EXHIBIT 2.1
SHARE EXCHANGE AGREEMENT
THIS SHARE EXCHANGE AGREEMENT (this "Agreement") is entered into
effective as of the 7th day of October, 1996, by and among HOPS GRILL & BAR,
INC., a Florida corporation ("Hops"); XXXXX X. XXXXX, an individual ("Xxxxx");
XXXXXX X. XXXXXXXXXX, an individual ("Schelldorf"); XXXXXXX X. XXXXX, an
individual ("Xxxxx"); XXXXX XXXXX, an individual ("Toomy"); and XXXXX AND
XXXXXXXXXX LEASING COMPANY, a Kentucky general partnership ("M&S"). Mason,
Schelldorf, Xxxxx, Xxxxx and M&S are sometimes hereinafter referred to as the
"Predecessor Shareholders."
W I T N E S S E T H :
WHEREAS, Xxxxx and Xxxxxxxxxx each own 50 shares (the "MS Corp A
Shares") of common stock, par value $0.01 per share (the "MS Corp A Common
Stock"), of HOPS RESTAURANTS, INC., a Florida corporation ("MS Corp A");
WHEREAS, Xxxxx and Schelldorf each own 50 shares (the "MS Corp B
Shares") of common stock, par value $0.01 per share (the "MS Corp B Common
Stock"), of HOPS PARTNERS, INC., a Florida corporation ("MS Corp B");
WHEREAS, Xxxxx and Xxxxxxxxxx each own 50 shares (the "MS Corp C
Shares") of common stock, par value $0.01 per share (the "MS Corp C Common
Stock"), of HOPS OF NORTHEAST FLORIDA, INC., a Florida corporation ("MS Corp
C");
WHEREAS, Xxxxx and Schelldorf each own 50 shares (the "MS Corp D
Shares") of common stock, par value $0.01 per share (the "MS Corp D Common
Stock"), of HOPS OF SOUTHEAST FLORIDA, INC., a Florida corporation ("MS Corp
D");
WHEREAS, Xxxxx and Xxxxxxxxxx each own 45 shares (the "MS Corp E
Shares") of Class A common stock, par value $0.01 per share (the "MS Corp E
Common Stock"), of HOPS OF GREATER WEST PALM BEACH, INC., a Florida corporation
("MS Corp E");
WHEREAS, Xxxxx and Schelldorf each own 50 shares (the "MS Corp F
Shares") of common stock $0.01 per share (the "MS Corp F Common Stock"), of HOPS
OF THE ROCKIES, INC., a Florida corporation ("MS Corp F");
WHEREAS, Xxxxx and Xxxxxxxxxx each own 50 shares (the "MS Corp G
Shares") of common stock, no par value (the "MS Corp G Common Stock"), of HOPS
MARKETING, INC., a Florida corporation ("MS Corp G Shares");
WHEREAS, Xxxxx and Schelldorf each own 50 shares (the "MS Corp H
Shares") of common stock $0.01 per share (the "MS Corp H Common Stock"), of
CYPRESS COAST CONSTRUCTION CORPORATION, a Florida corporation ("MS Corp H");
WHEREAS, Xxxxx and Xxxxxxxxxx each own 50 shares (the "MS Corp I
Shares") of common stock, par value $0.01 per share (the "MS Corp I Common
Stock"), of HOPS OF SOUTH FLORIDA, INC., a Florida corporation ("MS Corp I");
WHEREAS, Xxxxx and Schelldorf each own 45 shares (the "MSC Corp 1 Class
A Shares") of Class A common stock, par value $0.01 per share (the "MSC Corp 1
Class A Common Stock"), and Xxxxx owns 10 shares (the "MSC Corp 1 Class B
Shares") of Class B
common stock, par value $0.01 per share (the "MSC Corp 1 Class B Common Stock"),
of HOPS PARTNERS II, INC., a Florida corporation ("MSC Corp 1") (the MSC Corp 1
Class A Shares and the MSC Corp 1 Class B Shares are hereinafter collectively
referred to as the "MSC Corp 1 Shares," and the MSC Corp 1 Class A Common Stock
and the MSC Corp 1 Class B Common Stock are hereinafter collectively referred to
as the "MSC Corp 1 Common Stock");
WHEREAS, Xxxxx and Schelldorf each own 45 shares (the "MSC Corp 2 Class
A Shares") of Class A common stock, par value $0.01 per share (the "MSC Corp 2
Class A Common Stock"), and Xxxxx owns 10 shares (the "MSC Corp 2 Class B
Shares") of Class B common stock, par value $0.01 per share (the "MSC Corp 2
Class B Common Stock"), of HOPS PARTNERS III, INC., a Florida corporation ("MSC
Corp 2") (the MSC Corp 2 Class A Shares and the MSC Corp 2 Class B Shares are
hereinafter collectively referred to as "the MSC Corp 2 Shares," and the MSC
Corp 2 Class A Common Stock and the MSC Corp 2 Class B Common Stock are
hereinafter collectively referred to as the "MSC Corp 2 Common Stock");
WHEREAS, Xxxxx and Schelldorf each own 50 shares (the "MSC Corp 3 Class
A Shares") of Class A common stock, par value $0.01 per share (the "MSC Corp 3
Class A Common Stock"), and Xxxxx owns 11 shares (the "MSC Corp 3 Class B
Shares") of Class B common stock, par value $0.01 per share (the "MSC Corp 3
Class B Common Stock"), of HOPS OF GREATER ORLANDO, INC., a Florida corporation
("MSC Corp 3") (the MSC Corp 3 Class A Shares and the MSC Corp 3 Class B Shares
are hereinafter collectively referred to as "the MSC Corp 3 Shares," and the MSC
Corp 3 Class A Common Stock and the MSC Corp 3 Class B Common Stock are
hereinafter collectively referred to as the "MSC Corp 3 Common Stock");
WHEREAS, Xxxxx and Schelldorf each own 45 shares (the "MSC Corp 4 Class
A Shares") of Class A common stock, par value $0.01 per share (the "MSC Corp 4
Class A Common Stock"), and Xxxxx owns 10 shares (the "MSC Corp 4 Class B
Shares") of Class B common stock, par value $0.01 per share (the "MSC Corp 4
Class B Common Stock"), of HOPS OF SOUTHWEST FLORIDA, INC., a Florida
corporation ("MSC Corp 4") (the MSC Corp 4 Class A Shares and the MSC Corp 4
Class B Shares are hereinafter collectively referred to as "the MSC Corp 4
Shares," and the MSC Corp 4 Class A Common Stock and the MSC Corp 4 Class B
Common Stock are hereinafter collectively referred to as the "MSC Corp 4 Common
Stock");
WHEREAS, Xxxxx and Schelldorf each own 45 shares (the "MSC Corp 5 Class
A Shares") of Class A common stock, par value $0.01 per share (the "MSC Corp 5
Class A Common Stock"), and Xxxxx owns 10 shares (the "MSC Corp 5 Class B
Shares") of Class B common stock, par value $0.01 per share (the "MSC Corp 5
Class B Common Stock"), of HOPS OF THE OHIO VALLEY, INC., a Florida corporation
("MSC Corp 5") (the MSC Corp 5 Class A Shares and the MSC Corp 5 Class B Shares
are hereinafter collectively referred to as the "MSC Corp 5 Shares," and the MSC
Corp 5 Class A Common Stock and the MSC Corp 5 Class B Common Stock are
hereinafter collectively referred to as the "MSC Corp 5 Common Stock");
WHEREAS, Xxxxx and Schelldorf each own 45 shares (the "MSC Corp 6 Class
A Shares") of Class A common stock, par value $0.01 per share (the "MSC Corp 6
Class A Common Stock"), and Xxxxxxx X. Xxxxx ("Xxxxx") owns 10 shares (the "MSC
Corp 6 Class B Shares") of Class B common stock, par value $0.01 per share (the
"MSC Corp 6 Class B Common Stock"), of HOPS GRILL & BREWERY, INC., a Florida
corporation ("MSC Corp 6") (the
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MSC Corp 6 Class A Shares and the MSC Corp 6 Class B Shares are hereinafter
collectively referred to as "the MSC Corp 6 Shares," and the MSC Corp 6 Class A
Common Stock and the MSC Corp 6 Class B Common Stock are hereinafter
collectively referred to as the "MSC Corp 6 Common Stock");
WHEREAS, Xxxxx and Schelldorf each own 90 shares (the "MSC Corp 7 Class
A Shares") of Class A common stock, par value $0.01 per share (the "MSC Corp 7
Class A Common Stock"), and Xxxxx owns 20 shares (the "MSC Corp 7 Class B
Shares") of Class B common stock, par value $0.01 per share (the "MSC Corp 7
Class B Common Stock"), of HOPS OF CARROLLWOOD, INC., a Florida corporation
("MSC Corp 7") (the MSC Corp 7 Class A Shares and the MSC Corp 7 Class B Shares
are hereinafter collectively referred to as "the MSC Corp 7 Shares," and the MSC
Corp 7 Class A Common Stock and the MSC Corp 7 Class B Common Stock are
hereinafter collectively referred to as the "MSC Corp 7 Common Stock");
WHEREAS, Xxxxx and Schelldorf each own 45 shares (the "MSC Corp 8 Class
A Shares") of Class A common stock, par value $0.01 per share (the "MSC Corp 8
Class A Common Stock"), and Xxxxx owns 10 shares (the "MSC Corp 8 Class B
Shares") of Class B common stock, par value $0.01 per share (the "MSC Corp 8
Class B Common Stock"), of HOPS OF NORTH TAMPA, INC., a Florida corporation
("MSC Corp 8") (the MSC Corp 8 Class A Shares and the MSC Corp 8 Class B Shares
are hereinafter collectively referred to as "the MSC Corp 8 Shares," and the MSC
Corp 8 Class A Common Stock and the MSC Corp 8 Class B Common Stock are
hereinafter collectively referred to as the "MSC Corp 8 Common Stock");
WHEREAS, Xxxxx and Schelldorf each own 90 shares (the "MSC Corp 9 Class
A Shares") of Class A common stock, par value $0.01 per share (the "MSC Corp 9
Class A Common Stock"), and Xxxxx owns 20 shares (the "MSC Corp 9 Class B
Shares") of Class B common stock, par value $0.01 per share (the "MSC Corp 9
Class B Common Stock"), of HOPS OF PALM HARBOR, INC., a Florida corporation
("MSC Corp 9") (the MSC Corp 9 Class A Shares and the MSC Corp 9 Class B Shares
are hereinafter collectively referred to as "the MSC Corp 9 Shares," and the MSC
Corp 9 Class A Common Stock and the MSC Corp 9 Class B Common Stock are
hereinafter collectively referred to as the "MSC Corp 9 Common Stock");
WHEREAS, Xxxxx and Schelldorf each own 45 shares (the "MSC Corp 10
Class A Shares") of Class A common stock, par value $0.01 per share (the "MSC
Corp 10 Class A Common Stock"), and Xxxxx owns 10 shares (the "MSC Corp 10 Class
B Shares") of Class B common stock, par value $0.01 per share (the "MSC Corp 10
Class B Common Stock"), of HOPS OF SOUTH TAMPA, INC., a Florida corporation
("MSC Corp 10") (the MSC Corp 10 Class A Shares and the MSC Corp 10 Class B
Shares are hereinafter collectively referred to as "the MSC Corp 10 Shares," and
the MSC Corp 10 Class A Common Stock and the MSC Corp 10 Class B Common Stock
are hereinafter collectively referred to as the "MSC Corp 10 Common Stock");
WHEREAS, Xxxxx and Schelldorf each own 45 shares (the "MSC Corp 11
Class A Shares") of Class A common stock, par value $0.01 per share (the "MSC
Corp 11 Class A Common Stock"), and Xxxxx owns 10 shares (the "MSC Corp 11 Class
B Shares") of Class B common stock, par value $0.01 per share (the "MSC Corp 11
Class B Common Stock"), of HOPS OF ST. PETERSBURG, INC., a Florida corporation
("MSC Corp 11") (the MSC Corp 11 Class A Shares and the MSC Corp 11 Class B
Shares are hereinafter collectively referred to
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as "the MSC Corp 11 Shares," and the MSC Corp 11 Class A Common Stock and the
MSC Corp 11 Class B Common Stock are hereinafter collectively referred to as the
"MSC Corp 11 Common Stock");
WHEREAS, Xxxxx and Schelldorf each own 45 shares (the "MSC Corp 12
Class A Shares") of Class A common stock, par value $0.01 per share (the "MSC
Corp 12 Class A Common Stock"), and Xxxxx owns 10 shares (the "MSC Corp 12 Class
B Shares") of Class B common stock, par value $0.01 per share (the "MSC Corp 12
Class B Common Stock"), of HOPS OF PORT XXXXXX, INC., a Florida corporation
("MSC Corp 12") (the MSC Corp 12 Class A Shares and the MSC Corp 12 Class B
Shares are hereinafter collectively referred to as "the MSC Corp 12 Shares," and
the MSC Corp 12 Class A Common Stock and the MSC Corp 12 Class B Common Stock
are hereinafter collectively referred to as the "MSC Corp 12 Common Stock");
WHEREAS, Xxxxx and Xxxxxxxxxx each own 45 shares (the "MSC Corp 13
Class A Shares") of Class A Common Stock, par value $0.01 per share (the "MSC
Corp 13 Class A Common Stock"), and Xxxxx owns 10 shares (the "MSC Corp 13 Class
B Shares") of Class B Common Stock, par value $0.01 per share (the "MSC Corp 13
Class B Common Stock"), of HOPS OF THE CAROLINAS, INC., a Florida corporation
("MSC Corp 13") (the MSC Corp 13 Class A Shares and the MSC Corp 13 Class B
Shares are hereinafter collectively referred to as "the MSC Corp 13 Shares", and
the MSC Corp 13 Class A Common Stock and the MSC Corp 13 Class B Common Stock
are hereinafter collectively referred to as the "MSC Corp 13 Common Stock");
WHEREAS, M&S owns 100 shares (the "Property Corp Shares") of common
stock, par value $0.01 per share (the "Property Corp Common Stock"), of HOPS
PROPERTIES, INC., a Florida corporation ("Property Corp");
WHEREAS, Xxxxx Xxxxx owns 1,000 shares (the "Toomy Shares") of the
common stock, par value $0.25 per share (the "Toomy Common Stock"), of TOOMY
LCN, INC., a Florida corporation ("Toomy Corp");
WHEREAS, the MS Corp A Shares, the MS Corp B Shares, the MS Corp C
Shares, the MS Corp D Shares, the MS Corp E Shares, the MS Corp F Shares, the MS
Corp G Shares, the MS Corp H, and the MS Corp I shall be collectively
hereinafter referred to as the "MS Shares"; the MSC Corp 1 Shares, the MSC Corp
2 Shares, the MSC Corp 3 Shares, the MSC Corp 4 Shares, the MSC Corp 5 Shares,
the MSC Corp 6 Shares, the MSC Corp 7 Shares, the MSC Corp 8 Shares, the MSC
Corp 9 Shares, the MSC Corp 10 Shares, the MSC Corp 11 Shares, the MSC Corp 12
Shares, and the MSC Corp 13 Shares shall be collectively hereinafter referred to
as the "MSC Shares"; and the MS Shares, the MSC Shares, the Property Corp
Shares, and the Toomy Shares shall collectively hereinafter be referred to as
the "Predecessor Shares";
WHEREAS, the MS Corp A Common Stock, the MS Corp B Common Stock, the MS
Corp C Common Stock, the MS Corp D Common Stock, the MS Corp E Common Stock, the
MS Corp F Common Stock, the MS Corp G Common Stock, the MS Corp H Common Stock,
and the MS Corp I Common Stock shall hereinafter be referred to as the "MS
Common Stock"; the MSC Corp 1 Common Stock, the MSC Corp 2 Common Stock, the MSC
Corp 3 Common Stock, the MSC Corp 4 Common Stock, the MSC Corp 5 Common Stock,
the MSC Corp 6 Common Stock, the MSC Corp 7 Common Stock, the MSC Corp 8 Common
Stock, the MSC Corp 9 Common Stock, the MSC Corp 10 Common Stock, the MSC Corp
11 Common Stock, the MSC Corp 12 Common Stock, and the MSC Corp 13 Common Stock
shall hereinafter be referred to as the "MSC Common Stock"; and the MS Common
Stock, the MSC Common Stock, the Property Corp Common Stock, and the Toomy
Common Stock shall collectively hereinafter be referred to as the "Predecessor
Common Stock";
WHEREAS, MS Corp A, MS Corp B, MS Corp C, MS Corp D, MS Corp E, MS Corp
F, MS Corp G, MS Corp H, MS Corp I, MSC Corp 1, MSC Corp 2, MSC Corp 3, MSC Corp
4, MSC Corp 5, MSC Corp 6, MSC Corp 7, MSC Corp 8, MSC Corp 9, MSC Corp 10, MSC
Corp 11, MSC Corp 12, MSC Corp 13, Property Corp, and Toomy Corp shall be
hereinafter collectively referred to as the "Predecessor Subsidiaries"; and
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WHEREAS, Hops desires to acquire all of the outstanding Predecessor
Shares by issuing shares of common stock, par value $0.01 per share (the "Hops
Common Stock"), in exchange for the Predecessor Shares, and the Predecessor
Shareholders desire to acquire Hops Common Stock by exchanging their Predecessor
Shares for the shares of Hops Common Stock in a tax free exchange pursuant to
Section 351 of the Internal Revenue Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and the mutual
covenants, and agreements herein set forth, the parties hereto, intending
legally to be bound hereby, agree as follows:
SECTION 1. EXCHANGE OF PREDECESSOR SHARES FOR HOPS COMMON STOCK.
(a) EXCHANGE OBLIGATIONS. On the terms and subject to the conditions
set forth in this Agreement, immediately prior to the consummation of the
initial public offering of Hops Common Stock is consummated or such other date
as may be determined by the Board of Directors of Hops (the "Closing Date"), the
Predecessor Shareholders shall exchange the Predecessor Shares, for shares of
Hops Common Stock, and Hops shall issue shares of Hops Common Stock in the
manner described in Section 2 in exchange for the Predecessor Shares. On the
Closing Date, the Predecessor Shareholders shall deliver to Hops for exchange
and transfer to Hops all certificates representing the Predecessor Shares duly
endorsed in blank or accompanied by stock powers executed in blank.
(b) EFFECTIVE DATE; COMMENCEMENT OF EXCHANGES. This Agreement shall be
deemed effective for all purposes as of the date hereof, and shall thereafter
inure to the benefit of and be binding upon the parties hereto and their
respective successors, heirs, legal representatives and permitted assigns. The
exchange of the Predecessor Shares for Hops Common Stock shall for all purposes
be deemed to occur as a single transaction on the Closing Date set forth in
Section 1(a) above. Immediately following the exchanges set forth herein, the
Predecessor Shareholders will own one hundred percent (100%) of the Hops Common
Stock, which shall be the only shares of Hops capital stock then outstanding.
The exchanges set forth herein, are intended to be tax free to all parties
hereto pursuant to the terms of Section 351 of the Code. Following the exchanges
of Predecessor Shares, the Predecessor Subsidiaries shall cease to qualify as
S-corporations under the Code.
SECTION 2. CONVERSION.
(a) CONVERSION RATE. In accordance with Section 1, Hops shall issue to
the Predecessor Shareholders, as aggregate consideration for the Predecessor
Shares, shares of Hops Common Stock, free of all Liens (as defined below), in
the amounts listed opposite each Predecessor Shareholder's name on the schedule
attached hereto as SCHEDULE A. Accordingly, on the Closing Date or as soon
thereafter as practicable, certificates representing shares of Hops Common Stock
shall be delivered to the Predecessor Shareholders in the amounts listed on
SCHEDULE A.
(b) FRACTIONAL SHARES. In its sole discretion, Hops may elect (i) to
round up to the nearest whole share, in lieu of issuing fractional shares of
Hops Common Stock, or (ii) to pay the fair market value of such fractional
shares to the holders who would otherwise be entitled
5
to such fractional shares of Hops Common Stock, as determined in good faith by
its Board of Directors.
SECTION 3. REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS OF THE
PREDECESSOR SHAREHOLDERS.
(a) PREDECESSOR AUTHORITY. Each of the Predecessor Shareholders hereby
severally and not jointly represents and warrants to Hops that (i) such
Predecessor Shareholder is and will be as of the Closing Date the lawful owner
and holder of record of his respective shares of Predecessor Common Stock, free
and clear of all liens, restrictions, pledges, charges, encumbrances, mortgages,
security interests and claims of any kind (collectively, "Liens"), other than
permitted liens set forth on SCHEDULE B which will be extinguished on the
Closing Date; (ii) such Predecessor Shareholder has and will have as of the
Closing Date full authority to execute and deliver this Agreement and to perform
his obligations hereunder; (iii) this Agreement constitutes and will constitute
as of the Closing Date a valid and binding obligation of such Predecessor
Shareholder; (iv) such Predecessor Shareholder has no legal obligation, absolute
or contingent, to any other person or entity to sell any of his Predecessor
Shares to effect any merger, consolidation or other reorganization of any of the
Predecessor Subsidiaries or to enter into any agreement which would affect such
Predecessor Shareholder's title or right to deliver the Predecessor Shares on
the Closing Date, or on such date as his Predecessor Shares are exchanged, free
and clear of all Liens; and (v) such Predecessor Shareholder currently has no
plan or intention to sell, exchange or otherwise dispose of more than 20% of his
shares of Hops Common Stock once received pursuant to this Agreement, other than
pursuant to a transfer to a trust that qualifies as a grantor trust under
Sections 671 through 679 of the Code, with respect to which such Predecessor
Shareholder is the grantor, or any other transfer that is disregarded for
purposes of the "control immediately after" requirement of Section 351 of the
Code.
(b) INVESTMENT REPRESENTATIONS. Each of the Predecessor Shareholders
hereby represents and warrants to Hops that he/she/it: (i) is knowledgeable,
sophisticated and experienced in financial and business matters and is capable
of evaluating the merits and risks of the transactions contemplated by this
Agreement, including the prospective investment in the shares of Hops Common
Stock, and the undersigned is an "accredited investor" within the meaning of
Rule 501 promulgated under the Securities Act of 1933, as amended (the "Act");
(ii) has had a reasonable opportunity to ask questions of and receive answers
from Hops concerning Hops and this Agreement, and all such questions, if any,
have been answered to his/her/its full satisfaction; (iii) has requested,
received, reviewed and considered all information that he/she/it deems relevant
in making an informed decision to execute this Agreement and to acquire the
shares of Hops Common Stock; (iv) understands that the shares of Hops Common
Stock (x) have not been registered under the Act or applicable securities laws
of any state, based upon an exemption from such registration requirements for
non-public offerings pursuant to Sections 3(b) and/or 4(2) of the Act and/or
Regulation D promulgated under the Act, (y) will be "restricted securities," as
said term is defined in Rule 144 of the rules and regulations promulgated under
the Act and, (z) may not be sold or otherwise transferred unless their transfer
has first been registered under the Act and all applicable state securities
laws, or unless exemptions from such registration provisions are available with
respect to said resale or transfer (and he/she/it is able to obtain an opinion
of counsel acceptable to Hops to that effect); and (v) is acquiring the shares
of Hops
6
Common Stock solely for his/her/its own account, for investment purposes only,
and not with a view towards the resale or distribution thereof.
(c) STOCK TRANSFER LEGENDS. Each of the Predecessor Shareholders hereby
acknowledges that each certificate evidencing the shares of Hops Common Stock
will bear a legend substantially in the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") AND ARE "RESTRICTED
SECURITIES" AS THAT TERM IS DEFINED IN RULE 144 UNDER THE ACT. THE
SHARES MAY NOT BE OFFERED FOR SALE, SOLD OR OTHERWISE TRANSFERRED
EXCEPT PURSUANT TO THE EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT,
OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE ACT, THE
AVAILABILITY OF WHICH IS TO BE ESTABLISHED TO THE SATISFACTION OF THE
COMPANY.
(d) SPECIAL REPRESENTATIONS AND WARRANTIES OF TOOMY. Toomy hereby makes
to Hops, the representations and warranties set forth on SCHEDULE C to this
Agreement, which representations and warranties shall be considered as an
inducement for Hops to enter into this Agreement and shall be considered a part
of this Agreement for all purposes.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF HOPS. Hops hereby
represents and warrants to the Predecessor Shareholders as follows:
(a) ORGANIZATION, GOOD STANDING AND QUALIFICATION. Hops is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida, has all requisite power to own, lease and operate all
of its properties and assets and to carry on its business as it is now being
conducted, and is duly qualified to do business and in good standing in all
jurisdictions in which it owns or leases properties, or conducts any business so
as to require such qualification and in which the failure to be duly qualified
could have material adverse effect upon Hops.
(b) CORPORATE AUTHORITY. Hops has the full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder; the execution, delivery and performance of this Agreement by Hops and
the consummation of transactions contemplated hereby have been duly authorized
by all requisite corporate action of Hops; and this Agreement constitutes a
valid and binding obligation of Hops.
(c) CAPITALIZATION. As of the Closing Date, all of the issued and
outstanding shares of Hops Common Stock will have been duly authorized, validly
issued, fully paid and nonassessable. The shares of Hops Common Stock, when
issued in exchange for the Predecessor Shares as contemplated by this Agreement,
will have been duly authorized, validly issued, fully paid and will be
nonassessable.
(d) BOARD APPROVAL. The Board of Directors of Hops has approved this
Agreement and the transactions contemplated hereby.
7
SECTION 5. TERMINATION OF PRIOR SHAREHOLDER AGREEMENTS.
(a) PRIOR AGREEMENTS. Xxxxx and Xxxxxxxxxx hereby acknowledge that they
are parties to certain Shareholder Agreements and Stock Restriction & Retirement
Agreements (collectively, as amended or restated from time to time, the "Prior
MS Agreements") relating to their ownership of shares of common stock of MS Corp
A, MS Corp B, MS Corp C, MS Corp D, MS Corp E, MS Corp F, MS Corp G, MS Corp H,
and MS Corp I and certain matters related thereto; and Xxxxx, Schelldorf and
Xxxxx hereby acknowledge that they are parties to certain Shareholder Agreements
and Stock Restriction & Retirement Agreements (collectively, as amended or
restated from time to time, the "Prior MSC Agreements") relating to their
ownership of shares of common stock of MSC Corp 1, MSC Corp 2, MSC Corp 3, MSC
Corp 4, MSC Corp 5, MSC Corp 6, MSC Corp 7, MSC Corp 8, MSC Corp 9, MSC Corp 10,
MSC Corp 11, and MSC Corp 12 and certain matters related thereto.
(b) TERMINATION OF PRIOR AGREEMENTS.
(i) Xxxxx and Schelldorf hereby agree that the Prior MS Agreements
shall automatically terminate upon the Closing Date, and each
party thereto shall have no further obligations thereunder to
the other party thereto, and thereafter the Prior MS
Agreements shall be of no further force or effect. Each of
Xxxxx and Xxxxxxxxxx hereby waive any rights he may have had
under the Prior MS Agreements arising out of, relating to, or
resulting from the transactions contemplated by this
Agreement.
(ii) Xxxxx, Schelldorf and Xxxxx hereby agree that the Prior MSC
Agreements shall automatically terminate effective upon the
Closing Date, and each party thereto shall have no further
obligations or duties thereunder to the other parties thereto,
and thereafter the Prior MSC Agreements shall be of no further
force or effect. Each of Xxxxx, Schelldorf and Xxxxx hereby
waive any rights he may have had under the Prior MSC
Agreements arising out of, relating to, or resulting from the
transactions contemplated by this Agreement.
SECTION 6. TERMINATION.
This Agreement shall terminate and be of no further force or effect if
Hops shall not have consummated its initial public offering on or before March
31, 1997, unless this Agreement shall have previously been extended in a written
amendment to this Agreement executed by all parties hereto.
SECTION 7. MISCELLANEOUS.
(a) ENTIRE AGREEMENT; MODIFICATION. This Agreement constitutes the
entire agreement among the parties and supersedes all other agreements and
understandings, oral and written, between the parties hereto with respect to the
subject matter hereof. No modification of this Agreement shall be valid unless
made in writing and signed by the parties hereto.
8
(b) COUNTERPARTS. This Agreement may be executed by hand or by
facsimile in two or more counterparts, each of which when so executed shall be
deemed to be an original, and all of which when taken together shall constitute
one and the same instrument.
(c) NON-ASSIGNABILITY; THIRD PARTY BENEFICIARIES. This Agreement shall
be assignable by any party hereto only with the prior written consent of the
other parties hereto. This Agreement shall not benefit or create any right or
cause of action in or on behalf of any person other than the parties.
(d) SECTION HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect the meaning or
interpretation of this Agreement.
(e) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS OF THE STATE OF FLORIDA WITHOUT GIVING EFFECT TO
FLORIDA PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD OTHERWISE PROVIDE FOR THE
APPLICATION OF THE SUBSTANTIVE LAWS OF ANOTHER JURISDICTION.
(f) SEVERABILITY. If any provision in this Agreement shall for any
reason be determined to be invalid or unenforceable, the remaining provisions of
this Agreement shall nevertheless continue to be valid and enforceable as though
the invalid or unenforceable provision had not been a part hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed effective as of the date first above-written.
HOPS GRILL & BAR, INC.
By: /s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx, President and
Chief Executive Officer
"Hops"
PREDECESSOR SHAREHOLDERS OF
HOPS GRILL & BAR, INC. (MS Corp A)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
PREDECESSOR SHAREHOLDERS OF
HOPS PARTNERS, INC. (MS Corp B)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
PREDECESSOR SHAREHOLDERS OF
HOPS OF NORTHEAST FLORIDA, INC. (MS Corp C)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
00
PREDECESSOR SHAREHOLDERS OF HOPS OF
SOUTHEAST FLORIDA, INC. (MS Corp D)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
PREDECESSOR SHAREHOLDERS OF HOPS OF GREATER
WEST PALM BEACH, INC. (MS Corp E)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
PREDECESSOR SHAREHOLDERS OF HOPS OF THE
ROCKIES, INC. (MS Corp F)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
PREDECESSOR SHAREHOLDERS OF HOPS MARKETING,
INC. (MS Corp G)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
00
PREDECESSOR SHAREHOLDERS OF CYPRESS COAST
CONSTRUCTION CORPORATION (MS Corp H)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
PREDECESSOR SHAREHOLDERS OF HOPS OF SOUTH
FLORIDA, INC. (MS Corp I)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
PREDECESSOR SHAREHOLDERS OF HOPS PARTNERS
II, INC. (MSC Corp 1)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXXXX X. XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx
PREDECESSOR SHAREHOLDERS OF HOPS PARTNERS
III, INC. (MSC Corp 2)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXXXX X. XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx
12
PREDECESSOR SHAREHOLDERS OF HOPS OF GREATER
ORLANDO, INC. (MSC Corp 3)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXXXX X. XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx
PREDECESSOR SHAREHOLDERS OF HOPS OF
SOUTHWEST FLORIDA, INC. (MSC Corp 4)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXXXX X. XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx
PREDECESSOR SHAREHOLDERS OF HOPS OF THE
OHIO VALLEY, INC. (MSC Corp 5)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXXXX X. XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx
13
PREDECESSOR SHAREHOLDERS OF HOPS GRILL &
BREWERY, INC. (MSC Corp 6)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXXXX X. XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx
PREDECESSOR SHAREHOLDERS OF HOPS OF
CARROLLWOOD, INC. (MSC Corp 7)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXXXX X. XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx
PREDECESSOR SHAREHOLDERS OF HOPS OF NORTH
TAMPA, INC. (MSC Corp 8)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXXXX X. XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx
14
PREDECESSOR SHAREHOLDERS OF HOPS OF PALM
HARBOR, INC. (MSC Corp 9)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXXXX X. XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx
PREDECESSOR SHAREHOLDERS OF HOPS OF SOUTH
TAMPA, INC. (MSC Corp 10)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXXXX X. XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx
PREDECESSOR SHAREHOLDERS OF HOPS OF ST.
PETERSBURG, INC. (MSC Corp 11)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXXXX X. XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx
15
PREDECESSOR SHAREHOLDERS OF HOPS OF PORT
XXXXXX, INC. (MSC Corp 12)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXXXX X. XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx
PREDECESSOR SHAREHOLDERS OF
HOPS OF THE CAROLINAS, INC. (MSC Corp 13)
/s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx
/s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx
/s/ XXXXXXX X. XXXXX
-------------------------------------
Xxxxxxx X. Xxxxx
PREDECESSOR SHAREHOLDERS OF
HOPS PROPERTIES, INC. (Property Corp)
XXXXX AND SCHELLDORF LEASING COMPANY:
By: /s/ XXXXX X. XXXXX
-------------------------------------
Xxxxx X. Xxxxx, General Partner
By: /s/ XXXXXX X. XXXXXXXXXX
-------------------------------------
Xxxxxx X. Xxxxxxxxxx, General Partner
PREDECESSOR SHAREHOLDER OF TOOMY LCN, INC.
(Toomy Corp)
/s/ XXXXX XXXXX
-------------------------------------
Xxxxx Xxxxx
16
SCHEDULE A
PERCENTAGE AGGREGATE
NUMBER OF OWNERSHIP NUMBER OF PERCENTAGE
PREDECESSOR PREDECESSOR PREDECESSOR SHARES PREDECESSOR SHARES OF HOPS OWNERSHIP
SHAREHOLDERS SUBSIDIARY TO BE EXCHANGED SUBSIDIARY TO BE RECEIVED HOPS, INC.
------------ ----------- ------------------ ----------- -------------- -----------
Xxxxx X. Xxxxx Hops Restaurants, Inc. 50 50 % 735,000 32.67%
Hops Partners, Inc. 50 50
Hops of Northeast Florida, Inc. 50 50
Hops of Southeast Florida, Inc. 50 50
Hops of Greater West Palm Beach, Inc. 45 Class A 50
Hops of the Rockies, Inc. 50 50
Hops Marketing, Inc. 50 50
Cypress Coast Construction Corporation 50 50
Hops of South Florida, Inc. 50 50
Hops Partners II, Inc. 45 Class A 45
Hops Partners III, Inc. 45 Class A 45
Hops of Greater Orlando, Inc. 50 Class A 45
Hops of Southwest Florida, Inc. 45 Class A 45
Hops of the Ohio Valley, Inc. 45 Class A 45
Hops Grill & Brewery, Inc. 45 Class A 45
Hops of Carrollwood, Inc. 90 Class A 45
Hops of North Tampa, Inc. 45 Class A 45
Hops of Palm Harbor, Inc. 90 Class A 45
Hops of South Tampa, Inc. 45 Class A 45
Hops of St. Petersburg, Inc. 45 Class A 45
Hops of Port Xxxxxx, Inc. 45 Class A 45
Hops of the Carolinas, Inc. 45 Class A 45
Xxxxxx X. Xxxxxxxxxx Hops Restaurants, Inc. 50 50 % 735,000 32.67%
Hops Partners, Inc. 50 50
Hops of Northeast Florida, Inc. 50 50
Hops of Southeast Florida, Inc. 50 50
Hops of Greater West Palm Beach, Inc. 45 Class A 50
Hops of the Rockies, Inc. 50 50
Hops Marketing, Inc. 50 50
Cypress Coast Construction Corporation 50 50
Hops of Southeast Florida, Inc. 50 50
Hops Partners II, Inc. 45 Class A 45
Hops Partners III, Inc. 45 Class A 45
Hops of Greater Orlando, Inc. 50 Class A 45
Hops of Southwest Florida, Inc. 45 Class A 45
Hops of the Ohio Valley, Inc. 45 Class A 45
Hops Grill & Brewery, Inc. 45 Class A 45
Hops of Carrollwood, Inc. 90 Class A 45
Hops of North Tampa, Inc. 45 Class A 45
Hops of Palm Harbor, Inc. 90 Class A 45
Hops of South Tampa, Inc. 45 Class A 45
Hops of St. Petersburg, Inc. 45 Class A 45
Hops of Port Xxxxxx, Inc. 45 Class A 45
Hops of the Carolinas, Inc. 45 Class A 45
Xxxxxxx X. Xxxxx Hops Partners II, Inc. 10 Class B 10 % 112,500 5.00%
Hops Partners III, Inc. 10 Class B 10
Hops of Greater Orlando, Inc. 11 Class B 10
Hops of Southwest Florida, Inc. 10 Class B 10
Hops of the Ohio Valley, Inc. 10 Class B 10
Hops Grill & Brewery, Inc. 10 Class B 10
Hops of Carrollwood, Inc. 20 Class B 10
Hops of North Tampa, Inc. 10 Class B 10
Hops of Palm Harbor, Inc. 20 Class B 10
Hops of South Tampa, Inc. 10 Class B 10
Hops of St. Petersburg, Inc. 10 Class B 10
Hops of Port Xxxxxx, Inc. 10 Class B 10
Hops of the Carolinas, Inc. 10 Class B 10
Xxxxx Xxxxx Toomy LCN, Inc. 1,000 100 % 67,500 3.00%
Xxxxx and Xxxxxxxxxx Hops Properties, Inc. 100 100 % 600,000 26.66%
Leasing Company
SCHEDULE B
PERMITTED LIENS
None.
SCHEDULE C
REPRESENTATIONS AND WARRANTIES OF XXXXX
Xxxxx hereby represents and warrants to Hops Grill & Bar, Inc. ("Hops")
as follows:
(A) OWNERSHIP OF SHARES AND CAPACITY TO SELL.
Toomy owns beneficially and of record 1,000 Toomy Shares (which
represent 100% of the issued and outstanding capital stock of Toomy LCN, Inc., a
Florida corporation) and has the full legal right, power, and authority to sell,
convey, assign, and transfer the Toomy Shares to Hops pursuant to this Agreement
free and clear of any lien, claim, charge, encumbrance, or restriction
whatsoever, so that upon delivery of the Toomy Shares to Hops, good, valid, and
marketable title to the Toomy Shares will vest in Hops free and clear of any
lien, claim, charge, encumbrance, or restriction whatsoever.
(B) CORPORATE ORGANIZATION.
Toomy LCN, Inc. is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Florida. Toomy LCN, Inc. has all
requisite corporate power and authority to own, operate, and lease its
properties and to carry on its business as now being conducted and as presently
contemplated to be conducted. Toomy has heretofore delivered to Hops complete
and correct copies of the Articles of Incorporation and Bylaws of Toomy LCN,
Inc. as presently in effect.
(C) CAPITALIZATION.
The authorized capital stock of Toomy LCN, Inc. consists of 1,000
shares of common stock, par value $0.25 per share. The Toomy Shares are all of
the issued and outstanding shares of capital stock of Toomy LCN, Inc. There are
no shares of common stock of Toomy LCN, Inc. held by Toomy LCN, Inc. as treasury
shares. All of the Toomy Shares are duly authorized and issued, fully paid, and
non-assessable. There are no outstanding subscriptions, options, warrants,
calls, rights, contracts, commitments, understandings, restrictions, or
arrangements relating to the issuance, sale, or transfer of any of the Toomy
Shares or any other shares of capital stock of Toomy LCN, Inc., including any
rights of conversion or exchange under any outstanding securities or other
instruments. There are no voting trusts or other agreements or understandings
with respect to the capital stock of Toomy LCN, Inc.
(D) SUBSIDIARIES AND EQUITY INVESTMENTS.
Except for its limited partnership interest in Hops of Southeast
Florida, Ltd. (the "Joint Venture"), Toomy LCN, Inc. does not own any capital
stock or other equity securities of any corporation or any direct or indirect
equity or ownership interest in any business or entity. Other than pursuant to
the limited partnership agreement pursuant to which the Joint Venture was
formed, Toomy LCN, Inc. is not subject to any obligation or requirement to
provide funds to or make any investment (in the form of a loan, capital
contribution, or
C-1
otherwise) in any business or entity. Toomy LCN, Inc. owns its limited
partnership interest in the Joint Venture free and clear of any lien, claim,
charge, encumbrance, or restriction whatsoever.
(E) AUTHORIZATION.
No corporate proceedings on the part of Toomy LCN, Inc. are necessary
to approve and authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby except as have already been
obtained or will be obtained prior to the Closing Date as appropriate. Assuming
that this Agreement constitutes the valid and binding obligation of the other
parties hereto, this Agreement constitutes the valid and binding obligations of
Toomy, enforceable in accordance with its terms, except as the enforceability
hereof may be subject to or limited by applicable bankruptcy, insolvency,
reorganization, or other similar laws affecting creditors' rights generally and
to general principles of equity being applied at the discretion of the courts.
(F) CONSENTS AND APPROVALS.
Neither the execution and delivery by Toomy of this Agreement, nor the
consummation by Toomy of the transactions contemplated hereby, nor compliance by
Toomy with any of the provisions hereof will (i) conflict with or result in a
breach of any provision of the Articles of Incorporation or Bylaws of Toomy LCN,
Inc.; (ii) violate any order, writ, injunction, decree, judgment, ruling, law,
rule or regulation of any court or governmental authority, applicable to Toomy
LCN, Inc. or Toomy, or any of their respective properties; (iii) require any
consent, approval, or authorization of, or notice to, or declaration, filing, or
registration with, any governmental or regulatory authority; or (iv) violate or
conflict with, or result in a breach of, or constitute a default under, or
require consents from any other party to, or result in a right of termination or
cancellation of, or result in acceleration of any right or creation of any lien
under, any note, bond, mortgage, indenture, deed of trust, license, franchise,
permit, lease, contract, agreement, or other instrument or commitment or
obligation relating to the business of Toomy LCN, Inc. or to which either Toomy
or Toomy LCN, Inc. is or was a party or by which either of them or any of their
respective properties may be or was bound or affected.
(G) NO VIOLATION.
Neither Toomy nor Toomy LCN, Inc. is in violation of, or, to the best
knowledge of Toomy, under investigation with respect to or threatened to be
charged or given notice with respect to, any statute, rule, regulation, order,
judgment, injunction, decree, or other law, of any court or governmental
authority relating to the business of Toomy LCN, Inc. which would have a
material adverse effect on the business of Toomy LCN, Inc.
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(H) FINANCIAL STATEMENTS.
Toomy has previously delivered to Hops the unaudited balance sheet of
Toomy LCN, Inc. as of December 31, 1995, and the related statements of income,
retained earnings, and changes in financial position for the year then ended
(the "Toomy 1995 Financial Statements"), together with accompanying notes, as
compiled by Omni Tax & Financial, Certified Public Accountants. The Toomy 1995
Financial Statements present fairly the financial position of Toomy LCN, Inc. at
December 31, 1995, and the results of operations and changes in financial
position for the year then ended.
Toomy has previously delivered to Hops the unaudited balance sheet of
Toomy LCN, Inc. as of June 30, 1996, and the related statement of income for the
six-month period then ended (the "Toomy Interim Financial Statements"), as
compiled by Omni Tax & Financial, Certified Public Accountants. The Toomy
Interim Financial Statements present fairly the financial position of Toomy LCN,
Inc. at June 30, 1996, and the results of operations for the six-month period
then ended, except for usual and customary adjustments occurring at year end.
The Toomy 1995 Financial Statements and the Interim Financial
Statements have been prepared from and are in accordance with the books and
records of Toomy LCN, Inc.
(I) ABSENCE OF UNDISCLOSED LIABILITIES.
Toomy LCN, Inc. did not have as of December 31, 1995, any material
liabilities or obligations except for liabilities reflected on the balance sheet
included in the Toomy 1995 Financial Statements (the "Toomy 1995 Balance Sheet")
and did not have as of June 30, 1996, any material liabilities or obligations
except for liabilities reflected on the balance sheet included in the Interim
Financial Statements (the "Toomy Interim Balance Sheet"), and since June 30,
1996, Toomy LCN, Inc. has not incurred any material liabilities or obligations.
(J) ABSENCE OF CERTAIN CHANGES
Since June 30, 1996, Toomy LCN, Inc. has operated, and its business has
been conducted, in the ordinary course, and there has not been any change in or
effect on Toomy LCN, Inc. that is materially adverse to the business,
properties, earnings, prospects, or condition (financial or otherwise). Without
limiting the generality of the foregoing, since June 30, 1996, there has not
been, occurred, or arisen, (i) any indebtedness other than trade liabilities;
(ii) any agreement requiring the maintenance of a specified net worth; (iii) any
assumption, guarantee, endorsement, or other liability or responsibility
(whether direct, contingent, or otherwise) for the obligations of any other
individual, corporation, or other entity; (iv) any loans, advances, capital
contributions, gifts, or charitable contributions to, or investments in, any
other individual, corporation, or other entity; (v) any general increases in the
compensation of employees or any increases in the compensation payable or to
become payable to any officer or key employee; (vi) any declaration or payment
of any dividends or any other payment or distribution with respect to the
capital stock of Toomy LCN, Inc. or the grant of any options, warrants, calls,
or commitments of any kind with respect to the capital stock of Toomy LCN, Inc.;
(vii) any payment, discharge, or satisfaction of any claim, liability, or
obligation (absolute, accrued, contingent, or otherwise), other than the
payment, discharge,
C-3
or satisfaction, in the ordinary course of business and consistent with past
practice, of trade liabilities reflected on the Interim Balance Sheet or
incurred in the ordinary course of business and consistent with past practice of
Toomy LCN, Inc. since the date of the Interim Balance Sheet; (viii) any lien on
any of the assets of Toomy LCN, Inc.; (ix) any cancellation of debts or waiver
of any claims or rights of substantial value or any sale, transfer, or other
disposition of any of the properties or assets of Toomy LCN, Inc., except in the
ordinary course of business and consistent with past practice; (x) any capital
expenditures or commitments in excess of Two Thousand Five Hundred Dollars (U.S.
$2,500) each or Five Thousand Dollars (U.S. $5,000) in the aggregate; (xi) any
grant or extension of any power of attorney to any individual, corporation, or
other entity; or (xii) any agreement, whether in writing or otherwise, to do any
of the foregoing.
(K) LEGAL PROCEEDINGS.
There are no claims, actions, suits, inquiries, investigations, or
other proceedings pending or, to the best knowledge of Toomy, threatened or
imminent, relating to Toomy or Toomy LCN, Inc. before any court or governmental
body; nor is there any reasonable basis for any such proceedings. Neither Toomy
nor Toomy LCN, Inc. is subject to any judgment, order, decree, or any
governmental restriction which is likely to result in any change in or effect on
Toomy LCN, Inc. that is materially adverse to the business, properties,
earnings, prospects, or condition (financial or otherwise) of Toomy LCN, Inc.
(L) TITLE TO PROPERTIES AND RELATED MATTERS.
SCHEDULE L attached hereto sets forth (i) an accurate and reasonably
detailed listing of the machinery, equipment, vehicles, and other items of
tangible personal property owned or leased by Toomy LCN, Inc., having in the
case of each item a value in excess of Five Hundred Dollars (U.S. $500),
indicating in each case whether owned or leased, and (ii) an accurate listing of
real property leased by Toomy LCN, Inc. Toomy LCN, Inc. owns no real property.
Toomy LCN, Inc. has good, valid, and marketable title to all of its
assets and any other property which Toomy LCN, Inc. purports to own; such assets
and properties and title thereto are free and clear of all title defects and all
liens, mortgages, pledges, claims, charges, security interests, and other
encumbrances (all of the foregoing encumbrances being referred to herein as a
"Lien" or "Liens"), except, with respect to each such property, Liens which (i)
are disclosed in SCHEDULE L attached hereto; (ii) are reflected on the Interim
Balance Sheet; or (iii) relate to current Taxes (as defined below) not yet due;
and which, in any event, do not materially detract from or impair the
marketability, value, or present use of such property (the foregoing exceptions
being referred to herein as the "Permissible Exceptions").
(M) EMPLOYEE BENEFIT PLANS.
Toomy LCN, Inc. does not directly or indirectly maintain any bonus,
deferred compensation, hospitalization or other medical, stock purchase,
pension, life or other insurance, profit-sharing, or retirement plan or
arrangement or other employee benefit plan or arrangement which is an "employee
pension benefit plan," as such term is defined in
C-4
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended,
and the rules and regulations promulgated thereunder ("ERISA"), or a
"multi-employer plan," as that term is defined in Section 3(37) of ERISA.
(N) TAXES AND TAX RETURNS.
There are no Liens with respect to Taxes (except for Permissible
Exceptions). For purposes of this SCHEDULE C, (i) the term "Taxes" shall mean
all taxes, charges, fees, levies, or other assessments, including, without
limitation, income, gross receipt, excise, property, sales, use, license,
payroll, and franchise taxes, imposed by the United States, or any state, local,
or foreign government or subdivision or agency thereof, whether computed on a
unitary, combined, or any other basis; and such term shall include any interest
and penalties or additions to tax; and (ii) the term "Tax Return" shall mean any
report, return, or other document or information required to be supplied to a
taxing authority in connection with Taxes.
All Tax Returns required to be filed by or on behalf of Toomy LCN, Inc.
with respect to all periods ended prior to the date of this Agreement have been
duly filed with the appropriate authorities and such Tax Returns are accurate in
all material respects. All Taxes (including estimated tax payments) required to
be shown on such Tax Returns or claimed to be due from Toomy LCN, Inc. or with
respect to its business have been paid or reflected as a liability on the books
and records of Toomy LCN, Inc. All deficiencies asserted as a result of any
federal, state, or local tax audits have been paid or finally settled and no
issue has been raised in any such audit which, by application of the same or
similar principles, reasonably could be expected to result in a proposed
deficiency for any other period not so audited. No state of facts exists or has
existed which would constitute grounds for the assessment of any tax liability
with respect to the periods which have not been audited by the Internal Revenue
Service or by other appropriate federal or state authorities. There are no
outstanding agreements or waivers extending the statutory period of limitation
applicable to any Tax Return for any period.
(O) MATERIAL CONTRACTS.
SCHEDULE O attached hereto lists and briefly describes all Material
Contracts, whether domestic or foreign. As used herein the term "Material
Contract" shall mean a contract, agreement, instrument, arrangement,
understanding, lease, or rental agreement, whether written or oral, to which
Toomy LCN, Inc. is a party, which provides for aggregate payments in excess of
Five Hundred Dollars (U.S. $500) during that portion of its term which follows
the Closing Date.
(P) PERSONNEL.
SCHEDULE P attached hereto sets forth a list of all material plans,
contracts, agreements, programs, and policies relating to employment,
compensation, employee benefits; and other personnel matters, in each such case
with respect to directors, officers, or employees of Toomy LCN, Inc.; and Toomy
LCN, Inc. is not in default with respect to any of its obligations under any of
such plans, contracts, agreements, programs, and policies.
C-5
Neither Hops nor Toomy LCN, Inc. is or will be, by reason of the consummation of
the transactions contemplated hereby, liable to any employees of Toomy LCN, Inc.
for any amount of severance pay or for any other similar payments.
(Q) DISCLOSURE.
No representation or warranty by Toomy in this Agreement, and no
written statement contained in any document, certificate, or other writing
delivered by or on behalf of Toomy or Toomy LCN, Inc. to Hops contains any
untrue statement of material fact or omits to state any material fact necessary
to make the statements herein or therein, in light of the circumstances under
which they were made, not misleading.
C-6
