EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement"), dated September 5, 2000,
---------
("Execution Date") is entered into by and among Cabo Restaurants, LP, a Texas
--------------
limited partnership (the "Buyer"), CABO SHEPHERD, INC., a Texas corporation
-----
("Cabo-Shepherd"), CABO XXXXXX, INC., a Texas corporation ("Cabo-Xxxxxx"),
--------------- -----------
(Cabo-Shepherd and Cabo-Xxxxxx are sometimes referred to herein individually as
a "Seller", and collectively as the "Sellers"), AMERICAN FOOD CLASSICS, INC., a
------ -------
Nevada corporation ("AFCI"), and BFX HOSPITALITY GROUP, INC., a Delaware
----
corporation ("BFX"). XXXXXX X. XXXXXX ("XxXxxx") is joining solely for the
--- ------
purpose of being bound by the provisions of Section 6 hereof and no other. CABO-
---------
XXXX XXXXX #0, L.L.C., a Texas limited liability company ("Cabo-Fort Worth") is
---------------
joining solely for the purposes of being bound by the provisions of Sections 2,
-----------
6 and 12 hereof and no other.
--------
RECITALS
--------
WHEREAS, each Seller owns and operates a restaurant and bar business under
the name, "CABO The Original 'Mix Mex' Grill", in Houston, Texas (the
"Business"); and
--------
WHEREAS, Cabo-Fort Worth owns and operates a restaurant and bar business
under the name, "CABO The Original 'Mix Mex' Grill", in Fort Worth, Texas (the
"Fort-Worth Business"); and
-------------------
WHEREAS, each Seller desires to sell to Buyer, and Buyer desires to
purchase from Sellers, substantially all of the assets of each Seller used in
conducting the Business, and Buyer further desires to assume from each Seller
certain liabilities of Sellers arising from conducting the Business, upon the
terms and subject to the conditions set forth herein; and
WHEREAS, AFCI is the indirect parent of Sellers and an indirect third tier
Subsidiary of BFX, and owns certain intellectual property assets used by Sellers
in conducting the Business, and AFCI desires to sell to Buyer, and Buyer desires
to purchase from AFCI, such intellectual property assets, upon the terms and
subject to the conditions set forth herein; and
WHEREAS, each Seller is an indirect fourth tier Subsidiary of BFX, and BFX
desires to enter into this Agreement as an inducement for Buyer entering into
this Agreement, and for the limited purpose of making certain covenants,
agreements, representations, warranties, and indemnifications set forth herein;
and
WHEREAS, Cabo-Fort Worth is not being sold, is an indirect fourth tier
Subsidiary of BFX and is entering into this Agreement for the limited purposes
specifically set forth herein with the intent to make it clear what rights and
obligations it has with respect to the Transaction.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 1 of 29
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, and covenants set forth in this Agreement, and the other good and
valuable consideration exchanged between the parties, the receipt and
sufficiency of which is hereby acknowledged, the parties intending to be legally
bound agree as follows:
AGREEMENTS
----------
1. DEFINITIONS. As used in this Agreement, the terms defined in Schedule 1
----------- ----------
attached hereto have the meanings given to them therein. Other terms may be
defined elsewhere herein and have the meanings so given to them.
2. SALE AND PURCHASE.
------------------
a. Acquired Assets. Upon the terms and subject to the conditions set
---------------
forth herein and contemporaneously with the execution hereof, Cabo-Fort Worth as
to subsection iii.(2) hereof, each Seller and AFCI will sell, transfer, convey,
assign, and deliver to Buyer, and Buyer thereupon will purchase, acquire, and
assume from Cabo-Fort Worth as to subsection iii.(2) hereof, each Seller or
AFCI, as the case may be, all of the right, title, and interest of such party in
and to the following assets of the foregoing, as their respective interests may
appear (the "Acquired Assets"), but specifically excluding the Excluded Assets
---------------
(as defined in Section 2(d) hereof):
------------
i. Inventory of Sellers. All inventories of raw materials,
--------------------
components, packaging materials, supplies, foods, spices, and beverages of
Sellers, located at Sellers' principal place of Business, at the Effective Date
(as defined in Section 4 hereof) (less the Alcohol Inventory which will be
---------
conveyed pursuant to Section 11 hereof) (the "Inventory");
---------- ---------
ii. Equipment of Sellers. All furniture, fixtures, equipment,
--------------------
leasehold improvements, furnishings, computer hardware and software, machinery,
materials, supplies, and other tangible personal property of every kind, nature,
and description of Sellers, located at Sellers' principal place of Business, at
the Effective Date, and including, but not limited to, the items of tangible
personal property listed in Schedule 2(a)(ii) attached hereto (the "Equipment");
---------------- ---------
iii. (1) Intellectual Property of AFCI. The trademarks of AFCI
-----------------------------
specifically listed in Schedule 2(a)(iii)(1) attached hereto (the "AFCI
-------------------- ----
Intellectual Property"); provided, however, that nothing in this Section
--------------------- -------
2(a)(iii)(1) shall be interpreted as transferring, assigning, or otherwise
-----------
granting Buyer any right, title, or interest in or to any other intellectual
property assets or other assets or properties of AFCI other than those described
herein.
(2) Intellectual Property of Sellers and Cabo-Fort Worth. The
----------------------------------------------------
trade secrets and trade dress of each Seller in the Business and Cabo-Fort Worth
as to the trade secrets and
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 2 of 29
trade dress in the Fort Worth Business excluding the trade secrets and trade
dress utilized in the "El Xxxxxx Room."
iv. Business Records of Sellers. All sales records, market studies,
---------------------------
advertising and promotional literature, past and present customer lists,
customer history, procedures, recipe books and copies of the individual recipes
included therein, employee handbooks, operating and training manuals, business
records, accounting and financial records, logs, files, books, supplier lists,
mailing lists, computer and electronic data processing material, personnel
records, correspondence, and any other business records of Seller (the "Business
--------
Records"); provided, however, that Seller, AFCI, and BFX, or any of their
-------
respective Affiliates or Subsidiaries, shall be entitled to (A) delete or redact
any portion of the Business Records which do not relate exclusively to the
historical operations and the continued operation of the Business in the
Ordinary Course of Business after the Closing, and (B) retain a copy of and
continue using any Business Records for conducting any other business as
permitted by and not otherwise in violation of the non-competition provisions in
Section 6 hereof;
---------
v. Telephone Numbers of Sellers. The right to use the telephone
----------------------------
numbers listed on Schedule 2(a)(v) attached hereto;
---------------
vi. Assigned Contracts of Sellers. To the extent transfer or
-----------------------------
assignment is permitted by the terms thereof, all of the right, title, and
interest of Sellers under the Contracts listed in Schedule 2(a)(vi) attached
----------------
hereto (the "Assigned Contracts");
------------------
vii. Assigned Real Property Leases of Sellers. To the extent
----------------------------------------
transfer or assignment is permitted by the terms thereof, all of the right,
title, and interest of Sellers under the Contracts, which are leases for real
property, listed in Schedule 2(a)(vii) attached hereto (the "Assigned Real
----------------- -------------
Property Leases");
----------------
viii. Assigned Personal Property Leases of Sellers. To the extent
--------------------------------------------
transfer or assignment is permitted by the terms thereof, all of the right,
title, and interest of Sellers under the Contracts, which are leases for
tangible personal property, listed in Schedule 2(a)(viii) attached hereto (the
------------------
"Assigned Personal Property Leases");
---------------------------------
ix. Warranty Rights of Sellers. To the extent transfer or
--------------------------
assignment is permitted by the terms thereof, the benefit of and right to
enforce the covenants and warranties that Sellers are entitled to enforce
relating to any of the other Acquired Assets; and
x. Goodwill of Sellers. All the goodwill and going concern
-------------------
valued of the other Acquired Assets and the Business of Sellers.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 3 of 29
b. Transfer Without Liens. Each Seller and AFCI will convey good,
----------------------
valuable, and marketable title to the Acquired Assets, in or to those which it
has any interest, to Buyer free and clear of all Liens, except for the (i) Liens
expressly assumed by Buyer under Section 3(a) hereof, and (ii) Liens otherwise
------------
disclosed in Sellers' Disclosure Schedule (as defined in Section 8 hereof).
---------
c. Effect of Prohibited Assignment. Nothing in this Agreement shall be
-------------------------------
construed as an attempt or agreement to transfer or assign (i) any Contract,
Governmental Authorization, franchise, approval, variance, certification, or
authority which cannot be transferred or assigned without Consent, unless such
Consent shall have been given, or (ii) any Contract or claim as to which all the
rights and remedies for enforcement would not fully pass to Buyer incident to
the transfers or assignments required by this Agreement. However, in order for
Buyer to realize the full value of the items described in the foregoing clauses
(i) and (ii), each Seller and AFCI will, at the request of and under the
direction of Buyer, and in the name of Buyer, or as Buyer may otherwise specify
and as permitted by applicable Legal Requirements, take all reasonable actions
and do, or cause to be done, all such things necessary or proper for (x) the
rights and obligations of such Seller or AFCI thereunder to be preserved, and
(y) to facilitate the collection of any monies due and payable thereunder, which
such Seller or AFCI shall hold for in trust for the benefit of and pay and
deliver promptly to Buyer.
d. Excluded Assets. Buyer will not purchase hereunder any assets or
---------------
properties of Sellers, AFCI, or BFX, other than the Acquired Assets, and
notwithstanding any other provision of this Agreement, the Acquired Assets shall
not include the following assets of Sellers, AFCI, or BFX (the "Excluded
--------
Assets"):
------
i. Cash; Receivables. All cash on hand and in banks (or similar
-----------------
depositories) or in investments, and all account, trade, intercompany, and other
receivables, including, but not limited to, uncollected credit card receivables;
ii. Prepaid Expenses; Other Current Assets. All prepaid expenses,
--------------------------------------
prepaid accounts, deposits, rentals, bonds, other prepaid items, and all other
current assets, and including, but not limited to, the current assets listed in
Schedule 2(d)(ii) attached hereto;
-----------------
iii. Corporate Documents. The corporate minute book, stock book, Tax
-------------------
and financial records, and any other books or records not directly related to or
necessary for Buyer's operation of the Business in the Ordinary Course of
Business after the Closing;
iv. Business Records. The copies of Business Records retained in
----------------
accordance with Section 2(a)(iv) hereof;
----------------
v. BFX and AFCI Assets. The assets, properties, and rights of BFX,
-------------------
and of AFCI, other than the AFCI Intellectual Property; and
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 4 of 29
vi. Scheduled Excluded Assets. The assets, properties, and rights
-------------------------
specifically listed in Schedule 2(d)(vi) attached hereto; and
-----------------
vii. Cabo-Fort Worth Assets. All assets of Cabo-Fort Worth of what
-----------------------
ever nature and kind and where ever situated, save those assets transferred
under Section 2.a.iii.(2) hereof.
3. ASSUMPTION OF LIABILITIES.
-------------------------
a. Assumed Liabilities. Buyer will assume, become responsible for, and
-------------------
obligated to pay, perform, and discharge, the unfulfilled liabilities or
obligations of each Seller, AFCI or BFX (and the Affiliates thereof, to the
extent of any liability or obligation thereunder) as the case may be, arising or
accruing after the Effective Date under the Assigned Contracts, Assigned Real
Property Leases, or Assigned Personal Property Leases, to the extent such
Contracts have not been terminated and there is no material default in the
material terms thereof as of or prior to the Effective Date (the "Assumed
-------
Liabilities").
-----------
b. Excluded Liabilities. Buyer shall not assume, become responsible for,
--------------------
or otherwise be obligated to pay, perform, or discharge any liabilities or
obligations of Sellers, AFCI or BFX (whether known or unknown and whether
accrued, absolute, contingent, or otherwise), other than the Assumed
Liabilities. The liabilities and obligations excluded shall include:
i. any liability arising out of or relating to services provided by
Sellers prior to the date hereof ;
ii. any liability for Taxes including (A) any Taxes arising as a
result of AFCI, BFX or Seller's operation of the Business or ownership of the
Assets prior to Closing; (B) any Taxes that arise as a result of the sale of the
Assets pursuant to this Agreement; and (C) any deferred Taxes of any nature that
relate to AFCI, BFX or Seller's operation of the Business or ownership of the
Assets prior to Closing.
iii. any liability under employee plans, if any, or relating to
payroll, vacation, sick leave, pension benefits, employee stock options or
profit sharing plans, health care plans or benefits, or any other employee plans
or benefits of any kind for Seller's employees or former employees, or both;
iv. any environmental, health and safety liabilities arising out of
or relating to the operations of Seller's business or Seller's leasing of Real
Property;
v. any liability under any employment, severance, retention or
termination agreement with any employee of Seller or any of its Related Persons;
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 5 of 29
vi. any liability arising out of or related to any employee
grievance whether or not the affected employees are hired by Buyer;
vii. any liability to indemnify, reimburse or advance amounts to any
officers, directors, employees or agents of BFX, AFCI or Sellers;
viii. any liability of Seller upon BFX's, AFCI's or Sellers' acts or
omissions occurring after the Closing.
4. CLOSING/EFFECTIVE DATE/TIME
---------------------------
Effective Date/Time. The Closing of the Transaction shall take place
-------------------
concurrently with the execution of this Agreement (the "Closing") and shall be
effective for Tax, accounting, and all other purposes at and as of 11:59 p.m. on
the day immediately preceding the Execution Date (the "Effective Date or Closing
-------------------------
Date").
----
5. PURCHASE PRICE; PAYMENT.
-----------------------
a. Purchase Price. The aggregate purchase price to be paid by Buyer to
--------------
Sellers and AFCI for the Acquired Assets shall be $3,500,000.00, plus or minus
any adjustment to such sum required by Section 5(c) and Section 5(d) hereof (the
------------ ------------
"Purchase Price"). The Purchase Price shall be payable by Buyer
--------------
contemporaneously with the execution hereof as follows:
i. Buyer's wire transfer at the Closing of $3,500,000.00 in
immediately available funds to the account or accounts designated by Sellers and
AFCI.
b. Allocation of Purchase Price. The Purchase Price shall be allocated
----------------------------
among the Acquired Assets of each Seller and AFCI as set forth on Schedule 5(b)
-------------
attached hereto. The parties agree not to take any position on any Tax Return,
upon examination or audit of any Tax Return, in any claim for a Tax refund, or
otherwise that is inconsistent with such allocation of the Purchase Price, and
the parties further agree to duly prepare and timely file IRS Form 8594 or such
other federal income Tax Returns necessary for reporting such allocation.
c. Prorations of Taxes and Other Items. Personal property Taxes on the
-----------------------------------
Acquired Assets shall be prorated at the Closing, and Buyer shall receive a
credit against the Purchase Price, or Sellers shall receive a payment from Buyer
in addition to the Purchase Price, as appropriate based on each party's pro rata
portion thereof. The personal property Taxes for 2000 shall be estimated and
prorated based on the actual 1999 Taxes paid. Sellers shall make available to
Buyer the statements and assessments reflecting the 1999 personal property
Taxes. Buyer shall pay such sum to the appropriate Governmental Body when due,
prior to becoming delinquent. Buyer further shall
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 6 of 29
promptly forward to Sellers, after receipt thereof, copies of all 2000 Tax
statements and assessments on any Acquired Assets. If the 2000 Taxes due are
adjusted such that the Taxes due and payable are greater than the 1999 Taxes,
each Seller shall pay its pro rata portion of any deficiency promptly after
receiving notice that Buyer paid such Taxes. However, if the 2000 Taxes due
shall be adjusted such that the Taxes due and payable are less than the 1999
Taxes, Buyer shall refund to each Seller its pro rata portion of such reduction
upon receiving a copy of the 2000 Tax assessment. Buyer shall notify the
appropriate Taxing authorities of the change in ownership of the Acquired Assets
promptly following the Closing.
The parties further agree to prorate at the Closing all prepaid items,
expenses, and costs (including, but not limited to, rent, telephone, and
electrical and utility charges) associated with conducting the Business prior to
the Effective Date. To the extent such amounts can be determined at the Closing,
the Purchase Price shall be adjusted to reflect an increase or decrease, and to
the extent such amounts cannot be determined at the Closing, Sellers and Buyer
shall agreed upon and pay to the other any amount owing based on such proration
of prepaid items, expenses, and costs within 60 days following the Closing Date.
d. Inventory Adjustment Amount.
---------------------------
i. Physical Inventory. Sellers shall conduct, or cause to be
------------------
conducted, at its sole expense, as of the Effective Date, a physical count of
the Inventory (the "Physical Inventory"), and deliver a written listing thereof,
------------------
including an aggregate value of such Inventory (the "Effective Date Inventory
------------------------
Statement"), to Buyer at the Closing. Buyer, or any of its representatives, will
---------
have the right to be present and observe the Physical Inventory. The written
listing and value of the Inventory shall be initialed by Buyer and Sellers and
attached hereto as Schedule 5(d). The value of the Inventory for Tax and
-------------
accounting purposes shall be calculated based on the Physical Inventory and each
Seller's cost, as determined in accordance with GAAP consistently applied.
ii. Payment of Inventory Adjustment Amount. The amount by which the
--------------------------------------
final value of the Inventory on the Effective Date Inventory Statement (the
"Effective Date Inventory Value"), is greater than or less than $35,000.00 (the
------------------------------
"Estimated Inventory Value"), if at all, shall be referred to herein as the
-------------------------
"Inventory Adjustment Amount". If the Inventory Adjustment Amount is a positive
---------------------------
number, the Purchase Price shall be increased by the amount by which the
Effective Date Inventory Value exceeds the Estimated Inventory Value. If the
Inventory Adjustment Amount is a negative number, then, at Buyer's election,
either (i) the Purchase Price shall be decreased by the amount by which the
Estimated Inventory Value exceeds the Effective Date Inventory Value or (ii)
Buyer may use the amount of the negative Inventory Adjustment Amount as a credit
towards the payment for the alcoholic beverage inventory to be sold to Buyer
pursuant to the Lease, Accommodation and Management Agreement. Sellers will use
their best efforts to have as of the Effective Date an amount of inventory
consistent with what has historically been maintained in the ordinary course of
business.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 7 of 29
e. Closing Statement. At the Closing, Buyer, BFX, AFCI, and Sellers shall
-----------------
execute and deliver a Closing Statement, in form and substance reasonably
acceptable to counsel for Buyer and counsel for BFX, AFCI, and Sellers, setting
forth any debit, credit, or other adjustment to the Purchase Price required by
this Agreement and any other matters which the parties may agree to set forth
therein (the "Closing Statement").
-----------------
6. NON-COMPETITION COVENANT. BFX, AFCI, Sellers, Cabo-Fort Worth and Buyer
------------------------
covenant and agree as follows:
a. Sellers Non-competition Covenant. Subject to the provisions of this
--------------------------------
Section 6, each of BFX, AFCI, Sellers, Cabo-Fort Worth and XxXxxx agree that
---------
during the period beginning on the Effective Date and continuing for a period of
5 years thereafter, they will not, and will not permit any Subsidiary or
Affiliate, or any other Person, for them to directly or indirectly own, manage,
operate, work for, consult with, advise, control, finance, lend credit to,
guaranty the performance of, or otherwise engage or participate in any manner
whatsoever, in any restaurant or bar business using the Cabo Concept (as
hereinafter defined) or, use a menu in any restaurant or bar business that is
substantially the same as the A La Carte Taqueria Menus, as hereinafter defined,
used by the Business on the Effective Date, (the "Restricted Activity"),
-------------------
anywhere in the continental United States, except at the current business
address of Cabo-Fort Worth, 000 Xxxx Xxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxx 00000.
True and correct copies of the A La Carte Taqueria Menus used by Sellers in the
Business on the Effective Date are attached hereto as Exhibit 6 (a) (the "A La
-------------
Carte Taqueria Menus"). AFCI, BFX, Sellers, Cabo-Fort Worth and XxXxxx agree
that this covenant is reasonable with respect to its duration, geographical area
and scope.
Notwithstanding anything else contained in this Agreement to the contrary,
there shall be no restriction upon any of BFX, AFCI, Sellers, Cabo-Fort Worth
and XxXxxx in this Agreement which would limit their ability to open a Mexican
restaurant with a menu, food products and decor similar to those used at Uncle
Julio's, Pappasitas, Don Pablo's, or On The Border restaurants irrespective of
the fact that some of the menu items and the recipes used may be similar to
those which are a part of the Cabo Concept or that such menu items may be listed
in an a la carte format. It is expressly understood and agreed that BFX, AFCI,
Sellers, Cabo-Fort Worth and XxXxxx are entitled to sell all types of tacos,
burritos, enchiladas, fajitas, soups, chips, salsas and any other food products
sold from time to time on the menus of Uncle Julio's, Pappasitas, Don Pablo's,
or On The Border restaurants.
b. Definition of Cabo Concept. As used in this Agreement, the term
--------------------------
"Cabo Concept" means and includes collectively: (i) the recipes currently being
------------
transferred to Buyer, (ii) menu items on the A La Carte Taqueria Menus, and
(iii) the following elements of the trade dress of the Business, taken in the
aggregate:
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 8 of 29
. visual appearance of the exterior and interior signage
. interior decor of diamond plate metal countertops
. wall CD player
. red diamond dust vinyl barstools
. soda fountain seating
. floor plan and layout
. ala carte menu
. uniforms of staff
. furniture, fixtures and equipment
Photographs of the foregoing elements of the trade dress of the Business
are attached hereto as Exhibit 6(b) and are initialed by the parties, to
------------
evidence the elements of the trade dress which when taken in the aggregate are
included in the Cabo Concept. The Cabo Concept does not include any of the
foregoing referenced elements as they relate to the "El Xxxxxx Room" at the
Cabo-Fort Worth restaurant.
c. Limited Use of Cabo Name. It is specifically agreed between the
------------------------
parties that Sellers and Cabo-Fort Worth that may use at the current location of
Cabo-Fort Worth the name "Cabo Grande" in its name, and such will not violate
the provisions of this Agreement, and to the extent necessary Buyer hereby
grants to Sellers and Cabo-Fort Worth a perpetual, non-exclusive, royalty free
license to use the word "Cabo" in such name, so long as such name is used only
at Cabo-Fort Worth's current business location.
d. Remedies. In the event Buyer believes that Sellers, AFCI, BFX or
--------
XxXxxx has breached or has threatened to breach any of the provisions of this
Section 6, before Buyer pursues any remedy or relief, Sellers, AFCI, BFX and
---------
XxXxxx shall have 20 days to cure such breach or threatened breach after the
date on which it receives written notice from Buyer of the alleged violation
hereof. If Sellers, AFCI, BFX or XxXxxx cure the breach or threatened breach
within such period, there shall be no breach or default of this Section relating
to that incident of allegedly prohibited conduct by Sellers, AFCI, BFX or
XxXxxx. If BFX, AFCI, Sellers or XxXxxx breaches any of the provisions of
Section 6 and such breach is not cured within twenty (20) days after receiving
notice thereof, Buyer will be entitled to the following remedies;
i. Damages from the breaching party; and
ii. Any other rights it may have to obtain injunctive or other
equitable relief to restrain any breach or otherwise to specifically enforce the
provisions of Section 6 of this Agreement, it being agreed that money damages
---------
alone would be inadequate to compensate the non-breaching party and would be an
inadequate remedy for such breach.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 9 of 29
7. ADDITIONAL COVENANTS AND AGREEMENTS.
-----------------------------------
a. Employees and Fiduciary Obligations. Buyer, BFX, AFCI, and Sellers,
-----------------------------------
as the case may be, covenant and agree as follows:
i. Employees. Contemporaneously with the execution hereof, Seller
---------
will terminate or reassign all of its employees who are employed exclusively in
the Business. Each Seller will be solely responsible for any and all notices
required by applicable Legal Requirements with respect to its termination or
reassignment of such employees. Buyer shall have the option, but no obligation
to offer employment to any or all of such terminated employees of Seller, on
such terms and conditions acceptable to Buyer. Any such Persons who accept an
offer of employment shall be considered "newly hired" by Buyer, and Buyer shall
have no liability whatsoever with respect to any matter relating to the
employment of such Persons by Seller, whether before or after the Effective
Date. The provisions of this Section shall inure solely to the benefit of the
parties hereto and no third party (including, without limitation, any employee
of any Seller or Buyer) shall be permitted to rely hereon as a third party
beneficiary or otherwise.
ii. Disclaimer of Fiduciary Obligations. Without waiving any of the
-----------------------------------
representations or warranties made hereunder, Buyer, on the one hand, and BFX,
AFCI, and Sellers, on the other hand, agree that, (i) with respect to the
Transaction, each is an independent party, and (ii) each is an experienced and
sophisticated business Person, and is relying on its own representatives in
determining to enter into and consummate the Transaction. The relationship
between the parties in the Transaction as buyer and seller shall not create
fiduciary obligations with respect to each other for the purposes of the
Transaction.
8. REPRESENTATIONS AND WARRANTIES AND DISCLAIMERS OF WARRANTIES OF BFX, AFCI,
--------------------------------------------------------------------------
AND SELLERS. BFX, AFCI, and Sellers, jointly and severally, represent and
-----------
warrant to Buyer that, except as disclosed on the disclosure schedule attached
hereto, which shall be arranged in paragraphs corresponding to the numbered and
lettered Sections of this Section 8 (the "Sellers' Disclosure Schedule"), each
--------- ----------------------------
of the following statements is true and accurate on the date hereof:
a. Authorization of Transaction. BFX, AFCI, and each Seller has the
----------------------------
absolute and unrestricted full right, power, and authority (corporate and
otherwise) to execute and deliver this Agreement and the other Transaction
Documents to which it is a party and to perform its obligations under this
Agreement and the other Transaction Documents to which it is a party. Each of
this Agreement and the other Transaction Documents to which BFX, AFCI, and each
Seller is a party constitutes the legal, valid, and binding obligation of BFX,
AFCI, or Seller, as the case may be, enforceable against BFX, AFCI, or Seller,
as the case may be, in accordance with the respective terms thereof, except as
enforceability may be limited by (A) applicable bankruptcy, insolvency,
reorganization, or other similar Legal Requirements affecting the enforcement of
creditors'
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 10 of 29
generally, and (B) equitable principles which may limit the availability of
certain equitable remedies (such as specific performance). The execution and
delivery of this Agreement and the other Transaction Documents to which BFX,
AFCI, and each Seller is a party, and the consummation of the Transaction, has
been duly authorized and no other proceedings (corporate or otherwise) by BFX,
AFCI, or any Seller are necessary with respect thereto. BFX, AFCI, and Sellers
will take, or cause to be taken, all action (corporate or otherwise) necessary
to consummate the Transaction.
b. Organization; Good Standing.
---------------------------
i. BFX is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware.
ii. AFCI is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Nevada.
iii. Cabo-Shepherd is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Texas. To the Knowledge of
Cabo-Shepherd, such Seller has the full right, power, and authority to own,
lease, and operate all of the Acquired Assets owned, leased or operated by it,
and to conduct the Business as presently being conducted by it.
iv. Cabo-Xxxxxx is a corporation duly organized, validly existing,
and in good standing under the laws of the State of Texas. To the Knowledge of
Cabo-Xxxxxx, such Seller has the full right, power, and authority to own, lease,
and operate all of the Acquired Assets owned, leased or operated by it, and to
conduct the Business as presently being conducted by it.
c. No Conflict; Effect of Agreement. The execution, delivery, and
--------------------------------
performance of this Agreement and the other Transaction Documents and the
consummation by BFX, AFCI, and each Seller of the Transaction and the compliance
by BFX, AFCI, and each Seller with the applicable terms of this Agreement and
the other Transaction Documents to which it is a party does not and will not
(with or without the giving of notice or the lapse of time or both):
i. Contravene, conflict with, or result in the violation of any
provision of the Articles of Incorporation or Bylaws (or equivalent
organizational documents) of BFX, AFCI, or Sellers or any resolution or written
consent adopted by the board of directors or shareholders (or equivalent
governing bodies) of BFX, AFCI, or Sellers;
ii. To the Knowledge of BFX, AFCI, and each Seller, contravene,
conflict with, or result in a violation of, any judgment, order, writ,
injunction, decree, statute, rule, or regulation of any Governmental Body to
which Seller or the Acquired Assets may be bound or subject;
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 11 of 29
iii. Contravene, conflict with, or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization
that is held by Seller and that relates to the Business or any of the Acquired
Assets;
iv. Contravene, conflict with, or result in a violation or breach of
any material provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Contract; or
v. Result in the imposition or creation of any Lien upon or with
respect to any of the Acquired Assets.
d. No Consents Required. No Consent, filing, or registration with or from
--------------------
any Governmental Body or any other Person is or will be required in connection
with BFX's, AFCI's, or each Seller's execution, delivery, and performance under
this Agreement or the other Transaction Documents to which it is a party, except
for those listed in Section 8(d) of Sellers' Disclosure Schedule.
e. Title to Assets and Properties; No Liens. AFCI or one of the Sellers
----------------------------------------
has good, marketable, and valuable title to all of the Acquired Assets, except
for those Acquired Assets held under lease as identified in Schedule 2(a)(vii)
------------------
or Schedule 2(a)(viii); and all such assets are free and clear of all Liens,
-------------------
except for the Liens for Taxes not yet due and payable, and Liens listed in
Section 8(e) of Sellers' Disclosure Schedule. The condition of the Equipment
will be suitable for the conduct of the Business at and as of the Effective
Date, as conducted by Sellers prior to the Effective Date, except for ordinary,
routine maintenance and repairs that are not material in nature or cost.
f. Assigned Contracts; Assigned Real Property Leases; Assigned Personal
--------------------------------------------------------------------
Property Leases.
---------------
i. Sellers have delivered to Buyer true and complete copies of all
the Assigned Contracts, Assigned Real Property Leases, and Assigned Personal
Property Leases.
ii. To the Knowledge of Sellers, each Assigned Contract, Assigned
Real Property Lease, and Assigned Personal Property Lease is in full force and
effect and is valid and enforceable in accordance with its terms, except as
enforceability may be limited by (A) applicable bankruptcy, insolvency,
reorganization, or other similar Legal Requirements affecting the enforcement of
creditors' rights generally, and (B) equitable principals which may limit the
availability of certain equitable remedies (such as specific performance). Each
Seller is in material compliance with all material terms and requirements of
each Assigned Contract, Assigned Real Property Lease, and Assigned Personal
Property Lease to which it is a party. To the Knowledge of Sellers, each other
Person that has or had any obligation or liability under any Assigned Contract,
Assigned Real
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 12 of 29
Property Lease, or Assigned Personal Property Lease is in material compliance
with all material terms and requirements of such Assigned Contract, Assigned
Real Property Lease, or Assigned Personal Property Lease.
iii. No Seller has given or received from any other Person any notice
or other communication (whether oral or written) regarding any actual, alleged,
possible, or potential violation or breach of, or default under, any Assigned
Contract, Assigned Real Property Lease, or Assigned Personal Property Lease.
There are no renegotiations of, attempts to renegotiate, or outstanding rights
to renegotiate any material amounts paid or payable to any Seller under any
Assigned Contract, Assigned Real Property Lease, or Assigned Personal Property
Lease.
g. Employees. Section 8(g) of the Disclosure Schedule contains a complete
--------- ------------
and accurate list of the following information for each employee, including each
employee on leave of absence or layoff status: employer, name, job title, date
of hire, date of commencement of employment, current compensation paid or
payable, any change in compensation since September 30, 1999, and names of the
two senior kitchen supervisory personnel for each of the two locations.
h. Compliance with Applicable Laws. Seller is in material compliance with
-------------------------------
each Legal Requirement that is applicable to it or to the conduct or operation
of the Business or the ownership or use of the Acquired Assets owned or used by
it, except where the failure to comply could not reasonably be expected to have
a material adverse effect on the Acquired Assets and the Business taken as a
whole. Seller has not received any notice or other communication (whether oral
or written) from any Governmental Body or any other Person regarding (x) any
actual, alleged, possible, or potential violation of, or failure to comply with,
any Legal Requirement, or (y) any actual, alleged, possible, or potential
obligation on the part of Seller to undertake, or to bear all or any portion of
the cost of, any remedial action of any nature.
i. ERISA. Buyer will not assume, or otherwise become liable or
-----
responsible for, as a successor or otherwise, by virtue of the Transaction, any
liabilities or obligations of Seller under any applicable Legal Requirements
relating to employment or employee or welfare benefits.
j. Labor Matters. With respect to the Business, BFX, AFCI, and each
-------------
Seller has complied in all material respects with all Legal Requirements
relating to employment, equal employment opportunity, nondiscrimination,
immigration, wages, hours, benefits, collective bargaining, the payment of
social security and similar taxes, occupational safety and health and plant
closings ("Employment Laws"). With respect to the Business, no Seller is liable
---------------
for the payment of taxes, fines, penalties, judgments, costs or other amounts,
however designated, for failure to comply with any of the foregoing Employment
Laws. There is no collective bargaining agreement which is binding on BFX, AFCI,
or any Seller. There are no Proceedings pending or, to the Knowledge of Seller,
threatened between any employee and BFX, AFCI or any Seller.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 13 of 29
k. Environmental Matters. To the best of BFX, AFCI, or Seller's
---------------------
Knowledge, BFX, AFCI, and each Seller is not in violation of, has not violated
or been in non-compliance with, nor is it aware of any non-compliance relating
to, any Environmental Laws in connection with the ownership, use, maintenance or
operation or conduct of the Business or of the Acquired Assets by any of them.
BFX, AFCI, and each Seller is not and has not been subject to any Environmental
Claim in connection with the ownership, use, maintenance or conduct or operation
of the Business or of the Acquired Assets by any of them and, to the Knowledge
of BFX, AFCI, and each Seller, there is no basis for the same, assuming the
disclosure of all relevant facts, events, conditions and circumstances to
applicable Governmental Bodies.
Without in any manner limiting the generality of the immediately preceding
paragraph, to the best of BFX, AFCI, and each Seller's Knowledge: (i) except in
compliance with Environmental Laws (including, without limitation, by obtaining
necessary Environmental Permits), no Materials of Environmental Concern have
been disposed of, or in any other way exist or have been used, generated,
handled, managed, treated, stored or released (and no release is threatened) in
connection with the ownership, use, maintenance or operation or conduct of the
Business or of the Acquired Assets by any of them; (ii) all of the Acquired
Assets possess, and have been and are in compliance with all terms and
conditions of, any and all required Environmental Permits. BFX, AFCI and/or each
Seller has timely filed applications for renewal of any Environmental Permit if
such application submission is required prior to the Closing Date, and no
material expenditures, capital improvements, or changes in operation will be
necessary as a condition or as a result of any renewal, amendment, or
modification of any Environmental Permit; (iii) there is no requirement of any
Environmental Laws that will require future compliance costs on the part of BFX,
AFCI or any Seller in excess of Ten Thousand Dollars ($10,000) above costs
currently expended in the Ordinary Course of Business related to the Business or
the Acquired Assets.
l. Litigation and Related Matters. There is no Proceeding before any
------------------------------
Governmental Body or before any private arbitration tribunal pending against
Seller, or to best of Seller's Knowledge threatened, or that otherwise relates
to our could materially affect any of the Acquired Assets or the Business. There
are no unsatisfied judgments against Seller. Seller is not subject to any
currently existing Proceeding by any Governmental Body. Seller has no Knowledge
of any basis for the assertion of any Proceeding by any Governmental Body or any
other Person regarding any violation of any Legal Requirement relating to any of
the Acquired Assets or the Business.
m. Taxes. Seller has filed, or caused to be filed, on a timely basis or
-----
pursuant to a valid extension, since its date of incorporation, all Tax Returns
(including where appropriate consolidated tax returns) that are or were required
to be filed by or with respect to it pursuant to any applicable Legal
Requirement, and Seller has paid, or made provision for the payment of, all
Taxes that have or may have become due pursuant to such Tax Returns or
otherwise, except where the failure to file Tax Returns or to pay Taxes could
not reasonably be expected to have a material adverse effect on
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 14 of 29
the Acquired Assets and the Business taken as a whole. All such Tax Returns are
true, correct and complete in all material respects. No claim has ever been made
or is expected to be made by any authority in a jurisdiction where the Sellers
do not file tax returns that it is or may be subject to taxation by that
jurisdiction. There are no Liens on any of the Acquired Assets that arose in
connection with any failure (or alleged failure) to pay any Tax, and Sellers
have no knowledge of any basis for assertion of any claims attributable to Taxes
which, if adversely determined, would result in any such Lien. All Taxes that
Sellers are or were required by Legal Requirements to withhold, deduct or
collect have been duly withheld, deducted and collected, and, to the extent
required, have been paid to the proper Governmental Bodies or other Persons.
None of Sellers are a S corporation as defined in Code Section 1361.
n. No Broker's Fee. Seller has not incurred any obligation or liability
---------------
for broker's or finder's or similar fees with respect to the Transaction.
o. Financial Statements. Sellers have delivered to Buyer: (a) a
--------------------
consolidated audited balance sheet of BFX as of September 30, 1999 (including
the notes thereto, the "Balance Sheet"), and the related audited statements of
income, changes in shareholders' equity and cash flows for the fiscal year then
ended, including in each case the notes thereto, and (b) an unaudited balance
sheet of BFX as of February 29, 2000 ("Interim Balance Sheet") and the related
unaudited statements of income, including BFX's Form 10-Q dated December 31,
1999. Such financial statements fairly present the financial condition and the
results of operations, changes in shareholders' equity, and cash flows of
Sellers as of the respective dates of and for the periods referred to in such
financial statements, all in accordance with GAAP, subject in the case of the
Interim Balance Sheet, to normal recurring year-end adjustments (the effect of
which will not, individually or in the aggregate, be materially adverse) in the
absence of notes that, if presented, would not differ materially from those
included in the Balance Sheet. The financial statements referred to in this
Section 8(o) and delivered pursuant hereto will reflect the consistent
------------
application of such accounting principles throughout the periods involved. The
financial statements have been and will be prepared from and are in accordance
with the books and records of Sellers.
p. Disclaimer of Warranties. NOTWITHSTANDING ANY OTHER PROVISION IN THIS
------------------------
AGREEMENT, NEITHER BFX, AFCI, NOR ANY SELLER MAKES ANY REPRESENTATIONS OR
WARRANTIES, EITHER EXPRESS OR IMPLIED, CONCERNING THE ACQUIRED ASSETS, EXCEPT AS
SPECIFICALLY SET FORTH IN SECTION 8 HEREOF. EXCEPT AS SPECIFICALLY SET FORTH IN
---------
SECTION 8 HEREOF, THE ACQUIRED ASSETS SHALL BE SOLD BY SELLERS OR AFCI, AS THE
---------
CASE MAY BE, AND PURCHASED BY BUYER IN THEIR CONDITION AT CLOSING "AS IS" AND
"WHERE IS", WITH NO WARRANTY OF MERCHANTABILITY OR HABITABILITY OR FITNESS FOR A
PARTICULAR PURPOSE OR USE, AND ALL SUCH WARRANTIES, WHETHER EXPRESS OR IMPLIED,
ARE HEREBY DISCLAIMED BY SELLERS AND AFCI.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 15 of 29
9. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents and warrants to
---------------------------------------
BFX, AFCI, and Sellers that, except as disclosed on the disclosure schedule
attached hereto, which shall be arranged in paragraphs corresponding to the
numbered and lettered Sections of this Section 9 (the "Buyer's Disclosure
--------- ------------------
Schedule"), each of the following statements is true and accurate on the date
--------
hereof:
a. Authorization of Transaction. Buyer has the full right, power, and
----------------------------
authority (corporate and otherwise) to enter into, execute and deliver, and
perform its obligations under this Agreement and the other Transaction Documents
to which it is a party. Each of this Agreement and the other Transaction
Documents to which Buyer is a party constitutes the legal, valid, and binding
obligation of Buyer enforceable against such party in accordance with the
respective terms thereof, except as enforceability may be limited by (i)
applicable bankruptcy, insolvency, reorganization, or other similar Legal
Requirements affecting the enforcement of creditors' rights generally, and (ii)
equitable principals which may limit the availability of certain equitable
remedies (such as specific performance). The execution and delivery of this
Agreement and the other Transaction Documents to which Buyer is a party, and the
consummation of the Transaction, has been duly authorized and no other
proceedings (corporate or otherwise) by Buyer is necessary with respect thereto.
Buyer will take, or cause to be taken, all action (corporate or otherwise)
necessary to consummate the Transaction.
b. Organization; Good Standing. Buyer is a limited partnership duly
---------------------------
organized, validly existing, and in good standing under the laws of the State of
Delaware, and qualified to do business in the State of Texas. Buyer has the full
right, power, and authority (corporate and otherwise) to own, lease, and operate
all of the assets and properties it presently owns, leases, and operates, and to
conduct business as it is presently being conducted by it.
c. No Conflict; Effect of Agreement. The execution, delivery, and
--------------------------------
performance of this Agreement and the other Transaction Documents and the
consummation by Buyer of the Transaction and the compliance by Buyer with the
applicable terms of this Agreement and the other Transaction Documents to which
it is a party does not and will not (with or without the giving of notice or the
lapse of time or both):
i. Contravene, conflict with, or result in the violation of any
provision of the Certificate of Limited Partnership or Limited Partnership
Agreement (or equivalent organizational documents) of Buyer or any resolution or
written consent adopted by the general partner or limited partners of Buyer;
ii. To the best of Buyer's knowledge, contravene, conflict with, or
result in a violation of any judgment, order, writ, injunction, decree, statute,
rule, or regulation of any Governmental Body to which Buyer may be bound or
subject; or
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 16 of 29
iii. Contravene, conflict with, or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate, or modify, any Governmental Authorization
that is held by Buyer.
d. No Consents Required. No Consent, filing, or registration with or from
--------------------
any Governmental Body or any other Person is or will be required in connection
with Buyer's execution, delivery, and performance under this Agreement or the
other Transaction Documents to which it is a party, except for those listed in
Section 9(d) of Buyer's Disclosure Schedule.
------------
e. No Sales Tax Due. Buyer is in the business of reselling the Inventory
----------------
acquired hereunder, and possesses all sales Tax permits required for the resale
of the same. The Inventory acquired hereunder, is not acquired for consumption
or use and will be resold in the Ordinary Course of Business of Buyer.
f. Litigation and Related Matters. There is no Proceeding before any
------------------------------
Governmental Body or before any private arbitration tribunal pending against
Buyer, or to best of Buyer's knowledge threatened. To the knowledge of Buyer, no
event has occurred or circumstance exists that may give rise to or serve as a
basis for the commencement of any such Proceeding. There are no unsatisfied
judgments against Buyer. Buyer is not subject to any currently existing
Proceeding by any Governmental Body. Buyer has no knowledge of any basis for the
assertion of any Proceeding by any Governmental Body or any other Person
regarding any violation of any Legal Requirement.
g. No Broker's Fee. Buyer has not incurred any obligation or liability
---------------
for broker's or finder's or similar fees with respect to the Transaction.
h. Full and Complete Information; No Reliance. BFX, AFCI, and Sellers
------------------------------------------
have made available to Buyer all information, documents, and records that Buyer
has requested relating to Acquired Assets, the Assumed Liabilities, and the
Business, and its purchase of the Acquired Assets and assumption of the Assumed
Liabilities. Other than what is specifically set forth in this Agreement, Buyer
has not relied upon any representations or other information, written or oral,
from BFX, AFCI, or any Seller, or any of the respective officers, directors,
employees, control persons, accountants, attorneys, agents, or representatives
of BFX, AFCI, or any Seller, in making its decision to consummate the
Transaction. Buyer has relied on its own independent examination and due
diligence (and that of its professional advisers and representatives, including,
but limited to, accountants and attorneys as deemed necessary by it) of the
Acquired Assets, the Assumed Liabilities, and the Business.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 17 of 29
10. DELIVERIES AT EXECUTION; POST-CLOSING FURTHER ASSURANCES.
--------------------------------------------------------
a. Deliveries by BFX, AFCI, and Sellers. BFX, AFCI, and Sellers shall
------------------------------------
execute and deliver, or cause to be executed and delivered, to Buyer or such
other Person as required hereby, contemporaneously with the execution hereof the
following:
i. Secretary's Certificate. Buyer shall have received a certificate
-----------------------
of the Secretary (or other authorized corporate officer) of BFX, AFCI and
Sellers certifying as true, accurate, and complete, as of the Closing Date: (i)
a copy of the resolutions of such party's board of directors (or equivalent
governing body) authorizing the execution, delivery, and performance of this
Agreement and the other Transaction Documents to which it is a party and the
consummation by such party of the Transaction; (ii) a copy of the resolutions of
such party's shareholders (or equivalent governing body) authorizing the
execution, delivery, and performance of this Agreement and the other Transaction
Documents to which it is a party and the consummation by such party of the
Transaction; (iii) a certified copy of the articles of incorporation (or
equivalent organizational document) of such party issued by the Texas Secretary
of State; (iv) a copy of the Bylaws (or equivalent organizational document) of
such party; and (v) the incumbency of the officer or officers authorized to
execute on behalf of such party the Agreement and the other Transaction
Documents to which it is a party.
ii. Consents. Copies or other satisfactory evidence of the receipt of
--------
any required Consents to the Transaction, as reflected in Seller's Disclosure
Schedule.
iii. Corporate Documents and Governmental Certificates.
-------------------------------------------------
(1) A Certificate of Existence/Good Standing for BFX issued by
the Secretary of the State of the State of Delaware dated within 30 days prior
to the Closing Date;
(2) A Certificate of Existence/Good Standing for AFCI issued by
the Secretary of the State of the State of Nevada dated within 30 days prior to
the Closing Date;
(3) A Certificate of Existence for each Seller issued by the
Secretary of State of the State of Texas dated within 30 days prior to the
Closing Date; and
(4) A Certificate of Good Standing for each Seller issued by the
Comptroller of the State of Texas dated within 30 days prior to the Closing
Date.
iv. UCC, Judgment and Tax Lien Search Report. A Uniform Commercial
----------------------------------------
Code, judgment and tax lien search report issued by the Secretary of State of
the States of Nevada and Texas and the clerks of Xxxxxx and Xxxxxxx counties,
Texas, dated within 30 days prior to the Effective Date for the names "American
Food Classics, Inc.," "Cabo Shepherd, Inc.," "Cabo Xxxxxx,
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 18 of 29
Inc.," and "Cabo, The Original Mix-Mex Grill," which are the only names any of
AFCI, BFX or Sellers have conducted any of the Business under.
v. Delivery of Transaction Documents. The following Transaction
---------------------------------
Documents executed by Sellers, AFCI, or BFX, as the case may be:
(1) a Xxxx of Sale, Assignment and Assumption Agreement, between
Sellers, AFCI, and Buyer in a mutually agreed upon form and substance (the "Xxxx
----
of Sale") conveying the Inventory (less all Alcohol Inventory which will be
-------
conveyed pursuant to Section 11 hereof upon termination of the Lease,
----------
Accommodation and Management Agreement), Equipment, Sellers' Intellectual
Property, Business Records, telephone numbers and Goodwill;
(2) an Absolute Assignment and Assumption Agreement for each of
the Assigned Contracts, Assigned Real Property Leases, and Assigned Personal
Property Leases releasing BFX, AFCI, and Sellers, as the case may be, from all
liability or obligation thereunder and otherwise in a mutually agreed upon form
and substance (the "Assignment Agreements"); an Absolute Assignment and
Assumption Agreement for each of the Assigned Contracts, Assigned Real Property
Leases, and Assigned Personal Property Leases releasing BFX, AFCI, and Sellers,
as the case may be, from all liability or obligation thereunder and otherwise in
a mutually agreed upon form and substance (the "Assignment Agreements");
---------------------
(3) an Assignment of the AFCI Intellectual Property;
(4) a separate Lease, Accommodation and Management Agreement for
each location; and
(5) the Closing Statement.
vi. Possession. Possession or constructive possession of the Acquired
----------
Assets except the Alcohol Inventory which shall be delivered pursuant to Section
-------
11 hereof.
--
b. Further Assurances by Sellers. From time to time after the Effective
-----------------------------
Date, upon Buyer's request, each Seller agrees to execute and deliver such
additional instruments of conveyance and transfer and take such further actions
as may be required in conformity with this Agreement and the other Transaction
Documents for the complete sale and transfer to Buyer of the Acquired Assets.
c. Deliveries by Buyer. Buyer shall deliver, or cause to be delivered,
-------------------
to Sellers, AFCI, BFX, or such other Person as required hereby,
contemporaneously with the execution hereof:
i. Purchase Price. The amount of the Purchase Price to be paid by
--------------
wire transfer.
ii. Secretary's Certificate. BFX, AFCI, and Sellers shall have
-----------------------
received a certificate of the Secretary (or other authorized corporate officer)
of Buyer certifying as true, accurate, and complete, as of the Closing Date: (i)
a copy of the resolutions of such party's board
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 19 of 29
of directors (or equivalent governing body) authorizing the execution, delivery,
and performance of this Agreement and the other Transaction Documents to which
it is a party and the consummation by such party of the Transaction; (ii) a copy
of the resolutions of such party's shareholders (or equivalent governing body)
authorizing the execution, delivery, and performance of this Agreement and the
other Transaction Documents to which it is a party and the consummation by such
party of the Transaction; (iii) a certified copy of the articles of
incorporation (or equivalent organizational document) of such party issued by
the Texas Secretary of State; (iv) a copy of the Bylaws (or equivalent
organizational document) of such party; (v) a list of the equity owners of Buyer
with their addresses, telephone numbers and amounts of ownership; and (vi) the
incumbency of the officer or officers authorized to execute on behalf of such
party the Agreement and the other Transaction Documents to which it is a party.
iii. Corporate Documents and Governmental Certificates.
-------------------------------------------------
(1) A Certificate of Existence for Buyer issued by the Secretary
of State of the State of Delaware dated within 30 days prior to the Effective
Date; and
(2) A Certificate of Foreign Qualification and a Certificate of
Good Standing for Buyer issued by the Secretary of State of the State of Texas
and the Comptroller of the State of Texas, respectively, dated within 30 days
prior to the Effective Date.
iv. Delivery of Transaction Documents. The following Transaction
---------------------------------
Documents executed by Buyer, or such other Person as required thereby:
(1) the Xxxx of Sale;
(2) the Assignment Agreements;
(3) the Lease, Accommodation and Management Agreement for
each location;
(4) a non-exclusive, royalty free license to the
intellectual property to Cabo-Fort Worth (the "Cabo-
Fort Worth License") identical to the one attached
hereto as Exhibit 10; and
(5) the Closing Statement.
d. Further Assurances by Buyer. From time to time after the Effective
---------------------------
Date, upon any Seller's request, Buyer agrees to execute and deliver such
additional instruments of assumption and take such further actions as may be
required in conformity with this Agreement and the other Transaction Documents
for the complete assumption by Buyer of the Assumed Liabilities.
e. Change of Name. As soon as is reasonable following the Effective
--------------
Date, Sellers shall (a) amend their governing documents and take all other
actions necessary to change their names
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 20 of 29
to one sufficiently dissimilar to Sellers' present names, in Buyer's judgment,
and to avoid confusion; and (b) take all actions requested by Buyer to enable
Buyer to change its name to a name similar to Sellers' present names or to
utilize such name thereunto.
11. LEASE, ACCOMMODATION AND MANAGEMENT AGREEMENT/MIXED BEVERAGE PERMITS.
---------------------------------------------------------------------
Buyer shall be solely responsible to apply for Mixed Beverage Permits and
Late Hours Permits at each location of Sellers' Business. In order to
accommodate Buyer in the application process, contemporaneously with the
execution hereof, each Seller shall execute a Lease, Accommodation and
Management Agreement identical to the one attached hereto as Exhibit 11(f) and
--------------
will agree to continue to sell alcoholic beverages at the location of Seller's
business pursuant to the Lease, Accommodation and Management Agreement until the
earlier to occur to occur of (i) the date when Buyer is issued a Mixed Beverage
Permit by the Texas Alcoholic Beverage Commission for each location of Sellers'
Business or (ii) the ninetieth (90th) day after the Effective Date. The
Inventory shall be conveyed to Buyer less all the alcohol inventory at each
location of Sellers' Business as of the Effective Date ("Alcohol Inventory").
-----------------
Title to the Alcohol Inventory shall not pass until Buyer has been issued a
Mixed Beverage Permit from the Texas Alcoholic Beverage Commission. If the
Lease, Accommodation and Management Agreement terminates prior to the issuance
of the Mixed Beverage Permit at any location of Sellers' Business, the Alcohol
Inventory will be removed by the Seller until such time as the Mixed Beverage
Permit is issued.
12 SURVIVAL; INDEMNIFICATION.
-------------------------
a. Survival. Notwithstanding any investigation made by or on behalf of
--------
any party all representations or warranties made by the parties hereto in this
Agreement shall remain effective for the period of the applicable statute of
limitations or similar Legal Requirement. Each party is entitled to and is
hereby deemed to have reasonably relied upon the representations and warranties
of the other party, unless the relying party had knowledge of a
misrepresentation or other breach at the time of Closing, in which event, it
shall be deemed not to have reasonably relied thereon.
b. Indemnification of BFX, AFCI, Sellers and Cabo-Fort Worth. Subject
---------------------------------------------------------
to the provisions of this Section 12, Buyer agrees to indemnify, defend, and
----------
hold harmless BFX, AFCI, Cabo-Fort Worth and each Seller, and each of their
respective predecessors, successors, assigns, officers, directors, shareholders,
employees, Subsidiaries, parents, Affiliates, partners, agents, attorneys,
accountants, financial advisers, representatives, and insurers (the "Seller
------
Indemnified Parties"), against and in respect of any losses, damages (including
-------------------
incidental and consequential damages), deficiencies, diminutions in value,
liabilities, actions, suits, claims, proceedings, demands, assessments,
judgments, fines, and reasonable costs and expenses (including, but not limited
to, attorney and expert witness fees) (the "Losses"), arising or resulting,
------
directly or indirectly, from or in connection with:
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 21 of 29
i. Any misrepresentation or other breach of any representation or
warranty made by Buyer in this Agreement or in any of the other Transaction
Documents; or
ii. Any failure to perform or other breach of any covenant,
agreement, or obligation of Buyer in this Agreement or in any of the other
Transaction Documents.
The foregoing matters giving rise to the rights of the Seller Indemnified
Parties to indemnification hereunder are referred to as the "Seller Claims".
-------------
c. Indemnification of Buyer. Subject to the provisions of this Section
------------------------ -------
12, BFX, AFCI, and Sellers, jointly and severally, and Cabo-Fort Worth severally
--
only as to its liability arising under Section 6, agree to indemnify, defend,
and hold harmless Buyer and its predecessors, successors, assigns, officers,
directors, shareholders, employees, Subsidiaries, parents, Affiliates, partners,
agents, attorneys, accountants, financial advisers, representatives, and
insurers (the "Buyer Indemnified Parties"), against and in respect of any Losses
-------------------------
arising or resulting, directly or indirectly, from or in connection with:
i. Any misrepresentation or other breach of any representation or
warranty made by BFX, AFCI, or any Seller in this Agreement or in any of the
other Transaction Documents; or
ii. Any failure to perform or other breach by BFX, AFCI, or Seller
of any covenant, agreement, or obligation in this Agreement or in any of the
other Transaction Documents, or
iii. As to Cabo-Fort Worth only, any failure to perform or other
breach by it of any covenant, agreement, or obligation in this Agreement or in
any of the other Transaction Documents.
The foregoing matters giving rise to the rights of the Buyer Indemnified
Parties to indemnification hereunder are referred to as the "Buyer Claims".
------------
d. Limitations on Liability. Notwithstanding any other provision
------------------------
hereof, in no event shall BFX, AFCI, Cabo-Fort Worth or any Seller be liable to
any Buyer Indemnified Party, or Buyer be liable to any Seller Indemnified Party
for any Losses under this Section 12 in excess of the Purchase Price. Further,
----------
as between BFX, AFCI, Cabo-Forth Worth and Sellers on one hand, and Buyer on the
other hand, the rights and obligations set forth in this Section 12 will be the
----------
exclusive rights and obligations with respect to this Agreement, the events
giving rise to this Agreement and the Transaction.
e. Thresholds. The Seller Indemnified Parties shall have the right to
----------
indemnification under this Section 12 only after and to the extent the Seller
----------
Claims exceed, in the aggregate, the sum of $25,000.00, provided that this
Section shall not apply to payment of any portion of the Purchase Price. The
Buyer Indemnified Parties shall have the right to indemnification under this
Section 12
----------
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 22 of 29
only after and to the extent the Buyer Claims exceed, in the aggregate, the sum
of $25,000.00. Once the thresholds in the preceding sentences are satisfied, as
applicable to each party, Buyer shall be liable for any Losses of the Seller
Indemnified Parties in excess thereof, and the BFX, AFCI, Cabo-Fort Worth and
the Sellers in the manner and to the extent provided herein shall be liable for
any Losses of the Buyer Indemnified Parties in excess thereof, subject to the
limitations set forth in Section 12(d) hereof.
-------------
f. Procedure for Indemnification; Third Party Claims.
-------------------------------------------------
i. After receipt by an Indemnitee under this Section 12 of notice of
----------
the commencement of any Proceeding against it, such Indemnitee shall, if a claim
is to be made against an Indemnitor hereunder, promptly give notice to the
Indemnitor of the commencement of such claim (including all documents and other
information which the Indemnitee has with respect thereto), but the failure to
notify the Indemnitor shall not relieve the Indemnitor of any liability that it
may have to any Indemnitee, except to the extent that the Indemnitor
demonstrates that the defense of such action is prejudiced by the Indemnitee's
failure to give such notice.
ii. If any Proceeding referred to in the preceding Subsection is
brought against an Indemnitee and it gives notice to the Indemnitor of the
commencement of such Proceeding, the Indemnitor will be entitled to participate
in such Proceeding and, to the extent that it wants (unless (A) the Indemnitor
is also a party to such Proceeding and the Indemnitee determines in good faith
that joint representation would be inappropriate, or (B) the Indemnitor fails to
provide reasonable assurance to the Indemnitee of its financial capacity to
defend such Proceeding and provide indemnification with respect to such
Proceeding) to assume the defense of such Proceeding with counsel satisfactory
to the Indemnitee and, after notice from the Indemnitor to the Indemnitee of its
election to assume the defense of such Proceeding, the Indemnitor will not, as
long as it diligently conducts such defense, be liable to the Indemnitee under
this Section 12 for any fees of other counsel or any other expenses with respect
----------
to the defense of such Proceeding, in each case subsequently incurred by the
Indemnitee in connection with the defense of such Proceeding, other than
reasonable and necessary costs of investigation. If the Indemnitor assumes the
defense of a Proceeding, (A) it will be conclusively established for purposes of
this Agreement that the claims made in that Proceeding are within the scope of
and subject to indemnification under this Section 12; and (B) no compromise or
----------
settlement of such claims may be effected by the Indemnitor without the
Indemnitee's consent unless (y) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any Person and
no effect on any other claims that may be made against the Indemnitee, and (z)
the sole relief provided is monetary damages that are paid in full by the
Indemnitor; and (C) the Indemnitee will have no liability with respect to any
compromise or settlement of such claims effected without its consent. If
notice is given to an Indemnitor of the commencement of any Proceeding and the
Indemnitor does not, within 10 calendar days after the Indemnitee's notice is
given, give notice to the Indemnitee of its election to assume
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 23 of 29
the defense of such Proceeding, the Indemnitor will be bound by any
determination made in such Proceeding or any compromise or settlement effected
by the Indemnitee.
iii. Notwithstanding the foregoing, if an Indemnitee determines in
good faith that there is a reasonable probability that a Proceeding may
adversely affect it or its Affiliates, other than as a result of monetary
damages for which it would be entitled to indemnification under this Agreement,
the Indemnitee may, by notice to the Indemnitor, assume the exclusive right to
defend, compromise, or settle such Proceeding, but the Indemnitor will not be
bound by any determination of a Proceeding so defended or any compromise or
settlement effected without its consent (which may not be unreasonably
withheld).
h. Procedure for Indemnification; Other Claims. A claim for
-------------------------------------------
indemnification for any matter not involving a third-party claim covered by
Section 12(g) may be asserted by the Indemnitee promptly giving notice to the
-------------
Indemnitor requesting indemnification and stating in reasonable detail the
nature of such matter and the amount of Losses claimed therefor. The Indemnitor
shall have 15 days after receiving such notice to respond. If the Indemnitor
accepts responsibility or does not respond within such 15 day period, the
Indemnitor shall pay the Indemnitee the full amount of the claim within ten 10
Business Days after responsibility therefor is so determined. If the
Indemnitor rejects the claim for indemnification, and the dispute is not
resolved by the Indemnitor and Indemnitee within 15 days, the resolution of the
dispute shall be determined by the mandatory mediation and binding arbitration
provided for in Section 13(h) hereof. If it is determined after those
-------------
Proceedings that the Indemnitor is liable for the claim, it shall pay the
Indemnitee the full amount of the claim within 10 Business Days after
responsibility therefor is so determined or as otherwise ruled in the
Proceeding.
13. MISCELLANEOUS.
-------------
i. Notices. Any notices required or permitted by this Agreement shall be
-------
in writing and shall be sufficiently given if personally delivered, mailed by
certified or registered mail, return receipt requested, or sent by Federal
Express (or other nationally recognized guaranteed and receipted next day
delivery service) to the following addresses (or such other address as specified
by written notice timely given to the other parties):
To BFX, AFCI,
Sellers or XxXxxx BFX Hospitality Group, Inc.
Attn: Xxxxxx X. XxXxxx, President/CEO
000 Xxxxxx Xxxxxx, Xxxxx 000
Xx. Xxxxx, Xxxxx 00000
Telephone: 817/000-0000
Facsimile: 817/877-0420
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 24 of 29
With a copy (which
shall not constitute
notice) to: Whitaker, Chalk, Xxxxxxx & Xxxxxx, L.L.P.
Attn: Xxxxx X. Xxxxxxxx, Esq.
3500 City Center Tower II
000 Xxxxxxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
Telephone: 817/000-0000
Facsimile: 817/878-0501
To Buyer: Cabo Restaurants, LP
Attn: Xxxx Xxxxxxxx
000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Telephone: 713/000-0000
Facsimile: 713/225-2774
With a copy (which
shall not constitute
notice) to: Wilson, Cribbs, Xxxxx & Xxxxx
Attn: Xxxxxxxx X. Pound, III, Esq.
0000 Xxxxx Xxxxxx
000 Xxxxxxxxx
Xxxxxxx, XX 00000
Telephone: 713/000-0000
Facsimile: 713/229-8824
Any such notice shall be deemed to have been given: (i) if delivered by
messenger, on the day of delivery, if a Business Day and if not, on the first
Business Day thereafter, (ii) if sent by courier or Federal Express (or other
guaranteed and receipted delivery service), on the next Business Day, or (iii)
if sent by mail, on the third Business Day after mailing.
b. Transaction Costs and Expenses. Except as otherwise provided herein,
------------------------------
each party hereunder shall responsible for and pay its own costs and expenses,
including fees of accountants, attorneys, and other advisers, incurred by it in
connection with the Transaction; provided, however, that if the Transaction is
not consummated as a result of a breach of this Agreement by any party, such
party shall be liable for expenses and costs incurred by the other parties,
together with all reasonable expenses and costs (including attorneys' fees)
incurred by the other parties in connection with enforcing their rights under
this Agreement, notwithstanding the provisions of Section 12 (b)
--------------
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 25 of 29
of this Agreement. Buyer shall pay all sales Tax due and payable as a result of
the purchase of the Acquired Assets. Buyer shall also pay all recording fees,
documentary stamp Taxes, discretionary surtaxes and intangible Taxes for
recording any deeds, assignments, or other instruments in connection with the
Transaction. Buyer shall also pay any transfer fees required for the assignment
of any of the Assigned Contracts, Assigned Real Property Leases, Assigned
Personal Property Leases, or Assigned Governmental Authorizations.
c. Assignability; Binding Effect; Third Parties.
--------------------------------------------
i. Following the Closing, the rights and obligations of any party
under this Agreement may not be assigned or delegated by any party without the
prior written consent of the other party, which shall not be unreasonably
withheld. Subject to the preceding sentence, this Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns.
ii. Except as otherwise set forth in this Agreement, nothing in this
Agreement, whether express or implied, is intended to confer any rights or
remedies arising from this Agreement on any person other than the parties and
their respective successors or assigns, nor is anything in this Agreement
intended to relieve or discharge the obligation or liability of any third party
to a party, nor shall any provision of this Agreement give any third party a
right of subrogation or action against any party.
d. Waiver. There can be no waiver of any term, provision, or condition of
------
this Agreement which is not in writing signed by the party against whom the
waiver is sought to be enforced. Waiver by any party of the default or breach
of any provision of this Agreement by another shall not operate or be construed
as a waiver of any subsequent default or breach.
e. Severability. If any provision of this Agreement is held invalid or
------------
unenforceable by a court of final jurisdiction, it is the parties' intent that
all other provisions of this Agreement shall remain fully valid, enforceable,
and binding on the parties.
f. Further Assurances. The parties agree to take such further actions,
------------------
including the execution and delivery of any documents, as may be required,
necessary, or desirable for the performance of this Agreement.
g. Entire Agreement; Headings; Incorporation by Reference. This
------------------------------------------------------
Agreement, together with the other Transaction Documents, exhibits, schedules,
documents, and instruments referred to herein, constitutes the entire agreement
between the parties relating to the subject matter hereof, and supersedes all
previous agreements, written or oral. Except as provided otherwise in this
Agreement, this Agreement shall not be amended or modified except by an
instrument in writing signed by all parties. Headings are for convenience of
reference only and shall not affect the
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 26 of 29
interpretation or construction of this Agreement. All exhibits, schedules,
documents, and instruments referred to in this Agreement are incorporated by
reference for all purposes.
h. Mandatory Mediation; Binding Arbitration; Governing Law; Venue;
---------------------------------------------------------------
Attorney's Fees.
---------------
i. THE PARTIES AGREE THAT, EXCEPT FOR INJUNCTIVE OR OTHER IMMEDIATE
EQUITABLE RELIEF, ANY DISPUTE BETWEEN THEM RELATING TO THIS AGREEMENT, OR THE
BREACH HEREOF, SHALL, IF NEGOTIATIONS AND OTHER DISCUSSIONS FAIL, BE FIRST
SUBMITTED TO MEDIATION IN ACCORDANCE WITH THE PROVISIONS OF THE COMMERCIAL
MEDIATION RULES OF THE AAA BEFORE RESORTING TO ARBITRATION. THE PARTIES AGREE TO
CONDUCT THE MEDIATION IN GOOD FAITH AND MAKE REASONABLE EFFORTS TO RESOLVE THEIR
DISPUTE BY MEDIATION. THE COMMERCIAL MEDIATION RULES OF THE AAA THEN IN EFFECT
SHALL BE APPLIED. THE PARTIES AGREE TO CONDUCT THE MEDIATION IN HOUSTON, TEXAS,
OR ANOTHER MUTUALLY AGREED UPON LOCATION.
ii. THE PARTIES AGREE THAT, EXCEPT FOR INJUNCTIVE OR OTHER IMMEDIATE
EQUITABLE RELIEF, ANY DISPUTE BETWEEN THEM RELATING TO THIS AGREEMENT, OR THE
BREACH HEREOF, SHALL BE SUBJECT TO BINDING ARBITRATION, IF THE DISPUTE IS NOT
-------------------
RESOLVED BY THE MEDIATION REQUIRED UNDER THE PRECEDING SUBSECTION, IN ACCORDANCE
WITH THE PROVISIONS OF THE COMMERCIAL ARBITRATION RULES OF THE AAA, AND THAT
JUDGMENT ON THE AWARD RENDERED BY THE ARBITRATOR MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION THEREOF. THE ARBITRATION SHALL BE HEARD BEFORE ONE (1)
ARBITRATOR SELECTED IN ACCORDANCE WITH THE COMMERCIAL ARBITRATION RULES. THE
COMMERCIAL ARBITRATION RULES OF THE AAA THEN IN EFFECT SHALL BE APPLIED. THE
PARTIES AGREE TO CONDUCT THE ARBITRATION IN HOUSTON, TEXAS, OR ANOTHER MUTUALLY
AGREED UPON LOCATION.
iii. Any dispute between the parties relating to this Agreement shall
be construed under and in accordance with the laws of the State of Texas
applicable to contracts between residents of Texas that are to be wholly
performed within such state, without regard to conflicts of law principles.
iv. If any party appeals the decision of the arbitrator, the parties
agree that the United States District Court for the Southern District of Texas,
Houston Division, and the state courts within Xxxxxx County, Texas shall have
exclusive venue and jurisdiction of the same.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 27 of 29
v. The prevailing party in any mediation, arbitration, or litigation
shall be entitled to recover from the other party reasonable attorney and expert
witness fees, court costs, and the administrative costs, fees, and expenses of
the AAA, as the case may be, incurred in the same, in addition to any other
relief that may be awarded.
i. Time of Essence. Time shall be of the essence in interpreting this
---------------
Agreement.
j. Multiple Counterparts. This Agreement may be executed in multiple
---------------------
counterparts, each of which shall constitute an original and all of which shall
constitute one document; and furthermore, a facsimile signature shall be deemed
an original.
IN WITNESS WHEREOF, the parties have executed this Agreement and caused
same to be duly delivered on their behalf on the day and year first written
above.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 28 of 29
Buyer: Sellers:
CABO RESTAURANTS, LP CABO SHEPHERD, INC.
By: Xxxxxxxx Hospitality, Inc.
Its: General Partner By: /s/ Xxxxxx Xxxxxx
----------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
By: /s/ Xxxx Xxxxxxxx
---------------------------
Name: Xxxx Xxxxxxxx
Title: President
BFX: CABO XXXXXX, INC.
BFX HOSPITALITY GROUP, INC. By: /s/ Xxxxxx Xxxxxx
----------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
By: /s/ Xxxxxx Xxxxxx
---------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President
CABO-FORT WORTH #1, L.L.C. only
AFCI: for the purposes to be bound by Sections
--------
2, 6 and 12 hereof and no other.
-----------
AMERICAN FOOD CLASSICS, INC.
By: /s/ Xxxxxx Xxxxxx
----------------------
By: /s/ Xxxxxx Xxxxxx Name: Xxxxxx Xxxxxx
---------------------------
Name: Xxxxxx Xxxxxx Title: Vice President
Title: Vice President
XXXXXX:
/s/ Xxxxxx X. XxXxxx
------------------------------
Xxxxxx X. XxXxxx, individually and only
----------------
for the purposes to be bound by Section 6
---------
hereof and no other.
--------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT Page 29 of 29
