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EXHIBIT 10.7
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STOCK PURCHASE AGREEMENT
by
and
among
X.X. XXXXX'X CHINA BISTRO, INC.;
XXXXXXXXX-XXXXX PARTNERS, L.P.;
XXXXXXXXX-PFC, L.L.C.;
OAK INVESTMENT PARTNERS VI, L.P.;
OAK AFFILIATES FUND, L.P.;
the OTHER CO-INVESTORS listed on Schedule 1;
and
XXXX X. XXXXXXX and XXXXX X. XXXXXXX
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Dated as of FEBRUARY 1, 1996
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TABLE OF CONTENTS
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RECITALS ................................................................................................1
AGREEMENT ...............................................................................................1
ARTICLE 1
DEFINITIONS ...........................................................2
1.1 Definitions .................................................................................2
1.2 Accounting Terms; Financial Statements.......................................................8
1.3 Knowledge Standard...........................................................................8
1.4 Other Defined Terms..........................................................................8
ARTICLE 2
AUTHORIZATION OF PREFERRED STOCK;
PURCHASE AND SALE OF SECURITIES.................................................9
2.1 Preferred Stock..............................................................................9
2.2 Purchase and Sale of Securities..............................................................9
2.3 Closing......................................................................................9
2.4 Fees and Expenses...........................................................................10
ARTICLE 3
CONDITIONS TO THE OBLIGATION
OF THE PURCHASERS TO PURCHASE THE SECURITIES..........................................10
3.1 Representations and Warranties.............................................................10
3.2 Compliance with Terms and Conditions of this Agreement.....................................10
3.3 Delivery of Certificates Evidencing the Securities.........................................10
3.5 Secretary's Certificates...................................................................11
3.6 Documents .................................................................................11
3.7 Purchase Permitted by Applicable Laws......................................................11
3.8 Opinion of Counsel.........................................................................11
3.9 Approval of Counsel to Purchasers..........................................................11
3.10 Consents and Approvals.....................................................................11
3.11 Certain Waivers............................................................................12
3.12 No material Adverse Change.................................................................12
3.13 Certificate and By-laws....................................................................12
3.14 No Material Judgment or Order..............................................................12
3.15 Financial Statements.......................................................................12
3.16 Pro Forma Balance Sheet....................................................................12
3.17 Budget.....................................................................................12
3.18 Contribution Agreement.....................................................................13
3.19 Employment Agreement.......................................................................13
3.20 Guaranty Agreement.........................................................................13
3.21 Registration Rights Agreement..............................................................13
3.22 Shareholders' Agreement....................................................................13
3.23 Transition Services Agreement..............................................................13
3.24 Corporate Restructuring. The Corporate Restructuring shall have been completed in form
and substance reasonably satisfactory to the Purchasers....................................13
ARTICLE 4
CONDITIONS TO THE OBLIGATION OF THE
COMPANY TO CLOSE.........................................................13
4.1 Representations and Warranties.............................................................13
4.2 Compliance with Terms and Conditions of this Agreement.....................................13
4.3 Certificates. The Company shall have received (i) for each Purchaser
that is a corporation, a certificate from such corporation, dated as of the
Closing Date and signed by the Secretary or an Assistant Secretary of the
Company, certifying that the attached resolutions of the Board of Directors of
such corporation approving the Transaction Agreements and the transactions
contemplated thereby, are true, complete and correct and remain unchanged and in
full force and effect; and (ii) for each Purchaser that is not a corporation, a
certificate executed by such Person as the Company shall reasonably deem
appropriate under the circumstances, certifying that all approvals required
according to such Purchaser's organizational documents have been duly obtained,
and remain unchanged and in full force and effect.
4.4 Documents. The Company shall have received true, complete and
correct copies of such documents and such other information as it may have
reasonably requested in connection with or related to the purchase of the
Securities by each Purchaser and the transactions contemplated by the
Transaction Agreement, all in form and substance reasonably satisfactory to the
Company prior to the Closing, including without limitation the Registration
Rights Agreement and the Shareholders Agreement executed by the Purchasers,
unless the execution of such documents by the Company has been waived by the
Purchasers as a condition to their obligation to purchase
the Securities.
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TABLE OF CONTENTS - (cont'd)
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4.5 Closing Certificate..................................................................14
4.7 Payment of Purchase Price............................................................14
4.8 Approval of Counsel to Company.......................................................14
4.9 Consents and Approvals...............................................................15
4.10 No Material Judgment or Order........................................................15
ARTICLE 5
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY..........................................15
5.1 Corporate Existence and Authority....................................................15
5.2 Corporate Authorization; No Contravention............................................15
5.3 Governmental Authorization; Third Party Consents.....................................16
5.4 Binding Effect.......................................................................16
5.5 Other Agreements.....................................................................16
5.6 Capitalization.......................................................................16
5.7 Company Affiliates...................................................................17
5.8 Private Offering.....................................................................17
5.9 Litigation...........................................................................18
5.10 Financial Statements.................................................................18
5.11 Title and Condition of Assets........................................................18
5.12 Contractual Obligations..............................................................19
5.13 Patents, Trademarks, Etc.............................................................20
5.14 Tax Matters..........................................................................20
5.15 Severance Arrangements...............................................................22
5.16 No Material Adverse Change...........................................................22
5.17 Environmental Matters................................................................22
5.18 Investment Company/Government Regulations............................................23
5.19 Broker's, Finder's or Similar Fees...................................................23
5.20 Labor Relations and Employee Matters.................................................23
5.21 Employee Benefits Matters
5.22 Potential Conflicts of Interest......................................................26
5.23 Outstanding Borrowings...............................................................26
5.24 Insurance Schedule...................................................................26
5.25 Undisclosed Liabilities..............................................................26
5.26 Solvency.............................................................................26
5.27 Compliance with Law..................................................................27
5.28 No Other Agreements to Sell the Assets or Capital Stock of the Company...............27
5.29 Xxxx-Xxxxx-Xxxxxx....................................................................27
5.30 Disclosure...........................................................................27
ARTICLE 6
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASERS........................................28
6.1 Existence and Authority..............................................................28
6.2 Authorization; No Contravention......................................................28
6.3 Governmental Authorization; Third Party Consent......................................28
6.4 Binding Effect.......................................................................28
6.5 Purchase for Own Account.............................................................28
6.6 Accredited Investor Status...........................................................29
6.8 Broker's, Finder's or Similar Fees...................................................30
ARTICLE 7
COVENANTS OF THE COMPANY...........................................30
7.1 Further Assurances...................................................................30
7.2 Notification of Certain Matters......................................................30
7.3 Access to Information................................................................30
7.4 Conduct of Business..................................................................31
7.5 Contribution Agreement...............................................................31
ARTICLE 8
COVENANTS OF THE COMPANY WITH RESPECT
TO THE PERIOD FOLLOWING THE CLOSING.....................................31
8.1 Reservation of Shares................................................................31
8.2 Books and Records....................................................................32
8.3 Use of Proceeds......................................................................32
8.4 New Lines of Business................................................................32
8.5 Compensation of Directors............................................................32
8.6 Management Incentive Stock Option Plan...............................................32
ARTICLE 9
INDEMNIFICATION.................................................32
9.1 Indemnification......................................................................32
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TABLE OF CONTENTS - (cont'd)
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9.2 Notification........................................................................33
9.3 Registration Rights Agreement.......................................................34
ARTICLE 10
MISCELLANEOUS...........................................34
10.1 Termination.........................................................................34
10.2 Survival of Representations and Warranties..........................................35
10.4 Notices.............................................................................35
10.5 Successors and Assigns..............................................................36
10.6 Amendment and Waiver................................................................37
10.7 Counterparts........................................................................37
10.8 Headings............................................................................37
10.9 Governing Law.......................................................................37
10.10 Jurisdiction........................................................................37
10.11 Severability........................................................................38
10.12 Rules of Construction...............................................................38
10.13 Entire Agreement....................................................................38
10.14 Transaction Expenses................................................................38
10.15 Publicity...........................................................................38
10.16 Further Assurances..................................................................38
10.17 Severability of Representations, Warranties and Covenants...........................38
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TABLE OF EXHIBITS AND SCHEDULES
EXHIBITS
Contribution Agreement........................................................A
Acquisition Agreement.........................................................B
Corporate Restructuring.......................................................C
Guaranty Agreement............................................................D
Registration Rights Agreement.................................................E
Shareholders' Agreement.......................................................F
Transition Services Agreement.................................................G
Warrant.......................................................................H
Certificate of Incorporation..................................................I
By-Laws.......................................................................J
Employment Agreement..........................................................K
SCHEDULES
Securities Being Purchased....................................................1
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SCHEDULES (continued)
Government & Other Consents.......................................5.3
Shareholders......................................................5.6
Affiliates........................................................5.7
Leased Real Estate.............................................5.11(a)
Agreements.......................................................5.12
Intellectual Property............................................5.13
Tax Elections....................................................5.14
Environmental....................................................5.17
Employee Plans...................................................5.21
Conflicts........................................................5.22
Borrowings.......................................................5.23
Insurance Policies...............................................5.24
Noncompliance....................................................5.27
Obligation to Sell...............................................5.28
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered
into as of the 1st day of February, 1996 by and among XXXXXXXXX-XXXXX PARTNERS,
L.P., a Delaware limited partnership, and XXXXXXXXX-PFC, L.L.C., a Delaware
limited liability company (collectively "Xxxxxxxxx"), OAK INVESTMENT PARTNERS
VI, L.P., a Delaware limited partnership and OAK VI AFFILIATES FUND, L.P., a
Delaware limited partnership (collectively "Oak"), the other co-investors listed
on Schedule 1 attached hereto (the "Co-Investors"), XXXX X. XXXXXXX and XXXXX X.
XXXXXXX, a married couple dealing in community property (collectively,
"Xxxxxxx") and X.X. XXXXX'X CHINA BISTRO, INC., a Delaware corporation (the
"Company").
RECITALS:
A. WHEREAS, upon the terms and subject to the conditions set forth in
this Agreement, the Company proposes to issue and sell (i) shares of its Series
A Convertible Preferred Stock (as defined herein) and (ii) Warrants (as defined
herein) to purchase shares of Series A Convertible Preferred Stock to Xxxxxxxxx,
Oak and the Co-Investors (each being referred to herein as a "Purchaser" and
collectively referred to herein as the "Purchasers").
B. WHEREAS, upon the terms and subject to the conditions set forth in
this Agreement, the Purchasers desire to contribute capital to the Company in
exchange for the issuance to the Purchasers of shares of the Series A
Convertible Preferred Stock and Warrants of the Company as set forth herein.
C. WHEREAS, the Purchasers desire that, upon the Closing (as defined in
herein), the Purchasers will collectively own one hundred percent (100%) of the
Company's outstanding Series A Convertible Preferred Stock.
D. WHEREAS, Xxxxxxx and the Company shall enter into a Contribution
Agreement simultaneously with the execution of this Agreement in the form
attached hereto as Exhibit A.
E. WHEREAS, the Company, the Purchasers and Xxxxxxx, holder of 100% of
the Company's common stock, desire to set forth the objectives and agreements,
that will govern their relations and responsibilities with respect to each other
by entering into concurrently with the sale and purchase of securities hereunder
a Shareholders' Agreement (as defined herein).
AGREEMENT:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereby agree as follows:
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ARTICLE 1
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context
requires a different meaning, the following terms have the meanings indicated:
"Acquisition Agreement" means the Acquisition Agreement among the
holders of equity interests in the Company Affiliates and the Company
substantially in the form attached hereto as Exhibit B.
"Affiliate" means, with respect to any specified Person, any Person
that, directly or indirectly, controls, is controlled by, or is under common
control with, such specified Person, whether by contract, through one or more
intermediaries, or otherwise.
"Balance Sheet Date" means November 30, 1995.
"Benefit Arrangement" means any employment, consulting, severance or
other similar contract, arrangement or policy and each plan, arrangement
(written or oral), program, agreement or commitment providing for insurance
coverage (including any self-insured arrangements), workers' compensation,
disability benefits, supplemental unemployment benefits, vacation benefits,
retirement benefits, life, health, disability or accident benefits (including,
without limitation, any "voluntary employees' beneficiary association" as
defined in Section 501(c)(9) of the Code providing for the same or other
benefits) or for deferred compensation, profit-sharing bonuses, stock options,
stock appreciation rights, stock purchases or other forms of incentive
compensation or post-retirement insurance, compensation or benefits which (A) is
not a Welfare Plan, Pension Plan or Multiemployer Plan, (B) is entered into,
maintained, contributed to or required to be contributed to, as the case may be,
by the Company or an ERISA Affiliate or under which the Company or any ERISA
Affiliate may incur any liability, and (C) covers any employee or former
employee of the Company or any ERISA Affiliate (with respect to their
relationship with such entities).
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor statute thereto.
"Commission" means the Securities and Exchange Commission or any similar
agency then having jurisdiction to enforce the Securities Act.
"Common Stock" means the common stock, par value $.01 per share, of the
Company, or any other capital stock of the Company into which such stock is
reclassified or reconstituted.
"Company Affiliates" means (i) Xxxxxxx Chinese Restaurants, Inc., an
Arizona corporation, together with its successors and assigns; (ii) X.X. Xxxxx'x
XX, Inc., an Arizona corporation, together with its successors and assigns;
(iii) X.X. Xxxxx'x III, L.L.C., an Arizona
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limited liability company; (iv) X.X. Xxxxx'x XX, L.L.C., an Arizona limited
liability company; (v) PFC Building Limited Partnership, an Arizona limited
partnership; and (vi) Xxxxxxx/PFC III Corp, an Arizona corporation.
"Condition of the Company" means the assets, business, properties,
operations, financial condition or prospects (excluding prospects arising out of
general economic or business conditions affecting the restaurant industry
generally) of the Company and the Company Affiliates taken as a whole.
"Contractual Obligation" means as to any Person, any provision of any
security issued by such Person or any provision of any agreement, lease of real
or personal property, undertaking, contract, indenture, mortgage, deed of trust
or other instrument to which such Person is a party or by which it or any of its
property is bound.
"Contribution Agreement" means that certain Contribution Agreement to be
entered into as of the Closing Date by and between the Company and Xxxx Xxxxxxx.
"Corporate Restructuring" means the restructuring of Xxxxxxx Chinese
Restaurants, Inc., and X.X. Xxxxx'x XX, Inc., as described in Exhibit C attached
hereto.
"Defined Benefit Plan" means a defined benefit plan within the meaning
of Section 3(35) of ERISA or Section 414(j) of the Code, whether funded or
unfunded, qualified or nonqualified (whether or not subject to ERISA or the
Code).
"Employee Plans" means all Benefit Arrangements, Multiemployer Plans,
Pension Plans and Welfare Plans.
"Employment Agreement" means the Employment Agreement to be entered into
as of the Closing Date between the Company and Xxxxxxx substantially in the form
attached hereto as Exhibit K.
"Environmental Expenses" means any liability, loss, cost or expense
arising from any Pre-Closing Environmental Matter, including, without
limitation, costs of investigation, cleanup, removal, remedial, corrective or
response action, the costs associated with posting financial assurances for the
completion of investigation, cleanup, removal, remedial, corrective or response
actions, the preparation of any closure or other necessary or required plans or
analyses, or other reports or analyses submitted to or prepared by regulating
agencies, including the cost of health assessments, epidemiological studies and
the like, retention of engineers and other expert consultants, legal counsel,
capital improvement, operation and maintenance testing and monitoring costs,
power and utility costs and pumping taxes or fees, and administrative costs
or damages.
"Environmental Laws" means any federal, state, territorial, provincial
or local law, common law doctrine, rule, order, decree, judgment, injunction,
license, permit or regulation relating to environmental matters, including those
pertaining to land use, air, soil, surface water, ground water (including the
protection, cleanup, removal, remediation or damage
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thereof), public or employee health or safety or any other environmental matter,
together with any other laws (federal, state, territorial, provincial or local)
relating to emissions, discharges, releases or threatened releases of any
pollutant or contaminant including, without limitation, medical, chemical,
biological, biohazardous or radioactive waste and materials, into ambient air,
land, surface water, groundwater, personal property or structures, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transportation, discharge or handling of any contaminant, including,
without limitation, the Comprehensive Environmental Response, Compensation, and
Liability Act (42 U.S.C. Section 9601 et seq.), the Hazardous Material
Transportation Act (49 U.S.C. Section 1801 et seq.), the Resource Conservation
and Recovery Act (42 U.S.C. Section 6901 et seq.), the Federal Water Pollution
Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C.
Section 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. Section 2601
et seq.), and the Occupational Safety and Health Act (29 U.S.C. Section 651 et
seq.), as such laws have been, or are, amended, modified or supplemented
heretofore or from time to time hereafter and any analogous future federal, or
present or future state or local laws, statutes and regulations promulgated
thereunder.
"Equipment" means all of the tangible personal property owned or leased
by the Company or any Company Affiliate and used in or held for use in the
operations of the business of the Company or any of Company Affiliate.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means any Person that is (or at any relevant time was)
a member of a "controlled group of corporations" with or under "common control"
with the Company as defined in Section 414(b), (c), (m) or (o) of the Code.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission thereunder.
"Facilities" means the buildings, plants, offices, stores, restaurants
and all other improvements on any real property (including fixtures affixed
thereto) which are owned or leased by the Company or any Company Affiliate and
used or held for use in the operation of the business of the Company or any
Company Affiliate.
"GAAP" means United States generally accepted accounting principles, in
effect from time to time, consistently applied.
"Governmental Authority" means the government of any nation, state,
city, locality or other political subdivision of any thereof, any entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
exercising public functions owned or controlled, through stock or capital
ownership or otherwise, by any of the foregoing.
"Guaranty Agreement" means the Guaranty Agreement entered into by
Xxxxxxx for the benefit of the Purchasers substantially in the form attached
hereto as Exhibit D.
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"Hazardous Materials" means those substances which are regulated by or
form the basis of liability under any Environmental Laws, including, without
limitation, petroleum products, radon and asbestos.
"Indebtedness" means, as to any Person: (a) all obligations, whether or
not contingent, of such Person for borrowed money (including, without
limitation, reimbursement and all other obligations with respect to surety
bonds, letters of credit and bankers' acceptances, whether or not matured), (b)
all obligations of such Person evidenced by notes, bonds, debentures or similar
instruments, (c) all obligations of such Person representing the balance of
deferred purchase price of property or services, except trade accounts payable
and accrued commercial or trade liabilities arising in the ordinary course of
business, (d) all interest rate and currency swaps, caps, collars and similar
agreements or hedging devices under which payments are obligated to be made by
such Person, whether periodically or upon the happening of a contingency, (e)
all indebtedness created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property), (f)
all obligations of such Person under leases which have been or should be, in
accordance with GAAP, recorded as capital leases, (g) all indebtedness secured
by any Lien (other than Liens in favor of lessors under leases other than leases
included in clause (f)) on any property or asset owned or held by that Person
regardless of whether the indebtedness secured thereby shall have been assumed
by that Person or is non-recourse to the credit of that Person, and (h) all
Indebtedness of any other Person referred to in clauses (a) through (f) above,
guaranteed, directly or indirectly, by that Person.
"Initial Issue Date" shall mean the date that shares of Preferred Stock
are first issued by the Company.
"Lien" means any mortgage, deed of trust, pledge, hypothecation,
assignment, encumbrance, lien (statutory or other) or other security interest of
any kind or nature whatsoever (excluding preferred stock or equity related
preferences) including, without limitation, those created by, arising under or
evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a capital lease obligation, or any financing lease
having - substantially the same economic effect as any of the foregoing.
"Material Adverse Effect" means any event or condition which
individually or in the aggregate has a material adverse effect on the Condition
of the Company or on the ability of the Company to perform its obligations under
the Transaction Agreements.
"Multiemployer Plan" means any "multiemployer plan," as defined in
Section 4001(a)(3) or Section 3(37) of ERISA, (A) which the Company or any ERISA
Affiliate maintains, administers, contributes to or is required to contribute
to, or, after September 25, 1980, maintained, administered, contributed to or
was required to contribute to, or under which the Company or any ERISA Affiliate
may incur any liability and (B) which covers any employee or former employee of
the Company or any ERISA Affiliate (with respect to their relationship with such
entities).
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"Outstanding Borrowings" means all Indebtedness of the Company and/or
its Subsidiaries for borrowed money (including without limitation, reimbursement
and all other obligations with respect to surety bonds, letters of credit and
bankers' acceptances, whether or not matured), excluding obligations with
respect to trade payables incurred in the ordinary course of business.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means any "employee pension benefit plan" as defined in
Section 3(2) of ERISA (other than a Multiemployer Plan) (A) which the Company or
any ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or, within the five years prior to the Closing Date, maintained,
administered, contributed to or was required to contribute to, or under which
the Company or any ERISA Affiliate may incur any liability and (B) which covers
any employee or former employee of the Company or any ERISA Affiliate (with
respect to their relationship with such entities).
"Permitted Liens" means (i) Liens for taxes, governmental charges or
levies which (a) are not yet due and payable, or (b) are being diligently
contested in good faith by appropriate proceedings; provided, that for any such
taxes being diligently contested in good faith, the Company has set aside
adequate reserves, (ii) Liens imposed by law, such as mechanic's, materialman's,
landlord's, warehouseman's and carrier's liens, securing obligations incurred in
the ordinary course of business which are not yet overdue or which are being
diligently contested in good faith by appropriate proceeding and, with respect
to such obligations which are being contested, for which the Company has set
aside adequate reserves, and (iii) Liens which (x) in each case, secure
obligations of less than $10,000, and (y) do not, individually or in the
aggregate, interfere with the use and enjoyment of the property subject thereto.
"Person" means any individual, firm, corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
limited liability company, Governmental Authority or other entity of any kind,
and shall include any successor (by merger or otherwise) of such entity.
"Pre-Closing Environmental Matters" means (i) the production, use,
generation, storage, treatment, recycling, disposal, discharge, release, or
other handling or disposition of any kind at any time on or prior to the Closing
Date (collectively "Handling") of any Hazardous Material, either in, on, or
under any real property or facility (including the Facilities) owned, leased or
used at any time by the Company (or a predecessor or affiliate of the Company)
including without limitation the effects of such Handling of Hazardous Materials
on resources, persons, or property within or outside the boundaries of any
facility owned, operated or otherwise used by the Company; (ii) the presence as
of the Closing Date of Hazardous Materials in, on or under any facility
(including the Facilities) owned, leased or used at any time by the Company
regardless of how the Hazardous Materials came to rest at, on or under such
facility, (iii) the failure on or prior to the Closing Date of any facility or
any operations of the Company to be in compliance with an Environmental Laws,
and (iv) any other act, omission or condition existing prior to the Closing Date
which gives rise to liability under any Environmental Laws with respect to the
Company.
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"Preferred Stock" means the Series A Convertible Preferred Stock, par
value $.01 per share, of the Company, or any other capital stock of the Company
into which such stock is reclassified or reconstituted.
"Qualified Initial Public Offering" shall mean a public offering,
underwritten by a reputable and nationally recognized underwriter, pursuant to
an effective registration statement under the Securities Act of shares of the
Common Stock, (i) the aggregate gross proceeds of which equal or exceed
$15,000,000 and (ii) the per share offering price to the public of which equals
or exceeds five (5) times the per share Purchase Price; provided, however, that
the per share offering price referred to in clause (ii) shall be adjusted to
reflect the effect of any stock split or any subdivision, reclassification,
combination or like event of or with respect to outstanding shares of Common
Stock occurring after the Initial Issue Date.
"Registration Rights Agreement" means the Registration Rights Agreement
substantially in the form attached hereto as Exhibit E.
"Requirements of Law" means, as to any Person, the provisions of the
Certificate of Incorporation and By-laws or other organizational or governing
documents of such Person, and any law, treaty, rule, regulation, right,
privilege, qualification, license or franchise, order, judgment, or
determination, in each case, of an arbitrator or a court or other Governmental
Authority, in each case, applicable to or binding upon such Person or any of its
property (or to which such Person or any of its property is subject) or
applicable to any or all of the transactions contemplated by or referred to in
the Transaction Agreements.
"Securities" means the Preferred Stock and the Warrants.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder.
"Shareholders' Agreement" means the Shareholders' Agreement among the
Company, Xxxx Xxxxxxx and the Purchasers substantially in the form attached
hereto as Exhibit F.
"Shares" means the Common Stock and the Preferred Stock.
"Tax" or "Taxes" shall mean all federal, state, local, foreign and other
taxes, assessments or other government charges, including, without limitation,
income, estimated income, business, occupation, franchise, property, sales,
transfer, use, employment, commercial rent or withholding taxes, including
interest, penalties and additions in connection therewith for which the Company
may be liable.
"Transaction Agreements" means collectively, this Agreement, the
Acquisition Agreement, the Contribution Agreement, the Employment Agreement, the
Guaranty Agreement, the Registration Rights Agreement, the Shareholders'
Agreement, the Transition Services Agreement, and the Warrants.
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"Transaction Expenses" means any and all reasonable out-of-pocket
expenses incurred by the Purchasers in connection with the legal and financial
due diligence review of the Condition of the Company conducted by the
Purchasers, the negotiation and preparation of the Transaction Agreements, the
consummation of the transactions contemplated thereby and preparation for any of
the foregoing, including, without limitation, travel expenses, fees, charges and
disbursements of counsel and any similar or related costs and expenses;
provided, however, that with respect to legal fees and costs, such legal fees
and costs shall be limited to those charged by one firm of counsel representing
all Purchasers.
"Transition Services Agreement" means the Transition Services Agreement
between the Company and Xxxxxxx Hills Cajun, Inc. substantially in the form
attached hereto as Exhibit G.
"Warrants" means those certain warrants in the form attached hereto as
Exhibit H to purchase shares of Series A Convertible Preferred Stock.
"Welfare Plan" means any "employee welfare benefit plan" as defined in
Section 3(l) of ERISA, (A) which the Company or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or under which the
Company or any ERISA Affiliate may incur any liability and (B) which covers any
employee or former employee of the Company or any ERISA Affiliate (with respect
to their relationship with such entities).
1.2 Accounting Terms; Financial Statements. All accounting terms used
herein not expressly defined in this Agreement shall have the respective
meanings given to them in accordance with GAAP.
1.3 Knowledge Standard. When used herein, the phrase "to the knowledge
of" any Person, "to the best knowledge of" any Person or any similar phrase
shall mean, (i) with respect to any individual, the actual knowledge of such
Person (ii) with respect to any corporation (or a limited liability company),
the actual knowledge of officers and directors, or Persons acting in similar
capacities, of such corporation and the knowledge of such facts that such
persons should have in the exercise of their duties after reasonable inquiry and
(iii) with respect to a partnership, the actual knowledge of the officers and
directors of the general partner of such partnership and the knowledge of such
facts that such persons should have in the exercise of their duties after
reasonable inquiry. When used herein, the phrase "to the knowledge of the
Company," "to the best knowledge of the Company" or any similar phrase shall
mean "to the best knowledge of the Company and each Company Affiliate" using the
standards set forth in the previous sentence.
1.4 Other Defined Terms. The following terms shall have the meanings
specified in the Sections set forth below:
Term Section
---- -------
Actions 5.9
Certificate 2.1
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Closing 2.3
Closing Date 2.3
Indemnified Party 8.1
Indemnifying Party 8.1
Intellectual Property 5.13
Liability (and Liabilities) 8.1
Preferred Shares 2.1
Pro Forma Balance Sheet 3.17
Purchase Price 2.2
Purchased Securities 2.2
Taxpayers 5.14
Unaudited Financial Statements 5.10
Warrant Shares 2.1
ARTICLE 2
AUTHORIZATION OF PREFERRED STOCK;
PURCHASE AND SALE OF SECURITIES
2.1 Preferred Stock. The Company has authorized (a) the issuance and
sale to the Purchasers of 497,500 shares of Preferred Stock (the "Preferred
Shares") and the Warrants exercisable for an aggregate of 124,375 shares of
Preferred Stock (the "Warrant Shares") and (b) has duly adopted resolutions
establishing the rights, preferences, privileges and restrictions of the
Preferred Stock. The Preferred Stock will have the respective rights,
preferences and privileges set forth in the Company's Certificate of
Incorporation substantially in the form attached hereto as Exhibit I (the
"Certificate").
2.2 Purchase and Sale of Securities. Upon the terms and subject to the
conditions herein contained, at the Closing (as defined herein) on the Closing
Date (as defined herein), the Company agrees that it will issue to each of the
Purchasers, and each Purchaser agrees that it will purchase from the Company,
the number of Preferred Shares and a Warrant exercisable for the number of
Warrant Shares listed next to such Purchaser's name on Schedule 1 hereto
(collectively, the "Purchased Securities"). The aggregate purchase price of such
Purchased Securities, to be paid by the Purchasers in the amounts listed next to
each Purchaser's name on Schedule 1 hereto shall be Nine Million, Nine Hundred
and Fifty Thousand Dollars ($9,950,000) (the "Purchase Price"). The Purchase
Price is subject to adjustment which is reflected in the Warrants to be issued
at Closing.
2.3 Closing. The closing of the sale to and purchase by the Purchasers
of the Securities referred to in Section 2.2 hereof (the "Closing") shall occur
at the offices of Squire, Xxxxxxx & Xxxxxxx, 00 Xxxxx Xxxxxxx, Xxxxx 0000,
Xxxxxxx, XX 00000 at 10:00 a.m., Phoenix, AZ time on February 29, 1996 or at
such different time of day as the Purchasers and the Company shall agree (the
"Closing Date"). At the Closing, (i) the Company shall deliver to each Purchaser
certificates evidencing the Securities being purchased by such Purchaser, free
and clear of any Liens of any nature whatsoever, other than those created by the
Certificate,
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registered in such Purchaser's name, and (ii) each Purchaser shall deliver to
the Company the portion of the Purchase Price listed next to such Purchaser's
name on Schedule 1 hereto, by cashier's check or wire transfer of immediately
available funds.
2.4 Fees and Expenses. The Company shall reimburse the Purchasers for
all Transaction Expenses, at the Closing out of the proceeds of the sale of the
Securities hereunder. If the Closing does not occur for any reason other than a
refusal or failure of Purchasers to close in material breach hereof by the
Purchasers, the Company shall reimburse the Purchasers for all Transaction
Expenses promptly upon request therefor, which payment shall be made by wire
transfer of immediately available funds to an account or accounts designated by
the Purchasers.
ARTICLE 3
CONDITIONS TO THE OBLIGATION
OF THE PURCHASERS TO PURCHASE THE SECURITIES
The obligation of each Purchaser to purchase the Securities, to pay the
purchase prices therefor and to perform any obligations hereunder on the Closing
Date (unless otherwise specified) shall be subject to the satisfaction as
determined by, or waiver by, such Purchaser of the following conditions on or
before the Closing Date:
3.1 Representations and Warranties. The representations and warranties
of the Company contained in Article 5 hereof shall be true and correct at and as
of the Closing Date (both before and after giving effect to the transactions
contemplated under this Agreement) as if made at and as of such date, except
that the timely filing and payment of Taxes as set forth in the first sentence
of Section 5.14(a) and Section 5.14(b) shall be true and correct at and as of
the Closing Date (both before and after giving effect to the transactions
contemplated under this Agreement) as if made at and as of such date to the
extent that any failure to timely file or pay such Taxes shall not have a
Material Adverse Effect.
3.2 Compliance with Terms and Conditions of this Agreement. The Company
shall have performed and complied with all of the agreements and conditions set
forth herein that are required to be performed or complied with by the Company
on or before the Closing Date.
3.3 Delivery of Certificates Evidencing the Securities. The Company
shall contemporaneously deliver to each Purchaser the certificates evidencing
the Securities as set forth in Section 2.3.
3.4 Closing Certificates. The Company shall have delivered to each
Purchaser a certificate executed by an authorized officer of the Company
certifying that the representations and warranties of the Company contained in
the Agreement are true and correct on and as of the Closing Date, and that the
conditions set forth in this Section 3 to be satisfied by the Company have been
satisfied on and as of the Closing Date.
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3.5 Secretary's Certificates. Each Purchaser shall have received a
certificate from the Company, dated as of the Closing Date and signed by the
Secretary or an Assistant Secretary of the Company, certifying that the attached
copies of the Certificate of Incorporation, By-laws of the Company, and
resolutions of the Board of Directors of the Company approving the Transaction
Agreements and the transactions contemplated thereby, are all true, complete and
correct and remain unamended and in full force and effect.
3.6 Documents . Each Purchaser shall have received true, complete and
correct copies of such documents and such other information as it may have
reasonably requested in connection with or relating to the sale of the
Securities and the transactions contemplated by the Transaction Agreements, all
in form and substance reasonably satisfactory to the Purchasers prior to the
Closing.
3.7 Purchase Permitted by Applicable Laws. The acquisition of and
payment for the Securities to be acquired by the Purchasers hereunder and the
consummation of the transactions contemplated by the Transaction Agreements
shall not (a) violate any Requirements of Law, (b) result in a material breach
or default (i) under any of the Contractual Obligations of the Company or (ii)
under any order, writ, judgment, injunction, decree, determination or award of
any court, arbitrator, or commission, board, bureau, agency or other
governmental instrumentality, or (c) result in, or require, the creation or
imposition of any Lien upon or with respect to any of the property of the
Company.
3.8 Opinion of Counsel. Each Purchaser shall have received an opinion of
Squire, Xxxxxxx & Xxxxxxx, counsel to the Company, dated as of the Closing Date
in a form mutually agreed upon by Squire, Xxxxxxx & Xxxxxxx and Xxxxxx &
Xxxxxxx, counsel to the Purchasers.
3.9 Approval of Counsel to Purchasers. All actions and proceedings
required to be performed on or prior to the Closing Date hereunder and all
documents required to be delivered by the Company on or prior to the Closing
Date as required by this Agreement, shall have been acceptable to Xxxxxx &
Xxxxxxx, counsel to the Purchasers, in their reasonable judgment as to their
form and substance.
3.10 Consents and Approvals. All consents, exemptions, authorizations,
or other actions by, or notices to, or filings with, Governmental Authorities
and other Persons in respect of all Requirements of Law (except with respect to
any post-Closing filing requirements required by (i) the Arizona State
Department of Liquor License and Control, (ii) the California State Department
of Liquor License and Control, (iii) the Nevada State Department of Liquor
License and Control, or (iv) any federal or state securities agencies) and with
respect to those material Contractual Obligations of the Company, necessary or
required in connection with the execution, delivery or performance of the
Transaction Agreements (including, without limitation, the issuance of the
Securities, based solely on the Requirements of the Law and facts and
circumstances in effect as of the Closing Date, and issuance of the Common Stock
upon conversion or exercise of the Securities) by the Company, and shall have
been obtained and be in full force and effect, and the Purchasers shall have
been furnished with appropriate evidence
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thereof, and all waiting periods shall have lapsed without extension or the
imposition of any conditions or restrictions.
3.11 Certain Waivers. Each holder of the shares of the capital stock of
the Company (or any other party who may possess such rights) shall have waived
any and all preemptive rights, rights of first refusal, "tag along" rights,
rights of co-sale and any similar rights with respect to the issuance of the
Preferred Shares contemplated hereby.
3.12 No Material Adverse Change. Since the Balance Sheet Date, there
shall have been no Material Adverse Effect.
3.13 Certificate and By-laws. The Company shall have adopted and filed
the Certificate of Incorporation in the form of Exhibit I hereto (with such
changes as agreed to by the Purchasers) and adopted the By-laws of the Company
in the form of Exhibit J hereto.
3.14 No Material Judgment or Order. There shall not be on the Closing
Date any judgment or order of a court of competent jurisdiction or any ruling of
any Governmental Authority affecting the Company or any Company Affiliate or any
condition imposed under any Requirement of Law affecting the Company or any
Company Affiliate which, in the reasonable judgment of the Purchasers, would (i)
prohibit the purchase of the Securities or the consummation of the other
transactions contemplated hereunder, (ii) subject the Purchasers to any penalty
if the Securities were to be purchased hereunder, (iii) question the validity or
legality of the transactions contemplated hereby, or (iv) be reasonably expected
to materially adversely affect the value of the capital stock of the Company,
the Securities or have a Material Adverse Effect.
3.15 Financial Statements. The Company shall have delivered to the
Purchasers a copy of the combined audited balance sheets of the Company
Affiliates as of December 31, 1995, which financial statements shall fairly
present in all material respects the financial position and the results of
operations and cash flows of each Company Affiliate for such period in
conformity with GAAP.
3.16 Pro Forma Balance Sheet. The Company shall have delivered to the
Purchasers on or before the Closing Date pro forma balance sheet dated as of the
Balance Sheet Date (the "Pro Forma Balance Sheet"), setting forth the assets and
liabilities of the Company after giving effect to the transactions referred to
in the Transaction Agreements (including the payment of all fees and expenses
estimated to be paid or incurred in connection therewith), certified on behalf
of the Company by Xxxx Xxxxxxx, acting as an officer of the Company, as fairly
presenting the assets and liabilities of the Company and each Company Affiliate
as of the Balance Sheet Date, based on the assumptions set forth therein.
3.17 Budget. The Company previously has delivered to the Purchasers a
copy of the budget (the "Budget") for the Company's fiscal year ending December
31, 1996. As of the date hereof, the Budget represents the Company's
management's good faith estimate of the future financial and operating
performance of the Company (for the period set forth therein), based upon the
best currently available information. As of the Closing Date, no event shall
have
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occurred that would result in a material adverse change in the Budget or the
assumptions underlying the Budget.
3.18 Contribution Agreement. The Company and Xxxxxxx shall
contemporaneously enter into and consummate the Contribution Agreement
substantially in the form attached hereto as Exhibit A.
3.19 Employment Agreement. The Company and Xxxxxxx shall
contemporaneously duly execute and deliver to the Purchasers an Employment
Agreement substantially in the form attached hereto as Exhibit K.
3.20 Guaranty Agreement. Xxxxxxx shall have entered into the Guaranty
Agreement substantially in the form attached hereto as Exhibit D.
3.21 Registration Rights Agreement. The Company shall contemporaneously
duly execute and deliver to each Purchaser the Registration Rights Agreement
substantially in the form attached hereto as Exhibit E.
3.22 Shareholders' Agreement. The Company, Xxxxxxx and the Purchasers
shall contemporaneously enter into a Shareholders' Agreement substantially in
the form attached hereto as Exhibit F.
3.23 Transition Services Agreement. The Company shall have entered into
the Transition Services Agreement substantially in the form attached hereto as
Exhibit G.
3.24 Corporate Restructuring. The Corporate Restructuring shall have
been completed in form and substance reasonably satisfactory to the Purchasers.
ARTICLE 4
CONDITIONS TO THE OBLIGATION OF THE
COMPANY TO CLOSE
The obligation of the Company to issue and sell the Securities and the
other obligations of the Company hereunder, shall be subject to the satisfaction
as determined by, or waiver by, the Company of the following conditions on or
before the Closing Date:
4.1 Representations and Warranties. The representations and warranties
of the Purchasers contained in Section 6 hereof shall be true and correct at and
as of the Closing Date (both before and after giving effect to the transactions
contemplated under this Agreement) as if made at and as of such date.
4.2 Compliance with Terms and Conditions of this Agreement. The
Purchasers shall have performed and complied with all of the agreements and
conditions set forth
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herein that are required to be performed or complied with by the Purchasers on
or before the Closing Date.
4.3 Certificates. The Company shall have received (i) for each Purchaser
that is a corporation, a certificate from such corporation, dated as of the
Closing Date and signed by the Secretary or an Assistant Secretary of the
Company, certifying that the attached resolutions of the Board of Directors of
such corporation approving the Transaction Agreements and the transactions
contemplated thereby, are true, complete and correct and remain unchanged and in
full force and effect; and (ii) for each Purchaser that is not a corporation, a
certificate executed by such Person as the Company shall reasonably deem
appropriate under the circumstances, certifying that all approvals required
according to such Purchaser's organizational documents have been duly obtained,
and remain unchanged and in full force and effect.
4.4 Documents. The Company shall have received true, complete and
correct copies of such documents and such other information as it may have
reasonably requested in connection with or related to the purchase of the
Securities by each Purchaser and the transactions contemplated by the
Transaction Agreement, all in form and substance reasonably satisfactory to the
Company prior to the Closing, including without limitation the Registration
Rights Agreement and the Shareholders Agreement executed by the Purchasers,
unless the execution of such documents by the Company has been waived by the
Purchasers as a condition to their obligation to purchase the Securities.
4.5 Closing Certificate. Each Purchaser shall have delivered to the
Company a certificate executed by such Purchaser certifying that the
representations and warranties of such Purchaser contained in this Agreement are
true and correct on and as of the Closing Date, and that the conditions set
forth in this Section 4 to be satisfied by such Purchaser have been satisfied on
and as of the Closing Date.
4.6 Issuance Permitted by Applicable Laws. The issuance of the
Securities by the Company hereunder, acquisition of the Securities by the
Purchaser hereunder and the consummation of the transactions contemplated by the
Transaction Agreements shall not (a) violate any Requirements of Law, or (b)
result in a breach or default (i) under any of the Contractual Obligations of
the Purchasers, or (ii) under any order, writ, judgment, injunction, decree,
determination or award of any court, arbitrator, or commission, board, bureau,
agency or other governmental instrumentality, or (c) require any consents,
approvals, exemptions, authorizations, registrations, declarations or filings by
the Purchasers.
4.7 Payment of Purchase Price. The Purchasers shall tender to the
Company the Purchase Price in the manner set forth in Section 2.2 in the
respective amounts specified on Schedule 1 hereto.
4.8 Approval of Counsel to Company. All actions and proceedings required
to be performed on or prior to the Closing Date hereunder and all documents
required to be delivered by the Purchasers on or prior to the Closing Date as
required by this Agreement, shall have been acceptable to Squire, Xxxxxxx &
Xxxxxxx, counsel to the Company, in their reasonable judgment as to their form
and substance.
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4.9 Consents and Approvals. All consents, exemptions, authorizations, or
other actions by, or notices to, or filings with. Governmental Authorities and
other Persons in respect of all Requirements of Law and with respect to those
material Contractual Obligations of the Purchasers; necessary or required in
connection with the execution, delivery or performance of the Transaction
Agreements by each Purchaser, shall have been obtained and be in full force and
effect, and the Company shall have been furnished with appropriate evidence
thereof as requested by the Company and all waiting periods shall have lapsed
without extension or imposition of any conditions or restrictions.
4. 10 No Material Judgment or Order. There shall not be on the Closing
Date any judgment or order of a court of competent jurisdiction or any ruling of
any Governmental Authority or any condition imposed under any Requirements of
Law which, in the reasonable judgment of the Company would (i) prohibit the sale
of the Securities or the consummation of the other transactions contemplated
hereunder, (ii) subject the Company to any penalty if the Securities were to be
sold hereunder, or (iii) question the validity or legality of the transactions
contemplated hereby.
ARTICLE 5
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchasers as of the
date hereof as follows:
5.1 Corporate Existence and Authority. The Company (a) is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware, (b) has all requisite corporate power and authority to own
and operate its property, to lease the property it operates as lessee and to
conduct the business in which it is currently, or is currently proposed to be
engaged, (c) is duly qualified as a foreign corporation, licensed and in good
standing in each jurisdiction where the failure to do so would have a Material
Adverse Effect, and (d) has the corporate power and authority to execute,
deliver and perform its obligations under each Transaction Agreement to which it
is or will be a party.
5.2 Corporate Authorization, No Contravention. The execution, delivery
and performance by the Company of each of the Transaction Agreements and the
consummation of the transactions contemplated thereby, including without
limitation, the issuance of the Securities (a) has been duly authorized by all
necessary corporate action, including, if required, stockholder action, (b) does
not and will not conflict with or contravene the terms of the Certificate or the
By-Laws of the Company, or any amendment thereof; and (c) does not and will not
violate, conflict with or result in any material breach or contravention of (i)
any Contractual Obligation of the Company or any of its Subsidiaries, or (ii)
any Requirements of Law applicable to the Company or any of its Subsidiaries.
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5.3 Governmental Authorization, Third Party Consents. Except as set
forth on Schedule 5.3, no approval, consent, compliance, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or any other Person in respect of any applicable
Requirements of Law, and no lapse of a waiting period under any applicable
Requirements of Law, is necessary or required in connection with the execution,
delivery or performance (including, without limitation, the issuance of the
Securities, the issuance of the Common Stock upon the conversion or exercise of
the Securities and execution, delivery and performance of the Contribution
Agreement by the Company and Xxxxxxx) by the Company or the enforcement against
the Company of the Transaction Agreements, or the transactions contemplated
thereby.
5.4 Binding Effect. The Transaction Agreements have been duly executed
and delivered by the Company and constitute the legal, valid and binding
obligations of the Company enforceable against the Company in accordance with
their terms, except as enforceability may be limited by applicable bankruptcy,
insolvency or other similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity relating to enforceability.
5.5 Other Agreements. Neither the Company, the Company Affiliates nor
Xxxxxxx have previously entered into any agreements which are currently in
effect or to which the Company, the Company Affiliates and Xxxxxxx is currently
bound, granting any registration or other material rights to any Person, the
provision or performance of which would render the provision or performance
(including, without limitation, the issuance of the Securities and the issuance
of the Common Stock upon the conversion or exercise of the Securities and the
issuance of Common Stock upon the conversion or exercise of the Securities) of
the material rights to be granted to the Purchasers by the Company in the
Transaction Agreements impracticable.
5.6 Capitalization.
(a) As of the date hereof, the capital stock of the Company
consists solely of (i) 8,000,000 authorized shares of Common Stock (of which 100
are issued and outstanding and (ii) 2,000,000 authorized shares of Preferred
Stock. Immediately following the Closing (i) 500,000 shares of Common Stock will
be issued and outstanding; (ii) 933,541 shares of Common Stock will be reserved
for issuance upon (a) the exercise of options and warrants to purchase such
shares, (b) the conversion of Preferred Stock and (c) the conversion of
Preferred Stock issued upon the exercise of the Warrants and certain warrants
issued to Xxxxxxxxxx Securities; (iii) 497,500 shares of Preferred Stock will be
issued and outstanding; (iv) 124,375 shares of Preferred Stock will be reserved
for issuance upon exercise of the Warrants; (v) 12,438 shares of Preferred Stock
will be reserved for issuance upon exercise of certain warrants issued to
Xxxxxxxxxx Securities; (vi) 170,621 shares of Preferred Stock will be reserved
for issuance as "payment-in-kind" dividends of Preferred Stock. A total of
1,250,483 fully diluted shares of Common Stock will be outstanding immediately
following the Closing, assuming the conversion of all outstanding shares of
Preferred Stock and the exercise of all outstanding options and warrants. All
outstanding shares of capital stock of the Company are, and the shares of
Preferred Stock (when issued, sold and delivered against payment therefor) and
the shares of Preferred Stock issuable pursuant to the Warrant (when issued and
delivered against any applicable payment therefore) and as "payment-in-kind"
shares in respect
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of Preferred Stock will be, duly authorized and validly issued, fully paid,
nonassessable and free and clear of any Liens, preferential rights, priorities,
claims, options, charges or other encumbrances or restrictions, other than those
created by the Certificate and the Shareholders' Agreement.
(b) Schedule 5.6 sets forth the name of each holder of the issued
and outstanding capital stock of the Company, the number of shares of such
capital stock held of record by each such holder, the name of each Person
holding any options, warrants or other rights to purchase any capital stock of
the Company, the number, class and series of shares of capital stock subject to
each such option, warrant or right and the exercise price of each such option,
warrant or right. Except as set forth on Schedule 5.6, and except for the stock
options, warrants and rights referred to in Section 5.6(a) and the Preferred
Stock, there are no outstanding securities convertible into or exchangeable for
capital stock of the Company or options, warrants or other rights to purchase or
subscribe to capital stock of the Company or contracts, commitments, agreements,
understandings or arrangements of any kind to which the Company or any such
holder of capital stock is a party relating to the issuance of any capital stock
of the Company, any such convertible or exchangeable securities or any such
options, warrants or rights.
(c) Except as set forth on Schedule 5.6 and in the Transaction
Agreements, no Person has any preemptive rights, rights of first refusal, "tag
along" rights, rights of co-sale or any similar rights with respect to the
issuance of the Preferred Shares contemplated hereby. Schedule 5.6 identifies
all Persons holding any such rights and describes the material terms of all such
rights and as of the Closing Date.
5.7 Company Affiliates. Schedule 5.7 sets forth a complete and accurate
list of all of the Company Affiliates and all entities that own or operate a X.
X. Xxxxx'x China Bistro together with their respective jurisdictions of
incorporation or organization. Each Company Affiliate that is a corporation or a
limited liability company is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, with the
corporate or requisite power and authority to own its properties and conduct its
business. Each Company Affiliate that is a partnership is an existing
partnership under the laws of the jurisdiction of its formation and has full
partnership power and authority to own its properties and conduct its business.
Each Company Affiliate is qualified and licensed to transact business in each
jurisdiction where the failure to do so would have a Material Adverse Effect.
All of the outstanding shares of capital stock of the Company Affiliates that
are corporations have been duly authorized and validly issued and are fully paid
and nonassessable. Except as set forth on Schedule 5.7, all of the outstanding
shares of capital stock of, or other ownership interests in, each of the Company
Affiliates are owned by the Company free and clear of any Liens, claims,
options, charges or other encumbrances, except as expressly provided in the
organizational documents of the Company Affiliates. Except as set forth on
Schedule 5.7, no Company Affiliate has outstanding options, warrants,
subscriptions, calls, rights, convertible securities or other agreements or
commitments obligating the Company Affiliate to issue, transfer or sell any
securities of the Company Affiliate.
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5.8 Private Offering. No form of general solicitation or general
advertising was used by the Company or its representatives in connection with
the offer or sale of the Preferred Shares. No registration of the Preferred
Shares pursuant to the provisions of the Securities Act or any state securities
or "blue sky" laws will be required by the offer, sale or issuance of the
Securities pursuant to this Agreement.
5.9 Litigation. There is no complaint, action, order, writ, injunction,
judgment or decree outstanding, or claim, suit, litigation, proceeding, labor
dispute, arbitral action or investigation (collectively, "Actions") pending or,
to the knowledge of the Company, threatened against, relating to or affecting
(i) the assets of the Company or the Company Affiliates or (ii) the transactions
required to be performed under this Agreement or by the Transaction Agreements.
Neither the Company nor any of the Company Affiliates is in default with respect
to any judgment, order, writ, injunction or decree of any court or governmental
agency, and there are no unsatisfied judgments against the Company or any
Company Affiliate. There is not a reasonable likelihood of an adverse
determination of any pending Action that would, individually or in the
aggregate, have a Material Adverse Effect.
5.10 Financial Statements
(a) The Company has furnished the Purchasers with the unaudited
balance sheets of each Company Affiliate as of the Balance Sheet Date and the
related separate statements of operations and cash flows of each Company
Affiliate for the eleven (11) month period ending on the Balance Sheet Date,
certified on behalf of the Company by the Chief Financial Officer of the Company
or, if there is no such Chief Financial Officer, another responsible officer of
the Company (the "Unaudited Financial Statements"). The Unaudited Financial
Statements were properly prepared on a tax basis and present in all material
respects the separate financial position of each Company Affiliate as of the
dates thereof and the results of operations and cash flows of each Company
Affiliate for the periods set forth therein.
(b) The Pro Forma Balance Sheets delivered to the Purchasers set
forth the assets and liabilities of the Company and each Company Affiliate on a
pro forma consolidated basis after giving effect to the consummation of this
Agreement and the transactions contemplated hereby. The Pro Forma Balance Sheets
were properly prepared on a tax basis and present the assets and liabilities of
the Company and each Company Affiliate as of the Balance Sheet Date based on the
assumptions set forth therein.
5.11 Title and Condition of Assets.
(a) The Company and each Company Affiliate has good title to all
of the personal property reflected on the balance sheets included in the
Unaudited Financial Statements or acquired by the Company or any of the Company
Affiliates since the Balance Sheet Date, and all real and personal property
reflected on such balance sheets or acquired by the Company or the Company
Affiliates since the Balance Sheet Date is free and clear of any Liens or
defects of title, other than Permitted Liens. All real property which is leased
by the Company and the Existing Subsidiaries is listed on Schedule 5.11(a)
hereto. The Company and each Company Affiliate has a valid and enforceable
leasehold interest in all real property leased
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by it pursuant to the terms of the respective lease agreements (assuming that
each respective landlord has good and marketable title to all real property that
is subject to such leases and except as enforceability may be limited by
applicable bankruptcy laws or rights of creditors generally.)
(b) The Facilities and Equipment are in good operating condition
and repair (except for ordinary wear and tear and any defect the cost of
repairing which would not be material), are sufficient for the operation of the
business of the Company and each Company Affiliate and are in conformity in all
material respects with applicable laws, ordinances, orders, regulations and
other requirements (including applicable zoning, environmental, motor vehicle
safety standards, occupational safety and health laws and regulations) relating
thereto, except where such failure to conform would not have a Material Adverse
Effect. The Company and each Company Affiliate enjoy peaceful and undisturbed
possession of all Facilities owned or leased by the Company or such Company
Affiliate, and, to the best knowledge of the Company, such Facilities are not
subject to any encroachments, building or use restrictions, exceptions,
reservations or limitations which in any material respect interfere with or
impair the present and continued use thereof in the usual and normal conduct of
the business of the Company or each Company Affiliate. There are no pending or,
to the best knowledge of the Company, threatened, condemnation proceedings
relating to any of the Facilities. The Facilities and the Equipment are insured
and are, to the best of the Company's knowledge, structurally sound with no
material defects.
(c) All assets are valued on the books of the Company or the
Company Affiliate at or below actual cost less appropriate depreciation charges.
Neither the Company nor any Company Affiliate has depreciated any of the Assets
for tax purposes in any manner inconsistent with the Code or the rules,
regulations, or guidelines of the Internal Revenue Service.
5.12 Contractual Obligations.
(a) Neither the Company nor any of the Company Affiliates is in
default or breach under or with respect to any Contractual Obligation to which
it is a party (and to the best knowledge of the Company and such Company
Affiliates no other party to any such Contractual Obligation is in default or
breach thereunder), except any such default which, individually or together with
all such defaults, would not have a Material Adverse Effect.
(b) Schedule 5.12 lists all of the contracts, leases,
agreements, indentures and undertakings governing or relating to the Contractual
Obligations of the Company and the Company Affiliates other than (i) the
Transaction Agreements, (ii) purchase orders entered into in the ordinary course
of business, and (iii) any such contracts, leases, agreements, indentures or
undertaking that (x) do not involve the receipt or payment of more than $20,000
each, (y) do not involve employment or labor matters and (z) do not contain
covenants materially restricting the Company or any Company Affiliate from
engaging in any line of business. To the best knowledge of the Company, the
Company has provided the Purchaser with true, correct and complete copies of all
written contracts, leases, agreements, indentures and undertakings listed on
Schedule 5.12.
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5.13 Patents, Trademarks, Etc. As of the Closing, the Company owns or is
licensed or otherwise has the right to use all patents, trademarks, service
marks, trade names, copyrights, licenses, franchises and other intellectual
property rights that are material to the operation of the businesses of the
Company (the "Intellectual Property"), and all pending applications related to
such Intellectual Property, registered rights in such Intellectual Property and
executed agreements related to such Intellectual Property are listed on Schedule
5.13 hereto. To the best knowledge of the Company, no product, process, method,
substance or other material presently sold by or employed by the Company, or
which the Company contemplates selling or employing, infringes upon the patents,
trademarks, service marks, trade names, copyrights, licenses or other
intellectual property rights that are owned by others. No litigation is pending
and no claim has been made against the Company or any Company Affiliate or, to
the best knowledge of the Company, is threatened, contesting the right of the
Company or any Company Affiliate to sell or use any product, process, method,
substance or other material presently sold by or employed by the Company or any
Company Affiliate. To the best knowledge of the Company, no patent, invention,
devise, principal or any statute, law, rule, regulation, standard or code is
pending or proposed, which would have a material adverse effect on the Condition
of the Company.
5.14 Tax Matters.
(a) Filing of Tax Returns. Each of the Company and the Company
Affiliates (each such entity hereinafter a "Taxpayer" or collectively the
"Taxpayers") have timely filed with the appropriate taxing authorities all
returns (including without limitation information returns and other material
information) in respect of Taxes required to be filed through the date hereof
and will timely file any such returns required to be filed on or prior to the
Closing Date. The returns and other information filed (or to be filed) are
complete and accurate in all material respects. No Taxpayer has requested any
extension of time within which to file returns (including without limitation
information returns) in respect of any Taxes that have not been filed.
(b) Payment of Taxes. All Taxes of each of the Taxpayers in respect of
periods beginning before the Closing Date have been timely paid, or will be
timely paid prior to the Closing Date, to the extent due and payable prior to
the Closing Date, and no Taxpayer has any material liability for Taxes in excess
of the amounts so paid. All Taxes that each Taxpayer has been required to
collect or withhold have been duly collected or withheld and, to the extent
required when due, have been or will be (prior to the Closing Date) duly paid to
the proper taxing authority.
(c) Audits, Investigations or Claims. The federal income tax returns of
each of the Taxpayers have not been examined by the Internal Revenue Service,
and no material deficiencies for Taxes of any of the Taxpayers have been
claimed, proposed or assessed by any taxing or other governmental authority
against any of the Taxpayers. There are no pending or, to the best knowledge of
the Taxpayers, threatened audits, investigations or claims for or relating to
any material additional liability to any of them in respect of Taxes, and there
are no matters under discussion with any governmental authorities with respect
to Taxes that in the reasonable judgment of any of the Taxpayers, or its or
their counsel, is likely to result in a material
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additional liability to any of them for Taxes. No audits of any of the
Taxpayers' federal, state, and local returns for Taxes by the relevant taxing
authorities have occurred. None of the Taxpayers have been notified that any
taxing authority intends to audit a return for any period. No extension of a
statute of limitations relating to Taxes is in effect with respect to any of the
Taxpayers.
(d) Lien. There are no liens for Taxes (other than for current Taxes
not yet due and payable) on any assets of any Taxpayer.
(e) Partnership Status. Each of the Company Affiliates which purports to
be a limited liability company or a partnership is properly treated as a
partnership for federal income tax purposes and not as an association or
publicly traded partnership taxable as a corporation, and has been properly so
treated since the time of its organization.
(f) Tax Elections; Tax Sharing Arrangements
(i) All material elections with respect to Taxes affecting each
of the Taxpayers as of the date hereof are set forth on Schedule 5.14.
(ii) None of the Taxpayers have made an election, and none of
them are required, to treat any asset as owned by another person or as
tax-exempt bond financed property or tax-exempt use property within the meaning
of section 168 of the Code or under any comparable state or local income tax or
other tax provision.
(iii) None of the Taxpayers are a party to or bound by any
binding tax sharing, tax indemnity or tax allocation agreement or other similar
arrangement with any other party.
(iv) None of the Taxpayers have filed a consent pursuant to the
collapsible corporation provisions of Section 341(f) of the Code (or any
corresponding provision of state or local law) or agreed to have Section
341(f)(2) of the Code (or any corresponding provision of state or local law)
apply to any disposition of any asset owned by it.
(g) Affiliated Group. None of the Taxpayers have ever been a member of
an affiliated group of corporations, within the meaning of Section 1504 of the
Code.
(h) Section 481(a). None of the Taxpayers have agreed to make, or are
required to make, any adjustment under Section 481(a) of the Code by reason of a
change in accounting method or otherwise.
(i) Excess Parachute Payments. None of the Taxpayers are a party to any
agreement, contract, arrangement or plan that has resulted or would result,
separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code.
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(j) No Joint Venture. Except as set forth on Schedule 5.14, none of the
Taxpayers is a party to any joint venture, partnership, or other arrangement or
contract which could be treated as a partnership for federal income tax
purposes.
5.15 Severance Arrangements. Except pursuant to the Employment
Agreement, neither the Company nor any Company Affiliate has not entered into
any severance or similar arrangement in respect of any present or former
employee that will result in any obligation (absolute or contingent) of the
Purchasers, the Company to make any payment to any present or former employee
following termination of employment.
5.16 No Material Adverse Change. To the best knowledge of the Company,
since the Balance Sheet Date, there has not been any Material Adverse Effect,
nor to the best knowledge of the Company is any such Material Adverse Effect
threatened.
5.17 Environmental Matters.
(a) Except as set forth on Schedule 5.17, the property, assets
and operations of the Company and each Company Affiliate are and have been in
compliance in all material respects with all applicable Environmental Laws;
there are no Hazardous Materials stored or otherwise located in, on or under any
of the property or assets of the Company and each Company Affiliate, including
the groundwater; and, to the best knowledge of the Company, there have been no
releases or threatened releases of Hazardous Materials in, on or under any
property adjoining any of the property or assets of the Company and each Company
Affiliate. Neither the Company nor any Company Affiliate has stored or caused to
be stored any Hazardous Materials on or under any of the property or assets of
the Company, including the groundwater, other than in compliance with
Environmental Laws; and the Company has not generated, released or discharged
any Hazardous Materials other than in compliance with Environmental Laws.
(b) None of the property, assets or operations of the Company or
any Company Affiliate is the subject of any federal, state or local
investigation evaluating whether (i) any remedial action is needed to respond to
a release or threatened release of any Hazardous Materials into the environment
or (ii) any release or threatened release of any Hazardous Materials into the
environment is in contravention of any Environmental Law.
(c) There are no pending, or, to the best knowledge of the
Company, threatened lawsuits or proceedings against the Company or any Company
Affiliate, with respect to violations of an Environmental Law or in connection
with the presence of or exposure to any Hazardous Materials in the environment
or any release or threatened release of any Hazardous Materials into the
environment, and neither the Company nor any Company Affiliate is or was the
owner or operator of any property which (i) pursuant to any Environmental Law
has been placed on any list of Hazardous Materials disposal sites, including
without limitation, the "National Priorities List" or "CERCLIS List," (ii) has
or, to the best knowledge of the Company, had any subsurface storage tanks
located thereon; or (iii) to the knowledge of the Company, has ever been used as
or for a waste disposal facility, a mine, a gasoline service station or a
petroleum products storage facility.
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(d) Neither the Company nor any Company Affiliate has any
present or contingent liability in connection which the presence either on or
off the property or assets of the Company or any Company Affiliate of any
Hazardous Materials in the environment or any release or threatened release of
any Hazardous Materials into the environment, except for any such liability that
would not have a material adverse effect on the Condition of the Company.
5.18 Investment Company/Government Regulations. Immediately following
the Closing, after giving effect to the transactions contemplated by the
Transaction Agreements, neither the Company nor any Person controlling,
controlled by or under common control with the Company will be an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
The Company is not subject to regulation under the Public Utility Holding
Company Act of 1935, as amended, the Federal Power Act, or any federal or state
statute or regulation limiting its ability to incur Indebtedness.
5.19 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable in connection
with the transactions contemplated hereby based on any agreement, arrangement or
understanding with the Company or any officer, director, shareholder, or
Affiliate of the Company, or any action taken by any such person except for (i)
such fees payable to Xxxxxxxxxx Securities in an amount not to exceed $485,000
and (ii) certain warrants to purchase 12,438 shares of Preferred Stock at an
exercise price of $20.00 per share to be issued to Xxxxxxxxxx Securities.
5.20 Labor Relations and Employee Matters.
(a) Neither the Company nor any Company Affiliate is engaged in
any unfair labor practice. There is (i) no unfair labor practice complaint
pending or, to the best knowledge of the Company, threatened against the Company
or any Company Affiliate before the National Labor Relations Board, and no
grievance or arbitration proceeding arising out of or under collective
bargaining agreements is so pending or, to the best knowledge of the Company,
threatened against the Company or any Company Affiliate (ii) no strike, labor
dispute, slowdown or stoppage pending or, to the best knowledge of the Company,
threatened against the Company or any Company Affiliate and (iii) no union
representation question existing with respect to the employees of the Company or
any Company Affiliate and, to the knowledge of the Company, no union organizing
activities are taking place.
(b) Except as set forth on Schedule 5.12, the Company is not a
party to any employment agreement (other than "at will" employment
relationships), collective bargaining agreement or covenant not to compete.
5.21 Employee Benefits Matters.
Schedule 5.21 contains a complete list of Employee Plans
which cover or have covered employees of the Company or a Company Affiliate
(with respect to their relationship with such entities). True and complete
copies of each of the following documents have been delivered by the Company to
the Purchaser: (i) each Welfare Plan (and, if applicable,
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related trust agreements) which covers or has covered employees of the Company
or a Company Affiliate (with respect to their relationship with such entities)
and all amendments thereto, all written interpretations thereof and written
descriptions thereof which have been distributed to the Company's employees and
all funding instruments, (ii) each Benefit Arrangement (other than "at will"
benefits arrangements) which cover or have covered employees of the Company or a
Company Affiliate (with respect to their relationship with such entities)
including written interpretations thereof and written descriptions thereof which
have been distributed to the Company's employees (including descriptions of the
number and level of employees covered thereby) and a complete description of any
such Benefit Arrangement which is not in writing, (iii) the most recent
determination or opinion letter, if any, issued by the Internal Revenue Service,
with respect to each Welfare Plan (other than a "multiemployer plan," as defined
in Section 3(37) of ERISA) which covers or has covered employees of the Company
or a Company Affiliate (with respect to their relationship with such entities),
and (iv) a description setting forth the amount of any liability of the Company
as of the Closing Date for payments more than thirty days past due with respect
to each Welfare Plan which covers or has covered employees or former employees
of the Company or a Company Affiliate.
Except as set forth in Schedule 5.21, the Company
represents as follows:
(1) Pension Plans and Multiemployer Plans Neither the
Company nor any ERISA Affiliate sponsors, maintains, contributes to, is required
to contribute to or otherwise has a liability or potential liability with
respect to, or has at any time sponsored, maintained, contributed to, or been
required to contribute to, a Pension Plan or a Multiemployer Plan.
(2) Welfare Plans
(i) Each Welfare Plan which covers or has
covered employees or former employees of the Company or a Company Affiliate
(with respect to their relationship with such entities) has been maintained in
material compliance with its terms and, both as to form and operation, with the
requirements prescribed by any and all statutes, orders, rules and regulations
which are applicable to such Welfare Plan, including but not limited to ERISA
and the Code.
(ii) None of the Company, any ERISA Affiliate or
any Welfare Plan has any present or future obligation to make any payment to or
with respect to any present or former employee of the Company or any ERISA
Affiliate pursuant to any retiree medical benefit plan, or other retiree Welfare
Plan, and no condition exists which would prevent the Company from amending or
terminating any such benefit plan or Welfare Plan.
(iii) Each Welfare Plan which covers or has
covered employees or former employees of the Company or a Company Affiliate and
which is a "group health plan," as defined in Section 607(1) of ERISA, has been
operated in material compliance with the provisions of Part 6 of Title 1,
Subtitle B of ERISA and Sections 162K and 4980B of the Code at all times.
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(3) Benefit Arrangements. Each Benefit Arrangement which covers
or has covered employees or former employees of the Company or a Company
Affiliate (with respect to their relationship with such entities) has been
maintained in compliance with its terms and with the requirements prescribed by
any and all statutes, orders, rules and regulations which are applicable to such
Benefit Arrangement, including but not limited to the Code.
(4) Unrelated Business Taxable Income. No Employee Plan (or trust
or other funding vehicle pursuant thereto) is subject to any tax under Code
Section 511.
(5)Deductibility of Payments. There is no contract, agreement,
plan or arrangement covering any employee or former employee of the Company or a
Company Affiliate (with respect to their relationship with such entities) that,
individually or collectively, provides for the payment by the Company of any
amount (i) that is not deductible under Section 162(a)(1) or 404 of the Code or
(ii) for which the deduction by Company would be disallowed under Section 162(m)
of the Code.
(6) Fiduciary Duties and Prohibited Transactions. Neither the
Company nor any plan fiduciary of any Welfare Plan which covers or has covered
employees or former employees of the Company or any ERISA Affiliate, has engaged
in any transaction in violation of Sections 404 or 406 of ERISA or any
"prohibited transaction," as defined in Section 4975(c)(1) of the Code, for
which no exemption exists under Section 408 of ERISA or Section 4975(c)(2) or
(d) of the Code.
(7) Validity and Enforceability. Each Welfare Plan, related trust
agreement or other funding instrument and Benefit Arrangement which covers or
has covered employees or former employees of the Company or a Company Affiliate
(with respect to their relationship with such entities) is legally valid and
binding and in full force and effect.
(8) Litigation. There is no action, order, writ, injunction,
judgment or decree outstanding or claim, suit, proceeding, arbitral action,
governmental audit or investigation relating to or seeking benefits under any
Employee Plan that is pending, or, to the best knowledge of the Company,
threatened against the Company, any ERISA Affiliate or any Employee Plan other
than a domestic relations order or a qualified domestic relations order.
(9) No Amendments. Except for the Employment Agreement, neither
the Company nor any ERISA Affiliate has any announced plan or legally binding
commitment to create any additional Employee Plans which are intended to cover
employees or former employees of the Company or a Company Affiliate (with
respect to their relationship with such entities) or to amend or modify any
existing Employee Plan which covers or has covered employees or former employees
of the Company or a Company Affiliate (with respect to their relationship with
such entities).
(10) No Other Material Liability. No event has occurred in
connection with which the Company or any ERISA Affiliate or any Employee Plan,
directly or indirectly, could be subject to any material liability (i) under any
statute, regulation or governmental order relating to any Employee Plans or (ii)
pursuant to any obligation of the Company or any
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Company Affiliate to indemnify any person against liability incurred under, any
such statute, regulation or order as they relate to the Employee Plans.
(11) No Acceleration or Creation of Rights. Neither the execution
and delivery of this Agreement or other related agreements by the Company nor
the consummation of the transactions contemplated hereby or the related
transactions will result in the acceleration or creation of any rights of any
person to benefits under any Employee Plan.
5.22 Potential Conflicts of Interest. Except as set forth on
Schedule 5.22, no officer, director, or stockholder of ten percent (10%) or
more of the aggregate number of shares of Common Stock then outstanding on a
fully diluted basis of the Company or any Company Affiliate, no spouse of any
such officer, director or stockholder and no Affiliate of the foregoing: (a)
owns, directly or indirectly, any interest in, or is an officer, director,
employee or consultant of, any Person which is, or is engaged in business as, a
competitor, lessor, lessee, supplier, distributor, sales agent or customer of,
or lender to or borrower from, the Company or any Company Affiliate (b) owns,
directly or indirectly, in whole or in part, any tangible or intangible property
that the Company or any Company Affiliate uses in the conduct of business; or
(c) has any cause of action or other claim whatsoever against, or owes any
amount to, the Company or any Company Affiliate, except for claims in the
ordinary course of business such as for accrued vacation pay, accrued benefits
under employee benefit plans, and similar matters and agreements existing on the
date hereof and described in Schedule 5.22.
5.23 Outstanding Borrowings. Schedule 5.23 lists the amount of
all Outstanding Borrowings as of the date hereof and the name of each lender
thereof.
5.24 Insurance Schedule. Schedule 5.24 accurately summarizes all
of the insurance policies or programs of the Company or any Company Affiliate in
effect as of the date hereof (true and correct copies of which have been
provided to the Purchasers), and indicates the insurer's name, policy number,
expiration date, amount of coverage, type of coverage, annual premiums and
deductibles, and also indicates any self-insurance program that is in effect.
5.25 Undisclosed Liabilities. Neither the Company nor any Company
Affiliate have any liabilities or obligations (absolute, accrued, contingent or
otherwise) to the best knowledge of the Company except (i) liabilities that are
reflected and reserved against on the balance sheets included in the Unaudited
Financial Statements (including the notes thereto), (ii) liabilities incurred in
the ordinary course of business and consistent with the past practice of the
Company since the Balance Sheet Date, and which are reflected and reserved for
in the balance sheets included in the Unaudited Financial Statements, and (iii)
liabilities arising under Contractual Obligations described on Schedule 5.12, or
not required to be described on Schedule 5.12 pursuant to clauses (i), (ii) or
(iii) thereof.
5.26 Solvency. Neither the Company nor any Company Affiliate has
(i) made a general assignment for the benefit of its creditors, (ii) filed any
voluntary petition in bankruptcy or suffered the filing of any involuntary
petition in bankruptcy by its creditors, (iii) suffered the appointment of a
receiver to take possession of all or substantially all of its assets or
properties, (iv) suffered the attachment or other judicial seizure of all or
substantially all of
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its assets or (v) admitted in writing its inability to pay its debts as they
come due. After giving effect to the transactions contemplated by the
Transaction Agreements, the Pro Forma Balance Sheets will not show that the
Company will (i) have liabilities which exceed the stated value of its assets,
or (ii) be left with unreasonably small capital with which to engage in its
respective business for the foreseeable future, or (iii) have incurred debts
beyond its ability to pay such debts as they mature.
5.27 Compliance with Law. Except as set forth on Schedule 5.27,
to the best knowledge of the Company, the Company and the Company Affiliates and
the conduct of their businesses is in compliance with all applicable laws,
statutes, ordinances and regulations, whether federal, state or local, except
where the failure to comply would not have a Material Adverse Effect. Neither
the Company nor any Company Affiliate has received any written notice to the
effect that, or to the knowledge of the Company, it is not in compliance with
any of such statutes, regulations, orders, ordinances or other laws where the
failure to comply would have a material adverse effect on the Condition of the
Company or, to the best knowledge of the Company has no reason to anticipate
that any presently existing circumstances are likely to result in violations of
any such regulations which would, in any one case or in the aggregate, have a
Material Adverse Effect.
5.28 No Other Agreements to Sell the Assets or Capital Stock of
the Company. Except as set forth on Schedule 5.28, neither the Company nor any
Company Affiliate has any legal obligation, absolute or contingent, other than
the obligations of the Company and each Company Affiliate under the Transaction
Agreements, to any person or firm to (i) sell the assets other than in the
ordinary course of business consistent with past practices, (ii) sell any
capital stock of the Company (other than as set forth in Section 5.6) or effect
any merger, consolidation or other reorganization of the Company or (iii) enter
into any agreement with respect to any of the foregoing.
5.29 Xxxx-Xxxxx-Xxxxxx. The Person (as that term is defined in 16
C.F.R. Section 801.1(a)(1)) of which the Company is a part does not have total
assets or annual net sales of $100,000,000 or more, as measured under the
applicable rules and regulations interpreting the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act").
5.30 Disclosure.
(a) Agreement and Other Documents. This Agreement does
not, and the documents and certificates executed by the Company or otherwise
furnished by the Company to the Purchasers at the Closing will not, contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained herein or therein, in light of the
circumstances under which they were made, not misleading.
(b) Material Adverse Effects. There is no fact known to
the Company, which the Company has not disclosed to the Purchasers in writing,
which materially adversely affects, or insofar as the Company can reasonably
foresee, will have a Material Adverse Effect.
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ARTICLE 6
REPRESENTATIONS AND
WARRANTIES OF THE PURCHASERS
Each Purchaser, severally and not jointly, hereby represents and
warrants to the Company as of the date hereof as follows:
6.1 Existence and Authority. Such Purchaser (a) is an entity duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its formation, (b) has all requisite power and authority to own
its assets and operate its business, and (c) has all requisite power and
authority to execute, deliver and perform its obligations under each of the
Transaction Agreements to which it is or will be a party.
6.2 Authorization; No Contravention. The execution, delivery and
performance by such Purchaser of the Transaction Agreements to which it is a
party and the consummation of the transactions contemplated thereby, including,
without limitation, the acquisition of the Preferred Shares: (a) is within such
Purchaser's power and authority and has been duly authorized by all necessary
action on the part of such Purchaser; (b) does not conflict with or contravene
the terms of such Purchaser's organizational documents or any amendment thereof;
and (c) will not violate, conflict with or result in any material breach or
contravention of (i) any Contractual Obligation of such Purchaser, or (ii) the
Requirements of Law or any order or decree applicable to such Purchaser.
6.3 Governmental Authorization; Third Party Consent. No approval,
consent, compliance, exemption, authorization, or other action by, or notice to,
or filing with, any Governmental Authority or any other Person in respect of any
Requirements of Law, and no lapse of a waiting period under any Requirements of
Law, is necessary or required in connection with the execution, delivery or
performance by such Purchaser (including, without limitation, the acquisition of
the Securities and issuance of Common Stock upon the conversion or exercise of
the Securities) or enforcement against such Purchaser of this Agreement or the
other Transaction Agreements to which it is a party, or the transactions
contemplated thereby.
6.4 Binding Effect. This Agreement has been duly executed and delivered
by such Purchaser, and this Agreement constitutes the legal, valid and binding
obligation of such Purchaser, enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability.
6.5 Purchase for Own Account. The Securities and the Common Stock to be
issued upon conversion of the Securities, are being or will be acquired by such
Purchaser for its own account and with no intention of distributing or reselling
such securities or any part thereof in any transaction that would be in
violation of the securities laws of the United States of America, or any state,
without prejudice, however, to the rights of such Purchaser at all times to sell
or otherwise dispose of all or any part of the Securities or the shares of
Common Stock issuable upon conversion of the Securities under an effective
registration statement under the
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Securities Act, or under an exemption from such registration available under the
Securities Act, and subject, nevertheless, to the disposition of such
Purchaser's property being at all times within its control. Such Purchaser
agrees not to dispose of any of the Securities or the shares of Common Stock
issuable upon conversion of the Securities, unless it does so only in
compliance with the Securities Act and applicable state securities laws, as then
in effect. Such Purchaser agrees to the imprinting, so long as required by law,
of a legend on certificates representing all of the Securities or the shares of
Common Stock to be issued upon conversion of the Preferred Shares to the
following effect:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE SOLD OR OTHERWISE DISPOSED
OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH
ACT AND APPLICABLE STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR SUCH LAWS.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS SET FORTH IN A SHAREHOLDERS' AGREEMENT DATED AS OF
FEBRUARY, 1996. A COPY OF SUCH AGREEMENT MAY BE OBTAINED FROM THE
COMPANY UPON REQUEST."
6.6 Accredited Investor Status. Such Purchaser is an "accredited
investor" as such term is defined in Rule 501(a) of Regulation D, promulgated
under the Securities Act. Each Purchaser shall provide such information with
respect to its status as an "accredited investor" that the Company shall have
reasonably requested at least ten (10) days prior to the Closing Date.
6.7 Investment Risk. Each Purchaser has the ability to bear the
economic risks of the Purchaser's prospective investment and the Purchaser is
able, without materially impairing its financial condition, to hold the
Preferred Stock for an indefinite period of time and to suffer complete loss on
its investment. Each Purchaser understands and has fully considered for purposes
of this investment the risks of this investment and understands that: (i) this
investment is suitable only for an investor who is able to bear the economic
consequences of losing his or its entire investment; (ii) the Preferred Stock
represents an extremely speculative investment which involves a high degree of
risk of loss; (iii) there are substantial restrictions on the transferability of
the Preferred Stock and, accordingly, it may not be possible for the Purchaser
to liquidate his or its investment in the Preferred Stock; and (iv) there have
been no representations as to the possible future value, if any, of the
Preferred Stock. Each Purchaser acknowledges that it has been provided the
opportunity to ask questions and receive answers from duly authorized officers
or other representatives of the Company concerning the Company. Each Purchaser
acknowledges that its acquisition of the Securities hereunder may involve tax
consequences to such Purchaser and that the Company has not provided such
Purchaser with tax advice.
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Each Purchaser understands and acknowledges that the sale of the
Preferred Stock pursuant to this Agreement will not be registered under the
Securities Act on the grounds that the offering and sale of securities
contemplated by this Agreement are exempt from registration pursuant to Section
4(2) of the Securities Act, and that the Company's reliance upon such exemption
is predicated in part upon the Purchaser's representations set forth in this
Agreement.
6.8 Broker's, Finder's or Similar Fees. There are no brokerage
commissions, finder's fees or similar fees or commissions payable by the Company
in connection with the transactions contemplated hereby based on any agreement,
arrangement or understanding with the Purchasers.
ARTICLE 7
COVENANTS OF THE COMPANY
From the date hereof until the Closing Date, the Company hereby
covenants and agrees with the Purchasers as follows:
7.1 Further Assurances. Upon the terms and subject to the conditions
contained herein, each of the parties hereto agrees, both before and after the
Closing, (i) to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, (ii) to execute any documents, instruments or conveyances of any kind
which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder, and (iii) to cooperate with each other in
connection with the foregoing, including using their reasonable respective best
efforts (A) to obtain all necessary waivers, consents and approvals from other
parties that may be required; (B) to obtain all necessary permits as are
required to be obtained under any federal, state, local or foreign law or
regulations, and (C) to fulfill all conditions to this Agreement.
7.2 Notification of Certain Matters. From the date hereof through the
Closing, the Company shall give prompt notice upon obtaining knowledge thereof
to Purchaser of (a) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or warranty
contained in this Agreement or in any exhibit or schedule hereto to be untrue or
inaccurate in any material respect and (b) any material failure of the Company
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement or any exhibit or schedule hereto.
7.3 Access to Information. From the date hereof through the Closing, the
Company shall, and shall cause its officers, directors, employees and agents to,
afford the Purchasers (or its representatives) access at all times to the
Company's records for the purpose of inspecting the same, and subject to prior
written request, to the officers, employees, agents, attorneys, accountants,
properties, and contracts of the Company, and shall furnish Purchasers
30
37
all financial, operating and other data and information as the Purchasers or
their representatives, may reasonably request.
7.4 Conduct of Business. From the date hereof through the Closing (the
"Interim Period"), the Company shall, except as contemplated by this Agreement,
or as consented to by Purchaser in writing which consent will not be
unreasonably withheld, operate the Company in the ordinary course of business
and in accordance with past practice and will not take any action inconsistent
with this Agreement or with the consummation of the Closing; provided, however,
that the Company may during the Interim Period take such actions as a reasonably
necessary or appropriate in connection with the development of restaurant
facilities located in Irvine, California, Las Vegas, Nevada and the additional
locations set forth in Schedule 7.4 attached hereto so long as the Company (a)
provides advance notice to the Purchasers of any such action and (b) upon
request of any Purchaser, provides to such Purchaser and its counsel copies of
any agreements and other documents relating to such actions. The Company agrees
that neither it, nor anyone acting on its behalf, will offer or sell the
Securities or any other security in a manner that would require the issuance and
sale of the Securities to be registered or qualified pursuant to the provisions
of the Securities Act or any state securities or "blue sky" laws.
7.5 Contribution Agreement. The Company and Xxxxxxx shall consummate the
Contribution Agreement in accordance with its terms concurrently with the
transactions contemplated hereunder.
7.6 Corporate Restructuring. Xxxxxxx shall use his best efforts to cause
the Corporate Restructuring to be completed prior to the Closing Date.
ARTICLE 8
COVENANTS OF THE COMPANY WITH RESPECT
TO THE PERIOD FOLLOWING THE CLOSING
Until (a) all shares of Preferred Stock are no longer outstanding due to
conversion, redemption or otherwise, and (b) the Company has paid to the
Purchasers all other amounts due to them under the Transaction Agreements or the
Certificate, the Company hereby covenants and agrees with the Purchasers as
follows:
8.1 Reservation of Shares. The Company shall at all times reserve and
keep available out of its authorized Common Stock, solely for the purpose of
issue or delivery upon conversion of the Securities as provided in the
Certificate, the maximum number of shares of Common Stock that may be issuable
or deliverable upon such conversion, as well as the number of shares of Common
Stock that may be issuable or deliverable upon conversion of the Securities
issued to the Purchasers as dividends. Such shares of Common Stock shall, when
issued or delivered in accordance with the provisions of the Certificate, be
duly authorized, validly issued and fully paid and non-assessable. The Company
shall issue such Common Stock in accordance with the provisions of the
Certificate and shall otherwise comply with the terms thereof.
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38
8.2 Books and Records. The Company shall, and shall cause each of the
Company Affiliates, together with any newly formed subsidiaries of the Company,
to, keep proper books of record and account, in which full and correct entries
shall be made of all financial transactions and the assets and business of the
Company and each of such Company Affiliates or subsidiaries in accordance with
GAAP, to the extent GAAP is applicable. The Company shall provide the Purchasers
with reasonable access to all such books and records during regular business
hours and allow the Purchasers to make copies and abstracts thereof.
8.3 Use of Proceeds. The Company shall use the proceeds of the sale of
Securities hereunder only (a) as a payment to Xxxxxxx pursuant to the terms of
the Contribution Agreement, (b) as working capital for the Company, (c) for
expansion of the Company, (d) for the payment of fees and expenses in connection
with the transactions contemplated in the - Transaction Agreements, including
without limitation, expenses incurred by Xxxxxxx in connection with such
transactions; and (e) for any other purpose contained in, or undertaken pursuant
to, the Budget.
8.4 New Lines of Business. The Company shall not without the prior
written consent of holders of a majority in interest of the Preferred Stock,
engage in any business other than the preparation and distribution of Chinese
food products or any line of business that is related thereto.
8.5 Compensation of Directors. Each member of the Board of Directors
shall entitled to customary fees and reimbursement by the Company for all
out-of-pocket expenses, including, without limitation, travel expenses, incurred
by such director in connection with the performance of such director's duties.
8.6 Management Incentive Stock Option Plan. After consultation with the
Purchasers, the Company shall develop and the Board of Directors shall authorize
a Management Incentive Stock Option Plan pursuant to which Xxxxxxx shall be
granted options to purchase up to 5% of the Common Stock of the Company (after
taking into account the conversion of the Preferred Shares, including Preferred
Shares issued upon the exercise of the Warrants) in accordance with the
provisions set forth in the Employment Agreement and shall at all times keep and
reserve available out of its Common Stock, solely for the purpose of issue or
delivery upon exercise of such options, the maximum number of shares of Common
Stock that may be issuable or deliverable upon such exercise.
ARTICLE 9
INDEMNIFICATION
9.1 Indemnification. In addition to all other sums due hereunder or
provided for in this Agreement and all other remedies that may be otherwise
available, the Company (the "Indemnifying Party") agrees to indemnify and hold
harmless each Purchaser and its Affiliates and its respective officers,
directors, agents, employees, Subsidiaries, partners and assigns (each, an
"Indemnified Party") to the fullest extent permitted by law from and against any
and all (i) Environmental Expenses and (ii) tax liabilities, losses, costs,
claims, damages, expenses
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(including reasonable fees, disbursements and other charges of counsel) and
other liabilities (collectively, "Liabilities") based upon, relating to or
arising out of any breach of any representation or warranty, covenant or
agreement of such Indemnifying Party in this Agreement or any legal,
administrative or other actions (including actions brought by any of the
Purchasers or any Indemnifying Party or any equity holders of the Company or
derivative actions brought by any Person claiming through or in the Company's
name), proceedings or investigations (whether formal or informal), or written
threats thereof, based upon, relating to or arising out of (A) the status of the
Purchasers as shareholders of the Company and the existence or exercise of the
rights and powers of the Purchasers (including without limitation, any claim
against any Indemnified Party relating to Environmental Matters), (B) violations
of applicable securities laws by the Company in connection with the offering of
the Shares, or (C) third party claims that the Securities hereunder violate
preexisting understandings or arrangements with the Company; provided, however,
that no Indemnifying Party shall be liable under this Section 9.1 to an
Indemnified Party: (a) for any amount paid in settlement of claims without such
Indemnifying Party's consent (which consent shall not be unreasonably withheld),
(b) to the extent that it is finally judicially determined that such Liabilities
resulted solely from the willful misconduct or gross negligence of such
Indemnified Party, or (c) to the extent that it is finally judicially determined
that such Liabilities resulted solely from the material breach by such
Indemnified Party of any representation, warranty, covenant or other agreement
of such Indemnified Party contained in this Agreement; provided, further, that
if and to the extent that such indemnification is unenforceable for any reason,
the Indemnifying Party shall make the maximum contribution to the payment and
satisfaction of such indemnified liability which shall be permissible under
applicable laws. In connection with the obligation of the Indemnifying Party to
indemnify for expenses as set forth above, the Indemnifying Party further agrees
to reimburse each Indemnified Party for all such expenses (including reasonable
fees, disbursements and other charges of counsel) as they are incurred by such
Indemnified Party.
The Company shall be liable for losses pursuant to this Section 9.1
only to the extent that the aggregate amount of such losses exceed $100,000 (the
"Basket Amount"), whereupon the Company shall be liable for all such losses in
excess of the Basket Amount.
Notwithstanding any other provision of this Agreement, the Basket Amount
shall not apply to Liabilities (collectively, the "Exceptional Liabilities")
incurred by the Purchasers based upon, relating to or arising out of (i) any
breach of the representations and warranties in Section 5.14 of the this
Agreement; (ii) the Company's ownership of the assets it purports to own after
giving effect to the transactions contemplated by this Agreement; and (iii) the
organization and corporate or other governance of the Company Affiliates prior
to the Closing, including, but not limited to the Corporate Restructuring.
9.2 Notification. Each Indemnified Party under this Article 9 will,
promptly after the receipt of notice of the commencement of any action,
investigation, claim or other proceeding against such Indemnified Party in
respect of which indemnity may be sought from any Indemnifying Party under this
Article 9, notify the Indemnifying Party in writing of the commencement thereof.
The omission of any Indemnified Party to so notify the Indemnifying Party of any
such action shall not relieve the Indemnifying Party from any liability which it
may have to such Indemnified Party under this Article 9 except to the extent
that such failure to
33
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notify results in a loss of a material defense of such Indemnified Party in
actual prejudice due to such action. In case any such action, claim or other
proceeding shall be brought against any Indemnified Party and such Indemnified
Party shall notify the Indemnifying Party of the commencement thereof, the
Indemnifying Party shall be entitled to assume the defense thereof at its own
expense, with counsel satisfactory to such Indemnified Party in its reasonable
judgment; provided, however, that any Indemnified Party may, at its own expense,
retain separate counsel to participate in such defense. Notwithstanding the
foregoing, in any action, claim or proceeding in which both the Indemnifying
Party, on the one hand, and an Indemnified Party, on the other hand, is, or is
reasonably likely to become, a party, such Indemnified Party shall have the
right to employ separate counsel at the Indemnifying Party's expense and to
control its own defense of such action, claim or proceeding if, in the
reasonable opinion of counsel to such Indemnified Party, a conflict or potential
conflict exists between the Indemnifying Party, on the one hand, and such
Indemnified Party, on the other hand, that would make such separate
representation advisable. The Indemnifying Party agrees that it will not,
without the prior written consent of the Purchasers (such consent not to be
unreasonably withheld), settle, compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding relating to
the matters contemplated hereby (if any Indemnified Party is a party thereto or
has been actually threatened to be made a party thereto) unless such settlement,
compromise or consent includes an unconditional release of the Purchasers and
each other Indemnified Party from all liability arising or that may arise out of
such claim, action or proceeding. The rights accorded to Indemnified Parties
hereunder shall be in addition to any rights that any Indemnified Party may have
at common law, by separate agreement or otherwise.
9.3 Registration Rights Agreement. Notwithstanding anything to the
contrary in this Article 9, the indemnification and contribution provisions of
the Registration Rights Agreement shall govern any claim made with respect to
registration statements filed pursuant thereto or sales made thereunder.
ARTICLE 10
MISCELLANEOUS
10.1 Termination. This Agreement may be terminated at any time prior to
the Closing Date:
(a) by the mutual written consent of the Purchaser and the
Company;
(b) by either Purchaser or the Company if the Closing shall not
have occurred prior to March 31, 1996 (the "Termination Date") unless such
Termination Date is extended by mutual written consent of the Purchasers and the
Company provided, that the right to terminate this Agreement under this Section
10.1(b) shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or results in, the
failure of the Closing to have occurred by such date;
34
41
In the event of a termination, no party hereto (or any of its directors
or officers or shareholders, partner, members or Affiliates) shall have any
liability or further obligation to any other party hereto or directors or
officers in respect thereof, other than as provided in Section 2.4 and under
Section 10.3, except that nothing herein will relieve any party from liability
for any breach of this Agreement.
10.2 Survival of Representations and Warranties. All of the
representations and warranties made herein shall survive the Closing Date of
this Agreement for a period of two (2) years from the date hereof except the
representations and warranties in (i) Sections 5.11(a) and 5.17 shall survive
until the statute of limitations period has expired for such representations and
warranties and (ii) Section 5.14 shall survive until thirty days after the
expiration of the statute of limitations period has expired for such
representations and warranties.
10.3 Confidential Information. The Company and the Purchaser shall each
maintain as confidential any non-public, confidential and proprietary
information (collectively, "Confidential Information") provided by one to the
other regarding the matters contained in the Transaction Documents or with
respect to the other. The Company and Purchaser and each of their partners,
officers, directors, members, employees, agents and representative
(collectively, "Representatives") will not disclose, use or otherwise
appropriate the Confidential Information in any way detrimental to the other
party, and the Confidential Information will be kept confidential by each party;
provided, however, that any Confidential Information may be disclosed to
prospective investors who require such information for the purpose of evaluating
the transactions contemplated by the Transaction Agreements. If no transaction
is effected pursuant to the terms of the Transaction Agreements, the Company and
Purchaser shall each promptly deliver to the other party any Confidential
Information of such other party, without retaining any copy thereof.
10.4 Notices. All notices, demands and other communications provided for
or permitted hereunder shall be made in writing and shall be by registered or
certified first-class mail, return receipt requested, courier service or
personal delivery:
(a) if to Xxxxxxxxx:
Xxxxxxxxx Partners Corporation
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: J. Xxxxxxx Xxx
with a copy to:
Xxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, XX, Xxxxx 0000
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Stem, Esq.
35
42
(b) if to Oak:
Oak Investment Partners
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
with a copy to:
Xxxxxx & Xxxxxxx
0000 Xxxxxxxxxxxx Xxxxxx, X.X, Xxxxx 0000
Xxxxxxxxxx, XX 00000-0000
Attention: Xxxx X. Xxxxx, Esq.
(c) if to the Company:
X.X. Xxxxx'x China Bistro, Inc.
c/o Xxxx'x Xxxxx Steakhouse
0000 Xxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxx
with a copy to:
Squire, Xxxxxxx & Xxxxxxx
00 Xxxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; when delivered by
courier, if delivered by commercial overnight courier service; when mailed, five
business days after being deposited in the mail, postage prepaid.
10.5 Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and permitted assigns of the parties
hereto. This Agreement may not be assigned by any Purchaser subsequent to the
Closing without the written consent of the Company. The Company may not assign
any of its rights under this Agreement without the written consent of each of
the Purchasers. Except as provided in Article 9, no Person other than the
parties hereto and their successors and permitted assigns is intended to be a
beneficiary of any of the Transaction Agreements.
36
43
10.6 Amendment and Waiver.
(a) No failure or delay on the part of the Company, or the
Purchasers in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to the
Company or the Purchasers at law, in equity or otherwise.
(b) Any amendment, supplement or modification of or to any
provision of this Agreement, any waiver of any provision of this Agreement, and
any consent to any departure by any party from the terms of any provision of
this Agreement, shall be effective (i) only if it is made or given in writing
and signed by the Company and holders of a majority in interest of the Preferred
Stock or by the party or parties to be bound hereby, and (ii) only in the
specific instance and for the specific purpose for which made or given. Except
where notice is specifically required by this Agreement, no notice to or demand
on any party in any case shall entitle any party hereto to any other or further
notice or demand in similar or other circumstances.
10. 7 Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
10. 8 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
10. 9 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York, without regard to the
principles of conflicts of law of such state.
10. 10 Jurisdiction. Each party to this Agreement hereby irrevocably
agrees that any legal action or proceeding arising out of or relating to this
Agreement or any agreements or transactions contemplated hereby shall be brought
in the courts of the State of New York or of the United States of America for
the District of New York and hereby expressly submits to the personal
jurisdiction and venue of such courts for the purposes thereof and expressly
waives any claim of improper venue and any claim that such courts are an
inconvenient forum. Each party hereby irrevocably consents to the service of
process of any of the aforementioned courts in any such suit, action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to the address set forth in Section 10.2, such service to
become effective 10 days after such mailing.
10.11 Severability. If anyone or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable in any respect for any reason, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions hereof shall not be in any way impaired, unless the
37
44
provision or provisions held invalid, illegal or unenforceable shall
substantially impair the remaining provisions hereof.
10.12 Rules of Construction. Unless the context otherwise requires,
"or" is not exclusive, and references to sections or subsections refer to
sections or subsections of this Agreement.
10.13 Entire Agreement. This Agreement, together with the exhibits and
schedules hereto and the other Transaction Agreements is intended by the parties
as a final expression of their agreement and is intended to be a complete and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein. There are no
restrictions, promises, warranties or undertakings, other than those set forth
herein or therein. This Agreement, together with the exhibits and schedules
hereto, the other Transaction Agreements, supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
10.14 Transaction Expenses. The Company will pay all Transaction
Expenses of the Purchasers in accordance with Section 2.4 of this Agreement,
regardless whether the transactions contemplated hereby are consummated.
10.15 Publicity. Except as may be required by applicable law, none of
the parties hereto shall issue a publicity release or announcement or otherwise
make any public disclosure concerning this Agreement or the transactions
contemplated hereby, without prior approval by the other parties hereto. If any
announcement is required by law to be made by any party hereto, prior to making
such announcement such party will deliver a draft of such announcement to the
other parties and shall give the other parties an opportunity to comment
thereon.
10.16 Further Assurances. Upon the terms and subject to the conditions
contained herein, each of the parties hereto agrees, both before and after the
Closing, (i) to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by this
Agreement, (ii) to execute any documents, instruments or conveyances of any kind
which may be reasonably necessary or advisable to carry out any of the
transactions contemplated hereunder, and (iii) to cooperate with each other in
connection with the foregoing, including using their respective best efforts (A)
to obtain all necessary waivers, consents and approvals from other parties that
may be required; (B) to obtain all necessary permits as are required to be
obtained under any federal, state, local or foreign law or regulations, and (C)
to fulfill all conditions to this Agreement.
10.17 Severability of Representations, Warranties and Covenants.
Neither Xxxxxxxxx nor Oak shall be liable to the Company for the breach or
violation, if any, of any representation, warranty or covenant made or to be
complied with by any of the other Purchasers, but each such Purchaser shall be
liable to the Company solely for its own breach or violation, if any, of any
representation, warranty or covenant made or to be complied with by such
Purchaser. Neither the Company nor Xxxxxxx shall be liable to the Purchasers for
the breach or violation, if any, of any representation, warranty or covenant
made or to be complied
38
45
with by any party hereto, but the Company shall be liable to the Purchasers
solely for its and Fleming's breach or violation , if any, of any
representation, warranty, or covenant made or to be complied with by the Company
or Xxxxxxx.
39
46
X.X. XXXXX'X CHINA BISTRO, INC.
STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement or caused this Agreement to be executed and delivered
by their authorized representatives as of the date first above written.
X.X. XXXXX'X CHINA BISTRO, INC.
By: /s/ XXXX X. XXXXXXX
-------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
c/o Xxxx'x Xxxxx Steakhouse
0000 Xxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx Xxxxxxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
XXXX X. XXXXXXX
By: /s/ XXXX X. XXXXXXX
-------------------------------------------
c/o Xxxx'x Xxxxx Steakhouse
0000 Xxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
XXXXX X. XXXXXXX
By: /s/ XXXXX X. XXXXXXX
-------------------------------------------
c/o Xxxx'x Xxxxx Steakhouse
0000 Xxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxx 00000
47
X.X. XXXXX'X CHINA BISTRO, INC.
STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement or caused this Agreement to be executed and delivered by their
authorized representatives as of the date first above written.
XXXXXXXXX-XXXXX PARTNERS, L.P.
By: XXXXXXXXX INVESTMENT PARTNERS,
its General Partner
By: XXXXXXXXX PARTNERS CORPORATION
its Managing General Partner
By: /s/ J. XXXXXXX XXX
---------------------------------
Name: J. Xxxxxxx Xxx
Title: President
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: J. Xxxxxxx Xxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
XXXXXXXXX-PFC, L.L.C.
By: XXXXXXXXX PARTNERS CORPORATION
in Managing Member
By: /s/ J. XXXXXXX XXX
---------------------------------
Name: J. Xxxxxxx Xxx
Title: President
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Attention: J. Xxxxxxx Xxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
48
X.X. XXXXX'X CHINA BISTRO, INC.
STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement or caused this Agreement to be executed and delivered
by their authorized representatives as of the date first above written.
OAK INVESTMENT PARTNERS VI, LIMITED
PARTNERSHIP
By: /s/ XXXXXX X. XXXXXXXXX
---------------------------------------
Xxxxxx X. Xxxxxxxxx
General Partner of Oak Associates VI
Limited Partnership,
the General Partner of Oak Investment
Partners VI, Limited Partnership
Oak Investment Partners
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
OAK VI AFFILIATES FUND, LIMITED
PARTNERSHIP
By: /s/XXXXXX X. XXXXXXXXX
---------------------------------------
Xxxxxx X. Xxxxxxxxx
General Partner of Oak VI Affiliates,
Limited Partnership,
the General Partner of Oak VI
Affiliates Fund, Limited Partnership
Oak Investment Partners
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxxx
Telephone: 000-000-0000
Telecopy: 000-000-0000
49
X.X. XXXXX'X CHINA BISTRO, INC.
STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement or caused this Agreement to be executed and delivered
by their authorized representatives as of the date first above written.
TRINITY VENTURES V, L.P.
By: /s/ XXXXX X. XXXXXXX, XX.
-----------------------------------------------
General Partner
Trinity Ventures
000 Xxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Xx.
Telephone: 000-000-0000
Telecopy: 000-000-0000
TRINITY VENTURES V SIDE-BY-SIDE FUND, L.P.
By: /s/ XXXXX X. XXXXXXX, XX.
-----------------------------------------------
General Partner
Trinity Ventures
000 Xxxxx Xxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Xx.
Telephone: 000-000-0000
Telecopy: 000-000-0000
50
X.X. XXXXX'X CHINA BISTRO, INC.
STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement or caused this Agreement to be executed and delivered
by their authorized representatives as of the date first above written.
ARABELLA S.A.
By: /s/ PIERRE CALAND
--------------------------------------
Name:PIERRE CALAND
Title:
x/x XXXX
0, Xxxxxx Xxxxxxxxx
Xxxxx, Xxxxxx 00000
Telephone: 00 (00) 000-0000
Telecopy: 00 (00) 000-0000
51
X.X. XXXXX'X CHINA BISTRO, INC.
STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement or caused this Agreement to be executed and delivered
by their authorized representatives as of the date first above written.
XXXXXX XXXXXX
/s/ XXXXXX XXXXXX
--------------------------------------
0000 Xxxxx Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
XXXX XXXXXXXX
/s/ XXXX XXXXXXXX
--------------------------------------
0 Xxxxxxxx Xxxx
XX Xxx 0000
Xxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
J. XXXXXXX XXXXXXXXX
/s/ XXXXXXX XXXXXXXXX
--------------------------------------
0000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
52
X.X. XXXXX'X CHINA BISTRO, INC.
STOCK PURCHASE
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement or caused this Agreement to be executed and delivered by their
authorized representatives as of the date first above written.
XXXXX XXXXXXX
/s/ XXXXX XXXXXXX
----------------------------------
0000 Xxxxxxx Xxxxxx #000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
XXXXXX XXXXXX
/S/ XXXXXX XXXXXX
----------------------------------
000 Xxxxx Xxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
XXXX XXXXXX
/s/ XXXX XXXXXX
----------------------------------
0000 Xxxxxxxxx Xxx.
Xxxxxxxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
53
X.X. XXXXX'X CHINA BISTRO, INC.
STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement or caused this Agreement to be executed and delivered
by their authorized representatives as of the date first above written.
XXXXXXX XXXX
/s/ XXXXXXX XXXX
--------------------------------------
0000 Xxxxxxxxxx Xxxxxx #000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
54
X.X. XXXXX'X CHINA BISTRO, INC.
STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement or caused this Agreement to be executed and delivered
by their authorized representatives as of the date first above written.
XXXXXX X. XXXXXXX
/s/ XXXXXX X. XXXXXXX
--------------------------------------
0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
XXXXXXX X. XXXXX
--------------------------------------
0000 Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Telephone:
Telecopy:
XXXXXX XXXXX
--------------------------------------
000 Xxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
55
X.X. XXXXX'X CHINA BISTRO, INC.
STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement or caused this Agreement to be executed and delivered
by their authorized representatives as of the date first above written.
XXXXXX X. XXXXXXX
--------------------------------------
0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
XXXXXXX X. XXXXX
/s/ XXXXXXX X. XXXXX
--------------------------------------
0000 Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Telephone:
Telecopy:
XXXXXX XXXXX
--------------------------------------
000 Xxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
56
X.X. XXXXX'X CHINA BISTRO, INC.
STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement or caused this Agreement to be executed and delivered
by their authorized representatives as of the date first above written.
XXXXXX X. XXXXXXX
--------------------------------------
0000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
XXXXXXX X. XXXXX
--------------------------------------
0000 Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxx 00000
Telephone:
Telecopy:
XXXXXX XXXXX
/s/ XXXXXX XXXXX
--------------------------------------
000 Xxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
57
X.X. XXXXX'X CHINA BISTRO, INC.
STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement or caused this Agreement to be executed and delivered by their
authorized representatives as of the date first above written.
XXXXX X. XXXXXXXX and XXXXXX X.
XXXXXXX, JOINTLY
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------
/s/ Xxxxxx X. Xxxxxxx
-----------------------------------
c/x Xxxxxxxxx, Lufkin & Xxxxxxxx
2121 Avenue of the Stars
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
YVES SISTERON
-----------------------------------
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
58
X.X. XXXXX'X CHINA BISTRO, INC.
STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement or caused this Agreement to be executed and delivered by their
authorized representatives as of the date first above written.
XXXXX X. XXXXXXXX and XXXXXX X. XXXXXXX, JOINTLY
------------------------------------------------
------------------------------------------------
c/x Xxxxxxxxx, Lufkin & Xxxxxxxx
2121 Avenue of the Stars
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
YVES SISTERON
/s/ YVES SISTERON
------------------------------------------------
000 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
59
X.X. XXXXX'X CHINA BISTRO, INC.
STOCK PURCHASE AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement or caused this Agreement to be executed and delivered
by their authorized representatives as of the date first above written.
XXXXXXX XXXXXXXX
/s/ XXXXXXX XXXXXXXX
--------------------------------------
c/o X.X. Xxxxx'x China Bistro, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000-X
Xxxxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
