<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
February 27, 1998
EATERIES, INC.
(Exact name of registrant as specified in charter)
Oklahoma 0-14968 73-1230348
(State or other jurisdiction (Commission file number) (IRS Employer
of incorporation) Identification Number)
3240 W. Britton Road, Suite 202
Oklahoma City, Oklahoma 73120
(Address of principal executive offices, including zip code)
(405) 755-3607
(Registrant's telephone number, including area code)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On February 27, 1998, Fiesta Restaurants, Inc. ("Fiesta"), a
wholly-owned subsidiary of Eateries, Inc. (the "Registrant"), sold and
transferred to Chevys, Inc., a California corporation ("Chevys") substantially
all of the assets associated with three Casa Lupita restaurants located in
Naperville, Illinois, Ft. Myers, Florida and Lawrenceville, New Jersey for a
cash sales price of approximately $5.3 million. The sales price was determined
through negotiations between the parties. Neither the Registrant nor any of its
affiliates, officers or directors is affiliated with Chevys. The proceeds from
the sale were used to pay-down debt. In connection with this transaction, the
Registrant entered into an Agreement for Purchase and Sale of Assets with
Chevys under which the Registrant agreed to sell substantially all of the
assets associated with its Troy, Michigan Casa Lupita restaurant to Chevys for
a purchase price of $1 million. Closing of the sale of the Troy restaurant is
conditioned upon, among other things, the transfer to Chevys of the liquor
license related to such restaurant.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired: Not applicable.
(b) Pro forma financial information.
Included in this Report are the following pro forma Financial
Statements of Earteries, Inc.:
1. Pro forma condensed balance sheet at September 28, 1997
(unaudited)
2. Pro forma condensed statement of income for the year ended
December 29, 1996 (unaudited)
3. Pro forma condensed statement of income for the thirty-nine
weeks ended September 28, 1997
4. Notes to proforma condensed financial statements (unaudited)
(c) Exhibits:
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
Exhibit 2.1 Agreement for Purchase and Sale of Assets and
Licenses dated as of February 26, 1998, among
Eateries, Inc., Fiesta Restaurants, Inc. and
Chevys, Inc.
Exhibit 2.2 Agreement for Purchase and Sale of Assets
dated as of February 26, 1998, between Eateries, Inc. and Chevys, Inc.
</TABLE>
-2-
<PAGE> 3
Item 7(b)
PRO FORMA FINANCIAL INFORMATION
The following unaudited pro forma financial information relates to the
November 14, 1997 acquisition (the "Famous Acquisition") of substantially all of
the assets of Famous Restaurants, Inc. ("Famous") and the assumption of
specified liabilities of Famous and the February 27, 1998, sale (the "Chevy's
Sale") of three Casa Lupita restaurants to Chevy's, Inc. ("Chevy's"). The Famous
Acquisition has been accounted for as a purchase business combination. The pro
forma amounts have been prepared based on certain purchase accounting and other
pro forma adjustments (as described in the accompanying notes) to the historical
financial statements of Eateries, Inc. ("Eateries") and Famous.
The unaudited pro forma condensed balance sheet at September 28, 1997,
reflects the historical financial position of Eateries at September 28, 1997,
combined with the allocated purchase price of the Famous assets as of November
14, 1997, with pro forma adjustments as if the Famous Acquisition and Chevy's
Sale had both occurred on September 28, 1997. The unaudited pro forma condensed
statement of income for the fiscal year ended December 29, 1996, reflects the
historical results of operations of both companies with pro forma adjustments as
if the Famous Acquisition and Chevy's Sale had both occurred on January 1, 1996.
The unaudited pro forma condensed statement of income for the thirty-nine weeks
ended September 28, 1997, reflects the historical results of Eateries for the
same period and the historical results of Famous for the forty weeks ended
October 5, 1997, with pro forma adjustments as if the Famous Acquisition and
Chevy's Sale had both occurred on December 30, 1996. The pro forma adjustments
are described in the accompanying notes and give effect to events that are (a)
directly attributable to the acquisition, (b) factually supportable, and (c) in
the case of certain statement of income adjustments, expected to have a
continuing impact.
The unaudited pro forma condensed financial statements should be read
in connection with Eateries' and Famous's historical financial statements and
related footnotes.
The unaudited pro forma financial information presented is for
information purposes only and does not purport to represent what Eateries' and
Famous's financial position or results of operations as of the dates presented
would have been had the acquisition in fact occurred on such date or at the
beginning of the period indicated or to project Eateries' and Famous's financial
position or results of operations for any future date or period.
-3-
<PAGE> 4
Item 7 (b) 1.
EATERIES, INC.
PRO FORMA CONDENSED BALANCE SHEET
AS OF SEPTEMBER 28, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma Effects of
----------------------------
Famous Acquisition
Allocation of
Purchase Price Pro Forma
to Assets Acquired Before
Eateries, Inc. and Liabilities Acquisition Chevy's
Historical Assumed Financing Sale
---------- ------------------ ----------- ---------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 773,759 $ 41,900 $ -- $ 815,659
Receivables 938,879 -- -- 938,879
Deferred income taxes 683,000 -- -- 683,000
Inventories 1,381,180 942,340 -- 2,323,520
Other 330,335 158,016 -- 488,351
-----------------------------------------------------------------
Total current assets 4,107,153 1,142,256 -- 5,249,409
-----------------------------------------------------------------
Property and equipment, at cost 34,713,114 5,009,000 -- 39,722,114
Landlord finish-out allowances (14,308,064) -- -- (14,308,064)
Accumulated depreciation and amortization (6,658,594) -- -- (6,658,594)
-----------------------------------------------------------------
Net property and equipment 13,746,456 5,009,000 -- 18,755,456
-----------------------------------------------------------------
Deferred income taxes 518,000 -- -- 518,000
Other assets, net 717,081 4,348,434 -- 5,065,515
-----------------------------------------------------------------
Total assets $ 19,088,690 $ 10,499,690 $ -- $ 29,588,380
=================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,610,959 $ 498,595 $ -- $ 3,109,554
Accrued liabilities 2,381,525 1,020,178 -- 3,401,703
Current portion of long-term obligations 28,093 -- 1,155,000 1,183,093
-----------------------------------------------------------------
Total current liabilities 5,020,577 1,518,773 1,155,000 7,694,350
Other noncurrent liabilities 730,420 -- -- 730,420
Long-term obligations, net of current portion 3,315,000 -- 7,825,917 11,140,917
-----------------------------------------------------------------
Total liabilities 9,065,997 1,518,773 8,980,917 19,565,687
-----------------------------------------------------------------
Stockholders' equity:
Preferred stock -- -- -- --
Common stock 8,411 -- -- 8,411
Additional paid-in capital 9,437,653 -- -- 9,437,653
Retained earnings 2,143,912 -- -- 2,143,912
-----------------------------------------------------------------
11,589,976 -- -- 11,589,976
Treasury stock (1,567,283) -- -- (1,567,283)
-----------------------------------------------------------------
Total stockholders' equity 10,022,693 -- -- 10,022,693
-----------------------------------------------------------------
Total liabilities and stockholders' equity $ 19,088,690 $ 1,518,773 $ 8,980,917 $ 29,588,380
=================================================================
</TABLE>
<TABLE>
<CAPTION>
Pro Forma
Effects of
Chevy's Sale Pro Forma
------------ ---------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ (9,300) $ 806,359
Receivables -- 938,879
Deferred income taxes -- 683,000
Inventories (187,223) 2,136,297
Other (18,443) 469,908
---------------------------
Total current assets (214,966) 5,034,443
---------------------------
Property and equipment, at cost (3,114,000) 36,608,114
Landlord finish-out allowances -- (14,308,064)
Accumulated depreciation and amortization -- (6,658,594)
---------------------------
Net property and equipment (3,114,000) 15,641,456
---------------------------
Deferred income taxes -- 518,000
Other assets, net (1,971,034) 3,094,481
---------------------------
Total assets $(5,300,000) $ 24,288,380
===========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ -- $ 3,109,554
Accrued liabilities -- 3,401,703
Current portion of long-term obligations (397,743) 785,350
---------------------------
Total current liabilities (397,743) 7,296,607
Other noncurrent liabilities -- 730,420
Long-term obligations, net of current portion (4,902,257) 6,238,660
---------------------------
Total liabilities (5,300,000) 14,265,687
---------------------------
Stockholders' equity:
Preferred stock -- --
Common stock -- 8,411
Additional paid-in capital -- 9,437,653
Retained earnings -- 2,143,912
---------------------------
-- 11,589,976
Treasury stock -- (1,567,283)
---------------------------
Total stockholders' equity -- 10,022,693
---------------------------
Total liabilities and stockholders' equity $(5,300,000) $ 24,288,380
===========================
</TABLE>
4
<PAGE> 5
Item 7 (b) 2.
EATERIES, INC.
PRO FORMA CONDENSED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 29, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Pro Forma Pro Forma Effects Of
Adjustments Adjustments Chevy's Sale Pro Forma
Famous Related to Related
Eateries, Inc. Restaurants, Inc. Famous to Acquisitions
Historical Historical Acquisitions Chevy's Sale
------------- ----------------- ------------ ------------ ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Food and beverage sales $ 55,732,807 $32,099,178 $ -- $87,831,985 (6,418,746)(e) 81,413,239
Franchise fees and royalties 264,954 -- -- 264,954 -- 264,954
Other 418,476 68,230 -- 486,706 (36,830)(e) 449,876
------------------------------------------------------------------------------------------
Total revenues 56,416,237 32,167,408 -- 88,583,645 (6,455,576) 82,128,069
Cost of sales 17,070,384 8,578,169 -- 25,648,553 (1,698,461)(e) 23,950,092
------------------------------------------------------------------------------------------
Gross profit 39,345,853 23,589,239 -- 62,935,092 (4,757,115) 58,177,977
------------------------------------------------------------------------------------------
Operating expenses 32,218,754 20,412,382 -- 52,631,136 (3,958,355)(e) 48,672,781
Pre-opening costs 726,000 -- -- 726,000 -- 726,000
General and administrative
expenses 3,665,207 1,784,418 -- 5,449,625 (354,420)(e) 5,095,205
Depreciation and amortization 1,886,323 832,884 (463,551)(a) 2,519,552 (112,000)(f) 2,299,483
263,896(b) (108,069)(g)
Interest expense 194,070 -- 690,000(c) 884,070 (407,000)(h) 477,070
------------------------------------------------------------------------------------------
Total expenses 38,690,354 23,029,684 490,345 62,210,383 (4,939,844) 57,270,539
------------------------------------------------------------------------------------------
Income before provision for
income taxes 655,499 559,555 (490,345) 724,709 182,729 907,438
Provision for income taxes 74,000 -- (40,000)(d) 34,000 69,000(i) 103,000
------------------------------------------------------------------------------------------
Net income $ 581,499 $ 559,555 $ (450,345) $ 690,709 $ 113,729 $ 804,438
==========================================================================================
Weighted average common and
common equivalent shares 3,987,661 3,987,661 3,987,661
============ =========== ============
Net income per share $ 0.15 $ 0.17 $ 0.20
============ =========== ============
</TABLE>
5
<PAGE> 6
Item 7 (b) 3.
EATERIES, INC.
PRO FORMA CONDENSED STATEMENT OF INCOME
FOR THE THIRTY-NINE WEEKS ENDED SEPTEMBER 28, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
Pro Forma
Famous Adjustments Pro Forma
Eateries, Restaurants, Related to Pro Forma Adjustments
Inc. Inc. Famous Before Related to
Historical Historical Acquisition Chevy's Sale Chevy's Sale Pro Forma
------------ ------------ ----------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Revenues:
Food and beverage sales $ 42,136,103 $ 24,851,921 $ -- $ 66,988,024 $ (5,292,749)(e) $ 61,695,275
Franchise fees and
royalties 198,703 -- -- 198,703 -- 198,703
Other 312,775 59,198 -- 371,973 (40,874)(e) 331,099
-----------------------------------------------------------------------------------------
Total revenues 42,647,581 24,911,119 -- 67,558,700 (5,333,623) 62,225,077
Cost of sales 11,989,724 6,684,405 -- 18,674,129 (1,376,837)(e) 17,297,292
-----------------------------------------------------------------------------------------
Gross profit 30,657,857 18,226,714 -- 48,884,571 (3,956,786) 44,927,785
-----------------------------------------------------------------------------------------
Operating expenses 24,951,860 15,753,378 -- 40,705,238 (3,213,625)(e) 37,491,613
Pre-opening costs 266,000 -- -- 266,000 -- 266,000
General and administrative
expenses 2,927,616 1,412,280 -- 4,339,896 (255,576)(e) 4,084,320
Depreciation and
amortization 1,652,646 653,337 (359,723)(a) 2,144,182 (84,000)(f) 1,979,130
197,922 (b) (81,052)(g)
Interest expense 183,915 -- 517,500 (c) 701,415 (305,250)(h) 396,165
-----------------------------------------------------------------------------------------
Total expenses 29,982,037 17,818,995 355,699 48,156,731 (3,939,503) 44,217,228
-----------------------------------------------------------------------------------------
Income before provision for
income taxes 675,820 407,719 (355,699) 727,840 (17,283) 710,557
Provision for income taxes 198,000 -- (99,000)(d) 99,000 (7,000)(i) 92,000
-----------------------------------------------------------------------------------------
Net income $ 477,820 $ 407,719 $ (256,699) $ 628,840 $ (10,283) $ 618,557
=========================================================================================
Weighted average common and
common equivalent shares 4,019,128 4,019,128 4,019,128
============ ============ ============
Net income per share $ 0.12 $ 0.16 $ 0.15
============ ============ ============
</TABLE>
6
<PAGE> 7
Item 7 (b) 4.
EATERIES, INC.
NOTES TO PRO FORMA
CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(a) To adjust Famous's historical depreciation and amortization expense
related to buildings, furniture, equipment and leasehold improvements for
the decreased basis in these assets. Depreciable lives for the assets
acquired are as follows:
Buildings 30 years
Furniture and equipment 5 years
Leasehold improvements 5 years
(b) To record the increase in goodwill amortization due to the goodwill
created from the Famous acquisition. Goodwill is amortized over 15 years.
(c) To record interest expense on the acquisition debt.
(d) To adjust the provision for income taxes for the effect of the preceding
pro forma adjustments and Famous historical operations, including the
favorable impact of increased general business tax credits.
(e) To adjust historical results of operations for the three restaurants sold
to Chevy's.
(f) To adjust pro forma depreciation and amortization expense related to
buildings, furniture, equipment and leasehold improvements sold to Chevy's.
(g) To record the decrease in goodwill amortization due to a reduction in
goodwill resulting from the Chevy's Sale.
(h) To record the decrease in interest expense resulting from the assumed
pay-down of debt with the proceeds from the Chevy's Sale.
(i) To adjust the provision for income taxes for the effect of pro forma
adjustments (e) through (h) at an incremental tax rate of 38%.
7
<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EATERIES, INC.
(Registrant)
By: /s/ COREY GABLE
-------------------------------
Corey Gable
Vice President/Treasurer
Chief Financial and
Accounting Officer
Dated: March 16, 1998
-8-
<PAGE> 9
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
Exhibit 2.1 Agreement for Purchase and Sale of Assets and Licenses
dated as of February 26, 1998, among Eateries, Inc.,
Fiesta Restaurants, Inc. and Chevys, Inc.
Exhibit 2.2 Agreement for Purchase and Sale of Assets dated as of
February 26, 1998, between Eateries, Inc. and Chevys, Inc.
<PAGE> 1
EXHIBIT 2.1
AGREEMENT FOR PURCHASE AND SALE
OF
ASSETS AND LICENSES
This Agreement for Purchase and Sale of Assets and Licenses (this
"Agreement") is made and entered into as of February __, 1998 (the "Effective
Date"), by and among EATERIES, INC., an Oklahoma corporation ("Eateries"), and
FIESTA RESTAURANTS, INC., an Oklahoma corporation ("Fiesta") (unless specific
reference is made to an individual party, Eateries and Fiesta are hereinafter
referred to individually and collectively as "Seller"), and CHEVYS, INC., a
California corporation ("Purchaser").
R E C I T A L S
A. Seller is the owner and operator of certain CASA LUPITA
restaurants, the locations of which are set forth in EXHIBIT "A" hereto
(collectively, the "Restaurants");
B. As more particularly described in Schedule 1 hereto, Eateries
or Fiesta:
i. owns the fee interest in the land and the improvements on
which Restaurant #709 is located;
ii. owns the fee interest in the land and the improvements thereon
referred to as the Parking Lot Parcel in Schedule 1 hereto;
iii. leases the premises and improvements on which Restaurant #'s
702 and 706 are located, pursuant to leases more particularly described in
Schedule 1;
iv. leases certain property for parking lot purposes pursuant to
leases more particularly described as the Parking Leases in Schedule 1 hereto.
1
<PAGE> 2
The fee-owned properties referred to in clauses (i) and (ii) are hereinafter
referred to as the "Fee." The leasehold properties referred to in clauses
(iii) and (iv) are hereinafter referred to as "Leaseholds," and the leases
evidencing the Leaseholds more particularly identified in Schedule 1 are
hereinafter referred to as the "Leases." The Fees and the Leaseholds are
sometimes referred to herein collectively as the "Real Properties."
C. At each of the Restaurants, Seller sells liquor for
on-premises consumption under liquor licenses issued to it, or to Seller's
predecessor in interest at the Restaurant, by the appropriate governmental
agency with jurisdiction over the on-site sale and consumption of alcoholic
beverages (collectively, the "Liquor Licenses").
D. Except as set forth on Schedule 2 hereto, Seller owns all of
the items of personal property which are used in the operation of the
Restaurants, comprised of the following:
i) inventory of food and paper products ("Inventory");
ii) uniforms and supplies ("Supplies");
iii) furniture, fixtures (including, subject to the
reversionary interest of the landlords under the Leases, leasehold
improvements), equipment and all other tangible personal property items used to
operate the Restaurants ("Equipment"); and
iv) operating cash in the cash registers at the
Restaurants at any given time ("Operating Cash").
The items identified in (i), (ii), (iii) and (iv) are hereafter
referred to as the "Operations Assets," which term does not include the
Excluded Assets set forth on Schedule 2.
2
<PAGE> 3
E. Set forth on Schedule 4 attached hereto are each of the
equipment leases, and the service or vendor contracts relating to the operation
of the Restaurants, that Purchaser is assuming pursuant to this Agreement (the
"Material Contracts"); other than as set forth on Schedule 4 hereto and other
than the Leases, Purchaser shall not be obligated to assume any service or
vendor agreements or contracts to which Seller is a party relating to the
operation of the Restaurants, including, without limitation, maintenance
contracts, management contracts, equipment contracts or service contracts
(collectively "Excluded Agreements").
F. The Operations Assets, the Liquor License (as to the
Lawrenceville, NJ property) the Fee, the Leaseholds, the Material Contracts and
the Intellectual Property (as hereinafter defined), and any and all guarantees,
licenses, governmental permits and approvals and warranties, which are by their
terms transferable, issued to or owned by Seller, with respect to the
Restaurants or the business conducted, or any Equipment located, therein, any
goodwill of the business (not including any goodwill in any trade name,
trademark, or service mark of Seller or any of its affiliates) at each of the
Restaurants, and any and all records and reports relating to the Restaurants,
including but not limited to, plans, specifications, environmental and soils
reports, maintenance and repair records, surveys and operating records
(collectively, the "Intangible Property"), are hereinafter referred to as the
"Assets."
G. Seller is the owner of a distinctive concept and type of
restaurant for the marketing, preparation and sale of certain Mexican style
food products, commonly known as "CASA LUPITA," and of certain trade dress,
trademarks and service marks (collectively "Trademarks''), together with
certain trade secrets, know-how, distinctive
3
<PAGE> 4
designs and advertising, specially designed equipment, systems and procedures,
and other proprietary documentation and information used solely in connection
with the operation of the Restaurants as Casa Lupita restaurants (the "System")
(the Trademarks and the System are herein referred to as the "Intellectual
Property").
H. Seller desires to sell and transfer to Purchaser all of the
Assets, and Purchaser desires to purchase and accept the transfer of same, all
in accordance with the terms and conditions hereinafter set forth, and Seller
desires, upon the terms, conditions and provisions hereinafter set forth, to
receive a license to use the Intellectual Property in connection with the
operation of the certain Casa Lupita restaurants not being transferred to
Purchaser in accordance with this Agreement, and Purchaser's desires to grant
the same, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises herein of the
parties hereto, and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged by each of the parties, the parties
hereby agree as follows:
1. SALE AND PURCHASE. Subject to the terms and conditions
hereof, Seller shall sell, assign and transfer the Assets to Purchaser and
Purchaser shall purchase and acquire the Assets from Seller:
2. PURCHASE PRICE. The purchase price ("Purchase Price") for the
Assets (other than the Inventory, Supplies and Operating Cash) shall be FIVE
MILLION THREE HUNDRED THOUSAND DOLLARS ($5,300,000), allocated in accordance
with Schedule 5 attached hereto, plus the ISC Estimate (as that term is
hereinafter defined).
4
<PAGE> 5
3. VALUE OF INVENTORY, SUPPLIES AND OPERATING CASH. The value of
the Inventory, Supplies and Operating Cash is hereby estimated by the parties
to be Fifteen Thousand Dollars ($15,000) (the "ISC Estimate"), per Restaurant,
comprised of $10,000 for Inventory, $2,000 for Supplies and $3,000 for
Operating Cash, per Restaurant. Purchaser shall pay the ISC Estimate in
immediately payable funds at Closing. The actual value of the Inventory,
Supplies and Operating Cash shall be determined as of the close of business on
the Closing Date, as defined below, by a physical count of all Inventory,
Supplies and Operating Cash to be made jointly by Purchaser and Seller at that
time. The usable Inventory and Supplies shall be valued at its invoiced price
to Seller. Purchaser shall have the right to reject, within reason, any excess
or outdated Inventory or Supplies. Operating Cash transferred to Purchaser
shall be reimbursed to Seller dollar for dollar. Seller shall maintain at each
Restaurant on the day of the Closing cash on hand of approximately $3,000 so
that Purchaser shall have such cash available for the first day of Purchaser's
operating of the Restaurants. Within ten (10) business days after the Closing
Date, Purchaser or Seller, as appropriate, shall pay the other party the
positive difference between the value of the Inventory, Supplies and Operating
Cash and the ISC Estimate paid at Closing.
4. PAYMENT OF PURCHASE PRICE. The Purchase Price, plus the ISC
Estimate, plus or minus adjustments as hereinafter provided, shall be paid in
full in immediately available funds at Closing to an account designated in
writing by Seller.
5
<PAGE> 6
5. CLOSING.
5.1. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Stewart Title
Guaranty Company (the "Escrow Agent") located at 650 California Street, San
Francisco, California, at 10:00 a.m. on the Effective Date (the "Scheduled
Closing Date"), or such earlier date as may be mutually agreed by the parties
(the date of Closing, whether the Scheduled Closing Date or the actual date of
Closing is herein referred to as the "Closing Date").
5.2. Any and all real property transfer taxes, recording
charges and all other closing costs relating to the transfer of the real
property Assets (and not otherwise expressly provided for in this Agreement)
shall be paid by Seller. Purchaser shall pay all title insurance premiums
relating to any title insurance policy issued with respect to the Fees and
Leaseholds to be transferred to Purchaser hereunder. Purchaser and Seller
shall share equally the charges of the Escrow Agent. Seller will pay any
recording and other charges associated with the release of any liens
encumbering the Real Properties or to clear the status of title to enable
Seller to convey the Real Properties subject to the Permitted Exceptions.
Seller will pay any and all sales and excise taxes, if any, incurred in
connection with the transaction contemplated by this Agreement, subject to the
receipt from Purchaser of sales tax exemption certificate numbers for
Purchaser, or other evidence reasonably satisfactory to Seller, confirming the
exemption of Purchaser from sales tax for items being transferred under this
Agreement that constitute inventory.
6
<PAGE> 7
5.3. Possession of the Assets, and control of the
operations of the Restaurants, will be delivered by Seller to Purchaser at the
close of business on the Closing Date.
5.4. The obligations of Seller and Purchaser under this
Section 5 shall survive the Closing.
6. [Intentionally Omitted].
7. TITLE TO ASSETS; CONDITION OF ASSETS; ASSUMPTION OF LIABILITIES
7.1. [Intentionally omitted.]
7.2. (a) At Closing, Seller will transfer and convey
to Purchaser good and marketable title to the Assets (other than the Real
Properties) free and clear of any and all mortgages, liens, claims, security
interests and encumbrances, other than the lien for current personal property
taxes, if any (and not included in real property taxes), not yet delinquent,
and to the extent provided in Schedule 2, subject to the terms of the equipment
leases noted in Schedule 2 (the "Equipment Leases") (without limiting the
generality of the defined term "Material Contracts," the Equipment Leases are
deemed Material Contracts for purposes of this Agreement). Purchaser shall
assume the following liabilities of Seller with respect to the Assets (other
than the Real Properties):
(i) all trade accounts payable of the Restaurants
as of the Closing Date, and for any goods ordered (but not yet received) by
Seller in the ordinary course of business prior to the Closing; and
(ii) under the Material Contracts, accruing from
and after the Closing.
7
<PAGE> 8
(b) Except as expressly provided in this Agreement,
Purchaser does not assume and shall not be obligated to pay or satisfy any
obligation, debt or liability, contingent or otherwise of Seller with respect
to the Assets.
(c) Purchaser acknowledges that one of the Material
Contracts is an agreement with Pepsi Cola National Accounts (the "Pepsi
Contract"). Purchaser agrees to continue to purchase Pepsi Cola products under
the terms of the Pepsi Contract for the term thereof.
7.3. (a) At Closing, Seller shall assign its interest
in the Leases to Purchaser, and Purchaser shall accept such assignment, and
assume and be responsible for all obligations of Seller pursuant to the Leases
arising on and after the Closing, all in accordance with the terms of an
Assignment and Assumption of Leases in the form of EXHIBIT "D," or in such
other form as may be mutually agreed upon by Seller, Purchaser and the
applicable landlord under the Leaseholds. Purchaser acknowledges that Seller's
obligation to assign its interest in the Leases is contingent upon obtaining
the consent of each of the landlords under the Leases, in form and substances
reasonably acceptable to Seller, if required under the express terms of the
applicable Lease. Seller will use commercially reasonable efforts to obtain
all such consents, and Purchaser will cooperate with Seller in obtaining such
consents.
(b) At Closing, Seller shall assign its rights to
the Trademarks to Purchaser by an assignment in the form of Exhibit "C" hereto,
and Purchaser shall grant Seller a license to use the Intellectual Property in
the form of EXHIBIT "E" hereto (the "IP License").
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7.4. Seller has previously received from Purchaser a form
of estoppel certificate (the "Landlord Estoppel") with respect to the Leases
identified in Schedule 1 as the Restaurant Lease (the "Restaurant Leases"). In
the event Seller fails to obtain from any one or more landlord under the
Restaurant Leases signed Landlord Estoppels in a form satisfactory to
Purchaser, Purchaser shall have the right to terminate this Agreement or to
require Seller to execute a seller indemnity with respect to the matters
contained in the Landlord Estoppel.
7.5. At Closing, Seller shall convey its interest in the
Fee by warranty deed, in the form of EXHIBIT "F," subject to the lien of real
property taxes not yet delinquent, and to the title exceptions contained in the
Title Policies.
7.6. (a) As soon as procurable, Purchaser shall obtain
commitments for title insurance (the "Commitments"), issued by Stewart Title
Guaranty Company ("Title Company"), showing the status of title to each of the
Real Properties, together with legible copies of all underlying documents
referenced therein, and containing the commitment of Title Company, subject to
the conditions and on the other terms of the Commitments, to issue to Purchaser
an ALTA owner's policy of title insurance (10-17-92) insuring Purchaser's title
to the Real Properties (the "Title Policies") subject to Permitted Exceptions.
Purchaser shall have the right to obtain, at Purchaser's sole expense, surveys
(the "Surveys") of any or all of the Real Properties.
(b) Notwithstanding anything to the contrary in the
foregoing, Seller shall be obligated to cause to be released or reconveyed from
the Real Properties at Closing all liens and encumbrances (i) securing any
voluntary indebtedness or loans advanced to or for the benefit of Seller, or as
to which Seller acquired the Real Properties
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on a "subject to" basis, which Seller shall be obliged to pay-off or cause to
be satisfied at or prior to the Closing, and (ii) evidencing any other monetary
obligation (other than taxes and assessments) that can be removed by the
payment to the lienor of a liquidated sum of money, not to exceed $100,000.
8. CONDITIONS PRECEDENT TO CLOSING.
8.1. Each of Seller and Purchaser shall use commercially
reasonable efforts to timely fulfill those of the following conditions as are
its obligation hereunder.
8.2. The obligations of Purchaser to close on the purchase
and sale of the Assets are subject to the satisfaction of the following
conditions:
(i) Tender of the documents to be executed by
Seller as of the Closing, as provided in Section 9.1 hereof.
(ii) All consents provided in Section 7.3(a), and
the Landlord Estoppels provided in Section 7.4, shall have been obtained.
(iii) On the Closing Date, all representations and
warranties made by Seller in this Agreement shall be true and correct in all
material respects as if made on and as of the Closing Date.
(iv) The Title Company shall be prepared to issue
the Title Policies showing Purchaser as owner of the Fee, and as vested in a
leasehold interest as to the Restaurant Leaseholds, in each case subject only
to such exceptions as are acceptable to Purchaser (the "Permitted Exceptions").
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(v) On the Closing Date, Seller shall not be in
material default in the performance of any covenant or agreement to be
performed by Seller under this Agreement.
(vi) The execution and delivery of this Agreement
by Seller, and the performance of its covenants and obligations under it, shall
have been duly authorized by all necessary corporation action, and Purchaser
shall have received copies of all resolutions pertaining to that authorization,
certified by the secretary of Seller.
8.3. The obligations of Seller to close the purchase and
sale of the Assets are subject to the satisfaction of the following conditions:
(i) Tender of the Purchase Price, reduced or
increased by any credits and adjustments, and tender of the documents to be
executed by Purchaser as of the Closing, as provided in Section 9.1 hereof.
(ii) All consents provided in Section 7.3(a) shall
have been obtained.
(iii) On the Closing Date, all representations and
warranties made by Purchaser in this Agreement shall be true and correct in all
material respects as if made on and as of the Closing Date.
(iv) On the Closing Date, Purchaser shall not be
in material default in the performance of any covenant or agreement to be
performed by Purchaser under this Agreement.
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9. CLOSING.
9.1. The Closing shall take place on the Closing Date at
the time and place provided in Section 5.1. At the Closing, Seller and
Purchaser, as appropriate, shall execute and deliver the following documents:
(i) An Assignment and Assumption of Leases, in
the form of EXHIBIT "D" hereto, with respect to the Leaseholds.
(ii) A Warranty Deed, in the form of EXHIBIT "F"
with respect to the Fee.
(iii) A Bill of Sale and Assignment and Assumption
Agreement, in the form of EXHIBIT "H" hereto, with respect to the Assets (other
than the Real Properties).
(iv) The IP License in the form of EXHIBIT "E"
hereto.
(v) The Trademark Assignment in the form of
EXHIBIT "C" hereto.
10. PRORATIONS/CHANGE OF OWNERSHIP TRANSITION.
10.1. The following shall be prorated as of 12:01 a.m. on
the day immediately following the Closing Date, with Seller being entitled to
all income (whether on a cash basis or on credit) and responsible for all
liabilities and charges, in each case relating to the possession and operation
of the Restaurants on or prior to the Closing Date and Purchaser being entitled
to all income (whether on a cash basis or on credit) and responsible for paying
any and all such liabilities and any and all charges after the Closing Date:
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(i) Personal property taxes accruing for the year
in which the Closing occurs;
(ii) Real property taxes accruing during the year
in which the Closing occurs pertaining to the Fees and those which are the
lessee's obligation under each Lease shall be prorated between the parties as
of the Closing Date on the basis of the number of days within such tax period
as compared to the number of days within such tax period occurring prior to and
including the Closing Date. In the event it is necessary to estimate the
prorations, final adjustments shall be made promptly upon receipt of final tax
bills;
(iii) Rent (including but not limited to percentage
rent), maintenance, insurance and other charges under each Lease;
(iv) All amounts paid or payable under the
Material Contracts, including prepayments;
(v) All telephone and utility charges, and other
obligations relating to the operation of the Restaurants; to the extent such
amounts may be based on an estimate rather than actual statements or invoices
and later proved to be inaccurate, payment shall be made after the statement or
invoices that have been received as may be necessary to allocate all such
obligations in accordance herewith;
(vi) Any and all Accrued Employee Bonuses (as that
term is hereinafter defined) for Continuing Employees (as that term is
hereinafter defined); and
(vii) Seller shall receive a credit in the amount
of all deposits, if any, held by the landlord under the Leases.
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Any and all rent payable under the Leases (including percentage rent charges,
common area maintenance and operating expense pass-throughs, taxes, insurance
and utilities) shall be prorated as of the Closing Date based on the latest
figures available from the landlords under the Leases; provided, however, a
final adjustment between the parties with respect to such charges shall be made
promptly following receipt by Purchaser of final year-end statements for such
charges for the applicable lease or calendar year in which the Closing Date
occurs. The terms of this paragraph shall survive the Closing.
10.2. Seller has posted security and other deposits of
various kinds with utilities and landlords related to the Restaurants.
Purchaser shall pay to Seller at Closing the amount of any such deposits for
which Purchaser shall receive the benefit after Closing. Purchaser shall not
pay Seller at Closing for any deposits for which Seller is entitled to make
application for a separate refund.
11. REPRESENTATIONS AND WARRANTIES OF SELLER.
11.1. To induce Purchaser to enter into this Agreement,
Seller hereby represents and warrants to Purchaser as of the date hereof and as
of the Closing Date:
(i) Each of Eateries and Fiesta is a duly formed
and validly existing corporation incorporated in the State of Oklahoma, is in
good standing and qualified to do business in each of the States where a
Restaurant is located, and has full power and authority to execute, deliver and
perform this Agreement. This Agreement and all other documents and instruments
executed and delivered by Eateries and Fiesta pursuant to this Agreement is the
legal and binding obligation of such party and is enforceable against such
party in accordance with their terms.
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(ii) Neither Eateries nor Fiesta is a party to any
contract, commitment or agreement, nor is either party, any of its properties,
or the Assets subject to, bound by, or affected by any order, judgment, decree,
law, statute, ordinance, rule, regulation or other restriction of any kind or
character, which would (a) prevent either Eateries and/or Fiesta from entering
into this Agreement or from consummating the transactions contemplated hereby,
or (b) materially and adversely affect, or in the future may materially and
adversely affect, the Assets or the ability or prospects of Purchaser to
operate the Restaurants in a manner similar to that presently conducted by
Seller, or the ability of Purchaser to utilize the Assets in the manner in
which they are presently utilized.
(iii) Seller owns and operates the businesses at
the Restaurants and there are no existing tenancies, leases or subleases on any
of the Real Properties, except as expressly provided herein and as are to be
transferred to Purchaser pursuant hereto.
(iv) To the best knowledge of Seller, Seller has
delivered to Purchaser true, correct and complete copies of each Lease. To the
best knowledge of Seller, there are no other agreements, modifications or
amendments thereto entered into by, and binding on, Seller, other than as
contained in the Leases.
(v) Each Lease is in full force and effect, the
rent and all amounts due thereunder are paid current. To the best knowledge of
Seller, Seller is not in material default under any of the terms of any Lease
relating to the period of time it has owned and operated the Restaurants.
Seller has received no written notice of lessee's default under any of the
Leases which has not been cured by Seller.
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(vi) Except as otherwise provided in Schedule 11C,
Seller is not in default in any respect under any executive, legislative,
judicial, administrative or private (such as arbitration) ruling, order, writ,
injunction or decree with respect to or affecting its Restaurants.
(vii) Each of the Restaurants has in it at least
the items of Equipment determined by Seller in its reasonable judgment as
appropriate for such type of restaurant.
(viii) All unfilled purchase and sales orders and
all other commitments for purchases and sales made by Seller with respect to
the Restaurants were made in the usual and ordinary course of Seller's business
in accordance with, and subject to normal industry practice.
(ix) Seller owns good and marketable title to the
Assets (other than the Real Properties), free and clear of any and all
mortgages, liens, claims, security interests and encumbrances, other than the
lien for current personal property taxes, if any (and not included in real
property taxes), not yet delinquent. Except as to the equipment subject to the
Equipment Leases, none of the Operations Assets is held under a lease, security
agreement, conditional sales contract or other title retention agreement.
(x) To the best of Seller's knowledge, Schedule
11A sets forth a correct and complete list of all patents, trademarks, trade
names (including the name "CASA LUPITA"), copyrights and applications therefor
now or heretofore used (and indicates whether owned by Seller or used pursuant
to licenses or other arrangements, as described therein) in the conduct of the
Restaurants by Seller. To the best of Seller's knowledge, except as disclosed
in Schedule 11A: (a) Seller owns or possesses adequate
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licenses or other valid rights to use all of the Intellectual Property to the
extent necessary for the conduct by Seller of the Restaurants as presently
conducted; (b) the validity of such items and the title thereto of Seller
have not been questioned in any litigation to which Seller is a party, nor, is
any such litigation threatened; (c) there are no prior superior rights to or
infringing uses of the Intellectual Property; and (d) all of such Intellectual
Property is fully assignable and/or licensable to Purchaser without the consent
of any other. To the best knowledge of Seller, no other person or entity has
heretofore used or now uses any trademark, trade name or other item of the
Intellectual Property owned by or licensed to Seller.
(xi) Except as otherwise expressly provided in
this Agreement, Purchaser shall have no obligation with regard to any employees
of Seller or the funding of any benefit plans or programs related to Seller's
employees related to the period of time prior to the Closing Date. As of the
Closing Date, all amounts required to be withheld by Seller from employees
employed in the Restaurants will have been properly withheld and deposited and
all contributions required to be paid by Seller in respect of employees
employed in the Restaurants will have been paid in accordance with the
applicable provisions of federal, state and local law regarding income tax
withholding and social security, workers' compensation, unemployment
compensation or similar taxes or contributions. All wages, overtime pay,
bonuses (except as provided in Section 16 hereof) and other compensation due
employees through the date prior to the Closing Date will have been paid to all
employees on or prior to the Closing Date.
(xii) Except as set forth on Schedule 11B attached
hereto, Seller has not received any notice of any pending or proposed zoning or
use changes or road
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construction projects which would materially and adversely affect the current
use or operation of any of the Restaurants.
(xiii) Except as set forth on Schedule 11C attached
hereto, Seller has not been served and has not been notified of any actual or
threatened lawsuit, legal proceeding or governmental investigation which would
materially and adversely affect the operation of the Restaurants.
(xiv) Except as set forth on Schedule 11D attached
hereto, Seller has not received any presently effective written notice of
violation of any health and safety regulations applicable to the Restaurants.
(xv) Except as set forth on Schedule 11E attached
hereto, since November 14, 1997 there has been no material adverse change to
the performance or business at the Restaurants.
(xvi) To the best of Seller's knowledge, except as
set forth in Schedule 11F, neither Seller nor any of the Real Properties is in
violation of any federal, state or local law, ordinance or regulation relating
to Hazardous Substances. Neither Seller nor, to the best of Seller's
knowledge, any third party has at any time used, stored, released or disposed
of on, under, or about any of the Real Properties, or transported from or to
any of the Real Properties, any Hazardous Substances in violation of any
applicable law, ordinance or regulation, or which require any remedial action.
There is no proceeding or inquiry, either pending or to the best of Seller's
knowledge threatened, by any governmental authority (including, without
limitation, the U.S. Environmental Protection Agency or any State agency with
jurisdiction over any of the Real Properties) with respect to the presence of
Hazardous Substances on any of the Real
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Properties, the use of Hazardous Substances in the Restaurants or the migration
of Hazardous Substances from any of the Real Properties to other property or to
any of the Real Property from other property. For purposes of this Agreement,
"Hazardous Substances" will include but not be limited to substances that are
toxic, corrosive, inflammable or ignitable; any flammable explosives, asbestos,
radioactive materials, hazardous wastes, toxic substances, biological wastes,
or related injurious materials, whether injurious by themselves or in
combination with other materials; and substances defined as "hazardous
materials" or "toxic substances" in the Acts at 15 U.S.C. Sections 2601, et
seq., 33 U.S.C. Sections 1251, et seq., 42 U.S.C. Sections 6901, et seq. (the
Resource Conservation and Recovery Act), 42 U.S.C. Sections 7401, et seq. (the
Comprehensive Environmental Response, Compensation and Liability Act of 1980),
49 U.S.C. Sections 1801, et seq., and the regulations and publications adopted
and promulgated pursuant to such statutes.
(xvii) Nothing in this Agreement or in any
schedules, exhibits or documents delivered (or to be delivered prior to
Closing) contains (or for subsequently delivered documents, if any, will
contain) any untrue statements of material fact.
(xviii) Seller will duly and timely file, and pay any
and all amounts due, under all federal, state and local tax returns required to
be filed by it with respect to the Restaurants and any income, sales or other
activity related thereto accruing or attributable to periods prior to the
Closing Date.
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12. COVENANTS OF SELLER.
12.1. Between the date of the Confidentiality Letter (as
that term is hereinafter defined) and the Closing Date, Seller shall:
(i) except for its acts in the performance of
this Agreement, carry on Seller's business in substantially the same manner as
it has heretofore;
(ii) maintain the Assets in their current
condition, subject to ordinary wear and tear; and
(iii) pay, discharge and be solely responsible
through the Closing Date for all obligations incurred in connection with the
operation of the Restaurants.
(iv) except in the ordinary course of business,
not sell, lease or otherwise dispose of any Asset without Purchaser's prior
written consent.
12.2. Seller shall cooperate with Purchaser in transferring
Seller's interest in the Liquor Licenses for the Restaurants to Purchaser and
removing Seller's name therefrom. Seller will not transfer or agree to
transfer Seller's interest in the Liquor Licenses for the Restaurants to anyone
but Purchaser.
12.3. Seller shall terminate all Excluded Agreements to the
extent they relate to the Restaurants, as of the Closing Date.
12.4. On or prior to the Closing Date, Seller shall duly
pay and remit all sales and use and other tax liabilities of Seller relating to
the Restaurants accruing before the Closing Date.
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13. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.
13.1. To induce Seller to enter into this Agreement,
Purchaser hereby represents and warrants to Seller as of the date hereof and as
of the Closing Date:
(i) Purchaser is a corporation duly formed and
validly existing under the laws of the State of California, in good standing
and has full power and authority to execute, deliver and perform this
Agreement. This Agreement and all other documents and instruments executed and
delivered by Purchaser pursuant to this Agreement are the legal and binding
obligation of Purchaser and are enforceable against Purchaser in accordance
with their terms.
(ii) Purchaser's execution and delivery of this
Agreement, its consummation of the transactions hereby contemplated, and its
fulfillment of the terms hereof, will not violate any material provision or
result in the material breach of any term or provision of, or constitute a
material breach under, or materially conflict with, or cause the acceleration
of any obligation under, any material agreement or contract to which Purchaser
or any shareholder of Purchaser is a party or by which Purchaser or any such
shareholder is or may be bound, or any judgment, decree, order or award of any
court or governmental body, or any applicable law, rule or regulation.
(iii) Purchaser is aware of no facts or conditions
which would disqualify Purchaser or any of its shareholders, directors or
shareholders from ownership or control of any of the Liquor Licenses.
13.2. Subject to Seller's obligations under Section 12.2
above, Purchaser is solely responsible for, and hereby covenants and agrees to
promptly
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and diligently proceed with all that is required relating to, completing,
submitting and processing any and all applications (including posting of
financial assurances and completing background criminal checks) with local and
State authorities for the transfer of the Liquor Licenses, or the issuance of
new liquor licenses, effective as of the Closing, to Purchaser as to each of
the Restaurants. Purchaser will diligently and timely process any and all
applications at its sole cost and expense.
14. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
LIMITATION ON SELLER'S LIABILITY.
14.1. All representations and warranties, and any covenants
that by their terms are stated by the terms of this Agreement to survive the
Closing, made by each party shall survive the Closing for the benefit of the
other party, to the fullest extent permitted by law. Notwithstanding anything
to the contrary in the foregoing, the representations and warranties of Seller
set forth in this Agreement shall survive the Closing only for a period of one
year from the Closing Date, and shall terminate and be of no further force or
effect from and after the one year anniversary of the Closing Date (the
"Outside Closing Date"). Any action or proceeding with respect to the truth,
accuracy or completeness of any representation or warranties of Seller must be
commenced, if at all, prior to the Outside Closing Date and, if not commenced
on or before such date, shall be void and of no force or effect.
14.2. Notwithstanding anything to the contrary in Section
14.1, except for Excluded Claims, (as to which the "Cap" (as that term is
hereinafter defined) shall not apply, Seller shall not be responsible for, and
in no event shall Seller's liability for
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any claim brought by Purchaser under this Agreement, exceed, in the aggregate
Three Hundred Thousand Dollars ($300,000) (the "Cap"); provided, however, the
Cap shall not be applicable to, and except as otherwise provided in Section
14.1, there shall be no limitation on Seller's liability for any of the
following:
(i) any claim based on fraud or willful
misconduct of Seller or any of its employees; and
(ii) any claim under Section 17 of this Agreement.
15. FIRE OR OTHER CASUALTY. In the event of destruction, loss or
damage to the Assets due to fire, storm, flood or other casualty prior to the
Closing Date, Seller shall promptly repair or replace such Assets prior to the
Closing, Date, or at Seller's election, it may at the Closing pay to Purchaser
the amount reasonably necessary to effect such repair or replacement; provided,
however, in the event any two Restaurants suffer damage which would likely keep
such Restaurant(s), as applicable, closed for business for more than thirty
days after the Closing, then Purchaser may cancel this Agreement, in which
event the charges of the Escrow Agent shall be paid one-half each by the
parties, the Deposit shall be returned to Purchaser, and each party shall by
responsible for its own costs and expenses.
16. SELLER'S EMPLOYEES. Each individual employed at the
Restaurants will have his or her employment, wages and benefits terminated by
Seller effective as of the close of business on the Closing Date and be fully
compensated with all monetary and other benefits accrued by him or her up to
such termination. Seller shall be solely liable and responsible for all
accrued salary, vacation, severance and other compensation
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<PAGE> 24
payable up to the Closing; provided, however, if any employee is entitled to a
salary, wage or earnings cash "bonus" (provided the terms thereof has been
reduced to writing and disclosed to Purchaser) to be paid at a time after the
Closing (an "Accrued Employee Bonus"), and such employee continues as an
employee of Purchaser under the terms of this Section 16 (a "Continuing
Employee"), the Accrued Employee Bonus shall be allocated between Seller and
Purchaser as of the Closing Date based on the period of time covered by the
Accrued Employee Bonus. Seller makes no warranty express or implied with
respect to the qualifications or character of any such individual at the
Restaurants. Purchaser shall tender offers of employment (at will or
otherwise) to each of such individuals employed in a non-exempt status at the
Restaurants, such employment to commence on the date immediately after the
Closing Date; provided, however, in the event Purchaser in its sole discretion
determines that one or more of such individuals is not qualified for hire by
Purchaser, Purchaser shall in no way be obligated to tender employment to same,
and Purchaser shall immediately inform Seller of the name of each such
individual and the basis for Purchaser's determination.
17. INDEMNIFICATION BY SELLER. Seller shall indemnify, defend and
hold harmless Purchaser, its officers, directors, employees, members, managers
and shareholders for, by, from, against and in respect of any third party
claim, liability, obligation, loss, damage, cost or expense not expressly
assumed by Purchaser hereunder and arising from the acts or omissions of Seller
and its agents or employees arising from the operation of the Restaurants by
any of them from the date Seller acquired the applicable Restaurant and through
the Closing Date, including, without limitation, any
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and all actions, suits, proceedings, demands, assessments, reasonable expense
and costs, including arbitration and court costs and reasonable attorneys'
fees, incident to any of the foregoing. This covenant by Seller to indemnify,
defend and hold harmless Purchaser shall survive the Closing, and shall not be
subject to the limitation contained in Section 14.1 of this Agreement.
18. INDEMNIFICATION BY PURCHASER. Purchaser shall indemnify,
defend and hold harmless Seller for, by, from, against and in respect of any
third party claim, liability, obligation, loss, damage, cost and expense
arising from the acts or omissions of Purchaser and its agents or employees
arising from the operation of the Restaurants by any of them after the Closing
Date, including, without limitation, any and all actions, suits, proceedings,
demands, assessments, reasonable expenses and costs, including arbitration and
court costs and reasonable attorney's fees, incident to any of the foregoing.
Notwithstanding anything in the foregoing to the contrary, Purchaser's
indemnity obligation, if any, with respect to the Intellectual Property is
excluded from this paragraph and is governed solely by the terms of the
Intellectual Property License. This covenant by to indemnify, defend and hold
harmless Seller shall survive the Closing.
19. DEFAULT AND REMEDIES. Should this Agreement fail to close by
reason of a material breach or default by any party, the non-breaching party
may pursue any and all remedies provided by law; provided, however, except for
Seller's liability for damages attributable to the out-of-pocket costs and
expenses incurred by Purchaser in the evaluation, inspection and investigation
of the Restaurants, the Real Properties and the other Assets, and except for
each party's liability to the other for the legal fees incurred
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by each party in the negotiation of this Agreement, neither party shall be
responsible to the other for any consequential damages suffered or incurred by
the other as a result or the consequence of the breach or default of this
Agreement.
20. BROKER'S FEES. Each party hereby represents and warrants to
the other parties that the warranting party has not incurred any obligation to
compensate any broker or such other such party for any commission, finder's
fee, broker's fee or other similar fee as a result of any of the transactions
contemplated herein. Purchaser indemnify, defend and hold harmless Seller from
and against any and all claims, losses, liabilities, or expenses which may be
asserted against Seller by any finder, broker, or other person claiming any fee
or commission by reason of services alleged to have been rendered at the
instance of Purchaser in respect to the transactions contemplated by this
Agreement. Likewise, Seller shall indemnify, defend and hold harmless
Purchaser from and against any and all claims, losses, liabilities, or expenses
which may be asserted against Purchaser by any finder, broker or other person
claiming any fee or commission by reason of services alleged to have been
rendered at the instance of Seller in respect to the transactions contemplated
by this Agreement.
21. NOTICES. All notices to be given hereunder shall be in
writing and shall be deemed given when first received or tendered during normal
business hours for the locale of the addressee at the appropriate address set
forth below, or other address as one party may hereafter provide to the other
with not less than three (3) business days' notice.
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IF TO SELLER IF TO PURCHASER:
EATERIES, INC. CHEVYS, INC.
3240 West Britton Road, Suite 202 631 Howard, Suite 400
Oklahoma City, OK 73120 San Francisco, CA 94105
Attn: Mr. Vincent Orza Attn: Mr. William Schrader
President Vice President
Chief Development Officer
22. WAIVER. No waiver by either party of any breach or default
shall be deemed a waiver of any subsequent or other breach or default. A party
to this Agreement may waive a provision of this Agreement only by written
notice to the other party.
23. CAPTIONS. Captions and paragraph headings used herein are for
convenience only and shall not be deemed relevant in construing this Agreement.
24. GENDER. Whenever any word is used in the Agreement in one
gender, it shall also be construed as being used in the other genders, and
singular usage shall include the plural and vice versa, all as the context
shall require.
25. EXHIBITS. All exhibits and schedules expressly referenced
herein are hereby incorporated by reference into and made a part of this
Agreement.
26. COUNTERPARTS. This Agreement may be executed in any number of
counterparts; each such counterpart, when executed by all parties, shall be
deemed to constitute one and the same instrument and shall be deemed an
original hereof.
27. SEVERABILITY. If any provision of this Agreement is declared
void or unenforceable, such provision shall be deemed deleted from this
Agreement, the remaining portions of the Agreement shall remain in full force
and effect and the deleted
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portion shall be replaced with valid and enforceable language which in the
arbiter's judgment most closely reflects the parties' original intent.
28. COSTS AND EXPENSES. Each party shall pay its own legal fees
and costs incurred in connection with the negotiation, preparation and
consummation of this Agreement.
29. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, and their respective successors
in interest and assigns. This Agreement shall not, however, be assignable or
transferable in whole or in part, by any party hereto except upon the express
prior written consent of the other party, except that Seller may assign its
interest in this Agreement to any of its affiliates, so long as such assignment
does not relieve Seller of any of its liabilities to Purchaser. Nothing
contained in this Agreement is intended to confer upon any person, other than
the parties hereto and their respective heirs, successors and permitted
assigns, any rights, remedies or obligations under, or by reason of this
Agreement.
30. ADDITIONAL ACTS AND DOCUMENTS. Each party hereto shall do all
such things and take all such actions to make, execute and deliver such other
documents and instruments, as shall be reasonably requested to carry out the
provisions, intent and purpose of this Agreement. Without limiting the
generality of the foregoing, Seller shall execute, acknowledge and deliver any
further deeds, assignments, conveyances and instruments of transfer reasonably
requested by Purchaser and take any other action consistent with the terms of
this Agreement that may be reasonably requested by Purchaser for the purpose of
assigning, transferring, granting, conveying, and confirming
28
<PAGE> 29
to Purchaser, or reducing to possession, any or all of the Assets to be
conveyed and transferred by this Agreement.
31. TIME. Time is of the essence of this Agreement and each and
every provision hereof.
32. GOVERNING LAW. This Agreement shall be deemed to be made
under, construed in accordance with, and governed by, the laws of the State of
Oklahoma.
33. ENTIRE AGREEMENT. This Agreement, together with the ancillary
documents expressly referenced herein, and that certain letter agreement
between the parties dated January 23 1998 (the "Confidentiality Letter"),
represents the entire agreement of the parties with respect to the purchase and
sale described herein, and all agreements pertaining to such purchase and sale
entered into prior hereto (other than the Confidentiality Letter) are revoked
and superseded by this Agreement. No representations, warranties, inducements
or oral agreements with respect thereto have been made by any of the parties
except as expressly set forth herein, or in other contemporaneous written
agreements. Except as expressly provided otherwise herein, this Agreement may
not be changed, modified or rescinded except in writing, signed by all parties
hereto, and any attempt at oral modifications of this Agreement shall be void
and of no effect.
34. CONFIDENTIALITY AND PRESS RELEASES. Except as required by
law, each party hereto shall keep all of the terms and provisions of this
Agreement in strictest confidence for five years, or until every party has
expressly agreed otherwise. No party
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<PAGE> 30
shall release any specific information pertaining to this transaction to the
media until every other party hereto has expressly agreed to such release.
35. ATTORNEYS' FEES. In the event of any dispute arising
hereunder, the prevailing party in litigation or arbitration, inclusive of any
appeals, shall be entitled to recover attorneys' fees and costs, court costs,
arbitration costs and costs of discovery incurred in connection therewith.
30
<PAGE> 31
IN WITNESS WHEREOF, the parties hereto through their duly
authorized signatories have caused this Agreement to be executed and delivered
on the date first above written.
SELLER: PURCHASER:
EATERIES, INC., CHEVYS, INC.,
an Oklahoma corporation a California corporation
By: By:
------------------------------ ------------------------------
Its: Its:
----------------------------- -----------------------------
By: By:
------------------------------ ------------------------------
Its: Its:
----------------------------- -----------------------------
FIESTA RESTAURANTS, INC.,
an Oklahoma corporation
By:
------------------------------
Its:
-----------------------------
By:
------------------------------
Its:
-----------------------------
31
<PAGE> 32
State of _________________________)
) ss.
County of ________________________)
On ______________, 1998 before me, _____________________________, a
Notary Public, personally appeared ___________________________, personally
known to me or proved to me, on the basis of satisfactory evidence, to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
------------------------------
Notary Public
State of _________________________)
) ss.
County of ________________________)
On ______________, 1998 before me, _____________________________, a
Notary Public, personally appeared ___________________________, personally
known to me or proved to me, on the basis of satisfactory evidence, to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
------------------------------
Notary Public
32
<PAGE> 33
LIST OF EXHIBITS AND SCHEDULES
EXHIBITS
A RESTAURANT LOCATIONS
B INTENTIONALLY OMITTED
C TRADEMARK ASSIGNMENT
D ASSIGNMENT OF LEASE
E INTELLECTUAL PROPERTY LICENSE
F LIMITED WARRANTY DEED
G [INTENTIONALLY OMITTED]
H BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT
SCHEDULES
1 DESCRIPTION OF LEASES
2 PROPERTY SUBJECT TO EQUIPMENT LEASES AND EXCLUDED ASSETS
3 [INTENTIONALLY OMITTED]
4 MATERIAL CONTRACTS
5 ALLOCATION OF PURCHASE PRICE
11A INTELLECTUAL PROPERTY
11B ZONING AND LAND USE CHANGES
11C LITIGATION AND OTHER PROCEEDINGS
11D HEALTH AND SAFETY REGULATIONS VIOLATIONS
11E MATERIAL ADVERSE CHANGES IN RESTAURANTS
11F HAZARDOUS MATERIALS
33
<PAGE> 34
OMITTED SCHEDULES AND EXHIBITS
All schedules and exhibits to the Agreement for Purchase and Sale of
Assets have been omitted from this Report on Form 8-K. The following is a list
of such schedules and exhibits. Eateries will furnish supplementally a copy of
any omitted schedule to the Securities and Exchange Commission upon request.
<TABLE>
<CAPTION>
Exhibit or
Schedule Brief Description of Contents
---------- -----------------------------
<S> <C>
A Restaurant Locations
B [Intentionally Omitted]
C [Intentionally Omitted]
D Assignment of Lease
E [Intentionally Omitted]
F [Intentionally Omitted]
G [Intentionally Omitted]
H Bill of Sale
1 Description of Lease
2 Property Subject to Equipment Leases and Excluded Assets
3 [Intentionally Omitted]
4 Material Contracts
5 Allocation of Purchase Price
11A [Intentionally Omitted]
11B Zoning and Land Use Proceedings
11C Litigation and Other Proceedings
11D Health and Safety Regulations Violations
11E Material Adverse Changes in Restaurant
11F Hazardous Materials
</TABLE>
<PAGE> 1
EXHIBIT 2.2
AGREEMENT FOR PURCHASE AND SALE
OF ASSETS
This Agreement for Purchase and Sale of Assets (this "Agreement") is
made and entered into as of February __, 1998 (the "Effective Date"), by and
among EATERIES, INC., an Oklahoma corporation ("Seller"), and CHEVYS, INC., a
California corporation ("Purchaser").
R E C I T A L S
A. Seller is the owner and operator of a certain CASA LUPITA
restaurant, #708, the location of which is set forth in EXHIBIT "A" hereto (the
"Restaurant");
B. Seller leases the premises and improvements on which the
Restaurant is located, pursuant to a lease more particularly described in
Schedule 1 (the ownership interest of Seller in the Restaurant is sometimes
hereinafter referred to as the "Leasehold," and the lease evidencing the
Leasehold is hereinafter referred to as the "Lease."
C. Seller sells liquor at the Restaurant for on-premises
consumption, and on or before the Closing (as that term is defined in this
Agreement) will use its best efforts to have issued to it a license for such
sales by the appropriate governmental agency with jurisdiction over the on-site
sale and consumption of alcoholic beverages (the "Liquor License").
D. Except as set forth on Schedule 2 hereto, Seller owns all of
the items of personal property which are used in the operation of the
Restaurant, comprised of the following:
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<PAGE> 2
i) inventory of food and paper products ("Inventory");
ii) uniforms and supplies ("Supplies");
iii) furniture, fixtures (including, subject to the
reversionary interest of the landlord under the Lease, leasehold improvements),
equipment and all other tangible personal property items used to operate the
Restaurant ("Equipment"); and
iv) operating cash in the cash registers at the
Restaurant at any given time ("Operating Cash"). The items identified in (i),
(ii), (iii) and (iv) are hereafter referred to as the "Operations Assets,"
which term does not include the Excluded Assets set forth on Schedule 2.
E. Set forth on Schedule 4 attached hereto are each of the
equipment leases, and service or vendor contracts relating to the operation of
the Restaurant that Purchaser is assuming pursuant to this Agreement (the
"Material Contracts"); other than as set forth on Schedule 4 hereto and other
than the Lease, Purchaser shall not be obligated to assume any service or
vendor agreements or contracts to which Seller is a party relating to the
operation of the Restaurant, including, without limitation, maintenance
contracts, management contracts, equipment contracts or service contracts
(collectively "Excluded Agreements).
F. The Operations Assets, the Leasehold, the Material Contracts
and the Intellectual Property (as hereinafter defined), and any and all
guarantees, licenses, governmental permits and approvals and warranties, which
are by their terms transferable, issued to or owned by Seller, with respect to
the Restaurant or the business conducted, or any Equipment located, therein,
any goodwill of the business (not including
2
<PAGE> 3
any goodwill in any trade name, trademark, or service mark of Seller or any of
its affiliates) at the Restaurant, and any and all records and reports relating
to the Restaurant, including but not limited to, plans, specifications,
environmental and soils reports, maintenance and repair records, surveys and
operating records (collectively, the "Intangible Property"), are hereinafter
referred to as the "Assets."
G. Seller is the licensee of Purchaser for the use of certain
trade dress, trademarks and service marks (collectively "Trademarks''),
together with certain trade secrets, know-how, distinctive designs and
advertising, specially designed equipment, systems and procedures, and other
proprietary documentation and information in connection with the operation of
the Restaurant (the "System") (the Trademarks and the System are herein
referred to as the "Intellectual Property").
H. Seller desires to sell and transfer to Purchaser all of the
Assets, and Purchaser desires to purchase and accept the transfer of same, all
in accordance with the terms and conditions hereinafter set forth, and Seller,
upon the request of Purchaser, is prepared to permanently close the Restaurant
as of the Closing, and to terminate its use of the Intellectual Property in
connection with the Restaurant, on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises herein of the
parties hereto, and other good and valuable consideration the receipt and
sufficiency of which is hereby acknowledged by each of the parties, the parties
hereby agree as follows:
3
<PAGE> 4
1. SALE AND PURCHASE. Subject to the terms and conditions
hereof, Seller shall sell, assign and transfer the Assets to Purchaser and
Purchaser shall purchase and acquire the Assets from Seller:
2. PURCHASE PRICE. The purchase price ("Purchase Price") for the
Assets (other than the Inventory, Supplies and Operating Cash) shall be ONE
MILLION DOLLARS ($1,000,000), allocated in accordance with Schedule 5 attached
hereto, plus the ISC Estimate (as that term is hereinafter defined).
3. VALUE OF INVENTORY, SUPPLIES AND OPERATING CASH. The value of
the Inventory, Supplies and Operating Cash is hereby estimated by the parties
to be Fifteen Thousand Dollars ($15,000) (the "ISC Estimate"), comprised of
$10,000 for Inventory, $2,000 for Supplies and $3,000 for Operating Cash.
Purchaser shall pay the ISC Estimate in immediately payable funds at Closing.
The actual value of the Inventory, Supplies and Operating Cash shall be
determined as of the close of business on the Closing Date, as defined below,
by a physical count of all Inventory, Supplies and Operating Cash to be made
jointly by Purchaser and Seller at that time. The usable Inventory and
Supplies shall be valued at its invoiced price to Seller. Purchaser shall have
the right to reject, within reason, any excess or outdated Inventory or
Supplies. Operating Cash transferred to Purchaser shall be reimbursed to
Seller dollar for dollar. Seller shall maintain at the Restaurant on the day
of the Closing cash on hand of approximately $3,000 so that Purchaser shall
have such cash available for the first day of Purchaser's operating of the
Restaurant. Within ten (10) business days after the Closing Date, Purchaser or
Seller, as
4
<PAGE> 5
appropriate, shall pay the other party the positive difference between the
value of the Inventory, Supplies and Operating Cash and the ISC Estimate paid
at Closing.
4. DEPOSIT AND PAYMENT OF PURCHASE PRICE.
4.1. The Purchase Price, plus the ISC Estimate, plus or
minus adjustments as hereinafter provided, shall be paid in full in immediately
available funds at Closing to an account designated in writing by Seller.
4.2. Concurrently with the execution of this Agreement,
Purchaser is depositing with Escrow Agent, as an earnest money deposit,
immediately available funds in the amount of TWO HUNDRED FIFTY THOUSAND DOLLARS
($250,000) (the "Earnest Money Deposit"). The Earnest Money Deposit shall be
invested in such governmentally secured short term investments as may be
designated by Purchaser and Seller. All interest accruing on the Earnest Money
Deposit shall be payable to, and shall be earned for the account of, Purchaser
or Seller, depending upon which party is ultimately entitled to the Earnest
Money Deposit. The Earnest Money Deposit shall be fully refundable to
Purchaser on its sole instructions if Purchaser terminates this Agreement as a
result of a failure of the Liquor License Contingency (as that term is
hereinafter defined); provided Purchaser shall have given Seller five (5) days'
prior written notice of Purchaser's election to terminate this Agreement as a
result of the failure to satisfy the Liquor License Contingency. The Earnest
Money Deposit shall be fully refundable to Purchaser on the joint written
instructions of Purchaser and Seller if Purchaser terminates this Agreement as
a result of a failure of any other condition precedent of Purchaser contained
in Section 8.2 hereof. In all
5
<PAGE> 6
other cases, the Earnest Money Deposit shall be payable to Seller in accordance
with Section 4.3 hereof.
4.3. IN EVENT THE SALE OF THE ASSETS AS CONTEMPLATED
HEREUNDER IS NOT CONSUMMATED OTHER THAN DUE TO A FAILURE OF A CONDITION
PRECEDENT TO CLOSING AS PROVIDED IN SECTION 4.2 HEREOF, OR DUE TO A CASUALTY
UNDER SECTION 15 HEREOF, THE EARNEST MONEY DEPOSIT (INCLUDING ALL INTEREST
EARNED FROM THE INVESTMENT THEREOF) SHALL BE PAID TO AND RETAINED BY SELLER AS
LIQUIDATED DAMAGES. THE PARTIES ACKNOWLEDGE THAT SELLER'S ACTUAL DAMAGES IN
EVENT OF A DEFAULT BY PURCHASER WOULD BE EXTREMELY DIFFICULT OR IMPRACTICABLE
TO DETERMINE. THEREFORE, BY INITIALING BELOW, THE PARTIES ACKNOWLEDGE THAT THE
EARNEST MONEY DEPOSIT, PLUS INTEREST, HAS BEEN AGREED UPON, AFTER NEGOTIATION,
AS THE PARTIES' REASONABLE ESTIMATE OF SELLER'S DAMAGES AS SELLER'S EXCLUSIVE
REMEDY AGAINST BUYER IN THE EVENT OF A DEFAULT ON THE PART OF BUYER. THE
PAYMENT OF THE EARNEST MONEY DEPOSIT TO SELLER AS LIQUIDATED DAMAGES UNDER THE
CIRCUMSTANCES PROVIDED FOR HEREIN IS NOT INTENDED AS A FORFEITURE OR PENALTY.
BUYER: SELLER:
------------ ------------
6
<PAGE> 7
5. CLOSING.
5.1. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Stewart Title
Guaranty Company (the "Escrow Agent") located at 650 California Street, San
Francisco, California, at 10:00 a.m. on the earlier to occur of five (5)
business days after the issuance to (and in the name of) Purchaser of a valid
"full service" Liquor License (and containing no conditions not otherwise
effective at the Restaurant as of the Effective Date), with notice of such
issuance being given to Seller by Purchaser (the "Liquor License Contingency);
provided, however, if the Liquor License Contingency is not satisfied on or
before May 22, 1998 (the "Outside Closing Date"), Purchaser may either (i)
elect to waive the Liquor License Contingency and close the transaction
contemplated by this Agreement as otherwise provided for herein, or (ii)
Purchaser may terminate this Agreement by written notice to Seller whereupon,
provided Purchaser is not otherwise in material default under this Agreement,
the Earnest Money Deposit (together with all interest accruing thereon) shall
be immediately paid by Escrow Agent to Purchaser in accordance with Section 4.2
hereof. If Purchaser fails to elect either of the alternatives provided in
clauses (i) or (ii) above, Purchaser shall be deemed to have elected to
terminate this Agreement pursuant to clause (ii) above. The actual date of
Closing is herein referred to as the "Closing Date."
5.2. Any and all real property transfer taxes, recording
charges and all other closing costs relating to the transfer of the Leasehold
(and not otherwise expressly provided for in this Agreement) shall be paid by
Seller. Purchaser shall pay all title insurance premiums relating to any title
insurance policy issued with respect to the
7
<PAGE> 8
Leasehold to be transferred to Purchaser hereunder. Purchaser and Seller shall
share equally the charges of the Escrow Agent. Seller will pay any recording
and other charges associated with the release of any liens encumbering the
Leasehold or to clear the status of title to enable Seller to convey the
Leasehold subject to the Permitted Exceptions. Seller will pay any and all
sales and excise taxes, if any, incurred in connection with the transaction
contemplated by this Agreement, subject to the receipt from Purchaser of sales
tax exemption certificate numbers for Purchaser, or other evidence reasonably
satisfactory to Seller, confirming the exemption of Purchaser from sales tax
for items being transferred under this Agreement that constitute inventory.
5.3. Possession of the Assets, and control of the
operations of the Restaurant, will be delivered by Seller to Purchaser at the
close of business on the Closing Date.
5.4. The obligations of Seller and Purchaser under this
Section 5 shall survive the Closing.
6. [Intentionally Omitted].
7. TITLE TO ASSETS; CONDITION OF ASSETS; ASSUMPTION OF
LIABILITIES
7.1. [Intentionally omitted.]
7.2. (a) At Closing, Seller will transfer and convey
to Purchaser good and marketable title to the Assets (other than the Leasehold)
free and clear of any and all mortgages, liens, claims, security interests and
encumbrances, other than the lien for current personal property taxes, if any
(and not included in real property taxes), not yet delinquent, and to the
extent provided in Schedule 2, subject to the terms of the
8
<PAGE> 9
equipment leases noted in Schedule 2 (the "Equipment Leases") (without limiting
the generality of the defined term "Material Contracts," the Equipment Leases
are deemed Material Contracts for purposes of this Agreement). Purchaser shall
assume the following liabilities of Seller with respect to the Assets (other
than the Leasehold):
(i) all trade accounts payable of the Restaurant
as of the Closing Date, and for any goods ordered (but not yet received) by
Seller in the ordinary course of business prior to the Closing; and
(ii) under the Material Contracts, accruing from
and after the Closing.
(b) Except as expressly provided in this Agreement,
Purchaser does not assume and shall not be obligated to pay or satisfy any
obligation, debt or liability, contingent or otherwise of Seller with respect
to the Assets.
(c) Purchaser acknowledges that one of the Material
Contracts is an agreement with Pepsi Cola National Accounts (the "Pepsi
Contract"). Purchaser agrees to continue to purchase Pepsi Cola products under
the terms of the Pepsi Contract for the term thereof.
7.3. (a) At Closing, Seller shall assign its interest
in the Lease to Purchaser, and Purchaser shall accept such assignment, and
assume and be responsible for all obligations of Seller pursuant to the Lease
arising on and after the Closing, all in accordance with the terms of an
Assignment and Assumption of Lease in the form of EXHIBIT "D," or in such other
form as may be mutually agreed upon by Seller, Purchaser and the applicable
landlord under the Leasehold. Purchaser acknowledges that Seller's
9
<PAGE> 10
obligation to assign its interest in the Lease is contingent upon obtaining the
consent of each of the landlord under the Lease, in form and substances
reasonably acceptable to Seller. Seller will use commercially reasonable
efforts to obtain all such consent, and Purchaser will cooperate with Seller in
obtaining such consent.
(b) At Closing, Seller shall enter into a
termination agreement as to the license granted it from Purchaser to use the
Intellectual Property at the Restaurant in form and substance reasonably
acceptable to Purchaser (the "IP Termination Agreement").
7.4. Seller has previously received from Purchaser a form
of estoppel certificate (the "Landlord Estoppel") with respect to the Lease..
In the event Seller fails to obtain from the landlord under the Lease a signed
Landlord Estoppel in a form satisfactory to Purchaser, Purchaser shall have the
right to terminate this Agreement or to require Seller to execute a seller
indemnity with respect to the matters contained in the Landlord Estoppel.
7.5. [Intentionally Omitted.]
7.6. (a) Purchaser has obtained a commitment for title
insurance (the "Commitment") issued by Stewart Title Guaranty Company ("Title
Company") evidencing the commitment of Title Company, subject to the conditions
and on the other terms of the Commitment, to issue to Purchaser an ALTA
leasehold policy of title insurance (10-17-92) insuring Purchaser's title to
the Leasehold (the "Title Policies") subject to the exceptions as are noted
therein (the "Permitted Exceptions").
(b) Notwithstanding anything to the contrary in the
foregoing, Seller shall be obligated to cause to be released or reconveyed from
the Leasehold at
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<PAGE> 11
Closing all liens and encumbrances (i) securing any voluntary indebtedness or
loans advanced to or for the benefit of Seller, or as to which Seller acquired
the Real Properties on a "subject to" basis, which Seller shall be obliged to
pay-off or cause to be satisfied at or prior to the Closing, and (ii)
evidencing any other monetary obligation (other than taxes and assessments)
that can be removed by the payment to the lienor of a liquidated sum of money,
not to exceed $100,000.
8. CONDITIONS PRECEDENT TO CLOSING.
8.1. Each of Seller and Purchaser shall use commercially
reasonable efforts to timely fulfill those of the following conditions as are
its obligation hereunder.
8.2. The obligations of Purchaser to close on the purchase
and sale of the Assets are subject to the satisfaction of the following
conditions:
(i) Tender of the documents to be executed by
Seller as of the Closing, as provided in Section 9.1 hereof.
(ii) The consent provided in Section 7.3(a), and
the Landlord Estoppel provided in Section 7.4, shall have been obtained.
(iii) On the Closing Date, all representations and
warranties made by Seller in this Agreement shall be true and correct in all
material respects as if made on and as of the Closing Date.
(iv) The Liquor License Contingency shall have
been satisfied.
(v) The Title Company shall be prepared to issue
the Title Policies showing Purchaser as vested in a leasehold interest as to
the Leasehold, subject only to the Permitted Exceptions.
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<PAGE> 12
(vi) On the Closing Date, Seller shall not be in
material default in the performance of any covenant or agreement to be
performed by Seller under this Agreement.
(vii) The execution and delivery of this Agreement
by Seller, and the performance of its covenants and obligations under it, shall
have been duly authorized by all necessary corporation action, and Purchaser
shall have received copies of all resolutions pertaining to that authorization,
certified by the secretary of Seller.
8.3. The obligations of Seller to close the purchase and
sale of the Assets are subject to the satisfaction of the following conditions:
(i) Tender of the Purchase Price, reduced or
increased by any credits and adjustments, and tender of the documents to be
executed by Purchaser as of the Closing, as provided in Section 9.1 hereof.
(ii) The consent provided in Section 7.3(a) shall
have been obtained.
(iii) On the Closing Date, all representations and
warranties made by Purchaser in this Agreement shall be true and correct in all
material respects as if made on and as of the Closing Date.
(iv) On the Closing Date, Purchaser shall not be
in material default in the performance of any covenant or agreement to be
performed by Purchaser under this Agreement.
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<PAGE> 13
9. CLOSING.
9.1. The Closing shall take place on the Closing Date at
the time and place provided in Section 5.1. At the Closing, Seller and
Purchaser, as appropriate, shall execute and deliver the following documents:
(i) An Assignment and Assumption of Lease, in the
form of EXHIBIT "D" hereto, with respect to the Leasehold.
(ii) A Bill of Sale and Assignment and Assumption
Agreement, in the form of EXHIBIT "H" hereto, with respect to the Assets (other
than the Leasehold).
(iii) The IP Termination Agreement.
10. PRORATIONS/CHANGE OF OWNERSHIP TRANSITION.
10.1. The following shall be prorated as of 12:01 a.m. on
the day immediately following the Closing Date, with Seller being entitled to
all income (whether on a cash basis or on credit) and responsible for all
liabilities and charges, in each case relating to the possession and operation
of the Restaurant on or prior to the Closing Date and Purchaser being entitled
to all income (whether on a cash basis or on credit) and responsible for paying
any and all such liabilities and any and all charges after the Closing Date:
(i) Personal property taxes accruing for the year
in which the Closing occurs;
(ii) Real property taxes accruing during the year
in which the Closing occurs pertaining to the Leasehold that are the lessee's
obligation under the Lease shall be prorated between the parties as of the
Closing Date on the basis of the
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<PAGE> 14
number of days within such tax period as compared to the number of days within
such tax period occurring prior to and including the Closing Date. In the
event it is necessary to estimate the prorations, final adjustments shall be
made promptly upon receipt of final tax bills;
(iii) Rent (including but not limited to percentage
rent), maintenance, insurance and other charges under the Lease;
(iv) All amounts paid or payable under the
Material Contracts, including prepayments;
(v) All telephone and utility charges, and other
obligations relating to the operation of the Restaurant; to the extent such
amounts may be based on an estimate rather than actual statements or invoices
and later proved to be inaccurate, payment shall be made after the statement or
invoices that have been received as may be necessary to allocate all such
obligations in accordance herewith;
(vi) Any and all Accrued Employee Bonuses (as that
term is hereinafter defined) for Continuing Employees (as that term is
hereinafter defined); and
(vii) Seller shall receive a credit in the amount
of all deposits, if any, held by the landlord under the Lease.
Any and all rent payable under the Lease (including percentage rent charges,
common area maintenance and operating expense pass-throughs, taxes, insurance
and utilities) shall be prorated as of the Closing Date based on the latest
figures available from the landlords under the Leases; provided, however, a
final adjustment between the parties with respect to such charges shall be made
promptly following receipt by Purchaser of
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<PAGE> 15
final year-end statements for such charges for the applicable lease or calendar
year in which the Closing Date occurs. The terms of this paragraph shall
survive the Closing.
10.2. Seller has posted security and other deposits of
various kinds with utilities and landlords related to the Restaurant.
Purchaser shall pay to Seller at Closing the amount of any such deposits for
which Purchaser shall receive the benefit after Closing. Purchaser shall not
pay Seller at Closing for any deposits for which Seller is entitled to make
application for a separate refund.
11. REPRESENTATIONS AND WARRANTIES OF SELLER.
11.1. To induce Purchaser to enter into this Agreement,
Seller hereby represents and warrants to Purchaser as of the date hereof and as
of the Closing Date:
(i) Seller is a duly formed and validly existing
corporation incorporated in the State of Oklahoma, is in good standing and
qualified to do business in the State where the Restaurant is located, and has
full power and authority to execute, deliver and perform this Agreement. This
Agreement and all other documents and instruments executed and delivered by
Seller pursuant to this Agreement is the legal and binding obligation of Seller
and is enforceable against Seller in accordance with their terms.
(ii) Seller is not a party to any contract,
commitment or agreement, nor is either party, any of its properties, or the
Assets subject to, bound by, or affected by any order, judgment, decree, law,
statute, ordinance, rule, regulation or other restriction of any kind or
character, which would (a) prevent Seller from entering into this Agreement or
from consummating the transactions contemplated hereby (other than
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<PAGE> 16
satisfying the conditions described herein), or (b) materially and adversely
affect, or in the future may materially and adversely affect, the Assets or the
ability or prospects of Purchaser to operate the Restaurant in a manner similar
to that presently conducted by Seller, or the ability of Purchaser to utilize
the Assets in the manner in which they are presently utilized.
(iii) Seller owns and operates the businesses at
the Restaurant and there are no existing tenancies, leases or subleases on any
of the Real Properties, except as expressly provided herein and as are to be
transferred to Purchaser pursuant hereto.
(iv) To the best knowledge of Seller, Seller has
delivered to Purchaser a true, correct and complete copy of the Lease. To the
best knowledge of Seller, there are no other agreements, modifications or
amendments thereto entered into by, and binding on, Seller, other than as
contained in the Lease.
(v) The Lease is in full force and effect, the
rent and all amounts due thereunder are paid current. To the best knowledge of
Seller, Seller is not in material default under any of the terms of the Lease
relating to the period of time it has owned and operated the Restaurant.
Seller has received no written notice of lessee's default under the Lease which
has not been cured by Seller.
(vi) Except as otherwise provided in Schedule 11C,
Seller is not in default in any respect under any executive, legislative,
judicial, administrative or private (such as arbitration) ruling, order, writ,
injunction or decree with respect to or affecting its Restaurant.
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<PAGE> 17
(vii) The Restaurant has in it at least the items
of Equipment determined by Seller in its reasonable judgment as appropriate for
such type of restaurant.
(viii) All unfilled purchase and sales orders and
all other commitments for purchases and sales made by Seller with respect to
the Restaurant were made in the usual and ordinary course of Seller's business
in accordance with, and subject to normal industry practice.
(ix) Seller owns good and marketable title to the
Assets (other than the Leasehold), free and clear of any and all mortgages,
liens, claims, security interests and encumbrances, other than the lien for
current personal property taxes, if any (and not included in real property
taxes), not yet delinquent. Except as to the equipment subject to the
Equipment Leases, none of the Operations Assets is held under a lease, security
agreement, conditional sales contract or other title retention agreement.
(x) Except as otherwise expressly provided in
this Agreement, Purchaser shall have no obligation with regard to any employees
of Seller or the funding of any benefit plans or programs related to Seller's
employees related to the period of time prior to the Closing Date. As of the
Closing Date, all amounts required to be withheld by Seller from employees
employed in the Restaurant will have been properly withheld and deposited and
all contributions required to be paid by Seller in respect of employees
employed in the Restaurant will have been paid in accordance with the
applicable provisions of federal, state and local law regarding income tax
withholding and social security, workers' compensation, unemployment
compensation or similar taxes or contributions. All wages, overtime pay,
bonuses (except as provided in Section 16
17
<PAGE> 18
hereof) and other compensation due employees through the date prior to the
Closing Date will have been paid to all employees on or prior to the Closing
Date.
(xi) Except as set forth on Schedule 11B attached
hereto, Seller has not received any notice of any pending or proposed zoning or
use changes or road construction projects which would materially and adversely
affect the current use or operation of the Restaurant.
(xii) Except as set forth on Schedule 11C attached
hereto, Seller has not been served and has not been notified of any actual or
threatened lawsuit, legal proceeding or governmental investigation which would
materially and adversely affect the operation of the Restaurant.
(xiii) Except as set forth on Schedule 11D attached
hereto, Seller has not received any presently effective written notice of
violation of any health and safety regulations applicable to the Restaurant.
(xiv) Except as set forth on Schedule 11E attached
hereto, since November 14, 1997 there has been no material adverse change to
the performance or business at the Restaurant.
(xv) To the best of Seller's knowledge, except as
set forth in Schedule 11F, neither Seller nor the property subject to the
Leasehold is in violation of any federal, state or local law, ordinance or
regulation relating to Hazardous Substances. Neither Seller nor, to the best
of Seller's knowledge, any third party has at any time used, stored, released
or disposed of on, under, or about the property subject to the Leasehold, or
transported from or to such property, any Hazardous Substances in violation of
any applicable law, ordinance or regulation, or which require any remedial
18
<PAGE> 19
action. There is no proceeding or inquiry, either pending or to the best of
Seller's knowledge threatened, by any governmental authority (including, without
limitation, the U.S. Environmental Protection Agency or any State agency with
jurisdiction over the property subject to the Leasehold) with respect to the
presence of Hazardous Substances on the property subject to the Leasehold, the
use of Hazardous Substances in the Restaurant or the migration of Hazardous
Substances from the property subject to the Leasehold to other property or to
the property subject to the Leasehold from other property. For purposes of this
Agreement, "Hazardous Substances" will include but not be limited to substances
that are toxic, corrosive, inflammable or ignitable; any flammable explosives,
asbestos, radioactive materials, hazardous wastes, toxic substances, biological
wastes, or related injurious materials, whether injurious by themselves or in
combination with other materials; and substances defined as "hazardous
materials" or "toxic substances" in the Acts at 15 U.S.C. Sections 2601, et
seq., 33 U.S.C. Sections 1251, et seq., 42 U.S.C. Sections 6901, et seq. (the
Resource Conservation and Recovery Act), 42 U.S.C. Sections 7401, et seq. (the
Comprehensive Environmental Response, Compensation and Liability Act of 1980),
49 U.S.C. Sections 1801, et seq., and the regulations and publications adopted
and promulgated pursuant to such statutes.
(xvi) Nothing in this Agreement or in any
schedules, exhibits or documents delivered (or to be delivered prior to
Closing) contains (or for subsequently delivered documents, if any, will
contain) any untrue statements of material fact.
(xvii) Seller will duly and timely file, and pay any
and all amounts due, under all federal, state and local tax returns required to
be filed by it with
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<PAGE> 20
respect to the Restaurant and any income, sales or other activity related
thereto accruing or attributable to periods prior to the Closing Date.
12. COVENANTS OF SELLER.
12.1. Between the date of the Confidentiality Letter (as
that term is hereinafter defined) and the Closing Date, Seller shall:
(i) except for its acts in the performance of
this Agreement, carry on Seller's business in substantially the same manner as
it has heretofore;
(ii) maintain the Assets in their current
condition, subject to ordinary wear and tear; and
(iii) pay, discharge and be solely responsible
through the Closing Date for all obligations incurred in connection with the
operation of the Restaurant.
(iv) except in the ordinary course of business,
not sell, lease or otherwise dispose of any Asset without Purchaser's prior
written consent.
12.2. At the request of Purchaser given not less than five
(5) business days prior to the scheduled Closing, Seller shall permanently
close the Restaurant as of the Closing Date, and terminate Seller's employees
(subject to the provisions of Section 16 of this Agreement) and all Excluded
Agreements, each as of the Closing Date. Notwithstanding the foregoing,
Purchaser shall be responsible for de-identifying the Restaurant following the
Closing. Subject to the foregoing, the terms of Section 12.1 (i) shall govern
Seller's operation of the Restaurant.
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<PAGE> 21
12.3. Seller shall cooperate with Purchaser in transferring
Seller's interest in the Liquor License for the Restaurant to Purchaser.
Seller will not transfer or agree to transfer Seller's interest in the Liquor
Licenses for the Restaurant to anyone but Purchaser.
12.4. Seller shall terminate all Excluded Agreements to the
extent they relate to the Restaurant, as of the Closing Date.
12.5. On or prior to the Closing Date, Seller shall duly
pay and remit all sales and use and other tax liabilities of Seller relating to
the Restaurant accruing before the Closing Date.
13. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER.
13.1. To induce Seller to enter into this Agreement,
Purchaser hereby represents and warrants to Seller as of the date hereof and as
of the Closing Date:
(i) Purchaser is a corporation duly formed and
validly existing under the laws of the State of California, in good standing
and has full power and authority to execute, deliver and perform this
Agreement. This Agreement and all other documents and instruments executed and
delivered by Purchaser pursuant to this Agreement are the legal and binding
obligation of Purchaser and are enforceable against Purchaser in accordance
with their terms.
(ii) Purchaser's execution and delivery of this
Agreement, its consummation of the transactions hereby contemplated, and its
fulfillment of the terms hereof, will not violate any material provision or
result in the material breach of any term or provision of, or constitute a
material breach under, or materially conflict with, or cause
21
<PAGE> 22
the acceleration of any obligation under, any material agreement or contract to
which Purchaser or any shareholder of Purchaser is a party or by which
Purchaser or any such shareholder is or may be bound, or any judgment, decree,
order or award of any court or governmental body, or any applicable law, rule
or regulation.
(iii) Purchaser is aware of no facts or conditions
which would disqualify Purchaser or any of its shareholders, directors or
shareholders from ownership or control of a liquor license for the Restaurant.
13.2. Subject to Seller's obligations under Section 12.2
above, Purchaser is solely responsible for, and hereby covenants and agrees to
promptly and diligently proceed with all that is required relating to,
completing, submitting and processing any and all applications (including
posting of financial assurances and completing background criminal checks) with
local and State authorities for the transfer of the Liquor License, or the
issuance of a new liquor license, effective as of the Closing, to Purchaser as
to the Restaurant. Purchaser will diligently and timely process any and all
applications at its sole cost and expense.
14. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS;
LIMITATION ON SELLER'S LIABILITY.
14.1. All representations and warranties, and any covenants
that by their terms are stated by the terms of this Agreement to survive the
Closing, made by each party shall survive the Closing for the benefit of the
other party, to the fullest extent permitted by law. Notwithstanding anything
to the contrary in the foregoing, the representations and warranties of Seller
set forth in this Agreement shall survive
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<PAGE> 23
the Closing only for a period of one year from the Closing Date, and shall
terminate and be of no further force or effect from and after the one year
anniversary of the Closing Date (the "Outside Closing Date"). Any action or
proceeding with respect to the truth, accuracy or completeness of any
representation or warranties of Seller must be commenced, if at all, prior to
the Outside Closing Date and, if not commenced on or before such date, shall be
void and of no force or effect.
14.2. Notwithstanding anything to the contrary in Section
14.1, except for Excluded Claims, as to which the "Cap" (as that term is
hereinafter defined) shall not apply, Seller shall not be responsible for, and
in no event shall Seller's liability for any claim brought by Purchaser under
this Agreement exceed, in the aggregate, the amount of Three Hundred Thousand
Dollars ($300,000), less any amount for which Seller has sought recovery for a
breach of a representation or warranty under that certain Agreement of Purchase
and Sale of Assets and Licenses dated February __, 1998 (the difference of said
dollar amounts being referred to herein as the "Cap"); provided, however, the
Cap shall not be applicable to, and except as otherwise provided in Section
14.1, there shall be no limitation on Seller's liability for any of the
following ("Excluded Claims"):
(i) any claim based on fraud or willful misconduct of
Seller or any of its employees; and
(ii) any claim under Section 17 of this Agreement.
15. FIRE OR OTHER CASUALTY. In the event of destruction, loss or
damage to the Assets due to fire, storm, flood or other casualty prior to the
Closing Date, Seller shall
23
<PAGE> 24
promptly repair or replace such Assets prior to the Closing Date, or at
Seller's election, it may at the Closing pay to Purchaser the amount reasonably
necessary to effect such repair or replacement; provided, however, in the event
the Restaurant suffers damage which would likely keep the Restaurant closed for
business for more than thirty days after the Closing, then Purchaser may cancel
this Agreement, in which event the charges of the Escrow Agent shall be paid
one-half each by the parties, the Earnest Money Deposit shall be returned to
Purchaser, and each party shall by responsible for its own costs and expenses.
16. SELLER'S EMPLOYEES. Each individual employed at the
Restaurant will have his or her employment, wages and benefits terminated by
Seller effective as of the close of business on the Closing Date and be fully
compensated with all monetary and other benefits accrued by him or her up to
such termination. Seller shall be solely liable and responsible for all
accrued salary, vacation, severance and other compensation payable up to the
Closing; provided, however, if any employee is entitled to a salary, wage or
earnings cash "bonus" (provided the terms thereof has been reduced to writing
and disclosed to Purchaser) to be paid at a time after the Closing (an "Accrued
Employee Bonus"), and such employee continues as an employee of Purchaser under
the terms of this Section 16 (a "Continuing Employee"), the Accrued Employee
Bonus shall be allocated between Seller and Purchaser as of the Closing Date
based on the period of time covered by the Accrued Employee Bonus. Seller
makes no warranty express or implied with respect to the qualifications or
character of any such individual at the Restaurant. Purchaser shall tender
offers of employment (at will or otherwise) to each of such
24
<PAGE> 25
individuals employed in a non-exempt status at the Restaurant, such employment
to commence on the date immediately after the Closing Date; provided, however,
in the event Purchaser in its sole discretion determines that one or more of
such individuals is not qualified for hire by Purchaser, Purchaser shall in no
way be obligated to tender employment to same, and Purchaser shall immediately
inform Seller of the name of each such individual and the basis for Purchaser's
determination.
17. INDEMNIFICATION BY SELLER. Seller shall indemnify, defend and
hold harmless Purchaser, its officers, directors, employees, members, managers
and shareholders for, by, from, against and in respect of any third party
claim, liability, obligation, loss, damage, cost or expense not expressly
assumed by Purchaser hereunder and arising from the acts or omissions of Seller
and its agents or employees arising from the operation of the Restaurant by any
of them from the date Seller acquired the Restaurant and through the Closing
Date, including, without limitation, any and all actions, suits, proceedings,
demands, assessments, reasonable expense and costs, including arbitration and
court costs and reasonable attorneys' fees, incident to any of the foregoing.
This covenant by Seller to indemnify, defend and hold harmless Purchaser shall
survive the Closing, and shall not be subject to the limitation contained in
Section 14.1 of this Agreement.
18. INDEMNIFICATION BY PURCHASER. Purchaser shall indemnify,
defend and hold harmless Seller for, by, from, against and in respect of any
third party claim, liability, obligation, loss, damage, cost and expense
arising from the acts or omissions of Purchaser and its agents or employees
arising from the operation of the Restaurant by any
25
<PAGE> 26
of them after the Closing Date, including, without limitation, any and all
actions, suits, proceedings, demands, assessments, reasonable expenses and
costs, including arbitration and court costs and reasonable attorney's fees,
incident to any of the foregoing. Notwithstanding anything in the foregoing to
the contrary, Purchaser's indemnity obligation, if any, with respect to the
Intellectual Property is excluded from this paragraph and is governed solely by
the terms of the separate Intellectual Property License granted to Purchaser
for the Restaurant on the Effective Date. This covenant by to indemnify,
defend and hold harmless Seller shall survive the Closing.
19. DEFAULT AND REMEDIES. Should this Agreement fail to close by
reason of a material breach or default by Seller, Purchaser may pursue any and
all remedies provided by law; provided, however, except for Seller's liability
for damages attributable to the out-of-pocket costs and expenses incurred by
Purchaser in the evaluation, inspection and investigation of the Restaurant,
the Leasehold and the other Assets, and except for each party's liability to
Purchaser for the legal fees incurred by Purchaser in the negotiation of this
Agreement, Seller shall not be responsible to the other for any consequential
damages suffered or incurred by the Purchaser as a result or the consequence of
the breach or default of this Agreement by Seller. Should this Agreement fail
to close by reason of a material breach or default by Purchaser, Seller's sole
remedy shall be as provided in Section 4.3 of this Agreement.
20. BROKER'S FEES. Each party hereby represents and warrants to
the other parties that the warranting party has not incurred any obligation to
compensate any broker or such other such party for any commission, finder's
fee, broker's fee or other similar fee
26
<PAGE> 27
as a result of any of the transactions contemplated herein. Purchaser
indemnify, defend and hold harmless Seller from and against any and all claims,
losses, liabilities, or expenses which may be asserted against Seller by any
finder, broker, or other person claiming any fee or commission by reason of
services alleged to have been rendered at the instance of Purchaser in respect
to the transactions contemplated by this Agreement. Likewise, Seller shall
indemnify, defend and hold harmless Purchaser from and against any and all
claims, losses, liabilities, or expenses which may be asserted against
Purchaser by any finder, broker or other person claiming any fee or commission
by reason of services alleged to have been rendered at the instance of Seller
in respect to the transactions contemplated by this Agreement.
21. NOTICES. All notices to be given hereunder shall be in
writing and shall be deemed given when first received or tendered during normal
business hours for the locale of the addressee at the appropriate address set
forth below, or other address as one party may hereafter provide to the other
with not less than three (3) business days' notice.
IF TO SELLER IF TO PURCHASER:
EATERIES, INC.
3240 West Britton Road, Suite 202 CHEVYS, INC.
Oklahoma City, OK 73120 631 Howard, Suite 400
Attn.: Mr. Vincent Orza San Francisco, CA 94105
President Attn.: Mr. William Schrader
Vice President
Chief Development Officer
22. WAIVER. No waiver by either party of any breach or default
shall be deemed a waiver of any subsequent or other breach or default. A party
to this Agreement may waive a provision of this Agreement only by written
notice to the other party.
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<PAGE> 28
23. CAPTIONS. Captions and paragraph headings used herein are for
convenience only and shall not be deemed relevant in construing this Agreement.
24. GENDER. Whenever any word is used in the Agreement in one
gender, it shall also be construed as being used in the other genders, and
singular usage shall include the plural and vice versa, all as the context
shall require.
25. EXHIBITS. All exhibits and schedules expressly referenced
herein are hereby incorporated by reference into and made a part of this
Agreement.
26. COUNTERPARTS. This Agreement may be executed in any number of
counterparts; each such counterpart, when executed by all parties, shall be
deemed to constitute one and the same instrument and shall be deemed an
original hereof.
27. SEVERABILITY. If any provision of this Agreement is declared
void or unenforceable, such provision shall be deemed deleted from this
Agreement, the remaining portions of the Agreement shall remain in full force
and effect and the deleted portion shall be replaced with valid and enforceable
language which in the arbiter's judgment most closely reflects the parties'
original intent.
28. COSTS AND EXPENSES. Each party shall pay its own legal fees
and costs incurred in connection with the negotiation, preparation and
consummation of this Agreement.
29. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of the parties hereto, and their respective successors
in interest and assigns. This Agreement shall not, however, be assignable or
transferable in whole or in part, by any party hereto except upon the express
prior written consent of the other party, except
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<PAGE> 29
that Seller may assign its interest in this Agreement to any of its affiliates,
so long as such assignment does not relieve Seller of any of its liabilities to
Purchaser. Nothing contained in this Agreement is intended to confer upon any
person, other than the parties hereto and their respective heirs, successors
and permitted assigns, any rights, remedies or obligations under, or by reason
of this Agreement.
30. ADDITIONAL ACTS AND DOCUMENTS. Each party hereto shall do all
such things and take all such actions to make, execute and deliver such other
documents and instruments, as shall be reasonably requested to carry out the
provisions, intent and purpose of this Agreement. Without limiting the
generality of the foregoing, Seller shall execute, acknowledge and deliver any
further deeds, assignments, conveyances and instruments of transfer reasonably
requested by Purchaser and take any other action consistent with the terms of
this Agreement that may be reasonably requested by Purchaser for the purpose of
assigning, transferring, granting, conveying, and confirming to Purchaser, or
reducing to possession, any or all of the Assets to be conveyed and transferred
by this Agreement.
31. TIME. Time is of the essence of this Agreement and each and
every provision hereof.
32. GOVERNING LAW. This Agreement shall be deemed to be made
under, construed in accordance with, and governed by, the laws of the State of
Oklahoma.
33. ENTIRE AGREEMENT. This Agreement, together with the ancillary
documents expressly referenced herein, and that certain letter agreement
between the parties dated January 23 1998 (the "Confidentiality Letter"),
represents the entire
29
<PAGE> 30
agreement of the parties with respect to the purchase and sale described
herein, and all agreements pertaining to such purchase and sale entered into
prior hereto (other than the Confidentiality Letter) are revoked and superseded
by this Agreement. No representations, warranties, inducements or oral
agreements with respect thereto have been made by any of the parties except as
expressly set forth herein, or in other contemporaneous written agreements.
Except as expressly provided otherwise herein, this Agreement may not be
changed, modified or rescinded except in writing, signed by all parties hereto,
and any attempt at oral modifications of this Agreement shall be void and of no
effect.
34. CONFIDENTIALITY AND PRESS RELEASES. Except as required by
law, each party hereto shall keep all of the terms and provisions of this
Agreement in strictest confidence for five years, or until every party has
expressly agreed otherwise. No party shall release any specific information
pertaining to this transaction to the media until every other party hereto has
expressly agreed to such release.
35. ATTORNEYS' FEES. In the event of any dispute arising
hereunder, the prevailing party in litigation or arbitration, inclusive of any
appeals, shall be entitled to recover attorneys' fees and costs, court costs,
arbitration costs and costs of discovery incurred in connection therewith.
IN WITNESS WHEREOF, the parties hereto through their duly
authorized signatories have caused this Agreement to be executed and delivered
on the date first above written.
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<PAGE> 31
SELLER: PURCHASER:
EATERIES, INC., CHEVYS, INC.,
an Oklahoma corporation a California corporation
By: By:
-------------------------------- ------------------------------
Its: Its:
------------------------------- -----------------------------
By: By:
-------------------------------- ------------------------------
Its: Its:
------------------------------- -----------------------------
31
<PAGE> 32
State of _________________________)
) ss.
County of ________________________)
On ______________, 1998 before me, _____________________________, a
Notary Public, personally appeared ___________________________, personally
known to me or proved to me, on the basis of satisfactory evidence, to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
----------------------------------------
Notary Public
State of _________________________)
) ss.
County of ________________________)
On ______________, 1998 before me, _____________________________, a
Notary Public, personally appeared ___________________________, personally
known to me or proved to me, on the basis of satisfactory evidence, to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
WITNESS my hand and official seal.
----------------------------------------
Notary Public
32
<PAGE> 33
LIST OF EXHIBITS AND SCHEDULES
<TABLE>
<CAPTION>
EXHIBITS
- - --------
<S> <C>
A RESTAURANT LOCATIONS
B INTENTIONALLY OMITTED
C INTENTIONALLY OMITTED
D ASSIGNMENT OF LEASE
E INTENTIONALLY OMITTED
F INTENTIONALLY OMITTED
G INTENTIONALLY OMITTED
H BILL OF SALE
</TABLE>
<TABLE>
<CAPTION>
SCHEDULES
- - ---------
<S> <C>
1 DESCRIPTION OF LEASE
2 PROPERTY SUBJECT TO EQUIPMENT LEASES AND EXCLUDED ASSETS
3 INTENTIONALLY OMITTED
4 MATERIAL CONTRACTS
5 ALLOCATION OF PURCHASE PRICE
11A INTENTIONALLY OMITTED
11B ZONING AND LAND USE CHANGES
11C LITIGATION AND OTHER PROCEEDINGS
11D HEALTH AND SAFETY REGULATIONS VIOLATIONS
11E MATERIAL ADVERSE CHANGES IN RESTAURANT
11F HAZARDOUS MATERIALS
</TABLE>
33
<PAGE> 34
OMITTED SCHEDULES AND EXHIBITS
All schedules and exhibits to the Agreement for Purchase and Sale of
Assets and Licenses have been omitted from this Report on Form 8-K. The
following is a list of such schedules and exhibits. Eateries will furnish
supplementally a copy of any omitted schedule to the Securities and Exchange
Commission upon request.
<TABLE>
<CAPTION>
Exhibit or
Schedule Brief Description of Contents
---------- -----------------------------
<S> <C>
A Restaurant Locations
B [Intentionally Omitted]
C Trademark Assignment
D Assignment of Lease
E Intellectual Property License
F Limited Warranty Deed
G [Intentionally Omitted]
H Bill of Sale and Assignment and Assumption Agreement
1 Description of Lease
2 Property Subject to Equipment Leases and Excluded Assets
3 [Intentionally Omitted]
4 Material Contracts
5 Allocation of Purchase Price
11A Intellectual Property
11B Zoning and Land Use Proceedings
11C Litigation and Other Proceedings
11D Health and Safety Regulations Violations
11E Material Adverse Changes in Restaurants
11F Hazardous Materials
</TABLE>
