ASSET PURCHASE AGREEMENT

Exhibit 10.3

ASSET PURCHASE AGREEMENT

BY AND AMONG

RUTH’S CHRIS STEAK HOUSE, INC.

AND

NEW N.O. CRESCENT CITY INVESTORS, L.L.C.,

a Washington Limited Liability Company;

STEVEN QUEYROUZE,

individually

ANNE QUEYROUZE,

as First Intervenor

AND

CRESCENT CITY INVESTORS, INC.

as Second Intervenor

EXECUTION VERSION

TABLE OF CONTENTS

 

 

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Asset Purchase Agreement

THIS ASSET PURCHASE AGREEMENT (the “Agreement”) made this 16 ^th day of April, 2007, by and among Ruth’s Chris Steak House, Inc. (“RCSH”), a Delaware corporation, and, if applicable, one or more affiliates to whom it may assign its purchase rights before closing including, without limitation, RCSH Operations, L.L.C., a Louisiana limited liability company (“RCSH LLC”) and RCSH Operations, Inc., a California corporation (“RCSH Inc.”) (collectively, RCSH, its assignees, RCSH LLC and RCSH Inc. being referred to hereinafter as the “Purchaser”); and New N.O. Crescent City Investors, L.L.C., a Washington Limited Liability Company (referred to herein as the “Seller”). Also appearing herein is (a) Steven Queyrouze, Individually (“Queyrouze”), (b) Anne Queyrouze (“First Intervenor”) for the purpose of disclaiming any interest in the transactions contemplated by this Agreement, and (c) Crescent City Investors, Inc., a Washington corporation (“Second Intervenor”) for the purpose of disclaiming any interest in the transactions contemplated by this Agreement.

WITNESSETH:

WHEREAS, the Seller has previously acquired franchise rights relating to the ownership and operation of a Ruth’s Chris Steak House restaurant in Washington (referred to hereinafter as “Seller’s Ownership Rights” or “its Ownership Rights”) pursuant to the document set forth on Schedule 2.1(a)-3 (“Seller’s Ownership Agreement” or “its Ownership Agreement”);

WHEREAS, the Seller has previously acquired rights relating to the development of Ruth’s Chris Steak House restaurants in Washington (the foregoing right of Seller being referred to hereinafter as “Seller’s Option Rights” or “its Option Rights”) pursuant to the documents and instruments set forth on Schedule 2.1(a)-3 (“Seller’s Option Agreement” or “its Option Agreement”);

WHEREAS, the Seller currently owns and operates a Ruth’s Chris Steak House restaurant pursuant to Seller’s Ownership Rights (with respect to each Seller, “Seller’s Business” or “its Business”) in the location specified beside its name on Schedule 2.1(a)-1 ;

WHEREAS, the Seller desires to sell to Purchaser and Purchaser desires to purchase from each Seller Seller’s Assets (as hereinafter defined);

WHEREAS, New N.O. Crescent City Investors, L.L.C., a Washington Limited Liability Company and Bayou Investors Limited Liability Company, a Washington Limited Liability Company, which are owned and managed by the same or similar owners as Seller, are contemporaneously with this Agreement, entering into agreements to sell assets (hereinafter referred to as the “Related Agreements”), which Related Agreements are similar, in all material respects, to this Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties and covenants contained herein, and other good and valuable

 

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consideration, the receipt and sufficiency of which are acknowledged hereby, the parties agree as follows:

ARTICLE 1

DEFINITIONS

For the purpose of this Agreement the following terms shall have the following meanings:

1.1 “Affiliate” means, when used with respect to a specific Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified.

1.2 “Assumed Liabilities” means the payment and performance obligations of each Seller to be performed, paid, and otherwise assumed in full by Purchaser following the Closing Date under all contracts, customer orders, leases, licenses and purchase orders relating to Seller’s Business and listed on Schedule 2.4(a) to this Agreement.

1.3 “Closing” means the consummation of the transactions contemplated by this Agreement, along with the contemporaneous consummation of the transactions contemplated by the Related Agreements, on the terms and conditions set forth herein and therein whether on or before the Closing Date.

1.4 “Closing Date” means the date on which the parties agree that the Closing will occur, which shall be the exact same date as the closing date of the Related Agreements, but in no event later than the close of business on or before the date that is 60 days following the date of this Agreement unless (a) such date is extended in writing by the mutual agreement of the parties; or (b) if any lessor of Seller has failed to execute the estoppel certificate or has not otherwise consented to the Assignment of Lease in the form attached hereto or in such other form as is reasonably acceptable to the Purchaser within such 60 day period then the period for Closing shall automatically be extended to the date upon which the last of which all estoppel certificates and Assignments of Lease required as a condition of closing herein or in any Related Agreements are obtained by Purchaser, but no later than the date upon which the last of all Licenses required as a condition of closing herein or in any Related Agreements are obtained by Purchaser; or (c) if the Purchaser is unable to obtain all licenses necessary to operate a Ruth’s Chris Steak House restaurant, including but not limited to occupational permits, health permits, and permits authorizing the sale of wine, beer and liquor (“the Licenses”), within such 60 day period, then the period for Closing shall automatically be extended to the earlier of (i) the date upon which the last of all Licenses required as a condition of closing herein or in any Related Agreements are obtained by Purchaser or its application therefore is denied and the time for all appeals and rehearings has lapsed, or (ii) 210 days from the date of this Agreement. Any such extension of the Closing Date shall also constitute an extension of the closing date with respect to the Related Agreements. Notwithstanding anything in the foregoing to the contrary, the Parties shall make their good faith efforts to consummate this transaction as soon as possible. In the event that one or more of the

 

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events listed herein do not occur, then the termination of this Agreement and the Related Agreements shall be subject to Section 10.1.

1.5 “Code” means the Internal Revenue Code of 1986, as amended.

1.6 “Employee Benefit Plan” means that term as defined by Section 3(3) of the ERISA, or any other bonus, profit sharing, pension, retirement compensation, deferred compensation, stock option, stock purchase, fringe benefit, severance, post-retirement, scholarship, disability, sick leave, vacation, individual employment, commission, bonus, payroll practice, retention, severance, or other plan, agreement, policy, trust fund or arrangement for the benefit of current or former directors or employees of any Seller and any of Seller’s current or former Affiliates or ERISA Affiliates or any other persons currently or formerly performing services for any Seller and any of Seller’s current or former Affiliates, ERISA Affiliates and/or beneficiaries of any such persons.

1.7 “Environmental Law” means any and all applicable laws, rules, regulations, codes, ordinances and agreements issued, promulgated or entered into by any Governmental Authority relating in any way to the environment, the preservation or reclamation of natural resources, the management, release or threatened release of any Hazardous Material or to health and safety matters.

1.8 “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

1.9 “ERISA Affiliate” means any person that, together with Seller, would be or was at any time treated as a single employer under Section 414 of the Code or Section 4001 of ERISA and any general partnership of which Seller is or has been a general partner.

1.10 “First Intervenor” means Anne Queyrouze, wife of Steven Queyrouze.

1.11 “Franchise Rights” means all of the Ownership Rights and Option Rights of the Seller.

1.12 “Franchise Agreements” means any and all rights relating to the ownership, operation, and development of one or more Ruth’s Chris Steak House franchise restaurants pursuant to the Franchise Agreements.

1.13 “Governmental Authority” means any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States, any foreign country or any domestic or foreign state, county, city or other political subdivision.

1.14 “Hazardous Materials” means all explosive or radioactive substances or wastes, hazardous or toxic substances or wastes, and other pollutants of any nature, including without limitation those relating to grease traps and hood vent and smoke emissions from any stove, oven, boiler or other cooking device, regulated pursuant to any Environmental Law.

 

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1.15 “Investor” means all holders of stock, membership or equity interest in Seller.

1.16 “Knowledge” or similar terms used in this Agreement with respect to a Seller means: the extent of the knowledge, as of the date of this Agreement, of Steven Queyrouze or the Seller’s general manager, bar manager, and restaurant manager (or if Seller does not use those or similar titles, persons who have responsibilities and authority similar to those of a manager of the functional areas of Seller’s Business), and their successors as of the date of this Agreement through the Closing Date. “Knowledge” or similar terms used in this Agreement with respect to Purchaser means: the extent of the knowledge, as of the date of this Agreement, of Purchaser’s counsel, Purchaser’s executive counsel, or Purchaser’s President. For purposes of this definition, an individual shall be deemed to have “knowledge” of a particular fact, circumstance or other matter if (x) such individual is or at any time was actually aware of such fact, circumstance or other matter, or (y) a prudent individual could reasonably be expected to discover or otherwise become aware of such fact, circumstance or other matter within the scope and performance of the relevant individual’s duties.

1.17 “Leased Premises” means, with respect to Seller, the land and improvements leased or subleased by Seller pursuant to the Real Property Lease (as hereinafter defined) executed by Seller for the purpose of operating and conducting its Business.

1.18 “Liens” means any lien, mortgage, pledge, negative pledge, assessment, security interest, lease, adverse claim, levy, charge, options, rights of first refusal, or other encumbrance of any kind, or any conditional sale contract, title retention contract or other agreement to grant any of the foregoing.

1.19 “Material Adverse Effect” means on or before the Closing Date any change in or effect on the Business or Assets of any Seller that individually or together with any other change or effect has an adverse impact upon the Business, Assets, operations, properties (excluding intangible properties), condition (financial or otherwise), liabilities, prospects or regulatory status of said Seller in excess of $50,000, in the aggregate.

1.20 “Person” means any natural person, corporation, partnership, joint venture, trust, incorporated or unincorporated association, joint stock company, government (or any agency or political subdivision thereof) or other entity of any kind.

1.21 “Second Intervenor” means Crescent City Investors, Inc. a Washington corporation.

1.22 “WARN Act” means the Worker Adjustment and Retraining Notification (WARN) Act, 29 U.S.C. §2101 et. seq.

 

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ARTICLE 2

PURCHASE AND SALE OF ASSETS

2.1 Purchased Assets . Subject to and upon the terms and conditions set forth herein, at the Closing Seller shall convey, sell, assign, transfer and deliver to Purchaser and Purchaser shall purchase, acquire and accept all of Seller’s right, title and interest in and to all of Seller’s tangible and intangible assets used, held for use or in any way relating to its Business other than the Excluded Assets (as hereinafter defined) (referred to hereinafter collectively as “Seller’s Assets” or “its Assets”), including without limitation:

(a) The rights and benefits accruing to Seller as lessee under any immovable (real) property lease and/or sublease relating to Seller’s Business existing on the date of this Agreement through the Closing Date, each of which is listed on Schedule 2.1(a)-1, together with any leases which may be executed on the immovable (real) property listed on Schedule 2.1(a)-2 or any opportunities to lease that may arise from the date of this Agreement through the Closing Date (the “Real Property Lease”) and any and all Franchise Rights and Franchise Agreements listed on Schedule 2.1(a)-3 ;

(b) All right, title and interest, if any, to leasehold improvements, fixtures, constructions, component parts and other immovable (real) property owned by Seller and located on the Leased Premises, including without limitation those items listed on Schedule 2.1(b) (collectively, the “Leasehold Improvements”) and all architectural plans and mechanical drawings related to the Leasehold Improvements;

(c) All right, title and interest, if any, to easements, servitudes, privileges, rights-of-way and other real rights of Seller pertaining to or accruing to the benefit of the Leased Premises, including without limitation those items listed on Schedule 2.1(c) (collectively, the “Easements”);

(d) All machinery (including without limitation all computer hardware used in connection with the operation and maintenance of Seller’s Business), kitchen and other appliances, equipment, furniture, vehicles, smallwares, utensils, glassware, table cloths, spare parts, tools, supplies, and other corporeal (tangible), movable (personal) property located on the Leased Premises or otherwise relating to Seller’s Business, including without limitation those items listed and described on Schedule 2.1(d) (collectively, the “Equipment”);

(e) The rights and benefits accruing to Seller as lessee under any leases and/or subleases for equipment, machinery, appliances or other corporeal (tangible), movable (personal) property used in the operation of its Business (each an “Equipment Lease” and collectively the “Equipment Leases”), each of which is listed on Schedule 2.1(e) ;

(f) All of Seller’s inventory in connection with Seller’s Business, which as of the day before the Closing Date are those items listed and described on Schedule 2.1(f)-1 , which shall be not less than the minimum inventory levels as listed and described on Schedule 2.1(f)-2 (the “Inventory”);

 

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(g) Seller’s Business as a going concern, its Franchise Rights, all of the rights and benefits (but not its obligations or liabilities) under its Franchise Agreements, all intellectual property of Seller used in connection with its business, including without limitation, all trademarks, service marks, rights to computer software, trade secrets (including, without limitation, recipes) and trade names (whether acquired from Purchaser, an Affiliated franchisor or otherwise), (including without limitation all of the Seller’s right to do or develop business as a Ruth’s Chris Steak House restaurant), including without limitation the trade names listed on Schedule 2.1(g) , goodwill and other intangible assets (collectively, “Intellectual Property”);

(h) All claims and rights of Seller under all agreements, contracts, software license agreements, purchase and sale orders and other executory contracts and commitments of Seller arising from or relating to its Business, including without limitation those listed on Schedule 2.1(h) (each an “Assigned Contract” and collectively the “Assigned Contracts”) and all accrued or prepaid advertising rights;

(i) All licenses, permits, consents, use agreements, approvals, authorizations and certificates of any Governmental Authority to the extent they relate to Seller’s Business (collectively, the “Licenses”), in each case to the extent transferable by the Seller, including without limitation those listed on Schedule 2.1(i) ;

(j) All files, operating manuals and correspondence pertaining to the Equipment; all customer and potential customer lists; mailing lists; all files pertaining to current and potential vendors and suppliers; all price lists; all advertising materials; and copies of three years of financial records (which financial records shall be certified by Queyrouze), business books, records, ledgers, files, documents, business plans, budgets, financial statements, creative materials, advertising and promotional materials, corporate policy documents, architectural plans, mechanical drawings, parking plans, menus, training manuals, recipes, recipe manuals, and/or any other corporate manuals relating to its Business, and any correspondence relating to the Business or reasonably related to the Business (collectively, the “Books and Records”);

(k) All of Seller’s right, title and interest in and any right to lease the property identified in Schedule 2.1(a)-2 , which includes all potential lease rights Seller may have, including but not limited options to lease adjacent property or options to purchase the leased premises.

(l) All of Seller’s right, title and interest in and to its telephone numbers and the directory advertising for such telephone numbers, to the extent assignable;

(m) All domain names, websites and other intellectual property of any kind or nature used by Seller in its Business except for those items identified on Schedule 2.1(m) , which items are not used or related to Seller’s Business or to Ruth’s Chris Steak House;

(n) Except as provided in Section 2.2(c), all claims, security and other deposits, prepayments, prepaid expenses, refunds, causes of action, choses in action,

 

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rights of recovery, warranties and guarantees with respect to Purchased Assets (including without limitation the Inventory), rights of set off, and rights of recoupment of Seller (including any such item relating to the payment of taxes other than income taxes) and all federal, state and local franchise and property tax credits (“Claims”);

(o) Seller’s working cash, which shall be $1,000 per restaurant (the “Working Cash”); and

(p) All tax credits or rights to credits available to Seller in connection with the operation of Seller’s Business to the extent transferable to Purchaser but excluding any tip credits or income tax credits usable by Seller up to the Closing Date.

2.2 Excluded Assets . Notwithstanding anything in Section 2.1 hereof to the contrary, the term “Assets” shall exclude the following (“Excluded Assets”):

(a) The corporate minute books and stock ledgers of the Seller, all correspondence with Investors dealing with Investor relations or the governance of the Seller, all files, communication or other documentation and correspondence protected by attorney client privilege or related to causes of action asserted in that action captioned “New N.O. Crescent City Investors, L.L.C. and Crescent City Investors, Inc. versus Ruth’s Chris Steak House, Inc.”, 24 ^th Judicial District Court for the Parish of Jefferson, State of Louisiana Docket No. 615-283, Division “D” (“the Litigation”) and personal files of Queyrouze not related to Seller’s Business;

(b) All assets related to any pension, profit sharing, stock bonus, stock option, thrift or other retirement plan; medical, hospitalization, dental, life, disability, vacation or other insurance or benefit plan; employee stock ownership, deferred compensation, stock ownership, stock purchase, bonus, benefit or other incentive plan; severance plan; or other similar plan relating to Seller or its employees;

(c) All claims and rights of Seller under all causes of action, choses of action, rights of recovery, warranty rights with respect to assets other than Purchased Assets, rights of set off, rights of recoupment, accounts receivable and credit card company payments relating to Seller’s Business and accrued prior to Closing and all deposits and security in respect of any Real Property Lease and as appearing on Schedule 2.2(c) ;

(d) Personal memorabilia owned by Queyrouze on display in the various restaurants or otherwise contained in the various restaurants and as appearing on Schedule 2.2(d) ;

(e) Equipment, furniture or furnishings owned by Queyrouze and used exclusively by Queyrouze which are contained in an office used exclusively by Queyrouze and as appearing on Schedule 2.2(e) ; and

(f) Except for Working Cash, any other cash on hand, cash in Seller’s bank accounts and escrow accounts and cash equivalents.

 

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2.3 No Liens . The Assets will be transferred and sold to Purchaser at Closing free and clear of all Liens except for those listed on Schedule 2.3 .

2.4 Assumed Liabilities .

(a) Except as otherwise provided in this Agreement, subject to and in accordance with the terms and provisions of this Agreement, at the Closing, Purchaser will assume the payment and performance obligations of Seller that accrue following the Closing Date under all Assumed Liabilities, which are listed on Schedule 2.4(a) to this Agreement. Purchaser shall not be liable for or assume any obligations of Seller arising subsequent to the Closing Date, or any amounts outstanding under any contracts listed on Schedule 2.4(a) which (a) have accrued prior to the Closing Date or (b) relate to businesses other than Seller’s Business.

(b) Except for the Assumed Liabilities and Purchaser’s pro rata portion of any Shared Liabilities (as hereinafter defined), it is expressly understood and agreed that Purchaser will not be liable for any obligations, liabilities, contracts, debts, claims, costs, expenses, agreements or understandings of any kind or nature whatsoever arising from, attributable or related to Seller or the operation of its Business or the ownership or use of Seller’s Assets or any Leased Premises, including without limitation (i) any such liability arising from events or occurrences prior to the Closing, (ii) any such liability arising out of the employment, terms or conditions of employment, or termination of employment of any Person, or the failure to employ any Person, (iii) any such liability for any period of time for federal, state or local taxes, penalties or interest (including without limitation any property or sales tax liability, penalty or interest) and (iv) any such liability for expenses, debts or obligations incurred within or outside the ordinary course of business. Anything to the contrary contained herein notwithstanding, Purchaser shall neither assume nor have any obligations or liabilities whatsoever in respect of any environmental matter, any immigration matter or any employment matter including, without limitation, severance, the WARN Act, income tax withholding, payroll and/or unemployment tax, workers’ compensation, salary or consulting fees, pension, profit-sharing, accrued, earned or unused vacation or sick leave, health insurance or any other employee or employee benefit liabilities in respect of any employees, consultants or independent contractors or any Employee Benefit Plan, including, without limitation any contribution, tax, lien, penalty, cost, interest, claim, loss, action, suit, damage, cost assessment, withdrawal liability, liability to the Pension Benefit Guaranty Corporation (the “PBGC”), liability under Section 412 of the Internal Revenue Code, as amended (the “Code”) or Section 102 (a)(2) of ERISA or other similar liability or expense of any Seller and Purchaser shall not become a party to any Employee Benefit Plan as a result of any of the transactions contemplated by this Agreement.

2.5 Shared Liabilities . The following liabilities and obligations relating to the Business and the Assets (the “Shared Liabilities”) shall be shared between Purchaser and Seller as follows:

(a) Utility charges that relate to billing periods beginning before the Closing Date and ending after the Closing Date, shall be allocated on the basis of measured utility usage before and after such Closing Date (if meter or other measured

 

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service readings are made at such time) or otherwise on the basis of the proportional number of calendar days in the relevant billing period before and after such Closing Date;

(b) Rentals and other fees, charges and costs, including without limitation common area maintenance fees, administrative fees and any true-ups payable under the Real Property Lease and Equipment Leases that relate to lease periods beginning before and ending after the Closing Date shall be allocated between the parties on the basis of an annualized proration, with the understanding that neither side shall be entitled to benefit from the timing of the Closing Date; and

(c) Ad valorem property, real estate and similar taxes shall be allocated on the basis of the proportional number of calendar days in the relevant tax year before and after the Closing Date.

2.6 Payment of Liabilities . If any party pays all or any portion of any liabilities for which another party is entirely or partially responsible hereunder (including without limitation any Shared Liabilities), the responsible party will promptly (but in no event later than sixty (60) days after the Closing) reimburse the paying party for its portion of that payment, provided that any demand for reimbursement shall be accompanied by appropriate evidence of payment thereof. Notwithstanding anything contained herein to the contrary, any liability referred to herein that is paid sixty (60) days after Closing shall be paid out of the Liability Escrow Account or by Purchaser, as the case may be.

ARTICLE 3

PURCHASE PRICE

3.1 Purchase Price . As consideration for the Assets and the Business of Seller and for the assets and business of the sellers in the Related Agreements, Purchaser will pay on the Closing Date a total amount equal to Twelve Million Eight Hundred Thousand ($12,800,000.00) Dollars as such amount may be adjusted with respect to the Seller pursuant to Section 3.2 and with respect to the other sellers in accordance with comparable provisions of the Related Agreements. Purchaser shall pay to Seller for Seller’s Assets and Business the amount defined in Schedule 3.3 (as adjusted, the “Purchase Price”). The Purchase Price shall be paid directly to Seller by wire transfer of same day funds or certified check. The Seller will provide Purchaser with a receipt for the Purchase Price in form and substance satisfactory to Purchaser.

3.2 Adjustments to Purchase Price . The Purchase Price shall be adjusted as follows:

(a) by the aggregate amount, if any, owed to Purchaser or any Affiliate of Purchaser by the Seller under the Franchise Agreement or otherwise owing to Purchaser or any Affiliate of Purchaser in connection with Seller’s Franchise Rights. The Seller may at its option as provided in Section 8.11, pay the estimated amount of such charges at or prior to the Closing in lieu of a price adjustment;

 

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(b) by any amounts representing Seller’s portion of any prepaid or unpaid Shared Liabilities at or prior to Closing. Purchaser will assume responsibility for paying to the payee any such amounts withheld from the Purchase Price;

(c) pro-ration of all applicable taxes related to Seller’s Business, including but not limited to, ad valorem taxes; and

(d) Seller’s portion of the Purchase Price set forth on Schedule 3.3 will be reduced or increased as appropriate, by the amount allocated to Seller in connection with an adjustment to Purchase Price made under this Section 3.2.

3.3 Allocation of the Purchase Price Among the Assets . The Purchase Price shall be allocated, for tax purposes, among each item or class of the Assets in a manner substantially similar to Schedule 3.3 hereof. Seller and Purchaser shall prepare and file any notice or other filings required pursuant to Section 1060 of the Code, and any such notices or filings will be prepared based on the allocation set forth on Schedule 3.3 , which Seller and Purchaser shall agree upon before the Closing Date. Purchaser agrees to send to the Seller any forms required to be filed with respect to this transaction prior to filing such form with the Internal Revenue Service.

3.4 Noncompetition . For and in additional consideration of Four Hundred Fifty Thousand ($450,000) Dollars (“the Non-compete Price”) paid by Purchaser at Closing, in connection with this Agreement and the Related Agreements Queyrouze will execute an agreement not to compete in the form appearing in Exhibit “E” , wherein Queyrouze shall agree that Queyrouze and any Affiliate of Queyrouze shall not directly or indirectly own, lease, license (to or from any third party), operate, participate (passively or actively) in, consult with, invest in or lend money to a competing business similar to that of the Purchaser (i.e., a fine dining restaurant featuring prime steak as the primary menu offering) nor solicit any employees of the Purchaser or its Affiliates for a period of two (2) years from the Closing Date in the States of Washington and Oregon. Queyrouze shall be entitled to only one payment of Four Hundred Fifty Thousand ($450,000) Dollars, which shall not be cumulated with the Related Agreements.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF SELLER

In order to induce Purchaser to enter into this Agreement and consummate the transactions contemplated hereby, Seller makes the representations and warranties set forth in this Article 4. Seller acknowledges that each of the warranties and representations set forth in this Article 4 is material to and is relied upon by Purchaser. Additionally, Queyrouze warrants and represents only the information in Section 4.1, below. To the extent not covered herein by an express warranty, Purchaser shall be entitled to all warranties implied or imposed by law with respect to the Purchased Assets or such Assumed Liabilities, including, but not limited to, the warranty of merchantability, the warranty of fitness for a particular purpose, and any warranties that may have arisen from course of dealing or usage of trade. Where Seller has made an express warranty or representation with respect to such Purchased Assets or such

 

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Assumed Liabilities, such express warranty shall be in lieu of any implied warranties with respect to such Purchased Assets or such Assumed Liabilities, including but not limited to, the warranty of merchantability, the warranty of fitness for a particular purpose, and any warranties that may have arisen from course of dealing or usage of trade.

4.1 Queyrouze’s Capacity and Ownership Interest in Seller .

(a) Queyrouze is a competent, major domiciled in the State of Washington. Second Intervenor is wholly owned by Queyrouze.

(b) Queyrouze owns a 10% interest in New N.O. Crescent City Investors, L.L.C. and all rights attendant thereto; Second Intervenor, wholly owned by Queyrouze, owns a 52% interest in New N.O. Crescent City Investors, L.L.C., and all rights attendant thereto. Neither Queyrouze nor Second Intervenor have sold, transferred or assigned any of their respective rights in or to any of the interests in New N.O. Crescent City Investors, L.L.C.; and except as set forth on Schedule 4.1(b) , the New N.O. Crescent City Investors, L.L.C. interests owned by Queyrouze and Second Intervenor are free and clear of any liens, claims, encumbrances and restrictions of any kind except for those set forth in the articles or organization and operating agreement of New N.O. Crescent City Investors, L.L.C.

4.2 Organization . Seller (a) is duly organized and validly existing under the laws of the state of its incorporation or organization as set forth in Schedule 4.2 , (b) has all requisite power to carry on its Business as it is now being conducted and to own and operate its Assets, (c) is duly qualified to transact business and is, or by the Closing Date will be, validly existing in all states reflected on Schedule 4.2 , which are the only states in which the ownership or leasing of Seller’s property or the conduct of its Business make such qualifications necessary, and (d) has paid all applicable filing fees required to be paid by the Washington Corporation Division and any other states where the Seller does business.

4.3 Requisite Power and Authority . Seller warrants that (a) Seller has the requisite power and authority to execute and deliver this Agreement and it has been duly executed and delivered by Seller; (b) Seller has or will have the requisite power and authority to execute and deliver each of the Closing Documents (as hereinafter defined) to which Seller is or will be a party and to consummate the transactions contemplated hereby and thereby after taking those actions set forth in Schedule 4.3 ; (c) all action of Seller, including without limitation any vote or written consent of its shareholders, members or partners, as appropriate, necessary to authorize the execution, delivery and performance of this Agreement, including without limitation those documents, instruments, and certificates set forth in Sections 7.6 and 9.2 has been duly taken or, prior to the Closing, will be taken, including those actions set forth in Schedule 4.3; and (d) this Agreement is a valid and binding agreement, enforceable against Seller in accordance with its terms.

 

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4.4 Absence of Breach .

(a) The execution and delivery by Seller of this Agreement will not (a) result in or constitute a default, breach or violation of any of the terms, conditions or provisions of the Certificate of Formation or any Limited Liability Company Agreements, as the case may be, of Seller; (b) violate any provision of, or require any consent, authorization or approval (other than those that have been obtained or will be obtained prior to Closing by Seller) under any judicial, administrative or arbitration order, award, judgment, writ, injunction or decree applicable to, or any governmental permit or license issued to, Seller; or (c) conflict with, result in a breach of, constitute a default or event of default (whether by notice or the lapse of time or both) under or accelerate or permit the acceleration of the performance required by Seller, or require any consent, authorization, or approval (other than those that have been obtained or will be obtained prior to Closing by Seller) under any material indenture, lien, lease, instrument or other agreement, written or oral, to which Seller is a party or by which Seller or any of the Assets or Leased Premises of Seller may be bound.

(b) Once all actions listed in Schedule 4.4 are taken, the execution and delivery by Seller of the Closing Documents to which it is or will be a party, and the consummation by Seller of the transactions contemplated thereby will not (a) result in or constitute a default, breach or violation of any of the terms, conditions or provisions of the Certificate of Formation, and Limited Liability Company Agreement, as the case may be, of Seller; (b) violate any provision of, or require any consent, authorization or approval (other than those that have been obtained or will be obtained prior to Closing by Seller) under any judicial, administrative or arbitration order, award, judgment, writ, injunction or decree applicable to, or any governmental permit or license issued to, Seller; or (c) conflict with, result in a breach of, constitute a default or event of default (whether by notice or the lapse of time or both) under or accelerate or permit the acceleration of the performance required by Seller, or require any consent, authorization, or approval (other than those that have been obtained or will be obtained prior to Closing by Seller) under any material indenture, lien, lease, instrument or other agreement, written or oral, to which Seller is a party or by which Seller or any of the Assets or Leased Premises of Seller may be bound.

4.5 Ownership of Assets . Seller is the lawful owner of and has good and marketable title to its Assets, free and clear of all Liens except for those listed on Schedule 2.3 , and upon the Closing, Purchaser will be vested with good and marketable title to Seller’s Assets, free and clear of and all Liens, and free of any transferee and/or successor liabilities, except for the Assumed Liabilities. No other Person, including without limitation any Affiliate of Seller, owns or is a part owner of any other assets, trade secrets, contracts, leases, property or other rights that are material to the conduct of Seller’s Business and are not being transferred pursuant to this Agreement. No agreements exist to sell, assign, lease, or license, any of Seller’s Assets except those listed and described on Schedule 4.5 . No person other than Seller owns, is a party to or has any interest in any of the Franchise Agreement or Franchise Rights or any other agreement or instrument with the Purchaser or any Affiliate of the Purchaser which conveys franchise rights, area development rights or other similar rights with regard to

 

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the development of Ruth’s Chris Steak House restaurants. Seller’s Assets constitute all of the assets and property used by Seller in the operation of its Business.

4.6 Condition of Assets . Seller’s Assets and the Leased Premises are in good working condition, normal wear and tear excepted, and are suitable for their intended purpose in the ordinary course of Seller’s Business.

4.7 Compliance; Licenses and Permits . To Seller’s Knowledge, Seller has in all material respects complied with all laws, ordinances, rules, regulations, orders, filings, judgments, and decrees of any Governmental Authority applicable to the operation of its Business. Seller has not received any written notification, warning or inquiry from, or given any notification to or had any communication with, any Governmental Authority, with respect to any violation or alleged or possible violation of any law that may be applicable to Seller. Seller has not been cited or found guilty of any violations or offenses of any alcoholic beverage control laws. Schedule 2.1(i) sets forth all Licenses held or owned by Seller together with name of owner, issuer, expiration date, and whether such license is freely transferable or assignable, the party or parties whose consent is required for such transfer or assignment. Seller has all licenses, permits, consents, use agreements, approvals, authorizations and certifications required to conduct its Business, all of which are in validly existing, valid, and effective. Other than Seller, no Person, including without limitation any Affiliate of Seller, holds any License, relating to Seller’s Business or Franchise Rights. Seller shall use its commercially reasonable efforts to assist Purchaser in obtaining all Licenses necessary for the ownership and operation of its Assets and Business.

4.8 Contracts .

(a) Set forth on Schedule 4.8(a) is a list of all contracts and commitments of Seller relating to the operation of its Business or its Assets (including without limitation mortgages, indentures, loan agreements, and supply contracts) and all amendments thereto, except (i) the Real Property Lease listed on Schedule 2.1 (a) –1 and Schedule 2.1(a)-2; (ii) the Equipment Leases listed on Schedule 2.1(e) ; (iii) the Assigned Contracts listed on Schedule 2.1(h) ; (iv) the Easements listed on Schedule 2.1(c) ; (v) any contracts entered into in the ordinary course of business that involve an aggregate expenditure in any year of less than $5,000, provided that all of such undisclosed contracts do not involved expenditures in excess of $50,000 in the aggregate; (vi) any purchase and customer orders entered into in the ordinary course of business that in the aggregate involve expenditures of less than $5,000 annually; (vii) any contracts relating to Excluded Assets; and (viii) vendor lists.

(b) Schedule 4.8(b) identifies each contract of Seller’s Business in which (i) an officer or director of Seller, (ii) any of the Persons listed on Exhibit A , or (iii) an Affiliate of Seller has a material interest.

(c) Seller’s Equipment Leases and Assigned Contracts (i) are in full force and effect and enforceable in accordance with their terms; (ii) have not been amended except as set forth on the appropriate schedule hereto; and (iii) are not subject to

 

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any default (or any matter that with the giving of notice or lapse of time, or both, could become a default) by Seller or, to Seller’s Knowledge by any other party to such contract.

4.9 Trade Payables . None of the trade payables or accrued expenses of Seller is overdue including without limitation any such amounts as may be due to an alcoholic beverage wholesaler.

4.10 Inventory . Seller’s Inventory consists only of items that are of a quality and quantity usable in the ordinary course of its Business. All inventory is (i) of merchantable quality, (ii) suitable for sale (under existing quality control standards) under the trademark under which the Inventory is intended to be sold, and (iii) is in compliance with all applicable regulations and standards of any Governmental Authority. All beef included in the Inventory has been purchased from a supplier approved by Ruth’s Chris Steak House Franchise, Inc.

4.11 Real Property Lease . Seller has delivered to the Purchaser a true, correct and complete copy of the Real Property Lease listed on Schedule 2.1(a) – 1 (which comprises all the leases and/or subleases of immovable property to which Seller is a party or by which it is bound), together with all amendments, addenda and supplements thereto. Schedule 2.1(a) – 1 contains, in respect of Seller’s Real Property Lease, the name and address of the lessor, the street address of the premises leased thereunder, the commencement and termination dates of such Real Property Lease, the monthly rentals payable thereunder, all options to renew, if any, and a description of and reference to the Seller’s rights, if any, to assign such Real Property Lease or terminate such Real Property Lease for any reason other than lessor’s default. Schedule 4.11 sets forth, in respect of Seller’s Real Property Lease(s) and/or Seller’s franchised restaurant, a detailed description of the relevant parking plans, rights and accommodations. With respect to such Real Property Lease:

(a) The Real Property Lease is legal, valid, binding and enforceable against Seller, and to Seller’s Knowledge, enforceable against the lessor and any sublessors thereunder in accordance with its terms;

(b) Seller has received no notice that the lessor or any sublessor under the Real Property Lease intends to cancel or terminate the Real Property Lease or to exercise or not exercise any option thereunder;

(c) Except as set forth on Schedule 4.11(c) , the Real Property Lease is assignable to Purchaser;

(d) Neither Seller nor, to Seller’s Knowledge, any other party to the Real Property Lease is in breach or default, and no event has occurred that, with notice or lapse of time or both, would constitute a breach or default or permit termination, modification or acceleration thereunder;

(e) Neither Seller nor, to Seller’s Knowledge, any other party to the Real Property Lease has repudiated any provision thereof;

 

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(f) There have been and there are no disputes, oral agreement(s), temporary waivers, or forbearances in effect as to the Real Property Lease;

(g) Seller has good title to the leasehold interest under such Real Property Lease free and clear of all Liens except for those listed on Schedule 2.3 ;

(h) Seller has not assigned, pledged, transferred or conveyed any interest in the leasehold under the Real Property Lease and is not aware of any such assignment, transfer or conveyance;

(i) To Seller’s Knowledge, all facilities leased or subleased thereunder have received all approvals of governmental authorities (including licenses and permits) required in connection with the operation of its Business and have been operated and maintained in accordance with applicable laws, rules and regulations; and

(j) The Real Property Lease has not been amended or modified other than as described on Schedule 2.1(a) – 1 ;

(k) The Real Property Lease covering the premises has a remaining term of at least five (5) years (including any renewal options exercisable by the lessee thereunder); and

(l) There are no options to lease or purchase real estate obtained in connection with Seller’s Business or, to Seller’s Knowledge, in or around Seller’s Business.

4.12 Easements . Except for the Easements listed on Schedule 2.1(c) , Seller does not use or benefit from any easement, servitude, privilege, or other right-of-way in connection with its Business. Except as set forth on Schedule 2.1(c) the Easements are valid and binding, and the use and benefit of such Easements are freely assignable or transferable to Purchaser by Seller without the consent or acceptance of any other Person.

4.13 Proprietary Rights . Except for the Franchise Rights obtained by Seller from Purchaser, Seller (i) does not use any patents, inventions, research, trademarks, trade names, copyrights, service marks, trade formulas, secret formulas, recipes, royalty rights, design rights or other technical information in the operation of its Business, and (ii) is not bound by or a party to any option, license or agreement of any kind with respect to patents, trademarks, service marks, copyrights or pending applications therefore. Seller has not been informed of any claims or suits pending or threatened against it claiming an infringement of any patent, copyright, license, trademark, service mark or trade name of others in connection with its Business.

4.14 Other Property . Seller owns no fee simple real estate (corporeal immovable) or titled motor vehicles, and no such property is used in connection with its Business.

4.15 Insurance . Seller maintains property, fire, casualty, workman’s compensation, general liability insurance and other forms of insurance relating to its

 

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Assets and the operation of its Business consistent with the requirements of the Franchise Agreement.

4.16 Financial Statements . The income statements of Seller for the fiscal years 2004, 2005, and 2006, and the most current interim period of 2007 that Seller has prepared (the “Income Statements”) and the balance sheets of Seller as of December 31, 2006 (the “Balance Sheets”)(December 31, 2006 being referred to as the “Balance Sheet Date”), which have been delivered to Purchaser (collectively, the “Financial Statements”) (a) have been prepared on a U.S. federal income tax accrual basis consistently applied, (b) are correct and complete in all material respects, (c) accurately and completely represent the financial condition of the Seller in all material respects, including capital accounts, cash, other assets, income, expenses and other liabilities generated or retained as a result of Seller’s Business, as of the date or dates and for the period or periods stated, in all material respects, and (d) reflect all transactions to which Seller was a party during such period. To Seller’s Knowledge, no transaction or event has occurred since the Balance Sheet Date that has had or could have a Material Adverse Effect upon Seller’s Business or Assets.

4.17 No Assignments . Seller has not sold, assigned, transferred or otherwise disposed of, or modified, altered or replaced any of its Assets between the Balance Sheet Date and the date of this Agreement, except for Inventory sold in the ordinary course of business.

4.18 Taxes . All federal, state, county and local tax returns and reports required, including but not limited to those required for sales taxes, employment taxes, income taxes, corporate franchise taxes, and all other taxes applicable to Seller’s Business (“Taxes”), to be filed by Seller in connection with the operation of its Business or the ownership, use or operation of its Assets have been filed within the time periods and in the manner prescribed by law. Seller shall pay all Taxes when due from Seller’s Business from the date of this Agreement through the Closing Date, and thereafter to the extent such Taxes may be due after the Closing Date. Such returns and reports filed for the five preceding calendar years reflect accurately all liabilities for taxes required to be paid in connection with the operation of Seller’s Business for the periods covered thereby. All taxes and assessments (including interest and penalties) owed in connection with the operation of Seller’s Business or the ownership, use or operation of its Assets have been paid in full, or appropriate provision for payment has been made including all estimated corporate income tax payments due and payable through the date hereof. Seller currently has no outstanding tax liability under the law of any jurisdiction that would subject Purchaser or Seller’s Assets to the liability or withholding requirements of such jurisdiction’s law. There is no pending examination or proceeding by any authority or agency with respect to Seller’s Business relating to the assessment or collection of any taxes. Seller has no Knowledge that any Taxes remain unpaid, whether contested or uncontested, and Seller has no Knowledge of any notices of deficient filings or payments, whether contested or uncontested.

 

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4.19 No Violations . Seller has not violated any law, statute, rule or regulation of any Governmental Authority that individually or taken as a whole could have a Material Adverse Effect.

4.20 Business Names . Seller has not used any other business names or address within the last five years except as reflected on Exhibit “A” .

4.21 Brokers’ Fees and Expenses . Seller has not retained or utilized the services of any broker, finder or intermediary, or paid or agreed to pay any fee or commission to any person or entity for or on account of the transactions contemplated hereby, or had any communications with any person or entity that would obligate Purchaser to pay all or any portion of such fees or commissions.

4.22 Litigation . Except as set forth on Schedule 4.22 , there is no litigation, arbitration, known investigation, proceeding or controversy (including, without limitation, unsettled claims) relating to the Seller’s Business or Assets, or to Seller’s ability or right to sell its Assets, pending or, to Seller’s Knowledge, threatened by or against Seller by any third party or before any Governmental Authority. Seller has received no notice, order, judgment, injunction or decree of any Governmental Authority with respect to which Seller has been named as a party or that apply to or involve its Business or Assets.

4.23 Labor Matters .

(a) Seller is not a party to any collective bargaining agreement or other contract or understanding with a labor union relating to employees of its Business, and to the Knowledge of Seller there are no labor union organizational efforts underway or threatened involving any of Seller’s employees. There are no labor disputes, claims, lawsuits or grievances pending, or to Seller’s Knowledge threatened, against or otherwise affecting its Business. There are no written employment contracts or written employment agreements with any employees of Seller’s Business. All oral employment contracts or agreements with any employees of Seller’s Business shall be terminated by Seller effective on or before the Closing Date.

(b) Schedule 4.23(b) sets forth all full-time and part-time employees of Seller, together with each employee’s title and identification number, if any.

(c) Seller will deliver any and all necessary notices to its employees relating to the transaction contemplated by this Agreement, including without limitation any notices required by the WARN Act.

(d) To Seller’s Knowledge, Seller has at all times complied with all federal, state and local laws, rules, regulations, orders, judgments, decrees, ordinances and other statements of authority pertaining to employment, including without limitation all (i) employment eligibility verification forms, (ii) all immigration and alien employee regulations and laws, (iii) group health plans of Seller to which Part 6 of Subtitle B of Title I of ERISA and Section 4980B of the Code (such statutory provisions and predecessors thereof are referred to herein collectively as “COBRA”) applies and that

 

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cover employees of its Business, (iv) the Americans with Disabilities Act and (v) payment of withholding taxes for or on behalf of employees.

(e) The transactions contemplated by this Agreement do not violate any federal or state labor laws or regulations.

4.24 Benefit Plans and ERISA . Except as set forth on Schedule 4.24-1 , Seller does not maintain or contribute to, and Seller has no liability whatsoever with respect to, any Employee Benefit Plan. The health plan has been maintained and operated in accordance with applicable law including, without limitation, COBRA. Schedule 4.24-2 attached hereto lists the name of each person who has experienced a “Qualifying Event” (as defined in COBRA) with respect to the health plan and is eligible for “Continuation Coverage” (as defined in COBRA) and whose maximum period for Continuation Coverage has not expired. Included in such list are the current address for each such individual, the date and type of each Qualifying Event, whether the individual has already elected Continuation Coverage and, for any individual who has not yet elected Continuation Coverage, the date on which such individual was notified of his or her rights to elect Continuation Coverage. Except for the health plan, Seller does not sponsor, maintain or contribute to any Employee Benefit Plan governed by ERISA.

Neither the Seller nor any ERISA Affiliate maintains, has ever maintained or become obligated to contribute to any Employee Benefit Plan that is subject to Title IV of ERISA. Seller has not within the last five years engaged in, nor is a successor corporation to any entity that has engaged in, a transaction described in Section 4069 of ERISA. The Assets are not subject to a lien by the Pension Benefit Guaranty Corporation.

4.25 Environmental Matters .

(a) To Seller’s Knowledge, Seller is conducting and at all times has conducted its Business in compliance with, and has not violated in any material respects, any Environmental Law. Seller has no Knowledge that noncompliance exists with respect to any Environmental Law with respect to its Assets and/or its Business.

(b) To Seller’s Knowledge, no condition, circumstance or activity has existed or currently exists with respect to Seller’s Assets and/or Business which could reasonably be expected to result in recovery by a Governmental Authority or other Person for damages or other costs, expenses or damages arising from or relating to any alleged injury or threat of injury or harm to public health, safety, or the environment.

(c) There are no outstanding orders, decrees, or judgments of any kind against Seller or any of its Assets or Business concerning any environmental, public health, safety, land use matters or other Environmental Law including, but not limited to, the emissions discharge or release of Hazardous Materials into the environment or work place, or the management of Hazardous Materials.

 

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(d) To the extent any chemicals or chemical products are included among Seller’s Assets, such chemicals or chemical products are integral to and required for the conduct of Seller’s Business and are not waste or waste materials.

4.26 Full Disclosure .

(a) No representation or warranty or other statement made by Seller in the Agreement, and the exhibits and schedules thereto, contains any untrue statement or omits to state a material fact necessary to make any statements contained herein or therein, in light of the circumstances in which it was made, not misleading.

(b) Seller does not have Knowledge of any fact that has specific application to Seller (other than general economic or ind