AGREEMENT OF PURCHASE AND SALE OF ASSETS AMONG ORGANIC TO GO, INC. ORGANIC TO GO FOOD CORPORATION KASHOU BROTHERS, INC. doing business as BROTHERS RESTAURANT & DELI STEVE KASHOU EDWARD KASHOU JAMES KASHOU AND SAMI KASHOU
AGREEMENT
OF PURCHASE AND SALE OF ASSETS
AMONG
ORGANIC
TO GO, INC.
ORGANIC
TO GO FOOD CORPORATION
KASHOU
BROTHERS, INC.
doing
business as
BROTHERS
RESTAURANT
&
DELI
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
AND
▇▇▇▇
▇▇▇▇▇▇
___________________,
2007
AGREEMENT
OF PURCHASE AND SALE OF ASSETS
THIS
AGREEMENT OF PURCHASE AND SALE OF ASSETS is made as of _____________, 2007,
by
and among KASHOU BROTHERS, INC., a California corporation doing business as
“BROTHERS RESTAURANT & DELI” (“Company”),
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇ (each a “Shareholder”
and
collectively
the “Shareholders”),
ORGANIC TO GO, INC., a Delaware corporation (“Buyer”)
and
ORGANIC TO GO FOOD CORPORATION, a Delaware corporation (“Parent”).
Company and Shareholders are collectively referred to in this agreement as
“Selling
Parties.”
This
agreement is made under the following circumstances:
A. Buyer
is
a wholly owned subsidiary of Parent.
B. Buyer
desires to purchase from Company and Company desires to sell to Buyer, on the
terms and subject to the conditions set forth in this agreement, certain
business and properties of Company.
C. Selling
Parties desire that this transaction be consummated on the terms and subject
to
the conditions of this agreement.
NOW,
THEREFORE, in consideration of the mutual covenants, agreements,
representations, and warranties contained in this agreement, the parties agree
as follows:
ARTICLE
1
PURCHASE
AND SALE OF ASSETS
|
1.1
|
SALE
AND TRANSFER OF ASSETS
|
Subject
to the terms and conditions set forth in this agreement, at the Closing (as
hereinafter defined), Company shall sell, convey, transfer, assign, and deliver
to Buyer, and Buyer shall purchase from Company, all of the assets, properties,
and business of Company of every kind, character, and description, whether
tangible, intangible, personal, or mixed, and wherever located, including
without limitation the assets described on Schedule 1 attached to this
agreement, other than the property and rights specifically excluded in
Schedule 1 attached to this agreement (the “Excluded
Assets”).
The
assets acquired by Buyer pursuant to this agreement are referred to as the
“Acquired
Assets”.
|
1.2
|
CONSIDERATION
FROM BUYER AT CLOSING
|
The
total
purchase price of the Acquired Assets shall be Three Million Dollars
($3,000,000). As payment of such purchase price, Buyer shall deliver to
Company:
1.2(a) Cash
at Closing.
At the
Closing, cash, by bank cashier’s check, or by wire transfer, in the amount of
Two Million Four Hundred Thousand Dollars ($2,400,000) made payable to the
▇▇▇▇▇▇ & Associates Attorney Client Trust Account.
1.2(b) Additional
Cash.
Cash, by
check or by wire transfer, in the total amount of Three Hundred Thousand Dollars
($300,000) made payable to the ▇▇▇▇▇▇ & Associates Attorney Client Trust
Account in two installments as provided below. Each installment shall bear
interest at the rate of five and one-half percent (5.5%) per year from the
Closing Date until paid, and interest shall be payable on each installment
when
such installment is due. If at any time or from time to time Buyer shall be
entitled to be paid any amount pursuant to this agreement, Buyer shall be
entitled, if it so elects, to set-off such amount against the amount payable
under this paragraph 1.2(b). This right of set-off shall be in addition to
and
not in substitution of any other rights to which Buyer shall be
entitled.
(i) One
Hundred Fifty Thousand Dollars ($150,000) ninety (90) days after the Closing;
and
(ii) One
Hundred Fifty Thousand Dollars ($150,000) one hundred twenty (120) days after
the Closing.
1.2(c) Parent
Common Stock.
Three
stock certificates in equal allotments to ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇
▇▇▇▇▇▇ (the “Stock
Certificates”)
representing a total number of shares of the Common Stock of Parent, par value
$0.001 per share (the “Parent
Shares”),
equal
to shares having an aggregate Market Value (as hereinafter defined) of One
Hundred Thousand Dollars ($100,000) each which shall be delivered to the above
named Shareholders for the benefit of Company within ten (10) business days
after the Closing. For purposes of this Agreement, the “Market
Value”
of the
Parent Shares shall equal the average of the closing prices of the Parent Shares
in the over the counter market (or on any national securities exchange if shares
of Parent’s Common Stock are listed on a national securities exchange) during
the ten (10) consecutive trading days ending three (3) trading days before
the
Closing. ▇▇▇▇ ▇▇▇▇▇▇ waives any right he may have to receive any of the Parent
Shares.
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1.3
|
ASSUMPTION
OF LIABILITIES
|
Buyer
shall not assume any contracts, obligations, debts or liabilities under this
agreement, other than those listed on Schedule 1.3
attached
to this agreement (the “Assumed
Contracts”).
It is
expressly understood and agreed that Buyer shall not be liable for any of the
contracts, obligations, debts or liabilities of Company of any kind and nature,
other than those listed on Schedule 1.3,
if
any.
|
1.4
|
ALLOCATION
OF PURCHASE PRICE
|
The
purchase price of the Acquired Assets shall be allocated as
follows:
| 1. |
Furniture,
Fixtures and Equipment(other
than vehicles)
|
$
|
200,000
|
||
| 2. |
Motor
Vehicles
|
$
|
10,000
|
||
| 3. |
Goodwill,
Trade Name and Intangible Assets
|
$
|
2,790,000
|
||
| Total Purchase Price |
$
|
3,000,000
|
Each
of
the parties shall report this transaction for federal and state tax purposes
in
accordance with this allocation of the purchase price.
2
|
1.5
|
TAXES
|
Buyer
shall pay all sales and use taxes arising out of the transfer of the Acquired
Assets. Company shall pay its portion, prorated as of the Closing Date, of
state
and local real and personal property taxes, and all other taxes of Company’s
business. Buyer shall not be responsible for any business, sales, occupation,
withholding, or similar tax, or any taxes of any kind related to any period
before the Closing Date.
ARTICLE
2
SELLING
PARTIES’ REPRESENTATIONS AND WARRANTIES
Selling
Parties, jointly and severally, represent and warrant that except as set forth
in the Disclosure Schedule attached to this agreement as Schedule 2:
|
2.1
|
ORGANIZATION,
STANDING AND QUALIFICATION OF
COMPANY
|
Company
is a corporation duly organized, validly existing, and in good standing under
the laws of the State of California and has all necessary powers to own its
properties and to operate its business as now owned and operated by it; and
neither the ownership of its properties nor the nature of its business requires
Company to be qualified in any jurisdiction other than the state of its
organization.
|
2.2
|
SHARE
OWNERSHIP
|
Shareholders
own, beneficially and of record, all of the outstanding shares of capital stock
of Company free and clear of all liens, encumbrances, security agreements,
equities, options, claims, charges, and restrictions. There are no outstanding
subscriptions, options, rights, warrants, convertible securities, or other
agreements or commitments obligating Company to issue or to transfer any
additional shares of its capital stock, or any other interests in
Company.
|
2.3
|
SUBSIDIARIES
|
Company
does not own, directly or indirectly, any interest or investment (whether equity
or debt) in any Company, partnership, limited liability company, business,
trust, or other entity.
|
2.4
|
FINANCIAL
STATEMENTS
|
Schedule 2
to this
agreement includes the balance sheets of Company as of December 31,
2004,
2005 and
2006,
together with related statements of operations, stockholder’s equity and cash
flows for the periods then ended, prepared by Company’s independent public
accountants. Schedule 2
to this
agreement also includes the unaudited balance sheet of Company as of
July
31,
2007
together with the related unaudited statement of operations for the period
ended
on that date. The financial statements in Schedule 2
are
referred to as the “Financial
Statements”.
The
Financial Statements have been prepared in accordance with generally accepted
accounting principals consistently followed by Company throughout the periods
indicated, and fairly present the financial position of Company as of the
respective dates of the balance sheets included in the Financial Statements,
and
the results of its operations for the respective periods indicated.
3
|
2.5
|
ABSENCE
OF SPECIFIED CHANGES.
|
Since
July 31, 2007 there has been no:
2.5(a) Transaction
by Company except in the ordinary course of business as conducted on that
date;
2.5(b) Capital
expenditure by Company exceeding $25,000;
2.5(c) Material
adverse change in the financial condition, liabilities, assets, business, or
prospects of Company taken as a whole;
2.5(d) Destruction,
damage to, or loss of any asset of Company (whether or not covered by insurance)
that materially and adversely affects the financial condition, business, or
prospects of Company;
2.5(e) Labor
trouble or other event or condition of any character materially and adversely
affecting the financial condition, business, assets, or prospects of
Company;
2.5(f) Change
in
accounting methods or practices (including, without limitation, any change
in
depreciation or amortization policies or rates) by Company;
2.5(g) Revaluation
by Company of any of its assets;
2.5(h) Increase
in the salary or other compensation payable or to become payable by Company
to
any of its officers, directors, or employees, or the declaration, payment,
or
commitment or obligation of any kind for the payment, by Company, of a bonus
or
other additional salary or compensation to any such person;
2.5(i) Sale
or
transfer of any asset of Company, except in the ordinary course of
business;
2.5(j) Amendment
or termination of any contract, agreement, or license to which the Company
is a
party, except in the ordinary course of business;
2.5(k) Loan
by
Company to any person or entity, or guaranty by Company of any
loan;
2.5(l) Mortgage,
pledge, or other encumbrance of any asset of Company;
2.5(m) Waiver
or
release of any right or claim of Company except in the ordinary course of
business;
2.5(n) Commencement
or notice or threat of commencement of any civil litigation or any governmental
proceeding against or investigation of Company or the affairs of either of
them;
2.5(o) Other
event or condition of any character that has or might reasonably have a material
and adverse effect on the financial condition, business, assets, or prospects
of
Company;
4
2.5(p) Agreement
by Company to do any of the things described in the preceding clauses (a)
through (o).
|
2.6
|
DEBTS,
LIABILITIES AND OBLIGATIONS
|
A
true
and complete schedule of all debts, liabilities and obligations of Company
is
provided in Section 2.6 of Schedule 2.
Company
has no debts, liabilities, or obligations of any nature, whether accrued,
absolute, contingent, or otherwise, and whether due or to become due, that
are
not set forth in Section 2.6 of Schedule 2.
|
2.7
|
TAX
RETURNS AND AUDITS
|
Within
the times and in the manner prescribed by law, Company has filed all federal,
state, and local tax returns required by law and has paid all taxes,
assessments, and penalties due and payable, including without limitation all
sales taxes. There are no present disputes or claims as to taxes of any nature
payable by Company. All tax returns and reports filed by Company are true,
correct and complete. Company has delivered or made available to Buyer copies
of
all tax returns filed by Buyer since January
1, 2004.
All
taxes that Company is or was required to withhold, deduct or collect have been
withheld, deducted and collected and, to the extent required, have been paid
to
the proper government agency or other depository.
|
2.8
|
REAL
PROPERTY
|
A
complete list of all real property owned by or leased to Company is provided
in
Section 2.8 of Schedule 2
to this
agreement. The zoning of each property described in Section 2.8 of
Schedule 2
permits
the presently existing improvements and continuation of the business presently
being conducted on such property. All buildings and other improvements located
on such real property are in good condition and repair, ordinary wear and tear
excepted.
|
2.9
|
HAZARDOUS
MATERIALS
|
To
the
best knowledge and belief of Selling Parties, there are no underground storage
tanks located on the real property described in Section 2.8 of Schedule 2
in which
any hazardous material, as defined below, has been or is begin stored, nor
has
there been any spill, disposal, discharge or release of any hazardous material
into, upon, from or over that real property or into or upon ground or surface
water on that real property. As used in this paragraph, “hazardous material”
means any hazardous or toxic substance, material or waste that is regulated
by
any federal authority or by any state or local governmental authority where
the
substance, material or waste is located.
|
2.10
|
ENVIRONMENTAL
|
To
the
best knowledge and belief of Selling Parties, except as disclosed in
Section 2.10 of Schedule 2,
(i) Company complies in all respects with all applicable federal, state or
local environmental, health and safety statutes and regulations,
(ii) Company is not the subject of any pending judicial or administrative
proceeding alleging the violation of any federal, state or local environmental,
health or safety statute or regulation, (iii) Company is not the subject of
any federal or state investigation evaluating whether any remedial action is
needed to respond to a release of any hazardous or toxic waste, substance or
constituent, or other substance into the environment, (iv) Company has not
filed any notice under any federal or state law indicating past or present
treatment, storage or disposal of hazardous waste, or reporting a spill or
release of a hazardous or toxic waste, substance or constituent, or other
substance into the environment, nor does Company have or has it had any problems
relating to toxic or hazardous wastes, and (v) Company does not have any
contingent liability in connection with any release of any hazardous or toxic
waste, substance or constituent, or other substance into the
environment.
5
|
2.11
|
INVENTORY
|
The
inventories of raw materials, work in progress, and finished goods
(collectively, “Inventories”)
shown
on Company’s balance sheet as of July 31, 2007, included in the Financial
Statements, consist of items that are usable and salable in the ordinary course
of business by Company. The value of the Inventories has been determined on
a
first-in, first-out basis consistent with prior years. Except for sales made
in
the ordinary course of business since that date, all the Inventories are the
property of the Company. No items are subject to any security interest, except
as set forth in Schedule 2.
|
2.12
|
OTHER
TANGIBLE PERSONAL PROPERTY
|
The
books
and records of Company contain a complete and accurate description, and specify
the location, of all motor vehicles, machinery, equipment, furniture, fixtures,
supplies, tools, and all other tangible personal property owned by, in the
possession of, or used by Company in connection with its business. The Acquired
Assets constitute all tangible personal property necessary for the conduct
by
Company of its business as now conducted. No personal property used by Company
in connection with its business is held under any lease, security agreement,
conditional sales contract, or other title retention or security arrangement,
or
is other than in the possession and under the control of Company except as
stated in Schedule 2.
All
such personal property is in good operating condition and repair, ordinary
wear
and tear excepted.
|
2.13
|
INTELLECTUAL
PROPERTY
|
To
the
best knowledge and belief of Selling Parties, Company has not infringed, and
is
not now infringing, on any trade name, trademark, service ▇▇▇▇, copyright,
patent, trade secret, or other intellectual property right belonging to any
other person, firm, or Company. A schedule of all intellectual property,
including without limitation, trade names, trademarks, service marks,
copyrights, patents and trade secrets and their registrations, if any, owned
by
Company or in which it has any rights or licenses, together with a brief
description of each, is provided in Section 2.13 of Schedule 2
(“Company
Intellectual Property”).
Except
as set forth in Schedule 2,
to the
best knowledge and belief of Selling Parties, Company is not a party to any
license, agreement or arrangement, whether as licensor, licensee or otherwise,
with respect to any intellectual property necessary for its business as now
conducted by it (including without limitation those listed in Section 2.13
of Schedule 2),
and
that use does not, and will not, conflict with, infringe, on or otherwise
violate any rights of others. To the best knowledge and belief of Selling
Parties, Company has the right and authority to use the Company Intellectual
Property as currently used by it, and that use does not, and will not, conflict
with, infringe on, or violate any intellectual property rights of others. To
the
best knowledge and belief of Selling Parties, each trade secret’s documentation
is current, accurate, and sufficient in detail and content to identify and
explain it, and to allow its full and proper use by Buyer without reliance
on
the special knowledge or memory of others.
6
|
2.14
|
TITLE
TO ASSETS
|
Company
has good and marketable title to all its assets and interests in assets, whether
real, personal, mixed, tangible, or intangible, which constitute all the assets
and interests in assets that are used in the business of Company. All these
assets are free and clear of mortgages, liens, pledges, charges, encumbrances,
equities, claims, easements, rights of way, covenants, conditions, or
restrictions, except for (i) the lien of current taxes not yet due and
payable, and (ii) possible minor matters that, in the aggregate, are not
substantial in amount and do not materially detract from or interfere with
the
present or intended use of any of these assets, nor materially impair business
operations. Company is in possession of all premises leased to it from others.
Company does not occupy any real property in violation of any law, regulation,
or decree.
|
2.15
|
CUSTOMERS
AND SALES
|
Correct
and current lists of Company’s twenty (20) largest customers together with
summaries of the sales made to each customer during 2005 and during 2006 are
included in Section 2.15 of Schedule 2.
Except
as indicated in Section 2.15 of Schedule 2,
no
Selling Party has any information, nor is aware of any fact, indicating that
any
of these customers intends to cease doing business with Company or materially
alter the amount of the business that such customer is presently doing with
Company.
|
2.16
|
EMPLOYMENT
AGREEMENTS
|
A
list of
all employment agreements, severance agreements, collective bargaining
agreements, pension, bonus, profit-sharing, stock option, or other agreements
providing for employee remuneration or benefits to which Company is a party
or
is bound is included in Section 2.16 of Schedule 2.
All of
these agreements are in full force and effect, and neither Company nor any
other
party is in default under any of these agreements. There is no pending nor,
to
Selling Parties’ knowledge, threatened labor dispute, strike, slowdown, employee
grievance process, or work stoppage affecting Company’s business. There is no
organizational activity or other labor dispute against or affecting Company,
nor
is any application or petition for an election of or for certification of a
collective bargaining agent pending. Company
does not provide or sponsor any retirement plan or retirement benefits for
any
of its current or past employees.
|
2.17
|
INSURANCE
POLICIES.
|
A
description of all insurance policies held by Company concerning its business
and properties, and the respective principal amounts of each, is provided in
Section 2.17 of Schedule 2.
Company
has maintained and now maintains (i) insurance on all its assets and business
of
a type customarily insured, covering property damage and loss of income by
fire
or other casualty, and (ii) adequate insurance protection against all
liabilities, claims, and risks against which it is customary to insure. Company
is not in default with respect to payment of premiums on any such policy. No
claim is pending under any such policy.
7
|
2.18
|
OTHER
CONTRACTS
|
Except
for the agreements listed in Section 2.17 of Schedule 2,
copies
of which have been furnished or made available to Buyer, Company is not a party
to, nor is its property bound by, any representative or agency agreement, any
output or requirements agreement, any agreement not entered into in the ordinary
course of business, any indenture, mortgage, deed of trust, lease, or any
agreement that is unusual in nature, duration, or amount (including, without
limitation, any agreement requiring the performance by Company of any obligation
for a period of time extending beyond six months from the Closing Date or
calling for consideration of more than $20,000). There is no default or event
that with notice or lapse of time, or both, would constitute a default by any
party to any of these agreements. Company has received no notice that any party
to any of these agreements intends to cancel or terminate any of these
agreements or to exercise or not exercise any options under any of these
agreements. No consent or approval of any other party is required in connection
with the assignment to and assumption by Buyer of the agreements listed in
Section 2.17 of Schedule 2.
|
2.19
|
COMPLIANCE
WITH LAWS
|
Company
has complied with and is not in violation of applicable federal, state, and
local statutes, laws, and regulations (including, without limitation, any
applicable employment, immigration, building, zoning or other law, ordinance,
or
regulation) affecting or relating to its properties, employees, or the operation
of its business. Company has all licenses and permits required to operate its
business, and no governmental or third party approval is required to assign
and
transfer such licenses and permits to Buyer pursuant to this
agreement.
|
2.20
|
LITIGATION
|
There
is
no suit, action, arbitration, or legal, administrative, or other proceeding,
or
governmental investigation, pending or threatened, to the best knowledge of
Selling Parties, against or affecting Company or its businesses, assets, or
financial condition, except as set forth in Schedule 2.
The
litigation matters set forth in Schedule 2,
if
decided adversely to Company, will not result in a material adverse change
in
the business, assets, or financial condition of Company. Selling Parties have
furnished or made available to Buyer copies of all relevant court papers and
other documents relating to the matters set forth in Schedule 2.
Company
is not in default with respect to any order, writ, injunction, or decree of
any
federal, state, local, or foreign court, department, agency, or instrumentality.
Except as set forth in Schedule 2,
Company
is not presently engaged in any legal action to recover monies due to it or
damages sustained by it.
|
2.21
|
AGREEMENT
WILL NOT CAUSE BREACH OR
VIOLATION
|
The
consummation of the transactions contemplated by this agreement will not result
in or constitute any of the following: (i) a default or an event that, with
notice or lapse of time or both, would be a default, breach, or violation of
the
articles of incorporation or bylaws of Company or any lease, license, promissory
note, conditional sales contract, commitment, indenture, mortgage, deed of
trust, or other agreement, instrument, or arrangement to which any Shareholder
or Company is a party or by which any of them or the property of any of them
is
bound; or (ii) the creation or imposition of any lien, charge, or
encumbrance on any of the properties of Company.
8
|
2.22
|
AUTHORITY
AND CONSENTS
|
Selling
Parties have the right, power, legal capacity, and authority to enter into,
and
perform their respective obligations under, this agreement, and no approvals
or
consents of any persons other than Selling Parties are necessary in connection
with it. The execution and delivery of this agreement by Company has been duly
authorized by all necessary corporate action.
|
2.23
|
INTEREST
IN CUSTOMERS, SUPPLIERS, AND
COMPETITORS
|
No
Shareholder, nor any officer, director, or employee of Company nor any spouse
or
child of any of them, has any direct or indirect interest in any competitor,
supplier, or customer of Company or in any person from whom or to whom Company
leases or licenses any real or personal property, or in any other person with
whom Company is doing business, except as stated in Schedule 2.
|
2.24
|
IDENTIFICATION
AND COMPENSATION
|
A
list of
all officers, directors, employees, and agents of Company stating the rates
of
compensation payable to them is included in Schedule 2.
|
2.25
|
COMPANY
DOCUMENTS
|
Selling
Parties have furnished to Buyer, for its examination, copies of Company’s
articles of incorporation and bylaws.
|
2.26
|
ACQUISITION
OF SHARES FOR OWN ACCOUNT
|
The
Parent Shares will be acquired for investment for Company’s own account, not as
a nominee or agent, and not with a view to the resale or distribution of any
part thereof, and Company has no present intention of selling, granting any
participation in, or otherwise distributing the Parent Shares. Company does
not
have any contract, undertaking, agreement or arrangement with any person to
sell, transfer or grant participations to such person or to any third person,
with respect to any of the Parent Shares.
|
2.27
|
DISCLOSURE
OF INFORMATION
|
Company
believes it has received all of the information it considers necessary or
appropriate for deciding whether to acquire the Parent Shares. Company has
had
an opportunity to ask questions and receive answers from Buyer regarding the
terms and conditions of the issuance of the Parent Shares and the business,
properties, prospects and financial condition of Buyer. The foregoing, however,
does not limit or modify the representations and warranties of Buyer in
Article 3 of this agreement or the right of Company to rely
thereon.
|
2.28
|
INVESTMENT
EXPERIENCE
|
Selling
Parties are investors in securities of companies in the development stage and
are able to fend for themselves, can bear the economic risk of the ownership
of
the Parent Shares, and have such knowledge and experience in financial or
business matters that they are capable of evaluating the merits and risks of
the
acquisition of the Parent Shares.
9
|
2.29
|
ACCREDITED
INVESTOR
|
Each
Shareholder who is to receive any portion of the Parent Shares has a net worth
in excess of $1,000,000 (including his interest in Company).
|
2.30
|
RESTRICTED
SECURITIES
|
Selling
Parties understand that the Parent Shares will be characterized as “restricted
securities” under the federal securities laws inasmuch as they are being
acquired in a transaction not involving a public offering and that under such
laws and applicable regulations the
Parent Shares may be resold without registration under the Securities Act of
1933 (the “Act”) only in certain limited circumstances.
Selling
Parties are familiar with SEC Rule 144, as presently in effect, and
understand the resale limitations imposed thereby and by the Act.
|
2.31
|
FURTHER
LIMITATIONS ON DISPOSITION
|
Without
in any way limiting the representations set forth above, Selling Parties shall
not make any disposition of all or any portion of the Parent Shares unless
and
until:
(a) There
is
then in effect a Registration Statement under the Act covering such proposed
disposition and such disposition is made in accordance with such Registration
Statement; or
(b) (i) Selling
Parties shall have notified Buyer of the proposed disposition and shall have
furnished Buyer with a detailed statement of the circumstances surrounding
the
proposed disposition, and (ii) if reasonably requested by Buyer, Selling
Parties shall have furnished Buyer with an opinion of counsel, reasonably
satisfactory to Buyer, that such disposition will not require registration
of
such shares under the Act. Buyer will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual
circumstances.
(c) Notwithstanding
subsections (a) and (b) above, no such registration statement or opinion of
counsel shall be necessary for a transfer by Company to any Shareholder, if
such
Shareholder agrees in writing to be subject to the terms of this agreement
to
the same extent as if he were acquiring the Parent Shares directly pursuant
to
this agreement.
|
2.32
|
LEGEND
|
The
Stock
Certificate may bear the following legend:
“THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH
ACT.”
10
|
2.33
|
NO
ADVERTISEMENT
|
The
issuance of the Parent Shares has not been accomplished by the publication
of
any advertisement.
|
2.34
|
FULL
DISCLOSURE
|
None
of
the representations and warranties made by Shareholders or Company, or made
in
any certificate or memorandum furnished or to be furnished by any of them,
or on
their behalf, contains or will contain any untrue statement of a material fact,
or omits any material fact the omission of which would be
misleading.
ARTICLE
3
REPRESENTATIONS
AND WARRANTIES OF BUYER AND PARENT
Buyer
and
Parent represent and warrant that:
|
3.1
|
ORGANIZATION,
STANDING AND QUALIFICATION OF BUYER AND
PARENT
|
Buyer
and
Parent are each corporations duly organized, validly existing, and in good
standing under the laws of the State of Delaware and have all necessary powers
to own their properties and to operate their businesses as now owned and
operated by them. Buyer is duly qualified to do intrastate business and is
in
good standing in California and in each other jurisdiction in which the nature
of Buyer’s business or of its properties makes such qualification
necessary.
|
3.2
|
SUBSIDIARY
|
Parent
is
the sole stockholder of Buyer.
|
3.3
|
SEC
FILINGS; FINANCIAL STATEMENTS
|
3.3(a) Parent
has filed all forms, reports and documents required to be filed by it with
the
Securities and Exchange Commission (the “SEC”)
from
February 13, 2007 through the date of this agreement (collectively, the
“Parent
SEC Reports”).
As of
the respective dates they were filed (and if amended or superseded by a filing
before the date of this agreement, then on the date of such filing),
(i) the Parent SEC Reports complied in all material respects with the
requirements of the Act or the Securities Exchange Act of 1934, as the case
may
be, and (ii) none of the Parent SEC Reports contained any untrue statement
of a material fact or omitted or state a material fact required to be stated
therein or necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading.
3.3(b) Each
of
the consolidated financial statements (including, in each case, any notes
thereto) contained in the Parent SEC Reports was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by Form 10-Q
or 8-K promulgated by the SEC) and each presented fairly, in all material
respects, the consolidated financial position of Parent and its consolidated
subsidiaries as at the respective dates thereof and for the respective periods
indicated therein, except as otherwise noted therein (subject, in the case
of
unaudited statements, to normal and recurring year-end adjustments which were
not and are not expected, individually or in the aggregate, to have a material
adverse effect).
11
3.3(c) Since
the
date of the most recent filing with the SEC by Parent, there has not occurred
any event that (singly or together with other such events) would reasonably
be
expected to have a material adverse effect on the Buyer or Parent.
|
3.4
|
TAX
RETURNS AND AUDITS
|
Within
the times and in the manner prescribed by law, Buyer and Parent each have filed
all federal, state, and local tax returns required by law and have paid all
taxes, assessments, and penalties due and payable, including without limitation
all sales taxes. There are no present disputes as to taxes of any nature payable
by Buyer or Parent.
|
3.5
|
COMPLIANCE
WITH LAWS
|
Buyer
and
Parent each have complied with and are not in violation of applicable federal,
state, or local statutes, laws, and regulations (including, without limitation,
any applicable employment, immigration, building, zoning, or other law,
ordinance, or regulation) affecting or relating to their properties, employees,
or the operation of its business.
|
3.6
|
LITIGATION
|
There
is
no material suit, action, arbitration, or legal, administrative, or other
proceeding, or governmental investigation, pending or threatened, to the best
knowledge of Buyer or Parent, against or affecting Buyer or Parent or either
of
their businesses, assets, or financial condition. Neither Buyer nor Parent
is in
default with respect to any order, writ, injunction, or decree of any federal,
state, local, or foreign court, department, agency, or instrumentality. Buyer
is
not presently engaged in any legal action to recover monies due to it or damages
sustained by it.
|
3.7
|
AGREEMENT
WILL NOT CAUSE BREACH OR
VIOLATION
|
The
consummation of the transactions contemplated by this agreement will not result
in or constitute any of the following: (i) a default or an event that, with
notice or lapse of time or both, would be a default, breach, or violation of
the
articles of in Company or bylaws of Buyer or Parent or any lease, license,
promissory note, conditional sales contract, commitment, indenture, mortgage,
deed of trust, or other agreement, instrument, or arrangement to which Buyer
or
Parent is a party or by either of them or their property is bound; or
(ii) the creation or imposition of any lien, charge, or encumbrance on any
of the properties of Buyer or Parent.
|
3.8
|
AUTHORITY
AND CONSENTS
|
Buyer
and
Parent each have the right, power, legal capacity, and authority to enter into,
and perform their obligations under, this agreement, and no approvals or
consents of any persons are necessary in connection with it. The execution
and
delivery of this agreement by Buyer and Parent and the performance by them
of
their respective obligations under this agreement have been duly authorized
by
all necessary corporate action of Buyer and Parent.
12
|
3.9
|
FULL
DISCLOSURE
|
None
of
the representations and warranties made by Buyer and/or Parent, or made in
any
certificate or memorandum furnished or to be furnished by Buyer or Parent,
or on
its behalf, contains or will contain any untrue statement of a material fact,
or
omits any material fact the omission of which would be misleading.
ARTICLE
4
SELLING
PARTIES' OBLIGATIONS BEFORE CLOSING
Selling
Parties covenant that from the date of this agreement until the Closing they
are
bound by the obligations stated in this Article 4.
|
4.1
|
BUYER'S
ACCESS TO PREMISES AND
INFORMATION
|
Buyer
and
its counsel, accountants, and other representatives shall have full access
during normal business hours to all properties, books, accounts, records,
contracts, and documents of or relating to Company. Company shall furnish or
cause to be furnished to Buyer and its representatives all data and information
concerning Company's business, finances, and properties that may reasonably
be
requested.
|
4.2
|
CONDUCT
OF BUSINESS IN NORMAL COURSE
|
Company
will carry on its business and activities diligently and in substantially the
same manner as they previously have been carried out, and shall not make or
institute any unusual or novel methods of production, purchase, sale, lease,
management, accounting, or operation that will vary materially from those
methods used by Company as of the date of this agreement.
|
4.3
|
PRESERVATION
OF BUSINESS AND RELATIONSHIPS
|
Company
will use its best efforts to preserve its business organization intact, to
keep
available its present officers and employees, and to preserve its present
relationships with suppliers, customers, and others having business
relationships with it. In so doing, Company will make no commitments on Buyer's
behalf.
|
4.4
|
MAINTENANCE
OF INSURANCE
|
Company
will continue to carry its existing insurance, subject to variations in amounts
required by the ordinary operations of its business.
|
4.5
|
EMPLOYEES
AND COMPENSATION.
|
Company
will not do or agree to do any of the following acts: (i) grant any increase
in
salaries payable or to become payable by either of them, to any officer,
employee, sales agent, or representative; (ii) increase benefits payable to
any
officer, employee, sales agent, or representative under any bonus or pension
plan or other contract or commitment; or (iii) enter into or modify any
collective bargaining agreement to which it is a party or by which it may be
bound.
13
|
4.6
|
NEW
TRANSACTIONS
|
Company
will not, without Buyer's written consent, enter into any contract, commitment,
or transaction not in the usual and ordinary course of its
business.
|
4.7
|
EXISTING
AGREEMENTS
|
Company
will not modify, amend, cancel or terminate any of its existing contracts or
agreements, or agree to do any of these acts.
|
4.8
|
CONSENTS
OF OTHERS
|
As
soon
as reasonably practical after the execution and delivery of this agreement,
and
in any event on or before the Closing Date, Selling Parties will obtain and
furnish executed copies of the written consents of the persons described in
Schedule 4.8.
Buyer
will exercise its best efforts, and execute and deliver any documents and
instruments that may be reasonably required, to assist Selling Parties in
obtaining such consents. Buyer shall not be obligated under this paragraph
to
execute any guaranty, assumption of liability, or other document or instrument
requiring it to assume obligations not contemplated by this
agreement.
|
4.9
|
DOCUMENTATION
OF PROCEDURES AND TRADE SECRETS
|
At
the
written request of Buyer, Company will document and describe any of its trade
secrets, processes, or business procedures specified by Buyer, in form and
content satisfactory to Buyer.
|
4.10
|
REPRESENTATIONS
AND WARRANTIES TRUE AT CLOSING
|
All
representations and warranties of Selling Parties set forth in this agreement
and in any written statements delivered to Buyer by Selling Parties under this
agreement will also be true and correct as of the Closing Date as if made on
that date.
|
4.11
|
NOTIFICATION
|
Between
the date of this agreement and the Closing, Selling Parties shall promptly
notify Buyer in writing if any of them becomes aware of (a) any fact or
condition that causes or constitutes a breach of any of Selling Parties’
representations and warranties made as of the date of this agreement or (b)
the
occurrence after the date of this agreement of any fact or condition that would
or be reasonably likely to (except as expressly contemplated by this agreement)
cause or constitute a breach of any such representation or warranty had that
representation or warranty been made as of the time of the occurrence of, or
such Selling Party’s discovery of, such fact or condition. Should any such fact
or condition require any change to the Disclosure Schedule, Selling Parties
shall promptly deliver to Buyer a supplement to the Disclosure Schedule,
specifying such change. Such delivery shall not affect any rights of Buyer
under
this agreement. During the same period, Selling Parties also shall promptly
notify Buyer of the occurrence of any breach of any covenant of Selling Parties
in this Article 4 or of the occurrence of any event that may make the
satisfaction of the conditions in Article 6 impossible or
unlikely.
14
|
4.12
|
NO
NEGOTIATION
|
Until
such time as this agreement shall be terminated, no Selling Party shall directly
or indirectly solicit, initiate, encourage or entertain any inquiries or
proposals from, discuss or negotiate with, provide any nonpublic information
to
or consider the merits of any inquiries or proposals from any person (other
than
Buyer) relating to any business combination transaction involving Company,
including the sale by Shareholders of Company’s stock, the merger or
consolidation of Company or the sale of Company’s business or any of the
Acquired Assets (other than in the ordinary course of business). Selling Parties
shall notify Buyer of any such inquiry or proposal within twenty-four (24)
hours
of receipt or awareness of the same by any Selling Party.
ARTICLE
5
BUYER'S
OBLIGATIONS BEFORE CLOSING
|
5.1
|
SECURING
CONSENTS OF THIRD PARTIES
|
Buyer
will use its best efforts to assist Company in obtaining the consent of all
necessary persons and agencies to the assignment and transfer to Buyer of any
and all properties, assets, and agreements, to be assigned and transferred
under
this agreement.
|
5.2
|
RESALE
CERTIFICATE
|
Buyer
shall furnish any resale certificate or other documents reasonably requested
by
Company to comply with the provisions of the sales and use tax laws of the
State
of California.
|
5.3
|
BULK
SALES LAW
|
Buyer
waives compliance with the provisions of the California Commercial Code relating
to bulk transfers in connection with this sale of assets, subject to the
indemnities of Selling Parties contained in this agreement.
ARTICLE
6
CONDITIONS
PRECEDENT TO BUYER'S PERFORMANCE
The
obligations of Buyer to purchase the Acquired Assets under this agreement are
subject to the satisfaction, at or before the Closing, of all the conditions
set
out below in this article. Buyer may waive any or all 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 Buyer of any of its other rights or
remedies, at law or in equity, if any Shareholder or Company shall be in default
of any of their representations, warranties, or covenants under this
agreement.
|
6.1
|
ACCURACY
OF SELLING PARTIES' REPRESENTATIONS AND
WARRANTIES
|
Except
as
otherwise permitted by this agreement, all representations and warranties by
the
Selling Parties, or any of them, in this agreement or in any written statement
that shall be delivered to Buyer by any of them under this agreement shall
be
true (in all material respects), on and as of the Closing Date as though made
at
that time.
15
|
6.2
|
PERFORMANCE
BY SELLING PARTIES
|
Selling
Parties shall have performed, satisfied, and complied with all covenants,
agreements, and conditions required by this agreement to be performed or
complied with by them, or any of them, on or before the Closing
Date.
|
6.3
|
NO
MATERIAL ADVERSE CHANGE
|
There
shall not have been any Material (as defined below) adverse change in the
financial condition or the results of operations of Company and Company shall
not have sustained any Material loss or damage to its assets, whether or not
insured, that materially affects its ability to conduct a material part of
its
business, during the period ending on the Closing Date and beginning July 31,
2007. For purposes of this Section, “Material” means more than
$200,000.
|
6.4
|
CERTIFICATION
BY COMPANY
|
Buyer
shall have received a certificate, dated the Closing Date, signed and verified
by Company's president or vice president and treasurer or assistant treasurer,
certifying, in such detail as Buyer and its counsel may reasonably request,
that
the conditions specified in Sections 6.1, 6.2, and 6.3 of this
agreement have been satisfied (the “Closing
Certificate”).
|
6.5
|
ABSENCE
OF LITIGATION
|
No
action, suit, or proceeding before any court or any governmental body or
authority, pertaining to the transaction contemplated by this agreement or
to
its consummation, shall have been instituted or threatened on or before the
Closing Date.
|
6.6
|
CORPORATE
APPROVAL
|
The
execution and delivery of this agreement by Company and the performance of
its
covenants and obligations under it, shall have been duly authorized by all
necessary corporate action, and Buyer shall have received copies of all
resolutions pertaining to that authorization, certified respectively by the
secretary of Company.
|
6.7
|
CONSENTS
|
All
necessary agreements and consents to the consummation of the transactions
contemplated by this agreement, or otherwise pertaining to the matters covered
by it, shall have been obtained by Selling Parties and delivered to
Buyer.
|
6.8
|
CONSULTING
AGREEMENT
|
A
Consulting Agreement, dated the Closing Date, shall have been executed and
delivered by Company to Buyer in the form set forth in Schedule 6.12
attached to this agreement (the “Consulting
Agreement”).
16
|
6.9
|
APPROVAL
OF DOCUMENTATION
|
The
form
and substance of all certificates, instruments, and other documents delivered
to
Buyer under this agreement shall be satisfactory in all reasonable respects
to
Buyer and its counsel.
|
6.10
|
ASSIGNMENTS
OF LEASES, CONSENTS TO ASSIGNMENT AND ESTOPPEL
CERTIFICATES
|
Selling
Parties shall have delivered or caused to be delivered an Assignment of Lease
and Landlord’s Consent to Assignment (including without limitation landlords’
consent to the assignment of all options to extend and other rights held by
Company) and an Estoppel Certificate, each in form and substance reasonably
satisfactory to Buyer, with respect to each of the following
locations:
6.10(a) ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇;
6.10(b) ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇; and
6.10(c) ▇▇▇
▇▇▇▇
“▇” ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
|
6.11
|
MISSION
VALLEY LOCATION
|
Buyer
and
the owner of Brothers Restaurant & Deli at ▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (“Mission
Valley Owner”)
shall
have entered into a written agreement which provides that in exchange for
$25,000, (a) Mission Valley Owner shall cease to use the name “Brothers
Restaurant & Deli” (or any similar name) within one hundred twenty (120)
days after the Closing Date, (b) for at least twelve (12) months after the
Closing Date, visitors to ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ who click on the Mission Valley
location shall be redirected to a website maintained by Mission Valley Owner,
and visitors who click on the other locations shall be redirected to an Organic
To Go web site maintained by Buyer, and (c) so long as it desires to do so,
Buyer shall maintain ▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
|
6.12
|
EQUITY
FINANCING
|
Buyer
shall have received not less than $3.5
million
in net
proceeds between the date of this agreement and November 1, 2007 from the sale
of its Equity Securities (as defined below). (Section 10.2 of this agreement
requires a payment by Buyer to Company if Buyer terminates this agreement
because the condition set forth in this paragraph is not satisfied.) For
purposes of this paragraph, “Equity
Securities”
means
Buyer’s Common Stock or Preferred Stock or any securities conferring the right
to purchase Buyer’s Common Stock or Preferred Stock or securities convertible
into, or exchangeable for (with or without additional consideration), Buyer’s
Common Stock or Preferred Stock, except any security granted, issued and/or
sold
by Buyer to any director, officer, employee or consultant of Buyer in such
capacity for the primary purpose of soliciting or retaining their
services.
17
ARTICLE
7
CONDITIONS
PRECEDENT TO SELLING PARTIES’ PERFORMANCE
The
obligations of Company to sell and transfer the Acquired Assets under this
agreement are subject to the satisfaction, at or before the Closing, of all
the
following conditions. Company may waive any or all 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 Company of any of its other rights or
remedies, at law or in equity, if Buyer should be in default of any of its
representations, warranties, or covenants under this agreement.
|
7.1
|
ACCURACY
OF BUYER'S REPRESENTATIONS AND
WARRANTIES
|
All
representations and warranties by Buyer contained in this agreement or in any
written statement delivered by Buyer under this agreement shall be true on
and
as of the Closing as though such representations and warranties were made on
and
as of that date.
|
7.2
|
BUYER'S
PERFORMANCE
|
Buyer
shall have performed and complied with all covenants and agreements, and
satisfied all conditions that it is required by this agreement to perform,
comply with, or satisfy, before or at the Closing.
|
7.3
|
BUYER'S
CORPORATE APPROVAL
|
The
execution and delivery of this agreement and all corporate action necessary
or
proper to fulfill the obligations of Buyer to be performed under this agreement
on or before the Closing Date shall have been duly authorized by Buyer's board
of directors.
|
7.4
|
ABSENCE
OF LITIGATION
|
No
action, suit, or proceeding before any court or any governmental body or
authority, pertaining to the transaction contemplated by this agreement or
to
its consummation, shall have been instituted or threatened on or before the
Closing Date.
ARTICLE
8
SELLING
PARTIES’ OBLIGATIONS AFTER CLOSING
|
8.1
|
INDEMNIFICATION
|
8.1(a) Selling
Parties shall, jointly and severally, indemnify, defend, and hold Buyer harmless
against and in respect of any and all claims (including without limitation
third
party claims), demands, losses, costs, expenses, obligations, liabilities,
damages, recoveries, and deficiencies, including without limitation, interest,
penalties, and reasonable attorneys’ fees (collectively, “Damages”),
incurred or suffered by Buyer that arise from, result from, or relate to any
(i) breach of, or failure by Selling Parties to perform, any of their
representations, warranties, covenants, or agreements in this agreement or
in
any schedule, certificate, exhibit, or other instrument furnished or to be
furnished by Selling Parties under this agreement, (ii) any contract, debt,
liability, or obligation of Company (other than performance of obligations
under
the Assumed Contracts accruing after the Closing Date), including without
limitation any liability for sales taxes, interest or penalties on sales taxes,
or (iii) any finder’s fee or commission payable or alleged to be payable to
▇▇▇▇▇▇ ▇▇▇▇ or G.R. ▇▇▇▇ Business Brokers, Inc. in connection with the
transactions contemplated by this agreement.
18
8.1(b) Buyer
and
Parent shall, jointly and severally, indemnify, defend, and hold Selling Parties
harmless against and in respect of any and all Damages (as defined in
Section 8.1(a)) incurred or suffered by any Selling Party that arise from,
result from, or relate to any (i) breach of, or failure by Buyer or Parent
to perform, any of their representations, warranties, covenants, or agreements
in this agreement or in any schedule, certificate, exhibit, or other agreement,
instrument or document furnished or to be furnished by Buyer or Parent under
or
pursuant to this agreement, or (ii) any matter in any way related to or
arising out of the ownership and/or use of the Acquired Assets or satisfaction
and performance of the Assumed Contracts after the Closing Date.
8.1(c) A
party
that desires to assert a claim for indemnity (an “Indemnified
Party”)
shall
notify each party from whom it seeks indemnification (an “Indemnifying
Party”)
of the
existence of any claim, demand, or other matter to which the Indemnifying
Party’s indemnification obligations would apply, and shall give the Indemnifying
Party a reasonable opportunity to defend the same at their own expense and
with
counsel of their own selection; provided that the Indemnified Party shall at
all
times also have the right to fully participate in the defense at its own
expense. If an Indemnifying Party shall, within a reasonable time after this
notice, fail to defend, the Indemnified Party shall have the right, but not
the
obligation, to undertake the defense of, and to compromise or settle (exercising
reasonable business judgment), the claim or other matter on behalf, for the
account, and at the risk, of the Indemnifying Party. If the claim is one that
cannot by its nature be defended solely by the Indemnifying Party (including,
without limitation, any federal or state tax proceeding), then the Indemnified
Party shall make available and cause to be made available all information and
assistance that the Indemnifying Party may reasonably request.
8.1(d) Notwithstanding
any other provision of this agreement, no claim may be made after the date
of
this agreement by any party against any other party based on any claimed breach
of any representation or warranty, covenant or agreement contained in this
Agreement (or in any of the agreements to be executed and delivered by any
party
hereto), except to the extent and in the manner provided in this
Section 8.1. In addition, no claim may be made by any party against any
other party based on any alleged breach or inaccuracy of a representation or
warranty of the other party unless such claim is asserted within the survival
period applicable to such representation and warranty as set forth in
Section 8.2, and in the manner provided in this
Section 8.1.
| 8.2 |
LIMITS
ON INDEMNIFICATION.
|
8.2(a) No
amount
shall be payable by Selling Parties pursuant to Section 8.1
unless
the aggregate amount of Losses indemnifiable by Selling Parties under
Section 8.1
exceeds
$40,000 (the “Indemnification
Deductible”)
(and
then only to the extent of such excess) up to a total amount equal to $600,000
in aggregate Losses (the “Indemnification
Cap”);
provided,
however,
that
neither the Indemnification Deductible nor the Indemnification Cap shall apply
to (i) Losses described in Section 2.7 (Tax Returns and Audits), or (ii) Losses
described in clause 8.1(a)(ii).
19
8.2(b) Notwithstanding
anything to the contrary contained in this Agreement, the maximum amount of
aggregate indemnifiable Losses that may be recovered from Buyer pursuant to
Section
8.2.(a)
shall be
an amount equal to the Indemnification Cap.
8.2(c) The
amount of an Indemnifying Party’s liability under this Agreement shall be net of
any insurance proceeds actually received by such Indemnified Party in connection
with the Loss (it being understood that there shall be no obligation on the
part
of the Indemnified Party to seek insurance recovery).
| 8.3 |
INDEMNIFICATION
AS EXCLUSIVE REMEDY.
|
Subject
to the limitations set forth in this Article VIII, the Parties acknowledge
and agree that, from and after the Closing Date, the indemnification provided
in
this Article VIII shall be the exclusive remedy of the Parties and the other
Indemnified Parties with respect to any Losses under or relating to this
Agreement.
|
8.4
|
SURVIVAL
OF REPRESENTATIONS AND
OBLIGATIONS
|
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 as follows: (a) the
representations and warranties in Sections 2.21 (Authority and Consents)
and 3.8 (Authority and Consents) shall survive indefinitely; (b) the
representations and warranties in Sections 2.7 (Tax Returns and
Audits), 2.9 (Hazardous Materials), 2.10 (Environmental), 3.1
(Organization, etc.), 3.3 (SEC Filings; Financial Statements), and 3.4
(Tax Returns and Audits) shall survive the Closing until the expiration of
the
applicable statute of limitations; (c) all other representations and warranties
shall survive until eighteen (18) months after the Closing Date; (d) the
obligations in Section 8.5 (Non-Competition) shall survive the Closing for
the period specified in Section 8.5; and (e) the obligations in
Sections 8.6 (Confidential Information) and 8.7 (Company Not To Use
Name) and all other covenants and agreements of the parties shall survive
indefinitely.
|
8.5
|
NON-COMPETITION
|
No
Selling Party shall at any time during the thirty (30) month period immediately
after the Closing Date directly or indirectly engage in, or have any interest
in
any person, firm, corporation, or business (whether as an employee, officer,
director, agent, security holder, creditor, consultant, or otherwise) that
engages in any Competing Business (as defined below) within San Diego County,
California or Orange County, California. A “Competing
Business”
means:
(i) a foodservice business if more than 80% of its revenue during any calendar
month is derived from sales made Monday through Friday from 6:00 a.m. to 4:00
p.m., and (ii) breakfast and lunch catering.
|
8.6
|
CONFIDENTIAL
INFORMATION
|
Selling
Parties shall not divulge, communicate, use to the detriment of Buyer or for
the
benefit of any other person or persons, or misuse in any way, any confidential
information or trade secret of Company, including without limitation personnel
information, secret processes, know-how, customer lists, recipes, formulas,
or
other technical data. Any information or data Selling Parties have acquired
on
any of these matters or items was received in confidence and as fiduciaries
of
Company.
20
|
8.7
|
COMPANY
NOT TO USE NAME
|
Immediately
after the Closing, Selling Parties shall not use or employ in any manner
directly or indirectly the name “Brothers Restaurant & Deli,” or any other
name containing the same or similar terms alone or in combination with any
other
words. Promptly following the Closing, Selling Parties shall terminate any
fictitious business name statement that Company has filed for the use of the
fictitious business name “Brothers Restaurant & Deli.”
|
8.8
|
PAYMENT
OF RETAINED LIABILITIES
|
Company
shall pay, or make adequate provision for the payment, in full all of the debts,
liabilities and obligations of Company other than those expressly assumed by
Buyer pursuant to this Agreement (the “Retained
Liabilities”).
If
any Retained Liabilities are not so paid or provided for and Buyer determines
that failure to make any payments will impair Buyer’s use or enjoyment of the
Acquired Assets or conduct of the business previously conducted by Company
with
the Acquired Assets, Buyer may, at any time after the Closing Date, elect to
make all such payments directly (but shall have no obligation to do so) and
set
off and deduct the full amount of all such payments from the first maturing
installments pursuant to Section 1.2(b).
|
8.9
|
RETENTION
OF AND ACCESS TO RECORDS
|
After
the
Closing Date, Buyer shall retain for a period consistent with Buyer’s
record-retention policies and practices those books and records of Company
delivered to Buyer. Buyer also shall provide Selling Parties and their
representatives reasonable access thereto, during normal business hours and
on
at least three days’ prior written notice, to enable them to prepare financial
statements or tax returns or deal with tax audits. After the Closing Date,
Selling Parties shall (a) retain all of Company’s books and records (other than
those delivered to Buyer) until Buyer and its accountants have prepared audited
financial statements reflecting the assets, liabilities and results of
operations of Company for the period from January 1, 2004 until the Closing
Date
and (b) provide Buyer and its representatives reasonable access to all books
and
records that are Excluded Assets, during normal business hours and on at least
three days’ prior written notice, for any reasonable business purpose, including
without limitation the preparation of the audited financial statements described
above.
ARTICLE
9
THE
CLOSING
|
9.1
|
TIME
AND PLACE
|
The
transfer of the Acquired Assets by Company to Buyer (the “Closing”)
shall
occur on November 1, 2007 at the offices of Selling Parties’ attorney,
▇▇▇▇▇▇ & Associates, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇., ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇ unless
the parties otherwise agree in writing. That date, or if the Closing is advanced
or postponed under this paragraph, then the date to which it is advanced or
postponed, is called (the “Closing
Date”).
|
9.2
|
SELLING
PARTIES' OBLIGATIONS AT CLOSING
|
At
the
Closing, Selling Parties shall deliver or cause to be delivered to
Buyer:
21
9.2(a) A
▇▇▇▇ of
Sale with respect to the Acquired Assets.
9.2(b) An
Assignment of Lease and Landlord’s Consent to Assignment with respect to each
of:
(i) ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇;
(ii) ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇; and
(iii) ▇▇▇
▇▇▇▇
“▇” ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
9.2(c) Instruments
of assignment and transfer of all other Acquired Assets (if any).
9.2(d) The
Consulting Agreement signed by Company.
9.2(e) Certificates
of title with respect to all of Company’s motor vehicles, endorsed for transfer
to Buyer and accompanied by all documents required to transfer record title
to
such vehicles to Buyer.
9.2(f) The
Closing Certificate.
Simultaneously
with the consummation of the transfer, Company, through its officers, agents,
and employees, will put Buyer into full possession and enjoyment of all
properties and assets to be conveyed and transferred by this
agreement.
Selling
Parties, at any time before or after the Closing Date, shall execute,
acknowledge, and deliver any further deeds, assignments, conveyances, and other
assurances, documents, and instruments of transfer reasonably requested by
Buyer, and will take any other action consistent with the terms of this
agreement that may reasonably be requested by Buyer for the purpose of
assigning, transferring, granting, conveying, and confirming to Buyer, or
reducing to possession, any or all property to be conveyed and transferred
by
this agreement. If requested by Buyer, Company shall prosecute or otherwise
enforce in its own name for the benefit of Buyer any claims, rights, or benefits
that are transferred to Buyer by this agreement and that require prosecution
or
enforcement in Company's name. Any prosecution or enforcement of claims, rights,
or benefits under this paragraph shall be solely at Buyer's expense, unless
the
prosecution or enforcement is made necessary by a breach of this agreement
by
the Selling Parties, or any of them.
|
9.3
|
BUYER'S
OBLIGATIONS AT CLOSING
|
At
the
Closing, Buyer shall deliver the following instruments and
documents:
9.3(a) A
Bank
cashier’s check, or wire transfer, in the amount of $2,400,000.
9.3(b) An
Assignment of Lease and Landlord’s Consent to Assignment with respect to each
of:
(i) ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇;
(ii) ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇; and
22
(iii) ▇▇▇
▇▇▇▇
“▇” ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
9.3(c) The
Consulting Agreement executed by Buyer.
9.3(d) A
check
representing the security deposit and prorated rent, if any, for:
(i) ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇;
(ii) ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇; and
(iii) ▇▇▇
▇▇▇▇
“▇” ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
The
Stock
Certificate shall be delivered within ten (10) days after the
Closing.
ARTICLE
10
TERMINATION
|
10.1
|
TERMINATION
EVENTS
|
By
notice
given prior to or at the Closing, subject to Section 10.2, this agreement
may be terminated as follows:
10.1(a) by
Buyer
if a material breach of any provision of this agreement has been committed
by
Company or Shareholders and such breach has not been waived by
Buyer;
10.1(b) by
Selling Parties if a material breach of any provision of this agreement has
been
committed by Buyer and such breach has not been waived by Selling
Parties;
10.1(c) by
Buyer
if any condition in Article 6 has not been satisfied as of the Closing Date
or if satisfaction of such a condition by such date is or becomes impossible
(other than through the failure of Buyer to comply with its obligations under
this agreement), and Buyer has not waived such condition on or before such
date;
10.1(d) by
Selling Parties if any condition in Article 7 has not been satisfied as of
the Closing Date or if satisfaction of such a condition by such date is or
becomes impossible (other than through the failure of Company or the
Shareholders to comply with their obligations under this agreement), and Selling
Parties have not waived such condition on or before such date;
10.1(e) by
mutual
written consent of Buyer and Selling Parties;
10.1(f) by
Buyer
if the Closing has not occurred on or before the Closing Date, unless the Buyer
is in material breach of this agreement; or
10.1(g) by
Selling Parties if the Closing has not occurred on or before the Closing Date,
unless the Company or Shareholders are in material breach of this
agreement.
23
|
10.2
|
EFFECT
OF TERMINATION
|
10.2(a) Each
party's right of termination under Section 10.1 is in addition to any other
rights it may have under this agreement or otherwise, and the exercise of such
right of termination will not be an election of remedies. If this agreement
is
terminated pursuant to Section 10.1, all obligations of the parties under
this agreement will terminate, except that the obligations of the parties in
this Section 10.2 and Article 11 will survive, provided, however,
that, if this agreement is terminated because of a breach of this agreement
by
the nonterminating party or because one or more of the conditions to the
terminating party's obligations under this agreement is not satisfied as a
result of the party's failure to comply with its obligations under this
agreement, the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
10.2(b) Notwithstanding
any other provision of this agreement to the contrary, if Buyer terminates
this
agreement because the condition in Section 6.12 (Equity Financing) has not
been
satisfied, then Buyer shall pay Company $25,000 when Buyer delivers notice
of
termination of this agreement.
ARTICLE
11
MISCELLANEOUS
|
11.1
|
PUBLICITY
|
All
notices to third parties and all other publicity concerning the transactions
contemplated by this agreement shall be jointly planned and coordinated by
and
between Buyer and Selling Parties. None of the parties shall act unilaterally
in
this regard without the prior written approval of the others; this approval
shall not be unreasonably withheld.
|
11.2
|
FINDER’S
OR BROKER’S FEES
|
Each
of
the parties represents and warrants that it has dealt with no broker or finder
in connection with any of the transactions contemplated by this agreement,
and,
insofar as it knows, no broker or other person is entitled to any commission
or
finder’s fee in connection with any of these transactions, except that ▇▇▇▇▇▇
▇▇▇▇ of G.R. ▇▇▇▇ & Co. shall be entitled to a payment of $15,000 out of the
closing proceeds payable to Company representing a finders fee for this
transaction.
|
11.3
|
EXPENSES
|
Each
of
the parties shall pay all costs and expenses incurred or to be incurred by
it in
negotiating and preparing this agreement and in Closing and carrying out the
transactions contemplated by this agreement.
|
11.4
|
INTERPRETATION
AND EFFECT OF HEADINGS
|
This
agreement shall be construed as if drafted jointly by all the parties. The
subject headings of the paragraphs and subparagraphs of this agreement are
included for purposes of convenience only, and shall not affect the construction
or interpretation of any of its provisions.
24
|
11.5
|
ENTIRE
AGREEMENT; MODIFICATION; WAIVER
|
This
agreement constitutes the entire agreement among the parties pertaining to
the
subject matter contained in it and supersedes all prior and contemporaneous
agreements, representations, and understandings of the parties with respect
to
such subject matter. No supplement, modification, or amendment of this agreement
shall be binding unless executed in writing by all the parties. No waiver of
any
of the provisions of this agreement shall be deemed, or shall constitute, a
waiver of any other provision, whether or not similar, nor shall any waiver
constitute a continuing waiver. No waiver shall be binding unless executed
in
writing by the party making the waiver.
|
11.6
|
COUNTERPARTS
|
This
agreement may be executed in multiple counterparts, each of which constitutes
an
original, and all of which, collectively, constitute only one agreement. The
signatures of all of the parties need not appear on the same counterpart, and
delivery of an executed counterpart signature page by U.S. mail, overnight
courier, facsimile, or email is as effective as executing and delivering this
agreement in the presence of the other parties to this agreement.
|
11.7
|
PARTIES
IN INTEREST
|
Nothing
in this agreement, whether express or implied, is intended to confer any rights
or remedies under or by any reason of this agreement on any persons other than
the parties to it and their respective successors and assigns, nor is anything
in this agreement intended to relieve or discharge the obligation or liability
of any third persons to any party to this agreement, nor shall any provision
give any third persons any right of subrogation or action over against any
party
to this agreement.
|
11.8
|
ASSIGNMENT
|
This
agreement shall be binding on, and shall inure to the benefit of, the parties
to
it and their respective heirs, legal representatives, successors, and assigns,
but shall not be assignable by any party without the prior written consent
of
the other parties.
|
11.9
|
ARBITRATION
|
Any
dispute, claim or controversy arising out of or relating to this agreement
or
the breach, termination, enforcement, interpretation or validity thereof,
including the determination of the scope or applicability of this agreement
to
arbitrate, shall be determined by arbitration in Seattle, Washington. The
arbitration shall be administered by JAMS pursuant to its Comprehensive
Arbitration Rules and Procedures. Judgment on the arbitration award may be
entered in any court having jurisdiction. This clause shall not preclude the
parties from seeking provisional remedies in aid of arbitration from a court
of
appropriate jurisdiction.
|
11.10
|
RECOVERY
OF LITIGATION COSTS
|
If
any
legal action, 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 attorneys’ fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be
entitled.
25
|
11.11
|
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
or mailing if served personally on the party to whom notice is to be given,
or
if mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid, and properly addressed as
follows:
|
To
Selling Parties at:
|
▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇
Chief
Executive Officer
Kashou
Brothers, Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
|
With
a copy to:
|
▇▇▇▇▇
▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇
& Associates
▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ # ▇▇▇▇
▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
|
To
Buyer and Parent at:
|
Mr. ▇▇▇▇▇
▇▇▇▇▇
Chief
Executive Officer
Organic
To Go, Inc.
▇▇▇▇ ▇▇▇
▇▇▇. ▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
|
With
a copy to:
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Esq.
Carr,
McClellan, Ingersoll, ▇▇▇▇▇▇▇▇ & ▇▇▇▇, Professional Law
Corporation
▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
|
Any
party
may change its address for purposes of this paragraph by giving the other
parties written notice of the new address in the manner set forth
above.
|
11.12
|
GOVERNING
LAW
|
This
agreement shall be construed in accordance with, and governed by, the laws
of
the State of California.
|
11.13
|
SEVERABILITY
|
If
any
provision of this agreement is held invalid or unenforceable by any court of
final jurisdiction, it is the intent of the parties that all other provisions
of
this agreement be construed to remain fully valid, enforceable, and binding
on
the parties.
26
IN
WITNESS WHEREOF, the parties to this agreement have duly executed it as of
the
day and year first above written.
|
ORGANIC
TO GO, INC.
a
Delaware corporation
|
KASHOU
BROTHERS, INC.
a
California corporation
doing
business as
“Brothers
Restaurant & Deli”
|
|||
|
By:
|
By:
|
|||
|
▇▇▇▇▇
▇▇▇▇▇
Chief
Executive Officer
|
▇▇▇▇▇▇
▇▇▇▇▇▇
Chief
Executive Officer
|
|||
|
By:
|
||||
|
Secretary
|
||||
|
ORGANIC
TO GO FOOD CORPORATION
a
Delaware corporation
|
|
|||
|
▇▇▇▇▇▇
▇▇▇▇▇▇, Individually
|
||||
|
By:
|
||||
|
▇▇▇▇▇
▇▇▇▇▇
Chief
Executive Officer
|
▇▇▇▇▇
▇▇▇▇▇▇, Individually
|
|||
|
▇▇▇▇▇
▇▇▇▇▇▇, Individually
|
||||
|
▇▇▇▇
▇▇▇▇▇▇, Individually
|
||||
27
LIST
OF EXHIBITS AND SCHEDULES
|
Schedule
|
Description
|
|
|
1
|
Assets
of Company
|
|
|
1.3
|
Assumed
Liabilities
|
|
|
2
|
Disclosure
Schedule
|
|
|
4.7
|
Consents
of Others
|
|
|
6.12
|
Consulting
Agreement
|
SCHEDULE 1
ASSETS
OF KASHOU BROTHERS, INC.
dba
Brothers Restaurant & Deli
Acquired
Assets:
Inventory
Furniture
Fixtures
Equipment
Motor
vehicles
Leases
Leasehold
improvements
Telephone
numbers
Web
sites
URLs
Trademarks
Trade
names (including the name “Brothers Restaurant & Deli”)
Customer
lists
Trade
secrets
Goodwill
Licenses
and permits
Excluded
Assets:
Cash
Accounts
receivable
Company’s
minute book, stock book, tax records, employment and personnel files, and other
records related to Excluded Assets
Rights
to
tax refunds, claims and credits
Insurance
policies and rights thereunder, including any premium refunds
SCHEDULE 1.3
ASSUMED
LIABILITIES
1. Lease
for
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
2. Lease
for
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
3. Lease
for
▇▇▇ ▇▇▇▇ “▇” ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
SCHEDULE 2
COMPANY’S
DISCLOSURE SCHEDULE
SECTION
2.6
DEBTS,
LIABILITIES AND OBLIGATIONS
SECTION 2.7
REAL
PROPERTY
1. ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
2. ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
3. ▇▇▇
▇▇▇▇
“▇” ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇.
SECTION 2.12
INTELLECTUAL
PROPERTY
The
tradename “Brothers Restaurant & Deli”
SCHEDULE 4.7
CONSENTS
OF OTHERS
SCHEDULE
6.12
CONSULTING
AGREEMENT
(Attached)
TABLE
OF CONTENTS
|
Page
|
||
|
ARTICLE
1
|
PURCHASE
AND SALE OF ASSETS
|
1
|
|
1.1
|
SALE
AND TRANSFER OF ASSETS
|
1
|
|
1.2
|
CONSIDERATION
FROM BUYER AT CLOSING
|
1
|
|
1.3
|
ASSUMPTION
OF LIABILITIES
|
2
|
|
1.4
|
ALLOCATION
OF PURCHASE PRICE
|
2
|
|
1.5
|
TAXES
|
3
|
|
ARTICLE
2
|
SELLING
PARTIES’ REPRESENTATIONS AND WARRANTIES
|
3
|
|
2.1
|
ORGANIZATION,
STANDING AND QUALIFICATION OF COMPANY
|
3
|
|
2.2
|
SHARE
OWNERSHIP
|
3
|
|
2.3
|
SUBSIDIARIES
|
3
|
|
2.4
|
FINANCIAL
STATEMENTS
|
3
|
|
2.5
|
ABSENCE
OF SPECIFIED CHANGES
|
4
|
|
2.6
|
DEBTS,
LIABILITIES AND OBLIGATIONS
|
5
|
|
2.7
|
TAX
RETURNS AND AUDITS
|
5
|
|
2.8
|
REAL
PROPERTY
|
5
|
|
2.9
|
HAZARDOUS
MATERIALS
|
5
|
|
2.10
|
ENVIRONMENTAL
|
5
|
|
2.11
|
INVENTORY
|
6
|
|
2.12
|
OTHER
TANGIBLE PERSONAL PROPERTY
|
6
|
|
2.13
|
INTELLECTUAL
PROPERTY
|
6
|
|
2.14
|
TITLE
TO ASSETS
|
7
|
|
2.15
|
CUSTOMERS
AND SALES
|
7
|
|
2.16
|
EMPLOYMENT
AGREEMENTS
|
7
|
|
2.17
|
INSURANCE
POLICIES
|
7
|
|
2.18
|
OTHER
CONTRACTS
|
8
|
|
2.19
|
COMPLIANCE
WITH LAWS
|
8
|
|
2.20
|
LITIGATION
|
8
|
|
2.21
|
AGREEMENT
WILL NOT CAUSE BREACH OR VIOLATION
|
8
|
|
2.22
|
AUTHORITY
AND CONSENTS
|
9
|
|
2.23
|
INTEREST
IN CUSTOMERS, SUPPLIERS, AND COMPETITORS
|
9
|
|
|
Page
|
|
|
2.24
|
IDENTIFICATION
AND COMPENSATION
|
9
|
|
2.25
|
COMPANY
DOCUMENTS
|
9
|
|
2.26
|
ACQUISITION
OF SHARES FOR OWN ACCOUNT
|
9
|
|
2.27
|
DISCLOSURE
OF INFORMATION
|
9
|
|
2.28
|
INVESTMENT
EXPERIENCE
|
9
|
|
2.29
|
ACCREDITED
INVESTOR
|
10
|
|
2.30
|
RESTRICTED
SECURITIES
|
10
|
|
2.31
|
FURTHER
LIMITATIONS ON DISPOSITION
|
10
|
|
2.32
|
LEGEND
|
10
|
|
2.33
|
NO
ADVERTISEMENT
|
11
|
|
2.34
|
FULL
DISCLOSURE
|
11
|
|
ARTICLE
3
|
REPRESENTATIONS
AND WARRANTIES OF BUYER AND PARENT
|
11
|
|
3.1
|
ORGANIZATION,
STANDING AND QUALIFICATION OF BUYER AND PARENT
|
11
|
|
3.2
|
SUBSIDIARY
|
11
|
|
3.3
|
SEC
FILINGS; FINANCIAL STATEMENTS
|
11
|
|
3.4
|
TAX
RETURNS AND AUDITS
|
12
|
|
3.5
|
COMPLIANCE
WITH LAWS
|
12
|
|
3.6
|
LITIGATION
|
12
|
|
3.7
|
AGREEMENT
WILL NOT CAUSE BREACH OR VIOLATION
|
12
|
|
3.8
|
AUTHORITY
AND CONSENTS
|
12
|
|
3.9
|
FULL
DISCLOSURE
|
13
|
|
ARTICLE
4
|
SELLING
PARTIES' OBLIGATIONS BEFORE CLOSING
|
13
|
|
4.1
|
BUYER'S
ACCESS TO PREMISES AND INFORMATION
|
13
|
|
4.2
|
CONDUCT
OF BUSINESS IN NORMAL COURSE
|
13
|
|
4.3
|
PRESERVATION
OF BUSINESS AND RELATIONSHIPS
|
13
|
|
4.4
|
MAINTENANCE
OF INSURANCE
|
13
|
|
4.5
|
EMPLOYEES
AND COMPENSATION
|
13
|
|
4.6
|
NEW
TRANSACTIONS
|
14
|
|
4.7
|
EXISTING
AGREEMENTS
|
14
|
ii
TABLE
OF CONTENTS
(continued)
|
|
Page
|
|
|
4.8
|
CONSENTS
OF OTHERS
|
14
|
|
4.9
|
DOCUMENTATION
OF PROCEDURES AND TRADE SECRETS
|
14
|
|
4.10
|
REPRESENTATIONS
AND WARRANTIES TRUE AT CLOSING
|
14
|
|
4.11
|
NOTIFICATION
|
14
|
|
4.12
|
NO
NEGOTIATION
|
15
|
|
ARTICLE
5
|
BUYER'S
OBLIGATIONS BEFORE CLOSING
|
15
|
|
5.1
|
SECURING
CONSENTS OF THIRD PARTIES
|
15
|
|
5.2
|
RESALE
CERTIFICATE
|
15
|
|
5.3
|
BULK
SALES LAW
|
15
|
|
ARTICLE
6
|
CONDITIONS
PRECEDENT TO BUYER'S PERFORMANCE
|
15
|
|
6.1
|
ACCURACY
OF SELLING PARTIES' REPRESENTATIONS AND WARRANTIES
|
15
|
|
6.2
|
PERFORMANCE
BY SELLING PARTIES
|
16
|
|
6.3
|
NO
MATERIAL ADVERSE CHANGE
|
16
|
|
6.4
|
CERTIFICATION
BY COMPANY
|
16
|
|
6.5
|
ABSENCE
OF LITIGATION
|
16
|
|
6.6
|
CORPORATE
APPROVAL
|
16
|
|
6.7
|
CONSENTS
|
16
|
|
6.8
|
CONSULTING
AGREEMENT
|
16
|
|
6.9
|
APPROVAL
OF DOCUMENTATION
|
17
|
|
6.10
|
ASSIGNMENTS
OF LEASES, CONSENTS TO ASSIGNMENT AND ESTOPPEL
CERTIFICATES
|
17
|
|
6.11
|
MISSION
VALLEY LOCATION
|
17
|
|
6.12
|
EQUITY
FINANCING
|
17
|
|
ARTICLE
7
|
CONDITIONS
PRECEDENT TO SELLING PARTIES’ PERFORMANCE
|
18
|
|
7.1
|
ACCURACY
OF BUYER'S REPRESENTATIONS AND WARRANTIES
|
18
|
|
7.2
|
BUYER'S
PERFORMANCE
|
18
|
|
7.3
|
BUYER'S
CORPORATE APPROVAL
|
18
|
|
7.4
|
ABSENCE
OF LITIGATION
|
18
|
|
ARTICLE
8
|
SELLING
PARTIES’ OBLIGATIONS AFTER CLOSING
|
18
|
iii
TABLE
OF CONTENTS
(continued)
iv