EX 10.1 PURCHASE AGREEMENT

Exhibit 10.1

BURGER TIME CORPORATION

BUSINESS TRANSFER AGREEMENT

 

This Agreement made effective the 1st day of July, 2004, between Seller and Purchaser, who agree as follows:

 

 

1.

Definitions.  For the purpose of this Agreement:

a.

“Agreement” shall mean this Business Transfer Agreement between Seller and Purchaser.

 

b.

“Assignment of Real Estate Lease” shall mean the agreement between Seller and Purchaser pertaining to the Real Estate Lease and which shall be consented to by Dallas Vandenbos and Janice Vandenbos within seven (7) days after the Closing Date, a specimen of which is attached as Exhibit “A” to this Agreement.

 

c.

“Bill of Sale” shall mean the bill of sale given by Seller to Purchaser transferring the Business Assets to be Sold, a specimen of which is attached as Exhibit “B” to this Agreement.

 

d.

“Business” shall mean the fast food restaurant businesses known as Burger Time, which are located at:

 

 

(1)	Fargo, North Dakota;
(2)	Bismarck, North Dakota;
(3)	Minot, North Dakota;
(4)	Grand Forks, North Dakota;
(5)	Moorhead, Minnesota;
(6)	Detroit Lakes, Minnesota;
(7)	Elk River, Minnesota;
(8)	Waite Park, Minnesota;
(9)	Sioux City, Iowa; and,
(10)	Two (2) locations at Sioux Falls, South Dakota.

 

 

e.

“Business Assets to be Sold” shall collectively mean the following assets used in the operation of the Business:

 

(1)

“Equipment and Fixtures” shall mean the restaurant fixtures and equipment, and office equipment, including computer, desks, copier and fixtures and equipment.

 

(2)

“General Intangibles” shall mean the trade name of Seller and all assumed names under which it conducts business, all trade names, including “Burger Time” (as reserved in North Dakota, Minnesota, South Dakota and Iowa), all trademarks and service marks and any logos, formulas, trade secrets, technology, know-how, customer lists and telephone numbers of Seller which may be used in the operation of the Business and all Goodwill associated therewith.

 

(3)

“Goodwill” shall mean the intangible value of the Business as a going concern.

 

(4)

“Leasehold Improvements” shall mean the trade fixtures and improvements made by Seller during its tenancy under the Real Estate Lease, subject to the rights of Landlord under the Real Estate Lease relative to the trade fixtures and improvements.

 

(5)

“Outdoor Sign and Assets” shall mean the tables, utility sheds, fences and signs for the purpose of advertising the Business located on the Real Estate.

 

(6)

“Real Estate” shall mean the real property used in the conduct of the Business, excluding the real property that is the subject of the Real Estate Lease.

 

(7)

“Supplies” shall mean all non-consumable supplies, utensils and tools.

 

(8)

“Inventory” shall mean all food, paper products and consumable supplies.

 

(9)

“Vehicle” shall mean the 2003 Toyota Corolla CE/LE/S whose VIN is  1NXBR32E03Z058627.

 

(10)

“Permit” shall mean all licenses and permits necessary or convenient for conduct of the Business to the extent transferable.

 

f.

“Business Assets Not for Sale” shall collectively mean the following assets used in the operation of the Business, which are to be retained by Seller and not purchased by Purchaser:

 

(1)

“Accounts Receivable” shall mean all accounts receivable of the Business, including any receivables for returned checks in the process of collection and any receivables from supplier’s promotional rebates on product purchased prior to the Closing Date.

 

(2)

“Cash” shall mean all cash and cash equivalents used in the operation of the Business, wherever located.

 

(3)

“Checking Accounts” shall mean all checking accounts.

 

(4)

“Refunds” shall mean all claims for tax refunds and all deposits and pre-paid expenses.

 

(5)

“Records” shall mean Seller’s corporate minute book, stock records and similar records, including financial records and tax returns.

 

(6)

“Insurance” shall mean any pre-paid worker’s compensation insurance and pre-paid insurance insuring the assets of the Seller regarding the Business.

 

(7)

“Vehicles” shall mean the:

 

(a)

2003 Toyota Corolla CE/LE/S whose VIN is 1NXBR32E13Z038936;

 

(b)

2002 Toyota Camry LE/XLE/SE whose VIN is 4T1BE32K02U080644; and,

 

(c)

2002 Toyota Tundra Limited whose VIN is 5TBBT48132S293146.

 

(8)

“Employee Plan Assets” shall mean all assets in any of Seller’s employee plans of any kind, including any pension, retirement, disability, medical, dental or other health insurance plan, life insurance or death benefit plan, profit sharing, deferred compensation, stock option, bonus or other incentive plan, vacation benefit plan, severance  plan or other employee benefit plan or arrangement (collectively, the “Employee Plans”).

 

(9)

“Actions” all causes of action that Seller may have relating to any of the foregoing or relating to liabilities not assumed by Purchaser.

 

g.

“Closing Date” shall mean the date this Agreement is executed by both parties hereto.  The closing of the transactions contemplated by this Agreement shall be effective as of 11:59 p.m. on the Closing Date.

 

h.

“Contracts for Deed” shall mean the ten (10) separate contracts between Seller and Purchaser relating to the sale of the Real Estate located in North Dakota, South Dakota, Iowa and Minnesota, specimens of which are attached as Exhibits ”C-1 through C-10” to this Agreement.

 

i.

“Covenant Not to Compete” shall mean the agreement by and among Seller, Douglas R. Geeslin, Ralph B. Nordick and Purchaser, a specimen of which is attached as Exhibit ”D” to this Agreement.

 

j.

“Financial Statements” shall mean the unaudited balance sheets and the related statements of income and retained earnings of Seller, at and as of December 28, 2003 and March 28, 2004.

 

k.

“Financing Statements” shall mean the instruments by which the security interest granted in the Security Agreement is perfected, a specimen of which is attached as Exhibit ”E” to this Agreement.

 

l.

“Guarantor” shall mean Gary Copperud, whose mailing address is 1234 Trappers Point, Fort Collins, Colorado 80524.

 

m.

“Inventory Amount” shall mean the current value (as determined from supplier prices) of the Retail Inventory and Supplies based upon a physical count of the Retail Inventory and Supplies as of the Closing Date, as agreed to by Seller and Purchaser.

 

n.

“Personal Guaranty” shall mean the instrument by which Guarantor personally guarantees the obligations of Purchaser, a specimen of which is attached as Exhibit ”F” to this Agreement.

 

o.

“Promissory Note” shall mean the promissory note given to Seller, dated as of the date of this Agreement, in the original amount of Three Hundred Thousand and 00/100 ($300,000.00) Dollars, a specimen of which is attached as Exhibit ”G” to this Agreement.

 

p.

“Purchase Price” shall have the meaning ascribed to it at Paragraph 3.a.

 

q.

“Purchaser” shall mean Burger Time Acquisition Corporation, a wholly-owned subsidiary of Sterion Incorporated, a corporation organized under the laws of the State of Minnesota, whose mailing address is 13828 Lincoln Street NE, Ham Lake, Minnesota 55304.

 

r.

“Real Estate Lease” shall mean the real estate lease dated January 1, 2004 by and among Seller as Tenant and Dallas Vandenbos and Janice Vandenbos, as Landlord, relating to real property located in Sioux Falls, South Dakota.

 

s.

“Security Agreement” shall mean the agreement in which Seller retains and Purchaser grants a security interest in the Business Assets to be Sold, a specimen of which is attached as Exhibit ”H” to this Agreement.

 

t.

“Seller” shall mean Burger Time Corporation, a corporation organized under the laws of the State of North Dakota, whose mailing address is 675 12th Avenue NE, West Fargo, North Dakota 58078.

 

2.

Purchase of Assets, Assumption of Liabilities and Exclusions.  Subject to the terms and conditions of this Agreement:

a.

As of the Closing Date, Seller agrees to assign, sell, transfer, convey and deliver to Purchaser and Purchaser agrees to purchase from Seller, all of the Business Assets to be Sold.

 

b.

Purchaser agrees to assume all obligations arising after the Closing Date under the Real Estate Lease, provided that:

 

(1)

Seller agrees to pay for that portion of rent, utilities and other real estate expenses pertaining to the Real Estate Lease arising prior to and including the Closing Date.

 

(2)

Purchaser agrees to pay that part of rent, utilities and other real estate  expenses pertaining to the Real Estate Lease arising after the Closing Date.

 

c.

With respect to reoccurring ordinary monthly expenses:

 

(1)

Seller shall pay for any reoccurring ordinary monthly expenses, including linen service and alarm system costs arising prior to and including the Closing Date.

 

(2)

Purchaser agrees to pay any reoccurring ordinary monthly expenses, including linen service and alarm system costs arising after the Closing Date.

 

d.

Notwithstanding the above:

 

(1)

Purchaser does not purchase and Seller does not sell any of the Business Assets Not For Sale; and,

 

(2)

Except for the assumption under the Real Estate Lease, Purchaser shall not assume any liabilities, obligations, or undertakings of Seller of any kind or nature whatsoever, whether fixed or contingent, known or unknown, determined or determinable, due or not yet due.

 

3.

Purchase Price.  The purchase price for the Business Assets to be Sold shall be determined, allocated and paid as follows:

a.

Determination and Allocation.  The Purchase Price shall be the sum of Two Million Eight Hundred Thousand and 00/100 ($2,800,000.00) Dollars, subject to adjustment as provided in Paragraph 3.c., plus the amounts which may be owed by Purchaser under Paragraph 2.b.(2) and 2.c.(2) and the Inventory Amount.

 

(1)

Allocation of Purchase Price to Business Assets to be Sold.  The Purchase Price shall be allocated as follows:

 

 

(a)	Business Locations:
	i.	Fargo, North Dakota		$195,000
		a)	Land:		$50,000
		b)	Buildings and Leasehold Improvements:		$55,000
		c)	Equipment and Fixturies:		$90,000
	ii.	Bismarck, North Dakota		$185,000
		a)	Land:		$40,000
		b)	Buildings and Leasehold Improvements:		$55,000
		c)	Equipment and Fixturies:		$90,000
	iii.	Minot, North Dakota		$185,000
		a)	Land:		$40,000
		b)	Buildings and Leasehold Improvements:		$55,000
		c)	Equipment and Fixturies:		$90,000
	iv.	Grand Forks, North Dakota		$185,000
		a)	Land:		$40,000
		b)	Buildings and Leasehold Improvements:		$55,000
		c)	Equipment and Fixturies:		$90,000
	v.	Moorhead, Minnesota		$185,000
		a)	Land:		$40,000
		b)	Buildings and Leasehold Improvements:		$55,000
		c)	Equipment and Fixturies:		$90,000
	vi.	Detroit Lakes, Minnesota		$185,000
		a)	Land:		$40,000
		b)	Buildings and Leasehold Improvements:		$55,000
		c)	Equipment and Fixturies:		$90,000
	vii.	Elk River, Minnesota		$465,000
		a)	Land:		$275,000
		b)	Buildings and Leasehold Improvements:		$90,000
		c)	Equipment and Fixturies:		$100,000
	viii.	Waite Park, Minnesota		$305,000
		a)	Land:		$160,000
		b)	Buildings and Leasehold Improvements:		$55,000
		c)	Equipment and Fixturies:		$90,000
	ix.	Sioux City, Iowa		$380,000
		a)	Land:		$175,000
		b)	Buildings and Leasehold Improvements:		$115,000
		c)	Equipment and Fixturies:		$90,000
	x.	Sioux Falls, South Dakota (East)		$185,000
		a)	Land:		$40,000
		b)	Buildings and Leasehold Improvements:		$55,000
		c)	Equipment and Fixturies:		$90,000
	xi.	Sioux Falls, South Dakota (West)		$145,000
		a)	Land:		Leased
		b)	Buildings and Leasehold Improvements:		$55,000
		c)	Equipment and Fixturies:		$90,000
(b)	Goodwill			$100,000
(c)	Non-Compete Agreement			$100,000
	TOTAL			$2,800,000

 

 

 

(2)

Additional Purchase Price.   In addition to the Purchase Price under Paragraph 3.a. of this Agreement Purchaser shall pay to Seller the Inventory Amount by certified check or wire transfer, as Seller may direct, within three (3) business days of the Closing Date.

 

b.

Payment of Purchase Price.  The Purchase Price shall be payable as follows, subject to Paragraph 3.c. of this Agreement :

 

(1)

Cash Payment.  Purchaser shall pay to Seller on the Closing Date, in cash or by wire transfer, as Seller may direct, the sum of Five Hundred Thousand and 00/100 ($500,000.00) Dollars.

 

(2)

Balance of Purchase Price.  The balance of the Purchase Price in the amount of Two Million Three Hundred Thousand and 00/100 ($2,300,000.00) Dollars shall be payable as follows:

 

(a)

The sum of Two Million and 00/100 ($2,000,000.00) Dollars shall be payable under the terms of Ten (10) Contracts for Deed.

 

(b)

The sum of Three Hundred Thousand and 00/100 ($300,000.00) Dollars shall be payable pursuant to the terms set forth under the Promissory Note.

 

c.

Purchase Price Adjustment.  Purchaser may be entitled to the following adjustment to the Purchase Price:

 

(1)

If the Purchase Price is not paid in full by Purchaser to Seller by 5:00 p.m. Central Time on November 12, 2004, then:

 

(a)

The Purchase Price shall be increased by the sum of Three Hundred Thousand and 00/100 ($300,000.00) Dollars for a total Purchase Price of Three Million One Hundred Thousand and 00/100 ($3,100,000.00) Dollars;

 

(b)

Purchaser agrees to execute a promissory note pertaining to the payment of this Three Hundred Thousand and 00/100 ($300,000.00) Dollars pursuant to the terms set forth under Paragraph 3.c.(2)(a) of this Agreement, a specimen of the promissory note is attached to this Agreement as Exhibit “I”.

 

(2)

If the Purchase Price is increased as provided above:

 

(a)

The Three Hundred Thousand and 00/100 ($300,000.00) Dollars shall be payable as follows:

 

i.

Monthly interest only payments beginning December 1, 2004 at an annual interest rate of Six (6%) percent.

 

ii.

A lump sum principal payment in the amount of Three Hundred Thousand and 00/100 ($300,000.00) Dollars, plus any accrued interest, on November 12, 2009.

 

(b)

The Three Hundred Thousand and 00/100 ($300,000.00) Dollar increase to the Purchase Price shall be allocated to Goodwill for a total allocation to Goodwill in the amount of Four Hundred Thousand and 00/100 ($400,000.00) Dollars.

 

1.

Representations and Warranties of Seller.  Seller represents and warrants that:

 

a.

Organization.  Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of North Dakota.  Seller is qualified to do business as a foreign corporation in each state in which it does business.

 

b.

Authority.  Seller has the right, power, legal capacity, and authority to enter into and perform Seller’s obligations under this Agreement.

 

(1)

No approvals or consents of any person other than Seller are necessary in connection with this Agreement, other than the consent of Landlord under the Real Estate Lease.

 

(2)

The execution and delivery of this Agreement by Seller has been duly authorized by its Board of Directors and Shareholders.

 

(3)

This Agreement has been executed and delivered by a duly authorized officer of Seller and is a valid and binding agreement of Seller, and enforceable against it in accordance with its terms.

 

c.

Real Property.  With respect to Real Property:

 

(1)

Seller has not entered into any other contracts for the sale of the Real Property, nor are there any effective rights of first refusal or options to purchase the Real Property or any other legal or equitable rights of others that might prevent the consummation of this Agreement or the use of the Property by Buyer in the conduct of the Business.

 

(2)

To the best of Seller’s knowledge, there are no special assessments which have been certified or are pending certification that require annual installments in excess of Two Hundred and 00/100 ($200.00) Dollars per Business location.

 

(3)

Seller has not been cited for any violations of any rule, regulation, code, resolution, ordinance, statute or law involving the use, maintenance, or operation or condition of the Real Property, or any part thereof or installations therein, and to the best of Seller’s knowledge, the Real Property fully and duly complies with all applicable resolutions, statutes, laws, rules, regulations, and codes of all governmental units, authorities, agencies, and environmental protection agencies having authority over the Real Property.

 

(4)

There is no litigation, condemnation or proceeding of any kind, or, to Seller’s knowledge, threatened against, any portion of the Real Property.

 

d.

Title to Certain Business Assets to be Sold; Sufficiency; Condition.  Seller has and as of the Closing Date, Seller will deliver to Purchaser, good, valid and marketable title to all of the Business Assets to be Sold (other than the Real Property and the Pepsi soft drink equipment), free and clear of all liens, pledges, mortgages, security interests, claims or encumbrances of any nature whatsoever.

 

(1)

Except for the soft drink equipment and the Business Assets Not for Sale, the Business Assets to