Asset Purchase Agreement - NE Restaurant Co. Inc., NERC LP, NERC LP II and Brinker International Inc.
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (this "Agreement") is made as of November
20, 2000, by and among NE Restaurant Company, Inc., a Delaware corporation
("Parent"), NERC Limited Partnership, a Delaware limited partnership ("LP I"),
NERC Limited Partnership II, a Delaware limited partnership ("LP II" and
collectively with LP I and Parent, "Seller"), and Brinker International, Inc., a
Delaware corporation ("Purchaser").
WHEREAS, Seller is engaged in the business (the "Business") of
operating forty Chili's Grill & Bar and seven On the Border Mexican Cafe
restaurants (collectively the "Purchased Restaurants") and has entered into
leases for four additional sites (the "In-Process Sites") on which Chili's Grill
& Bar restaurants are to be constructed; and
WHEREAS, Purchaser desires to purchase certain assets and assume
certain liabilities of the Business, and Seller desires to sell such assets and
assign such liabilities to Purchaser, each upon the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS.
1.1. PURCHASE AND SALE.
(a) At the Closing (as hereinafter defined) and subject to the terms
and conditions of this Agreement, Purchaser shall purchase from Seller, and
Seller shall sell to Purchaser, all right, title and interest in and to the
following assets that are owned by or under the control of Seller (collectively
the "Purchased Assets"):
(i) Seller's real property identified in Schedule 1.1(a),
together with all buildings, fixtures, plant, equipment and
improvements thereon or attached thereto (the "Owned Real Estate");
(ii) Seller's leasehold interests in the real property
identified in Schedule 1.1(a), together with all buildings, fixtures,
plant, equipment and improvements thereon or attached thereto (the
"Leased Real Estate" and together with the Owned Real Estate, the "Real
Estate");
(iii) all tangible personal property located at the Real
Estate;
(iv) all inventory of food, alcoholic beverages (to the extent
transferable), raw materials and packaging supplies for use in the
Purchased Restaurants (including inventory in transit to the Purchased
Restaurants);
(v) subject to any required consents, all of Seller's rights
in and under all contracts and agreements relating primarily to the
Business (the "Contracts");
(vi) Seller's records and files relating primarily to the
Purchased Assets and the Purchased Restaurants and set forth on
Schedule 1.1(a)(vi) (the "Business Records");
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(vii) to the extent transferable, all licenses, permits or
other rights granted by governmental authorities used in or required or
necessary for the lawful ownership or operation of the Business (the
"Permits"); and
(viii) all prepaid expenses of the Business for which
proration of the Purchase Price pursuant to Section 1.4 hereof is made.
(b) Notwithstanding the foregoing, the Purchased Assets shall not
include the following assets of Seller (the "Excluded Assets"):
(i) cash and cash equivalents (provided, however, that Seller
will include in the Purchased Assets normal amounts of petty cash at
the Purchased Restaurants on the Closing Date to the extent such
amounts are credited to Seller on the Closing Prorations Schedule
described herein);
(ii) except as otherwise provided in this Agreement, all
right, title and interest of Seller in any insurance policies relating
to the Purchased Assets or the Business and all rights of Seller or any
of its affiliates to insurance claims, related refunds and proceeds
arising from or related thereto;
(iii) all Permits that are not transferable by the terms
thereof or by operation of law;
(iv) the contracts listed on Schedule 1.1(b)(iv);
(v) all accounts and notes receivable, including without
limitation, credit card receivables, arising from the operation of the
Business prior to Closing;
(vi) all Seller's properties, assets, capital stock, rights,
claims, contracts and goodwill relating to all businesses conducted by
Seller other than the Business, including without limitation, Seller's
"Bertucci's" and "Sal and Vinnie's Sicilian Steakhouse" restaurant
businesses, including without limitation the capital stock of
Bertucci's, Inc.;
(vii) Seller's fee interest in the property currently leased
to Zoots in West Springfield, Massachusetts, and Seller's leasehold
estates in Seller's headquarters located at 5 Clock Tower Place,
Maynard, Massachusetts and 80A Turnpike Road, Westborough,
Massachusetts, and all buildings, fixtures, plants, furniture,
equipment, personal property and improvements located therein, thereon
and attached thereto;
(viii) Seller's rights under this Agreement and the other
agreements, certificates and instruments to be executed by Seller in
connection with or pursuant to this Agreement;
(ix) all refunds of income taxes filed or to be filed by
Seller or its affiliates;
(x) all assets used in connection with the general corporate
operations and administration of Seller's business that are not
primarily used in the Business, including without limitation, computer
software and hardware;
(xi) all Seller's records other than the Business Records (the
"Seller's Records");
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(xii) all moneys owed to Seller by the landlord of the Rocky
Hill, Connecticut "On the Border" restaurant site for site improvement
costs and expenses incurred by Seller with respect to the construction
of such restaurant; and
(xiii) all Failed Sites, as defined in Section 1.3(i), and all
aspects of the Business related thereto.
1.2. ASSUMPTION OF LIABILITIES. At the Closing, the Purchaser shall
assume, and agree to pay, perform and discharge when due, the following
categories of liabilities (collectively the "Assumed Liabilities"):
(i) to the extent relating to periods on and after the
Closing, all liabilities and obligations of the Seller under the
Permits, Contracts and leases and subleases relating to the Real Estate
(including all Parent guarantees relating to the Leased Real Estate);
(ii) Seller's debts, liabilities and obligations under the
agreements identified on Schedule 1.2 hereto (the "FFCA Loan
Documents");
(iii) the liabilities and obligations in respect of employee
relations and benefits as further described in Section 5.5 hereof;
(iv) subject to Section 5.11 hereof, Seller's obligations to
customers in respect of gift certificates issued prior to the Closing
Date to consumers for redemption at the Purchased Restaurants (the
"Gift Certificates") (it being understood that Purchaser is not
assuming any obligations to governmental agencies or taxing authorities
under escheatment or similar statutes in respect of the funds collected
by Seller upon the sale of such Gift Certificates); and
(v) all debts, liabilities, obligations, taxes, commitments
and contracts (including without limitation any actions, suits,
proceedings, disputes, claims or investigations) in respect of the
Business or the Purchased Assets arising in respect of periods, or
incurred by Purchaser, on or after the Closing Date (including
deliveries of inventory and services occurring after the Closing Date
but ordered prior to such date).
Except as specifically set forth above, Purchaser does not assume and shall in
no event be liable for any debt, obligation, responsibility, liability or
contingent liability of Seller, or any affiliate or successor of Seller, or any
claim against any of the foregoing, whether known or unknown, contingent or
absolute, or otherwise.
1.3. PURCHASE PRICE. The consideration to be received by Seller
hereunder for the Purchased Assets ("Purchase Price") shall be (i) $93.5 million
less (ii) the aggregate amount of the indebtedness (unpaid principal amount
outstanding as of the Closing Date, plus accrued and unpaid interest through the
Closing Date) under the FFCA Loan Documents; provided, however, that:
(i) if Landlord Consents and/or Liquor Consents (each as
defined in Section 5.1) have been denied with respect to not more than
four of the Purchased Restaurants, such that Purchaser would not be
able to operate such Failed Sites on and after the Closing, except
where such denial would not reasonably be likely to have a Business
Material Adverse Effect (the
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"Failed Sites"), such Failed Sites shall become Excluded Assets and the
Purchase Price shall be reduced for such Failed Sites as set forth on
Schedule 1.3; and
(ii) if a Purchased Restaurant is not operating as of the
Closing Date due to a casualty loss, it shall be treated as a Failed
Site (and the Purchase Price reduced by the greater of the amount set
forth on Schedule 1.3 in respect of such Failed Site or the cost to
rebuild and reopen such restaurant) unless (X) Seller assumes the cost
of rebuilding and reopening the restaurant or (Y) Seller assigns to
Purchaser sufficient insurance proceeds to rebuild and reopen the
restaurant.
1.4. PRORATIONS. The Purchase Price shall be subject to proration as
provided hereinbelow:
(a) Proration of the items described below between the Seller
and Purchaser shall be effective as of the close of business for the
day immediately preceding the Closing Date and shall occur as follows:
(i) Except as elsewhere set forth herein, all items
of income and expense arising from the operation of the
Purchased Restaurants before the Closing Date shall be for the
account of Seller, and all items of income and expense arising
from the operation of the Purchased Restaurants on or after
the Closing Date shall be for the account of Purchaser;
(ii) Liability for state and local real estate,
personal property and sales taxes, water and sewer use
charges, special assessments and tax abatements assessed on
the Purchased Assets payable with respect to the tax year in
which the Closing Date falls shall be prorated as between the
Seller and Purchaser on the basis of the number of days of the
tax year elapsed to and including the Closing Date. If, for
any reason, ad valorem taxes for the current calendar year
have not been assessed on the Owned Real Estate, such
proration shall be based upon the immediately preceding year's
assessment and adjusted when exact amounts are available;
(iii) Prepaid items, deposits and accruals (including
without limitation rent, utilities, security deposits,
compensation to Transferred Employees (as defined in Section
5.5), liquor license fees, royalties, advertising and other
monthly payments under franchise agreements and other service
charges and rental and other payments under any of the
Contracts) shall be prorated between the Seller and Purchaser
on the basis of the period of time to which such prepaid items
and accruals apply (it being understood that Purchaser shall
have the right to object to the proration of any prepaid
items, deposits or accruals for which the commensurate benefit
thereof will not inure to Purchaser after the Closing Date);
and
(iv) Petty cash on hand at the Purchased Restaurants
as of the opening of business shall be for the account of the
Seller.
Notwithstanding the foregoing, normal trade accounts payable of the
Purchased Restaurants (other than with respect to inventory) will not
be prorated. All franchise fees paid prior to the Closing Date will be
deemed fully earned by Purchaser and therefore will not be prorated.
The $150,000 extension fee paid by Seller to Purchaser under the
Development Agreement will be
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refunded to Seller at Closing as provided in Section 6.4 hereof and
therefore will not be prorated.
(b) All prorations shall be made and paid insofar as feasible
on the Closing Date pursuant to a schedule of prorated items mutually
prepared by Purchaser and Seller (the "Closing Prorations Schedule"),
with a final settlement to be made in accordance with the following
procedure:
(i) Purchaser shall prepare and deliver to Seller
within 60 days after the Closing Date a schedule indicating
any proposed revisions to the Closing Prorations Schedule (the
"Schedule of Revisions"); and if Purchaser fails to prepare
the Schedule of Revisions within such period, Seller shall
have the right, within the succeeding 30 days, to prepare the
Schedule of Revisions. Purchaser shall permit Seller and its
accountants to participate in the preparation thereof and
shall promptly make available to Seller and its accountants
all work papers and other pertinent information used in
connection therewith.
(ii) Within 30 days after the Schedule of Revisions
is delivered to Seller or Purchaser pursuant to clause (i)
above, the recipient of the Schedule of Revisions shall
complete its examination thereof and shall deliver to the
other party either (i) a written acknowledgment accepting the
Schedule of Revisions or (ii) a written report setting forth
in reasonable detail any proposed adjustments to the Schedule
of Revisions ("Adjustment Report"). A failure by a party to
deliver the Adjustment Report within the required 30 day
period shall constitute its acceptance of the Schedule of
Revisions.
(iii) During a period of 30 days following the
receipt of the Adjustment Report, Seller and Purchaser shall
attempt to resolve any difference they may have with respect
to the matters raised in the Adjustment Report. In the event
Seller and Purchaser fail to agree on any of Seller's proposed
adjustments contained in the Adjustment Report within such 30
day period, then Seller and Purchaser mutually agree that the
Boston office of Ernst & Young ("Independent Auditors"), shall
make the final determination with respect to the correctness
of the proposed adjustments in the Adjustment Report in light
of the terms and provisions of this Agreement. The decision of
the Independent Auditors shall be final and binding on Seller
and Purchaser, and may be used in a court of law by either
Seller or Purchaser for the purpose of enforcing such
decision. The costs and expenses of the Independent Auditors
and their services rendered pursuant to this Section 1.4(b)
shall be borne by the non-prevailing party or, if neither
party prevails, equally by the Seller and Purchaser.
(iv) Within five days of the finalization of the
Schedule of Revisions (which shall be deemed to mean either
the failure of Seller to deliver an Adjustment Report within
the 30-day period referred to above or, if Seller delivers
such an Adjustment Report, promptly upon the resolution of the
matters raised in such Adjustment Report), Purchaser shall pay
to Seller, or Seller shall pay to Purchaser, as the case may
be, the dollar amount set forth in the Schedule of Revisions,
as so finalized.
1.5. INVENTORY ADJUSTMENT. The Purchase Price shall be (i) increased by
the amount by which the ultimate determination of inventory, as of the Closing
Date, at the premises of the Purchased
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Restaurants (as described in Section 2.2 hereof) exceeds $890,500 or (ii)
decreased by the amount by which such ultimate determination is less than
$890,500 (in either event, the "Inventory Adjustment").
1.6. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Purchased Assets and Assumed Liabilities in accordance with
Section 1060 of the Internal Revenue Code of 1986, as amended. Seller and
Purchaser each agree to report the federal, state and local income and other tax
consequences of the transactions contemplated herein in a manner consistent with
such allocation. Seller and Purchaser shall use their reasonable efforts to
agree upon such allocations prior to the Closing Date.
2. CLOSING; INVENTORY ADJUSTMENT.
2.1. THE CLOSING. A closing (the "Closing") to effect the purchase and
sale of the Purchased Assets shall be held at the offices of Seller on such date
(the "Closing Date") that is the fifth business date after the satisfaction or
waiver of all conditions precedent to the Closing, or such other date as may be
mutually agreed upon by the parties. At the Closing, Seller and Purchaser shall
execute such warranty or quitclaim deeds (whichever is customary and usual in
the jurisdiction where the Real Estate is located), bills of sale and
instruments of assignment and assumption as are necessary to convey title to the
Purchased Assets and to constitute assignment and assumption of the Assumed
Liabilities, and Purchaser shall pay to Seller, in immediately available funds,
an amount equal to the Purchase Price, adjusted as set forth in the Closing
Prorations Schedule; provided, however, that the sum of $100,000 (the "Escrowed
Funds") shall be set aside from the Purchase Price by the Purchaser and paid to
the escrow agent ("Escrow Agent") appointed under the Escrow Agreement in the
form of Exhibit B hereto ("Escrow Agreement"). All actions taken at the Closing
shall be deemed to have been taken simultaneously at the time the last of any
such actions is taken or completed. The parties shall use reasonable efforts to
exchange the delivery in escrow of all closing documents at a pre-closing held
the day before the Closing Date so that the Closing may be completed (and
payment of the Purchase Price shall have occurred) prior to 12:00 noon, Boston,
Massachusetts time, on the Closing Date.
2.2. PAYMENT FOR INVENTORY ADJUSTMENT. As of the close of business
immediately preceding the Closing, the restaurant managers of the Purchased
Restaurants shall conduct a physical inventory of the Purchased Restaurants, and
the dollar amount of such inventory shall be computed in accordance with
generally accepted accounting principles consistently applied in accordance with
the Seller's prior practice. For this purpose, at the time of the taking of such
physical inventory, Seller shall provide to Purchaser detailed costing and
similar data regarding the inventory as is reasonably practicable under Seller's
current accounting systems. Representatives of each of the Seller and Purchaser
shall observe such physical inventory, and Purchaser may utilize some of its
employees or representatives of its independent auditors to conduct spot audits
of such physical inventory. No later than five days after the Closing Date,
Purchaser shall advise Seller in writing of its determination of the Inventory
Adjustment, whereupon the following provisions shall be applicable:
(i) If Seller agrees with Purchaser's determination of the
Inventory Adjustment, the Purchase Price shall be increased or
decreased by the Inventory Adjustment and the Escrowed Funds shall
disbursed by the Escrow Agent in such manner as to pay to Seller the
Purchase Price as adjusted hereunder (with any excess Escrowed Funds
returned to Purchaser); and, to the extent the Escrowed Funds are
insufficient to pay the entire Purchase Price, as so adjusted, to
Seller, then Purchaser shall promptly pay the amount of such deficiency
to Seller in immediately available funds; or
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(ii) If Seller asserts that Purchaser's determination of the
Inventory Adjustment is too low, the Purchase Price shall be
temporarily increased or decreased by Purchaser's determination of the
Inventory Adjustment at the Closing, and the provisions of clause (i)
above shall be implemented with respect to such amount. Then, the
parties shall proceed in good faith to agree upon the Inventory
Adjustment as promptly as practicable. In the event the parties are
unable to agree upon the Inventory Adjustment within five days, the
dispute shall be submitted to the Independent Auditors according to the
rules set forth in Section 1.4 applicable to the Closing Prorations
Schedule. Any additional amount of Inventory Adjustment, as determined
by agreement of the parties or the Independent Auditors, shall be
promptly paid to Seller in immediately available funds, either from the
Escrowed Funds or by the Purchaser, as applicable in accordance with
the procedures in clause (i) above.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and
warrants to Purchaser as follows.
3.1. ORGANIZATION AND GOOD STANDING OF SELLER. Parent is a corporation
duly organized and validly existing and in good standing under the laws of the
state of Delaware. Each of LP I and LP II is a limited partnership duly formed
and validly existing and in good standing under the laws of the state of
Delaware.
3.2. BINDING EFFECT. This Agreement has been or will have been duly
authorized, executed and delivered by Seller and is the legal, valid and binding
obligation of Seller enforceable in accordance with its terms except that (i)
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights and (ii) the availability of equitable remedies may
be limited by equitable principles of general applicability.
3.3. NO CONFLICTS; CONSENTS AND APPROVALS.
(a) Except as contemplated elsewhere herein and except as set forth in
Schedule 3.3., neither the execution and delivery by Seller of this Agreement
nor the consummation by it of the transactions contemplated hereby will violate,
breach, be in conflict with, or constitute a default under, or permit the
termination or the acceleration of maturity of, or result in the imposition of
any lien, claim, or encumbrance upon any of the Purchased Assets pursuant to (i)
Seller's articles of incorporation, bylaws or limited partnership agreement, as
the case may be, or (ii) any note, bond, indenture, mortgage, deed of trust,
evidence of indebtedness, loan or lease agreement, other agreement or instrument
which is material to the operation of the Purchased Restaurants, or any
judgment, order, injunction, or decree to which Seller is bound and to which the
Purchased Assets are subject.
(b) Except as contemplated elsewhere herein and except as set forth in
Schedule 3.3, Seller is not required to submit any notice, declaration, report
or other filing or registration with any governmental or regulatory authority or
instrumentality in connection with the execution and delivery of this Agreement
or the consummation of the transactions contemplated hereby.
(c) Except as contemplated elsewhere herein and except as set forth in
Schedule 3.3, no waiver, consent, approval or authorization of any governmental
or regulatory authority or instrumentality or any other person is required to be
obtained or made by Seller in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby, except
for such waivers, consents, approvals or authorizations which in the aggregate
would not reasonably be likely to have a Business Material Adverse Effect (as
defined in Section 3.5 below).
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3.4. FINANCIAL STATEMENTS AND RECORDS OF SELLER. Seller has delivered
to Purchaser true, correct and complete copies of the following financial
statements (the "Seller Financial Statements"): (i) the unaudited pro forma
balance sheet of the Business as of December 31, 1999 (the "1999 Balance
Sheet"), and the related statement of operations for the year then ended, and
(ii) the unaudited pro forma balance sheet of the Business as of September 27,
2000, and the related statement of operations for the nine months then ended.
The Seller Financial Statements have been prepared in accordance with generally
accepted accounting principles (except for the absence of footnotes and as
otherwise noted therein and subject, in the case of the September 27, 2000
financial statements referred to above) to normal and recurring year-end audit
adjustments) and present fairly, in all material respects, the assets,
liabilities and financial condition of the Business as of the dates thereof and
the results of operations thereof for the periods then ended.
3.5. ABSENCE OF CERTAIN CHANGES. Except as set forth on Schedule 3.5,
since September 27, 2000, Seller has not (except for changes that are primarily
attributable to the announcement or performance of the transactions contemplated
by this Agreement, changes resulting from actions of Purchaser, or as set forth
on the Seller Financial Statements, and except for changes relating generally to
the economy, the restaurant industry or the specific regional markets in which
the Business competes) (i) suffered any change, effect or circumstance that is
materially adverse to the results of operations or financial condition of the
Business, taken as a whole, or which would prevent the Purchaser from operating
any of the Purchased Restaurants in the ordinary course of business (except for
Failed Sites for which the Purchase Price has been adjusted pursuant to Section
1.3) on and after the Closing Date (a "Business Material Adverse Effect"); (ii)
suffered any material damage or destruction to or loss of the Purchased Assets
not covered by insurance; or (iii) entered into or terminated any material
agreement, commitment or transaction, or agreed or made any material changes in
the Assumed Liabilities.
3.6. NO MATERIAL UNDISCLOSED LIABILITIES. To Seller's knowledge, there
are no material liabilities or obligations of the Business of any nature,
whether absolute, accrued, contingent or otherwise, which are required by
generally accepted accounting principles to be shown on a balance sheet, other
than the liabilities and obligations that are fully reflected, accrued, or
reserved against on the Seller Financial Statements, for which the reserves are
appropriate and reasonable, or incurred in the ordinary course of business and
consistent with past practices since September 27, 2000.
3.7. TAX LIABILITIES. Seller has filed all material federal, state,
county and local tax returns and reports required to be filed by it, including
those with respect to income, payroll, property, withholding, social security,
unemployment, franchise, excise and sales taxes, to the extent that the same
relate to the Purchased Assets or the operations of the Business; has either
paid in full all such taxes that have become due as reflected on any return or
report and any interest and penalties with respect thereto or has fully accrued
on its books or has established adequate reserves for all taxes payable but not
yet due; and has made required cash deposits with appropriate governmental
authorities representing estimated payments of taxes, including income taxes and
employee withholding tax obligations. No extension or waiver of any statute of
limitations or time within which to file any return has been granted to or
requested by Seller with respect to any such tax with respect to any period
after the date hereof. Since September 27, 2000, no unsatisfied deficiency,
delinquency or default for any tax, assessment or governmental charge has been
assessed (or, to the knowledge of Seller, claimed or proposed) against Seller,
nor has Seller received notice of any such deficiency, delinquency or default.
3.8. TITLE TO PERSONAL PROPERTIES. Seller has, and will convey to
Purchaser at Closing, good and marketable title to the Purchased Assets
(excluding Real Estate), free and clear of any lien, claim or encumbrance,
except as reflected in Seller Financial Statements or notes thereto and except
for the
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following liens and encumbrances (as so reflected on the Seller Financial
Statements and as set forth below, the "Permitted Liens"):
(i) liens for taxes, assessments or other governmental charges
not yet due and payable;
(ii) statutory liens incurred in the ordinary course of
business with respect to liabilities that are not yet due and payable;
(iii) liens arising after the Closing relating to the Assumed
Liabilities;
(iv) liens set forth on Schedule 3.8 hereto; and
(v) such imperfections of title and/or encumbrances as do not
materially detract from the value or interfere with the use of the
properties and assets subject thereto or affected thereby.
3.9. CONDITION OF ASSETS. All of the Purchased Assets (other than
inventory) viewed as a whole and not on an asset by asset basis are in working
order, ordinary wear and tear excepted, and have been maintained as is customary
in the ordinary course of business. Except as provided in this Agreement, Seller
expressly disclaims any other representation and warranty of any kind or nature,
express or implied, as to the condition, value or quality of the Purchased
Assets and SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF
MERCHANTABILITY, USAGE OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO ANY
OF THE PURCHASED ASSETS. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE
PURCHASED ASSETS SHALL BE TRANSFERRED TO PURCHASER "AS IS" AND "WHERE IS."
3.10. REAL ESTATE.
(a) Seller has not granted any mortgages, pledges, liens,
security interests or encumbrances of any kind that would materially
adversely affect the marketability of title of the Owned Real Estate or
the leasehold interests in and to the Leased Real Estate, except
Permitted Liens. To Seller's knowledge, Seller has a valid, binding and
enforceable leasehold interest in and to the sites for the Leased Real
Estate. A true, complete and correct copy of the leases evidencing such
interests has been made available to Purchaser. Seller currently
occupies the Leased Real Estate and, to Seller's knowledge, no third
party has asserted any claim with respect to a right to occupy the
Lease Real Estate. No representation or warranty is made as to the
title of the respective lessor to any Leased Real Estate.
(b) After request by Purchaser therefor, Seller will make
available to Purchaser, and will transfer possession to Purchaser at
Closing, with respect to all of the Owned Real Estate, in each case to
the extent in the possession of Seller: (i) real estate tax abatement
certificates for previous years, current real estate tax bills and
receipts for current real estate taxes (if available); (ii) copies of
all certificates of occupancy, if any; (iii) originals of any tags,
licenses, permits, authorizations and approvals required by law and
issued by all governmental authorities having jurisdiction and all
other records, files and correspondence relating to the operation and
maintenance of the Owned Real Estate which have not been previously
delivered, if any; (iv) "as built" and other surveys, if any; and (v)
environmental site assessments, if any.
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(c) To the extent in the possession of the Seller, the file
copies of the owner's title policies with respect to the Owned Real
Estate and leasehold title policies with respect to the Leased Real
Estate (collectively the "Title Policies") have been made available to
Purchaser.
(d) To the knowledge of Seller and except as set forth on
Schedule 3.10(d), there is no material violation of any zoning,
building, health, fire, water use or similar statute, ordinance, law,
regulation or code in connection with the ownership and/or use of the
Real Estate. To the knowledge of Seller, no fact or condition exists
which would result in the termination or impairment of access to the
Real Estate or discontinuation of necessary sewer, water, electrical,
gas, telephone or other utilities or services.
(e) Neither the Company nor any of its subsidiaries have
received any notice that either the whole or any portion of the Real
Estate is to be condemned, requisitioned or otherwise taken by any
public authority. Seller has no knowledge of any public improvements
that may result in special assessments against or otherwise adversely
affect any of the Real Estate in any material respect.
(f) Except as set forth on Schedule 3.10 and in each case
solely in respect of the Real Estate:
(i) to Seller's knowledge, Seller is not in violation
or alleged violation of any judgment, decree, order, law,
license, rule or regulation pertaining to environmental
matters, including, without limitation those arising under the
Resource Conservation and Recovery Act, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980
as amended ("CERCLA"), the Superfund Amendments and
Reauthorization Act of 1986, the Federal Water Pollution
Control Act, the Solid Waste Disposal Act, as amended, the
Federal Clean Air Act, the Toxic Substances Control Act, or
any state or local statute, regulation, ordinance, order or
decree relating to health, safety or the environment
(hereinafter "Environmental Laws");
(ii) Seller has not received written notice from any
third party, including without limitation any federal, state
or local governmental authority, (A) that Seller has been
identified by the United States Environmental Protection
Agency as a potentially responsible party under CERCLA with
respect to a site listed on the National Priorities List, 40
C.F.R. Part 300 Appendix B (1986); (B) that any hazardous
waste, as defined by 42 U.S.C. ss.6903(5), any hazardous
substance as defined by 42 U.S.C. ss.9601(33) or any toxic
substance, oil or hazardous material or other chemical or
substance regulated by any Environmental Laws ("Hazardous
Substances") which Seller has generated, transported or
disposed of has been found at any site at which a federal,
state or local agency or other third party has conducted or
has ordered that Seller conduct a remedial investigation,
removal or other response action pursuant to any Environmental
Law; or (C) that Seller is or shall be named party to any
claim, action, cause of action, complaint (contingent or
otherwise), legal or administrative proceeding arising out of
any third party's incurrence of costs, expenses, losses or
damages of any kind whatsoever in connection with the release
of Hazardous Substances; and
<PAGE>
(iii) to Seller's knowledge, (A) no portion of any of
the Real Estate or any other real property owned, leased or
operated by Seller has been used for the handling,
manufacturing, processing, storage or disposal of Hazardous
Substances except in accordance with applicable Environmental
Laws; and no underground tank or other underground storage
receptacle for Hazardous Substances is located on such
properties; (B) in the course of any activities conducted by
Seller, no Hazardous Substances have been generated or are
being used on such properties except in accordance with
applicable Environmental Laws; and (C) there have been no
releases (i.e., any past or present releasing, spilling,
leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, disposing or dumping) or threatened
releases of Hazardous Substances on, upon, into or from any of
such properties except in accordance with applicable
Environmental Laws.
3.11. LITIGATION AND GOVERNMENTAL CLAIMS. Except as set forth in
Schedule 3.11, there is no pending suit, action or litigation, or
administrative, arbitration or other proceeding or governmental investigation or
inquiry, to which Seller is a party or to which the Purchased Assets are subject
which would, if decided against Seller, individually or in the aggregate, have a
Business Material Adverse Effect. To the knowledge of Seller, there are no such
proceedings threatened which would, if decided against Seller, individually or
in the aggregate, have a Business Material Adverse Effect.
3.12. SUPPLIERS. Schedule 3.12 sets forth a list of all vendors or
other suppliers from or through whom Seller has purchased goods and services
relating primarily to the Business, other than utilities, in excess of $20,000
in the aggregate during the three month period ending September 27, 2000. Except
as set forth on Schedule 3.12, there are no claims pending or, to the knowledge
of Seller overtly threatened, by any of such suppliers.
3.13. PERMITS. The Seller holds all Permits which are required to
permit it to conduct the Business as presently conducted, except where the
failure to hold such Permits would not reasonably be likely to have a Business
Material Adverse Effect, and all such Permits are in full force and effect,
except as disclosed in Schedule 3.13 or where the failure to be in full force
and effect would not reasonably be likely to have a Business Material Adverse
Effect.
3.14. LABOR MATTERS.
(a) Except for the arrangements set forth on Schedule 3.14,
Seller does not now maintain or contribute to, and have not in the
current or preceding six calendar years maintained or contributed to,
any material pension, profit-sharing, deferred compensation, bonus,
stock option, share appreciation right, severance, group or individual
health, dental, medical, life insurance, survivor benefit, or similar
plan, policy or arrangement, whether formal or informal, written or
oral, for the benefit of any director, officer, consultant or employee,
whether active or terminated, of the Business. Each of the arrangements
set forth on Schedule 3.14 is herein referred as an "Employee Benefit
Plan".
(b) Schedule 3.14 sets forth all liabilities of Seller under
The Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or similar laws with respect to Employee Benefit Plans to be
assumed by Purchaser hereunder. Except as set forth on Schedule 3.14,
no "plan" which is subject to Part 3 of Subtitle B of Title I of ERISA
or Section 412 of the Code has incurred an accumulated funding
deficiency as the term is defined in Section 302 of ERISA
<PAGE>
or Section 412 of the Code (whether or not waived). Except as set forth
on Schedule 3.14, none of Seller nor any of its affiliates has ever
sponsored, adopted, maintained or been obligated to contribute to a
"multiemployer plan" as such term is defined in Section 3(37) of ERISA.
In respect of the Employee Benefit Plans, no liability under Title IV
of ERISA has been incurred by Seller or an affiliate thereof that has
not been satisfied in full, and no condition exists that presents a
material risk to Seller or its affiliates of incurring liability under
such Title. Seller has made or will make all contributions required to
be made by it under any Employee Benefit Plan for all periods through
and including the Closing Date.
(c) Except as set forth on Schedule 3.14,
(i) there is no pending or, to the knowledge of
Seller, threatened legal action, proceeding or investigation,
other than routine claims for benefits, concerning any
Employee Benefit Plan;
(ii) no communication, report or disclosure has been
made which, at the time made, did not accurately reflect the
terms and operations of any Employee Benefit Plan;
(iii) no benefits due under any Employee Benefit Plan
have been forfeited subject to the possibility of
reinstatement (which possibility would still exist at or after
Closing);
(iv) Seller has not announced its intention, or
undertaken (whether or not legally bound) to modify or
terminate any Employee Benefit Plan or adopt any arrangement
or program which, once established, would come within the
definition of an Employee Benefit Plan; and
(v) Seller has not undertaken to maintain any
Employee Benefit Plan for any period of time, and each such
Employee Benefit Plan is terminable at the sole discretion of
the sponsor thereof, subject only to such constraints as may
be imposed by applicable law.
(d) Except as described on Schedule 3.14, the execution of
this Agreement and the consummation of the transactions contemplated
herein will not result in any payment (whether of severance pay or
otherwise) becoming due from or under any Employee Benefit Plan to any
current or former director, officer, consultant or employee of the
Business or result in the vesting, acceleration of payment or increases
in the amount of any benefit payable to or in respect of any such
current or former director, officer, consultant or employee.
(e) There are no labor disputes of a material nature pending
between Seller and any of its employees engaged in the Business, and
there are no organizational efforts known to Seller presently being
made involving any of such employees. In connection with the Business,
Seller has, to its knowledge, complied in all material respects with
all laws relating to the employment of labor, including any provisions
thereof relating to wages, hours, collective bargaining and the payment
of social security and other taxes, and is not liable for any material
arrearages of wages or any taxes or penalties for failure to comply
with any of the foregoing.
<PAGE>
3.15. MATERIAL CONTRACTS. Set forth on Schedule 3.15 are complete and
accurate lists of all of the following categories of contracts and commitments
to which Seller is a party or bound and which primarily relate to the Business:
(i) contracts with any labor union; employee benefit plans or
contracts; and employment, consulting or similar contracts, including
confidentiality agreements;
(ii) leases, whether as lessor or lessee, of the Leased Real
Estate, or of any personal property providing for annual rental
payments in excess of $10,000;
(iii) agreements for money borrowed and other than in the
ordinary course of business providing for liens, claims or encumbrances
on the Purchased Assets;
(iv) contracts (other than with respect to Excluded Assets and
purchase orders in the ordinary course of business) with third parties
that do not terminate or are not terminable by the Seller without
penalty within 90 days after the Closing Date and (X) involve aggregate
payments by the Purchased Restaurants of more than $50,000 or (Y)
contain covenants limiting the freedom of Seller to compete or deal
with competitors of the other party; and
(v) contracts not made in the ordinary course of the Business.
To the extent requested, Seller has furnished or made available accurate and
complete copies of the foregoing contracts and agreements to Purchaser. All such
contracts are valid, binding, subsisting and enforceable obligations of Seller.
3.16. TRANSACTION WITH AFFILIATES. Upon the occurrence of the Closing,
neither Seller, nor any Affiliate of Seller will have any material interest in
or will own any material property or material right used principally in the
conduct of the Business. The term "Affiliate" shall mean Seller, any officer or
director of Seller, any member of the immediate family of the forgoing persons
or any corporation, partnership, trust or other entity in which Seller, the
officer and directors of Seller or any of such family member of such persons has
a substantial interest or is a director, officer, partner or trustee.
3.17. COMPLIANCE WITH LAWS. Except as set forth on Schedule 3.17,
Seller is in compliance with all material laws, statutes, governmental
regulations and all judicial or administrative tribunal orders, judgments,
writs, injunctions, decrees or similar commands applicable to the Business,
except where such noncompliance would not have a Business Material Adverse
Effect. Seller has not been charged with, or received notice of investigation
with respect to, any material violation of any provision of any federal, state
or local law or administrative regulation applicable to the Business.
3.18. INSURANCE. Schedule 3.18 hereto lists all policies of fire,
liability, workmen's compensation, life, property and casualty and other
insurance owned or held by Seller in connection with the operation of the
Business or otherwise covering the Purchased Assets. Such policies of insurance
are of the kinds and covers such risks and are in such amounts as are consistent
with past practice in the operation of the Business. All such policies (i) are
in full force and effect and (ii) to Seller's knowledge, are sufficient in all
material respects for compliance by Seller with all requirements of law and all
agreements to which Seller is a party. To Seller's knowledge, Seller is not in
default with respect to its obligations under any of such insurance policies and
has not received any notification of cancellation of any such insurance
policies.
<PAGE>
3.19. BROKERS AND FINDERS. No broker, finder or other person has, as a
result of any agreement or action by Seller, any right or valid claim against
Purchaser or any of Purchaser's affiliates for any commission, fee or other
compensation as a broker or finder, or in any similar capacity in connection
with the transactions contemplated herein.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser hereby represents and
warrants to Seller as follows:
4.1. ORGANIZATION AND GOOD STANDING. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
4.2. CORPORATE POWER AND AUTHORITY. Purchaser has the corporate power
and authority and all licenses and permits required by governmental authorities
to execute, deliver and perform this Agreement.
4.3. BINDING EFFECT. This Agreement has been duly authorized, executed
and delivered by Purchaser and is the legal, valid and binding obligation of it,
enforceable in accordance with its terms except that (i) enforceability may be
limited by bankruptcy, insolvency, or other similar laws affecting creditors'
rights and (ii) the availability of equitable remedies may be limited by
equitable principles of general applicability.
4.4. NO CONFLICTS; CONSENTS AND APPROVALS.
(a) Except as contemplated elsewhere herein and except as set forth in
Schedule 4.4., neither the execution and delivery by Purchaser of this Agreement
nor the consummation by it of the transactions contemplated hereby will violate,
breach, be in conflict with, or constitute a default under, or permit the
termination or the acceleration of maturity of, or result in the imposition of
any lien, claim, or encumbrance upon any property or asset of Purchaser pursuant
to (i) Seller's certificate of incorporation or bylaws or (ii) any note, bond,
indenture, mortgage, deed of trust, evidence of indebtedness, loan or lease
agreement, other agreement or instrument which is material to Purchaser's
ability to consummate the transactions contemplated hereby.
(b) Except as contemplated elsewhere herein and except as set forth in
Schedule 4.4, Purchaser is not required to submit any notice, declaration,
report or other filing or registration with any governmental or regulatory
authority or instrumentality in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
(c) Except as contemplated elsewhere herein and except as set forth in
Schedule 4.4, no waiver, consent, approval or authorization of any governmental
or regulatory authority or instrumentality or any other person is required to be
obtained or made by Purchaser in connection with the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
4.5. BROKERS AND FINDERS. No broker, finder or other person has, as a
result of any agreement or action by Purchaser any right or valid claim against
Seller or any of Seller's affiliates for any commission, fee or other
compensation as a broker or finder, or in any similar capacity in connection
with the transactions contemplated herein.
<PAGE>
4.6. LIQUOR LICENSES. To Purchaser's knowledge, Purchaser has no reason
to believe that it will not be approved for licenses required in connection with
the transfer in the normal course of business of alcoholic beverages and the
service of alcoholic beverages ("Liquor Licenses") in Connecticut,
Massachusetts, Maine, New Hampshire, Vermont and Rhode Island and neither
Purchaser nor any of its affiliates has ever been permanently denied Liquor
Licenses in any jurisdiction nor has Purchaser or any of its affiliates ever
held Liquor Licenses which were revoked in any jurisdiction.
4.7. SOLVENCY. Immediately after giving effect to the transactions
contemplated by this Agreement and the closing of any financing to be obtained
by Purchaser or any of its affiliates in order to effect the transactions
contemplated by this Agreement, Purchaser shall be able to pay its debts as they
become due and shall own property having a fair saleable value greater than the
amounts required to pay its debts (including a reasonable estimate of the amount
of all contingent liabilities). Immediately after giving effect to the
transactions contemplated by this Agreement and the closing of any financing to
be obtained by Purchaser or any of its affiliates in order to effect the
transactions contemplated by this Agreement, Purchaser shall have adequate
capital to carry on its business. No transfer of property is being made and no
obligation is being incurred in connection with the transactions contemplated by
this Agreement and the closing of any financing to be obtained by Purchaser or
any of its affiliates in order to effect the transactions contemplated by this
Agreement with the intent to hinder, delay or defraud either present or future
creditors of Purchaser.
4.8. NO KNOWLEDGE OF MISREPRESENTATION OR OMISSION. Purchaser has no
knowledge that any of the representations and warranties of Seller in this
Agreement is not true and correct, and Purchaser has no knowledge of any errors
in, or omissions from, any Schedule attached hereto.
4.9. ACKNOWLEDGMENT OF PURCHASER. Purchaser acknowledges that prior to
the Closing Date it will have conducted to its satisfaction an independent
investigation and verification of the financial condition, results of
operations, assets, liabilities, properties and projected operations of the
Business and, in making its determination to proceed with the transactions
contemplated by this Agreement, Purchaser has relied on the results of its own
independent investigation and verification and the representations and
warranties of Seller expressly and specifically set forth in Article II of this
Agreement, including the Disclosure Schedules (and any updates thereto). SUCH
REPRESENTATIONS AND WARRANTIES BY SELLER CONSTITUTE THE SOLE AND EXCLUSIVE
REPRESENTATIONS AND WARRANTIES OF SELLER TO PURCHASER IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY, AND PURCHASER UNDERSTANDS, ACKNOWLEDGES AND
AGREES THAT ALL OTHER REPRESENTATIONS AND WARRANTIES OF ANY KIND OR NATURE
WHETHER EXPRESS, IMPLIED OR STATUTORY (INCLUDING, BUT NOT LIMITED TO, ANY
RELATING TO THE FUTURE OR HISTORICAL FINANCIAL CONDITION, RESULTS OF OPERATIONS,
ASSETS OR LIABILITIES OF THE BUSINESS) ARE SPECIFICALLY DISCLAIMED BY SELLER.
PURCHASER ALSO ACKNOWLEDGES THAT ITS SOLE AND EXCLUSIVE RECOURSE IN RESPECT OF
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IS TO ASSERT RIGHTS OF PURCHASER
PURSUANT TO ARTICLE VIII AND SECTION 9.1.
5. CERTAIN COVENANTS.
5.1. CONSENTS AND APPROVALS.
(a) Each of the parties hereto shall, and shall cause each of
its affiliates to, use its reasonable efforts to (i) obtain at the
earliest practicable date and, in any event, before the
<PAGE>
Closing Date, any approvals, authorizations and consents necessary to
consummate the transactions contemplated by this Agreement, including
without limitation the required consents of alcoholic beverage agencies
(the "Liquor Consents") and the required consents of lessors of the
Leased Real Estate (the "Landlord Consents"); (ii) as reasonably
requested by the other, cooperate with and keep the other informed in
connection with this Agreement; and (iii) take such actions as the
other parties may reasonably request to consummate the transactions
contemplated by this Agreement and diligently attempt to satisfy, to
the extent within its control, all conditions precedent to its
obligations to close the transactions contemplated by this Agreement.
(b) As soon as practicable but in no event later than 10 days
from the date hereof, each of the parties shall make any and all
filings which are required under the Hart-Scott-Rodino Antitrust
Improvements Act ("HSR Act"). Purchaser and Seller will bear equally
the applicable filing fees required to be paid under the HSR Act.
(c) Seller shall call a meeting of its stockholders to be held
as soon as practicable after the date hereof for the purpose of voting
upon this Agreement (the "Stockholders' Consent"). Seller will use its
reasonable efforts to hold its stockholders' meeting as promptly as
practicable and will, through its Board of Directors, recommend to its
stockholders approval of this Agreement at the stockholders' meeting.
Concurrently with the execution and delivery of this Agreement, Seller
will deliver to Purchaser the voting agreement of Benjamin Jacobson, in
form satisfactory to Purchaser, confirming his agreement to vote in
favor of this Agreement at the aforesaid meeting of stockholders and
recommending the approval of the transactions contemplated by this
Agreement to the other stockholders of Seller.
(d) In connection with obtaining the Landlord Consents, each
of Seller and Purchaser shall bear equally the payment of any fees or
other monetary consideration charged by the respective lessors of the
Leased Real Estate; provided, however, that neither party shall be
required to pay more than $100,000 to any one lessor or more than
$500,000 in the aggregate to all such lessors. In connection with
obtaining the consents of the holders of the Seller's 10 3/4% senior
notes due 2008 and of the indebtedness under the FFCA Loan Documents,
Seller will pay all required fees and expenses of the holders or their
counsel for processing such consents (but shall not be required to pay
any assumption fees, prepayment penalties or similar charges under the
terms of such indebtedness). In obtaining the Liquor Consents, the
Purchaser shall pay all application fees, hearing costs, public notice
expenses and similar charges imposed or required by applicable
governmental entities. Except as set forth above, nothing in this
Section 5.1 shall require a party to expend any monies to obtain any
approval or consent required hereunder, except for customary attorneys'
fees and filing fees incident to the transactions contemplated hereby
or as otherwise specifically required under this Agreement.
5.2. ACCESS TO INFORMATION AND PURCHASED RESTAURANTS.
(a) From and after the date of this Agreement and through the
Closing Date, Seller will provide to Purchaser and its accountants,
counsel and other authorized representatives reasonable access, during
normal business hours, upon prior written notice, reasonably requested
and accompanied by such employees of Seller as Seller shall reasonably
designate, to the premises, senior management, multi-unit managers and
restaurant managers, properties, contracts, commitments, books and
records of the Business and will cause its officers to furnish to
Purchaser and its authorized representatives such financial, technical
and operating data and
<PAGE>
other information pertaining to the Business, as the Purchaser shall
from time to time reasonably request.
(b) Concurrently with the execution and delivery of this
Agreement, Seller will provide to Purchaser unit-level results of
operations for the Purchased Restaurants as of the most recent
completely period for which information is available. In addition,
Seller will provide to Purchaser copies of the unaudited balance sheets
and results of operations for the Business for periods subsequent to
September 27, 2000, as promptly as practicable after the preparation
thereof for internal use.
(c) For a period following the Closing Date consistent with
Seller's normal record retention policy, (the "Seller Retention
Period"), Seller will retain the Seller's Records relating primarily to
the Business. During the Seller Retention Period, Seller will cooperate
with and afford reasonable access to the Seller's Records relating
primarily to the Business, to Purchaser, its counsel and accountants
and any government officials, during normal business hours, to the
extent that such cooperation and access may reasonably be required to
facilitate the preparation by Purchaser of such tax returns as it may
be required to file and the investigation, litigation and final
disposition of any claims which may be made against Purchaser, provided
that such cooperation and access does not unreasonably disrupt the
normal operations of the Seller's business. Following the expiration of
the Seller Retention Period, Seller may dispose of any such books,
records and other data, provided, however, that before disposing of
such materials it will first notify Purchaser and permit Purchaser, at
its sole expense, to remove such materials.
(d) For a period following the Closing Date consistent with
Purchaser's normal record retention policy (the "Purchaser Retention
Period"), Purchaser will retain the Business Records. During the
Purchaser Retention Period, Purchaser will cooperate with and afford
reasonable access to the Business Records, to Seller, its counsel and
accountants and any government officials, during normal business hours,
to the extent that such cooperation and access may reasonably be
required to facilitate the preparation by Seller of such tax returns as
it may be required to file and the investigation, litigation and final
disposition of any claims which may be made against Seller, provided,
that such cooperation and access does not unreasonably disrupt the
normal operations of the Business. Following the expiration of the
Purchaser Retention Period, Purchaser may dispose of any such books,
records and other data, provided, however, that before disposing of
such materials it will first notify Seller and permit Seller, at its
sole expense, to remove such materials.
(e) The Purchaser and its representatives shall hold in strict
confidence all information (other than information which is generally
available to the public) concerning Seller, the Purchased Assets and
the Business acquired pursuant to the transactions contemplated hereby
in the event that the sale of the Purchased Assets is not consummated.
All files, records, documents, information, data and similar items
relating to the confidential information of Seller shall remain the
exclusive property of Seller and shall be promptly delivered to Seller
upon any termination of this Agreement.
5.3. MAINTENANCE OF BUSINESS AND THE PURCHASED ASSETS. Seller covenants
that, between the date hereof and the Closing:
(a) except as contemplated hereby or with the prior consent of
Purchaser, it will refrain from doing any of the following in respect
of the Business: (i) entering into any
<PAGE>
transaction other than in the ordinary course of Business, (ii)
permitting any encumbrance, mortgage or pledge on any Purchased Asset
other than Permitted Liens, (iii) disposing of any material Purchased
Asset except for the sale or use of inventory and supplies in the
ordinary course of Business, (iv) amending, renewing or modifying any
of the Contracts listed on Schedule 5.3 hereof without the prior
written consent of Purchaser, which consent shall not be unreasonably
withheld, (v) entering into any employment contract or make any change
in the compensation payable or to become payable to any of its
officers, executives or managers or other employees engaged primarily
in the Business, other than anniversary increases or promotions
consistent with past practice, (vi) amending in any material respect
any of its leases and subleases relating to the Leased Real Estate
without the prior written consent of Purchaser, which consent shall not
be unreasonably withheld, (vii) reduce (other than for seasonal
adjustments consistent with past practice) the level of advertising
expenses for the Business or (viii) entering into any agreement,
commitment or arrangement with respect to the foregoing.
(b) Without the consent of Purchaser, Seller shall not
transfer the employment of any "Chili's" or "On the Border" restaurant
manager to a "Bertucci's" restaurant or other restaurant concept of
Seller or its affiliates.
(c) Seller shall maintain insurance, in respect of the
Business and Purchased Assets, of the kind, in the amount and with the
insurers as currently maintained or equivalent insurance with
substitute insurers.
5.4. AMENDMENT OF SCHEDULES. From time to time commencing on the date
of this Agreement and until the Closing Date, Seller shall deliver to Purchaser
written notice of any event or development that would (i) render any statement,
representation or warranty of Seller in this Agreement (including the
"Disclosure Schedule," as defined in Section 9.12 below) inaccurate or
incomplete in any material respect or (ii) constitute or result in a breach by
Seller of, or a failure by Seller to comply with, any agreement or covenant in
this Agreement applicable to it. Any disclosure made by Seller pursuant to
clause (i) of the prior sentence shall be deemed to amend and supplement the
Disclosure Schedule for all purposes of this Agreement (except for Purchaser's
right to terminate this Agreement pursuant to Section 9.1(ii), which right (A)
must be initiated by Purchaser giving notice of a breach, as required by Section
9.1(ii), and (B) will be subject to Seller's right to cure under Section
9.1(ii).
5.5. EMPLOYEES AND EMPLOYEE BENEFITS.
(a) The Purchaser will offer employment, as of the Closing
Date, to all salaried and hourly employees employed by Seller
immediately prior to Closing at the Purchased Restaurants and those
multi-unit employees listed on Schedule 5.5(a) hereto, including those
employees on vacation, leave of absence or disability; however, the
employment of any employees of Seller who accept employment with the
Purchaser after the Closing Date (the "Transferred Employees") shall be
at will.
(b) Except as set forth in subsection (c) below, Seller shall
retain responsibility for any liability under its Employee Benefit
Plans in respect of periods prior to the Closing Date.
(c) Effective as of the Closing Date, the Purchaser shall make
available to the Transferred Employees the employee benefit plan(s)
maintained by Purchaser for its employees generally (the "Purchaser
Plans") in accordance with their terms. To the extent permitted by the
terms of the Purchaser Plans, the Purchaser will (i) waive all
deductibles, waiting periods and
<PAGE>
limitations with respect to pre-existing conditions and other
conditions applicable to employees of Seller under the Purchaser Plans,
and (ii) grant full past service credit (including credit for
eligibility, benefit accrual and for vesting) to the Transferred
Employees for service with Seller under any and all of the Purchaser
Plans, including but not limited to bonus, severance, and similar
employment policies. Neither this Agreement nor the consummation of the
transactions contemplated by this Agreement will entitle any employee,
including but not limited to, Transferred Employees, to any other
severance benefits nor will it accelerate compensation due any such
Transferred Employee as of the Closing Date. The Purchaser will further
credit each Transferred Employee with the accrued vacation and sick
time owing to such Transferred Employee by Seller as of the Closing
Date, provided that the same has been recorded in either the general
ledger or payroll records of Seller in accordance with good business
practice and on a basis consistent with prior periods. In this regard,
Seller has set forth on Schedule 5.5(c) a listing of accrued vacation
liability in excess of two weeks, as of the date most recently
available to Seller prior to the date hereof, for prospective
Transferred Employees. Subject to the foregoing, the Purchaser shall
have the right in the good faith exercise of operations and managerial
discretion to make changes or cause changes to be made after the
Closing Date in compensation, benefits and other terms of employment
and to terminate any such employee.
(d) Purchaser will not for a period of 60 days after the
Closing undertake any "plant closing" or "mass layoff" (as such terms
are defined in the Worker Adjustment and Retraining Notification Act
("WARN") or undertake any other actions requiring notification pursuant
to WARN. Purchaser shall be solely responsible for compliance with any
United States federal, state, or local laws and regulations relating to
plant closing or a substantial layoff of personnel with respect to the
Transferred Employees.
(e) Purchaser shall be solely responsible under the
"continuation coverage" provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended, for the Transferred Employees
and their beneficiaries.
5.6. NO SHOPPING. From the date hereof through and until the earlier of
termination of this Agreement or Closing, neither Seller nor any of its
affiliates, employees, officers, directors, agents or advisors shall, directly
or indirectly, (a) solicit, initiate or encourage any inquiries, proposals or
offers from any third party relating to any acquisition of the Business or the
Purchased Assets, or (b) with respect to any effort or attempt by any third
party to do or seek any of the foregoing, (i) participate in any discussions or
negotiations, (ii) furnish to any third party any information with respect to,
or afford access to the properties, books or records of or relating to, the
Business or Purchased Assets, or (iii) otherwise cooperate in any way with, or
assist or participate in, or facilitate or encourage any such effort. Seller
shall promptly notify Purchaser if any such proposal or offer or any bona fide
inquiry or contact with any third party with respect thereto is being considered
by Seller.
5.7. NON-SOLICITATION OF EMPLOYEES. For a period of one year after the
date of the Closing, (i) Seller shall not, and shall not cause or assist any of
Seller's subsidiaries or affiliates to, attempt to or assist any other person in
attempting to encourage any director, officer, employee or agent of Purchaser or
its subsidiaries or affiliates to terminate such relationship with Purchaser or
such subsidiary or affiliate, as the case may be, and (ii) Purchaser shall not,
and shall not cause or assist any of Purchaser's subsidiaries or affiliates to,
attempt to or assist any other person in attempting to encourage any director,
officer, employee or agent of Seller or its subsidiaries or affiliates to
terminate such relationship with Seller or such subsidiary or affiliate.
<PAGE>
5.8. NON-HIRING OF MANAGERIAL EMPLOYEES. For a period of one year after
the date of the Closing, (i) Seller shall not, and shall not cause or assist any
of Seller's subsidiaries or affiliates to, hire any managerial employee (i.e. at
the level of restaurant general manager or above) of Purchaser or its
subsidiaries or affiliates (except for the individual noted on Schedule 5.8),
and (ii) Purchaser shall not, and shall not cause or assist any of Purchaser's
subsidiaries or affiliates to, hire any managerial employee (i.e., at the level
of restaurant general manager or above) of Seller or its subsidiaries or
affiliates.
5.9. TOLLING AGREEMENT. Contemporaneously with the execution and
delivery of this Agreement, Purchaser will extend the time for compliance by
Seller of its obligations to develop additional "Chili's" and "On the Border"
restaurants during 2000 and 2001 under the existing Development Agreements, in
the event the Closing hereunder shall not occur, for a period of time equal to
the number of days elapsed from the date of this Agreement through the date of
termination of this Agreement. In addition, Purchaser hereby agrees that the
development schedule for "Chili's" shall be amended from the current 3
additional units in each of 2001 and 2002 to a schedule of 2 additional units in
2001 and 4 additional units in 2002.
5.10. OPERATION OF FAILED SITES. In the event that any of the Purchased
Restaurants becomes a Failed Site as of the Closing Date, the Seller shall
continue to operate the Failed Site under its existing Franchise Agreement for
such period as determined by Seller but which shall in no event exceed 12 months
after the Closing. During such period, Seller shall comply with all of its
obligations under the Franchise Agreement. Upon conclusion of such period, the
Franchise Agreement for such Failed Site shall terminate, without any refund of
franchise fees required to be made by Purchaser, and Purchaser's interest in the
leasehold estate of such Failed Site shall terminate as well. Purchaser will
consent to all modifications of the leases for such Failed Sites requested by
Seller that are consistent with the intent of this Section 5.10.
5.11. GIFT CERTIFICATES. For a period of two years after the Closing
Date, Seller shall pay to Purchaser in cash the face amount of all Gift
Certificates issued by Seller that are presented for redemption and are redeemed
by Purchaser during such period. From time to time, no more frequently than
monthly, Purchaser shall remit redeemed Gift Certificates to Seller for
cancellation, and Seller shall pay Purchaser within 10 days of the date Gift
Certificates are so remitted.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligations of Seller to
consummate the transactions contemplated by this Agreement shall be subject to
the satisfaction on or before the Closing Date of each of the following
conditions:
6.1. COMPLIANCE. Purchaser shall have, or shall have caused to be,
satisfied or complied with and performed in all material respects, all terms,
covenants and conditions of this Agreement to be complied with or performed by
it on or before the Closing Date.
6.2. REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties made by Purchaser in this Agreement and in all certificates and other
documents delivered by Purchaser to Seller pursuant hereto, shall have been true
and correct in all material respects as of the date hereof, and shall be true
and correct in all material respects at the Closing Date with the same force and
effect as if such representations and warranties had been made at and as of the
Closing Date, except for changes permitted or contemplated by this Agreement.
<PAGE>
6.3. CONSENTS.
(a) Seller shall have obtained the Stockholder Consent, the
consent of FFCA Acquisition Corporation and FFCA Funding Corporation to
the assumption by Purchaser, as of the Closing Date, of the Seller's
obligations under the FFCA Loan Documents and the release of Seller
therefrom, and the consent, if required, of the holders of Seller's 10
3/4% senior notes due 2008 to the transactions contemplated hereby.
(b) All applicable waiting periods under the HSR Act shall
have been terminated or shall have expired without objection or action
which would prevent the consummation of the transactions contemplated
hereby.
(c) Seller shall have received the Landlord Consents and
Liquor Consents, except where the failure to obtain same would not
reasonably be likely to have a Business Material Adverse Effect.
6.4. DEVELOPMENT AND FRANCHISE AGREEMENTS. Purchaser shall have
executed a termination agreement with respect to the existing Development
Agreement and Franchise Agreements by and among the parties hereto,
substantially in the form of Exhibit A hereto, and Purchaser shall have paid
Seller $150,000 in immediately available funds relating to prepaid fees under
the Chili's Development Agreement. Notwithstanding the foregoing, the Franchise
Agreements in respect of Failed Sites shall not be terminated as of the Closing
and shall remain in effect as provided in Section 5.10 hereof.
6.5. PAYMENT OF CONSTRUCTION COSTS. Purchaser shall have reimbursed
Seller for all out-of-pocket construction expenses for the In-Process Sites
represented by invoices dated on and after September 27, 2000.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER. Except as may be waived by
Purchaser, the obligations of Purchaser to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction, on or
before the Closing Date, of each of the following conditions:
7.1. COMPLIANCE. Seller shall have, or shall have caused to be,
satisfied or complied with and performed in all material respects all terms,
covenants, and conditions of this Agreement to be complied with or performed by
Seller on or before the Closing Date.
7.2. REPRESENTATIONS AND WARRANTIES. All of the representations and
warranties made by Seller in this Agreement, the exhibits attached hereto and in
all certificates and other documents delivered by Seller pursuant hereto, shall
have been true and correct in all material respects as of the date hereof, and
shall be true and correct in all material respects at the Closing Date with the
same force and effect as if such representations and warranties had been made at
and as of the Closing Date, except for changes permitted or contemplated by this
Agreement.
<PAGE>
7.3. CONSENTS.
(a) Purchaser shall have received a copy of the Stockholder
Consent and shall have obtained the consent of FFCA Acquisition
Corporation and FFCA Funding Corporation to the assumption by
Purchaser, as of the Closing Date, of the Seller's obligations under
the FFCA Loan Documents.
(b) All applicable waiting periods under the HSR Act shall
have been terminated or shall have expired without objection or action
which would prevent the consummation of the transactions contemplated
hereby.
(c) Purchaser shall have received the Landlord Consents and
Liquor Consents, except where the failure to obtain same would not
reasonably be likely to have a Business Material Adverse Effect.
7.4. DEVELOPMENT AND FRANCHISE AGREEMENTS. Seller shall have executed a
termination agreement with respect to the existing Development Agreement and
Franchise Agreements by and among the parties hereto, substantially in the form
of Exhibit A hereto, and Seller shall be current in the payment of all
royalties, advertising contributions and franchise fees thereunder as of the
date of termination. Notwithstanding the foregoing, the Franchise Agreements in
respect of Failed Sites shall not be terminated as of the Closing and shall
remain in effect as provided in Section 5.10 hereof.
7.5. DUE DILIGENCE. Purchaser's due diligence investigation of the
Business and Purchased Assets shall not have revealed any item which (i) would
be reasonably likely to constitute a Business Material Adverse Effect or (ii)
would be reasonably likely to constitute a material breach of a representation
and warranty hereunder, and (iii) in the case of either (i) or (ii) above, was
not cured to Purchaser's reasonable satisfaction (it being understood that so
long as the aggregate of such items, after giving effect to Seller's efforts to
cure, results in not more than $500,000 of actual or expected damages or losses
to the Purchaser, then Purchaser shall be deemed to have been satisfied with
such cure) within 20 days after Purchaser gives Seller notice identifying such
item; provided, however, that if Purchaser has not notified Seller of such item
within 35 days after the date of this Agreement, the condition set forth in this
Section shall be deemed to have been satisfied.
7.6. SELLER BONUS PLAN. Seller shall have satisfied (or set aside funds
for such purpose) its liability to Transferred Employees in respect of periods
on and prior to the Closing under its bonus plans listed on Schedule 3.14.
8. INDEMNIFICATION.
8.1. INDEMNIFICATION OF PURCHASER. Subject to the limitations set forth
in Sections 8.3 and 8.4, Seller shall indemnify and hold Purchaser harmless
from, against, for and in respect of (i) any and all damages, losses, settlement
payments, obligations, liabilities, claims, actions or causes of action and
encumbrances suffered, sustained, incurred or required to be paid by Purchaser,
net of any insurance coverage with respect thereto, any amounts recovered from
third parties which reduce the damages that would otherwise be sustained or any
resulting income tax benefits to Purchaser, (A) because of the breach of any
written representation, warranty, agreement or covenant of Seller contained in
this Agreement or (B) in respect of any liability of the Purchased Restaurants
(other than the Assumed Liabilities) relating to periods at or prior to the
Closing; and (ii) all reasonable costs and expenses (including, without
limitation,
<PAGE>
attorneys' fees, interest and penalties) incurred by Purchaser in connection
with any action, suit, proceeding, demand, assessment or judgment incident to
any of the matters indemnified against in this Section 8.1.
8.2. INDEMNIFICATION OF SELLER. Subject to the limitations set forth in
Sections 8.3 and 8.4, Purchaser shall indemnify and hold Seller harmless from,
against, for and in respect of: (i) any and all damages, losses, settlement
payments, obligations, liabilities, claims, actions or causes of action and
encumbrances suffered, sustained, incurred or required to be paid by Seller, net
of any insurance coverage with respect thereto, any amounts recovered from third
parties which reduce the damages that would otherwise be sustained or any
resulting income tax benefits to Seller, (A) because of the breach of any
written representation, warranty, agreement or covenant of Purchaser contained
in this Agreement or (B) in respect of any of the Assumed Liabilities, or in
respect of any liability of the Purchased Restaurants relating to periods after
the Closing; and (ii) all reasonable costs and expenses (including, without
limitation, attorneys' fees, interest and penalties) incurred by Seller in
connection with any action, suit, proceeding, demand, assessment or judgment
incident to any of the matters indemnified against in this Section 8.2.
8.3. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. All
representations, warranties, covenants and agreements made by any party to this
Agreement or pursuant hereto shall be deemed to be material and to have been
relied upon by the parties hereto, and shall survive until the first anniversary
of the Closing Date (except for the representations pursuant to Section 3.7,
which shall survive until the third anniversary of the Closing Date). Notice of
any claim, whether made under the indemnification provisions hereof or
otherwise, based on a breach of a representation, warranty, covenant or
agreement must be given prior to the expiration of such representation,
warranty, covenant or agreement; and any claim not made within such period shall
be of no force or effect. The representations and warranties hereunder shall not
be affected or diminished by any investigation at any time by or on behalf of
the party for whose benefit such representations and warranties were made.
8.4. GENERAL RULES REGARDING INDEMNIFICATION. The obligations and
liabilities of each indemnifying party hereunder with respect to claims
resulting from the assertion of liability by the other party shall be subject to
the following terms and conditions:
(a) The indemnified party shall give prompt written notice
(which in no event shall exceed 30 days from the date on which the
indemnified party first became aware of such claim or assertion) to the
indemnifying party of any claim which might give rise to a claim by the
indemnified party against the indemnifying party based on the indemnity
agreements contained in Sections 8.1 or 8.2 hereof, stating the nature
and basis of said claims and the amounts thereof, to the extent known;
(b) If any action, suit or proceeding is brought against the
indemnified party with respect to which the indemnifying party may have
liability under the indemnity agreements contained in Sections 8.1 or
8.2 hereof, the action, suit or proceeding shall, at the election of
the indemnifying party, be defended (including all proceedings on
appeal or for review which counsel for the indemnified party shall deem
appropriate) by the indemnifying party. The indemnified party shall
have the right to employ its own counsel in any such case, but the fees
and expenses of such counsel shall be at the indemnified party's own
expense unless the employment of such counsel and the payment of such
fees and expenses both shall have been specifically authorized in
writing by the indemnifying party in connection with the defense of
such action, suit or
<PAGE>
proceeding. Notwithstanding the foregoing, (A) if there are defenses
available to the indemnified party which are inconsistent with those
available to the indemnifying party to such extent as to create a
conflict of interest between the indemnifying party and the indemnified
party, the indemnified party shall have the right to direct the defense
of such action, suit or proceeding insofar as it relates to such
inconsistent defenses, and the indemnifying party shall be responsible
for the reasonable fees and expenses of the indemnified party's counsel
insofar as they relate to such inconsistent defenses, and (B) if such
action, suit or proceeding involves or could have an effect on matters
beyond the scope of the indemnity agreements contained in Sections 8.1
and 8.2 hereof, the indemnified party shall have the right to direct
(at its own expense) the defense of such action, suit or proceeding
insofar as it relates to such other matters. The indemnified party
shall be kept fully informed of such action, suit or proceeding at all
stages thereof whether or not it is represented by separate counsel.
(c) The indemnified party shall make available to the
indemnifying party and its attorneys and accountants all books and
records of the indemnified party relating to such proceedings or
litigation and the parties hereto agree to render to each other such
assistance as they may reasonably require of each other in order to
ensure the proper and adequate defense of any such action, suit or
proceeding.
(d) The indemnified party shall not make any settlement of any
claims without the written consent of the indemnifying party.
(e) An indemnified party shall not make any claim hereunder
unless and until it has incurred damages and expenses of a cumulative
aggregate in an amount equal to $500,000 and shall thereafter be
entitled to make a claim only for amounts incurred in excess of such
amount; provided, however, that such amount shall not apply with
respect to the amounts owed by virtue of the adjustments to the
Purchase Price described in Sections 1.4 or 1.5 or in respect of the
matters described in clause (i)(B) of Sections 8.1 and 8.2.
(f) In no event shall the cumulative liability of Seller in
respect of all claims made hereunder exceed $10 million; provided,
however, that such aggregate maximum shall not apply in respect of any
claims arising from the fraudulent conduct of Seller and/or its
representatives.
(g) Except to the extent the parties may be entitled to the
remedy of specific performance of any covenant or agreement contained
in this Agreement after the Closing, the remedies provided in this
Article VIII shall be exclusive and shall preclude assertion by an
indemnified party of any other rights or the seeking of any and all
other remedies against an indemnifying party for claims based on this
Agreement.
9. MISCELLANEOUS.
9.1. TERMINATION. This Agreement and the transactions contemplated
hereby may be terminated at any time on or before the Closing Date:
(i) by mutual consent of Seller and Purchaser;
(ii) by Purchaser if there has been a material
misrepresentation or breach of warranty in the representations and
warranties of Seller set forth herein or if there has been any material
failure
<PAGE>
on the part of Seller to comply with its obligations hereunder, and
such breach, failure or misrepresentation is not cured to Purchaser's
reasonable satisfaction within ten days after Purchaser gives Seller
written notice identifying such breach, failure or misrepresentation;
(iii) by Seller if there has been a material misrepresentation
or breach of warranty in the representations and warranties of
Purchaser set forth herein or if there has been any material failure on
the part of Purchaser to comply with its obligations hereunder, and
such breach, failure or misrepresentation is not cured to Seller's
reasonable satisfaction within ten days after Seller gives Purchaser
written notice identifying such breach, failure or misrepresentation;
(iv) by either of Purchaser or Seller if the transactions
contemplated by this Agreement have not been consummated by February
28, 2001 (which date shall be extended if, as of February 28, 2001, all
other conditions contained herein have been satisfied or, to the extent
permitted hereunder, waived, to no later than April 30, 2001, if
approvals with respect to the HSR Act, Landlord Consents or Liquor
Consents have been applied for and have not been obtained by February
28, 2001), unless the parties otherwise agree or unless such failure of
consummation is due to the failure of the terminating party to perform
or observe the covenants and agreements hereof to be performed or
observed by it at or before the Closing Date;
(v) by either of Seller or Purchaser if the transactions
contemplated hereby violate any order, decree, or judgment of any court
or governmental body or agency having competent jurisdiction;
(vi) by Purchaser if the condition set forth in Section 7.5
has not been satisfied within the time period set forth therein; and
(vii) by either Purchaser or Seller in the event that as of
the Closing there are five or more Failed Sites or a proposed reduction
in the Purchase Price of more than $10 million as a result of Failed
Sites.
Except for liability or obligations pursuant to Sections 5.2(e), 5.9 and 9.2
hereof, in the event of the termination of this Agreement pursuant to this
Section 9.1, this Agreement shall forthwith become null and void and of no
further force or effect; provided, however, that the parties hereto shall remain
liable for any breach of this Agreement prior to its termination.
9.2. EXPENSES. Each of the Purchaser and Seller shall pay its own
expenses incurred in connection with this Agreement and the transactions
contemplated hereby. For purposes of determining the responsibility for fees and
expenses in connection with the transfer of the Real Estate, Purchaser shall be
responsible for all title policy premiums, title search and examination fees and
survey charges; Seller shall be responsible for all deed transfer taxes; and
Purchaser and Seller shall bear equally any recording fees.
9.3. ENTIRE AGREEMENT. This Agreement and the exhibits hereto contain
the complete agreement among the parties with respect to the transactions
contemplated hereby and supersede all prior agreements and understandings, oral
or written, among the parties with respect to such transactions. Section and
other headings are for reference purposes only and shall not affect the
interpretation or construction of this Agreement. The parties hereto have not
made any representation or warranty except as expressly set forth in this
Agreement or in any certificate or schedule delivered pursuant hereto.
<PAGE>
9.4. PUBLIC ANNOUNCEMENTS. No party to this Agreement shall issue any
press release relating to, or otherwise publicly disclose, the transactions
contemplated by this Agreement without the prior approval of the other parties.
Notwithstanding the foregoing, any party may make such disclosure as may be
required by law, provided the disclosing party obtains from the other party
prior approval of the substance of the proposed disclosure (such as the content
of a proposed press release), which approval may not be unreasonably withheld or
delayed.
9.5. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be deemed an
original, and such counterparts together shall constitute only one original.
9.6. NOTICES. All notices, demands, requests or other communications
that may be or are required to be given, served or sent by any party to any
other party pursuant to this Agreement shall be in writing and shall be
transmitted by a reputable overnight courier service or by hand delivery or
facsimile transmission, addressed as follows:
(i) If to the Purchaser:
Brinker International, Inc.
6820 LBJ Freeway
Dallas, Texas 75240
Attn: Noah C. Pollack, Corporate Counsel
Fax: 972-770-9465
with copy (which shall not constitute notice) to:
Hallett & Perrin
717 N. Harwood, 14th Floor
Dallas, Texas 75240
Attn: Bruce H. Hallett
Fax: 214-953-0576
(ii) If to Seller:
NE Restaurant Company, Inc.
5 Clock Tower Place, Suite 200
Maynard, Massachusetts 01754
Attn: Gregory A. Pastore, General Counsel
Fax: 978-897-5858
with copy (which shall not constitute notice) to:
Brown, Rudnick, Freed & Gesmer
One Financial Center
Boston, Massachusetts 02111
Attn: Carl E. Axelrod
Fax: 617-856-8201
<PAGE>
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served, or sent.
Each notice, demand, request or communication that is mailed, delivered, or
transmitted in the manner described above shall be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt, fax confirmation
sheet or the affidavit of courier or messenger being deemed conclusive evidence
of such delivery) or at such time as delivery is refused by the addressee upon
presentation.
9.7. ASSIGNMENT; SUCCESSORS AND ASSIGNS. This Agreement may not be
assigned by either of the parties hereto without the written consent of all the
other parties; provided, however, that the Purchaser shall be entitled to assign
this Agreement to one or more subsidiary corporations so long as the Purchaser
remains liable for the payment of the Purchase Price and performance of its
other obligations hereunder. Subject to the preceding sentence, this Agreement
and the rights, interests and obligations hereunder shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.
9.8. GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with the laws of the state of Delaware.
9.9. WAIVER AND OTHER ACTION. This Agreement may be amended, modified,
or supplemented only by a written instrument executed by the parties against
which enforcement of the amendment, modification or supplement is sought.
9.10. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid, or unenforceable, such provision shall be fully severable, and
this Agreement shall be construed and enforced as if such illegal, invalid or
unenforceable provision were never a part hereof; the remaining provisions
hereof shall remain in full force and effect and shall not be affected by the
illegal, invalid or unenforceable provision or by its severance; and in lieu of
such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
9.11. THIRD-PARTY BENEFICIARIES. This Agreement and the rights,
obligations, duties and benefits hereunder are intended for the parties hereto,
and no other person or entity shall have any rights, obligations, duties and
benefits pursuant hereto.
9.12. DISCLOSURE SCHEDULES; KNOWLEDGE. Any information furnished by
Seller in the Schedules attached hereto (collectively, the "Disclosure
Schedule") (or any update thereto) shall be deemed to modify all of Seller's
representations and warranties. The inclusion of any information in the
Disclosure Schedule (or any update thereto) shall not be deemed to be an
admission or acknowledgment, in and of itself, that such information is required
by the terms hereof to be disclosed, is material to the Business, has or would
reasonably be likely to have a Business Material Adverse Effect, or is outside
the ordinary course of Business. For purposes of this Agreement, the terms "to
Seller's knowledge," "known by Seller" or other words of similar meaning shall
mean the actual knowledge of, or constructive knowledge by virtue of the receipt
of written notice by, Benjamin Jacobson, David Nace, Raymond P. Barbrick and
Gregory Pastore, without any further obligation of investigation, and shall not
refer to the knowledge of any other person or entity.
<PAGE>
9.13. MUTUAL CONTRIBUTION. The parties to this Agreement and their
counsel have mutually contributed to its drafting. Consequently, no provision of
this Agreement shall be construed against any party on the ground that such
party drafted the provision or caused it to be drafted or the provision contains
a covenant of such party.
[signatures on following page]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
NE RESTAURANT COMPANY, INC.
---------------------------
(Registrant)
By: /s/ Benjamin R. Jacobson
-------------------------------------
Chairman of the Board of Directors,
President and Chief Executive Officer
NERC Limited Partnership
By NERC SPE Inc. (general partner)
By: /s/ Benjamin R. Jacobson
-------------------------------------
Chairman of the Board of Directors,
President and Chief Executive Officer
NERC Limited Partnership II
By NERC SPE II Inc. (general partner)
By: /s/ Benjamin R. Jacobson
-------------------------------------
Chairman of the Board of Directors,
President and Chief Executive Officer
Brinker International, Inc.
By: /s/
-------------------------------------
Russell Owens
Executive Vice President