Exhibit 10
PURCHASE AGREEMENT
BETWEEN
SHAREHOLDERS OF CREATIVE EATERIES CORPORATION
A NEVADA PUBLIC CORPORATION
AND
SHAREHOLDERS OF FRANCHISE CAPITAL CORPORATION
A NEVADA PUBLIC CORPORATION
AGREEMENT, made this 4th day of October 2005, by and between Franchise Capital
Corporation ("FCC") and Creative Eateries Corporation ("CEC").
RECITALS
WHEREAS, FCC is a the managing member and 90% owner of Kokopelli Franchise
Company, LLC, the managing member and 72.5% owner in ▇▇▇▇▇▇▇▇ Jake's Franchise
Company, LLC, the managing member and 100% owner of Cousin Vinnie's Franchise
Company, LLC, and the managing member and 100% owner of ▇▇▇▇▇ Foo's Franchise
Company, LLC which are considered their portfolio companies (Restaurants).
WHEREAS, FCC's portfolio companies operate restaurant concepts (Concepts)
Kokopelli Sonoran Grill(R), ▇▇▇▇▇▇▇▇ Jake's(R), Cousin Vinnie's Italian
Diner(R), and ▇▇▇▇▇ Foo's Asian Grill(R). These Concepts, offer to the public
franchise restaurant concepts. The Concepts include, among other things: all
assets, including company owned and operated stores, specific trademarks or
service marks, including without limitation, trademarks, logos and related
commercial symbols and slogans, and recipes and related liabilities.
WHEREAS, other third parties, as individuals and entities are owners of the
remaining membership interests in the Restaurants and are as listed in Exhibit
B.
WHEREAS, CEC desires to purchase the Restaurants and the Concepts from FCC, for
$2,161,493 to be paid in $200,000 in cash and 3,583,667 shares of CEC's
restricted common stock consistent with the following terms.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
representations contained herein,
THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF FCC
FCC hereby represents and warrants to CEC that:
1.1 FCC will transfer to CEC its manager positions and ownership in each of
the Restaurants and the Concepts including, without limitation, all hard assets
including company owned and operated stores, specific trademarks or service
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marks, including without limitation, trademarks, logos and related commercial
symbols and slogans, and recipes and related liabilities in exchange for
$2,161,493 to be paid in $200,000 in cash and 3,583,667 shares of CEC's
restricted common stock. Said shares shall be exempt from reverse splits and
dilution as stated in 2.2.
1.2 FCC Organization. FCC is a corporation duly organized, validly existing
and in good standing under the laws of Nevada, has all necessary corporate
powers to own its property and to carry on its business as now owned and
operated by it, and is duly qualified to do business and is in good standing in
each of the states where its business requires qualification.
1.3 Restaurants Organization. The Restaurants are LLC's duly organized,
validly existing and in good standing under the laws of Arizona, has all
necessary corporate powers to own its property and to carry on its business as
now owned and operated by it, and is duly qualified to do business and is in
good standing in each of the states where its business requires qualification.
1.4 Capital. Management of FCC owns control of the Restaurants and
therefore has the right to vote for the completion of this transaction. FCC
represents that there are no other issued and outstanding open subscriptions,
options, rights, warrants, debentures, instruments, convertible securities, or
other agreements or commitments obligating FCC in regards to the Restaurants.
1.5 Financial Statements. The most recent financial statements of the
Restaurants are attached as Exhibit A. The financial statements have been
prepared in accordance with generally accepted accounting principles and
practices consistently followed by the Restaurants throughout the period
indicated, and fairly represent the financial position of each as of the date of
the balance sheet included in the financial statements.
1.6 Investigation of Financial Condition. Without in any manner reducing or
otherwise mitigating the representations contained herein, CEC and/or its
attorneys shall have the opportunity to meet with the accountants and attorneys
to discuss the financial condition of the Restaurants. FCC shall make available
to CEC and/or its attorney all books and records of the Restaurants, once
reasonable notice of such request has been given.
1.7 Authority. The Board of Directors of FCC have authorized the execution
of this Agreement and the consummation of transactions contemplated herein, and
FCC has full power and authority to execute, deliver, and perform this Agreement
and this Agreement is a legal, valid and binding obligation of FCC, and is
enforceable in accordance with its terms and conditions.
1.8 Ability to Carry Out Obligations. The execution and delivery of this
Agreement by FCC of its obligations hereunder in the time and in the manner
contemplated will not cause, constitute or conflict with or result in (a) any
breach or violation of any of the provisions or constitute a default under any
license, indenture, mortgage, charter, instrument, articles of incorporation,
bylaws, or other agreement or instrument to which either is a party, or by which
it may be bound, nor will any consents or authorizations of any party other than
those hereto be required, (b) an event that would permit any party to any
agreement or instrument to terminate it or to accelerate the maturity of any
indebtedness or other obligation of FCC, or (c) any event that would result in
the creation or imposition of any lien, charge, or encumbrance on any asset of
FCC.
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1.9 Full Disclosure. None of the representations and warranties made by FCC
herein, or in any exhibit, certificate or memorandum furnished or to be
furnished by either, or on their behalf, contains or will contain any untrue
statement of material fact, or omit any material fact the omission of which
would be misleading.
1.10 Good Title. Other than as described in Exhibit A, the Restaurants have
good and marketable title to all of its property free and clear of any liens,
claims and encumbrances of any nature, form or description.
1.11 Indemnification. FCC and the Restaurants agrees to defend and hold CEC
harmless against and in respect of any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries, and deficiencies,
including interest, penalties, and reasonable attorney's fees, that it shall
incur or suffer, which arise out of, result from or relate to any breach of, or
failure by FCC to perform any of its representations, warranties, covenants and
agreements in this Agreement or in any exhibit or other instrument furnished or
to be furnished by FCC under this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF CEC
CEC hereby represents and warrants to FCC that:
2.1 CEC will deliver $2,161,493 to be paid in $200,000 in cash and
3,583,667 shares of CEC's restricted common stock. Said shares shall be exempt
from reverse splits and dilution as stated in 2.2 below. The $200,000 in cash
will be delivered within ninety days after closing. Once $200,000 in cash is
received FCC will deliver their ownership in Kokopelli Franchise Company, LLC.
FCC's ownership in ▇▇▇▇▇▇▇▇ Jake's Franchise Company, LLC, Cousin Vinnie's
Franchise Company, LLC, and ▇▇▇▇▇ Foo's Franchise Company, LLC will be delivered
upon closing. CEC will acquire FCC's position in the Restaurants and the
Concepts including, without limitation, all hard assets including company owned
and operated stores, specific trademarks or service marks, including without
limitation, trademarks, logos and related commercial symbols and slogans, and
recipes and related liabilities.
2.2 CEC agrees the 3,583,667 shares of restricted common stock shall carry
a limited exemption from reverse splits and dilution. CEC assures FCC that for
as long as they own their shares, or after a period of twenty-four months, or
which ever comes first, FCC shall control a minimum of 5% of the total
outstanding shares of CEC, or hold a minimum of 3,000,000 shares of CEC, or
which ever is the least. A review of FCC's position in CEC shall be conducted
every three months starting on November 15, 2005. If it is discovered that FCC
does not hold a minimum of 5% of the total outstanding shares of CEC, or hold a
minimum of 3,000,000 shares of CEC, or which ever is the least at the time of
review, CEC will issue the difference in restricted common stock within 15 days
of the review.
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2.3 Financial Ability. CEC is a corporation duly organized, validly
existing and in good standing, and has the necessary wherewithall to complete
this agreement through its legal counsel.
2.4 Authority. CEC has authorized the execution of this Agreement and the
consummation of transactions contemplated herein through its legal counsel.
CEC's legal counsel has full power and authority to execute, deliver, and
perform this Agreement and this Agreement is a legal, valid and binding
obligation of CEC, and is enforceable in accordance with its terms and
conditions.
2.5 Ability to Carry Out Obligations. The execution and delivery of this
Agreement by CEC and the performance by CEC of its obligations hereunder in the
time and in the manner contemplated will not cause, constitute or conflict with
or result in (a) any breach or violation of any of the provisions or constitute
a default under any license, indenture, mortgage, charter, instrument, articles
of incorporation, bylaws, or other agreement or instrument to which CEC is a
party, or by which it may be bound, nor will any consents or authorizations of
any party other than those hereto be required except approvals required by law,
if any, (b) an event that would permit any party to any agreement or instrument
to terminate it or to accelerate the maturity of any indebtedness or other
obligation of CEC, or (c) any event that would result in the creation or
imposition of any lien, charge, or encumbrance on any asset of CEC.
2.6 Full Disclosure. None of the representations and warranties made by CEC
herein, or in any exhibit, certificate or memorandum furnished or to be
furnished by CEC, or on its behalf, contains or will contain any untrue
statement of material fact, or omit any material fact the omission of which
would be misleading.
2.7 Indemnification. CEC agrees to defend and hold FCC and the Restaurants
harmless against and in respect to any and all claims, demands, losses, costs,
expenses, obligations, liabilities, damages, recoveries, and deficiencies,
including interest, penalties, and reasonable attorney's fees, that it shall
incur or suffer, which arise out of, result from or relate to any breach of, or
failure by CEC to perform any of its respective representations, warranties,
covenants and agreements in this Agreement or in any exhibit or other instrument
furnished or to be furnished by CEC under this Agreement.
ARTICLE III
COVENANTS
3.1 Investigative Rights. From the date of this Agreement until the Closing
date, FCC shall provide the other full access during normal business hours to
all properties, books, contracts, commitments, and records of Restaurants for
the purpose of examining same.
3.2 Conduct of Business. Prior to the Closing, the Restaurants shall
conduct its business in the normal course and FCC, and the Restaurants, shall
not sell, pledge or assign any assets without the prior written consent of CEC.
Neither CEC nor the Restaurants shall amend its articles of incorporation or
Bylaws, declare dividends, redeem or sell stock or other securities, incur
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additional or newly-funded liabilities, acquire or dispose of fixed assets or
settle or discharge any balance sheet receivable other than in the normal course
of business.
3.3 Required Corporate Action by CEC. CEC and its officers and directors
shall cause a meeting to be held as soon as practicable for the purpose of
voting on the approval of this Agreement.
ARTICLE IV
CONDITIONS PRECEDENT TO CEC'S PERFORMANCE
4.1 Conditions. CEC's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in this
Article V. CEC may waive any of these conditions in whole or in part without
prior notice; provided however, that no such waiver of a condition shall
constitute a waiver by CEC of any other condition of or any of CEC's other
rights or remedies, at law or in equity, if FCC shall be in default of any of
their representations, warranties, or covenants under this Agreement.
4.2 FCC Performance. FCC shall have performed, satisfied and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it, on or before the Closing Date.
4.3 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by FCC in this Agreement or in any
written statement that shall be delivered to CEC by FCC under this Agreement
shall be true and accurate on and as of the Closing Date as though made at that
time.
ARTICLE V
CONDITIONS PRECEDENT TO FCC PERFORMANCE
5.1 Conditions. FCC obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in this
Article VI. FCC may waive any of these conditions in whole or in part without
prior notice; provided however, that no such waiver of a condition shall
constitute a waiver by FCC of any other condition of or any of FCC other rights
or remedies, at law or in equity, if CEC shall be in default of any of their
representations, warranties, or covenants under this Agreement.
5.2 CEC Performance. CEC shall have performed, satisfied and complied with
all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it, on or before the Closing Date.
5.3 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by CEC in this Agreement or in any
written statement that shall be delivered to FCC by CEC under this Agreement
shall be true and accurate on and as of the Closing Date as though made at that
time.
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ARTICLE VI
CLOSING
6.1 Closing. The Closing of this transaction shall be held at a place and
on a date mutually acceptable to the parties.
At the Closing the parties shall deliver the following in form acceptable
to counsel to the parties or as set forth herein:
By CEC:
A. CEC will deliver $2,161,493 to be paid in $200,000 in cash and
3,589,407 shares of CEC's restricted common stock. The 3,583,667
shares of CEC's restricted common stock shall be delivered within ten
days after closing and subjected to the terms and conditions stated in
Section 2.2 of this agreement. The $200,000 in cash will be delivered
within ninety days after closing.
By FCC:
A. Its membership in the Restaurants, with the exception of Kokopelli
Franchise Company, LLC which will be delivered upon the receipt of the
$200,000, and all books and records including, but not limited to, the
Concepts which includes, among other things, specific trademarks or
service marks, including without limitation, all hard assets including
company owned and operated stores, specific trademarks or service
marks, including without limitation, trademarks, logos and related
commercial symbols and slogans, and recipes and related liabilities.
ARTICLE VII
REMEDIES
7.1 Legal Action and Costs. If any legal action or any arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorney's fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
7.2 Termination. In addition to the other remedies, any of the parties
hereto may terminate this Agreement, without liability:
(i) upon the failure of any condition not otherwise waived by the parties;
or
(ii) upon mutual consent of the respective boards of directors of CEC and
FCC.
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ARTICLE VIII
MISCELLANEOUS
8.1 Captions and Headings. The Article and paragraph headings throughout
this Agreement are for convenience and reference only, and shall in no way be
deemed to define, limit, or add to the meaning of any provision of this
Agreement.
8.2 No Oral Change. This Agreement and any provisions hereof, may not be
waived, changed, modified or discharged orally, but it can be changed by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification or, discharge is sought.
8.3 Non-Waiver. Except as other wise expressly provided herein, no waiver
of any covenant, condition, or provision of this Agreement shall be deemed to
have been made unless expressly in writing and signed by the party against whom
such waiver is charged.
8.4 Time of Essence. Time is of the essence of this Agreement and each and
every part hereof.
8.5 Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings and merges any all such prior discussions and/or agreements
herein.
8.6 Choice of Law. This Agreement and its application shall be governed by
the laws of the State of Arizona.
8.7 Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument.
8.8 Notices. All notices, requests, demands, and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
on the date of service if served personally on the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid, and
properly addressed as follows:
CEC Representative:
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FCC Representative:
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8.9 Binding Effect. This Agreement shall inure to and be binding upon the
heirs, executors, personal representatives successors and assigns of each of the
parties to this Agreement.
8.10 Effect of Closing. All representations, warranties, covenants, and
agreements of the parties contained in this Agreement, or in any instrument,
certificate, opinion, or other writing provided for in it, shall survive the
Closing of this Agreement.
8.11 Brokers. The parties hereto represent that no finder's fee has been
paid or is payable by any party.
8.12 Expenses. Each party will pay its own legal, accounting and any other
out-of-pocket expenses reasonably incurred in connection with this transaction,
whether or not the transaction contemplated hereby is consummated.
8.13 Facsimile Signatures as Originals. Original signatures transmitted by
facsimile communication shall constitute originals for the purpose of validly
executing this Agreement.
AGREED TO AND ACCEPTED as of the date first above written.
Creative Eateries Corporation:
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President & C.E.O.
Franchise Capital Corporation:
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President & C.E.O.
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Exhibit A
Financial Statements of the Restaurants
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KOKOPELLI FRANCHISE COMPANY, LLC FINANCIAL STATEMENTS
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▇▇▇▇▇▇▇▇ JAKES FRANCHISE COMPANY, LLC FINANCIAL STATEMENTS
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COUSIN VINNIE'S FRANCHISE COMPANY, LLC FINANCIAL STATEMENTS
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▇▇▇▇▇ FOO'S FRANCHISE COMPANY, LLC FINANCIAL STATEMENTS
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EXHIBIT B
Third Party Members to the Restaurants
Kokopelli Franchise Company, LLC -
▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - 10% Owner
▇▇▇▇▇▇▇▇ Jake's Franchise Company, LLC -
Alexis Group, LLC - 25% Owner
▇▇▇▇▇ ▇▇▇▇▇▇▇ - 2.5% Owner
Cousin Vinnie's Franchise Company, LLC -
No third party owners
▇▇▇▇▇ Foo's Franchise Company, LLC -
No third party owners
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