SHARE EXCHANGE AGREEMENT
This SHARE EXCHANGE AGREEMENT is made and entered into as of this ___ day
of March, 1998, between HARVEST RESTAURANT GROUP, INC., a Texas corporation
("Harvest"), and KOOTENAY HOLDINGS, L.L.C., an Arizona Limited Liability Company
("Kootenay") which is the sole shareholder of SURF CITY ACQUISITION II, INC., an
Arizona corporation ("Surf City").
RECITALS
WHEREAS, the parties, together with Surf City Acquisition Corporation II,
an Arizona corporation ("Surf City"), executed an Agreement in Principle wherein
the basic terms of the transactions described herein were agreed to and reduced
to writing, subject to further negotiations;
WHEREAS, Kootenay owns all of the issued and outstanding shares of Surf
City;
WHEREAS, the intended result of this Agreement and the Sports Group
International, Inc. ("Sports")/Harvest Share Exchange Agreement of even date
hereof, taken together, is for Harvest to own all outstanding shares of Sports
and Surf City and for Harvest's shares of Common Stock to be allocated as
follows upon the Effective Date:
4,089,500 To Harvest's shareholders
4,000,000 To Sports shareholders
542,045 To Sports debt holders
9,290,545 To Kootenay
17,922,090 Total issued shares of Harvest Common Stock
on the Effective Date
WHEREAS, it is understood and agreed that Harvest's outstanding shares of
Common Stock shall be determined as of the Effective Date and that, to the
extent Harvest Common Stock on the Effective Date is proportionally greater or
lesser than 4,129,130 shares, then the shares of Harvest Common Stock to be
issued to Sports shareholders and to Kootenay as set forth above shall be
adjusted pro rata in the same proportion;
WHEREAS, it is intended that the Xxxxxxxx Note shall be exchanged for a
single indivisible share of Xxxxxxxx Preferred class of Harvest stock. Xxxxxxxx
Preferred Stock shall accrue dividends at the Wall Street Journal's National
Prime Rate upon the first business day of each year upon a principal sum of
$4,500,000, the dividend being payable by January 31 of each succeeding year.
Xxxxxxxx Preferred shall have preferred rights against all assets of Sports, and
shall have default rights in the event of failure to timely pay such dividends
which shall permit the holder to demand immediate redemption of the full amount
of $4,500,000 and all past-due dividends. Xxxxxxxx Preferred may, at its
holder's option, convert to 1,600,000 shares of Harvest Common Stock after two
years from the Effective Date, in which event Kootenay shall receive an
additional 1,000,000 shares of Harvest Common Stock. Xxxxxxxx Preferred is a
non-voting share, does not vote as a class, and does not participate in
Harvest's dividends, or profits other than as is expressly set forth herein;
WHEREAS, it is the intention of the parties hereto that (a) the transfer
and allocation of economic benefits and burdens described in this Agreement
shall for all purposes shall be deemed as having been transferred and allocated
as of the Effective Date and (b) if the execution of the Agreement, the
obtaining of certain regulatory consents, the actual exchange of share
certificates and other documents should occur subsequent to the Effective Date,
then each of the before- referenced events shall be deemed conditions subject to
an executed contract and shall in no fashion be considered as deferrals of the
effective exchange of stock which occurred, for all purposes, as of the
Effective Date; and
WHEREAS, the parties intend this transaction to qualify as a "tax free
re-organization" within the meaning of Section 368(a)(1)(B) of the Internal
Revenue Code of 1986, as amended, and that Sports become a subsidiary of
Harvest.
1
ARTICLE I.
CLOSING CONTINGENT UPON
CLOSING OF CONTEMPLATED TRANSACTIONS
1.01 Share Exchange. The obligation of the parties to this Agreement to
close this transaction is contingent upon the closing of certain other
transactions listed below and defined collectively as the "Contemplated
Transactions." Each of the parties to each of the Contemplated Transactions
shall use their best efforts to fulfill their obligations to close all of the
Contemplated Transactions. If any of the Contemplated Transactions do not close,
parties who are not in breach or default of their own obligations under this
Agreement shall not be required to close their respective transactions which are
part of the Contemplated Transactions and will not be in default of their
obligations for not closing the same.
1.02 Contemplated Transactions. This Agreement contemplates that the
following multiple transactions (collectively, the "Contemplated Transactions")
shall be closed before or concurrently with the Closing of this transaction.
1.02.1 Sports/Harvest Share Exchange Agreement. The Sports/Harvest
Share Exchange Agreement executed between the parties of even date hereof shall
be closed before or concurrently with the closing of the transaction described
in this Agreement.
1.02.2 Financing. A $4,000,000 financing arrangement shall have been
obtained on or before Closing, and is to be used, in part, as follows:
(a) $500,000 to partially redeem all Harvest Preferred B Stock;
(b) $1,000,000 to Kootenay;
(c) $1,000,000 loan to Kootenay, which shall be evidenced by a
promissory note and secured by stock of Surf City;
(d) $250,000 payable to the Bank of L.A. for corporate purposes;
(e) $500,00 payable to Sports for corporate purposes; $500,000
paid to Surf City for corporate purposes; and
(f) $750,000 payable to Harvest accounts dedicated to Harvest
Food Court/Red Line project; and the remainder being
retained by Harvest for corporate purposes.
2
1.02.3 Voting Agreement. Harvest, Sports, and Surf City shall have
executed the Voting Agreement attached hereto as Exhibit "A" simultaneously with
the execution of this Agreement. The Voting Agreement provides for the election
of a new Harvest Board of Directors at a Shareholder Meeting to be held promptly
after Closing of this transaction the following to be the new Directors: Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxxx, Xxxxx Xxxxxxx, Xxxxxx (KiKi) Vandewaehe III, Xxxx
Xxxxxx, Xxxxx Xxxxxxx, Xxxx Xxxxxxxxx, and Xxxxxx Xxxxxxxx. It is agreed and
understood that election of these Directors is subject to closing of the
transaction described in this Agreement.
1.02.4 Employment Agreements. Xxxx Xxxxxx, Xxxxxxx Xxxxxxxxx, Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxx, Xxxxx Xxxxxxxxx, and Xxxxxx (KiKi) Vandewaehe III
shall have executed the agreements with Harvest which are attached hereto as
Exhibits X-0, X-0, X-0, X-0, and B-5. The Xxxxxx and Xxxxxxxxx agreements will
be consulting agreements at $10,000 per month plus approved expenses. The
Xxxxxxxxx and Xxxxxxx agreements shall be employment contracts paying an annual
amount of $200,000. The Vandewaehe III Agreement will be a consulting Agreement
paying an annual amount of $70,000. Each of these employment agreements will
extend four years from the Effective Date.
1.02.5 Xxxxxxxx Preferred. The holders of the Sports Xxxxxxxx
Preferred Note have executed the Xxxxxxxx Preferred Agreement attached hereto as
Exhibit C. The Xxxxxxxx Preferred Agreement will exchange the Xxxxxxxx Note for
a single indivisible share of Xxxxxxxx Preferred Class of Harvest Stock.
Xxxxxxxx Preferred Stock shall accrue dividends at the Wall Street Journal's
national prime rate on the first business day of each year upon the amount of
$4,500,000, the dividend being payable by January 1, of each succeeding year.
Xxxxxxxx Preferred shall have preferred rights against all assets of Sports, and
if Harvest shall fail to timely pay such dividends, the holder shall have the
right to demand immediate redemption of the full amount of $4,500,000 and all
past-due dividends. Xxxxxxxx Preferred may, at its holder's option, convert to
1,600,000 shares of Harvest Common Stock after two years from the Effective
Date, in which event Kootenay shall receive an additional 1,000,000 shares of
Harvest Common Stock. Xxxxxxxx Preferred is a non-voting share, does not vote as
a class, and does not participate in Harvest's dividends, or profits other than
as is expressly set forth herein.
3
1.02.6 Harvest Preferred B Agreement. The Harvest Series B Preferred
Stock amendments shall be entered into before Closing.
1.02.7 Guarantee. Harvest will guarantee the guarantors of Sports
$500,000 note to the Bank of L.A. that the note will be paid.
II.
FEASIBILITY PERIOD
2.01 Feasibility Study. Each party is granted the right to conduct a
feasibility study of all of the existing and contingent assets and liabilities
of the other party including a physical inspection of all leases, improvements,
fixtures, mechanical equipment, personnel property, and other tangible and
intangible assets ("Feasibility Study"). Each party shall have until March 30,
1998 ("Feasibility Period"). During the Feasibility Period, either party, or
their designated agents, may enter upon the leased or owned premises of the
other party for such analyses, tests, and inspections which may be deemed
necessary by either party. If either party determines, in their sole reasonable
judgment, that the transaction is not desirable for any reason, then that party
may, on written notice to the other party, on or before expiration of the
Feasibility Period, terminate this Agreement without penalty or being in default
of their obligations. If the written notice is not given to the other party on
or before 5:00 p.m. Central Standard Time on the expiration date of the
Feasibility Period, this right to terminate shall be deemed to have been waived
by the party failing to give the notice.
2.02 Documents to be Delivered. Each party shall deliver to the other party
copies of the following within five business days from the date of this
Agreement. Failure to deliver any of the listed documents is an independent
reason for the other party to rightfully terminate this Agreement. If any one or
more of the items described in Section 2.02 do not exist, the disclosing party
shall advise the receiving party, in writing, to that effect.
2.02.1 Financial Statements. Copies of financial statements as set
forth in Sections 5.01.20 and 7.01.20. This includes monthly sales reports for
the period commencing January 1, 1998, through the calendar month immediately
proceeding the date of submittal of the same.
2.02.2 Asset List. A detailed inventory of all equipment, furnishings,
fixtures, and inventories.
2.02.3 Leases. All leases of real or personal property and any
documents pertaining to such leases in the disclosing parties' possession.
2.02.4 Contracts. Copies of all contracts and warranties and related
documents including service, maintenance, management, employment, or other
4
agreements, including loan agreements which affect the disclosing party or its
assets. If such exist, all documents, notices, or citations indicating a default
or breach by the disclosing party of any contract in which the disclosing party
is a party.
2.02.5 Certificates. Certificates of all fire, hazard, liability, and
other insurance policies maintained by the disclosing party.
2.02.6 Taxes. The most recent real estate and personal property tax
statements regarding the disclosing party's property along with the disclosing
party's federal income tax returns for the last two years and proof of payment
of all sales and payroll taxes.
2.02.7 Litigation. If such exists, all notices, citations, or other
documents evidencing actions, suits or proceedings pending or threatened or
asserted against the disclosing party, at law or in equity, before any state,
federal, county, municipal, or other governmental department, commission, board,
bureau, agency, or instrumentality, whether domestic or foreign.
2.02.8 Violations. If such exists, all documents, notices, or
citations indicating a violation by the disclosing party of zoning, building,
fire, or similar law, ordinance, code, order, regulation or restriction claimed
by any applicable governmental authority.
2.02.9 Organizational Documents. All currently effective
organizational documents and other records of the disclosing party including,
without limitation, articles, by laws, directors, minutes, and stock ledger.
ARTICLE III.
THE SHARE EXCHANGE
3.01. Closing.
3.01.1 Time and Place of Closing. Subject to the provisions of
Articles V and VII, the Closing of the transaction contemplated hereby
("Closing") shall take place at the offices of Xxxxx, Xxxxxxxxx & Xxxxx, P.C.,
0000 X. Xxxxxxxxxx Xxxx, Xxxxx X-000, Xxxxxxxxxx, Xxxxxxx 00000 at 10:00 a.m.,
local time, on the Effective Date, or at such other place, date, or time, as the
parties may mutually agree upon writing for the Closing to take place.
3.01.2 Actions of Harvest at Closing. At the Closing, Harvest shall
deliver to Kootenay and Surf City the following:
3.01.2.1 Resignations. Harvest shall deliver to Kootenay and Surf
City the written and executed resignations of such directors of Harvest and such
executed employment agreements, dated as of the Effective Date, as called for in
this Agreement.
5
3.01.2.2 Certificate of Harvest. Harvest shall deliver to
Kootenay and Surf City a certificate, which shall be dated as of Closing and
which shall be signed by Harvest's Chief Executive Officer certifying (i) the
authority of Harvest to enter into and consummate the transactions contemplated
by this Agreement; (ii) the authority of the officers of Harvest to execute and
deliver any document contemplated by this Agreement on behalf of Harvest; (iii)
that the representations and warranties of Harvest obtained herein were correct
and true when made and are correct and true as of the date of Closing (except to
the extent that any representation or warranty of Harvest specifically relates
to an earlier date); and (iv) that each and every covenant and agreement of
Harvest contained in the Agreement to be performed by Harvest on or prior to
Closing has been performed by Harvest. Kootenay and Surf City may rely upon the
certificate as if it were delivered to them directly.
3.01.2.3 Corporation Resolutions. Harvest shall deliver to
Kootenay and Surf City certified copies of the resolutions of the Board of
Directors of Harvest authorizing the execution, delivery, and performance of
this Agreement and the transactions contemplated herein.
3.01.2. Actions of Surf City at Closing. At the Closing, Surf City
shall deliver to Harvest the following:
3.01.2.1 Resignations. Surf City shall deliver to Harvest the
written and executed resignations of such directors of Surf City and such
executed employment agreements, dated as of the Effective Date, as called for in
this Agreement.
3.01.2.2 Certificate of Surf City. Surf City shall deliver to
Harvest a certificate, which shall be dated as of Closing and which shall be
signed by Surf City Chief Executive Officer certifying (i) the authority of Surf
City to enter into and consummate the transactions contemplated by this
Agreement; (ii) the authority of the officers of Surf City to execute and
deliver any document contemplated by this Agreement on behalf of Surf City;
(iii) that the representations and warranties of Surf City obtained herein were
correct and true when made and are correct and true as of the date of Closing
(except to the extent that any representation or warranty of Surf City
specifically relates to an earlier date); and (iv) that each and every covenant
and agreement of Surf City contained in the Agreement to be performed by Surf
City on or prior to Closing has been performed by Surf City. Kootenay and Surf
City may rely upon the certificate as if it were delivered to them directly.
3.01.2.3 Corporation Resolutions. Surf City shall deliver to
Harvest certified copies of the resolutions of the Board of Directors of Surf
City and the shareholder approval of Surf City authorizing the execution,
delivery, and performance of this Agreement and the transactions contemplated
herein.
6
3.02.3 Effective Date. The date on which the Exchange of Shares occurs
and becomes effective is hereinafter called the "Effective Date." The Effective
Date shall be March 31, 1998, except and unless there is a delay in the filing
of Articles of Share Exchange with any state Secretary of State which is needed
for the exchange of shares to lawfully occur, in which event the Effective Date
shall be the earliest date after March 31, 1998, that is lawful for the exchange
of shares to occur. The parties shall cause all such documents and instruments
to be filed with the appropriate state Secretaries of State as promptly as
practicable upon satisfaction of the conditions described herein.
ARTICLE IV.
EXCHANGE OF SHARES AND OTHER MATTERS
4.01. Exchange of Shares. Upon the Effective Date, by virtue of this
Agreement, each of the following shall be deemed to occur contemporaneously:
4.01.1 Exchange of Surf City Common Stock. All issued and outstanding
shares of Surf City Common Stock shall be exchanged for a total of 9,290,545
fully paid and non-assessable shares of Harvest Common Stock in accordance with
the provisions of Section 4.02. An exception is that, if more or less than
4,089,500 issued shares of Harvest Common Stock are issued on the Effective
Date, then the Harvest Common Stock shares received by Kootenay in exchange for
each Surf City share shall be increased or decreased by the same pro rata
proportion as Harvest's Common Stock at Effective Date is greater or lesser than
4,089,500 shares.
4.01.2 Total Harvest Shares Exchanged. The shares of Harvest Common
Stock to be issued pursuant to this Section shall total 9,290,545 shares
adjusted as set forth herein.
4.02 Exchange Procedure. Surf City Common Stock. Following the Effective
Date, Kootenay shall surrender to the Secretary of Harvest (or to any agent
designated for such purpose by the President of Harvest) its outstanding
certificate which prior thereto represented Surf City Common Stock, and shall
upon such surrender receive in substitution and exchange therefor a certificate
representing the number of shares of Harvest Common Stock into which such Surf
City Common Stock shall have been converted. Until so surrendered and exchanged,
each outstanding certificate which, prior to the Effective Date, represented
Surf City Common Stock shall, following the Effective Date, be deemed for all
purposes to evidence ownership of the number of shares of Harvest Common Stock
into which such shares of Surf City Common Stock have been converted.
ARTICLE V.
SURF CITY'S REPRESENTATIONS AND WARRANTIES
5.01. Surf City's Representations and Warranties. Surf City makes the
following representations and warranties to Harvest and to Sports and Surf City
as a material inducement for Harvest to enter into this Agreement and for Sports
7
and Surf City to enter into the Sports/Harvest Share Exchange Agreement subject
only to such disclaimers as disclosures and exceptions as are expressly set
forth in the attachments hereto. These representations and warranties are
limited to the best actual knowledge of Surf City Directors and officers.
Further, immaterial breaches of these representations and warranties are
specifically agreed to not comprise actionable breaches.
5.01.1 Capitalization.
5.01.1.1 Authorized Stock. The authorized capital stock of Surf
City consists of ______ shares of Surf City Common Stock, $___ par value per
share.
5.01.1.2. Issued Common Stock. There are _______ shares of Surf
City Common Stock issued and outstanding, all of which are owned beneficially
and of record by the listed shareholders. All such issued and outstanding shares
of Surf City Common Stock are duly authorized, validly issued, fully paid and
non-assessable, were not issued in violation of the terms of any contract,
agreement or commitment binding upon Surf City or any preemptive rights or
rights of first refusal, and were issued in compliance with all of its charter
documents and applicable law.
5.01.2 Organization, Standing and Power. Surf City is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Arizona and is qualified to do business where the failure to be so
qualified would materially and adversely affect its condition, properties,
assets or operations. Surf City has all requisite corporate power and authority
to enter into and perform and consummate the transactions contemplated by this
Agreement. The copies of the charter documents of Surf City and all amendments
thereto and of its bylaws as amended to date which have heretofore been
furnished or delivered to the Harvest are correct and complete.
5.01.3 Subsidiaries. Surf City has no subsidiaries.
5.01.4 Title to Assets. Surf City has good, valid and indefeasible
title to its assets, free and clear of all security interests, mortgages, liens,
encumbrances, title retention or security agreements, claims, restrictions,
leases, options, rights of first offer or first refusal, confidentiality or
secrecy agreements, non-competition agreements, defects of title or other
encumbrances or rights of others. The execution and delivery of this Agreement
and the consummation of the transaction contemplated hereby will not constitute
a violation of, nor be in conflict with, nor constitute a default, under any
terms or provisions of any contract, lease, mortgage, indenture, or any other
document whatsoever to which Surf City may be a party or to which Surf City may
be bound on each Closing Date.
8
5.01.5 Other Relationships. No affiliate, director, officer, principal
executive, or employee of or consultant to Surf City owns, directly or
indirectly, in whole or in part, any property, asset or right, tangible or
intangible relating to or affecting Surf City.
5.01.6 Other Transactions Etc. No affiliate, director, officer,
principal executive or employee of Surf City, has, directly or indirectly,
engaged in any transaction with Surf City outside of the ordinary course of
business.
5.01.7 Undisclosed Liabilities. Surf City has no debts, liabilities or
obligations of any nature, whether accrued, absolute, contingent or otherwise,
whether due or to become due, including, but not limited to, liabilities or
obligations on account of known fraud by any merchant customer, taxes, other
governmental charges, duties, penalties, interest, fines, vacation pay,
workmen's compensation claims, or pension plan obligations and there is no known
basis for the assertion against Surf City.
5.01.8 Absence of Certain Changes or Events. The business of Surf City
has been operated only in the usual and ordinary course of business and there
has not been any occurrence, event or condition outside of the ordinary course
of business.
5.01.9 Condition of Assets. The assets of Surf City are in good
operating condition for the purposes of conducting the business of Surf City on
the Effective Date as such business has been or is being conducted. Surf City
has good and marketable title to all of the Assets subject to no mortgage,
pledge, lien, conditional sales agreement, encumbrance, security interest,
encumbrance, or charge of any nature whatsoever, except as herein provided.
5.01.10 No Violation of Law. Neither Surf City, nor any of its assets
or property of Surf City or the ownership, leasing, occupancy or operation
thereof, is in violation of any applicable law, code, rule, regulation,
ordinance, license or permit, including, but not limited to, those related to
building, zoning, environmental matters or employee health and safety, and no
notice from any governmental body or other person has been served upon Surf City
occupied or operated by Surf City claiming any such violation.
5.01.11 Contracts. All of Surf City' contracts, agreements, customer
and supplier purchase order and other commitments are legal, valid and binding
and in full force and effect, and there are no defaults thereunder. None of the
rights of Surf City thereunder will be impaired by the consummation of the
transactions contemplated by this Agreement, and all of the rights of Surf City
thereunder will be enforceable by Harvest after the Merger without the consent
or agreement of any other party except for the agreements specifically listed in
attachments hereto which contracts require consent to assignment. Copies of the
all such contracts have heretofore been delivered to Harvest by Surf City and
are true and complete and include all amendments and supplements thereto and
modifications thereof.
9
5.01.12 Permits, Licenses, Consents, Etc. Surf City has all
governmental leases, licenses, permits, consents, approvals, authorizations,
qualifications and orders necessary to conduct its business and to operate its
properties and assets, and such leases, licenses, permits, consents, approvals,
authorizations, qualifications and orders are in full force and effect. No
notification to or approval of any governmental agency is required for all
governmental leases, licenses, permits, consents, approvals, authorizations,
qualifications and orders to remain in full force and effect after the closing.
No violations exist or have been recorded in respect of any governmental lease,
license, permit, consent, approval, authorization, qualification or order of
Surf City. No proceeding is pending or, to the best of Surf City's knowledge,
threatened looking toward the revocation or limitation of any such governmental
lease, license, permit, consent, approval, authorization, qualification or order
and there is no basis or grounds for any such revocation or limitation. Surf
City has complied in all material respects with all present and, to the best of
Surf City's knowledge, enacted but not yet effective, federal, state and local
laws, rules, regulations, ordinances, codes, orders, licenses and permits
relating to any of its properties or applicable to its business.
5.01.13 Absence of Defaults. Surf City is not nor is it alleged to be,
in default under, or in breach of any term or provision of, any contract,
agreement, lease, license, commitment, instrument or fiduciary or other
obligation. No other party to any contract, agreement, lease, license,
commitment, instrument or fiduciary or other obligation to which Surf City is
party is in default thereunder or in breach of any term or provision thereof.
There exists no condition or event which, after notice or lapse of time or both,
would constitute a default by any party to any such contract, agreement, lease,
license, commitment, instrument or fiduciary or other obligation.
5.01.14 Litigation. There is (i) no suit, action or claim, (ii)_no
investigation or inquiry by any administrative agency or governmental body, and
(iii) no legal, administrative or arbitration proceeding pending or, to the best
of Surf City's knowledge, threatened against Surf City or any of the properties,
assets, business or prospects of Surf City or to which Surf City is or might
become a party, and to the best of Surf City's knowledge, there is no basis or
grounds for any such suit, action, claim, investigation, inquiry or proceeding,
including but not limited to, labor, equal employment opportunity, safety and
health, environmental and antitrust laws. There is no outstanding order, writ,
injunction or decree of any court, administrative agency or governmental body or
arbitration tribunal against or affecting or relating to Surf City.
5.01.15 No Breach or Violation of Law. The execution and delivery of
this Agreement by Surf City and the consummation of the transactions
contemplated hereby will not (i) conflict with, or result in the breach of any
of the terms or conditions of, or constitute a default under, or result in the
acceleration of any obligation under, or require any consent, approval or notice
under, the charter documents or the bylaws or any resolution of Surf City or any
10
contract, agreement, commitment, indenture, mortgage, deed of trust, lease,
pledge agreement, note, bond, license or other instrument or obligation to which
Surf City is now a party or by which Surf City or any of the properties or
assets of Surf City may be bound or affected, or (ii) violate any law, or any
rule or regulation of any administrative agency or governmental body, or any
order, writ, injunction or decree of any court, administrative agency or
governmental body.
5.01.16 Validity and Authorization. This Agreement has been duly
authorized by all necessary corporate and shareholder action and duly and
validly executed and delivered by Surf City and is legally binding on Surf City
in accordance with its terms.
5.01.17 Completeness; No Misrepresentations. The copies of all
instruments, agreements, and written information, including without limitation
the Schedules hereto, delivered pursuant to this Agreement or otherwise
furnished or made available to Harvest by Surf City, or any representatives of
either of them are complete and correct as of the date hereof. The
representations and warranties made by Surf City or the Shareholder in this
Agreement or in any Schedule or other document furnished in connection with this
Agreement do not contain any untrue statement of a material fact, or omit to
state a material fact necessary to make the statements or facts contained herein
or therein not misleading. The fact that Harvest and its representatives have
conducted an investigation of Surf City prior to the execution of this Agreement
shall not affect the representations and warranties contained in this Article or
the extent of the obligations or liabilities of Surf City in the event of a
breach of any such representation or warranty.
5.01.18 Tax Matters. Surf City has duly and timely filed all returns
with respect to any taxes required to be filed by it or for which it may be held
responsible, and has paid, or will pay on a timely basis, all taxes shown to be
due and payable on such returns, all deficiencies and assessments of taxes,
notice of which has been received by it, and all other taxes payable by it. Surf
City is not aware of any basis upon which any assessment for a material amount
of additional taxes could be made.
5.01.20 Financial Statements. It is understood that Surf City's
financial statements are not audited unless indicated as such on the delivered
financial documents. The year-end financial statements and interim financial
statements delivered by Surf City to the Purchaser have been prepared in
accordance with generally accepted accounting principles and present fairly the
financial position of Surf City as of December 31, 1998, and as of February 28,
1998, respectively, and the statement of income presents fairly the results of
operations and changes in financial position of Surf City for the periods ended
December 31, 1997, and February 28, 1998, respectively, and sales reports for
the period commencing January 1, 1998, through the calendar month immediately
proceeding the date of submittal of the same, all in conformity with generally
accepted accounting principles applied on a basis consistent with that of prior
periods, except that the interim financial statements are not audited and do not
contain footnotes and are subject to audit adjustments. Other than as disclosed
11
in the Financial Statements, or elsewhere herein, as supplemented, as of the
Closing Date, Surf City has no outstanding liabilities as of the closing Date
and Surf City has no knowledge of any threatened claims, actions or
investigations which would result in the incurrence of any additional
liabilities by Surf City which will result in Harvest being liable to any third
party due to Buyer's purchase of the Transferred Assets. Surf City has no
indebtedness, liability or obligation or any character whatsoever, whether or
not accrued, whether known or unknown, fixed or unfixed, xxxxxx or inchoate,
liquidated or unliquidated, contingent or otherwise, including without
limitation liabilities for taxes, other governmental charges or pending
lawsuits, other than (i) liabilities reflected in the Financial Statements or
Interim Financial Statements, or elsewhere herein, or (ii) liabilities since the
date of the Interim Financial Statements as disclosed in writing to Harvest.
5.01.21 Full Disclosure. Surf City has disclosed to Harvest all
material facts relating to Surf City and its operations and has not omitted to
disclose to Harvest any material fact relating to Surf City, or its operations
necessary to make the statements made herein not misleading.
5.02. Survival of Representations, Warranties, Covenants and
Indemnification. All covenants, agreements, representations and warranties of
Surf City under this Agreement shall survive indefinitely and shall be deemed
material and relied upon by the other parties, regardless of any investigation
made by or on behalf of the other parties.
5.03. Disclosures. All of Surf City's warranties and representations herein
are modified to the extent needed to take into account Surf City's disclosures
set forth or identified in the attachment hereto entitled Surf City Disclosures.
ARTICLE VI.
SURF CITY'S COVENANTS
6.01. Continuation of Business. Surf City covenants and agrees with
Harvest, Kootenay, and Sports as follows: between the date hereof and the
Effective Date,(i) unless otherwise consented to in writing by Harvest, it shall
conduct its affairs solely in the ordinary course of business consistent with
past practice and shall not materially change its policies and practices; (ii)
shall not issue or caused to be issued by Surf City any capital stock or
security convertible into capital stock, except pursuant to outstanding
warrants, convertible preferred stock, stock options and convertible debentures,
or grant any options or rights to acquire capital stock, or otherwise alter Surf
City's capital structure; (iii) shall not repurchase any of its securities or
pay any dividend or make any distribution with respect to its securities other
than normal cash dividends; (iv) shall not enter into any contract or
arrangement other than in the ordinary course of business; and (v) shall not
amend its charter documents or bylaws.
12
6.02. No Solicitation. Unless and until the Effective Date occurs, Surf
City shall not (i) solicit any offer to acquire all or any part of Surf City's
business, assets or other properties or capital stock, whether by merger,
purchase of assets, tender offer or otherwise or (ii) except as required by law,
disclose, directly or indirectly, any information not customarily disclosed to
any person or entity concerning Surf City's business or properties, afford to
any other person or entity access to Surf City's properties, books or records or
otherwise assist or encourage any person or entity in connection with any of the
foregoing.
ARTICLE VII.
HARVEST'S REPRESENTATIONS AND WARRANTIES
7.01. Harvest's Representations and Warranties. Harvest makes the following
representations and warranties to Surf City and Kootenay as a material
inducement for Surf City and Kootenay to enter into this Agreement subject only
to such disclaimers as disclosures and exceptions as are expressly set forth in
the attachments hereto. These representations and warranties are limited to the
best actual knowledge of Harvest Directors and officers. Further, immaterial
breaches of these representations and warranties are specifically agreed to not
comprise actionable breaches.
7.01.1 Capitalization.
7.01.1.1 Authorized Stock. The authorized capital stock of
Harvest consists of 20,000,000 shares of Harvest Common Stock, $0.01 par value
per share, 3,000,000 Series A, Preferred Stock, and 1,000 shares of Harvest
Series B Preferred Stock, $1.00 par value per share.
7.01.1.2. Issued Common Stock. There are 2,699,030 shares of
Harvest Common Stock issued and outstanding, all of which are owned beneficially
and of record by the listed shareholders. All such issued and outstanding shares
of Harvest Common Stock are duly authorized, validly issued, fully paid and
non-assessable, were not issued in violation of the terms of any contract,
agreement or commitment binding upon Harvest or any preemptive rights or rights
of first refusal, and were issued in compliance with all of its charter
documents and applicable law.
7.01.1.3 Issued Preferred Stock. There are 515,000 shares of
Harvest Series A preferred Stock and 150 shares of Harvest Series B Preferred
Stock issued and outstanding, all of which are owned beneficially and of record
by the listed shareholders. All such issued and outstanding shares of Harvest
Preferred Stock are duly authorized, validly issued, fully paid and
non-assessable, were not issued in violation of the terms of any contract,
agreement or commitment binding upon Harvest or any preemptive rights or rights
of first refusal, and were issued in compliance with all of its charter
documents and applicable law.
13
7.01.2 Organization, Standing and Power. Harvest is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Texas and is qualified to do business where the failure to be so qualified would
materially and adversely affect its condition, properties, assets or operations.
Harvest has all requisite corporate power and authority to enter into and
perform and consummate the transactions contemplated by this Agreement. The
copies of the charter documents of Harvest and all amendments thereto and of its
bylaws as amended to date which have heretofore been furnished or delivered to
the Surf City are correct and complete.
7.01.3 Subsidiaries. Harvest has no subsidiaries.
7.01.4 Title to Assets. Harvest has good, valid and indefeasible title
to its assets, free and clear of all security interests, mortgages, liens,
encumbrances, title retention or security agreements, claims, restrictions,
leases, options, rights of first offer or first refusal, confidentiality or
secrecy agreements, non-competition agreements, defects of title or other
encumbrances or rights of others. The execution and delivery of this Agreement
and the consummation of the transaction contemplated hereby will not constitute
a violation of, nor be in conflict with, nor constitute a default, under any
terms or provisions of any contract, lease, mortgage, indenture, or any other
document whatsoever to which Harvest may be a party or to which Harvest may be
bound on each Closing Date.
7.01.5 Other Relationships. No affiliate, director, officer, principal
executive, or employee of or consultant to Harvest owns, directly or indirectly,
in whole or in part, any property, asset or right, tangible or intangible
relating to or affecting Harvest.
7.01.6 Other Transactions Etc. No affiliate, director, officer,
principal executive or employee of Harvest, has, directly or indirectly, engaged
in any transaction with Harvest outside of the ordinary course of business.
7.01.7 Undisclosed Liabilities. Harvest has no debts, liabilities or
obligations of any nature, whether accrued, absolute, contingent or otherwise,
whether due or to become due, including, but not limited to, liabilities or
obligations on account of known fraud by any merchant customer, taxes, other
governmental charges, duties, penalties, interest, fines, vacation pay,
workmen's compensation claims, or pension plan obligations and there is no known
basis for the assertion against Harvest.
7.01.8 Absence of Certain Changes or Events. The business of Harvest
has been operated only in the usual and ordinary course of business and there
has not been any occurrence, event or condition outside of the ordinary course
of business.
7.01.9 Condition of Assets. The assets of Harvest are in good
operating condition for the purposes of conducting the business of Harvest on
14
the Effective Date as such business has been or is being conducted. Harvest has
good and marketable title to all of the Assets subject to no mortgage, pledge,
lien, conditional sales agreement, encumbrance, security interest, encumbrance,
or charge of any nature whatsoever, except as herein provided.
7.01.10 No Violation of Law. Neither Harvest, nor any of its assets or
property of Harvest or the ownership, leasing, occupancy or operation thereof,
is in violation of any applicable law, code, rule, regulation, ordinance,
license or permit, including, but not limited to, those related to building,
zoning, environmental matters or employee health and safety, and no notice from
any governmental body or other person has been served upon Harvest occupied or
operated by Harvest claiming any such violation.
7.01.11 Contracts. All of Harvest' contracts, agreements, customer and
supplier purchase order and other commitments are legal, valid and binding and
in full force and effect, and there are no defaults thereunder. None of the
rights of Harvest thereunder will be impaired by the consummation of the
transactions contemplated by this Agreement, and all of the rights of Harvest
thereunder will be enforceable by Surf City after the Merger without the consent
or agreement of any other party except for the agreements specifically listed in
attachments hereto which contracts require consent to assignment. Copies of the
all such contracts have heretofore been delivered to Surf City by Harvest and
are true and complete and include all amendments and supplements thereto and
modifications thereof.
7.01.12 Permits, Licenses, Consents, Etc. Harvest has all governmental
leases, licenses, permits, consents, approvals, authorizations, qualifications
and orders necessary to conduct its business and to operate its properties and
assets, and such leases, licenses, permits, consents, approvals, authorizations,
qualifications and orders are in full force and effect. No notification to or
approval of any governmental agency is required for all governmental leases,
licenses, permits, consents, approvals, authorizations, qualifications and
orders to remain in full force and effect after the closing. No violations exist
or have been recorded in respect of any governmental lease, license, permit,
consent, approval, authorization, qualification or order of Harvest. No
proceeding is pending or, to the best of Harvest' knowledge, threatened looking
toward the revocation or limitation of any such governmental lease, license,
permit, consent, approval, authorization, qualification or order and there is no
basis or grounds for any such revocation or limitation. Harvest has complied in
all material respects with all present and, to the best of Harvest' knowledge,
enacted but not yet effective, federal, state and local laws, rules,
regulations, ordinances, codes, orders, licenses and permits relating to any of
its properties or applicable to its business.
7.01.13 Absence of Defaults. Harvest is not nor is it alleged to be,
in default under, or in breach of any term or provision of, any contract,
agreement, lease, license, commitment, instrument or fiduciary or other
obligation. No other party to any contract, agreement, lease, license,
commitment, instrument or fiduciary or other obligation to which Harvest is
15
party is in default thereunder or in breach of any term or provision thereof.
There exists no condition or event which, after notice or lapse of time or both,
would constitute a default by any party to any such contract, agreement, lease,
license, commitment, instrument or fiduciary or other obligation.
7.01.14 Litigation. There is (i) no suit, action or claim, (ii)_no
investigation or inquiry by any administrative agency or governmental body, and
(iii) no legal, administrative or arbitration proceeding pending or, to the best
of Harvest' knowledge, threatened against Harvest or any of the properties,
assets, business or prospects of Harvest or to which Harvest is or might become
a party, and to the best of Harvest' knowledge, there is no basis or grounds for
any such suit, action, claim, investigation, inquiry or proceeding, including
but not limited to, labor, equal employment opportunity, safety and health,
environmental and antitrust laws. There is no outstanding order, writ,
injunction or decree of any court, administrative agency or governmental body or
arbitration tribunal against or affecting or relating to Harvest.
7.01.15 No Breach or Violation of Law. The execution and delivery of
this Agreement by Harvest and the consummation of the transactions contemplated
hereby will not (i) conflict with, or result in the breach of any of the terms
or conditions of, or constitute a default under, or result in the acceleration
of any obligation under, or require any consent, approval or notice under, the
charter documents or the bylaws or any resolution of Harvest or any contract,
agreement, commitment, indenture, mortgage, deed of trust, lease, pledge
agreement, note, bond, license or other instrument or obligation to which
Harvest is now a party or by which Harvest or any of the properties or assets of
Harvest may be bound or affected, or (ii) violate any law, or any rule or
regulation of any administrative agency or governmental body, or any order,
writ, injunction or decree of any court, administrative agency or governmental
body.
7.01.16 Validity and Authorization. This Agreement has been duly
authorized by all necessary corporate and shareholder action and duly and
validly executed and delivered by Harvest and is legally binding on Harvest in
accordance with its terms.
7.01.17 Completeness; No Misrepresentations. The copies of all
instruments, agreements, and written information, including without limitation
the Schedules hereto, delivered pursuant to this Agreement or otherwise
furnished or made available to Surf City by Harvest, or any representatives of
either of them are complete and correct as of the date hereof. The
representations and warranties made by Harvest or the Shareholder in this
Agreement or in any Schedule or other document furnished in connection with this
Agreement do not contain any untrue statement of a material fact, or omit to
state a material fact necessary to make the statements or facts contained herein
or therein not misleading. The fact that Surf City and its representatives have
conducted an investigation of Harvest prior to the execution of this Agreement
shall not affect the representations and warranties contained in this Article VI
or the extent of the obligations or liabilities of Harvest in the event of a
breach of any such representation or warranty.
16
7.01.18 Tax Matters. Harvest has duly and timely filed all returns
with respect to any taxes required to be filed by it or for which it may be held
responsible, and has paid, or will pay on a timely basis, all taxes shown to be
due and payable on such returns, all deficiencies and assessments of taxes,
notice of which has been received by it, and all other taxes payable by it.
Harvest is not aware of any basis upon which any assessment for a material
amount of additional taxes could be made.
7.01.20 Financial Statements. It is understood that Harvest' financial
statements are not audited unless indicated as such on the delivered financial
documents. The year-end financial statements and interim financial statements
delivered by Harvest to the Purchaser have been prepared in accordance with
generally accepted accounting principles and present fairly the financial
position of Harvest as of December 31, 1998, and as of February 28, 1998,
respectively, and the statement of income presents fairly the results of
operations and changes in financial position of Harvest for the periods ended
December 31, 1998, and February 28, 1998, respectively, and sales reports for
the period commencing January 1, 1997, through the calendar month immediately
proceeding the date of submittal of the same, all in conformity with generally
accepted accounting principles applied on a basis consistent with that of prior
periods, except that the interim financial statements are not audited and do not
contain footnotes and are subject to audit adjustments. Other than as disclosed
in the Financial Statements, or elsewhere herein, as supplemented, as of the
Closing Date, Harvest has no outstanding liabilities as of the closing Date and
Harvest has no knowledge of any threatened claims, actions or investigations
which would result in the incurrence of any additional liabilities by Harvest
which will result in Surf City or Kootenay being liable to any third party due
to Buyer's purchase of the Transferred Assets. Harvest has no indebtedness,
liability or obligation or any character whatsoever, whether or not accrued,
whether known or unknown, fixed or unfixed, xxxxxx or inchoate, liquidated or
unliquidated, contingent or otherwise, including without limitation liabilities
for taxes, other governmental charges or pending lawsuits, other than (i)
liabilities reflected in the Financial Statements or Interim Financial
Statements, or elsewhere herein, or (ii) liabilities since the date of the
Interim Financial Statements as disclosed in writing to Surf City and Kootenay.
7.01.21 Full Disclosure. Harvest has disclosed to Surf City and
Kootenay all material facts relating to Harvest and its operations and has not
omitted to disclose to Surf City any material fact relating to Harvest, or its
operations necessary to make the statements made herein not misleading.
7.01.22 Financing. Harvest has been negotiating for debt/equity
financing which is in process and is anticipated to close by the end of March
1998.
7.02. Survival of Representations, Warranties, Covenants and
Indemnification. All covenants, agreements, representations and warranties of
17
Harvest under this Agreement shall survive indefinitely and shall be deemed
material and relied upon by the other parties, regardless of any investigation
made by or on behalf of the other parties.
7.03. Disclosures. All of Harvest' warranties and representations herein
are modified to the extent needed to take into account Harvest' disclosures set
forth or identified in the attachment hereto entitled Harvest Disclosures.
ARTICLE VIII.
HARVEST'S COVENANTS
8.01. Continuation of Business. Harvest covenants and agrees as follows:
between the date hereof and the Effective Date,(i) unless otherwise consented to
in writing by Surf City and Kootenay, it shall conduct its affairs solely in the
ordinary course of business consistent with past practice and shall not
materially change its policies and practices; (ii) shall not issue or caused to
be issued by Harvest any capital stock or security convertible into capital
stock, except pursuant to outstanding warrants, convertible preferred stock,
stock options and convertible debentures, or grant any options or rights to
acquire capital stock, or otherwise alter Harvest's capital structure; (iii)
shall not repurchase any of its securities or pay any dividend or make any
distribution with respect to its securities other than normal cash dividends;
(iv) shall not enter into any contract or arrangement other than in the ordinary
course of business; and (v) shall not amend its charter documents or bylaws
8.02. No Solicitation. Unless and until the Effective Date occurs, Harvest
shall not (i) solicit any offer to acquire all or any part of Harvest's
business, assets or other properties or capital stock, whether by merger,
purchase of assets, tender offer or otherwise or (ii) except as required by law,
disclose, directly or indirectly, any information not customarily disclosed to
any person or entity concerning Harvest's business or properties, afford to any
other person or entity access to Harvest's properties, books or records or
otherwise assist or encourage any person or entity in connection with any of the
foregoing.
ARTICLE IX.
CONDITIONS TO THE EXCHANGE OF STOCK
9.01. Conditions Precedent to Performance by Harvest. The obligations of
Harvest under this Agreement are subject to the satisfaction of the following
conditions (any or all of which may be waived by Harvest in its sole discretion
to the extent permitted by law):
9.01.1 Board and Stockholder Approval. The Merger shall have been
effectively adopted and approved at or prior to the Effective Date by the Board
of Directors and stockholders of Surf City and the members of Kootenay in
accordance with applicable law.
18
9.01.2 Representations True Representations and Covenants Performed.
The representations and warranties of Surf City set forth herein shall be true
and correct in all material respects immediately prior to the Effective Date
with the same effect as if made at that time. Surf City shall have performed all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by them on or prior to the Effective Date. The
President of Surf City shall have delivered to Harvest a certificate to such
effect.
9.01.3 No Litigation Affecting Merger. No judgment, decree, order or
ruling of any court or regulatory or governmental authority shall have been
issued or entered against Surf City which would be violated by the completion of
the Merger, and no person or entity which is not a party to this Agreement shall
have commenced any litigation against Surf City seeking to restrain or prohibit,
or to obtain substantial damages in connection with, this Agreement or the
transactions contemplated hereby.
9.01.4 Securities Laws. All approvals, consents, permits, licenses or
qualifications from authorities administering the securities or "blue-sky" laws
of any state having jurisdiction required for the consummation of the Merger
shall have been obtained and shall be effective.
9.01.5 Regulatory Compliance, Approvals and Consents. Surf City shall
have complied with all legal provisions applicable to the Merger, and all
approvals required under any legal provision to carry out the Merger, and all
consents required to be obtained in connection with the Merger in order to avoid
a default under any contract, agreement, commitment, lease, mortgage, instrument
or other document to or by which any of Surf City is a party or may be bound,
shall have been obtained on terms reasonably satisfactory to Harvest.
9.01.6 Filings. A duly certified, executed and acknowledged copy of
articles of merger with respect to the Merger shall have been filed with the
appropriate Secretary in accordance with applicable law and a duly certified,
executed and acknowledged copy of this Agreement, or a certificate of merger
with respect thereto, shall have been filed with the appropriate Secretary in
accordance with applicable law.
90.02. Conditions Precedent to Performance by Surf City. The obligations of
Surf City under this Agreement are subject to the satisfaction of the following
conditions (any or all of which may be waived by Surf City in their sole
discretion to the extent permitted by law):
9.02.1 Board and Stockholder Approval. The Merger shall have been
effectively adopted and approved at or prior to the Effective Date by the Board
of Directors of Harvest and stockholders of Harvest in accordance with
applicable law and Harvest shall have delivered such certificate and evidence of
the same as reasonably requested by Surf City.
19
9.02.2 Representations True and Covenants Performed. The
representations and warranties of Harvest set forth herein shall be true and
correct in all material respects immediately prior to the Effective Date with
the same effect as if made at that time. Harvest shall have performed all
obligations and complied with all covenants required by this Agreement to be
performed or complied with by them on or prior to the Effective Date. The
President of Harvest shall have delivered to Surf City and Kootenay a
certificate to such effect.
9.02.3 No Litigation Affecting Merger. No judgment, decree, order or
ruling of any court or regulatory or governmental authority shall have been
issued or entered against Harvest which would be violated by the completion of
the Merger, and no person or entity which is not a party to this Agreement shall
have commenced any litigation against Harvest seeking to restrain or prohibit,
or to obtain substantial damages in connection with, this Agreement or the
transactions contemplated hereby.
9.02.4 Securities Laws. All approvals, consents, permits, licenses or
qualifications from authorities administering the securities or "blue-sky" laws
of any state having jurisdiction required for the consummation of the Merger
shall have been obtained and shall be effective.
9.02.5 Regulatory Compliance, Approvals and Consents. Surf City shall
have complied with all legal provisions applicable to the Merger, and all
approvals required under any Legal Provisions to carry out the Merger, and all
consents required to be obtained in connection with the Merger in order to avoid
a default under any contract, agreement, commitment, lease, mortgage, instrument
or other document to or by which Harvest is a party or may be bound, shall have
been obtained on terms reasonably satisfactory to Surf City and Kootenay.
9.02.6 Filings. A duly certified, executed and acknowledged copy of
this Agreement, or a certificate of merger with respect thereto, shall have been
filed with the appropriate state Secretary in accordance with applicable law and
a duly certified, executed and acknowledged copy of articles of merger with
respect to the Merger shall have been filed with the appropriate Secretary in
accordance with applicable law.
ARTICLE X.
NOTICES
10.01 Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder or with respect hereto shall be in
writing, and may be given by (a) personal service, (b) first-class United States
mail postage prepaid, (c) overnight delivery service, charges prepaid or (d)
telecopy or other means of electronic transmission, if confirmed promptly by any
20
of the methods specified in clauses (a) (c) of this sentence, and will be deemed
to have been duly given or made when delivered personally, when mailed
first-class, postage prepaid, registered or certified mail when delivered to the
telegraph company, charges prepaid or when sent by electronic transmission, to
the respective parties, as follows:
If to Harvest:
Harvest Restaurant Group, Inc.
0000 X.X. Xxxx 000, Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
If to Kootenay Holdings, L.L.C. or Surf City Squeeze, Inc.
Surf City Squeeze, Inc.
x/x Xxxxx X-000 Xxxxxxxxx Xxxxxx
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000-0000
10.02 Change of Address. Any of the parties hereto may change the address
to which such communications are to be directed to it or him by giving written
notice to the other parties in the manner provided in Section_10.01
ARTICLE XI.
GENERAL
11.01 Governing Law. This Agreement and the performance of the transactions
contemplated hereby shall be governed by and construed and enforced in
accordance with the laws of Texas, notwithstanding any contrary application of
conflicts of laws principles.
11.02 Press Releases. The parties hereto agree to use their best efforts to
coordinate the preparation of and making of any public announcements of the
transactions contemplated by this Agreement. No such release or public
announcement pertaining to the transactions contemplated by this Agreement may
be made by either party without the prior consent of the other party, unless
such release or announcement is required by law.
11.03 Entire Agreement. This Agreement and the Schedules hereto and the
agreements, documents and instruments referred to herein, set forth the entire
agreement and understanding of the parties in respect of the transactions
contemplated hereby and supersede all prior agreements, arrangements and
understandings relating to the subject matter hereof, whether oral or written.
The parties hereto have not relied upon any promises, representations,
warranties, agreements, covenants or undertakings, other than those expressly
set forth or referred to herein.
21
11.04 Successors. All of the terms, covenants, representations, warranties
and conditions of this Agreement shall be binding upon, and inure to the benefit
of and be enforceable by, the parties hereto and their respective successors,
heirs, and other legal representatives, but this Agreement and the rights and
obligations hereunder shall not be assigned, except that Harvest may assign or
transfer any of its rights and obligations hereunder to any of its affiliates
without Surf City's or the Shareholder's consent.
11.05 Modification. No amendment, modification or attempt to supersede or
cancel any of the terms, covenants, representations, warranties or conditions
hereof shall be effective unless such amendment, modification or direction to
supersede or cancel such term, covenant, representation, warranty or condition
is in writing executed by Harvest, Surf City, or, in the case of a waiver, by or
on behalf of the party waiving compliance. No waiver by any party of any
condition, or of any breach of any term, covenant, representation or warranty
contained in this Agreement, in any one or more instances, shall be deemed to be
a further or continuing waiver of any such condition or breach or a waiver of
any other condition or of any breach of any other term, covenant, representation
or warranty.
11.06 Counterparts. This Agreement and any amendment or modification hereof
may be executed simultaneously in two or more counterparts, each of which shall
be deemed an original, but all of which taken together shall constitute one and
the same instrument.
11.07 Signatures by Facsimile. Any facsimile signature of any party hereto
shall constitute a legal, valid and binding execution hereof by such party.
11.08 Arbitration. In the event of a dispute between the parties arising
under this Agreement, the parties shall submit to binding arbitration before a
single arbitrator in a neutral city, under the Commercial Arbitration Rules of
the American Arbitration Association. The decision of the arbitrator shall be
final and binding with respect to the dispute subject to arbitration and shall
be enforceable in any court of competent jurisdiction. Each party shall bear its
own expenses and costs incurred in such arbitration. Nothing in this paragraph
shall derogate from the rights of the parties to seek preliminary injunctive
relief to preserve the status quo.
22
23
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
and Plan of Merger as of the date first above written.
HARVEST RESTAURANT GROUP, INC. SURF CITY ACQUISITION
CORPORATION II, INC.
By:_____________________________
Title: Chairman & Chief Executive Officer By: Xxxxxxx X. Xxxxxxxxx
Title: President
KOOTENAY HOLDINGS, L.L.C.
By:__________________________________
Title: ______________________________
24
