corporate action by the board of
directors of Seller to authorize or ratify the consummation of the
transactions provided for herein.
(d) The certificate of Seller that all representations and
warranties of Seller contained in this Agreement are true and correct in all
material respects at the Closing Date.
(e) An opinion of counsel of ▇▇▇▇▇▇▇▇▇ Traurig, LLP, as
counsel for Seller, to the effect as set forth in Exhibit D attached hereto.
(f) Copies of all consents or approvals that Seller is
responsible for obtaining under this Agreement.
(g) All certificates and other documents delivered by Seller
shall be in form reasonably satisfactory to Buyer, Buyer's lender, and
counsel for Buyer.
(h) Documents satisfying the requirements of Section 9.10.
11.2 DELIVERIES BY BUYER. At the Closing, Buyer shall deliver:
(a) The Purchase Price.
(b) The Subordinated Note and Warrant.
(c) The Lease Assignments/Subleases.
(d) The ▇▇▇▇ of Sale and Franchise Assignments.
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(e) The Certificate of Buyer's manager certifying to the
resolutions constituting all necessary action by the members and managers of
Buyer to authorize the consummation of the transactions provided for herein.
(f) The Certificate of Buyer that all representations and
warranties of Buyer contained in this Agreement are true and correct in all
material respects at the Closing Date.
(g) A Certificate of Existence (or Qualification) from the
State of Arizona and of each other state in which the Restaurants are located
where Buyer is required to be qualified, each such certificate dated within
five days prior to the Closing, or other evidence of such qualification that
shall be satisfactory to Seller in its reasonable discretion.
(h) An opinion of Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., or other
counsel for Buyer qualified to practice in the jurisdiction in which the
Purchased Assets are located, to the effect as set forth on Exhibit D
attached hereto.
(i) Copies of all consents or approvals that Buyer is
responsible for obtaining under this Agreement.
(j) All certificates and other documents delivered by Buyer
shall be in form reasonably satisfactory to Seller and counsel for Seller.
SECTION 12. EMPLOYEES. Simultaneously with or immediately following the
Closing, Seller shall terminate all employees employed at the Restaurants by
Seller, excluding any employees whose employment responsibilities extend to
restaurants owned or operated by Seller other than the Restaurants. Buyer
shall offer employment to all employees employed at the Restaurants by Seller
as of the Closing (except that Buyer shall have the option to offer
employment to, but shall not be required to offer employment to, the District
Managers whose employment responsibilities extend to the Restaurants)
identified to Buyer as such by Seller prior to the Closing (the "Continuing
Employees"); provided, however, that nothing in this Agreement or otherwise
shall (i) limit in any way the right of Buyer to change the rate of pay or
salary or benefits of any Continuing Employee, or to assume any of Seller's
liabilities with respect to such Continuing Employees for vacation, or such
pay, bonuses or the like, or (ii) prevent Buyer from terminating the
employment of any Continuing Employee after the Closing Date. Seller hereby
agrees to indemnify, defend and hold Buyer harmless from and against any
liabilities, claims, losses, fines or liabilities with respect to, and
against the claims of any persons alleging violations of any pension,
retirement, profit sharing, compensation, fringe benefit, health or other
insurance, or any other employee benefit plans, including any "employee
benefit plan" as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, arising with respect to such persons'
employment at the Restaurants on or before 3:00 p.m. local time on the
Closing Date, and no facts or circumstances exist that would cause Buyer to
be liable to any person in connection with any such plans of Seller.
SECTION 13. POST-CLOSING COVENANTS.
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13.1 BULK TRANSFER. Seller and Buyer hereby acknowledge and agree
that, to expedite the closing of the transactions pursuant to this Agreement,
Buyer shall be under no obligation to comply with any applicable "Bulk
Transfer" provisions of each jurisdiction in which the Restaurants are
located. Seller shall pay all of its liabilities, including all accounts
payable, in accordance with the terms of Section 2 hereof, and Seller shall
indemnify and hold harmless Buyer, upon demand, from and against any and all
liability incurred by Buyer by reason of Seller's failure to pay any accounts
payable or by reason of the failure of Buyer to comply with the requirements
of such Bulk Transfer provisions. Seller acknowledges that the covenants
made in this Section 13.1 have been made with the express purpose of inducing
Buyer to waive compliance with such Bulk Transfer provisions. The provisions
of this Section 13.1 shall survive for the duration of the statute of
limitations provisions of the "Bulk Transfer" provisions of the respective
jurisdictions in which the Restaurants are located.
13.2 FURTHER ASSURANCES; TRANSFER OF OBLIGATIONS AND LIABILITIES.
Seller and Buyer shall execute and deliver all such other instruments and
take all such other action as any party may reasonably request from time to
time, before or after the Closing, in order to effectuate the transactions
provided for herein. The parties shall cooperate with each other and with
their respective counsel and accountants in connection with any steps to be
taken as a part of their respective obligations under this Agreement,
including the preparation of financial statements. Buyer and Seller shall
use their respective best efforts to obtain any approvals or consents of
third parties that may be required in order to consummate the transactions
contemplated by this Agreement. Within 14 days after the Closing Date, Buyer
shall have made such arrangements as may be necessary to transfer any
obligations or liabilities relating to the Restaurants (other than the
Franchise Agreements and Leases) that Buyer has agreed to assume hereunder,
including, but not limited to, telephone bills and utility charges. After
the Closing, Seller shall cooperate with Buyer to permit Buyer to enjoy
Seller's rating and benefits under the ▇▇▇▇▇▇▇'▇ compensation laws and
unemployment compensation laws of applicable jurisdictions, to the extent
permitted by such laws. Nothing herein shall be deemed a waiver by Buyer of
its right to receive at the Closing an effective assignment of each of the
Contracts, commitments or rights of Seller as otherwise set forth in this
Agreement.
13.3 ASSIGNMENT OF VENDING COMMISSIONS. Seller has represented to
Buyer that Seller is a party to certain agreements (the "Vending Contracts")
under which the other parties to those agreements (the "Vendors") have
installed coin-operated amusement equipment (the "Equipment") at the
Restaurants. Seller represents and warrants to Buyer that, under the Vending
Contracts, (i) the Vendors are obligated to pay to Seller commissions (the
"Vending Commissions") based upon a percentage of monthly net revenue from
the Equipment, and (ii) the Vendors have advanced monies to Seller against
future Vending Commissions to be earned from the Equipment. Seller further
represents and warrants to Buyer that Seller will not assign its rights to
the Vending Commissions or terminate the Vending Contracts with respect to
the Equipment at any Restaurant until such Equipment generates Vending
Commissions at least equal to $10,000 at each Restaurant (the "Break Even
Amount") since the signing of the applicable Vending Contract. Based upon
the foregoing, the parties agree as follows:
(a) Seller shall retain the right to receive all Vending
Commissions from Equipment located at each of the Restaurants (on an
individual Restaurant basis) until the earlier
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to occur of (i) the date on which the Vending Commissions at such Restaurant
(for the entire period of the applicable Vending Contract) equals the Break
Even Amount or (ii) the date on which Buyer pays the applicable Vendor the
amount necessary to reach the Break Even Amount for such Restaurant, but in
no event later than the termination date of the applicable Vending Contract
(the later of such dates is hereinafter referred to as the "Transition
Date"), after which date Seller shall either (A) assign to Buyer its rights
to receive the Vending Commissions from the Equipment located at such
Restaurant or (B) terminate the Vending Contract with respect to the
Equipment at such Restaurant. Seller shall provide Buyer with reports of
Vending Commissions received on a monthly basis within five days of Seller's
receipt of such reports from the Vendors.
(b) As soon as practicable after the Transition Date for the
Equipment at any given Restaurant, at the option of Buyer, Seller shall
either (i) assign to Buyer its rights to the Vending Commissions for such
Equipment, or (ii) terminate the Vending Contract with respect to the
Equipment at such Restaurant.
(c) Until the Transition Date, Buyer hereby agrees to provide
(i) suitable and adequate floor space, customer access, and utilities to and
for the Equipment at each of the Restaurants, and (ii) reasonable access to
the Vendors to service, maintain, and restock the Equipment at each of the
Restaurants, in each case as though Buyer, and not Sellers, were parties to
each of the Vending Contracts.
13.4 EMPLOYMENT OBLIGATIONS. Seller shall be responsible for all
obligations and liabilities of Seller with respect to any employees employed
at the Restaurants arising prior to the Closing Date, including, but not
limited to, all obligations for salaries, vacation and holiday pay, severance
payments, bonuses, retirement benefits, welfare benefits, and other forms of
compensation, benefits or other payments or liabilities of Seller arising
under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1986.
SECTION 14. INDEMNIFICATION.
14.1 INDEMNIFICATION BY SELLER. If, at any time hereafter, it is
determined that any representation, warranty or covenant of Seller contained
in this Agreement or in any schedule, exhibit or document delivered pursuant
hereto was materially incomplete, incorrect or untrue, or that Seller
breached any representation, warranty, covenant or agreement contained in
this Agreement and in either case neither Buyer nor Principals had any
knowledge as of the Closing Date that such representation, warranty or
covenant was incomplete, incorrect or untrue in any respect or that such
covenants or agreements had been or would be breached , Seller shall promptly
pay Buyer the amount of the loss, expense or damage suffered or incurred by
Buyer that would not have been suffered or incurred if those representations,
warranties, covenants or agreements had not been breached. Seller shall also
indemnify and hold Buyer and its members, managers, employees, agents and
representatives harmless for, from and against all liabilities, suits,
actions, proceedings, claims, demands, losses, damages, fees, costs, taxes,
penalties and expenses (including, but not limited to, reasonable attorneys'
and accountants' fees) caused by, arising out of or otherwise related to the
ownership of the Purchased Assets and the operation of the Restaurants prior
to the Closing Date.
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14.2 INDEMNIFICATION BY BUYER. If, at any time hereafter, it is
determined that any representation, warranty or covenant of Buyer contained
in this Agreement or in any certificate, schedule, exhibit or document
delivered pursuant hereto was materially incomplete, incorrect or untrue, or
that Buyer breached any representation, warranty, covenant or agreement
contained in this Agreement, Buyer shall promptly pay Seller the amount of
the loss, expense or damage suffered or incurred by Seller that would not
have been suffered or incurred if those representations, warranties,
covenants or agreements had not been breached. Buyer shall also indemnify
and hold Seller, and its employees, agents, and representatives harmless for,
from and against all liabilities, suits, actions, proceedings, claims,
demands, losses, damages, fees, costs, taxes, penalties and expenses
(including, but not limited to, reasonable attorneys' and accountants' fees)
that first arise and are caused by or otherwise related to the ownership of
the Purchased Assets and operation of the Restaurants subsequent to the
Closing Date.
14.3 CERTAIN LIMITATIONS. The rights of indemnification provided
for under this Section 14 are intended to be and shall constitute the sole
and exclusive remedy of any party hereto for any breach of any
representation, warranty, or covenant contained in this Agreement or the
operation of the Restaurants. The obligations of a party to indemnify any
other party under Sections 14.1 and 14.2 shall survive until the third
anniversary of the Closing Date, except that an indemnifying party's
obligations shall continue as to any matter to which a claim identified as a
claim for indemnification pursuant to this Agreement is submitted in writing
to the indemnifying party prior to the third anniversary of the Closing Date.
SECTION 15. BROKERS AND FINDERS. Each of the parties hereto represents
and warrants to the other that it has not employed or retained any broker or
finder in connection with the transactions contemplated by this Agreement nor
has it had any dealings with any person which may entitle that person to a
fee or commission from any other party hereto, except that Seller shall be
responsible for and shall pay the fee of CNL Advisory Services in connection
with the transaction contemplated hereby. Each of the parties shall
indemnify and hold the other harmless for, from and against any claim, demand
or damages whatsoever by virtue of any arrangement or commitment made by it
with or to any person that may entitle such person to any fee or commission
from the other parties to this Agreement.
SECTION 16. NEW LEASES. Subject to the terms of the Subleases, as soon
as practicable after the Closing Date, Buyer shall use its commercially
reasonable efforts to enter into a new lease (a "New Lease") for each of the
Leased Properties, such that Seller's Lease with respect to each of the
Leased Properties shall be cancelled or terminated and Seller shall be
released from all of its duties and obligations under such Lease immediately
upon the effectiveness of the New Lease for such Leased Property.
SECTION 17. TERMINATION.
17.1 RIGHT TO TERMINATE. Notwithstanding anything to the contrary
contained herein, this Agreement and the transactions contemplated hereby may
be terminated:
(a) at any time by written agreement among Seller and Buyer;
17
(b) by Seller, at any time after January 29, 2001, if the
conditions precedent set forth in Section 10 are not satisfied or waived in
writing by Seller;
(c) by Buyer, at any time after January 29, 2001, if the
conditions precedent set forth in Section 9 are not satisfied or waived in
writing by Buyer;.
17.2 REMEDIES. No party shall be limited to the termination right
granted in Section 17.1 hereof by reason of the nonfulfillment of any
condition precedent to such party's closing obligations or a breach of
another party's representations and warranties, but may, in the alternative,
elect to do one of the following:
(a) Proceed to Closing despite the nonfulfillment of any
condition precedent to its obligation to proceed to Closing, it being
understood that consummation of the transactions contemplated herein shall
not be deemed a waiver of a breach of any representation, warranty or
covenant or of any party's rights and remedies with respect thereto.
(b) Decline to proceed to Closing, terminate this Agreement as
provided in Section 17.1, and thereafter seek damages as limited by, and only
to the extent permitted in, Section 17.3.
17.3 RIGHT TO DAMAGES. If this Agreement is terminated pursuant to
Section 17.1, no party hereto shall have any liability or obligation to the
other; provided, however, that each party shall remain liable for (a) any
willful breach of any of such party's representations, warranties and
covenants contained in this Agreement, and (b) any willful failure by such
party to perform any of its obligations or agreements contained in this
Agreement, in which case such party shall be liable for all of the other
parties' out-of-pocket costs and expenses that were incurred in connection
with the negotiations and preparation of this Agreement and all of the other
documents related to the transactions contemplated by this Agreement, and
those costs and expenses which are incurred by the other party in pursuing
such rights and remedies (including reasonable attorneys' fees), in an amount
not to exceed $25,000.
17.4 RETURN OF DOCUMENTS ON TERMINATION. In the event of a
termination, (i) Buyer agrees to return to Seller any and all documents and
copies and extracts therefrom that Buyer obtained from Seller pursuant to
this Agreement, and (ii) Seller agrees to return to Buyer any and all
documents and copies and extracts therefrom that Seller obtained from Buyer
pursuant to this Agreement.
SECTION 18. GENERAL PROVISIONS.
18.1 DEFINITION OF KNOWLEDGE. As used in this Agreement, (i) the
term "knowledge" with respect to any natural person shall mean such person's
actual knowledge, without inquiry, and (ii) the term "knowledge" with
respect to any entity shall mean the actual knowledge, without inquiry, of
such entity's executive officers, provided, however, that as to Seller
"knowledge" shall not include any facts, information or other knowledge
obtained by Principals in their respective capacities as executive officers
and directors of Seller if such facts, information or other knowledge was not
otherwise actually known by other executive officers of Seller.
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18.2 NOTICES. All notices, requests, demands and other
communications required or permitted under this Agreement shall be in writing
and shall be deemed to have been duly given, made and received (i) when
delivered against receipt; (ii) upon delivery by an overnight courier service
or facsimile with confirmation of receipt; or (iii) upon actual receipt of
registered or certified mail, postage prepaid, return receipt requested,
addressed as set forth below:
If to Buyer:
Mountain Range Restaurants, LLC
c/o ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Squire, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller:
Phoenix Restaurant Group, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇-▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Re: Mountain Range Restaurants Transaction
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may alter the address to which communications or copies are to be
sent by giving notice of such change of address in conformity with the
provisions of this paragraph for the giving of notice.
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18.3 CONFIDENTIALITY AND PUBLIC ANNOUNCEMENTS. Any public
announcement or similar publicity with respect to this Agreement or the
transactions contemplated hereby will be issued, if at all, at such time and
in such manner as Seller and Buyer mutually agree upon. Unless consented to
by the other party in advance, each of the parties to this Agreement shall,
and shall cause its respective officers, directors, shareholders, members,
managers, employees, partners, affiliates, accountants, counsel, and other
authorized representatives to keep this Agreement strictly confidential and
shall not make any disclosure of the contents of this Agreement or any
information obtained from the other parties hereto in connection with the
transactions contemplated hereby to any person except to the extent (a)
required to comply with the terms of this Agreement; (b) reasonably necessary
to enable Buyer to obtain the financing contemplated herein or to conduct its
due diligence as contemplated herein; (c) the disclosing party can establish
that such information has become publicly available other than as a result of
a breach of this Agreement or any other agreement between the parties hereto;
(d) disclosure is required in any judicial or administrative proceedings,
pursuant to court order or decree or applicable law, or by any governmental
or regulatory authority, provided that the party required to make such
disclosure shall give the other party notice of such request as promptly as
practicable and shall use its good faith efforts to obtain reasonable
assurance that confidential treatment will be accorded to such information.
Notwithstanding the foregoing, however, Seller may make any public disclosure
that it believes in its good faith to be required by applicable law or the
regulations of the Securities and Exchange Commission or the American Stock
Exchange.
18.4 BINDING NATURE OF AGREEMENT; ASSIGNMENT. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, personal representatives, successors and assigns, except
that no party may assign or transfer its rights or obligations under this
Agreement without the prior written consent of the other party hereto.
Nothing in this Agreement is intended to confer any rights or benefits to any
third party.
18.5 EXHIBITS AND SCHEDULES; ENTIRE AGREEMENT. All Exhibits and
Schedules referred to herein or attached hereto are hereby incorporated by
reference into, and made a part of, this Agreement. This Agreement, together
with the Exhibits and Schedules hereto, contains the entire agreement and
understanding among the parties hereto with respect to the subject matter
hereof, and supersedes all prior and contemporaneous agreements,
understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter hereof.
The express terms hereof control and supersede any course of performance
and/or usage of the trade inconsistent with any of the terms hereof. This
Agreement may not be modified or amended other than by an agreement in
writing.
18.6 CONTROLLING LAW. THIS AGREEMENT AND ALL QUESTIONS RELATING TO
ITS VALIDITY, INTERPRETATION, PERFORMANCE AND ENFORCEMENT, SHALL BE GOVERNED
BY AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ARIZONA, NOTWITHSTANDING ANY ARIZONA OR OTHER CONFLICT-OF-LAW
PROVISIONS TO THE CONTRARY.
18.7 INDULGENCES, NOT WAIVERS. Neither the failure nor any delay
on the part of a party to exercise any right, remedy, power or privilege
under this Agreement shall operate as
20
a waiver thereof, nor shall any single or partial exercise of any right,
remedy, power or privilege preclude any other or further exercise of the same
or of any other right, remedy, power or privilege, nor shall any waiver of
any right, remedy, power or privilege with respect to any occurrence be
construed as a waiver of such right, remedy, power or privilege with respect
to any other occurrence. No waiver shall be effective unless it is in
writing and is signed by the party asserted to have granted such waiver.
18.8 ATTORNEYS' FEES. The party prevailing in any legal proceeding
hereunder shall be entitled to recover from the other party or parties all
costs, expenses and attorneys' fees incurred in connection with the
enforcement of its rights and remedies. For the purpose of this Section 18.8
the "prevailing party" shall mean, in the case of the claimant, one who is
successful in obtaining substantially all of the relief sought, and in the
case of a defendant or respondent, one who is successful in denying
substantially all of the relief sought by a claimant.
18.9 COSTS AND EXPENSES. Seller shall be responsible for and shall
pay all costs and expenses related to the assignment of the Franchise
Agreements, payments to lessors of any of the Purchased Assets in connection
with the assignment of such leases, or costs and expenses related to the
transactions contemplated by the Lease Assignments/Subleases. Buyer shall be
responsible for and shall pay all costs and expenses related to obtaining any
title insurance policy or environmental reports desired by Buyer or its
lenders in connection with this Agreement or the Lease Assignments/Subleases.
Except as set forth in the preceding sentence and Section 17.3, each party
shall bear its own costs and expenses incurred in connection with the
negotiation, preparation and execution of this Agreement, the obtaining of
necessary approvals thereof, and the Closing under this Agreement and all
matters incident thereto, including fees and expenses of counsel,
accountants, investment bankers, and other experts.
18.10 TITLES NOT TO AFFECT INTERPRETATION. The titles of sections
contained in this Agreement are for convenience only, and they neither form
a part of this Agreement nor are they to be used in the construction or
interpretation hereof.
18.11 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original
as against any party whose signature appears thereon, and all of which shall
together constitute one and the same instrument. This Agreement shall become
binding when one or more counterparts hereof, individually or taken together,
shall bear the signatures of all of the parties reflected hereon as the
signatories. Any photographic or xerographic copy of this Agreement, with
all signatures reproduced on one or more sets of signature pages, shall be
considered for all purposes as of it were an executed counterpart of this
Agreement.
18.12 PROVISIONS SEPARABLE. The provisions of this Agreement are
independent and separable from each other, and no provision shall be affected
or rendered invalid or unenforceable by virtue of the fact that for any
reason any other or others of them may be invalid or unenforceable in whole
or in part.
18.13 NUMBER OF DAYS. In computing the number of days for purposes
of this Agreement, all days shall be counted, including Saturdays, Sundays
and bank holidays; provided, however, that if the final day of any time
period falls on a Saturday, Sunday or bank holiday,
21
then the final day shall be deemed to be the next day which is not a
Saturday, Sunday or bank holiday.
18.14 WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVES
ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON
OR ARISING OUT OF THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
18.15 CONSTRUCTION. The parties hereto acknowledge that each party
was represented by legal counsel (or had the opportunity to be represented by
legal counsel) in connection with this Agreement and that each of them and
its counsel have reviewed and revised this Agreement, or have had an
opportunity to do so, and that any rule of construction to the effect that
ambiguities are to be resolved against the drafting party shall not be
employed in the interpretation of this Agreement or any amendments or any
Exhibits or Schedules hereto or thereto.
18.16 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. Buyer and Seller assert they have each
investigated the requirements under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇") and agree that no HSR Act filings
are required for this transaction.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
22
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
BUYER: SELLER:
MOUNTAIN RANGE RESTAURANTS PHOENIX RESTAURANT GROUP, INC.,
LLC, an Arizona limited liability company a Georgia corporation
/s/ ▇▇▇▇▇▇▇ ▇▇▇ /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------- -------------------------------
By: ▇▇▇▇▇▇▇ ▇▇▇ By: W. ▇▇▇▇▇ ▇▇▇▇▇▇
-------------------------------------- ----------------------------
Its: Manager Its: President
------------------------------------- ---------------------------
23
SCHEDULE A
UNIT ADDRESS
---- -------
1. 6638 ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
2. 6639 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇
3. 6640 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇
4. 6753 76 ▇▇▇▇▇▇▇▇▇▇, Ontario, Oregon
5. 6787 ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
6. 6708 ▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇
7. 6709 3500 S. ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
8. 6710 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
9. 6712 ▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇
10. 6739 ▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
11. 6835 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇, ▇▇▇▇
12. 6867 ▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
13. 6306 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇
14. 6320 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
15. 6348 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
16. 6556 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
17. 6619 ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
18. 6644 ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇
19. 6648 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇
20. 6758 1218 Litchfield, Goodyear, Arizona
21. 7025 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇
22. 6309 ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
23. 6356 ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
24. 6357 ▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇
Exhibits Omitted Due to Immateriality