EXHIBIT 5
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is made as of February 18,
1999, by and between CHICAGO PIZZA & BREWERY, INC., a California corporation
(the "Company"), XXXXX XXXXXX ("Xxxxxx") and ASSI, INC., a Nevada corporation
("ASSI"), with reference to the following facts:
RECITALS
A. In order to provide additional working capital and to facilitate
its continued growth, the Company desires to raise additional equity through
the sale of shares of its Common Stock, no par value ("Common Stock").
B. ASSI, a corporation owned and controlled by Xxxxxx, desires to make
an equity investment in the Company on the terms and conditions set forth in
this Agreement.
C. ASSI and the Company have previously entered into (i) that certain
Consulting Agreement, dated February 20, 1996, relating to the Company's
Pacific Northwest operations, and (ii) that certain Consulting Agreement,
dated February 20, 1996, relating to the Company's Las Vegas, Nevada
operations (collectively, the "Consulting Agreements"), and (iii) that
certain Note Purchase Agreement, dated February 20, 1996, relating to
$2,000,000 in financing provided to the Company by ASSI (the "Note
Agreement").
D. ASSI is the record and beneficial owner of Warrants to purchase an
aggregate of 3,200,000 shares of Common Stock (the "ASSI Warrants"),
3,000,000 of which were issued upon conversion of the Convertible Note issued
pursuant to the terms of the Note Agreement, and 200,000 of which were issued
pursuant to the terms of the Consulting Agreements.
E. ASSI desires to purchase from the Company and the Company desires
to issue and sell to ASSI an aggregate of 1,250,000 shares of Common Stock
pursuant to the terms and conditions set forth in this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS. In addition to the definitions contained elsewhere
herein, the following terms, as used herein, shall have the following
meanings:
1.1 "California Securities Law" shall mean the California
Corporate Securities Law of 1968, as amended, and any successor statutes.
1.2 "Securities Act" shall mean the Securities Act of 1933, as
amended, and any successor statutes.
2. PURCHASE AND SALE OF SHARES.
2.1 PURCHASE AND SALE OF SHARES. Upon the terms and subject to
the conditions set forth herein, the Company hereby agrees to issue to ASSI,
and ASSI hereby agrees to acquire
2
from the Company an aggregate of One Million Two Hundred Fifty Thousand
(1,250,000) shares of Common Stock of the Company (the "Shares"), for the
following consideration:
(a) A cash payment of One Million Dollars ($1,000,000) (the
"Cash Payment") which shall be paid on or prior to March 1, 1999 by
wire transfer to an account or accounts designated by the Company;
(b) Cancellation of the Warrants in accordance with Section 2.3
of this Agreement;
(c) Termination of the Consulting Agreements and any remaining
rights or obligations of the Company and ASSI pursuant to the Note
Agreement in accordance with Section 2.4 of this Agreement;
(d) A general release by Xxxxxx, ASSI and their respective
affiliates of any claims against the Company in accordance with
Section 3 of this Agreement; and
(e) The additional covenants of Xxxxxx and ASSI contained in
Section 8 of this Agreement.
ASSI shall have no voting or other rights as owner of the Shares unless and
until the Cash Payment has been made. Notwithstanding anything to the
contrary contained herein, failure of ASSI to make the Cash Payment on or
prior to March 1, 1999 shall not affect the applicability and effectiveness
of Sections 2.3, 2.4, 3, 8.4, 8.5 and 8.6 of this Agreement.
2.2 DELIVERY OF CERTIFICATES. Simultaneously with the Company's
receipt of the Cash Payment (the "Payment Date"), the Company shall issue
and deliver to ASSI or its designees a certificate or certificates
representing the Shares (the "Certificates"). The Certificates shall bear a
restrictive legend in accordance with the provisions of the Securities Act
and any applicable Blue Sky laws and shall also bear a legend reflecting that
the Shares are subject to the voting and transfer restrictions contained in
Section 8.1 of this Agreement.
2.3 CANCELLATION OF WARRANTS. Simultaneously with the execution
of this Agreement (i) each of the Warrants shall be automatically canceled
and of no further force and effect, (ii) ASSI shall promptly deliver to the
Company all warrant certificates representing the Warrants which certificates
shall be endorsed (with signature Medallion guaranteed by a national bank or
member of the New York Stock Exchange) for transfer to the Company; provided,
however, that in the event such warrant certificates have been lost or
destroyed, ASSI shall deliver an indemnity of lost certificate to the Company
in a form reasonably satisfactory to the Company (with signature Medallion
guaranteed by a national bank or member of the New York Stock Exchange)
pursuant to which ASSI will certify, among other things, that the
certificates have been lost or destroyed and that ASSI will indemnify the
Company from and against any losses, claims or damages resulting from or
relating to the loss or destruction of the certificates in question, (iii)
ASSI shall execute and deliver such other documents, assignments or
certifications as the Company may reasonably require in order to effect the
cancellation of the Warrants contemplated hereby, (iv) the Company shall be
authorized to notify the Warrant Agent for the Redeemable Warrants and the
Company's Transfer Agent and Registrar of the cancellation of the Warrants.
3
2.4 CANCELLATION OF CONSULTING AGREEMENTS AND NOTE AGREEMENT.
Simultaneously with the execution of this Agreement (i) each of the
Consulting Agreements shall be automatically canceled, terminated and of no
further force and effect, (ii) any remaining obligations of the Company or
rights of ASSI pursuant to the Note Agreement shall be automatically
canceled, terminated and of no further force and effect, and (iii) ASSI shall
execute and deliver such other documents or certifications as the Company may
reasonably require in order to effect the cancellation of the Consulting
Agreements and Note Agreement contemplated hereby.
3. RELEASE OF CLAIMS.
3.1 RELEASE BY ASSI AND XXXXXX. Each of ASSI and Xxxxxx, on
behalf of themselves and each of their affiliates, successors and assigns
(collectively, the "ASSI Releasing Parties"), hereby forever releases and
discharges the Company and each of its representatives, employees, attorneys,
advisors, successors and assigns and all persons acting in concert with any
such person and the Company and its present and former directors, officers,
representatives, employees, attorneys, advisors, parents, subsidiaries,
affiliated companies, predecessors, successors and assigns and all persons
acting in concert with any such person (the "Company Released Parties") from
all manner of claims, actions, causes of action or suits, at law or in
equity, which any of the ASSI Releasing Parties now has or hereafter can,
shall or may have by reason of any matter, cause or thing whatsoever from the
beginning of time to the date of this Agreement, arising out of, in
connection with, or in any way related to the Consulting Agreements or Note
Agreement or the transactions contemplated thereby, the acquisition or
ownership of shares of Common Stock, warrants or any other securities of the
Company by any ASSI Releasing Party, excepting only any action, cause of
action or suit arising by virtue of an undertaking, covenant, promise or
representation contained in this Agreement, including those arising in
connection with the acquisition of Shares contemplated by this Agreement (the
"ASSI Released Claims").
3.2 RELEASE BY COMPANY. The Company, on behalf of itself and each
of its affiliates, successors and assigns (collectively, the "Company
Releasing Parties"), hereby forever releases and discharges ASSI and each of
its representatives, employees, attorneys, advisors, successors and assigns
and all persons acting in concert with any such person and its present and
former directors, officers, representatives, employees, attorneys, advisors,
parents, subsidiaries, affiliated companies, predecessors, successors and
assigns and all persons acting in concert with any such person (the "ASSI
Released Parties") from all manner of claims, actions, causes of action or
suits, at law or in equity, which any of the Company Releasing Parties now
has or hereafter can, shall or may have by reason of any matter, cause or
thing whatsoever from the beginning of time to the date of this Agreement,
arising out of, in connection with, or in any way related to the Consulting
Agreements or Note Agreement or the transactions contemplated thereby,
excepting only any action, cause of action or suit arising by virtue of an
undertaking, covenant, promise or representation contained in this Agreement
(the "Company Released Claims").
3.3 RELEASE OF UNKNOWN CLAIMS PURSUANT TO SECTION 1542. Each of
the ASSI Releasing Parties and the Company Releasing Parties hereby waives
the benefits of California Civil Code Section 1542 which provides as follows:
4
Section 1542. CERTAIN CLAIMS NOT AFFECTED BY GENERAL RELEASE. A general
release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which
if known by him must have materially affected his settlement with the
debtor.
3.4 NO ASSIGNMENT OR TRANSFER OF CLAIMS BY ASSI RELEASING PARTIES.
Each of the ASSI Releasing Parties represents and warrants that he, she or it
has not heretofore assigned or transferred, or purported to assign or
transfer, to any person, firm, partnership, corporation or other entity
whomsoever any ASSI Released Claim. Each of Xxxxxx and ASSI agrees to
indemnify and hold harmless each Company Released Party against any claim,
debt, liability, demand, obligation, cost, expense, including, but not
limited to, attorneys' fees, action or cause of action based on, arising out
of or in connection with any such transfer or assignment or purported
transfer or assignment.
3.5 NO ASSIGNMENT OR TRANSFER OF CLAIMS BY COMPANY RELEASING
PARTIES. Each of the Company Releasing Parties represents and warrants that
he, she or it has not heretofore assigned or transferred, or purported to
assign or transfer, to any person, firm, partnership, corporation or other
entity whomsoever any Company Released Claim. The Company hereby agrees to
indemnify and hold harmless each ASSI Released Party against any claim, debt,
liability, demand, obligation, cost, expense, including, but not limited to,
attorneys' fees, action or cause of action based on, arising out of or in
connection with any such transfer or assignment or purported transfer or
assignment.
3.6 FURTHER ASSURANCES. Each of the Company, Xxxxxx and ASSI
hereby agrees to execute and deliver any documents or instruments of any kind
requested by another party to carry out any of the releases or
acknowledgments contemplated hereunder.
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company hereby represents and warrants to ASSI as follows:
4.1 ORGANIZATION OF THE COMPANY. The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of California. The Company has all requisite corporate power and
authority to conduct its business as it is presently being conducted.
4.2 AUTHORIZATION. The Company has all necessary corporate power
and authority and has taken all corporate action necessary to enter into this
Agreement, to consummate the transactions contemplated hereby and to perform
its obligations hereunder. This Agreement has been duly executed and
delivered by the Company and is a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms. No
authorization, approval, consent, order, registration, license or permit of
any court or governmental agency or body (other than under the Securities
Act, the Regulations promulgated thereunder and applicable state securities
or Blue Sky laws) is required for the valid authorization, issuance, sale and
delivery of the Shares to ASSI and the consummation by the Company of the
transactions contemplated by the Agreement.
4.3 NO CONFLICTS. The execution, delivery and performance of this
Agreement, the consummation by the Company of the transactions herein and
therein contemplated and the
5
compliance by the Company with the terms of this Agreement do not, and will
not, with or without the giving of notice or the lapse of time, or both, (i)
result in any violation of the Articles of Incorporation or By-Laws of the
Company; (ii) result in a breach of or conflict with any of the terms or
provisions of, or constitute a default under, or result in the modification
or termination of, or result in the creation or imposition of any lien,
security interest, charge or encumbrance upon any of the properties or assets
of the Company pursuant to, any indenture, mortgage, note, contract,
commitment or other agreement or instrument to which the Company is a party
or by which the Company or any of its properties or assets are or may be
bound or affected, except to the extent that such violation, breach,
conflict, default or termination is not material to the Company taken as a
whole; or (iii) have any material adverse effect on any permit,
certification, registration, approval, consent, license or franchise
necessary for the Company to own or lease and operate any of its properties
and to conduct its business or the ability of the Company to make use thereof.
4.4 AUTHORIZATION OF SHARES. The issuance and sale of the Shares
have been duly authorized, and when the Shares have been issued and duly
delivered against payment therefor as contemplated by this Agreement the
Shares will be validly issued, fully paid and nonassessable, and ASSI will
not be subject to personal liability solely by reason of being a purchaser.
The Shares will not be subject to preemptive rights of any security holder of
the Company.
4.5 SEC DOCUMENTS. Since October 8, 1996, the Company has filed
all reports, schedules, forms, statements and other documents required to be
filed by it with the Securities and Exchange Commission (the "SEC" or
"Commission") pursuant to the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (all of the foregoing
filed prior to the date hereof being hereinafter referred to as the "SEC
Documents"), except where the failure to file would not have a material
adverse effect on the Company, its operations, or the Company's listing on
the Nasdaq SmallCap Market. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Exchange Act
and the regulations of the SEC promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed with
the SEC, contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
4.6 INDEMNIFICATION. The Company agrees to indemnify and hold
harmless ASSI, Xxxxxx and their respective affiliates and representatives
from and against all damages, losses, costs and expenses (including
reasonable attorney's fees) that they may incur by reason of the failure of
the Company to fulfill any of the terms or conditions of this Agreement or by
reason of any breach of the representations and warranties made by the
Company in this Agreement.
4.7 CAPITALIZATION. Immediately prior to the closing of the sale
of Shares contemplated by this Agreement and assuming no exercise of any of
the Company's outstanding Redeemable Warrants, the authorized capital stock
of the Company will consist of 60,000,000 shares of Common Stock, of which
6,408,321 will be issued and outstanding, and 5,000,000 shares of Preferred
Stock, none of which are issued and outstanding. Immediately prior to the
closing of the transactions contemplated by this Agreement and assuming no
exercise of any of the Company's Redeemable Warrants that are outstanding on
the date of this Agreement, there will be outstanding Redeemable Warrants of
the Company to purchase 8,884,584 shares of the Company's Common Stock
(excluding the ASSI Warrants canceled in accordance with the terms of this
Agreement).
6
4.8 NO MATERIAL ADVERSE CHANGE. Since the date of the last
periodic report filed by the Company pursuant to the requirements of the
Exchange Act and except as disclosed in such report or specifically
contemplated thereby, the Company has not experienced any adverse change in
its financial condition, business prospects, results of operations, or assets
that an investor in similar circumstances to ASSI would consider material in
making an investment decision.
5. REPRESENTATIONS AND WARRANTIES OF ASSI AND XXXXXX. ASSI and Xxxxxx
hereby jointly and severally represent and warrant to the Company as follows:
5.1 ORGANIZATION OF ASSI. ASSI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Nevada.
ASSI has all requisite corporate power and authority to conduct its business
as it is presently being conducted.
5.2 AUTHORIZATION. ASSI has all necessary corporate power and
authority and has taken all corporate action necessary to enter into this
Agreement, to consummate the transactions contemplated hereby and to perform
its obligations hereunder. Xxxxxx has all requisite power and authority and
has taken all actions necessary to enter into this Agreement, to consummate
the transactions contemplated hereby and to perform his obligations
hereunder. This Agreement has been duly executed and delivered by each of
ASSI and Xxxxxx and is a legal, valid and binding obligation of ASSI and
Xxxxxx enforceable against each of them in accordance with its terms.
5.3 KNOWLEDGE AND EXPERIENCE. Each of ASSI and Xxxxxx has a
preexisting business relationship with the Company and has sufficient
knowledge and experience in business and financial matters to evaluate the
risks of ASSI's purchase of the Shares and to make an informed decision.
Each of ASSI and Xxxxxx is aware that the Shares are speculative securities
and involve a high degree of risk.
5.4 FINANCIAL RESOURCES. ASSI has the financial resources for
providing for its current needs and to bear the economic risks associated
with its investment. ASSI's overall commitment to investments which are not
readily marketable is not disproportionate to ASSI's net worth and the
purchase of the Shares by ASSI will not cause such overall commitment to
become excessive. ASSI is an "accredited investor" as such term is defined
in the Regulation D promulgated under the Securities Act. Each equity owner
of ASSI has a net worth, or joint net worth with his spouse, in excess of
$1,000,000, or each equity owner of ASSI had individual income in excess of
$200,000 during each of 1997 and 1998 and such person has a reasonable
expectation of reaching the same income level in 1999, or such equity owner's
joint income with his or her spouse was in excess of $300,000 during each of
1997 and 1998 and such person has a reasonable expectation of reaching the
same income level during 1999.
5.5 INVESTMENT INTENT. ASSI is acquiring the Shares for
investment purposes only, for its own account, not as a nominee or agent, and
not with a view to, or for resale in connection with, any distribution
thereof. Except as contemplated by this Agreement, ASSI has no contract,
undertaking, agreement or arrangement with any person to sell, transfer or
otherwise distribute to such person or to have any person sell, transfer or
otherwise distribute for ASSI the Shares or any interest therein. ASSI
presently is not engaged, nor does ASSI plan to engage within the presently
foreseeable future, in any discussion with any person relative to such sale,
transfer or other distribution of the Shares or any interest therein.
7
5.6 COMPLIANCE WITH SECURITIES LAWS. ASSI understands that the
issuance and sale of the Shares have not been, and will not be, registered
under the Securities Act or qualified pursuant to the California Securities
Law by reason of specific exemptions therefrom which depend upon, among other
things, the bona fide nature of the investment intent and the accuracy of
ASSI's representations as expressed herein. ASSI understands that the
exemptions only exempt the issuance of the Shares to ASSI and not necessarily
any sale or other disposition of the Shares or any interest therein by ASSI.
5.7 LEGEND CONDITION. ASSI understands that its right to assign,
transfer, pledge, sell, hypothecate, exchange or otherwise dispose of the
Shares shall be restricted by legend conditions, when appropriate, in
accordance with the provisions of the Securities Act and any applicable Blue
Sky laws and shall contain a legend that reflects that the Shares are subject
to and bound by the provisions of Section 8.1 of this Agreement.
5.8 NO BROKERS. Neither ASSI nor Xxxxxx is a party to any
contract, agreement, arrangement or understanding with any person or firm
which will result in the obligation of ASSI, Xxxxxx or the Company to pay any
finder's fee, brokerage commission or similar payment in connection with the
transactions contemplated hereby.
5.9 OWNERSHIP OF ASSI WARRANTS. ASSI is the record and beneficial
owner of all of the ASSI Warrants, free and clear of all claims, liens and
encumbrances. No person other than ASSI has any interest in or right to
acquire all or any portion of the ASSI Warrants or the shares of Common Stock
issuable upon exercise of the ASSI Warrants.
5.10 INDEMNIFICATION. ASSI and Xxxxxx jointly and severally agree
to indemnify and hold harmless the Company and its officers, directors,
affiliates and representatives from and against all damages, losses, costs
and expenses (including reasonable attorney's fees) that they may incur by
reason of the failure of ASSI or Xxxxxx to fulfill any of the terms or
conditions of this Agreement or by reason of any breach of the
representations and warranties made by ASSI or Xxxxxx in this Agreement.
6. RIGHT TO DESIGNATE BOARD NOMINEES.
6.1 RIGHT TO DESIGNATE BOARD NOMINEES. For a period commencing on
the Payment Date and ending on the earlier of (i) the date that is three
years from the date of this Agreement or (ii) at such time as Xxxxxx and his
affiliates (including ASSI) no longer beneficially own at least five percent
(5%) of the Company's outstanding Common Stock (the "Designation Period") the
Company shall, if requested by ASSI:
(a) use its best efforts to cause two of the Company's directors
to be persons designated by ASSI (the "Board Designees"), and
(b) cause each of the Board Designees, if any, to be included on
the slate of director-nominees of the board of directors for election
at each annual meeting of shareholders during the Designation Period.
8
In addition, the Company covenants and agrees that during the Designation
Period, it shall not increase the number of authorized directors of the
Company to more than nine (9) without the prior written consent of ASSI.
6.2 AGREEMENT TO VOTE SHARES OF XXXX XXXXXXX AND XXXXXXXX
XXXXXXXXX. Xxxx Xxxxxxx and Xxxxxxxx Xxxxxxxxx hereby agree to vote during
the Designation Period all shares of Common Stock of the Company held of
record and beneficially by each of them in favor of the individuals
designated by ASSI to serve on the Board of Directors of the Company in
accordance with the terms of this Section 6; provided, however, that nothing
herein shall prohibit Xxxx Xxxxxxx and Xxxxxxxx Xxxxxxxxx from voting their
respective shares in favor of themselves as nominees for director in any such
election to the extent that they deem such votes to be reasonably necessary
to effect their election to the Board of Directors. Notwithstanding the
foregoing, each of ASSI and Xxxxxx acknowledges and agrees that the Company
has not made and ASSI and Xxxxxx are not relying on any representations
regarding the validity or enforceability of this Section 6.
7. REGISTRATION RIGHTS. ASSI will have the following registration
rights with respect to the Shares:
7.1 DEMAND REGISTRATION. At any time commencing three months from
the Payment Date and expiring at such time as the Shares are saleable
pursuant to Rule 144(k) of the Securities Act (the "Termination Date"), ASSI
shall have the right (which right is in addition to the registration rights
under Section 7.2 hereof), exercisable by written notice to the Company, to
have the Company prepare, file and use its best efforts to have declared
effective by the Commission, on one occasion, a registration statement and
such other documents, including a prospectus, as may be necessary in the
opinion of both counsel for the Company and counsel for the holder of the
Shares, if any, in order to comply with the provisions of the Securities Act
and applicable blue sky laws, so as to permit a public offering and sale by
the holders of the Shares held of record by such holders at the time of
exercise of such registration rights, for a period of time expiring when all
the Shares are saleable pursuant to Rule 144(k).
7.2 PIGGY-BACK REGISTRATION. If at any time following the Payment
Date the Company proposes to register any of its securities under the
Securities Act (other than in connection with a merger, acquisition, exchange
offer, redemption or pursuant to Form S-8 or successor form) it will give
written notice (the "Filing Notice") by registered mail, at least twenty (20)
days prior to the filing of each such registration statement to ASSI of its
intention to do so. Upon the written request of ASSI given within ten (10)
days after receipt of the Filing Notice to include any Shares in such
proposed registration statement, the Company shall afford the holder of the
Shares the opportunity to have such Shares registered under such
registration. The "piggy-back" registration rights described in this Section
7.2 shall terminate on the Termination Date.
Notwithstanding anything to the contrary contained in the
provisions of this Section 7.2, the Company shall have the right at any time
after it shall have given written notice pursuant to this Section 7.2
(irrespective of whether a written request for inclusion of any such
securities shall have been made) to elect not to file any such proposed
registration statement, or to withdraw the same after the filing but prior to
the effective date thereof.
9
7.3 LIMITATION ON REGISTRATION RIGHTS. Notwithstanding anything
to the contrary contained in this Agreement, (i) the Company shall not be
obligated to effect a registration pursuant to Section 7.1 of this Agreement
during the period starting with the date ninety (90) days prior to the
Company's estimated date of filing of, and ending on a date ninety (90) days
following the effective date of, a registration statement pertaining to an
underwritten public offering of the Company's securities, provided that the
Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective and that the Company's
estimate of the date of filing such registration statement is made in good
faith; and (ii) if the Company shall furnish ASSI a certificate signed by the
President of the Company stating that in the good faith judgment of the Board
of Directors it would be seriously detrimental to the Company or its
shareholders for a registration statement to be filed in the near future,
then the Company's obligations to use its best efforts to file a registration
statement on demand by ASSI shall be deferred for a period not to exceed
ninety (90) days; provided, however, that the Company shall not obtain such a
deferral more than once in any twelve (12) month period.
7.4 INDEMNIFICATION.
a. The Company shall indemnify and hold harmless ASSI,
Xxxxxx and each of their respective officers, directors, affiliates,
successors and assigns from and against any and all losses, claims, damages
and liabilities caused by any untrue statement of a material fact contained
in any registration statement filed by the Company under the Securities Act
by reason of this Agreement, any post-effective amendment to such
registration statements, or any prospectus included therein, or caused by any
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any such untrue
statement or omission based upon information furnished or required to be
furnished in writing to the Company by ASSI or Xxxxxx (or the authorized
representatives or agents of ASSI or Xxxxxx) expressly for use therein, which
indemnification shall include each person, if any, who controls ASSI within
the meaning of the Securities Act and each officer, director, employee and
agent of ASSI and Xxxxxx; provided, however, that the indemnification in this
Section 7.4 with respect to any prospectus shall not inure to the benefit of
the ASSI or Xxxxxx (or to the benefit of any person controlling the ASSI) on
account of any such loss, claim, damage or liability arising from the sale of
Shares, if a copy of a subsequent prospectus correcting the untrue statement
or omission in such earlier prospectus was provided to ASSI or Xxxxxx by the
Company prior to the subject sale and the subsequent prospectus was not
delivered or sent by ASSI or Xxxxxx to the purchaser of such securities prior
to such sale; and provided further, that the Company shall not be obligated
to so indemnify ASSI, Xxxxxx or any other person referred to above unless
ASSI, Xxxxxx or such other person, as the case may be, shall at the same time
indemnify the Company, its directors, each officer signing the Registration
Statement and each person, if any, who controls the Company within the
meaning of the Securities Act, from and against any and all losses, claims,
damages and liabilities caused by any untrue statement of a material fact
contained in any registration statement or any prospectus required to be
filed or furnished by reason of this Agreement or caused by any omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, insofar as such losses, claims,
damages or liabilities are caused by any untrue statement or omission based
upon information furnished in writing to the Company by ASSI or Xxxxxx
expressly for use therein.
10
b. If for any reason the indemnification provided for in the
preceding subparagraph is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss, claim, damage,
liability or expense referred to therein, then the indemnifying party, in
lieu of indemnifying such indemnified party thereunder, shall contribute to
the amount paid or payable by the indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect
not only the relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the indemnified party and
the indemnifying party, as well as any other relevant equitable
considerations.
7.5 EXPENSES OF REGISTRATION; PROSPECTUS DELIVERY.
a. All expenses, filing fees and other costs incurred by the
Company in connection with any registration of securities pursuant to this
Section 7 (exclusive of underwriting discounts and selling commissions
applicable to any sale of registered securities) shall be borne by the
Company.
b. In the case of each registration effected by the Company
pursuant to this Section 7, the Company will (i) furnish to the holders of
the registered securities such numbers of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as such holders may reasonably request in order
to facilitate the disposition of the registered securities owned by them, and
(ii) notify each holder of registered securities covered by such registration
statement at any time when a prospectus relating thereto is required to be
delivered under the Securities Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances then existing.
8. ADDITIONAL AGREEMENTS OF ASSI AND XXXXXX.
8.1 RIGHT OF FIRST REFUSAL.
(a) NOTICE OF OFFER. Except for Excluded Transfers (as defined
below), in the event ASSI has a bona fide intention to sell or
transfer all or any of the Shares in the open market or otherwise,
ASSI shall give notice to the Company (the "Offer Notice"). The Offer
Notice shall specify: (i) the number of Shares proposed to be
transferred (the "Offered Shares"), (ii) the identity of the proposed
transferee, or if no transferee has been identified, the method by
which the Shares will be sold, and (iii) the terms and conditions upon
which ASSI intends to make the transfer.
(b) RIGHT OF FIRST REFUSAL. The Company or its designees (which
may include officers, directors or other affiliates of the Company)
shall have the right to purchase all or, in the event the Offer Notice
relates to a sale of the Offered Shares in the public market, any
portion of the Offered Shares, at a price per Share equal to the price
set forth in the Offer Notice (on the terms set forth therein), or, if
no such price is specified or the Offered Shares are proposed to be
sold in the public market, the closing bid price per share of Common
Stock as reported on the Nasdaq Stock Market or any other exchange or
electronic quotation system on which the
11
Company's Common Stock is listed for the day immediately preceding
the closing date of the Company's purchase of the Offered Shares.
The Company's right to purchase the Offered Shares must be
exercised by the Company within five (5) business days of its
receipt of the Offer Notice by delivery of written notice of
exercise to ASSI. Notwithstanding anything to the contrary
contained in this Agreement, the Company may, in its sole
discretion, elect to exercise the right of first refusal on behalf
of parties other than the Company and transfer and assign such
purchase right to such parties subsequent to the exercise thereof.
The members of the Board of Directors designated pursuant to
Section 6 shall not participate in any vote of the Board of
Directors that may be required in connection with the Company's
decision as to whether to exercise the right to purchase the
Offered Shares or to assign the purchase right to any party.
(c) CLOSING FOR RIGHT OF FIRST REFUSAL PURCHASE. If the Company
exercises the right to purchase the Offered Shares on behalf of itself
or any other party, the closing of such purchase shall take place on
or before the seventh business day following the date that the Company
gave notice of the exercise of the right to purchase such Shares. The
Company shall give written notice to ASSI of the number of Offered
Shares to be purchased, the closing date, the identities of the
purchasers of the Offered Shares, the allocation of the Offered Shares
among the Company and any additional purchasers, and the location of
the closing for the purchase at least three business days prior to
such closing date.
(d) TRANSFER OF OFFERED SHARES TO THIRD PARTY. Notwithstanding
any other provision in this Agreement, if and only if the Company
either (i) does not exercise its right to purchase all of the Offered
Shares within the five (5) business day period described in paragraph
(b) above, or (ii) after exercising such rights, fails to consummate
such purchases through no fault of ASSI, then ASSI may carry out the
proposed sale or transfer of any Offered Shares not purchased by the
Company or its designees in accordance with the terms set forth in the
Offer Notice, provided that such transfer is consummated on or before
the thirtieth (30th) day following the date of the Offer Notice. No
transfer or sale of any of the Offered Shares or any interest therein
shall be made after the end of the thirty day period referred to
above, nor shall any material change in the price or terms of the
transfer from those set forth in the Offer Notice be permitted, unless
ASSI gives a new Offer Notice to the Company and complies with all of
the provisions of this Section 8.1.
(e) EXCLUDED TRANSFERS. The provisions of Sections 8.1(a)
through 8.1(d), inclusive, shall not apply to any transfer or sale,
whether or not for consideration, by ASSI to any entity owned and
controlled entirely by ASSI or Xxxxxx (an "Excluded Transfer"). The
transferee of an Excluded Transfer shall be fully subject to the terms
of this Agreement.
(f) TERMINATION OF RIGHT. The right of first refusal granted
pursuant to this Section 8.1 shall terminate upon expiration of the
Designation Period.
8.2 FINANCING COMMITMENT. Subject to project pre-commitment
approval by Xxxxxx which may be given in Xxxxxx'x sole discretion, Xxxxxx
will agree to finance or guarantee
12
financing (directly or through one of his affiliates) future development
projects of the Company. Such financing will be made at commercially
reasonable rates and may be secured by assets of the Company or its
subsidiaries.
8.3 [INTENTIONALLY OMITTED]
8.4 COOPERATION IN LICENSING. Each of Xxxxxx and ASSI covenant
and agree to cooperate fully with the Company in connection with the
preparation of, application for, and proceedings relating to any license that
the Company deems necessary or appropriate. Such cooperation shall include,
without limitation, (i) prompt, complete and accurate completion and prompt
execution of any liquor or gambling permit applications or amendments or
modifications thereto required to be completed by the Company, its Board of
Directors, shareholders or affiliates as a result of the transactions
contemplated by this Agreement or otherwise, (ii) providing complete
cooperation and disclosure to the extent such cooperation and disclosure is
required or deemed necessary or advisable by the Company or any licensing
authority in connection with any licensing proceedings or applications, (iii)
cooperation with the Company in connection with obtaining any regulatory
approvals required in connection with the present or future operation of the
Company's business (including in connection with applications or other
proceedings with the Bureau of Alcohol, Tobacco and Firearms or any state or
federal gambling or liquor licensing authority). In this regard, it is
expressly understood by Xxxxxx and ASSI that the Company may apply for liquor
and gambling licenses in all jurisdictions in which the Company's restaurants
are or may in the future be located.
8.5 COOPERATION WITH SEC FILINGS AND PRESS RELEASES. Each of
Xxxxxx and ASSI covenant and agree to promptly provide the Company with all
information regarding either of them and their respective affiliates and
business affairs as the Company may deem reasonably necessary in order to
meet its obligations as a reporting company under the Exchange Act. In this
regard, it is expressly contemplated that the Company will issue a press
release regarding the transactions contemplated by this Agreement that will
include information regarding the experience of ASSI and its affiliates in
the hospitality, restaurant and real estate development industries.
8.6 ACTIONS OF CONTROLLED PERSONS. Each of Xxxxxx and ASSI will
cause each person over whom he or it may have control or share control to
observe the foregoing provisions of Section 8 of this Agreement as if they
were bound thereby.
9. MISCELLANEOUS.
9.1 ASSIGNMENT AND BINDING EFFECT. Neither this Agreement nor any
of the rights or obligations hereunder may be assigned by any party without
the prior written consent of the other parties. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors, transferees, assigns,
representatives, executors, heirs, administrators and agents and no other
person shall have any right, benefit or obligation hereunder.
9.2 ARBITRATION. Any claims or disputes arising out of or
relating to this Agreement shall be settled by binding arbitration conducted
in Los Angeles County or Orange County, California in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then in
effect, and judgment upon the award entered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. There shall be no
pre-arbitration discovery.
13
Neither party's right to file a lawsuit seeking an injunction or such party's
right to injunctive relief is subject to arbitration or to the provisions of
this Section 9.2. Each of the Company, Xxxxxx and ASSI hereby irrevocably
submits to the jurisdiction of the arbitrator in Los Angeles or Orange
County, California and waives any defense in an arbitration based upon any
claim that such party is not subject personally to the jurisdiction of such
arbitrator, that such arbitration is brought in an inconvenient forum or that
such venue is improper. The arbitral award shall be in writing and shall be
final and binding on each of the parties thereto. The award may include an
award of costs, including reasonable attorneys' fees and disbursements.
Judgment upon the award may be entered by any court having jurisdiction
thereof or having jurisdiction over the parties or their assets.
9.3 NOTICES. Unless applicable law requires a different method of
giving notice, any and all notices, demands or other communications required
or desired to be given hereunder by any party shall be in writing. Assuming
that the contents of a notice meet the requirements of the specific Section
of this Agreement which mandates the giving of that notice, a notice shall be
validly given or made to another party if served either personally or if
postage prepaid, or if transmitted by telegraph, telecopy or other electronic
written transmission device or if sent by overnight courier service, and if
addressed to the applicable party as set forth below. If such notice, demand
or other communication is served personally, service shall be conclusively
deemed made at the time of such personal service. If such notice, demand or
other communication is given by mail, service shall be conclusively deemed
given upon the earlier of receipt or ninety-six (96) hours after the deposit
thereof in the United States mail, postage prepaid. If such notice, demand
or other communication is given by overnight courier, or electronic
transmission, service shall be conclusively made at the time of confirmation
of delivery. The addresses for ASSI, Xxxxxx and the Company are as follows:
If to ASSI or Xxxxxx:
0000 Xxxxxxxx Xxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Attention: Xx. Xxxxx Xxxxxx
Telecopier No.: (000) 000-0000
With a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxx & XxXxxxx
00000 XxxXxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
If to the Company:
Chicago Pizza & Brewery, Inc.
00000 Xxxxxxxxxx Xxxxxxx, Xxxxx X
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxx Xxxxxxx
14
With a copy to:
Xxxxxx X. Xxxxxxxxx, Esq.
Jeffer, Mangels, Xxxxxx & Marmaro
2121 Avenue of the Stars, Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Any party hereto may change his or its address for the purpose of receiving
notices, demands and other communications as herein provided, by a written
notice given in the aforesaid manner to the other parties hereto.
9.4 CHOICE OF LAW; VENUE. This Agreement shall be construed,
interpreted and the rights of the parties determined in accordance with the
laws of the State of California.
9.5 ENTIRE AGREEMENT. This Agreement, together with all exhibits
and schedules hereto, constitutes the entire agreement among the parties
pertaining to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties.
9.6 AMENDMENTS AND WAIVERS. No supplement, modification or
amendment of this Agreement, or of any covenant, condition or limitation
herein contained, shall be valid unless made in writing and executed by the
parties hereto. No waiver of any covenant, condition, or limitation herein
contained shall be valid unless made in writing and executed by the party
making the waiver. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provision hereof
(whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
9.7 MULTIPLE COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
9.8 EXPENSES. Each party hereto shall pay his or its own legal,
accounting, out-of-pocket and other expenses incident to this Agreement and
to any action taken by such party in preparation for carrying this Agreement
into effect.
9.9 SEVERABILITY. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, then to the maximum extent permitted by law,
such invalidity, illegality or unenforceability shall not affect any other
provision of this Agreement or any other such instrument.
9.10 FURTHER ACTIONS. Each party will cooperate in good faith with
the others and will take all appropriate action and execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the transactions contemplated hereunder.
15
IN WITNESS WHEREOF, the Company and ASSI have caused this Agreement to
be duly executed on their respective behalf by officers thereunto duly
authorized, and Xxxxxx has executed this Agreement, all as of the day and
year first above written.
"Company" CHICAGO PIZZA & BREWERY, INC., a California
corporation
By: /s/ Xxxx Xxxxxxx
-------------------------------------
Xxxx Xxxxxxx, Chief Executive Officer
"ASSI" ASSI, INC., a Nevada corporation
By: /s/ Xxxxx Xxxxxx
-------------------------------------
Xxxxx Xxxxxx, President
"Xxxxxx"
/s/ Xxxxx Xxxxxx
-------------------------------------
XXXXX XXXXXX
AGREED TO AND ACCEPTED
(solely with respect to Section 6.2 above) BY:
/s/ Xxxx Xxxxxxx
---------------------------------
XXXX XXXXXXX
/s/ Xxxxxxxx Xxxxxxxxx
---------------------------------
XXXXXXXX XXXXXXXXX
16
