Contract

Exhibit 10.1 ASSET PURCHASE AGREEMENT BETWEEN BANNER BUFFETS, LLC as Buyer and EACO CORPORATION as Seller * * * * * * * * * * * * * * * * February 22, 2005 ASSET PURCHASE AGREEMENT This Asset Purchase Agreement (this “Agreement”) is enteredinto as of the 22nd day of February, 2005, by and between BannerBuffets, LLC, a Delaware limited liability company (the “Buyer”),and EACO Corporation, a Florida corporation, (the “Seller”). WHEREAS, Seller presently owns and operates six (6) Ryan’sfranchise restaurants (the “Ryan’s Restaurants”), four (4)Whistle Junction restaurants (the “WJ Restaurants”) and six (6)Florida Buffet restaurants (the “FB Restaurants”) (the Ryan’sRestaurants, WJ Restaurants and FB Restaurants are collectivelyreferred to as “Restaurants” and individually as a “Restaurant”),as further identified on Schedule 1 attached hereto; WHEREAS, Seller desires to sell, transfer and assign toBuyer, and Buyer desires to purchase and acquire from Seller, theRestaurants together with all rights and interests of Seller in,to and under all agreements, contracts and other assets relatingto the business of owning and operating the Restaurants (the”Business”) on the terms and subject to the conditions set forthin this Agreement (the “Acquisition”). NOW, THEREFORE, in consideration of the mutual covenants,representations, warranties and agreements hereinafter set forth,and for other good and valuable consideration, the receipt andsufficiency of which is hereby acknowledged, the parties agree asfollows: ARTICLE I. PURCHASE AND SALE OF ASSETS ————————————— SECTION 1.1 ASSETS TO BE TRANSFERRED. Upon the terms andsubject to the conditions set forth in this Agreement, on theClosing Date Seller shall sell, transfer and assign to the Buyerall of Seller’s right, title, and interest in and to thebusiness, property, and assets (excepting only the assetsspecifically identified as “Excluded Assets” in Section 1.2hereof) used in or relating to the operation of the Restaurants(the “Assets”), including, but not limited to: (a) All fixtures, equipment, machinery, tradefixtures, leasehold improvements, point of sale hardware andsoftware, telephone equipment, service, replacement and spareparts, and service and replacement equipment located at theRestaurants or stored off site for use at any of the Restaurants,and all other personal property not included in Inventory (ashereinafter defined) owned, utilized or held for use by Seller onthe Closing Date located at the Restaurants and all dishes,glassware, utensils and other smallwares located at theRestaurants (the “Equipment”), all of which are set forth onSchedule 1.1(a) attached hereto; (b) All intangible personal property, business records(including pictures, historical records and archived businessrecords related to the Restaurants and their respective brands),customer lists (to the extent of their existence) and allgoodwill of the Restaurants (the “Intangible Property”); (c) All of the real property owned by the Seller,which real property includes all buildings, fixtures, parkingfacilities and other improvements located thereon and easementsand appurtenances thereto (the “Real Property”), which propertiesare identified and legally described in Schedule 1.1(c) attachedhereto; (d) All of Seller’s interest in all real propertyleases to which Seller is party that are used by or associatedwith the Restaurants (the “Real Property Leases”), all of whichleases are set forth in Schedule 1.1(d) attached hereto, whichshall be assumed in accordance with Section 1.3 hereof; (e) All rights under leases affecting any personalproperty with Seller as lessee, and all contracts, advertisementcontracts, books of account, files, papers, and all records locatedat the Restaurants, in each case listed on Schedule 1.1(e) attachedhereto (the “Contracts”), which shall be assumed at the option ofBuyer in accordance with Section 1.3 hereof; (f) All cash in the cash drawers and safes of eachRestaurant (the “Cash Drawers”) at the close of business on theClosing Date, not to exceed $1,500 per Restaurant; (g) [RESERVED] (h) All rights and benefits of Seller under and pursuantto all licenses, permits, and approvals of Seller relating to theRestaurants or the operation thereof, to the extent transferablewith or without consent of a third party; (i) All Seller’s inventory for the Restaurants which shallinclude food and beverage inventory, uniforms, supplies, papergoods and products, and promotional items that are marketable anduseable as of the Closing Date (the “Inventory”); (j) All deposits, receivables and prepaid expenses relatedto the Restaurants agreed to be acquired by Purchaser (collectively,the “Prepaid Expenses”) all of which expenses are set forth inSchedule 1.1(j) attached hereto; (k) All trademarks, service marks, trade names, copyrights,trade secrets, know-how associated with the Restaurants,(including, but not limited to, the names “Whistle Junction” and”Florida Buffet,” any prototype plans, memos, other work productsof consultants or architects and trade secrets such as recipes(including such recipes or formulas currently in the name of theSeller used exclusively in the Restaurants), operating systemsand manuals or other tangible materials embodying technology,proprietary information or other intellectual property rights ofSeller and used in connection with the Restaurants) and otherproprietary confidential information related to the Restaurants(“Intellectual Property”), except that Seller does not have theright to andwill not transfer any Intellectual Property relatingto the trademark “Ryan’s” or any Intellectual Property related tothe operation of the Ryan’s Restaurants; (l) Any memorabilia used for decor in the Restaurantsowned by Seller and located in the Restaurants; (m) The current telephone listings of the Restaurantsand the right to use the telephone and facsimile numbers currentlybeing used at the Restaurants; and (n) All of Seller’s books, records and other documents andinformation relating to the Assets or the business of theRestaurants, including, without limitation, inventory records,purchase orders and invoices, sale orders and sales order logbooks, customer and marketing information and records,correspondence, employee payroll and personnel records, andproduct and merchandise data, all floor plans and constructionand architectural drawings and conversion plans, and materiallists in the possession of Seller which relate to the FBRestaurants and WJ Restaurants to the extent transferable. SECTION 1.2 EXCLUDED ASSETS. Notwithstanding anyprovision of this Agreement to the contrary, Buyer does notpurchase, and the Seller does not sell, any of the followingassets (i) all bank balances, sales and income tax reserves andstore receipts up to (but not including) the Closing Date; (ii)all contracts, arrangements and understandings which are notcapable of being transferred or assigned; (iii) tax and insurancerefunds relating to actions or time periods prior to the ClosingDate, and (iv) assets of the Seller unrelated to the Restaurantsor the business conducted at the Restaurants (collectively, the”Excluded Assets”). SECTION 1.3 ASSUMPTION OF LIABILITIES. Buyer willassume, pay, perform in accordance with their terms or otherwisesatisfy, from and after the Closing Date: (i) the Real PropertyLeases, (ii) all utility, telephone, yellow page and advertisingexpenses, taxes, and other fees and costs, (collectively, the”Expenses” or singularly, an “Expense”), whether prepaid or yetto be charged, related to obligations and time periods subsequentto the Closing Date; and (iii) the Contracts, to the extent thatBuyer elects to assume such Contracts in its sole discretion and(iv) all obligations that relate to ownership or tenancy of theReal Property. SECTION 1.4 EXCLUDED LIABILITIES. (a) Other than as set forth in Section 1.3, Sellershall retain, and Buyer shall not assume, and nothing containedin this Agreement shall be construed as an assumption by Buyerof, any liabilities, obligations or undertakings of Seller of anynature whatsoever, whether accrued, absolute, fixed orcontingent, known or unknown due or to become due, unliquidatedor otherwise. Seller shall be responsible for all of theliabilities, obligations and undertakings of Seller not assumedby Buyer pursuant to Section 1.3 hereof. (b) Seller shall be responsible for all Expensesincurred prior to the Closing Date and Buyer shall be responsiblefor all Expenses incurred from and after the Closing Date. Sellershall use reasonable efforts to determine Expenses as of theClosing Date and shall submit its estimation of such Expenses tothe Buyer not less than five (5) days prior to the Closing Date.If any Expense cannot be determined as of the Closing Date,Buyer and Seller agree to prorate such Expense based on thenumber of days of Buyer’s and Seller’s respective occupation ofthe Restaurants during the month in which the Closing occurscompared to the total number of days in the month. Any partyrequired to pay an adjustment amount for prorated Expenses shallpay such amount not later than fifteen (15) days afterpresentation to such party of a statement prepared by the partyto whom the adjustment amount is owed. Seller further agrees toexecute any document required to transfer any account related toany Expense to Buyer, including the transfer of any deposits inconnection with such Expenses. (c) Seller shall be responsible for and shall pay whendue all sales and use taxes, any applicable transfer taxes,franchise fees and any other costs, fees and expenses associatedwith the sale, transfer and assignment of the Assets or anyportion of the same to Buyer, but not any other taxes associatedwith Buyer’s financing. SECTION 1.5 PURCHASE PRICE AND PAYMENT. (a) PURCHASE PRICE. The purchase price (the “PurchasePrice”) for the Restaurants and the Assets shall be the amount setforth below plus the value of the liabilities assumed by Buyerpursuant to Section 1.3. (b) PAYMENT OF PURCHASE PRICE. The Purchase Price shallbe paid at the Closing as follows: (i) Twenty-Five Million Four Hundred Fifty Thousand Dollars and No/100 ($25,450,000.00) in cash; plus (ii) The Deposit in cash; plus (iii) One-half of the aggregate sum of the Prepaid Expenses set forth on Schedule 1.1(j) attached hereto; plus (iv) An additional cash payment of up to Two Hundred Fifty Thousand Dollars and No/100 ($250,000.00) for each Ryan’s Restaurant converted to a WJ Restaurant from February 1, 2005, through the Closing (such actual amount to be equal to all out-of- pocket costs incurred by Seller in connection with the conversion based on documentation reasonably required by Buyer to support such expenditures; (v) Four Million Dollars and No/100 ($4,000,000.00) paid by delivery of a secured promissory note (the “Note”) in form and substance identical to the form attached hereto as Exhibit 1.5 which contains the following terms: (A) The principal balance of the Note shall be secured by the assets identified on Schedule 1.5 attached hereto and shall bear simple interest at the fixed rate of eight (8.0%) per annum and shall be payable in monthly installments of interest only, with principal payments in accordance with the following schedule: (1) Seller shall have received the sum of $1,500,000.00 twenty-four (24) months following the Closing Date; (2) Seller shall have received the sum of $1,500,000.00 thirty-six (36) months following the Closing Date; and (3) All principal and accrued but unpaid interest thereon shall be due forty-eight (48) months following the Closing Date. (B) The principal amount of the Note will be credited with $173,333.00 if Buyer exercises its right to purchase the DeLand Restaurant within 30 days following the Closing and consummates the purchase within 9 months from the Closing. (vi) The additional consideration, if any, described on Schedule 1.5 attached hereto. (c) ESCROW DEPOSIT. Concurrently with Buyer’s executionof this Agreement, Buyer shall deliver to Lawyers Title InsuranceCorporation (the “Title Company”) in cash by wire transfer, thesum of Five Hundred Thousand Dollars and No/100 ($500,000.00) asthe escrow deposit (“Deposit”) pursuant to the Escrow Agreementattached hereto as Exhibit 1.5(c). Section 1.6 ALLOCATION OF PURCHASE PRICE. On or beforethe Closing Date, the parties shall mutually agree on theallocation of the Purchase Price among the Assets. Seller andBuyer shall execute and file any of their respective tax returnsand other tax information on a basis that is consistent with theallocations made pursuant to this Section 1.6. Seller shallprovide Buyer with any information reasonably required by Buyerto prepare its tax return or to otherwise comply with anyfederal, state or local tax rules or regulations. Each partyshall duly and timely file Form 8594 with its appropriate taxreturns. ARTICLE II. REPRESENTATIONS AND WARRANTIES OF SELLER —————————————————– As an inducement to Buyer to enter into this Agreement andto consummate the transactions contemplated hereby, Sellerrepresents and warrants to Buyer as follows, whichrepresentations and warranties are true and correct on the datehereof and shall remain true and correct on the Closing Date: SECTION 2.1 ORGANIZATION AND QUALIFICATION. EACOCorporation is a corporation duly organized, validly existing andin good standing under the laws of the State of Florida. Thenature of the Restaurants’ business or the Assets does notrequire Seller to be licensed or qualified in any otherjurisdiction. SECTION 2.2 SUBSIDIARIES. The Assets do not include anystock, partnership interest, joint venture interest or any othersecurity or ownership interest issued by any other corporation,organization or entity. Seller has no subsidiaries. SECTION 2.3 POWER AND AUTHORITY. Seller has therequisite corporate power and authority and all authorizations,permits, licenses and certifications necessary to own, lease andoperate the Assets and to carry on the business of theRestaurants as now being conducted. SECTION 2.4 EXECUTION, DELIVERY; VALID AND BINDINGAGREEMENT. The execution, delivery and performance of this Agreementby Seller and the consummation of the transactions contemplatedhereby have been duly and validly authorized by the Board ofDirectors of Seller, and, except for approval by Seller’sshareholders, no other proceedings on its part are necessary toauthorize the execution, delivery and performance of thisAgreement. This Agreement constitutes, and when executed anddelivered, the other documents and instruments to be executed anddelivered by Seller pursuant hereto (the “Ancillary Agreements”)will constitute, the valid and binding obligations of Seller,enforceable in accordance with their terms. SECTION 2.5 NO VIOLATION. Neither the execution anddelivery of this Agreement or the Ancillary Agreements, theconsummation of the transactions contemplated hereby or thereby,nor the performance of the Seller’s obligations hereunder andthereunder will (i) violate, conflict with or result in anybreach of any trust agreement, Articles of Incorporation, bylaws,judgment, decree, order, statute or regulation applicable toSeller, (ii) violate, conflict with or result in a materialbreach, material default or termination or give rise to any rightof termination, cancellation or acceleration of the maturity ofany payment date of any of the obligations of Seller or increaseorotherwise materially affect the obligations of Seller underany law, rule, regulation or any judgment, decree, order,governmental permit, license or order or any of the terms,conditions or provisions of any mortgage, indenture, note,license, agreement or other instrument or obligation related toSeller or to Seller’s ability to consummate the transactionscontemplated hereby or thereby, except that landlords’ consentmay be required for assignment of Real Property Leases, (iii)violate any order, writ, injunction, decree, statute, rule orregulation applicable to Seller or (iv) result in the creation ofany claim or lien upon the Assets. SECTION 2.6 TITLE OF PROPERTIES. (a) The Real Property owned by Seller and the real propertydemised by the Real Property Leases (the “Leased Parcels”)constitutes all of the real property owned, used or occupied bySeller used in connection with operation of the Restaurants. TheReal Property and Leased Parcels have access, sufficient for theoperation of the Restaurants as now conducted, to public roadsand to all utilities, including electricity, sanitary and stormsewer, potable water, natural gas and other utilities, used inthe operation of the Restaurant at that location. To Seller’sactual knowledge without inquiry, there is not (i) any claim ofadverse possession involving any of the Restaurants, (ii) anybuilding or other structure which encroaches on the boundaries ofany of the Real Property or Leased Parcels except as may be shownby the Surveys, or (iii) any structure of any other party whichencroaches on the boundaries of any of the Restaurants except asmay be shown by the Surveys. (b) The Real Property Leases are in full force and effect,and Seller holds a valid and existing leasehold interest under eachof the Real Property Leases for the term set forth in Schedule2.6(b) attached hereto. Seller has delivered to Buyer completeand accurate copies of each of the Real Property Leases, and noneof the Real Property Leases has been modified in any respect,except to the extent that such modifications are disclosed by thecopies delivered to Buyer. To the best of Seller’s knowledge,Seller is not in default beyond applicable cure periods, and nocircumstances exist which, if unremedied, would, either with orwithout notice or the passage of time or both, result in suchdefault under any of the Real Property Leases; nor, to theknowledge of Seller, is any other party to any of the RealProperty Leases in default. Seller has not, and to the knowledgeof Seller, the lessors under any of the Real Property Leases havenot (i) subleased or assigned any of its rights and obligationsunder the Real Property Leases to any other party, or (ii)granted any possessory right in any of the Assets to any otherperson. Seller is in sole possession, use and quiet enjoyment ofthe Real Property and the Leased Parcels. (c) Seller owns good and marketable title to the Assets,including each parcel of Real Property and each of the tangibleproperties and tangible assets reflected on the Latest BalanceSheet (as defined in Section 2.12 hereof) or acquired since thedate thereof, free and clear of all liens and encumbrances,except for (i) liens for current taxes not yet due and payable,(ii) liens set forth onSchedule 2.6(c) attached hereto, (iii) the properties subject tothe Real Property Leases, (iv) assets disposed of since the dateof the Latest Balance Sheet in the ordinary course of business,(v) liens imposed by law and incurred in the ordinary courseof business for obligations not yet due to carriers, warehousemen,laborers and materialmen and (vi) liens in respect of pledges ordeposits under workers’ compensation laws, all of which liensaggregate less than $5,000, and (vii) matters shown on the TitleCommitment. The Assets comprise all of the property and assets(except for Excluded Assets) necessary to permit Buyer to operatethe Restaurants as they are presently operated. (d) Schedule 2.6(d)(1) attached hereto sets forth a descriptionof all the Assets which constitute equipment, machinery, motorvehicles, furniture, fixtures, furnishings and leaseholdimprovements. Except as otherwise described in Schedule2.6(d)(2), all of the buildings, machinery, equipment and othertangible assets necessary for the operation of the Restaurantsare in good condition and repair, ordinary wear and tearexcepted, and are usable in the ordinary course of business. Theparties agree that Seller shall pay up to, but not exceeding, OneHundred Thousand Dollars ($100,000.00) for repairs to the itemsdescribed on Schedule 2.6(d)(2), provided that each claim forrepair shall equal or exceed the sum of One Thousand Dollars($1,000.00). The parties agree that such repairs shall not beincluded in the Damages described in Section 10.2. To Seller’sknowledge there are no defects in such assets or other conditionsrelating thereto which, in the aggregate, materially adverselyaffect the operation of the Restaurants. Seller owns, or leasesunder valid leases, all buildings, machinery, equipment and othertangible assets necessary for operation of the Restaurants. (e) To the best of Seller’s knowledge, Seller is not inviolation of any applicable zoning ordinance or other law,regulation or requirement relating to the operation of anyproperties used in the operation of the Restaurants, and Sellerhas not received any notice of any such violation, or theexistence of any condemnation proceeding with respect to any ofthe Real Property or Leased Parcels, except, in each case, withrespect to violations the potential consequences of which do notor will not have a material adverse effect on the Restaurants. (f) Seller has no knowledge of improvements made orcontemplated to be made by any public or private authority, thecosts of which are to be assessed as special taxes or chargesagainst any of the Real Property or Leased Parcels, and thereare no present assessments. SECTION 2.7 LABOR AND EMPLOYEE RELATIONS. Except asset forth in Schedule 2.7 attached hereto, and only with respectto employees of Seller who perform functions in connection withthe Business: (a) to the knowledge of Seller, no employee ofSeller and no group of the Seller’s employees has any plans toterminate his, her or its employment; (b) Seller has compliedwith all laws relating to the employment of labor, includingprovisions thereof relating to wages, hours, equal opportunity,collective bargaining and the payment of social security andother taxes; (c) Seller hasno material labor relations problem pending and its labor relationsare satisfactory; (d) there are no workers’ compensation claimspending against Seller nor is Seller aware of any facts that wouldgive rise to such a claim; (e) to the knowledge of Seller, no employeeof Seller is subject to any secrecy or noncompetition agreement or anyother agreement or restriction of any kind that would impede in anyway the ability of such employee to carry out fully all activities ofsuch employee in connection with the Restaurants; and (f) noemployee or former employee of Seller has any claim with respectto any Intellectual Property or Seller’s rights therein. Schedule2.7 attached hereto lists, as of the date of this Agreement,each employee of Seller who performs functions in connection withthe Restaurants and the position, title, remuneration (includingany scheduled salary or remuneration increases), date ofemployment and accrued vacation pay of each such employee. Sellershall update Schedule 2.7 attached hereto as of the Closing Date.All Employees are employees-at-will and are employed for anindefinite term. SECTION 2.8 GOVERNMENTAL APPROVALS. Except for theapplicable requirements of the Hart-Scott-Rodino AntitrustImprovements Act of 1976, as amended, and the rules andregulations promulgated thereunder (the “HSR Act”) and theSecurities Exchange Act of 1934 and the regulations promulgatedthereunder (the “Exchange Act”), the Seller is not required tosubmit any notice, report or other filing with any governmentalauthority in connection with the execution or delivery by it ofthis Agreement or the consummation of the transactionscontemplated hereby. Except as set forth on Schedule 2.8attached hereto, no consent, approval, authorization or otheraction by any governmental or regulatory authority is required tobe obtained by Seller in connection with its execution, deliveryand performance of this Agreement. Seller acknowledges that Buyeris not familiar with the HSR Act or any other approvals whichSeller may be required to obtain. SECTION 2.9 COMPLIANCE WITH LAW; LICENSES; PERMITS. (a) To Seller’s knowledge, Seller has complied in allmaterial respects with all applicable laws, regulations andother requirements, including, but not limited to, federal, state,local and foreign laws, ordinances, rules, regulations and otherrequirements pertaining to product labeling, consumer productssafety, equal employment opportunity, employee retirement, theAmericans with Disabilities Act, affirmative action and otherhiring practices, occupational safety and health, workers’compensation, unemployment and building and zoning codes, whichare applicable to the Restaurants or the Assets and to whichSeller is or may be subject, and no claims have been filedagainst Seller alleging a violation of any such laws, regulationsor other requirements. Except as set forth on Schedule 2.9attached hereto, Seller has no knowledge of any action, pendingor threatened, to change the zoning or building ordinances or anyother laws, rules, regulations or ordinances affecting theRestaurants or the Assets. Seller is not relying on anyexemption from or deferral of any such applicable law, regulationor other requirement that would not be available to Buyer afterit acquires the Assets. (b) Seller has, in full force and effect, all licenses,permits and certificates, from federal, state, local and foreignauthorities (including, without limitation, federal and stateagencies regulating occupational health and safety) necessary tooperate the Restaurants and to own and operate the Assets (otherthan Environmental Permits, as such term is defined in Section2.19(c) hereof) (collectively, the “Permits”). A true, correctand complete list of all Permits is set forth in Schedule 2.9(b)attached hereto, with an indication as to whether the Permit isassignable to Buyer. Seller has conducted its business incompliance with all material terms and conditions of the Permits. (c) Seller has not violated and has no liability, andhas not received a notice or charge asserting any violation of orliability under, the federal Occupational Safety and Health Actof 1970 or any other federal or state acts (including rules andregulations thereunder) regulating or otherwise affectingemployee or consumer health and safety in connection with theRestaurants or the Assets. SECTION 2.10 EMPLOYEE BENEFITS. (a) Except as set forth in Schedule 2.10(a) attachedhereto, with respect to all employees and former employees of Sellerwho perform or performed functions in connection with the Restaurantsand all dependents and beneficiaries of such employees and formeremployees: (i) Seller does not maintain or contribute to anynonqualified deferred compensation or retirement plans, contractsor arrangements; (ii) Seller does not maintain or contribute toany qualified defined contribution plans (as defined in Section3(34) of the Employee Retirement Income Security Act of 1974, asamended (“ERISA”), or Section 414(i) of the Code; (iii) Sellerdoes not maintain or contribute to any qualified defined benefitplans (as defined in Section 3(35) of ERISA or Section 414(j) ofthe Code); and (iv) Seller does not maintain or contribute to anyemployee welfare benefit plans (as defined in Section 3(1) ofERISA). (b) To the extent required (either as a matter of law or toobtain the intended tax treatment and tax benefits), all employeebenefit plans (as defined in Section 3(3) of ERISA) which Sellerdoes maintain or to which it does contribute (collectively, the”Plans”) comply in all material respects with the requirements ofERISA and the Code. With respect to the Plans, (i) all requiredcontributions which are due have been made and a proper accrualhas been made for all contributions due in the current fiscalyear; (ii) there are no actions, suits or claims pending, otherthan routine uncontested claims for benefits; and (iii) therehave been no prohibited transactions (as defined in Section 406of ERISA or Section 4975 of the Code). (c) Buyer has received true and complete copies of (i) themost recent determination letter, if any, received by Seller from theInternal Revenue Service regarding the Plans which Sellermaintains or to which it contributes and any amendment to anyPlan made subsequent to any Plan amendments covered by any suchdetermination letter; (ii) the most recent financial statementsand annual report or return for the Plans; and (iii) the mostrecently prepared actuarial valuation reports. (d) Seller does not contribute (and has not ever contributed)to any multi-employer plan, as defined in Section 3(37) of ERISA.Seller has no actual or potential liabilities under Section 4201of ERISA for any complete or partial withdrawal from a multi-employer plan. Seller has no actual or potential liability fordeath or medical benefits after separation from employment, otherthan (i) death benefits under the employee benefit plans orprograms (whether or not subject to ERISA) set forth in Schedule2.10(d) attached hereto and (ii) health care continuationbenefits described in Section 4980B of the Code. (e) Neither Seller nor any of its directors, officers,employees or other “fiduciaries”, as such term is defined in Section3(21) of ERISA, has committed any breach of fiduciary responsibilityimposed by ERISA or any other applicable law with respect to thePlans which would subject Seller, Buyer, Buyer’s subsidiaries orany of their respective officers, members, managers or employeesto any liability under ERISA or any applicable law. (f) Seller has not incurred any liability for any tax or civilpenalty or any disqualification of any employee benefit plan (asdefined in Section 3(3) of ERISA) imposed by Sections 4980B and4975 of the Code and Part 6 of Title I and Section 502(i) ofERISA. SECTION 2.11 CONTRACTS. The Contracts identified onSchedule 1.1(e) attached hereto and on Schedule 2.11 attachedhereto (Contracts not assigned), together with the Real PropertyLeases, comprise a true, correct and complete list of allmaterial leases, contracts and commitments necessary for theoperation of the Restaurants. Seller has delivered to Buyer trueand complete copies of all Contracts on Schedules 1.1(e) and 2.11attached hereto (including all amendments and modificationsthereto) and has provided to Buyer a complete description of allContracts which are not in writing. Except as set forth inSchedule 2.11 attached hereto each Contract is valid andenforceable, and is full force and effect. Seller has performedall the obligations required to be performed by it, has notreceived any notice of default and is not in default, with duenotice or lapse of intention of not fully performing all itsobligations under each of the Contracts, and Seller has noknowledge of any breach of or anticipated breach by the otherparty to any of the Contracts to which Seller is a party. Noneof the Contracts has been terminated. To Seller’s knowledge, nonotice has been given by any party thereto of any alleged defaultby any party thereunder, and Seller is not aware of any intentionor right of any party to declare another party to any of theContracts to be in default. SECTION 2.12 FINANCIAL STATEMENTS. Seller has delivered toBuyer copies of (a) the unaudited balance sheet, as of November 30,2004, of the Restaurants (the “Latest Balance Sheet”) and the unauditedstatements of earnings, shareholders’ equity and cash flows of theBusiness for the nine month period ended September 30, 2004(such statements and the Latest Balance Sheet being herein referredto as the “Latest Financial Statements”) and (b) the auditedbalance sheets, as of December 31, 2001, 2002 and 2003 of theRestaurants and the audited statements of earnings, shareholders’equity and cash flows of the Business for each of the years endedDecember 31, 2001, 2002 and 2003 (collectively, the “Annual FinancialStatements”). The Latest Financial Statements and the AnnualFinancial Statements are based upon the information contained inthe books and records of Seller and fairly present the financialcondition of the business as of the dates thereof and results ofoperations for the periods referred to therein. The AnnualFinancial Statements have been prepared in accordance withgenerally accepted accounting principles, consistently appliedthroughout the periods indicated. The Latest FinancialStatements have been prepared in accordance with generallyaccepted accounting principles applicable to unaudited interimfinancial statements (and thus may not contain all notes and maynot contain prior period comparative data which are required tobe prepared in accordance with generally accepted accountingprinciples) consistently with the Annual Financial Statements andreflect all adjustments necessary to a fair statement of theresults for the interim period(s) presented. SECTION 2.13 ABSENCE OF UNDISCLOSED LIABILITIES. With respectto the Assets or the operations of the Restaurants, Seller has noliabilities (whether accrued, absolute, contingent, unliquidated orotherwise, whether due or to become due, whether known or unknown,and regardless of when asserted) arising out of transactions orevents heretofore entered into, or any action or inaction, or anystate of facts existing, with respect to or based upon transactionsor events heretofore occurring, except (i) as reflected in the LatestBalance Sheet, (ii) liabilities which have arisen after the dateof the Latest Balance Sheet in the ordinary course of business(none of which is a material uninsured liability for breach ofcontract, breach of warranty, tort, infringement, claim orlawsuit), or (iii) as otherwise set forth in Schedule 2.13attached hereto. SECTION 2.14 NO MATERIAL ADVERSE CHANGES. Since the dateof the Latest Balance Sheet (the “Balance Sheet Date”), there hasbeen no material adverse change in the assets, financialcondition, operating results, customer, employee or supplierrelations, business condition or prospects of Seller. SECTION 2.15 ABSENCE OF CERTAIN DEVELOPMENTS. Since theBalance Sheet Date, Seller has not in each case, with respectto the Restaurants or the Assets: (a) borrowed any amount or incurred or become subject to anyliability in excess of $5,000, except (i) current liabilitiesincurred in the ordinary course of business and (ii) liabilitiesunder contracts entered into in the ordinary course of business; (b) mortgaged, pledged or subjected to any lien, charge orany other encumbrance, any of the Assets except (i) liens for currentproperty taxes not yet due and payable, (ii) liens imposed by lawand incurred in the ordinary course of business for obligationsnot yet due to carriers, warehousemen, laborers, materialmen andthe like, (iii) liens in respect of pledges or deposits underworkers’ compensation laws, (iv) liens set forth in Schedule2.15(b) attached hereto, or (v) items shown on TitleCommitments.; (c) discharged or satisfied any lien or encumbrance or paidany liability, in each case with a value in excess of $5,000, otherthan current liabilities paid in the ordinary course of business; (d) sold, assigned or transferred (including, withoutlimitation, transfers to any employees, affiliates orshareholders) any tangible assets of the Restaurants (except thesale/leaseback of the DeLand Restaurant) or canceled any debts orclaims, in each case, except in the ordinary course of business; (e) sold, assigned or transferred (including, withoutlimitation, transfers to any employees, affiliates orshareholders) any Intellectual Property or other intangibleassets used in or held for use with respect to the Restaurants; (f) disclosed, to any person other than Buyer and authorizedrepresentatives of Buyer, any proprietary confidentialinformation of the Business or otherwise related to theRestaurants or the Assets, other than pursuant to (i) reports andfilings required under the Securities Act of 1933, as amended,and rules and regulations promulgated thereunder, (ii) theSecurities and Exchange Act of 1934, as amended, and rules andregulations promulgated thereunder, or (iii) a confidentialityagreement prohibiting the use or further disclosure of suchinformation, which agreement is identified in Schedule 2.15(f)attached hereto and is in full force and effect on the datehereof; (g) waived any rights of material value or suffered anyextraordinary losses or adverse changes in collection lossexperience, whether or not in the ordinary course of business orconsistent with past practice; (h) taken any other action or entered into any other transactionother than in the ordinary course of business and in accordancewith past custom and practice, or entered into anytransaction with any “insider” (as defined in Section 2.16 hereof)other than employment arrangements otherwise disclosed in the schedulesto this Agreement; (i) suffered any material theft, damage, destruction orloss of or to any property or properties owned or used byit in connection with the Restaurants, whether or not coveredby insurance; (j) made or granted any bonus or any wage, salary orcompensation increase to any officer or employee or consultantother than in the normal course of business consistent with pastpractices, or made or granted any increase in any employeebenefit plan or arrangement, or amended or terminated anyexisting employee benefit plan or arrangement, or adopted any newemployee benefit plan or arrangement or made any commitment orincurred any liability to any labor organization; or (k) made any single capital expenditure or commitmenttherefor in excess of $5,000, except as shown Schedule 2.15(k)attached hereto. SECTION 2.16 TRANSACTIONS WITH AFFILIATES. Except as disclosedin Schedule 2.16 attached hereto, no officer, director or employeeof Seller or any member of the immediate family of any such officer,director or employee, or any entity in which any of such personsowns any beneficial interest (other than any publicly-held corporationwhose stock is traded on a national securities exchange or in theover-the-counter market and less than one percent of the stock of which isbeneficially owned by any of such persons) (collectively “insiders”), hasany agreement with Seller (other than normal employment arrangements)or any interest in any property, real, personal or mixed, tangible orintangible, used in or pertaining to the operation of the Restaurantsor to the Assets. None of the insiders has any direct or indirectinterest in any competitor, supplier or customer of Seller or in anyperson, firm or entity from whom or to whom Seller leases any property,or in any other person, firm or entity with whom Seller transactsbusiness of any nature. For purposes of this Section 2.16, themembers of the immediate family of an officer, director oremployee shall consist of the spouse, parents, children,siblings, mothers- and fathers-in-law, sons- and daughters-in-law, and brothers- and sisters-in-law of such officer, directoror employee. SECTION 2.17 TAXES. (a) Each of Seller and any subsidiary, any affiliated,combined or unitary group of which the Seller or any subsidiary isor was a member, any “Plans” (as defined in Section 2.10(b) hereof),as the case may be (each, a “Tax Affiliate” and, collectively, the”Tax Affiliates”), has: (i) timely filed (or has had timelyfiled on its behalf) all returns, declarations, reports,estimates, information returns, and statements (“Returns”)required to be filed or sent by it in respect of any”Taxes” (as defined in subsection (p) below) or required to be filedor sent by it by any taxing authority having jurisdiction; (ii) timelyand properly paid (or has had paid on its behalf) all Taxes shownto be due and payable on such Returns; (iii) established on itsLatest Balance Sheet, in accordance with generally acceptedaccounting principles, reserves that are adequate for the paymentof any Taxes not yet due and payable; (iv) complied with allapplicable laws, rules, and regulations relating to thewithholding of Taxes and the payment thereof (including, withoutlimitation, withholding of Taxes under Sections 1441 and 1442 ofthe Internal Revenue Code of 1986, as amended (the “Code”), orsimilar provisions under any foreign laws), and timely andproperly withheld from individual employee wages and paid over tothe proper governmental authorities all amounts required to be sowithheld and paid over under all applicable laws. (b) There are no liens for Taxes upon any of the assets,except liens for Taxes not yet due and payable. (c) No deficiency for any Taxes has been proposed, assertedor assessed against Seller or the Tax Affiliates that has not beenresolved and paid in full. No waiver, extension or comparableconsent given by Seller or the Tax Affiliates regarding theapplication of the statute of limitations with respect to anyTaxes or Returns is outstanding, nor is any request for any suchwaiver or consent pending. There has been no Tax audit or otheradministrative proceeding or court proceeding with regard to anyTaxes or Returns, nor is any such Tax audit or other proceedingpending, nor has there been any notice to Seller by any Taxingauthority regarding any such Tax, audit or other proceeding, or,to the knowledge of Seller, is any such Tax audit or otherproceeding threatened with regard to any Taxes or Returns. Sellerdoes not expect the assessment of any additional Taxes on Selleror the Tax Affiliates and is not aware of any unresolvedquestions, claims or disputes concerning the liability for Taxeson Seller or the Tax Affiliates which would exceed the estimatedreserves established on its books and records. (d) Neither Seller nor any Tax Affiliate is a party toany agreement, contract or arrangement that would result, separatelyor in the aggregate, in the payment of any “excess parachutepayments” within the meaning of Section 280G of the Code and theconsummation of the transactions contemplated by this Agreementwill not be a factor causing payments to be made by Seller or anyTax Affiliate that are not deductible (in whole or in part) underSection 280G of the Code. (e) Neither Seller nor any Tax Affiliate has requestedany extension of time within which to file any Return, which Returnhas not since been filed. (f) No Asset is property that Seller or any Tax Affiliatesis or will be required to treat as being owned by another person underthe provisions of Section 168(f)(8) of the Code (as in effectprior to amendment by the Tax Reform Act of 1986) or is “tax-exempt use property” within the meaning of Section 168 of theCode. (g) Neither Seller nor any Tax Affiliate is required toinclude in income any adjustment under Section 481(a) of the Code byreason of a voluntary change in accounting method initiated bySeller or any Tax Affiliate as a result of the Tax Reform Act of1986 and neither Seller nor any Tax Affiliate has knowledge thatthe Internal Revenue Service has proposed any such adjustment orchange in accounting method. (h) All transactions that could give rise to anunderstatement of federal income tax (within the meaning of Section6661 of the Code as it applied prior to repeal) or an underpaymentof tax (within the meaning of Section 6662 of the Code) were reportedin a manner for which there is substantial authority or wereadequately disclosed (or, with respect to Returns filed beforethe Closing Date, will be reported in such a manner or adequatelydisclosed) on the Returns required in accordance with Sections6661(b)(2)(B) and 6662(d)(2)(B) of the Code. (i) Neither Seller nor any Tax Affiliate has engaged inany transaction that would result in a deemed election under Section338(e) of the Code, and neither Seller nor any Tax Affiliate willengage in any such transaction within any applicable “consistencyperiod” (as such term is defined in Section 338 of the Code). (j) All deductions claimed or reported on all Returns ofSeller and any Tax Affiliate on account of royalties or similar feespayable with respect to any intellectual property of Seller orany other party are allowable in full. (k) For purposes of this Agreement, the term “Tax” or”Taxes” means all taxes, charges, fees, levies, or otherassessments, including, without limitation, all net income, grossincome, gross receipts, sales, use, ad valorem, transfer, franchise,profits, license, withholding, payroll, employment, socialsecurity, unemployment, excise, estimated, severance, stamp,occupation, property, or other taxes, customs duties, fees,assessments, or charges of any kind whatsoever, including,without limitation, all interest and penalties thereon, andadditions to tax or additional amounts imposed by any taxingauthority, domestic or foreign, upon Seller or any Tax Affiliate. SECTION 2.18 LITIGATION. Except as set forth on Schedule2.18 attached hereto, there is no (i) action, suit, claim,proceeding or investigation pending or, to the knowledge ofSeller, threatened against or affecting Seller (whether or notSeller is a party or prospective party thereto), at law or inequity, or before or by any federal, state, municipal or othergovernmental department, commission, board, bureau, agency orinstrumentality, domestic or foreign, (ii) arbitration proceedingpending relating to Seller or (iii) governmental inquiry pendingor to Seller’s knowledge, threatened against or involving Seller,and there is no basis for any of the foregoing. Seller has notreceived any opinion or memorandum or legal advice from legalcounsel to the effect that it is exposed, from a legalstandpoint, to any liability or disadvantage which may bematerial and adverse to the business,prospects, financial condition, operations, property or affairs ofSeller. There are no outstanding, orders, writs, judgments,injunctions, or decrees served upon Seller by any court,governmental agency or arbitration tribunal against Seller. To Seller’sknowledge, there are no facts or circumstances which may result ininstitution of any action, suit, claim or legal, administrativeor arbitration proceeding or investigation against, involving oraffecting any Seller or the transactions contemplated hereby.Seller is not in default with respect to any order, writ, injunctionor decree known to or served upon it from any court or of any federal,state, municipal or other governmental department, commission,board, bureau, agency or instrumentality, domestic or foreign.There is no action or suit by Seller pending or threatenedagainst others. SECTION 2.19 ENVIRONMENTAL MATTERS. (a) As used in this Section 2.19, the following termsshall have the following meanings: (i) “Hazardous Materials” means any dangerous, toxic or hazardous pollutant, contaminant, chemical, waste, material or substance as defined in or governed by any federal, state or local law, statute, code, ordinance, regulation, rule or other requirement relating to such substance or otherwise relating to the environment or human health or safety, including without limitation any waste, material, substance, pollutant or contaminant that might cause any injury to human health or safety or to the environment or might subject Seller to any imposition of costs or liability under any Environmental Law. (ii) “Environmental Laws” means all applicable federal, state, local and foreign laws, rules, regulations, codes, ordinances, orders, decrees, directives, permits, licenses and judgments relating to pollution, contamination or protection of the environment (including, without limitation, all applicable federal, state, local and foreign laws, rules, regulations, codes, ordinances, orders, decrees, directives, permits, licenses and judgments relating to Hazardous Materials in effect as of the date of this Agreement). (iii) “Release” shall mean the spilling, leaking, disposing, discharging, emitting, depositing, ejecting, leaching, escaping or any other release or threatened release, however defined, whether intentional or unintentional, of any Hazardous Material. (b) To the best of Seller’s actual knowledge, Seller, withrespect to the Restaurants and the Assets, is in materialcompliance with all applicable Environmental Laws. (c) Seller has obtained, and maintained in full force andeffect, all environmental permits, licenses, certificates ofcompliance, approvals and other authorizations necessary tooperate the Restaurants and to own or operate the Assets,including the Real Property and real property demisedby the Real Property Leases (collectively, the “Environmental Permits”).A copy of each such Environmental Permit shall be provided bySeller to Buyer at least fourteen (14) days prior to the Closing.Seller has operated the Restaurants and owned and operated theAssets in compliance with all terms and conditions of theEnvironmental Permits. Seller has filed all reports andnotifications required to be filed under and pursuant to allapplicable Environmental Laws with respect to the Business andthe Assets. (d) Except as set forth in Schedule 2.19(d) attached hereto,to Seller’s knowledge,: (i) no Hazardous Materials have beengenerated, treated, contained, handled, located, used,manufactured, processed, buried, incinerated, deposited, stored,or released on, under or about any part of the Real Property orreal property demised by the Real Property Leases, (ii) the RealProperty and the Leased Parcels and any improvements thereon,contain no asbestos, urea, formaldehyde, radon at levels abovenatural background, polychlorinated biphenyls (PCBs) orpesticides, and (iii) no aboveground or underground storage tanksare located on, under or about the Real Property or the LeasedParcels, or have been located on, under or about such realproperty and then subsequently been removed or filled. ToSeller’s knowledge, if any such storage tanks exist on, under orabout the Real Property or the Leased Parcels, such storage tankshave been duly registered with all appropriate governmentalentities and are otherwise in compliance with all applicableEnvironmental Laws. (e) Except as set forth in Schedule 2.19(e) attachedhereto, Seller has not received notice alleging in any manner thatSeller is, or might be potentially responsible for, any Release ofHazardous Materials, or any costs arising under or violation ofEnvironmental Laws with respect to the Restaurants or the Assets. (f) To Seller’s knowledge, no expenditure will be requiredin order for Buyer to comply with any Environmental Laws in effectat the time of the Closing in connection with the operation orcontinued operation of the Restaurants or the Assets in a mannerconsistent with the current operation thereof by Seller. (g) Neither Seller, the Real Property nor the Leased Parcelsare, and to Seller’s knowledge, have not been listed on theUnited States Environmental Protection Agency National PrioritiesList of Hazardous Waste Sites, or any other list, schedule, law,inventory or record of hazardous or solid waste sites maintainedby any federal, state or local agency. (h) Seller has disclosed and delivered to Buyer allenvironmental reports and investigations which Seller hasobtained with respect to the Real Property and the LeasedParcels. (i) To Seller’s knowledge, no part of the Real Property orthe Leased Parcels have been used as a landfill, dump or otherdisposal, storage, transfer, handling or treatment area forHazardous Materials, or as a gasoline service station or afacility for selling, dispensing, storing, transferring,disposing or handling petroleum and/or petroleum products. (j) No lien has been attached or filed against Seller or any ofthe Assets in favor of any governmental or private entity for (i)any liability or imposition of costs under or violation of anyapplicable Environmental Law; or (ii) any Release of HazardousMaterials. (k) Seller, on behalf of itself and its successors and assigns,hereby waives, releases and agrees not to bring any claim,demand, cause of action or proceeding, including withoutlimitation any cost recovery action, against Buyer under anyEnvironmental Law in connection with the Buyer’s purchase,ownership or operation of the Restaurants and the Assets. SECTION 2.20 INSURANCE. Schedule 2.20 attached heretolists and briefly describes each insurance policy maintained bySeller with respect to the Assets and operations of theRestaurants and sets forth the date of expiration of each suchinsurance policy. All of such insurance policies are in fullforce and effect and are issued by insurers of recognizedresponsibility. Seller is not in default with respect to itsobligations under any of any insurance policies relating to theAssets or the Restaurants. SECTION 2.21 INTELLECTUAL PROPERTY. The IntellectualProperty constitutes all such property needed or used in theoperation of the Restaurants. Schedule 2.21 attached heretodescribes all Intellectual Property and whether such IntellectualProperties are owned or licensed and registered or unregistered.Except as set forth on Schedule 2.21 attached hereto Seller isnot a party to, either as a licensor or licensee, and is notbound by or subject to, any license agreement for anyIntellectual Property. Except as set forth on Schedule 2.21attached hereto there are no rights of third parties with respectto any Intellectual Property which would have an adverse effecton the operations of the Restaurants. To its knowledge, Sellerhas not interfered with, infringed upon, or misappropriated, orotherwise come into conflict with any intellectual propertyrights of any other person, and Seller has not received anycharge, complaint, claim, demand, or notice alleging any suchinterference, infringement, misappropriation, or violation. ToSeller’s knowledge, no person has interfered with, infringedupon, misappropriated, or otherwise come into conflict withIntellectual Property which are owned or used in the operation ofthe Restaurants. SECTION 2.22 BROKER’S OR FINDER’S FEES. Except for theservices rendered by Bob Lurie of Florida Growth Realty, Inc.,the fees of which shall be paid by Seller, no agent, broker,person or firm acting on behalf of any Seller is, or will be,entitled to any commission or broker’s or finder’s fees from anySeller or from any person controlling, controlled by or undercommon control with any Seller in connection with any of thetransactions contemplated herein. SECTION 2.23 DISCLOSURE. Neither this Agreement, theAncillary Agreements, the schedules and exhibits attached heretonor any other documents prepared by Seller nor any of thefinancial statements referred to in Section 2.12 hereof, containany untrue statement of a material fact regarding Seller, theRestaurants or any of the Assets or other matters dealt with inthis Article II.This Agreement, the Ancillary Agreements, the schedules and exhibitsattached hereto. any other documents delivered to Buyer by or onbehalf of Seller and the financial statements referred to inSection 2.12 hereof, do not omit any material fact necessary to makethe statements contained herein or therein, in light of thecircumstances in which they were made, not misleading, and to Seller’sknowledge, there is no fact which has not been disclosed to Buyer ofwhich any officer of Seller is aware which materially affectsadversely or could reasonably be anticipated to materially affectadversely the Assets or the Restaurants, including operating results,assets, customer relations, employee relations and business prospects. SECTION 2.24 NO EXISTING ACQUISITION PROPOSALS. Seller hasnot received any proposals to acquire the Restaurants, the Assetsor any portion thereof, and Seller is not a party to any letterof intent, contract, agreement of sale, merger or businesscombination agreement, or other agreements relating to the saleof all or any portion of the Assets or the Restaurants. ARTICLE III. REPRESENTATIONS AND WARRANTIES OF BUYER —————————————————- As an inducement to Seller to enter into this Agreement andto consummate the transactions contemplate hereby, Buyerrepresents and warrants to Seller as follows: SECTION 3.1 ORGANIZATION. Buyer is a limited liabilitycompany duly organized, validly existing and in good standingunder the laws of the State of Delaware. Buyer is duly licensedand in good standing in each jurisdiction where it is required tobe registered as a foreign limited liability company. SECTION 3.2 POWER OF AUTHORITY. Seller has therequisite corporate power and authority and all authorizations,permits, licenses and certifications necessary to own, lease andoperate the Assets and to carry on the business of theRestaurants as now being conducted. SECTION 3.3 EXECUTION, DELIVERY; VALID AND BINDINGAGREEMENT. The execution, delivery and performance of this Agreementby Buyer and the consummation of the transactions contemplatedhereby have been duly and validly authorized by the Board ofManagers [and members] of Buyer, and no other proceedings on itspart are necessary to authorize the execution, delivery andperformance of this Agreement. This Agreement constitutes, andwhen executed and delivered will constitute, the valid andbinding obligation of Buyer, enforceable in accordance with itsterms. SECTION 3.4 NO VIOLATION. Neither the execution anddelivery of this Agreement or the Ancillary Agreements to whichBuyer is a party, the consummation of the transactionscontemplated hereby or thereby, nor the performance of Buyer’sobligations hereunder and thereunder will (i)violate, conflict with or result in any breach of any trust agreement,Certificate of Organization, limited liability company agreement,judgment, decree, order, statute or regulation applicable to Buyer,(ii) violate, conflict with or result in a material breach, materialdefault or termination or give rise to any right of termination,cancellation or acceleration of the maturity of any payment dateof any of the obligations of Buyer or increase or otherwisematerially affect the obligations of Buyer under any law, rule,regulation or any judgment, decree, order, governmental permit,license or order or any of the terms, conditions or provisions ofany mortgage, indenture, note, license, agreement or otherinstrument or obligation related to Buyer or to Buyer’s abilityto consummate the transactions contemplated hereby or thereby,or (iii) violate any order, writ, injunction, decree, statute,rule or regulation applicable to Buyer. SECTION 3.5 BROKER’S OR FINDER’S FEES. No agent, broker,person or firm acting on behalf of Buyer is, or will be, entitledto any commission or broker’s or finder’s fees from Buyer, orfrom any person controlling, controlled by or under commoncontrol with Buyer, in connection with any of the transactionscontemplated herein and Buyer shall indemnify Seller for anydamages arising from a breach of this representation. SECTION 3.6 DISCLOSURE. Neither this Agreement nor anyAncillary Agreement to which Buyer is a party contain any untruestatement of a material fact regarding Buyer. This Agreement andthe Ancillary Agreements to which Buyer is a party do not omitany material fact necessary to make the statements containedherein or therein, in light of the circumstances in which theywere made, not misleading, and there is no fact which has notbeen disclosed to Seller of which any officer or director ofBuyer is aware which materially affects adversely or couldreasonably be anticipated to materially affect adversely Buyer’sability to consummate the transactions contemplated hereby. SECTION 3.7 GOVERNMENTAL APPROVALS. Except for theapplicable requirements of the HSR Act, Buyer is not required tosubmit any notice, report or other filing with any governmentalauthority in connection with the execution or delivery by it ofthis Agreement or the consummation of the transactionscontemplated hereby. No consent, approval or authorization ofany governmental or regulatory authority or any other party orperson is required to be obtained by Buyer in connection with itsexecution, delivery and performance of this Agreement or thetransactions contemplated hereby. ARTICLE IV. COVENANTS OF SELLER ——————————– SECTION 4.1 CONDUCT OF THE BUSINESS. In connection with theAssets and the Restaurants, Seller agrees that, from the date hereofuntil the Closing Date, unless otherwise consented to by Buyer in writing: (a) The Restaurants shall be operated only in, and Sellershall not take any action except in, the ordinary course of Seller’sbusiness, on an arm’s-length basis and in accordance in allmaterial respects with all applicable laws, rules and regulationsand Seller’s past custom and practice; (b) Seller shall not, directly or indirectly, do or permit tooccur any of the following insofar as they relate to Restaurantsor the Assets: (i) sell, pledge, dispose of or encumber any ofthe Assets, except in the ordinary course of business; (ii)acquire (by merger, exchange, consolidation, acquisition of stockor assets or otherwise) any corporation, partnership, jointventure or other business organization or division or materialassets thereof; (iii) incur any indebtedness for borrowed moneyor issue any debt securities except the borrowing of workingcapital in the ordinary course of business and consistent withpast practice; (iv) permit any accounts payable owed to tradecreditors to remain outstanding more than 60 days; (v)accelerate, beyond the normal collection cycle, collection ofaccounts receivable; or (vi) enter into or propose to enter into,or modify or propose to modify, any agreement, arrangement orunderstanding with respect to any of the matters set forth inthis Section 4.1(b); (c) Seller shall not, directly or indirectly, in thecase of employees, take any action with respect to the grantof any bonuses, salary increases, severance or termination pay orwith respect to any increase of benefits payable in effect on the datehereof except as otherwise in the ordinary course of businessconsistent with past practices; (d) Seller shall not adopt or amend any bonus, profitsharing, compensation, pension, retirement, deferred compensation,employment or other employee benefit plan, trust, fund or grouparrangement for the benefit or welfare of any employees oraffiliates; (e) Seller shall not cancel or terminate its currentinsurance policies covering the Assets and the Restaurants, or causeany of the coverage thereunder to lapse, unless simultaneously with suchtermination, cancellation or lapse, replacement policiesproviding coverage equal to or greater than the coverage underthe canceled, terminated or lapsed policies for substantiallysimilar premiums are in full force and effect; (f) Seller shall (i) use its best efforts to preserveintact the organization and goodwill associated with the Restaurants,keep available the services of Seller’s employees as a group andmaintain satisfactory relationships with suppliers, distributors,customers and others having business relationships with Seller inconnection with the Restaurants; (ii) confer on a regular andfrequent basis with representatives of Buyer to reportoperational matters and the general status of ongoing operationswith respect to the Restaurants; (iii) not intentionally take anyaction which would render, or which reasonably may be expected torender, any representation or warranty madeby it in this Agreement untrue at the Closing; (iv) notifyBuyer of any emergency or other change in the normal courseof the Restaurants’ businesses or in the operation of the properties ofthe Restaurants and of any governmental or third partycomplaints, investigations or hearings (or communicationsindicating that the same may be contemplated) if such emergency,change, complaint, investigation or hearing would be material,individually or in the aggregate, to the business, operations orfinancial condition of Seller or to Seller’s or Buyer’s abilityto consummate the transactions contemplated by this Agreement;and (v) promptly notify Buyer in writing if Seller shall discoverthat any representation or warranty made by it in this Agreementwas when made, or has subsequently become, untrue in any respect; (g) Seller shall (i) file any Returns, elections orinformation statements with respect to any liabilities for Taxes ofSeller or other matters relating to Taxes of Seller which affect theAssets and pursuant to applicable law must be filed prior to the ClosingDate; (ii) promptly upon filing provide copies of any suchReturns, elections or information statements to Buyer; (iii) makeany such Tax elections or other discretionary positions withrespect to Taxes taken by or affecting Seller only upon priorconsultation with and consent of Buyer; and (iv) not amend anyReturn; (h) Neither Seller nor any of its affiliates shall make anyelection without respect to Taxes, change an annual accountingperiod, adopt or change any accounting method or file any amendedreturn, report or form, if such election, adoption, change orfiling would have the effect of increasing the Tax liability ofthe Buyer with respect to any period ending after the ClosingDate; and (i) Seller shall not perform any act referenced by (oromit to perform any act which omission is referenced by) the terms ofSection 2.15 hereof; and (j) Seller shall continue to convert its Ryan’sRestaurants to the WJ Restaurant and FB Restaurant concepts asfurther described on Schedule 4.1(j) attached hereto. SECTION 4.2 ACCESS TO BOOKS AND RECORDS. Between the datehereof and the Closing Date, Seller shall afford to Buyer and itsauthorized representatives (the “Buyer’s Representatives”) fullaccess at all reasonable times and upon reasonable notice to theoffices, properties, books, records, officers, employees and otheritems relating to the business of the Restaurants, and the workpapers of Deloitte & Touche LLP, Seller’s independent accountants,relating to work done by Deloitte & Touche LLP for Seller (insofaras the work relates to the Restaurants or the Assets) for each ofthe fiscal years ended December 31, 2001, 2002 and 2003, andotherwise provide such assistance as is reasonably requested by Buyerin order that Buyer may have a full opportunity to make suchinvestigation and evaluation as it shall reasonably desire tomake of the Restaurants and the Assets. In addition, Seller andits officers and directors shall cooperate fully (includingproviding introductions where necessary) with Buyer to enableBuyer to contact such third parties, including customers,prospective customers, specifying agencies, vendors or suppliersof the Restaurants, asBuyer deems reasonably necessary to complete its due diligence;provided that Buyer agrees not to initiate such contacts withoutthe prior approval of Seller, which approval will not be unreasonablywithheld. SECTION 4.3 REGULATORY FILINGS. As promptly as practicable afterthe execution of this Agreement, Seller shall make or cause to be madeall filings and submissions under the HSR Act and any other laws orregulations applicable to Seller on connection with consummation of thetransactions contemplated herein. Seller will coordinate andcooperate with Buyer in exchanging such information, will notmake any such filing without providing to Buyer a final copythereof for its review and consent at least two full businessdays in advance of the proposed filing and will provide suchreasonable assistance as Buyer may request in connection with allof the foregoing. SECTION 4.4 CONDITIONS. Seller shall take all commerciallyreasonable actions necessary or desirable to cause the conditionsset forth in Article VI to be satisfied and to consummate thetransactions contemplated herein as soon as reasonably possibleafter the satisfaction thereof (but in any event within three businessdays of such date). SECTION 4.5 PAYMENT OF LIABILITIES. Except for theliabilities assumed pursuant to Section 1.3 hereof, Seller shallpay and satisfy in full all of its other obligations andliabilities relating to the Restaurants and the Assets, of anynature whatsoever, due or accrued prior or subsequent to theClosing Date. SECTION 4.6 ELECTRONIC DATA TRANSFER. Seller shall useits best efforts to make an electronic data transfer to Buyer ofinformation, data and records used or useful in the recordkeeping associated with the Restaurants. SECTION 4.7 USE OF CORPORATE OFFICES. Seller agrees toallow Buyer to use its corporate offices located at 2113 FloridaBoulevard, Neptune Beach, Florida, 32266, free of charge for aperiod of sixty (60) days after the Closing Date. SECTION 4.8 EMPLOYEES AND EMPLOYEE BENEFITS. (a) As of the Closing Date, Seller shall terminateand/or accept the resignations of employment from all employeeswho are currently employed by any Seller in the Restaurants.Buyer shall have the option, but not the obligation, to extendoffers of employment to the Restaurant employees of Seller onsuch terms and conditions as Buyer shall determine in its solediscretion. (b) Seller shall not increase the compensation of orbenefits for any employee employed at the Restaurants or hire anyemployee at any of the Restaurants other than in the ordinarycourse of business and consistent with past practices. Sellerwill use reasonable efforts to maintain substantially all of thecurrent Restaurant employees in a manner consistent with Sellersnormal business practices. SECTION 4.9 NECESSARY ACTIONS. At any time and from timeto time after the Closing Date, at the request of Buyer andwithout further consideration, Seller shall execute and deliversuch other instruments of sale, transfer, conveyance, assignmentand confirmation as may be reasonably requested in order to moreeffectively carry out the transactions contemplated by thisAgreement. SECTION 4.10 NON-COMPETITION AGREEMENT. (a) Seller and its principal shareholder will not, atany time during the five (5) year period following the ClosingDate, directly or indirectly, own, manage, operate, control,participate in the ownership, management, operation or controlof, engage in or be connected with or have any interest in, anyperson, firm, corporation, limited liability company,partnership, or other business entity (whether as a stockholder,member, agent, security holder, creditor, independent contractor,consultant, or otherwise) that engages in any restaurant businessactivity which is the same as, similar to, or competitive with,the business currently engaged in by Buyer or Seller withinthirty (30) miles of any Restaurant (each a “Location”). If anyof the provisions of this paragraph is held to be unenforceablebecause of the scope, duration or area of its applicability, thecourt or arbitrator making such determination shall have thepower to modify such scope, duration or area so that thiscovenant shall remain enforceable, and such provision shall thenbe applicable in modified form. (b) Seller acknowledges and understands that thecovenants contained in this Section 4.10 shall be construed as aseries of separate covenants, one for each Location. Except forgeographic coverage, each such separate covenant shall be deemedidentical in terms to the covenants contained in this Section4.10. If, in any judicial proceeding, a court shall refuse toenforce any of the separate covenants deemed included in thissection, then such unenforceable covenant shall be deemedeliminated from these provisions for the purpose of thoseproceedings to the extent necessary to enable the remainingseparate covenants to be enforced. (c) Seller expressly agrees that Buyer shall beentitled to injunctive and/or other equitable relief to prevent abreach by Seller of this covenant and to secure the enforcementof the terms and conditions herein in addition to any other legalor equitable remedy which may be available. This Section 4.10shall survive the closing for a period of five (5) years from theClosing Date. SECTION 4.11 NO NEGOTIATIONS, ETC. Seller shall notdirectly or indirectly, through any officer, director, agent orotherwise, solicit, initiate or encourage submission of anyproposal or offer from any person or entity (including any of itsor their officers or employees) relating to any liquidation,dissolution, recapitalization, merger, consolidation oracquisition or purchase of all or a material portion of theassets of, or any equity interest in, Seller or other similartransaction or business combination involving Seller or, unlessSeller’s Board of Directors is advised by Seller’s outsidecounsel in writing to the effect that there would be a materialrisk of liability on the part of the members of Seller’s Board ofDirectors to Seller’s shareholders for failure to do so,participate in any negotiations regarding, or furnish to anyother person any information with respect to, or otherwisecooperate in any way with, or assist or participate in,facilitate or encourage, any effort or attempt by any otherperson or entity to do or seek any of the foregoing. Sellershall promptly notify Buyer if any such proposal or offer, or anyinquiry from or contact with any person with respect thereto, ismade and shall promptly provide Buyer with such informationregarding such proposal, offer, inquiry or contact as Buyer mayrequest. ARTICLE V: COVENANTS OF THE BUYER ——————————— SECTION 5.1 INVESTIGATION BY BUYER. Buyer shall haveuntil the date which is thirty (30) days after the date of thisAgreement (the “Diligence Period”) to complete its due diligenceinvestigation (“Review”) of Seller, the Restaurants and theAssets. Upon Buyer’s request, Buyer shall be given reasonableaccess to Seller’s management personnel associated with theRestaurants, which access shall be coordinated through andarranged by Seller. Buyer shall conduct its Review at suchtimes and in such a manner as to minimize any disruption to theoperation of the Restaurants. Buyer shall identify any Assetswhich are not in good serviceable or working condition, ordinarywear and tear excepted, and Seller shall repair or replace suchAssets prior to the Closing Date. Seller shall furnish to Buyerany additional financial and operating data and other informationas Buyer and its counsel, accountants, and other authorizedrepresentatives shall from time to time reasonably request withrespect to the same. Until the conclusion of the DiligencePeriod, Buyer shall have the right, in its sole discretion, toterminate this Agreement if the Review reveals any informationthat would have a material adverse effect on Buyer’s ability toconsummate the Acquisition, Seller, the Restaurants or the Assetswhich cannot be reasonably cured by the Closing. For purposes ofthis Agreement, “material adverse effect” shall be defined as aneffect that prevents Buyer, through no fault of Buyer, fromhaving the ability to operate the Restaurants in a profitablemanner consistent with Seller’s operations thereof prior to theClosing Date. SECTION 5.2 REGULATORY FILINGS. (a) As promptly as practicable after the conclusion ofthe Diligence Period, Buyer shall make or cause to be made allfilings and submissions under the HSR Act and any other laws orregulations applicable to Buyer for the consummation of thetransactions contemplated herein. Buyer will coordinate andcooperate with Seller in exchanging such information, will notmake any such filing without providing to Seller a final copythereof for its review and consent at least two full businessdays in advance of the proposed filing and will provide suchreasonable assistance as Seller may request in connection withall of the foregoing. (b) Upon execution of this Agreement, Seller shallpromptly prepare and file with the Securities and ExchangeCommission an Information Statement under the Exchange Actdescribing the transactions contemplated by this Agreement.Buyer will cooperate with Seller in providing informationnecessary or appropriate to be included in the InformationStatement and Seller will keep Buyer advised as to the progressof the review by the Securities and Exchange Commission.Following completion of the review by the Securities and ExchangeCommission, Seller shall promptly mail the Information Statementto its shareholders so that the shareholders may approve thetransactions contemplated by this Agreement. SECTION 5.3 CONDITIONS. Buyer shall take all commerciallyreasonable actions necessary or desirable to cause the conditionsset forth in Article VII to be satisfied and to consummate the transactionscontemplated herein as soon as reasonably possible after thesatisfaction thereof (but in any event within three business daysof such date). ARTICLE VI. CONDITIONS TO THE BUYER’S OBLIGATION ———————————————— SECTION 6.1 CONDITIONS TO BUYER’S OBLIGATION. Theobligation of Buyer to consummate the transactions contemplatedby this Agreement is subject to the satisfaction of the followingconditions on or before the Closing Date (unless a shorter timeis provided): (a) The representations and warranties set forth inArticle II hereof shall be true and correct in all material respectsat and as of the Closing Date as though then made and as though theClosing Date had been substituted for the date of this Agreementthroughout such representations and warranties (without takinginto account any disclosures by Seller of discoveries, events oroccurrences arising on or after the date hereof), except that anysuch representation or warranty made as of a specified date(other than the date hereof) shall only need to have been true onand as of such date; (b) Seller shall have performed in all material respectsall of the covenants and agreements required to be performedand complied with by it under this Agreement prior to the Closing; (c) Seller shall have assigned to Buyer the agreements andpermits specified in Schedule 2.9(b) attached hereto to theextent they are assignable; (d) Seller shall have obtained, or caused to be obtained,each consent and approval necessary in order that the transactionscontemplated herein not constitute a breach or violation of, orresult in a right of termination or acceleration of, or creationof any encumbrance on any of the Assets pursuant to theprovisions of, any agreement, arrangement or undertaking of oraffecting Seller or any license, franchise or permit of oraffecting Seller, regardless of whether assigned to Sellerpursuant to Section 1.3 hereof; (e) Seller’s shareholders shall have approved this Agreementand the transactions contemplated hereby; (f) The applicable waiting periods under the HSR Act shallhave expired or been terminated, and all other material governmentalfilings, authorizations and approvals that are required for theconsummation of the transactions contemplated hereby will havebeen duly made and obtained; (g) There shall not be threatened, instituted or pendingany action or proceeding, before any court or governmental authorityor agency, domestic or foreign, (i) challenging or seeking tomake illegal, or to delay or otherwise directly or indirectlyrestrain or prohibit, the consummation of the transactionscontemplated hereby or seeking to obtain material damages inconnection with such transactions, (ii) seeking to prohibitdirect or indirect ownership or operation by Buyer of all or amaterial portion of the Assets, or to compel Buyer or any of itssubsidiaries to dispose of or to hold separately all or amaterial portion of the business or assets of Buyer and itssubsidiaries, as a result of the transactions contemplatedhereby, (iii) seeking to invalidate or render unenforceable anymaterial provision of this Agreement or (iv) otherwise relatingto and materially adversely affecting the transactionscontemplated hereby; (h) There shall not be any action taken, or any statute,rule, regulation, judgment, order or injunction enacted, entered,enforced, promulgated, issued or deemed applicable to thetransactions contemplated hereby by any federal, state or foreigncourt, government or governmental authority or agency, whichwould reasonably be expected to result, directly or indirectly,in any of the consequences referred to in subsection (g) above; (i) Buyer shall not have discovered any fact or circumstanceexisting as of the date of this Agreement which has not beendisclosed to Buyer as of the date of this Agreement regarding theRestaurants or Assets, which is, individually or in the aggregatewith other such facts and circumstances, materially adverse tothe value of the Assets or the Restaurants, as determined by theBuyer in its reasonable discretion; (j) There shall have been no damage, destruction or lossof or to any of the Assets, whether or not covered by insurance, which,in the aggregate, has, or would be reasonably likely to have, amaterial adverse effect on the Assets or the Restaurants; (k) Buyer shall have received from counsel for Seller awritten opinion, dated as of the Closing Date, addressed to Buyer andsatisfactory to Buyer’s counsel, in form and substancesubstantially as set forth in Exhibit A attached hereto; (l) By the conclusion of the Diligence Period, Buyer shallhave received a commitment for financing (a “Financing Commitment”) inan amount sufficient to enable Buyer to consummate thetransactions contemplated by this Agreement; (m) On the Closing Date, Seller shall have delivered to Buyer all of the following: (i) an executed Bill of Sale and such other instruments of conveyance, transfer, assignment and delivery as Buyer shall reasonably request; (ii) appropriate assignment documents assigning Seller’s right, title and interest in and to the Real Property Leases and Contracts to Buyer; (iii) special warranty deed for each parcel of Real Property transferring the Real Property to Buyer; (iv) certificates of the officers of Seller or other persons satisfactory to Buyer in form and substance satisfactory to Buyer, dated the Closing Date and stating that the conditions precedent set forth in subsections (a) and (b) above have been satisfied; (v) copies of the third party and governmental consents and approvals referred to in subsections (c) and (d) above.; (vi) estoppel certificates from each lessor under the Real Property Leases, dated the Closing Date, stating that Seller is in compliance with all terms of the Real Property Leases and containing such other information as Buyer shall reasonably request; (vii) each of the Real Property Leases shall have a minimum of fifteen (15) years remaining, including options; (viii) the aggregate annual rent under all Real Property Leases shall not exceed $1,300,000.00, and contain provisions limiting increases in rent such that the aggregate annual rent under all Real Property Leases does not escalate in excess of two percent (2.0%) annually over the life of the Lease (including options); (ix) a copy of the text of the resolutions adopted by the Board of Directors and shareholders of Seller authorizing the execution, delivery and performance of this Agreement and the consummation of all of the transactions contemplated by this Agreement; along with a certificate executed on behalf of Seller, by its corporate secretary certifying to Buyer that such copy is a true, correct and complete copy of such resolutions, and that such resolutions were duly adopted and have not been amended or rescinded; (x) incumbency certificates executed on behalf of Seller by its corporate secretary certifying the signature and office of each officer executing this Agreement or any of the Related Agreements; (xi) Seller shall have completed conversion of the Ryan’s Restaurant located at 9569 Regency Square Boulevard, N., Jacksonville, Florida, into a WJ Restaurant (which restaurant shall be deemed a “Restaurant” for purposes of this Agreement); and (xii) such other certificates, documents and instruments as Buyer reasonably requests related to the transactions contemplated hereby. ARTICLE VII. CONDITIONS TO THE SELLER’S OBLIGATIONS —————————————————- SECTION 7.1 CONDITIONS TO SELLER’S OBLIGATION. Theobligation of Seller to consummate the transactions contemplatedby this Agreement is subject to the satisfaction, on or prior tothe Closing Date, of the following conditions: (a) The representations and warranties set forth in ArticleIII hereof will be true and correct in all material respects at andas of the Closing as though then made and as though the ClosingDate had been substituted for the date of this Agreementthroughout such representations and warranties, except that anysuch representation or warranty made as of a specified date(other than the date hereof) shall only need to have been true onand as of such date (b) Buyer shall have performed in all material respectsall the covenants and agreements required to be performed by it underthis Agreement prior to the Closing; (c) The applicable waiting periods under the HSR Act shallhave expired or been terminated and all other material governmentalfilings, authorizations and approvals that are requiredfor the consummation of the transactions contemplated hereby willhave been duly made and obtained; (d) Seller shall receive the requisite approval of itsshareholders with respect to the transaction contemplated by thisAgreement; (e) There shall not be threatened, instituted or pendingany action or proceeding, before any court or governmental authorityor agency, domestic or foreign, (i) challenging or seeking tomake illegal, or to delay or otherwise directly or indirectlyrestrain or prohibit, the consummation of the transactionscontemplated hereby or seeking to obtain material damages inconnection with such transactions, (ii) seeking to invalidate orrender unenforceable any material provision of this Agreement, or(iii) otherwise relating to and materially adversely affectingthe transactions contemplated hereby; (f) There shall not be any action taken, or any statute,rule, regulation, judgment, order or injunction, enacted, entered,enforced, promulgated, issued or deemed applicable to thetransactions contemplated hereby by any federal, state or foreigncourt, government or governmental authority or agency, whichwould reasonably be expected to result, directly or indirectly,in any of the consequences referred to in subsection (d) above; (g) Seller shall have received from counsel for Buyer awritten opinion, dated as of the Closing Date, addressed to Sellerand satisfactory to Seller’s counsel, in form and substancesubstantially as set forth in Exhibit B attached hereto; and (h) On the Closing Date, Buyer will have delivered to Seller: (i) a wire transfer in immediately available funds in the amount described in Sections 1.5(b)(i), (ii) and (iii); (ii) the executed Note; (iii) a certificate of the appropriate officer(s) of Buyer in form and substance satisfactory to Seller, dated the Closing Date, stating that the conditions precedent set forth in subsections (a) and (b) above have been satisfied, (iv) appropriate assignment documents assuming Seller’s obligations under the Real Property Leases and Contracts; (v) a copy of the text of the resolutions adopted by the Board of Managers of Buyer authorizing the execution, delivery and performance of this Agreement and the consummation of all of the transactions contemplated by this Agreement, along with a certificate executed on behalf of Buyer by its corporate secretary certifying to Seller that such copy is a true, correct and complete copy of such resolutions, and that such resolutions were duly adopted and have not been amended or rescinded, and (vi) an incumbency certificate executed on behalf of Buyer by its corporate secretary certifying the signature and office of each officer executing this Agreement or any of the Related Agreements. (i) Seller shall have obtained landlords’ consents tothe assignment of the Real Estate Leases. (j) Seller shall have received an opinion from itsinvestment adviser that the consideration to be received by theSeller in the transactions contemplated by the Agreement is fair,from a financial point of view. ARTICLE VIII. THE CLOSING ————————– SECTION 8.1 TIME AND PLACE OF CLOSING. The closing ofthe transactions contemplated by this Agreement (the “Closing”)shall take place at the offices of McGuireWoods LLP, Bank ofAmerica Tower, 50 North Laura Street, Ste 3300, Jacksonville,Florida, at 10:00 a.m. (local time) on or prior to April 18, 2005(such date the “Closing Date”), or on such other date and time asmutually agreed upon by the parties. ARTICLE IX. TITLE MATTERS ————————– SECTION 9.1 TITLE COMMITMENTS AND OBJECTIONS. (a) Seller will, at its expense, within twenty (20)days from the date hereof, deliver commitments for titleinsurance (collectively, the “Title Commitments”) to Buyer,together with copies of all exceptions to title (collectively,the “Title Exceptions”) appearing in Schedule B of each of theTitle Commitments, whereby the Title Company agrees to issue toBuyer an owner’s policy of title insurance, includingendorsements for access, survey and such other endorsements asBuyer deems reasonably necessary (individually, an “Owner’sPolicy,” and collectively, the “Owners’ Policies”) with respectto each parcel of Real Property and a leasehold owner’s policy oftitle insurance, including endorsements for access, survey andsuch other endorsements as Buyer deems reasonably necessary(individually, a “Leasehold Owner’s Policy,” and collectively,the “Leasehold Owners’ Policies”) (“Owners’ Policies” and”Leasehold Owners’ Policies” collectively referred to herein as”Title Policies”) with respect to each Leased Parcel on AmericanLand Title Association standard Form B10-17-92 with Florida modifications. The Owners’ Policies willinsure the Buyer that, upon consummation of the purchase and saleherein contemplated, Buyer will be vested with good, fee simple,marketable and insurable title to the Real Property. The LeaseholdOwners’ Policies will insure the Buyer that, upon consummation of thetransactions herein contemplated, Buyer will be vested with good,valid and insurable leasehold estates in and to the LeasedParcels. Buyer, shall, at its expense obtain any mortgagee’stitle insurance policies which may be required by Buyer’slenders. (b) Notwithstanding the time limit prescribed bySection 5.1, Buyer shall have twenty (20) days from the date ofits receipt of the last to be received of the: (i) TitleCommitments and the Title Exceptions; or (ii) the Surveys (the”Title Inspection Period”) to furnish Seller a written statementof title and survey objections (“Title Objections”). Sellershall have until April 13, 2005 (“Title Objection Cure Date”) tosatisfy such Objections (but with no obligation to do so), and ifSeller fails to satisfy all Objections on or prior to the TitleObjection Cure Date, then Buyer’s sole right and remedy shall beto either (i) waive the objections and elect to close, or (ii)terminate this Agreement by giving written notice of suchtermination to Seller within five (5) days after the TitleObjection Cure Date. Buyer will be deemed to have waived itsright to terminate due to the Objections if no such notice oftermination is so given to Seller. SECTION 9.2 SURVEYS, PLANS AND PERMITS. Seller shall, atits expense, within thirty (30) days after the date hereof,furnish to Buyer or to Buyer’s permitted assigns, a current ALTAsurvey of each parcel of Real Property and Leased Parcels (the”Surveys”) and copies of any and all drawings and plans of thebuildings, structures, improvements, underground storage tanksand piping installations located on the Real Property and LeasedParcels to the extent the same are in Seller’s possession.Seller shall provide to Buyer copies of the building permits,certificates of occupancy and all other material permits andcertificates issued by any governmental organizations or agencieswhich relate to the construction, occupancy or use of the RealProperty and Leased Parcels and the buildings and improvementslocated thereon. SECTION 9.3 TESTS AND STUDIES. Buyer and its employeesand representatives shall have the right at reasonable times toenter upon the Real Property and Leased Parcels, and into thebuildings and improvements thereon, for the purpose of inspectingthe physical condition of the respective buildings andimprovements. Buyer shall, at Buyer’s expense, also have theright to conduct an asbestos inspection other tests orinspections on the Real Property and Leased Parcels. All suchtests or inspections shall be at Buyer’s sole expense andconducted by persons acceptable to Buyer. Buyer shall giveSeller reasonable advance notice of the time of all such testsand inspections, and Seller shall have the right to be presentduring such tests. SECTION 9.4 BUYER’S DUTY AS TO TESTS AND INSPECTIONS.All tests, studies, inspections and examinations conductedpursuant to this Agreement by Buyer, Buyer’s employees, agentsandrepresentatives shall be done in a manner so as not tounreasonably impede the normal operation of the Business orunreasonably interfere with Seller’s occupancy of same. Buyershall reimburse Seller for any damages arising from the conductof any such tests, studies, inspections or examinations by or onbehalf of Buyer and caused solely by the negligence or misconductof Buyer or its agents; but Buyer shall not be liable for anyconsequential damages of such tests. Buyer agrees to indemnifySeller for any loss, cost, damage or expense incurred by Selleras a result of Buyer’s tests or inspections. SECTION 9.5 ENVIRONMENTAL REPORTS. Seller shall, withinthirty (30) days after the date hereof, furnish to Buyer or toBuyer’s permitted assigns, copies of all environmental reportspertaining to the Real Property and the Leased Parcels (the”Environmental Reports”) in Seller’s possession as of the date ofthis Agreement (the “Environmental Reports”). Seller shallprovide Buyer or Buyer’s permitted assigns, copies of allEnvironmental Reports received after the date of this Agreementimmediately after such reports have been delivered to Seller.Seller shall have no duty to order new or additionalEnvironmental Reports and Seller makes no representation as tothe accuracy of Environmental Reports delivered. ARTICLE X. SURVIVAL; INDEMNIFICATION ————————————- SECTION 10.1 SURVIVAL. All representations, warranties,and covenants contained in this Agreement and the AncillaryAgreements shall survive the closing of the transactionscontemplated by this Agreement and any investigation at any timemade by or on behalf of any party for a period of eleven (11)months, except that the covenant not to compete described inSection 4.10 shall survive the closing of the transactionscontemplated by this Agreement and for a period of five (5) yearsthereafter. SECTION 10.2 INDEMNIFICATION BY SELLER. Seller shallindemnify, defend, and hold Buyer and the respective officers,directors, shareholders, members, managers, employees and agentsof Buyer, and their successors and assignees (the “BuyerIndemnified Parties”) harmless from, against and with respect toany claim, liability, obligation, loss, damage, assessment,judgment, legal fee, cost and expense of any kind or character(“Damages”), arising out of or in any manner incident, relatingor attributable to: (a) Any material inaccuracy in any representationor material breach of any material warranty of Seller containedin this Agreement; (b) Any failure by Seller to perform or observe,or to have performed or observed, in full any covenant, agreementor condition to be performed or observed by it under thisAgreement; (c) Reliance by Buyer on any books or records ofSeller or written information prepared by Seller in the eventthat such books and records or written information are false insome material respect or materially inaccurate; (d) Liabilities or obligations of, or claims against,Buyer (whether absolute, accrued, contingent or otherwise) relating to,or arising out of, the operation of the Restaurants or the Assetsprior to the Closing Date (excluding any liabilities assumedpursuant to Section 1.3 hereof); or (e) Claims of employees of Seller, generalcreditor claims, vendor claims, product liability, warrantyrefund or customer injury or damage claims arising out of or inany way relating to circumstances existing or events occurringprior to the Closing Date, but asserted after the Closing Date. Notwithstanding the foregoing, Seller shall not be obligatedto indemnify any Buyer Indemnified Party under this Section 10.2until Damages exceed Twenty-five Thousand Dollars and No/100($25,000) and then only to the extent of aggregated Damages inexcess of Twenty-five Thousand Dollars and No/100 ($25,000).Damages are to be calculated separate from the Purchase Price andnot to be an addition to or deduction from the disbursement ofthe Purchase Price. SECTION 10.3 NOTICE TO SELLER. If any of the matters asto which a Buyer Indemnified Party is entitled to receiveindemnification under Section 10.2 should entail litigation withor claims asserted by parties other than Seller, Seller shall begiven prompt notice thereof and shall have the right, at itsexpense, to control such claim or litigation upon prompt noticeto Buyer of its election to do so. To the extent requested bySeller, Buyer shall cooperate with and assist Seller inconnection with such claim or litigation. Buyer shall have theright to appoint counsel to consult with and remain advised bySeller in connection with such claim or litigation. Seller shallhave final authority to determine all matters in connection withsuch claim or litigation; provided, however, that Seller shallnot settle any third party claim without the consent of Buyer,which shall not be unreasonably denied or delayed. SECTION 10.4 INDEMNIFICATION BY BUYER. Buyer shallindemnify, defend, and hold Seller and its successors and assigns(the “Seller Indemnified Parties”) harmless from, against andwith respect to any Damages arising out of or in any mannerincident, relating or attributable to: (a) Any material inaccuracy in any materialrepresentation or material breach of material warranty of Buyercontained in this Agreement; (b) Any material failure by Buyer to perform orobserve, or to have performed or observed, in full, any materialcovenant, material agreement or material condition to beperformed or observed by it under any of the AncillaryAgreements; (c) Reliance by Seller on any books or records ofBuyer or reliance by Seller on any written information furnishedto Seller pursuant to this Agreement by or on behalf of Buyer inthe event that such books and records or written information arefalse in some material respect or inaccurate; or (d) The failure of Buyer to pay or perform theContracts, Real Property Leases and other liabilities assumedpursuant to Section 1.3 hereof subsequent to the Closing Date. (e) Notwithstanding the foregoing, Buyer shallnot be obligated to indemnify any Seller Indemnified Party underthis Section 10.4 until Damages exceed One Thousand Dollars andNo/100 ($1,000) and then only to the extent of aggregated Damagesin excess of One Thousand Dollars and No/100 ($1,000). SECTION 10.5 NOTICE TO THE BUYER. If any of the mattersas to which a Seller Indemnified Party is entitled to receiveindemnification under Section 10.4 should entail litigation withor claims asserted by parties other than Buyer, Buyer shall begiven prompt notice thereof and shall have the right, at itsexpense, to control claim or litigation upon prompt notice toSeller of its election to do so. To the extent requested byBuyer, Seller, at its expense, shall cooperate with and assistBuyer, in connection with such claim or litigation. Seller shallhave the right to appoint counsel to consult with and remainadvised by Buyer in connection with such claim or litigation.Buyer shall have final authority to determine all matters inconnection with such claim or litigation; provided, however, thatBuyer shall not settle any third party claim without the consentof Seller entitled to indemnity, which shall not be unreasonablydenied or delayed. ARTICLE XI. TERMINATION ———————— SECTION 11.1 TERMINATION. This Agreement may be terminated atany time prior to the Closing: (a) by the mutual consent of Buyer and Seller; (b) by either Buyer or Seller if there has been a materialmisrepresentation, breach of warranty or breach of covenant onthe part of the other in the representations, warranties andcovenants set forth in this Agreement; (c) by either Buyer or Seller if the transactionscontemplated hereby have not been consummated by May 31, 2005; providedthat, neither Buyer nor Seller will be entitled to terminate thisAgreement pursuant to this Section 11.1(c) if such party’swillful breach of this Agreement has prevented the consummationof the transactions contemplated hereby; (d) by Buyer if, after the conclusion of the DiligenceReview, there shall have been a material adverse change in thefinancial condition or business of the Restaurants or Assets whichchange was not reasonably foreseeable during the Diligence Review; or (e) by Buyer at any time, if any of the Schedulesprepared by Seller and delivered to Buyer after execution of theAgreement reveals any information not previously disclosed toBuyer that would have a “material adverse effect” (as defined inSection 5.1) on Buyer’s ability to consummate the Acquisition oroperate the Restaurants in a profitable manner consistent withSeller’s operations thereof prior to the Closing Date; (f) by Buyer as provided in Section 5.1; or (g) by Seller if Buyer fails to obtain a FinancingCommitment by the conclusion of the Diligence Period. SECTION 11.2 EFFECT OF TERMINATION. In the event of terminationof this Agreement by either Buyer or Seller as provided in Section 11.1,the Deposit shall be returned to Buyer and this Agreement shall becomevoid and there shall be no liability on the part of either Buyer orSeller, or their respective stockholders, officers, or directors,except that Articles X and XI shall survive indefinitely, and exceptwith respect to willful breaches of this Agreement prior to thetime of such termination, and except for termination pursuant toSection 11.1(g), Buyer shall be entitled to retain of one-half(1/2) of the Deposit. ARTICLE XII. MISCELLANEOUS —————————- SECTION 12.1 KNOWLEDGE OF SELLER. Where anyrepresentation or warranty contained in this Agreement isexpressly qualified by reference to “Seller’s knowledge”,”Seller’s knowledge” shall mean the actual knowledge of its boardof directors or officers of Seller, or the knowledge they shouldhave acquired in the prudent and reasonable exercise of theirduties as to the matters that are the subject of suchrepresentations and warranties. SECTION 12.2 “PERSON” DEFINED. “Person” shall mean andinclude an individual, a partnership, a joint venture, acorporation, a trust, an unincorporated organization and agovernment or other department or agency thereof. SECTION 12.3 NOTICES. All notices, requests, consents andother communications hereunder shall be in writing, shall beaddressed to the receiving party’s address set forth below or tosuch other addresses as a party may designate by noticehereunder, and shall be either (i) delivered by hand, (ii) sentby recognized overnight courier, (iii) sent by registered orcertified mail, return receipt requested, postage prepaid, or(iv) sent via facsimile with confirmation of receipt. If to the Buyer: Banner Buffets, LLC 1000 S. Caraway, Ste. 101 Post Office Box 3017 Jonesboro, AR 72403-3017 Attn: George W. Osborn Facsimile No. (870) 933-8144 With a copy to: Donald L. Parker II, Esq. MIXON PARKER & HURST PLC 505 Union Street Post Office Box 1442 Jonesboro, AR 72403-1442 Facsimile No. (870) 935-8622 Richard R. Gibson, Esq. KRASS MONROE, P.A. 8000 Norman Center Drive Suite 1000 Minneapolis, MN 55437 Facsimile No. (952) 885-5969 If to the Seller: EACO Corporation Mr. Glen F. Ceiley, Chairman 1500 N. Lakeview Ave. Anaheim, CA 92807 Facsimile No. (714) 693-5980 With a copy to: Halcyon E. Skinner, Esq. McGuireWoods LLP Bank of America Tower 50 North Laura Street, Ste. 3300 Jacksonville, FL 32202-3661 Facsimile No. (904)360-6324All notices, requests, consents and other communicationshereunder shall be deemed to have been given (i) if by hand, atthe time of the delivery thereof to the receiving party at theaddress of such party set forth above, (ii) if sent by overnightcourier, on the next business day following the day such noticeis delivered to the courier service, or (iii) if sent byregistered or certified mail, on the fifth business day followingthe day such mailing is sent. The address of any party herein maybe changed at any time by written notice to the parties. SECTION 12.4 ENTIRE AGREEMENT. This Agreement and theAncillary Agreements embody the entire agreement andunderstanding between the parties hereto with respect to thesubject matter hereof and supersede all prior oral or writtenagreements and understandings relating to the subject matterhereof. No statement, representation, warranty, covenant oragreement of any kind not expressly set forth in the AncillaryAgreements shall affect, or be used to interpret, change orrestrict, the express terms and provisions of this Agreement. SECTION 12.5 MODIFICATIONS AND AMENDMENTS. The terms andprovisions for this Agreement may be modified or amended only bywritten agreement executed by all parties hereto. SECTION 12.6 ASSIGNMENT/BINDING EFFECT. Seller shall notassign this Agreement, nor any rights or obligations hereunder,without the prior written consent of Buyer. Buyer shall bepermitted to assign its rights and obligations hereunder to itssubsidiaries or affiliated entities, and shall be permitted toassign its obligation to purchase the Real Property and rightsattendant therewith underthis Agreement to a third party, without the consent of Seller.This Agreement shall be binding upon, and inure to the benefit of,the parties hereto and their respective heirs, personalrepresentatives, successors and permitted assigns. SECTION 12.7 PARTIES IN INTEREST. Nothing in thisAgreement, express or implied, is intended to confer upon anyother person any rights or remedies of any nature whatsoeverunder or by reason of this Agreement. Nothing in this Agreementshall be construed to create any rights or obligations exceptamong the parties hereto, and no person or entity shall beregarded as a third-party beneficiary of this Agreement. SECTION 12.8 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTSAND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE CONSTRUED INACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF FLORIDAWITHOUT GIVING EFFECT TO THE CONFLICT OF LAW PRINCIPLE THEREOF. SECTION 12.9 SEVERABILITY. In the event that anyarbitrator shall finally determine that any provision, or anyportion thereof, contained in this Agreement shall be void orunenforceable in any respect, then such provision shall be deemedlimited to the extent that such arbitrator determines itenforceable, and as so limited shall remain in full force andeffect. In the event that such arbitrator shall determine anysuch provision, or portion thereof, wholly unenforceable, theremaining provisions of this Agreement shall nevertheless remainin full force and effect. SECTION 12.10 INTERPRETATION. The parties heretoacknowledge and agree that: (i) the rule of construction to theeffect that any ambiguities are resolved against the draftingparty shall not be employed in the interpretation of thisAgreement, and (ii) the terms and provisions of this Agreementshall be construed fairly as to all parties hereto and not infavor of or against any party, regardless of which party wasgenerally responsible for the preparation of this Agreement. SECTION 12.11 HEADINGS AND CAPTIONS. The headings andcaptions of the various subdivisions of this Agreement are forconvenience of reference only and shall in no way modify, oraffect, or be considered in construing or interpreting themeaning or construction of any of the terms or provisions hereof. SECTION 12.12 RELIANCE. The parties hereto agree that,notwithstanding any right of any party to the Agreement toinvestigate the affairs of any other party of this Agreement, theparty having such right to investigate shall have the right torely fully upon the representations and warranties of the otherparty expressly contained herein. SECTION 12.13 EXPENSES. Except as otherwisespecifically provided herein, each party shall pay its own feesand expenses (including the fees of any attorneys, accountants,appraisers or others engaged by such party) incurred inconnection with this Agreement and the transactions contemplatedhereby whether or not the transaction contemplated hereby areconsummated. SECTION 12.14 GENDER. All pronouns and any variationthereof shall be deemed to refer to the masculine, feminine,neuter, singular, or plural as the identity of the person orentity or the context may require. SECTION 12.15 PUBLICITY. Except by the mutual agreementbetween Seller and Buyer, no party shall issue any press releaseor otherwise make any public statement with respect to theexecution of, or the transactions contemplated by, this Agreementexcept as may be required by law. SECTION 12.16 COUNTERPARTS. This Agreement may beexecuted in one or more counterparts, and by different partieshereto on separate counterparts, each of which shall be deemed anoriginal, but all of which together shall constitute one and thesame instrument. SECTION 12.17 FURTHER ASSURANCES. Seller and Buyer shallexecute and deliver all such other instruments and take all suchother action as any party may reasonably request from time totime, before or after the Closing, in order to effectuate thetransactions provided for herein. The parties shall cooperatewith each other and with their respective counsel and accountantsin connection with any steps to be taken as a part of theirrespective obligations under this Agreement. IN WITNESS WHEREOF, Buyer and Seller have each caused thisAgreement to be executed by its duly authorized officer all as ofthe day and year first above written. BUYER: BANNER BUFFETS, LLC By:/s/ George W. Osborn ———————————– George W. Osborn, Authorized Member SELLER: EACO CORPORATION By:/s/ Glen F. Ceiley ———————————— Glen F. Ceiley, Chairman SCHEDULE 1 RESTAURANTSFlorida Buffet #108 Florida Buffet #1273933 E. Silver Springs Blvd. 5100 US Highway 90WOcala, FL 34470 Lake City, FL 32055Fee Property Fee PropertyRyans #110 Whistle Junction #1302815 Lakeland Hills Blvd. 13235 Cortez Blvd.Lakeland, FL 33805 Brooksville, FL 34613Fee Property Leased PropertyFlorida Buffet #111 Whistle Junction #1323125 US Highway 98 South 301 E. International SpeedwayLakeland, FL 33803 Blvd.Fee Property DeLand, FL 32724 Leased PropertyRyan’s #112 Ryan’s #1342775 Lake Alfred Rd. 4551 13th St.Winter Haven, FL 33881 St. Cloud, FL 34769Fee Property Fee PropertyFlorida Buffet #114 Ryan’s #1352501 N. Main St. 3125 Columbia Blvd.Gainsville, FL 32609 Titusville, FL 32780Fee Property Fee PropertyRyan’s #119 Ryan’s #1361854 S. Ridgewood Ave. 9569 Regency Sq. Blvd. N.Daytona Beach, FL 32119 Jacksonville, FL 32225Fee Property Fee PropertyRyan’s #122 Whistle Junction #1201754 Econlockhatchee Tr. 5109 Fowler Ave.Orlando, FL 32825 Tampa, FL 33617Fee Property Leased PropertyFlorida Buffet #124 Whistle Junction #1373299 S. Babcock St. 5350 International DriveMelbourne, FL 32901 Orlando, FL 32819Fee Property Leased PropertyThe remaining Exhibits and Schedules to this Asset PurchaseAgreement are not filed as part of this Exhibit 10.1.