ACQUISITION AGREEMENT
THIS ACQUISITION AGREEMENT, made this 18th day of May, 2001, by and among
Xxxxxxx'x Restaurants, Inc., a Delaware corporation ("Purchaser"),
Wallstreet-Review, Inc., a Florida corporation ("Shareholder") and WSR Energy
Resources, Inc., a Florida corporation and wholly owned subsidiary of
Shareholder ("Seller");
W I T N E S S E T H:
WHEREAS, the parties hereto desire to enter into this Acquisition Agreement
pursuant to which Purchaser will purchase from Seller the Assets of Seller, upon
the terms and subject to the conditions set forth herein;
NOW, THEREFORE, for and in consideration of the premises and the mutual
promises, agreements, representations, warranties and covenants hereinafter set
forth, and the sum of $10.00 and other good and valuable consideration, the
receipt and sufficiency of which is hereby specifically agreed to and
acknowledged, the parties hereto agree as follows:
I. DEFINITIONS.
As used herein, the following terms shall have the following meanings unless the
context otherwise requires:
1.1 "Agreement" shall mean this Acquisition Agreement.
1.2 "Assets" shall mean only those assets, which are owned by Seller, as
indicated and described in Section 2.1,
1.3 "Closing" shall mean the consummation of the transactions provided for in
this Agreement.
1.4 "Closing Date" shall mean the date on which the Closing occurs pursuant to
Section 8.1 hereof.
1.5 "Code" shall mean the Internal Revenue Code of 1986, as amended.
1.6 "Improvements" shall mean, collectively, any and all improvements located on
the Leased Real Property.
1.7 "Indemnitee" shall have the meaning set forth in Section 8.4.
1.8 "Indemnifying Party" shall have the meaning set forth in Section 8.4.1.1(a).
1.9 "Interim Financial Statement" shall have the meaning set forth in Section
3.4.1.
1.10 "Leased Real Property" shall have the meaning set forth in Section 3.6.2.3.
1.11 "Minimum Aggregate Liability Amount" shall have the meaning set forth in
Section 8.3.
1.12 "1933 Act" shall mean the Securities Act of 1933, as amended.
1.13 "Notice to Contest" shall have the meaning set forth in Section 8.4.1.2
(d).
1.14 "Notice to Defend" shall have the meaning set forth in Section 8.4.1.1 (c).
1.15 "Notice of Settlement shall have the meaning set forth in Section 8.4.1.2
(c).
1.16 "Permits" shall mean all licenses, registrations, certificates, approvals,
and permits issued by governmental authorities and quasi-governmental
authorities in regard to the Leased Real Property, the Improvements, or any
portion or component of either of them.
1.17 "Promissory Note" shall mean the note of Purchaser to the Seller,
substantially in the form attached hereto as Exhibit 2.2.
1.18 "Property" shall have the meaning set forth in Section 3.12.
1.19 "SEC" shall mean the Securities and Exchange Commission.
1.20 "SEC Documents" shall have the meaning set forth in Section 5.6.
1.21 "Third Party Claim" shall have the meaning set forth in Section 8.4.
II. COVENANTS AND UNDERTAKINGS.
2.1 Purchase and Sale of Assets.
2.1.1 Subject to the terms and conditions hereinafter set forth at the
Closing, Seller shall sell, assign, transfer, convey, and deliver, and the
Shareholder shall cause Seller to sell, assign, transfer, convey, and
deliver, to Purchaser, and Purchaser shall purchase and assume from Seller
for the purchase price specified in Section 2.2 of this Agreement, (i) all
items of real and personal property which constitute a part of the Assets,
free and clear of all liens, claims, charges, and encumbrances of any
nature whatsoever and (ii) all leases, licenses, contracts, and agreements
constituting part of the Assets, all of which shall be as of the Closing in
full force and effect without any existing defaults (or events or
conditions, which with notice or lapse of time, or both, would constitute a
default) thereunder.
2.1.2 The Assets conveyed hereunder shall be the property and rights
relating to approximately 409 acres in Pecos County, Texas, known as GLASS
XXXX "X000 SF 14162" PROPERTY under a certain Oil, Gas and Mineral Lease
dated 26th day of April, 1996, between Xxxxxx Xxx Xxxxxx 1992 Investment
Trust, Xxxxxxxxx Xxxxxx Xxxxxx, Trustee of 0000 Xxxx 00xx Xxxxxx, Xxxxxx,
Xxxxx 00000, as Lessors, and Pilares Oil & Gas, Inc., 3241 South First
Street, Xxx Xxxxx Xxxxx, Xxxxxxx, XX 00000, as Lessor. The lease is
recorded in Vol. 727, at Page 662.
2.2 Purchase Price.
In consideration of the sale, transfer, conveyance, assignment and delivery of
the Assets, and in reliance upon the representations and warranties made herein
by Seller and the Shareholder, Purchaser in payment for the Assets, shall pay to
Seller Seven Million Six Hundred Dollars ($7,600,000.00) as follows:
(i) One Hundred Thousand Dollars ($100,000.00) in cash, by cashier's check
or wire transfer of immediately available funds at Closing;
(ii) One Million Five Hundred Thousand Dollars ($1,500,000.00) in the form
of a Promissory Note, substantially in the form set forth in Exhibit 2.2,
delivered at Closing and;
(iii) Common Shares of Buyer equal to Six Million Dollars ($6,000,000)
based on the share price of Buyer's common shares one day prior to Closing,
or if a sufficient number of the common shares are not available for
issuance, shares of preferred stock convertible into the number of shares
of common stock which can not, for such reason, be issued, which (a) vote
on an as converted basis, (b) receive dividends on an as converted basis,
and (c) which automatically convert into common stock when sufficient
shares are available either because of an increase in the authorized common
stock or because of a common stock combination.
2.3 Compliance with Securities Laws.
In connection with the transactions contemplated by this Agreement, the parties
hereto agree to cooperate with one another in complying with the provisions of
the 1933 Act and the General Rules and Regulations thereunder and all other
applicable federal and state securities laws, and each of them agrees to furnish
the other, or its counsel, with such information and to take such actions as may
be reasonably requested in respect of such compliance.
2.4 Liabilities of Seller.
2.4.1 Except for Purchaser's assumption at the Closing of the obligations
of Seller thereafter to accrue under agreements, contracts, licenses and
leases which constitute part of the Assets and which are set forth on the
schedules hereto Purchaser will not assume or become liable on any other
agreement, contract or lease of Seller or Shareholder or for any other
indebtedness, obligations or liabilities of Seller or Shareholder
whatsoever.
Purchaser shall not assume any indebtedness, obligation or liability for
any litigation matter arising from the Assets prior to the Closing,
regardless of whether such matter is disclosed in Exhibit 3.07]. Purchaser
shall not assume any liability for any legal fees or expenses of Seller,
Shareholder or any other party incurred for any reason whatsoever, and the
Assets shall not be utilized for or reduced by the amount of any such fees
or expenses. Seller and Shareholder will pay with funds that are not Assets
all stamp, sales, income, realty transfer or other taxes imposed on Seller
or Shareholder, and Purchaser will pay all such taxes imposed on it, in
respect of any and all transfers pursuant to the terms of this Agreement.
2.4.2 All property and ad valorem taxes, leasehold rentals and other
customarily proratable items relating to the Assets payable subsequent to
the Closing Date and relating to a period of time both prior to and
subsequent to the Closing Date will be prorated as of the close of business
on the day before the Closing Date between Purchaser and Seller. If the
actual amount of any such item is not known as of the Closing Date, the
aforesaid proration shall be based on the previous year's assessment of
such item and the parties agree to adjust said proration and pay any
underpayment or reimburse for any overpayment within thirty (30) days after
the actual amount becomes known.
2.5 Shareholder Meetings; Covenants and Representations of Shareholder.
Prior to Closing, Seller will submit the sale of the Assets pursuant to this
Agreement, and such other agreements, documents and instruments evidencing the
transactions contemplated hereby as may be appropriate or necessary, to the
Shareholder, recommend its approval and use its best efforts to obtain such
approval. Shareholder hereby covenants and agrees that at the meeting of
Seller's Shareholder such Shareholder will vote all of the shares of the Seller
owned or controlled by Shareholder in favor of the approval of such sale and in
favor of the approval of all other agreements, documents and instruments which
are contemplated by this Agreement. To the extent permitted by law, the actions
contemplated above may be taken by unanimous written consent in lieu of a
meeting.
2.6 Maintainment of the Assets Prior to Closing.
2.6.1 Except with the prior consent in writing of Purchaser, Seller and
Shareholder covenant and agree that, between the date of this Agreement and
the Closing Date, Seller will maintain the Assets in the same working order
and condition as such Assets are in as of the date of this Agreement,
reasonable wear and tear excepted and not liquidate the Assets to cash; (b)
keep in force at no less than their present limits all existing bonds and
policies of insurance insuring the Assets; (c) suffer, permit or incur any
of the transactions or events described in Section 3.11 hereof to the
extent such events or transactions are within the control of the Seller or
the Shareholder or in any way affect the Assets; (d) not make or permit any
change in Seller's Articles of Incorporation or Bylaws, or in its
authorized, issued or outstanding securities, if such action would
adversely affect the ability of Seller to consummate the transactions
contemplated hereunder or would cause the necessity of obtaining the
consent of any individual or entity not disclosed in Exhibit 3.13; and (e)
promptly advise Purchaser in writing of any matters arising or discovered
after the date of this Agreement which, if existing or known at the date
hereof, would be required to be set forth or described in this Agreement or
the Exhibits hereto.
2.7 Examination of Property and Records.
Between the date of this Agreement and the Closing Date, Seller will allow, and
Shareholder will cause Seller to allow, Purchaser, its counsel and other
representatives full access to all the books, records, files, documents, assets,
properties, contracts and agreements of Seller relating to the Assets which may
be reasonably requested. Purchaser will conduct any investigation in a manner
which will not unreasonably interfere with the business of Seller. In the event
the Closing does not occur, Purchaser will as soon as practicable, return all
material of or concerning the Assets then in its possession and hereby covenants
to keep confidential and not use for its own benefit any information concerning
the Assets and ascertained from its review; provided, however, that the
foregoing shall not apply to any information (a) in the public domain not as a
result of the violation of Purchaser's undertakings herein, (b) available to
Purchaser on a nonconfidential basis without regard to the disclosure by Seller,
Shareholder or their representatives to Purchaser, (c) available to Purchaser
from a source other than Seller, Shareholder or their representatives (provided
that such source in so acting is not violating any duty or agreement of
confidentiality) or (d) required to be disclosed by any law, rule or regulation.
The parties hereto acknowledge and agree that certain information, including the
names of customers and clients of Seller are already in the possession of
Purchaser and such information shall not be deemed to be confidential for the
purposes hereof.
2.8 Consents, Waivers and Approvals.
Seller and Shareholder agree to use their best reasonable commercial efforts to
obtain the waiver, consent and approval of all persons whose waiver, consent or
approval (i) is required in order to consummate the transactions contemplated by
this Agreement, or (ii) is required by any agreement, lease, instrument,
arrangement, judgment, decree, order or license to which Seller or Shareholder
is a party or subject on the Closing Date, and (a) which would prohibit, or
require the waiver, consent or approval of any person to such transactions or
(b) under which, without such waiver, consent or approval, such transactions
would constitute an occurrence of default under the provisions thereof, result
in the acceleration of any obligation thereunder, or give rise to a right of any
party thereto to terminate its obligations thereunder. All written waivers,
consents and final approvals shall be produced at Closing in form and content
reasonably satisfactory to Purchaser. No consents are required except as set on
Exhibit 2.8
2.9 Supplying of Financial Statements.
Seller and Shareholder covenant to deliver to Purchaser all regularly prepared
unaudited financial statements of Seller that relate to the Assets prepared
after the date of this Agreement through the Closing Date, in the format
historically utilized internally, as soon as such financial statements are
available. In addition, and within 60 days after the closing, Seller shall
deliver audited financial statements, if any required by Regulation S-X of the
General Rules and Regulations under the Securities Exchange Act of 1934 which
are required to be included on the Purchaser's reports on Form 8-K and 10-KSB
under such Act, insofar as this will be a material acquisition for Purchaser and
will require all of the financial statements referred to in said Regulation S-X
to the extent that the Seller, or any predecessors with respect to the Assets,
have been in operation.
III. REPRESENTATIONS AND WARRANTIES OF SELLER AND
SHAREHOLDER.
Seller and Shareholder, jointly and severally, represent and warrant to, and for
the benefit of, Purchaser as follows:
3.1 Organization and Standing.
Seller is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Florida, and has the full power and authority
(corporate and otherwise) to own and lease the properties and assets which it
now owns or leases. Seller is now, and will be at Closing, duly qualified and/or
licensed to transact business and in good standing as a foreign corporation in
all jurisdictions listed in Exhibit 3.1(a) hereto. Purchaser shall have no
liability and shall incur no loss, damage, injury, costs or expense from the
failure of Seller to be qualified or licensed to do business or to own or lease
property in any jurisdiction.
3.2 Authority and Status.
Each of Shareholder and Seller has the capacity and authority to execute and
deliver this Agreement, to perform hereunder, and to consummate the transactions
contemplated hereby without the necessity of any act or consent of any other
person whomsoever. The execution, delivery and performance by Seller and
Shareholder of this Agreement and each and every agreement, document and
instrument provided for herein have been duly authorized and approved by the
Board of Directors of Seller and Shareholder. This Agreement and each and every
agreement, document and instrument to be executed, delivered and performed by
Seller or Shareholder in connection herewith, constitute or will, when executed
and delivered, constitute the valid and legally binding obligations of Seller
and Shareholder, as the case may be, enforceable against each of them in
accordance with their respective terms, except as enforceability may be limited
by applicable equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws from time to time in effect affecting the
enforcement of creditors' rights generally. The execution of the Agreement and
all other documents contemplated by the Agreement will not result in a breach or
violation of Seller's bylaws or certificate of in corporation. Attached hereto
as Exhibit 3.2 are true, correct and complete copies of the Articles of
Incorporation and Bylaws of Seller.
3.3 Capitalization.
All of the issued and outstanding shares of Seller are owned by Shareholder,
and, except for the requisite affirmative vote of Shareholder of Seller pursuant
to Florida law, the authorization or consent of no other person or entity is
required in order to consummate the transactions contemplated herein by virtue
of any such person or entity having an equitable or beneficial interest in
Seller or the capital stock of Seller. There are no outstanding options,
warrants, calls, commitments, or plans by Seller to issue any additional shares
of its capital stock, or to pay any dividends on such shares, or to purchase,
redeem, or retire any outstanding shares of its capital stock, nor are there
outstanding shares of its capital stock, nor are there outstanding any
securities or obligations which are convertible into or exchangeable for any
shares of capital stock of Seller, which would give any other person the right
to consent or vote on the transaction contemplated herein.
3.4 Liabilities and Obligations of Seller.
3.4.1 Attached hereto to Exhibit 3.4.1 is a true, correct and complete copy
of Seller's unaudited balance sheet as of inception and the related income
statement for the period from inception to May 4, 2001 (the "Interim
Financial Statements"). The Interim Financial Statements have been prepared
from and are in complete accordance with the books and records of Seller,
are true and complete statements of the financial position of Seller as of
their respective dates, have been prepared in accordance with generally
accepted accounting principles consistently applied, fairly present the
financial position and results of operations of Seller as of the respective
dates thereof, and disclose all liabilities of Seller, whether absolute,
contingent, accrued or otherwise, existing as of the respective dates
thereof. The books and records of Seller are sufficient and accurate to the
extent (i) to permit Purchaser's independent certified public accountants
to conduct an audit of Seller sufficient in scope to permit the issuance of
an unqualified opinion on the financial statements of Seller and (ii) to
permit Purchaser to comply with any applicable reporting requirements under
any applicable federal or state securities laws.
3.4.2 Seller has no liability or obligation related to the Assets (whether
accrued, absolute, contingent or otherwise) which is of a nature required
to be reflected in financial statements prepared in accordance with
generally accepted accounting principles, consistently applied, including,
without limitation, any liability which might result from an audit of its
tax returns by any appropriate authority, except for (i) the liabilities
and obligations of Seller which are disclosed and reserved against in the
Interim Financial Statements or reflected on Exhibit 3.4.2 hereto, to the
extent and in the amounts so disclosed and reserved against, and (ii)
liabilities incurred or accrued in the ordinary course of business since
the date of the Interim Financial Statements, and which do not, either
individually or in the aggregate, have an adverse effect on the Assets.
Except as otherwise disclosed herein, there is no basis for any assertion
against the Assets as of the Interim Financial Statements of any liability
of any nature or in any amount not fully accrued and appearing on the
balance sheet as of that date.
3.4.3 Except as disclosed in the Interim Financial Statements or Exhibit
3.4.2, Seller is not in default with respect to any liabilities or
obligations which are related to the Assets, and all such liabilities or
obligations shown and reflected in the Interim Financial Statements or
Exhibit 3.4.2, and such liabilities incurred or accrued subsequent to the
Interim Financial Statements, have been, or are being, paid or discharged
as they become due, and all such liabilities and obligations were incurred
in the ordinary course of business, except as indicated in Exhibit 3.4.2.
3.5 Taxes.
There is not, and there will not be, any liability for federal, state or local
income, sales, use, excise, payroll, employment or other taxes arising out of,
or attributable to, or affecting the Assets through the close of business on the
Closing Date, or attributable to the conduct of the operations of Seller at any
time for which Purchaser will have any liability for payment or otherwise. After
the Closing, there will not exist by virtue of the transactions contemplated by
this Agreement any liability for taxes (except for sales taxes and realty
transfer taxes, if any, incident to the consummation of the transactions
contemplated herein) which may be asserted by any taxing authority against the
Assets, and no lien or other encumbrance for taxes will attach to the Assets.
3.6 Ownership of Assets and Leases.
3.6.1 Other than with respect to the Leased Real Property and Improvements:
3.6.1.1 Seller has good and marketable title to all of the assets shown on
Exhibit 3.6.1.1 subject to no mortgage, pledge, lien, security interest,
conditional sale agreement, encumbrance, charge or adverse claim
whatsoever.
3.6.1.2 Each of the leases and agreements described in Exhibit 3.6.1.2 is
in full force and effect and constitutes a legal, valid and binding
obligation of Seller and the other respective parties thereto and is
enforceable in accordance with its terms, and there is not under any of
such leases or agreements existing any default of Seller or of any other
parties thereto (or event or condition which, with notice or lapse of time,
or both, would constitute a default). Neither Seller nor any Shareholder
has received any payment from a lessor in connection with or as inducement
for entering into any such lease except as set forth on Exhibit 3.6.1.2.
3.6.1.3 None of the property of Seller shown on Exhibits 3.6.1.1 or 3.6.1.2
is subleased by Seller to any other person or entity.
3.6.1.4 Except pursuant to this Agreement, Seller is not a party to any
contract or obligation whereby there has been granted to anyone an absolute
or contingent right to purchase, obtain or acquire any rights in any of the
assets, properties or operations which are owned by Seller.
3.6.2 With respect to the Leased Real Property, Improvements and other real
estate:
3.6.2.1 No taxes, assessments, water charges or sewer charges relating to
the Leased Real Property or Improvements are delinquent and there are no
special taxes, assessments or charges pending or threatened against the
Leased Real Property or the Improvements.
3.6.2.2 All water, sewer, gas, electric, telephone and drainage facilities
and all other utilities required by law or by the normal use and operation
of the Leased Real Property and the Improvements currently service the
Leased Real Property and the Improvements in such capacities as are
required by law or by the normal use and operation of the Leased Real
Property and the Improvements.
3.6.2.3 The Leased Real Property and the Improvements are usable and
operable and the Improvements are in good operating condition and
reasonable state of repair, subject only to ordinary wear and tear.
3.6.2.4 Seller has obtained and maintained in full force and effect to the
date hereof all Permits required for the normal use and operation of the
Leased Real Property and the Improvements as currently operated. A complete
and correct list of all such Permits is set forth on Exhibit 3.6.2.4.
Seller has delivered to Purchaser complete and accurate photocopies of all
Permits. Seller has complied in all respects with all such Permits and has
not received any notice that any such Permits will not be renewed upon
expiration or of any conditions which will be imposed in order to receive
any such renewal. Except as described on Exhibit 3.6.2.5, all of the
Permits will remain in full force and effect, and will inure to the benefit
of Purchaser, after the consummation of the transactions contemplated by
this Agreement.
3.6.2.6 The Leased Real Property is being operated and maintained in full
compliance with all applicable local, state and federal ordinances,
regulations and requirements which affect the use and operation thereof,
with all contracts related thereto and with all Permits. Seller has not
received any notice of violation of law or municipal ordinance, order or
requirement having jurisdiction over or affecting the Leased Real Property.
3.6.2.7 The zoning classification of the various tracts comprising the
Leased Real Property permits the use of all or any part of the Leased Real
Property for the purposes and in the manner in which the Leased Real
Property is currently used. Seller has not received notice of any pending
or contemplated changes in the status of the zoning for the Leased Real
Property. None of Seller, nor any predecessor in title to the Leased Real
Property, has any agreement currently in effect with any county or township
in which a tract is located, or any other entity, public or private, which
would be binding and would prevent the use of the Leased Real Property for
any of the uses allowed by the current zoning of the Leased Real Property.
3.6.2.8 The Leased Real Property abuts a public right-of-way and the rights
of ingress and egress to and from the Leased Real Property and adjoining
public ways are not restricted or limited in any manner.
3.6.2.9 There are no pending or threatened or contemplated eminent domain
proceedings affecting the Leased Real Property or any part thereof.
3.6.3.0 The appraisals and other information provided by Seller to
Purchaser in connection with the Leased Real Property is, to the best
knowledge of Seller and Shareholder, true and correct.
3.7 Indebtedness of Seller.
Attached hereto as Exhibit 3.7 is a list of all instruments, agreements or
arrangements related to the Assets pursuant to which Seller has borrowed any
money, incurred any indebtedness, established any line of credit, pledged any
Assets, or made any guarantees secured by Assets, any of which represents a
liability of Seller on the date hereof. Seller has performed all the obligations
required to be performed by it to the date hereof pursuant to the obligations
listed on Exhibit 3.7 and Seller is not in default under any mortgage,
indenture, note or other obligation for, or relating to, borrowed money to which
Seller is a party, or to which any property or assets belonging to, or used by,
Seller is subject, and there has not occurred any event which, but for the
passage of time or giving of notice, or both, would constitute a default.
3.8 Agreement Does Not Violate Other Instruments.
Except as listed in Exhibit 3.8, the execution and delivery of this Agreement by
Seller or Shareholder do not, and the consummation of the transactions
contemplated hereby will not, violate any provision of the Articles of
Incorporation, as amended, or Bylaws, as amended, of Seller or violate or
constitute an occurrence of default under any provision of, or conflict with, or
result in acceleration of any obligation under, or give rise to a right by any
party to terminate its obligations under, any mortgage, deed of trust,
conveyance to secure debt, note, loan, lien, lease, agreement, instrument, or
any order, judgment, decree or other arrangement to which Seller or any of
Shareholder is a party or is bound or by which the Assets are affected. Except
as listed or described on Exhibit 3.8 attached hereto, no consent, approval,
order or authorization of, or registration, declaration or filing with, any
governmental entity is required to be obtained or made by or with respect to
Seller, Shareholder, any of the Assets, in connection with the execution and
delivery by Seller or Shareholder of this Agreement or any of the agreements,
certificates or other documents delivered or to be delivered on or after the
date hereof and at or prior to the Closing in connection with the transactions
contemplated hereby.
3.9 Absence of Changes.
Since the date of the Interim Financial Statements, Seller has not, except as
disclosed on Exhibit 3.9 attached hereto:
3.9.1 Transferred, assigned, conveyed or liquidated any of the Assets or
entered into any transaction or incurred any liability or obligation which
affect the Assets;
3.9.2 Suffered any change in its financial condition which may have an
adverse effect on the Assets, and neither Seller nor Shareholder has become
aware of any event which may result in any such adverse change;
3.9.3 Suffered any destruction, damage or loss, relating to the Assets
whether or not covered by insurance;
3.9.4 Suffered, permitted or incurred the imposition of any lien, charge,
encumbrance (which as used herein includes, without limitation, any
mortgage, deed of trust, conveyance to secure debt or security interest) or
claim upon any of the Assets, except for any current year lien with respect
to personal or Leased Real Property taxes not yet due and payable;
3.9.5 Committed, suffered, permitted or incurred any default in any
liability or obligation which, in the aggregate, have had or will have an
adverse effect upon the Assets;
3.9.4 Made or agreed to any change in the terms of any contract or
instrument to which it is a party which may have an adverse effect on the
Assets;
3.9.5 Waived, canceled, sold or otherwise disposed of, for less than the
face amount thereof, any claim or right relating to the Assets which it has
against others;
3.9.6 Declared, promised or made any distribution from the Assets or other
payment from the Assets to Shareholder (other than reasonable compensation
for services actually rendered) or issued any additional shares or rights,
options or calls with respect to the capital stock of Seller, or redeemed,
purchased or otherwise acquired any of the capital stock of Seller, or made
any change whatsoever in Seller's capital structure (if such action would
affect the ability of Seller to consummate the transactions contemplated in
this Agreement or would cause the necessity of obtaining the consent of any
individual or entity not disclosed in Exhibit 3.9);
3.9.9 Delayed or postponed the payment of any liabilities, whether current
or long term, or failed to pay any liability on a timely basis consistent
with prior practice.
3.10 Litigation.
Except as otherwise set forth in Exhibit 3.10 hereto, there is no suit, action,
proceeding, claim or investigation pending or threatened against, or affecting,
the Assets, and there exists no basis or grounds for any such suit, action,
proceedings, claim or investigation. None of the items described in Exhibit
3.10, singly or in the aggregate, if pursued and/or resulting in a judgment
would have an adverse effect on the Assets, or the right of Seller or
Shareholder to consummate the transactions contemplated hereby.
3.11 Licenses and Permits; Compliance With Law.
Seller holds all licenses, certificates, permits, franchises and rights from all
appropriate federal, state or other public authorities necessary for the use of
the Assets. All such licenses, certificates, permits, franchises and rights are
listed on Exhibit 3.11. Seller neither is presently charged with nor is under
governmental investigation with respect to any actual or alleged violation of
any statute, ordinance, rule or regulation, nor is presently the subject of any
pending or threatened adverse proceeding by any regulatory authority having
jurisdiction over the Assets. Neither the execution nor delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
result in the termination of any such license, certificate, permit, franchise or
right held by Seller which is to be assigned pursuant to this Agreement, and all
such assigned licenses, certificates, permits, franchises and rights will inure
to the benefit of Purchaser after the transactions contemplated by this
Agreement. The representations and warranties shall not expand or limit the
representations and warranties made in Section 3.11 hereof.
3.12 Environmental Matters.
Except as set forth in Exhibit 3.12, no real property now or previously owned or
used by Seller or now or previously leased by Seller relating to the Assets (the
"Property") has been used by Seller or any affiliate of Seller or, to the
knowledge of Seller, any other party, for the handling, treatment, storage or
disposal into the environment of any Hazardous Substance (as hereinafter
defined). Except as set forth in Exhibit 3.12, no release, discharge, spillage
or disposal of any Hazardous Substance and no soil, water or air contamination
by any Hazardous Substance has occurred or is occurring in, from or on the
Property resulting from any action or inaction of Seller or any affiliate of
Seller or, to the knowledge of Seller, any other party. Except as set forth in
Exhibit 3.12, Seller has complied with all reporting requirements under any
applicable federal, state or local environmental laws and permits as they relate
to the Assets, and there are no existing violations by Seller of any such
environmental laws or permits. Except as set forth in Exhibit 3.12, there are no
claims, actions, suits, proceedings or investigations related to the presence,
release, production, handling, discharge, spillage, transportation or disposal
of any Hazardous Substance or contamination of soil, water or air by any
Hazardous Substance pending or threatened with respect to the Property or
otherwise against Seller or any affiliate of Seller in any court or before any
state, federal or other governmental agency or private arbitration tribunal and
there is no basis for any such claim, action, suit, proceeding or investigation.
There are no underground storage tanks on the Property for which Seller or any
affiliate of Seller may be held to be or have been the owner or operator. No
building or other improvement included in the Property for which Seller or any
affiliate of Seller may be held legally responsible contains any asbestos or any
asbestos-containing materials, and such buildings and improvements are free from
radon contamination. For the purposes of this Agreement, "Hazardous Substance"
shall mean any hazardous or toxic substance or waste as those terms are defined
by any applicable federal, state or local law, ordinance, regulation, policy,
judgment, decision, order or decree regulation including, without limitations,
the Comprehensive Environmental Recovery Compensation and Liability Act, 42
U.S.C. 9601 et seq. ("CERCLA"), the Hazardous Materials Transportation Act, 49
U.S.C. ss. 1801 et seq. and the Resource Conservation and Recovery Act, 42
U.S.C. 6901 et seq. ("RCRA"), and petroleum, petroleum products and oil.
3.13 Related Party Relationships.
Except as set forth in Exhibit 3.13, neither Shareholder nor any officer or
director of Seller possesses, directly or indirectly, any beneficial interest
in, or is a director, officer or employee of, any corporation, partnership,
firm, association or business organization which is a client, supplier,
customer, lessor, lessee, lender, creditor, borrower, debtor or contracting
party with or of Seller with respect to the Assets (except as a stockholder
holding less than a one percent (1%) interest in a corporation whose shares are
traded on a national or regional securities exchange or in the over-the-counter
market), other than that relationship that has existed between Shareholder,
Seller (including each wholly owned subsidiary of Seller) and any officer or
director thereof with all or any one of the medical practices managed by it.
3.14 Exhibits.
All Exhibits attached hereto are true, correct and complete as of the date of
this Agreement, and will be true, correct and complete as of the Closing, except
to the extent that such Exhibits may be untrue, incorrect or incomplete due to
changes occurring. Matters disclosed on each Exhibit shall be deemed disclosed
only for purposes of the matters to be disclosed in such Exhibit and shall not
be deemed to be disclosed for any other purpose unless expressly provided
therein.
3.15 Disclosure and Absence of Undisclosed Liabilities.
This Agreement and the Exhibits hereto disclose all facts material to the
Assets. No representation or statement contained herein or in any certificate,
schedule, list, exhibit or other instrument furnished to Purchaser pursuant to
the provisions hereof contains or will contain any untrue statement of any
material fact or omits or will omit to state a material fact necessary in order
to make the statements contained herein or therein not misleading.
IV. SECURITIES LAWS.
4.1 No Registration Statement Required.
Seller and Shareholder represent that they understand that the Promissory Note
to be issued and delivered pursuant to the provisions of this Agreement will not
be registered under the 1933 Act, or under Florida or any other applicable
"Blue-Sky" laws, in reliance upon the exemptions contained in the 1933 Act and
the General Rules and Regulations under the 1933 Act promulgated by the SEC.
4.2 Investment Letter of Seller and Shareholder.
Seller and Shareholder each represent, warrant and covenant to and with
Purchaser that the Promissory Note to be issued and delivered pursuant to the
provisions of this Agreement will be, when issued and delivered, acquired by
Seller for investment for its own account and not with a view to the subsequent
resale or other distribution thereof, except within the limitations prescribed
under the Rules and Regulations under the 1933 Act, or in some other manner
which will not violate the registration requirements of the 1933 Act or any
applicable "Blue-Sky" laws, and Seller agrees to execute and deliver to
Purchaser on the Closing Date, a letter substantially in the form of Exhibit
4.2(a) attached hereto, dated as of such Closing Date, to such effect; provided,
however, in the event Seller desires to transfer the Promissory Note to an
affiliate, in liquidation or otherwise, it shall obtain a letter, substantially
in the form of Exhibit 4.2(b) attached hereto, dated as of the proposed
effective date of such transfer, from each such transferee as a condition to
such transfer. Notwithstanding, the Promissory Note may be transferred to any
company directly or indirectly wholly owned by Seller or to any company that
directly or indirectly wholly owns Seller (an "affiliate"), provided that such
affiliate executes and delivers to Purchaser a letter substantially in the form
of Exhibit 4.2(b).
4.3 Conditions Precedent to Transfer of the Promissory Note.
Seller and Shareholder understand, consent, and agree that transfer of the
Promissory Note received by Seller under this Agreement, including the proposed
transfer in liquidation of Seller described in Section 4.2 but not including a
proposed transfer to an affiliate described in Section 4.2, will be permitted or
allowed only when:
4.3.1 such request for transfer is accompanied by an opinion of counsel
satisfactory to Purchaser, which satisfaction will not be unreasonably
denied, to the effect that neither the sale nor the proposed transfer
results in a violation of the 1933 Act or the Rules and Regulations
thereunder or applicable "Blue-Sky" laws, or
4.3.2 such request for transfer is accompanied by a "no-action" letter from
the SEC and the applicable state securities regulatory agency with respect
to the proposed transfer, or
4.3.3 a Registration Statement under the 1933 Act and applicable Blue-Sky
laws is then in effect with respect to the Promissory Note is subject to
the proposed transfer.
4.4 Legend on the Promissory Note.
The Promissory Note issued and delivered to Seller under this Agreement shall
contain the following legend:
"THE SECURITIES ACT OF 1933 AND STATE SECURITIES LAWS
This Promissory Note has not been registered under the Securities Act of 1933,
as amended, or under the securities laws of Florida or any other state and
cannot be sold or transferred unless (i) a Registration Statement under the
Securities Act of 1933, as amended, and any applicable state securities laws is
then in effect with respect to the securities represented hereby; or (ii) a
written opinion from legal counsel reasonably acceptable to the issuer is
obtained to the effect that an exemption from registration under the Securities
Act of 1933, as amended, and any applicable state securities laws is available
with respect to the proposed sale or transfer and that no such registration is
required; or (iii) a no action letter or its then equivalent with respect to
such sale or transfer has been issued by the Staff of the Securities and
Exchange Commission and any applicable state securities governmental body; or
(iv) the transfer takes place between the Holder and (a) any company wholly
owned by Holder or (b) any company which wholly owns Holder in compliance with
the Agreement (defined below)."
V. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
Purchaser represents and warrants to, and for the benefit of, Seller and
Shareholder as follows:
5.1 Organization and Standing.
Purchaser is a duly organized and validly existing corporation in good standing
under the laws of the State of Delaware, and has the full power and authority
(corporate and otherwise) to carry on its business in the places and as it is
now being conducted and to own and lease the properties and assets which it now
owns or leases.
5.2 Corporate Power and Authority.
Purchaser has the capacity and authority to execute and deliver this Agreement,
to perform hereunder, and to consummate the transactions contemplated hereby
without the necessity of any act or consent of any other person whomsoever. The
execution, delivery and performance by Purchaser of this Agreement and each and
every agreement, document and instrument provided for herein is subject to the
approval of the Board of Directors of Purchaser, which approval shall be
obtained, if at all, within seven(7) days following the signing of this
Agreement, with immediate notification thereof to the Seller. This Agreement,
and each and every other agreement, document and instrument to be executed,
delivered and performed by Purchaser in connection herewith, constitute or will,
when executed and delivered, and after such Board approval, constitute the valid
and legally binding obligations of Purchaser, enforceable against it in
accordance with their respective terms, except as enforceability may be limited
by applicable equitable principles, or by bankruptcy, insolvency,
reorganization, moratorium, or similar laws from time to time in effect
affecting the enforcement of creditors' rights generally.
5.3 Agreement Does Not Violate Other Instruments.
The execution and delivery of this Agreement by Purchaser do not, and the
consummation of the transactions contemplated hereby will not, violate any
provisions of the respective Articles of Incorporation, as amended, or
respective Bylaws, as amended, of Purchaser, or violate or constitute an
occurrence of default under any provision of, or conflict with, result in
acceleration of any obligation under, or give rise to a right by any party to
terminate its obligations under, any mortgage, deed of trust, conveyance to
secure debt, note, loan, lien, lease, agreement, instrument, or any order,
judgment, decree or other arrangement to which Purchaser is a party or is bound
or by which their assets are affected.
5.4 Consents and Approvals. No consent, approval, order or authorization of, or
registration, declaration or filing with, any third party, including, without
limitation, any governmental or regulatory authority is required to be obtained
or made by or with respect to Purchaser, in connection with the execution and
delivery by Purchaser of this Agreement or any of the agreements, certificates
or other documents delivered or to be delivered on or after the date hereof and
at or prior to the Closing in connection with the transactions contemplated
hereby, provided that Seller has obtained all consents necessary for the
transfer of the Assets at or before the date of closing.
5.5 Litigation. There is no suit, action, proceeding, claim or investigation
pending or threatened against or affecting the right of Purchaser to consummate
the transactions contemplated hereby, and there exists no basis or grounds, with
respect to actions by Purchaser, for any such suit, action, proceeding, claim or
investigation.
5.6 SEC Reports. Purchaser has made all filings, as amended, required by it to
be made with the SEC (the "SEC Documents"), except for a possible delay in the
filing of its report on Form 10-QSB for its most recent quarterly period. As of
their respective dates, the SEC Documents, as amended, complied in all material
respects with the requirements of the Securities Act of 1933 and Securities
Exchange Act of 1934, as amended, and the rules and regulations of the SEC
thereunder applicable to such SEC Documents, and none of the SEC Documents, as
amended, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading.
5.7 No Adverse Change. Seller acknowledges that Purchaser is in a detrimental
financial condition. Since March 31, 2001 Purchaser has not suffered any
material adverse change in its business, operations or financial conditions, and
Purchaser has not become aware of any event or state of facts which may result
in any such material adverse change, except as noted in the first sentence of
this Section 5.7.
5.8 Board of Directors. The transactions have been approved by the Board of
Directors of Purchaser within seven(7) days of the date hereof.
VI. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER TO CLOSE.
All of the obligations of Purchaser to consummate the transactions contemplated
by this Agreement shall be contingent upon and subject to the satisfaction, on
or before the Closing Date, of each and every one of the following conditions,
all or any of which may be waived, in whole or in part, by Purchaser for
purposes of consummating such transactions, but without prejudice to any other
right or remedy which Purchaser may have hereunder as a result of any
misrepresentations by, or breach of any covenant or warranty of, Seller or
Shareholder contained in this Agreement or any other certificate or instrument
furnished by Seller or Shareholder hereunder.
6.1 Representations True at Closing.
The representations and warranties made by Seller and Shareholder to Purchaser
in this Agreement, the Exhibits hereto or any document or instrument delivered
to Purchaser or its representatives hereunder shall be true and correct on the
Closing Date in all material respects with the same force and effect as though
such representations and warranties had been made on and as of such time (except
for changes contemplated by this Agreement).
6.2 Covenants of Seller and Shareholder.
Seller and Shareholder shall have duly performed all of the covenants, acts and
undertakings to be performed by them on or prior to the Closing Date in all
material respects and duly authorized officers of Seller and Shareholder shall
deliver to Purchaser a certificate dated as of the Closing Date certifying to
the fulfillment of this condition and the condition set forth in Section 6.1
hereof.
6.3 No Injunction, Etc.
No action, proceeding, investigation, regulation or legislation shall have been
instituted, threatened or proposed before any court, governmental agency or
legislative body to enjoin, restrain, prohibit, or obtain substantial damages in
respect of, or which is related to, or arises out of, this Agreement or the
consummation of the transactions contemplated hereby, or which is related to or
arises out of the Assets, if such action, proceeding, investigation, regulation
or legislation, in the reasonable judgment of Purchaser would make it
inadvisable to consummate such transactions.
6.4 Consents, Approvals and Waivers.
Purchaser shall have received a true and correct copy of each and every consent,
approval and waiver (a) described in Section 2.8 hereof, or (b) otherwise
required for the execution of this Agreement and the consummation of the
transactions contemplated hereby.
6.5 Approvals.
The execution and the delivery of this Agreement and the consummation of the
transactions contemplated hereby shall have been approved by all regulatory
authorities whose approvals are required by law.
6.6 Absence of Changes.
Since the date of the Interim Financial Statements, (a) Seller shall not have
suffered any change in its financial condition which adversely affects the
Assets, and (b) neither Seller nor Shareholder shall have permitted or suffered
to occur any transaction or event described in Section 3.9 hereof which is not
described in Exhibit 3.9 hereto.
6.7 Results of Certain Investigations.
Purchaser shall have completed, and been satisfied in its reasonable discretion
with the results of legal and business investigations with respect to the
Assets.
6.8 Board of Directors. The transactions have been approved by the Board of
Directors of Purchaser within seven(7) days of the date hereof.
VII. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE SELLER
AND SHAREHOLDER TO CLOSE.
All of the obligations of Seller and Shareholder to consummate the transactions
contemplated by this Agreement shall be contingent upon and subject to the
satisfaction, on or before the Closing Date, of each and every one of the
following conditions, all or any of which may be waived, in whole or in part, by
Seller and Shareholder for purposes of consummating such transactions but
without prejudice to any other right or remedy which they may have hereunder as
a result of any misrepresentation by, or breach of any covenant or warranty of
Purchaser contained in this Agreement, or any certificate or instrument
furnished by it hereunder.
7.1 Representations True at Closing.
The representations and warranties made by Purchaser in this Agreement to Seller
and Shareholder or any document or instrument delivered to Seller, Shareholder
or their representatives hereunder shall be true and correct on the Closing Date
in all material respects with the same force and effect as though such
representations and warranties had been made on and as of such date, except for
changes contemplated by this Agreement.
7.2 Covenants of Purchaser.
Purchaser shall have duly performed all of the covenants, acts and undertakings
to be performed by them on or prior to the Closing Date, in all material
respects and a duly authorized officer of Purchaser shall deliver a certificate
dated as of the Closing Date certifying to the fulfillment of this condition and
the condition set forth under Section 7.1 above.
7.3 No Injunction, Etc.
No action, proceeding, investigation, regulation or legislation shall have been
instituted, threatened or proposed before any court, governmental agency or
legislative body to enjoin, restrain, prohibit, or obtain substantial damages in
respect of, or which is related to, or arises out of, this Agreement or the
consummation of the transactions contemplated hereby, or which is related to or
arises out of the business of Purchaser, if such action, proceedings,
investigation, regulation or legislation, in the reasonable judgment of Seller
or Shareholder would make it inadvisable to consummate same.
7.4 Approvals.
The execution and the delivery of this Agreement and the consummation of the
transactions contemplated hereby shall have been approved by all regulatory
authorities and all courts whose approvals are required by law.
VIII. CLOSING.
8.1 Time and Place of Closing and Effective Date.
8.1.1 The Closing shall be held at the offices of Ruskin, Moscou, Xxxxx &
Faltischek, P.C., commencing at 10:00 am, Eastern Time, on or about June 1,
2001, unless another place or date is agreed to in writing by Seller,
Shareholder and Purchaser. The Closing shall be consummated by mail or
facsimile with the offices of Ruskin, Moscou, Xxxxx & Faltischek, P.C. as
clearinghouse for signature pages of documents, the delivery of which are
required by this Article VIII. Upon receipt of such signature pages and
other documents required by Article VIII, Ruskin, Moscou, Xxxxx &
Faltischek, P.C. will instruct Purchaser to effect delivery of the
consideration as set forth in this Agreement. Within a reasonable time
after the Closing, Ruskin, Moscou, Xxxxx & Faltischek, P.C. will forward
executed duplicate originals of the documents described in this Article
VIII to each of the parties.
8.2 Transactions at Closing.
At the Closing, each of the following transactions shall occur:
8.2.1 Seller's and Shareholder's Performance. At the Closing, Seller and
Shareholder shall deliver to Purchaser, the following:
(a) such good and sufficient bills of sale, assignments, deeds and
other good and sufficient instruments of sale, conveyance, transfer
and assignment as shall be required or as may be appropriate in order
to effectively invest in Purchaser good and marketable title to the
Assets free and clear of all liens, security interests and
encumbrances of whatever nature;
(b) the certificates of the duly authorized officers of Seller and
Shareholder described in Section 6.2;
(c) copies of all consents, approvals, acknowledgments and waivers
described in Sections 2.8 and Section 6.4, which have been obtained
prior to Closing;
(d) certificates of compliance or certificates of good standing of
Seller, as of the most recent practicable date, from the appropriate
governmental authority of the jurisdiction of its incorporation and
any other jurisdiction which is set forth in Exhibit 3.1 hereto;
(e) certified copies of resolutions of the Board of Directors of
Seller approving the transactions set forth in this Agreement;
(f) certified copies of resolutions of shareholder(s) of Seller
approving the transactions set forth in this Agreement;
(g) certificate of incumbency for the officers of Seller who are
executing this Agreement and the other documents contemplated
hereunder;
(h) investment letter executed by Seller, substantially in the form of
Exhibit 4.2(a);
(i) copies of all books of account (excluding minute books and stock
books of Seller), contracts, files and other data and documents
pertaining to the Assets;
(j) non-interference by Seller and Shareholder with Purchaser's
physical possession of the Assets where located; and
(k) such other evidence of the performance of all covenants and
satisfaction of all conditions required of Seller and Shareholder by
this Agreement, at or prior to the Closing, as Purchaser, Purchaser or
its counsel may reasonably require.
(l) the execution of (X) all necessary agreements to consummate the
transfer of the subsidiaries of Purchaser owning its restaurant
operations to Xxx Xxxxx or his designee, and (Y) a lease between the
subsidiary operating the Xxxxxxx'x Restaurant at 000 Xxxxxxx Xxxx,
Xxxxxxx XX and the subsidiary of Purchaser having a right to purchase
such real property.
8.2.2 Performance by Purchaser. At the Closing, Purchaser shall deliver to
Seller and Shareholder the following:
(a) cash, by cashier's check or wire transfer, in the amount to be
paid at Closing, as set forth in Section 2.2;
(b) Promissory Note executed by Purchaser, substantially in the form
of Exhibit 2.2
(c) Common Stock certificate, and Preferred Stock certificate, if
necessary
(d) the certificate of the authorized officers described in Section
7.2;
(e) satisfactory evidence of the approvals described in Section 7.5;
(f) certificate of incumbency of the officers of Purchaser who are
executing this Agreement and the other documents contemplated
hereunder;
(g) certified copy of resolutions of the Board of Directors of
Purchaser approving the transactions set forth in this Agreement; and
(h) such other evidence of the performance of all the covenants and
satisfaction of all of the conditions required of Purchaser by this
Agreement at or before the Closing as Seller, Shareholder or their
counsel may reasonably require.
VIIIX. SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION.
9.1 Survival of Representations and Warranties of Seller and Shareholder.
All representations, warranties, agreements, covenants and obligations made or
undertaken by Seller and Shareholder in this Agreement or in any document or
instrument executed and delivered pursuant hereto are material, have been relied
upon by Purchaser and shall survive the Closing hereunder and shall not merge in
the performance of any obligation by any party hereto. Seller and Shareholder,
jointly and severally, agree to and shall indemnify and hold harmless Purchaser
or any assignee of Purchaser at all times after the date of this Agreement from
and against and in respect of, any liability, claim, deficiency, loss, damage,
or injury and all reasonable costs and expenses (including reasonable counsel
fees and costs of any suit related thereto) suffered or incurred by Purchaser
arising from (i) any misrepresentation, or breach of any covenant or warranty of
Seller or Shareholder contained in this Agreement or any exhibit, certificate or
other instrument furnished or to be furnished by Seller or Shareholder
hereunder, or any claim by a third party (regardless of whether the claimant is
ultimately successful) which if true would be such a misrepresentation or
breach, (ii) any nonfulfillment of any agreement on the part of either of Seller
or Shareholder under this Agreement or from any misrepresentation in or omission
from, any certificate or other instrument furnished or to be furnished to
Purchaser hereunder, (iii) any suit, action, proceeding, claim or investigation
pending or threatened against or affecting the Assets from any matter or state
of facts existing prior to Closing, regardless of whether it is disclosed on
Exhibit 3.12, (iv) any claim or debt, obligation or liability which is not
specifically assumed by Purchaser pursuant to this Agreement, (v) any matter
regarding Hazardous Substances on any Leased Real Property or regarding any
applicable federal, state or local environmental laws or permits pertaining to
the Leased Real Property, regardless of whether it has been disclosed in the
Exhibits hereto, (vi) any claim or right, or any alleged claim or right, of
third persons by virtue of application of bulk sales laws or otherwise which may
be asserted against any of the Assets, (vii) any Third Party Claim, or (viii)
any claim against, or liability that is of a nature that, if known at Closing,
would have been required to have been disclosed pursuant to this Agreement. In
addition to any other rights or remedies Purchaser may have, Purchaser shall be
entitled to withhold from the payments due under the Promissory Note the amount
of any and all liabilities, losses, damages, injuries, costs, expenses and
counsel fees which it or Purchaser has sustained or which it reasonably believes
it or Purchaser may sustain, and to offset from such withheld amount any amount
ultimately determined to be due and owing to Purchaser by way of indemnification
pursuant to this Section, and Purchaser shall not be liable for principal or
interest under the Promissory Note on any amounts so set off. If the withholding
of payments then due under the Promissory Note has been based on a reasonable
belief of a future claim due to a specific allegation, Purchaser shall pay any
such amount withheld which Purchaser has not offset pursuant to the preceding
sentence, within one year of the giving of the written notification of such
claim to Shareholder, unless a lawsuit, arbitration or administrative proceeding
based on such claim shall have been commenced within said period and is then
pending. If such a lawsuit, arbitration or administrative proceeding has
commenced within said one year period, Purchaser shall pay within thirty days
after a final determination under such lawsuit, arbitration or administrative
proceeding, the difference, if any, between said withheld amount and the amount
of any liability, loss, damage or injury actually sustained, if the withheld
amount is larger. Any examination, inspection by audit of the properties,
financial condition or other matters of Seller which is conducted pursuant to
this Agreement shall in no way limit, affect or impair the ability of Purchaser
to rely upon the representations, warranties, covenants and obligations of
Seller and Shareholder set forth herein.
9.2 Survival of Representations and Warranties of Purchaser.
All representations, warranties, agreements, covenants and obligations made or
undertaken by Purchaser in this Agreement or in any document or instrument
executed and delivered pursuant hereto are material, have been relied upon by
Seller and Shareholder and shall survive the Closing hereunder for a period of
twelve (12) months and shall not merge in the performance of any obligation by
any party hereto. Purchaser agrees to and shall indemnify and hold harmless
Seller and Shareholder at all times after the date of this Agreement from and
against and in respect of, any liability, claim, deficiency, loss, damage or
injury and all reasonable costs and expenses (including reasonable counsel fees
and costs of any suit related thereto) suffered or incurred by Seller or
Shareholder arising from (i) any misrepresentation, or breach of any covenant or
warranty of Purchaser contained in this Agreement or any certificate or other
instrument furnished or to be furnished by Purchaser hereunder, or any claim by
a third party (regardless of whether the claimant is ultimately successful)
which if true would be such a misrepresentation or breach, or (ii) any
nonfulfillment of any agreement on the part of Purchaser under this Agreement or
from any misrepresentation in or omission from, any certificate or other
instrument furnished or to be furnished to Seller or Shareholder hereunder.
9.3 Minimum Aggregate Liability Amount.
Purchaser, Seller and Shareholder each agree not to seek recourse against, and
shall not recover from, Purchaser, Seller or Shareholder under this Article IX
on account of any liability, loss, damage, injury or claim until the aggregate
amount thereof exceeds Sixty Two Thousand Five Hundred Dollars ($62,500.00) (the
"Minimum Aggregate Liability Amount"), at which time claims may be asserted for
the Minimum Aggregate Liability Amount and amounts in excess of the Minimum
Aggregate Liability Amount.
9.4 Notification and Defense of Claims.
9.4.1 Third Party Claims.
9.4.1.1 Notification and Defense Rights.
(a) If any party to this Agreement (an "Indemnitee") receives
written notice of the assertion of any claim or of the
commencement of any action or proceeding by any entity who is not
a party to this Agreement (a "Third Party Claim") against or
affecting such Indemnitee, and if such assertion were presumed to
be true (regardless of the actual outcome) then the other party
or parties could be obligated to provide indemnification under
this Agreement (an "Indemnifying Party"), then such Indemnitee
will give such Indemnifying Party reasonably prompt written
notice thereof, but in any event no later than thirty (30)
calendar days after receipt of such written notice of such Third
Party Claim. However, if it is reasonably determined by the
Indemnitee that immediate action is required to address a
condition giving rise to a Third Party Claim, the Indemnitee is
authorized to take immediate action without prior notice, and
thereafter give notice to the Indemnifying Party as soon as
practicable. In such event the Indemnitee shall be entitled to
recover from the Indemnifying Party to the extent the
Indemnifying Party is liable for indemnification hereunder.
(b) Failure of the Indemnitee to give the notice described in
subsection (a) above shall not relieve the Indemnifying Party
from any liability which it may have on account of
indemnification or otherwise, except to the extent that the
Indemnifying Party is prejudiced thereby.
(c) The Indemnifying Party may participate in (but not control)
the defense if it gives the Notice to Defend within such
twenty-day period, and the Indemnitee also will have the right to
participate in the defense of any Third Party Claim assisted by
counsel of its own choosing; provided, however, that the
Indemnitee shall have the sole right to make any significant
decisions with respect to the defense of such Third Party Claim
except as to the settlement or compromise of such Third Party
Claim, which shall be subject to the provisions of Section
9.4.1.2.
(d) During the period prior to receiving the Notice to Defend,
the Indemnitee can proceed to defend the claim, action or
proceeding and the Indemnitee shall be entitled to recover from
the Indemnifying Party to the extent the Indemnifying Party is
liable for indemnification hereunder.
(e) Notwithstanding anything in this Section 9.4.1.1 to the
contrary, the Indemnifying Party shall not be entitled to
participate in, and the Indemnitee shall be entitled to sole and
absolute control over the defense, compromise or settlement of,
any claim to the extent that the claim seeks an injunction or
other similar equitable or nonmonetary relief against the
Indemnitee.
(f) If the Indemnitee does not receive a Notice to Defend with
respect to a Third Party Claim within the twenty day period
described in subsection (c) above, the Indemnitee may, at its
option, solely defend the Third Party Claim assisted by counsel
of its own choosing, and the Indemnifying Party will be liable
for all costs and expenses, and all settlement amounts (subject
to and in accordance with Section 9.4.1.2), but only to the
extent the Indemnifying Party is liable for indemnification
hereunder.
9.4.1.2 Settlement.
(a) In the circumstances described in Section 9.4.1.1(c) where the
Indemnifying Party has the sole right to control the defense of the
Third Party Claim, the Indemnifying Party shall have the sole right to
settle such claim. Furthermore, in the circumstances described in
Section 9.4.1.1(f), the Indemnitee shall have the sole right to settle
a Third Party Claim to the extent provided in such Section.
(b) In all other circumstances, if there is a dispute between the
Indemnifying Party and Indemnitee concerning whether a Third Party
Claim should be contested, settled or compromised, it shall be
settled, compromised or contested, in accordance with the next
succeeding subsections of this Section 9.4.1.2; provided, however,
that the Indemnitee, or its respective successors or assigns, shall
neither be required to refrain from paying or satisfying any claim
which the Indemnifying Party has not acknowledged in writing its
obligations to indemnify the Indemnitee, or which has matured by court
judgment or decree, unless appeal is taken thereafter and proper
appeal bond posted by the Indemnifying Party, nor shall the Indemnitee
be required to refrain from paying or satisfying any Third Party Claim
after and to the extent that such Third Party Claim has resulted in an
unstayed injunction or other similar equitable relief against the
Indemnitee or in an imposition of a lien upon any of the properties or
assets then held by the Indemnitee or its respective successors and
assigns (unless such claim shall have been discharged or enforcement
thereof stayed by the filing of a legally permitted bond by the
Indemnifying Party or otherwise, at its sole expense), or result in a
breach or default in a license, lease or other contract by which any
of them is bound, or would materially adversely affect their
respective assets, businesses or financial condition.
(c) Subject to subsection (b), in the event that the Indemnifying
Party, on the one hand, or the Indemnitee, on the other hand, has
reached a good faith, bona fide settlement agreement or compromise,
subject only to approval hereunder, with any claimant regarding a
matter which may be the subject of indemnification hereunder and
desires to settle on the basis of such agreement or compromise, such
party who desires to so settle or compromise shall notify the other
party in writing of its desire setting forth the terms of such
settlement or compromise (the "Notice of Settlement").
(d) The Third Party Claim may be settled or compromised on the basis
set forth in the Notice of Settlement unless within twenty (20) days
of the receipt of the Notice of Settlement the party who issued the
Notice of Settlement receives a notice from the other party of its
desire to continue to contest the matter (the "Notice to Contest")
and, in such case:
(i) Should the Indemnitee deliver a Notice to Contest, the claim
shall be so contested and the liability of the Indemnifying Party
shall be limited as provided in subsection (iii) below.
(ii) If the settlement or compromise could result in a claim for
indemnification being made against the Indemnifying Party and if
the Indemnifying Party delivers the Notice to Contest, the claim
shall be so contested and the liability of the Indemnitee shall
be limited as provided in subsection (iii) below.
(iii) If a matter is contested as provided in subsections (i) or
(ii) above and is later adjudicated, settled, compromised or
otherwise disposed of and such adjudication, compromise,
settlement or disposition results in a liability, loss, damage or
injury in excess of the amount for which one party desired
previously to settle the matter as set forth in the Notice of
Settlement, then the liability of such party shall be limited to
such lesser proposed settlement amount and the party contesting
the matter shall be solely responsible for the amount in excess
of such lesser proposed settlement amount and without regard to
any minimum restriction on liability described in the Agreement.
(e) For an Indemnifying Party's Notice to Contest to be effective, it
must also state that the Indemnifying Party acknowledges and agrees
that it shall be obligated to indemnify the Indemnitee for any amount
in excess of the lesser proposed settlement amount as described in
subsection (d)(iii) above.
(f) The Indemnifying Party hereby expressly waives and renounces any
and all rights to make a claim against the Indemnitee or its
respective directors, officers, agents and employees based upon a
right or claim of any Third Party to which it may become subrogated as
a result of making any payment for indemnification hereunder except to
the extent that such waiver adversely affects any rights of
subrogation of an insurer under an applicable insurance policy;
provided however, nothing herein is intended to constitute a waiver by
the Indemnifying Party of any rights of subrogation to which it may be
entitled against persons other than those described herein.
9.5 Survival Period For Indemnification Claims Against Seller and Shareholder.
A claim for indemnification based on the covenants, representations and
warranties contained in the provisions of Sections 3.1, 3.2, 3.3, 3.6, 3.11.8,
3.11.9, 3.19, 12.2 or 12.5 or from a breach of the covenants contained in
Section 2.6.1 to the extent it pertains to the making of a payment described in
Sections 3.11.8 and 3.11.9 or from a Third Party Claim or a claim for indemnity
under Section 9.1(iv) shall survive for the longest period available under
applicable laws and may be made at any time. Except for such claims, a claim for
indemnification hereunder shall be forever barred unless made by notifying the
Seller and Shareholder (a) in the case of a claim based upon a tax liability of
the Seller (including, without limitation, any claim based upon an assertion
that any of the previously filed tax returns of the Seller are inaccurate or
incomplete), within the statutory period of limitations under the applicable tax
statute, unless such claim in raised by the taxing authority by way of an offset
against any claim or suit for refund or is allowed to be assessed after the
expiration of the applicable statute of limitations pursuant to a validly
executed waiver or extension thereof or pursuant to the mitigation provisions
contained in the Code, in which case a claim may be made within one (1) year
after such offset or assessment, or (b) in all other cases, within thirty-six
(36) months after the Closing Date.
X. TAX EFFECT OF THE TRANSACTION.
Neither Purchaser, Seller nor Shareholder have made nor do any of them make
herein any representation or warranty as to the tax consequences of the
transactions contemplated or provided for herein to any party hereto. It is
understood and agreed that each party has looked to its own advisors for advice
and counsel as to such tax effects.
IXI. TERMINATION.
11.1 Method of Termination.
This Agreement constitutes the binding and irrevocable agreement of the parties
to consummate the transactions contemplated hereby, the consideration for which
is (a) the covenants set forth in Article II hereof, and (b) expenditures and
obligations incurred and to be incurred by Purchaser and by Seller and
Shareholder in respect of this Agreement, and this Agreement may be terminated
or abandoned only as follows:
11.1.1 By the mutual consent of Shareholder and the Boards of Directors of
Seller and Purchaser, notwithstanding prior approval by Shareholder of any
or all of such corporations;
11.1.2 By Shareholder and Seller after June 11, 2001, if any of the
conditions set forth in Article VII hereof, to which their obligations are
subject, have not been fulfilled or waived, unless such fulfillment has
been frustrated or made impossible by any act or failure to act of any of
them; or
11.1.3 By Purchaser after June 11, 2001, if any of the conditions set forth
in Article VI hereof, to which the obligations of Purchaser is subject,
have not been fulfilled or waived, unless such fulfillment has been
frustrated or made impossible by any act or failure to act of Purchaser.
11.2 Effect of Termination.
In the event of a termination of this Agreement pursuant to Section 11.1.1
hereof, each party shall pay the costs and expenses actually incurred by it in
connection with this Agreement, and no party (or any of its officers, directors,
employees, agents, representatives or shareholders) shall be liable to any other
party for any costs, expenses, damage or loss of anticipated profits hereunder.
In the event of any other termination, the parties shall retain any and all
rights incident to a breach of any covenant, representation or warranty made
hereunder.
11.3 Risk of Loss.
Seller and Shareholder assume all risk of condemnation, destruction, loss or
damage due to fire or other casualty from the date of this Agreement up to the
Closing. If the condemnation, destruction, loss or damage is such that the
Assets are materially adversely affected, then Purchaser shall have the right to
terminate this Agreement. If the condemnation, destruction, loss, or damage is
such that the Assets are not materially adversely affected, or if the Assets are
materially adversely affected and Purchaser nevertheless forgoes the right to
terminate this Agreement, the purchase price shall be adjusted at the Closing to
reflect such condemnation, destruction, loss, or damage to the extent that
insurance proceeds are not sufficient to cover such destruction, loss or damage,
and if Purchaser, on the one hand, and Seller and Shareholder, on the other
hand, are unable to agree upon the amount of such adjustment, the dispute shall
be resolved jointly by the independent accounting firms then employed by
Purchaser and Seller, and if said accounting firms do not agree, they shall
appoint a nationally recognized accounting firm, whose determination of the
dispute shall be final and binding.
XI. GENERAL PROVISIONS.
12.1 Notices.
All notices, requests, demands and other communications hereunder shall be in
writing and shall be delivered by hand or sent by Federal Express or similarly
recognized overnight delivery service with receipt acknowledged, addressed as
follows:
12.1.1 If to Seller or Shareholder:
WSR Energy Resources, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx 000 X-0
Xxxxxxxxxx Xxxxx, Xxxxxxx 00000
Wallstreet-Review, Inc.
0000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxx 000 X-0
Xxxxxxxxxx Xxxxx, Xxxxxxx 00000
and to:
Xxxx X. Xxxxxx
Attorney At Law
0000 Xxxxx Xxxxxxxx Xxx
Xxxxxxxxx, XX 00000
12.1.2 If to Purchaser:
Xxxxxxx'x Restaurants, Inc.
000 Xxxxxxx Xxxx
Xxxxxxx, XX 00000
and to:
Xxxxxx X. Xxxxxx, Esq.
Ruskin, Moscou, Xxxxx & Faltischek, P.C.
000 Xxx Xxxxxxx Xxxx
Xxxxxxx, XX 00000
12.1.3 The date on which a notice, request, instruction or document is
delivered shall be the date on which such delivery is made in person or by
recognized overnight delivery service.
12.1.4 Any party hereto may change its address specified for notices herein
by designating a new address by notice in accordance with this Section
12.1.
12.2 Brokers.
12.2.1 Seller and Shareholder, jointly and severally, represent and warrant
to Purchaser that no investment banker, broker or finder has acted for it
or them, in connection with this Agreement or any of the transactions
contemplated hereby. Seller and Shareholder, jointly and severally agree to
indemnify and hold harmless Purchaser from and against any fee, claim,
loss, or expense arising out of any claim by any investment banker, broker
or finder employed or alleged to have been employed by it or them.
12.2.2 Purchaser represents and warrants to Seller and Shareholder that it
has not retained any investment banker, broker or finder in connection with
this Agreement or any of the transactions contemplated hereby. Purchaser
agrees to indemnify and hold harmless Seller and Shareholder from and
against any fee, claim, loss, or expense arising out of any claim by any
investment banker, broker or finder employed or alleged to have been
employed by it.
12.3 Further Assurances.
Each party covenants that at any time, and from time to time, after the Closing
Date, it will execute such additional instruments and take such actions as may
be reasonably requested by the other parties to confirm or perfect or otherwise
to carry out the intent and purposes of this Agreement.
12.4 Waiver.
Any failure on the part of any party hereto to comply with any of its
obligations, agreements or conditions hereunder may be waived by any other party
to whom such compliance is owed. No waiver of any provision of this Agreement
shall be deemed, or shall constitute, a waiver of any other provision, whether
or not similar, nor shall any waiver constitute a continuing waiver.
12.5 Expenses.
All expenses incurred by the parties hereto in connection with or related to the
authorization, preparation and execution of this Agreement and the Closing of
the transactions contemplated hereby, including, without limitation of the
generality of the foregoing, all fees and expenses of brokers, agents,
representatives, counsel and accountants employed by any such party, shall be
borne solely and entirely by the party which has incurred the same. All such
fees and expenses of Seller shall be borne either by Shareholder or by Seller
from proceeds from the sale of the Assets hereunder or from funds not included
in the Assets. In no event shall Assets to be purchased by Purchaser be utilized
for or be reduced by the payment of any such fees or expenses. Seller and
Shareholder hereby, jointly and severally, represent and warrant that no such
fees or expenses have been paid by Seller from any Assets prior to the date of
this Agreement, and hereby, jointly and severally, covenant that Seller will not
so pay any such fees or expenses from Assets prior to the Closing.
12.6 Nondisclosure of Terms.
12.6.1 Seller and Shareholder, jointly and severally, represent and warrant
that prior to the execution hereof they have not disclosed any of the
terms, conditions, obligations or matters contained in or relating to this
Agreement and the transactions contemplated herein, and Seller and
Shareholder, jointly and severally, covenant and agree that following the
execution of this Agreement, it and they shall not disclose to any person,
individual or entity any of such terms, conditions or matters and to keep
the same confidential, regardless of whether the Closing occurs.
12.6.2 In the event that Purchaser proposes to issue, make or distribute
any press release, public announcement or other written publicity or
disclosure prior to the Closing Date that refers to the transactions
contemplated herein, Purchaser shall provide a copy of such disclosure to
Seller and Shareholder and shall afford Seller and Shareholder reasonable
opportunity (subject to any legal obligation of prompt disclosure) to
comment on such disclosure or the portion thereof which refers to the
transactions contemplated herein prior to making such disclosure, except
that Purchaser shall have the right to make any public disclosure without
such provision to Seller and Shareholder which its counsel advises is
required by law.
12.7 Materiality.
When an item in this Agreement is characterized as "material," such item shall
be deemed "material" even though individually it may not be material, or even
though the individual adverse effect on the Assets may not be material, if the
liability, loss, damage or injury (including all reasonable costs and expenses
related thereto) arising from any misrepresentation or other breach under this
Agreement in connection with such item and any other item or items (regardless
of their characterization as material) are in the aggregate material. Once all
such items in the aggregate are so deemed material, thereafter any liability,
loss, damage or injury (and related expenses) arising from any misrepresentation
or breach in connection with any item shall be deemed material and shall be
deemed to have a material adverse effect on the.
12.8 Binding Effect.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, legal representatives, executors,
administrators, successors and assigns.
12.9 Headings.
The section and other headings in this Agreement are inserted solely as a matter
of convenience and for reference, and are not a part of this Agreement.
12.10 Entire Agreement.
This Agreement and the Exhibits hereto constitutes the entire agreement among
the parties hereto and supersedes and cancels any prior agreements,
representations, warranties, or communications, whether oral or written, among
the parties hereto relating to the transactions contemplated hereby or the
subject matter herein. Neither this Agreement nor any provision hereof may be
changed, waived, discharged or terminated orally, but only by an agreement in
writing signed by the party against whom or which the enforcement of such
change, waiver, discharge or termination is sought.
12.11 Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of
the State of New York without regard to conflicts of law principles.
12.12 Counterparts.
This Agreement may be executed in two or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute one and the
same instrument. Facsimile counterparts may be used.
12.13 Pronouns.
All pronouns used herein shall be deemed to refer to the masculine, feminine or
neuter gender as the context requires.
12.14 Exhibits Incorporated.
All Exhibits attached hereto are incorporated herein by reference, and all
blanks in such Exhibits, if any, will be filled in as required in order to
consummate the transactions contemplated herein and in accordance with this
Agreement.
**********
IN WITNESS WHEREOF, each party hereto has executed or caused this Agreement to
be executed on its behalf, all on the day and year first above written.
XXXXXXX'X RESTAURANTS, INC.
("Purchaser")
By:/s/
--------------
Name:
Title:
WSR ENERGY RESOURCES, INC.
("Seller")
By:/s/
--------------
Name:
Title:
WALLSTREET-REVIEW, INC.
("Shareholder")
By:/s/
--------------
Name:
Title:
LIST OF EXHIBITS
EXHIBITS
2.2 Form of Promissory Note.
2.8 Consents, Waivers and Approvals.
3.1(a) List of Jurisdictions Where There is Good Standing Status.
3.2 Articles of Incorporation and Bylaws.
3.4.1 Interim Financial Statements.
3.4.2.1 List of Liabilities not disclosed in the Financial Statements.
3.6.1.1 List of Owned Assets
3.6.2.2 List of Leased Real Property.
3.6.2.4 List of Permits.
3.7 List of Indebtedness.
3.8 List of Other Instruments Violated
3.9 List of Changes.
3.10 List of Litigation
3.11 List of Licenses and Permits.
3.12 List of Environmental Matters.
3.13 List of Related Party Relationships.
4.2(a) Form of Investment Letter for Seller.
4.2(b) Form of Investment Letter for Transferee.
