EXHIBIT 10.30
STOCK PURCHASE AGREEMENT
Dated as of October 2, 2001
among
FRESH ENTERPRISES, INC.
and
Those Persons listed on Schedule 1 hereto
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS .............................................. 1
1.1 Defined Terms ........................................ 1
ARTICLE II THE AUTHORIZATION AND SALE OF PREFERRED STOCK ........... 6
2.1 Authorization of Preferred Stock ..................... 6
2.2 Purchase of Preferred Stock .......................... 6
2.3 Closing .............................................. 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE BUYERS ........... 6
3.1 Authority ............................................ 7
3.2 No Violation ......................................... 7
3.3 Disclosure of Information ............................ 7
3.4 Investment Experience ................................ 7
3.5 Accredited Investors ................................. 7
3.6 Exculpation Among Buyers ............................. 8
3.7 Legends .............................................. 8
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY ........... 8
4.1 Corporate Organization ............................... 8
4.2 Subsidiaries and Investments ......................... 8
4.3 Capital Stock ........................................ 9
4.4 Issuance of Shares ................................... 9
4.5 Authority ............................................ 10
4.6 No Violation ......................................... 10
4.7 Litigation ........................................... 11
4.8 Financial Statements ................................. 11
4.9 No Undisclosed Liabilities ........................... 11
4.10 Absence of Certain Changes or Events ................. 11
4.11 Insurance ............................................ 13
4.12 Employee Benefits .................................... 13
4.13 Material Contracts and Other Agreements .............. 14
4.14 Suppliers ............................................ 14
4.15 Leased Property ...................................... 14
4.16 Condition and Sufficiency of Assets .................. 15
4.17 Compliance with Laws ................................. 15
4.18 Licenses and Permits; Franchise Matters ............. 15
4.19 Intellectual Property ............................... 18
4.20 Title to Assets ...................................... 18
4.21 Inventory ............................................ 19
4.22 Accounts and Notes Receivable ........................ 19
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4.23 Taxes ................................................. 19
4.24 Environmental Laws and Regulations .................... 21
4.25 Board of Directors Approval ........................... 21
4.26 No Agreements to Sell the Company ..................... 22
4.27 Related Party Transactions ............................ 22
4.28 No Finders or Brokers ................................. 22
4.29 Labor Matters ......................................... 22
4.30 Full Disclosure ....................................... 23
ARTICLE V CONDITIONS PRECEDENT ..................................... 23
5.1 Conditions to the Obligations of the Company .......... 23
5.2 Conditions to the Obligations of the Buyers ........... 23
ARTICLE VI POST CLOSING ............................................ 25
6.1 Survival of Representations and Warranties ............ 25
6.2 Directors and Officers' Insurance ..................... 25
6.3 California Securities Filing .......................... 25
ARTICLE VII MISCELLANEOUS .......................................... 25
7.1 Notices ............................................... 25
7.2 Headings; Agreement ................................... 26
7.3 Publicity ............................................. 26
7.4 Entire Agreement ...................................... 26
7.5 Amendment ............................................. 26
7.6 Assignment ............................................ 26
7.7 Expenses .............................................. 27
7.8 Severability .......................................... 27
7.9 Counterparts .......................................... 27
7.10 Governing Law ......................................... 27
7.11 Cumulative Remedies ................................... 27
7.12 Third Party Beneficiaries ............................. 27
7.13 Limitation of Liability ............................... 27
7.14 Arbitration ........................................... 27
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STOCK PURCHASE AGREEMENT
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STOCK PURCHASE AGREEMENT (this "Agreement") dated as of October 2, 2001
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among Fresh Enterprises, Inc., a California corporation (the "Company") and
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those Persons listed on Schedule 1 hereto (collectively, the "Buyers" and
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individually a "Buyer").
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NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms
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"Accounts Payable" shall mean accounts payable and accrued liabilities of
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the Company and its Subsidiaries, including taxes payable, but excluding the
current portion of Funded Debt and deferred revenues.
"Additional Buyers" shall mean those Buyers that participate in the
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Subsequent Closing.
"Additional Series C Shares" shall have the meaning set forth for such term
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in Section 2.2.
"Affiliate" shall have the meaning set forth for such term in the
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Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder. Without limiting the foregoing, all directors and officers of a
Person that is a corporation shall be deemed Affiliates of such Person for all
purposes hereunder.
"Aggregate Series C Purchase Price" shall have the meaning set forth for
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such term in Section 2.2.
"Balance Sheet" shall have the meaning set forth for such term in Section
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4.9.
"Benefit Plans" shall have the meaning set forth for such term in Section
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412.
"Board" shall mean the board of directors of the Company.
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"Breach" shall mean, and a breach of a representation, warranty, covenant,
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obligation or other provision of this Agreement or any Transaction Document will
be deemed to have occurred if there is or has been, any inaccuracy in or breach
of, or any failure to perform or comply with, such representation, warranty,
covenant, obligation or other provision.
"Buyers" shall have the meaning set forth for such term in the preamble of
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this Agreement.
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"Catterton" shall mean, collectively, Catterton Partners IV, L.P.,
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Catterton Partners IV Offshore, L.P., Catterton Partners IV Special Purpose,
L.P., Catterton Partners IV-A, L.P., Catterton Partners IV-B, L.P. and their
respective assigns and Affiliates.
"CGCL" shall mean the General Corporation Law of the State of California.
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"Closing" shall have the meaning set forth for such term in Section 2.3.
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"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
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successor law.
"Commercially Reasonable Efforts" shall mean the efforts that a reasonable
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Person desirous of achieving a result would use in similar circumstances to
ensure that such result is achieved as expeditiously and effectively as
possible. Notwithstanding the foregoing, an obligation to use Commercially
Reasonable Efforts under this Agreement does not require the Person subject to
that obligation to make any payments or pay other consideration to third parties
from whom Consents are required to be obtained hereunder in exchange for receipt
of such Consents; provided, however, that such payments or consideration shall
exclude any payments or consideration which are otherwise required to be paid to
such parties.
"Common Stock" shall have the meaning set forth for such term in Section
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2.2.
"Company Contracts" shall have the meaning set forth for such term in
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Section 4.13.
"Company Stores" shall have the meaning set forth for such term in Section
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4.18.
"Company Taxes" shall have the meaning set forth for such term in Section
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4.23.
"Consent" shall mean any approval, consent, ratification, waiver, or other
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authorization (including any Governmental Authorization).
"Contract" shall mean any agreement, contract, obligation, promise or
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undertaking (whether written or oral and whether express or implied) that is
legally binding.
"Disposed Businesses" shall have the meaning set forth for such term in
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Section 4.13.
"Encumbrance" shall mean any charge, claim, condition, equitable interest,
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lien, option, pledge, security interest, right of first refusal or restriction
of any kind, including any restriction on use, voting, transfer, receipt of
income or exercise of any other attribute of ownership, which in each case is
not created by or arising under the Stockholders' Agreement.
"ERISA" shall have the meaning set forth for such term in Section 4.12.
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"Financial Statements" shall have the meaning set forth for such term in
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Section 4.8.
"Franchise Agreements" shall have the meaning set forth for such term in
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Section 4.18.
"Franchise Laws" shall have the meaning set forth for such term in Section
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4.18.
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"FTC" shall have the meaning set forth for such term in Section 4.18.
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"GAAP" shall mean United States generally accepted accounting principles
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and practices.
"Governmental Authorization" shall mean any approval, Consent, license,
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permit, waiver or other authorization issued, granted, given or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
"Governmental Body" shall mean any:
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(a) nation, state, county, city, town, village, district or other
jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi-governmental authority of any nature (including
any governmental agency, branch, department, official or entity and any court or
other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any administrative,
executive, judicial, legislative, police, regulatory or taxing authority or
power of any nature.
"Hazardous Material" shall have the meaning set forth for such term in
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Section 4.24.
"Initial Buyers" shall mean those Buyers that participate in the Initial
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Closing.
"Initial Closing" shall have the meaning set forth for such term in Section
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2.3.
"Initial Closing Date" shall have the meaning set forth for such term in
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Section 2.3.
"Initial Series C Shares" shall have the meaning set forth for such term in
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Section 2.2.
"Knowledge" shall mean and an individual will be deemed to have "Knowledge"
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of a particular fact or other matter if such individual is actually aware of
such fact or other matter; provided that, such individual shall be required to
make a reasonable investigation of the circumstances related thereto, including
making due inquiry of other Persons who should be aware of such fact or other
matter.
"Knowledge of the Company" or other similar phrases shall mean and include
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the Knowledge (provided that the Company's duty of inquiry shall be limited to
inquiry of officers, directors, employees and agents of the Company) of Louis A.
Siracusa, Greg Dollarhyde, and Donald Breen, who are respectively, the Chairman,
President and Chief Executive Officer, and Chief Financial Officer of the
Company.
"Leased Property" shall have the meaning set forth for such term in Section
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4.15.
"Leases" shall have the meaning set forth for such term in Section 4.15.
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"Legal Requirement" shall mean any federal, state, local, municipal or
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other administrative order, constitution, law, ordinance, principle of common
law, regulation, statute or treaty, including, without limitation, any
applicable franchise, building, zoning, health, environmental, sanitation,
safety, labor relations, immigration or other law, ordinance or regulation.
"Liability" shall mean any direct or indirect liability, indebtedness,
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obligation, commitment, expense, claim, deficiency, deferred income, guaranty or
endorsement of or by any Person of any type, whether known, unknown, accrued,
absolute, contingent, matured or unmatured.
"Material Adverse Effect" or "Material Adverse Change" shall mean any
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significant adverse effect or change in the condition (financial or other),
business, results of operations, liabilities or operations of any party or on
the ability of such party to consummate the Transactions, or any event or
condition which would reasonably be expected to, with the passage of time,
constitute a "Material Adverse Effect" or "Material Adverse Change"; provided,
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however, that a Material Adverse Change shall not include changes, generally, in
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economic conditions or the restaurant industry.
"Order" shall mean any award, decision, injunction, judgment, order,
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ruling, subpoena or verdict entered, issued, made or rendered by any court,
administrative agency or other Governmental Body or by any arbitrator.
"Organizational Documents" shall mean (a) the articles or certificate of
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incorporation, all certificates of determination and designation, and the bylaws
of a corporation; (b) the partnership agreement and any statement of partnership
of a general partnership; (c) the limited partnership agreement and the
certificate or articles of limited partnership of a limited partnership; (d) the
operating agreement, limited liability company agreement and the certificate or
articles of organization or formation of a limited liability company; (e) any
charter or similar document adopted or filed in connection with the creation,
formation or organization of a Person; and (f) any amendment to any of the
foregoing.
"Person" shall mean any individual, corporation (including any non-profit
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corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union or other entity
or Governmental Body.
"Proceeding" shall mean any action, arbitration, audit, hearing,
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investigation, litigation or suit (whether civil, criminal, administrative,
investigative or informal) commenced, brought, conducted or heard by or before,
or otherwise involving, any Governmental Body or arbitrator.
"Proprietary Rights" shall have the meaning set forth for such term in
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Section 4.19.
"RCRA" shall have the meaning set forth for such term in Section 4.24.
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"Real Property" shall have the meaning set forth for such term in Section
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4.24.
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"Registration Rights Agreement" shall mean that certain Registration Rights
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Agreement between the Company and certain of its shareholders dated November 24,
1998, as amended to date.
"Representative" shall mean any officer, director, principal, stockholder,
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partner, attorney, accountant, adviser, agent, employee or other representative.
"Required Permits" shall have the meaning set forth for such term in
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Section 5.24.
"Securities Act" shall mean the Securities Act of 1933, as amended, and the
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rules and regulations promulgated thereunder or any successor law.
"Senior Credit Facility" shall mean the Business Loan Agreement, dated
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December 12, 2000, among Fresh Enterprises, Inc. and Baja Fresh Westlake
Village, Inc., as Borrower, Triune Corporation, as Guarantor, and Western
Financial Bank, as Lender.
"Series A Shares" shall mean the 2,727,941 shares of Series A Convertible
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Preferred Stock of the Company.
"Series B Shares" shall mean the 2,153,507 shares of Series B Convertible
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Preferred Stock of the Company.
"Series C Shares" shall have the meaning set forth for such term in Section
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2.2.
"Series C Stock" shall have the meaning set forth for such term in Section
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2.1.
"Shareholders' Agreement" shall mean that certain Amended and Restated
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Shareholders' Agreement dated as of the date hereof, between the Company and the
holders of the capital stock of the Company.
"Subsequent Closing" shall have the meaning set forth for such term in
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Section 2.3.
"Subsequent Closing Date" shall have the meaning set forth for such term in
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Section 2.3.
"Subsidiary" shall have the meaning set forth for such term in Section 4.2.
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"Threatened" shall describe any claim, Proceeding, dispute, action or other
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matter if any demand, notice or statement has been received or deemed to be
received (orally or in writing) with respect to such claim, Proceeding, dispute,
action or other matter.
"Transaction Documents" shall mean this Agreement, the Shareholders
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Agreement and the Registration Rights Agreement.
"Transactions" shall mean the transactions contemplated by the Transaction
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Documents.
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ARTICLE II
THE AUTHORIZATION AND SALE OF PREFERRED STOCK
2.1 Authorization of Preferred Stock. Prior to the Initial Closing, the
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Company will file with the California Secretary of State an Amended and Restated
Articles of Incorporation, which, inter alia, sets forth the rights, powers,
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preferences, qualifications, limitations and restrictions of the Company's
Series C Convertible Preferred Stock ("Series C Stock") in a form and substance
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satisfactory to the Buyers (the "Restated Articles").
2.2 Purchase of Preferred Stock. Subject to the terms and conditions of
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this Agreement, the Initial Buyers agree to purchase from the Company and the
Company agrees to sell to the Initial Buyers at the Initial Closing, 1,328,794
shares (the "Initial Series C Shares") of Series C Stock of the Company free and
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clear of all Encumbrances. Each of the Initial Buyers shall purchase the Initial
Series C Shares listed opposite such Initial Buyer's name on Exhibit B attached
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hereto. Subject to the terms and conditions of this Agreement, the Additional
Buyers agree to purchase from the Company and the Company agrees to sell to the
Additional Buyers at the Subsequent Closing, up to 22,611 additional shares (the
"Additional Series C Shares") of Series C Stock of the Company free and clear of
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all Encumbrances. Each of the Additional Buyers shall become parties hereto by
signing counterpart signature pages, and shall purchase the Additional Series C
Shares listed opposite such Additional Buyer's name on the amended Exhibit B
which shall be attached hereto on or before the Subsequent Closing. The purchase
price for each Initial Series C Share and each Additional Series C Share
(collectively, the "Series C Shares") shall be an amount equal to $9.25,
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constituting an aggregate purchase price of up to Twelve Million Five Hundred
Thousand Four Hundred Ninety-Six and 25/100's Dollars ($12,500,496.25) (the
"Aggregate Series C Purchase Price").
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2.3 Closing. The initial closing of the sale to and purchase by the Initial
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Buyers of the Initial Series C Shares (the "Initial Closing") shall occur at the
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offices of Pillsbury Winthrop LLP, 725 South Figueroa Street, Los Angeles,
California at 10:00 a.m. local time on October 2, 2001 or at such other date,
place or time of day as the Initial Buyers and the Company shall agree to in
writing (the "Initial Closing Date"). The subsequent closing of the sale to and
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purchase by the Additional Buyers of the Additional Series C Shares (the
"Subsequent Closing") shall occur at the same place thirty (30) days after the
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Initial Closing at 10:00 a.m. local time, or at such earlier date, place or time
of day as the Additional Buyers and the Company shall agree to in writing (the
"Subsequent Closing Date"). At the Initial Closing and the Subsequent Closing
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(each a "Closing"), (i) the Company shall deliver to each Buyer certificates
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evidencing the Series C Shares being purchased by such Buyer, free and clear of
any Encumbrances of any nature whatsoever registered in such Buyer's name, and
(ii) each Buyer shall deliver to the Company the portion of the Purchase Price
listed next to such Buyer's name on Exhibit B hereto, by check or wire transfer
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of immediately available funds or, in the case of Gregory Dollarhyde and Donald
Breen, by a promissory note in a form acceptable to the Buyers purchasing a
majority of the Series C Shares at the Initial Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYERS
Each Buyer severally represents and warrants to the Company as follows:
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3.1 Authority. Such Buyer has full power and authority to execute and
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deliver this Agreement and to perform its obligations under this Agreement. The
execution, delivery and performance by such Buyer of this Agreement and the
consummation of the Transactions have been duly authorized by all necessary
action on the part of such Buyer. No other action on the part of such Buyer is
necessary to authorize the execution and delivery of this Agreement by such
Buyer or the performance by such Buyer of its obligations hereunder. Each of the
Transaction Documents have been duly executed and delivered by such Buyer and
constitutes a legal, valid and binding agreement of such Buyer, enforceable
against such Buyer in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
creditors' rights generally and subject to general equitable principles
(regardless of whether such enforceability is considered in a Proceeding in
equity or at law).
3.2 No Violation. Neither the execution and delivery of the Transaction
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Documents by such Buyer nor the consummation of the Transactions will (a)
violate any provision of any Legal Requirement or Order applicable to such
Buyer, (b) require the Consent or any filing with any Person or Governmental
Body, except as permitted by Section 500 et seq. of the CGCL, (c) violate,
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result (with or without notice or the passage of time, or both) in a Breach of,
or give rise to the right to terminate, accelerate or cancel any obligation
under, or require the payment of any fee, or constitute (with or without notice
or the passage of time, or both) a default under, any of the terms or provisions
of (i) the Organizational Documents of such Buyer, or (ii) any indenture,
mortgage, lien, Order, judgment, ordinance, regulation, decree, license, permit
or other Contract or instrument to which such Buyer is subject or bound, (d)
result in the creation of any Encumbrance upon any property of such Buyer which
could have, individually or in the aggregate, a Material Adverse Effect on such
Buyer, or (e) with respect to such Buyer, result in a termination, loss or
adverse modification of any license, permit, certificate or Contract granted to
or otherwise held by such Buyer except (in the case of clauses (a) and (c)(ii))
for such violations, Breaches and defaults which could not have, individually or
in the aggregate, a Material Adverse Effect on such Buyer or to interfere in any
material way with the consummation of the Transactions.
3.3 Disclosure of Information. Such Buyer has conducted and shall continue
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to conduct due diligence. Notwithstanding the foregoing, nothing in this Section
3.3 shall, or shall be deemed to, modify, waive, qualify or in any way negate
the representations and warranties of the Company set forth herein.
3.4 Investment Experience. Such Buyer is an investor in securities of
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companies in the development stage, is able to bear the economic risk of this
investment, and has such knowledge and experience in financial and business
matters that such Buyer is capable of evaluating the merits and risks of the
investment in the securities to be purchased hereunder.
3.5 Accredited Investors. Such Buyer is an "accredited investor" within the
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meaning of Rule 501 of Regulation D promulgated under the Securities Act. Such
Buyer is purchasing the Series C Shares pursuant to this Agreement for
investment for such Buyer's own account and not with a view to, or for resale in
connection with, any distribution thereof, within the meaning of Section 2(11)
of the Securities Act.
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3.6 Exculpation Among Buyers. Each Buyer acknowledges that in making its
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decision to invest in the Company, it is not relying on any other Buyer or upon
any person, firm or company, other than the Company and its officers, employees
and/or directors. Each Buyer agrees that no other Buyer, nor the partners,
employees, officers or controlling persons of any other Buyer shall be liable
for any actions taken by such Buyer, or omitted to be taken by such Buyer, in
connection with such investment.
3.7 Legends. Such Buyer understands that the certificates evidencing the
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securities to be purchased hereunder will bear the following legend:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE
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SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED EXCEPT IN COMPLIANCE WITH
THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS."
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Buyers that the following
representations and warranties are, as of the date hereof, true and correct;
provided, however, that notwithstanding anything to the contrary set forth
herein, all Schedules referred to in this Article IV and attached hereto refer
only to matters in existence, or occurrences taking place, since April 28, 2000,
and any matters in existence or occurrences taking place prior to April 28, 2000
and on or after November 24, 1998 which would otherwise be required to be set
forth on a Schedule are incorporated by reference from the Schedules attached to
that certain Stock Purchase Agreement dated April 28, 2000 among the Company and
the purchasers set forth therein.
4.1 Corporate Organization. The Company is a corporation duly organized,
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validly existing and in good standing under the laws of the State of California,
with all requisite corporate power and authority to own, operate and lease its
properties and assets that it now purports to own, operate or lease, to carry on
its business as it is now being conducted, and to perform its obligations under
the Transaction Documents. Except as set forth on Schedule 4.1(a), the Company
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is duly qualified to do business and is in good standing under the laws of each
state or other jurisdiction in which either the nature of the activities
conducted by it or the ownership, operation or leasing of the properties and
assets owned, operated or leased by it requires such qualification and good
standing, except where the failure to be so qualified or in good standing would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. Schedule 4.1(b) contains a list of jurisdictions
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in which the Company is qualified to do business.
4.2 Subsidiaries and Investments. Except as set forth on Schedule 4.2, the
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Company does not own, directly or indirectly, any stock, partnership interest,
joint venture interest or other security, investment or interest in any other
corporation, partnership, association, joint venture, organization or other
entity. Each of the entities set forth in Schedule 4.2 (each a "Subsidiary" and,
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collectively, the "Subsidiaries") is duly organized, validly existing and in
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good standing
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under the laws of its organization or existence with all requisite corporate
power and authority to own, operate and lease its properties and assets that it
now purports to own, operate or lease, to carry on its business as it is now
being conducted, and to perform its obligations under the Transaction Documents
to which it is a party. Each Subsidiary is duly qualified to do business under
the laws of each state or other jurisdiction in which either the nature of the
activities conducted by it or the ownership, operation or leasing of the
properties and assets owned, operated or leased by it requires such
qualification and good standing, except where the failure to be so qualified or
in good standing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on such Subsidiary.
4.3 Capital Stock. As of the date hereof the authorized capital stock of
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the Company consists and will consist in its entirety of (a) 15,000,000 shares
of Common Stock, 1,520,224.50 of which are issued and outstanding, 13,479,775.50
of which are authorized but unissued and none of which is held by the Company as
treasury shares, and (b) 15,000,000 shares of preferred stock, 2,727,941 of
which are designated as Series A Preferred Stock, 2,727,940 of which shares are
issued and outstanding, and 2,153,507 of which are designated as Series B
Preferred Stock, 2,153,507 of which shares are issued and outstanding.
Immediately following the Closings, the authorized capital stock of the Company
will consist in its entirety of (x) 15,000,000 shares of Common Stock,
1,520,224.50 of which will be issued and outstanding, and (y) 15,000,000 shares
of preferred stock, 2,727,941 of which are designated as Series A Preferred
Stock, 2,727,940 of which shares will be issued and outstanding, 2,153,507 of
which are designated as Series B Preferred Stock, 2,153,507 of which shares will
be issued and outstanding, and 1,351,405 of which are designated as Series C
Stock, 1,328,794 of which shares will be issued and outstanding after the
Initial Closing and up to 22,611 more of which will be outstanding after the
Subsequent Closing. No other class or series of preferred stock has been
authorized by the Company. All of the outstanding shares of capital stock of the
Company and its Subsidiaries have been duly authorized and validly issued and
are fully paid and non-assessable. All of the outstanding shares of capital
stock of the Company and its Subsidiaries were issued in compliance with the
Securities Act and all Legal Requirements. Other than as set forth on Schedule
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4.3, there are no Contracts with respect to the voting, issuance, redemption,
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repurchase, acquisition, sale or transfer of the capital stock or other
securities of the Company, or any securities convertible into or exchangeable
for shares of capital stock or other securities of the Company to which the
Company is a party. Except as set forth on Schedule 4.3, the Company has not
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granted any preemptive rights, registration rights, subscriptions, calls,
options, warrants, rights, convertible securities or other agreements or
commitments of any character relating to the issued or unissued capital stock or
other securities of the Company, or any securities convertible into or
exchangeable for shares of such capital stock or other securities of the
Company, and there are no statutory obligations of the Company to repurchase,
redeem or otherwise acquire or sell, issue or otherwise transfer any shares of
such capital stock. Schedule 4.3 sets forth the record ownership of Common
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Stock, including the identity of each shareholder of the Company and the number
of shares of Common Stock held by such shareholder.
4.4 Issuance of Shares. The Series C Shares to be issued at each Closing
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will have been duly authorized, validly issued, fully paid and non-assessable
and will be free and clear of all Encumbrances.
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4.5 Authority. The Company has full corporate power and authority to
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execute and deliver the Transaction Documents and to perform its obligations
under such Transaction Documents. The execution, delivery and performance of the
Transaction Documents and the consummation of the Transactions have been duly
authorized by the Board, and no other corporate proceedings on the part of the
Company, its Subsidiaries or their shareholders are necessary to authorize the
execution and delivery by the Company of the Transaction Documents or to
consummate the Transactions, except those which have already been obtained. This
Agreement has been duly executed and delivered by the Company and constitutes
the legal, valid and binding obligation of the Company, enforceable against the
Company in accordance with its terms, subject to bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting creditors' rights generally
and subject to general equitable principles (regardless of whether such
enforceability is considered in a Proceeding in equity or at law). Each of the
other Transaction Documents to be executed by the Company will be duly executed
and delivered by the Company on or prior to each Closing Date and, upon such
execution and delivery (assuming due execution and delivery by the other party
or parties thereto), will constitute a legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except where such enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization, or similar laws affecting creditors' rights
generally and subject to general equitable principles (regardless of whether
such enforceability is considered in a Proceeding in equity or at law). The
holders of the capital stock of the Company will have the rights, preferences
and privileges set forth in the Company's Organizational Documents.
4.6 No Violation. Neither the execution and delivery of this Agreement and
------------
the other Transaction Documents by the Company nor the consummation of the
Transactions will (a) violate any provision of any Legal Requirement or Order
applicable to the Company or any Subsidiary, (b) require the Consent of or any
filing with any Person or Governmental Body, except (i) as permitted by Section
500 et seq. of the CGCL, (ii) those that have been received or made prior to the
-- ---
date hereof or (iii) the filing of a Form D with the Securities and Exchange
Commission, a notice of transaction under Section 25102(f) with the California
Secretary of State and necessary notices under applicable blue sky laws and
regulations, (c) violate, result (with or without notice or the passage of time,
or both) in a Breach of, or give rise to the right to terminate, accelerate or
cancel any obligation under, or require the payment of any fee, or constitute
(with or without notice or the passage of time, or both) a default under, any of
the terms or provisions of (i) the Organizational Documents of the Company or
any Subsidiary, or (ii) any indenture, mortgage, lien, lease, Order, judgment,
ordinance, regulation, decree, license, permit, franchise or other Contract or
instrument to which the Company or any Subsidiary is subject or bound, (d)
result in the creation of any Encumbrance upon any property of the Company or
any Subsidiary which would have, individually or in the aggregate, a Material
Adverse Effect on the Company and its Subsidiaries taken as a whole, or (e)
except as set forth on Schedule 4.6, result in a termination, loss or adverse
------------
modification of any license, permit, certificate, franchise or Contract granted
to or otherwise held by the Company or any Subsidiary, except (in the case of
clauses (a), (b), (c)(ii) and (e)) for such terminations, losses, Breaches,
accelerations, cancellations or modifications which would not have, individually
or in the aggregate, a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole or interfere in any material way with the
consummation of the Transactions.
-10-
4.7 Litigation. Except as set forth on Schedule 4.7, there is no Proceeding
---------- ------------
pending or, to the Knowledge of the Company, Threatened against the Company or
any Subsidiaries or any of their respective assets or property before any court
or Governmental Body or arbitrator, which would have, individually or in the
aggregate, a Material Adverse Effect, nor, to the Knowledge of the Company, is
there any basis for any of the foregoing. There is no Proceeding pending or, to
the Knowledge of the Company, Threatened, against the Company or any
Subsidiaries challenging the validity, timing or propriety of the Transactions.
None of the Company or any Subsidiaries or any of their assets or property is
subject to any Order, judgment, injunction or decree, which would have,
individually or in the aggregate, a Material Adverse Effect on the Company or
any Subsidiary.
4.8 Financial Statements. True and complete copies of the Company's audited
--------------------
consolidated financial statements for the fiscal years 1999 and 2000, together
with the report thereon of the Company's independent certified public
accountants, and the Company's unaudited consolidated financial statements for
the eight (8) periods ended August 13, 2001 (collectively, the "Financial
---------
Statements") are set forth in Schedule 4.8. The Financial Statements were
- ---------- ------------
prepared in accordance with GAAP, reflect all normal and customary year-end
audit adjustments and present, fairly and accurately, the financial position,
results of operations, income, expenses, assets, liabilities, changes in
shareholders' equity and cash flows of the Company and its Subsidiaries as of
the respective dates and for the periods indicated. The Financial Statements are
prepared in accordance with the books and records of the Company and its
Subsidiaries. At the respective dates of the Financial Statements, there were no
Liabilities, commitments or obligations (absolute, accrued, contingent or
otherwise) of the Company or any Subsidiary, which in accordance with GAAP
should have been shown or reflected in such Financial Statements or the notes
thereto which were not so reflected (it being acknowledged and understood that
footnote disclosure is not required with respect to interim financial
statements).
4.9 No Undisclosed Liabilities. Except as set forth in Schedule 4.9,
-------------------------- ------------
neither the Company nor any Subsidiary has any Liabilities or obligations of any
nature (whether known or unknown, with or without the passage of time, and
whether absolute, accrued, contingent or otherwise) except for Liabilities or
obligations reflected or reserved against in the audited consolidated balance
sheet of the Company and its Subsidiaries as of January 1, 2001 (the "Balance
-------
Sheet Date") and Liabilities incurred in the ordinary course of business since
- ----------
such date.
4.10 Absence of Certain Changes or Events. Except as set forth in Schedule
------------------------------------ --------
4.10, since the Balance Sheet Date, the Company and its Subsidiaries have
- ----
conducted their business in the ordinary course of business consistent with past
practice and there has not been any:
(a) Material Adverse Change in the financial condition, properties
assets, liabilities, business, operations or results of operations of the
Company or any Subsidiary;
(b) material addition to or modification of employee benefits plans,
arrangements or practices;
(c) sale, assignment or transfer of any of the material assets of the
Company or any Subsidiary, other than in the ordinary course of business,
consistent with past practice;
-11-
(d) cancellation of any indebtedness owed to the Company or any
Subsidiary in an aggregate amount greater than $50,000, or waiver of any
rights of similar value to the Company or any Subsidiary relating to any of
its business activities or properties, other than in the ordinary course of
business;
(e) amendment, cancellation or termination of any Contract, license or
other instrument material to the Company or any Subsidiary;
(f) failure to repay any material obligation of the Company or any
Subsidiary when due;
(g) change in accounting methods, principles or practices by the
Company or any Subsidiary materially affecting its assets, Liabilities,
results of operations or business;
(h) material revaluation by the Company or any Subsidiary of any of
its assets, including without limitation, any material write-offs, material
increases in any reserves or any write-up of the value of inventory,
property, plant, equipment or any other asset;
(i) material damage, destruction or loss (whether or not covered by
insurance) affecting any store or office maintained by the Company or any
Subsidiary or any other material asset of the Company or any Subsidiary and
resulting in a loss in excess of $50,000;
(j) mortgage, pledge or other Encumbrance of any assets of the Company
or any Subsidiary, material singly or in the aggregate;
(k) declaration, setting aside or payment of any dividend or other
distribution or payment (whether in cash, stock or property) with respect
to the capital stock or other equity securities of the Company or any
Subsidiary or any redemption, purchase or other acquisition of any of the
securities of the Company or any Subsidiary, or any other payment to any
shareholder of the Company or any Subsidiary in its capacity as a
shareholder;
(l) issuance by the Company or any Subsidiary of, or commitment by it
to issue, any capital stock or other equity securities or obligations or
any securities convertible into or exchangeable or exercisable for capital
stock or other equity interests;
(m) indebtedness for borrowed money incurred by the Company or any
Subsidiary or any commitment to incur indebtedness for borrowed money
entered into by the Company or any Subsidiary, or any loans made or agreed
to be made by the Company or any Subsidiary other than as set forth on
Schedule 4.10;
-------------
(n) incurrence of other Liabilities involving $100,000 or more, except
in the ordinary course of business, or any increase or change in any
assumptions underlying, or methods of calculating, any bad debt,
contingency or other reserves;
-12-
(o) payment, discharge or satisfaction of any Liabilities other than
the payment, discharge or satisfaction (i) in the ordinary course of
business, consistent with past practice, of Liabilities reserved against in
the Financial Statements or of Liabilities incurred in the ordinary course,
consistent with past practice or (2) of other Liabilities involving $50,000
or less individually and $100,000 or less in the aggregate;
(p) increase in the compensation of officers or employees (including
any such increase pursuant to any bonus, pension, profit sharing or other
plan or commitment) or any increase in the compensation payable or to
become payable to any officer or employee or any severance or termination
pay, except for increases as required by law;
(q) granting of any bonus, incentive compensation, service award or
other like benefit to any officer or employee except in accordance with
plans or arrangements disclosed on Schedule 4.10; or
-------------
(r) agreement, whether oral or written, by the Company or any
Subsidiary to do any of the foregoing;
except as expressly required by this Agreement or any Transaction Document.
- ------
4.11 Insurance. Schedule 4.11 contains a list of all policies of insurance,
--------- -------------
surety bonds and letters of credit maintained by the Company or any Subsidiary
(showing as to each policy or binder, the carrier, coverage limits, expiration
dates, annual premiums, summary of loss experience since April 28, 2000, any
claim exceeding $50,000 and a general description of the type of coverage
provided), which list is true, complete and accurate in all material respects as
of the date hereof. To the best of the Company's Knowledge, the Company and each
of its Subsidiaries have paid all premiums due and are not otherwise in default
with respect to their respective obligations under any such policies. All of
such policies are sufficient for (i) compliance with all Legal Requirements and
Contracts, leases and other agreements to which the Company or any Subsidiary is
a party and (ii) all risks normally insured against by a Person conducting the
same business as the business conducted by the Company and its Subsidiaries,
except, in each case, where any such insufficiencies would not have,
individually or in the aggregate, a Material Adverse Effect on the Company or
such Subsidiary. Neither the Company nor any Subsidiary has failed to give any
notice or to present any material claim under any such policy or binder in a due
and timely fashion except for such failure as would not have, individually or in
the aggregate, a Material Adverse Effect on the Company or such Subsidiary.
4.12 Employee Benefits. For purposes of this Section 4.12, the term
-----------------
"Company" shall include any Person that, together with the Company as of any
relevant measuring date under the Employee Retirement Income Security Act of
1974, as amended ("ERISA") was or is required to be treated as a single employer
-----
under Code Section 414. The Company does not sponsor or contribute to any
employee benefit plan subject to ERISA, other than as identified on Schedule
--------
4.12 hereto. None of the employee benefit plans listed on Schedule 4.12 have any
- ---- -------------
accumulated funding deficiency within the meaning of ERISA or any liability to
the Pension Benefit Guaranty Corporation, or any successor thereof ("PBGC")
----
established under ERISA in connection with any employee benefit plan (or other
class of benefit which the PBGC has elected to insure) other than an obligation
to tender premium payments to the PBGC; to the Company's
-13-
Knowledge there have been no "reportable events" or "prohibited transactions"
with respect to any such plan, as those terms are defined in Section 4043 of
ERISA and Section 4975 of the Internal Revenue Code of 1986, as amended,
respectively; and the Company is otherwise in full compliance with the
provisions of ERISA.
4.13 Material Contracts and Other Agreements. Schedule 4.13 discloses, as
--------------------------------------- -------------
of the date hereof, whether written or oral, together with all amendments and
modifications thereto, (a) obligations (contingent or otherwise) of, or payments
to, the Company or any of its subsidiaries in excess of $50,000 which are not
cancelable by the Company on less than thirty (30) days' notice, and excluding
inventory purchase orders, (b) any agreement relating to the Proprietary Rights,
(c) all employment and consulting agreements, employee benefit, bonus, pension,
profit-sharing, stock option, stock purchase and similar plans and arrangements,
and distribution and sales representative agreements, (d) all joint venture or
partnership agreements to which the Company or any Subsidiary is a party or
bound, (e) all area development agreements, letters of commitment and franchise
agreements to which the Company or any Subsidiary is a party or bound and, (f)
each collective bargaining agreement or other Contract to or with any labor
union or other employee representative of a group of employees. The foregoing
are hereinafter referred to as the "Company Contracts." With respect to each
-----------------
Company Contract, (1) such Contract is valid, binding and enforceable against
the Company or a Subsidiary and, to the Company's Knowledge, each other party
thereto in accordance with its terms, subject in each case to applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws affecting
creditors' rights generally and subject to general equitable principles
(regardless of whether such enforceability is considered in a Proceeding in
equity or at law); (2) neither the Company nor any Subsidiary, nor, to the
Company's Knowledge, any other party to such Contract is in material Breach
thereof or material default thereunder; (3) to the Knowledge of the Company,
there does not exist any event that, with the giving of notice or the lapse of
time or both, would, constitute a material Breach of or a material default under
such Contract, and neither the Company nor any Subsidiary has received or given
notice of any such Breach, default or event; and (4) there have been no waivers
or releases of any of the Company's or any Subsidiaries' material rights or
remedies under any of the Contracts.
4.14 Suppliers. The Company and each of its Subsidiaries has a good
---------
business relationship with each of its suppliers. None of the Company's or its
Subsidiaries' suppliers has canceled or otherwise terminated, or threatened in
writing to cancel or otherwise terminate, its relationship with the Company or
any Subsidiary or, since the Balance Sheet Date, decreased materially, or
threatened to decrease or limit materially, its services, supplies or materials
to the Company or any Subsidiary except to the extent such cancellation,
decrease, termination or limitation would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the Company or
any Subsidiary.
4.15 Leased Property. Neither the Company nor any Subsidiary owns or, since
---------------
their respective inceptions, has owned, any real property or any interest in any
real property, other than leasehold interests. For purpose of this Agreement,
"Leased Property" shall mean all real property leased or otherwise operated or
---------------
occupied (other than as an owner) in whole or in part by the Company or any
Subsidiary. Schedule 4.15 sets forth a list of (a) all leases and subleases
-------------
under which the Company or any Subsidiary is the lessor, lessee, operator or
occupant of any real property, and (b) all material options granted by or to the
Company or any Subsidiary or any
-14-
contractual obligations on the part of the Company or any Subsidiary to
purchase, acquire, sell or dispose of any interest in real property. The Company
and its Subsidiaries have good and valid leasehold title to all Leased Property,
free and clear of all Encumbrances other than Encumbrances created by the Leases
or the Senior Credit Facility. Each lease, sublease or other agreement
(collectively, the "Leases") set forth on Schedule 4.15 (or required to be set
------ -------------
forth on Schedule 4.15) is in full force and effect; all rents and additional
-------------
rents due to date on each such Lease have been paid in full; and, to the
Company's Knowledge, except as set forth on Schedule 4.15, the Company's and the
-------------
Subsidiaries' lessors are not in default thereunder in any material respect and
except as set forth on Schedule 4.15, there exists no event of default or event,
-------------
occurrence, condition or act (including the transactions contemplated hereby)
which, with the giving of notice, the lapse of time or the happening of any
further event or condition not within the control of the Company or a
Subsidiary, would become a material default under such Lease, or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company or any Subsidiary. The Company and its
Subsidiaries have not violated any of the terms or conditions under any such
Lease in any material respect.
4.16 Condition and Sufficiency of Assets. The plant, offices, structures,
-----------------------------------
and equipment of the Company whether constituting the Company Stores or
otherwise are in good condition and repair in the ordinary course of business
and are reasonably fit and suitable for the purposes for which they are being
used and conform in all respects with all applicable Legal Requirements, except
to the extent such noncompliance would not reasonably be expected to have a
Material Adverse Effect on the Company and its Subsidiaries taken as a whole.
4.17 Compliance with Laws. Except as set forth on Schedule 4.17, (i) the
-------------------- -------------
Company and its Subsidiaries are in compliance with each Legal Requirement
applicable to it or to the conduct or operation of its business or the ownership
or use of any of its assets, including, without limitation, any applicable
franchise, building, zoning, health, environmental, sanitation, safety, labor
relations, immigration or other law, ordinance or regulation except to the
extent such noncompliance would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect on the Company or any Subsidiary;
(ii) no event has occurred or circumstance exists that may result in a violation
of, or failure on the part of the Company or any Subsidiary to comply with, any
Legal Requirement or give rise to any obligation of the Company or any
Subsidiary to undertake, or bear all or any portion of the cost of, any remedial
action of any nature except to the extent such event or circumstance would not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company or any Subsidiary; and (iii) neither the Company
nor any Subsidiary has received any notice regarding the foregoing.
4.18 Licenses and Permits; Franchise Matters.
---------------------------------------
(a) Licenses and Permits. Except as set forth on Schedule 4.18(a) and
-------------------- ----------------
Schedule 4.18(d), the Company and each Subsidiary has all governmental or
regulatory licenses, permits and Governmental Authorizations (all of which
are in full force and effect) necessary to conduct its business as it is
now being conducted, except for such governmental or regulatory licenses,
permits and Governmental Authorizations the absence of which would not
have, individually or in the aggregate, a Material Adverse Effect on the
Company or such Subsidiary, and none of such governmental or regulatory
-15-
licenses, permits and Governmental Authorizations will be impaired as a
result of the Transactions, except for such impairments which would not
have, individually or in the aggregate, a Material Adverse Effect on the
Company or such Subsidiary. Except as set forth on Schedule 4.18(a) and
----------------
Schedule 4.18(d), the Company and each of its Subsidiaries is, and at all
----------------
times since November 24, 1998 has been, in full compliance with all of the
terms and requirements of each Governmental Authorization held by it except
to the extent that such noncompliance would not reasonably be expected to
lead to the loss or revocation of such Governmental Authorization or to
result in a Material Adverse Effect on the Company and its Subsidiaries
taken as a whole. Neither the Company nor any Subsidiary has received any
notice to the effect that, (i) any actual or potential withdrawal,
suspension, cancellation or modification to any Governmental Authorization
of the Company or a Subsidiary is Threatened or (ii) it is not in
compliance with, or it is in violation of, any such governmental or
regulatory licenses, permits and Governmental Authorizations in a manner
that would have, individually or in the aggregate, a Material Adverse
Effect, and there are not currently existing circumstances that are likely
to result in a failure of the Company or any Subsidiary to comply with, or
in a violation by the Company or any Subsidiary of, any such governmental
or regulatory licenses, permits or Governmental Authorizations that would
have, individually or in the aggregate, a Material Adverse Effect on the
Company and its Subsidiaries taken as a whole.
(b) Franchise and Area Development Agreements. Schedule 4.18(b)
----------------------------------------- ----------------
accurately identifies all franchise agreements and area development
agreements (the "Franchise Agreements") in effect on September 15, 2001, by
--------------------
name of franchisee, date of agreement, expiration date, location of store,
and exclusive territory, and since November 24, 1998, no other current
Contracts, agreements or understandings exist, whether oral or written,
between the Company or any Subsidiary and any third party granting the
right, or any option or right of first refusal, to operate a restaurant
business under the name "Baja Fresh" or any related marks. Except as set
forth in Schedule 4.18(b) and Schedule 4.18(d), the Franchise Agreements
---------------- ----------------
listed on Schedule 4.18(b) represent the complete terms and provisions of
----------------
all current agreements with franchisees, and no written or, to the
Knowledge of the Company, oral modifications of or supplements to those
written agreements have been entered into since November 24, 1998. Except
as set forth in Schedule 4.18(b) and Schedule 4.18(d), each of the
---------------- ----------------
Franchise Agreements is in full force and effect and is enforceable against
the Company and the franchisee party to such Franchise Agreement in
accordance with its terms subject to applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws affecting creditors' rights
generally and subject to general equitable principles (regardless of
whether such enforceability is considered in a Proceeding in equity or
at law) and no notices of or demands for rescission or early termination
have been delivered thereunder by any party. Except as set forth in
Schedule 4.18(b) and Schedule 4.18(d), there are no material Breaches by
---------------- ----------------
the Company, any Subsidiary or to the Knowledge of the Company any
franchisee of any of the Franchise Agreements, which Breaches remain
uncured. Each franchisee is no more than 30 days past due in its financial
obligations to the Company and its Subsidiaries, including without
limitation, payments due for royalties and product purchases, except as set
forth in Schedule 4.18(b) and Schedule 4.18(d). Except as set forth in
---------------- ----------------
Schedule 4.18(b) and Schedule 4.18(d), there are no assertions or claims,
---------------- ----------------
whether
-16-
oral or in writing, or, as of the date hereof or as of the Closing Date, to
the Knowledge of the Company, any basis for any claims by any franchisee of
material Breaches of any of the Franchise Agreements by the Company or any
Subsidiary which remain uncured. Except as set forth in Schedule 4.18(b)
----------------
and Schedule 4.18(d), to the Knowledge of the Company there is no basis for
----------------
any demand by any franchisee for rescission of any Franchise Agreement no
franchisee is entitled to any credit, set off or reduction in any payment
required to be made pursuant to the terms of any Franchise Agreement, or in
any other payment(s) owed to the Company or any Subsidiary, and no event
has occurred which would give any franchisee a defense to its obligation to
pay fees, or to perform its other obligations under its Franchise
Agreement, and no franchisee has any claims, counterclaims or offsets
against the Company or any Subsidiary. The Transactions do not require the
prior Consent of or notice to any franchisee, or grant any franchisee the
right to terminate any Franchise Agreement. There are no contractual
limitations or prohibitions upon the Company or any Subsidiary from
operating "Baja Fresh Mexican Grill" restaurants or selling franchises in
any city, state, territory or country except as expressly set forth in the
Franchise Agreements. Schedule 4.18(b) also separately lists by location
----------------
all restaurants owned or leased by the Company, any Subsidiary, or any
Affiliate thereof (the "Company Stores") indicating which of the Company
--------------
Stores are open and operating as of the Closing Date. Schedule 4.18(b) also
----------------
lists all stores other than Company Stores that are currently open and
operating as of the Closing Date.
(c) Franchise Law Compliance. Schedule 4.18(c) accurately sets forth
------------------------ ----------------
each state in which the Company and its Subsidiaries are currently
registered or with whom the Company or any Subsidiary has filed for an
exemption from registration to sell franchises, the effective date and
expiration date of each such registration. Neither the Company nor any of
its Subsidiaries has voluntarily or involuntarily ceased to be registered
to sell franchises in any state and the Company has no Knowledge of any
fact or circumstance which would preclude or inhibit the Company or any
Subsidiary from filing and receiving approval of an application to offer
and sell franchises in any state in which the Company or such Subsidiary is
not presently registered to do so. Except as disclosed in that certain
Notice of Violation filed with and approved in form by the California
Department of Corporations in December 1996, except as set forth on
Schedule 4.18(c) neither the Company nor any Subsidiary has committed any
----------------
material violation of any Legal Requirement of the Federal Trade Commission
("FTC") or of any state relating to the offer, sale, assignment, renewal,
---
termination or rights of succession, of franchises, business opportunities
and seller assisted marketing plans ("Franchise Laws"). Except as set forth
--------------
on Schedule 4.18(c), there is no pending, unresolved claim or assertion of
----------------
any violation by the Company or any Subsidiary of any Franchise Laws,
neither the Company nor any Subsidiary has received notice from any
Governmental Body or private party alleging any such violation, and neither
the Company nor any Subsidiary has any Knowledge of any basis for any such
claim of violation. Except as set forth on Schedule 4.18(c), there
----------------
currently exist no escrow or impound conditions or requirements imposed
upon the sale of franchises by the Company or any Subsidiary in any
jurisdiction. Except as set forth on Schedule 4.18(c), there are no pending
----------------
or currently effective stop orders, administrative Proceedings, notices of
investigation, injunctions, Orders or restitution, rescission notices, or
other orders, actions or decrees by any state or federal agency, or by any
state or federal court, whether civil or criminal,
-17-
against the Company or any Subsidiary. There is currently no litigation or
arbitration between the Company or any Subsidiary and any franchisee or
ex-franchisee thereof.
4.19 Intellectual Property.
---------------------
(a) Trademarks. The Company and its Subsidiaries own all trademarks,
----------
service marks, copyrights, and trade dress (collectively, "Proprietary
-----------
Rights") which are used in the business of the Company and its Subsidiaries
------
or that of its franchisees, including without limitation, the "Baja Fresh"
and "Baja Fresh Mexican Grill" service mark. None of the Company and its
Subsidiaries has, and prior to the Closing shall not have, sold, assigned,
transferred, conveyed, or otherwise disposed of or agreed to sell, assign,
transfer, convey, or otherwise dispose of any of the Proprietary Rights,
except for licenses granted to franchisees pursuant to the Franchise
Agreements, for fair consideration in the ordinary course of business
consistent with prior practices. Except as set forth on Schedule 4.19 to
-------------
the Company's Knowledge, there have been no Threatened to be filed
oppositions to or requests for cancellation of any of the registrations or
applications. The Company has promptly taken and will promptly take
appropriate action to protect its Proprietary Rights when it becomes aware
of uses by third parties of any Proprietary Rights which infringe any of
the Proprietary Rights. Except as set forth in Schedule 4.19, no claims
-------------
have been asserted or, to the Knowledge of the Company, Threatened against
the Company or any Subsidiary by any third party alleging that any of the
Proprietary Rights infringe any rights or marks held by such third party,
or asserting palming-off, dilution or unfair competition, unjust
enrichment, or similar claims, and the Company has no Knowledge of any
basis for any such claim. None of the Proprietary Rights will cease to be
valid and in full force and effect by reason of the execution, delivery and
performance of this Agreement or the consummation of the Transactions.
(b) Franchise Trade Secrets. The Company or a Subsidiary owns all
-----------------------
trade secrets which are used in the business of the Company and its
Subsidiaries, and has not and prior to Closing shall not have sold,
assigned, transferred, conveyed, or otherwise disposed of or agreed to
sell, assign, transfer, convey, or otherwise dispose of any of the trade
secrets, except for licenses granted to franchisees pursuant to the
Franchise Agreements, for fair consideration in the ordinary course of
business consistent with prior practices. All reasonable precautions have
been taken and will be taken prior to Closing, by the Company to protect
such trade secrets from usage by or disclosure to any unauthorized Person.
4.20 Title to Assets. The Company and each of its Subsidiaries owns or
---------------
leases all tangible personal property necessary for the conduct of its business
as presently conducted. Each such asset has been maintained in accordance with
ordinary industry practice, is in good operating condition and is usable in the
ordinary course of business, other than where any such failures individually or
in the aggregate would not reasonably be expected to have a Material Adverse
Effect on the Company or such Subsidiary. The Company and each of its
Subsidiaries have good and valid leasehold title to all leased tangible personal
property leased by them from third parties, free and clear of all liens,
security interests and other Encumbrances except for such imperfections of title
which individually or in the aggregate would not reasonably be expected to
-18-
cause a Material Adverse Effect on the Company or such Subsidiary and except for
Encumbrances arising under documents listed on Schedule 4.20.
4.21 Inventory. The value at which the inventory of the Company is carried
---------
on the Company's Balance Sheet (attached hereto as part of Schedule 4.8)
-------------
reflects the customary inventory valuation policy of the Company and is in
accordance with GAAP consistently applied. The current inventory of the Company
and its Subsidiaries consists of items of a quantity and quality which are
usable and saleable in the ordinary course of business except to the extent
deviations in such quality or quantity could not have, individually or in the
aggregate, a Material Adverse Effect on the Company and its Subsidiaries taken
as a whole.
4.22 Accounts and Notes Receivable. With the exception of the accounts
-----------------------------
receivable included on Schedule 4.22, all accounts receivable of the Company are
-------------
collectible at the aggregate recorded amounts thereof, net of any applicable
reserves for doubtful accounts, which reserves are adequate and were calculated
consistent with past practices. There are no refunds, rebates, discounts or
other adjustments payable with respect to accounts receivables except in the
ordinary course of business consistent with past practices.
4.23 Taxes.
-----
(a) Subject to subsection (b) hereof and except as set forth in
Schedule 4.23, since November 24, 1998:
-------------
(i) The Company and each Subsidiary has paid all federal, state,
local and foreign income, alternative, add-on, gross receipts,
franchise, payroll, F.I.C.A., unemployment, withholding, real
property, personal property, admissions, gains, replacement, sales,
use, excise, payroll, disability and other taxes imposed on the
Company or such Subsidiary or with respect to any of its properties,
or otherwise payable by it, including interest, penalties and other
additions, if any, in respect thereof (collectively, "Company Taxes"),
-------------
which were due and payable on or prior to each Closing Date.
(ii) Without limiting the foregoing representations in any way,
(i) the Company and each Subsidiary has collected all sales, use and
value added taxes required to be collected, and has remitted, or will
remit on a timely basis, such amounts to the appropriate Governmental
Bodies and has furnished properly completed exemption certificates for
all exempt transactions and (ii) the Company and each Subsidiary has
properly withheld income and social security or other similar taxes
and paid payroll taxes with respect to all Persons properly
characterized as employees for federal, state or local tax purposes.
(iii) The Company and each Subsidiary has timely filed all
returns, reports and other filings related to Company Taxes which it
is required to file and has paid all the amounts shown to be due
thereon. All such returns, reports and filings are true and correct
and complete. Neither the Company nor any Subsidiary is required to
file returns, reports or filings in any state or local or
-19-
foreign jurisdiction for any tax period except in those state, local
or foreign jurisdictions in which it has filed.
(iv) No audit, examination, action or Proceeding is pending or,
to the Knowledge of the Company, Threatened by any Governmental Body
with respect to the possible assessment or collection from the Company
or any Subsidiary of any Company Taxes, no unresolved claim for
assessment or collection of any Company Taxes has been asserted
against the Company or any Subsidiary, and all resolved assessments of
Company Taxes have been paid.
(v) There are no liens for Company Taxes (other than for current
Company Taxes not yet due and payable) upon the assets of the Company
or any Subsidiary.
(vi) Neither the Company nor any Subsidiary is a party to or
bound by any tax sharing, tax indemnity or tax allocation agreement or
other similar arrangement.
(vii) Neither the Company nor any Subsidiary has taken any action
that would require an adjustment pursuant to Section 481 of the Code
by reason of a change in accounting method or otherwise.
(viii) Neither the Company nor any Subsidiary has filed a consent
under Section 341(f)(1) of the Code or agreed to have the provisions
of Section 341(f)(2) of the Code apply to any disposition of
"subsection (f) assets" as such term is defined in Section 341(f)(4)
of the Code.
(ix) Neither the Company nor any Subsidiary has made any
payments, is obligated to make any payments or is a party to any
agreement or agreements that, individually or collectively, provide
for the payment by the Company of any amount (i) that is not
deductible under Section 162(a)(1) or 404 of the Code or (ii) that is
an "excess parachute payment" pursuant to Section 280G of the Code.
(x) Neither the Company nor any Subsidiary has agreed to any
extension of any applicable statute of limitations for the imposition
of any Company Tax.
(xi) Neither the Company nor any Subsidiary is an "S corporation"
within the meaning of Section 1361(a) of the Code.
(b) All representations in Section 4.23(a) hereof, with respect to
state and local Company Taxes are true and correct except to the extent any
exceptions to the truth or correctness of such representations would not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company or any Subsidiary.
(c) All Company Taxes and related fees shall be accrued for in the
Balance Sheet and the Pre-Closing Financial Statements.
-20-
4.24 Environmental Laws and Regulations.
----------------------------------
(a) For the purposes of this section, the following words and phrases
shall have the following meanings:
"Environmental Condition" means any condition relating to the
-----------------------
presence, release, threat of release, transportation, disposal, storage or
treatment of Hazardous Materials in, at, on, under or about (i) the Real
Property (as defined below), or (ii) the environment beyond the Real Property,
which Hazardous Materials migrated, emanated or originated from the Real
Property.
"Environmental Law" means any environmental or health and
-----------------
safety-related law, policy, regulation, rule, requirement, statute, ordinance,
common law decision, Order or determination of any Governmental Body or judicial
authority at the federal, state, or local level, whether existing as of the date
hereof, previously enforced or subsequently enacted.
"Hazardous Material" means any pollutant, contaminant, toxic
------------------
substance, hazardous waste, hazardous material, hazardous substance, petroleum
or petroleum product, asbestos, polychlorinated biphenyls, underground storage
tanks and the contents thereof including, without limitation, any such materials
defined in or regulated pursuant to any Environmental Law.
"Real Property" means any real property or "facility" (as defined in
-------------
the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901 et seq. ("RCRA"))
-- --- ----
currently or formerly owned, operated, leased or occupied by the Company.
(b) Except as set forth on Schedule 4.24(b), the Company and its
----------------
Subsidiaries have no Liability under, and are in compliance with, all
Environmental Laws applicable to the Company's and such Subsidiaries'
respective businesses, the Real Property and any facilities and operations
thereon, except for such Liabilities and except for such noncompliance
which would not have, individually or in the aggregate, a Material Adverse
Effect on the Company or any Subsidiary. Except as set forth on Schedule
--------
4.24(b), (i) to the Knowledge of the Company, each Real Property is in
-------
compliance with all Environmental Laws, except where the failure to so
comply would not have, individually or in the aggregate, a Material Adverse
Effect on the Company or any Subsidiary and (ii) to the Knowledge of the
Company, there are no Hazardous Materials located in, under or about any
Real Property, except for such Hazardous Materials which individually or in
the aggregate would not have a Material Adverse Effect on the Company or
any Subsidiary.
(c) (i) Neither the Company nor any Subsidiary has caused an
Environmental Condition that could, individually or in the aggregate, have
a Material Adverse Effect on the Company or such Subsidiary and (ii) to the
Company's Knowledge, there are no Environmental Conditions that could,
individually or in the aggregate, have a Material Adverse Effect on the
Company or any Subsidiary.
4.25 Board of Directors Approval. The Board has unanimously approved the
---------------------------
Transactions and has unanimously determined that such Transactions are fair to
and in the best
-21-
interests of the Company and its shareholders. Such actions of the Board remain
in full force and effect.
4.26 No Agreements to Sell the Company. Except as contemplated by this
---------------------------------
Agreement and pursuant to stock options and warrants relating to the purchase of
up to 691,206.5 and 142,500 shares of common stock of the company, respectively,
the Company does not have any legal obligation, absolute or contingent, to any
other Person to sell any capital stock or material assets or businesses of the
Company or any Subsidiary or to effect any merger, consolidation, liquidation,
dissolution, recapitalization or other reorganization of the Company or to enter
into any agreement with respect thereto.
4.27 Related Party Transactions. Except as set forth on Schedule 4.27, no
-------------------------- -------------
employee, officer, or director of the Company or any Subsidiary or, to the
Knowledge of the Company, no Affiliate of any such Person, and no member of such
Person's immediate family has engaged in any transaction with or entered into
any Contract with, the Company or any Subsidiary. Except as set forth on
Schedule 4.27, no officer or director of the Company or any Subsidiary or, to
- -------------
the Knowledge of the Company, no Affiliate of any such Person, and no member of
such Person's immediate family has had any interest in any property (whether
real, personal, or mixed and whether tangible or intangible), used in or
pertaining to the businesses of the Company or any Subsidiary. Except as set
forth on Schedule 4.27, no officer, or employee-director of the Company or any
-------------
Subsidiary or, to the Knowledge of the Company, no Affiliate of any such Person,
and no member of such Person's immediate family has owned (of record or as a
beneficial owner), an equity interest or any other financial or profit interest
in, a Person that has engaged in competition with the Company or any Subsidiary
with respect to any line of the products or services of the Company or such
Subsidiary in any market presently served by the Company or such Subsidiary
excluding interests in publicly traded companies of less than 1% of the
outstanding equity of such company.
4.28 No Finders or Brokers. The Company has not incurred any obligation or
---------------------
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement or any of
the Transactions.
4.29 Labor Matters
-------------
(a) Neither the Company nor any Subsidiary is a party to or bound by
any collective bargaining agreement or other Contracts with labor unions.
The Company and each Subsidiary has complied in all respects with all Legal
Requirements, Orders or Contracts affecting employment, nondiscrimination,
immigration, collective bargaining, equal opportunity employment, the
payment of social security and similar taxes, occupational safety and
health or employees' benefits, health, safety, welfare, wages and hours,
except where the default or violation of such Legal Requirements, Orders or
Contracts could not have, individually or in the aggregate, a Material
Adverse Effect on the Company or any Subsidiary.
(b) Except as could not have, individually or in the aggregate, a
Material Adverse Effect on the Company or any Subsidiary: (i) there are no
labor disputes pending or existing, or to the Company's Knowledge,
Threatened, involving strikes,
-22-
slow-downs, picketing, work stoppages, employee grievance processes, job
actions or lockouts of any employees of the Company, (ii) there are no
Proceedings against or affecting the Company or any Subsidiary relating to
the alleged violation of any Legal Requirement pertaining to labor
relations or employment matters, including any charge, petition or
complaint filed by an employee or union with the National Labor Relations
Board, the Equal Employment Opportunity Commission, or any comparable
Governmental Body, and (iii) no demand for recognition heretofore made by
any labor organization is pending with respect to the Company or any
Subsidiary. No event has occurred or circumstance exists that could provide
the basis for any work stoppage or other labor dispute.
4.30 Full Disclosure. No representation or warranty by the Company
---------------
contained in this Agreement or any Transaction Document, and no statement
contained in the Schedules hereto, contains any untrue statement of material
fact or omits to state any material fact necessary to make the statements herein
or therein, in light of the circumstances under which they were made, not
misleading. There is no fact known to the Company, which the Company has not
disclosed to the Buyers in writing, which has a Material Adverse Effect on the
Company or any Subsidiary or insofar as the Company can reasonably foresee, will
have a Material Adverse Effect on the Company or any Subsidiary.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions to the Obligations of the Company. The obligations of the
--------------------------------------------
Company to effect the transactions contemplated by this Agreement shall be
subject to the fulfillment at or prior to each Closing Date of the following
additional conditions:
(a) Buyer's Performance of Obligations. The Buyers participating in a
----------------------------------
Closing shall have performed in all respects their obligations under this
Agreement required to be performed by them on or prior to such Closing Date
pursuant to the terms hereof.
(b) Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of the Buyers participating in a Closing contained in this
Agreement shall be true and correct in all respects at and as of such
Closing Date as if made at and as of such date, except to the extent that
any such representation or warranty is made as of a specified date in which
case such representation or warranty shall have been true and correct as of
such date.
(c) Authorization by the Buyers. Where applicable, all actions
---------------------------
necessary to authorize the execution, delivery and performance of this
Agreement by the Buyers, and the consummation of the transactions
contemplated herein, shall have been duly and validly taken.
5.2 Conditions to the Obligations of the Buyers. The obligations of the
-------------------------------------------
Buyers participating in a Closing to effect the transactions contemplated by
this Agreement shall be subject to the fulfillment at or prior to such Closing
Date of the following additional conditions:
-23-
(a) The Company's Performance of Obligations. The Company shall have
----------------------------------------
performed in all respects its obligations under this Agreement required to
be performed by it on or prior to such Closing Date pursuant to the terms
hereof.
(b) Accuracy of Representations and Warranties. The representations
------------------------------------------
and warranties of the Company contained in this Agreement shall be true and
correct in all respects at and as of such Closing Date as if made at and as
of such date, except to the extent that any such representation or warranty
is made as of a specified date in which case such representation or
warranty shall have been true and correct as of such date.
(c) Authorization by the Company. All actions necessary to authorize
----------------------------
the execution, delivery and performance of this Agreement by the Company
and its shareholders, and the consummation of the transactions contemplated
herein, shall have been duly and validly taken.
(d) Consents and Regulatory Approvals. All necessary waivers, Consents
---------------------------------
and approvals of any third party or Governmental Bodies necessary to
prevent the cancellation of any material Contract, lease, permit or license
of the Company shall have been obtained by the Company and the Company
shall have obtained all waivers, estoppels, non-disturbance agreements,
Consents and approvals (including, without limitation, Consents required
under any leases and Contracts) required by the Buyers.
(e) Amendment of Articles. The Board and the shareholders of the
---------------------
Company shall have approved, and the Company shall have filed, the Restated
Articles with the California Secretary of State.
(f) Stock Option Plan. The Board and the shareholders of the Company
-----------------
shall have authorized and approved an increase in the number of shares
reserved for issuance under the 1998 Fresh Enterprises, Inc. Stock Plan by
425,000 shares.
(g) 2000 Financial Statement. The Buyers shall have received from the
------------------------
Company true and complete copies of the Company's audited consolidated
financial statements for fiscal year 2000.
(h) Certain Shareholders. On or prior to the Initial Closing Date, the
--------------------
Company shall have received either waivers of preemptive rights pursuant to
Section 3 of the Shareholders' Agreement or subscriptions pursuant to
Section 3 of the Shareholders' Agreement from Gregory G. Dollarhyde, Louis
A. Siracusa, Donald D. Breen, Steve Lebow, James and Linda Magglos, John
and Coralee Yonkich, and JKG Enterprise Group Money Purchase Pension Plan
FBO Greg Dollarhyde.
(i) Amendment of the Senior Credit Facility. The Senior Credit
---------------------------------------
Facility shall have been amended to increase the amount available to the
Company thereunder to Eighteen Million Dollars ($18,000,000).
(j) Other Instruments. The Buyers shall have received such other duly
-----------------
and validly executed documents and instruments in connection with such
Closing as are
-24-
reasonably requested by them, including without limitation, the projections
schedule referred to in Section 4 of the Shareholders' Agreement.
ARTICLE VI
POST CLOSING
6.1 Survival of Representations and Warranties. Regardless of any
------------------------------------------
investigation at any time made by or on behalf of any party, or of any
information any party may have in respect thereof, all representations and
warranties made hereunder or pursuant hereto or in connection with the
Transactions shall survive the Initial Closing Date for a period of twenty-four
(24) months from the Initial Closing Date; provided, however, all
-------- -------
representations and warranties with respect to Sections 4.12, 4.23 and 4.24
shall survive the Initial Closing Date until the close of business on the day
following the expiration of the applicable statute of limitations (giving effect
to any waiver or extension thereof); and provided further, that the
representations and warranties contained in Sections 4.3 shall survive
indefinitely (each, a "Survival Date").
-------------
6.2 Directors and Officers' Insurance. The Company shall use reasonable
---------------------------------
best efforts to maintain in force a policy of directors and officers liability
insurance reasonably satisfactory to the directors.
6.3 California Securities Filing. The Company will take reasonable steps in
----------------------------
accordance with the advice of counsel in order to correct any violation that may
exist with respect to the failure to file a Notice of Issuance of Securities
Pursuant to Subdivision (o) of Section 25102 of the Corporations Code with the
California Department of Corporations in connection with the initial issuance of
securities under the 1998 Fresh Enterprises, Inc. Stock Plan in 1998. Such steps
shall include seeking the requisite Board and shareholder consents to adopt a
new stock plan, making appropriate filings with the California Department of
Corporations, and making a rescission offer if approved by the Board.
ARTICLE VII
MISCELLANEOUS
7.1 Notices. All notices and other communications given or made pursuant
-------
hereto shall be in writing and shall be deemed to have been given or made if in
writing and delivered personally, sent by commercial carrier or registered or
certified mail (postage prepaid, return receipt requested) to the parties at the
following addresses and numbers:
a) If to the Buyers to:
Frank M. Vest, Jr.
Catterton Partners IV, L.P.
c/o Catterton Partners IV Management Company, L.L.C.
10 Hale Street, Suite 205
Charleston, WV 25301
-25-
with a copy to:
David McPherson, Esq.
Latham & Watkins
555 11th Street, N.W.
Washington, DC 20004
(b) If to the Company, to:
Fresh Enterprises, Inc.
225 W. Hillcrest Drive
Thousand Oaks, CA 91360
Attention: Gregory G. Dollarhyde
with a copy to:
Anna M. Graves, Esq.
Pillsbury Winthrop LLP
725 South Figueroa Street, Suite 2800
Los Angeles, California 90017
or at such other addresses as shall be furnished by the parties by like notice,
and such notice or communication shall be deemed to have been given or made as
of the date actually received.
7.2 Headings; Agreement. The headings contained in this Agreement are
-------------------
inserted for convenience only and do not constitute a part of this Agreement.
The term "Agreement" for purposes of representations and warranties hereunder
shall be deemed to include the Exhibits hereto to be executed and delivered by a
party.
7.3 Publicity. So long as this Agreement is in effect, the Company shall
---------
not, and shall cause their Affiliates not to, issue or cause the publication of
any press release or other announcement with respect to the transactions
contemplated by this Agreement or this Agreement without the consent of the
Buyers, which consent shall not be unreasonably withheld or delayed.
7.4 Entire Agreement. This Agreement (including all the Schedules and
----------------
Exhibits hereto) and the other Transaction Documents constitute the entire
agreement among the parties and supersede all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
7.5 Amendment. This Agreement may be amended by an instrument in writing
---------
signed on behalf of each of the parties hereto.
7.6 Assignment. This Agreement and all of the provisions hereof shall be
----------
binding upon and inure to the benefits of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations shall be assigned by any of the parties
hereto without the prior written consent of the other parties.
-26-
7.7 Expenses. Except as otherwise set forth herein each party, shall bear
--------
their respective costs, expenses and fees incurred in connection with the
preparation, execution and performance of this Agreement and the other
Transaction Documents (including, but not limited to, amounts payable to
accountants, attorneys, consultants, finders or investment bankers in connection
with this Agreement and the Transactions). Notwithstanding the foregoing, the
Company shall pay the reasonable expenses of a single counsel to the Buyers to
be retained by Catterton Partners IV, L.P. in connection with the preparation,
execution and performance of this Agreement and the other Transaction Documents.
7.8 Severability. In the event that any one or more of the provisions
------------
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
7.9 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Agreement by telecopier shall be
effective as delivery of a manually executed counterpart, with original
signatures, of this Agreement.
7.10 Governing Law. The validity and interpretation of this Agreement shall
-------------
be governed by the laws of the State of California without reference to the
conflict of laws principles thereof.
7.11 Cumulative Remedies. All rights and remedies of any party hereto are
-------------------
cumulative of each other and of every other right or remedy such party may
otherwise have at law or inequity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
7.12 Third Party Beneficiaries. This Agreement is not intended to confer
-------------------------
upon any other Person any rights or remedies hereunder.
7.13 Limitation of Liability. In no event shall any partner or
-----------------------
representative of the Buyers or of any partnership which is a partner of the
Buyers or any partner of any such partnership, or any direct or indirect
stockholder, officer, director, partner or any other such Person, be personally
liable for any such obligation of the Buyers under this Agreement. In no event
shall recourse with respect to the obligations under this Agreement of the
Buyers be had to the assets or business of any Person other than the Buyers. In
no event shall recourse with respect to the obligations under this Agreement of
the Company be had to the assets or business of any Person other than the
Company, including its Subsidiaries. In no event shall any officer, director or
shareholder (and their officers, directors, representatives and agents) of the
Company be personally liable for any obligation of the Company under this
Agreement. Any obligation of any trust shall be enforceable solely against the
assets of such trust and not against any trustee.
7.14 Arbitration. All disputes and controversies arising out of or relating
-----------
to this Agreement, or relating to a Breach hereof shall be settled by
arbitration conducted in Los
-27-
Angeles, California in accordance with the Commercial Arbitration Rules of the
American Arbitration Association then in effect. The award rendered by the
arbitrator(s) shall be final and judgment upon the award rendered by the
arbitrator(s) may be entered upon it in any court having jurisdiction thereof or
application may be made to such court for a judicial acceptance of the award and
an order of judgment. The arbitrator(s) shall possess the powers to issue
mandatory orders and restraining orders in connection with such arbitration.
Each party shall bear its own costs and expenses of the arbitration, subject to
reimbursement as determined by the arbitrator(s).
-28-
IN WITNESS WHEREOF, each of the Buyers and the Company have caused this
Agreement to be signed by an officer or partner thereunto duly authorized, all
as of the date first written above.
COMPANY: FRESH ENTERPRISES, INC.
By: /s/ Gregory G. Dollarhyde
--------------------------------------
Gregory G. Dollarhyde
President and Chief Executive Officer
CATTERTON: CATTERTON PARTNERS IV, L.P.,
a Delaware limited partnership
By: Catterton Managing
Partner IV, L.L.C.
Its: General Partner
By: CP4 Principals, L.L.C.
Its: Managing Member
By: /s/ Frank M. Vest, Jr.
--------------------------------------
Name: Frank M. Vest, Jr.
Title: Authorized Person
CATTERTON PARTNERS IV-A, L.P.,
a Delaware limited partnership
By: Catterton Managing
Partner IV, L.L.C.
Its: General Partner
By: CP4 Principals, L.L.C.
Its: Managing Member
By: /s/ Frank M. Vest, Jr.
--------------------------------------
Name: Frank M. Vest, Jr.
Title: Authorized Person
-29-
CATTERTON PARTNERS IV-B, L.P.,
a Delaware limited partnership
By: Catterton Managing
Partner IV, L.L.C.
Its: General Partner
By: CP4 Principals, L.L.C.
Its: Managing Member
By: /s/ Frank M. Vest, Jr.
--------------------------------------
Name: Frank M. Vest, Jr.
Title: Authorized Person
CATTERTON PARTNERS IV OFFSHORE, L.P.
a Cayman limited partnership
By: Catterton Managing
Partner IV, L.L.C.
Its: Managing General Partner
By: CP4 Principals, L.L.C.
Its: Managing Member
By: /s/ Frank M. Vest, Jr.
--------------------------------------
Name: Frank M. Vest, Jr.
Title: Authorized Person
CATTERTON PARTNERS IV SPECIAL
PURPOSE, L.P. a Cayman limited partnership
By: Catterton Managing
Partner IV, L.L.C.
Its: Managing General Partner
By: CP4 Principals, L.L.C.
Its: Managing Member
By: /s/ Frank M. Vest, Jr.
--------------------------------------
Name: Frank M. Vest, Jr.
Title: Authorized Person
-30-
CATTERTON-BAJA PARTNERS, L.L.C.,
a Delaware limited liability company
By: Catterton Partners IV Management
Company, L.L.C.
Its: Managing Member
By: /s/ Frank M. Vest Jr.
--------------------------------------
Name: Frank M. Vest Jr.
Title: Authorized Person
GRUMMAN HILL: GRUMMAN HILL INVESTMENTS III, L.P.,
a Delaware limited partnership
By: Grumman Hill Group, L.L.C.
Its: General Partner
/s/ James T. Kelsey
--------------------------------------
Name: James T. Kelsey
Title: Authorized Person
OAK INVESTMENT: OAK INVESTMENT PARTNERS VIII, LIMITED
PARTNERSHIP, a Delaware limited partnership
By: /s/ Gerald R. Gallagher
--------------------------------------
Name: Gerald R. Gallagher
Title: Managing Member of
Oak Associates VIII, LLC,
The General Partner of
Oak Investment Partners VIII,
Limited Partnership
OAK VIII AFFILIATES FUND, LIMITED
PARTNERSHIP, a Delaware limited partnership
By: /s/ Gerald R. Gallagher
---------------------------------------
Name: Gerald R. Gallagher
Title: Managing Member of
Oak Associates VIII, LLC,
The General Partner of
Oak VIII Affiliates Fund, Limited
Partnership
-31-
DAVE & DIANE JOHNSON LIVING TRUST
/s/ Dave Johnson
--------------------------
Dave Johnson, Trustee
/s/ Diane D. Johnson
--------------------------
Diane D. Johnson, Trustee
/s/ Cyrus Monroe
--------------------------------
CYRUS MONROE
/s/ Jill Monroe
--------------------------------
JILL MONROE
/s/ Patrick J. McNeela
--------------------------------
PATRICK J. MCNEELA
/s/ Wolfe H. Bragin
--------------------------------
WOLFE H. BRAGIN
/s/ Louis A. Siracusa
--------------------------------
LOUIS A. SIRACUSA, individually and as trustee
of the Louis A. Siracusa Separate Property Trust
/s/ Donald D. Breen
--------------------------------
DONALD D. BREEN
/s/ Gregory G. Dollarhyde
--------------------------------
GREGORY G. DOLLARHYDE
/s/ Steven E. Lebow
--------------------------------
STEVEN E. LEBOW
THE HARRY & JUDITH KEYS FAMILY TRUST
/s/ Harry E. Keys
--------------------------
Harry E. Keys, Trustee
/s/ Judith A. Keys
--------------------------
Judith A. Keys, Trustee
-32-
Schedule 1
----------
Purchaser Number of Series C Shares
- --------- -------------------------
Catterton Partners IV, L.P. 288,463
Catterton Partners IV-A, L.P. 101,132
Catterton Partners IV-B, L.P. 7,051
Catterton Partners IV Offshore, L.P. 243,181
Catterton Partners IV Special Purpose, L.P. 8,822
Catterton-Baja Partners, L.L.C. 216,216
Grumman Hill Investments III, L.P. 172,973
Oak Investment Partners VIII, L.P. 254,529
Oak VIII Affiliates Fund, L.P. 4,930
The David & Diane Johnson Living Trust 2,482
Cyrus and Jill Monroe 10,915
Patrick J. McNeela 3,686
Wolfe H. Bragin 3,686
Donald D. Breen 3,686
Gregory G. Dollarhyde 17,000
Steven E. Lebow 10,811
The Harry & Judith Keys Family Trust 1,842
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