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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D/A
UNDER THE SECURITIES EXCHANGE ACT OF 1934
STACEY'S BUFFET, INC.
(Name of Issuer)
COMMON STOCK
(Title of Class of Securities)
852328103
(CUSIP Number)
ROBERT E. WHEATON
CHIEF EXECUTIVE OFFICER AND PRESIDENT
STAR BUFFET, INC.
440 LAWNDALE DRIVE
SALT LAKE CITY, UTAH 84115-2917
(801) 463-5500
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
Copies to:
C. CRAIG CARLSON, ESQ.
J. MICHAEL VAUGHN, ESQ.
STRADLING, YOCCA, CARLSON & RAUTH
660 NEWPORT CENTER DRIVE, SUITE 1600
NEWPORT BEACH, CA 92660
TELEPHONE: (714) 725-4000
FEBRUARY 13, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed on Schedule 13G to report the
acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box. [ ]
Check the following box if a fee is being paid with this statement [ ].
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page. The information required in the
remainder of this cover page shall not be deemed to be "filed" for the purpose
of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise
subject to the liabilities of that section the Act but shall be subject to all
other provisions of the Act (however, see the Notes).
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SCHEDULE 13D
CUSIP No. 852328103 PAGE 2 OF 5 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Star Buffet, Inc.
IRS No. 84-1430786
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [X]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
Not Applicable
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
0
NUMBER OF ----------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY ----------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 0
PERSON ----------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
0
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0
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14 TYPE OF REPORTING PERSON
CO
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ITEM 1. SECURITY AND ISSUER
This Amendment No. 1 (the "Amendment") amends the Statement on Schedule
13D filed with the Securities and Exchange Commission ("SEC") on November 10,
1997 (the "Statement") relating to the common stock, par value $0.01 per share
(the "Common Stock"), of Stacey's Buffet, Inc., a Florida corporation (the
"Company"). The principal executive offices of the Company are located at 801
West Bay Drive, Suite 704, Largo, Florida 33770.
Other than as set forth herein, there has been no material change in the
information set forth in the Schedule 13D filed with the SEC on November 10,
1997.
ITEM 4. PURPOSE OF TRANSACTION
Pursuant to that certain Termination Agreement dated February 13, 1998,
between the Company and the Reporting Person, a copy of which is attached hereto
as an exhibit to this Schedule 13D/A, the Company and the Reporting Person
agreed to (i) terminate their alliance including, among other things,
termination and cancellation of the Credit Agreement and the Warrant to Purchase
Common Stock of the Company and (ii) cancel the outstanding indebtedness of the
Company payable to the Reporting Person under the Credit Agreement and a
Business Services Agreement in exchange for the sale, transfer and assignment to
the Reporting Person of the Company's right, title and interest in and to the
assets related to three (3) Stacey's Buffet restaurants pursuant to the terms of
an Asset Purchase Agreement executed concurrently with the Termination
Agreement, a copy of which is attached as an exhibit to this Schedule 13D/A.
Star has no current plans or proposals of the type set forth in
paragraphs (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF ISSUER
Pursuant to the terms of the Termination Agreement described in Item 4
above, the Reporting Person ceased to be the beneficial owner of any securities
as of February 13, 1998.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
See Item 4 to this Amendment, which is incorporated herein by this
reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
99.3 Termination Agreement
99.4 Asset Purchase Agreement
3
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this Statement is true, complete and
correct.
Date: March 13, 1998 Star Buffet, Inc.
By: /s/ THEODORE ABAJIAN
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Theodore Abajian, Chief Financial Officer
4
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INDEX TO EXHIBITS
99.3 Termination Agreement
99.4 Asset Purchase Agreement
5
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EXHIBIT 99.3
TERMINATION AGREEMENT
This TERMINATION AGREEMENT (the "Agreement") is made and entered into as
of this _____ day of February 1998, by and between STAR BUFFET, INC., a Delaware
corporation ("Star"), and STACEY'S BUFFET, INC., a Florida corporation
("Stacey's"), with reference to the following facts and circumstances:
R E C I T A L S
A. On October 31, 1997, Star and Stacey's entered into (i) a Credit
Agreement (the "Credit Agreement"), (ii) a promissory note (the "Note")
evidencing a loan made or to be made pursuant to the Credit Agreement, (iii) a
Warrant to Purchase Common Stock of Stacey's (the "Warrant"), (iv) a
Registration Rights Agreement (the "Registration Rights Agreement"), (v) a
Security Agreement (the "Security Agreement"), (vi) an Option Agreement (the
"Option Agreement"), (vii) a Business Services Agreement (the "BSA"), and (viii)
any and all other agreements, documents or instruments relating to the Credit
Agreement or any of the documents set forth in this paragraph A (collectively,
the "Transaction Documents").
B. As of the date hereof and pursuant to the Credit Agreement, Star made
loans (the "Loans") to Stacey's in the aggregate principal amount of $710,000,
which Loans are evidenced by the Note. The Note is secured by Stacey's
Collateral (as defined in the Security Agreement), and Star has perfected a
security interest in the Collateral by the filing of UCC Financing Statements in
the States of Florida, New York, New Jersey and Pennsylvania (the "Financing
Statements").
C. For services rendered by Star pursuant to the BSA, Stacey's has
incurred fees and expenses payable to Star in an aggregate amount of $390,000
(the "BSA Fees and Expenses").
D. The parties hereto have agreed that it is in the best interests of
such parties to enter into this Agreement for the purpose of terminating all of
the Transaction Documents and the Financing Statements in accordance with the
terms and provisions of this Agreement. Stacey's understands and acknowledges
that (1) it is not obligated to enter into this Agreement, but is doing so of
its own free will without interference, influence or coercion by Star; (2) it
has had the opportunity to consult with attorneys, appraisers and accountants of
its choice for advice concerning the terms of this Agreement, the fair value of
the Purchased Restaurants (as defined below) and the tax implications of the
transactions contemplated herein; (3) Star has pursued a course of fair dealing
and that the transactions contemplated herein are fair and equitable; and (4) it
is entering into this Agreement to enjoy the benefits of Star's promises and
covenants contained herein.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises of the parties contained herein, the parties agree to terminate
all of the Transaction Documents and the Financing Statements in accordance with
the terms and provisions of this Agreement, which shall include provisions
satisfying all of Stacey's financial obligations to Star through the sale to
Star of all of Stacey's right, title and interest in and to assets that are
related to, or used in the operation of, the Stacey's Buffet restaurants located
in Holiday, Florida, North Fort Meyers, Florida; and Port Charlotte, Florida;
all as more fully described in the Asset Purchase Agreement executed
concurrently herewith (the "Purchase Agreement"); and to otherwise agree as
follows:
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ARTICLE 1
THE TRANSACTIONS
1.1 Closing Date. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place concurrently with the execution and
delivery of this Agreement and all exhibits, schedules and instruments
contemplated hereby (the "Closing Date").
1.2 Purchase and Sale of Stacey's Buffet Restaurants. On the Closing
Date, Star and Stacey's hereby agree to execute and deliver the Purchase
Agreement pursuant to which Star shall purchase from Stacey's, and Stacey's
shall sell, transfer and assign to Star all of Stacey's right, title and
interest in and to the assets that are related to or used in the operation of
the three (3) Stacey's Buffet Restaurants (the "Purchased Restaurants")
identified on Schedule 1 to the Purchase Agreement, all in accordance with the
terms and conditions of the Purchase Agreement (the "Purchase and Sale
Transaction"). In exchange therefor, Star hereby grants to Stacey's a full and
complete release and satisfaction of any and all financial obligations of
Stacey's to Star existing or accruing through the date hereof.
1.3 Transition Services. For a period of thirty (30) days following the
Closing, Star shall provide store level management services (the "Transition
Services") for nineteen (19) Stacey's Buffet restaurants at a cost to Stacey's
of Ten Thousand and no/100 dollars ($10,000), payable in four equal weekly
installments of Two Thousand and Five Hundred and no/100 dollars ($2,500), plus
reasonable and necessary out of pocket expenses, which amounts shall be paid
weekly in arrears. Either party may terminate the Transition Services to be
provided hereunder by Star effective upon the giving of written notice to the
other party pursuant to Section 4.7 below; provided, however, that other than
pro-rating the fees due and payable by Stacey's for the Transition Services, the
termination of the Transition Services shall have no effect on the other terms
and provisions of this Agreement. Star shall not be liable for any direct,
indirect or consequential damages suffered or incurred by Stacey's or to any
third party, including, without limitation, lost profits arising from or
relating to the performance of Transition Services by Star hereunder absent a
finding in a final judgment of a court of competent jurisdiction that such
damages proximately resulted from the bad faith, gross negligence or willful
misconduct of Star or its agents. Stacey's shall indemnify, hold harmless and
defend Star, and its officers, directors, stockholders and employees
(collectively, the "Star Indemnified Parties"), from and against any and all
liabilities, losses, judgments, damages, demands, claims, causes of action or
any other legal or government proceedings, or any settlement thereof, and any
and all costs and expenses (including reasonable attorneys' fees), whether or
not covered by insurance, caused or asserted to have been caused, directly or
indirectly, by or as a result of the performance of the Transition Services or
any intentional or willful misconduct or negligent acts or omissions by Stacey's
and/or its agents, employees and/or subcontractors (other than Star, its
affiliates and agents) during the provision of the Transition Services.
1.4 Obligations to Vendors. On the Closing Date, Stacey's shall pay
Choice Food Service Equipment Co. for all of the smallwares that were purchased
for Stacey's Buffet restaurants, whether such smallwares are currently located
at the Stacey's Buffet restaurants or are in transit to such restaurants, but in
no event shall Stacey's be obligated to pay in excess of $68,894.
1.5 Return of Equipment. Star and Stacey's acknowledge and agree that
the equipment listed on Schedule 1.5 hereto (the "Equipment") shall be invoiced
to Star (and, to the extent invoiced
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to Stacey's, shall be re-invoiced to Star) so that Star shall be obligated to
pay for the Equipment, provided that Star shall have the right to take title to
the Equipment and, to the extent installed in any of the Stacey's Buffet
restaurants, Stacey's shall, within ten (10) days from the date hereof, remove
the Equipment and provide notice to Star that Star may take possession of the
Equipment. Star shall indemnify and hold Stacey's harmless and defend Stacey's
against any and all claims, judgments, damages or liabilities asserted by any
vendor of the Equipment against Stacey's with respect to the Equipment.
1.6 Termination of Transaction Documents. Subject to the terms and
conditions set forth herein, the parties hereby agree to terminate the
Transaction Documents effective on the date hereof, and, except for the duties
and obligations of the parties under this Agreement and the Exhibits hereto,
neither party shall have any further duties and obligations under any of the
Transaction Documents.
1.7 Termination of Financing Statements. Within three (3) business days
from the Closing, Star shall release any and all liens against the Collateral
(as defined in the Security Agreement).
1.8 Waiver and Release of Star. Effective as of the Closing Date,
Stacey's and its successors and assigns hereby knowingly and voluntarily forever
releases, acquits and discharges Star, its directors, officers, employees,
agents, controlling persons and stockholders (collectively, the "Star Released
Parties") (a) from and of any and all claims arising from acts or omissions of
any of the Star Released Parties that may have occurred prior to the date hereof
that any of the Star Released Parties (i) is in any way responsible for the
past, current or future condition or deterioration of the business operations
and/or financial condition of Stacey's, or (ii) breached any agreement to
provide services, to loan money or make other financial accommodations available
to Stacey's or to fund any operations of Stacey's at any time, and (b) from and
of any and all other claims, damages, losses, actions, counterclaims, suits,
judgments, obligations, liabilities, defenses, affirmative defenses, setoffs,
and demands of any kind or nature whatsoever, in law or in equity, whether
presently known or unknown, which Stacey's may have had, now have, or which it
can, shall or may have for, upon, or by reason of any matter, course or thing
whatsoever relating to, arising out of, based upon, or in any manner connected
with, any transaction, event, circumstance, action, failure to act, or
occurrence of any sort or type, whether known or unknown, which occurred,
existed, was taken, permitted, begun, or otherwise related or connected to or
with any or all of the Loans, the Credit Agreement, any or all of the
Transaction Documents, and/or any direct or indirect action or omission of any
of the Star Released Parties arising from acts or omissions of the Star Released
Parties; provided, however, this release and waiver shall not apply to (i)
enforcement of any term of this Agreement including any rights of
indemnification or remedies against Star for its breach of this Agreement and
(ii) any intentional act of misrepresentation. by Star or Star Released Parties.
Stacey's further agrees that from and after the date hereof, it will not assert
to any person or entity, other than required under state or federal law, that
any deterioration of the business operations or financial condition of Stacey's
was caused by any breach or wrongful act of any of the released parties
occurring prior to the date hereof.
1.9 Waiver and Release of Stacey's. Effective as of the Closing Date,
Star and its successors and assigns hereby knowingly and voluntarily releases,
acquits and forever discharges Stacey's, its directors, officers, employees,
agents, controlling persons and shareholders (collectively
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the "Stacey's Released Parties") from any and all claims, rights, demands,
actions, suits, causes of actions, damages, counterclaims, defenses, losses,
costs, obligations, liabilities and expenses of every kind or nature, known or
unknown, suspected or unsuspected, fixed or contingent, foreseen or unforeseen
(collectively "Claims"), arising out of or relating directly or indirectly to
any circumstances or state of facts pertaining to the Loan, or the Transaction
Documents, or any nonperformance of any agreement or obligation related thereto,
or any statements, representations, acts or omissions, intentional, willful,
negligent or innocent, by any of the Stacey's Released Parties in any way
connected with, relating to or affecting, directly or indirectly, the Loan or
the Transaction Documents; provided, however, that the foregoing shall in no
event extend to (i) the liabilities and obligations of the Stacey's Released
Parties relating to, arising out of, or in connection with the breach of any
representation, warranty, indemnity, covenant or agreement set forth in this
Agreement or the Purchase Agreement or any documents contemplated hereby or
thereby or (ii) an intentional act of misrepresentation by Stacey's or the
Stacey's Released Parties.
1.10 Disclosures. To the best of Star's knowledge, Star has delivered to
Stacey's all agreements, contracts, arrangements, documents, or other
instruments (together, the "Instruments") purporting to bind Stacey's that were
entered into, executed by, or executed at the direction of, personnel employed
or retained by Star to provide services to Stacey's during the pendency of the
Business Services Agreement, or who otherwise executed Instruments which may be
purported to bind Stacey's.
1.11 Publicity. Star, Stacey's and their respective affiliates agree
that (i) any public disclosure of the transactions contemplated hereby shall be
by mutual agreement of the parties and in a form and manner agreed to by the
parties; provided, however, that either party shall be entitled to make any
disclosure required by applicable law, rule or regulation of any governmental
authority or securities exchange, and (ii) except as provided in clause (i)
above, each party and its respective affiliates shall maintain the
confidentiality of any and all information relating to this Agreement and the
transactions contemplated hereby and any and all confidential information of the
other party received in connection with this Agreement and the transactions
contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF STACEY'S
Stacey's represents and warrants to Star as follows:
2.1 Organization, Existence and Good Standing. Stacey's is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Florida.
2.2 Authority. Stacey's has full corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder, and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Stacey's and constitutes the legal, valid
and binding agreement of Stacey's enforceable against Stacey's in accordance
with its terms.
2.3 Consents and Approvals; No Violation. Except as otherwise provided
in this Agreement or the Purchase Agreement, no filing or registration with, no
notice to and no governmental authorization, consent or approval of any
governmental authority or other person is
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necessary in connection with Stacey's execution and delivery of this Agreement,
the performance of its obligations hereunder or the consummation by Stacey's of
the transactions contemplated hereby.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF STAR
Star represents and warrants to Stacey's as follows:
3.1 Organization, Existence and Good Standing. Star is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
3.2 Authority. Star has full corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder, and to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Star and constitutes the legal, valid and
binding agreement of Star enforceable against Star in accordance with its terms.
3.3 Consents and Approvals; No Violation. Except as otherwise provided
in this Agreement or the Purchase Agreement, no filing or registration with, no
notice to and no governmental authorization, consent or approval of any
governmental authority or other person is necessary in connection with Star's
execution and delivery of this Agreement, the performance of its obligations
hereunder or the consummation by Star of the transactions contemplated hereby.
ARTICLE IV
MISCELLANEOUS
4.1 Relief From Stay. As additional consideration for Star's execution
of this Agreement, Stacey's agrees that, so long as Star is not in default
hereunder: (a) in the event of a bankruptcy filing by or against Stacey's,
Stacey's shall not reject or contest any claim or assertion by Star that the
Agreement is binding between the parties and that valuable consideration has
been received by Stacey's for same; (b) Star shall receive immediate relief from
the automatic stay provisions of the United States Bankruptcy Code following any
bankruptcy petition which Stacey's may file or which may be filed against
Stacey's, and Stacey's shall in no event contest a motion to lift the automatic
stay filed by Star.
4.2 Expenses. Each party shall pay the expenses that it has incurred in
connection with the negotiation, preparation and execution of this Agreement and
the Purchase Agreement, and any other matters related thereto.
4.3 Further Assurances. From and after the date hereof, and upon the
reasonable request of any party hereto, the other parties shall execute and
deliver such further instruments or documents and take such further actions as
may be reasonably necessary or desirable to better evidence or more completely
effectuate the agreements contained herein.
4.4 Severability. Any provision of this Agreement which is illegal,
invalid or unenforceable shall be ineffective to the extent of such illegality,
invalidity or unenforceability, without affecting in any way the remaining
provisions hereof.
4.5 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns.
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4.6 Governing Law. This Agreement shall be governed by, construed and
enforced in accordance with the internal laws of the State of Florida.
4.7 Notices. All notices, requests and other communications to any party
hereunder shall be in writing (including bank wire, telecopier or similar
writing) and shall be given to such party at the address or telecopier number
set forth below or such other address or telecopier number as such party may
hereafter specify for the purpose by notice to each other party. Each such
notice, request or other communication shall be effective (i) if given by mail,
72 hours after such communication is deposited in the mails with first class
postage prepaid, addressed as aforesaid or (ii) if given by any other means,
when delivered at the address or telecopier number set forth below.
If to Stacey's Buffet Inc.: Stacey's Buffet, Inc.
12812 60th Street North, Room 200
Clearwater, Florida 33760
Attention: President
Telephone: (813) 507-0335
Telecopier: (813) 507-0345
with a copy to: Jeffrey M. Stoler, Esq.
Gadsby & Hannah LLP
225 Franklin Street
Boston, Massachusetts 02110
Telephone: (617) 345-7000
Telecopier: (617) 345-7050
If to Star Buffet, Inc. 440 Lawndale Drive
Salt Lake City, Utah 84115-1917
Attention: Charlotte L. Miller, Esq.
Telephone: (801) 463-5553
Telecopier: (801) 463-5585
with a copy to: David E. Lafitte, Esq.
Stradling, Yocca, Carlson & Rauth
A Professional Corporation
660 Newport Center Drive, Suite 1600
Newport Beach, California 92660-6441
Telephone: (714) 725-4000
Telecopier: (714) 725-4100
4.8 Headings. The Section headings in this Agreement are for
convenience of reference only and shall be disregarded in interpreting or
construing any of the provisions of this Agreement.
4.9 Counterparts. This Agreement may be executed by any of the parties
in separate counterpart and each party must sign and deliver at least one such
counterpart, but it shall not be necessary for all of the parties to have signed
and delivered the same counterpart, for this Agreement to be effective. All of
the counterparts of this Agreement signed and delivered by any of the parties
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first written above.
STACEY'S BUFFET, INC
By:
--------------------------------------
Name:
Title:
STAR BUFFET, INC.,
By:
--------------------------------------
Name:
Title:
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EXHIBIT 99.4
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is entered into this
_____ day of February __, 1998, by and between STACEY'S BUFFET, INC., a Florida
corporation (the "Seller"), and STAR BUFFET, INC., a Delaware corporation ("STAR
BUFFET" or the "Buyer").
R E C I T A L S
A. Seller is engaged in the business of owning, operating and licensing
Stacey's Buffet restaurants.
B. Concurrently with the execution hereof, Seller and Buyer are
executing that certain Termination Agreement (the "Termination Agreement"),
pursuant to which Buyer and Seller have agreed to terminate the Transaction
Documents (as defined in the Termination Agreement). In connection with the
Termination Agreement, Seller and Buyer have agreed to enter into this Agreement
pursuant to which Buyer shall purchase from Seller, and Seller shall sell and
transfer to Buyer, the assets used in the operation of the Restaurants
identified on Schedule 1 hereto (the "Purchased Restaurants"), including,
without limitation, all right, title and interest of Seller in and to
substantially all of the assets related to the ownership and operation of such
Purchased Restaurants, and, in connection therewith, Buyer is willing to assume
certain liabilities of Seller relating to such Purchased Restaurants.
NOW, THEREFORE, in consideration of the terms, covenants, and conditions
hereinafter set forth, the parties hereto agree as follows:
A G R E E M E N T
1. PURCHASED ASSETS. Subject to the terms and conditions of this Agreement,
Buyer hereby agrees to purchase from Seller, and Seller hereby agrees to sell,
transfer and assign to Buyer, free and clear of any and all Liens and
Encumbrances (as hereinafter defined), all of Seller's right, title and interest
in and to assets that are related to, used in the operation of or have been
generated by the Purchased Restaurants (collectively, the "Purchased Assets")
including, but not limited to, the following:
1.1 All of the equipment, furniture, fixtures, trade fixtures, signs,
sign poles, machinery, kitchen equipment, computers, cash registers, menus,
uniforms, small equipment, small wares and other tangible personal property used
in connection with the operation of the Purchased Restaurants, wherever located
and owned by Seller on the Closing Date, including, without limitation, those
assets identified on Schedule 1.1 attached hereto (the "Fixed Assets");
1.2 All inventory of Seller purchased for use in connection with the
Purchased Restaurants, wherever located and owned by Seller on the Closing Date
(the "Inventory"), including, without limitation, the Inventory identified on
Schedule 1.2 hereto;
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1.3 All of the agreements relating to the Purchased Restaurants under
which Seller owns or holds any leasehold interest in real property (each, a
"Real Property Lease"), including any buildings and improvements thereon, or
leases in personal property, whether tangible or intangible (each a "Personal
Property Lease") (collectively, the "Leases"), a true and complete list of which
is set forth in Schedule 1.3 hereto;
1.4 All of the agreements, contracts, licenses, instruments, commitments
and understandings, written or oral, that (in addition to the Leases) are
related solely to the Purchased Restaurants and listed (or, in the case of oral
agreements or understandings, that are described) under the caption "Assigned
Contracts" in Schedule 1.4 attached hereto (collectively, the "Assigned
Contracts");
1.5 All rights in and to any governmental and private permits, licenses,
certificates of occupancy, franchises and authorizations, to the extent
assignable, used in or relating to the Purchased Restaurants;
1.6 (intentionally omitted);
1.7 All financial books and accounting records, and all files, lists,
publications, and other records and data used in or relating to the Purchased
Restaurants, including, without limitation, lists of suppliers and distributors
and related files, environmental records, price lists, marketing plans, sales
records, labor relations and employee compensation records, and maintenance
records, regardless of the medium on which such information is stored or
maintained;
1.8 All cash on hand at the Purchased Restaurants as of the Closing Date
("Cash and Equivalents") identified on Schedule 1.8 hereto;
1.9 All prepaid fees and deposits associated with the Leases and the
utilities used in connection with the Purchased Restaurants ("Prepaid Fees and
Deposits"), which are set forth in Schedule 1.9 attached hereto;
1.10 Any cause of action, claim, suit, proceeding, judgment or demand,
of whatsoever nature, of or held by Seller against any third parties arising out
of the Purchased Assets or the Purchased Restaurants prior to the date hereof;
1.11 All goodwill associated with the Purchased Restaurants and the
Purchased Assets.
2. EXCLUDED ASSETS. Seller is not selling, and the Purchased Assets do not
include, the following assets (the "Excluded Assets"):
2.1 Any corporate and financial records of Seller;
2.2 Any rights under operating contracts, other than the Assigned
Contracts;
2.3 Any contracts or agreements pursuant to which Seller has granted any
person or entity any franchise, license or other right to operate a Restaurant;
and
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2.4 Any rights in and to any recipes, menus, formulations, trade dress,
patents, copyrights, trade names, trademarks and service marks, and all
applications therefor, owned or held by Seller and used in connection with the
operation of or relating to the Stacey's Buffet restaurants (collectively, the
"Intangible Property Rights"), which are more fully described in Schedule 2.4
and which include all goodwill associated therewith; provided, however, that
Seller shall license the Intangible Property Rights to Buyer pursuant to a
license agreement described in Section 9.7 below.
3. OBLIGATIONS BEING ASSUMED; LIABILITIES NOT BEING ASSUMED.
3.1 ASSUMED OBLIGATIONS. Buyer hereby agrees to assume only: (i) those
liabilities and obligations specifically set forth in Schedule 3.1; (ii) those
executory obligations arising after the date hereof under the Assigned
Contracts; and (iii) the obligations arising after the Closing Date under the
Leases (collectively, the "Assumed Obligations"). Except as set forth in
Schedule 3.1, Seller represents and warrants that Seller is not in default of
any Assumed Obligation, and Buyer shall not be obligated to assume any Assumed
Obligation which is in default as of the date hereof.
3.2 LIABILITIES NOT BEING ASSUMED. Except for the Assumed Obligations,
Seller agrees that Buyer shall not be obligated to assume or perform and is not
assuming or performing any, and Seller shall remain responsible for and shall
indemnify, defend (with counsel reasonably acceptable to Buyer and paid for by
Seller) and hold harmless Buyer from and against all, liabilities and
obligations of Seller, whether known or unknown, and regardless of when such
liabilities or obligations may arise or may have arisen or when they are or were
asserted (the "Retained Liabilities"), which shall include, without limitation,
any and all of the following obligations or liabilities of Seller:
(a) Any compensation or benefits payable to employees of Seller,
other than payroll expenses expressly assumed and listed on Schedule 3.1,
including without limitation, any liabilities arising under any employee pension
or profit sharing plan or other employee benefit plan or retirement plan and any
of Seller's obligations for insurance, sick pay or any non-cash employee
compensation arrangement;
(b) Subject to the proration of real and personal property taxes
at Closing relating to the Purchased Restaurants, all federal, state, local,
foreign or other taxes that have arisen out of the Restaurants or may arise
hereafter out of Seller's other operations;
(c) Any intercompany obligations between Seller and any of its
subsidiaries or affiliates;
(d) Any Liens or Encumbrances on any of the Purchased Assets and
all obligations and liabilities secured thereby that are not set forth on
Schedule 3.1 hereto;
(e) All obligations of Seller, either for borrowed money or
incurred in connection with the purchase, lease or acquisition of any assets,
that are not set forth on Schedule 3.1 hereto (collectively, the "Retained
Debt");
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(f) Any accounts or notes payable of Seller that are not set
forth on Schedule 3.1 hereto (the "Retained Payables");
(g) Any claims, demands, actions, suits or legal proceedings that
have arisen or may arise hereafter from or in connection with Seller's operation
of the Purchased Restaurants, including, but not limited to, those arising out
of any act or omission or default of Seller under any Assigned Contracts,
regardless of when such liability was incurred or when the obligation is
asserted, those set forth in Schedule 6.15, or arising from any business or
business activities engaged in by Seller other than in connection with the
Purchased Restaurants, whether engaged in prior to or after the date hereof, and
whether such claims, demands, actions, suits or legal proceedings are presently
pending or threatened or are threatened or asserted at any time after the date
hereof;
(h) Any obligations under any employment or consulting agreement,
or any union or other organized labor obligation, whether written or oral, that
is not listed on Schedule 3.1 and any liabilities or obligations arising out of
the termination by Seller of any of its employees in anticipation or as a
consequence of, or following, consummation of the transactions contemplated
hereby; and
(i) Any obligations or liabilities arising out of or relating to
the Excluded Assets.
4. PURCHASE PRICE AND TERMS OF PAYMENT.
4.1 PURCHASE PRICE.
(a) In addition to the assumption by Buyer of the Assumed
Obligations, the aggregate purchase price for the Purchased Restaurants shall be
One Million One Hundred Thousand Dollars ($1,100,000) (the "Purchase Price").
4.2 PAYMENT OF PURCHASE PRICE. The Purchase Price shall be paid by Buyer
to Seller by (i) the cancellation of any outstanding principal and accrued and
unpaid interest owed by Seller to Buyer under the Credit Agreement, dated as of
October 31, 1997 between Seller and Buyer, in the amount of $710,000 (the
"Seller Indebtedness") and (ii) the set-off of the BSA Fees and Expenses (as
defined in the Termination Agreement).
4.3 ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be allocated
among the Purchased Assets as set forth in Exhibit A attached hereto. Each of
the parties, when reporting the transactions consummated hereunder in their
respective Tax Returns (as hereinafter defined), shall allocate the Purchase
Price paid or received, as the case may be, in a manner that is consistent with
the Purchase Price allocation set forth in Exhibit A hereto. Additionally, each
of the parties will comply with, and furnish the information required by,
Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"), and
any regulations thereunder.
5. CLOSING.
(a) The closing of the transactions contemplated hereby (the
"Closing") shall occur concurrently with the execution and delivery of this
Agreement and the schedules
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and exhibits contemplated hereby (the "Closing Date") at the offices of
Stradling Yocca Carlson & Rauth, a Professional Corporation, located at 660
Newport Center Drive, Suite 1600, Newport Beach, California 92660.
6. REPRESENTATIONS AND WARRANTIES OF SELLER.
Except as set forth in disclosure schedules (the "Seller's Disclosure
Schedules") prepared by Seller and delivered to Buyer in connection with the
execution and delivery of this Agreement, Seller hereby represents and warrants
to Buyer as follows:
6.1 AUTHORITY AND BINDING EFFECT.
(a) Seller has the full power and authority to execute and
deliver this Agreement and the ancillary agreements to which it will be a party.
This Agreement and the ancillary agreements, and the consummation by Seller of
its respective obligations contained herein and therein, have been duly
authorized by all necessary actions of Seller and such Agreements have been duly
executed and delivered by Seller.
(b) This Agreement is, and the ancillary agreements, when
executed and delivered by Seller, will be, binding agreements of Seller
enforceable against it in accordance with their respective terms, except as
enforceability may be limited by (i) bankruptcy, insolvency, moratorium or other
similar laws affecting creditors' rights generally, and (ii) general principles
of equity relating to the availability of equitable remedies.
(c) Except as set forth in Schedule 6.1(c), it is not necessary
for Seller to take any action or to obtain any approval, consent or release by
or from any third persons, governmental or other, to enable Seller to enter into
or perform his obligations under this Agreement and the ancillary agreements.
6.2 ORGANIZATION AND STANDING.
(a) Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Florida. Seller is duly licensed
or qualified to transact business as a foreign corporation in each of the
jurisdictions in which a Purchased Restaurant is located, and neither the scope
of Seller's business in connection with the Purchased Restaurants, nor the
location of any of its assets, properties or employees, requires that Seller be
licensed or qualified to transact business in any other jurisdiction. Seller has
the requisite corporate power and authority to operate the Purchased Restaurants
as now conducted and to own or lease (as the case may be) the Purchased Assets,
and to use such Purchased Assets in the operation of the Purchased Restaurants;
(b) No actions or proceedings have been commenced or threatened
against Seller that, if adversely determined, and no agreements or transactions
have been entered into by any of Seller that, if consummated, would give rights
to any person, other than Buyer, in or to acquire any of the Purchased Assets or
otherwise interfere with the consummation of the transactions contemplated by
this Agreement.
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6.3 FINANCIAL STATEMENTS. Seller has delivered to Buyer true and correct
copies of financial statements of Seller consisting of balance sheets and
related statements of income and cash flows as of and for each of the years in
the three-year period ended December 31, 1996 and as of and for the fiscal
40-week period ended October 8, 1997 (the "Financial Statements"). The Financial
Statements were prepared in accordance with GAAP, consistently applied, and
fairly present the financial condition of Seller and the results of its
operations as at the relevant dates thereof and for the respective periods
covered thereby. Seller has also delivered true and correct copies of its
internal financial statements and records relating to the results of operations
of each of the Purchased Restaurants as of and for the periods covered by the
Financial Statements, which fairly present the results of operations of such
Purchased Restaurants for such periods.
6.4 UNDISCLOSED LIABILITIES. Except as set forth in Schedule 6.4, Seller
does not have any debts, obligations, liabilities or commitments of any nature
arising out of or relating to the Purchased Restaurants, whether due or to
become due, absolute, contingent or otherwise, that, in accordance with GAAP,
should be disclosed in a balance sheet or the footnotes thereto, and are not
shown on the October 8, 1997 Balance Sheet (the "Undisclosed Liabilities"),
other than liabilities incurred after October 8, 1997 in the ordinary course of
the business of the Purchased Restaurants and consistent with past practice
which, in any event, are not material in amount and have not had and are not
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Purchased Restaurants. As to each Undisclosed Liability set forth on
Schedule 6.4, Seller has provided the following information in or as an
attachment to such Schedule 6.4: (i) a summary description of such Undisclosed
Liability, together with copies of all relevant documentation relating thereto,
the amounts claimed and any other action or relief sought and, the identity of
the claimant and of any other parties involved party and, if the Undisclosed
Liability is one that may arise from a suit, action or other proceeding, the
court or agency in which such suit, action or other proceeding is being
prosecuted, and (ii) the best estimate of Seller of the maximum amount, if any,
which is likely to become payable with respect to any such contingent
Undisclosed Liability. For purposes hereof, if no written estimate is provided,
such best estimate shall be deemed to be zero.
6.5 ABSENCE OF CERTAIN CHANGES. Except as set forth in Schedule 6.5,
since December 31, 1996, there has not been:
(a) The execution of or commencement of performance by Seller
under any default or breach, or anticipated default or breach, or any amendment,
termination or revocation or, to the knowledge of Seller, any threatened
amendment, termination, or revocation of, any of the Assigned Contracts or the
Leases to which Seller now is, or at any time since December 31, 1996 was, a
party;
(b) Any actual or threatened amendment, termination or revocation
of any license, permit or franchise required for the continued operation by
Seller of any of the Purchased Restaurants;
(c) Any sale, transfer, or other disposition of, or the
incurrence or imposition of any Lien or Encumbrance of any kind on or affecting,
any of the Purchased Assets except (i) sales or utilization of inventory and
obsolete equipment in the ordinary course of
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business and consistent with past practices of the Seller and (ii) Liens for
current taxes not yet due and payable;
(d) Any disputes with, or any action of or notice from the
suppliers of the Restaurants which has led or could lead to a reduction in or
termination of the supplies to the Restaurants by any such suppliers, or to a
decrease in contracted rates of payment under any sales contract, rental
agreement or service contract under which Seller purchases goods or services;
(e) Any damage, destruction or loss, whether or not covered by
insurance, of any of the Purchased Assets in an amount that exceeds $10,000 or
which adversely affects Seller's ability to continue to conduct the Purchased
Restaurants in any material respect as the Purchased Restaurants were conducted
during the year ended December 31, 1996;
(f) Other than pursuant to the Credit Agreement, the incurrence
by Seller of any indebtedness of more than $5,000 individually or $10,000 in the
aggregate, either for borrowed money or in connection with any purchase or other
acquisition of assets, or otherwise for the operation of the Purchased
Restaurants, that is not reflected in the October 8, 1997 Balance Sheet;
(g) Any purchase or lease, or commitment for the purchase or
lease, of equipment, machinery leasehold improvements or other capital items not
disclosed in the Financial Statements which involves amounts exceeding $5,000
individually or $10,000 in the aggregate, or which is in excess of or represents
a departure from the normal, ordinary and usual requirements of the Restaurants;
(h) Any increase in salaries or wages other than in the ordinary
course of business and there has been no increase in benefits of or the awarding
or payment of any bonuses to any employees, the adoption of any new or amendment
of any existing employee benefit plan, or the execution of any new, or the
renewal, extension, or amendment of any existing, employment or consulting
agreements relating to the Restaurants;
(i) The entry or violation of any judgment, order, writ or decree
that has had or could reasonably be expected to have a Material Adverse Effect
on Seller or on the Purchased Restaurants;
(j) The threat, assertion or commencement of any legal action or
other proceeding or investigation against Seller or the Purchased Restaurants
which, if adversely determined, could reasonably be expected to have a Material
Adverse Effect on Seller or the Purchased Restaurants or the occurrence of any
event that could reasonably be expected to result in the commencement of any
such legal action or other proceeding or investigation; or
(k) The occurrence of any other event or circumstance which has
had or could reasonably be expected to have a Material Adverse Effect on Seller
or on the Purchased Restaurants.
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6.6 THE PURCHASED ASSETS.
(a) Fixed Assets. There is contained in Schedule 1.1 a list of
all of the Fixed Assets used in the Purchased Restaurants. To the best of
Seller's knowledge, the Fixed Assets are in good working order and condition,
ordinary wear and tear excepted, have been properly maintained, are suitable for
the uses for which they are being utilized in the Purchased Restaurants, do not
require more than regularly scheduled maintenance to keep them in good operating
condition and comply with all requirements under applicable laws, regulations
and licenses which govern the use and operation thereof.
(b) The Leases.
(i) Schedule 1.3 contains a complete and accurate list,
and Seller has furnished to Buyer accurate and complete copies, of all of the
Real Property Leases and Personal Property Leases related to the Purchased
Restaurants, as amended to date, together with a brief description of (A) each
of the real properties that are leased by Seller under the Real Property Leases
(the "Leased Properties"), including the respective addresses and the names and
addresses of the landlords thereof, and (B) any improvements made by Seller to
any of the Leased Properties that will not revert to any of the landlords upon
termination of the Real Property Leases. Seller has delivered to Buyer accurate
and complete copies of all environmental studies and reports with respect to any
of the Leased Properties that are in the possession of or are readily available
to Seller. The zoning of each of the Leased Properties permits the presently
existing improvements thereon and continuation of the business presently
conducted thereon and, to Seller's knowledge, no changes therein are pending or
are threatened. No condemnation or similar proceedings are pending or, to the
best knowledge of Seller, threatened against any of the Leased Properties.
Seller does not own any fee interest in any real property.
(ii) Seller is not in default, and no facts or
circumstances have occurred which, with the passage of time or the giving of
notice, or both, would constitute a default, under any of the Leases and the
assignment by Seller to Buyer of the Leases included in the list of Assigned
Contracts on Schedule 1.4 will not adversely affect Buyer's quiet enjoyment and
use, without disturbance, of the Leased Properties or of the personal properties
or assets that are the subject of the Personal Property Leases (the "Leased
Personal Property"). None of the Leases contains any provisions which, after the
date hereof, would (A) hinder or prevent Buyer from continuing to use any of the
Leased Properties or Leased Personal Property in the manner in which they are
currently used, or (B) impose any additional costs (other than scheduled rental
increases) or burdensome requirements as a condition to their continued use
which are not currently in effect. Except as otherwise set forth in Schedule 1.3
hereto, none of the Purchased Assets are held under, or used by Seller pursuant
to, any lease or conditional sales contract.
(c) Title to and Adequacy of Purchased Assets. Except as
disclosed on Schedule 6.6(c) hereto, Seller has, and on the Closing Date will
convey and transfer to Buyer, good, complete and marketable title to all of the
Purchased Assets, free and clear of all mortgages, security interests, liens,
options, pledges, equities, claims, charges, restrictions, conditions,
conditional sale contracts and any other encumbrances or adverse interests of
any kind or nature whatsoever (collectively "Liens or Encumbrances"). Except as
set forth on
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Schedule 6.6(c), all of the Purchased Assets are in the exclusive possession and
control of Seller and Seller has the unencumbered right to use, and to sell to
Buyer in accordance with the terms and provisions of this Agreement, all of the
Purchased Assets without interference from and free of the rights and claims of
others. The Purchased Assets constitute all the assets, properties, rights,
privileges and interests necessary for Buyer to own and operate the Purchased
Restaurants.
6.7 LABOR AND EMPLOYMENT AGREEMENTS.
(a) Schedule 6.7 sets forth the name of each employee of the
Purchased Restaurants, together with a description of all compensation and
benefits that are payable to such individuals as a result of their employment by
or association with Seller. Seller also has furnished to Buyer a true and
complete copy of its employee handbook. Buyer shall not have any obligation to
continue, nor shall Buyer have or incur any liability or obligation whatsoever
arising out of, any personnel policies or practices, either written or oral,
promulgated or followed by Seller.
(b) Seller is not a party or subject to any collective bargaining
or other labor, employment, deferred compensation, bonus, retainer, consulting,
or incentive agreement, plan or contract related to the Purchased Restaurants.
Except to the extent set forth in Schedule 6.7, (i) there has been no strike or
other work stoppage by, nor has there been any union organizing activity among,
any of the employees of Seller during the past five (5) years; (ii) to the best
of Seller's knowledge, Seller is in compliance with all applicable laws
respecting employment and employment practices, terms and conditions of
employment and wages and hours, and is not engaged in any unfair labor practice;
and (iii) there is no unfair labor practice complaint pending or, to the best
knowledge of Seller, threatened against Seller, nor, to the best knowledge of
Seller, is there any factual basis for any such complaint.
6.8 THE ASSIGNED CONTRACTS AND OTHER AGREEMENTS. Schedule 1.4 contains
accurate and complete list of the Assigned Contracts and Schedule 6.8 hereto
contains accurate and complete list of, each contract, agreement, indenture,
note, lease, or other instrument or commitment, written or oral, to which Seller
is a party or is bound or which relates to or affects or could affect any of the
Purchased Assets, the Assumed Obligations or the Purchased Restaurants or the
consummation of the transactions contemplated by this Agreement and is not
already listed on Schedule 1.3, Schedule 1.4 or Schedule 6.7 (collectively the
"Other Contracts"). Accurate and complete copies of all of Assigned Contracts
and the Other Contracts (collectively, the "Material Contracts") have been
furnished by Seller to Buyer. The Material Contracts include, without
limitation, each contract, agreement, license, instrument commitment or
understanding, written or oral (other than the Leases), which:
(a) Provides for the sale, lease or rental of any products goods,
or equipment or other assets or properties to or by Seller related to the
Purchased Restaurants (other than purchase orders issued or received by Seller
in the ordinary course of business and consistent with past practices);
(b) Provides for the payment of monies to or by Seller which
arise out of or relate to the Purchased Restaurants;
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(c) Provides for the licensing by or to Seller, or the use or
possession by Seller, of any software, trademarks, trade names, service marks,
copyrights, know-how, patents or other intellectual property rights used in
connection with the operation of the Purchased Restaurants;
(d) Grants a security interest or permit or provide for the
imposition of any other Lien or Encumbrance on, or provide for the disposition
of, any of the Purchased Assets;
(e) Requires the consent of any third party to or would terminate
as a result of the consummation by Seller of the transactions contemplated by
this Agreement;
(f) Restricts or would restrict the conduct of any aspects of the
Purchased Restaurants or the use or disposition by Buyer after the date hereof
of any of the Purchased Assets;
(g) Governs or relates to any of the Assumed Obligations or which
evidences any other liability or obligation, whether for borrowed money or
otherwise, that would be accelerated by reason of the consummation of the
transactions contemplated hereby; or
(h) If terminated or breached would have a Material Adverse
Effect on the Purchased Restaurants.
Except for the Assigned Contracts, the Leases, the Agreements listed on
Schedule 6.7 and the Other Contracts, there is no contract, lease, license or
other agreement, commitment or understanding that is material to the Purchased
Restaurants or the breach, termination or loss of which would have a Material
Adverse Effect on Seller or the Purchased Restaurants. Each of the Material
Contracts is a valid and binding obligation of Seller enforceable in accordance
with its terms, except as may be affected by bankruptcy, insolvency, moratorium
or similar laws affecting creditors' rights generally and general principles of
equity relating to the availability of equitable remedies. Except as otherwise
set forth in Schedule 6.8 hereto, there have not been any defaults by Seller or
defaults or any claims of default or claims of nonenforceability by the other
party or parties under or with respect or any of Material Contracts which,
individually or in the aggregate, would have a Material Adverse Effect on the
Purchased Restaurants, and, to the best of Seller's knowledge, there are no
facts or conditions that have occurred or that are anticipated to occur which,
with the passage of time or the giving of notice, or both, would constitute a
default by Seller or by the other party or parties under any of the Material
Contracts or would cause a creation or imposition of any Lien or Encumbrance
upon any of the Purchased Assets or otherwise would have a Material Adverse
Effect on Seller or on the Purchased Restaurants.
6.9 CONFLICTS. Except as described on Schedule 6.9 hereto, neither the
execution and delivery of, nor the consummation of the transactions contemplated
by, this Agreement will or could result in any of the following:
(a) A default or an event that, with notice or lapse of time, or
both, would be a default, breach or violation of the respective charter, bylaws
or other governing instruments of Seller, or any Material Contract;
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(b) The termination of any Material Contract, or the acceleration
of the maturity of any indebtedness or other obligation of Seller which would
have a Material Adverse Effect on the Purchased Restaurants, Seller or Buyer;
(c) The creation or imposition of any Lien or Encumbrance on any
of the Purchased Assets;
(d) The creation or imposition of any new, or a violation or
breach of any existing, writ, injunction or decree that would become or is now
applicable to or binding on Seller or any of the Purchased Assets or the
Purchased Restaurants;
(e) A loss or adverse modification of any license, franchise,
permit or other authorization or right (contractual or other) to operate the
Purchased Restaurants, granted to or otherwise held by Seller or used in the
operation of the Purchased Restaurants, which would have a Material Adverse
Effect on the Purchased Restaurants, Seller or Buyer;
(f) The cessation or termination of any other business
relationship or arrangement between Seller and any third party that would have a
Material Adverse Effect on the Purchased Restaurants, Seller or Buyer; or
(g) Any other consequence that would have or reasonably could be
expected to have a Material Adverse Effect on the Purchased Restaurants, Seller
or Buyer.
6.10 VENDORS AND SUPPLIERS. Schedule 6.10 attached hereto contains
correct and current list of the five (5) largest vendors and suppliers of the
Purchased Restaurants in terms of purchases or sales made by Seller during the
fiscal year ended December 31, 1996, showing the approximate aggregate dollar
amounts of purchases by Seller from each such vendor and supplier during that
fiscal period. Except as set forth on Schedule 6.10, since December 31, 1996
there has been no change in the business relationship of Seller with any vendor
or supplier named in Schedule 6.10 and Seller is not aware of any intention of
any of the vendors or suppliers listed in Schedule 6.10 to cease, or of any
event or circumstance that has occurred during the past twelve (12) months which
might reasonably be expected to cause any such vendor or supplier to cease,
doing business with Seller, or alter materially the amount of the business that
any of them is presently doing with Seller, or will require, as a condition to
the continuation of its business relationship with Seller, a change in the
prices or rents at or any other material terms under which any of such vendors
and suppliers have been doing business with Seller.
6.11 LIABILITIES. Except as otherwise set forth in Schedule 6.11, Seller
does not have any knowledge of any fact or of the occurrence of any event
forming the basis of any present or future claim against Seller, whether or not
fully covered by insurance, for liability on account of negligence which would
have, individually or in the aggregate, a Material Adverse Effect on Seller or
the Purchased Restaurants.
6.12 INSURANCE. Schedule 6.12 contains an accurate description
(including liability limits, deductibles and coverage exclusions) of all
policies of fire, general liability, worker's compensation, errors and
omissions, malpractice and other forms of insurance maintained by or on behalf
of Seller in connection with the Purchased Restaurants as protection for the
Purchased
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Assets and the Purchased Restaurants. Except as set forth in Schedule 6.12
hereto, all of such policies are now in full force and effect and policies
covering the same risks and in substantially the same amounts have been in full
force and effect continuously for the past five (5) years. Seller has not
received any notice of cancellation or material amendment of any such policies;
no coverage thereunder is being disputed; and all material claims thereunder
have been filed in a timely fashion. Seller has furnished to Buyer a schedule of
all insurance claims filed by Seller within the past three (3) years that were
related to the Purchased Restaurants and the disposition thereof. No such claims
have been denied by any of Seller's insurers and Seller has not failed to comply
with the requirements of any insurance policies which would provide any insurers
the right to deny any claim related to the Purchased Restaurants.
6.13 COMPLIANCE WITH LAW/PERMITS.
(a) Except as set forth in Schedule 6.13(a) hereto, Seller is in
compliance with all, and is not in violation of any, law, ordinance, order,
decree, rule or regulation of any governmental agency or authority. Except as
disclosed in Schedule 6.13(a) hereto, no unresolved (i) charges of violations of
laws or regulations have been made or threatened, (ii) proceedings or
investigations are pending or, to the best knowledge of Seller, have been
threatened, and (iii) citations or notices of deficiency have been issued or
have been threatened, against Seller or the Restaurants by any governmental
agencies or authorities; and, to the best knowledge of Seller, there are no
facts or circumstances upon which any such charges, proceedings, investigations,
or citations or deficiency notices, may be instituted, issued or brought
hereafter.
(b) Schedule 6.13(b) contains a true, correct and complete list
of all governmental licenses, permits, authorizations, franchises, or
certificates or rights (contractual or other) to operate the Purchased
Restaurants that are held by Seller (collectively, "Licenses and Permits"). Such
Licenses and Permits are the only licenses, permits, authorizations, franchises,
certificates and rights to operate required for operation of the Purchased
Restaurants and all of such Licenses and Permits are in full force and effect at
the date hereof. Seller has provided Buyer with true, correct and complete
copies of each License and Permit listed in Schedule 6.13(b). Except as
otherwise set forth in Schedule 6.13(b), the Purchased Restaurants are in
compliance with the conditions and requirements imposed by or in connection with
such Licenses and Permits. Seller has not received any notice, nor does Seller
have any knowledge or reason to believe, that any governmental agency or
authority intends to cancel, terminate or modify any of such Licenses or Permits
or that there are valid grounds for any such cancellation, termination or
modification. Seller has delivered or made available to Buyer a true, correct
and complete copy of the most recent safety inspection and quality assurance
reports, prepared by any employees or consultants of Seller or by any
governmental agencies or authorities relating to the Purchased Restaurants.
6.14 TAXES AND TAX RETURNS. Seller has duly filed all Tax Returns (as
hereinafter defined) which are required by law to be filed by it and has duly
and properly paid, or withheld for payment and paid, when due, all foreign,
federal, state and local Taxes (as hereinafter defined) due or claimed to be due
from it, and there are no assessments or claims for payment of Taxes (as
hereinafter defined) now pending or, to the best knowledge of Seller,
threatened, nor any audit of Seller's records presently being made by any taxing
authority. For purposes of this
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Agreement, (i) the term "Tax" or "Taxes" means any federal, state, local or
foreign income, gross receipts, license, payroll, employment, excise, severance,
stamp, occupation, premium, windfall profits, environmental (including taxes
under Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security, unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not; and (ii) the term "Tax
Return" means any return, declaration, report, claim for refund, or information
return or statement (including, but not limited to, information returns or
reports related to back-up withholding and any payments to third parties)
relating to any Taxes, including any schedule or attachment thereto, and
including any amendment thereof. Buyer shall have no liability or obligation
whatsoever, and shall not incur any loss, expense or cost, and none of the
Purchased Assets, or any assets of Buyer, shall be subjected to any Lien or
Encumbrance, by reason of any Taxes arising out of any operations or activities
of Seller whether conducted prior to the date hereof or hereafter.
6.15 LITIGATION AND PROCEEDINGS. Except as set forth in Schedule 6.15
hereto, there is no action, suit, proceeding or investigation, or any counter or
cross-claim in an action brought by or on behalf of any of Seller, whether at
law or in equity, or before or by any governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind, that is pending or, to the best knowledge of Seller,
threatened, against Seller, which (i) could reasonably be expected to affect
adversely Seller's ability to perform his obligations under this Agreement or
complete any of the transactions contemplated hereby or thereby, or (ii)
involves the possibility of any judgment or liability, or which may become a
claim, against Buyer, the Purchased Restaurants or the Purchased Assets. Except
as set forth in Schedule 6.15, Seller is not subject to any judgment, order,
writ, injunction, decree or award of any court, arbitrator or governmental
department, commission, board, bureau, agency or instrumentality having
jurisdiction over Seller or any of the Purchased Assets or the Purchased
Restaurants. All of the legal actions or other proceedings that are pending or
threatened against Seller, the Purchased Restaurants or the Purchased Assets
involve only routine claims for monetary damages that are incidental to and have
arisen out of the ordinary course of the business of the Purchased Restaurants
and any liability, damage, cost or expense that may be incurred in any of such
actions or proceedings will be fully covered by insurance, except as expressly
stated to the contrary on Schedule 6.15.
6.16 CERTAIN TRANSACTIONS. Except as set forth in Schedule 6.16, there
are no existing or pending transactions, nor are there any agreements or
understandings, with any employees of Seller, or any person that is related to,
or any person or entity that is affiliated with, any of them (collectively,
"Affiliates"), relating to, arising from or affecting the Purchased Restaurants,
or any of the Purchased Assets, including, without limitation, any transactions,
arrangements or understandings relating to the purchase of services, the lending
of monies, or the sale, lease or use of any of the Purchased Assets, with or
without adequate compensation, in any amount whatsoever. No existing or former
employee of Seller has any claims against or, to the best of Seller's knowledge,
disputes with Seller which could result in the imposition of any liability,
judgment, lien or encumbrance against the Purchased Restaurants or any of the
Purchased Assets.
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6.17 ENVIRONMENTAL AND SAFETY MATTERS. Except as set forth in Schedule
6.17, Seller has complied with, and the operation of the Purchased Restaurants
and the use of the Purchased Assets are in compliance with, in all material
respects, all federal, state, regional and local statutes, laws, ordinances,
rules, regulations and orders relating to the protection of human health and
safety, natural resources or the environment, including, but not limited to, air
pollution, water pollution, noise control, on-site or off-site hazardous
substance discharge, disposal or recovery, toxic or hazardous substances,
training, information and warning provisions relating to toxic or hazardous
substances, and employee safety relating to the Purchased Restaurants or the
Purchased Assets (collectively the "Environmental Laws"); and no notice of
violation of any Environmental Laws or of any permit, license or other
authorization relating thereto has been received or threatened against Seller,
and to the best knowledge of Seller, there is no factual basis for the giving of
any such notice. Except as set forth in Schedule 6.17, no underground or
above-ground storage tanks or surface impoundments are located on any of the
real properties that are or have been used, operated, leased or owned by Seller
in connection with or for the Purchased Restaurants and (i) except in compliance
with applicable Environmental Laws and any licenses or permits relating thereto,
there has been no generation, use, treatment, storage, transfer, disposal,
release or threatened release in, at, under, from, to or into, or on such
properties of toxic or hazardous substances during the ownership or occupancy
thereof by Seller or, to the best knowledge of Seller, prior to such ownership
or occupancy, and (ii) in no event has there been any generation, use,
treatment, storage, transfer, disposal, release or threatened release in, at,
under, from, to or into, or on such properties of toxic or hazardous substances
that has resulted in or is reasonably likely to result in a Material Adverse
Effect on the Purchased Restaurants or on Seller. Seller has not received any
notice or claim to the effect that Seller or the Purchased Restaurants is or may
be liable to any governmental authority or private party as a result of the
release or threatened release of any toxic or hazardous substances in connection
with the conduct or operation of the Purchased Restaurants, and none of the
operations of the Purchased Restaurants and none of the Purchased Assets is the
subject of any federal, state or local investigation evaluating whether any
remedial action is needed to respond to a release or a threatened release of any
toxic or hazardous substances at any of the Leased Properties or any other real
properties leased, used, operated or owned by Seller in connection with the
Purchased Restaurants. Seller has not disposed, or had disposed of on its
behalf, toxic or hazardous substances at any site other than a federal and state
licensed hazardous waste treatment, storage and disposal facility and, to the
best knowledge of Seller, each such facility is not currently listed, or
threatened to be listed, on any state or federal "superfund" list. For the
purposes of this Section 6.17, "toxic or hazardous substances" shall include any
material, substance or waste that, because of its quantity, concentration or
physical or chemical characteristics, is deemed under any federal, state, local
or regional statute, law, ordinance, regulation or order, or by any governmental
agency pursuant thereto, to pose a present or potential hazard to human health
or safety or the environment, including, but not limited to, (i) any material,
waste or substance which is defined as a "hazardous substance" pursuant to the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(42 U.S.C. Section 9601, et seq.), as amended, and its related state and local
counterparts, (ii) asbestos and asbestos containing materials and
polychlorinated biphenyls, and (iii) any petroleum hydrocarbon including oil,
gasoline (refined and unrefined) and their respective constituents and any
wastes associated with the exploration, development or production of crude oil,
natural gas or geothermal energy.
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6.18 BROKERS. Seller has not retained or used the services of an agent,
finder or broker in connection with the transactions contemplated by this
Agreement. Seller shall pay, and shall indemnify, hold harmless and defend Buyer
from and against, all commissions, finder's and other fees and expenses charged
or asserted by any agent, finder or broker, by reason of any such retention or
use of the services of any such agent, finder or broker by Seller.
6.19 REPRESENTATIONS AND WARRANTIES OF SELLER. The representations and
warranties of Seller contained herein, and the disclosures contained in Seller's
Disclosure Schedules, do not contain any statement of a material fact that was
untrue when made or omits any information necessary to make any such statement
contained therein, in light of the circumstances under which such statement was
made, not misleading.
7. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer makes the following representations and warranties to Seller as of
the date of this Agreement:
7.1 ORGANIZATION. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
7.2 CORPORATE POWER. Buyer possesses the requisite corporate power and
authority to enter into and perform its obligations under this Agreement and the
ancillary agreements.
7.3 NECESSARY ACTIONS; BINDING EFFECT. Buyer has taken all corporate
action necessary to authorize the execution and delivery of, and the performance
of its obligations under, this Agreement and the ancillary agreements. This
Agreement constitutes, and upon its execution and delivery the ancillary
agreements will constitute, valid obligations of Buyer that are legally binding
on and enforceable against Buyer in accordance with their respective terms,
except (in each case) as such enforceability may be limited by (i) bankruptcy,
insolvency, moratorium or other similar laws affecting creditors' rights, and
(ii) general principles of equity relating to the availability of equitable
remedies (regardless of whether such agreements are sought to be enforced in a
proceeding at law or in equity).
7.4 BROKER. Buyer has not retained or used the services of an agent,
finder or broker in connection with the transactions contemplated by this
Agreement. Buyer shall pay, and shall indemnify, hold harmless and defend Seller
from and against all commissions, finder's and other fees and expenses charged
or asserted by any agent, finder or broker, by reason of any such retention or
use of the services of any agent, finder or broker by Buyer.
7.5 CONSENTS AND APPROVALS; NO VIOLATION. No filing or registration
with, no notice to and no governmental authorization, consent or approval of any
governmental authority or other person is necessary in connection with Buyer's
execution and delivery of this Agreement, the performance of its obligations
hereunder or the consummation by Buyer of the transactions contemplated hereby.
8. INTENTIONALLY OMITTED.
9. ADDITIONAL COVENANTS.
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9.1 RETAINED EMPLOYEES. Buyer and Seller shall jointly notify all
Retained Employees (as hereinafter defined) that their employment by Seller will
be terminated as of the Closing Date by reason of the transactions contemplated
by this Agreement and that Buyer will hire only those employees of Seller
engaged in the operation of the Purchased Restaurants designated on Schedule 9.1
hereto (the "Retained Employees"). On the Closing Date, Seller shall (i)
terminate all Retained Employees, and (ii) waive any rights it may have to
prohibit the Retained Employees from being employed by the Buyer.
9.2 ADVERSE CHANGES. Seller shall promptly notify Buyer in writing of
any material adverse facts or developments affecting or which may affect the
Purchased Restaurants including, without limitation, (i) any damage, destruction
or loss (whether or not covered by insurance) affecting any of the Purchased
Assets or the Purchased Restaurants, or (ii) anything which, if not corrected
prior to Closing, could prevent Seller from fulfilling any condition precedent
described in Section 12 below.
9.3 PUBLICITY. Buyer, Seller and their respective affiliates agree that
(i) any public disclosure of the transactions contemplated hereby shall be by
mutual agreement of the parties and in a form and manner agreed to by the
parties; provided, however, that either party shall, after reasonable notice, be
entitled to make any disclosure required by applicable law, rule or regulation
of any governmental authority or securities exchange, and (ii) except as
provided in clause (i) above, each party and its respective affiliates shall
maintain the confidentiality of any and all information relating to this
Agreement and the transactions contemplated hereby and any and all confidential
information of the other party received in connection with this Agreement and
the transactions contemplated hereby.
9.4 BULK TRANSFERS. Buyer hereby waives compliance with any applicable
bulk sale or bulk transfer laws of any jurisdiction in connection with the sale
of the Purchased Assets to the Buyer.
9.5 LICENSE AGREEMENT. Seller and Buyer shall enter into a license
agreement (the "License Agreement") pursuant to which Seller shall grant to
Buyer a perpetual, non-exclusive, royalty-free license to use the Intangible
Property Rights to the extent necessary to operate the Purchased Restaurants in
the form of Exhibit B hereto.
10. SURVIVAL OF COVENANTS, REPRESENTATIONS AND WARRANTIES.
All of the representations and warranties set forth in this Agreement
shall remain in full force and effect regardless of any investigation,
verification or approval by any party hereto or by anyone on behalf of any party
hereto, and shall survive for a period of two years following the Closing,
regardless of any investigation, verification or approval by any party hereto.
The covenants and agreements of the parties contained in this Agreement shall
survive the Closing.
11. CLOSING DELIVERIES.
11.1 SELLER'S DELIVERIES. In connection with and at the time of the
Closing, Seller shall deliver to Buyer the following:
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(a) Bill of Sale. A bill of sale in the form attached hereto as
Exhibit C and all other instruments and documents of transfer necessary to
transfer and vest in Buyer good title to the Purchased Assets, free and clear of
any liabilities, liens, encumbrances or restrictions whatsoever except as set
forth herein, in the form and substance satisfactory to Buyer's counsel.
(b) License Agreement. A duly executed counterpart of the License
Agreement.
(c) Opinion of Seller's Counsel. An opinion of Seller's counsel
substantially in the form of Exhibit D hereto.
11.2 BUYER'S DELIVERIES. In connection with and at the time of the
Closing, Buyer shall deliver to Seller the following:
(a) Purchase Price. The Purchase Price, in the manner set forth
in Section 4 above, and in connection therewith, shall deliver the Note to the
Seller, which Note shall be marked cancelled and paid.
(b) License Agreement. A duly executed counterpart of the License
Agreement.
12. OBLIGATIONS SURVIVING THE DATE OF THIS AGREEMENT AND THE CLOSING.
12.1 TERMINATION OF LIENS AND ENCUMBRANCES. Seller hereby covenants that
it shall have arranged for and shall have caused all Liens and Encumbrances on
any of the Purchased Assets to be terminated, released or otherwise removed as
of the Closing Date in exchange for the payment to the holders of such Liens or
Encumbrances of the indebtedness or other obligations secured thereby, a list of
which is attached hereto as Schedule 12.1 (the "Secured Obligations"). If it is
determined at any time hereafter that Seller failed to remove or cause to be
removed, without liability or cost or expense to Buyer and without the
disposition of any of the Purchased Assets, any Lien or Encumbrance on any of
the Purchased Assets that was in existence on or prior to the date hereof, or if
any Lien or Encumbrance is imposed or placed on any of the Purchased Assets (or
any replacements thereof) after the date hereof as a result of any act or
omission of Seller, occurring on, prior to or after the date hereof, then,
without limiting any other right or remedy that Buyer may have, Seller shall
cause such Lien or Encumbrance to be removed at no expense or liability to
Buyer, and without any reduction or disposition of any of the Purchased Assets.
12.2 FURTHER ASSURANCES. Each party hereto shall execute and deliver
after the date hereof such instruments and take such other actions as the other
party may reasonably request in order to carry out the intent of this Agreement
or to better evidence or effectuate the transactions contemplated herein.
12.3 COSTS AND EXPENSES. Each party shall pay all costs and expenses
incurred or to be incurred by it in negotiating and preparing this Agreement and
Related Agreements and in carrying out and closing the transactions contemplated
by this Agreement.
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12.4 TAXES. Seller shall pay all Taxes of any kind or nature arising
from (i) the conduct or operation of the Purchased Restaurants up to the Closing
Date and the conduct or operation by Seller, prior to or after the date hereof,
of any other business or business activities operations; and (ii) consummation
of the transactions contemplated hereby, including, without limitation, all
sales, use or similar Taxes, if any, that may arise from or be assessed by
reason of the sale of the Purchased Assets by Seller to Buyer. If any taxes
required under this Section 12.4 to be borne by are assessed against Buyer or
any of the Purchased Assets, Buyer shall notify Seller in writing promptly
thereafter and Seller shall be entitled to contest, in good faith, such
assessment or charge so long as such assessment does not adversely affect Buyer
or the Purchased Assets or the Purchased Restaurants. Notwithstanding the
foregoing, Buyer may (but shall not be obligated to) pay any such Taxes assessed
against it, the Purchased Restaurants or any of the Purchased Assets, but which
are payable by Seller pursuant hereto, if Buyer's failure to do so, in the
judgment of Buyer, could result in the imposition of a Lien or Encumbrance on
any of the Purchased Assets or any other assets of Buyer or would constitute a
violation of any agreement to which Buyer is subject, or if Seller fails to
contest such assessment or charge diligently and in good faith. If Buyer pays
any Taxes which pursuant hereto are required to be borne by Seller, Buyer shall
be entitled to reimbursement thereof from Seller on demand.
12.5 FINANCIAL BOOKS AND RECORDS. For a period of five (5) years
hereafter, Buyer shall provide Seller with access during normal business hours
to any books or records relating to the Purchased Restaurants or the Purchased
Assets, which Seller may need solely to file tax returns or other filings or to
defend litigation, filed prior or subsequent to the date hereof, which relate to
periods prior to the date hereof.
13. INDEMNIFICATION PROVISIONS.
13.1 OBLIGATIONS OF SELLER. Seller hereby agrees that it will indemnify,
hold harmless and defend Buyer and each of its directors, officers,
stockholders, employees and agents and their respective successors and assigns,
from and against any and all demands, claims, actions, suits, judgments
liabilities, damages, losses, Taxes, costs and expenses, including, without
limitation, reasonable attorneys' fees, and whether or not they have arisen from
or were incurred in or as a result of any demand, claim, action, suit,
assessment or other proceeding or any settlement or judgment (collectively, the
"Liabilities") that arise from or are in connection with:
(a) Any facts, circumstances or events, the existence or
happening of which constitutes a breach of or material inaccuracy in any of the
representations or warranties of Seller contained in this Agreement or in
Seller's Disclosure Schedules;
(b) Any breach or default by Seller of any of his respective
covenants or agreements contained in this Agreement, including, without
limitation, any of the covenants of Seller set forth in Section 3.2 with respect
to the Retained Liabilities;
(c) Any claim, lawsuit, action or other proceeding that (i) is
pending against Seller or to which the Purchased Restaurants or any of the
Purchased Assets is subject on the date hereof, or (ii) is brought against Buyer
or to which any of the Purchased Restaurants or any of the Purchased Assets may
become subject hereafter as a result of or arising from any acts or omissions of
Seller that have occurred on or before the date hereof or any acts or
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omissions of Seller that may occur after the date hereof, and whether or not the
bringing or assertion of any such claim, lawsuit, action or other proceeding
constitutes a breach of Seller representations or warranties contained in the
Agreement;
(d) Any breach of or inaccuracy in any of the representations or
warranties contained in Section 6.13 hereof or any violation of or
non-compliance with any applicable laws or regulations applicable to Seller or
the Purchased Restaurants prior to the Closing, whether or not such violation or
non-compliance constitutes a breach of the representations or warranties
contained in Section 6.13 hereof;
(e) The presence on or in or the discharge from any real
properties owned or leased now or in the past by Seller of any toxic or
hazardous substances (as defined in Section 6.17 above) that originated or took
place prior to the date hereof, whether or not disclosed in this Agreement or
Seller's Disclosure Schedules hereto; and
(f) The failure to have paid or to pay, when due, any Taxes that
arose out of the operations of the Seller or the consummation of the
transactions contemplated by this Agreement or the failure to have filed, when
due, any Tax Returns related to any such Taxes or any period up to the Closing
Date.
13.2 OBLIGATIONS OF BUYER. Buyer agrees that it will indemnify, hold
harmless and defend Seller and each of its directors, officers, stockholders,
employees and agents from and against any and all Liabilities that arise from or
are in connection with:
(a) a breach or default by Buyer of any of his respective
covenants or agreements contained in this Agreement;
(b) the operation of the Purchased Restaurants from and after the
Closing, other than any act or omission of Seller; and
(c) the Assumed Obligations.
13.3 CLAIMS. If any party (the "Indemnitee) receives notice of
circumstances that would give rise to a claim by such party or notice of any
claim or the commencement of any action or proceeding with respect to which any
other party (or parties) is obligated to provide indemnification (the
"Indemnifying Party") pursuant to Sections 13.1 or 13.2 (a "Claim"), the
Indemnitee shall promptly give the Indemnifying party notice thereof; provided,
however, that failure to so notify shall not affect the right of indemnification
hereunder unless such failure has prejudiced the rights of the Indemnifying
Party. Within 30 days after such notice, the Indemnifying Party will notify the
Indemnitee whether it irrevocably elects to make payment of the amount claimed
or, with respect to third party claims, to contest such claim by appropriate
legal proceedings. The failure of the Indemnifying Party to notify the
Indemnitee of its intention within such 30 days shall constitute an irrevocable
election by them that it will pay the amount claimed. Any defense of a claim
shall be conducted by counsel of good standing chosen by Indemnitee and
satisfactory to Indemnifying Party. Such defense shall be conducted at the
expense of Indemnifying Party, except that if any proceeding involves both
claims against which indemnity is granted hereunder and other claims for which
indemnification is not granted
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hereunder, the expenses of defending against such claims shall be borne by the
Indemnifying Party and the Indemnitee in respective proportions to the dollar
amount of the claims for which they may be liable based on he aggregate dollar
amount of the claims.
14. MISCELLANEOUS.
14.1 NOTICES. All notices, requests, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given, (i)
on the date of delivery if delivered in person; (ii) on the second business day
after being sent by fax, provided that the successful transmission of the fax
has been confirmed through a confirmation function sheet provided by the fax
machine used for such transmission and a true and correct copy thereof is sent
by first class mail to the party to which the fax was sent within one (1)
business day thereafter; or (iii) on the third business day following the
deposit thereof in the United States Mails, provided it is mailed by certified
mail, return-receipt requested and postage prepaid and properly addressed as
follows:
If to Seller: Stacey's Buffet, Inc.
12812 60th Street North, Room 200
Clearwater, Florida 33760
Fax No.: (813) 507-0345
Attn: President
With a copy to: Gadsby & Hannah LLP
225 Franklin Street
Boston, MA 02110-2811
Fax No.: (617) 345-7050
Attn: Jeffrey M. Stoler
If to Buyer, addressed to: Star Buffet, Inc.
440 Lawndale Drive
Salt Lake City, Utah 84115
Fax No.: (801) 463-5585
Attn: Charlotte Miller
With a copy to: Stradling Yocca Carlson & Rauth
660 Newport Center Drive, Suite 1600
Newport Beach, CA 92660-6441
Fax No. (714) 725-4100
Attn: C. Craig Carlson, Esq.
Any party hereto may from time to time, by written notice to the other
parties, designate a different address, which shall be substituted for the one
specified above.
14.2 MATERIAL ADVERSE EFFECT. When used in this Agreement, the phrase
"Material Adverse Effect" shall mean a circumstance, state of facts, event,
consequence or result that, individually or in the aggregate, materially and
adversely affects, or could reasonably be expected to materially and adversely
affect the Purchased Assets or the Purchased Restaurants or the condition
(financial or other), operating results or future prospects of Buyer or Seller,
as
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the case may be, or the ability of Buyer or Seller to consummate the
transactions which it is required to consummate hereunder.
14.3 ASSIGNMENT. Seller may not assign this Agreement, or assign its
rights or delegate its duties hereunder, without the prior written consent of
Buyer. Buyer shall have the right, without Seller's consent, to assign its
rights and delegate its duties hereunder to any corporation which is controlled
by Buyer.
14.4 SEVERABILITY. Any provision of this Agreement which is illegal,
invalid or unenforceable shall be ineffective to the extent of such illegality,
invalidity or unenforceability, without affecting in any way the remaining
provisions hereof.
14.5 GOVERNING LAW. This Agreement is deemed to have been entered into
and is to be performed in the State of Florida and its interpretation, its
construction and the remedies for its enforcement or breach are to be applied
pursuant to, and in accordance with, the laws of the State of Florida for
contracts made and to be performed in that state.
14.6 ENTIRE AGREEMENT; AMENDMENT. This Agreement, and the Exhibits and
Schedules hereto, and each additional agreement and document to be executed and
delivered pursuant hereto, constitute all of the agreements of the parties with
respect to, and supersede all prior agreements and understandings relating to
the subject matter of, this Agreement or the transactions contemplated by this
Agreement. This Agreement may not be modified or amended except by a written
instrument specifically referring to this Agreement signed by the parties
hereto.
14.7 WAIVER. No waiver by one party of the other party's obligations, or
of any breach or default hereunder by any other party, shall be valid or
effective, unless such waiver is set forth in writing and is signed by the party
giving such waiver; and no such waiver shall be deemed a waiver of any
subsequent breach or default of the same or similar nature or any other breach
or default by such other party.
14.8 INTERPRETATION; HEADINGS. This Agreement is the result of
arms'-length negotiations between the parties hereto and no provision hereof,
because of any ambiguity found to be contained therein or otherwise, shall be
construed against a party by reason of the fact that such party or its legal
counsel was the draftsman of that provision. The section, subsection and any
paragraph headings contained herein are for the purpose of convenience only and
are not intended to define or limit or affect, and shall not be considered in
connection with, the interpretation of any of the terms or provisions of this
Agreement.
14.9 COUNTERPARTS. This Agreement may be executed in separate
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.10 ARBITRATION. All claims, controversies, differences or disputes
between or among any of the parties hereto arising from or relating to this
Agreement, or any of the agreements entered into pursuant to any of the express
provisions hereof, shall be determined solely and exclusively by arbitration in
accordance with the rules of commercial arbitration then in effect of the
American Arbitration Association, or any successors thereto. Each of the parties
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consent to venue for such arbitrations in Salt Lake City, Utah and to service of
process by certified or registered mail to their respective addresses where
notices may be sent pursuant to Subsection 14.1. Either party may initiate any
such arbitration and, if initiated, the parties shall jointly select a mutually
acceptable arbitrator therefor. In the event the parties fail to agree upon such
an arbitrator within twenty (20) days after written notification of the
initiation of the arbitration has been given to all of the parties, then each
party shall select an arbitrator and such arbitrators shall then select a third
arbitrator to serve as the sole arbitrator, provided that if, in such event,
either party fails to select such an arbitrator within seven (7) days, such
party's arbitrator shall be selected by the American Arbitration Association, or
any successor thereto, upon application of either party. Judgment upon the award
of the agreed upon arbitrator or the so chosen third arbitrator, as the case may
be, shall be binding and may be entered in any court of competent jurisdiction.
The parties agree to abide by any decision rendered in any such arbitration as
final and binding and waive the right to submit the dispute to a public tribunal
for jury or non-jury trial. Notwithstanding the foregoing, any party may bring
an action in any court of competent jurisdiction when the remedy sought is
limited to injunctive relief of a breach or threatened breach of this Agreement
by another party hereto or specific performance of any of the obligations of any
of the other parties thereto. The prevailing party in any such arbitration or
other proceeding brought in accordance with this Subsection 14.10, shall be
reimbursed for its reasonable attorneys' fees and disbursements and costs
incurred in connection therewith by the non-prevailing party as determined by
the arbitrator.
IN WITNESS WHEREOF, the undersigned have caused this Asset Purchase
Agreement to be executed by officers thereunto duly authorized as of the date
first above stated.
BUYER
STAR BUFFET, INC.
By:
---------------------------------------------
Its:
--------------------------------------------
SELLER
STACEY'S BUFFET, INC.
------------------------------------------------
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EXHIBITS
Exhibit A Allocation of Purchase Price
Exhibit B License Agreement
Exhibit C Bill of Sale
Exhibit D Form of Opinion of Seller's Counsel
SCHEDULES
Schedule 1 List of Purchased Restaurants
Schedule 1.1 Tangible Personal Property and Fixtures
Schedule 1.2 Inventory
Schedule 1.3 Real Property and Personal Property Leases
Schedule 1.4 Assigned Contracts
Schedule 1.8 Cash and Equivalents
Schedule 1.9 Prepaid Fees and Deposits
Schedule 3.1 Assumed Obligations
Schedule 6.1(c) Consents, Approvals, etc.
Schedule 6.4 Undisclosed Liabilities
Schedule 6.5 Certain Changes
Schedule 6.6(c) Exceptions to Title
Schedule 6.7 Labor and Employment Matters
Schedule 6.8 Material Contracts
Schedule 6.9 Conflicts
Schedule 6.10 Vendors and Suppliers
Schedule 6.11 Liabilities
Schedule 6.12 Insurance
Schedule 6.13(a) Compliance With Laws
Schedule 6.13(b) Licenses and Permits
Schedule 6.15 Litigation
Schedule 6.16 Certain Transactions
Schedule 6.17 Environmental and Safety Matters
Schedule 6.18 Operational Restrictions
Schedule 9.1 Retained Employees
Schedule 12.1 The Secured Obligations
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Schedule 1
1. Holiday, Florida
2. Fort Myers, Florida
3. Port Charlotte, Florida
