REORGANIZATION
AND STOCK EXCHANGE AGREEMENT
AMONG
THE RATTLESNAKE HOLDING COMPANY, INC.
AND
XXXXXXXXXXX BROTHERS WEST, LTD.,
XXXXXXXXXXX'X CAFE FRANCHISING CORP.,
34TH ST. CAFE ASSOCIATES INC.,
GARDEN STATE CAFE CORP.
AND THEIR SHAREHOLDERS
August 21, 1997
TABLE OF CONTENTS
Page
1. Definitions................................................................................................1
2. Purchase and Sale of Xxxxxxxxxxx Corporations Shares.......................................................6
(a) Basic Transaction......................................................................................6
(b) Stock Exchange.........................................................................................6
(c) The Closing............................................................................................6
3. Representations and Warranties Concerning the Transaction..................................................7
(a) Representations and Warranties of the Shareholders.....................................................7
(b) Representations and Warranties of RHC..................................................................8
4. Representations and Warranties Concerning the Xxxxxxxxxxx Corporations....................................10
(a) Organization, Qualification, and Corporate Power......................................................11
(b) Capitalization........................................................................................11
(c) Noncontravention......................................................................................11
(d) Brokers' Fees.........................................................................................12
(e) Title to Assets.......................................................................................12
(f) Subsidiaries..........................................................................................12
(g) Financial Statements..................................................................................12
(h) Events Subsequent to Most Recent Fiscal Year End......................................................13
(i) Undisclosed Liabilities...............................................................................15
(j) Legal Compliance......................................................................................15
(k) Tax Matters...........................................................................................15
(l) Real Property.........................................................................................17
(m) Intellectual Property.................................................................................17
(n) Tangible Assets.......................................................................................18
(o) Inventory.............................................................................................18
(p) Contracts.............................................................................................18
(q) Notes and Accounts Receivable.........................................................................19
(r) Powers of Attorney....................................................................................20
(s) Insurance.............................................................................................20
(t) Litigation............................................................................................20
(u) Employees.............................................................................................20
(v) Employee Benefits.....................................................................................21
(w) Guaranties............................................................................................21
(x) Environment, Health, and Safety.......................................................................21
(y) Certain Business Relationships between the
Shareholders and with the Xxxxxxxxxxx Corporations....................................................22
(z) Disclosure............................................................................................22
5. Pre-Closing Covenants.....................................................................................22
(a) General...............................................................................................22
(b) Notices and Consents..................................................................................22
(c) Operation of Business.................................................................................22
(d) Preservation of Business..............................................................................23
(e) Full Access...........................................................................................23
(f) Notice of Developments................................................................................23
6. Post-Closing Covenants....................................................................................23
(a) General...............................................................................................23
(b) Litigation Support....................................................................................24
(c) Transition............................................................................................24
(d) Confidentiality.......................................................................................24
(e) Covenant Not to Compete...............................................................................25
(f) Management of RHC and Subsidiaries....................................................................26
7. Conditions to Obligation to Close.........................................................................26
(a) Conditions to Obligation of RHC.......................................................................26
(b) Conditions to Obligation of the Shareholders..........................................................28
8. Remedies for Breaches of This Agreement...................................................................29
(a) Survival of Representations ad Warranties.............................................................29
(b) Indemnification Provisions for Benefit of the Buyer...................................................29
(c) Indemnification Provisions for Benefit of the Shareholders............................................30
(d) Matters Involving Third Parties.......................................................................31
(e) Determination of Adverse Consequences.................................................................32
(f) Other Indemnification Provisions......................................................................32
9. Termination...............................................................................................33
(a) Termination of Agreement..............................................................................33
(b) Effect of Termination.................................................................................34
10. Post-Closing Financing; Security Interest.................................................................34
11. Miscellaneous.............................................................................................34
(a) Nature of Certain Obligations.........................................................................34
(b) Press Releases and Public Announcements...............................................................34
(c) No Third-Party Beneficiaries..........................................................................35
(d) Entire Agreement......................................................................................35
(e) Succession and Assignment.............................................................................35
(f) Counterparts..........................................................................................35
(g) Headings..............................................................................................35
(h) Notices...............................................................................................35
(i) Governing Law.........................................................................................36
(j) Amendments and Waivers................................................................................36
(k) Severability..........................................................................................36
(l) Expenses..............................................................................................36
(m) Construction..........................................................................................37
(n) Incorporation of Exhibits, Annexes, and Schedules.....................................................37
(o) Specific Performance..................................................................................37
(p) Submission to Jurisdiction............................................................................37
Exhibit A = Form of Opinion of Counsel to Shareholders and Xxxxxxxxxxx
Corporations
Exhibit B = Form of Opinion of Counsel to RHC
Exhibit C = Form of Registration Rights Agreement
Exhibit D = Form of RHC Warrant
Exhibit E = Form of Xxxxxx Xxxxxxxxxxx Employment Agreement
Exhibit F = Form of Xxxxxx Xxxxxxxxxxx Employment Agreement
Exhibit G = Form of Trademark License Agreement
Exhibit H = preferred Stock Restructuring Terms Disclosure Schedule =
Exceptions to Representations and Warranties Concerning the Xxxxxxxxxxx
Corporations
REORGANIZATION AND STOCK EXCHANGE AGREEMENT
Agreement entered into on August 21, 1997, by and among The Rattlesnake
Holding Company, Inc., a Delaware corporation ("RHC") and Xxxxxx Xxxxxxxxxxx and
Xxxxxx Xxxxxxxxxxx (collectively the "Shareholders") and Xxxxxxxxxxx Brothers
West, Ltd., Xxxxxxxxxxx'x Cafe Franchising Corp., 00xx Xxxxxx Cafe Associates,
Inc., and Garden State Cafe Corp. (together, the "Xxxxxxxxxxx Corporations").
RHC, the Xxxxxxxxxxx Corporations and the Shareholders are referred to
collectively herein as the "Parties."
WHEREAS, the Shareholders in the aggregate own all of the outstanding
capital stock of each of the Xxxxxxxxxxx Corporations.
WHEREAS, the Parties desire to consummate a tax free reorganization under
Section 368 of the Internal Revenue Code in which RHC will acquire from the
Shareholders, and the Shareholders will deliver to RHC, all of the outstanding
capital stock of the Xxxxxxxxxxx Corporations in exchange for the RHC Shares and
RHC Warrants (as defined herein).
WHEREAS, it is the intention of the Parties that the reorganization qualify
as a tax free exchange in accordance with Section 368 of the Internal Revenue
Code.
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Definitions.
"Accredited Investor" has the meaning set forth in Regulation D promulgated
under the Securities Act.
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, amounts paid
in settlement, Liabilities, obligations, Taxes, liens, losses, expenses, and
fees, including court costs and reasonable attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12-2 of the regulations
promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the meaning of Code
Sec. 1504.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that substantially forms, or is likely,
substantially to form the basis for any specified consequence.
"Closing" has the meaning set forth in ss.2(c) below.
"Closing Date" has the meaning set forth in Section 2 (c) below.
"Commonwealth Fairness Opinion" means the investment banking fairness
opinion in customary form to be delivered by Commonwealth Associates LP which
opinion shall deem the terms of the transaction contemplated herein as fair to
RHC.
"Code" means the Internal Revenue Code of 1986, as amended.
"Confidential Information" means any information concerning the businesses
and affairs of the Xxxxxxxxxxx Corporations or RHC, as the case may be, that is
not already available to the public.
"Controlled Group of Corporations" has the meaning set forth in Code Sec.
1563.
"Deferred Intercompany Transaction" has the meaning set forth in Treas.
Reg. Section 1.1502-13.
"Disclosure Schedule" has the meaning set forth in Section 4 below.
"Employee Benefit Plan" means any (a) nonqualified deferred compensation or
retirement plan or arrangement which is an Employee Pension Benefit Plan, (b)
qualified defined contribution retirement plan or arrangement which is an
Employee Pension Benefit Plan, (c) qualified defined benefit retirement plan or
arrangement which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or material fringe
benefit plan or program.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA Sec.
3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA Sec.
3(1).
"Employment Agreements" means the employment agreements between Xxxxxx
Xxxxxxxxxxx and Xxxxxx Xxxxxxxxxxx, respectively, and RHC, substantially in the
form of Exhibit E and F, respectively annexed hereto.
"Environmental, Health, and Safety Laws" means the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, the Resource
Conservation and Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the environment, public
health and safety, or employee health and safety, including laws relating to
emissions, discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic materials or toxic
wastes into ambient air, surface water, ground water, or lands or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, or chemical,
industrial, hazardous, or toxic materials or toxic wastes.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excess Loss Account" has the meaning set forth in Treas. Reg. Section
1.1502-19.
"Extremely Hazardous Substance" has the meaning set forth in Sec. 302 of
the Emergency Planning and Community Right-to-Know Act of 1986, as amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Financial Statement" has the meaning set forth in Section 4(g) below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Indemnified Party" has the meaning set forth in Section 8(d) below.
"Indemnifying Party" has the meaning set forth in Section 8(d) below.
"Intellectual Property" means (a) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereto,
and all patents, patent applications, and patent disclosures, together with all
reissuances, continuations, continuations- in-part, revisions, extensions, and
reexaminations thereof, in which the person organization, or a governmental
entity (or any department, agency, or political subdivision thereof).
(next page missing)
"Prohibited Transaction" has the meaning set forth in ERISA Sec. 406 and
Code Sec. 4975.
"RHC Common Stock" means the Common Stock, par value $.00l per share of
RHC.
"RHC Shares" means the RHC Common Stock to be delivered to the
Shareholders.
"Registration Rights Agreement" means the agreement substantially in the
form of Exhibit C annexed hereto whereby RHC grants to the Shareholders certain
registration rights for certain shares of RHC Common Stock for sale under the
Securities Act.
"Reportable Event" has the meaning set forth in ERISA Sec. 4043.
"RHC Warrant" means the common stock purchase Warrants to be delivered to
the Shareholders and substantially in the form of Exhibit D annexed hereto.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1,934, as
amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable, (c) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"Shareholder" has the meaning set forth in the preface above.
"Subsidiary" means any corporation with respect to which a specified Person
(or a subsidiary thereof) owns a majority of the common stock or has the power
to vote or direct the voting of sufficient securities to elect a majority of the
directors.
"Xxxxxxxxxxx Corporations Capital Stock" means all shares of capital stock
of the Xxxxxxxxxxx Corporations.
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 8(d) below.
"Trademark License Agreement" mean the license agreement to be entered into
between Xxxxxxxxxxx Brothers West Ltd. and RHC whereby RHC grants an exclusive,
perpetual license to Xxxxxxxxxxx Brothers Ltd. for use of the registered
tradename "Xxxxxxxxxxx'x Cafe."
2. Exchange of Xxxxxxxxxxx Corporations Capital Stock for RHC Shares and
RHC Warrants.
(a) Basic Transaction. On and subject to the terms and conditions of this
Agreement, the Shareholders shall exchange all of the Xxxxxxxxxxx Corporations
Capital Stock for the RHC Shares and RHC Warrants.
(b) In exchange for all of the Xxxxxxxxxxx Corporations Capital Stock RHC
agrees to deliver to the Shareholders at the Closing (i) such number of shares
of RHC Common Stock as shall equal 37.5% of the issued and outstanding shares of
RHC Common Stock (including shares of RHC Common Stock issuable in connection
with issued and outstanding convertible securities of RHC other than RHC Common
Stock purchase warrants and options) as of a date which is three (3) business
days prior to the Closing and (ii) RHC Common Stock purchase Warrants to
purchase an amount of RHC Common Stock as shall equal up to 37.5% of the RHC
Common Stock underlying all issued and outstanding warrants of RHC as of the
date which is three days prior to the Closing (the RHC Shares and RHC Warrants
sometimes hereinafter referred to as the "Stock Exchange Consideration"). The
Stock Exchange Consideration shall be allocated among the Shareholders in
proportion to their respective holdings of Xxxxxxxxxxx Corporations Capitol
Stock as set forth in Section 4(b) of the Disclosure Schedule or as the
Shareholders shall otherwise advise RHC in writing. RHC covenants and agrees not
to issue any shares of RHC Common Stock or any securities convertible into RHC
Common Stock during the period commencing three days prior to the Closing.
(c) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Xxxxxxxxx & XxXxxxx
LLP at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx commencing at 9:00 a.m. local
time on such date as RHC and the Shareholders may mutually determine (the
"Closing Date"); provided, however, that the Closing Date shall be no later than
October 30, 1997.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and Warranties of the Shareholders. Each of the
Shareholders represents and warrants to RHC that the statements contained in
this Section 3 (a) are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 3(a)) with respect to himself, except as set forth in
the Disclosure Schedule.
(i) Authorization of Transaction. The Shareholder has full power and
authority to execute and deliver this Agreement and to perform his obligations
hereunder. This Agreement constitutes the valid and legally binding obligation
of the Shareholder, enforceable in accordance with its terms and conditions. The
Shareholder need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order to consummate the transactions contemplated by this Agreement.
(ii) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(A) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Shareholder is subject or (B)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any material agreement, contract, lease,
license, instrument, or other arrangement to which the Shareholder is a party or
by which he or it is bound or to which any of his or its material assets is
subject.
(iii) Brokers' Fees. The Shareholder has no Liability or obligation to pay
any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which RHC could become liable or
obligated.
(iv) Investment. The Shareholder: (A) understands that neither the RHC
Shares nor RHC Warrants have been, nor will be, registered under the Securities
Act, or under any state securities laws, and are being offered and sold in
reliance upon federal and state exemptions for transactions not involving any
public offering; (B) agrees that he is acquiring the RHC Shares and RHC Warrants
solely for his own account for investment purposes, and not with a view to the
distribution thereof; (C) is a sophisticated investor with knowledge and
experience in business and financial matters; (D) has received certain
information concerning RHC including, without limitation, RHC's Report on Form
10KSB for the fiscal year ended June 30, 1996 and Reports on Form 10QSB for the
fiscal quarters ended September 30, 1996, December 31, 1996 and March 31, 1997,
and has had the opportunity to obtain additional information as desired in order
to evaluate the merits and the risks inherent owning and holding the RHC Shares
and RHC Warrants; and is able to bear the economic risk and lack of liquidity
inherent in holding the RHC Shares and RHC Warrants.
(vi) Xxxxxxxxxxx Corporations Capital Stock. The --Shareholder holds of
record and owns beneficially the number and types of Xxxxxxxxxxx Corporations
Capital Stock set forth next to his name on Section 4(b) of the Disclosure
Schedule annexed hereto free and clear of any restrictions on transfer (other
than any restrictions under the Securities Act and state securities laws),
Taxes, Security Interests, options, warrants, purchase rights, contracts,
commitments, equities, claims, and demands. The Shareholder is not a party to
any option, warrant, purchase right, or other contract or commitment that could
require the Shareholder to sell, transfer, or otherwise dispose of any capital
stock of the Xxxxxxxxxxx Corporations (other than this Agreement). The
Shareholder is not a party to any voting trust, proxy, or other agreement or
understanding with respect to the voting of any capital stock of the Xxxxxxxxxxx
Corporations.
(b) Representations and Warranties of RHC. RHC represents and warrants to
the Shareholders that the statements contained in this Section 3 (b) are correct
and complete as of the date of this Agreement and will be correct and complete
as of the Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Section 3 (b))
(i) organization of RHC. RHC is a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation.
(ii) Authorization of Transaction. RHC has full power and authority
(including full corporate power and authority) to execute and deliver this
Agreement and to perform its obligations hereunder, except for RHC Board of
Directors approval to be obtained within five days of the date hereof. This
Agreement constitutes the valid and legally binding obligation of RHC,
enforceable in accordance with its terms and conditions. RHC need not give any
notice to, make any filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order to consummate the
transactions contemplated by this Agreement.
(iii) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(A) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which RHC is subject or any provision of its
charter or bylaws or (B) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
RHC is a party or by which it is bound or to which any of its assets is subject.
(iv) Brokers' Fees. RHC has no Liability or obligation to pay any fees or
commissions to any broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which any Shareholder could become liable or
obligated or for which RHC could become liable or obligated.
(v) Investment. RHC is not acquiring the Xxxxxxxxxxx Corporation's Capital
Stock with a view to or for sale in connection with any distribution thereof
within the meaning of the Securities Act.
(vi) Accuracy of SEC Reports. RHC has filed all reports ("Exchange Act
Reports") required to be filed by it with the Securities and Exchange Commission
("SEC") under the Securities Exchange Act of 1934, as amended ("Exchange Act").
All of such Exchange Act Reports have been prepared and contain such information
as may be required under the Exchange Act. None of the Exchange Act Reports
contain any untrue statements of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
in light of the circumstances under which they were made not misleading.
(vii) Capitalization. Exhibit 3 (b) (vii) annexed hereto sets forth the
capitalization of RHC and the outstanding debt (excluding trade debt) of RHC as
of the date of this Agreement. Exhibit 3(b) (vii) states (i) the amount of
authorized capital stock of RHC (ii) the number [proceed to next page] issued
and outstanding shares of Common Stock and preferred stock of RHC (iii) the
number of issued and outstanding options and warrants and (iv) a description of
the terms and principal amount of all outstanding debt securities of RHC.
(viii) Litigation. There is no action, suit, proceedings, litigation or
governmental proceeding pending or to the knowledge of RHC threatened against
RHC or involving the properties or business of RHC.
(ix) Other than as set forth on Schedule 3(b) (ix) annexed hereto, RHC and
its subsidiaries are not in breach of any lease or other material agreement with
respect to any of their respective restaurant locations. To the knowledge of RHC
and its subsidiaries, each restaurant property is in substantial compliance with
all environmental, health and safety laws.
(x) RHC has delivered to the Shareholders all correspondence received by
RHC from the Nasdaq Stock Market Inc. ("NASDAQ") and all correspondence sent by
RHC to NASDAQ regarding the continued listing of RHC's Common Stock on the
-NASDAQ SmallCap Market.
(xi) The RHC Shares and RHC Warrants will be, when delivered at the Closing
to the Shareholders, validly issued fully paid and non-assessable, and will not
be subject to any lien, security interest or encumbrance of any kind whatsoever.
Assuming due payment therefor in accordance with the RHC Warrants, the Shares of
RHC Common Stock issuable upon exercise of the RHC Warrants will be validly
issued fully paid and non-assessable, and will not be subject to any lien,
security interest or encumbrance of any kind whatsoever.
(xii) Exhibit 3 (b) (xii) annexed hereto sets forth the unaudited cost of
operations data of RHC for the months of June and July, 1997.
4. Representations and Warranties Concerning the Xxxxxxxxxxx Corporations.
The Shareholders represent and warrant to RHC that the statements contained in
this Section 4 are correct and complete as of the date of this Agreement and
will be correct and complete as of the Closing Date (as though made then and as
though the Closing Date were substituted for the date of this Agreement
throughout this Section 4), except as set forth in the disclosure schedule
delivered by the Shareholders to RHC on the date hereof and initialed by the
Parties (the "Disclosure Schedule") . Nothing in the Disclosure Schedule shall
be deemed adequate to disclose an exception to a representation or warranty made
herein, however, unless the Disclosure Schedule identifies the exception with
particularity and describes the relevant facts in detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other item itself). The
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this Section 4.
(a) Organization, Qualification, and Corporate Power. Each of the
Xxxxxxxxxxx Corporations is a corporation duly organized, validly existing, and
in good standing under the laws of the jurisdiction of its incorporation. Each
of the Xxxxxxxxxxx Corporations is duly authorized to conduct business and is in
good standing under the laws of each jurisdiction where such qualification is
required. Each of the Xxxxxxxxxxx Corporations has full corporate power and
authority and all licenses, permits, and authorizations necessary to carry on
the businesses in which it is engaged and to own and use the properties owned
and used by it. Section 4(a) of the Disclosure Schedule lists the directors and
officers of each of the Xxxxxxxxxxx Corporations. Prior to the Closing, the
Shareholders have delivered to RHC correct and complete copies of the charter
and bylaws of each of the Xxxxxxxxxxx Corporations (as amended to date). The
stock (certificate books and the stock record books of each of the Xxxxxxxxxxx
Corporations are correct and complete and the minute books accurately reflect
all formal actions of the directors and/or shareholders of each of the
Xxxxxxxxxxx Corporations since the date of its respective incorporation. None of
the Xxxxxxxxxxx Corporations is in material default under or in violation of any
provision of its charter or bylaws.
(b) Capitalization. The entire authorized, issued and outstanding capital
stock of each of the Xxxxxxxxxxx Corporations is set forth on Section 4(b) of
the Disclosure Schedule. All of the issued and outstanding Xxxxxxxxxxx
Corporations Capital Stock have been duly authorized, are validly issued, fully
paid, and nonassessable, and are held of record by the respective Shareholders
as set forth in Section 4(b) of the Disclosure Schedule. There are no
outstanding or authorized options, warrants, purchase rights, subscription
rights, conversion rights, exchange rights, or other contracts or commitments
that could require any of the Xxxxxxxxxxx Corporations to issue, sell, or
otherwise cause to become outstanding any of its capital stock. There are no
outstanding or authorized stock appreciation, phantom stock, profit
participation, or similar rights with respect to any of the Xxxxxxxxxxx
Corporations. There are no voting trusts, proxies, or other agreements or
understandings with respect to the voting of the capital stock of the any of the
Xxxxxxxxxxx Corporations.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which any of the Xxxxxxxxxxx Corporations is
subject or any provision of the charter or bylaws of any of the Xxxxxxxxxxx
Corporations or (ii) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
any of the Xxxxxxxxxxx Corporations is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any Security
Interest upon any of its respective assets) . None of the Xxxxxxxxxxx
Corporations needs to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement.
(d) Brokers' Fees. None of the Xxxxxxxxxxx Corporations has any Liability
or obligation to pay any fees or commissions to any broker, finder, or agent
with respect to the transactions contemplated by this Agreement.
(e) Title to Assets. The Xxxxxxxxxxx Corporations have good and marketable
title to, or a valid leasehold interest in, or a valid license to use the
properties and assets used by them, located on their premises, or acquired after
the date thereof, free and clear of all Security Interests, except as provided
in the license agreements and except for properties and assets disposed of in
the Ordinary Course of Business.
(f) Subsidiaries. None of the Xxxxxxxxxxx Corporations owns any capital
stock of any other corporation, partnership or other entity.
(g) Financial Statements. At least 10 days prior to Closing, the
Shareholders shall cause the Xxxxxxxxxxx Corporation to deliver to RHC the
following financial statements (collectively the "Financial Statements"). (i)
audited consolidated and unaudited consolidating balance sheets and statements
of income, changes in stockholders' equity, and cash flow as of and for the
fiscal years ended December 31, 1995, December 31, 1996) ("Most Recent Fiscal
Year End") and (ii) unaudited consolidated and consolidating balance sheets and
statements of income, changes in stockholders equity, cash flow as of and for
the 6 months ended June 30( 1997 for each of the Xxxxxxxxxxx Corporations. The
Financial Statements (including the notes thereto) shall have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods being
covered thereby, present fairly the financial condition of the Xxxxxxxxxxx
Corporations as of such dates and the results of operations of the Xxxxxxxxxxx
Corporations for such periods, and shall be consistent with the books and
records of the Xxxxxxxxxxx Corporations (which books and records are correct and
complete in all material respects.
(h) Events Subsequent to June 30, 1997. Since June 30, 1997, there has not
been any material adverse change in the business, financial condition,
operations, results of operations, or future prospects of any of the Xxxxxxxxxxx
Corporations. Without limiting the generality of the foregoing, since that date:
(i) none of the Xxxxxxxxxxx Corporations has sold, leased, transferred, or
assigned any of its assets, tangible or other than in the Ordinary Course of
Business;
(ii) none of the Xxxxxxxxxxx Corporations has entered into any agreement,
contract, lease, or license (or series of related agreements, contracts, leases,
and licenses) outside the Ordinary Course of Business;
(iii) no party (including any of the Xxxxxxxxxxx Corporations) has
accelerated, terminated, modified, or canceled any material agreement, contract,
lease, or license (or series of related agreements, contracts, leases, and
licenses) the Xxxxxxxxxxx Corporations is a party or by which any of them is
bound;
(iv) none of the Xxxxxxxxxxx Corporations has imposed any Security Interest
upon any of its assets, tangible or intangible;
(v) except as disclosed to RHC none of the Xxxxxxxxxxx Corporations has
made any capital expenditure (or series of 4 related capital expenditures)
either involving more than $25,000;
(vi) none of the Xxxxxxxxxxx Corporations has made any capital investment
in, any loan to, or any acquisition of the securities or assets of, any other
Person (or series of related capital investments, loans, and acquisitions)
either involving more than $10,000;
(vii) none of the Xxxxxxxxxxx Corporations and its Subsidiaries has issued
any note, bond, or other debt security or created, incurred, assumed, or
guaranteed any indebtedness for borrowed money or capitalized lease obligation
either involving more than $50,000 in the aggregate;
(viii) none of the Xxxxxxxxxxx Corporations has delayed or postponed the
payment of accounts payable and other Liabilities outside the Ordinary Course of
Business;
(ix) none of the Xxxxxxxxxxx Corporations has cancelled, compromised,
waived, or released any right or claim (or series of related rights and claims)
outside of the Ordinary Course of Business;
(x) none of the Xxxxxxxxxxx Corporations has granted any license or
sublicense of any rights under or with respect to any Intellectual Property
belonging to it;
(xi) there has been no change made or authorized in the charter or bylaws
of any of the Xxxxxxxxxxx Corporations;
(xii) none of the Xxxxxxxxxxx Corporations has issued, sold, or otherwise
disposed of any of its capital stock, or granted any options, warrants, or other
rights to purchase or obtain (including upon conversion, exchange, or exercise)
any of its capital stock;
(xiii) none of the Xxxxxxxxxxx Corporations has declared, set aside, or
paid any dividend or made any distribution with respect to its capital stock
(whether in cash or in kind) or redeemed, purchased, or otherwise acquired any
of its capital stock;
(xiv) none of the Xxxxxxxxxxx Corporations has experienced any damage,
destruction, or loss (whether or not covered by insurance) to its property which
has had or will have, a material adverse affect upon the business or operations
of the Xxxxxxxxxxx Corporations;
(xv) none of the Xxxxxxxxxxx Corporations has made any loan to, or entered
into any other transaction with, any of its directors, officers, and employees
outside the Ordinary Course of Business;
(xvi) none of the Xxxxxxxxxxx Corporations has entered into any employment
contract or collective bargaining agreement, written or oral, or modified the
terms of any existing such contract or agreement outside the ordinary Course of
Business;
(xvii) none of the Xxxxxxxxxxx Corporations has granted any increase in the
base compensation of any of its directors, officers, and employees outside the
Ordinary Course of Business;
(xviii) none of the Xxxxxxxxxxx Corporations has adopted, amended,
modified, or terminated any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or taken any such action with respect to any other
Employee Benefit Plan);
(xix) none of the Xxxxxxxxxxx Corporations has made or pledged to make any
charitable or other capital contribution;
(xx) there has not been any other material adverse occurrence, event,
incident, action, failure to act, or transaction outside the Ordinary Course of
Business involving any of the Xxxxxxxxxxx Corporations.
(i) Undisclosed Liabilities. None of the Xxxxxxxxxxx Corporations has any
Liability (and there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand against
any of them giving rise to any Liability), except for (i) Liabilities in the
Financial Statements (or in any notes thereto) and (ii) Liabilities which have
arisen after the Financial Statements in the Ordinary Course of Business (none
of which results from, arises out of, relates to, is in the nature of, or was
caused by any breach of contract, breach of warranty, tort, infringement, or
violation of law which would result in damages to or liability of the
Xxxxxxxxxxx Corporation in excess of $50,000).
(j) Legal Compliance. Each of the Xxxxxxxxxxx Corporations, and their
respective predecessors has complied with all applicable laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees, rulings, and
charges thereunder) of federal, state, local, and foreign governments (and all
agencies thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply except where the failure to so
comply would not have a material adverse affect upon the business or operations
of Xxxxxxxxxxx Corporations taken as a whole.
(k) Tax Matters.
(i) The Xxxxxxxxxxx Corporations are S Corporations under the Code. Each of
the Xxxxxxxxxxx Corporations has filed all Tax Returns that it was required to
file. All. such Tax Returns were correct and complete in all respects, except
where amendments to such returns have been made or will be made to conform to
the Financial Statements, copies of which amendments have been or will be
delivered to RHC prior to Closing. All Taxes owed by any of the Xxxxxxxxxxx
Corporations (whether or not shown on any Tax Return) have been paid. None of
the Xxxxxxxxxxx Corporations currently is the beneficiary of any extension of
time within which to file any Tax Return. No claim is pending by an authority in
a jurisdiction where any of the Xxxxxxxxxxx Corporations does not file Tax
Returns that it is or may be subject to taxation by that jurisdiction. There are
no Security Interests on any of the assets of any of the Xxxxxxxxxxx
Corporations that arose in connection with any failure (or alleged failure) to
pay any Tax.
(ii) Each of the Xxxxxxxxxxx Corporations has withheld and paid all Taxes
required to have been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder, or other third
party.
(iii) No Shareholder or director or officer of any of the Xxxxxxxxxxx
Corporations has any actual acknowledgment of a basis on which any authority
will assess any additional Taxes for any period for which Tax Returns have been
filed, except for matters related to the Financial Statements. There is no
dispute or claim concerning any Tax Liability of any of the Xxxxxxxxxxx
Corporations either (A) claimed or raised by any authority in writing or (B) as
to which any of the Shareholders and the directors and officers (and employees
responsible for Tax matters) of the Xxxxxxxxxxx Corporations has Knowledge based
upon personal contact with any agent of such authority. Section 4(k) of the
Disclosure Schedule lists all federal, state, local, and foreign income Tax
Returns filed with respect to any of the Xxxxxxxxxxx Corporations for taxable
periods ended on or after December 31 1994, indicates those Tax Returns that
have been audited, and indicates those Tax Returns that currently are the
subject of audit. The Shareholders have delivered to RHC correct and complete
copies of all federal income Tax Returns, examination reports, and statements of
deficiencies assessed against or agreed to by any of the Xxxxxxxxxxx
Corporations since December 31, 1994.
(iv) None of the Xxxxxxxxxxx Corporations has waived any statute of
limitations in respect of Taxes or agreed to any extension of time with respect
to a Tax assessment or deficiency.
(v) None of the Xxxxxxxxxxx Corporations has filed a consent under Code
Sec. 341(f) concerning collapsible corporations. None of the Xxxxxxxxxxx
Corporations has made any payments, is obligated to make any payments, or is a
party to any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Code Sec. 280G. None of the
Xxxxxxxxxxx Corporations has been a United States real property holding
corporation within the meaning of Code Sec. 897(c) (2) during the applicable
period specified in Code Sec. 897(c) (1) (A) (ii). Each of the Xxxxxxxxxxx
Corporations has disclosed on its federal income Tax Returns all positions taken
therein that could give rise to a substantial understatement of federal income
Tax within the meaning of Code Sec. 6662. None of the Xxxxxxxxxxx Corporations
is a party to any Tax allocation or sharing agreement. None of the Xxxxxxxxxxx
Corporations (A) has been a member of an Affiliated Group filing a consolidated
federal income Tax Return or (B) has any Liability for the Taxes of any Person
(other than any of the Xxxxxxxxxxx Corporations) under Treas. Reg. Section
1.1502-6 (or any similar provision of state, local, or foreign law) , as a
transferee successor, by contract, or otherwise.
(1) Real Property. The Xxxxxxxxxxx Corporations do not own, or lease, any
real property.
(m) Intellectual Property.
(i) The Xxxxxxxxxxx Corporations own or have the right to use pursuant to
license, sublicense, agreement, or permission all Intellectual Property
necessary for the operation of the businesses of the Xxxxxxxxxxx Corporations as
presently conducted. Each item of Intellectual Property owned or used by any of
the Xxxxxxxxxxx Corporations immediately prior to the Closing hereunder will be
owned or available for use by the respective Xxxxxxxxxxx Corporations on
identical terms and conditions immediately subsequent to the Closing hereunder.
Each of the Xxxxxxxxxxx Corporations has taken all necessary action to maintain
and protect each item of Intellectual Property that it owns.
(ii) To the knowledge of the Shareholders, none of the Xxxxxxxxxxx
Corporations has interfered with, infringed upon, misappropriated, any
Intellectual Property rights of third parties, and none of the Shareholders has
within the last three (3) years received any charge, complaint, claim, demand,
or notice alleging any such interference, infringement, misappropriation, or
violation (including any 4 claim that any of the Xxxxxxxxxxx Corporations must
license or refrain from using any Intellectual Property rights of any third
party). To the Knowledge of any of the Shareholders and the directors and
officers (and employees with responsibility for Intellectual Property matters)
of the Xxxxxxxxxxx Corporations, no third party has interfered with, infringed
upon, misappropriated any Intellectual Property rights of any of the Xxxxxxxxxxx
Corporations.
(iii) Section 4(m) (iii) of the Disclosure Schedule identifies each trade
name or unregistered trademark used by any of the Xxxxxxxxxxx Corporations in
connection with any of its businesses. With respect to each item of Intellectual
Property required to be identified in Section 4(m) (iii) of the Disclosure
Schedule:
(A) the Xxxxxxxxxxx Corporations possess all right, title, and interest in
and to the item, free and clear of any Security Interest, license, or other
restriction, except as disclosed in Section 4 (m) of the Disclosure Schedule;
(B) the item is not subject to any outstanding injunction, judgment, order,
decree, ruling, or charge;
(C) no action, suit, proceeding, hearing, investigation, charge, complaint,
claim, or demand is pending or, to the Knowledge of any of the Shareholders is
threatened which challenges the legality, validity, enforceability, use, or
ownership of the item; and
(D) none of the Xxxxxxxxxxx Corporations has agreed to indemnify any Person
for or against any interference, infringement, misappropriation, or other
conflict with respect to the item which agreement is now in effect.
(iv) To the Knowledge of any of the Shareholders the use of the
Intellectual Property by the Xxxxxxxxxxx Corporations will not interfere with,
infringe upon, misappropriate, or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of the continue
operation of its business as presently conducted.
(n) Tangible Assets. The Xxxxxxxxxxx Corporations are authorized to use all
buildings, machinery, equipment, and other tangible assets necessary for the
conduct of their businesses as presently conducted and as presently proposed to
be conducted, subject to the terms of the Macy's license agreements. Each such
tangible asset has been maintained in accordance with normal industry practice,
is in good operating condition and repair (subject to normal wear and tear) ,
and is suitable for the purposes for which it presently is used.
(o) Inventory. The inventory of the Xxxxxxxxxxx Corporations consists of
raw materials and supplies utilized in the restaurant and related businesses of
the Xxxxxxxxxxx Corporations. All of such inventory is fit for the purpose for
which it was procured except for normal spoilage and waste.
(p) Contracts. Section 4(p) of the Disclosure Schedule lists the following
contracts and other agreements to which any of the Xxxxxxxxxxx Corporations is a
party:
(i) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments in excess
of 10,000 per annum;
(ii) any agreement concerning a partnership or joint venture;
(iii) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed money,
or any capitalized lease obligation, in excess of $50,000 or under which it has
imposed a Security Interest on any of its assets, tangible or intangible;
(v) any agreement concerning confidentiality or noncompetition;
(vi) any agreement with any of the Shareholders and their Affiliates (other
than the Xxxxxxxxxxx Corporations)
(vii) any profit sharing, stock option, stock purchase, stock appreciation,
deferred compensation, severance, or other plan or arrangement for the benefit
of its current or former directors, officers, and employees;
(viii) any collective bargaining agreement;
(ix) any agreement for the employment of any individual on a full-time,
part-time, consulting, or other basis providing annual compensation in excess of
$25,000 or providing severance benefits;
(x) any agreement under which it has advanced or loaned -any amount to any
of its directors, officers, and employees outside the Ordinary Course of
Business;
The Shareholders have delivered to RHC a correct and complete copy of each
written agreement listed in Section 4 (p) of the Disclosure Schedule (as amended
to date) and a written summary setting forth the terms and conditions of each
oral agreement referred to in Section 4(p) of the Disclosure Schedule. With
respect to each such agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect in accordance with its terms, subject
to bankruptcy, insolvency, moratorium or similar rights and remedies of
creditors generally and general principles of equity; (B) the agreement will
continue to be legal, valid, binding, enforceable, and in full force and effect
on identical terms following the consummation of the transactions contemplated
hereby subject to; (C) to the Shareholders knowledge no party is in breach or
default, and no event has occurred which with notice or lapse of time would
constitute a breach or material default, or permit termination, modification, or
acceleration, under the agreement; and (D) no party has repudiated any material
provision of the agreement.
(q) Notes and Accounts Receivable. All notes and accounts receivable of the
Xxxxxxxxxxx Corporations are reflected properly on their books and records, are
valid receivables subject to no setoffs or counterclaims, are current and
collectible, and will be collected in accordance with their terms at their
recorded amounts, subject only to a reserve for bad debts set forth in the
Financial Statements.
(r) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of any of the Xxxxxxxxxxx Corporations.
(s) Insurance. Section 4(s) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements) to which any of the Xxxxxxxxxxx Corporations has
been a party, a named insured, or otherwise the beneficiary of coverage at any
time within the past five (5) years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and the name of
each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage was on a
claims made, occurrence, or other basis) -and amount (including a description of
how deductibles and ceilings are calculated and operate) of coverage; and
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy will continue
to be legal, valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby.
(t) Litigation. Section 4(t) of the Disclosure Schedule sets forth each
instance in which any of the Xxxxxxxxxxx Corporations (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or (ii) is a party or,
to the Knowledge of any of the Shareholders is threatened to be made a party to
any action, suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator.
(u) Employees. To the Knowledge of any of the Shareholders of the
Xxxxxxxxxxx Corporations, no executive, key employee, or group of employees has
any plans to terminate employment with any of the Xxxxxxxxxxx Corporations. None
of the Xxxxxxxxxxx Corporations is a party to or bound by any collective
bargaining agreement, nor has any of them experienced any strikes, grievances,
claims of unfair labor practices, or other collective bargaining disputes except
for grievances or claims in the Ordinary Course of Business. None of the
Xxxxxxxxxxx Corporations has committed any unfair labor practice. None of the
Shareholders has any Knowledge of any organizational effort presently being made
or threatened by or on behalf of any labor union with respect to employees of
any of the Xxxxxxxxxxx Corporations.
(v) Employee Benefits.
(i) Other than with respect to indirect contributions to the Macy's
Employee Benefit Plans, none of the Xxxxxxxxxxx Corporations maintains or
contributes to, an Employee Benefit Plan.
(ii) None of the Xxxxxxxxxxx Corporations maintains or ever has maintained
or contributes, ever has contributed, or ever has been required to contribute to
any Employee Welfare Benefit Plan providing medical, health, or life insurance
or other welfare-type benefits for current or future retired or terminated
employees, their spouses, or their dependents (other than in accordance with
Code Sec. 498(B).
(w) Guaranties. None of the Xxxxxxxxxxx Corporations is a guarantor or
otherwise is liable for any Liability or obligation (including indebtedness) of
any other Person.
(x) Environment, Health, and Safety.
(i) Each of the Xxxxxxxxxxx Corporations, has complied in all material
respects with all Environmental, Health, and Safety Laws, and no action, suit,
proceeding, hearing, investigation, charge, complaint, claim, demand, or notice
has been filed or commenced against any of them alleging any failure so to
comply. Without limiting the generality of the preceding sentence, each of the
Xxxxxxxxxxx Corporations has obtained and been in compliance with all of the
terms and conditions of all permits, licenses, and other authorizations which
are required under, and has complied with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental, Health, and Safety Laws.
(ii) None of the Xxxxxxxxxxx Corporations has any Liability for damage to
any site, location, or body of water (surface or subsurface), for any illness of
or personal injury to any employee or other individual, or for any reason under
any Environmental, Health, and Safety Law, except for matters in the Ordinary
Course of Business and covered by insurance.
(y) Certain Business Relationships between the Xxxxxxxxxxx Corporations and
the Shareholders. None of the Shareholders has been involved in any business
arrangement or relationship with any of the Xxxxxxxxxxx Corporations within the
past 12 months, and none of the Shareholders and their Affiliates owns any
asset, tangible or intangible, which is used in the business of any of the
Xxxxxxxxxxx Corporations except as described in Section 4 (y) of the Disclosure
Schedule.
(z) Disclosure. The representations and warranties contained in this
Section 4 do not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements and
information contained in this Section 4 not misleading.
5. Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use his or its commercially
reasonable efforts to take all action and to do all things necessary, proper, or
advisable in order to consummate and make effective the' transactions
contemplated by this Agreement (including satisfaction, but not waiver, of the
closing conditions set forth in Section 7 below).
(b) Notices and Consents. Each of the Parties will (and the Shareholders
will cause each of the Xxxxxxxxxxx Corporations to) give any notices to, make
any filings with, and use its best efforts to obtain any authorizations,
consents, and approvals of governments and governmental agencies in connection
with the matters referred to in Section 3 (a) (ii) , Section 3 (b) (ii) , and
Section 4(c) above, except as set forth in the Disclosure Schedule.
(c) Operation of Business. (i) The Shareholders will not cause or permit
any of the Xxxxxxxxxxx Corporations to engage in any practice, take any action,
or enter into any transaction outside the Ordinary Course of Business. Without
limiting the generality of the foregoing, the Shareholders will not cause or
permit any of the Xxxxxxxxxxx Corporations to (i) declare, set aside, or pay any
dividend or make any distribution with respect to its capital stock or redeem,
purchase, or otherwise acquire any of its capital stock or (ii) otherwise engage
in any practice, take any action, or enter into any transaction of the sort
described in Section 4(h) above.
(ii) RHC shall not engage in any practice, take any action, or enter into
any transaction outside the Ordinary Course of Business. Without limiting the
generality of the foregoing, RHC will not: (i) declare, set aside, or pay any
dividend or make any distribution with respect to its capital stock or redeem,
purchase, or otherwise acquire any of its capital stock or (ii) otherwise engage
in any practice, take any action, or enter into any transaction of the sort
described in Section 4(h) above or (iii) close or suspend operations at any
restaurant.
(d) Preservation of Business. (i) The Shareholders will cause each of the
Xxxxxxxxxxx Corporations to keep its business and properties substantially
intact, including its present operations, physical facilities, working
conditions, and relationships with lessors, licensors, suppliers, customers, and
employees.
(ii) RHC will keep its business and properties substantially intact,
including its present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers, and employees.
(e) Full Access. (i) Each of the Shareholders will permit, and the
Shareholders will cause each of the Xxxxxxxxxxx Corporations to permit,
representatives of RHC to have full access at all reasonable times, and in a
manner so as not to interfere with the normal business operations of the
Xxxxxxxxxxx Corporations, to all premises, properties, personnel, books, records
(including. Tax records) , contracts, and documents of or pertaining to each of
the Xxxxxxxxxxx Corporations.
(ii) RHC shall permit the Shareholders full access at all reasonable times,
and in a manner so as not to interfere with the normal business operations of
RHC and its subsidiaries to all premises, properties, personnel, books, records
(including Tax records) , contracts, and documents of or pertaining to RHC and
its subsidiaries.
(f) Notice of Developments. Each Party and the Shareholders with respect to
the Xxxxxxxxxxx Corporations will give prompt written notice to the others of
any material adverse development causing a breach of any of his or its own
representations and warranties contained herein. No disclosure by any Party
pursuant to this Section 5(f), however, shall be deemed to amend or supplement
the Disclosure Schedule or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.
6. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing.
(a) General. In case at any time after the Closing any further action is
necessary to carry out the purposes of this Agreement, each of the Parties will
take such further action (including the execution and delivery of such further
instruments and documents) as any other Party reasonably may request, all at the
sole cost and expense of the requesting Party (unless the requesting Party is
entitled to indemnification therefor under Section 8 below) . The Shareholders
acknowledge and agree that from and after the Closing RHC will be entitled to
possession of all documents, books, records (including Tax records) agreements,
and financial data of any sort relating to the Xxxxxxxxxxx Corporations. RHC
acknowledges and agrees that from and after the Closing the Shareholders will be
entitled to review and make copies of all documents, books, records (including
Tax records) , agreements, and financial data of any sort relating to the
Xxxxxxxxxxx Corporations.
(b) Litigation Support. In the event and for so long as any Party actively
is contesting or defending against any action, suit, proceeding hearing,
investigation, charge, complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement or (ii) any fact, situation,
circumstance, status, condition, activity, practice, plan, occurrence, event,
incident, action, failure to act, or transaction on or prior to the Closing Date
involving any of the Xxxxxxxxxxx Corporations , each of the other Parties will
cooperate with him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be necessary in connection with the contest or defense, all
at the sole cost and expense of the contesting or defending Party (unless the
contesting or defending Party is entitled to indemnification therefor under
Section 8 below)
(c) Transition. (i) None of the Shareholders will take any action that is
designed or intended to have the effect of discouraging any lessor, licensor,
customer, supplier, or other business associate of any of the Xxxxxxxxxxx
Corporations from maintaining the same business relationships with the
Xxxxxxxxxxx Corporations after the Closing as it maintained with the Xxxxxxxxxxx
Corporations prior to the Closing. Each of the Shareholders will refer all
customer inquiries relating to the businesses of the Xxxxxxxxxxx Corporations to
RHC from and after the Closing. None 0(pound) the Shareholders will take any
action that is designed or intended to have the effect of discouraging any
lessor, licensor, customer, supplier, or other business associate of any of the
Xxxxxxxxxxx Corporations from maintaining the same business relationships with
the Xxxxxxxxxxx Corporations after the Closing as it maintained with the
Xxxxxxxxxxx Corporations prior to the Closing. Each of the Shareholders will
refer all customer inquiries relating to the businesses of the Xxxxxxxxxxx
Corporations to RHC from and after the Closing.
(d) Confidentiality. (i) Each of the Shareholders will treat and hold as
such all of the Confidential Information, refrain from using any of the
Confidential Information except in connection with this Agreement, and deliver
promptly to RHC or destroy, at the request and option of RHC, all tangible
embodiments (and all copies) of the Confidential Information which are in his or
its possession. In the event that any of the Shareholders is requested or
required (by oral question or request for information or documents in any legal
proceeding, interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, that Shareholder will notify
RHC promptly of the request or requirement so that RHC may seek an appropriate
protective order or [proceed to next page] waive compliance with the provisions
of this Section 6(d). If, in the absence of a protective order or the receipt of
a waiver hereunder, any of the Shareholders is, on the advice of counsel,
compelled to disclose any Confidential Information to any tribunal or else stand
liable for contempt, that Shareholder may disclose the Confidential Information
to the tribunal; provided, however, that the disclosing Shareholder shall use
his reasonable efforts to obtain, at the reasonable request of RHC, an order or
other assurance that confidential treatment will be accorded to such portion of
the Confidential Information required to be disclosed as RHC shall designate.
The foregoing provisions shall not apply to any Confidential Information which
is generally available to the public immediately prior to the time of
disclosure.
(ii) RHC will treat and hold as such all of the Confidential Information,
refrain from using any of the Confidential Information except in connection with
this Agreement, and deliver promptly to the Shareholders or destroy, at the
request and option of the Shareholders, all tangible embodiments (and all
copies) of the Confidential Information which are in his or its possession. In
the event that RHC is requested or required (by oral question or request for
information or documents in a legal proceeding, interrogatory, subpoena, civil
investigative demand, or similar process) to disclose any Confidential
Information, RHC will notify the Shareholders promptly of the request or
requirement so that the Shareholders may seek an appropriate protective order or
waive compliance with the provisions of this Section 6 (d). If, in the absence
of a protective order or the receipt of a waiver hereunder, RHC is, on the
advice of counsel, compelled to disclose any Confidential Information to any
tribunal or else stand liable for contempt, that RHC may disclose the
Confidential Information to the tribunal; provided, however, that the RHC shall
use its reasonable efforts to obtain, at the reasonable request of the
Shareholders, an order or other assurance that confidential treatment will be
accorded to such portion of the Confidential Information required to be
disclosed as the Shareholders shall designate. The foregoing provisions shall
not apply to any Confidential Information which is generally available to the
public immediately prior to the time of disclosure.
(e) Covenant Not to Compete. For a period of five years from and after the
Closing Date, (i) as long as a Shareholder is employed by RHC, such Shareholder
will not engage directly or indirectly in any business that competes with the
business that the Xxxxxxxxxxx Corporations or RHC conducts as of the Closing
Date, and (ii) if the Shareholder is not then employed by RHC, then the
Shareholder shall not compete in any business which and of the Xxxxxxxxxxx
Corporations or RHC restaurants conducts as of the date of termination of
employment within a one-half mile radius of the Xxxxxxxxxxx Corporations or RHC
restaurants; provided, however, that no owner of less than 1% of the outstanding
stock of any publicly traded corporation shall be deemed to engage solely by
reason thereof in any of its businesses. If the final judgment of a court of
competent jurisdiction declares that any term or provision of this Section 6(e)
is invalid or unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power to reduce
the scope, duration, or area of the term or provision, to delete specific words
or phrases, or to replace any invalid or unenforceable term or provision with a
term or provision that is valid and enforceable and that comes closest to
expressing the intention of the invalid or unenforceable term or provision, and
this Agreement shall be enforceable as so modified after the expiration of the
time within which the judgment may be appealed.
(f) Management of RHC and Subsidiaries. Following the Closing, and for a
period of five years thereafter. The Board of Directors of RHC shall consist of
not more than five persons, two of whom shall be the Shareholders or their
designees, The Board of Directors of RHC shall also designate an Executive
Committee comprised of not more than four persons, inclusive of the Shareholders
or their designees, which shall vote by a majority of its members on all
significant transactions and remain in effect for a period of at least five (5)
years following the Closing.
7. Conditions to Obligation to Close.
(a) Conditions to Obligation of RHC. The obligation of RHC to consummate
the transactions to be performed by it in connection with the Closing is subject
to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 3 (a) and
Section 4 above shall be true and correct in all material respects at and as of
the Closing Date;
(ii) the Shareholders shall have performed and complied with all of their
covenants hereunder in all material respects through the Closing;
(iii) the Xxxxxxxxxxx Corporations shall have procured all of the third
party consents specified in Section 5 (b) above;
(iv) no action, suit, or proceeding shall be pending or threatened before
any court or quasi-judicial or administrative agency of any federal, state,
local, or foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement, (B)
cause any of the transactions contemplated by this Agreement to be rescinded
following consummation, (C) affect adversely the right of RHC to own the
Xxxxxxxxxxx Corporations Shares and to control the Xxxxxxxxxxx Corporations , or
(D) affect materially and adversely the right of any of the Xxxxxxxxxxx
Corporations to own its assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);
(v) the Shareholders shall have delivered to RHC a certificate to the
effect that each of the conditions specified above in Section 7(a) (i)-(iv) is
satisfied in all respects;
(vi) the relevant parties shall have entered into the Registration Rights
Agreement, and Trademark License Agreement and the Employment Agreements and the
same shall be in full force and effect;
(vii) RHC shall have received from counsel to the Shareholders are the
Xxxxxxxxxxx Corporations an opinion in form and substance as set forth in
Exhibit A attached hereto, addressed to RHC, and dated as of the Closing Date;
(viii) RHC shall have received the resignations, effective as of the
Closing, of each director and officer of the Xxxxxxxxxxx Corporations other than
Xxxxxx Xxxxxxxxxxx and Xxxxxx Xxxxxxxxxxx;
(ix) the Xxxxxxxxxxx Corporations shall have delivered the Financial
Statements at least 10 days prior to Closing;
(x) all actions to be taken by the Shareholders in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and substance to
RHC;
(xi) RHC shall have obtained an agreement from the holders of its Series A
Preferred Stock whereby the holders agree to restructure the terms of the Series
A Preferred Stock substantially on the terms forth in Exhibit H annexed hereto;
(xii) RHC shall have received the Commonwealth Fairness Opinion at least 10
days prior to Closing;
(xiii) RHC shall have received a commitment letter in usual and customary
form from Commonwealth Associates LP to effect and close a private placement
offering of equity securities with gross proceeds of at least $1,500,000 on
behalf of RHC within 120 days of the Closing.
RHC may waive any condition specified in this Section 7(a) if it executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Shareholders. The obligation of the
Shareholders to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the following
conditions:
(i) the representations and warranties of RHC set forth in Section 3 (b)
above shall be true and correct in all material respects at and as of the
Closing Date;
(ii) RHC shall have performed and complied with all of its covenants
hereunder in all material respects through the Closing;
(iii) no action, suit, or proceeding shall be pending before any court or
quasi-judicial or administrative agency of any federal, state, local, or foreign
jurisdiction [or before any arbitrator] wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling, or charge
shall be in effect);
(iv) RHC shall have delivered to the Shareholders a certificate to the
effect that each of the conditions specified above in Section 7(b) (i)-(iii) is
satisfied in all respects;
(v) the relevant parties shall have entered into the Registration Rights
Agreement, Trademark License Agreement, RHC Warrants and the Employment
Agreements and the same shall be in full force and effect;
(vi) the Shareholders shall have received from counsel to RHC an opinion in
form and substance as set forth in Exhibit B attached hereto, addressed to the
Shareholders, and dated as of the Closing Date;
(vii) There shall be agreements entered into by RHC with respect to RHC
debt of approximately (a) $500,000 principal amount held by Xx. Xxxxxxxx whereby
the same shall be converted into equity and (b) $425,000 principal amount of
debt with respect to the RHC Fairfield, Connecticut restaurant whereby the same
shall be paid or assumed by a third party;
(viii) RHC shall have received a commitment letter in usual and customary
form from Commonwealth Associates L.P. to conduct a private placement offering
of equity securities with gross proceeds of at least $1,500,000 on behalf of RHC
within 120 days of the Closing, which is reasonably satisfactory to the
Shareholders;
(ix) the Bylaws of RHC shall have been amended in form satisfactory to the
Shareholders to reflect the obligations set forth in Section 6(f) herein;
(x) RHC shall have obtained an agreement from the holders of its Series A
Preferred Stock whereby the holders agree to restructure the terms of the Series
A Preferred Stock substantially on the terms set forth in Exhibit H;
(xi) all actions to be taken by RHC in connection with consummation of the
transactions contemplated hereby and all certificates, opinions, instruments,
and other documents required to effect the transactions contemplated hereby will
be reasonably satisfactory in form and substance to the Shareholders; and
(xii) Bridge Financing of at least $150,00 reasonably satisfactory to the
Shareholders shall be obtained.
The Shareholders may waive any condition specified in this Section 7(b) if
they execute a writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties.
All of the representations and warranties of the Parties contained in this
Agreement shall survive the Closing hereunder (even if the damaged Party knew or
had reason to know of any misrepresentation or breach of warranty at the time of
Closing) and continue in full force and effect for a period of one year from the
Closing.
(b) Indemnification Provisions for Benefit of RHC.
(i) In the event any of the Shareholders breaches (or in the event any
third party alleges facts that, if true, would mean any of the Shareholders has
breached) any of their representations, warranties, and covenants contained
herein (other than the covenants in Section 2 (a) above and the representations
and warranties in Section 3 (a) above), and, if there is an applicable survival
period pursuant to Section 8(a) above, provided that RHC makes a written claim
for indemnification against any of the Shareholders pursuant to Section 10(h)
below within such survival period, then each of the Shareholders agrees to
indemnify RHC from and against the entirety of any Adverse Consequences .RHC may
suffer through and after the date of the claim for indemnification (including
any Adverse Consequences RHC may suffer after the end of any applicable survival
period) resulting from, arising out of, relating to, in the nature of, or caused
by the breach (or the alleged breach) provided, however, that the Shareholders
shall not have any obligation to indemnify RHC from and against any Adverse
Consequences resulting from, arising out of, relating to, in the nature of, or
caused by the breach (or alleged breach) of any representation or warranty of
the Shareholders contained in until RHC has suffered Adverse Consequences by
reason of all such breaches (or alleged breaches) in excess of a $50,000
aggregate threshold (such initial $50,000 not being subject to collection by
RHC)
(ii) In the event any of the Shareholders breaches (or in the event any
third party alleges facts that, if true, would mean any of the Shareholders has
breached) any of his or its covenants in Section 2 (a) above or any of his or
its representations and warranties in Section 3 (a) above, and, if there is an
applicable survival period pursuant to Section 8(a) above, provided that RHC
makes a written claim for indemnification against the Shareholder pursuant to
Section l0(h)below within such survival period, then the Shareholder agrees to
indemnify RHC from and against any Adverse Consequences RHC may suffer through
and after the date of the claim for indemnification (including any Adverse
Consequences RHC may suffer after the end of any applicable survival period)
resulting from or, arising out of, the breach (or the alleged breach).
(c) Indemnification Provisions for Benefit of the Shareholders. In the
event RHC breaches (or in the event any third party alleges facts that, if true,
would mean RHC has breached) any of its representations, warranties, and
covenants contained herein, and, if there is an applicable survival period
pursuant to Section 8(a) above, provided that any of the Shareholders makes a
written claim for indemnification against RHC pursuant to Section 10(h) below
within such survival period, then RHC agrees to indemnify each of the
Shareholders from and against the entirety of any Adverse Consequences the
Shareholder may suffer through and after the date of the claim for
indemnification (including any Adverse Consequences the Shareholder may suffer
after the end of any applicable survival period) resulting from, arising out of,
relating to, in the nature of, or caused by the breach (or the alleged breach).
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified Party")
with respect to any matter (a "Third Party Claim") which may give rise to a
claim for indemnification against any other Party (the "Indemnifying Party")
under this Section 8, then the Indemnified Party shall promptly notify each
Indemnifying Party thereof in writing; provided, however, that no delay on the
part of the Indemnified Party in notifying any Indemnifying Party shall relieve
the Indemnifying Party from any obligation hereunder unless (and then solely to
the extent) the Indemnifying Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend the Indemnified
Party against the Third Party Claim with counsel of its choice reasonably
satisfactory to the Indemnified Party so long as (A) the Indemnifying Party
notifies the Indemnified Party in writing within 15 days after the Indemnified
Party has given notice of the Third Party Claim that the Indemnifying Party
will, if final indemnification liability is established, indemnify the
Indemnified Party from and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of, relating to, in the
nature of, or caused by the Third Party Claim, (B) the Third Party Claim
involves only money damages and does not seek an injunction or other equitable
relief, (C) settlement of, or an adverse judgment with respect to, the Third
Party Claim is not, in the good faith judgment of the Indemnified Party, likely
to establish a precedential custom or practice materially adverse to the
continuing business interests of the Indemnified Party, and (D) the Indemnifying
Party conducts the defense of the Third Party Claim reasonably and -in good
faith.
(iii) So long as the Indemnifying Party is conducting the defense of the
Third Party Claim in accordance with Section 8(d) (ii) above, (A) the
Indemnified Party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Third Party Claim, (B) the Indemnified
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably), and (C) the Indemnifying
Party will not consent to the entry of any judgment or enter into any settlement
with respect to the Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
(iv) In the event any of the conditions in Section 8 (d) (ii) above is or
becomes unsatisfied, however, (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with respect
to, the Third Party Claim in any manner it reasonably may deem appropriate (and
the Indemnified Party need not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith), (B) the Indemnifying Parties will
reimburse the Indemnified Party promptly and periodically for the reasonable
costs of defending against the Third Party Claim (including reasonable
attorneys' fees and expenses) , and (C) the Indemnifying Parties will remain
responsible for any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or caused by the
Third Party Claim to the fullest extent provided in this Section 8. The
Indemnifying Party may participate in any proceedings at its sole cost and
expense with counsel of its choosing.
(e) Determination of Adverse Consequences. All indemnification payments
under this Section 8 shall be deemed adjustments to the Purchase Price.
(f) Other Indemnification Provisions. The foregoing indemnification
provisions are in addition to, and not in derogation of, any statutory,
equitable, or common law remedy any Party may have for breach of representation,
warranty, or covenant. Each of the Shareholders hereby agrees that he will not
make any claim for indemnification against any of the Xxxxxxxxxxx Corporations
by reason of the fact that he or it was a director, officer, employee, or agent
of any such entity or was serving at the request of any such entity as a
partner, trustee, director, officer, employee, or agent of another entity
(whether such claim is for judgments, damages, penalties, fines, costs, amounts
paid in settlement, losses, expenses, or otherwise and whether such claim is
pursuant to any statute, charter document, bylaw, agreement, or otherwise) with
respect to any action, suit, proceeding, complaint, claim, or demand brought by
RHC against such Shareholder (whether such action, suit, proceeding, complaint,
claim, or demand is pursuant to this Agreement, applicable law, or otherwise).
(g) RHC hereby agrees, notwithstanding anything to the contrary set forth
herein, that the Shareholders liability for indemnification shall be limited to
the value of the RHC Shares and RHC Warrants on the Closing Date. The
Shareholders may use the RHC Shares and RHC Warrants to pay any indemnification
liability hereunder. For purposes herein the RHC Shares and RHC Warrants shall
be valued at the greater of (i) the value on the Closing Date as recorded on the
financial statements of RHC, or (ii) the fair market value on the date of
payment. In the event that the Shareholders have sold any RHC Shares or RHC
Warrants, then the Shareholders shall deliver cash to the extent of such sale
proceeds. In addition, any claim for liability shall be reduced by the amount of
such claim or loss which is satisfied by the proceeds of insurance.
9. Termination.
(a) Termination of Agreement. Certain of the Parties may terminate this
Agreement as provided below:
(i) RHC and the Shareholders may terminate this Agreement by mutual written
consent at any time prior to the Closing;
(ii) RHC may terminate this Agreement by giving written notice to the
Shareholders on or before the 15th day following the date of this Agreement if
RHC is not reasonably satisfied with the results of its continuing business,
legal, and accounting due diligence regarding the Xxxxxxxxxxx Corporations;
(iii) RHC may terminate this Agreement by giving written notice to the
Shareholders at any time prior to the Closing (A) in the event any of the
Shareholders has breached any material representation, warranty, or covenant
contained in this Agreement in any material respect, RHC has notified the
Requisite Shareholders of the breach, and the breach has continued without cure
for a period of 15 days after the notice of breach or (B) if the Closing shall
not have occurred on or before October 30, 1997, by reason of the failure of any
condition precedent under Section 7(a) hereof (unless the failure results
primarily from RHC itself breaching any representation, warranty, or covenant
contained in this Agreement).
(iv) the Shareholders may terminate this Agreement by giving written notice
to RHC at any time prior to the -Closing (A) in the event RHC has breached any
material representation, warranty, or covenant contained in this Agreement in
any material respect, any of the Shareholders has notified RHC of the breach,
and the breach has continued without cure for a period of 15 days after the
notice of breach or (B) if the Closing shall not have occurred on or before
October 30, 1997, by reason of the failure of any condition precedent under
Section 7(b) hereof (unless the failure results primarily from any of the
Shareholders themselves breaching any representation, warranty, or covenant
contained in this Agreement).
(v) The Shareholders may terminate this Agreement by giving written notice
to RHC on or before the 15th day following the date of this Agreement if the
Shareholders are not reasonably satisfied with the results of its continuing
business, legal, and accounting due diligence regarding RHC.
(b) Effect of Termination. If any Party terminates this Agreement pursuant
to Section 9(a) above, all rights and obligations of the Parties hereunder shall
terminate without any Liability of any Party to any other Party (except for any
Liability of any Party then in breach) and except as set forth in Section 11 (1)
hereof.
10. Post-Closing Financing; Security Interest. The Parties hereby
acknowledge and understand that the Shareholders have entered into this
Agreement in anticipation of RHC receiving post-Closing equity financing in an
amount reasonably satisfactory to the post-Closing Executive Committee of the
Board of Directors of RHC in an amount deemed necessary to operate RHC and the
Xxxxxxxxxxx Corporations and to assist RHC in maintaining its present listing or
reapplying for listing on the NASDAQ Stock Market. In the event that the
post-Closing financing is not consummated within 180 days of the Closing Date,
then the Shareholders shall have the option to purchase for $10.00, the
trademark "Xxxxxxxxxxx Cafe(R)" trade name from RHC for their use for any
business purpose in accordance with the Trademark License Agreement. In order to
secure the rights granted herein, the Shareholders shall be granted a security
interest in and to the trade name as of the Closing Date.
11. Miscellaneous.
(a) Nature of Certain Obligations.
(i) The covenants of each of the Shareholders in Section 2 (a) above
concerning the sale of his or its Xxxxxxxxxxx Corporations Capital Stock to RHC
and the representations and warranties of each of the Shareholders in Section 3
(a) above concerning the transaction are several obligations. This means that
the particular Shareholder making the representation, warranty, or covenant will
be -solely responsible to the extent provided in Section 8 above for any Adverse
Consequences RHC may suffer as a result of any breach thereof.
(ii) The remainder of the representations, warranties, and covenants in
this Agreement are joint and several obligations. This means that each
Shareholder will be responsible to the extent provided in Section 8 above for
the entirety of any Adverse Consequences RHC may suffer as a result of any
breach thereof.
(b) Press Releases and Public Announcements. No Party shall issue any press
release or make any public announcement relating to the subject matter of this
Agreement prior to the Closing without the prior written approval of RHC and the
Shareholders; provided, however, that any Party may make any public disclosure
it believes in good faith is required by applicable law or any listing or
trading agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its reasonable best efforts to advise the other
Parties prior to making the disclosure).
(c) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns.
(d) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(e) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of his
or its rights, interests, or obligations hereunder without the prior written
approval of RHC and the Shareholders.
(f) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(g) Headings. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(h) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Shareholders: Copy to:
Xxxxxx Xxxxxxxxxxx Xxxxxx Xxxxxx, Esq.
0000 Xxxx Xxxxxx Salon Marrow & Xxxxxxx LLP
Xxx Xxxx, XX 00000 000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
If to RHC: Copy to:
3 Stamford Landing Xxxxxxxxx & XxXxxxx, LLP
Suite 130 000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000 Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxx Attention: Xxxxx X. Xxxxxxxx
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
using any other means (including personal delivery, expedited courier, messenger
service, telecopy, telex, ordinary mail, or electronic mail), but no such
notice, request, demand, claim, or other communication shall be deemed to have
been duly given unless and until it actually is received by the intended
recipient. Any Party may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered by giving the
other Parties notice in the manner herein set forth.
(i) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of New York without giving effect
to any choice or conflict of law provision or rule (whether of the State of New
York or any other jurisdiction) that would cause the application of the laws of
any jurisdiction other than the State of New York.
(j) Amendments and Waivers. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by RHC and the
Shareholders. No waiver by any Party of any default misrepresentation, or breach
of warranty or covenant hereunder, whether intentional or not, shall be deemed
to extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
(k) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(1) Expenses. Each of the Parties, will bear his or its own costs and
expenses (including legal fees and expenses) incurred in connection with this
Agreement and the transactions contemplated hereby. The Shareholders agree that
none of the Xxxxxxxxxxx Corporations has borne or will bear any of the
Shareholders' costs and expenses (including any of their legal fees and
expenses) in connection with this Agreement or any of the transactions
contemplated hereby. Notwithstanding the foregoing, the parties agree that (A)
in the event the transactions contemplated herein are consummated, the
accounting fees of KPMG Peat Marwick in preparing the Financial Statements shall
be paid by RHC and (B) in the event the transactions contemplated herein are not
consummated because the Financial Statements have a material adverse deviation
from the previously delivered financial statements by more than 10% for amounts
regarded as gross revenues or results of operations (excluding $750,000 with
respect to a discontinued operation), then the Shareholders shall bear the
entire cost of the Financial Statements. In the event the transactions are not
consummated by RHC under Section 9(a) (ii) hereof, then RHC shall pay the entire
costs of the Financial Statements. Notwithstanding the foregoing, if the
transactions contemplated hereby are consummated, RHC agrees to pay up to
$60,000 of the legal and accounting expenses increased by the Shareholders.
(m) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The Parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(n) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
(o) Specific Performance. Each of the Parties acknowledges and agrees that
the other Parties would be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the Parties agrees that
the other Parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted in any
court of the United States or any state thereof having jurisdiction over the
Parties and the matter (subject to the provisions set forth in Section 10(p)
below), in addition to any other remedy to which they may be entitled, at law or
in equity.
(p) Submission to Jurisdiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in New York, New York, in any
action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
of the Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or other
security that might be required of any other Party with respect thereto. Each
Party agrees that a final judgment in any action or proceeding so brought shall
be conclusive and may be enforced by suit on the judgment or in any other manner
provided by law or at equity. In the event of suit under this Agreement, the
prevailing party will be entitled to costs, including reasonable attorneys'
fees.
* * * * *
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on the
date first above written.
THE RATTLESNAKE HOLDING
COMPANY, INC.
By: /s/
-----------------------------
Name:
Title:
/s/Xxxxxx Xxxxxxxxxxx
----------------------------
XXXXXX XXXXXXXXXXX
/s/Niclolo Xxxxxxxxxxx
-----------------------------
XXXXXX XXXXXXXXXXX
XXXXXXXXXXX BROTHERS WEST, LTD.
By: /s/
----------------------------
Name:
Title:
XXXXXXXXXXX'X CAFE FRANCHISING CORP.
By: /s/
----------------------------
Name:
Title:
34TH ST. CAFE ASSOCIATES INC.
By: /s/
-----------------------------
Name:
Title:
GARDEN STATE CAFE CORP.
By: /s/
----------------------------
Name:
Title:
