EXHIBIT 2.1 AGREEMENT FOR PURCHASE AND SALE OF ASSETS

 

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                                                                     EXHIBIT 2.1

 

                    AGREEMENT FOR PURCHASE AND SALE OF ASSETS

 

         This Agreement is entered into this 18th day of October, 2005, by and

between the following parties:

 

o         Back Yard Burgers, Inc., a Delaware corporation ("BUYER"); and

 

o         Charles L. Rodgers ("Rodgers"), an individual residing in Memphis,

         Shelby County, Tennessee, Southern Restaurant Development, LLC ("SRD"),

         a Florida limited liability company, and CLR Management, LLC ("CLR"), a

         Tennessee limited liability company (Rodgers, SRD and CLR are

         collectively, the "SELLERS").

 

                                    RECITALS

 

         A. Sellers are the owners and franchisee operators of four (4)

restaurants doing business under the "Back Yard Burgers" trade name in the

Florida cities of Panama City, Destin, Fort Walton Beach, and Crestview

(collectively, the "BUSINESS").

 

         B. Buyer desires to buy and Sellers desire to sell substantially all of

Sellers' assets used or useful in the operation of the Business as a going

concern on the terms and conditions set forth in this Agreement.

 

                                    AGREEMENT

 

         In consideration of the mutual agreements, promises and covenants set

forth above and contained herein, the parties hereto agree as follows:

 

                     ARTICLE 1. PURCHASE AND SALE OF ASSETS

 

         1.01 PURCHASED ASSETS. Subject to the terms and conditions set forth in

this Agreement, Sellers hereby agree to sell, transfer and convey to Buyer, free

and clear of all mortgages, liens, security interests and encumbrances of any

kind, and Buyer hereby agrees to purchase from Sellers, all of the real and

personal property, tangible and intangible, owned or leased, that is located at

and used by Sellers in the operation of the Business (collectively, the

"ASSETS"), being more particularly described as follows:

 

                  (a) All equipment, machinery, tools, furniture, computers,

         cash registers and all other tangible personal property used by Sellers

         in the operation of the Business, set forth on SCHEDULE 1.01(a) and all

         rights associated therewith ("EQUIPMENT");

 

                  (b) All of Rodgers' right, title and interest under that

         certain Lease Agreement dated as of January 21, 2004, by and between

         Delores W. Holman, as Lessor, and Charles L. Rodgers, as Lessee, and

         all amendments, renewals, modifications and assignments thereof (the

         "LEASE");

 

                  (c) All of Sellers' right, title and interest in the building,

         and all fixtures thereto, and all related improvements existing at

         10260 Front Beach Road in Panama City, Florida (the "PANAMA CITY

         BUILDING");

 

 

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                  (d) The real estate described on SCHEDULE 1.01(d) and all

         buildings, fixtures and improvements located thereon (the "REAL

          ESTATE");

 

                  (e) All of Sellers' rights, to the extent legally

         transferable, in all Permits which relate to the operation of the

         Business;

 

                  (f) All records, computer software, operations manuals, repair

         and maintenance logs, "Back Yard Burgers" franchise materials, employee

         manuals and warranties located at the Business, and all other documents

         used by Sellers in the operation of the Business;

 

                  (g) All of Sellers' right, title and interest in and to any

         franchise agreements relating to the Business, including but not

         limited to those certain franchise agreements entered into between

         Buyer and CLR, dated November 8, 2002, October 4, 2004, and February 7,

         2005, and that certain franchise agreement entered into between Buyer

         and CLR, dated December 15, 2004, and any amendments, addenda or

         alterations thereto; and

 

                  (h) All of Sellers' right, title and interest in and to that

         certain Area Development Agreement entered into between Buyer and CLR,

         dated November 8, 2002.

 

         1.02 EXCLUDED ASSETS. The Assets purchased by Buyer shall not include

any assets of Sellers or Assets associated with the Business not specifically

listed in the Agreement.

 

         1.03 ASSUMED LIABILITIES AND OBLIGATIONS. Upon the terms and subject to

the conditions set forth in this Agreement, at the Closing, Buyer shall assume

and thereafter shall perform and discharge all of Sellers' obligations under the

Lease and the Service Contracts described on Exhibit 1.03 annexed hereto and

incorporated herein by this reference (the "ASSUMED LIABILITIES"). Buyer shall

forever defend, indemnify and hold harmless Sellers from and against all

liability of Sellers under the Assumed Liabilities, including costs, expenses,

reasonable attorney's fees and expert witness fees related to, or arising,

therefrom. Buyer shall NOT assume any of Sellers' liabilities, including its

accounts payable, except the Assumed Liabilities.

 

                            ARTICLE 2. PURCHASE PRICE

 

         2.01 PURCHASE PRICE; PAYMENT. Buyer shall purchase the Assets for the

amount of Four Million Six Hundred Fifty Thousand and no/100 Dollars

($4,650,000.00) (the "PURCHASE PRICE"). Buyer shall pay the sum of Fifty

Thousand and no/100 Dollars ($50,000.00) to Sellers upon execution of this

Agreement as earnest money. At the Closing, Buyer shall pay Sellers the balance

of the Purchase Price by bank cashier's check or a Federal Reserve System wire

transfer of immediately available funds.

 

         2.02 INVENTORY. At the Closing, Buyer shall purchase from Sellers all

usable inventory of the Business at the Sellers' invoice cost ("AT COST"). The

purchase of the inventory under this Section is separate from and in addition to

the Purchase Price stated in Section 2.01. The purchase price of the inventory

shall be paid to Sellers at Closing. The Buyer shall have the right to

physically inspect, count and value (at cost) the inventory on-hand the night

prior to the Closing. The Buyer has the right to reject (and not purchase) any

inventory items that Buyer, or

 

 

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its agents, deems to be unuseable or unsalable in the ordinary course of the

Business, within Buyer's sole discretion.

 

         2.03 CASH ON HAND. At the Closing, Buyer shall compensate Sellers for

any cash on hand as of said date. This payment shall likewise be separate from

and in addition to the Purchase Price stated in Section 2.01.

 

                             ARTICLE 3. THE CLOSING

 

         3.01 CLOSING DATE. Provided this Agreement has not been previously

terminated as provided herein, the closing (the "CLOSING") of the transactions

contemplated herein (the "TRANSACTION") shall occur at the offices of Wyatt,

Tarrant & Combs, LLP, 1715 Aaron Brenner Drive, Suite 800, Memphis, Tennessee

38120, at 10:00 a.m. on November 15, 2005 (the "CLOSING DATE"), or sooner upon

mutual agreement.

 

          3.02. TRANSFER OF CONTROL. Buyer shall be in control and possession of

the Assets as of the close of the Business on the Closing Date.

 

         3.03 PRORATION OF SALES AND EXPENSES ON THE CLOSING DATE. All sales

proceeds on the Closing Date shall belong to Buyer. All operating expenses,

including staffing, attributable to the Closing Date shall be paid by the Buyer.

 

         3.04 ACCOUNTS RECEIVABLE. All outstanding royalties, ad fees and any

other payments due to Buyer from Seller under the aforesaid franchise agreements

will be made at or prior to closing.

 

               ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF BUYER

 

         Buyer represents and warrants to Sellers as follows:

 

         4.01 ORGANIZATION AND QUALIFICATION. Buyer is a corporation duly

organized, validly existing and in good standing under the laws of the State of

Delaware.

 

          4.02 AUTHORITY. Buyer has full power and legal capacity to execute and

deliver this Agreement and to perform its obligations under the terms hereof,

including consummation of the Transaction. Buyer's execution and delivery of

this Agreement and performance of its obligations hereunder, including

consummation of the Transaction, have been duly authorized by all necessary

corporate action.

 

         4.03 ENFORCEABLE AGREEMENT. This Agreement constitutes a legally valid

and binding obligation of Buyer that is enforceable according to its terms

subject only to bankruptcy, insolvency, fraudulent conveyance, reorganization,

moratorium and similar laws affecting the enforceability of contractual

obligations and creditor's rights generally and by the application of equitable

principles by courts of competent jurisdiction, sitting at law or in equity.

 

         4.04 NO CONFLICTS, VIOLATIONS OR BREACHES. Execution and delivery of

this Agreement by Buyer and its performance of the obligations hereunder,

including consummation of the Transaction, do not conflict with or contravene

(i) any provision of Buyer's Articles of

 

 

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Incorporation or Bylaws; (ii) any judgment, order or decree binding on or

affecting Buyer; or (iii) any law, ordinance, regulation or rule, or any order

or restriction of any court, governmental body or agency, to which Buyer is

subject or bound.

 

          4.05 BROKER'S FEES. No agent, broker, finder, investment banker or

other person is entitled to any fee in connection with the Transaction or the

closing of the Transaction.

 

              ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF SELLERS

 

          Sellers represent and warrant the following to Buyer:

 

         5.01 ORGANIZATION AND QUALIFICATION. Southern Restaurant Development,

LLC, is a limited liability company duly organized, validly existing and in good

standing under the laws of the State of Florida. CLR Management, LLC, is a

limited liability company duly organized, validly existing and in good standing

under the laws of the State of Tennessee.

 

         5.02 AUTHORITY. Sellers have full power and legal capacity to execute

and deliver this Agreement and to perform their obligations hereunder, including

consummation of the Transaction. Sellers' execution and delivery of this

Agreement and performance of their obligations hereunder, including consummation

of the Transaction, have been duly authorized by all necessary corporate action.

 

         5.03 ENFORCEABLE AGREEMENT. This Agreement constitutes a legally valid

and binding obligation of Sellers that is enforceable according to its terms

subject only to bankruptcy, insolvency, fraudulent conveyance, reorganization,

moratorium and similar laws affecting the enforceability of contractual

obligations and creditor's rights generally and by the application of equitable

principles by courts of competent jurisdiction, sitting at law or in equity.

 

          5.04 NO CONFLICTS, VIOLATIONS OR BREACHES. Sellers' execution and

delivery of this Agreement and performance of the obligations hereunder,

including consummation of the Transaction, do not conflict with, contravene or

constitute a material default, violation or breach under any of the following:

(i) any judgment, order or decree of any court, governmental body or agency that

binds or affects any Seller; (ii) any law, ordinance, regulation or rule of any

governmental body or agency, to which any Seller, any Asset or the Business is

subject; or (iii) any agreement, or other instrument, to which any Seller is a

party.

 

         5.05 BROKER'S FEES. No agent, broker, finder, investment banker or

other person is entitled to any fee or commission based upon bringing the Buyer

and Sellers together.

 

         5.06 TAXES.

 

                  (a)       Sellers have:

 

                           (i) filed all returns for federal, state, county,

                  local and foreign income, use, excise, property, sales,

                  employment, business activity and other taxes that were

                  required to be filed on or before the date of this Agreement;

 

 

 

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                           (ii) paid all taxes, assessments, governmental

                  charges, withholding deposits and all interest and penalties

                  which were due and payable on or before the date hereof; and

 

                           (iii) withheld and paid all taxes required to have

                  been withheld and paid in connection with amounts paid or

                  owing to their employees, creditors, independent contractors

                  or other third parties

 

                  (b) Each of the Sellers has no knowledge that it or any other

         Seller is a party to any pending or threatened action or proceeding for

         assessment or collection of taxes, and no claim for assessment or

         collection of taxes has been asserted against any Seller.

 

          5.07 JUDGMENTS; LITIGATION. The Assets and/or the Business are not

subject to any judgment, order or decree of any court or agency. There is not

now pending any suit, action or proceeding before any court, arbitrator or

tribunal, against or involving the Business or the Assets, and Sellers have no

knowledge of any threat of any such proceeding.

 

         5.08 ABSENCE OF CERTAIN DEVELOPMENTS. None of the following events has

occurred since January 1, 2005:

 

                  (a) any material transaction affecting the Business of the

         Assets not in the ordinary course of the Business;

 

                  (b) any material adverse change in the condition, financial or

         otherwise, of the Business;

 

                  (c) any purchase, sale, lease, assignment or other transfer of

         any of the Assets or any interest therein, or reaching an agreement or

         understanding to do any of the foregoing, excepts sales in the ordinary

         course of the Business;

 

                  (d) any mortgage or pledge of any of the Assets or subjecting

         any of the Assets to any mortgage, lien, charge, security interest or

         other encumbrance; or

 

                  (e) Any of the Sellers becoming obligated for any indebtedness

         or liability except any incurred in the ordinary course of business.

 

         5.09 ASSETS. Except for the Permitted Exceptions, Sellers are the legal

and beneficial owners of all the Assets. The Assets constitute all of the

property that Sellers use in the operation of the Business.

 

         5.10 CONDITION OF EQUIPMENT. All heating, air-conditioning, electrical,

sewer and plumbing systems, equipment and appliances to be acquired by Buyer are

suitable for the uses intended therefor.

 

         5.11 EMPLOYEE RELATIONS. Sellers have no written agreement with any

employee whereunder (a) any Seller has any obligation to such employee, or his

or her beneficiaries, other than the obligation to pay current compensation and

accrued vacation, (b) any Seller must give

 

 

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more than thirty (30) days prior notice in order to terminate such agreement, or

(c) any employee owes money to any Seller.

 

         5.12 MATTERS REGARDING REAL ESTATE.

 

                   (a) Charles L. Rodgers ("Rodgers") is the record owner of the

         Real Estate, free and clear of all mortgages, liens or encumbrances

         whatsoever (other than mortgages which will be paid at Closing out of

         the sale proceeds) or claims of any other person or entity, except for

         any special exceptions shown on SCHEDULE 5.12 attached hereto.

 

                   (b) Rodgers has not received any notice of any existing or

         threatened condemnation or any legal action of any kind involving the

         Real Estate.

 

                   (c) Except for Buyer's rights, Rodgers is not subject to any

         agreement including, but not limited to, any right of first refusal or

         option to purchase granted to a third party which would or could

         prevent him from completing the sale of the Real Estate under this

         Agreement.

 

                   (d) Rodgers has no knowledge with respect to any part of the

         Real Estate:

 

                           (i) that asbestos or polychlorinated byphenyls

                  ("PCBS") is located on or in any of the Real Estate;

 

                           (ii) that any underground storage tanks are located

                  on the Real Estate or were located on any part of the Real

                   Estate and subsequently removed or filled;

 

                           (iii) that any portion of the Real Estate (including

                  improvements thereon) contains asbestos or any substance or

                  materials which are deemed to be hazardous or toxic under any

                  Federal or State law, regulation or order.

 

                   (e) That from the date hereof and up to the Closing Date,

         Rodgers will refrain from transferring any of the Real Estate or

          creating on the Real Estate any easements, liens, mortgages,

         encumbrances or other interests in favor of third parties.

 

                   (f) No work has been performed or is in progress and no

         materials have been furnished which might give rise to a mechanic's,

         materialman's or other similar lien against the Real Estate.

 

                   (g) Until the Closing Date, Rodgers shall not, without the

         prior written consent of Buyer, permit any structural or mechanical

         modifications or additions to the Real Estate.

 

             ARTICLE 6. CONDUCT AND OBLIGATIONS PENDING THE CLOSING

 

         6.01 Unless Buyer otherwise agrees in writing or as otherwise

contemplated by this Agreement, Sellers will, prior to the Closing Date, conduct

the Business in the ordinary and usual course and consistent with past custom

and practice.

 

 

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                           ARTICLE 7. OTHER AGREEMENTS

 

         7.01 PRE-CLOSING ACCESS BY BUYER.

 

                  (a) Immediately after this Agreement is signed and through and

         including the Closing Date, the Buyer, subject to Sellers' reasonable

         approval, shall have access to the Real Estate and the Business during

          the regular business hours of the Business for the purposes of: (i)

         evaluating and hiring for itself existing employees of Sellers; (ii)

         hiring and training new employees to work in the Business and (iii)

         inspecting facilities and equipment.

 

                  (b) The hiring process referred to in Section 7.01(a) shall

         include but not be limited to advertising for open positions in the

         local newspapers, on-site interviews and making offers of employment.

 

                   (c) The Buyer shall not to interfere with the operation of the

         Sellers' Business.

 

                  (d) It is understood and agreed that Buyer's above-described

         pre-closing activities will not relieve Sellers of the responsibility

         of fully staffing and operating the Business in its ordinary course at

         all times prior to Closing.

 

         7.02 ACCESS TO BOOKS, RECORDS AND PERSONNEL. Sellers shall provide

Buyer and its counsel, accountants or other agents, access to Sellers' books and

records, personnel and properties, including the Assets, during reasonable

hours.

 

         7.03 FILINGS AND CONSENTS. Buyer and Sellers shall take all reasonable

action necessary to (a) prepare all applications, filings and other

requirements, if any, under applicable federal, state and local laws, ordinances

and regulations governing completion of the Transaction and conduct of the

Business and (b) obtain all consents, amendments or waivers under any contract

that is necessary in order to avoid a breach of or default under such contract

as the result of the execution of this Agreement or the consummation of the

Transaction.

 

         7.04 EXPENSES. Except as otherwise provided herein, all costs and

expenses, including attorney's fees, incurred in connection with the negotiation

of this Agreement and the sale of the Assets under the terms hereof and with all

other events upon which closing of the Transaction shall be paid by the party

incurring such expenses.

 

         7.05 PROVISIONS REGARDING PURCHASE OF THE REAL ESTATE. The parties

hereto agree that the sale of the Real Estate shall close simultaneously with

the closing of the sale of the other Assets. Such Real Estate purchase shall be

consummated pursuant to the following:

 

                   (a) TITLE AND DEEDS. On the Closing Date, Rodgers shall sell

         and convey to Buyer the Real Estate by warranty deeds (the "DEEDS"),

         subject only to the "Permitted

 

 

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         Exceptions" (defined in Section 7[c]) and all matters which would be

         disclosed by an accurate survey.

 

                  (b) TAXES AND ASSESSMENTS. General real property taxes and

         installments of special assessments imposed upon the Real Estate

         (herein called "TAXES") shall be remitted