Exhibit 10
PURCHASE AGREEMENT
BETWEEN
PASTA PRANZO, LLC.
A CALIFORNIA LLC
AND
SHAREHOLDERS OF CREATIVE EATERIES CORPORATION
A NEVADA PUBLIC CORPORATION
AGREEMENT, made this 1st day of November 2005, by and between Pasta Pranzo, LLC,
("PASTA") and Creative Eateries Corporation ("CREATIVE").
RECITALS
WHEREAS, PASTA has developed a system (System) for the operation of Pasta
Pranzo(R) restaurants, offering to the public food restaurant items. The system
includes, among other things, specific trademarks or service marks, including
without limitation, the Pasta Pranzo(R) trademark, logo and related commercial
symbols and slogans, and recipes, including future recipes, developed by PASTA.
WHEREAS, CREATIVE desires to purchase from PASTA 100% membership in Pasta Pranzo
Franchise Company, LLC and the System including, without limitation, the Marks
and Recipes in exchange for $300,000 in shares of CREATIVE's restricted common
stock, 1% (one sixth) of the 6% royalty fee charged to franchisees, and $2000
from each franchise fee of $25,000 collected.
WHEREAS, CREATIVE also desires to purchase from PASTA its California operation
at 0000 Xxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, XX for a $300,000 note, Exhibit B, with
the first payment due on January 15th, 2006, but may be made prior to that date.
WHEREAS, PASTA agrees to cover operating costs of the store until December 31,
2005 and will continue to run the store in the same manner, including training
manuals, and any other tasks that may be required at the store level.
NOW, THEREFORE, in consideration of the mutual promises, covenants, and
representations contained herein,
THE PARTIES HERETO AGREE AS FOLLOWS:
ARTICLE I
ISSUANCE OF SHARES
1.1 Issuance of Shares. Subject to all of the terms and conditions of this
Agreement, CREATIVE will issue to PASTA $300,000 in value of CREATIVE's
restricted common stock.
1.2 Exemption From Registration. The parties hereto intend that the common
stock to be issued by the CREATIVE to PASTA shall be exempt from the
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registration requirements of the Securities Act of 1933, as amended ("the Act"),
pursuant to section 4(2) and or 3(b) of the Act and the rules and regulations
promulgated there under.
1.3 Restricted Securities. CREATIVE represents to PASTA, and PASTA is aware
that the shares are "Restricted Securities" as that term is defined in Rule 144
and the general rules and regulations of the 1933 act. CREATIVE further
represents that PASTA is fully aware of the applicable limitations on the resale
of restricted securities and that these restrictions are set forth, for the most
part, in Rule 144 of the act as promulgated by the Securities and Exchange
Commission (SEC).
1.4 Restrictive Legend. CREATIVE further represents that PASTA understands
that any and all certificates representing the Shares shall bear the following
investment legend, which PASTA understands:
"No sale, offer to sell, or transfer of the shares represented by this
certificate shall be made unless a registration statement under the Federal
Securities Act of 1933, as amended, with respect to such shares then in effect
or an exemption from the registration requirements of said act is then in fact
applicable to said shares."
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PASTA
PASTA hereby represents and warrants to CREATIVE that:
2.1 PASTA will provide CREATIVE with the Pasta Pranzo System including,
without limitation, the Marks and Recipes in exchange for $300,000 in shares of
CREATIVE's restricted common stock, 1% (one sixth) of the 6% royalty fee charged
to franchisees, and $2000 from each franchise fee of $25,000 collected. PASTA
will also provide its California operation at 0000 Xxxxxxxx Xxxxxxxxx, Xxx
Xxxxxxx, XX for a $300,000 note, Exhibit B, with the first payment due on
January 15th, 2006, but may be made prior to that date and PASTA agrees to cover
operating costs of the store until December 31, 2005 and will continue to run
the store in the same manner, including training manuals, and any other tasks
that may be required at the store level.
2.2 Non-Competition. PASTA Affiliates, their affiliates and family will
not, either separately or together, as long as they are directly or indirectly
affiliates of Seller or related, directly or indirectly, to the Master Franchise
Agreement and for a period of three (3) years following the termination of any
such direct or indirect affiliation or relationship, directly or indirectly, in
any capacity, without Buyer's prior written consent, engage in a business, or
plan for or organize a business, or provide services to, or have any financial
interest in a business, which is competitive with or substantially similar to
the business of the Pasta Pranzo(R) franchise or any Pasta Pranzo(R) franchise
business by becoming an owner, operator, officer, director, shareholder,
partner, consultant, associate, employee, advisor, agent, lessor or lessee,
representative or franchisee or serve in any other capacity whatsoever in any
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such competing or substantially similar business. The ownership of not more than
2% of the voting stock of a publicly held corporation shall not be considered a
violation of the foregoing provision.
2.2 Organization. PASTA is a LLC duly organized, validly existing and in
good standing under the laws of California, has all necessary corporate powers
to own its property and to carry on its business as now owned and operated by
it, and is duly qualified to do business and is in good standing in each of the
states where its business requires qualification.
2.2 Capital. Management of PASTA own control of Pasta Pranzo Franchise
Company, LLC and therefore have the right to vote for the completion of this
transaction. PASTA represents that there are no other issued and outstanding
open subscriptions, options, rights, warrants, debentures, instruments,
convertible securities, or other agreements or commitments obligating PASTA to
issue or to transfer from treasury any additional shares of its capital stock.
2.3 Financial Statements. The most recent financial statements of PASTA
including Pasta Pranzo Franchise Company, LLC and the store located at 0000
Xxxxxxxx Xxxxxxxxx, Xxx Xxxxxxx, XX are attached as Exhibit A. The financial
statements have been prepared in accordance with generally accepted accounting
principles and practices consistently followed by PASTA throughout the period
indicated, and fairly represent the financial position of each as of the date of
the balance sheet included in the financial statements.
2.4 Investigation of Financial Condition. Without in any manner reducing or
otherwise mitigating the representations contained herein, CREATIVE and/or its
attorneys shall have the opportunity to meet with the accountants and attorneys
to discuss the financial condition of PASTA. PASTA shall make available to
CREATIVE and/or its attorney all books and records, once reasonable notice of
such request has been given.
2.5 Authority. The Board of Directors of PASTA have authorized the
execution of this Agreement and the consummation of transactions contemplated
herein, and PASTA has full power and authority to execute, deliver, and perform
this Agreement and this Agreement is a legal, valid and binding obligation of
PASTA, and is enforceable in accordance with its terms and conditions.
2.6 Ability to Carry Out Obligations. The execution and delivery of this
Agreement by PASTA of its obligations hereunder in the time and in the manner
contemplated will not cause, constitute or conflict with or result in (a) any
breach or violation of any of the provisions or constitute a default under any
license, indenture, mortgage, charter, instrument, articles of incorporation,
bylaws, or other agreement or instrument to which either is a party, or by which
it may be bound, nor will any consents or authorizations of any party other than
those hereto be required, (b) an event that would permit any party to any
agreement or instrument to terminate it or to accelerate the maturity of any
indebtedness or other obligation of PASTA, or (c) any event that would result in
the creation or imposition of any lien, charge, or encumbrance on any asset of
PASTA.
2.7 Full Disclosure. None of the representations and warranties made by
PASTA herein, or in any exhibit, certificate or memorandum furnished or to be
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furnished by either, or on their behalf, contains or will contain any untrue
statement of material fact, or omit any material fact the omission of which
would be misleading.
2.8 Good Title. Other than as described in Exhibit A, PASTA has good and
marketable title to all of its property free and clear of any liens, claims and
encumbrances of any nature, form or description.
2.9 Indemnification. PASTA agrees to defend and hold CREATIVE harmless
against and in respect of any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries, and deficiencies, including
interest, penalties, and reasonable attorney's fees, that it shall incur or
suffer, which arise out of, result from or relate to any breach of, or failure
by PASTA to perform any of its representations, warranties, covenants and
agreements in this Agreement or in any exhibit or other instrument furnished or
to be furnished by PASTA under this Agreement.
2.10 Settlements. PASTA agrees to negotiate the settlement of all
outstanding obligations of those represented on Exhibit A.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF CREATIVE
CREATIVE hereby represents and warrants to PASTA that:
3.1 CREATIVE will provide $300,000 in shares of CREATIVE's restricted
common stock, 1% (one sixth) of the 6% royalty fee charged to franchisees, and
$2000 from each franchise fee of $25,000 collected in exchange for 100%
membership in Pasta Pranzo Franchise Company, LLC and the System including,
without limitation, the Marks and Recipes. CREATIVE will also provide a $300,000
note, Exhibit B, with the first payment due on January 15th, 2006, but may be
made prior to that date for the Pasta Pranzo location at 0000 Xxxxxxxx
Xxxxxxxxx, Xxx Xxxxxxx, XX.
3.2 Financial Ability. CREATIVE is a corporation duly organized, validly
existing and in good standing, and has the necessary wherewithall to complete
this agreement through its legal counsel.
3.3 Authority. CREATIVE has authorized the execution of this Agreement and
the consummation of transactions contemplated herein through its legal counsel.
CREATIVE's legal counsel has full power and authority to execute, deliver, and
perform this Agreement and this Agreement is a legal, valid and binding
obligation of CREATIVE, and is enforceable in accordance with its terms and
conditions.
3.4 Ability to Carry Out Obligations. The execution and delivery of this
Agreement by CREATIVE and the performance by CREATIVE of its obligations
hereunder in the time and in the manner contemplated will not cause, constitute
or conflict with or result in (a) any breach or violation of any of the
provisions or constitute a default under any license, indenture, mortgage,
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charter, instrument, articles of incorporation, bylaws, or other agreement or
instrument to which CREATIVE is a party, or by which it may be bound, nor will
any consents or authorizations of any party other than those hereto be required
except approvals required by law, if any, (b) an event that would permit any
party to any agreement or instrument to terminate it or to accelerate the
maturity of any indebtedness or other obligation of CREATIVE, or (c) any event
that would result in the creation or imposition of any lien, charge, or
encumbrance on any asset of CREATIVE.
3.5 Full Disclosure. None of the representations and warranties made by
CREATIVE herein, or in any exhibit, certificate or memorandum furnished or to be
furnished by CREATIVE, or on its behalf, contains or will contain any untrue
statement of material fact, or omit any material fact the omission of which
would be misleading.
3.6 Indemnification. CREATIVE agrees to defend and hold PASTA harmless
against and in respect to any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries, and deficiencies, including
interest, penalties, and reasonable attorney's fees, that it shall incur or
suffer, which arise out of, result from or relate to any breach of, or failure
by CREATIVE to perform any of its respective representations, warranties,
covenants and agreements in this Agreement or in any exhibit or other instrument
furnished or to be furnished by CREATIVE under this Agreement.
ARTICLE IV
COVENANTS
4.1 Investigative Rights. From the date of this Agreement until the Closing
date, PASTA shall provide the other full access during normal business hours to
all properties, books, contracts, commitments, and records for the purpose of
examining same.
4.2 Conduct of Business. Prior to the Closing, PASTA shall conduct its
business in the normal course and shall not sell, pledge or assign any assets
without the prior written consent of CREATIVE. Neither CREATIVE nor PASTA shall
amend its articles of incorporation or Bylaws, declare dividends, redeem or sell
stock or other securities, incur additional or newly-funded liabilities, acquire
or dispose of fixed assets or settle or discharge any balance sheet receivable
other than in the normal course of business.
4.3 Required Corporate Action by CREATIVE. CREATIVE and its officers and
directors shall cause a meeting to be held as soon as practicable for the
purpose of voting on the approval of this Agreement.
4.4 Officers and Directors. Effective on the Date of Closing, the officers
and directors of PASTA shall appoint additional officers and/or directors as
recommended by CREATIVE.
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ARTICLE V
CONDITIONS PRECEDENT TO CREATIVE'S PERFORMANCE
5.1 Conditions. CREATIVE's obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in this
Article V. CREATIVE may waive any of these conditions in whole or in part
without prior notice; provided however, that no such waiver of a condition shall
constitute a waiver by CREATIVE of any other condition of or any of CREATIVE's
other rights or remedies, at law or in equity, if PASTA shall be in default of
any of their representations, warranties, or covenants under this Agreement.
5.2 PASTA Performance. PASTA shall have performed, satisfied and complied
with all covenants, agreements, and conditions required by this Agreement to be
performed or complied with by it, on or before the Closing Date.
5.3 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by PASTA in this Agreement or in
any written statement that shall be delivered to CREATIVE by PASTA under this
Agreement shall be true and accurate on and as of the Closing Date as though
made at that time.
5.4 Acceptance by CREATIVE. The holders of an aggregate of not less than
51% of the issued and outstanding shares of common stock of PASTA shall have
executed this agreement below thereby acknowledging their agreement to exchange
issuance of control to CREATIVE of common stock as described in paragraph 1.1.
above.
ARTICLE VI
CONDITIONS PRECEDENT TO PASTA PERFORMANCE
6.1 Conditions. PASTA obligations hereunder shall be subject to the
satisfaction, at or before the Closing, of all the conditions set forth in this
Article VI. PASTA may waive any of these conditions in whole or in part without
prior notice; provided however, that no such waiver of a condition shall
constitute a waiver by PASTA of any other condition of or any of PASTA other
rights or remedies, at law or in equity, if CREATIVE shall be in default of any
of their representations, warranties, or covenants under this Agreement.
6.2 CREATIVE Performance. CREATIVE shall have performed, satisfied and
complied with all covenants, agreements, and conditions required by this
Agreement to be performed or complied with by it, on or before the Closing Date.
6.3 Accuracy of Representations. Except as otherwise permitted by this
Agreement, all representations and warranties by CREATIVE in this Agreement or
in any written statement that shall be delivered to PASTA by CREATIVE under this
Agreement shall be true and accurate on and as of the Closing Date as though
made at that time.
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ARTICLE VII
CLOSING
7.1 Closing. The Closing of this transaction shall be held at a place and
on a date mutually acceptable to the parties.
At the Closing the parties shall deliver the following in form acceptable
to counsel to the parties or as set forth herein:
By CREATIVE:
A. $300,000 in shares of CREATIVE's restricted common stock to be issued
within ten days of closing, the rights to 1% (one sixth) of the 6%
royalty fee charged to franchisees, and $2000 from each franchise fee
of $25,000 collected and a $300,000 note.
By PASTA:
B. 100% membership in Pasta Pranzo Franchise Company, LLC and the System
including, without limitation, the Marks and Recipes as related to
Pasta Pranzo and its California operation at 0000 Xxxxxxxx Xxxxxxxxx,
Xxx Xxxxxxx, XX.
ARTICLE VIII
REMEDIES
8.1 Legal Action and Costs. If any legal action or any arbitration or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this agreement, the successful or prevailing party or parties
shall be entitled to recover reasonable attorney's fees and other costs incurred
in that action or proceeding, in addition to any other relief to which it or
they may be entitled.
8.2 Termination. In addition to the other remedies, any of the parties
hereto may terminate this Agreement, without liability:
(i) upon the failure of any condition not otherwise waived by the
parties; or
(ii) upon mutual consent of the respective boards of directors of
CREATIVE and PASTA.
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ARTICLE IX
MISCELLANEOUS
9.1 Captions and Headings. The Article and paragraph headings throughout
this Agreement are for convenience and reference only, and shall in no way be
deemed to define, limit, or add to the meaning of any provision of this
Agreement.
9.2 No Oral Change. This Agreement and any provisions hereof, may not be
waived, changed, modified or discharged orally, but it can be changed by an
agreement in writing signed by the party against whom enforcement of any waiver,
change, modification or, discharge is sought.
9.3 Non-Waiver. Except as other wise expressly provided herein, no waiver
of any covenant, condition, or provision of this Agreement shall be deemed to
have been made unless expressly in writing and signed by the party against whom
such waiver is charged.
9.4 Time of Essence. Time is of the essence of this Agreement and each and
every part hereof.
9.5 Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties hereto and supersedes all prior agreements and
understandings and merges any all such prior discussions and/or agreements
herein.
9.6 Choice of Law. This Agreement and its application shall be governed by
the laws of the State of Arizona.
9.7 Counterparts. This Agreement may be executed simultaneously in one or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument.
9.8 Notices. All notices, requests, demands, and other communications under
this Agreement shall be in writing and shall be deemed to have been duly given
on the date of service if served personally on the party to whom notice is to be
given, by first class mail, registered or certified, postage prepaid, and
properly addressed as follows:
CREATIVE Representative:
Xxxxxx X. Xxxxxxx
0000 X. XxXxxxxx Xxxxx 000
Xxxxxxxxxx, XX 00000
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PASTA Representative:
Xxxx Xxxxxx
0000 Xxxxxxx Xx. #0
Xxxxx Xxxxx, XX 00000
9.9 Binding Effect. This Agreement shall inure to and be binding upon the
heirs, executors, personal representatives successors and assigns of each of the
parties to this Agreement.
9.10 Effect of Closing. All representations, warranties, covenants, and
agreements of the parties contained in this Agreement, or in any instrument,
certificate, opinion, or other writing provided for in it, shall survive the
Closing of this Agreement.
9.11 Brokers. The parties hereto represent that no finder's fee has been
paid or is payable by any party.
9.12 Expenses. Each party will pay its own legal, accounting and any other
out-of-pocket expenses reasonably incurred in connection with this transaction,
whether or not the transaction contemplated hereby is consummated.
9.13 Facsimile Signatures as Originals. Original signatures transmitted by
facsimile communication shall constitute originals for the purpose of validly
executing this Agreement.
AGREED TO AND ACCEPTED as of the date first above written.
Pasta Pranzo, LLC.
By /s/ Xxxx Xxxxxxx By /s/ Xxxxx Xxxxx
------------------------------ ------------------------------
Xxxx Xxxxxxx, President Xxxxx Xxxxx
By /s/ Xxxx Xxxxxx
------------------------------
Xxxx Xxxxxx
Creative Eateries Corporation
By /s/ Xxxxx Xxxxxxxxx
------------------------------
Xxxxx Xxxxxxxxx, President
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EXHIBIT A
Financial Statements
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EXHIBIT B
Promissory Note
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