EXHIBIT 10.5
XXXXX'X RESTAURANTS, INC.
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
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November 19, 1997
TABLE OF CONTENTS
PAGE
1. Purchase and Sale of Stock. . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Sale and Issuance of Series D Preferred Stock. . . . . . . . . . . . . . 1
1.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.3 Subsequent Sale of Series D Preferred Stock. . . . . . . . . . . . . . . 1
2. Representations and Warranties of the Company . . . . . . . . . . . . . . . . 2
2.1 Organization, Good Standing and Qualification. . . . . . . . . . . . . . 2
2.2 Capitalization and Voting Rights . . . . . . . . . . . . . . . . . . . . 2
2.3 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.4 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.5 Valid Issuance of Preferred and Common Stock . . . . . . . . . . . . . . 3
2.6 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 Proprietary Information. . . . . . . . . . . . . . . . . . . . . . . . . 5
2.9 Patents and Trademarks . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.10 Compliance with Other Instruments. . . . . . . . . . . . . . . . . . . . 5
2.11 Agreements; Action . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.12 Related-Party Transactions . . . . . . . . . . . . . . . . . . . . . . . 6
2.13 Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.14 Environmental and Safety Laws. . . . . . . . . . . . . . . . . . . . . . 7
2.15 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.16 Registration Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.17 Title to Property and Assets . . . . . . . . . . . . . . . . . . . . . . 7
2.18 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.19 Changes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.20 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.21 Tax Returns, Payments and Elections. . . . . . . . . . . . . . . . . . . 9
2.22 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.23 Minute Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.24 Labor Agreements and Actions . . . . . . . . . . . . . . . . . . . . . . 9
2.25 Manufacturing and Marketing Rights . . . . . . . . . . . . . . . . . . . 10
2.26 Real Property Holding Company. . . . . . . . . . . . . . . . . . . . . . 10
2.27 Reincorporation in Delaware. . . . . . . . . . . . . . . . . . . . . . . 10
3. Representations and Warranties of the Investors . . . . . . . . . . . . . . . 10
3.1 Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Purchase Entirely for Own Account. . . . . . . . . . . . . . . . . . . . 10
3.3 Disclosure of Information. . . . . . . . . . . . . . . . . . . . . . . . 10
3.4 Investment Experience. . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5 Accredited Investor. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.6 Restricted Securities. . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.7 Further Limitations on Disposition . . . . . . . . . . . . . . . . . . . 11
3.8 Legends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
PAGE
4. California Commissioner of Corporations . . . . . . . . . . . . . . . . . . . 12
4.1 Corporate Securities Law . . . . . . . . . . . . . . . . . . . . . . . . 12
5. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.1 Board Observation Rights . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 Series D Director. . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6. Conditions of Investors' Obligations at Closing.. . . . . . . . . . . . . . . 13
6.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 13
6.2 Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.3 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . 13
6.4 California Qualification . . . . . . . . . . . . . . . . . . . . . . . . 13
6.5 Opinion of Company Counsel . . . . . . . . . . . . . . . . . . . . . . . 13
6.6 Investors' Rights and Stock Restriction Agreements . . . . . . . . . . . 13
6.7 Restated Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7. Conditions of the Company's Obligations at Closing. . . . . . . . . . . . . . 14
7.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . 14
7.2 Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.3 Payment of Purchase Price. . . . . . . . . . . . . . . . . . . . . . . . 14
7.4 California Qualification . . . . . . . . . . . . . . . . . . . . . . . . 14
7.5 Investors' Rights and Stock Restriction Agreement. . . . . . . . . . . . 14
7.6 Restated Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.1 Survival of Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 14
8.2 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.5 Titles and Subtitles . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.7 Finder's Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
8.9 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.11 Aggregation of Stock . . . . . . . . . . . . . . . . . . . . . . . . . . 16
8.12 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SCHEDULE A - Schedule of Investors
SCHEDULE B - Schedule of Stockholders
EXHIBIT A - Amended and Restated Certificate of Incorporation
EXHIBIT B - Amended and Restated Investors' Rights Agreement
EXHIBIT C - Amended and Restated Stock Restriction Agreement
EXHIBIT D - Schedule of Exceptions
SERIES D PREFERRED STOCK PURCHASE AGREEMENT
THIS SERIES D PREFERRED STOCK PURCHASE AGREEMENT is made as of the 19th day
of November, 1997, by and between Xxxxx'x Restaurants, Inc., a Delaware
corporation (the "Company"), and the investors listed on Schedule A hereto, each
of which is herein referred to as an "Investor."
THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
1.1 SALE AND ISSUANCE OF SERIES D PREFERRED STOCK.
(a) The Company shall adopt and file with the Secretary of State
of Delaware on or before the Closing (as defined below) an Amended and Restated
Certificate of Incorporation ("Restated Certificate") in the form attached
hereto as EXHIBIT A.
(b) Subject to the terms and conditions of this Agreement, each
Investor agrees, severally and not jointly, to purchase at the Closing and the
Company agrees to sell and issue to each Investor at the Closing, that number of
shares of the Company's Series D Preferred Stock set forth opposite each
Investor's name on SCHEDULE A hereto for the purchase price set forth thereon.
Such purchase price shall be payable by Investor either by delivery to Company
by Investor of a check in the amount of the purchase price payable to the
Company's order (or by wire transfer of funds in such amount to the Company's
designated bank account).
1.2 CLOSING. The purchase and sale of at least 1,250,949 shares of
the Series D Preferred Stock shall take place at the offices of Xxxxxxx, Xxxxxxx
& Xxxxxxxx LLP, 000 Xxxx "X" Xxxxxx, Xxxxx 0000, Xxx Xxxxx, Xxxxxxxxxx, at 11:00
A.M., on November 19, 1997, or at such other time and place as the Company and
Investors acquiring in the aggregate more than half the shares of Series D
Preferred Stock sold pursuant hereto mutually agree upon orally or in writing
(which time and place are designated as the "Closing"). At the Closing the
Company shall deliver to each Investor a certificate representing the Series D
Preferred Stock which such Investor is purchasing against delivery to the
Company by such Investor of a check in the amount of the purchase price therefor
payable to the Company's order or by wire transfer of funds in such amount to
the Company's designated bank account.
1.3 SUBSEQUENT SALE OF SERIES D PREFERRED STOCK. To the extent that
at least 1,250,949 but less than 1,389,943 shares of Series D Preferred Stock
are sold at the Closing, the Company may sell within sixty days following the
Closing any remaining shares of Series D Preferred Stock at a price not less
than $7.19454 per share to such other purchaser(s) as the Company's Board of
Directors shall select. Any purchaser in a subsequent closing shall execute a
counterpart signature page to this Agreement, the Amended and Restated
Investors' Rights Agreement and the Amended and Restated Stock Restriction
Agreement, and any additional sales of Series D Preferred Stock to Investors
shall be deemed to be made hereunder. The sale of any additional shares of
Series D Preferred Stock under this Section
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1.3 occurring within sixty days following the Closing shall not be subject to
the right of first offer contained in Section 2.4 of the Amended and Restated
Investors' Rights Agreement to be executed contemporaneously with this
Agreement, which is attached hereto as EXHIBIT B (the "Investors' Rights
Agreement").
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to each Investor on the date of the Closing that, except
as set forth on a Schedule of Exceptions attached hereto as EXHIBIT D furnished
to each Investor and to special counsel for the Investors, specifically
identifying the relevant subparagraph hereof, which exceptions shall be deemed
to be representations and warranties as if made hereunder:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted. The Company is duly qualified to
transact business and is in good standing in each jurisdiction in which the
failure so to qualify would have a material adverse effect on its business,
prospects, properties or financial condition. The Company is the successor to
all of the business, assets, properties, rights, permits, licenses, approvals,
liabilities, and obligations of Xxxxx'x Restaurants, Inc., a California
corporation.
2.2 CAPITALIZATION AND VOTING RIGHTS.
(a) The authorized capital of the Company consists, or will
consist prior to the Closing, of:
(i) PREFERRED STOCK. 5,248,985 shares of Preferred Stock,
$0.001 par value per share (the "Preferred Stock"), of which (a) 1,973,395
shares have been designated Series A Preferred Stock, all of which are currently
issued and outstanding; (b) 1,092,007 shares of which have been designated
Series B Preferred Stock, all of which are currently issued and outstanding; (c)
793,640 shares of which have been designated Series C Preferred Stock, all of
which are currently issued or outstanding; and (d) 1,389,943 shares of which
have been designated Series D Preferred Stock, none of which are currently
issued or outstanding and up to all of which may be sold pursuant to this
Agreement. The rights, privileges and preferences of the Series D Preferred
Stock will be as stated in the Restated Certificate attached hereto as
EXHIBIT A.
(ii) COMMON STOCK. 7,251,015 shares of common stock, $0.001
par value per share ("Common Stock"), of which 1,010,557 shares are issued and
outstanding.
(b) The outstanding shares of Common Stock have been issued in
accordance with the registration or qualification provisions of the Act (as
defined below) and any applicable state securities laws or pursuant to a valid
exemption therefrom.
(c) Except for (A) the conversion privileges of the Series A
Preferred Stock, the Series B Preferred Stock, the Series C Preferred Stock and
the Series D Preferred Stock to be issued under this Agreement, (B) the rights
provided in paragraph 2.4 of the
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Investors' Rights Agreement, (C) currently authorized options to purchase
325,000 shares of Common Stock of which 233,747 (10,557 of which have been
exercised) have been granted to employees, and (D) warrants to purchase 50,000
shares of Common Stock issued to Xxxxxxxx & Xxxxxxx, Inc., there are not
outstanding any options, warrants, rights (including conversion or preemptive
rights and rights of first refusal) or agreements for the purchase or
acquisition from the Company of any shares of its capital stock. The Company is
not a party or subject to any agreement or understanding, and, to the Company's
knowledge, there is no agreement or understanding between any persons and/or
entities, which affects or relates to the voting or giving of written consents
with respect to any security or by a director of the Company.
(d) All of the shares of capital stock of the Company are owned
of record by the persons and in the amounts set forth on SCHEDULE B and were
purchased for the purchase price set forth thereon.
2.3 SUBSIDIARIES. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, association or
other business entity. The Company is not a participant in any joint venture,
partnership or similar arrangement.
2.4 AUTHORIZATION. All corporate action on the part of the Company,
its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the Investors' Rights Agreement, the
Amended and Restated Stock Restriction Agreement dated of even date herewith and
attached hereto as EXHIBIT C (the "Stock Restriction Agreement") and any other
agreement to which the Company is a party, the execution and delivery of which
is contemplated hereby (collectively, the "Ancillary Agreements"), the
performance of all obligations of the Company hereunder and thereunder and the
authorization, issuance (or reservation for issuance) and delivery of the Series
D Preferred Stock being sold hereunder and the Common Stock issuable upon
conversion of the Series D Preferred Stock has been taken or will be taken prior
to the Closing, and this Agreement, the Investors' Rights Agreement, the Stock
Restriction Agreement and any Ancillary Agreements constitute valid and legally
binding obligations of the Company, enforceable in accordance with their
respective terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally, (ii) as limited by laws relating to
the availability of specific performance, injunctive relief or other equitable
remedies, and (iii) to the extent the indemnification provisions contained in
the Investors' Rights Agreement may be limited by applicable federal or state
securities laws.
2.5 VALID ISSUANCE OF PREFERRED AND COMMON STOCK.
(a) The Series D Preferred Stock which is being purchased by the
Investors hereunder, when issued, sold and delivered in accordance with the
terms hereof for the consideration expressed herein, will be duly and validly
issued, fully paid and nonassessable and, based in part upon the representations
of the Investors in this Agreement, will be issued in compliance with all
applicable federal and state securities laws. The shares of Series D Preferred
Stock are being issued free of restrictions on transfer other than restrictions
on transfer set forth in this Agreement, the Investors' Rights Agreement, the
Stock
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Restriction Agreement or any Ancillary Agreement and other than pursuant to
federal or state securities laws. The Common Stock issuable upon conversion of
the Series D Preferred Stock purchased under this Agreement has been duly and
validly reserved for issuance and, upon issuance in accordance with the terms of
the Restated Certificate, shall be duly and validly issued, fully paid and
nonassessable, and issued in compliance with all applicable securities laws, as
then in effect, of the United States and each of the states whose securities
laws govern the issuance of any of the Series D Preferred Stock hereunder.
(b) The outstanding shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Common Stock are all duly and
validly authorized and issued, fully paid and nonassessable, and were issued in
compliance with all applicable federal and state securities laws. The Common
Stock issuable upon conversion of the Series A Preferred Stock, Series B
Preferred Stock and Series C Preferred Stock will be issued free of restrictions
on transfer other than restrictions on transfer set forth in this Agreement, the
Investors' Rights Agreement, the Stock Restriction Agreement or any Ancillary
Agreement and other than pursuant to federal or state securities laws.
2.6 CONSENTS. No consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
federal, state, local or provincial governmental authority or any other person
or entity on the part of the Company is required in connection with the
consummation of the transactions contemplated by this Agreement, except for (a)
the filing of a Restated Certificate with the Secretary of State of the State of
Delaware, and (b) the filing pursuant to Section 25102(f) of the California
Corporate Securities Law of 1968, as amended, and the rules thereunder, which
filing will be effected within 15 days of the sale of the Series D Preferred
Stock hereunder.
2.7 LITIGATION. There is no action, suit, proceeding or
investigation pending or currently threatened against the Company which
questions the validity of this Agreement, the Investors' Rights Agreement, the
Stock Restriction Agreement or any Ancillary Agreements, or the right of the
Company to enter into any of them, or to consummate the transactions
contemplated hereby or thereby, or which might result, either individually or in
the aggregate, in any material adverse changes in the assets, financial
condition, business affairs or prospects of the Company, financially or
otherwise, taken as a whole or any change in the current equity ownership of the
Company. The foregoing includes, without limitation, any action, suit,
proceeding or investigation pending or threatened involving the prior employment
of any of the Company's employees, their use in connection with the Company's
business of any information or techniques allegedly proprietary to any of their
former employers, or their obligations under any agreements with prior employers
or negotiations by the Company with potential investors in the Company or its
proposed business. The Company is not a party or subject to the provisions of
any order, writ, injunction, judgment or decree of any court or government
agency or instrumentality. There is no action, suit, proceeding or
investigation by the Company currently pending or which the Company intends to
initiate.
2.8 PROPRIETARY INFORMATION. Each key employee, officer and
consultant of the Company has executed an Employment Relationship and
Confidentiality Agreement in the form provided to special counsel to the
Investors. The Company, after reasonable
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investigation, is not aware that any of its employees, officers or consultants
are in violation thereof, and the Company will use its best efforts to prevent
any such violation.
2.9 PATENTS AND TRADEMARKS. The Company has sufficient title and
ownership of all patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes necessary
for its business as now conducted and as proposed to be conducted without any
conflict with or infringement of the rights of others. There are no outstanding
options, licenses or agreements of any kind relating to the foregoing, nor is
the Company bound by or a party to any options, licenses or agreements of any
kind with respect to the patents, trademarks, service marks, trade names,
copyrights, trade secrets, licenses, information, proprietary rights and
processes of any other person or entity. The Company has not received any
communications alleging that the Company has violated or, by conducting its
business as proposed, would violate any of the patents, trademarks, service
marks, trade names, copyrights or trade secrets or other proprietary rights of
any other person or entity. The Company is not aware that any of its employees
is obligated under any contract (including licenses, covenants or commitments of
any nature) or other agreement, or subject to any judgment, decree or order of
any court or administrative agency, that would interfere with the use of his or
her best efforts to promote the interests of the Company or that would conflict
with the Company's business as proposed to be conducted. Neither the execution
nor delivery of this Agreement, the Investors' Rights Agreement, the Stock
Restriction Agreement and any Ancillary Agreements nor the carrying on of the
Company's business by the employees of the Company, nor the conduct of the
Company's business as proposed, will conflict with or result in a breach of the
terms, conditions or provisions of, or constitute a default under, any contract,
covenant or instrument under which any of such employees is now obligated. The
Company does not believe it is or will be necessary to utilize any inventions of
any of its employees (or people it currently intends to hire) made prior to
their employment by the Company.
2.10 COMPLIANCE WITH OTHER INSTRUMENTS. The Company is not in
violation or default of any provisions of its Restated Certificate or Bylaws or
of any material provision of any instrument, judgment, order, writ, decree,
mortgage, indenture, agreement, lease or contract to which it is a party or by
which it is bound or, to its knowledge, of any provision of federal or state
statute, rule or regulation applicable to the Company. To the Company's best
knowledge, the other party or parties to such instruments, mortgages,
indentures, agreements, leases or contracts are not in default in any material
respect of any provisions contained therein. The execution, delivery and
performance of this Agreement, the Investors' Rights Agreement, the Stock
Restriction Agreement and any Ancillary Agreements and the consummation of the
transactions contemplated hereby and thereby does not require the consent of any
third party to, and will not result in any such violation or be in conflict with
or constitute, with or without the passage of time and giving of notice, either
a default under any provision, instrument, judgment, order, writ, decree,
mortgage, indenture, agreement, lease or contract, or an event which results in
the creation of any lien, charge or encumbrance upon any assets of the Company,
or the suspension, revocation, impairment, forfeiture or nonrenewal of any
material permit, license, authorization, or approval applicable to the Company,
its business or operations or any of its assets or properties.
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2.11 AGREEMENTS; ACTION.
(a) Except for agreements explicitly contemplated hereby and by
the Investors' Rights Agreement, Stock Restriction Agreement or any Ancillary
Agreement, there are no commitments, agreements, understandings or proposed
transactions between the Company and any of its officers, directors, affiliates
or any affiliate thereof.
(b) There are no commitments, agreements, understandings,
instruments, contracts, proposed transactions, judgments, orders, writs or
decrees to which the Company is a party or by which it is bound which may
involve (i) obligations (contingent or otherwise) of, or payments to, the
Company in excess of $50,000, or (ii) the license of any patent, copyright,
trade secret or other proprietary right to or from the Company or
(iii) provisions restricting or affecting the development, manufacture or
distribution of the Company's products or services.
(c) The Company has not (i) declared or paid any dividends, or
authorized or made any distribution upon or with respect to any class or series
of its capital stock, (ii) incurred any indebtedness for money borrowed or any
other liabilities individually in excess of $50,000 or, in the case of
indebtedness and/or liabilities individually less than $50,000, in excess of
$200,000 in the aggregate, (iii) made any loans or advances to any person, other
than ordinary advances for travel expenses, or (iv) sold, exchanged or otherwise
disposed of any of its assets or rights, other than the sale of its inventory in
the ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(e) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Restated Certificate or Bylaws, which adversely affects its business as now
conducted or as proposed to be conducted, its properties or its financial
condition.
(f) The Company is not a party to any employment or consulting
agreements that are not terminable at will by the Company on no more than thirty
(30) days' notice without cost or liability to the Company.
2.12 RELATED-PARTY TRANSACTIONS. No employee, officer, or director or
stockholder of the Company or member of his or her immediate family is indebted
to the Company, nor is the Company indebted (or committed to make loans or
extend or guarantee credit) to any of them. To the best of the Company's
knowledge, none of such persons has any direct or indirect ownership interest or
serves as an officer or director in any firm or corporation with which the
Company is affiliated or with which the Company has a business relationship, or
any firm or corporation that competes with the Company, except that employees,
officers or directors of the Company and members of their immediate families
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may own not more than 5% of the outstanding stock in publicly-traded companies
that may compete with the Company. Other than as a participant in Company
benefit plans, no form of compensation, remuneration or financial interest is
due or promised to any officer or director, or member of the immediate family of
any officer or director of the Company, for 1995, 1996 and 1997, except as set
forth on the Schedule of Exceptions. No officer or director, or member of the
immediate family of any officer or director, of the Company has a direct or
indirect financial interest in any material contract of the Company.
2.13 PERMITS. The Company has all franchises, permits, licenses and
any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects or financial condition of the Company, taken as
a whole, and believes it can obtain, without undue burden or expense, any
similar authority for the conduct of its business as planned to be conducted.
The Company is not in default in any material respect under any of such
franchises, permits, licenses or other similar authority.
2.14 ENVIRONMENTAL AND SAFETY LAWS. To the best of its knowledge, the
Company is not in violation of, and the Company has not received any
communications alleging that the Company has violated, or by conducting its
business as proposed, would violate any applicable statute, law or regulation
relating to the environment or occupational health and safety and, to the best
of its knowledge, no material expenditures are or will be required in order to
comply with any such existing statute, law or regulation.
2.15 DISCLOSURE. The Company has fully provided each Investor with
all the information which such Investor has requested for deciding whether to
purchase the Series D Preferred Stock and all information which the Company
believes is reasonably necessary to enable such Investor to make such decision.
Neither this Agreement, the Investors' Rights Agreement, the Stock Restriction
Agreement and any Ancillary Agreements nor any other statements or certificates
made or delivered in connection herewith or therewith contains any untrue
statement of a material fact or omits to state a material fact necessary to make
the statements herein or therein not misleading.
2.16 REGISTRATION RIGHTS. Except as provided in the Investors' Rights
Agreement, the Company has not granted or agreed to grant any registration
rights, including piggyback rights, to any person or entity.
2.17 TITLE TO PROPERTY AND ASSETS. The Company owns its property and
assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens which arise in the ordinary course of business and
do not materially impair the Company's ownership or use of such property or
assets. With respect to the property and assets it leases, the Company is in
compliance with such leases and, to the best of its knowledge, holds a valid
leasehold interest free of any liens, claims or encumbrances, except such
encumbrances and liens which arise in the ordinary course of business and do not
materially impair the Company's use of such property or assets.
2.18 FINANCIAL STATEMENTS. The Company has made available to each
Investor its audited financial statements (balance sheet and statements of
operations, retained
-7-
earnings and cash flows) at December 31, 1996 and for the fiscal year then ended
and its unaudited financial statements (balance sheet and statements of
operations, retained earnings and cashflows) as at and for the nine-month period
ended September 30, 1997 (the "Financial Statements"). The Financial Statements
are complete and correct in all material respects and accurately set out and
describe the financial condition and operating results of the Company as of the
date, and for the period, indicated therein. The Financial Statements have been
prepared in accordance with generally accepted accounting principles ("GAAP").
Except as set forth in the Financial Statements, the Company has no liabilities,
contingent or otherwise, other than (i) liabilities incurred in the ordinary
course of business subsequent to September 30, 1997, which in the aggregate do
not exceed $50,000 and (ii) obligations under contracts and commitments incurred
in the ordinary course of business and not required under generally accepted
accounting principles to be reflected in the Financial Statements, which, in
both cases, individually or in the aggregate, are not material to the financial
condition or operating results of the Company. Except as disclosed in the
Financial Statements, the Company is not a guarantor or indemnitor of any
indebtedness of any other person, firm or corporation. The Company maintains
and will continue to maintain a standard system of accounting established and
administered in accordance with generally accepted accounting principles.
2.19 CHANGES. Since September 30, 1997, there has not been:
(a) any change in the assets, liabilities, financial condition
or operating results of the Company, except changes in the ordinary course of
business which have not been, in the aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, financial
condition, operating results, prospects or business of the Company (as such
business is presently conducted and as it is proposed to be conducted);
(c) any waiver or compromise by the Company of a valuable right
or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and which is not material to the assets, properties,
financial condition, operating results or business of the Company (as such
business is presently conducted and as it is proposed to be conducted);
(e) any change or amendment to a material contract or
arrangement by which the Company or any of its assets or properties is bound or
subject;
(f) any material change in any compensation arrangement or
agreement with any employee; or
(g) to the Company's knowledge, any other event or condition of
any character which might materially and adversely affect the assets,
properties, financial
-8-
condition, operating results or business of the Company (as such business is
presently conducted and as it is proposed to be conducted).
2.20 EMPLOYEE BENEFIT PLANS. The Company does not have any Employee
Benefit Plan as defined in the Employee Retirement Income Security Act of 1974,
as amended.
2.21 TAX RETURNS, PAYMENTS AND ELECTIONS. The Company has filed all
tax returns and reports as required by law. These returns and reports are true
and correct in all material respects. The Company has paid all taxes and other
assessments due, except those contested by it in good faith which are listed in
the Schedule of Exceptions. The provision for taxes of the Company is adequate
for taxes due or accrued as of the date thereof. The Company has not elected
pursuant to the Internal Revenue Code of 1986, as amended ("Code"), to be
treated as a Subchapter S corporation or a collapsible corporation pursuant to
Section 341(f) or Section 1362(a) of the Code, nor has it made any other
elections pursuant to the Code (other than elections which relate solely to
methods of accounting, depreciation or amortization) which would have a material
effect on the Company, its financial condition, its business as presently
conducted or proposed to be conducted or any of its properties or material
assets. The Company has never had a tax deficiency or tax audit and the Company
has made all withholdings for all income taxes of its employees.
2.22 INSURANCE. The Company has in full force and effect fire and
casualty insurance policies, with extended coverage, sufficient in amount
(subject to reasonable deductibles) to allow it to replace any of its properties
that might be damaged or destroyed. The Company has in full force and effect
products liability and errors and omissions insurance in amounts customary for
companies similarly situated.
2.23 MINUTE BOOKS. The minute books of the Company, access to which
has been provided to the Investors, contain a complete summary of all meetings
of directors and stockholders and all actions by written consent without a
meeting of directors and stockholders since the time of inception and reflect
all transactions referred to in such minutes accurately in all material
respects.
2.24 LABOR AGREEMENTS AND ACTIONS. The Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees, representatives or agents
of the Company. There is no strike or other labor dispute involving the Company
pending, or to the knowledge of the Company threatened, which could have a
material adverse effect on the assets, properties, financial condition,
operating results or business of the Company (as such business is presently
conducted and as it is proposed to be conducted), nor is the Company aware of
any labor organization activity involving its employees. The Company is not
aware that any officer or key employee, or that any group of key employees,
intends to terminate their employment with the Company, nor does the Company
have a present intention to terminate the employment of any of the foregoing.
Subject to general principles related to wrongful termination of employees, the
-9-
employment of each officer and employee of the Company is terminable at the will
of the Company.
2.25 MANUFACTURING AND MARKETING RIGHTS. The Company has not granted
rights to manufacture, produce, assemble, license, market or sell its products
to any other person and is not bound by any agreement that affects the Company's
exclusive rights to develop, manufacture, assemble, distribute and sell its
products.
2.26 REAL PROPERTY HOLDING COMPANY. The Company is not a real
property holding company within the meaning of the Internal Revenue Code Section
897.
2.27 REINCORPORATION IN DELAWARE. The merger of Xxxxx'x Restaurants,
Inc., a California corporation, into the Company did not have a material adverse
effect on the business prospects and financial condition of the Company.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. Each Investor hereby
represents and warrants that:
3.1 AUTHORIZATION. This Agreement constitutes its valid and legally
binding obligation, enforceable in accordance with its terms, except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally, and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
3.2 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made with
each Investor in reliance upon such Investor's representation to the Company,
which by such Investor's execution of this Agreement such Investor hereby
confirms, that the Series D Preferred Stock to be received by such Investor and
the Common Stock issuable upon conversion thereof (collectively, the
"Securities") will be acquired for investment for such Investor's own account,
not as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and that such Investor has no present intention of selling,
granting any participation in, or otherwise distributing the same. By executing
this Agreement, each Investor further represents that such Investor does not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Securities. Each Investor represents that it has
full power and authority to enter into this Agreement.
3.3 DISCLOSURE OF INFORMATION. Each Investor believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Securities. Each Investor further represents that it
has had an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the offering of the Securities. The
foregoing, however, does not limit or modify the representations and warranties
of the Company in Section 2 of this Agreement or the right of the Investors to
rely thereon.
3.4 INVESTMENT EXPERIENCE. Each Investor is an investor in
securities of companies in the development stage and acknowledges that it is
able to fend for itself, can
-10-
bear the economic risk of its investment and has such knowledge and experience
in financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Securities. If other than an individual,
Investor also represents it has not been organized for the purpose of acquiring
the Securities.
3.5 ACCREDITED INVESTOR. Each Investor is an "accredited investor"
within the meaning of SEC Rule 501 of Regulation D, as presently in effect.
3.6 RESTRICTED SECURITIES. Each Investor understands that the
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the Company
in a transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Securities Act of 1933, as amended (the "Act"), only in certain limited
circumstances. In this connection, each Investor represents that it is familiar
with SEC Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Act.
3.7 FURTHER LIMITATIONS ON DISPOSITION. Without in any way limiting
the representations set forth above, each Investor further agrees not to make
any disposition of all or any portion of the Securities unless and until the
transferee has agreed in writing for the benefit of the Company to be bound by
this Section 3, provided and to the extent such sections are then applicable,
and the Investors' Rights Agreement, the Stock Restriction Agreement and any
applicable Ancillary Agreement and:
(a) There is then in effect a registration statement under the
Act covering such proposed disposition and such disposition is made in
accordance with such registration statement or an exemption from such
registration is available; or
(b)(i) Such Investor shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (ii) if
reasonably requested by the Company, such Investor shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the Act. It
is agreed that the Company will not require opinions of counsel for transactions
made pursuant to Rule 144 except in unusual circumstances.
(c) Notwithstanding the provisions of paragraphs (a) and (b)
above, or any legend on certificates representing the Securities pursuant to
Section 3.8 below, no such registration statement or opinion of counsel shall be
necessary for a transfer (i) by an Investor to any person or entity that,
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with such Investor or (ii) by an
Investor which is a partnership to a partner of such partnership or a retired
partner of such partnership who retires after the date hereof, or to the estate
of any such partner or retired partner or the transfer by gift, will or
intestate succession of any partner to his spouse or to the siblings, lineal
descendants or ancestors of such partner or his spouse, if the transferee agrees
in writing to be subject to the terms hereof to the same extent as if he were an
original Investor hereunder.
-11-
3.8 LEGENDS. It is understood that the certificates evidencing the
Securities may bear one or all of the following legends:
(a) "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY
STATE SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE ACT, OR PURSUANT TO
RULE 144 UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT."
(b) Any legend required by the laws of any state.
4. CALIFORNIA COMMISSIONER OF CORPORATIONS.
4.1 CORPORATE SECURITIES LAW. THE SALE OF THE SECURITIES WHICH ARE
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION FOR SUCH SECURITIES
PRIOR TO SUCH QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT
FROM QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA
CORPORATIONS CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY
CONDITIONED UPON SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO
EXEMPT.
5. COVENANTS.
5.1 BOARD OBSERVATION RIGHTS. For so long as Farallon Capital
Management LLC ("Farallon") and any parties controlling, controlled by or under
common control with Farallon hold at least 750,000 shares of the Company's
Series D Preferred Stock, and in the event that a director elected by a majority
of the holders of the Series D Preferred Stock is not serving on the Company's
Board of Directors, the Company shall permit a representative of Farallon
reasonably acceptable to the Company's Board of Directors to attend as an
observer all meetings of the Company's Board of Directors and to receive all
written materials and other information given to directors in connection with
such meetings; provided, however, that such representative shall have entered
into the Company's standard confidentiality agreement prior to attending any
meetings of the Board of Directors or receiving any written materials in
connection with such meetings.
5.2 SERIES D DIRECTOR. The Investors agree that any nominee of the
holders of Series D Preferred Stock to serve as the director to be elected by
the holders of Series D Preferred Stock as contemplated in Section 5(b) of
Article VI of the Restated Certificate shall be approved by the majority of the
Company's Board of Directors, which approval will not be unreasonably withheld,
prior to election.
-12-
6. CONDITIONS OF INVESTORS' OBLIGATIONS AT CLOSING. The obligations of
each Investor under subsection 1.1(b) of this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions, the
waiver of which shall not be effective against any Investor which does not
consent thereto:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company contained in Section 2 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of such Closing.
6.2 PERFORMANCE. The Company shall have performed and complied with
all agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing.
6.3 COMPLIANCE CERTIFICATE. The President of the Company shall
deliver to each Investor at the Closing a certificate certifying that the
conditions specified in Sections 6.1 and 6.2 have been fulfilled and stating
that there shall have been no material adverse change in the business, affairs,
operations, properties, assets or condition of the Company since September 30,
1997.
6.4 CALIFORNIA QUALIFICATION. The Commissioner of Corporations of
the State of California shall have issued a permit qualifying the offer and sale
of the Securities to the Investors pursuant to this Agreement, or such offer and
sale shall be exempt from such qualification under the California Corporate
Securities Law of 1968, as amended.
6.5 OPINION OF COMPANY COUNSEL. Each Investor shall have received
from Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP, counsel for the Company, an opinion, dated
as of the Closing, in form and substance satisfactory to the special counsel to
the Investors.
6.6 INVESTORS' RIGHTS AND STOCK RESTRICTION AGREEMENTS. The Company
and each Investor shall have entered into the Investors' Rights Agreement, and
the Company, each Investor and a majority of the holders of outstanding shares
of the Company's Common Stock, Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock shall have entered into the Stock Restriction
Agreement.
6.7 RESTATED CERTIFICATE. The Restated Certificate shall have been
filed with the Secretary of State of the State of Delaware and shall be in full
force and effect on the Closing Date.
7. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT CLOSING. The obligations
of the Company to each Investor under this Agreement are subject to the
fulfillment on or before the Closing of each of the following conditions by that
Investor:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investor contained in Section 3 shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the Closing.
-13-
7.2 PERFORMANCE. The Investors shall have performed and complied
with all agreements, obligations and conditions contained in this Agreement that
are required to be performed or complied with by them on or before the Closing.
7.3 PAYMENT OF PURCHASE PRICE. The Investors shall have delivered
the purchase price specified in Section 1.2.
7.4 CALIFORNIA QUALIFICATION. The Commissioner of Corporations of
the State of California shall have issued a permit qualifying the offer and sale
to the Investors of the Series D Preferred Stock and the Common Stock issuable
upon the conversion thereof or such offer and sale shall be exempt from such
qualification under the California Corporate Securities Law of 1968, as amended.
7.5 INVESTORS' RIGHTS AND STOCK RESTRICTION AGREEMENT. The Company
and each Investor shall have entered into the Investors' Rights Agreement and
the Company, each Investor and a majority of the holders of outstanding shares
of the Company's Common Stock, Series A Preferred Stock, Series B Preferred
Stock and Series C Preferred Stock shall have entered into the Stock Restriction
Agreement.
7.6 RESTATED CERTIFICATE. The Restated Certificate shall have been
filed with the Secretary of State of the State of Delaware and shall be in full
force and effect on the Closing Date.
8. MISCELLANEOUS.
8.1 SURVIVAL OF WARRANTIES. The warranties, representations and
covenants of the Company and Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement and the
Closing and shall in no way be affected by any investigation of the subject
matter thereof made by or on behalf of the Investors or the Company.
8.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Securities). Nothing in this Agreement, express or implied,
is intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
8.3 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
8.4 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
-14-
8.5 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
8.6 NOTICES. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be sent to
the address/fax number indicated for such party on the signature page hereof
(provided that any party may at any time change its address/fax number for
notice by ten (10) days' advance written notice to the other parties), and shall
be deemed effectively given upon (i) personal delivery to the party to be
notified, (ii) the time of successful facsimile transmission to the party to be
notified, (iii) sending by reputable overnight delivery service or (iv) three
(3) days after deposit with the United States Post Office, by registered or
certified mail.
8.7 FINDER'S FEE. Except for fees owed to Xxxxxxxxxx Securities for
its services acting as the placement agent in connection with the sale of
securities contemplated by this Agreement, for which the Company shall be
responsible, each party represents that it neither is nor will be obligated for
any finders' fee or commission in connection with this transaction. Each
Investor agrees to indemnify and to hold harmless the Company from any liability
for any commission or compensation in the nature of a finders' fee (and the
costs and expenses of defending against such liability or asserted liability)
for which the Investor or any of its officers, partners, employees or
representatives is responsible. The Company agrees to indemnify and hold
harmless each Investor from any liability for any commission or compensation in
the nature of a finders' fee (and the costs and expenses of defending against
such liability or asserted liability) for which the Company or any of its
officers, employees or representatives is responsible.
8.8 EXPENSES. Irrespective of whether the Closing is effected, the
Company shall pay all costs and expenses that it incurs with respect to the
negotiation, execution, delivery and performance of this Agreement. If the
Closing is effected, the Company shall, at the Closing, reimburse the reasonable
fees of special counsel for Rosewood Capital, L.P. (not to exceed $10,000) and
for Farallon (not to exceed $10,000), and shall, upon receipt of a xxxx
therefor, reimburse the out-of-pocket expenses of such counsel for an amount not
to exceed $10,000 to each of Rosewood and Farallon. If any action at law or in
equity is necessary to enforce or interpret the terms of this Agreement or the
Restated Certificate, the prevailing party shall be entitled to reasonable
attorney's fees, costs and necessary disbursements in addition to any other
relief to which such party may be entitled.
8.9 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
seventy-five percent (75%) of the Common Stock issued or issuable upon
conversion of the Series D Preferred Stock. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each holder of any
securities subject to this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities and the Company.
-15-
8.10 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
8.11 AGGREGATION OF STOCK. All shares of Series D Preferred Stock
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
8.12 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein constitute the entire agreement among the parties and no party shall be
liable or bound to any other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein or
therein.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-16-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
XXXXX'X RESTAURANTS, INC.
By: /s/ Xxxxx Xxxxx
------------------------------
Xxxxx Xxxxx, President
Address: 0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Fax No: (000) 000-0000
INVESTORS:
ROSEWOOD CAPITAL, L.P.
By: Rosewood Capital Associates, L.P.,
General Partner
By: /s/ Xxxx Xxxxxxxx
---------------------------
Xxxx X. Xxxxxxxx, Principal
Address: Xxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Fax No: (000) 000-0000
FARALLON CAPITAL PARTNERS, L.P.
By: Farallon Partners, L.L.C.,
its General Partner
By: /s/ Xxxxx Xxxx
------------------------------
Managing Member
Address: Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Fax No: (000) 000-0000
Attention: Xxxxx Xxxx and Xxxx Xxxxxx
[COUNTERPART SIGNATURE PAGE TO
SERIES D PREFERRED STOCK PURCHASE AGREEMENT]
FARALLON CAPITAL INSTITUTIONAL
PARTNERS, L.P.
By: Farallon Partners, L.L.C.,
its General Partner
By: /s/ Xxxxx Xxxx
------------------------------
Managing Member
Address: Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Fax No: (000) 000-0000
Attention: Xxxxx Xxxx and Xxxx Xxxxxx
FARRALON CAPITAL INSTITUTIONAL
PARTNERS II, L.P.
By: Farallon Partners, L.L.C.,
its General Partner
By: /s/ Xxxxx Xxxx
------------------------------
Managing Member
Address: Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Fax No: (000) 000-0000
Attention: Xxxxx Xxxx and Xxxx Xxxxxx
FARALLON CAPITAL INSTITUTIONAL
PARTNERS III, L.P.
By: Farallon Partners, L.L.C.,
its General Partner
By: /s/ Xxxxx Xxxx
------------------------------
Managing Member
Address: Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Fax No: (000) 000-0000
Attention: Xxxxx Xxxx and Xxxx Xxxxxx
[COUNTERPART SIGNATURE PAGE TO
SERIES D PREFERRED STOCK PURCHASE AGREEMENT]
RR CAPITAL PARTNERS, L.P.
By: Farallon Partners, L.L.C.,
its General Partner
By: /s/ Xxxxx Xxxx
------------------------------
Managing Member
Address: Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Fax No: (000) 000-0000
Attention: Xxxxx Xxxx and Xxxx Xxxxxx
W.A. & H. INVESTMENT, L.L.C.
By: /s/ illegible
------------------------------
Title:
-----------------------------
Address: Xxxxxxx, Xxxxxx & Xxxxxxxxx, L.L.C.
c/o Xxx-Xxx Xxxx
000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000-0000
Fax No: ____________________
/s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx X. Xxxxxx
Address: 0000 Xxxxxxx Xxxxx
Xxxxxx Xxx Xxx, XX 00000
Fax No: 000-000-0000
[COUNTERPART SIGNATURE PAGE TO
SERIES D PREFERRED STOCK PURCHASE AGREEMENT]
XXXXX AND XXXXXX XXXXXX
/s/ Xxxxx Xxxxxx
-----------------------------------
Xxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx
Address: 0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Fax No: ____________________
XXXX AND XXXXX XXXXX
/s/ Xxxx Xxxxx
-----------------------------------
Xxxx Xxxxx
/s/ Xxxxx Xxxxx
-----------------------------------
Xxxxx Xxxxx
Address: 0000 Xxxx Xxx
Xx Xxxxx, XX 00000
Fax No: 619/000-0000
X.X. XXXXXXX CO., INC. PROFIT SHARING
TRUST FOR THE BENEFIT OF XXXX
XXXXXXX XXXXXX & XXXX XXXXXXX XXXXXX
By: /s/ illegible
------------------------------
Trustee
Address: 0000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Fax No: 000 000-0000
[COUNTERPART SIGNATURE PAGE TO
SERIES D PREFERRED STOCK PURCHASE AGREEMENT]
XXXXX AND XXX XXXXXXX
/s/ Xxxxx Xxxxxxx
-----------------------------------
Xxxxx Xxxxxxx
/s/ Xxx Xxxxxxx
-----------------------------------
Xxx Xxxxxxx
Address: 00 Xxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Fax No: 000-000-0000
/s/ Xxxxx Xxxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxxx
Address: 00 Xxxxx Xxxx Xxxxx
Xxxxxx Xxxxxx, XX 00000
Fax No: 000-000-0000
/s/ R. Xxxx Xxxxxxxx
-----------------------------------
R. Xxxx Xxxxxxxx
Address: 00000 Xxxxxxx Xxxxx
Xxx Xxxxx, XX 00000
Fax No: 000-0000
T. XXXXX AND XXXXXXXX XXXXXXXXX
/s/ T. Xxxxx Xxxxxxxxx
-----------------------------------
T. Xxxxx Xxxxxxxxx
/s/ Xxxxxxxx Xxxxxxxxx
-----------------------------------
Xxxxxxxx Xxxxxxxxx
Address: 0000 Xxxx Xxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Fax No: 000-0000
[COUNTERPART SIGNATURE PAGE TO
SERIES D PREFERRED STOCK PURCHASE AGREEMENT]
XXXXXXX AND XXXXXX XXXXXX
/s/ Xxxxxxx Xxxxxx
-----------------------------------
Xxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx
Address: 000 Xxxxxxxxxx
Xxx Xxxxx, XX 00000
Fax No: 000-0000
XXXXXXX, PHLEGER & XXXXXXXX LLP
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Its: Partner
------------------------------
Address: Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxx, XX 00000
Fax No: ____________________
EVEREN CLEARING CORP. CUST.
FBO: XXXXX X. XXXXXXX XXX
By: /s/ Xxxxx Xxxxxxx
------------------------------
Title:
------------------------------
Address: 0000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Fax No.: (000) 000-0000
/s/ Lic. Xxxxxxx Xxxxxxxx
-----------------------------------
Lic. Xxxxxxx Xxxxxxxx R.R.
Address: Ave. Batallon De San Xxxxxxxx No. 111
Torre Comercial America Piso 26
Fracc. Xxxxx Oriente
Xxxxx Xxxxxx, N.L. CP66269 Mexico
Fax No: (00-0) 000-0000
[COUNTERPART SIGNATURE PAGE TO
SERIES D PREFERRED STOCK PURCHASE AGREEMENT]
XXXXXX X. AND XXXXXX XXXXXXX JTWROS
/s/ Xxxxxx Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxx Xxxxxxx
-----------------------------------
Xxxxxx Xxxxxxx
Address: 0000 Xxxxxxxx Xxxxxx
Xxx Xxxxxx, XX 00000
Fax No: (000) 000-0000
EVEREN CLEARING CORP. CUST.
FBO: XXXX X. XXXX XXX
By: /s/ Xxxx Xxxx
------------------------------
Title:
-----------------------------
Address: 0000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Fax No: (000) 000-0000
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxx X. Xxxxxxx
Address: 00000 Xxxxxxxx Xx.
Xxx Xxxxx, XX 00000
Fax N.: 000-000-0000
EVEREN CLEARING CORP. CUST.
FBO: XXXXXX X. XXXXXXX XXX
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------
Title:
-----------------------------
Address: 0000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Fax No: (000) 000-0000
[COUNTERPART SIGNATURE PAGE TO
SERIES D PREFERRED STOCK PURCHASE AGREEMENT]
EVEREN CLEARING CORP. CUST.
FBO: XXXXX X. XXXX XXX
By: /s/ Xxxxx Xxxx
------------------------------
Title:
-----------------------------
Address: 0000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Fax No: (000) 000-0000
EVEREN CLEARING CORP. CUST.
FBO: XXXXXX XXXX XXX
By: /s/ Xxxxxx Xxxx
------------------------------
Title:
-----------------------------
Address: 0000 Xxxxxxx Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Fax No: (000) 000-0000
XXXXX X. XXXX AND XXXXXX XXXX
JTWROS
/s/ Xxxxx Xxxx
-----------------------------------
Xxxxx X. Xxxx
/s/ Xxxxxx Xxxx
-----------------------------------
Xxxxxx Xxxx
Address: 000 Xxxxxxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
/s/ Xxxx Xxxxxxxx
-----------------------------------
Xxxx Xxxxxxxx
Address: Nations Bank Xxxxxxxxxx Securities
0 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Fax No: 000-000-0000
[COUNTERPART SIGNATURE PAGE TO
SERIES D PREFERRED STOCK PURCHASE AGREEMENT]
/s/ X. Xxxxxxxx Xxxxxxxxxx
-----------------------------------
X. Xxxxxxxx Xxxxxxxxxx
Address: Nations Bank Xxxxxxxxxx Securities
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Fax No: 000-0000
/s/ Xxxxxx Xxxxxx
-----------------------------------
Xxxxxx Xxxxxx, Trustee for Xxxxxx
Family Trust
Address: Nations Bank Xxxxxxxxxx Securities
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Fax No: 000-000-0000
[COUNTERPART SIGNATURE PAGE TO
SERIES D PREFERRED STOCK PURCHASE AGREEMENT]
SCHEDULE A
SCHEDULE OF INVESTORS
(as amended)
NAME PURCHASE PRICE NUMBER OF SHARES
---------------------------------- ----------------- ------------------
FIRST CLOSING
-------------
Rosewood Capital, L.P. $2,500,001.93 347,486
Farallon Capital Partners, L.P. $2,729,996.98 379,454
Farallon Capital Institutional
Partners, L.P. $2,274,999.88 316,212
Farallon Capital Institutional
Partners II, L.P. $ 974,996.87 135,519
Farallon Capital Institutional
Partners III, L.P. $ 260,003.48 36,139
RR Capital Partners, L.P. $ 260,003.48 36,139
W.A. & H. Investment, L.L.C. $ 249,995.88 34,748
Xxxxxx X. Xxxxxx $ 50,002.05 6,950
Xxxxx and Xxxxxx Xxxxxx $ 50,002.05 6,950
Xxxx and Xxxxx Xxxxx $ 50,002.05 6,950
X.X. Xxxxxxx Co., Inc. Profit
Sharing Trust for the benefit of
Xxxx Xxxxxxx Xxxxxx & Xxxx
Xxxxxxx Xxxxxx $ 74,995.88 10,424
Xxxxx and Xxx Xxxxxxx $ 50,002.05 6,950
Xxxxx X. Xxxxxxxx $ 25,001.03 3,475
R. Xxxx Xxxxxxxx $ 9,993.22 1,389
T. Xxxxx and Xxxxxxxx Xxxxxxxxx $ 25,001.03 3,475
Xxxxxxx and Xxxxxx Xxxxxx $ 25,001.03 3,475
Xxxxxxx, Phleger & Xxxxxxxx LLP $ 15,000.62 2,085
Subtotal: $9,624,999.51 1,337,820
SUBSEQUENT CLOSING
------------------
EVEREN Clearing Corp. Cust.
FBO: Xxxxx X. Xxxxxxx XXX $ 25,001.03 3,475
Lic. Xxxxxxx Xxxxxxxx R.R. $ 249,995.88 34,748
Xxxxxx X. & Xxxxxx Xxxxxxx JTWROS $ 25,001.03 3,475
EVEREN Clearing Corp. Cust.
FBO: Xxxx X. Xxxx XXX $ 30,001.23 4,170
Xxxxxx X. Xxxxxxx $ 12,504.11 1,738
EVEREN Clearing Corp. Cust.
FBO: Xxxxxx X. Xxxxxxx XXX $ 12,496.92 1,737
EVEREN Clearing Corp. Cust.
FBO: Xxxxx X. Xxxx XXX $ 9,000.37 1,251
EVEREN Clearing Corp. Cust.
FBO: Xxxxxx Xxxx XXX $ 4,496.59 000
Xxxxx X. Xxxx & Xxxxxx Xxxx XXXXXX $ 6,503.87 904
Xxxx Xxxxxxxx $ 25,001.03 3,475
J. Xxxxxxxx Xxxxxxxxx $ 50,002.06 6,950
Xxxxxx Family Trust $ 25,001.03 3,475
Subtotal: $ 475,005.15 66,023
Total: $10,100,004.66 1,403,843
SCHEDULE B
SCHEDULE OF STOCKHOLDERS
Xxxxx'x Restaurants, Inc.
Shareholder Listing
NO. OF SHARES % OF TOTAL
SHAREHOLDER COMMON PREFERRED A PREFERRED B PREFERRED C TOTAL OUTSTANDING
Xxxxx & Dione Family Trust 400,000 784,400 1,184,400 24.32%
Xxxxxx X. Xxxxx and Xxxxxx X. Xxxxx Family Trust 400,000 784,400 1,184,400 24.32%
Xxxxxx Xxxxxx as Trustee of the Trust 50,000 100,000 150,000 3.08%
f/b/o Xxxxx Xxxxx
Xxxxxxx X. Xxxxx & Xxxxxxxx X. Xxxxx Trust 50,000 100,000 150,000 3.08%
Xxxxxx Xxxxx Trust 50,000 100,000 150,000 3.08%
Xxxxxx X. Xxxxxx & Xxxxxx X. Xxxxxx, Trust 50,000 73,395 123,395 2.53%
Total Xxxxx Family 1,000,000 1,942,195 2,942,195 60.42%
Rosewood Capital 936,005 743,321 1,679,326 34.49%
Xxxxxxx Family Trust 31,200 46,800 78,000 1.60%
Brophar Investor Partners 29,641 4,772 34,413 0.71%
UMB Bank, Trustee of the Xxxxxxx, Phleger & 7,800 3,121 10,921 0.22%
Xxxxxxxx Retirement Savings Plan f/b/o
X. Xxxxx
Xxx Xxxxxxx 10,000 10,000 0.21%
J. Xxxxxxx Xxxxxxxxxx 9,291 9,291 0.19%
Xxxxx Xxxxxx 9,291 9,291 0.19%
UMB Bank, Trustee of the Xxxxxxx, Phleger & 7,800 1,418 9,218 0.19%
Xxxxxxxx Retirement Savings Plan f/b/o
X. Xxxxxxxx
Xxxxxx X. Xxxxx Xx. 7,800 1,418 9,218 0.19%
Xxxx Xxxxx 7,800 1,418 9,218 0.19%
Xxx Xxxxxx 7,800 1,418 9,218 0.19%
T. Xxxxx Xxxxxxxxx and Xxxxxxxx Xxxxxxxxx 7,800 1,418 9,218 0.19%
Prudential Securities, Custodian for Xxxxx 7,800 1,418 9,218 0.19%
L. Shibuya & Xxxxx Xxxxxxx (ind.)
Prudential Securities, Custodian for Xxxxx 7,800 1,418 9,218 0.19%
X. Xxxxxxxx & Xxxxx Xxxxxxxx (ind.)
R. Xxxx Xxxxxxxx 7,800 1,418 9,218 0.19%
UMB Bank, Trustee of the Xxxxxxx, Xxxxxxx 6,241 6,241 0.13%
& Xxxxxxxx Retirement Savings Plan f/b/o
X. Xxxxxxx
Xxx Xxxxxxx 4,700 4,700 0.10%
C. Xxxx Xxxxxx 3,812 3,812 0.08%
Xxxxx Xxxxxxx 2,500 2,500 0.05%
UMB Bank, Trustee of the Xxxxxxx, Xxxxxxx 1,560 1,560 0.03%
& Xxxxxxxx Retirement Savings Plan f/b/o
X. Xxxxxxxxx
UMB Bank, Trustee of the Xxxxxxx, Phleger 1,560 1,560 0.03%
& Xxxxxxxx Retirement Savings Plan f/b/o
X. Xx Xxxxx
Xxxxx Xxxxx 000 000 0.01%
Xxxxxx Xxxx Xxxxx 480 480 0.01%
Xxxxx Xxxxx 300 300 0.01%
Xxxx Xxxxxx 100 100 0.01%
Xxxx Xxxxxxx 450 450 0.01%
Total Outstanding stock 1,010,557 1,973,395 1,092,007 793,640 4,869,599 100.00%
Series B Preferred at $3.21 per share
Series C Preferred at $5.38126 per share
EXHIBIT A
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
See Exhibit 3.1 to the Registration Statement on Form S-1
A-1
EXHIBIT B
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
See Exhibit 10.7 to the Registration Statement on Form S-1
B-1
EXHIBIT C
AMENDED AND RESTATED STOCK RESTRICTION AGREEMENT
See Exhibit 10.10 to the Registration Statement on Form S-1
C-1
EXHIBIT D
SCHEDULE OF EXCEPTIONS
D-1
SCHEDULE OF EXCEPTIONS TO
SERIES D STOCK PURCHASE AGREEMENT
This Schedule of Exceptions is made and given pursuant to Section 2 of the
Series D Preferred Stock Purchase Agreement (the "Agreement"). The section
numbers in this Schedule of Exceptions correspond to the section numbers in the
Agreement; however, any information disclosed herein under any section number
shall be deemed to be disclosed and incorporated into any other section number
under the Agreement where such disclosure would otherwise be appropriate. Any
terms defined in the Agreement shall have the same meaning when used in this
Schedule of Exceptions as when used in the Agreement unless the context
otherwise requires.
SECTION 2.2 CAPITALIZATION AND VOTING RIGHTS
(c) The Company has agreed to issue a warrant to purchase 27,104 shares of
Series D Preferred Stock at an exercise price of $8.633448 per share to
Xxxxxxxxxx Securities, Inc. In connection with the issuance of such warrant,
the Company intends to amend the Restated Certificate to increase the number of
authorized shares of Series D Preferred Stock to 1,417,047.
SECTION 2.3 SUBSIDIARIES
Xxxxx'x Restaurants of Nevada, Inc., a Nevada corporation, is a
wholly-owned subsidiary of the Company, which was incorporated on October 23,
1997 for the sole purpose of holding liquor licenses in Nevada.
SECTION 2.7 LITIGATION
Personal injury (foreign object in food) complaint filed by Rubio's
customer alleging wage loss, hospital and medical expenses, general damage, loss
of earning capacity, and incidental damages including travel expense. The
complaint states that plaintiff's damages exceed $25,000. A court date (jury
trial) has been set for February 1998. The Company believes that any damages
resulting from this action would be covered by the Company's liability
insurance.
Four worker's compensation claims have been made by three employees,
claiming various back injuries and other injuries. The Company believes that
any damages resulting from these actions would be covered by the Company's
worker's compensation insurance.
D-1
SECTION 2.8 PROPRIETARY INFORMATION
The Company enters into an Employment Relationship and Confidentiality
Agreement with all employees. The form of such agreement has been provided to
Investor's counsel.
SECTION 2.9 PATENTS AND TRADEMARKS
On April 9, 1992, the Company entered into an agreement with Service
America Corporation (SAC) to operate a concession stand at San Diego's Qualcomm
Stadium in conjunction with the Company. The agreement was for a term of four
years, but includes an annual one-year renewal provision effective if neither
party gives timely notice of intent not to renew. Pursuant to such agreement,
SAC was granted the right and license to use the name "Rubio's" and any and all
other trademarks, tradenames, logos and/or copyrights utilized by Rubio's in the
sale of its products. SAC is obligated to pay to the Company 10% of all net
sales on Rubio's products sold in the stand.
The Company entered into a test agreement on August 4, 1995 with Host
International, Inc. (Host) whereby the Company granted to Host a non-exclusive
license to use the name Rubio's and other trademarks, service marks, and
logotypes at a San Diego Airport location. The term of this agreement was a
"test period" 180 days. The agreement calls for the parties to consider
extending the term at the end of the test period, on mutually agreeable terms.
Rubio's and Host are currently in the process of finalizing that agreement
extension. A license fee of 6% of gross revenues from the sale of Rubio's
proprietary items was charged during the test period.
SECTION 2.10 COMPLIANCE WITH OTHER INSTRUMENTS
Pursuant to that certain Business Loan Agreement, dated July 18, 1995, the
Company must obtain the consent of Union Bank of California, N.A. ("Union Bank")
prior to the sale and issuance of shares of Series D Preferred Stock. The
Company has obtained a conditional consent from Union Bank, containing certain
conditions which the Company intends to fulfill in due course.
Certain stockholders have a right of first refusal with respect to the
issuance of Series D Preferred Stock pursuant to that certain Investors' Rights
Agreement, dated February 1, 1995, as amended.
SECTION 2.11 AGREEMENTS; ACTION
(b)(i) The Company is a party to a certain Fountain Agreement Amendment,
executed on August 15, 1997, pursuant to which Pepsi-Cola Company has advanced
the Company marketing support funds in an amount in excess of $50,000.
Pursuant to an engagement letter entered into by the Company with
Xxxxxxxxxx Securities, Inc. in approximately May 1997, the Company is obligated
to issue a
D-2
warrant to Xxxxxxxxxx Securities, Inc. (see Section 2.2 above) and to pay them a
selling commission in the amount of $480,000.
Certain of the Company's store locations have notes payable
outstanding to Union Bank of California (with the exception of the loan on the
El Cajon restaurant which is outstanding to Bank of Commerce) in connection with
the acquisition and buildout of the facilities as follows:
OUTSTANDING
BALANCE AT TERM OF
RESTAURANT 9/28/97 NOTE
-------------------------------- --------------------- ------------------
El Cajon $241,952 20 years
Carmel Mountain Ranch 57,990 5 years
Point Loma expansion 38,000 5 years
Upgrades to 13 restaurants 18,147 5 years
Temecula 80,000 5 years
Costa Mesa 83,333 5 years
Laguna Niguel 94,252 5 years
Anaheim 115,760 5 years
Mission Valley 115,760 5 years
Encino 122,807 5 years
Irvine Spectrum 133,333 5 years
Grossmont 133,327 5 years
Manhattan Beach 113,310 5 years
La Jolla Village 137,363 5 years
Santa Xxx 135,026 5 years
Hall of Justice 78,947 5 years
Marina del Rey 183,333 5 years
Carlsbad 163,333 5 years
La Habra 166,667 5 years
Hillcrest 183,333 5 years
Cypress 183,333 5 years
Mission Viejo 186,667 5 years
These loans are each secured by the assets, inventory and accounts of the
respective loan's restaurant to which the money was applied. UCC-1 Financing
Statements have been filed in connection with certain of these loans. The Bank
of Commerce loan is an SBA loan and is secured by the assets of the El Cajon
restaurant and further backed by personal guarantees from both Xxxxx and Xxxxxx
Xxxxx.
D-3
In addition, in October 1997 the Company negotiated a $500,000 credit line
with Union Bank of California. The line is due and payable in full on December
31, 1997, with interest paid monthly at the Reference Rate plus 1.00%.
Both the Union Bank of California notes payable and the credit line are
governed by a Business Loan Agreement dated July 18, 1995 as amended. This
Agreement contains certain negative covenants concerning the operation and
financial status of the Company. In addition, it provides that the restaurant
notes payable are to be perfected by a purchase money security agreement and UCC
Financing Statement. The credit line is secured pursuant to a General Security
Agreement covering all accounts receivable, inventory, equipment, chattel paper
and instruments.
See Section 2.9 above.
(b)(ii) See Section 2.9 above.
(c)(ii) See Section 2.11(b)(i) above.
SECTION 2.17 TITLE TO PROPERTY AND ASSETS
The Company owns the building in which the El Cajon store is located;
however, the land on which it is sited is leased on a long-term ground lease,
the material terms of which are described in SCHEDULE A attached hereto. All
other store sites are leased pursuant to individual leases, the material terms
of which are also described in SCHEDULE A.
SECTION 2.20 EMPLOYEE BENEFIT PLANS
The Company has medical and dental plans that are offered to each employee
generally after six months employment. The Company pays for a majority of the
costs of the plans with an amount deducted from each participating employee's
pay check. The Company is partially self-funded with respect to payment of
medical and dental expenses, with stop loss insurance in place for both
individual and aggregate losses.
Full-time employees, 21 years of age or older who have been employed by the
Company for one year or more, are eligible to participate in the Company's
401(k) Plan. There is a partial Company match, vesting over five years.
The Company has a Profit Sharing Plan in place that is subject to ERISA.
The Plan was frozen in November of 1995, and distribution of the assets
commenced upon receipt of an IRS determination letter in 1997. At September 28,
1997, the Plan had approximately $36,000 in plan assets (investments and cash).
There are no unfunded liabilities.
In addition, the Company has a Salary Continuation Plan that is available
to full-time executive employees. The Company pays 100% of the employee's base
monthly salary as of the date of the employee's disability, for the first ninety
days of disability. The Company has
D-4
disability income insurance which provides monthly benefits equal to 60% of the
employee's base salary after ninety days from the date of disability.
SECTION 2.25 MANUFACTURING AND MARKETING RIGHTS
See Section 2.9 above.
D-5
SCHEDULE A
RUBIO'S LEASE PROVISIONS
1. PACIFIC BEACH, CA
Term: ***
Payment per month: ***
2. CARMEL MOUNTAIN, CA
Term: ***
Payment per month: ***
3. CHULA VISTA, CA
Term: ***
Payment per month: ***
4. COSTA MESA, CA
Term: ***
Payment per month: ***
5. DOWNTOWN, CA
Term: ***
Payment per month: ***
6. EL CAJON, CA
Term: ***
Payment per month: ***
7. ENCINITAS, CA
Term: ***
Payment per month: ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
A-1
8. IRVINE, CA
Term: ***
Payment per month: ***
9. KEARNY MESA, CA
Term: ***
Payment per month: ***
10. LAGUNA NIGUEL, CA
Term: ***
Payment per month: ***
11. MISSION BAY, CA
Term: ***
Payment per month: ***
12. CORPORATE OFFICE
Term: ***
Payment per month: ***
13. POINT LOMA, CA
Term: ***
Payment per month: ***
14. SDSU, CA
Term: ***
Payment per month: ***
Termination: ***
15. SAN MARCOS, CA
Term: ***
Payment per month: ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
A-2
16. SOLANA BEACH, CA
Term: ***
Payment per month: ***
17. TEMECULA, CA
Term: ***
Payment per month: ***
18. TUSTIN, CA
Term: ***
Payment per month: ***
19. UTC, CA
Term: ***
Payment per month: ***
20. MISSION VALLEY, CA
Term: ***
Payment per month: ***
21. ENCINO, CA
Term: ***
Payment per month: ***
22. IRVINE SPECTRUM, CA
Term: ***
Payment per month: ***
23. GROSSMONT CENTER, CA
Term: ***
Payment per month: ***
24. MANHATTAN BEACH, CA
Term: ***
Payment per month: ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
A-3
25. LA JOLLA, CA
Term: ***
Payment per month: ***
26. SANTA ANA, CA
Term: ***
Payment per month: ***
27. HALL OF JUSTICE, CA
Term: ***
Payment per month: ***
28. MARINA DEL REY, CA
Term: ***
Payment per month: ***
29. CARLSBAD, CA
Term: ***
Payment per month: ***
30. LA HABRA, CA
Term: ***
Payment per month: ***
31. HILLCREST, CA
Term: ***
Payment per month: ***
32. CYPRESS/STANTON, CA
Term: ***
Payment per month: ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
A-4
33. BELMONT, CA
Term: ***
Payments per month: ***
34. MISSION VIEJO, CA
Term: ***
Payments per month: ***
35. AHWATUKEE, AZ
Term: ***
Payments per month: ***
36. CERRITOS, CA
Term: ***
Payment per month: ***
37. TORRANCE, CA
Term: ***
Payments per month: ***
38. NORTH SCOTTSDALE, AZ
Term: ***
Payment per month: ***
39. VISTA, CA
Term: ***
Payment per month: ***
40. ONTARIO, CA
Term: ***
Payment per month: ***
41. RANCHO CUCAMONGA, CA
Term: ***
Payment per month: ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
A-5
42. HENDERSON, NV
Term: ***
Payment per month: ***
43. MISSION GORGE, CA
Term: ***
Payment per month: ***
44. SAN CLEMENTE, CA
Term: ***
Payment per month: ***
45. YORBA LINDA, CA
Term: ***
Payment per month: ***
46. GILBERT, AZ
Term: ***
Payment per month: ***
47. VILLA PARK, CA
Term: ***
Payment per month: ***
48. XXXXXXXXX, NV
Term: ***
Payment per month: ***
49. CHANDLER, AZ
Term: ***
Payment per month: ***
50. RANCHO SAN DIEGO, CA
Term: ***
Payment per month: ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
A-6
51. GLENDALE, CA
Term: ***
Payment per month: ***
*** Portions of this page have been omitted pursuant to a request for
Confidential Treatment and filed separately with the Commission.
A-7
