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EXHIBIT 2.5
STOCK PURCHASE AGREEMENT
BETWEEN
BEP HOLDINGS, INC.
AND
DENAMERICA CORP.
MAY 31, 1996
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TABLE OF CONTENTS
Section 1. Definitions................................................................. 1
Section 2. Purchase and Sale of Company Shares......................................... 5
(a) Basic Transaction........................................................... 5
(b) Purchase Price.............................................................. 5
(c) Post-Closing Purchase Price Adjustment...................................... 5
(e) Deliveries at the Closing................................................... 5
(f) Treatment of Intercompany Debt.............................................. 6
Section 3. Representations and Warranties Concerning the Transaction................... 6
(a) Representations and Warranties of Seller.................................... 6
(b) Representations and Warranties of Buyer..................................... 7
Section 4. Representations and Warranties Concerning the Company and its Subsidiaries.. 8
(a) Organization, Qualification, and Corporate Power............................ 8
(b) Capitalization.............................................................. 9
(c) Noncontravention............................................................ 9
(d) Brokers' Fees............................................................... 9
(e) Title to Personal Properties................................................ 9
(f) Subsidiaries. .............................................................. 10
(g) Financial Statements........................................................ 10
(h) Events Subsequent to February 5, 1996....................................... 11
(i) Compliance with Law and Other Related Regulations........................... 12
(j) Tax Matters................................................................. 13
(k) Real Property; Certain Other Matters........................................ 13
(l) Intellectual Property....................................................... 15
(m) Contracts................................................................... 15
(n) Litigation.................................................................. 16
(o) Employee Benefits........................................................... 16
(p) Bonds....................................................................... 17
(q) Environmental Matters....................................................... 17
(r) Certain Business Relationships With the Company and its Subsidiaries........ 18
(s) Certain Employee Matters.................................................... 18
(t) Accounts Receivable......................................................... 18
(u) Insurance................................................................... 18
(v) Minute Books................................................................ 19
(w) Accuracy of Statements...................................................... 19
(x) Franchises.................................................................. 19
(y) Labor Matters............................................................... 19
(i)
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Section 5. Pre-Closing Covenants........................................ 20
(a) Financing.................................................... 20
(b) General...................................................... 20
(c) Notice of Developments....................................... 21
(d) Exclusivity.................................................. 21
(e) Letters of Credit and Comfort Letters........................ 21
(f) Covenants of Seller.......................................... 22
(g) Section 338(h)(10) Election.................................. 25
(h) Permitted Actions of Seller.................................. 25
(i) Audited Financial Statements................................. 25
Section 6. Post-Closing Covenants....................................... 25
(a) General...................................................... 25
(b) Litigation Support........................................... 25
(c) Transition................................................... 26
(d) Name Changes................................................. 26
(e) Prepayment of Buyer Note..................................... 26
(f) Returns for Periods Through the Closing Date................. 26
(g) Mutual Cooperation........................................... 26
(h) Employees and Employee Benefit Plans......................... 26
(i) Uniform Franchise Offering Circular.......................... 28
Section 7. Conditions to Obligation to Close............................ 28
(a) Conditions to Obligation of Buyer............................ 28
(b) Conditions to Obligation of Seller........................... 29
Section 8. Remedies for Breaches of This Agreement...................... 31
(a) Survival of Representations and Warranties................... 31
(b) Indemnification Provisions for Benefit of Buyer.............. 31
(c) Indemnification Provisions for Benefit of Seller............. 32
(d) Matters Involving Third Parties.............................. 33
(e) Treatment.................................................... 34
Section 9. Termination.................................................. 34
(a) Termination of Agreement..................................... 34
(b) Effect of Termination........................................ 35
Section 10. Miscellaneous................................................ 35
(a) Certain Understandings of Buyer.............................. 35
(b) Press Releases and Public Announcements...................... 35
(c) No Third Party Beneficiaries................................. 35
(d) Entire Agreement............................................. 35
(e) Succession and Assignment.................................... 36
(f) Counterparts................................................. 36
(g) Headings..................................................... 36
(ii)
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(h) Notices.................................................. 36
(i) Governing Law............................................ 37
(j) Amendments and Waivers................................... 37
(k) Severability............................................. 37
(l) Expenses................................................. 37
(m) Construction............................................. 37
(n) Incorporation of Exhibits and Schedules.................. 38
(o) Confidentiality.......................................... 38
EXHIBITS
Exhibit A - Form of Buyer Note
Exhibit B - List of 39 Owned Properties
Exhibit C-1- List of Letters of Credit
Exhibit C-2- List of Comfort Letters
Exhibit D - Certain Management Corp. Employees
Exhibit E - List of 63 Leased Properties
Exhibit F - Form of Transition Services Agreement
Exhibit G - Form of Opinion of Counsel to Seller
Exhibit H - Form of Opinion of Counsel to Buyer
Exhibit I - Form of Registration Rights Agreement
Exhibit J - Purchase Price Adjustment
Exhibit K - Permitted Actions between Signing and Closing
Exhibit L - Form of Warrant
Exhibit M - Letter Agreement regarding Series B Notes
Disclosure Schedule - Exceptions to Representations and Warranties
(iii)
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STOCK PURCHASE AGREEMENT
AGREEMENT entered into as of May 31, 1996, by and between DenAmerica
Corp., a Georgia corporation ("Buyer"), and BEP Holdings, Inc., a Delaware
corporation ("Seller"). Buyer and Seller are referred to herein as the
"Parties." Other capitalized terms used herein are defined in Section 1.
WHEREAS, Seller owns all of the outstanding capital stock of
Black-eyed Pea U.S.A., Inc., a Texas corporation (the "Company");
WHEREAS, the Company and its Subsidiaries are engaged in the business
of operating the Black-eyed Pea restaurant chain;
WHEREAS, subject to the terms and conditions set forth in this
Agreement, Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, all of the outstanding capital stock of the Company;
WHEREAS, the purchase price for the capital stock of the Company will
consist of cash and a promissory note payable by Buyer; and
WHEREAS, Unigate Holdings, NV, the indirect parent of Seller, has
executed and delivered to Buyer a Guarantee Agreement, pursuant to which Unigate
Holdings, NV has guaranteed the obligations of Seller under this Agreement on
the terms set forth therein.
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
Section 1. Definitions.
"Adverse Consequences" means (i) all actions, suits, proceedings,
investigations, charges, complaints, claims, injunctions, judgments, orders,
decrees, rulings, damages, dues, penalties, fines, costs, reasonable amounts
paid in settlement, liabilities, obligations, taxes, liens, losses, expenses,
and fees, including court costs and reasonable attorneys' fees and expenses and
(ii) the amount of the loss, damage or expense (or decrease in the value of the
business of the Company and its Subsidiaries taken as a whole) that is actually
suffered or incurred by reason of a breach of a representation or warranty or a
covenant or agreement that would not have been suffered or incurred if the
representation or warranty or covenant or agreement not been breached.
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"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, the first mentioned Person
within the meaning of the Securities Exchange Act.
"Applicable Rate" means the corporate base rate of interest announced
from time to time by Chemical Bank (or its successors).
"BEP Development Agreement" means a development agreement or license
agreement relating to the opening of additional BEP Restaurants.
"BEP Franchise Agreement" means a franchise agreement relating to the
operation of a BEP Restaurant.
"BEP Leases" means the leases relating to the BEP Restaurant
Properties.
"BEP Mortgages" means the mortgages (if any) relating to the BEP
Restaurant Properties.
"BEP Real Estate Documents" means the deeds, leases and other
documents pursuant to which the Company and its Subsidiaries own, lease or
otherwise occupy the properties associated with the BEP Restaurants.
"BEP Restaurant Properties" means the real properties associated with
the BEP Restaurants.
"BEP Restaurants" means the Black-eyed Pea restaurants operated by
the Company and its Subsidiaries (excluding restaurants operated by
franchisees).
"Black-eyed Pea Restaurants, Inc." means Black-eyed Pea Restaurants,
Inc., a Delaware corporation and the indirect parent of Seller.
"Buyer" has the meaning set forth in the preface above.
"Buyer Note" has the meaning set forth in Section 2(b) below.
"Buyer SEC Reports" has the meaning set forth in Section 3(b) below.
"Closing" has the meaning set forth in Section 2(d) below.
"Closing Date" has the meaning set forth in Section 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
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"Company" has the meaning set forth in the preface above.
"Company Shares" means the shares of common stock, par value $.01 per
share, of the Company.
"Confidentiality Agreement" has the meaning set forth in Section
10(d) below.
"Credit Agreement" has the meaning set forth in the Buyer Note.
"Debt Agreements" has the meaning set forth in Section 3(b)(x) below.
"Disclosure Schedule" has the meaning set forth in Section 4 below.
"Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan, or (d)
Employee Welfare Benefit Plan.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA
Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA
Sec. 3(1).
"Environmental Laws" has the meaning set forth in Section 4(q) below.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"FFCA" means Franchise Finance Corporation of America (or the
Affiliate of FFCA which provides financing to Buyer in connection with the
transactions contemplated by this Agreement).
"Financial Statements" has the meaning set forth in Section 4(g)
below.
"GAAP" means United States generally accepted accounting principles
as in effect from time to time.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
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"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto.
"Indemnified Party" has the meaning set forth in Section 8(d) below.
"Indemnifying Party" has the meaning set forth in Section 8(d) below.
"Intellectual Property" has the meaning set forth in Section 4(l)
below.
"Knowledge" means actual knowledge without independent investigation.
"Latest Balance Sheet" has the meaning set forth in Section 4(g)
below.
"Management Corp." means Black-eyed Pea Management Corp., a South
Dakota corporation and wholly-owned subsidiary of Seller.
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Registration Rights Agreement" means the Registration Rights
Agreement in the form attached as Exhibit I hereto.
"Securities Act" means the Securities Act of 1933, as amended.
"SEC" means the Securities and Exchange Commission.
"Securities Exchange Act" means the Securities Exchange Act of 1934,
as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (a) mechanic's, materialmen's,
and similar liens, (b) liens for taxes not yet due and payable or for taxes that
the taxpayer is contesting in good faith through appropriate proceedings, (c)
purchase money liens on personal properties and liens securing rental payments
under capital lease
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arrangements for real or personal properties, and (d) other liens arising in the
Ordinary Course of Business and not incurred in connection with the borrowing of
money.
"Seller" has the meaning set forth in the preface above.
"Store Change Funds" means cash held at stores for purposes of making
change.
"Subsidiary" means any corporation with respect to which a specified
Person (or a Subsidiary thereof) directly or indirectly owns a majority of the
common stock or has the power to vote or direct the voting of sufficient
securities to elect a majority of the directors (or any partnership as to which
such Person has a similar ownership or voting interest).
"Third Party Claim" has the meaning set forth in Section 8(d) below.
"Unigate PLC" means Unigate PLC, a company organized under the laws
of England and Wales and the indirect holder of all of the outstanding capital
stock of Seller.
"Warrant" means the warrant to purchase shares of Buyer's common
stock in the form attached as Exhibit L hereto, which warrant will be issued to
Seller on the Closing Date and become exercisable in the future under the
circumstances set forth therein.
Section 2. Purchase and Sale of Company Shares.
(a) Basic Transaction. On and subject to the terms and conditions of
this Agreement, Buyer agrees to purchase from Seller, and Seller agrees to sell
to Buyer, all of the outstanding Company Shares for the consideration specified
in Section 2(b).
(b) Purchase Price. At the Closing, Buyer shall pay to Seller the
following as the purchase price for the Company Shares: (i) $50.0 million by
wire transfer of immediately available funds and (ii) a negotiable promissory
note in the principal amount of $15.0 million payable by Buyer to Seller in the
form of Exhibit A hereto (the "Buyer Note"). The purchase price paid at the
Closing shall be subject to adjustment as provided in Section 2(c) below.
(c) Post-Closing Purchase Price Adjustment. Within the time periods
set forth in Exhibit J hereto, the purchase price paid by Buyer to Seller at the
Closing shall be adjusted in accordance with Exhibit J. Any purchase price
adjustment owed by reason of the provisions of Exhibit J shall be paid by wire
transfer of immediately available funds and shall be accompanied by interest on
such payment from the Closing Date at the Applicable Rate.
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(d) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of O'Connor, Cavanagh,
Anderson, Killingsworth & Beshears, P.A., One East Camelback Road, Phoenix,
Arizona, commencing at 9:00 a.m. local time on June 24, 1996 (or, if later, the
second business day following the satisfaction or waiver of all conditions to
the obligations of the Parties to consummate the transactions contemplated
hereby (other than conditions with respect to actions the respective Parties
will take at the Closing itself)) (the "Closing Date").
(e) Deliveries at the Closing. At the Closing, (i) Seller will
deliver to Buyer the various instruments and documents referred to in Section
7(a) below, (ii) Buyer will deliver to Seller the various instruments and
documents referred to in Section 7(b) below (including the Buyer Note, the
Warrant and the Registration Rights Agreement), (iii) Seller will deliver to
Buyer stock certificates representing all of the outstanding Company Shares,
endorsed in blank or accompanied by duly executed assignment documents and (iv)
Buyer will deliver to Seller the consideration specified in Section 2(b) above
for the outstanding Company Shares (as such consideration may be modified
pursuant to Section 2(c)(i) above).
(f) Treatment of Intercompany Debt. Immediately prior to the Closing,
all outstanding intercompany balances and promissory notes between the Company
and its Subsidiaries, on the one hand, and the Seller and its Affiliates (other
than the Company and its Subsidiaries), on the other hand, shall be combined and
netted. Any net amount owing by the Company and its Subsidiaries shall be
contributed to the capital of the Company. Any net amount owing to the Company
and its Subsidiaries shall be forgiven. If requested by Buyer, Seller shall
deliver written evidence of the consummation of such transactions at the
Closing.
Section 3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of Seller. Seller represents and
warrants to Buyer that the statements contained in this Section 3(a) are true
and correct as of the date of this Agreement.
(i) Organization. Seller is a corporation, duly organized and
validly existing under the laws of State of Delaware.
(ii) Authorization of Transaction. Seller has full corporate
power and authority to execute and deliver this Agreement and to perform
its obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of Seller, enforceable against it in accordance with its
terms. Seller does not need to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any government or
governmental agency in order to consummate the transactions contemplated by
this Agreement, except as required pursuant to the HSR Act.
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(iii) Brokers' Fees. Neither Seller nor any of its Affiliates has
any liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement for which Buyer could become liable or obligated.
(iv) Company Shares. Seller holds of record and owns beneficially
all of the issued and outstanding Company Shares free and clear of any
restrictions on transfer (other than restrictions under the Securities Act
and state securities laws), taxes, security interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, demands, liens,
claims, charges and encumbrances. Seller is not party to any option,
warrant, purchase right, or other contract or commitment that could require
it to sell, transfer, or otherwise dispose of any capital stock of the
Company. Seller is not party to any voting trust, proxy, or other agreement
or understanding with respect to the voting of any capital stock of the
Company.
(v) Investment. Seller is not acquiring the Buyer Note or the
Warrant with a view to or for sale in connection with any distribution
thereof within the meaning of the Securities Act.
(b) Representations and Warranties of Buyer. Buyer represents and
warrants to Seller that the statements contained in this Section 3(b) are true
and correct as of the date of this Agreement.
(i) Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Georgia.
(ii) Authorization of Transaction. Buyer has the corporate power
and authority to execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of Buyer, enforceable against it in accordance with its
terms. Buyer need not give any notice to, make any filing with, or obtain
any authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this
Agreement, except as required pursuant to the HSR Act.
(iii) Buyer Note, etc. Buyer has the corporate power and
authority to execute, issue and deliver the Buyer Note, the Warrant and the
Registration Rights Agreement and to perform its obligations thereunder.
Each of the Buyer Note, the Warrant and the Registration Rights Agreement
has been duly authorized and, when executed, issued and delivered to
Seller, will constitute the valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms.
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(iv) Noncontravention. The execution, delivery and performance of
this Agreement, the Buyer Note, the Warrant and the Registration Rights
Agreement (and the issuance of capital stock of Buyer upon exercise of the
Warrant) will not (i) violate any statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Buyer is subject or any
provision of the charter or bylaws of Buyer or (ii) result in a breach of,
constitute a default under, result in the acceleration or termination of,
create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice or consent (other than notices previously given or
consents previously obtained) under any agreement, contract, lease,
license, instrument, or other arrangement to which Buyer is a party or by
which it is bound or to which any of its assets is subject (or result in
the imposition of any Security Interest upon any of its assets). The
issuance of the Warrant (and the issuance of capital stock of Buyer upon
exercise of the Warrant) will not breach or conflict with any preemptive,
first refusal or similar rights of any holder of Buyer's securities.
(v) SEC Reports. Buyer has filed all forms, reports and documents
required to be filed by it with the SEC since November 30, 1995 pursuant to
the federal securities laws and the SEC rules and regulations thereunder,
all of which, as of their respective dates, complied in all material
respects with all applicable requirements of the Securities Act and the
Securities Exchange Act (collectively, the "Buyer SEC Reports"). Except to
the extent cured in any filing made prior to the date of this Agreement,
none of the Buyer SEC Reports, including, without limitation, any financial
statements or schedules included therein, as of their respective dates,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
(vi) No Material Adverse Change. Since March 27, 1996, there has
not been any material adverse change in the business or financial condition
of the Buyer.
(vii) Sufficient Funds. Buyer has cash available, and/or has
obtained commitments from financial institutions, in amounts sufficient to
pay at the Closing the purchase price for the Company Shares as provided in
Section 2(b) above.
(viii) Brokers' Fees. Neither Buyer nor any of its Affiliates has
any liability or obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated by this
Agreement for which Seller or any of its Affiliates could become liable or
obligated.
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(ix) Investment. Buyer is not acquiring the Company Shares with a
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act.
(x) Debt Agreements. Buyer has provided to Seller true and
correct copies of all agreements and instruments of Buyer under which
Indebtedness (as defined in the Buyer Note) is outstanding or may be issued
("Debt Agreements").
Section 4. Representations and Warranties Concerning the Company and
its Subsidiaries. Seller represents and warrants to Buyer that the statements
contained in this Section 4 are true and correct as of the date of this
Agreement except as set forth in the disclosure schedule delivered by Seller to
Buyer on the date hereof (the "Disclosure Schedule"), as the same may be amended
pursuant to Section 5(d)(i) below.
(a) Organization, Qualification, and Corporate Power. Each of the
Company and its Subsidiaries is duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its organization. Each of the
Company and its Subsidiaries is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such qualification is
required, except where the lack of such qualification or good standing would not
materially interfere with the ability of the Company and its Subsidiaries to
conduct business or have a material adverse effect on the Company and its
Subsidiaries taken as a whole. Each of the Company and its Subsidiaries has full
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it.
(b) Capitalization. The entire authorized capital stock of the
Company consists of 500,000 shares of common stock, par value $.01 per share, of
which 22,499 shares are issued and outstanding. All of the issued and
outstanding Company Shares have been duly authorized, are validly issued, fully
paid, and nonassessable, and are held of record by Seller. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require the Company to issue, sell, or otherwise cause to become
outstanding any additional shares of its capital stock. There are no outstanding
or authorized stock appreciation, phantom stock, profit participation, or
similar rights issued by the Company (or with respect to which the Company could
be required to make payments or issue any capital stock).
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which any of the Company or its Subsidiaries is subject or any
provision of the charter or bylaws of any of the Company or its Subsidiaries or
(ii) result in a breach of, constitute
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a default under, result in the acceleration or termination in accordance with
its terms of, create in any party the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract, lease, license,
instrument, or other arrangement to which any of the Company or its Subsidiaries
is a party or by which any of them are bound or to which any of their assets is
subject (or result in the imposition of any Security Interest upon any of their
assets), except where the violation, conflict, breach, default, acceleration,
termination, modification, cancellation, failure to give notice, or Security
Interest would not have a material adverse effect on the Company and its
Subsidiaries taken as a whole or on the ability of the Parties to consummate the
transactions contemplated by this Agreement. None of the Company or its
Subsidiaries needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement, except (i) under the HSR Act and (ii) where the failure to give
notice, to file, or to obtain any authorization, consent, or approval would not
have a material adverse effect on the Company and its Subsidiaries taken as a
whole or on the ability of the Parties to consummate the transactions
contemplated by this Agreement.
(d) Brokers' Fees. None of the Company or its Subsidiaries has any
liability or obligation to pay any fees or commissions to any broker, finder, or
agent with respect to the transactions contemplated by this Agreement.
(e) Title to Personal Properties. The Company and its Subsidiaries
have good and marketable title to, or a valid and effective right to use, all of
their respective personal properties, including all personal properties
reflected on the Latest Balance Sheet or acquired since the date of the Latest
Balance Sheet (except property disposed of subsequent to that date in the
Ordinary Course of Business and except other immaterial items). Such assets and
properties are not subject to any mortgage, pledge, lien, claim, encumbrance,
charge, security interest or title retention or other security arrangement
except for liens for the payment of federal, state and other taxes, the payment
of which is neither delinquent nor subject to penalties, and except for other
liens and encumbrances incidental to the conduct of the business of the Company
and its Subsidiaries or the ownership of their assets or properties which were
not incurred in connection with the borrowing of money or the obtaining of
advances and which do not in the aggregate materially detract from the value of
the assets or properties of the Company and its Subsidiaries taken as a whole or
materially impair the use thereof in the operation of their respective
businesses. All leases pursuant to which the Company or any of its Subsidiaries
leases any substantial amount of personal property are valid and effective in
accordance with their respective terms.
(f) Subsidiaries. Section 4(f) of the Disclosure Schedule sets forth
for each Subsidiary of the Company (i) if such Subsidiary is a corporation (A)
its name and jurisdiction of incorporation, (B) the number of shares of
authorized capital stock of each class of its capital stock, (C) the number of
issued and outstanding shares of each class of its capital stock, (D) the names
of the holders of shares of each class of its
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capital stock, (E) the number of shares held by each such holder and (F) the
number of shares of its capital stock held in treasury; and (ii) if such
Subsidiary is a partnership (1) its name and jurisdiction of organization, (2)
the names of the holders of its general and limited partner interests and (3)
the percentage general or limited partner interest held by each such holder. All
of the issued and outstanding shares of capital stock of each corporate
Subsidiary of the Company have been duly authorized and are validly issued,
fully paid and nonassessable. All of the outstanding general and limited partner
interests of each partnership Subsidiary of the Company have been duly
authorized and are validly issued. One of the Company and its Subsidiaries holds
of record and owns beneficially all of the outstanding shares of each corporate
Subsidiary of the Company and one of the Company and its Subsidiaries owns each
outstanding partner interest of each partnership Subsidiary of the Company, in
each case free of all security interests, liens, charges, claims and
encumbrances.
(g) Financial Statements. The following financial statements are
included in the Disclosure Schedule (collectively the "Financial Statements"):
(i) the consolidated balance sheets and statements of earnings,
changes in stockholders' equity and cash flows for the Company and its
Subsidiaries as of and for the fiscal years ended April 3, 1995 and April
4, 1994, which have been audited by KPMG Peat Marwick LLP; and
(ii) the consolidated balance sheet (the "Latest Balance Sheet")
of the Company and its Subsidiaries as of February 5, 1996, which balance
sheet has not been audited or reviewed by KPMG Peat Marwick LLP.
The Financial Statements referenced in clause (i) above have been prepared in
accordance with GAAP applied on a consistent basis and present fairly the
consolidated financial condition and results of operations of the Company and
its Subsidiaries as of and for the fiscal years ended April 3, 1995 and April 4,
1994. The Latest Balance Sheet has been prepared in accordance with GAAP applied
on a consistent basis and presents fairly the financial condition of the Company
and its Subsidiaries as of February 5, 1996; provided, however, that the Latest
Balance Sheet does not include footnotes and is subject to normal year-end audit
adjustments. Neither the Company nor any of its Subsidiaries has any material
liabilities of a type which would be included in a balance sheet prepared in
accordance with generally accepted accounting principles, whether related to tax
or non-tax matters, accrued or contingent, due or not yet due, liquidated or
unliquidated or otherwise, except (i) liabilities disclosed in the Latest
Balance Sheet; (ii) liabilities incurred since the date of the Latest Balance
Sheet in the Ordinary Course of Business; (iii) liabilities referred to in the
Disclosure Schedule and (iv) other liabilities which would not have a material
adverse effect on the Company and its Subsidiaries taken as a whole.
(h) Events Subsequent to February 5, 1996.
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(i) Since February 5, 1996, neither the Company nor its
Subsidiaries (A) has taken any material action outside the Ordinary Course
of Business; (B) has borrowed any money; (C) become contingently liable for
any borrowings of another Person (or guaranteed or become contingently
liable for the performance of contractual obligations of another Person);
(D) has failed to use its reasonable efforts to preserve its business
organization intact, to keep available the services of its employees and
independent contractors, or to preserve its relationships with its
customers, suppliers and other Persons with which it deals; or (E) has
increased or committed to increase the salary or compensation of any
officer.
(ii) Since February 5, 1996, none of the Company or its
Subsidiaries has engaged in any material practice, taken any material
action or entered into any material transaction outside the Ordinary Course
of Business (other than the transactions contemplated by this Agreement).
Without limiting the generality of the foregoing, since that date:
(A) there has been no change made or authorized in the
charter or bylaws of the Company or any of its Subsidiaries;
(B) none of the Company or its Subsidiaries has issued, sold
or otherwise disposed of any of its capital stock, or granted any
options, warrants or other rights to purchase or obtain (including
upon conversion, exchange or exercise) any of its capital stock;
(C) none of the Company or its Subsidiaries has declared,
set aside or paid any dividend or made any distribution with respect
to its capital stock (whether in cash or in kind), or redeemed,
purchased or otherwise acquired any of its capital stock;
(D) the Company and its Subsidiaries have not created,
incurred, assumed or guaranteed more than $100,000 in aggregate
indebtedness for borrowed money and capitalized lease obligations;
(E) none of the Company or its Subsidiaries has sold,
leased, transferred or assigned any material assets, tangible or
intangible, outside the Ordinary Course of Business;
(F) there has not been any material adverse change in the
financial condition, business, properties, assets or results of
operations of the Company and its Subsidiaries taken as a whole
(provided that no representation or warranty is made as to the
decline in the performance of the business (including but not
limited to the decline in comparable store sales) experienced to
date, the circumstances or factors giving rise
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to such decline or any continuation of such decline, circumstances
or factors in the future, all of which risks are being assumed by
Buyer);
(G) there has not been any destruction, damage or loss
(whether or not covered by insurance) to the assets or properties of
the Company or its Subsidiaries which materially affects or impairs
the ability of the Company and its Subsidiaries to conduct their
business, taken as a whole;
(H) there has not been any mortgage or pledge of any
material amount of the assets or properties of the Company or any of
its Subsidiaries; and
(I) none of the Company or its Subsidiaries has committed
to any of the foregoing.
(i) Compliance with Law and Other Related Regulations. Except in the
case of environmental, franchise and labor matters (which are exclusively
covered by the representations and warranties contained in Sections 4(q), (x)
and (y), respectively):
(i) Each of the Company and its Subsidiaries is in compliance
with all requirements of federal, state and local law and regulations, and
all requirements of all governmental bodies and agencies having
jurisdiction over it, the conduct of its business, the use of its assets
and properties and all premises occupied by it, except where failure to
comply would not have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
(ii) Neither the Company nor any of its Subsidiaries has received
any written official notice or citation from any federal, state or local
authority or any insurance or inspection body that any of its assets,
properties, facilities, equipment or business procedures or practices
contravenes or fails to comply in any material respect with any applicable
federal, state or local law, ordinance, regulation, building or zoning law,
or requirement of any public body, including but not limited to any
federal, state or local law or regulations relating to health or safety
matters or any OSHA requirements, except for notices or citations as to
matters which would not have a material adverse effect on the Company and
its Subsidiaries taken as a whole.
(iii) Without limiting the foregoing, each of the Company and its
Subsidiaries has properly filed all material reports, paid all fees and
obtained all material licenses, permits, certificates and authorizations
needed or required for the conduct of its business and the use of its
assets and properties and the premises occupied by it in connection
therewith and is in compliance in all material respects with all
conditions, restrictions and provisions of all such material licenses,
permits, certificates and authorizations.
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(j) Tax Matters.
(i) Each of the Company and its Subsidiaries has filed or been
included in all federal, state and local, foreign and domestic, income,
employment, franchise, transaction privilege, sales, use, property or other
excise tax returns it was required to file or be included in, and has paid
in full or adequately reserved for or will pay all taxes shown due thereon
(together with all interest, penalties, assessments and deficiencies
assessed in connection therewith due through the date hereof). Such tax
returns and reports are correct in all material respects. Each of the
Company and its Subsidiaries has paid or will pay in full any taxes for
which a return or report may not be required, including all property taxes
due through the date hereof.
(ii) Section 4(j) of the Disclosure Schedule lists all Income Tax
Returns filed with respect to any of the Company and its Subsidiaries for
taxable periods ended on or after March 31, 1992 that have been audited and
indicates those Income Tax Returns that currently are the subject of audit.
Seller has delivered or made available to Buyer correct and complete copies
of all U.S. federal Income Tax Returns, state Income Tax Returns,
examination reports, and statements of deficiencies filed by, assessed
against or agreed to by any of the Company and its Subsidiaries since April
1, 1992.
(iii) None of the Company or its Subsidiaries has waived any
statute of limitations in respect of Income Taxes or agreed to any
extension of time with respect to an Income Tax assessment or deficiency.
(iv) None of the Company or its Subsidiaries is a party to any
Income Tax allocation or sharing agreement.
(k) Real Property; Certain Other Matters.
(i) Section 4(k)(i) of the Disclosure Schedule lists all real
property that any of the Company and its Subsidiaries owns. With respect to
each such parcel of owned real property, except for matters which would not
have a material adverse effect on the Company and its Subsidiaries taken as
a whole:
(A) the owner has good and marketable title to the parcel
of real property, free and clear of any Security Interest, easement,
covenant, or other restriction, except for installments of special
assessments not yet delinquent, recorded easements, covenants, and
other restrictions, and utility easements, building restrictions,
zoning restrictions, and other easements and restrictions existing
generally with respect to properties of a similar character;
(B) there are no leases, subleases, licenses, concessions,
or other agreements granting to any Person or Persons the right of
use or occupancy of any portion of the parcel of real property; and
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(C) there are no outstanding options or rights of first
refusal to purchase the parcel of real property.
(ii) Section 4(k)(ii) of the Disclosure Schedule lists all real
property leased or subleased to any of the Company and its Subsidiaries.
Seller has made available to Buyer copies of the leases and subleases
listed in Section 4(k)(ii) of the Disclosure Schedule. Each lease and
sublease listed in Section 4(k)(ii) of the Disclosure Schedule is legal,
valid, binding, enforceable, and in full force and effect, except where the
illegality, invalidity, nonbinding nature, unenforceability, or
ineffectiveness would not have a material adverse effect on the Company and
its Subsidiaries taken as a whole.
(iii) Neither the Company nor its Subsidiaries has received
written notice from any landlord of any BEP Restaurant Property that the
Company or any of its Subsidiaries is in default of any material terms,
conditions, or provisions of any BEP Lease relating to the BEP Restaurant
Properties (other than written notices received in the past as to alleged
defaults which have been cured, waived or otherwise resolved). The BEP
Leases represent the entire agreement between the Company or its
Subsidiaries, as the case may be, and the respective landlords relating to
the BEP Restaurants. The Company directly or through its Subsidiaries
operates each BEP Restaurant Property in accordance with its authorized
use.
(iv) The buildings and material equipment, fixtures, furniture,
furnishings and office equipment (and other material tangible personal
assets and properties) of the Company and its Subsidiaries presently used
in their respective businesses are in reasonable operating condition and in
a state of reasonable maintenance and repair, normal wear and tear
excepted. The equipment, fixtures and other tangible personal assets and
properties located in the BEP Restaurants are reasonably sufficient to
operate the business of the BEP Restaurants as currently operated.
(v) The BEP Restaurants are served by public utilities which are
adequate for the current use of the BEP Restaurants. All utility connection
fees and use charges have been paid when due. The BEP Restaurants comply
with all applicable building, fire and safety codes, subject to such
exceptions as would not, individually or in the aggregate, have a material
adverse effect on the Company and its Subsidiaries taken as a whole. Seller
does not have Knowledge of any existing or proposed plan to widen, modify
or realign any street or highway adjoining any BEP Restaurant Property or
any existing or proposed eminent domain proceedings or private purchase in
lieu thereof of any BEP Real Property (or any portion thereof). Each of the
BEP Restaurants is operational and open for business.
(l) Intellectual Property.
(i) Section 4(l) of the Disclosure Schedule identifies the
following owned or used by any of the Company or its Subsidiaries: (A)
patents and pending patent applications; (B) trademark, service mark and
trade name
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registrations and applications therefor; (C) copyright registrations and
applications therefor; and (D) licenses and similar agreements for the use
of any intellectual property (including, without limitation, patents,
unpatented inventions and technology, trademarks, service marks and trade
names, copyrights and copyrightable works, know-how and trade secrets,
hereinafter collectively referred to as "Intellectual Property") to which
any of the Company or its Subsidiaries is a party, either as licensee or
licensor (other than licenses for the use of commercially available
computer software and related documentation).
(ii) The Company and its Subsidiaries own and possess all right,
title and interest in and to, or have a valid and enforceable license to
use, the Intellectual Property necessary for the operation of their
respective businesses and no written claim by any third party contesting
the validity, enforceability, use or ownership of any of the Intellectual
Property has been made or, to the Knowledge of Seller, threatened in the
last three years or is currently outstanding.
(m) Contracts. Section 4(m) of the Disclosure Schedule lists the
following written contracts to which any of the Company and its Subsidiaries is
a party on the date hereof:
(i) any agreement the performance of which is expected to involve
consideration in excess of $100,000;
(ii) any agreement which relates to the granting of a franchise
relating to the operation of a BEP Restaurant to a third party by the
Company, its Subsidiaries or any Affiliate of the Company or Seller;
(iii) any agreement which restricts or contains limitations on
the ability of any of the Company or its Subsidiaries to freely conduct
business anywhere in the world;
(iv) any collective bargaining agreement;
(v) any agreement with the Seller or its Affiliates (other than
the Company and its Subsidiaries);
(vi) any agreement for the employment of any individual on a
full- time, part-time, consulting or other basis providing annual
compensation in excess of $100,000; and
(vii) any agreement which relates to the borrowing of money or
the guarantee thereof.
Seller has made available to Buyer a correct and complete copy of each contract
or other agreement listed in Section 4(m) of the Disclosure Schedule.
(n) Litigation. Section 4(n) of the Disclosure Schedule sets forth
each instance in which any of the Company and its Subsidiaries (i) is subject to
any
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outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party to or, to the Knowledge of Seller, threatened with, any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction, except where the injunction, judgment, order, decree, ruling,
action, suit, proceeding, hearing, or investigation, if adversely determined,
would not have a material adverse effect on the Company and its Subsidiaries
taken as a whole.
(o) Employee Benefits. Section 4(o) of the Disclosure Schedule lists
each Employee Benefit Plan that any of the Company and its Subsidiaries
maintains or to which any of them contributes.
(i) Each such Employee Benefit Plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all
respects with the applicable requirements of ERISA and the Code, except
where the failure to comply would not have a material adverse effect on the
Company and its Subsidiaries taken as a whole; provided, however, the
Company makes no representation or warranty as to compliance subsequent to
the Closing.
(ii) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to
each such Employee Benefit Plan which is an Employee Pension Benefit Plan.
(iii) Each such Employee Benefit Plan which is an Employee
Pension Benefit Plan that is intended to meet the requirements of Code
Section 401(a) has (A) received a determination letter from the Internal
Revenue Service to the effect that it meets the requirements of Code Sec.
401(a), or (B) an application for such a determination letter for such plan
has been timely filed within the remedial amendment period (as described in
Section 401(b) of the Code) with respect to the Tax Reform Act of 1986, as
amended, and subsequent federal legislation, or (C) such remedial amendment
period for such plan has not yet expired.
(iv) None of the Employee Benefit Plans set forth in Section 4(n)
of the Disclosure Schedule is subject to Title IV of ERISA.
(v) Seller has made available to Buyer true and correct copies of
the plan documents and summary plan descriptions, the most recent
determination letter received from the Internal Revenue Service, the most
recent Form 5500 Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each such Employee
Benefit Plan. Seller has made available to Buyer historical cost data with
respect to the provision of benefits to employees of the Company and its
Subsidiaries under Seller's Employee Benefits Plans.
(p) Bonds. Section 4(p) of the Disclosure Schedule identifies all
bonds, guarantees, comfort letters and similar instruments currently maintained
by or on behalf of the Company and its Subsidiaries.
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(q) Environmental Matters. Except for (1) matters which would
not have a material adverse effect on the Company and its Subsidiaries taken as
a whole and (2) matters relating to the presence or use of cleaning solvents and
other substances normally used in the day-to-day operations of business such as
the BEP Restaurants:
(i) the Company and its Subsidiaries have obtained all
required permits, licenses, and other authorizations, if any, which are
required under federal, state, regional, county, local and foreign
statutes, codes, ordinances and other laws relating to pollution or
protection of the environment, including laws relating to emissions,
discharges, releases, spilling, injecting, leaching, or disposing into
the environment or threatened releases of pollutants, contaminants,
chemicals, or industrial, hazardous, or toxic materials or wastes into
the environment (including, without limitation, ambient air, surface
water, ground water, land surface, or subsurface strata) or otherwise
relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, discharge into the environment, transport, or
handling of pollutants, contaminants, chemicals, or industrial,
hazardous, or toxic materials or wastes, or any regulation, rule, code,
plan, order, decree, judgment, injunction, notice, or demand letter
issued, entered, promulgated, or approved thereunder ("Environmental
Laws");
(ii) the Company and its Subsidiaries are in material
compliance with all terms and conditions of all required permits,
licenses, and authorizations, and are also in material compliance with
all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables
contained in the Environmental Laws;
(iii) there is no pending or, to the Knowledge of Seller,
threatened civil or criminal litigation, notice of violation, warning
letter, or administrative proceeding relating in any way to the
Environmental Laws (including, without limitation, notices, demand
letters, or claims under the Resource Conservation and Recovery Act of
1976, as amended ("RCRA"), the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), as
amended by the Superfund Amendments Reauthorization Act of 1987
("SARA"), the Toxic Substances Control Act of 1976, the Emergency
Planning and Community Right-to-Know Act of 1986, the Clean Water Act
of 1977, and the Clear Air Act of 1966, all as amended, and similar
foreign, state, or local laws) involving the Company or any of its
Subsidiaries;
(iv) there have not been and there are not any past or
present events, conditions, circumstances, activities, practices,
incidents or actions which may interfere with or prevent continued
compliance, or which may give rise to any common law or legal
liability, based on or related to the manufacture, processing,
distribution, use, treatment, storage, disposal, arrangement for
disposal, transport, arrangement for transport, or handling, or the
emission, discharge, release, or threatened release into the
environment, of any pollutant,
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contaminant, chemical, or industrial, hazardous, or toxic material or
waste, including, without limitation, any liability arising, or any
claim, action, demand, suit, proceeding, hearing, study, or
investigation which may be brought, under RCRA, CERCLA, SARA, or
similar foreign, state, regional, county, or local laws; and
(v) to the Knowledge of Seller, no facts or circumstances
exist with respect to the real property owned by the Company and its
Subsidiaries which give rise to any liability based upon or related to
the processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge or release into the
environment of any pollutant, contaminant or hazardous substance.
(r) Certain Business Relationships With the Company and its
Subsidiaries. Except for matters which are treated in the purchase price
adjustment to be made under Exhibit J and matters which are addressed by the
Transition Services Agreement attached as Exhibit F, none of Seller or its
Subsidiaries or other Affiliates (excluding for this purpose the Company and its
Subsidiaries) owns any material asset, tangible or intangible, which is used in
the business of, or provides any material service to, any of the Company or its
Subsidiaries.
(s) Certain Employee Matters. None of Theodore Papit, Jack
Davis and Don Martin, Jr. is an employee of the Company or its Subsidiaries.
(t) Accounts Receivable. The accounts receivable of the
Company and its Subsidiaries have been acquired in the Ordinary Course of
Business, are valid and enforceable and are fully collectible, subject to no
known defenses, setoffs or counterclaims, except to the extent of any reserve
reflected in the Latest Balance Sheet (as the same may be adjusted in the
Ordinary Course of Business subsequent to the date of the Latest Balance Sheet
consistent with past practice).
(u) Insurance. The Disclosure Schedule lists the insurance
coverage for the Company and its Subsidiaries and all such insurance coverage is
in full force and effect as of the date hereof.
(v) Minute Books. The minute books of the Company and each of
its Subsidiaries accurately record all material actions taken by their
respective shareholders and directors.
(w) Accuracy of Statements. Neither this Agreement nor the
Disclosure Schedule contains an untrue statement of a material fact or omits to
state a material fact necessary to make the statements contained herein or
therein, in light of the circumstances in which they are made, not misleading.
(x) Franchises. Seller has made available to Buyer a true and
accurate copy of each BEP Franchise Agreement and each BEP Development Agreement
to which the Company, its Subsidiaries or any Affiliate of the Company is a
party. Neither the Company nor any of its Subsidiaries have received written
notice from any
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franchisor or franchisee that the Company or any of its Subsidiaries is in
default of any of the material terms, conditions, or provisions of any BEP
Franchise Agreement or BEP Development Agreement. Except as would not have a
material adverse effect on the Company and its Subsidiaries taken as a whole:
(i) each such BEP Franchise Agreement and BEP Development
Agreement is valid, binding and enforceable in accordance with its
terms; each such BEP Franchise Agreement and BEP Development Agreement
is in good standing and neither the Company nor any of its Subsidiaries
is in default under any such agreement; and
(ii) each of the Company and its Subsidiaries which is a
party to any such BEP Franchise Agreement or BEP Development Agreement
has performed in all material respects its obligations under each such
BEP Franchise Agreement and BEP Development Agreement in accordance
with its terms. Neither the Company nor any of its Subsidiaries has any
agreements or understandings (written or oral) with, or contractual
obligations to, any franchisor or franchisee that will survive the
Closing other than under the BEP Franchise Agreements and the BEP
Development Agreements. All BEP Franchise Agreements and BEP
Development Agreements comply in all material respects with all federal
and state laws and regulations relating to franchising.
The foregoing notwithstanding, Seller makes no representations or warranties
regarding the impact or effect of any actions which Buyer may take before or
after the Closing or which the Company or its Subsidiaries may take after the
Closing.
(y) Labor Matters. The Company and its Subsidiaries have
complied with wage and hour determinations issued by the U.S. Department of
Labor under the Service Contract Act of 1965 and the Fair Labor Standards Act in
paying its employees' salaries, fringe benefits, and other compensation for the
performance of work or other duties in connection with contracts with the U.S.
government, and have complied with the requirements of the Americans with
Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Employee
Retirement Income Security Act, the Civil Rights Act of 1964 (Title VII), as
amended, the Age Discrimination in Employment Act and state labor laws, except
failures to comply with any such determinations, laws, rules or requirements
which do not have a material adverse effect on the Company and its Subsidiaries,
taken as a whole.
Section 5. Pre-Closing Covenants. The Parties agree as follows
with respect to the period between the execution of this Agreement and the
Closing.
(a) Financing. Buyer and its Affiliates will use their best
efforts to obtain financing under that certain commitment letter with FFCA dated
May 2, 1996 as soon as possible (and Seller will lend all assistance to Buyer
that Buyer may reasonably request in this regard). Buyer and its Affiliates will
use their best efforts in order to (i) assist FFCA in obtaining title insurance
commitments with respect to the 39 properties listed in Exhibit B hereto as soon
as possible and (ii) obtain landlord consents to FFCA's equipment financing.
Seller will lend all assistance to Buyer that
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Buyer may reasonably request in this regard. The foregoing notwithstanding,
Seller shall not be required to assist Buyer by providing guarantees of
borrowings, guarantees of performance under contracts or credit support or by
making payments to third parties in exchange for consents. At or prior to the
Closing, Buyer shall repay all outstanding principal and interest on its Series
A 13% Subordinated Notes due 2003. Prior to the Closing, Buyer will provide to
Seller true and correct copies of all new Debt Agreements and amendments to
existing Debt Agreements.
(b) General. Subject to Section 5(a), each of the Parties will
use its reasonable efforts to take all action and to do all things necessary,
proper, or advisable in order to consummate and make effective the transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Section 7 below). Subject to Section 5(a), each
of the Parties will (and Seller will cause each of the Company and its
Subsidiaries to) give any notices to third parties, and each of the Parties will
(and Seller will cause each of the Company and its Subsidiaries to) use its
reasonable efforts to obtain any third party consents that the other Party
reasonably may request in connection with the matters referred to in Section
3(b)(iv) and Section 4(c) above. Subject to Section 5(a), each of the Parties
will (and Seller will cause each of the Company and its Subsidiaries to) give
any notices to, make any filings with, and use its reasonable efforts to obtain
any authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in Section 3(a)(ii), Section
3(b)(ii), and Section 4(c) above. Without limiting the generality of the
foregoing, each of the Parties will file within 5 business days of the date of
this Agreement any Notification and Report Forms and related material that it
may be required to file with the Federal Trade Commission and the Antitrust
Division of the United States Department of Justice under the HSR Act, will
supply promptly any additional information and documentary material that may be
requested in connection therewith, will use its reasonable efforts to obtain a
waiver from the applicable waiting period, and will make any further filings
pursuant thereto that may be necessary, proper, or advisable in connection
therewith.
(c) Notice of Developments.
(i) Seller may elect at any time to notify Buyer in
writing of any development causing a breach of any of its
representations and warranties in Section 4 above. Unless Buyer has the
right to terminate this Agreement pursuant to Section 9(a)(ii) below by
reason of the development and exercises that right within the period of
10 business days referred to in Section 9(a)(ii) below, the written
notice pursuant to this Section 5(c)(i) will be deemed to have amended
the Disclosure Schedule, to have qualified the representations and
warranties contained in Section 4 above, and to have cured any
misrepresentation or breach of warranty that otherwise might have
existed hereunder by reason of the development, in each case to the
extent of the disclosure contained in such written notice .
(ii) Each Party will give prompt written notice to
the other of any development causing a breach of any of its own
representations and warranties in Section 3 above. No disclosure by any
Party pursuant to this Section 5(c)(ii),
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however, shall be deemed to amend or supplement the Disclosure Schedule
or to prevent or cure any misrepresentation or breach of warranty.
(d) Exclusivity. Neither Seller nor its Affiliates will
solicit, initiate, or encourage the submission of any proposal or offer from any
Person or enter into any discussions, negotiations or agreements relating to the
acquisition of all or substantially all of the capital stock or assets of any of
the Company and its Subsidiaries (including any acquisition structured as a
merger, consolidation, or share exchange).
(e) Letters of Credit and Comfort Letters.
(i) The Parties agree and acknowledge that a portion of
the face amount of the Letters of Credit identified on Exhibit C-1
hereto are attributable to the operations of the Company and its
Subsidiaries and that the balance of the face amount of such Letters of
Credit are attributable to the other operations of Seller and its
Affiliates. Prior to the Closing, (A) Buyer and Seller shall contact
the insurance carriers holding the Letters of Credit identified on
Exhibit C-1 hereto and shall allocate the face amount thereof between
Buyer and Seller in an equitable manner which is reasonably acceptable
to the insurance carriers, (B) Buyer shall arrange for Letters of
Credit to be posted with the appropriate insurance carriers having face
amounts equal to its allocated portion of the face amount of the
Letters of Credit identified on Exhibit C-1 hereto (such Letters of
Credit to be issued by banks or other financial institutions reasonably
acceptable to such insurance carriers and supported by customary
counter-indemnities or similar arrangements between Buyer and the
issuing banks or institutions) and (C) the parties shall take all
actions necessary to cause the insurance carriers holding the Letters
of Credit listed on Exhibit C-1 hereto to return such Letters of Credit
to Seller or otherwise release Black-eyed Pea Restaurants, Inc. from
liability in connection therewith (subject to receipt from Seller or
Black-eyed Pea Restaurants, Inc. of replacement Letters of Credit
having face amounts equal to its allocated portion of the face amount
of the Letters of Credit listed on Exhibit C-1 hereto).
(ii) Pursuant to the terms of the comfort letters
identified on Exhibit C-2 attached hereto, Seller will cause Unigate
PLC to give written notice to Texas Commerce Bank N.A. of the
transactions contemplated by this Agreement and the division of the
Letters of Credit described in Section 5(e)(i) above.
(f) Covenants of Seller. Subject to Section 5(h) below, Seller
agrees that, unless Buyer otherwise agrees in writing and except as set forth in
the Disclosure Schedule, prior to the Closing Date:
(i) Truth of Representations and Warranties. Seller shall
use reasonable efforts to assure that the Company and its Subsidiaries
do not take any action which would render untrue in any material
respect any of the representations or warranties of Seller herein
contained, and Seller shall use reasonable efforts to assure that the
Company or its Subsidiaries do not omit to
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take any action, the omission of which would render untrue in any
material respect any such representation or warranty. If the Closing
occurs, Buyer shall not have any right of action or remedy against
Seller for breach of this Section 5(f)(i).
(ii) Preservation of Business. Seller shall cause the
Company and its Subsidiaries to use their reasonable efforts to (i)
preserve intact the present business organization of the Company and
its Subsidiaries, (ii) preserve the present goodwill and relationships
of the Company and its Subsidiaries with all Persons having business
dealings with the Company or its Subsidiaries, and (iii) preserve and
maintain in force all material licenses, registrations, franchises,
patents, trademarks, copyrights, bonds and other similar rights of the
Company and its Subsidiaries. Seller shall cause the Company and its
Subsidiaries to refrain from entering into any employment agreements
with any of their officers or management personnel which may not be
cancelled without penalty upon notice not exceeding 90 days.
(iii) Ordinary Course. Seller shall use reasonable
efforts to not cause or permit any of the Company and its Subsidiaries
to engage in any material practice, take any material action, or enter
into any material transaction outside the Ordinary Course of Business.
Seller shall use reasonable efforts to cause the Company and its
Subsidiaries to operate their businesses only in the usual, regular and
Ordinary Course of Business and to maintain all supplies, inventory,
and consumables at levels commensurate with those customarily
maintained by the Company and its Subsidiaries in the Ordinary Course
of Business at each BEP Restaurant during comparable prior periods.
Seller shall use reasonable efforts to cause the Company and its
Subsidiaries to operate their businesses in material compliance with
their contractual obligations. Without limiting the foregoing, Seller
shall use reasonable efforts to assure that neither the Company nor any
of its Subsidiaries (i) places a Security Interest on any property or
assets, (ii) except in the Ordinary Course of Business, incurs any
material obligation (contingent or otherwise), or purchases or
acquires, or transfers or conveys, any material assets or properties or
enters into any material transaction, or (iii) acquires any stock or
other equity interest in any corporation, trust or other entity.
(iv) Books and Records. Seller shall cause the
Company and its Subsidiaries to maintain their books, accounts and
records in the usual, regular and ordinary manner, and on a basis
consistent with prior years.
(v) No Organic Change. Except as contemplated by this
Agreement, Seller shall assure that neither the Company nor its
Subsidiaries (i) amend their charter or by-laws, (ii) make any change
in their capital stock by reclassification, subdivision, reorganization
or otherwise, or (iii) merge or consolidate with any other corporation,
trust or entity or change the character of their businesses.
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(vi) No Issuance of Shares, Options or Other
Securities. Seller shall assure that neither the Company nor its
Subsidiaries (i) issue any shares of capital stock or (ii) grant any
option, warrant or other right to purchase or to convert any obligation
into shares of capital stock.
(vii) Compensation. Seller shall assure that neither
the Company nor its Subsidiaries (i) increase the compensation payable
to any officer or to other management personnel from the amount payable
as of the date of this Agreement, except in accordance with normal and
customary practice, or (ii) introduce or change any pension or profit
sharing plan, or any other employee benefit arrangement, except for
insubstantial changes necessary to comply with the minimum requirements
of the Code or ERISA, or except as disclosed in the Disclosure Schedule
or as contemplated by this Agreement.
(viii) Dividends. Seller shall assure that neither
the Company nor any of its Subsidiaries (i) declares, makes or pays any
dividend or other distribution with respect to its capital stock or
otherwise, (ii) purchases, redeems or otherwise acquires any shares of
its capital stock, or (iii) transfers, distributes or pays, directly or
indirectly, any assets or properties (other than money) to any
shareholders of the Company or its subsidiaries, except in each case as
otherwise permitted in this Agreement.
(ix) Right of Inspection. Seller shall cause the
Company and its Subsidiaries to make available to Buyer, FFCA and their
representatives for inspection at all reasonable times all of the
assets, properties, facilities, records, agreements (including all
documents of any description evidencing any right or obligation of the
Company or any of its Subsidiaries) and the consolidated financial
statements of the Company and allow Buyer, FFCA and their
representatives the right to make whatever copies of such materials
they require, and Seller shall cause the Company to permit Buyer, FFCA
and their independent accountants to audit or make such audit tests
respecting the accounts of the Company and its Subsidiaries as Buyer,
FFCA or their accountants consider appropriate.
(x) Entry Into Obligations. Seller shall assure that
the Company and its Subsidiaries do not (i) enter into any lease,
contract, agreement or other obligation with any Person other than
contracts for the sale of products or services and contracts for the
purchase of supplies or services in the Ordinary Course of Business
(or, whether or not in the Ordinary Course of Business, which involve
obligations in excess of $100,000 (but excluding food purchases made in
the Ordinary Course of Business)), (ii) enter into any amendment,
modification, termination, extension or any other change of any of the
BEP Leases or any other presently existing material lease, contract,
agreement or other contractual obligation, or (iii) enter into any
service agreements, maintenance agreements, contracts or other
arrangements relating to the operation or maintenance of the BEP
Restaurants other than in the Ordinary Course.
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(xi) Confidentiality. Seller shall assure that the
Company and its Subsidiaries do not reveal, orally or in writing, to
any Person, other than Buyer, FFCA and their representatives, any of
the confidential business procedures or practices followed by it in the
conduct of its business or any other information of a confidential
nature.
(xii) Maintenance of Insurance. Seller shall cause
the Company and each of its Subsidiaries to maintain in force through
the Closing Date all of the insurance policies listed in the Disclosure
Schedule and to refrain from making any change in any insurance
coverage; provided that Seller may replace or renew such coverage with
coverage that is substantially comparable.
(xiii) Maintenance of Assets and Properties. Seller
shall use reasonable efforts to cause the Company and each of its
Subsidiaries to keep the premises occupied by it and all of the
equipment and other tangible assets and personal property of the
Company and its Subsidiaries in substantially the same condition as on
the date of this Agreement. Seller shall assure that the Company and
its Subsidiaries do not remove any personal property from the BEP
Restaurants unless same are replaced with similar items of at least
equal quality prior to the Closing Date. Seller shall assure that the
Company and its Subsidiaries do not sell or permit to be sold or
otherwise transferred or disposed of any material item or group of
items constituting personal property, except food, beverage and other
items sold in the Ordinary Course of Business. Seller shall assure that
the Company and its Subsidiaries do not convey any ownership or
leasehold interest in the BEP Restaurants.
(xiv) Satisfaction of Obligations and Liabilities.
Seller shall use reasonable efforts to cause the Company and each of
its Subsidiaries to (i) pay or cause to be paid all of the obligations
and liabilities arising out of its business as they mature, other than
immaterial items disputed in good faith by Seller or other items
disputed with the written approval of Buyer, (ii) maintain in all
material respects and perform in all material respects its obligations
under all agreements and contracts to which it is bound in a manner
consistent with past practice, and (iii) comply in all material
respects with all requirements of applicable federal, state and local
laws, regulations and rules in a manner consistent with past practice.
Seller shall cause the Company and its Subsidiaries to pay or cause to
be paid in full when due all bills and invoices for labor, goods,
materials, services and utilities of any kind relating to the BEP
Restaurants which were contracted for by the Company or any of its
Subsidiaries or which were delivered to or performed on the BEP
Restaurants other than immaterial items disputed by Seller or other
items disputed with the written approval of Buyer.
(g) Section 338(h)(10) Election. At Seller's request, Buyer
and Seller will join in the filing of an election under Section 338(h)(10) of
the Code with respect to the purchase and sale of the Company Shares hereunder.
At Seller's request, Buyer will join Seller in making corresponding elections
under any state, local or foreign tax law. Seller shall prepare all such
elections, including forms required to be filed in order
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to make such elections. Seller shall pay or indemnify Buyer against any tax
liabilities arising from the making of any elections under this Section 5(g).
(h) Permitted Actions of Seller. Notwithstanding anything to
the contrary herein, Buyer expressly agrees that Seller, the Company and their
Subsidiaries shall not be prohibited from, or need Buyer's written consent to,
take any of the actions set forth on Exhibit K attached hereto prior to the
Closing.
(i) Audited Financial Statements. Seller will use its best
efforts to furnish the audited consolidated financial statements for the Company
and its Subsidiaries to Buyer prior to the Closing, but in no event later than
July 10, 1996.
Section 6. Post-Closing Covenants. The Parties agree as
follows with respect to the period following the Closing.
(a) General. In case at any time after the Closing any further
reasonable action is necessary to carry out the purposes of this Agreement, each
of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party may
reasonably request, all at the sole cost and expense of the requesting Party
(unless the requesting Party is entitled to indemnification therefor under
Section 8 below).
(b) Litigation Support. In the event and for so long as any
Party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or prior
to the Closing Date involving any of the Company and its Subsidiaries, each of
the other Parties shall cooperate with such Party or its counsel in the defense
or contest, make available their personnel, and provide such testimony and
access to their books and records as shall be necessary in connection with the
defense or contest, all at the sole cost and expense of the contesting or
defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under Section 8 below).
(c) Transition. Neither Seller nor its Affiliates will take
any action that is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate of any of the
Company and its Subsidiaries from maintaining the same business relationships
after the Closing as it maintained with the Company and its Subsidiaries prior
to the Closing.
(d) Name Changes. Seller covenants that, within 5 days
following the Closing Date, Black-eyed Pea Restaurants, Inc. will change its
name to CB Restaurant Holdings, Inc. and Management Corp. will change its name
to CB Management Corp. (or other names not containing the words "Black-eyed
Pea").
(e) Prepayment of Buyer Note. To the extent permitted by the
Credit Agreement, Buyer will use its reasonable efforts to pay the outstanding
principal
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amount of the Buyer Note plus all accrued and unpaid interest thereon prior to
maturity.
(f) Returns for Periods Through the Closing Date. Seller shall
cause Black-Eyed Pea Restaurants, Inc. to include the income of the Company and
its Subsidiaries (including any deferred income triggered into income by Reg.
Section1.1502-13 and Reg. Section1. 1502-14 and any excess loss accounts taken
into income under Reg. Section1.1502-19) on its consolidated federal Income Tax
Returns for all periods through the Closing Date and pay any federal Income
Taxes attributable to such income. The Company and its Subsidiaries will furnish
Income Tax information to Seller for inclusion in Black-eyed Pea Restaurant,
Inc.'s federal consolidated Income Tax Return for the period which includes the
Closing Date in accordance with the Company's past custom and practice. The
income of the Company and its Subsidiaries will be apportioned to the period up
to and including the Closing Date and the period after the Closing Date by
closing the books of the Company and its Subsidiaries as of the end of the
Closing Date. Notwithstanding the provisions of Section 8 hereof, Seller agrees
to indemnify Buyer for any Income Taxes paid by the Company or Buyer
attributable to tax years in which any of the Company and its Subsidiaries was a
member of Black-eyed Pea Restaurants, Inc.'s consolidated federal Income Tax
Returns.
(g) Mutual Cooperation. Seller or one of its Affiliates shall
be responsible for handling the pending U.S. tax audits of Black-eyed Pea
Restaurants, Inc. Buyer, the Company and its Subsidiaries will cooperate fully
with Seller in connection with Seller's defense of any audit, proceeding or
litigation with respect to any Income Tax Returns filed pursuant to Section
6(f). Such cooperation shall include the retention and (upon Seller's request)
the provision of records and information which are reasonably relevant to any
such audit, proceeding or litigation and making employees available on a
mutually convenience basis to provide additional information and explanation of
any material provided hereunder.
(h) Employees and Employee Benefit Plans.
(i) Effective as of the Closing Date, each employee
and former employee of the Company and its Subsidiaries shall cease
participation in all Employee Benefit Plans of the Company, Seller or
any Subsidiary of Seller.
(ii) Effective as of the Closing Date, Buyer shall
cover each employee and former employee of the Company and its
Subsidiaries under workers' compensation programs and/or policies of
the Buyer existing as of the Closing Date. Buyer shall assume, bear and
discharge all liabilities for, and administration of, workers'
compensation benefits in connection with all claims of, or attributable
to, employees and former employees of the Company and its Subsidiaries
whether such claims arise or arose prior to, on or after the Closing
Date.
(iii) Effective as of the Closing Date, Buyer shall
cover each employee and former employee of the Company and its
Subsidiaries who is covered under Employee Welfare Benefit Plans of the
Company, Seller or any
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Subsidiary of Seller immediately prior to the Closing Date under
Employee Welfare Benefit Plans of Buyer, including but not limited to
health, disability, and life insurance plans, existing as of the
Closing Date (or similar plans implemented after the Closing Date)
which Buyer makes generally available to all of its other employees on
a non-discriminatory basis. With respect to each Employee Welfare
Benefit Plan of Buyer, employment with the Company, Seller and each
Subsidiary of Seller prior to the Closing Date shall be considered as
employment with Buyer for all purposes, including for purposes of
eligibility to participate, eligibility to receive benefits, waiting
and elimination periods, and preexisting condition limitation periods.
Each such Employee Welfare Benefit Plan of Buyer shall credit employees
and former employees of the Company and its Subsidiaries with their
deductibles and co-payments paid as of the Closing Date for the current
calendar year under Seller's or any Subsidiary of Seller's Welfare
Benefit Plans. Buyer shall assume, bear and discharge all liabilities
with respect to covered eligible welfare expenses that are incurred by
each such employee and former employee (to the extent such former
employees were covered under Seller's Employee Welfare Benefit Plans
prior to the Closing Date) and his covered dependents with respect to
Incidents occurring prior to, on and after the Closing Date. For
purposes of this Section 6(h)(iii), "Incident" includes, without
limitation, death, accident, disability, injury and disease. Seller
shall cooperate with Buyer to the extent reasonably necessary for Buyer
to administer or cause to be administered such claims.
(iv) Within 60 days of the Closing Date, Buyer or one
of its Affiliates shall offer employment to those Persons listed on
Exhibit D hereto that Buyer, in its sole discretion, deems appropriate.
Seller shall not take any action that is designed or intended to have
the effect of discouraging any such persons from accepting such offer
of employment. With respect to those Persons listed on Exhibit D, if
any, that Buyer or one of its Affiliates employs within 60 days of the
Closing Date, the provisions of Sections 6(h)(i) through (iii) above
shall apply as of the date on which each such Person begins his or her
employment with Buyer or one of its Affiliates.
(v) Buyer shall indemnify Seller (and each Subsidiary
of Seller) from and against any and all Adverse Consequences that
Seller (or any of its Subsidiaries) suffers as a result of (a) any
failure of Buyer to discharge its obligations in accordance with this
Section 6(h) (including any such failure of Buyer's claims
administrator or any other party engaged by Buyer to assist it in
connection with the proper discharge of Buyer's obligations herein), or
(b) any welfare benefit claim subject to the provisions of Section
6(h)(iii), or any workers' compensation or other benefit claim subject
to Section 6(h).
(i) Uniform Franchise Offering Circular. Seller will cause
Management Corp. (or the Company) to prepare the Uniform Franchise Offering
Circular with respect to the Company for 1996 in accordance with its past
practice and in a manner to ensure timely filing.
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Section 7. Conditions to Obligation to Close.
(a) Conditions to Obligation of Buyer. The obligation of Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties of Seller
herein contained shall have been true and correct in all material
respects when made and, in addition, shall be true and correct in all
material respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date, except as affected
by transactions contemplated hereby;
(ii) Seller shall have in all material respects
performed all obligations and agreements and complied in all material
respects with all its covenants and conditions contained in this
Agreement to be performed and complied with by it or on or prior to the
Closing Date;
(iii) there shall be no material adverse change in
the business, properties or financial condition of the Company and its
Subsidiaries taken as a whole (other than any material adverse change
resulting from or relating to (A) the decline in the performance of the
business (including but not limited to the decline in comparable store
sales) experienced to date, the circumstances or factors giving rise to
such decline or any continuation of such decline, circumstances or
factors in the future, (B) any pending or threatened litigation by or
on behalf of franchisees or (C) any actions taken or announced by Buyer
in connection with the transactions contemplated by this Agreement or
any reaction of employees or business relations of the Company or its
Subsidiaries to the transactions contemplated by this Agreement, all of
which risks are being assumed by the Buyer);
(iv) (A) no action or proceeding before any court or
governmental agency shall have been instituted or threatened which
would enjoin, restrain or prohibit (or which seeks substantial damages
as a result of or in connection with the transactions contemplated by
this Agreement) and which would in the reasonable judgment of Buyer
make it inadvisable to consummate such transactions (provided, however,
that the obligation of Buyer to consummate the Closing shall not be
conditioned on, and the closing condition contained in this clause
(iv)(A) shall not be triggered by, any action or proceeding pending or
threatened by or on behalf of franchisees) and (B) no court order shall
have been entered in any action or proceeding instituted by any other
Person which enjoins, restrains or prohibits the consummation of the
transactions contemplated by this Agreement;
(v) all applicable waiting periods (and any
extensions thereof) under the HSR Act shall have expired or otherwise
been terminated;
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(vi) Buyer and FFCA shall have obtained title
insurance commitments with respect to the 39 properties identified on
Exhibit B hereto and such commitments, taken as a whole, shall be
reasonably satisfactory to FFCA;
(vii) Buyer and FFCA shall have received consents in
reasonable and customary form from the landlords of at least 60% of the
63 properties listed on Exhibit E hereof;
(viii) Seller shall have executed the Transition
Services Agreement in form and substance as set forth in Exhibit F
attached hereto;
(ix) the Company and its Subsidiaries shall have at
least $5.03 million in cash (plus any amounts constituting Store Change
Funds); provided, however, that if the sale of the restaurant site in
Midlothian, Virginia has not been completed prior to the Closing Date
(or if such sale has been completed and Seller has not caused the
Company to distribute the proceeds thereof to Seller), then this
closing condition shall be modified to require that the Company and its
Subsidiaries shall have at least $4.18 million in cash at the Closing
(plus any amounts constituting Store Change Funds);
(x) Buyer shall have received from counsel to Seller
an opinion in form and substance as set forth in Exhibit G attached
hereto, addressed to Buyer, and dated as of the Closing Date;
(xi) Buyer shall have received from Seller a
certificate of the president and secretary of Seller, dated the date of
the Closing Date, certifying that the closing conditions set forth in
Sections 7(a)(i), (ii) and (ix) are satisfied; and
(xii) all other documents required to be delivered by
Seller, the Company or its Subsidiaries under this Agreement at or
prior to the Closing Date shall be delivered or shall be tendered by
the Closing Date.
Buyer may waive any condition specified in this Section 7(a).
(b) Conditions to Obligation of Seller. The obligation of
Seller to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties of Buyer
herein contained shall have been true and correct in all material
respects when made and, in addition, shall be true and correct in all
material respects on and as of the Closing Date with the same force and
effect as though made on and as of the Closing Date, except as affected
by transactions contemplated hereby;
(ii) Buyer shall have in all material respects
performed all obligations and agreements and complied in all material
respects with all its
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covenants and conditions contained in this Agreement to be performed
and complied with by it on or prior to the Closing Date;
(iii) no action or proceeding before any court or
governmental agency shall have been instituted or threatened which
would enjoin, restrain or prohibit (or seeks substantial damages as a
result of or in connection with the transactions contemplated by this
Agreement) and which would in the reasonable judgment of Seller make it
inadvisable to consummate such transactions, and no court order shall
have been entered in any action or proceeding instituted by any other
Person which enjoins, restrains or prohibits the consummation of the
transactions contemplated by this Agreement;
(iv) all applicable waiting periods (and any
extensions thereof) under the HSR Act shall have expired or otherwise
been terminated;
(v) Buyer or its Affiliates shall have offered
employment to the Management Corp. employees listed on Exhibit D
attached hereto;
(vi) Buyer shall have executed and delivered the
Buyer Note, the Warrant and the Registration Rights Agreement;
(vii) At or prior to the Closing, Buyer shall have
repaid all outstanding principal and interest on its Series A 13%
Subordinated Notes due 2003 and Buyer shall have amended the terms of
its Series B 13% Subordinated Notes due 2003 in accordance with the
letter agreement attached as Exhibit M;
(viii) Seller shall have received from counsel to
Buyer an opinion in form and substance as set forth in Exhibit H
attached hereto, addressed to Seller, and dated as of the Closing Date;
(ix) None of the Debt Agreements as in effect at the
time of the Closing shall be more restrictive on the ability of Buyer
to perform its obligations under the Buyer Note (including its ability
to borrow thereunder in order to pay the Buyer Note) than the Debt
Agreements in effect on the date of this Agreement without the consent
of Seller, such consent not to be unreasonably withheld;
(x) Seller shall have received from Buyer a
certificate of the president and secretary of Buyer, dated as of the
Closing Date, certifying that the closing conditions set forth in
Sections 7(b)(i), (ii), (v), (vi) and (vii) are satisfied; and
(xi) all other documents required to be delivered by
Buyer under this Agreement at or prior to the Closing Date shall be
delivered or shall be tendered by the Closing Date.
Seller may waive any condition specified in this Section 7(b).
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Section 8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in Sections 3 and 4
above shall survive the Closing hereunder and shall continue in full force and
effect for a period of one year thereafter.
(b) Indemnification Provisions for Benefit of Buyer.
(i) In the event that (A) Seller breaches any
representation or warranty contained herein and (B) Buyer makes a
written claim for indemnification against Seller with respect thereto
within one year after the Closing (which written claim shall specify in
reasonable particulars the basis of the breach being asserted and, to
the extent then determinable, a calculation of any Adverse Consequences
which Buyer claims to suffer as a result thereof), then Seller agrees
to indemnify Buyer from and against any Adverse Consequences Buyer
suffers which are proximately caused by the breach; provided, however,
that Seller shall not have any obligation to indemnify Buyer from and
against any Adverse Consequences caused by the breach of any
representation or warranty of Seller contained in Section 4 above
unless and until Buyer has suffered Adverse Consequences in excess of a
$250,000 deductible per occurrence (after which point Seller will be
obligated only to indemnify Buyer from and against further Adverse
Consequences associated with the occurrence in question).
(ii) Seller shall indemnify Buyer and its Affiliates
from and against any Adverse Consequences which they suffer in
connection with any action, suit or proceeding brought by any
franchisee of the Company or its Subsidiaries if and to the extent that
such action, suit or proceeding seeks relief in respect of actions or
omissions which occur prior to the Closing; provided that (A) a
$250,000 per occurrence deductible shall apply to indemnification
claims under this Section 8(b)(ii); (B) Seller shall not be obligated
to indemnify Buyer or its Affiliates in respect of any actions or
omissions of Buyer or its Affiliates at any time before or after the
Closing or any actions or omissions of the Company or its Subsidiaries
after the Closing; and (C) Seller shall not be obligated to indemnify
Buyer or its Affiliates in respect of any actions, suits or proceedings
if and to the extent they relate to the identity, finances or business
strategy of Buyer or its Affiliates.
(iii) Any indemnification for Adverse Consequences
suffered by Buyer or its Affiliates shall first be paid by reducing the
outstanding principal amount of the Buyer Note; provided, however, that
no such reduction shall occur unless (A) Buyer has made its claim for
indemnification in accordance with this Section 8(b) and (B) Seller has
agreed to such claim or, if Seller does not so agree, Buyer has
obtained a judgement in favor of Buyer from a court of competent
jurisdiction. Buyer and its Affiliates shall not be entitled to payment
in cash for any claim for indemnification unless and until (C) the
principal amount of the Buyer Note has been repaid and/or canceled in
full (or reduced to zero
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pursuant to this Section 8(b)(iii)) or (D) Seller has transferred the
Buyer Note to any Person (which is not an Affiliate of Unigate PLC).
(iv) Notwithstanding anything to the contrary herein,
Buyer and its Affiliates shall not be entitled to indemnification in
respect of any breach of the representations and warranties contained
in Section 4(k) above unless and until Buyer and FFCA have used
reasonable efforts to collect or recover under all Applicable Title
Policies (as defined below), and the Adverse Consequences (if any) for
which Seller is obligated to indemnify Buyer hereunder shall be reduced
by all amounts, if any, paid to or collected by Buyer or FFCA under
such polices at any time. As used in this Agreement, "Applicable Title
Policies" means with respect to a particular BEP Restaurant Property
all title insurance policies of which Buyer, FFCA, the Company or any
of its Subsidiaries is holder or beneficiary.
(v) Notwithstanding anything to the contrary herein,
Seller shall not have any obligation to indemnify Buyer or its
Affiliates from and against any Adverse Consequences to the extent the
aggregate Adverse Consequences Buyer and its Affiliates have suffered
exceed a $25 million aggregate ceiling (after which point Seller will
have no obligation to indemnify Buyer or its Affiliates from and
against any further such Adverse Consequences). The $25 million
aggregate ceiling covers all Adverse Consequences from all matters
(i.e., it is not a per occurrence ceiling).
(c) Indemnification Provisions for Benefit of Seller.
(i) In the event (A) Buyer breaches any
representation or warranty contained in Section 3 above and (B) Seller
makes a written claim for indemnification against Buyer with respect
thereto within one year after the Closing (which written claim shall
specify in reasonable particulars the basis of the breach being
asserted and, to the extent then determinable, a calculation of any
Adverse Consequences which Seller claims to suffer as a result
thereof), then Buyer agrees to indemnify Seller from and against any
Adverse Consequences Seller suffers through and after the date of the
claim for indemnification proximately caused by the breach.
(ii) Buyer shall indemnify Seller and its Affiliates
from and against any Adverse Consequences which they may suffer in
connection with any action, suit or proceeding brought by any
franchisee of the Company or its Subsidiaries if and to the extent such
action, suit or proceeding seeks relief (A) in respect of acts or
omissions of the Company or its Subsidiaries at any time after the
Closing or acts or omissions of Buyer or its Affiliates at any time
before or after the Closing or (B) as a result of the identity,
finances or business strategy of Buyer or its Affiliates; provided,
however, that a $250,000 per occurrence deductible shall apply to
indemnification claims under this Section 8(c)(ii).
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(iii) Except in the case of matters for which Buyer
is entitled to indemnification from Seller under Section 8(b) above, in
the event that Seller or any of its Affiliates are named as a party to
any action, suit or proceeding arising from, relating to or in
connection with any actions or omissions of the Company or its
Subsidiaries (whether before or after the Closing Date), then Buyer
shall fully indemnify and hold harmless Seller and its Affiliates from
all Adverse Consequences in connection therewith.
(iv) Notwithstanding anything to the contrary herein,
Buyer shall not have any obligation to indemnify Seller or its
Affiliates from and against any Adverse Consequences to the extent the
aggregate Adverse Consequences Seller and its Affiliates have suffered
exceed a $25 million aggregate ceiling (after which point Buyer will
have no obligation to indemnify Seller or its Affiliates from and
against any further such Adverse Consequences). The $25 million
aggregate ceiling covers all Adverse Consequences from all matters
(i.e., it is not a per occurrence ceiling).
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party Claim")
which may give rise to a claim for indemnification against any other
Party (the "Indemnifying Party") under this Section 8, then the
Indemnified Party shall promptly (and in any event within 5 business
days after receiving notice of the Third Party Claim) notify each
Indemnifying Party thereof in writing; provided, however, that failure
to provide such notice on a timely basis shall not release the
Indemnifying Party from any of its obligations under this Section 8
except to the extent the Indemnifying Party is materially prejudiced by
such failure.
(ii) The Indemnifying Party will have the right at
any time to assume and thereafter conduct the defense of the Third
Party Claim with counsel of its choice; provided, however, that the
Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without
the prior written consent of the Indemnified Party (not to be
unreasonably withheld or delayed) unless the judgment or proposed
settlement involves only the payment of money damages by the
Indemnifying Party and does not impose an injunction or other equitable
relief upon the Indemnified Party.
(iii) Unless and until the Indemnifying Party assumes
the defense of the Third Party Claim as provided in Section 8(d)(ii)
above, the Indemnified Party may defend against the Third Party Claim
in any manner it reasonably may deem appropriate.
(iv) In no event will the Indemnified Party consent
to the entry of any judgment or enter into any settlement with respect
to the Third Party Claim without the prior written consent of each of
the Indemnifying Parties (not to be unreasonably withheld or delayed).
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(v) In the event that any Party suffers damage or
loss in respect of which it has or makes a valid claim against another
Party for indemnification, it must take reasonable steps to mitigate
its loss or damage.
(e) Treatment. All indemnification payments under this Section
8 shall be deemed adjustments to the Purchase Price.
Section 9. Termination.
(a) Termination of Agreement. This Agreement may be terminated
as provided below:
(i) Buyer and Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) Buyer may terminate this Agreement by giving
written notice to Seller at any time prior to the Closing in the event
that (A) Seller has within the previous 10 business days given the
Buyer any notice pursuant to Section 5(c)(i) above and (B) the
development that is the subject of the notice (taken together with
developments which were the subject of any previous notices pursuant to
Section 5(c)(i)) has had a material adverse effect upon the Company and
its Subsidiaries taken as a whole (other than any material adverse
effect resulting from or relating to (1) the decline in the performance
of the business (including but not limited to the decline in comparable
store sales) experienced to date, the circumstances or factors giving
rise to such decline or any continuation of such decline, circumstances
or factors in the future, (2) any pending or threatened litigation by
or on behalf of franchisees or (3) any actions taken or announced by
Buyer in connection with the transactions contemplated by this
Agreement or any reaction of employees or business relations of the
Company or its Subsidiaries to the transactions contemplated by this
Agreement, all of which risks are being assumed by the Buyer);
(iii) Buyer may terminate this Agreement by giving
written notice to Seller at any time prior to the Closing (A) in the
event that (1) Seller has breached any representation, warranty or
covenant contained in this Agreement, (2) such breach would have a
material adverse effect on the Company and its Subsidiaries taken as a
whole, (3) Buyer has notified Seller in writing of such breach and (4)
such breach has continued without cure for a period of 30 days after
the notice of breach or (B) if the Closing shall not have occurred on
or before August 31, 1996 by reason of the failure of any condition
precedent under Section 7(a) hereof (unless the failure results
primarily from Buyer breaching any representation, warranty or covenant
contained in this Agreement); and
(iv) Seller may terminate this Agreement by giving
written notice to Buyer at any time prior to the Closing (A) in the
event that (1) Buyer has breached any representation, warranty or
covenant contained in this Agreement, (2) such breach would have a
material adverse effect on Buyer, (3) Seller has notified Buyer in
writing of such breach, and (4) such breach has continued
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without cure for a period of 30 days after the notice of breach or (B)
if the Closing shall not have occurred on or before August 31, 1996 by
reason of the failure of any condition precedent under Section 7(b)
hereof (unless the failure results primarily from Seller breaching any
representation, warranty or covenant contained in this Agreement).
(b) Effect of Termination. If either Party terminates this
Agreement pursuant to Section 9(a) above, all rights and obligations of the
Parties hereunder shall terminate without any liability of any Party to any
other Party (except for any liability of any Party which has committed a willful
breach hereof or any Party which fails to consummate the Closing notwithstanding
the fact that (1) all of the conditions running in its favor under Section 7
hereof have been satisfied and (2) all of the conditions running in the favor of
the other Party under Section 7 have been satisfied or waived); provided,
however, that the Confidentiality Agreement shall survive termination.
Section 10. Miscellaneous.
(a) Certain Understandings of Buyer. Buyer acknowledges (i)
that in the course of its independent investigation of the Company, it examined
the information contained in the draft Confidential Offering Memorandum (the
"Offering Memorandum") and attended presentations conducted by management of the
Company (the "Presentations"), (ii) Buyer is not relying on the information
contained in the Offering Memorandum or the statements made and information
furnished in connection with the Presentations in its decision to enter into
this Agreement and purchase the Company Shares hereunder, and (iii) that Seller
makes no representation or warranty concerning the information contained in the
Offering Memorandum or the statements made and information furnished in
connection with the Presentations.
(b) Press Releases and Public Announcements. No Party shall
issue any press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written approval
of the other Party; provided, however, that either Party may make any public
disclosure it believes in good faith is required by applicable law, the
regulations of the SEC, the London Stock Exchange or the American Stock Exchange
or any listing or trading agreement concerning its publicly-traded securities
(in which case the disclosing Party will use its reasonable efforts to consult
the other Party prior to making the disclosure).
(c) No Third Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the exhibits
and schedules hereto referred to herein) constitutes the entire agreement
between the Parties and supersedes any prior understandings, agreements, or
representations by or between the Parties, written or oral, to the extent they
related in any way to the subject matter hereof; provided, however, that the
letter agreement between Buyer and Schroder Wertheim & Co. Incorporated
concerning confidentiality (the "Confidentiality Agreement") shall continue in
effect.
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(e) Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement or
any of its rights, interests, or obligations hereunder without the prior written
approval of the other Party; provided, however, that any Party may (i) assign
any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the assigning Party
nonetheless shall remain responsible for the performance of all of its
obligations hereunder); and provided further, however, that Buyer may assign to
FFCA its rights to pursue remedies against the Seller under this Agreement in
respect of the representations and warranties contained in Sections 4(e), (i),
(k), (n) and (q).
(f) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The Section headings contained in this Agreement
are inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then five
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to Seller: Copy to:
BEP Holdings, Inc. Kirkland & Ellis
8115 Preston Road 200 East Randolph Drive
Dallas, TX 75225 Chicago, IL 60601
Attn: President Attn: Carter W. Emerson
With a copy to Unigate PLC: Copy to:
Unigate House Kirkland & Ellis
Wood Lane 200 East Randolph Drive
London W12 7RP Chicago, IL 60601
England Attn: Carter W. Emerson
Attn: Secretary
If to Buyer: Copy to:
DenAmerica Corp. O'Connor, Cavanagh, Anderson,
7373 North Scottsdale Road Kilingsworth & Beshears P.A.
Scottsdale, AZ 85253 One East Camelback
Attn: President Phoenix, AZ 85012
Attn: Robert S. Kant
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Either Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Party
notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Delaware without
giving effect to any choice or conflict of law provision or rule (whether of the
State of Delaware or any other jurisdiction) that would cause the application of
the laws of any jurisdiction other than the State of Delaware.
(j) Amendments and Waivers. No amendment of any provision of
this Agreement shall be valid unless the same shall be in writing and signed by
duly authorized representatives of Buyer and Seller. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant hereunder,
whether intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or covenant hereunder or
affect in any way any rights arising by virtue of any such prior or subsequent
occurrence.
(k) Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any situation or in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions
hereof or the validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction.
(l) Expenses. Each of Buyer and Seller will bear its own costs
and expenses (including legal fees and expenses) incurred in connection with
this Agreement and the transactions contemplated hereby.
(m) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation.
(n) Incorporation of Exhibits and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(o) Confidentiality. Following the Closing, Seller and its
Affiliates shall maintain the confidentiality of all nonpublic information
concerning the Company and
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its Subsidiaries; provided that Seller and its Affiliates shall be entitled to
use and/or disclose relevant portions of such information for tax, accounting
and financial reporting purposes and in connection with the enforcement of their
rights under this Agreement.
* * * * * *
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IN WITNESS WHEREOF, the Parties hereto have executed this
Agreement as of the date first above written.
DENAMERICA CORP.
By:
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Title:
BEP HOLDINGS, INC.
By:
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Title: