UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest event reported): March 2, 2000
Restaurant Teams International, Inc.
(Exact name of registrant as specified in its charter)
State of Texas 001-13559 75-2337102
(State of incorporation) (Commission File No.) (IRS Employer
Identification No.)
911 N.W. Loop 281, Suite 111
Longview, Texas 75604
(Address of principal executive offices) (Zip code)
No change
(Former name of address, if changed since last report).
Item 5. Other events
Restaurant Teams International, Inc. issued the following press releases on
February 9th, 22nd, & 23rd respectively.
February 9th:
Restaurant Teams International Inc. Acquires the Assets of Tanner's
Restaurant Group Inc.
Restaurant Teams International, Inc. (RTIN), Longview, Texas, has acquired
substantially all of the operating assets of the chapter 11 subsidiaries of
Tanner's Restaurant Group, Inc. RTIN has completed the sale process, which was
approved by the US Bankruptcy Court in Atlanta Tuesday February 8, 2000.
Stanley L. Swanson, Chief Executive Officer of Restaurant Teams International,
Inc. stated, "We are all very excited to announce the completion of this
acquisition of the Tanner's restaurants in Atlanta. This was a solid opportunity
in a great market. Currently there are other opportunities under review. We are
looking forward to increasing the value of "RTIN" through future acquisitions
this year."
Curtis A. Swanson, Chief Financial Officer Stated, "I am pleased that we have
successfully completed the acquisition of Tanner's so quickly. This all cash
purchase, will maximize the projected $9 million in additional revenues for the
year 2000, with an estimated $1.2 million in EBITDA which we expect to impact
earnings by $0.10 cents per share."
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Tanner's is a 14 year-old restaurant concept with a reputation built on friendly
service and quality food. The concept is that of a full service family
restaurant serving foods such as rotisserie chicken, BBQ ribs, shrimp, chili,
salads, 13 varieties of vegetables, and more. Tanner's restaurants are said to
be "An Atlanta Tradition".
Restaurant Teams International, Inc. is a public holding company whose stock
trades on the fully reporting NASDAQ OTC BB.
This press release may contain forward-looking statements, which are generally
preceded by words such as "believes", "expects", "anticipates", or "intends".
Such statements are subject to risks and uncertainties, including but not
limited to competitive conditions, real estate zoning and permitting
complications, government regulations, and general conditions in the restaurant
market.
Contact: Restaurant Teams International Inc.
Curtis A. Swanson CFO (903) 295-6800
February 22nd:
Restaurant Teams International Inc., Acquires Regulatory Solutions Inc.
Restaurant Teams International, Inc. (RTIN), Longview, Texas, announced today
that it has successfully completed the acquisition of privately held Regulatory
Solutions Inc. (RSI). RSI is a business to business, (B2B), Professional
Services Company. The company's founder, Mr. Johann Wasserman, will remain in
his current position as President & CEO of RSI. Mr. Wasserman, who has been in
the regulatory business for over 15 years, brings the contacts and networking of
over 1000 clients in 47 states such as Sodexho Marriott (NYSE:SDH), Delta Daily
Foods, and Pavestone Corp. to the acquisition.
RSI specializes in State and Federal laws that govern both the employer and
employee in the work place. The company provides proprietary "Worksafe" training
and certification programs utilized as a major outsource for regional and
national businesses alike.
The "Worksafe" programs, which are marketed on both a corporate and franchise
level, provide cutting edge safety and training designed to address the specific
needs of management as it relates to ongoing safety and health issues associated
with their industry. RSI is expanding through marketing a well-designed
franchise program. RSI franchisees will develop regional territories and provide
customer service for the ongoing needs of the franchise client acting as a
direct liaison between the franchisor and the end user. The Worksafe programs
address vital compliance issues with specific industry related agencies such as
DOH, DOT, OSHA, and EPA. The Worksafe products are designed to reduce potential
liabilities and assist their clients in obtaining the lowest possible premium
associated with Workers Compensation Insurance.
Curtis A. Swanson, Chief Financial Officer of Restaurant Teams International,
Inc. stated, "This acquisition is a further step toward our objective to
diversify the company and create increased shareholder value. Based on projected
revenues of $4,200,000, we are anticipating earnings of $0.15 per share from
this division, in the year 2000. Increased revenues are expected from the sale
of our newly released proprietary software. This CD based interactive training
system was just released in January 2000. We recognize the need in our industry
for professional solutions to health and safety issues in the work place. Our
experience with the Worksafe services saved the company approximately $50,000
annually in insurance premiums when we closed on the recent Tanner's restaurant
chain. RSI currently has 29 restaurant industry specific Worksafe products
addressing a full spectrum of health and safety issues vital to every size and
style of food service provider."
Mr. Swanson further stated "It is our intention to quickly introduce these
products and services to the Internet in order to capitalize on the high growth
business to business e-commerce market place. This will enable us to maximize
the exposure and delivery systems of the already established "Worksafe" products
and services by making it available to millions of potential clients."
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Johann Wasserman, President and CEO of Regulatory Solutions Inc. stated, "I am
looking forward to working with RTIN Holdings and their management. We are
focusing on the synergies to which this alliance brings throughout the
restaurant industry that will enable us to penetrate this market in a more
comprehensive way. I believe our company has just barely scratched the surface
of market share in any one of the many industries we now provide professional
services to."
Restaurant Teams International, Inc. is a public holding company whose stock
trades on the fully reporting NASDAQ OTC BB.
This press release may contain forward-looking statements, which are generally
preceded by words such as "believes", "expects", "project", "anticipates", or
"intends". Such statements are subject to risks and uncertainties, including but
not limited to competitive conditions, real estate zoning and permitting
complications, government regulations, and general conditions in the restaurant
market.
Contact: Restaurant Teams International Inc.
Curtis A. Swanson CFO (903) 295-6800
February 23rd:
Restaurant Teams International Inc. dba, RTIN Holdings, Announces Terms of
Tanner's & Regulatory Solutions Inc. Acquisitions.
RTIN Holdings, (RTIN), Longview, Texas, has paid $325,000 in Cash and an
additional $125,000 in O&D insurance, indemnifying certain officers and
directors of the now defunct Tanners Restaurant Group Inc. (OTC BB: TORI). The
$450,000 total represents full payment of substantially all the assets of all
the subsidiaries of Tanner's Restaurant Group Inc., which was approved by the US
Bankruptcy Court in Atlanta. With historical annual revenues of over $9 million
and 8 operating restaurants producing an estimated $1.2 million in EBITDA, we
expect to impact earnings by $0.10 cents per share in this division.
RTIN Holdings has paid $3.1 million dollars for the privately held Regulatory
Solutions Inc. (RSI). The all cash purchase will be paid in three payments. One
payment each year converted into restricted common stock of the company. The
stock's conversion price will be an average of the stock's price 30 days prior
to the conversion. Additionally there is an earn-out provision for the company's
principal management upon meeting certain performance guidelines set forth in
the agreement. Current management of RSI anticipates meeting or exceeding these
guidelines respectively. Based on projected revenues of $4,200,000, we are
anticipating earnings of $0.15 per share from this division, in the year 2000.
Stanley L. Swanson, CEO stated, "I believe we are finally building the company
we have all been waiting for. With several opportunities for expansion and
growth, it pleases me to see that we now have a depth and growing professional
resources to assist us with the future of RTIN."
Curtis A. Swanson, CFO stated, "The diversification that the current
acquisitions have given us, sets the tone of RTIN as a holding company. We have
not lost our focus in the restaurant industry, nor have we lost sight of ongoing
current and pending acquisitions within the restaurant industry. We are simply
going to limit our involvement in operations to focus on Franchising and explore
the world of acquisitions. There are many well-run, very profitable businesses
to buy, and I want to be focused on growth opportunities, not the day to day
operations. We have secured operational professionals that will assist us within
our most management intensive industry, and we feel confident in our future."
When commenting on the recent acquisition of RSI, Mr. Swanson said; "I don't
think anyone fully understands the positive impact this transaction will have on
this company and our shareholders in the future. Mr. Wasserman, CEO of RSI is
truly an expert in the field of regulatory compliance and brings with him
tremendous base of knowledge, contacts, and resources with which we plan to
develop a leading Internet presence for business to business commerce in the
regulatory, safety, and training segments. The RSI products are something that
virtually every business in America needs. The ability to reduce liability
exposure for owners and shareholders alike, as well as, provide a safe
environment for people to work, is a universal issue. We are tremendously
optimistic about what this new acquisition provides in the way of future
opportunities for RTIN and our shareholders."
<PAGE>
Restaurant Teams International, Inc. is a public holding company whose stock
trades on the fully reporting NASDAQ OTC BB.
This press release may contain forward-looking statements, which are generally
preceded by words such as "believes", "expects", "anticipates", or "intends".
Such statements are subject to risks and uncertainties, including but not
limited to competitive conditions, real estate zoning and permitting
complications, government regulations, and general conditions in the restaurant
market.
Contact: Restaurant Teams International Inc.
Curtis A. Swanson CFO (903) 295-6800
Item 7. Exhibits
(c)
1) Agreement to acquire assets of the bankrupt subsidiaries of Tanner's
Restaurant Group, Inc.
2) Agreement and Plan of Merger to acquire all the assets of Regulatory
Solutions, Inc.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Restaurant Teams International, Inc.
Date: March 3, 2000 By: /s/ Stanley L. Swanson
-------------------
Stanley L. Swanson
Chief Executive Officer
(Signature)
Date: March 3, 2000 By: /s/ Curtis A. Swanson
------------------
Curtis A. Swanson
Chief Financial Officer
(Signature)
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Exhibits
Attachment 1: Regulatory Solutions, Inc. agreement and plan of Merger
Attachment 2: Tanner's Acquisitions documents
<PAGE>
ATTACHMENT 1
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER ("Agreement"), dated as of February 15,
2000, among REGULATORY SOLUTIONS, INC, a Texas corporation (the "Company"); and
RESTAURANT TEAMS INTERNATIONAL, INC., a Texas corporation ("Purchaser").
WHEREAS, the respective Boards of Directors of Purchaser and the
Company have duly approved the acquisition of the Company by means of a Merger
of the Company with and into the Purchaser pursuant to the terms of this
Agreement, it is therefore agreed as follows:
ARTICLE I.
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the relevant provisions of the Texas Corporation
Law (the "Act"), the Company shall be merged with the Purchaser (the "Merger")
as soon as practicable following the satisfaction or waiver, if permissible, of
the conditions set forth in Article VI hereof. Following the Merger the Company
shall continue as the surviving corporation (the "Surviving Corporation") and
continue its existence under the laws of the State of Texas.
SECTION 1.2 Effective Time. The Merger shall be consummated by filing
with the Secretary of State the Certificate of Merger in the form attached
hereto as Exhibit "A" (the "Certificate of Merger") (the time of such filing
being the "Effective Time").
SECTION 1.3 Effects of the Merger. The Merger shall have the effects
set forth in Part 5 of the Act. As of the Effective Time, the Purchaser shall
merge with and into the Company, and the Company shall become a direct
wholly-owned Subsidiary of Purchaser.
SECTION 1.4 Certificate of Incorporation and Bylaws. The Certificate of
Incorporation of the Company, and the Bylaws of the Company both as in effect at
the Effective Time, shall be the Certificate of Incorporation and Bylaws of the
Surviving Corporation.
SECTION 1.5 Directors. As of the Effective Time, all directors of the
Company shall resign or be removed, and the directors of the Purchaser will be
elected to become the directors of the Surviving Corporation. The Company shall
be allowed to appoint one director to serve as a director after the Effective
Time.
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SECTION 1.6 Officers. Upon execution of this Agreement and satisfaction
of all conditions to the Closing of the Merger , the officers of the Company
will be elected to become the officers of the Surviving Corporation as of the
Effective Time.
SECTION 1.7 Transfer of and Payment for Shares.
(a) All shares of common stock, par value $.01 ("Shares"), of
the Company issued and outstanding immediately prior to the Effective Time,
shall, by virtue of the Merger and without any action on the part of any holder
thereof, be cancelled and reissued as newly issued, fully paid, and
non-assessable shares of the common stock, par value $0.01 per share, of the
Company issued in the name of the Purchaser. Until surrendered in accordance
with the provisions of this Section, each certificate representing shares of the
Company shall represent for all purposes the right to receive the Merger
Consideration. At and after the Effective Time there shall be no transfers of
Shares which were outstanding immediately prior to the Effective Time on the
stock transfer books of the Company. If, after the Effective Time, certificates
are presented to the Company, they shall be cancelled and exchanged for the
Merger Consideration provided in this Article I. At the close of business on the
day prior to the Effective Time the stock ledger of the Company shall be closed.
From and after the Effective Time, holders of certificates formerly evidencing
Shares of the Company shall cease to have any rights as stockholders of the
Company, except as provided herein or by law.
(b) In exchange for the cancelled shares of the Company, each
stockholder of record of the Company as of the Effective Date shall be entitled
to receive and shall be by the Purchaser two business days prior to the Closing,
such stockholder's proportion share of the following (referred to as the "Merger
Consideration"):
(i) cash in the amount of $100,000 to be paid $25,000 on the
Effective Date and $25,000 per month for three consecutive months
following the Effective Date;
(ii) 1,000,000 shares of the Purchaser's common stock.
(iii) $1,000,000.00 equivalent of the Purchaser's common
stock at the end of year one following the Effective Date (the
"First Payment") to be issued based on the average closing price
of the Purchaser's common stock for the thirty (30) days prior to
the First Payment ; and
(iv) $1,000,000.00 equivalent of the Purchaser's common
stock at the end of year two following the Effective Date (the
"Second Payment") to be issued based on the average closing price
of the Purchaser's common stock for the thirty (30) days prior to
the Second Payment.
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SECTION 1.8 Closing. Upon the terms and subject to the conditions
hereof, as soon as practicable after the mutual agreement of the Company, and
the Purchaser that all conditions described in Article VI have been satisfied or
waived by the applicable party, the Company and Purchaser shall execute in the
manner required by the Act and deliver to the Texas Secretary of State a duly
executed and verified Certificate of Merger, and the parties shall take such
other and further actions as may be required by law to make the Merger
effective. Contemporaneous with the filings referred to in this Section, a
closing (the "Closing") will be held at such place as the parties may agree for
the purpose of implementing all transactions described in this Agreement.
ARTICLE II.
APPRAISAL RIGHTS
SECTION 2.1 Stockholders Rights. By virtue of Article 5.11 and 5.12 of
the Act, the stockholders of the Company are entitled to exercise any appraisal
rights in connection with the Merger. It is a condition to Purchaser's
obligation to complete the Merger that no stockholder of the Company, shall
exercise any dissenter's rights.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY AND STOCKHOLDER
The Company represents and warrants to the Purchaser as follows:
SECTION 3.1 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Texas. The Company has all requisite power and authority to own
or operate its properties and conduct its business as it is now being conducted.
The Company is duly qualified and in good standing as a foreign corporation or
entity authorized to do business in each of the jurisdictions in which the
character of the properties owned or held under lease by it or the nature of the
business transacted by it makes such qualification necessary, except where the
failure to qualify would not have a Material Adverse Effect. The Company has
delivered to Purchaser true and correct copies of the Articles of Incorporation
and Bylaws of the Company.
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SECTION 3.2 Capitalization; Subsidiaries.
(a) The authorized capital stock of the Company consists of
100,000 Shares. As of February 16, 2000 , 10,000 Shares were issued and
outstanding. Except as described in the Disclosure Schedule, since February 16,
2000, the Company has not issued any shares or other capital stock, and has not
repurchased or redeemed any Shares. The Company does not have any shares of its
capital stock reserved for issuance. All issued and outstanding Shares are
validly issued, fully paid, non-assessable and free of preemptive rights.
SECTION 3.3 Authority Relative to this Agreement. The Company has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby shall, as of the Closing, have been duly and validly authorized by the
Board of Directors and stockholders of the Company, and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions so contemplated. This Agreement has been duly
and validly executed and delivered by the Company and, assuming this Agreement
constitutes a valid and binding obligation of the Purchaser, this Agreement
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with and subject to its terms and conditions.
SECTION 3.4 Financial Statements. The Company has delivered to
Purchaser copies of its consolidated financial statements as of and for the
period ended January 1, 2000, (the "Company Financial Statements.") Each of the
Company Financial Statements fairly presents the financial position of the
entity or entities to which it relates as of its date, and each of the related
consolidated statements of operations and retained earnings and cash flows or
equivalent statements in the Company Financial Statements (including any related
notes and schedules) fairly presents the results of operations, retained
earnings and cash flows, as the case may be, of the entity or entities to which
it relates for the period set forth therein (subject in the case of unaudited
interim statements, to normal year-end audit adjustments) in each case in
accordance with generally accepted accounting principles applicable to the
particular entity consistently applied throughout the periods involved, except
as may be noted therein. The accounts receivable, notes receivable and any other
contingent asset reflected on the latest balance sheet of the Company arose from
bona fide transactions in the ordinary course of business, and, to the best of
the Company's knowledge, are not subject to any offset or counterclaim.
SECTION 3.5 Consents and Approvals; No Violation. Except as described
in the Disclosure Schedule, neither the execution and delivery of this Agreement
by the Company nor the consummation of the transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will (a) conflict
with or result in any breach of any provision of the Certificate of
Incorporation, Bylaws or other organization documents of the Company, (b)
require any consent, approval, authorization or permit of, or filing with or
notification to, any Governmental Authority (as defined herein), except (i) the
filing of the Certificate of Merger pursuant to the Act, or (ii) where the
failure to obtain such consent, approval, authorization or permit, or to make
such filing or notification, would not in the aggregate have a Material Adverse
Effect (as defined herein), (c) result in a material default (with or without
due notice or lapse of time or both) (or give rise to any right of termination,
cancellation or acceleration) under any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, Contract (as hereinafter defined),
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license, agreement or other instrument or obligation to which the Company or any
of its Subsidiaries is a party or by which the Company, any of its Subsidiaries
or any of their respective assets may be bound, except for such defaults (or
rights of termination, cancellation or acceleration) as to which requisite
waivers or consents have been requested, (d) result in the creation or
imposition of any lien, charge or other encumbrance on the assets of the Company
or any of its Subsidiaries, or (e) violate any order, writ, injunction, decree,
statute, rule or regulation applicable to the Company, any of its Subsidiaries
or any of their respective assets.
SECTION 3.6 Litigation, etc. Except as described in the Disclosure
Schedule, (a) there is no action, claim, or proceeding pending or, to the
knowledge of the Company, threatened, to which the Company or any of its
Subsidiaries is or would be a party before any court or Governmental Authority
acting in an adjudicative capacity, or any arbitrator or arbitration tribunal;
(b) neither the Company nor any of its Subsidiaries is subject to any
outstanding order, writ, injunction or decree; and (c) since December 31, 1999,
there have been no claims made or actions or proceedings brought against any
officer or director of the Company arising out of or pertaining to any action or
omission within the scope of his employment or position with the Company. All
litigation and other administrative, judicial or quasi-judicial proceedings to
which the Company is a party or to which it has been threatened to the Company's
knowledge to be made a party, are described in the Disclosure Schedule.
SECTION 3.7 Changes. Except as expressly contemplated by this Agreement
or as reflected in the Disclosure Schedule or in the Company Financial
Statements, since January 1, 2000, the Company and the Subsidiaries have
conducted their business only in the ordinary and usual course, and, except as
set forth in the Disclosure Schedule or in the Company Financial Statements,
none of the following has occurred, except as shall have occurred in the
ordinary course of its business:
(a) any material adverse change in the condition (financial or
other), results of operations, business, assets, customer, supplier and employee
relations of the Company, taken as a whole;
(b) any change in accounting methods, principles or practices
by the Company materially affecting its assets, liabilities or business, except
insofar as may have been required by a change in generally accepted accounting
principles;
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(c) any damage, destruction or loss, whether or not covered
by insurance, resulting in a Material Adverse Change of the Company;
(d)any declaration, setting aside or payment of dividends or
distributions in respect of the Shares, or any redemption, purchase or other
acquisition of any of the securities of the Company;
(e) any issuance by the Company of, or commitment of the
Company to issue, any Shares or other capital stock or securities convertible
into or exchangeable or exercisable for Shares or other capital stock;
(f) any entry by the Company into any commitment or
transaction material to the condition (financial or other), business or
operations of the Company, taken as a whole, which is not in the ordinary course
of business and consistent with past practice;
(g) any revaluation by the Company of any of their respective
assets, including without limitation, writing down the value of assets or
writing off notes or accounts receivable other than in the ordinary course of
business and consistent with past practice;
(h) any agreement by the Company to do any of the things
described in the preceding clauses (a) through (g) other than as expressly
contemplated or provided for herein; or
(i) any waiver by the Company of any rights that, singularly
or in the aggregate, are material to the business, assets, financial condition,
or results of operation of the Company and its Subsidiaries, taken as a whole.
SECTION 3.8 (LEFT BLANK INTENTIONALLY)
SECTION 3.9 (LEFT BLANK INTENTIONALLY)
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SECTION 3.10 Taxes, Tax Returns.
(a) The Company has or within two business days from the date
hereof will deliver to Purchaser copies of the federal income tax returns of the
Company for each of the last three fiscal years and all schedules and exhibits
thereto. Except as set forth on the Disclosure Schedule, the Company duly and
timely filed in correct form all federal, state and local information returns
and tax returns required to be filed by it on or prior to the date hereof (all
such returns to the knowledge of the Company being accurate and complete in all
material respects) and, to the knowledge of the Company, has duly paid or made
provision for the payment of all taxes and other governmental charges which have
been incurred or are due or claimed to be due from them by any Governmental
Authority (including, without limitation, those due in respect of their
properties, income, business, capital stock, franchises, licenses, sales and
payrolls) other than taxes or other charges (i) which are not yet delinquent or
are being contested in good faith and set forth in the Disclosure Schedule, (ii)
have not been finally determined or (iii) that would not have a Material Adverse
Effect on the Company. The liabilities and reserves for taxes in the Company
Financial Statements are sufficient to the best of the Company's knowledge in
the aggregate for the payment of all unpaid federal, state and local taxes
(including any interest or penalties thereon), whether or not disputed or
accrued, for the period ended December 31, 1999 or for any year or period prior
thereto, and for which the Company may be liable in its own right or as
transferee of the assets of, or successor to, any corporation, person,
association, partnership, joint venture or other entity.
(b) To the knowledge of the Company, (i) proper and accurate
amounts have been withheld by the Company from their employees and others for
all prior periods in compliance in all material respects with the tax
withholding provisions of applicable federal, state and local laws and
regulations, and proper due diligence steps have been taken in connection with
back-up withholding, (ii) federal, state and local returns which are accurate
and complete in all material respects have been filed by the Company and each of
its Subsidiaries for all periods for which returns were due with respect to
income tax withholding, Social Security and unemployment taxes and (iii) the
amounts shown on such returns to be due and payable have been paid in full, or
adequate provision therefore has been included by the Company in the most recent
Company Financial Statements.
SECTION 3.11 Tax Audits. Except as disclosed in the Disclosure
Schedule, (i) no audit of any material federal, state or local U.S. return of
the Company is currently in progress, nor has the Company been notified that
such an audit is contemplated by any taxing authority, (ii) The Company has not
extended any statute of limitations with respect to the period for assessment of
any federal, state or local U.S. tax, (iii) the Company does not contemplate the
filing of an amendment to any return, which amendment would have a Material
Adverse Effect on the Company, and (iv) the Company does not have any actual or
potential material liability for any tax obligation of any taxpayer other than
the Company. Except as disclosed in the Disclosure Schedule, there are no
material tax claims pending against the Company and there are no material tax
claims to the knowledge of the Company threatened to be asserted against the
Company. For purposes of this Section 3.11, "tax" and "taxes" shall include all
income, gross receipt, franchise, excise, real and personal property, sales, ad
valorem, employment, withholding and other taxes imposed by any foreign,
federal, state, municipal, local, or other Governmental Authority including
assessments in the nature of taxes.
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SECTION 3.12 Undisclosed Liabilities. The Company is not liable for or
subject to any material Liabilities (as hereinafter defined), except (a)
Liabilities adequately disclosed or reserved for in the most recent Company
Financial Statements and not heretofore paid or discharged, (b) Liabilities
under any contract, commitment or agreement specifically disclosed on the
Disclosure Schedule, or (c) Liabilities incurred, consistent with past practice,
in or as a result of the ordinary course of business of the Company since the
date of the most recent Company Financial Statements. As used in this Agreement,
the term "Liability" or "Liabilities" includes any material direct or indirect
liability, indebtedness, obligation, guarantee or endorsement (other than
endorsements of notes, bills, and checks presented to banks for collection or
deposit in the ordinary course of business), whether known or unknown, accrued,
absolute, contingent or otherwise.
SECTION 3.13 No Default; Compliance.
(a) Except as set forth in the Disclosure Schedule, to the
knowledge of the Company, the Company is not in material default under, and no
condition exists that with notice or lapse of time or both would constitute a
material default under, (i) any mortgage, loan agreement, indenture, evidence of
indebtedness or other instrument evidencing borrowed money to which the Company
is a party or by which the Company or its properties is bound, (ii) any
judgment, order or injunction of any court, arbitrator or governmental agency or
(iii) any other agreement, contract, lease, license or other instrument, which
default or potential default might reasonably be expected to have a Material
Adverse Effect.
(b) Except as set forth in the Disclosure Schedule, the
Company has complied in all material respects with all laws, regulations,
orders, judgments or decrees of any federal or state court or Governmental
Authority applicable to their respective businesses and operations,
non-compliance with which might reasonably be expected to have a Material
Adverse Effect.
SECTION 3.14 Representations and Warranties Continuing. The
representations and warranties set forth herein shall be true and correct on the
date hereof and subject to an update of the Disclosure Schedule from time to
time, at all times prior to the Effective Time as if made from time to time,
including, without limitation, at the Effective Time and the Closing.
SECTION 3.15 Contracts and Commitments. Except as listed and described
in the Disclosure Schedule or the Company Financial Statements, the Company is
not a party to, nor are they or their assets bound by any written or oral
covenant, contract, agreement or understanding (a "Contract"), excluding the
Franchise and License Agreements referred to in Section 3.22, but including the
following:
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(a) Contract with any present or former stockholder, director,
officer, employee or consultants;
(b) Contract with any labor union or other representative of
employees;
(c) Contract for the future purchase of, or payment for,
supplies or products, or for the performance of services by a third party,
involving payment or potential payment by the Company of $5,000 or more under
any one Contract or series of related Contracts;
(d) any Contract, including, without limitation, any
outstanding quotations, bids or proposals, to sell goods or to perform services
in an aggregate amount in excess of $10,000;
(e) distributorship, representative or sales agency agreement,
contract or commitment;
(f) conditional sale agreement or lease under which the
Company is either the seller or purchaser, lessor or lessee, involving
annualized payments or potential payments by or to the Company that is in excess
of $10,000;
(g) Contract (including, without limitation, any note,
debenture, bond, conditional sale or equipment trust agreement, letter of credit
agreement or loan agreement) for the borrowing or lending of money more than
$10,000 (including, without limitation, those to or from officers, directors or
stockholders of the Company, or any affiliates or members of their immediate
families, for a line of credit, or for a guarantee, security, indemnity, pledge
or undertaking of the indebtedness or obligations of any other person);
(h) Contract for any charitable or political contribution;
(i) Contract for any capital expenditure involving future
payments, which, together with future payments under all other existing
Contracts for the same capital project, are in excess of $10,000;
(j) Contract limiting or restraining the Company from engaging
or competing in any lines of business with any person, nor is any officer or
employee of the Company subject to any such agreement, contract or commitment;
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(k) license, franchise, distributorship or other Contract
relating in whole or in part to any ideas, technical assistance or other
know-how of or used by the Company;
(l)Contract greater than $10,000 which is expected to continue
for more than six months
from the date hereof;
(m) Contract not made in the ordinary course of business;
(n) any guaranty, direct or indirect, of any person of any
contract, lease or agreement in an amount greater than $10,000 entered into by
the Company;
Except as may be disclosed on the Disclosure Schedule: each of the Contracts
listed on the Disclosure Schedule is valid and enforceable in accordance with
its terms; to the best of the Company's knowledge, the Company and the other
parties thereto are in substantial compliance with the provisions thereof;
except as may be disclosed on the Disclosure Schedule, neither the Company nor
any other party is (or by reason of the consummation of the transactions
contemplated by this Agreement, will be) in default in the performance,
observance or fulfillment of any obligation, covenant or condition contained
therein and no event has occurred or is anticipated to occur (including the
consummation of the transactions contemplated by this Agreement) which with or
without the giving of notice or lapse of time, or both, would constitute a
default or give the right of termination thereunder.
SECTION 3.16 Compliance with Law and Permits. To its knowledge, the
Company has owned and operated its properties and assets in substantial
compliance with the provisions and requirements of all laws, orders,
regulations, rules and ordinances issued or promulgated by all Governmental
Authorities having jurisdiction with respect thereto, except where the failure
to own and operate such properties and assets in compliance with such provisions
and requirements would not reasonably be expected to have a Material Adverse
Effect. All material governmental certificates, consents, permits, licenses or
other authorizations with regard to the ownership or operation by the Company or
its Subsidiaries of their respective properties and assets have been obtained,
and to the knowledge of the Company no violation exists in respect of such
licenses, permits or authorizations, except where the failure to obtain and hold
such permits, or any violation thereof by the Company or its Subsidiaries, would
not reasonably be expected to have a Material Adverse Effect. To the knowledge
of the Company, none of the documents and materials filed with or furnished to
any Governmental Authority with respect to the properties, assets or businesses
of the Company or its Subsidiaries contains any untrue statement of a material
fact or fails to state a material fact necessary to make the statements therein
not misleading.
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SECTION 3.17 Title to Property. Except as disclosed on the Disclosure
Schedule, the Company has good and marketable title, free and clear (except as
indicated in the Disclosure Statement or in the most recent Company Financial
Statements and liens for current taxes not yet due and payable), of all security
interests, liens, encumbrances and encroachments of a material nature, to its
real property and other property and assets that are material to the Company's
business on a consolidated basis.
SECTION 3.18 Insurance and Bank Accounts.
(a) The Disclosure Schedule sets forth a complete and accurate
list and description of all insurance policies in force naming the Company or
any employees of any of them as an insured or beneficiary or as a loss payable
payee or for which the Company has paid or is obligated to pay all or part of
the premiums. The Company has not received notice of any pending or threatened
termination or retroactive premium increase with respect thereto, and the
Company is in compliance in all material respects with all conditions contained
therein. There are no pending material claims against such insurance by the
Company as to which insurers have denied liability, no defenses provided by
insurers under reservations of rights, and no material claim under such
insurance that has not been properly filed by the Company.
(b) The Disclosure Schedule contains a list of all bank and
investment accounts maintained by the Company, including the account numbers,
recent balance, institution, and persons having signing authority.
SECTION 3.19 Employees. The Disclosure Statement sets forth a list of
the employees of the Company, stating with respect to each the name, date of
hire and rate of compensation. Except as described in the Disclosure Statement,
there are no claims or disputes pending with any employee regarding workers'
compensation, unemployment benefits, discrimination (including discrimination
based on any disability), or compensation, and no employment or collective
bargaining agreements are in effect covering any such person.
SECTION 3.20 Tangible Personal Property. The books and records of the
Company contain a complete and accurate description and the location of all
trucks, automobiles, machinery, equipment, furniture, supplies, and other
tangible personal property owned by, in the possession of, or used by any of the
Company in connection with the Business. Except as stated in the Disclosure
Schedule hereof, no personal property used by the Company in connection with the
Business is held under any lease, security agreement, conditional sales
contract, or other title retention or security arrangement, or is other than in
the possession and under the control of the Company. The tangible personal
property reflected in those books and records constitutes all such tangible
personal property necessary for the conduct of the Business as now conducted by
the Company.
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SECTION 3.21 Intellectual Property, Trade Names, Trademarks, and
Copyrights. The Disclosure Schedule sets forth all intellectual property, trade
names, trademarks, service marks, and copyrights and their registrations, owned
by the Company or in which they have any rights or licenses, together with a
brief description of each. The Company has no knowledge of any infringement or
alleged infringement by others of any trade name, trademark, service mark, or
copyright. The Company has not infringed, nor is now infringing, on any trade
name, trademark, service mark, or copyright belonging to any other person, firm,
or corporation. Except as set forth in the Disclosure Schedule, the Company is
not a party to any license, agreement, or arrangement, whether as licensor,
licensee, franchisor (other than as franchisor or licensor pursuant to the
franchise and license agreements set forth in the Disclosure Schedule),
franchisee, or otherwise, with respect to any trade names, trademarks, service
marks, or applications for them, or any copyrights. The Company owns, or holds
adequate licenses or other rights to use, all trade names, trademarks, service
marks, and copyrights necessary for its respective business as now conducted by
it, and that use does not, and will not, conflict with, infringe on, or
otherwise violate any rights of others. The Company has the right to sell or
assign to Purchaser all owned trade names, trademarks, service marks, and all
such licenses and other rights.
SECTION 3.22 Franchises and Licenses. The Disclosure Schedule contains
a list of all franchise and license agreements which the Company has entered
into with respect to the Business (the "Franchise Agreements"), including
identification of the franchisee or licensee, its principal owners, and a
description of the location for which such franchise is granted. Each of the
Franchise Agreements is in full force and effect, and there is no default or
event that, with notice or lapse of time or both, would constitute a default by
any party to any of the Franchise Agreements. The Company has not received
notice that any party to any of the Franchise Agreements intends to cancel or
terminate any of these agreements or to exercise or not exercise any options
under any of these agreements. Each of the Franchise Agreements complies with
all requirements of federal and applicable state and local laws, and each
franchisee thereunder received full and adequate disclosure of all material
information required to be provided thereto pursuant to applicable federal and
state laws regulating the sale of franchises or securities. No complaints have
been received by the Company from any regulatory agency having jurisdiction over
the franchisor or franchisee under any of the Franchise Agreements.
SECTION 3.23 Title to Assets. The Company has good and marketable title
to all of its assets, whether real, personal, mixed, tangible, or intangible,
which constitute all the assets and interests in assets that are used in the
Business. All of the assets are free and clear of restrictions on or conditions
to transfer or assignment, and of mortgages, liens, pledges, charges,
encumbrances, equities, claims, easements, rights of way, covenants, conditions,
or restrictions, except for (a) those disclosed in the Financial Statements or
in the Disclosure Schedule; (b) the lien of current taxes not yet due and
payable; and (c) possible minor matters that, in the aggregate, are not
substantial in amount and do not materially detract from or interfere with the
present or intended use of any of these assets or materially impair business
operations. The Company is not in default or in arrears in any material respect
under any lease of property used in the Business. All tangible personal property
of Seller is in good operating condition and repair, ordinary wear and tear
expected.
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SECTION 3.24 (LEFT BLANK INTENTIONALLY)
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser jointly and severally represents and warrants to the Company
as follows:
SECTION 4.1 Authority Relative to this Agreement. The Purchaser has all
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the stockholders of the
Purchaser and the Boards of Directors of the Purchaser, and no other corporate
proceedings on the part of the Purchaser are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly and validly executed and delivered by the Purchaser and, assuming this
Agreement constitutes a valid and binding obligation of the Company, this
Agreement constitutes a valid and binding agreement of the Purchaser,
enforceable against the Purchaser in accordance with and subject to its terms
and conditions.
SECTION 4.2 SEC Reports. Since September 30, 1999, to the best of its
knowledge the Purchaser has filed all required forms, reports and documents
("Purchaser SEC Reports") with the Securities and Exchange Commission (the
"SEC") required to be filed by it pursuant to the federal securities laws and
the SEC rules and regulations thereunder, all of which have complied in all
material respects with all applicable requirements of the Securities Act and the
Securities Exchange Act of 1934 (the "Exchange Act"), and the rules and
interpretive releases promulgated thereunder. None of such Purchaser SEC
Reports, including without limitation any financial statements, notes, or
schedules included therein, at the time filed, contained, or, if to be filed in
the future will contain, any untrue statement of a material fact, or omitted,
omit or will omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
Each of the consolidated balance sheets in or incorporated by reference
into the Purchaser SEC Reports fairly presents or will fairly present the
financial position of the entity or entities to which it relates as of its date,
and each of the related consolidated statements of operations and retained
earnings and cash flows or equivalent statements in the Purchaser SEC Reports
(including any related notes and schedules) fairly presents or will fairly
present the results of operations, retained earnings and cash flows, as the case
may be, of the entity or entities to which it relates for the period set forth
therein (subject in the case of unaudited interim statements, to normal year-end
audit adjustments) in each case in accordance with generally-accepted accounting
principles applicable to the particular entity consistently applied throughout
the periods involved, except as may be noted therein. The consolidated financial
statements included or to be included in the Purchaser SEC Reports are
hereinafter sometimes collectively referred to as the "Purchaser Financial
Statements."
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SECTION 4.3 Consents and Approvals; No Violation. Except as described
in the Disclosure Schedule, neither the execution and delivery of this Agreement
by the Purchaser nor the consummation of the transactions contemplated hereby
nor compliance by the Purchaser with any of the provisions hereof will (i)
conflict with or result in any breach of any provision of the Articles of
Incorporation or By-laws of the Purchaser or any Subsidiary, (ii) require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Authority, except (A) the filing of Certificate of Merger
pursuant to the Act, or (B) where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, would not in
the aggregate have a Material Adverse Effect, (iii) result in a material default
(with or without due notice or lapse of time or both) (or give rise to any right
of termination, cancellation or acceleration) under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, Contract, license,
agreement or other instrument or obligation to which the Purchaser or any of its
Subsidiaries is a party or by which the Purchaser, any of its Subsidiaries or
any of their respective assets may be bound, except for such defaults (or rights
of termination, cancellation or acceleration) as to which requisite waivers or
consents have been requested or which, in the aggregate, would not have a
Material Adverse Effect, (iv) result in the creation or imposition of any lien,
charge or other encumbrance on the assets of the Purchaser or any of its
Subsidiaries, or (v) violate any order, writ, injunction, decree, statute, rule
or regulation applicable to the Purchaser, any of its Subsidiaries or any of
their respective assets, except for violations which would not in the aggregate
have a Material Adverse Effect.
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ARTICLE V.
COVENANTS
SECTION 5.1 Conduct of Business of the Company. Except as contemplated
by this Agreement or disclosed in the Disclosure Schedule, during the period
from the date of this Agreement to the Effective Time, the Company will conduct
their operations according to their ordinary and usual course of business and
consistent with past practice. Without limiting the generality of the foregoing,
and except as otherwise expressly provided in this Agreement or disclosed in the
Disclosure Schedule, the Company will not, prior to the Effective Time, without
the prior written consent of Purchaser (a) issue, sell or pledge, or authorize
or propose the issuance, sale or pledge of (i) additional shares of capital
stock of any class, or securities convertible into any such shares, or any
rights, warrants or options to acquire any such shares or other convertible
securities, or (ii) any other securities in respect of, in lieu of or in
substitution for, capital stock outstanding on the date hereof; (b) purchase or
otherwise acquire, or propose to purchase or otherwise acquire, any outstanding
securities; (c) declare or pay any dividend or distribution on any shares of its
capital stock; (d) authorize, recommend, propose or announce an intention to
authorize, recommend or propose, or enter into an agreement in principle or an
agreement with respect to, any merger, consolidation or business combination
(other than the Merger), any acquisition of a material amount of assets or
securities, any disposition of a material amount of assets or securities or any
material change in its capitalization, or any entry into a material contract or
any release or relinquishment of any material contract rights, not in the
ordinary course of business; (e) propose or adopt any amendments to its charter
or by-laws; (f) enter into, assign or terminate, or amend in any material
respect, any Contract other than in the ordinary course of business; (g)
acquire, dispose of, encumber or relinquish any material asset (other than sale
of real properties at prices equal to or greater than their carrying values);
(h) waive, compromise or settle any right or claim that would adversely affect
the ownership, operation or value of any asset; (i) make any capital
expenditures other than pursuant to existing capital expenditure programs that
are disclosed in the Disclosure Schedule; (j) allow or permit the expiration,
termination or cancellation at any time prior to the Effective Time of any of
the insurance policies or coverages or surety bonds currently maintained by or
on behalf of the Company unless replaced with a policy, coverage or bond having
substantially the same coverage and similar terms and conditions; (k) increase,
directly or indirectly, the salary or other compensation of any officer or
member of management, enter into any employment agreement with any person or pay
or enter into any agreement to pay any bonuses or other extraordinary
compensation to any officer of the Company or its Subsidiaries or to any member
of management or other employees, or institute any general increase in rates of
compensation for its employees, or increase, directly or indirectly, any
provisions or other benefits of any of such persons; or (l) waive, settle or
compromise any material litigation or other claim on a basis materially adverse
to the Company.
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SECTION 5.2 No Solicitations. The Purchaser shall not, and they shall
use their best efforts to ensure that none of their respective affiliates,
officers, directors, representatives or agents shall, directly or indirectly,
solicit, initiate or encourage (including by way of furnishing information) any
corporation, partnership, person, entity or group concerning any merger, sale of
substantial assets (except as permitted by Section 5.1(g)) outside the ordinary
course of business, sale of shares of capital stock or similar transaction
involving the Company or any of its Subsidiaries or divisions (other than the
transactions contemplated by this Agreement). The Company will immediately cease
and cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing. The
parties will promptly communicate to the other the terms of any proposal or
inquiry, oral or written, which may be received in respect of any such
transaction, and will inform the other prior to the time that it furnishes any
information to, or engages in negotiations or discussions with, any third party
with respect to the acquisition of either party.
SECTION 5.3 Access to Information.
(a) Between the date of this Agreement and the Effective Time,
the parties will afford to one another and their authorized representatives
reasonable access (subject to franchisee's or licensee's rights) to the
operations, and to the books and records of such party, will permit the parties
and their representatives to make such reasonable inspections as they may
require and will cause their officers to furnish the parties and their
representatives with such financial and operating data, environmental
assessments and other information with respect to the business of the parties
and their Subsidiaries as they and their representatives may from time to time
reasonably request. No inspection or examination by either party will constitute
a waiver of any claim against the other party for misrepresentation or breach of
this Agreement.
(b) The parties will hold and will cause their representatives
to hold in strict confidence, unless compelled to disclose by judicial or
administrative process, or, in the opinion of counsel, by other requirements of
law, all documents and information concerning the parties furnished to them and
their representatives in connection with the transactions contemplated by this
Agreement (except to the extent that such information can be shown to have been
(i) in the public domain through no fault of the parties or their
representatives, or (ii) later lawfully acquired by the parties or their
representatives from other sources unless they or their representatives know
that such other sources are not entitled to disclose such information) and will
not release or disclose such information to any other person, except their
auditors, attorneys, financial advisors and other consultants and advisors in
connection with this Agreement, provided that such person shall have first been
advised of the confidentiality provision of this Section 5.3. If the
transactions contemplated by this Agreement are not consummated, such confidence
shall be maintained except to the extent such information can be shown to have
been (i) in the public domain through no fault of Purchaser, Purchaser or their
representatives, or (ii) later lawfully acquired by the parties or
representatives from other sources, and, if requested by the other party will,
and will cause its agents, auditors, consultants, representatives and advisors
to, return to the other or destroy all copies of written information furnished.
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SECTION 5.4 Best Efforts. Subject to the terms and conditions herein
provided, and to the fiduciary duties of the Boards of Directors of the parties
under applicable law, each of the parties hereto agrees to use its best efforts
to take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
In case at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
SECTION 5.5 Consents. Purchaser and the Company each will use its best
efforts to obtain such consents of third parties to agreements which would
otherwise be violated by any provisions hereof, to take all actions necessary to
effect the transactions contemplated hereby, and to make such filings with
Governmental Authorities necessary to consummate the transactions contemplated
by this Agreement including, without limitation, (a) the vigorous defense of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the transaction contemplated
hereby, including seeking to have any stay or temporary restraining order
entered by any court or Governmental Authority vacated or reviewed, and (b) the
execution and delivery of any additional instruments (including any required
supplemental indentures) necessary to consummate the transactions contemplated
by this Agreement.
SECTION 5.6 Public Announcements. Purchaser and the Company will
consult with each other before issuing any press release or otherwise making any
public statements with respect to the existence of this Agreement or the Merger
and shall not issue any such press release or make any such public statement
prior to such consultation, except as may be required by law or by obligations
pursuant to any listing agreement with any national securities exchange.
SECTION 5.7 (LEFT BLANK INTENTIONALLY)
ARTICLE VI.
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 6.1 Conditions to the Closing. Immediately prior to the
Effective Time, the Company and the Purchaser shall cause to be delivered to
each other or to have received the following:
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(a) A certificate, dated the date of the Effective Time of the
chief executive officer certifying that all representations and warranties made
herein are true and correct as of the date made and as of the Effective Time and
that all agreements or other actions required to be performed prior to the
Effective Time as a condition to consummating the Merger have been performed or
taken and such conditions satisfied in accordance with the terms of this
Agreement.
(b) An opinion of counsel to the Company dated the date of the
Effective Time in form and substance satisfactory to the Purchaser and its
counsel as to the matters set forth in Sections 3.1, 3.2, 3.3 and 3.6 and such
other matters as the Purchaser shall request, which opinion may contain
customary exceptions and qualifications.
(c) An opinion of counsel to the Purchaser dated as of the
Effective Time as to each of the matters set forth in Sections 4.1 and 4.3, and
such other matters as the Company may request, which opinion may contain
customary exceptions and qualifications.
(d) No statute, rule, regulation, executive order, decree, or
injunction shall have been enacted, entered, promulgated or enforced by any
court of competent jurisdiction in the United States or domestic Governmental
Authority which prohibits or restricts the consummation of the Merger.
(e) There shall have been no material adverse change in the
business, properties, or financial condition of any party to this Agreement.
(f) All parties shall have delivered all documents, exhibits
and schedules and taken all other actions required by this Agreement.
(g All representations and warranties of any party shall be
true and effective as of the Effective Time.
(h) At the Closing, the Stockholder shall deliver a release
of all claims it may have against the Company or any Subsidiary.
(i) The parties to the Merger shall have executed and
delivered agreements in the form of Exhibits "A" (Certificate of Merger), "B"
($1,000,000 note for First Payment), "C" ($1,000,000 note for Second Payment),
"D" ($75,000 note for cash payment), and "E" (Executive employment agreements).
ARTICLE VII.
TERMINATION, AMENDMENTS; WAIVER
SECTION 7.1 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time notwithstanding approval
thereof by the Purchaser and Company, but prior to the Effective Time:
(a) by mutual written consent duly authorized by the Boards
of Directors of Company and Purchaser;
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(b) by Purchaser or the Company if the Effective Time shall
not have occurred on or before February 29, 2000, unless such failure is caused
by the party seeking termination;
(c) by Purchaser or the Company if any court of competent
jurisdiction or other Governmental Authority shall have issued an order, decree
or ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Merger or if litigation or proceedings shall be pending that are
reasonably likely to result in any of the foregoing;
(d) by the Company, if Purchaser shall not have performed all
obligations required to be performed by them under this Agreement, except where
any failures to perform would, in the aggregate, not materially impair or delay
the ability of Purchaser and the Company to effect the Merger; or
(e) by the Company or Purchaser, if there shall have been a
breach of any of the covenants contained herein or if any representation or
warranty made by any other party is untrue in any material respect.
SECTION 7.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 7.1, this Agreement shall
forthwith become void and have no effect, without any liability on the part of
any party or its directors, officers, or stockholders, other than the provisions
of Sections 5.3(b) and 9.9.
SECTION 7.3 Amendment. This Agreement may be amended only by means of
an instrument in writing signed on behalf of all the parties.
SECTION 7.4 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken by or on behalf of the respective Boards of
Directors of the Company and Purchaser, may (a) extend the time for the
performance of any of the obligations or other acts of any other applicable
party hereto, (b) waive any inaccuracies in the representations and warranties
contained herein by any other applicable party or in any document, certificate
or writing delivered pursuant hereto by an other applicable party, or (c) waive
compliance with any of the agreements of any other applicable party or with any
conditions to its own obligations. Any agreement on the part of any other
applicable party to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party.
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ARTICLE VIII.
INDEMNIFICATION
SECTION 8.1 Purchaser's Right to Indemnification. Company shall and
does hereby indemnify and hold harmless, Purchaser, and their stockholders,
directors, officers, employees, agents and representatives from any and all
liabilities, obligations, claims, contingencies, damages, costs and expenses
(including all court costs and reasonable attorneys' fees) that Purchaser or any
such other indemnified party may suffer or incur as a result of or relating to
the material breach or inaccuracy of any of the representations, warranties,
covenants or agreements made by the Company herein or pursuant hereto.
SECTION 8.2 Company's Right to Indemnification. Purchaser shall and do
hereby indemnify and hold the Company, and their directors, officers, employees,
agents and representatives harmless from any and all liabilities, obligations,
claims, contingencies, damages, costs and expenses (including all court costs
and reasonable attorneys' fees) that Company or any such indemnified party may
suffer or incur as a result of or relating to: (a) the breach or inaccuracy, or
any alleged breach or inaccuracy, of any of the representations, warranties,
covenants or agreements made by Purchaser herein or pursuant hereto; and (b)
those liabilities, obligations, claims, contingencies and encumbrances accruing
or arising after the Closing in connection with the business of the Purchaser,
except to the extent that such liabilities, obligations, claims, contingencies
or encumbrances are attributable to a breach of warranty, representation or
covenant by the Company prior to the Closing.
SECTION 8.3 Notice. The party seeking indemnification hereunder
("Indemnitee") shall promptly, and within 30 days after notice to it (notice to
Indemnitee being the filing of any action, receipt of any claim in writing or
similar form of actual notice) of any claim as to which it asserts a right to
indemnification, notify the party from whom indemnification is sought
("Indemnitor") of such claim. Indemnitee shall bill Indemnitor for any such
claims no more frequently than on a monthly basis, and Indemnitor shall promptly
pay (or cause to be paid) Indemnitee upon receipt of any such bill. The failure
of Indemnitee to give the notification to Indemnitor contemplated above in this
Section shall not relieve Indemnitor from any liability or obligation that it
may have pursuant to this Agreement unless the failure to give such notice
within such time shall have been materially prejudicial to it, and in no event
shall the failure to give such notification relieve Indemnitor from any
liability it may have other than pursuant to this Agreement.
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SECTION 8.4 Third-Party Claims. If any claim for indemnification by
Indemnitee arises out of an action or claim by a person other than Indemnitee,
Indemnitor may, by written notice to Indemnitee, undertake to conduct the
defense thereof and to take all other steps or proceedings to defeat or
compromise any such action or claim, including the employment of counsel;
provided that Indemnitor shall reasonably consider the advice of Indemnitee as
to the defense or compromise of such actions and claims, and Indemnitee shall
have the right to participate, at its own expense, in such proceedings, but
control of such proceedings shall remain exclusively with Indemnitor. Indemnitee
shall provide all reasonable cooperation to Indemnitor in connection with such
proceedings. Counsel and auditor costs and expenses and court costs and fees of
all proceedings with respect to any such action or claim shall be borne by
Indemnitor. If any such claim is made hereunder and Indemnitor does not elect to
undertake the defense thereof by written notice to Indemnitee, Indemnitee shall
be entitled to control such proceedings and shall be entitled to indemnity with
respect thereto pursuant to the terms of this Article VIII. To the extent that
Indemnitor undertakes the defense of such claim by written notice to Indemnitee
and diligently pursues such defense at its expense, Indemnitee shall be entitled
to indemnification hereunder only to the extent that such defense is
unsuccessful as determined by a final judgment of a court of competent
jurisdiction, or by written acknowledgment of the parties.
SECTION 8.5 Time to Assert Claims. Any claim asserted pursuant to
Section 8.1 or Section 8.2 above must be asserted by written notice given by one
party to the other on or before the date of the release of the first audit
report of the Purchaser containing combined financial statements of the
Purchaser and the Company, not to exceed one (1) year from the date of Closing.
SECTION 8.6 Access to Records. The Company, or its agents, shall be
afforded reasonable access to the Purchaser's books and records during normal
business hours upon reasonable notice for the purpose of verifying any claim
against the Company hereunder. The Company or its agents may be required to sign
an appropriate confidentiality agreement prior to any inspection of books and
records hereunder.
SECTION 8.7 (LEFT BLANK INTENTIONALLY)
SECTION 8.8 Arbitration. All disputes under this Article VIII shall be
settled by arbitration in Dallas, Texas, before three arbitrators pursuant to
the rules of the American Arbitration Association. Each party shall select one
arbitrator and the two arbitrators shall select a third. Arbitration may be
commenced at any time by any party hereto giving written notice to each other
party to a dispute that such dispute has been referred to arbitration under this
Section 8.7. Any award rendered by the arbitrators shall be conclusive and
binding upon the parties hereto; provided, however, that any such award shall be
accompanied by a written opinion giving the reasons for the award. This
provision for arbitration shall be specifically enforceable by the parties and
the decision of the arbitrators shall be final and binding and there shall be no
right of appeal therefrom. Each party shall pay its own expenses of arbitration
and the expenses of the arbitrators shall be equally shared; provided, however,
that if in the opinion of the arbitrators any claim for indemnification or any
defense or objection thereto was unreasonable, the arbitrators may assess, as
part of their award, all or any part of the arbitration expenses of the other
party (including reasonable attorney's fees) and of the arbitrators against the
party raising such unreasonable claim, defense or objection.
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ARTICLE IX.
MISCELLANEOUS
SECTION 9.1 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person or persons any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement.
SECTION 9.2 Brokerage Fees and Commissions. Each party represents that
it has incurred no obligation to any broker or finder in connection with the
transactions described in this Agreement and agrees to indemnify the other
parties and hold them harmless against any liability to any such broker or
finder.
SECTION 9.3 Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes all other prior agreements and understandings, both
written and oral, among the parties or any of them with respect to the subject
matter hereof and (b) shall not be assigned by operation of law or otherwise.
SECTION 9.4 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, each of which shall remain in full force
and effect.
SECTION 9.5 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by facsimile telegram or telex, or by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties as follows:
If to the Company (pre closing):
Regulatory Solutions, Inc.
P.O. Box 2044
Malakoff, TX 75418
Attn: Johann Wasserman
with a copy (which shall not affect the validity of notice hereunder)
to:
James Hada, Corporate Counsel
708 Mills Lane
Irving, TX 75062
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If to Purchaser or Purchaser:
Restaurant Teams International, Inc.
911 N.W. Loop 281, Suite 111
Longview, Texas 75604
Attn: Curtis Swanson
with a copy (which shall not affect the validity of notice hereunder) to:
Brill & Johnson
Cullen Center
1600 Smith Street, 40th Floor
Houston, Texas 77002
Attention: Bob Brill
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.6 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, REGARDLESS OF THE
LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF
LAWS THEREOF.
SECTION 9.7 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same agreement.
SECTION 9.9 Expenses. Except as otherwise provided herein, the
Purchaser and Company shall bear and pay all costs and expenses incurred by it
or on its behalf in connection with the transactions contemplated hereunder,
including fees and expenses of its own financial or other consultants,
investment bankers, accountants and counsel.
SECTION 9.10 Disclosure Schedule. Within five business days after the
execution hereof, the Company and the Purchaser shall deliver the Disclosure
Schedule to each other. The Disclosure Schedule shall be updated from time to
time and prior to the Closing to report any changes in the information contained
therein. The Disclosure Schedule shall contain all information required to
disclose fully any exception or qualification to this Agreement and shall cross
reference the section of this Agreement so qualified.
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ARTICLE X.
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
meanings set forth below:
"Action" shall mean any action, suit, litigation, complaint,
counterclaim, claim, petition, mediation contest, or administrative proceeding,
whether at law, in equity, in arbitration or otherwise, and whether conducted by
or before any Government or other Person.
"Business" shall mean the business of providing safety, training,
inspections, and human resources management as conducted prior to the Closing by
Seller.
"Closing" shall have the meaning set forth in Section 1.8 hereof.
"Closing Date" shall mean the time and date that the Closing occurs.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended, and all regulations thereunder. Any reference herein to a specific
section or sections of the Code shall be deemed to include a reference to any
corresponding provision of future law.
"Consents" shall mean all consents, approvals, and estoppels of others
which are required to be obtained in order to effect the valid assignment,
transfer, and conveyance to Purchaser of the Material Contracts without
resulting in any default thereunder.
"Contracts" shall mean all contracts, agreements, and leases of
equipment or other personal property that relate exclusively to the Business.
"Default" shall mean an event of default as defined in any contract or
other agreement or instrument, or any event which, with the passage of time or
giving of notice or both, would constitute an event of default or other breach
under such document or instrument.
"Disclosure Memorandum" shall mean the set of numbered schedules
referencing Sections of this Agreement delivered by Seller and dated of even
date herewith, as supplemented by new or amended schedules delivered by Seller
prior to the Closing.
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"Effective Time" shall have the meaning set forth in Section 1.2
hereof.
"Environmental Laws" shall mean all federal, state, municipal, and
local laws, statutes, ordinances, rules, regulations, conventions, and decrees
relating to the environment, including without limitation, those relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, chemicals, or industrial, toxic, or Hazardous Materials or wastes
of every kind and nature into the environment (including without limitation
ambient air, surface water, ground water, soil, and subsoil), or otherwise
relating to the manufacture, generation, processing, distribution, application,
use, treatment, storage, disposal, transport, or handling of pollutants,
contaminants, chemicals, or industrial, toxic, or hazardous substances or
wastes, and any and all laws, rules, regulations, codes, directives, orders,
decrees, judgments, injunctions, consent agreements, stipulations, provisions,
and conditions of Environmental Permits, licenses, injunctions, consent
agreements, stipulations, certificates of authorization, and other operating
authorizations, entered, promulgated, or approved thereunder.
"Environmental Permits" shall mean all permits, licenses, certificates,
approvals, authorizations, regulatory plans or compliance schedules required by
applicable Environmental Laws, or issued by a Government pursuant to applicable
Environmental Laws, or entered into by agreement of the party to be bound,
relating to activities that affect the environment, including without
limitation, permits, licenses, certificates, approvals, authorizations,
regulatory plans and compliance schedules for air emissions, water discharges,
pesticide and herbicide or other agricultural chemical storage, use or
application, and Hazardous Material or Solid Waste generation, use, storage,
treatment and disposal.
"Forum" shall mean any federal, state, local, municipal, or foreign
court, governmental agency, administrative body or agency, tribunal, private
alternative dispute resolution system, or arbitration panel.
"Financial Statements" shall have the meaning set forth in Section 3.4.
"Government" shall mean any federal, state, local, municipal, or
foreign government or any department, commission, board, bureau, agency,
instrumentality, unit, or taxing authority thereof.
"Hazardous Material" shall mean all substances and materials designated
as hazardous or toxic as of the date hereof pursuant to any applicable
Environmental Law.
"Knowledge of Seller" (or words of like effect) when used to qualify a
representation, warranty, or other statement shall mean the actual knowledge of
Seller's executive officers.
"Liabilities" shall have the meaning set forth in Section 3.12.
25
<PAGE>
"Material Adverse Effect" shall mean any adverse change in the
financial condition, assets, business or operations of any party and its
Subsidiaries which is material to such party taken as a whole.
"Material Contracts" shall mean all Contracts that involve monetary
obligations of Seller of more than $10,000 per year or that are not cancelable
by Seller upon thirty days notice or less without penalty, a list of which are
set forth in the Disclosure Schedule.
"Minor Contracts" shall mean all Contracts that are not Material
Contracts.
"Orders" shall mean all applicable orders, writs, judgments, decrees,
rulings, consent agreements, and awards of or by any Forum or entered by consent
of the party to be bound.
"Permits" shall mean all rights of Seller under any licenses of every
kind, certificates of occupancy, and permits or approvals of any nature, from
any Government which relate exclusively to the Business, or the property.
"Person" shall include an individual, a partnership, a joint venture, a
corporation, a limited liability company, a trust, an unincorporated
organization, a government, and any other legal entity.
"Property" shall mean the improvements owned or leased by the Company
and all buildings, fixtures, signs, parking facilities, and other improvements
located thereon and appurtenances thereto.
"Schedules" shall mean the numbered sections of the Disclosure
Memorandum.
"Solid Waste" shall mean any garbage, refuse, sludge from a waste
treatment plant, water supply treatment plant, or air pollution control
facility, and other discarded material, including solid, liquid, semisolid, or
contained gaseous material resulting from industrial, commercial, mining, and
agricultural operations, and from community activities.
26
<PAGE>
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized, all as of the
day and year set forth above.
RESTAURANT TEAMS INTERNATIONAL, INC.,
a Texas corporation
By: /s/ Curtis A. Swanson
--------------------------
Curtis A. Swanson
Executive Vice President
REGULATORY SOLUTIONS, INC.
a Texas corporation
By: /s/ Johann Wasserman
--------------------------
Johann Wasserman
President
27
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ATTACHMENT 2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT is entered into as of the 7th day of
February, 2000, by and among Hartan, Inc., ("Hartan"); the undersigned
affiliated companies, each of which have filed for Chapter 11 protection in
cases that are being jointly administered with the Chapter 11 case of Hartan
(the "Affiliates"; Hartan and the Affiliates being hereinafter referred to,
collectively, as "Tanners"); and Restaurant Teams International, Inc. ("RTI").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, on January 28, 2000 (the "Petition Date"), each of Tanners
filed a petition under Chapter 11 of Title 11 of the United States Code, 11
U.S.C. ss. 101 et seq. (the "Bankruptcy Code") which are pending as Case Nos.
00-61323-MHM through 00-61329-MHM, for which a request is pending for joint
administration (the "Proceedings") in the United States Bankruptcy Court for the
Northern District of Georgia, Atlanta Division (the "Bankruptcy Court") and each
has entered into this Agreement as a debtor and as a debtor-in-possession; and
WHEREAS, Tanners desire to sell and RTI desires to purchase all of the
assets owned and/or used by Tanners in connection with, associated with, or
otherwise necessary for the operation of the eight (8) Tanners restaurants
located in metropolitan Atlanta which are operated at the leased premises
described on Exhibit "A" attached hereto and incorporated herein (the "Acquired
Restaurants") upon the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the mutual promises and agreements
set forth herein,Tanners and RTI agree as follows:
1. RELATED MOTIONS AND AGREEMENTS
RTI's obligation to purchase assets hereunder are subject to Tanners'
filing certain motions and obtaining third party consents and Bankruptcy Court
approval as follows:
1.1 Approval of D.I.P. Financing and Management Agreement. Within three
(3) business days after the commencement of the Proceedings, the Bankruptcy
Court shall have approved post-petition financing by RTI in an order (the
"D.I.P. Financing Order"), which grants RTI superpriority lien rights under
Section 364(c)(2) and (d) of the Bankruptcy Code and which enables Tanners to
maintain the status quo of its business operations for at least ten (10) days
after the Petition Date, including, without limitation, maintaining existing
employees and restaurant management, on the terms and conditions described in
the letter agreement (and attached term sheet) executed by Tanners and RTI on
January 27, 2000 and attached hereto as Exhibit "B" (the "Letter Agreement").
Within three (3) business days after the commencement of the Proceedings, the
Bankruptcy Court shall have approved the management agreement as described in
the Letter Agreement, including the initial indemnity of certain key members of
management as described in the Letter Agreement (the "Management Order").
<PAGE>
1.2 Establishment of Sale Procedures and Approval of this Agreement.
Within three (3) business days after the commencement of the Proceedings, the
Bankruptcy Court shall have entered an order approving the sale procedures,
including, but not limited to, the bidding, overbidding, earnest money deposit,
and break-up fee provisions as described in the Letter Agreement in form and
substance acceptable to RTI (the "Sale Procedures Order"). Within one (1)
business day after the Petition Date, Tanners shall have filed a motion for
approval of a sale as contemplated under this Agreement and under the Sale
Procedures Order. Within ten (10) days after the Petition Date, the Bankruptcy
Court shall have entered an order approving the sale of assets to RTI as
described in this Agreement, free and clear of all liens or encumbrances, with
that order to include certain findings of fact and conclusions of law described
more fully in the Letter Agreement and otherwise to be in form and substance
reasonably acceptable to RTI (the "Sale Order").
1.3 Leases for the Acquired Restaurants. Prior to the closing (the
"Closing") of the sale of assets to RTI hereunder, Tanners shall endeavor to
obtain, with assistance from RTI, the written agreement of the landlords under
each of the leases listed for the Acquired Restaurants on Exhibit "A" (the
"Restaurant Leases") for modification of each of the Restaurant Leases to allow
the waiver of arrearages as of the Petition Date and the consent of each such
landlord to assumption and assignment of the Restaurant Leases, as modified, to
RTI at the Closing or an agreement to enter into a new leases on such terms as
Seller shall deem acceptable in its sole discretion ("New Leases"). Prior to the
Closing, Tanners shall file a motion, and obtain court approval, to assume and
assign all of the Restaurant Leases (except such Restaurant Leases as to which
RTI has entered into New Leases) to RTI in connection with the Closing, with RTI
to pay amounts required to cure defaults under the Restaurant Leases which it
designates for assumption and assignment hereunder. The order entered by the
Bankruptcy Court in connection with assumption and assignment of the Restaurant
Leases shall confirm (a) that one of Tanners is presently the tenant under the
Restaurant Leases; (b) that each of the Restaurant Leases is in effect and has
not been terminated; and (c) that no landlord or other creditor has any valid
objection to such assumption and assignment. There may be claims by certain
landlords that certain Restaurant Leases were terminated prior to the Petition
Date and to the extent that any Restaurant Lease was terminated prior to the
Petition Date, Debtors shall not be required to obtain an order authorizing the
assumption and assignment of any such Restaurant Lease.
2. PURCHASE AND SALE.
2.1 Acquired Assets. Subject to satisfaction prior to the Closing of
the conditions set forth in Sections 1 and 4 hereof, Tanners shall sell, assign,
transfer, and deliver to RTI, and RTI shall purchase, acquire and take
assignment and delivery of the following assets of Seller (collectively, the
"Acquired Assets"):
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(a) All of Tanners' cash, accounts receivable, prepaid charges, and
telephone numbers, provided, however, that from such cash Tanners and RTI will
establish an escrow in an amount to determined by Tanners and RTI for payment of
administrative expense claims incurred from the Petition Date through the
Closing, with any payment from the escrow to be made only with the mutual
agreement of Tanners and RTI;
(b) All of Tanners' title to, interest in, and rights under the
Restaurant Leases and, to the extent covered by the Restaurant Leases, any and
all fixtures, leasehold improvements, machinery, installations, equipment, and
other property attached thereto or located thereon (the "Leased Real Property"),
and any security deposits, escrow accounts, or utility deposits related to the
Restaurant Leases;
(c) All inventory of Tanners used or useful in the operations of the
Acquired Restaurants;
(d) All fixtures, machinery, equipment, furniture, restaurant or office
furnishings, tools, spare parts, and other personal property of Tanners used or
useful in the operations of the Acquired Restaurants;
(e) All right, title and interest of Tanner's in trademarks, trademark
rights and interests necessary for the exclusive use of the trademarks
"Tanner's", "Tanner's - Home of the Rotisserie" and derivations therefrom in
connection with continued operations of the Acquired Restaurants and in
connection with expansion of Tanners' restaurant concept in connection with any
other restaurants or business operations of RTI or its licensees throughout the
United States and the world (collectively, the "Acquired Trademarks");
(f) All of Tanners' right, title, and interest in, under or to all
patents, trademarks, trade names, and copyrights, and applications therefor,
owned by or under license to Tanners and used in connection with the Acquired
Restaurants, and all inventions, discoveries (whether or not patentable),
processes, designs, know-how, trade secrets, proprietary data, intellectual
property of all kinds and other technology owned by or under license to any of
Tanners and used in connection with operation of the Acquired Restaurants,
including without limitation all drawings, plans, specifications, patterns,
blueprints, information, knowledge, and procedures used in connection with the
design or operation of the Acquired Restaurants (collectively, the "Intellectual
Property");
(g) All of Tanners' rights under any contracts with vendors or other
third parties or under any other executory contracts or unexpired leases which,
in each case, are identified by RTI prior to the Closing as being appropriate
for continued operation of the Acquired Restaurants (collectively, the
"Identified Executory Contracts");
(h) All of Tanners' permits, licenses, and franchises relating to the
operation of the Acquired Restaurants, to the extent transfer or assignment is
permitted by law;
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<PAGE>
(i) All of Tanners' interest in connection with liquor licenses used in
connection with operation of the Acquired Restaurants before the Petition Date;
(j) All of Tanners goodwill relating to the operation of the Acquired
Restaurants and the use of the Acquired Trademarks and Intellectual Property;
(k) All of Tanners' interest in any software, vendor lists programs,
and other intangibles used in or related to the operation of the Acquired
Restaurants;
(l) All of Tanners' right, title and interest in any franchise
agreements, franchise rights and royalties, including, without limitation, the
right to enter into franchises in the future; and
(m) All of Tanners' rights relating to or arising out of express or
implied warranties from the suppliers to the Tanners with respect to equipment,
fixtures, or other items included in the Acquired Assets.
2.2 Excluded Assets. Notwithstanding the foregoing, Tanners are not
selling and RTI is not purchasing, pursuant to this Agreement, any tangible or
intangible properties, assets or rights of Tanners not specifically included in
the Acquired Assets. Without limiting the foregoing, there shall not be sold,
assigned, transferred or delivered hereunder any of the following assets of
Tanners, and the term "Acquired Assets" shall not include:
(a) Any Avoidance Actions; and
(b) Accounting or tax records and books that the Seller is required to
retain pursuant to any statute, rule or regulation, subject however to RTI's
right of inspection and access pursuant to this Agreement and RTI's right to
copy same.
3. PURCHASE PRICE
3.1 Payment of Purchase Price. Subject to adjustment as described in
Section 3.2 below, RTI shall pay to Tanners as the purchase price for the
Acquired Assets (the "Purchase Price") (a) Two Hundred Fifty Thousand Dollars
($250,000) in immediately available funds to such account or accounts as may be
specified by Tanners to RTI at least three days prior to the Closing plus (b)
forgiveness of management fees and/or debt owed by Tanners to RTI under the
D.I.P. Financing Order plus (c) an indemnity (the "Final Indemnity") in favor of
the Key Personnel (as hereinafter defined) for certain claims up to a maximum
aggregate amount of $125,000 (inclusive of an initial indemnity provided to the
Key Personnel under the Management Order).
3.2 Adjustment of Purchase Price. If an appeal of the Sale Order is
filed and RTI agrees to keep this Agreement in place pending such appeal and
such appeal is ultimately lost, thereby permitting the sale of Acquired Assets
hereunder to proceed, the Purchase Price shall be reduced by an amount equal to
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<PAGE>
all costs and expenses reasonably incurred by RTI in participating in the
defense of such appeal and shall be further reduced by an amount calculated at
the rate of 10% of the Purchase Price per annum from the date of the filing of
the notice of appeal until a final order resolving all issues on appeal, to
compensate RTI for RTI's loss of use and lost earnings potential.
4. ASSUMPTION OF CERTAIN OBLIGATIONS
4.1 Assumed Post-Closing Obligations. At the Closing, RTI shall (a)
hire all of Tanners' employees and assume the obligation to pay any unpaid,
accrued salary due from Tanners to those employees for services before the
Closing, including any payroll taxes and related expenses; and (b) assume and
agree to pay, perform, fulfill, and discharge, all obligations of Tanners under
the Restaurant Leases, as modified as described in Section 1.3, and the
Identified Executory Contracts which become due and payable or are required to
be performed or fulfilled after the Closing (collectively, the "Assumed
Obligations").
4.2 Excluded Obligations. Notwithstanding anything in this Agreement to
the contrary, RTI shall not assume, and shall not be deemed to have assumed, any
liability or obligation of Tanners whatsoever whether known or unknown, fixed or
contingent and however arising, other than as specifically set forth in Section
4.1 above, it being understood that the Sale Order shall specifically provide
that RTI is assuming no liabilities or obligations of Tanners other than the
Assumed Obligations. Without limiting the generality of the preceding sentence
RTI shall not assume and shall not be deemed to have assumed any liability,
whether direct, indirect or contingent, for or in respect of any federal, state,
local, or foreign income, capital gains, property transfer, value added, capital
stock, franchise or other taxes imposed on Tanners or with respect to the
Acquired Assets, including but not limited to, operation of the Acquired
Restaurants, which accrued prior to the Closing.
5. CLOSING.
5.1 Time and Place. The Closing, including the transfer and delivery of
all documents and instruments necessary to consummate the transactions
contemplated by this Agreement shall be held at the offices of Greenberg
Traurig, One Buckhead Plaza, 3060 Peachtree Road, Suite 1100, Atlanta, Georgia
30305 at a time and date specified by RTI within the first three (3) business
days following satisfaction of the other conditions precedent specified in this
Agreement or at such other time (but in any event not later than February 10th,
2000) as RTI and Tanners may agree. Notwithstanding anything to the contrary
herein, RTI may delay the Closing pending resolution of an appeal of the Sale
Procedures Order or the Sale Order as described in Section 10.1(d) below. The
date on which the Closing is actually held hereunder is sometimes referred to
herein as the "Closing Date."
5.2 Transactions at Closing. At the Closing:
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(a) Tanners shall duly execute and deliver to RTI a bill of sale in
form and substance reasonably acceptable to RTI, together with such deeds,
certificates of title and other instruments of assignment or transfer with
respect to the Acquired Assets as RTI may reasonably request and as may be
necessary to vest in RTI good record and marketable title to all of the Acquired
Assets, in each case free and clear of any liens, claims, interests, options or
encumbrances (collectively "Encumbrances") pursuant to Sections 363(b), (f), and
(m) of the Bankruptcy Code.
(b) RTI shall pay the Purchase Price on the Closing Date in the manner
specified in Section 3.1 above.
(c) RTI shall duly execute and deliver to Tanners an instrument of
assumption in form and substance reasonably acceptable to Tanners with respect
to the Assumed Obligations.
6. REPRESENTATIONS AND WARRANTIES OF TANNERS. Tanners represent and
warrant to RTI as follows:
6.1 Authority; Non-Contravention. Subject to and after giving effect to
the approval of the Bankruptcy Court by entry of the Sale Order (a) Tanners have
all requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby; (b) Tanners have obtained all
(if any) necessary approvals for the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby; and (c) this
Agreement has been duly executed and delivered by Tanners (and assuming due
authorization, execution, and delivery by RTI) constitutes Tanners' legal, valid
and binding obligations, enforceable against each of them in accordance with its
terms.
6.2 Title to Acquired Assets, Relation to Operation of the Acquired
Restaurants. Tanners are the lawful owners of, have good and valid record and
marketable title to, and, subject to the approval of the Bankruptcy Court by
entry of the Sale Order, have the full right to sell, convey, transfer, assign,
and deliver the Acquired Assets to RTI, without any restrictions of any kind
whatsoever, free and clear of any and all Encumbrances pursuant to Sections
363(b), (f), and (m) of the Bankruptcy Code. All of the Acquired Assets are
entirely free and clear of any security interests, liens, claims, charges,
options, mortgages, debts, leases (or subleases). At and as of the Closing,
Tanners will convey the Acquired Assets to RTI by deeds, bills of sale,
certificates of title and instruments of assignment and transfer effective to
vest in RTI, and RTI will have, good and valid record and marketable title to
all of the Acquired Assets, free and clear of any and all Encumbrances pursuant
to Sections 363(b), (f), and (m) of the Bankruptcy Code.
6.3 Governmental Consents: Licenses. Except for approval by the
Bankruptcy Court, no consent, approval or authorization of, or registration,
qualification or filing with, any governmental agency or authority is required
for the execution and delivery of this Agreement by Tanners or for the
consummation by Tanners of the transactions contemplated hereby.
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<PAGE>
6.4 Compensation of and Contracts with Employees. Tanners have no
collective bargaining agreement, employment agreement, or other agreement,
written or oral, with or pertaining to any currently active employee.
6.5 Intellectual Property. Tanners have not licensed to any party the
right to use any of the Acquired Trademarks or any of the Intellectual Property.
7. CONDUCT OF BUSINESS PENDING CLOSING. Tanners and RTI covenant
and agree that, from and after the date of this Agreement and until the Closing,
except as otherwise specifically consented to or approved by the other parties
in writing or as contemplated by this Agreement:
7.1 Full Access. Through the Closing, Tanners will permit RTI and its
representatives to examine Tanners' assets, business affairs, and finances and
to interview Tanners' officers, directors, employees, and suppliers. Through the
Closing, Tanners shall afford to RTI and its representatives full access to all
properties, books, records, contracts and documents of Tanners and a full
opportunity to make such investigations as RTI or its representatives shall
desire to make with respect to the Acquired Restaurants, other Acquired Assets,
and Assumed Obligations. Tanners shall furnish or cause to be furnished to RTI
and its representatives all such information as Tanners possess or can
reasonably obtain with respect to the Acquired Restaurants, the other Acquired
Assets, and the Assumed Obligations.
7.2 Government Filings and Compliance. Tanners and RTI agree to furnish
to the other parties such necessary information and reasonable assistance as the
other parties may request in connection with the preparation of necessary
filings, submissions or permit applications to any governmental agency in
connection with the transactions contemplated hereby or in connection with
Tanners' conclusion of its obligations in the Proceedings. The parties shall
advise the other parties of the filing of each and every of the foregoing and
shall provide to each other copies of such of the foregoing filings, submissions
or permit applications as do not contain confidential information. Tanners and
RTI agree to use reasonable efforts to comply with all applicable requirements
of statutes and governmental orders, regulations or rules relating to the
transactions contemplated hereby and the Closing hereunder.
7.3 Operation of Business. Tanners shall maintain the status quo
including maintaining existing employees and restaurant management and shall
operate the Acquired Restaurants and Tanners' business substantially in the same
manner as conducted presently and will take all actions in the ordinary course
to keep their business and properties substantially intact, including their
present operations. Tanners will not engage in transactions outside the ordinary
course of business.
-7-
<PAGE>
8. CONDITIONS PRECEDENT TO RTI'S OBLIGATIONS. The obligation of RTI
to consummate the Closing shall be subject to the satisfaction at or prior to
the Closing of each of the following conditions and the conditions set forth in
Sections 1.1, 1.2 and 1.3 above (to the extent noncompliance is not waived in
writing by RTI):
8.1 Representations and Warranties True at Closing. The representations
and warranties made by Tanners in or pursuant to this Agreement shall be true
and correct at and as of the Closing Date with the same effect as though such
representations and warranties had been made or given at and as of the Closing
Date.
8.2 Compliance With Agreement. Tanners shall have performed and
complied with all of its obligations under this Agreement to be performed or
complied with by it on or prior to the Closing Date.
8.3 Governmental Approvals. Tanners shall have received all licenses,
permits and other governmental approvals deemed necessary in the opinion of
RTI's counsel to own the Acquired Assets and operate the Acquired Restaurants.
8.4 No Restraining Order. No restraining order or injunction or the
order of any court or governmental authority shall prevent the transactions
contemplated by this Agreement.
8.5 Bankruptcy Approval. The Bankruptcy Court shall have entered the
Sale Procedures Order and the Sale Order, and any of the following shall have
occurred: (i) expiration of the time for an appeal therefrom without such appeal
having been taken; (ii) if an appeal is taken, denial of such appeal and the
expiration of the time for further appeal therefrom without such further appeal
having been taken; (iii) failure of the Sale Procedures Order and the Sale Order
to have been stayed as of the Closing Date, although an appeal therefrom has
been taken, and determination by RTI, in its sole discretion, to consummate the
Closing; or (iv) entry of the Sale Procedures Order and the Sale Order, and a
determination by RTI, in its sole discretion, to consummate the Closing
notwithstanding the failure to occur of the events or conditions specified in
the preceding clauses (i),(ii) or (iii).
8.6 Consent of Third Parties. Each other party to any executory
contracts or unexpired leases with any of Tanners under which the transactions
contemplated by this Agreement (a) would constitute a default giving rise to a
claim for damages or injunctive relief which could materially adversely affect
any of the Acquired Assets or the business carried on with any of the Acquired
Assets; (b) would accelerate or otherwise modify any obligations which will
constitute Assumed Obligations; or (c) would permit cancellation of any of the
Restaurant Leases or Identified Executory Contracts, shall have given such
consent at no expense to RTI and in form and substance satisfactory to RTI, as
may be necessary to permit the consummation of the transactions contemplated by
this Agreement without such default, acceleration, modification or cancellation
under or of such lease or contract.
-8-
<PAGE>
8.7 Assumption and Assignment of Identified Executory Contracts.
Tanners shall have obtained an order of the Bankruptcy Court authorizing the
assumption and assignment to RTI of any Identified Executory Contracts.
8.8. Absence of Certain Conditions. There shall not have been any
material adverse developments from the date hereof to the date of Closing with
respect to the business of Tanners, as determined by RTI, in its discretion,
including without limitation, any notice of violation from any governmental
authority.
8.9 Liquor Licenses. RTI shall have received written confirmation as of
the Closing Date that Tim Robinson has agreed to continue to act as agent under
the liquor licenses used for the Acquired Restaurants after the sale of those
restaurants to RTI hereunder until RTI or its nominee has obtained new liquor
licenses for those restaurants.
8.10 Noncompete Agreements. Robinson, Bob Hoffman, Clyde Culp, and
Margaret Smoot (collectively, the "Key Personnel") shall have entered into
noncompete arrangements with RTI on terms and conditions customary in
acquisitions of this type.
9. CONDITIONS PRECEDENT TO TANNERS' OBLIGATIONS. The obligation of
Tanners to consummate the Closing shall be subject to the satisfaction, at or
prior to the Closing, of each of the following conditions (to the extent
noncompliance is not waived in writing by Tanners):
9.1 Compliance with Agreement. RTI shall have performed and complied
with all of its obligations under this Agreement that are to be performed or
complied with by it at or prior to the closing.
9.2 Compliance with Law; No Restraining Order. No restraining order or
injunction shall prevent the transactions contemplated by this Agreement, and
Tanners and RTI shall have complied with all applicable requirements of statutes
and governmental orders, regulations or rules relating to the Closing hereunder.
9.3 Proceedings and Documents Satisfactory. All proceedings in
connection with the transactions contemplated by this Agreement and all
certificates and documents delivered to Tanners in connection with the
transactions contemplated by this Agreement shall be reasonably satisfactory in
all respects to Tanners and Tanners' counsel, and Tanners shall have received
the originals or certified or other copies of all such records and documents as
Tanners may reasonably request.
9.4 Bankruptcy Court Approval. The Bankruptcy Court shall have entered
the Sale Procedures Order and the Sale Order.
-9-
<PAGE>
10. TERMINATION.
10.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing Date:
(a) By mutual written consent of Tanners and RTI;
(b) By RTI, in its sole discretion, if the Bankruptcy Court shall not
have issued the Sale Procedures Order and the Sale Order, approving this
Agreement and the transactions contemplated hereby, on or before ten (10) days
after the Petition Date;
(c) By RTI, in its sole discretion, if it shall not have obtained
satisfactory modifications to the Restaurant Leases as more fully described in
subsection 1.3 hereof on or before fifteen (15) days after the Petition Date,
and has not waived such condition;
(d) By RTI, at its election, if an appeal of the Sale Procedures Order
or the Sale Order is pending and either of those orders is not stayed pending
appeal, in which case, RTI will be entitled to immediate return of up to
$100,000.00 loaned to Tanners under the D.I.P. Financing Order with accrued
interest and the payment of the break-up fee as described in more detail in the
Letter Agreement;
(e) By RTI or Tanners, if, without fault of the party seeking
termination, the Closing shall not have occurred on or before fifteen (15) days
after the Petition Date; or
(f) By RTI or Tanners, if any court of competent jurisdiction in the
United States or any other United States governmental body shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated hereby and such order,
decree, ruling or other action shall have become final and non-appealable.
11. GENERAL PROVISIONS.
11.1 Expenses. All expenses of the preparation, execution and
consummation of this Agreement and of the transactions contemplated hereby,
including, without limitation, fees and disbursements of attorneys, accountants,
and outside advisors, shall be borne by the party incurring such expenses.
11.2 Further Assurances. If, at any time after the closing, RTI shall
consider or be advised that any further instrument of assignment, conveyance or
transfer or other document is necessary to vest, perfect or confirm of record in
RTI the title to any of the Acquired Assets or otherwise to carry out the
provisions of this Agreement, Tanners and or any successor in interest to
Tanners shall promptly execute and deliver any and all such instruments,
assignments, powers of attorney or other necessary documents and do all such
other things necessary to vest, perfect or confirm title to such property or
rights in RTI and otherwise to carry out the provisions hereof, within a
reasonable period of time after RTI's request and without further cost and
expense to RTI.
-10-
<PAGE>
11.3 Notices. All notices, demands and other communications hereunder
shall be writing or by written telecommunication, and shall be deemed to have
been duly given if delivered personally or if mailed by certified mail, return
receipt requested, postage prepaid, or sent by written telecommunication, as
follows:
If to Tanners, to: Bob Hoffman, Acting C.E.O.
5500 Oakbrook Pkwy, Suite 260
Norcross, GA 30093
With a copy to: Richard B. Herzog
Nelson Mullins Riley & Scarborough, LLP
First Union Plaza, Suite 1400
999 Peachtree St., N.E.
Atlanta, GA 30309
If to RTI, to: Curtis A. Swanson, C.F.O
RTIN Holdings
911 N.W. Loop 281, Suite 111
Longview, Texas 75604
With a copy to: Sheri L. Labovitz, Esq.
Greenberg Traurig
3060 Peachtree Road, NE
Suite 1100
Atlanta, Georgia 30305
11.4 Entire Agreement. This Agreement contains the entire understanding
of the parties, supersedes all prior agreements and understandings relating to
the subject matter hereof and shall not be amended except by a written
instrument hereafter signed by all of the parties hereto.
11.5 Governing Law. The validity and construction of this Agreement
shall be governed by the internal laws (and not the choice-of-law rules) of the
State of Georgia.
11.6 Sections and Section Headings. The headings of sections and
subsections are for reference only and shall not limit or control the meaning
thereof.
-11-
<PAGE>
11.7 Assigns. This Agreement shall be binding and inure to the benefit
of the parties hereto and their respective heirs, successors and permitted
assigns. Neither this Agreement nor the obligations of any party hereunder shall
be assignable or transferable by such party without the prior written consent of
the other parties hereto; provided, however, that notwithstanding anything to
the contrary in this Section 11.7, RTI shall be authorized, without the consent
of Tanners, to transfer or assign this Agreement or its rights or obligations
hereunder to RTOSF, Inc., a wholly owned subsidiary of RTI or to another entity
controlling, under the control of, or under common control with RTI, and, in the
case of such an assignment by RTI, all references to RTI herein shall, after
such assignment, be deemed to refer to RTI's assignee.
11.8 No Implied Rights or Remedies. Except as otherwise expressly
provided herein, nothing herein expressed or implied is intended or shall be
construed to confer upon or to give any person, firm or corporation, other than
Tanners and RTI and their respective shareholders, any rights or remedies under
or by reason of this Agreement.
11.9 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-12-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal and delivered by their respective duly authorized
officers as of the date and year first above written.
Hartan, Inc.,
Debtor-in-Possession
By: /s/ Robert Hoffman
---------------------------------------
Title: Acting CEO
Tanner's/Vinings, Inc.
Debtor-in-Possession
By: /s/ Robert Hoffman
---------------------------------------
Title: Acting CEO
Tanner's/Oaks, Inc.,
Debtor-in-Possession
By: /s/ Robert Hoffman
---------------------------------------
Title: Acting CEO
Tanner's Mill, Inc.,
Debtor-in-Possession
By: /s/ Robert Hoffman
---------------------------------------
Title: Acting CEO
Tanner's-Lawrenceville, Inc.,
Debtor-in-Possession
By: /s/ Robert Hoffman
---------------------------------------
Title: Acting CEO
Tanner's Tucker, Inc.,
Debtor-in-Possession
By: /s/ Robert Hoffman
---------------------------------------
Title: Acting CEO
Central Administration, Inc. f/k/a Tanner's
Management, Inc.,
Debtor-in-Possession
By: /s/ Robert Hoffman
---------------------------------------
Title: Acting CEO
Restaurant Teams International, Inc.
By: /s/ Curtis A. Swanson
---------------------------------------
Title: Executive Vice President
-13-
<PAGE>
EXHIBIT "A"
Restaurant Leases to be Acquired by RTI
1. Vinings - Shopping Center Lease dated 7/21/98 between Riverview Associates,
LTD. d/b/a Riverview II, as landlord, and TRC Acquisition Corporation, as
tenant, for premises in Riverview II Shopping Center, Cobb County, Georgia
2. Oaks - Fountain Oaks Lease Agreement dated 1/11/89, as extended, between
Long Island Associates, Ltd., as landlord, and Tanner's Oaks, Inc., as
tenant, for premises in Fountain Oaks, Fulton County, Georgia
3. Emory - Commercial Lease Contract dated 8/27/91, between Rubin Pichulik, as
landlord, and Tanner's Mill, Inc., as tenant, for premises at 1371
Clairmont Road, Decatur, Georgia
4. Lawrenceville - Shopping Center Lease dated 2/7/92 between JDN Realty
Corporation as the successor of Town Center Associates, as landlord, and
Tanner's Lawrenceville, Inc., as tenant, for premises at Lawrenceville Town
Center, Gwinnett County, Georgia
5. Tucker - Shopping Center Lease dated 2/28/92 between Fund I and Fund II -
Tucker, as landlord, and Tanner's Tucker, Inc., as tenant, for premises at
Heritage Place, _________ County, Georgia
6. Suwanee - Lease dated 8/1/97 between Suwanee Point, L.L.C., a Georgia
limited liability company, as landlord, and TRC Acquisition Corporation, as
tenant, for premises in Suwanee Point Shopping Center, ________ County,
Georgia
7. Fayetteville - Lease Agreement dated 6/24/98 between Epic X, LLC, as
landlord, and TRC Acquisition Corporation, as tenant, for land and
improvements at 94 Pavillion Parkway, Fayetteville, Fayette County, Georgia
30214
8. Towne Lake - Shopping Center Lease dated October 20, 1998, between The
Means Brothers, LLC, as landlord and TRC Acquisition Corp., as tenant, for
premises at The Shops at Towne Lake, Woodstock, Cherokee Georgia.
-14-
<PAGE>
BILL OF SALE AND ASSIGNMENT
AND RELATED UNDERTAKINGS
THIS BILL OF SALE AND ASSIGNMENT AND RELATED UNDERTAKINGS (the "Bill of
Sale") is made this 9th day of February, 2000, by and between Hartan, Inc.,
Tanner's/Vinings, Inc., Tanner's/Oaks, Inc., Tanner's Mill, Inc.,
Tanner's-Lawrenceville, Inc., Tanner's-Tucker, Inc., and Central Administration,
Inc. f/k/a Tanner's Management, Inc. (collectively "Sellers") and RTOSF, a Texas
corporation, ("Buyer") as the assignee of Restaurant Teams International, Inc.
("RTI").
Pursuant to the terms of that certain Asset Purchase Agreement between
RTI and Sellers, dated as of February 2, 2000, as assigned by RTI to Buyer, by
Assignment of Asset Purchase Agreement dated as of February 7, 2000 (as
assigned, "Asset Purchase Agreement"), and in consideration of the mutual
covenants, conditions and agreements set forth in the Asset Purchase Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, it is hereby agreed that:
1. CONVEYANCE. Sellers hereby sell, assign, convey, transfer and
deliver to Buyer the following described assets and property, each of which is
defined in the Asset Purchase Agreement (collectively, the "Acquired Assets"),
with all capitalized terms not otherwise defined herein to have the meaning
ascribed to such term in the Asset Purchase Agreement:
(a) All of Sellers' cash, accounts receivable, prepaid charges,
and telephone numbers;
(b) All of Sellers' title to, interest in, and rights in
connection with any and all fixtures, leasehold improvements,
machinery, installations, equipment, and other property
attached to or located on the Leased Real Property, and any
security deposits, escrow accounts, or utility deposits
related to the eight (8) leases listed on Exhibit "A" attached
hereto and incorporated herein (the "Restaurant Leases");
(c) All inventory of Sellers used or useful in the operations of
the Acquired Restaurants;
(d) All fixtures, machinery, equipment, furniture, restaurant or
office furnishings, tools, spare parts, and other personal
property of Sellers used or useful in the operations of the
Acquired Restaurants, including, but not limited to, those
items located at the Sellers' warehouse and office, and those
items set forth on Exhibit "B" attached hereto and made a part
hereof;
(e) All right, title and interest of Sellers in trademarks,
trademark rights and interests necessary for the exclusive use
of the trademarks "Tanner's", "Tanner's - Home of the
Rotisserie" and derivations therefrom in connection with
continued operations of the Acquired Restaurants and in
connection with expansion of the Sellers' restaurant concept
in connection with any other restaurants or business
operations of Buyer or its licensees throughout the United
States and the world (collectively, the "Acquired
Trademarks");
<PAGE>
(f) All of Sellers' right, title, and interest in, under or to all
patents, trademarks, trade names, and copyrights, and
applications therefor, owned by or under license to Sellers
and used in connection with the Acquired Restaurants, and all
inventions, discoveries (whether or not patentable),
processes, designs, know-how, trade secrets, proprietary data,
intellectual property of all kinds and other technology owned
by or under license to any of the Sellers and used in
connection with operation of the Acquired Restaurants,
including without limitation all drawings, plans,
specifications, patterns, blueprints, information, knowledge,
and procedures used in connection with the design or operation
of the Acquired Restaurants (collectively, the "Intellectual
Property");
(g) All of Sellers' rights under the following executory
contracts, subject to Bankruptcy Court approval of the
assumption and assignment of such executory contracts to
Buyer following the Closing: Tanner's Catering License
Agreement dated August 29. 1999, by and between Hartan,
Inc., and Stox Inc. (the "Catering Agreement") and agreement
by and among Hartan, Inc., Tanners Lilburn, Inc., Tanners
Restaurant Group, Inc., Tim Peterson, and William Alexander
concerning franchising of store known as 521 Indian Trail
Road, Lilburn, Georgia 30047 (the "Lilburn Franchise
Agreement");
(h) All of Sellers' permits, licenses, and franchises relating to
the operation of the Acquired Restaurants, to the
extent transfer or assignment is permitted by law;
(i) All of Sellers' interest in connection with liquor licenses
used in connection with operation of the Acquired Restaurants
before the Petition Date;
(j) All of Sellers' goodwill relating to the operation of the
Acquired Restaurants and the use of the Acquired Trademarks
and Intellectual Property;
(k) All of Sellers' interest in any software, vendor lists,
programs, and other intangibles used in or related to the
operation of the Acquired Restaurants;
(l) In addition to Sellers' interest in the Lilburn Franchise
Agreement and the Catering Agreement, all of Sellers' right,
title and interest in any franchise agreements, franchise
rights and royalties, including, without limitation, the right
to enter into franchises in the future; and
(m) All of Sellers' rights relating to or arising out of express
or implied warranties from the suppliers to Sellers with
respect to equipment, fixtures, or other items included in the
Acquired Assets.
Notwithstanding the foregoing, the parties acknowledge that "Acquired
Assets" sold, assigned, and transferred to Buyer hereunder do not include (i)
any causes of action arising under Sections 544, 545, 457, 548, 549, 550, 551,
552 or 553 of the Bankruptcy Code (ii) any accounting or tax records and books
<PAGE>
that the Sellers are required to retain pursuant to any statute, rule or
regulation, subject however to Buyer's right of inspection and access pursuant
to the Asset Purchase Agreement and Buyer's right to copy same; (iii) that
certain Promissory Note dated August 29, 1999, made by Stox, Inc. in the
original principal amount of $106,000; (iv) that certain Promissory Note dated
July 1, 1999, made by ALTIM, LLC in the original principal amount of $22,000;
and (v) any fixtures machinery, equipment, furniture, restaurant or office
furnishings, tools, spare parts, and other personal property of Sellers located
at the Canton or Athens restaurants.
2. ACCEPTANCE AND ASSUMPTION. Buyer hereby accepts the foregoing sale
and assignment and agrees to assume the Sellers' obligations under the Catering
Agreement and the Lilburn Franchise Agreement and any Restaurant Leases assumed
and assigned to Buyer as contemplated herein, subject to approval of such
assumption and assignment by the Bankruptcy Court after the Closing. Buyer
hereby indemnifies Sellers against any and all liability for expenses incurred
after the Petition Date through the date hereof in the ordinary course of
operating the Acquired Restaurants, including, but not limited to payroll and
payroll related expenses relating to the employees of the Acquired Restaurants,
utilities and rental under the Restaurant Leases accruing after the Petition
Date.
3. WARRANTY OF TITLE; TRANSFER FREE AND CLEAR OF LIENS. Sellers warrant
that they have good and marketable title to the Acquired Assets. By execution
below, Tanners Restaurant Group, Inc. ("TRG"), acknowledges that it has no right
to receive any payments or any continuing interest in the Lilburn Franchise
Agreement. The parties acknowledge that this Bill of Sale is intended to
transfer the Acquired Assets to the Buyer "free and clear" of liens pursuant to
the Bankruptcy Court's Order approving the Sale Motion as a sale complying with
Section 363 (b), (f), and (m) of the Bankruptcy Code.
4. TRANSFER OF CASH. Sellers and TRG agree to authorize SunTrust and
all other banks where any accounts of the Sellers and TRG were maintained before
or after the Petition Date, including, but not limited to those accounts
described on Exhibit "C" attached hereto and made a part hereof (collectively,
the "Accounts") to pay to Buyer all amounts deposited or clearing in such
Accounts based on operations or contractual rights of the Sellers before the
Petition Date through the Closing.
The Sellers obligation under this Section 4 is intended to, and shall,
survive the Closing.
[SIGNATURES COMMENCE ON FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Bill of Sale
as of the date first above written.
"SELLER"
Hartan, Inc.,
Debtor-in-Possession
By: /s/ Robert Hoffman
----------------------------
Title: Acting CEO
Tanner's/Vinings, Inc.
Debtor-in-Possession
By: /s/ Robert Hoffman
----------------------------
Title: Acting CEO
Tanner's/Oaks, Inc.,
Debtor-in-Possession
By: /s/ Robert Hoffman
-----------------------------
Title: Acting CEO
Tanner's Mill, Inc.,
Debtor-in-Possession
By: /s/ Robert Hoffman
----------------------------
Title: Acting CEO
Tanner's-Lawrenceville, Inc.,
Debtor-in-Possession
By: /s/ Robert Hoffman
----------------------------
Title: Acting CEO
Tanner's Tucker, Inc.,
Debtor-in-Possession
By: /s/ Robert Hoffman
----------------------------
Title: Acting CEO
<PAGE>
[SIGNATURES CONTINUE ON FOLLOIWNG PAGE]
Central Administration, Inc. f/k/a Tanner's
Management, Inc.,
Debtor-in-Possession
By: /s/ Robert Hoffman
----------------------------
Title: Acting CEO
BUYER:
RSTOF, Inc.
By: /s/ Curtis A. Swanson
-----------------------------------
Title: Executive Vice President
FOR THE LIMITED PURPOSE
DESCRIBED IN SECTION 3 AND 4 ABOVE:
Tanners Restaurant Group, Inc.
By: /s/ Robert Hoffman
-----------------------------------
Title: Acting CEO
<PAGE>
EXHIBIT "A"
1. Vinings - Shopping Center Lease dated 7/21/98 between Riverview Associates,
LTD. d/b/a Riverview II, as landlord, and TRC Acquisition Corporation, as
tenant, for premises in Riverview II Shopping Center, Cobb County, Georgia
2. Oaks - Fountain Oaks Lease Agreement dated 1/11/89, as extended, between
Long Island Associates, Ltd., as landlord, and Tanner's Oaks, Inc., as
tenant, for premises in Fountain Oaks, Fulton County, Georgia
3. Emory - Commercial Lease Contract dated 8/27/91, between Rubin Pichulik, as
landlord, and Tanner's Mill, Inc., as tenant, for premises at 1371
Clairmont Road, Decatur, Georgia
4. Lawrenceville - Shopping Center Lease dated 2/7/92 between JDN Realty
Corporation as the successor of Town Center Associates, as landlord, and
Tanner's Lawrenceville, Inc., as tenant, for premises at Lawrenceville Town
Center, Gwinnett County, Georgia
5. Tucker - Shopping Center Lease dated 2/28/92 between Fund I and Fund II -
Tucker, as landlord, and Tanner's Tucker, Inc., as tenant, for premises at
Heritage Place, _________ County, Georgia
6. Suwanee - Lease dated 8/1/97 between Suwanee Point, L.L.C., a Georgia
limited liability company, as landlord, and TRC Acquisition Corporation, as
tenant, for premises in Suwanee Point Shopping Center, ________ County,
Georgia
7. Fayetteville - Lease Agreement dated 6/24/98 between Epic X, LLC, as
landlord, and TRC Acquisition Corporation, as tenant, for land and
improvements at 94 Pavillion Parkway, Fayetteville, Fayette County, Georgia
30214
8. Towne Lake - Shopping Center Lease dated October 20, 1998, between The
Means Brothers, LLC, as landlord and TRC Acquisition Corp., as tenant, for
premises at The Shops at Towne Lake, Woodstock, Cherokee Georgia.
