STOCK PURCHASE AGREEMENT
Among
CNL CALIFORNIA RESTAURANTS, LTD.,
MAIN ST. CALIFORNIA, INC.
and
MAIN STREET AND MAIN INCORPORATED
STOCK PURCHASE AGREEMENT
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This STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into as of the ___ day of January, 1997 by and among (i) CNL CALIFORNIA
RESTAURANTS, LTD., a Florida limited partnership ("Buyer"), (ii) MAIN ST.
CALIFORNIA II, INC., an Arizona corporation (the "Company"), (iii) MAIN ST.
CALIFORNIA, INC., an Arizona corporation, ("Seller"); and (iv) MAIN STREET AND
MAIN INCORPORATED, a Delaware corporation ("Shareholder").
Recitals
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A. The Seller owns of record and beneficially all of the outstanding
capital stock of the Company.
B. Buyer desires to purchase all of the Company's capital stock, and
Seller desire to sell such stock, upon the terms and subject to the conditions
set forth herein.
Agreement
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NOW, THEREFORE, in consideration of the premises and of the mutual
covenants contained herein, the parties agree as follows:
ARTICLE I - SALE AND PURCHASE OF SHARESARTICLE I - SALE AND PURCHASE OF SHARES
1.01 Sale and Purchase of Shares.
(a) On the terms and subject to the conditions of this
Agreement, at the Closing referred to in Section 2.01 hereof, Seller shall sell,
convey, assign, transfer and deliver to Buyer, and Buyer shall purchase, acquire
and accept delivery of, all of the issued and outstanding capital stock of the
Company, free and clear of any and all liens, mortgages, adverse claims,
charges, security interests, encumbrances or other restrictions or limitations
whatsoever other than any encumbrance arising under or in connection with the
loan from CNL Financial I, Inc. ("CNL Financial") obtained by Buyer and the
Company under the loan commitment from CNL Financial Services, Inc. for an
acquisition loan (herein the "Acquisition Loan") not to exceed Eight Million Six
Hundred Thousand and No/100 Dollars ($8,600,000.00) under the Commitment Letter
therefor entered into by CNL Growth Fund Advisors, Inc. dated December 13,
1996..
(b) To effect the transfers contemplated by Section 1.01(a),
at the Closing, Seller shall deliver or cause to be delivered to Buyer, against
payment therefor in accordance with Section 1.02 hereof, stock certificates
representing all the shares of the Company's capital stock being sold by Seller
hereunder, accompanied by stock powers duly executed in blank and otherwise in
form acceptable to Buyer for transfer on the books of the Company.
1.02 Payment for Shares. As payment in full for the Shares being sold
by Seller to Buyer hereunder, Buyer shall pay, in the manner set forth in this
Section 1.02, an aggregate of Ten Million Five Hundred Seventy-Five Thousand
Dollars ($10,575,000), subject to adjustment as provided herein (such aggregate
amount, as adjusted is herein referred to as the "Purchase Price"). The Purchase
Price shall be paid by Buyer at the Closing in immediately available funds.
1.03 Purchase Price Adjustment. The Purchase Price shall be adjusted by
the net amount (the "Purchase Price Adjustment") of all adjustments, credits,
deductions and prorations provided for as set forth in that certain Asset
Conveyance Agreement entered into of even date herewith by and between
Buyer and Seller and Shareholder with respect to the "Seller's SF Restaurants"
to be contributed and/or conveyed to the Company thereunder (the "Asset
Agreement").
ARTICLE II - CLOSING
Closing. Subject to the conditions stated in Article VI of this
Agreement, the closing of the transactions contemplated hereby (the "Closing")
shall be held on January __, 1997, or, if the conditions set forth in Section
6.02 have not been satisfied or waived on such date, no later than the date on
which all such conditions shall have been satisfied or waived, through the
Escrow Holder in accordance with the Escrow Closing procedures of the Asset
Agreement. The date upon which the Closing occurs is hereinafter referred to as
the "Closing Date." The Closing shall be deemed completed as of the opening of
business on the Closing Date.
2.02 Deliveries by Seller. At or prior to the Closing, the Seller shall
deliver to Buyer:
(i) certificates representing all of the outstanding shares of
the Company's capital stock, duly endorsed in blank for transfer, or with
appropriate stock powers in blank attached;
(ii) the resignations of all the officers and directors of the
Company;
(iii) the stock book, stock ledger, minute books and corporate
seal of the Company;
(iv) a certificate executed by Seller to the effect that the
conditions set forth in Section 6.02(a) has been satisfied; and
(v) possession of all originals and copies of agreements,
instruments, documents, deeds, books, records, files, tax returns and other data
and information within the possession of the Company or any Affiliate of any
Company pertaining to the Company (collectively, the "Records"); provided,
however, that the Seller may retain (1) copies of any tax returns and copies of
Records relating thereto; (2) copies of any Records that the Seller is
reasonably likely to need for complying with requirements of law; and (3) copies
of any Records that in the reasonable opinion of the Seller will be required in
connection with the performance of its obligations under Article VIII hereof.
2.03 Deliveries by Buyer. At or prior to the Closing, Buyer shall
deliver to the Seller (i) the Purchase Price, required to be paid by Buyer at
Closing, all as provided in Section 1.02 hereof, (ii) the Management Agreements
to be entered into by the Company, as Owner, and Seller, as Manager, with
respect to the Seller's Existing SF Restaurants to be conveyed by Seller to the
Company pursuant to the Asset Agreement and (iii) the Master Incentive Agreement
to be entered into between the Seller and Buyer with respect to the Seller's SF
Restaurants.
2.04 Termination in Absence of Closing.
(a) Subject to the provisions of Section 2.04(b), if by the
close of business on January 31, 1997, the Closing has not occurred, then any
party hereto may thereafter terminate this Agreement by written notice to such
effect, to the other parties hereto, without liability of or to any party to
this Agreement or any shareholder, director, officer, employee or representative
of such party unless the reason for Closing having not occurred is (i) such
party's willful breach of the provisions of this Agreement, or (ii) if all of
the conditions to such party's obligations set forth in Article VI have been
satisfied or waived in writing by the date scheduled for the Closing pursuant to
Section 2.01, the failure of such party to perform its obligations under this
Article II on such date; provided, however, that the provisions of Sections
9.02, 9.03, 9.04, 9.07 and 9.08 shall survive any such termination; and provided
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further, however, that any termination pursuant to this Section 2.04 shall not
relieve any party hereto who was responsible for Closing having not occurred as
described in clauses (i) or (ii) above of any liability for (x) such party's
willful breach of the provisions of this Agreement, or (y) if all of the
conditions to such party's obligations set forth in Article VI have been
satisfied or waived in writing by the date scheduled for the Closing pursuant to
Section 2.01, the failure of such party to perform its obligations under this
Article II on such date.
(b) This Agreement and the transactions contemplated herein
may be terminated and abandoned at any time on or prior to the Closing Date by
the Buyer if:
(i) any representations or warranties made herein for
the benefit of Buyer, or any certificate, schedule or document furnished to
Buyer pursuant to this Agreement is untrue in any material respect; or
(ii) the Company or Seller shall have defaulted in
any material respect in the performance of any material obligation under this
Agreement.
(c) This Agreement and the transactions contemplated herein
may be terminated and abandoned at any time on or prior to the Closing Date by
the Seller if:
(i) any representations or warranties made herein for
the benefit of Seller, or any certificate, schedule or document furnished to
Seller pursuant to this Agreement is untrue in any material respect; or
(ii) the Buyer shall have defaulted in any material
respect in the performance of any material obligation under this Agreement.
ARTICLE III - REPRESENTATIONS AND WARRANTIES
OF THE SELLER AND THE COMPANYOF THE SELLER AND THE COMPANY
The Seller and the Company hereby jointly and severally represent and
warrant to Buyer that, except as specifically disclosed under and in accordance
with the terms of the Asset Agreement or elsewhere herein (a "Disclosure"):
3.01 Corporate Existence and Qualification; Corporate Documents.
(a) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Arizona; the
Company has the corporate power to own, manage, lease, operate and hold its
Properties and to carry on its business as and where such Properties are
presently located and such business is presently conducted; and neither the
character of the Company's Properties nor the nature of the Company's business
requires the Company to be duly qualified to do business as a foreign
corporation in any jurisdiction outside those identified in Schedule 3.01(a)
attached hereto, and the Company is qualified as a foreign corporation and in
good standing in each listed jurisdiction.
(b) The stock and minute books of the Company that have been
made available to Buyer for review contain a complete and accurate record of the
sole stockholder of the Company and any actions of the stockholders and
directors (and any committees thereof) of the Company. The Company has
previously furnished to Buyer true and complete copies of the Company's charter
and bylaws as currently in effect, which charter documents and bylaws have been
certified by the appropriate
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governmental official and the secretary of the Company, respectively.
(c) The Company does not have any subsidiaries, participate in
any partnership or joint venture, or own any outstanding capital stock of any
other corporation.
3.02 Authority, Approval and Enforceability. This Agreement has been
duly executed and delivered by the Company and the Seller, and the Seller and
the Company have all requisite power and legal capacity to execute and deliver
this Agreement and all Collateral Agreements executed and delivered or to be
executed and delivered in connection with the transactions provided for hereby,
to consummate the transactions contemplated hereby and by the Collateral
Agreements, and to perform its or his respective obligations hereunder and under
the Collateral Agreements. This Agreement and each Collateral Agreement to which
Seller and/or the Company is a party constitutes, or upon execution and delivery
will constitute, the legal, valid and binding obligation of such party which is
enforceable in accordance with its terms.
3.03 Capitalization and Ownership. The Company's authorized capital
stock consists solely of ________________shares of common stock, par value
$_____ per share (the "Common Stock"), [______] shares of which are issued and
outstanding, all of which issued and outstanding shares of capital stock are
owned beneficially and of record by the Seller free and clear of any and all
liens, mortgages, adverse claims, charges, security interests, encumbrances or
other restrictions or limitations whatsoever other than any arising under or in
connection with the Acquisition Loan. All of the outstanding shares of the
Company are duly authorized, validly issued, fully paid and nonassessable and
were not issued in violation of (i) any preemptive or other rights of any Person
to acquire securities of the Company, or (ii) any applicable federal or state
securities laws, and the rules and regulations promulgated thereunder
(collectively "Securities Laws"). There are no outstanding subscriptions,
options, convertible securities, rights (preemptive or other), warrants, calls
or agreements relating to any shares of capital stock of the Company.
3.04 No Seller Defaults. The execution and delivery of this Agreement
and the Collateral Agreements by Seller and the performance by Seller of its
obligations hereunder and thereunder will not violate any provision of law or
any judgment, award or decree or any indenture, agreement or other instrument to
which Seller is a party, or by which Seller and the Company or any properties or
assets of Seller or the Company is bound or affected, or conflict with, result
in a breach of or constitute (with due notice or lapse of time or both) a
default under, any such indenture, agreement or other instrument, or result in
the creation or imposition of any lien, charge, security interest or encumbrance
of any nature whatsoever upon any of the properties or assets of Seller or the
Company.
3.05 No Company Default or Consents. Neither the execution and delivery
of this Agreement nor the carrying out of any of the transactions contemplated
hereby will:
(i) violate or conflict with any of the terms, conditions or
provisions of the charter or bylaws of the Company;
(ii) violate any Legal Requirements applicable to the
Company;
(iii) violate, conflict with, result in a breach of,
constitute a default under (whether with or without notice or the lapse of time
or both), or accelerate or permit the acceleration of the performance required
by, or give any other party the right to terminate, any Contract or Permit
applicable to the Company;
(iv) result in the creation of any lien, charge or other
encumbrance on the shares
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of capital stock or any Properties of the Company; or
(v) require the Seller or the Company to obtain or make any
waiver, consent, action, approval or authorization of, or registration,
declaration, notice or filing with, any private non-governmental third party or
any Governmental Authority other than waivers and consents which have been
obtained in writing by Seller and copies provided to Buyer.
3.06 No Proceedings. No suit, action or other proceeding is pending or,
to the Knowledge of the Company, threatened before any Governmental Authority
seeking to restrain the Company or Seller or prohibit their entry into this
Agreement or prohibit the Closing, or seeking damages against the Company or its
Properties as a result of the consummation of this Agreement.
3.07 Employee Matters. The Company has never had any employees, nor has
it ever sponsored, maintained or contributed to:
(i) any "employee benefit plan", as such term is
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974
("ERISA") (including, but not limited to, employee benefit plans, such as
foreign plans, which are not subject to the provisions of ERISA) ("Plan"); or
(ii) any personnel policy, stock option plan,
collective bargaining agreement, bonus plan or arrangement, incentive award plan
or arrangement, vacation policy, severance pay policy or agreement, deferred
compensation agreement or arrangement, consulting agreement, employment contract
and each other employee benefit plan, agreement, arrangement, program, practice
or understanding which is not described in Section 3.07(a)(i) ("Benefit Program
or Agreement").
3.08 Financial Statements; Liabilities; Accounts Receivable.
(a) Seller shall prepare and deliver to Buyer a true, correct
and complete Balance Sheet for the Company, effective as of the Closing Date
prepared in accordance with generally accepted accounting principles ("GAAP")
and taking into consideration the ss.338 Election required under Section 8.03
below.
(b) Except as otherwise set forth in Schedule 3.08(b) attached
hereto, the Company does not have any liabilities or obligations (whether
accrued, absolute, contingent, known, unknown or otherwise, and whether or not
of a nature required to be reflected or reserved against in a balance sheet in
accordance with GAAP), other than continuing liabilities of the Company
contemplated and permitted under the Asset Agreement (the "Permitted
Liabilities").
3.09 Absence of Certain Changes.
(a) Except as otherwise set forth in Schedule 3.09(a) attached
hereto, and except as contemplated under the Asset Agreement, since the
formation of the Company, there has not been:
(i) any change in circumstances that had or might
have an adverse effect on the business, operations, prospects, Properties,
securities, financial condition or working capital of the Company; or
(ii) any damage, destruction or loss (whether or
not covered by insurance) that had or might have an adverse effect on the
business, operations, prospects, Properties, securities or financial condition
of the Company.
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(b) Except as otherwise set forth in Schedule 3.09(b) attached
hereto, and except as contemplated under the Asset Agreement, since the
formation of the Company, the Company has not done any of the following:
(i) declared, set aside or paid any dividends, or
made any distributions or other payments in respect of its equity securities, or
repurchased, redeemed or otherwise acquired any such securities;
(ii) merged into or with or consolidated with, any
other corporation or acquired the business or assets of any person;
(iii) purchased any securities of any person;
(iv) amended its charter or bylaws;
(v) issued any capital stock or other securities,
or granted, or entered into any agreement to grant, any options, convertibility
rights, other rights, warrants, calls or agreements relating to its capital
stock other than the outstanding capital stock held by the Seller;
(vi) created, incurred, assumed, guaranteed or
otherwise become liable or obligated with respect to any indebtedness, or made
any loan or advance to, or any investment in, any person, except in each case in
the ordinary course of business;
(vii) made any change in any existing election, or
made any new election, with respect to any tax law in any jurisdiction which
election could have an effect on the tax treatment of the Company or the
Company's business operations;
(viii) entered into, amended or terminated any
material agreement;
(ix) sold, transferred, leased, mortgaged,
encumbered or otherwise disposed of, or agreed to sell, transfer, lease,
mortgage, encumber or otherwise dispose of, any Properties except (i) in the
ordinary course of business, or (ii) pursuant to any agreement specified in
Schedule 3.13;
(x) settled any claim or litigation, or filed any
motions, orders, briefs or settlement agreements in any proceeding before any
Governmental Authority or any arbitrator;
(xi) maintained its books of account other than in
the usual, regular and ordinary manner in accordance with generally accepted
accounting principles and on a basis consistent with prior periods or made any
change in any of its accounting methods or practices that would be required to
be disclosed under generally accepted accounting principles;
(xii) engaged in any one or more activities or
transactions outside the ordinary course of business; or
(xiii) committed to do any of the foregoing.
3.10 Compliance with Laws. To the knowledge of the Seller and of the
Company, the Company is and has been in compliance in all respects with any and
all Legal Requirements applicable to the Company, other than failures to so
comply that would not have an adverse effect on the business, operations,
prospects, Properties, securities or financial condition of the Company.
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3.11 Litigation; Default. There are no claims, actions, suits,
investigations or proceedings against the Company pending or, to the Knowledge
of the Company, threatened in any court or before or by any Governmental
Authority, or before any arbitrator, that might have an adverse effect (whether
covered by insurance or not) on the business, operations, prospects, Properties,
securities or financial condition of the Company and, to the Knowledge of the
Company, there is no basis for any such claim, action, suit, investigation or
proceeding. Except as set forth in the Disclosures, the Company is not in
default under, and no condition exists (whether covered by insurance or not)
that with or without notice or lapse of time or both would (i) constitute a
default by Seller or the Company under, or breach or violation of, any Legal
Requirement, Permit or Contract applicable to the Company, or (ii) accelerate or
permit the acceleration of the performance required under, or give any other
party the right to terminate, any Contract applicable to the Company, other than
defaults, breaches, violations or accelerations that would not have an adverse
effect on the business, operations, prospects, Properties, securities or
financial condition of the Company.
3.12 Ownership of Company Properties. Subject only to Seller's existing
lender, Sanwa Bank, having consented to the proposed conveyance and stock
transfer transaction and agreed to release its lien on the as such Properties in
connection with the Closing hereunder and under the Asset Agreement, the Company
has and will have as of the Closing Date legal and beneficial ownership of its
Properties, free and clear of any and all liens, mortgages, pledges, adverse
claims, encumbrances or other restrictions or limitations whatsoever other than
any such lien or encumbrances in favor of CNL Financial which may arise under or
in connection with the Acquisition Loan.
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
OF BUYERNTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Seller that:
4.01 Corporate Existence and Qualification. Buyer is a limited
partnership duly organized, validly existing and in good standing under the laws
of the State of Florida; has the legal power to own, manage, lease and hold its
properties and to carry on its business as and where such properties are
presently located and such business is presently conducted; and is duly
qualified to do business and is in good standing as a foreign corporation in
each of the jurisdictions where the character of its properties or the nature of
its business requires it to be so qualified.
4.02 Authority, Approval and Enforceability. This Agreement has been
duly executed and delivered by Buyer and Buyer has all requisite legal power and
legal capacity to execute and deliver this Agreement and all Collateral
Agreements executed and delivered or to be executed and delivered by Buyer in
connection with the transactions provided for hereby, to consummate the
transactions contemplated hereby and by the Collateral Agreements, and to
perform its obligations hereunder and under the Collateral Agreements. This
Agreement and each Collateral Agreement to which Buyer is a party constitutes,
or upon execution and delivery will constitute, the legal, valid and binding
obligation of Buyer which is enforceable in accordance with its terms.
4.03 No Default or Consents. Neither the execution and delivery of this
Agreement nor the carrying out of the transactions contemplated hereby by Buyer
will:
(i) violate or conflict with any of the terms, conditions or
provisions of Buyer's limited partnership agreement or certificate;
(ii) violate any Legal Requirements applicable to Buyer;
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(iii) violate, conflict with, result in a breach of,
constitute a default under (whether with or without notice or the lapse of time
or both), or accelerate or permit the acceleration of the performance required
by, or give any other party the right to terminate, any contract or Permit
applicable to Buyer;
(iv) result in the creation of any lien, charge or other
encumbrance on the shares of capital stock or any property of Buyer; or
(v) require Buyer to obtain or make any waiver, consent,
action, approval or authorization of, or registration, declaration, notice or
filing with, any private non-governmental third party or any Governmental
Authority.
4.04 No Proceedings. No suit, action or other proceeding is pending or,
to Buyer's knowledge, threatened before any Governmental Authority seeking to
restrain Buyer or prohibit its entry into this Agreement or prohibit the
Closing, or seeking Damages against Buyer or its properties as a result of the
consummation of this Agreement.
4.05 No Securities Transactions. Buyer has not entered into any type of
transaction relating to the stock of the Company to be acquired hereunder which
could result in a violation of any of the Securities Laws.
ARTICLE V - OBLIGATIONS PRIOR TO CLOSING
From the date of this Agreement through the Closing:
5.01 Buyer's Access to Information and Properties. The Company shall
permit Buyer and its authorized employees, agents, accountants, legal counsel
and other representatives to have access to the books, records, employees,
counsel, accountants, engineers and other representatives of the Company at all
times reasonably requested by Buyer for the purpose of conducting an
investigation of the Company's financial condition, corporate status,
operations, prospects, business and Properties. The Company shall make available
to Buyer for examination and reproduction all documents and data of every kind
and character relating to the Company in possession or control of, or subject to
reasonable access by, the Company and/or the Seller, including, without
limitation, all files, records, data and information relating to the Properties
(whether stored in paper, magnetic or other storage media) and all agreements,
instruments, contracts, assignments, certificates, orders, and amendments
thereto. Also, the Company shall allow Buyer access to, and the right to
inspect, the Properties, except to the extent that such Properties are operated
by a third-party operator, in which case the Company shall use its best efforts
to cause the operator of such Properties to allow Buyer access to, and the right
to inspect, such Properties.
5.02 Company's Conduct of Business and Operations. The Company and the
Seller shall keep Buyer advised as to any material operations and proposed
material operations relating to the Company.
5.03 General Restrictions. Except as otherwise expressly permitted in
this Agreement and except as contemplated by the Asset Agreement, without the
prior written consent of Buyer, which consent shall not be unreasonably
withheld, the Company shall not:
(i) declare, set aside or pay any dividends, or make any
distributions or other payments in respect of its equity securities, or
repurchase, redeem or otherwise acquire any such securities;
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(ii) merge into or with or consolidate with, any other
corporation or acquire the business or assets of any person;
(iii) purchase any securities of any person;
(iv) amend its charter or bylaws;
(v) issue any capital stock or other securities, or grant, or
enter into any agreement to grant, any options, convertibility rights, other
rights, warrants, calls or agreements relating to its securities;
(vi) create, incur, assume, guarantee or otherwise become
liable or obligated with respect to any indebtedness, or make any loan or
advance to, or any investment in, any person, except in each case in the
ordinary course of business;
(vii) make any change in any existing election, or make any
new election, with respect to any tax law in any jurisdiction which election
could have an effect on the tax treatment of the Company or the Company's
business operations;
(viii) enter into, amend or terminate any material agreement;
(ix) sell, transfer, lease, mortgage, encumber or otherwise
dispose of, or agree to sell, transfer, lease, mortgage, encumber or otherwise
dispose of, any Properties except (i) in the ordinary course of business, or
(ii) pursuant to any agreement specified in Schedule 3.13;
(x) maintain its books of account other than in the usual,
regular and ordinary manner in accordance with generally accepted accounting
principles and on a basis consistent with prior periods or make any change in
any of its accounting methods or practices;
(xi) adopt any Plan or Benefit Program or Agreement;
(xii) engage in any one or more activities or transactions
outside the ordinary course of business; or
(xiii) enter into any transaction or make any commitment
which could result in any of the representations, warranties or covenants of the
Company and/or Seller contained in this Agreement not being true and correct
after the occurrence of such transaction or event.
5.04 Notice Regarding Changes. The Company and Seller shall promptly
inform Buyer in writing of any change in facts and circumstances that could
render any of the representations and warranties made herein by the Company
and/or Seller inaccurate or misleading if such representations and warranties
had been made upon the occurrence of the fact or circumstance in question. The
Buyer shall promptly inform the Seller in writing of any change in facts and
circumstances that could render any of the representations and warranties made
herein by it inaccurate or misleading if such representations and warranties had
been made upon the occurrence of the fact or circumstance in question.
5.05 Ensure Conditions Met. The Seller, the Company and Buyer shall use
their best efforts to cause all conditions to Closing hereunder to be satisfied
on or before the Closing Date and shall specifically use their mutual best
efforts to cause to be assigned to Buyer any and all necessary Permits for the
conduct of the Company's business and shall cooperate with Buyer with regard to
obtaining all such Permits.
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Casualty Loss. If, between the date of this Agreement and the Closing,
any of the Properties of the Company shall be substantially destroyed or damaged
in whole or in part by fire, earthquake, flood, other casualty or any other
cause, then this Agreement shall be terminable, at Buyer's election.
ARTICLE VI - CONDITIONS TO SELLER'S AND BUYER'S OBLIGATIONS
6.01 Conditions to Obligations of the Seller. The obligations of Seller
to carry out the transactions contemplated by this Agreement are subject, at the
option of Seller, to the satisfaction, or waiver of the following conditions:
(a) All representations and warranties of Buyer contained in
this Agreement shall be true and correct in all material respects at and as of
the Closing as if such representations and warranties were made at and as of the
Closing, except for changes contemplated by the terms of this Agreement, and
Buyer shall have performed and satisfied in all material respects all covenants
and agreements required by this Agreement to be performed and satisfied by Buyer
at or prior to the Closing.
(b) As of the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by or on behalf of the Company
or the Seller shall be pending or threatened before any Governmental Authority
seeking to restrain the Company or prohibit the Closing or seeking Damages
against the Company as a result of the consummation of this Agreement.
(c) All necessary consents of third parties shall have been
received.
(d) The Company and Seller shall enter into the Management
Agreement and Master Incentive Agreement as contemplated under the Asset
Agreement immediately upon the transfer of shares of the Company hereunder as of
the Closing Date.
6.02 Conditions to Obligations of Buyer. The obligations of Buyer to
carry out the transactions contemplated by this Agreement are subject, at the
option of Buyer, to the satisfaction, or waiver by Buyer, of the following
conditions:
(a) All representations and warranties of the Company and
Seller contained in this Agreement shall be true and correct in all material
respects at and as of the Closing as if such representations and warranties were
made at and as of the Closing, except for changes contemplated by the terms of
this Agreement, and each of the Company and the Seller shall have performed and
satisfied in all material respects all agreements and covenants required by this
Agreement to be performed and satisfied by them at or prior to the Closing.
(b) As of the Closing Date, no suit, action or other
proceeding (excluding any such matter initiated by or on behalf of Buyer) shall
be pending or threatened before any court or governmental agency seeking to
restrain Buyer or prohibit the Closing or seeking Damages against Buyer or the
Company or its Properties as a result of the consummation of this Agreement.
(c) All notices required to be given in connection with the
transactions contemplated by this Agreement shall have been duly and timely
given, and there shall not be any preferential purchase rights or consent
requirements with respect to the transactions contemplated by this Agreement
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that have not expired or been waived.
(d) Since the formation of the Company and up to and including
the Closing, except as contemplated by the Asset Agreement and hereby there
shall not have been:
(i) any change in the business, operations,
prospects or financial condition of the Company that had or might have a
material adverse effect on its business, operations, prospects, Properties,
securities or financial condition;
(ii) any damage, destruction or loss to the Company
(whether or not covered by insurance) that had or might have an adverse effect
on its business, operations, prospects, Properties, securities or financial
condition.
(e) The Buyer shall have received the opinion of X'Xxxxxx,
Cavanagh, Anderson, Xxxxxxxxxxxxx & Xxxxxxxx, counsel to the Company, dated as
of the Closing Date, addressed to the CNL Financial and Buyer and in a form
approved in writing by Buyer.
(f) The Company and Seller shall have furnished Buyer with a
certified copy of all necessary corporate actions required to authorize and
effectuate the execution, delivery and performance of this Agreement.
(g) The Purchased Assets with respect to the Seller's Existing
Restaurants, both as defined in the Asset Agreement, shall have been conveyed to
the Company in accordance with the terms of the Asset Agreement.
(h) All proceedings to be taken by the Company and Seller in
connection with the transactions contemplated hereby and all documents incident
thereto shall be reasonably satisfactory in form and substance to Buyer and its
counsel, and Buyer and said counsel shall have received all such counterpart
originals or certified or other copies of such documents as it or they may
reasonably request.
(i) Buyer shall have received written evidence, in form and
substance satisfactory to Buyer, of the consent to the transactions contemplated
by this Agreement of all governmental, quasi-governmental and private third
parties (including, without limitation, persons or other entities leasing real
or personal property to the Company) where the absence of any such consent would
result in a violation of law or a breach or default under any material agreement
to which the Company is a party.
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ARTICLE VII - POST-CLOSING OBLIGATIONS
7.01 Further Assurances. Following the Closing, Seller, the Company and
the Buyer shall execute and deliver such documents, and take such other action,
as shall be reasonably requested by any other party hereto to carry out the
transactions contemplated by this Agreement.
7.02 Post-Closing Indemnity by the Seller. For a period of one year
following the Closing, Seller shall indemnify and hold harmless Buyer and the
Company, and their respective directors, officers and constituent partners, from
and against any and all Damages arising out of, resulting from or in any way
related to (i) a breach of, or the failure to perform or satisfy, any of the
representations, warranties, covenants and agreements made by Seller in this
Agreement; or (ii) any claim that the Company's securities were issued or
acquired prior to the Closing in violation of any applicable Federal or state
securities laws.
ARTICLE VIII - TAX MATTERS
8.01 Representations and Obligations Regarding Taxes. The Company and
Seller jointly and severally represent and warrant to and agree with the Buyer
as follows:
(a) Except as set forth in Schedule 8.01(a), (i) all returns
and reports, including without limitation, information and withholding returns
and reports ("Tax Returns") of or relating to any foreign, federal, state or
local tax assessment or other governmental charge (all herein referred to
collectively as "Taxes" or singularly as a "Tax") that are required to be filed
on or before the Closing Date by or with respect to the income, business,
operations or property of the Company have been duly and timely filed, (ii) all
items of income, gain, loss, deduction and credit or other items required to be
included in such Tax Returns have been so included, (iii) all information
provided in such Tax Returns is true, correct and complete, (iv) all Taxes that
have become due with respect to the taxable years covered by such Tax Returns
have been timely paid in full, (v) no penalty, interest or other charge is or
will become due with respect to the late filing of any such Tax Return or late
payment of any such Tax, and (vi) all withholding Tax requirements imposed on
the Company for all taxable periods through the close of business on the Closing
Date have been satisfied in full in all respects.
(b) There is no claim against the Company with respect to any
Taxes and no assessment, deficiency or adjustment has been asserted or proposed
with respect to any Tax Return of or with respect to the Company, other than
those disclosed (and to which are attached true and complete copies of all audit
or similar reports) in Schedule 8.01(b).
(c) Except as set forth in Schedule 8.01(c), there is not in
force any extension of time with respect to the date on which any Tax Return of
or with respect to the Company is due to be or have been filed, or any waivers
or agreements by or with respect to the Company or either Seller of or for any
extension of time for the assessment or payment of any Tax.
(d) The total amounts set up as liabilities for Taxes in the
Financial Statements are sufficient to cover the payment of all Taxes, including
any penalties or interest thereon and whether or not assessed or disputed, which
are, or are hereafter found to be, or to have been, due with respect to the
conduct of the business of the Company for the taxable periods covered thereby.
(e) The Company and Seller shall grant to Buyer or its
designees access at all reasonable times to all of the their books and records
(including tax workpapers and returns and correspondence with tax authorities)
insofar as they relate to the operations of the Company, including the right to
take extracts therefrom and make copies thereof, to the extent such books and
records relate to taxable periods ending on or prior to or that include the
Closing Date. Buyer shall (i) grant to the
12
Seller access at all reasonable times to all of the Company's books and records
(including tax workpapers and returns and correspondence with tax authorities),
including the right to take extracts therefrom and make copies thereof, to the
extent that such books and records relate to taxable periods ending on or prior
to or that include the Closing Date, and (ii) otherwise cooperate with the
Seller in connection with any audit of Taxes that relate to the business of the
Company prior to Closing.
8.02 Indemnification for Taxes.
(a) Seller hereby indemnifies Buyer, the Company and their
respective Affiliates (each herein sometimes referred to as an "Indemnified
Taxpayer") against, and agrees to protect, save and hold harmless each
Indemnified Taxpayer from, any and all claims, damages, deficiencies, losses
(including Taxes, interest and penalties) and all expenses, including attorneys'
and accountants' fees and disbursements (all herein referred to as "Losses")
resulting from:
(i) A claim by any taxing authority for (A) any
Taxes of the Company allocable to any period ending on or prior to the Closing
Date, and (B) any Taxes of the Seller or any corporation that is or was a member
of an affiliated group of corporations of which the Seller was or is a member;
(ii) A claim by any taxing authority for any Taxes
arising from or occasioned by the sale of the Company's capital stock pursuant
to this Agreement; or
(iii) Any misrepresentation or breach of any
representation, warranty or obligation set forth in this Article VIII.
(b) Subject to the resolution of any Tax contest pursuant to
Section 8.02(c), upon notice from Buyer to the Shareholder that an Indemnified
Taxpayer is entitled to an indemnification payment for a Loss pursuant to
Section 8.02(a), the Seller shall thereupon pay to the Indemnified Taxpayer an
amount that, net of any Taxes imposed on the Indemnified Taxpayer with respect
to such payment, will indemnify and hold the Indemnified Taxpayer harmless from
such Loss.
(c) (i) If a claim shall be made by any taxing authority
that, if successful, would result in the indemnification of an Indemnified
Taxpayer, the Indemnified Taxpayer shall promptly notify the Seller in writing
of such fact; provided, however, that any failure to give such notice will not
waive any rights of the Indemnified Taxpayer except to the extent the rights of
the indemnifying party are actually prejudiced.
(ii) The Indemnified Taxpayer shall take such action
in connection with contesting such claim as the Shareholder Representative shall
reasonably request in writing from time to time; provided that (A) within 30
days (or such earlier date that any payment of Taxes is due by the Indemnified
Taxpayer) after the notice described in (i) above has been delivered, the
Shareholder Representative requests that such claim be contested, (B) the Seller
shall have agreed to pay to the Indemnified Taxpayer on demand all costs and
expenses that the Indemnified Taxpayer may incur in connection with contesting
such claim, including, without limitation, reasonable attorneys' and
accountants' fees and disbursements, and (C) if the Indemnified Taxpayer is
requested to pay the Tax claimed and xxx for a refund, the Seller shall have
advanced to the Indemnified Taxpayer, on an interest free basis, the amount of
such claim. In the case of any such claim referred to above, the Indemnified
Taxpayer shall not make payment of such claim for at least 30 days (or such
shorter period as may be
13
required by applicable law) after the giving of the notice required by (i)
above, shall give to the Shareholder Representative any information reasonably
requested relating to such claim and otherwise shall cooperate with the
Shareholder Representative in good faith in order to contest effectively any
such claim.
(iii) Subject to the provisions of paragraph (ii)
above, the Indemnified Taxpayer shall prosecute such contest to a determination
in a court of initial jurisdiction, and if the Shareholder Representative shall
reasonably request, the Indemnified Taxpayer shall prosecute such contest to a
determination in an appellate court.
(iv) If, after actual receipt by the Indemnified
Taxpayer of an amount advanced by Seller pursuant to paragraph (ii)(C) above,
the extent of the liability of the Indemnified Taxpayer with respect to the
indemnified matter shall be established by the final judgment or decree of a
court or a final or binding settlement with an administrative agency having
jurisdiction thereof, the Indemnified Taxpayer shall promptly pay to Seller of
any refund received by or credited to the Indemnified Taxpayer with respect to
the indemnified matter (together with any interest paid or credited thereon by
the taxing authority and any recovery of legal fees from such taxing authority).
Notwithstanding the foregoing, the Indemnified Taxpayer shall not be required to
make any payment hereunder before such time as the Seller shall have made all
payments or indemnities then due with respect to Indemnified Taxpayer pursuant
to this Article VIII or Article VI.
(d) Anything to the contrary in this Agreement
notwithstanding, the indemnification obligations of the Seller under this
Article VIII shall survive the Closing and shall continue until the expiration
of the applicable statutes of limitations.
8.03 Section 338 Election. In addition, at Buyer's option Seller and
Shareholder will join with the Company and Buyer in making an election under
Section 338(h)(10) of the Internal Revenue Code of 1986, as amended (the
"Code"), and any applicable Regulations promulgated thereunder (and any
corresponding elections under state and local tax law) (collectively a "Section
338 (h)(10) Election") with respect to the purchase and sale of the stock of the
Company under the Stock Purchase Agreement. Seller and Shareholder shall pay any
and all federal, state and local taxes attributable to the making of the Section
338(h)(10) Election and will indemnify the Buyer and the Company against any
claim, loss, cost or damage in connection therewith. Seller and Shareholder
shall also pay, and indemnify Buyer and the Company from and against any claim,
loss, cost or damage in connection with) any state or local tax attributable to
an election under any state or local law similar to the election available under
Section 338(g) of the Code (or which results from the making of an election
Section 338(g) of the Code) with respect to the purchase and sale of the stock
of the Company under the Stock Purchase Agreement.
ARTICLE IX - MISCELLANEOUS
9.01 Shareholder Guarantee. Shareholder hereby guarantees to Buyer and
becomes a surety for the performance of and compliance with all of Seller's
agreements, covenants and obligations hereunder and the truth and correctness of
all of Seller's representations and warranties contained herein and under the
instruments of transfer and conveyance of the shares of the Company pursuant
hereto in connection with the Closing. Any claim or right of Buyer for the
failure to perform or comply with any of Seller's agreements, covenants or
obligations hereunder or for the untruth or incorrectness of any of its
representations or warranties contained herein may be directly enforced against
Shareholder and upon or
14
pursuing any without any notice of any kind and without first making any demand
upon or pursuing any remedy against Seller. Without notice to or consent of
Shareholder, Seller and Buyer may modify or change the terms of this Agreement
or any obligation of Seller, and may grant any extension, renewal or indulgence,
release, compromise or settlement with respect thereto and none of the foregoing
shall in any way affect Shareholder's liability hereunder. Shareholder shall
execute or cause to be executed management's representation letter of Buyer's
independent accountants with respect to Seller's financial statements so as to
enable such accountants to certify such financial statements with no material
changes.
. Each of the parties to this Agreement shall bear his or its own legal
fees and costs incurred in connection with the negotiation, preparation,
execution and closing of this Agreement and the transactions contemplated
hereby, and Buyer shall be responsible for all other costs consistent with and
subject to the limits set forth in the Asset Agreement. For purposes of the
foregoing and of the Asset Agreement, all costs incurred by the Company and
Buyer in connection with the liquidation of the Company and conveyance of its
assets to Buyer upon receipt of all necessary approvals, and the net incremental
income tax burden on the Company and Buyer resulting from any corporate level
income taxes until thirty (30) days following delivery to Buyer of all consents
and approvals necessary to allow such conveyance. In the event that necessary
approvals to such conveyance are denied, then Buyer and Seller shall cooperate
in good faith to restructure the ownership of the Company or its assets in order
to avoid double corporate taxation while satisfying Buyer's investment
restrictions.
9.03 Governing Law. The provisions of this agreement and the documents
delivered pursuant hereto shall be governed by and construed in accordance with
the laws of the State of Florida (excluding any conflict of law rule or
principle that would refer to the laws of another jurisdiction). Each party
hereto irrevocably submits to the jurisdiction of the Circuit Court of the State
of Florida, Orange County, in any action or proceeding arising out of or
relating to this Agreement or any of the Collateral Agreements, and each party
hereby irrevocably agrees that all claims in respect of any such action or
proceeding must be brought and/or defended in such court; provided, however,
that matters which are under the exclusive jurisdiction of the Federal courts
shall be brought in the Federal District Court for the Middle District of
Florida. Each party hereto consents to service of process by any means
authorized by the applicable law of the forum in any action brought under or
arising out of this Agreement or any of the Collateral Agreements, and each
party irrevocably waives, to the fullest extent each may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court.
9.04 Representations and Warranties. Each of the representations and
warranties of each of the parties to this Agreement shall be deemed to have been
made, and the certificates delivered pursuant to clause (ii) of Section 2.02 and
clause (ii) of Section 2.03 by a party are agreed to and shall be deemed to
constitute the making of such representations and warranties, again at and as of
the Closing Date by and on behalf of the party(ies) on behalf of whom such
certificates are delivered.
9.05 Entire Agreement; Amendments and Waivers. This Agreement, together
with all exhibits and schedules attached hereto, constitutes the entire
agreement between and among the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the parties, and there are no
warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth specifically
herein or contemplated hereby. No supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver
15
of any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (regardless of whether similar), nor shall
any such waiver constitute a continuing waiver unless otherwise expressly
provided.
9.06 Binding Effect and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns; but neither this Agreement nor any of the
rights, benefits or obligations hereunder shall be assigned, by operation of law
or otherwise, by any party hereto without the prior written consent of the other
party, provided, however, that nothing herein shall prohibit the assignment of
all of Buyer's rights and obligations hereunder to any single Affiliate prior to
the Closing Date to the extent such assignee assumes all such obligations, or
prohibit the assignment of Buyer's rights (but not obligations) to any lender
providing financing in connection with the transactions contemplated hereby.
Nothing in this Agreement, express or implied, is intended to confer upon any
person or entity other than the parties hereto and their respective permitted
successors and assigns, any rights, benefits or obligations hereunder.
9.07 Remedies. The rights and remedies provided by this Agreement are
cumulative, and the use of any one right or remedy by any party hereto shall not
preclude or constitute a waiver of its right to use any or all other remedies.
Such rights and remedies are given in addition to any other rights and remedies
a party may have by law, statute, or otherwise.
Schedules. The Schedules referred to herein are attached hereto and
incorporated herein by this reference. Disclosure of a specific item in any one
Schedule shall be deemed restricted only to the Section to which such disclosure
specifically relates except where (i) there is an explicit cross-reference to
another Schedule, and (ii) Buyer could reasonably be expected to ascertain the
scope of the modification to a representation intended by such cross-reference.
9.09 Multiple Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
9.10 References. Whenever required by the context, and is used in this
Agreement, the singular number shall include the plural and pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural, as the identification the person may require. References to
monetary amounts, specific named statutes and generally accepted accounting
principles are intended to be and shall be construed as references to United
States dollars, statutes of the United States of the stated name and United
States generally accepted accounting principles, respectively, unless the
context otherwise requires.
9.11 Survival. Any provision of this Agreement which contemplates
performance or the existence of obligations after the Closing Date, and any and
all representations and warranties set forth in this Agreement, shall not be
deemed to be merged into or waived by the execution and delivery of the
instruments executed at the Closing, but shall expressly survive Closing for a
period of one(1) year and shall be binding upon the party or parties obligated
thereby in accordance with the terms of this Agreement, subject to any
limitations expressly set forth in this Agreement.
9.12 Attorneys' Fees. In the event any suit or other legal proceeding
is brought for the enforcement of any of the provisions of this Agreement, the
parties hereto agree that the prevailing party or parties shall be entitled to
recover from the other party or parties upon final judgment on the merits
16
reasonable attorneys' fees (and sales taxes thereon, if any), including
attorneys' fees for any appeal, and costs incurred in bringing such suit or
proceeding.
9.13 Risk of Loss. Prior to the Closing, the risk of loss of damage to,
or destruction of, any and all of the Company's assets, including without
limitation the Properties, shall remain with Seller and the Company, and the
legal doctrine known as the "Doctrine of Equitable Conversion" shall not be
applicable to this Agreement or to any of the transactions contemplated hereby.
ARTICLE X - DEFINITIONS
Capitalized terms used in this Agreement are used as defined in this
Article X or elsewhere in this Agreement.
10.01 Affiliate. The term "Affiliate" shall mean, with respect to any
person, any other person controlling, controlled by or under common control with
such person. The term "Control" as used in the preceding sentence means, with
respect to a corporation, the right to exercise, directly or indirectly, more
than 50% of the voting rights attributable to the shares of the controlled
corporation and, with respect to any person other than a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person.
10.02 Collateral Agreements. The term "Collateral Agreements" shall
mean any or all other agreements, instruments or documents required or expressly
provided under this Agreement to be executed and delivered in connection with
the transactions contemplated by this Agreement.
10.03 Contracts. The term "Contracts", when described as being those of
or applicable to any person, shall mean any and all contracts, agreements,
franchises, leases, licenses, easements, mortgages, notes, liens, indebtedness
or other instruments or undertakings to which such person is a party or to which
or by which such person or the property of such person is subject or bound,
excluding any Permits.
10.04 Damages. The term "Damages" shall mean any and all damages,
liabilities, obligations, penalties, fines, judgments, claims, deficiencies,
losses, costs, expenses and assessments (including without limitation income and
other taxes, interest, penalties and attorneys' and accountants' fees and
disbursements).
10.05 Governmental Authorities. The term "Governmental Authorities"
shall mean any nation or country (including but not limited to the United
States) and any commonwealth, territory or possession thereof and any political
subdivision of any of the foregoing, including but not limited to courts,
departments, commissions, boards, bureaus, agencies, ministries or other
instrumentalities.
10.06 Knowledge of the Company. The term "Knowledge of the Company"
shall mean the actual knowledge of the Seller or any of the directors, officers
or managerial personnel of the Seller or the Company with respect to the matter
in question, and such knowledge as the Seller or any of the directors, officers
or managerial personnel of the Seller or the Company reasonably should have
obtained upon diligent investigation and inquiry into the matter in question.
10.07 Legal Requirements. The term "Legal Requirements", when described
as being
17
applicable to any person, shall mean any and all laws (statutory, judicial or
otherwise), ordinances, regulations, judgments, orders, directives, injunctions,
writs, decrees or awards of, and any Contracts with, any Governmental Authority,
in each case as and to the extent applicable to such person or such person's
business, operations or properties.
10.08 Permits. The term "Permits" shall mean any and all permits,
orders or Contracts under any Legal Requirement or otherwise granted by any
Governmental Authority.
10.09 Properties. The term "Properties" shall mean any and all
properties and assets (real, personal or mixed, tangible or intangible) to be
contributed and/or conveyed to the Company pursuant to the Asset Agreement.
10.10 Regulations. The term "Regulations" shall mean any and all
regulations promulgated by the Department of the Treasury pursuant to the Code.
10.11 Used. The term "Used" shall mean, with respect to the Properties,
Contracts or Permits of the Company, those owned, leased, licensed or otherwise
held by the Company which were acquired for use or held for use by the Company
in connection with the Company's business and operations, whether or not
reflected on the Company's books of account.
EXECUTED as of the date first written above.
SELLER: BUYER:
MAIN ST. CALIFORNIA, INC., an Arizona corporation CNL CALIFORNIA RESTAURANTS, LTD., a Florida limited
partnership
By: CNL Restaurants XVII, Inc., a
By: ______________________________________ Florida corporation, General
Partner
Name: ___________________________________
As its: ___________________________ President
By: _______________________________
(CORPORATE SEAL) Name: ____________________________
As its: ____________________ President
SHAREHOLDER:
(CORPORATE SEAL)
MAIN STREET AND MAIN INCORPORATED, a Delaware
corporation
By: ______________________________________ COMPANY:
Name: ___________________________________ MAIN ST. CALIFORNIA II, INC., an Arizona corporation
As its: ___________________________ President
By: ______________________________________
(CORPORATE SEAL)
Name: ___________________________________
As its: ___________________________ President
(CORPORATE SEAL)
