Exhibit 10.1

MEMBERSHIP INTEREST PURCHASE AGREEMENT

by and between

MIMI’S CAFÉ LLC

AND

SWH MIMI’S CAFÉ HOLDING COMPANY, INC.

Dated January 28, 2013

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TABLE OF CONTENTS

 

              Page  

1.

 

DEFINITIONS AND USAGE

     1     

1.1

  

Definitions

     1     

1.2

  

Usage

     11   

2.

 

SALE OF MEMBERSHIP INTERESTS; CLOSING

     12     

2.1

  

Membership Interests

     12     

2.2

  

Consideration

     12     

2.3

  

Allocation

     12     

2.4

  

Closing

     13     

2.5

  

Closing Obligations

     13     

2.6

  

Adjustment Amount

     15     

2.7

  

Adjustment Procedure

     16     

2.8

  

Post-Closing Insurance Liabilities True-Ups

     22     

2.9

  

Consents

     25   

3.

 

REPRESENTATIONS AND WARRANTIES OF SELLER

     25     

3.1

  

Organization And Good Standing

     25     

3.2

  

Enforceability; Authority; No Conflict

     26     

3.3

  

Capitalization

     26     

3.4

  

Financial Statements

     26     

3.5

  

Books And Records

     27     

3.6

  

Sufficiency Of Assets

     27     

3.7

  

Real Property

     27     

3.8

  

Title To Assets; Encumbrances

     28     

3.9

  

Accounts Receivable

     29     

3.10

  

Inventories

     29     

3.11

  

No Undisclosed Liabilities

     29     

3.12

  

Taxes

     29     

3.13

  

No Material Adverse Change

     32     

3.14

  

Employee Benefits

     32     

3.15

  

Compliance With Legal Requirements; Governmental Authorizations

     34     

3.16

  

Legal Proceedings; Orders

     35     

3.17

  

Absence of Certain Changes and Events

     35     

3.18

  

Contracts; No Defaults

     37     

3.19

  

Insurance Policies

     39     

3.20

  

Environmental Matters

     39     

3.21

  

Employees

     41     

3.22

  

Labor Disputes; Compliance

     41     

3.23

  

Intellectual Property Assets

     42     

3.24

  

Relationships With Related Persons

     43     

3.25

  

Brokers or Finders

     43     

3.26

  

Suppliers

     43     

3.27

  

Indebtedness

     44     

3.28

  

Quality and Safety of Food & Beverage Products

     44     

3.29

  

No Other Representations and Warranties

     45   

4.

 

REPRESENTATIONS AND WARRANTIES OF BUYER

     45     

4.1

  

Organization and Good Standing

     45   

 

-ii-

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4.2

  

Authority; No Conflict

     45     

4.3

  

Certain Proceedings

     45     

4.4

  

Brokers or Finders

     46     

4.5

  

Independent Investigation

     46     

4.6

  

Buyer’s Operations

     46   

5.

 

COVENANTS OF SELLER PRIOR TO CLOSING

     46     

5.1

  

Access and Investigation

     46     

5.2

  

Operation of the Business

     47     

5.3

  

Required Approvals

     48     

5.4

  

Notification

     48     

5.5

  

No Negotiation

     49     

5.6

  

Resignations

     50     

5.7

  

Closing Conditions

     50     

5.8

  

Receivables

     50     

5.9

  

Books and Records

     50     

5.10

  

Financial Statements

     50     

5.11

  

Title Review and Survey

     50     

5.12

  

Seller’s Net Worth Covenant

     51   

6.

 

COVENANTS OF BUYER PRIOR TO CLOSING

     51     

6.1

  

Required Approvals

     51     

6.2

  

Liquor License Consent Process

     51     

6.3

  

Closing Conditions

     52   

7.

 

CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE

     52     

7.1

  

Accuracy Of Representations

     52     

7.2

  

Seller’s Performance

     52     

7.3

  

Consents

     52     

7.4

  

Material Adverse Effect

     52     

7.5

  

Additional Documents

     53     

7.6

  

No Proceedings

     53     

7.7

  

No Conflict

     53     

7.8

  

Authorizations

     53     

7.9

  

Encumbrances

     53     

7.10

  

Closing Certificates and Other Documents

     53   

8.

 

CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE

     53     

8.1

  

Accuracy Of Representations

     54     

8.2

  

Buyer’s Performance

     54     

8.3

  

Consents

     54     

8.4

  

No Proceedings

     54   

9.

 

TERMINATION

     54     

9.1

  

Termination Events

     54     

9.2

  

Effect Of Termination

     55   

10.

 

ADDITIONAL COVENANTS

     55     

10.1

  

Employees And Employee Benefits

     55     

10.2

  

Transfer Taxes

     57     

10.3

  

Retention of and Access to Records

     57     

10.4

  

Noncompetition, Nonsolicitation

     58     

10.5

  

Tax Matters

     58   

 

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10.6

  

Further Assurances

     60   

11.

 

INDEMNIFICATION; REMEDIES

     61     

11.1

  

Survival

     61     

11.2

  

Indemnification And Reimbursement By Seller

     61     

11.3

  

Indemnification And Reimbursement By Buyer

     61     

11.4

  

Limitations On Amount - Seller

     62     

11.5

  

Limitations On Amount - Buyer

     62     

11.6

  

Third-Party Claims

     63     

11.7

  

Other Claims

     64     

11.8

  

Effect of Investigation

     64     

11.9

  

Right of Set-off

     65     

11.10

  

Other Limitations

     65     

11.11

  

Indemnity Payment Characterization

     66     

11.12

  

Exclusive Remedy

     66   

12.

 

CONFIDENTIALITY

     66     

12.1

  

Definition of Confidential Information

     66     

12.2

  

Restricted Use Of Confidential Information

     67     

12.3

  

Exceptions

     68     

12.4

  

Legal Proceedings

     68     

12.5

  

Return Or Destruction Of Confidential Information

     68   

13.

 

GENERAL PROVISIONS

     69     

13.1

  

Expenses

     69     

13.2

  

Public Announcements

     69     

13.3

  

Notices

     69     

13.4

  

Governing Law; Consent to Jurisdiction

     70     

13.5

  

Enforcement of Agreement

     71     

13.6

  

Waiver; Remedies Cumulative

     71     

13.7

  

Entire Agreement and Modification

     71     

13.8

  

Disclosure Schedule

     71     

13.9

  

Assignments, Successors and No Third-Party Rights

     72     

13.10

  

Severability

     72     

13.11

  

Counterparts

     72   

 

-iv-

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LIST OF EXHIBITS

 

Exhibit A - List of Mimi’s Café Restaurants Exhibit 2.3(a) - Allocation Schedule
Exhibit 2.5(a)(vi) - Form of Transition Services Agreement Exhibit 2.5(a)(vii) -
Form of Supply Agreement Exhibit 2.5(a)(viii) - Form of Assignment and
Assumption Agreement Exhibit 2.5(a)(ix) - Form of Subordination Agreement
Exhibit 2.5(c)(ii) - Form of Note Exhibit 2.5(c)(iii) - Form of Guaranty
Agreement Exhibit 2.7(b) - Form of Balance Sheet and Trial Balance Exhibit 4.6 -
Pro Forma Balance Sheet Exhibit 6.2 - Forms of Interim Beverage Management
Agreements

 

-v-

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DEFINED TERMS

 

     Page  

2014 Proposed Insurance Liabilities Amount

     22   

2016 Proposed Insurance Liabilities Amount

     22   

Accounts Receivable

     1   

Acquired Subsidiaries

     1   

Active Employees

     1   

Affiliate

     2   

Agreement

     1   

Allocation Schedule

     13   

Applicable Accounting Principles

     12   

Appurtenances

     2   

Assets

     2   

Assignment and Assumption Agreement

     14   

Assumed Liabilities

     2   

Balance Sheet

     26   

BEF 401(k) Plan

     55   

Benefit Arrangement

     2   

Bob Evans Group

     30   

Breach

     2   

Broker Fee

     43   

Business

     2   

Business Day

     3   

Buyer

     1   

Buyer Closing Certificate

     15   

Buyer Contact

     67   

Buyer Group

     46   

Buyer Indemnified Persons

     61   

Buyer Secretary Certificate

     15   

Buyer Transaction Expense

     3   

CERCLA

     3   

Cleanup

     4   

Closing

     13   

Closing Adjustment Amount

     16   

Closing Current Assets

     16   

Closing Current Liabilities

     16   

Closing Date

     3   

Closing Indebtedness

     16   

Closing Pay-offs

     15   

Closing Purchase Price

     12   

Closing Working Capital

     16   

Closing Working Capital Ratio

     16   

COBRA

     33   

Code

     3   

Competing Business

     58   

 

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Consent

     3   

Contemplated Transactions

     3   

Contract

     3   

Conversion

     3   

Current Assets

     17   

Current Liabilities

     18   

Custom Kitchen Liabilities

     3   

Damages

     61   

De Minimis Claim

     62   

Decline Date

     21   

Deferred Compensation Plan

     3   

Disclosing Party

     66   

Disclosure Schedule

     3   

Dispute Notice

     65   

Disputed Insurance Items

     23   

Disputed Items

     21   

Dominant Parcel

     2   

Due Inquiry

     7   

Effective Date

     1   

Effective Time

     3   

Employee Benefit Plan

     3   

Encumbrance

     3   

Environment

     4   

Environmental Law

     4   

Environmental, Health and Safety Liabilities

     4   

ERISA

     5   

ERISA Affiliate

     5   

Estimated Closing Current Assets

     16   

Estimated Closing Current Liabilities

     16   

Estimated Closing Date Balance Sheet

     18   

Estimated Closing Working Capital Ratio

     17   

Estimated Working Capital

     17   

Extraordinary Costs

     4   

FDA

     5   

FDA Laws

     5   

Final Adjustment Amount

     17   

Final Closing Date Balance Sheet

     17   

Final Insurance Liabilities Amount

     24   

Final Insurance Liabilities Statement

     24   

Financials

     27   

Flow of Funds Memorandum

     5   

Fundamental Representations

     62   

GAAP

     6   

Governing Documents

     6   

Governmental Authorization

     6   

Governmental Body

     6   

 

-vii-

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Guaranty Agreement

     15   

Hazardous Activity

     6   

Hazardous Material

     6   

Improvements

     7   

Indebtedness

     7   

Indemnified Person

     63   

Indemnifying Person

     63   

Indemnity Basket

     62   

Indemnity Cap

     62   

Insurance Liabilities

     7   

Insurance Liabilities Notice of Dispute

     23   

Insurance Policies

     39   

Intellectual Property Assets

     42   

Interim Beverage Management Agreement

     51   

Inventories

     7   

IRS

     7   

Knowledge

     7   

Lease

     8   

Leased Real Property

     27   

Legal Requirement

     8   

Liability

     8   

Liquor License Agency Approval

     8   

Material Adverse Effect

     8   

Material Consents

     52   

Material Contracts

     37   

Membership Interests

     1   

Net Names

     43   

Non-Compete

     13   

Non-Compete Term

     58   

Note

     12   

Notice of Contact

     50   

Notice of Dispute

     20   

Occupational Safety and Health Law

     9   

Order

     9   

Ordinary Course of Business

     9   

Owned Real Property

     27   

Owner

     11   

Parent

     14   

Pay-Off Letters

     5   

Permitted Encumbrances

     9   

Permitted Real Property Encumbrances

     28   

Person

     9   

Proceeding

     9   

Proposed 2014 Insurance Liabilities Statement

     22   

Proposed 2016 Insurance Liabilities Statement

     22   

Proposed Final Closing Date Balance Sheet

     19   

 

-viii-

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Real Property

     9   

Real Property Lease

     9   

Real Property Leases

     27   

Receiving Party

     66   

Record

     9   

Related Person

     10   

Release

     10   

Representative

     10   

Restaurants

     1   

Restricted Area

     58   

Restricted Material Contracts

     25   

Restricted Transaction

     49   

Schedule

     3   

Section 2.7(b) Disputes

     19   

Securities Act

     26   

Seller

     1   

Seller Closing Certificate

     14   

Seller Contact

     67   

Seller Indemnified Persons

     61   

Seller Secretary Certificate

     14   

Seller Transaction Expenses

     10   

Seller’s Representatives

     49   

Set-off Claim

     65   

Set-off Notice

     65   

Settlement Firm

     21   

Shares

     10   

Software

     10   

Straddle Period

     59   

Straddle Periods

     59   

Subordination Agreement

     14   

Subsidiary

     11   

Supply Agreement

     14   

SWH

     1   

Tangible Personal Property

     11   

Target Working Capital Ratio

     17   

Tax

     11   

Tax Packages

     59   

Tax Return

     11   

Taxes

     11   

Third Party

     11   

Third Party Claim

     11   

Threat of Release

     11   

Title Deficiency Notice

     50   

Title Notice Period

     51   

Transition Services Agreement

     14   

WARN Act

     41   

Working Capital

     11, 17   

 

-ix-

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MEMBERSHIP INTEREST PURCHASE AGREEMENT

THIS MEMBERSHIP INTEREST PURCHASE AGREEMENT (this “Agreement”), dated as of
January 28, 2013 (the “Effective Date”), is made by and between Mimi’s Café LLC,
a Delaware limited liability company (“Seller”), and SWH Mimi’s Café Holding
Company, Inc., a Delaware corporation (“Buyer”).

W I T N E S S E T H:

WHEREAS, SWH Mimi’s Cafe, LLC, a California limited liability company (“SWH”),
is a wholly-owned subsidiary of Seller and operates the Mimi’s Café restaurants
(the “Restaurants”) listed on Exhibit A attached hereto;

WHEREAS, SWH owns all of the issued and outstanding equity interests of each of
the Acquired Subsidiaries (as defined below); and

WHEREAS, Seller desires to sell, and Buyer desires to purchase, all of the
issued and outstanding membership interests of SWH (the “Membership Interests”),
for the consideration and on the terms and subject to the conditions set forth
in this Agreement.

NOW THEREFORE, in consideration of the premises and of the mutual covenants of
the parties set forth in this Agreement Seller and Buyer hereby agree as
follows:

 

1. DEFINITIONS AND USAGE

1.1 Definitions. Capitalized terms used herein and not otherwise defined have
the meanings specified or referred to in this Section 1.1:

“Accounts Receivable” – (a) all trade accounts receivable and other rights to
payment of SWH and the full benefit of all security for such accounts or rights
to payment, including all trade accounts receivable representing amounts
receivable in respect of goods shipped or products sold or services rendered,
(b) all other accounts or notes receivable of SWH and the full benefit of all
security for such accounts or notes and (c) any claim, remedy or other right
related to any of the foregoing.

“Acquired Subsidiaries” – Mimi’s Café of Rogers, Inc., an Arkansas non-profit
mutual benefit corporation, Mimi’s Café Kansas, Inc., a Kansas corporation; SWH
Texas, Inc., a Delaware corporation; SWH Oklahoma, Inc., an Oklahoma
corporation; SWH Howard Maryland, Inc., a Maryland corporation; SWH Charles
Maryland, Inc., a Maryland corporation; and SWH Frederick Maryland, Inc., a
Maryland corporation.

“Active Employees” – all employees employed by SWH who are employed in the
Business as currently conducted, including employees on temporary leave of
absence, including family medical leave, military leave, temporary disability or
sick leave, but excluding employees on long-term disability leave or
unauthorized leave of absence or who have terminated employment, retired or died
on or before the Effective Time.

 

1

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“Affiliate” – of a Person is any other Person controlling, controlled by or
under common control with such Person. For purposes of the foregoing, the term
“control” means holding the power to direct or cause the direction of the
management and policies of a Person, whether by ownership of equity securities,
contract or otherwise.

“Appurtenances” – all privileges, rights, easements, hereditaments and
appurtenances belonging to or for the benefit of the Real Property, including
all easements appurtenant to and for the benefit of any Real Property (a
“Dominant Parcel”) for, and as the primary means of access between, the Dominant
Parcel and a public way, or for any other use upon which lawful use of the
Dominant Parcel for the purposes for which it is presently being used is
dependent, and all rights existing in and to any streets, alleys, passages and
other rights-of-way included thereon or adjacent thereto (before or after
vacation thereof) and vaults beneath any such streets.

“Assets” – all property, business and assets, real, personal or mixed, tangible
and intangible, of every kind and description, wherever located and whether now
existing or acquired hereafter which relate to, or are used or held for use in
connection with the Business.

“Assumed Liabilities” – all Liabilities that constitute (a) Extraordinary Costs,
(b) Seller Transaction Expenses, (c) Closing Indebtedness, (d) other than
Liabilities for earned but unused vacation of employees of SWH and the Acquired
Subsidiaries, Liabilities relating to any amounts owed under any Employee
Benefit Plan or Benefit Arrangement that is maintained, administered or
contributed to by SWH or any Acquired Subsidiary relating to an event occurring
on or before the Closing Date, (e) Liabilities relating to any amounts owed
under any Deferred Compensation Plan to which any of SWH or any Acquired
Subsidiary is (or was prior to the Closing Date) a party or in which any Active
Employee is (or was prior to the Closing Date) a participant, regardless of when
such liability arises, (f) any Custom Kitchen Liabilities, (g) any Liabilities
relating to SWH Too, LLC, and (h) Liabilities of the nature and type reflected
in the general ledger accounts of SWH and the Acquired Subsidiaries set forth on
Schedule 1.1(a).

“Benefit Arrangement” – any employment, severance or other similar Contract,
arrangement or policy (written or oral) and each plan or arrangement (written or
oral) providing for profit-sharing, bonuses, commissions, stock options, stock
appreciation or other forms of equity or equity-based compensation, incentive
compensation, deferred compensation, including all Deferred Compensation Plans,
insurance coverage (including any self-insured arrangements), workers’
compensation, disability benefits, supplemental unemployment benefits, leave of
absence, sick pay, vacation benefits, retirement benefits, or post-retirement
insurance, compensation or benefits which is not an Employee Benefit Plan.

“Breach” – any breach of, or any inaccuracy in, any representation or warranty
or any breach of, or failure to perform or comply with, any covenant or
obligation, in or of this Agreement or any other Contract, or any event which,
with the passing of time or the giving of notice, or both, would constitute such
a breach, inaccuracy or failure.

“Business” – the operation of the Restaurants.

 

2

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“Business Day” – any day other than (a) Saturday or Sunday, or (b) any other day
on which banks in Delaware are permitted or required to be closed.

“Buyer Transaction Expense” – any Liability of Buyer arising out of or incurred
in connection with the negotiation, preparation, investigation and performance
of this Agreement, the other documents contemplated by this Agreement, and the
Contemplated Transactions, including fees and expenses of counsel, accountants,
consultants, advisers, and others.

“CERCLA” – means the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.

“Closing Date” – the date on which the Closing actually takes place.

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

“Consent” – any approval, consent, ratification, waiver or other authorization.

“Contemplated Transactions” – all of the transactions contemplated by this
Agreement.

“Contract” – any legally binding agreement, contract, Lease, purchase order,
license, power of attorney, letter of intent, consensual obligation, promise or
undertaking (whether written or oral).

“Conversion” – the conversion of SWH from a California corporation to a
California limited liability company on December 31, 2012.

“Custom Kitchen Liabilities” – any and all Liabilities or Third-Party Claims
based on, resulting from, relating to, or arising out of the custom kitchen
business, whether attributable to SWH, the Acquired Subsidiaries, Seller, or
otherwise, including any and all Liabilities relating to or arising from the
termination of employees associated with the custom kitchen business.

“Deferred Compensation Plan” – any arrangement providing for a deferral of
compensation that is a “nonqualified deferred compensation plan” within the
meaning of Section 409A(d)(1) of the Code and as identified on Schedule 3.12.

“Disclosure Schedule” – the Disclosure Schedule delivered by Seller to Buyer
concurrently with the execution and delivery of this Agreement. Each such
disclosure Schedule is referred to herein as a “Schedule.”

“Effective Time” – 10:00 a.m., Eastern Standard Time, on the Closing Date.

“Employee Benefit Plan” – an employee benefit plan, as such term is defined in
Section 3(3) of ERISA.

“Encumbrance” – any charge, claim, condition, equitable interest, lien, option,
pledge, security interest, deed of trust, mortgage, right of way, covenant,
restriction, easement, encroachment, servitude, right of first option, right of
first refusal or restriction of any kind,

 

3

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including any restriction on use, voting (in the case of any security or equity
interest), transfer, receipt of income or exercise of any other attribute of
ownership.

“Environment” – soil, land surface or subsurface strata, surface waters
(including navigable waters and ocean waters), groundwaters, drinking water
supply, stream sediments, ambient air (including indoor air), plant and animal
life and any other environmental medium or natural resource.

“Environmental, Health and Safety Liabilities” – any cost, damage, expense,
liability, obligation or other responsibility arising from or under any
Environmental Law or Occupational Safety and Health Law, including those
consisting of or relating to: (a) any fine, penalty, judgment, award,
settlement, legal or administrative proceeding, damages, loss, claim, demand or
response, remedial or inspection cost or expense arising from Seller’s violation
of Environmental Law or Occupational Safety and Health Law; (b) cleanup costs or
corrective action, including any cleanup, removal, containment or other
remediation or response actions (“Cleanup”) required by any Governmental Body
pursuant to Environmental Law; or (c) any other compliance, corrective or
remedial measure required under any Environmental Law or Occupational Safety and
Health Law. For purposes of the foregoing, the terms “removal,” “remedial” and
“response action” include the types of activities covered by CERCLA.

“Environmental Law” – any Legal Requirement applicable to SWH or the Business,
including but not limited to CERCLA, that requires or relates to: (a) advising
or notifying appropriate authorities, employees or the public of intended or
actual Releases of pollutants or hazardous substances or materials, violations
of discharge limits or other prohibitions and the commencement of activities,
such as resource extraction or construction, that could have significant adverse
impact on the Environment; (b) preventing, reducing or limiting to acceptable
levels the Release of pollutants, hazardous substances, or Hazardous Materials
into the Environment; (c) reducing the quantities, preventing the Release or
minimizing the hazardous characteristics of wastes that are generated;
(d) protecting human health, the environment, resources, species or ecological
amenities; (e) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil or other potentially
harmful substances; (f) requirements for cleaning up pollutants that have been
Released, preventing the Threat of Release or paying the costs of such clean up
or prevention; or (g) the handling, management, storage or disposal of Hazardous
Materials.

“Extraordinary Costs” – the amount of all payments or other distributions
required to be made by SWH or any Acquired Subsidiary to any securityholder,
director, officer, employee or agent of SWH or any Acquired Subsidiary as a
result of the Contemplated Transactions, including (i) any and all retention
bonuses or performance bonuses payable in connection with the consummation of
the Contemplated Transactions under the terms of any employment agreement, plan
or other arrangement existing prior to the Closing Date, (ii) any and all change
in control payments under SWH’s Retention Bonus and Change in Control Plan,
(iii) any and all severance payments, termination payments or other amounts
payable (including the estimated costs of benefits required to be provided)
under the terms of any employment agreement, plan or other arrangement existing
prior to the Closing Date and determined as if the employee’s employment with
SWH or any Acquired Subsidiary was terminated by the employer after the
occurrence of a “change of control” or other similar event, (iv) any and all
bonuses or other

 

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payments under The Mimi’s Million Dollar Challenge bonus program pursuant to
that letter to Mimi’s Café General Managers, dated December 4, 2012, (v) the
Liabilities reflected in the general ledger accounts of SWH and the Acquired
Subsidiaries set forth on Schedule 1.1(b), and (vi) the employer’s portion of
social security, Medicare, unemployment or other employment Taxes imposed with
respect to the amounts described above, in each case, whether such payments are
paid on or immediately prior to the Closing or are payable after the Closing.
Extraordinary Costs shall not include Seller Transaction Expenses.

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

“ERISA Affiliate” – any entity which is a member of (a) a controlled group of
corporations (as defined in Section 414(b) of the Code), (b) a group of trades
or businesses under common control (as defined in Section 414(c) of the Code),
or (c) an affiliated service group (as defined in Section 414(m) of the Code or
the Treasury Regulations under Section 414(o) of the Code), any of which
includes Seller.

“FDA” – means the United States Food and Drug Administration.

“FDA Laws” – means the Federal Food, Drug and Cosmetic Act and other Legal
Requirements regulating or imposing standards with respect to the safety and
quality of food and beverage products intended for human consumption, including
any such Legal Requirements relating to the manufacture, production, labeling,
packaging, transportation, distribution or sale of such products.

“Flow of Funds Memorandum” – means a memorandum prepared by Seller and
acceptable to Buyer, to be delivered to Buyer at least three (3) Business Days
prior to Closing specifying in reasonable detail the payments to be made at
Closing with respect to each item of Indebtedness, Seller Transaction Expenses,
and Extraordinary Costs, along with corresponding wire transfer account
instructions.

(a) In respect of Closing Indebtedness, the Flow of Funds Memorandum shall
include (i) the name of each creditor, the amount of Closing Indebtedness
payable to such creditor and wire transfer instructions for such creditor and
(ii) unexecuted draft pay-off letters in form and substance reasonably
satisfactory to Buyer in substantially the form to be executed at the Closing by
all Persons which any portion of the Closing Indebtedness is owed, which shall
provide for, among other things, (1) the amounts required to pay off in full on
the Closing Date the Closing Indebtedness owing to such Person (including the
outstanding principal, accrued interest and all prepayment penalties, “breakage
costs”, redemption fees, costs and expenses or premiums and other amounts owing
pursuant to the instruments evidencing such Closing Indebtedness), (2) the
release, discharge, removal and termination of all Encumbrances on the assets of
SWH and the Acquired Subsidiaries arising under such Closing Indebtedness upon
payment of the amounts set forth therein and (3) documentation evidencing the
termination of all such Encumbrances (the “Pay-Off Letters”).

(b) In respect of Seller Transaction Expenses, the Flow of Funds Memorandum
shall include (i) a detailed schedule setting forth all Seller Transaction
Expenses, (ii) the

 

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identity of each Person that is to be paid Seller Transaction Expenses,
(iii) the amount owed or to be owed to each such Person in respect thereof and
(iv) an invoice from each such Person accompanied by an executed pay-off letter
(in form and substance reasonably satisfactory to Buyer) containing an
acknowledgment from such Person that such invoice reflects all fees, costs and
expenses incurred by such Person through and including the Closing Date.

“GAAP” – generally accepted accounting principles for financial reporting in the
United States, applied on a basis consistent with the basis on which the Balance
Sheet and the other financial statements referred to in Section 3.4 were
prepared.

“Governing Documents” – with respect to any particular entity, (a) if a
corporation, the articles or certificate of incorporation and the bylaws; (b) if
a general partnership, the partnership agreement and any statement of
partnership; (c) if a limited partnership, the limited partnership agreement and
the certificate of limited partnership; (d) if a limited liability company, the
articles of organization and operating agreement; (e) if another type of Person,
any other charter or similar document adopted or filed in connection with the
creation, formation or organization of the Person; (f) all equityholders’
agreements, voting agreements, voting trust agreements, joint venture
agreements, registration rights agreements or other agreements or documents
relating to the organization, management or operation of any Person or relating
to the rights, duties and obligations of the equityholders of any Person; and
(g) any amendment or supplement to any of the foregoing.

“Governmental Authorization” – any Consent, license, registration, franchise,
certificate or permit obtained, or required to be obtained, under the authority
of any Governmental Body or pursuant to any Legal Requirement.

“Governmental Body” – any: (a) nation, state, county, city, town, borough,
village, district or other jurisdiction; (b) federal, state, local, municipal,
foreign or other government; (c) governmental authority of any nature (including
any agency, branch, department, board, commission, court, tribunal or other
entity exercising governmental or quasi-governmental powers); or (d) body
authorized to exercise any administrative, executive, judicial, legislative,
police, regulatory or taxing authority or power.

“Hazardous Activity” – the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment or use of Hazardous Material in, on, under,
about or from any of the Real Property or any part thereof into the Environment.

“Hazardous Material” – any substance, material or waste which is regulated by
any Governmental Body, including any material, substance or waste which is
defined as a “hazardous waste,” “hazardous material,” “hazardous substance,”
“extremely hazardous waste,” “restricted hazardous waste,” “contaminant,” “toxic
waste” or “toxic substance” under any provision of Environmental Law, and
including petroleum, petroleum products, asbestos, presumed asbestos-containing
material or asbestos-containing material, urea formaldehyde and polychlorinated
biphenyls.

 

6

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“Improvements” – all buildings, structures, fixtures and improvements located on
the Real Property or belonging to SWH, including those under construction.

“Indebtedness” – with respect to any Person, without duplication, (i) the
principal, accreted value, accrued and unpaid interest, prepayment and
redemption premiums or penalties (if any), unpaid fees or expenses and other
monetary obligations in respect of A. indebtedness of such Person for money
borrowed and B. indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable, including indebtedness of any Related Person; (ii) all obligations of
such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations of such Person and all obligations of such Person
under any title retention agreement; (iii) all obligations of such Person under
leases required to be capitalized in accordance with GAAP; (iv) all obligations
of such Person for the reimbursement of any obligor on any letter of credit
(including any letter of credit used to support SWH’s comprehensive general
liability insurance), banker’s acceptance or similar credit transaction; (v) all
obligations of such Person under interest rate or currency swap transactions
(valued at the termination value thereof); (vi) all obligations of the type
referred to in clauses (i) through (v) of any Persons for the payment of which
such Person is responsible or liable, directly or indirectly, as obligor,
guarantor, surety or otherwise, including guarantees of such obligations; and
(vii) all obligations of the type referred to in clauses (i) through (vi) of
other Persons secured by (or for which the holder of such obligations has an
existing right, contingent or otherwise, to be secured by) any Encumbrance on
any property or asset of such Person (whether or not such obligation is assumed
by such Person); and (viii) any accrued and unpaid interest on, and any
prepayment and redemption premiums, penalties or similar contractual charges in
respect of, any of the foregoing, without duplication. For purposes of the
foregoing, Indebtedness shall include, but not be limited to, Indebtedness set
forth on Schedule 3.27. Unless otherwise expressly stated herein, any reference
to Indebtedness in this Agreement shall refer to Indebtedness of SWH and the
Acquired Subsidiaries.

“Insurance Liabilities” – All Liabilities relating to claims for medical
insurance, general liability insurance, property insurance, worker’s
compensation, or directors and officer’s liability insurance, whether such claim
arises before or after the Closing, and, in each case, if the incident,
occurrence, fact, condition, event or circumstance that forms the primary basis
for such claim arises prior to the Closing, including the Liabilities reflected
in the general ledger accounts of SWH and the Acquired Subsidiaries set forth on
Schedule 1.1(c).

“Inventories” – all inventories of SWH, wherever located, including all finished
goods, work in process, raw materials and all other materials and supplies to be
used or consumed by Seller in connection with the Business.

“IRS” – the United States Internal Revenue Service and, to the extent relevant,
the United States Department of the Treasury.

“Knowledge” – means (i) with respect to Seller, the actual knowledge after Due
Inquiry of each of Joanna Blake, Karen Eadon, Kristen Flynn, Mark Mears, Steven
Schroeder and Molly Sureck, and (ii) with respect to Buyer, the actual knowledge
after Due Inquiry of Harry Martin, Claude Bergeron, and Michael T. Clock. “Due
Inquiry” means inquiry by the foregoing individuals of the individuals who would
be reasonably expected to have knowledge of the matter at issue as a usual part
of their job responsibilities.

 

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“Lease” – any lease or rental agreement, license, right to use or installment
and conditional sale agreement relating to the operations of the Business to
which SWH is a party and any other Contract pertaining to the leasing or use of
any Tangible Personal Property.

“Legal Requirement” – any federal, state, local, municipal, foreign,
international, multinational or other constitution, law, ordinance, principle of
common law, code, regulation, statute or treaty.

“Liability” – with respect to any Person, any liability or obligation of such
Person of any kind, character or description, whether known or unknown, absolute
or contingent, accrued or unaccrued, disputed or undisputed, liquidated or
unliquidated, secured or unsecured, joint or several, due or to become due,
vested or unvested, executory, determined, determinable or otherwise, and
whether or not the same is required to be accrued on the financial statements of
such Person.

“Liquor License Agency Approval” – means (a) approval by all applicable state,
local or other governmental authorities of permanent or temporary licenses for
Buyer (or its Affiliates), the transfer of existing licenses for the Restaurants
to Buyer (or its Affiliates) or other alternative arrangements that in each case
permit Buyer to serve alcohol at each of the Restaurants on and after the
Closing Date consistent with the current service hours and days permitted by
such existing licenses or (b) the execution of Interim Management Agreements in
substantially the form attached as Exhibit 6.2 between Seller and Buyer that
will be in effect on and after the Closing Date pending an approval described in
provision (a) of this definition.

“Material Adverse Effect” – means any change, effect, event, occurrence, fact,
condition, or development that is, or could reasonably be expected to become,
individually or in the aggregate, materially adverse to (a) the operations,
condition (financial or otherwise) or assets of the Business, (b) the value of
SWH or the Business, each taken as a whole, or (c) any material adverse effect
on the ability of Seller to consummate the Contemplated Transactions on a timely
basis; provided, however, that none of the following shall be deemed to
constitute, and none of the following shall be taken into account in determining
whether there has been, a Material Adverse Effect: (i) any failure to meet a
forecast (whether internal or published) of sales, revenue, earnings, cash flow,
or other data for any period or any change in such a forecast (notwithstanding
the foregoing, underlying causes of such failure may be taken into account),
(ii) any change, effect (whether short-term or long-term), event, occurrence,
state of facts, or development, directly or indirectly, arising out of or
relating to: A. any changes, conditions or effects in the United States or
foreign economies or securities or financial markets in general; B. changes,
conditions or effects that generally affect the industries in which the Business
operates; C. the taking of any action contemplated by this Agreement and the
other agreements contemplated hereby; D. changes in GAAP or Legal Requirements;
E. the announcement, declaration, commencement, occurrence, continuation or
threat of any geopolitical condition, war or armed hostilities, any act of
terrorism or any public health or other public emergency or crisis; or (vi) any
act of God; provided further, however, that any event, occurrence, fact,
condition, or change referred to in clauses (i), (iii), (iv), (v), or
(vi) immediately above shall be taken into account in determining whether a
Material adverse Effect has occurred or could reasonably be expected to occur to
the extent that such event, occurrence, fact, condition, or

 

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change has a material disproportionate effect on the Business or SWH, compared
to other participants in the industries in which the Business operates.

“Occupational Safety and Health Law” – any Legal Requirement designed to provide
safe and healthful working conditions and to reduce occupational safety and
health hazards, including the Occupational Safety and Health Act.

“Order” – any order, injunction, judgment, decree, ruling, assessment or
arbitration award of any Governmental Body or arbitrator.

“Ordinary Course of Business” – an action taken by a Person will be deemed to
have been taken in the Ordinary Course of Business only if that action is
consistent in nature, scope and magnitude with the past practices of such Person
and is taken in the ordinary course of the normal, day-to-day operations of such
Person.

“Permitted Encumbrances” – (a) the Permitted Real Property Encumbrances listed
on Schedule 3.8(a), (b) liens for Taxes not yet due and payable or being
contested in good faith by appropriate procedures and for which there are
adequate accruals or reserves on the Balance Sheet; (c) mechanics, carriers’,
workmen’s, repairmen’s or other like liens arising or incurred in the ordinary
course of business consistent with past practice or amounts that are not
delinquent and which are not, individually or in the aggregate, material to the
business of the Company; (d) easements, rights of way, zoning ordinances and
other similar encumbrances affecting Real Property which are not, individually
or in the aggregate, material to the business of the Company; or (e) other than
with respect to owned Real Property, liens arising under original purchase price
conditional sales contracts and equipment leases with third parties entered into
in the ordinary course of business consistent with past practice which are not,
individually or in the aggregate, material to the business of the Company.

“Person” – an individual, partnership, corporation, business trust, limited
liability company, limited liability partnership, joint stock company, trust,
unincorporated association, joint venture or other entity or a Governmental
Body.

“Proceeding” – any action, arbitration, audit, hearing, investigation,
litigation or suit (whether civil, criminal, administrative, judicial or
investigative, whether formal or informal, whether public or private) commenced,
brought, conducted or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.

“Real Property” – all of right, title and interest of SWH or the Acquired
Subsidiaries in and to all parcels and tracts of land relating to the operations
of the Business in which SWH has an ownership interest (whether fee or
leasehold), including the Owned Real Property, the Leased Real Property, any
Contract interest and Improvements and all Appurtenances thereto.

“Real Property Lease” – as defined in Section 3.7(b) of this Agreement.

“Record” – information that is inscribed on a tangible medium or that is stored
in an electronic or other medium and is retrievable in perceivable form.

 

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“Related Person” – any current Affiliate, officer, director, manager,
member-equity holder or employee of Buyer, Seller or SWH, including the
descendants, siblings, spouse and parents of any of the foregoing Persons.

“Release” – any release, spill, emission, leaking, pumping, pouring, dumping,
emptying, injection, deposit, disposal, discharge, dispersal, leaching or
migration on or into the Environment or into or out of any property.

“Representative” – with respect to a particular Person, any director, officer,
manager, employee, agent, consultant, advisor, accountant, financial advisor,
legal counsel or other representative of that Person.

“Seller Transaction Expenses” – all Liabilities for any fees, costs and expenses
incurred or subject to reimbursement by SWH or any of the Acquired Subsidiaries
(whether or not invoiced at or prior to the Effective Time and whether incurred
prior to, on or after the date hereof but, in any case, prior to or in
connection with the Closing) and not paid prior to the Closing (other than
pursuant to Section 2.5(b)), in each case, in connection with the preparation,
negotiation, execution, delivery and performance of this Agreement, the other
documents contemplated by this Agreement, and the Contemplated Transactions,
including: (i) any brokerage fees, costs and expenses, commissions, finders’
fees, costs and expenses or financial advisory fees, costs and expenses;
(ii) any fees, costs and expenses of counsel, accountants or other advisors or
service providers; (iii) any other fees, costs and expenses or payments required
to be paid under the terms of any Contract existing as of the date hereof or as
of the Closing Date to the extent resulting from the change of control of SWH or
any of the Acquired Subsidiaries; (iv) the costs of obtaining the consents set
forth on Schedule 7.3, (v) any fees, costs and expenses incurred in connection
with the preparation of any Tax Return covering any pre-Closing Tax Periods and
the portion of the Straddle Period that ends on the Closing Date and any tax
advice and consultation associated therewith; (vi) any fees, costs and expenses
incurred in connection with the sale or other strategic alternative processes
conducted by or on behalf of SWH and the Acquired Subsidiaries prior to the
Closing Date, including the preparation, negotiation and execution of any
Contracts, documents or instruments with any other potential purchaser of all or
any portion of the business of SWH or any of the Acquired Subsidiaries; and
(vii) any fees, costs and expenses incurred in connection with participation in
or response to the investigation, review and inquiry conducted by Seller and its
Representatives with respect to SWH, the Acquired Subsidiaries and the Business
(and Seller’s furnishing of information to Buyer and its Representatives in
connection with such investigation and review). The amount of Seller Transaction
Expenses shall be determined without giving effect to the Closing payments made
pursuant to Section 2.5(b).

“Shares – all of the issued and outstanding common shares of the Acquired
Subsidiaries.

“Software” – all computer software and subsequent versions thereof, including
source code, object, executable or binary code, objects, comments, screens, user
interfaces, report formats, templates, menus, buttons and icons and all files,
data, materials, manuals, design notes and other items and documentation related
thereto or associated therewith.

 

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“Subsidiary” – with respect to any Person (the “Owner”), any corporation or
other Person of which securities or other interests having the power to elect a
majority of that corporation’s or other Person’s board of directors or similar
governing body, or otherwise having the power to direct the business and
policies of that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency that has
not occurred), are held by the Owner or one or more of its Subsidiaries.

“Tangible Personal Property” – all miscellaneous personal property used in the
Business, including the supplies of paper products, disposable and
non-disposable tableware, flatware, and cups, kitchenware, smallwares, uniforms,
cleaning supplies, advertising and promotional materials, office and maintenance
supplies (wherever located and whether or not carried on SWH’s books), together
with any express or implied warranty by the manufacturers of sellers or lessors
of any item or component part thereof and all maintenance records and other
documents relating thereto.

“Tax” or “Taxes” – A. any federal, state, local, or non-U.S. income, gross
receipts, license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under Code §59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, whether computed on a separate
or consolidated, unitary or combined basis or in any other manner, and in
respect of each and every of the foregoing, including any interest, penalty, or
addition thereto, whether disputed or not, and B. Liability for the payment of
any amounts of the type described in clause (A) as a transferee or successor, by
Contract, or from any express or implied obligation to indemnify or otherwise
assume or succeed to such a Liability of any other Person.

“Tax Return” – any return, declaration, report, claim for refund, or information
return or statement relating to Taxes that is filed with or submitted to, or
required to be filed with or submitted to, any Governmental Body, including any
Schedule or attachment thereto, and including any amendment thereof.

“Third Party” – a Person that is not a party to this Agreement.

“Third-Party Claim” – any claim against any Indemnified Person by a Third Party,
whether or not involving a Proceeding.

“Threat of Release” – a reasonable likelihood of a Release that may require
action in order to prevent or mitigate damage to the Environment that may result
from such Release.

“Working Capital” – as defined in Section 2.7(a) of this Agreement.

1.2 Usage.

(a) Interpretation. In this Agreement, unless a clear contrary intention
appears: (i) the singular number includes the plural number and vice versa;
(ii) reference to any Person includes such Person’s successors and assigns but,
if applicable, only if such successors and assigns are not prohibited by this
Agreement, and reference to a Person in a particular

 

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capacity excludes such Person in any other capacity or individually;
(iii) reference to any gender includes each other gender; (iv) reference to any
agreement, document or instrument means such agreement, document or instrument
as amended or modified and in effect from time to time in accordance with the
terms thereof; (v) reference to any Legal Requirement means such Legal
Requirement as amended, modified, codified, replaced or reenacted, in whole or
in part, and in effect as of the time of such reference, including rules and
regulations promulgated thereunder; (vi) “hereunder,” “hereof,” “hereto,” and
words of similar import shall be deemed references to this Agreement as a whole
and not to any particular Article, Section or other provision hereof;
(vii) “including” (and with correlative meaning “include”) means including
without limiting the generality of any description preceding such term;
(viii) “or” is used in the inclusive sense of “and/or”; (ix) with respect to the
determination of any period of time, “from” means “from and including” and “to”
means “to but excluding”; and (x) references to documents, instruments or
agreements shall be deemed to refer as well to all addenda, exhibits, schedules
or amendments thereto.

(b) Accounting Terms and Determinations. Unless otherwise specified herein, all
accounting terms used herein shall be interpreted, and all accounting
determinations hereunder shall be used or made, in accordance with GAAP, except
to the extent the historic practices of SWH are inconsistent with GAAP, and in
such case the Applicable Accounting Principles shall be consistent with the
historic practices of SWH. The accounting principles set forth on
Schedule 1.2(b) are referred to as the “Applicable Accounting Principles.”

(c) Legal Representation of the Parties. This Agreement was negotiated by the
parties with the benefit of legal representation, and any rule of construction
or interpretation otherwise requiring this Agreement to be construed or
interpreted against any party shall not apply to any construction or
interpretation hereof.

 

2. SALE OF MEMBERSHIP INTERESTS; CLOSING

2.1 Membership Interests. Upon the terms and subject to the conditions set forth
in this Agreement, at the Closing, Seller shall sell the Membership Interests to
Buyer, and Buyer shall purchase the Membership Interests from Seller, free and
clear of all Encumbrances, for the consideration specified in Section 2.2.

2.2 Consideration. The aggregate purchase price for the Membership Interests
will be $50,000,000 (the “Closing Purchase Price”). Subject to the terms of this
Agreement, the Closing Purchase Price shall be paid by Buyer at Closing (i) by
wire transfer in the amount of $20,000,000, plus or minus the Closing Adjustment
Amount pursuant to Section 2.6(a), of immediately available funds to an account
designated in writing by Seller to Buyer no later than two (2) Business Days
prior to the Closing Date, and (ii) by delivery of a promissory note (the
“Note”) in the amount of $30,000,000 by Buyer to Seller at Closing.

2.3 Allocation.

(a) The Closing Purchase Price plus the assumed Liabilities (as determined for
federal income Tax purposes) as of the Closing Date shall be allocated among,
and paid in respect of, the Assets held by SWH (including, for the avoidance of
doubt, stock of the Acquired

 

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Subsidiaries) and the noncompetition provisions contained in Section 10.4 (the
“Non-Compete”) in accordance with Section 1060 of the Code (and any similar
provision of state, local, or non-U.S. Tax law, as appropriate) and as set forth
on the allocation Schedule attached hereto as Exhibit 2.3(a) (the “Allocation
Schedule”). Except as otherwise required by law or pursuant to a “determination”
under Section 1313(a) of the Code, Buyer and Seller agree to act, and will cause
their Affiliates to act, in accordance with the Allocation Schedule and the
final allocation statement prepared in accordance with the Allocation Schedule,
for all Tax purposes, including, those matters subject to Section 1060 of the
Code and the Treasury Regulations thereunder, and neither Buyer nor Seller nor
their respective Affiliates will take any position inconsistent therewith in any
Tax Returns or other Tax filings (including IRS Form 8594), any refund claim,
any litigation or otherwise.

(b) The Adjustment Amount and any other adjustments to the Closing Purchase
Price shall also be allocated among the Assets in accordance with Section 1060
of the Code. All such amounts shall be treated, to the extent allowable under
Tax law, as allocable only to those Assets with respect to which the installment
sale rules under Section 453 of the Code are applicable. Buyer and Seller shall
use reasonable efforts to come to agreement on such allocations, or if no
agreement is reached, shall use the resolution process set forth in the
Allocation Schedule.

2.4 Closing. The purchase and sale provided for in this Agreement (the
“Closing”) will take place at the offices of Vorys, Sater, Seymour and
Pease LLP, 52 East Gay Street, Columbus, Ohio, or such other mutually agreeable
location at 10:00 a.m. Eastern Standard Time on February 15, 2013, provided that
all of the conditions to Closing set forth in Articles 7 and 8 have been
satisfied or waived (other than conditions which, by their nature, are to be
satisfied on the Closing Date), unless Buyer and Seller otherwise mutually
agree, and shall be effective as of the Effective Time. Subject to the
provisions of Article 9, failure to consummate the purchase and sale provided
for in this Agreement on the date and time and at the place determined pursuant
to this Section 2.4 will not result in the termination of this Agreement and
will not relieve any party of any obligation under this Agreement. In such a
situation, the Closing will occur as soon as practicable, subject to Article 9.

2.5 Closing Obligations. In addition to any other documents to be delivered
under other provisions of this Agreement, at the Closing:

(a) Seller shall deliver to Buyer, together with funds sufficient to pay all
Taxes necessary for the transfer, filing or recording thereof:

 

  (i) evidence satisfactory to Buyer of the transfer of Membership Interests,
including an assignment of Membership Interests, free and clear of Encumbrances;

 

  (ii)

a certificate executed by Seller as to the accuracy of its representations and
warranties as of the date of this Agreement and as of the Closing in accordance
with Section 7.1 and as to its compliance with and performance of its covenants
and obligations

 

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  to be performed or complied with at or before the Closing in accordance with
Section 7.2 (the “Seller Closing Certificate”);

 

  (iii) a certificate of the Secretary of Seller certifying, as complete and
accurate as of the Closing, attached copies of the Governing Documents of
Seller, certifying and attaching all requisite resolutions or actions of
Seller’s sole member approving the execution and delivery of this Agreement and
the consummation of the Contemplated Transactions and certifying to the
incumbency and signatures of the officers of Seller executing this Agreement and
any other document relating to the Contemplated Transactions (the “Seller
Secretary Certificate”);

 

  (iv) a certificate stating that Bob Evans Farms, Inc., a Delaware corporation
(the “Parent”), is not a “foreign” person within the meaning of Section 1445 of
the Code, which certificate shall set forth all information required by, and
otherwise be executed in accordance with, Treasury Regulation
Section 1.1445-2(b)(2);

 

  (v) each of the Material Consents identified in Schedule 7.3;

 

  (vi) a transition services agreement substantially in the form of
Exhibit 2.5(a)(vi) (the “Transition Services Agreement”), executed by BEF
Management, Inc.;

 

  (vii) a supply agreement in the form of Exhibit 2.5(a)(vii)(the “Supply
Agreement”), executed by BEF Foods, Inc.;

 

  (viii) a assignment and assumption agreement of the Assumed Liabilities,
substantially in the form attached hereto as Exhibit 2.5(a)(viii) (the
“Assignment and Assumption Agreement”), executed by Seller;

 

  (ix) a subordination agreement, substantially in the form attached hereto as
Exhibit 2.5(a)(ix) (the “Subordination Agreement”), executed by Seller;

 

  (x) evidence of the dissolution of SWH Too, LLC;

 

  (xi) resignations of directors, officers, and managers of SWH and the Acquired
Subsidiaries pursuant to Section 5.7; and

 

  (xii) (1) the Pay-Off Letters required by Sections 1.1 (Flow of Funds
Memorandum) and 2.7(b), executed by the Persons to which any portion of
Indebtedness is owed, and (2) a pay-off letter from each payee in respect of
Seller Transaction Expenses in substantially the form of the pay-off letter
delivered to Buyer pursuant to Section 1.1 (Flow of Funds Memorandum).

 

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(b) Seller shall pay (i) to each of the parties set forth on the Flow of Funds
Memorandum, the Closing Indebtedness and Seller Transaction Expenses and
(ii) the Extraordinary Costs that are due and payable at Closing, in each case,
by wire transfer to an account specified in writing by such party on the Flow of
Funds Memorandum (such Closing pay-off obligations, the “Closing Pay-offs”);

(c) Buyer shall deliver to Seller:

 

  (i) the Closing Cash Payment by wire transfer to an account specified by
Seller in a writing delivered to Buyer;

 

  (ii) the Note, substantially in the form attached hereto as
Exhibit 2.5(c)(ii), executed by Buyer;

 

  (iii) a guaranty agreement (the “Guaranty Agreement”), substantially in the
form attached hereto as Exhibit 2.5(c)(iii), executed by SWH;

 

  (iv) a certificate executed by Buyer as to the accuracy of its representations
and warranties as of the date of this Agreement and as of the Closing in
accordance with Section 8.1 and as to its compliance with and performance of its
covenants and obligations to be performed or complied with at or before the
Closing in accordance with Section 8.2 (the “Buyer Closing Certificate”);

 

  (v) a certificate of the Secretary of Buyer certifying, as complete and
accurate as of the Closing, attached copies of the Governing Documents of Buyer
and certifying and attaching all requisite resolutions or actions of Buyer’s
board of directors approving the execution and delivery of this Agreement and
the consummation of the Contemplated Transactions and certifying to the
incumbency and signatures of the officers of Buyer executing this Agreement and
any other document relating to the Contemplated Transactions (the “Buyer
Secretary Certificate”);

 

  (vi) the Transition Services Agreement executed by SWH;

 

  (vii) the Supply Agreement executed by SWH;

 

  (viii) the Subordination Agreement executed by SWH; and

 

  (ix) the Assignment and Assumption Agreement executed by SWH.

2.6 Adjustment Amount.

(a) If the Estimated Closing Working Capital Ratio is greater than the Target
Working Capital Ratio, then Buyer shall pay to Seller an additional amount in
cash equal to the Closing Adjustment Amount pursuant to Section 2.2. If the
Estimated Closing Working Capital Ratio is less than the Target Working Capital
Ratio, then the cash amount otherwise payable to

 

15

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Seller pursuant to Section 2.2 shall be reduced by an amount equal to the
Closing Adjustment Amount.

(b) If the Closing Working Capital Ratio is greater than the Target Working
Capital Ratio, then Buyer shall pay to Seller an amount in cash equal to the
Final Adjustment Amount by wire transfer of immediately available funds to an
account specified by Seller. If the Closing Working Capital Ratio is less than
the Target Working Capital Ratio, then Seller shall pay to Buyer an amount in
cash equal to the Final Adjustment Amount by wire transfer of immediately
available funds to an account specified by Buyer. Within three (3) Business Days
after the calculation of the Closing Working Capital becomes binding and
conclusive on the parties pursuant to Section 2.7, Seller or Buyer, as the case
may be, shall make the wire transfer payment required by this Section 2.6(b).

2.7 Adjustment Procedure.

(a) Defined Terms.

 

  (i) “Closing Adjustment Amount” means the amount in cash by which Estimated
Closing Current Assets must be increased or decreased such that the Estimated
Closing Working Capital Ratio, after such increase or decrease, equals the
Target Working Capital Ratio.

 

  (ii) “Closing Current Assets” means the amount of Current Assets included in
Closing Working Capital.

 

  (iii) “Closing Current Liabilities” means the amount of Current Liabilities
included in Closing Working Capital.

 

  (iv) “Closing Indebtedness” means the amount of Indebtedness of SWH and the
Acquired Subsidiaries as of immediately prior to the Effective Time.

 

  (v) “Closing Working Capital” means the Working Capital reflected in the Final
Closing Date Balance Sheet.

 

  (vi) “Closing Working Capital Ratio” means a fraction, expressed as a
percentage rounded to the nearest fifth decimal place, (i) the denominator of
which shall equal the Closing Current Liabilities and (ii) the numerator of
which shall equal the Closing Current Assets.

 

  (vii) “Estimated Closing Current Assets” means the amount of Current Assets
included in Estimated Working Capital.

 

  (viii) “Estimated Closing Current Liabilities” means the amount of Current
Liabilities included in Estimated Working Capital.

 

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  (ix) “Estimated Closing Working Capital Ratio” means a fraction, expressed as
a percentage rounded to the nearest fifth decimal place, (i) the denominator of
which shall equal the Estimated Closing Current Liabilities and (ii) the
numerator of which shall equal the Estimated Closing Current Assets.

 

  (x) “Estimated Working Capital” means the Working Capital reflected in the
Estimated Closing Date Balance Sheet.

 

  (xi) “Final Adjustment Amount” means the amount of cash by which Closing
Current Assets must be increased or decreased such that the Closing Working
Capital Ratio, after such increase or decrease, equals the Target Working
Capital Ratio.

 

  (xii) “Final Closing Date Balance Sheet” means, as applicable, (i) the
Proposed Final Closing Date Balance Sheet if Seller does not timely dispute such
balance sheet in accordance with Section 2.7(e), (ii) if there are no Disputed
Items, the Final Closing Date Balance Sheet agreed to by Buyer and Seller, or
(iii) if there are Disputed Items, the Final Closing Date Balance Sheet
determined by the Settlement Firm after its resolution and determination of the
Disputed Items in accordance with Section 2.7(e)(ii).

 

  (xiii) “Target Working Capital Ratio” means 40.0%.

 

  (xiv) “Working Capital” means the amount equal to Current Assets minus Current
Liabilities, where:

(1) “Current Assets” means the sum of all consolidated current assets of SWH and
the Acquired Subsidiaries, determined as of the Effective Time in accordance
with the Applicable Accounting Principles. Notwithstanding the foregoing,
“Current Assets” shall exclude (A) Accounts Receivable that do not conform to
the representations and warranties contained in Section 3.9, (B) current and
deferred income Tax benefits or assets, (C) any prepayments to the extent that
SWH and the Acquired Subsidiaries will not be able to use or otherwise receive
the benefits of such prepayments following the Closing or to the extent that
such prepayments are lost, forfeited, cancelled or otherwise diminished in value
in connection with, or as a result of, the Contemplated Transactions, (D) any
asset that would constitute a Seller Transaction Expense if such expense had not
been previously paid, (E) any asset based on a pending insurance or
indemnification claim, (F) any accounts and obligations owed by SWH to any
Acquired Subsidiaries or owed by an Acquired Subsidiary to SWH or any one or
more of the Acquired Subsidiaries, (G) any Inventory that does not conform to
the representations and warranties contained in Section 3.10, (H) current assets
reflected in the general ledger accounts of SWH and the Acquired Subsidiaries
set forth on Schedule 2.7(a)(xv), (I) except for petty cash at each of the
Restaurants (which shall be included in Current Assets), all cash and cash
equivalents, and (J) all deposits, including the deposit with Gordon Food
Service, and other assets relating to the liquor licenses used or held for use
in the Business. In calculating “Current

 

17

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Assets”, no reserve reflected in the Balance Sheet shall be reduced or
eliminated except by reason of payment or settlement. In determining Current
Assets for purposes of determining Closing Current Assets and Closing Working
Capital, any cash adjustment pursuant to the second sentence of Section 2.6(a)
shall increase “Current Assets”; and

(2) “Current Liabilities” means the sum of all consolidated current liabilities
of SWH and the Acquired Subsidiaries, determined as of the Effective Time in
accordance with the Applicable Accounting Principles. Notwithstanding the
foregoing, “Current Liabilities” shall include the Insurance Liabilities.
“Current Liabilities” shall exclude (A) current and deferred Tax obligations or
liabilities, (B) current liabilities included in the determination of Closing
Indebtedness, Seller Transaction Expenses, or Extraordinary Costs, (C) current
liabilities that constitute Assumed Liabilities, and (D) any accounts and
obligations owed by SWH to any Acquired Subsidiaries or owed by an Acquired
Subsidiary to SWH or any one or more of the Acquired Subsidiaries. In
calculating “Current Liabilities”, no reserve reflected in the Balance Sheet
shall be reduced or eliminated except by reason of payment or settlement.

(b) Closing Estimates. No later than three (3) Business Days prior to the
Closing Date, Seller shall prepare in good faith and deliver to Buyer:

 

  (i) an estimated unaudited balance sheet for SWH and the Acquired Subsidiaries
as of the Effective time in the form attached hereto as Exhibit 2.7(b), which is
prepared in accordance with this Agreement (including this Section 2.7 and the
definition of “Working Capital”, “Current Assets”, and “Current Liabilities”
contained herein) and, to the extent not inconsistent with this Agreement and
otherwise applicable to the particular calculation or determination, the
Applicable Accounting Principles (as modified to reflect (x) modifications
mutually agreed to by Buyer and Seller pursuant to the last paragraph of this
Section 2.7(b) and (y) any Section 2.7(b) Disputes, the “Estimated Closing Date
Balance Sheet”);

 

  (ii) a trial balance supporting each of the line items included in the
Estimated Closing Date Balance Sheet and reasonable supporting documentation of
Seller’s calculations of Estimated Working Capital, Estimated Current Assets and
Estimated Current Liabilities, in each case, determined in accordance with this
Agreement (including this Section 2.7 and the definition of “Working Capital”,
“Current Assets”, and “Current Liabilities” contained herein) and, to the extent
not inconsistent with this Agreement and otherwise applicable to the particular
calculation or determination, the Applicable Accounting Principles; and

 

  (iii) the Flow of Funds Memorandum.

The foregoing documents (and the line items and calculations contained therein)
delivered by Seller pursuant to Sections 2.7(b)(i) and 2.7(b)(ii) shall be
subject to

 

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the reasonable approval of Buyer. Seller promptly shall deliver, or cause to be
delivered, to Buyer and its Representatives detailed schedules of the foregoing
documents (and calculations contained therein), together with any supporting
documents as Buyer may request. If Buyer shall have any dispute with the
foregoing documents, or any underlying amounts or calculations, then Seller and
Buyer shall endeavor in good faith to resolve such disputes within two
(2) Business Days. If they are unable to so resolve any of such disputes (such
unresolved disputes, the “Section 2.7(b) Disputes”), then the Parties hereto
agree that the foregoing documents, and any underlying amounts or calculations,
in each case, shall be modified in favor of Buyer’s position to reflect the
Section 2.7(b) Disputes, and as so modified shall be the Estimated Closing Date
Balance Sheet and trial balance for purposes of the Closing and the
determination of the Estimated Closing Working Capital Ratio and the Closing
Adjustment Amount. For the avoidance of doubt, if there are Section 2.7(b)
Disputes, the consummation of the Contemplated Transactions based on the
Estimated Closing Date Balance Sheet and the trial balance, and any underlying
amounts, in each case, as so modified in favor of Buyer to reflect the
Section 2.7(b) Disputes, shall not be deemed to constitute the agreement of
Seller to the estimates or amounts set forth therein, and the consummation of
the Contemplated Transactions based on such Estimated Closing Date Balance Sheet
and the trial balance, and any underlying amounts, shall not be construed as a
waiver by Seller of any provisions, rights or privileges hereunder.

(c) Post-Closing Determinations. On or before 5:00 p.m., Eastern time, on the
sixtieth (60th) day after the Closing Date, Buyer shall prepare in good faith
and deliver, or cause to be so prepared and delivered, to Seller

 

  (i) an unaudited balance sheet for the SWH and the Acquired Subsidiaries as of
the Effective Time in the form attached hereto as Exhibit 2.7(b), which is
prepared in accordance with this Agreement (including this Section 2.7 and the
definition of “Working Capital”, “Current Assets”, and “Current Liabilities”
contained herein) and, to the extent not inconsistent with this Agreement and
otherwise applicable to the particular calculation or determination, the
Applicable Accounting Principles (the “Proposed Final Closing Date Balance
Sheet”); and

 

  (ii) a trial balance supporting each of the line items included in the
Proposed Final Closing Date Balance Sheet and reasonable supporting
documentation of Buyer’s proposed calculations of Closing Working Capital,
Closing Current Assets and Closing Current Liabilities, in each case, determined
in accordance with this Agreement (including this Section 2.7 and the definition
of “Working Capital”, “Current Assets”, and “Current Liabilities” contained
herein) and, to the extent not inconsistent with this Agreement and otherwise
applicable to the particular calculation or determination, the Applicable
Accounting Principles.

 

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(d) Post-Closing Access Rights. Buyer shall grant Seller and Seller’s authorized
accounting and legal representatives reasonable access to such work papers or
other documents and information as they may reasonably request relating to
Buyer’s calculation of the amounts included in the Proposed Final Closing Date
Balance Sheet and the supporting trial balance delivered pursuant to
Section 2.7(c)(ii) and shall make appropriate officers reasonably available to
assist the representatives of Seller and respond to questions in connection with
Seller’s review of the Proposed Final Closing Date Balance Sheet and the
supporting trial balance delivered pursuant to Section 2.7(c)(ii).
Notwithstanding the foregoing, Buyer shall not be required to grant access or
furnish information to Seller or any of its representatives to the extent that
such information is subject to (i) an attorney/client or attorney work product
privilege or (ii) restrictions under any applicable Legal Requirement, any
fiduciary duty or any binding agreement; provided, however, that Buyer shall, to
the extent that the same may be provided in a fashion consistent with the
maintenance of the applicable privilege and compliance with any applicable Legal
Requirement, fiduciary duty or binding agreement, endeavor to provide all
information and records reasonably requested by Seller or any of its
representatives.

(e) Post-Closing Dispute Resolution.

 

  (i)

Seller shall have until 5:00 p.m., Eastern time, on the thirtieth (30th) day
after the date of Buyer’s delivery of the Proposed Final Closing Date Balance
Sheet and the supporting trial balance delivered pursuant to Section 2.7(c)(ii)
to give Buyer written notice of any dispute regarding the amounts reflected in
the Proposed Final Closing Date Balance Sheet and the supporting trial balance
delivered pursuant to Section 2.7(c)(ii). If Seller does not timely give Buyer
written notice of a dispute in accordance with this Section 2.7(e), the Proposed
Final Closing Date Balance Sheet and the supporting trial balance delivered
pursuant to Section 2.7(c)(ii) shall be deemed to have been accepted and agreed
to by Seller in the form in which they were delivered as the Final Closing Date
Balance Sheet and the trial balance, and shall be final and binding on all
parties hereto in all respects. Any written notice of a dispute regarding the
Proposed Final Closing Date Balance Sheet and the supporting trial balance
delivered pursuant to Section 2.7(c)(ii) (a “Notice of Dispute”), as to each
dispute, shall set forth in reasonable detail the elements and amounts with
which Seller disagrees, including the amounts of any adjustments that are
necessary in the reasonable judgment of Seller for the computations contained in
the Proposed Final Closing Date Balance Sheet and the supporting trial balance
delivered pursuant to Section 2.7(c)(ii) to conform to the requirements of this
Agreement and the basis for Seller’s suggested adjustments. During the twenty
(20) day period ending at 5:00 p.m., Eastern time, on the twentieth (20th) day
following the date of Buyer’s receipt of a Notice of Dispute, if provided
Seller, Buyer and Seller shall make reasonable good faith efforts to attempt to
resolve such disputed items and agree in writing upon the final content of the

 

20

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  disputed Proposed Final Closing Date Balance Sheet and the supporting trial
balance delivered pursuant to Section 2.7(c)(ii) or to stipulate to such portion
thereof with respect to which there is no dispute.

 

  (ii) If Buyer and Seller cannot resolve or stipulate to all disputed items
relating to the Proposed Final Closing Date Balance Sheet and the supporting
trial balance delivered pursuant to Section 2.7(c)(ii) within the twenty
(20) day period referenced in Section 2.7(e), the matters with respect to which
no resolution or stipulation can be reached (the “Disputed Items”) shall be
submitted to and resolved by a recognized independent accounting firm selected
by mutual written agreement of Buyer and Seller; provided, however, that if such
mutually selected recognized independent accounting firm is unwilling to so
serve (the date of notice of such unwillingness to serve, the “Decline Date”)
and Buyer and Seller are unable to agree on another recognized independent
accounting firm within five (5) days after the Decline Date, then within ten
(10) days after the Decline Date, each of Buyer and Seller shall select an
office of an independent accounting firm of recognized standing and such two
firms shall, within fifteen (15) days after the Decline Date, then select a
third independent accounting firm of recognized standing to resolve any
remaining Disputed Items (the firm selected in accordance with the foregoing,
the “Settlement Firm”). The Settlement Firm shall only resolve each Disputed
Item by making an adjustment to the Proposed Final Closing Date Balance Sheet
and the supporting trial balance delivered pursuant to Section 2.7(c)(ii) that
is within the range for such Disputed Item defined by the amount of such
Disputed Item in the Proposed Final Closing Date Balance Sheet and the
supporting trial balance delivered pursuant to Section 2.7(c)(ii) delivered by
Buyer pursuant to Section 2.7 and the amount of such Disputed Item included in
Seller’s Notice of Dispute. The resolution and determination of the Disputed
Items by the Settlement Firm shall be based solely on the provisions of this
Agreement and on written submissions and presentations by Buyer and Seller (or
their respective representatives), and not on independent review by the
Settlement Firm, and shall be made in conformity with applicable Legal
Requirements. The decision of the Settlement Firm shall constitute an arbitral
award and shall be conclusive, final and binding on all parties hereto in all
respects and upon which a judgment may be rendered by a Governmental Body having
proper jurisdiction thereover.

 

  (iii)

Fifty percent (50%) of the fees, costs and expenses of the Settlement Firm shall
be borne by Buyer and the remaining fifty

 

21

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  percent (50%) of the fees, costs and expenses of the Settlement Firm shall be
borne by Seller.

2.8 Post-Closing Insurance Liabilities True-Ups.

(a) On or before 5:00 p.m., Eastern time, on the sixtieth (60th) day following
Buyer’s 2014 fiscal year end, Buyer shall prepare in good faith and deliver, or
cause to be so prepared and delivered, to Seller a detailed statement (the
“Proposed 2014 Insurance Liabilities Statement”) of (i) the aggregate amount of
Insurance Liabilities paid through the end of Buyer’s 2014 fiscal year and
(ii) Buyer’s good faith estimate of the amount of Insurance Liabilities that
remain outstanding, including reasonable supporting documentation of Buyer’s
proposed calculations, which estimate in the foregoing clause (ii) shall be
determined in accordance with this Agreement and, to the extent not inconsistent
with this Agreement, the Applicable Accounting Principles. The sum of the
amounts described in clauses (i) and (ii) of the immediately preceding sentence
is referred to herein as the “2014 Proposed Insurance Liabilities Amount”.

(b) On or before 5:00 p.m., Eastern time, on the sixtieth (60th) day following
Buyer’s 2016 fiscal year end, Buyer shall prepare in good faith and deliver, or
cause to be so prepared and delivered, to Seller a detailed statement (the
“Proposed 2016 Insurance Liabilities Statement”) of (i) the aggregate amount of
Insurance Liabilities paid through the end of Buyer’s 2016 fiscal year and
(ii) Buyer’s good faith estimate of the amount of Insurance Liabilities that
remain outstanding, including reasonable supporting documentation of Buyer’s
proposed calculations, which estimate in the foregoing clause (ii) shall be
determined in accordance with this Agreement and, to the extent not inconsistent
with this Agreement, the Applicable Accounting Principles. The sum of the
amounts described in clauses (i) and (ii) of the immediately preceding sentence
is referred to herein as the “2016 Proposed Insurance Liabilities Amount”. The
“Proposed Insurance Liabilities Amount” refers to the 2014 Proposed Insurance
Liabilities Amount or the 2016 Proposed Insurance Liabilities Amount, as
applicable. The “Proposed Insurance Liabilities Statement” refers to the 2014
Proposed Insurance Liabilities Statement or the 2016 Proposed Insurance
Liabilities Statement, as applicable.

(c) Post-Closing Access Rights. Buyer shall grant Seller and Seller’s authorized
accounting and legal representatives reasonable access to such work papers or
other documents and information as they may reasonably request relating to the
applicable Proposed Insurance Liabilities Statement and the Proposed Insurance
Liabilities Amount contained therein and shall make appropriate officers
reasonably available to assist the representatives of Seller and respond to
questions in connection with Seller’s review of such statement and the Proposed
Insurance Liabilities Amount contained therein. Notwithstanding the foregoing,
Buyer shall not be required to grant access or furnish information to Seller or
any of its representatives to the extent that such information is subject to
(i) an attorney/client or attorney work product privilege or (ii) restrictions
under any applicable Legal Requirement, any fiduciary duty or any binding
agreement; provided, however, that Buyer shall, to the extent that the same may
be provided in a fashion consistent with the maintenance of the applicable
privilege and compliance with any applicable Legal Requirement, fiduciary duty
or binding agreement, endeavor to provide all information and records reasonably
requested by Seller or any of its representatives.

 

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(d) Post-Closing Dispute Resolution.

 

  (i) Seller shall have until 5:00 p.m., Eastern time, on the thirtieth
(30th) day after the date of Buyer’s delivery of the applicable Proposed
Insurance Liabilities Statement to give Buyer written notice of any dispute
regarding the amounts reflected in such statement. If Seller does not timely
give Buyer written notice of a dispute in accordance with this Section 2.7(e),
the applicable Proposed Insurance Liabilities Statement and the Proposed
Insurance Liabilities Amount contained therein shall be deemed to have been
accepted and agreed to by Seller in the form in which they were delivered as the
Final Insurance Liabilities Statement, and shall be final and binding on all
parties hereto in all respects. Any written notice of a dispute regarding the
applicable Proposed Insurance Liabilities Statement (an “Insurance Liabilities
Notice of Dispute”), as to each dispute, shall set forth in reasonable detail
the elements and amounts with which Seller disagrees, including the amounts of
any adjustments that are necessary in the reasonable judgment of Seller for the
computations contained in the Proposed Insurance Liabilities Statement to
conform to the requirements of this Agreement and the basis for Seller’s
suggested adjustments. During the twenty (20) day period ending at 5:00 p.m.,
Eastern time, on the twentieth (20th) day following the date of Buyer’s receipt
of an Insurance Liabilities Notice of Dispute, if provided by Seller, Buyer and
Seller shall make reasonable good faith efforts to attempt to resolve such
disputed items and agree in writing upon the final content of the disputed
Proposed Insurance Liabilities Statement or to stipulate to such portion thereof
with respect to which there is no dispute.

 

  (ii)

If Buyer and Seller cannot resolve or stipulate to all disputed items relating
to the Proposed Insurance Liabilities Statement within the twenty (20) day
period referenced in Section 2.7(e), the matters with respect to which no
resolution or stipulation can be reached (the “Disputed Insurance Items”) shall
be submitted to and resolved by the Settlement Firm (which firm shall be
selected as provided in Section 2.7(e)(ii). The Settlement Firm shall only
resolve each Disputed Insurance Item by making an adjustment to the Proposed
Insurance Liabilities Statement that is within the range for such Disputed
Insurance Item defined by the amount of such Disputed Insurance Item in the
Proposed Insurance Liabilities Statement delivered by Buyer pursuant to
Section 2.7(a) or Section 2.8(b), as applicable, and the amount of such Disputed
Insurance Item included in Seller’s Insurance Liabilities Notice of Dispute. The
resolution and determination of the Disputed Insurance Items by the Settlement
Firm shall be based solely on the provisions of this Agreement and on written
submissions and presentations by

 

23

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  Buyer and Seller (or their respective representatives), and not on independent
review by the Settlement Firm, and shall be made in conformity with applicable
Legal Requirements. The decision of the Settlement Firm shall constitute an
arbitral award and shall be conclusive, final and binding on all parties hereto
in all respects and upon which a judgment may be rendered by a Governmental Body
having proper jurisdiction thereover.

 

  (iii) Fifty percent (50%) of the fees, costs and expenses of the Settlement
Firm shall be borne by Buyer and the remaining fifty percent (50%) of the fees,
costs and expenses of the Settlement Firm shall be borne by Seller.

(e) Defined Terms.

 

  (i) “Final Insurance Liabilities Statement” means, as applicable, (i) the
applicable Proposed Insurance Liabilities Statement if Seller does not timely
dispute such balance sheet in accordance with Section 2.7(e), (ii) if there are
no Disputed Insurance Items, the Final Insurance Liabilities Statement agreed to
by Buyer and Seller, or (iii) if there are Disputed Insurance Items, the Final
Insurance Liabilities Statement determined by the Settlement Firm after its
resolution and determination of the Disputed Insurance Items in accordance with
Section 2.7(e)(ii).

 

  (ii) “Final Insurance Liabilities Amount” the sum of (A) the aggregate amount
of Insurance Liabilities paid through the end of Buyer’s 2014 fiscal year or
2016 fiscal year, as applicable, and (B) the estimate of the amount of Insurance
Liabilities that remain outstanding, in each case, that are reflected in the
applicable Final Insurance Liabilities Statement.

(f) Adjustments to the Note.

 

  (i) If the Final Insurance Liabilities Amount included in the Final Insurance
Liabilities Statement for Buyer’s 2014 fiscal year exceeds the amount of
Insurance Liabilities included in Closing Current Liabilities, then the
outstanding principal balance or accrued interest then outstanding on the Note,
or a combination of the foregoing, shall be reduced by the amount of such
excess, and Buyer and Seller shall memorialize such adjustment to the Note in
writing. If the Final Insurance Liabilities Amount included in the Final
Insurance Liabilities Statement for Buyer’s 2014 fiscal year is less than the
amount of Insurance Liabilities included in Closing Current Liabilities, then
the outstanding principal balance of the Note shall be increased by such
shortfall, and Buyer and Seller shall memorialize such adjustment to the Note in
writing.

 

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  (ii) If the Final Insurance Liabilities Amount included in the Final Insurance
Liabilities Statement for Buyer’s 2016 fiscal year exceeds the Final Insurance
Liabilities Amount included in the Final Insurance Liabilities Statement for
Buyer’s 2014 fiscal year, then the outstanding principal balance or accrued
interest then outstanding on the Note, or a combination of the foregoing, shall
be reduced by the amount of such excess, and Buyer and Seller shall memorialize
such adjustment to the Note in writing. If the Final Insurance Liabilities
Amount included in the Final Insurance Liabilities Statement for Buyer’s 2016
fiscal year is less than the amount of Insurance Liabilities included in the
Final Insurance Liabilities Statement for Buyer’s 2014 fiscal year, then the
outstanding principal balance of the Note shall be increased by such shortfall,
and Buyer and Seller shall memorialize such adjustment to the Note in writing.

2.9 Consents. If there are any Material Consents that are required and have not
yet been obtained (or otherwise are not in full force and effect) as of the
Closing, in the case of each Material Contract as to which such Material
Consents were not obtained (or otherwise are not in full force and effect) (the
“Restricted Material Contracts”), Buyer may elect to have Seller continue its
efforts to obtain the Material Consents. If Buyer elects to have Seller continue
its efforts to obtain any Material Consents, following the Closing, the parties
shall use commercially reasonable best efforts and cooperate with each other to
obtain the Material Consent relating to each Restricted Material Contract as
quickly as practicable.

 

3. REPRESENTATIONS AND WARRANTIES OF SELLER

Seller represents and warrants to Buyer as follows:

3.1 Organization And Good Standing. Schedule 3.1 contains a complete and
accurate list of Seller’s jurisdiction of formation and any other jurisdictions
in which it is qualified to do business as a foreign limited liability company.
Seller is a limited liability company duly formed, validly existing and in good
standing under the laws of its jurisdiction of formation. Schedule 3.1 contains
a complete and accurate list of SWH’s jurisdiction of formation and any other
jurisdictions in which it is qualified to do business as a foreign limited
liability company. SWH is a limited liability company duly formed, validly
existing and in good standing under the laws of its jurisdiction of formation,
with full limited liability company power and authority to conduct its business
as it is now being conducted, to own or use the properties and assets that it
purports to own or use, and to perform all its obligations under Contracts. SWH
is duly qualified to do business as a foreign limited liability company and is
in good standing under the laws of each state or other jurisdiction in which
either the ownership or use of the properties owned or used by it, or the nature
of the activities conducted by it, requires such qualification.

 

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3.2 Enforceability; Authority; No Conflict.

(a) This Agreement has been duly executed and delivered by Seller, and (assuming
due authorization, execution and delivery by Buyer) constitutes the legal, valid
and binding obligation of Seller, enforceable against it in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, or moratorium laws, other similar laws
affecting creditors’ rights and general principles of equity affecting the
availability of specific performance and other equitable remedies. Seller has
the absolute and unrestricted right, power and authority to execute and deliver
this Agreement and to perform its obligations under this Agreement, and such
action has been duly authorized by all requisite corporate action on the part of
Seller.

(b) Except as set forth in Schedule 3.2(b) and except for Liquor License Agency
Approval, and subject to the provisions of Section 2.9, (i) neither the
execution and delivery of this Agreement by Seller nor the consummation or
performance by Seller of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of time): A. Breach (1) any
provision of any of the Governing Documents of Seller, or (2) any resolution
adopted by the sole member of Seller; B. Breach or give any Governmental Body or
other Person the right to challenge any of the Contemplated Transactions or to
exercise any remedy or obtain any relief under any Legal Requirement or any
Order to which SWH, the Business, or any of the Assets, may be subject; C.
require the Consent, notice or other action by any Person under, contravene,
conflict with, result in a violation or Breach of any of the terms or
requirements of, constitute a default or an event that would constitute a
default under, result in the acceleration of or create in any Person or
Governmental Body the right to accelerate, revoke, withdraw, suspend, cancel,
terminate or modify, any Contract or Governmental Authorization to which SWH is
a party or by which SWH or the Business is bound or that otherwise relates to
the Business; D. Breach any provision of, or give any Person the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or payment under, or to cancel, terminate or modify, any
Material Contract; or E. result in the imposition or creation of any Encumbrance
upon or with respect to any of the Assets other than Permitted Encumbrances; and
(ii) no Consent, approval, Governmental Authorization, declaration or filing
with, or notice to, any Governmental Body is required by or with respect to
Seller in connection with the execution and delivery of this Agreement or the
documents contemplated hereby in the consummation of the transactions
contemplated hereby and thereby.

3.3 Capitalization. All of the outstanding membership interests of SWH are duly
authorized, validly issued, fully paid and non-assessable. Seller holds of
record and beneficially owns all of the outstanding membership interests of SWH.
All of the outstanding shares of capital stock of the Acquired Subsidiaries are
duly authorized, validly issued, fully paid and non-assessable. SWH holds of
record and beneficially owns all of the outstanding shares of capital stock of
the Acquired Subsidiaries. There are no Contracts relating to the issuance, sale
or transfer of any equity securities or other securities of SWH or the Acquired
Subsidiaries. None of the outstanding equity securities of SWH or the Acquired
Subsidiaries was issued in violation of the Securities Act of 1933, as amended
(the “Securities Act”), or any other Legal Requirement.

3.4 Financial Statements. Seller has delivered to Buyer: (a) an unaudited
balance sheet of SWH as of December 28, 2012 (the “Balance Sheet”), and the
related unaudited

 

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statement of income and cash flow for the three month period then ended
(together with the Balance Sheet, the “Financials”); and (b) and unaudited
balance sheets of such SWH as of the end of the 2010 through 2012 fiscal years
of SWH and the related unaudited statements of income and cash flows. Such
financial statements fairly present the financial condition and the results of
operations, changes in owners’ equity and changes in cash flows of SWH as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with the Applicable Accounting Principles except,
in the case of the Financials, normal year-end adjustments and accruals. The
financial statements referred to in this Section 3.4 reflect the consistent
application of such accounting principles throughout the periods involved in all
material respects except as disclosed in the notes to such financial statements.
Such financial statements have been prepared from and are in accordance with the
accounting Records of Seller.

3.5 Books And Records. The books of account and other financial Records of
Seller and SWH, all of which have been made available to Buyer, are complete and
correct in all material respects and represent actual, bona fide transactions
and have been maintained in accordance with sound business practices.

3.6 Sufficiency Of Assets. Except as set forth in Schedule 3.6, the Assets
(a) constitute all of the assets, tangible and intangible, of any nature
whatsoever, necessary to operate the Business in the manner presently operated
by SWH, and (b) are sufficient for the continued conduct of the Business after
the Effective Time in substantially the same manner as conducted prior to the
Effective Time.

3.7 Real Property.

(a) The title commitments delivered pursuant to Section 5.11 shall set forth
each parcel of real property owned by SWH and used in or necessary for the
conduct of the Business as currently conducted (together with all buildings,
fixtures, structures and improvements situated thereon and all easements,
rights-of-way and other rights and privileges appurtenant thereto, collectively
the “Owned Real Property”). Attached to such title commitments shall be copies
of the deeds and other instruments (as recorded) by which SWH acquired such
parcel of Owned Real Property, and copies of all title insurance policies,
opinions, abstracts and surveys in the possession of SWH with respect to such
parcel.

(b) Schedule 3.7(b) lists the street address and other identifying information
for all Real Property leased by SWH and used in or necessary for the conduct of
the Business as currently conducted (together with all rights, title and
interest of SWH in and to leasehold improvements relating thereto, including
security deposits, reserves or prepaid rents paid in connection therewith,
collectively, the “Leased Real Property”), and a true and complete list of all
leases, subleases, licenses, concessions and other agreements (whether written
or oral), including all amendments, extensions, renewals, guaranties and other
agreements with respect thereto, pursuant to which SWH holds any Leased Real
Property (collectively, the “Real Property Leases”). Seller has delivered to
Buyer a true and complete copy of each Real Property Lease.

(c) Neither Seller nor SWH has received any written notice of (i) material
violations of building codes or zoning ordinances or other Legal Requirement
affecting the Real

 

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Property, (ii) existing, pending or threatened condemnation proceedings
affecting the Real Property, or (iii) existing, pending or threatened zoning,
building code or other moratorium proceedings, or similar matters which could
reasonably be expected to materially and adversely affect the ability to operate
the Real Property as currently operated. Except as set forth on Schedule 3.7(c),
neither the whole nor any material portion of the Real Property has been damaged
or destroyed by fire or other casualty.

(d) The Real Property is sufficient for the continued conduct of the Business
after the Effective Time in substantially the same manner as conducted prior to
the Effective Time and constitutes all of the real property necessary to conduct
the Business as currently conducted.

(e) Except as set forth on Schedule 3.7(e) and Schedule 3.20, and to the
Knowledge of Seller, the Real Property is (i) suited for the various purposes
for which it is presently being used, and (ii) supplied with utilities and other
services appropriate for the operation of the Business located thereon.

3.8 Title To Assets; Encumbrances.

(a) SWH (i) owns good and marketable fee simple title to its respective estates
in the Owned Real Property, free and clear of any Encumbrances, other than as
described in Schedule 3.8(a) (the “Permitted Real Property Encumbrances”); and
(ii) except as set forth on Schedule 3.8(a), has not leased or otherwise granted
to any Person the right to use or occupy such Owned Real Property or any portion
thereof. Except as set forth on Schedule 3.8(a), there are no unrecorded
outstanding options, rights of first offer or rights of first refusal to
purchase such Owned Real Property or any portion thereof or interest therein.

(b) All Real Property Leases are in good standing and are valid, binding and
enforceable in accordance with their respective terms, and SWH enjoys peaceful
and undisturbed possession of all Leased Real Property. Except as set forth on
Schedule 3.8(b), there does not exist any Breach or, to the Knowledge of Seller,
any event which with notice or lapse of time or both would constitute a Breach
under any Real Property Lease, nor has any party to any Real Property Lease
exercised any termination rights with respect thereto. SWH (i) has paid all rent
due and payable under each Real Property Lease, (ii) except as set forth on
Schedule 3.8(b), has not subleased, assigned or otherwise granted to any Person
the right to use or occupy such Leased Real Property or any portion thereof; and
(iii) except as set forth on Schedule 3.8(b), has not pledged, mortgaged or
otherwise granted an Encumbrance on its leasehold interest in any Leased Real
Property.

(c) SWH has good and valid title to, or a valid leasehold interest in, all of
the Assets. All such owned Assets (including leasehold interests) are free and
clear of Encumbrances, except for Permitted Encumbrances, and all such leased
Assets are free and clear of Encumbrances except Permitted Encumbrances.

(d) Schedule 3.8(d) lists the leases pertaining to Tangible Personal Property.
All such Tangible Personal Property Leases are in good standing and are valid,
binding and enforceable in accordance with their respective terms, and to the
Knowledge of Seller there does

 

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not exist under any such Tangible Personal Property Lease any Breach or any
event which with notice or lapse of time or both would constitute a Breach.
Except with respect to the Tangible Personal Property set forth on
Schedule 3.8(d), SWH owns good and transferable title to the Tangible Personal
Property.

3.9 Accounts Receivable. The Accounts Receivable that are reflected on the
Balance Sheet, the Financials, the Closing Balance Sheet, or on the accounting
Records of SWH as of the Effective Time represent, or will represent, valid,
undisputed claims of SWH not subject to claims of set-off or other defenses or
counterclaims other than normal cash discounts accrued in the Ordinary Course of
Business and have arisen from sales actually made or services actually performed
by SWH in the Ordinary Course of Business. The reserves for bad debts shown in
the Balance Sheet and the Closing Balance Sheet have been determined in
accordance with Applicable Accounting principles, consistently applied, subject
to normal year-end adjustments. Schedule 3.9 contains a complete and accurate
list of all Accounts Receivable as of the date of the Balance Sheet, which list
sets forth the aging of each such Accounts Receivable. Except as set forth in
Schedule 3.9, Seller has not received notice from any debtor that such debtor
disputes or otherwise refuses to pay the amount reflected on the Balance Sheet
or the Closing Balance Sheet.

3.10 Inventories. All Inventory of SWH set forth on the Balance Sheet or
acquired since the date of the Balance Sheet is usable in the Ordinary Course of
Business, except to the extent reserved against in accordance with Applicable
Accounting Principles. The Balance Sheet and the Closing Balance Sheet will not
include an inventory reserve because spoiled inventories have historically been
insignificant and are expensed if and when inventories are disposed. All
Inventory is owned by SWH free and clear of Encumbrances, and no Inventory is
held on a consignment basis. Except as set forth on Schedule 3.10, the physical
location of all Inventory is located on the Real Property and the quantities of
each item of Inventories are not excessive but are reasonable in accordance with
the present circumstances of SWH.

3.11 No Undisclosed Liabilities. Except as set forth in Schedule 3.11, SWH has
no Liabilities that are material, individually or in the aggregate, and would be
required under Applicable Accounting Principles to be reflected or reserved
against in the Balance Sheet or the Balance Sheet other than current liabilities
incurred in the Ordinary Course of Business of SWH since the date of the Balance
Sheet.

3.12 Taxes.

Except as set forth in Schedule 3.12:

(a) SWH and each Acquired Subsidiary has filed or caused to be filed on a timely
basis (taking into account permitted extensions actually received) with the
appropriate Governmental Body all material Tax Returns that were required to be
filed with respect to it pursuant to applicable Legal Requirements. All such Tax
Returns were true, correct and complete in all material respects. SWH and each
Acquired Subsidiary has paid or caused to be paid to the appropriate
Governmental Body all Taxes that have or may have become due (whether or not
shown or required to be shown on any Tax Return), except such Taxes, if any, as
are listed in Schedule 3.12 and are being contested in good faith.

 

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(b) There are no Encumbrances on any of the Assets, or on any of the assets of
any Acquired Subsidiary, that arose in connection with any failure (or alleged
failure) to pay any Tax.

(c) No claim has ever been made in writing by any Governmental Body in a
jurisdiction where SWH or an Acquired Subsidiary does not file Tax Returns that
SWH or such Acquired Subsidiary is or may be subject to Taxation by that
jurisdiction.

(d) No audits or administrative or judicial proceedings regarding Taxes are
pending against or with respect to SWH or any Acquired Subsidiary.

(e) No waiver or extension of any statute of limitations relating to the payment
of Taxes has been given or requested with respect to Taxes for which SWH or any
Acquired Subsidiary may be liable.

(f) All Taxes that SWH or any Acquired Subsidiary is or was required by Legal
Requirements to withhold, deduct or collect have been duly withheld, deducted
and collected and, to the extent required, have been paid to the proper
Governmental Body, and each of SWH and each Acquired Subsidiary has complied in
all material respects with all information reporting and back-up withholding
requirements, and has maintained all required records with respect thereto, in
connection with amounts paid or owing to any employee, independent contractor,
customer, creditor, equityholder, or other third party.

(g) There is no Tax sharing agreement, Tax allocation agreement, Tax indemnity
obligation or similar written or unwritten agreement, arrangement, understanding
or practice with respect to Taxes (including any advance pricing agreement,
closing agreement or other arrangement relating to Taxes) that will require any
payment by SWH or by any Acquired Subsidiary after the Closing Date.

(h) SWH A. has not been a member of an affiliated group within the meaning of
Section 1504(a) of the Code (or any similar group defined under a similar
provision of state, local or foreign law), other than the group for which Parent
is the parent (the “Bob Evans Group”), and B. has no Liability for Taxes of any
Person (other than other members of the Bob Evans Group) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law), as a transferee or successor, by Contract, or otherwise.

(i) Seller has delivered or made available to Buyer true, correct and complete
copies of all income Tax Returns of SWH and the Acquired Subsidiaries filed by,
and all examination reports, and statements of deficiencies assessed against or
agreed to by, any such Person during the three-year period ending on the date
hereof. For fiscal years ending 2009, 2010, and 2011 (i.e., the Tax year ending
April 29, 2011), Seller has delivered or made available to Buyer true, correct
and complete copies of pro-forma federal income Tax Returns of SWH and the
Acquired Subsidiaries (prepared as if SWH were the parent of such affiliated
group) that although not filed with any Governmental Body (because such Persons
were included in the affiliated group of the Bob Evans Group and included in the
consolidated federal income Tax Returns of the entire Bob Evans Group), properly
reflect the operations of SWH and the Acquired Subsidiaries, as well as their
taxable income and other tax attributes and

 

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characteristics, as if such Persons operated on a stand-alone basis from the
remainder of the Bob Evans Group.

(j) Except as set forth in Schedule 3.12, neither SWH nor any Acquired
Subsidiary has made any payments, or is obligated to make any payments, or is a
party to any agreement that under certain circumstances could obligate it to
make payments that will not be deductible under Section 280G of the Code (or any
corresponding or similar provision of state, local or foreign Tax law) or
Section 162(m) of the Code (or any corresponding or similar provision of state,
local or foreign Tax law).

(k) The unpaid Taxes of SWH and Acquired Subsidiaries (1) did not, as of the
date of the Balance Sheet, exceed the reserve for Liability for Taxes (rather
than any reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the Balance Sheet (rather
than in any notes thereto) and (2) will not exceed that reserve as adjusted for
the passage of time through the Closing Date in accordance with the past custom
and practice of such Persons in filing their Tax Returns though taking into
account the Conversion. Since the date of the Balance Sheet, neither SWH nor any
Acquired Subsidiary has incurred any Liability for Taxes outside the ordinary
course of business.

(l) Neither SWH nor any Acquired Subsidiary has, directly or indirectly,
participated in any transaction (including the Contemplated Transactions) that
would constitute (1) a “reportable transaction” or “listed transaction” as
defined in Treasury Regulation Section 1.6011-4 or (2) a “tax shelter” as
defined in Section 6111 of the Code and the Treasury Regulations thereunder.

(m) No Acquired Subsidiary will be required to include any item of income in, or
exclude any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of any: A. change in
method of accounting for a taxable period ending on or prior to the Closing
Date; B. “closing agreement” as described in Section 7121 of the Code (or any
corresponding or similar provision of state, local or foreign Tax law) executed
on or prior to the Closing Date; C. intercompany transactions occurring at or
prior to the Closing or any excess loss account in existence at Closing
described in Treasury Regulations under Section 1502 of the Code (or any
corresponding or similar provision of state, local or foreign Tax law);
D. installment sale or open transaction disposition made on or prior to the
Closing Date; or E. prepaid amount received on or prior to the Closing Date.

(n) Except for Mimi’s Café of Rogers, Inc. which is an Arkansas non-profit
mutual benefit corporation, each Acquired Subsidiary is treated as a corporation
under Subchapter C of the Code for federal and applicable state and local income
Tax purposes. At all times since the Conversion and through the Closing Date,
each of Seller and SWH has been disregarded as an entity separate from Parent
for federal and applicable state income Tax purposes. Neither SWH nor any
Acquired Subsidiary owns an interest, directly or indirectly, in any joint
venture, partnership, limited liability company, or other entity that is treated
as a partnership for U.S. federal, state or local income Tax purposes.

(o) Schedule 3.12 lists each agreement, contract, plan or other arrangement
(whether or not written and whether or not an Employee Benefit Plan) that is a
Deferred

 

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Compensation Plan to which any of SWH or any Acquired Subsidiary is a party or
in which any Active Employee is a participant that is a “nonqualified deferred
compensation plan” within the meaning of Section 409A(d)(1) of the Code and the
Treasury Regulations promulgated thereunder. Each such Deferred Compensation
Plan (i) complies, and is operated and administered in accordance, with the
requirements of Section 409A of the Code, the Treasury Regulations promulgated
thereunder and any other official IRS guidance issued thereunder and (ii) has
been operated and administered in good faith compliance with Section 409A of the
Code from the period beginning on January 1, 2005.

3.13 No Material Adverse Change. Since December 28, 2012, there has not been any
material adverse change in the business, operations, assets, results of
operations or condition (financial or other) of SWH.

3.14 Employee Benefits.

(a) Schedule 3.14(a), lists each Employee Benefit Plan that is maintained,
administered or contributed to by SWH or any Acquired Subsidiary, and, with
respect to each Employee Benefit Plan on Schedule 3.14(a) for which SWH or any
Acquired Subsidiary is the plan sponsor, such plan is identified as an “SWH
Plan”. With respect to each Employee Benefit Plan for which SWH or any Acquired
Subsidiary is the plan sponsor, Seller has made available to Buyer, to the
extent applicable, true, accurate, and complete copies of the following
documents with respect to each Employee Benefit Plan (i) the plan document or,
in the case of any unwritten Employee Benefit Plan, summaries thereof, (ii) the
summary plan description, to the extent such summary plan description is legally
required for the applicable Employee Benefit Plan; (iii) any trust agreement;
(iv) the most recently filed Form 5500 Annual Report, and (v) all related
agreements and insurance contracts by which such Employee Benefit Plan is
established, operated, administered or funded.

(b) Except as provided in Schedule 3.14(b), neither SWH nor any ERISA Affiliate
has in the last six (6) years (i) ever sponsored, maintained, been a
participating employer in, or contributed to any or on behalf of an employee to
a “multi-employer plan” within the meaning of ERISA Sections 3(37) or
4001(a)(3); and (ii) no Employee Benefit Plan is subject to Title IV of ERISA.

(c) Each Employee Benefit Plan that is intended to qualify under Section 401(a)
of the Code has either received a favorable determination letter from the IRS as
to its qualified status or the remedial amendment period for such Employee
Benefit Plan has not yet expired, and each trust established in connection with
any Employee Benefit Plan which is intended to be exempt from federal income
taxation under Section 501(a) of the Code is so exempt. To the Knowledge of
Seller no fact or event has occurred or condition exists which would be
reasonably likely to adversely affect the qualified status of any such Employee
Benefit Plan or the exempt status of any such trust. Each Employee Benefit Plan
has been maintained and operated in compliance with the material terms thereof
and with the requirements prescribed by any applicable Legal Requirement. All
premiums that are due with respect to periods prior to the Closing Date have
been paid with respect to each Employee Benefit Plan that is a “welfare benefit
plan” (as defined in ERISA Section 3(1)). All reports, disclosures, notices and
filings with respect to such Employee Benefit Plans required to be made to
employees, participants,

 

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beneficiaries, alternate payees, qualified beneficiaries (as defined in the
Code) and any Governmental Body have been timely made or an extension has been
timely obtained.

(d) Neither SWH nor any ERISA Affiliate, nor any director, officer or employee
of SWH or any ERISA Affiliate has engaged in any transaction with respect to any
Employee Benefit Plan, or breached any applicable fiduciary responsibility or
obligation under Title I of ERISA that would subject any of them to a material
tax, penalty or liability for a “prohibited transaction” (as defined under ERISA
Section 406 and Section 4975 of the Code) or breach of any obligations under
ERISA or the Code or would result in any claim being made under, by or on behalf
of any such Employee Benefit Plan by any party with standing to make such a
claim. To the Knowledge of Seller, no Employee Benefit Plan is under audit or
investigation by the IRS, the U.S. Department of Labor or other Governmental
Body.

(e) Schedule 3.14(e) lists each Benefit Arrangement that is entered into,
maintained or contributed to by SWH, excluding any such Benefit Arrangement
which constitutes a Deferred Compensation Plan as listed on Schedule 3.12, and,
with respect to any Benefit Arrangement on Schedule 3.14(e) for which SWH or any
Acquired Subsidiary is the plan sponsor, such plan is identified as an “SWH
Plan”. Seller has made available to Buyer current copies of each Benefit
Arrangement for which SWH or any Acquired Subsidiary is the plan sponsor or in
the case of any unwritten such Benefit Arrangement, summaries thereof. Each
Benefit Arrangement has been maintained in compliance with the material terms
thereof and with the requirements prescribed by any applicable Legal
Requirement.

(f) Except as set forth on Schedule 3.14(f), none of the Employee Benefit Plans
nor any Benefit Arrangement (i) provides for the payment of or obligates SWH to
pay separation, severance, termination, retention, change of control or
similar-type benefits to any Person, which has not yet been paid, or
(ii) obligates SWH to pay separation, severance, termination, retention,
change-in-control or similar-type benefits as a result of any transaction
contemplated by this Agreement being a “change in control” within the meaning of
such term under Section 280G of the Code.

(g) There are no actions, suits or claims pending or, to the Knowledge of
Seller, threatened against or with respect to any Employee Benefit Plan or any
Benefit Arrangement (other than routine claims for benefits and appeals of
denied claims) that could reasonably be expected to result in a material
liability to SWH.

(h) Except as required under Sections 601 through 609 of ERISA, Section 4980B of
the Code or any similar state law (“COBRA”) and except as set forth on
Schedule 3.14(h), neither SWH nor any ERISA Affiliate has, with respect to any
employee of SWH, made any written commitments to provide, and is not obligated
to provide (i) health benefits (including, through insurance) to any retired or
former employee of Seller, or their respective dependants beyond termination of
employment, or (ii) life insurance or other death benefits to any retired or
former employee of Seller or their respective dependants beyond termination of
employment.

(i) Except as set forth in Schedule 3.14(i), each Benefit Arrangement subject to
Section 409A of the Code is in documentary compliance with Section 409A of the
Code and

 

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has been operated in good faith compliance with Section 409A of the Code since
January 1, 2005.

(j) Except as set forth in Schedule 3.14(j), neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated hereby
will (i) result in any payment not in the Ordinary Course of Business becoming
due to any employee of SWH under any Employee Benefit Plan or Benefit
Arrangement, (ii) materially increase any benefits under any Employee Benefit
Plan with respect to any employee of SWH, or (iii) result in the acceleration of
the time of payment, vesting or funding of any benefits under any Employee
Benefit Plan or Benefit Arrangement for any employee of SWH.

3.15 Compliance With Legal Requirements; Governmental Authorizations.

(a) Except as set forth in Schedule 3.15(a) and Schedule 3.20 and except for the
Custom Kitchen Liabilities which shall be assigned at Closing to Seller, (i) SWH
is, and since January 1, 2009 has been, in compliance with each Legal
Requirement that is applicable to it or to the conduct or operation of the
Business or the ownership or use of the Assets in all material respects; (ii) no
event has occurred (with or without notice or lapse of time) A. may constitute
or result in a violation by SWH of, or a failure on the part of SWH to comply
with, any Legal Requirement or B. may give rise to any material obligation on
the part of SWH to undertake, or to bear all or any portion of the cost of, any
remedial action of any nature; and (i) SWH has not received any notice or other
communication (whether oral or written) from any Governmental Body or any other
Person regarding A. any actual, alleged, possible or potential violation of, or
failure to comply with, any Legal Requirement or B. any actual, alleged,
possible or potential obligation on the part of SWH to undertake, or to bear all
or any portion of the cost of, any remedial action of any nature.

(b) Schedule 3.15(b) contains a complete and accurate list of each Governmental
Authorization (including liquor licenses) that is held by SWH or is required to
be held by SWH that relates to the Business or the Assets. Each Governmental
Authorization listed or required to be listed in Schedule 3.15(b) is valid and
in full force and effect. Except as set forth in Schedule 3.15(b): (i) SWH is,
and for the last three (3) years has been, in compliance with all of the terms
and requirements of each Governmental Authorization identified or required to be
identified in Schedule 3.15(b) in all material respects; (ii) no event has
occurred or circumstance exists that may (with or without notice or lapse of
time) A. constitute or result directly or indirectly in a violation of or a
failure to comply with any term or requirement of any Governmental Authorization
listed or required to be listed in Schedule 3.15(b) or B. result directly or
indirectly in the revocation, withdrawal, suspension, cancellation or
termination of, or any modification to, any Governmental Authorization listed or
required to be listed in Schedule 3.15(b); (i) SWH has not received any written
notice from any Governmental Body or any other Person regarding A. any actual,
alleged, possible or potential violation of or failure to comply with any term
or requirement of any Governmental Authorization or B. any actual, proposed,
possible or potential revocation, withdrawal, suspension, cancellation,
termination of or modification to any Governmental Authorization; and (i) all
applications required to have been filed for the renewal of the Governmental
Authorizations listed or required to be listed in Schedule 3.15(b) have been
duly filed on a timely basis with the appropriate Governmental Bodies, and all
other filings required to have been made with respect to such Governmental

 

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Authorizations have been duly made on a timely basis with the appropriate
Governmental Bodies. The Governmental Authorizations listed in Schedule 3.15(b)
collectively constitute all of the Governmental Authorizations necessary to
permit SWH to lawfully conduct and operate the Business in the manner in which
it is currently conducted and operated.

3.16 Legal Proceedings; Orders.

(a) Except as set forth in Schedule 3.16(a), there is no pending or, to Seller’s
Knowledge, threatened Proceeding: (i) by or against SWH or that otherwise
relates to or may affect the Business; or (ii) that challenges, or that may have
the effect of preventing, delaying, making illegal or otherwise interfering
with, any of the Contemplated Transactions. Seller has delivered to Buyer copies
of all pleadings, correspondence and other documents relating to each Proceeding
listed in Schedule 3.16(a). No event has occurred or circumstances exist that
may give rise to, or serve as a basis for, any such Proceeding. There are no
Proceedings listed, or required to be listed, in Schedule 3.16(a) that could
result in a Material Adverse Effect.

(b) Except as set forth in Schedule 3.16(b), (i) there is no Order to which SWH
or the Acquired Subsidiaries is subject; and (ii) to the Knowledge of Seller, no
officer, director, manager, agent or employee of SWH is subject to any Order
that prohibits such officer, director, manager, agent or employee from engaging
in or continuing any conduct, activity or practice relating to the Business. To
the Knowledge of Seller, no event has occurred or circumstances exist that may
constitute or result in (with or without notice or lapse of time) a violation of
any such Order.

3.17 Absence of Certain Changes and Events. Except as set forth in Schedule 3.17
or as required by this Agreement, since December 28, 2012, SWH has conducted the
Business only in the Ordinary Course of Business and there has not been any:

(a) incurrence, assumption or guarantee by SWH of any Indebtedness with respect
to the Business other than in the Ordinary Course of Business;

(b) creation or assumption by SWH of any Encumbrance on any Asset other than in
the Ordinary Course of Business;

(c) event, occurrence or development that has had, or could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;

(d) damage, destruction, other casualty loss or any interruption in use (whether
or not covered by insurance) of any Assets which is material individually or in
the aggregate;

(e) (i) payment (except in the Ordinary Course of Business), grant, or increase
by SWH of any bonuses, salaries or other compensation to any shareholder,
member, director, manager, officer or employee or entry into any employment,
severance or similar Contract with any shareholder, member, officer, director,
manager or employee, (ii) change in the terms of employment for any employee of
the Business or any termination of any employees for which the aggregate costs
and expenses exceed $50,000, or (iii) any action to accelerate the vesting or

 

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payment of any compensation or benefit for any officer, director, consultant or
independent contractor of the Business;

(f) distribution, advance or dividend paid by SWH to any of SWH’s shareholders
or members;

(g) adoption of, amendment to or increase in the payments to or benefits under,
or acceleration of benefits under, (i) employment, severance, retention or other
agreement with any current or former employee, director, officer, independent
contractor or consultant of the Business, (ii) any Employee Benefit Plan or any
Benefit Arrangement, or (iii) collective bargaining or other arrangement with a
labor union, in each case whether written or oral;

(h) voluntary recognition of any labor organization or group as the bargaining
representative of any unit or group of SWH’s employees or entry into any
stipulated election agreement with any union or the National Labor Relations
Board with respect to any unit or group of SWH employees;

(i) entry into, termination of or receipt of notice of termination of (i) any
license, distributorship, dealer, sales representative, joint venture, credit or
similar Contract to which SWH is a party, or (ii) any Contract that constitutes
or would constitute a Material Contract;

(j) cancellation or waiver of any Indebtedness, claims or rights belonging to
SWH;

(k) to the Knowledge of Seller, any indication by any customer or supplier of an
intention to discontinue or materially change the terms of its relationship with
SWH;

(l) sale, lease, assignment, license, or other disposition of any Asset or
property of SWH (including the Intellectual Property Assets) or the creation of
any Encumbrance on any Asset, other than in the Ordinary Course of Business;

(m) acceleration, termination, material modification to or cancellation of any
Assigned Contract or Governmental Authorization;

(n) material capital expenditures;

(o) loan to (or forgiveness of loan to), or entry into any other transaction
with, any directors, officers, or employees of the Business;

(p) adoption of any plan of merger, consolidation, reorganization, liquidation
or dissolution or filing of a petition in bankruptcy petition against it under
any similar Legal Requirement;

(q) material change in the accounting methods used by SWH; or

(r) Contract by SWH to do any of the foregoing, or any action or omission of SWH
that would result in the foregoing.

 

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3.18 Contracts; No Defaults.

(a) Schedule 3.18(a) lists each of the following Contracts to which SWH or any
Acquired Subsidiary is a party (such Contracts, together with all Contracts
concerning the occupancy, management or operation of any Real Property
(including brokerage contracts) listed or otherwise disclosed in Schedule 3.7(b)
and all Contracts relating to the Intellectual Property Assets set forth in
Schedules 3.23(a) and 3.23(b)), being “Material Contracts”:

 

  (i) each Contract that involves performance of services or delivery of goods
or materials by SWH, or to SWH, of an amount or value in excess of $50,000;

 

  (ii) each Contract that was not entered into in the Ordinary Course of
Business and that involves expenditures or receipts of SWH in excess of $50,000;

 

  (iii) each Contract that requires SWH to purchase or sell a stated portion of
the requirements or outputs of the Business or that contain “take or pay”
provisions;

 

  (iv) each Contract affecting the ownership of, leasing of, title to, use of or
any leasehold or other interest in any real or personal property (except
personal property leases and installment and conditional sales agreements having
a value per item or aggregate payments of less than $50,000 and with a term of
less than one year);

 

  (v) each Contract with any labor union or other employee representative of a
group of employees relating to wages, hours and other conditions of employment;

 

  (vi) each employment agreement and Contract with an independent contractor or
consultant (or similar arrangement) which are not cancellable without material
penalty or without more than 90 days’ notice;

 

  (vii) each Contract involving a sharing of profits, losses, costs or
liabilities by SWH with any other Person or otherwise providing for payments to
or by any Person based on sales, purchases or profits, other than direct
payments for goods;

 

  (viii) each broker, distributor, dealer, manufacturer’s representative,
franchise, agency, sales promotion, market research, marketing consulting or
advertising Contract;

 

  (ix) each Contract that relates to the acquisition or disposition of any
business, a material amount of stock or assets of any other Person or any real
property (whether by merger, sale of stock, sale of assets or otherwise);

 

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  (x) each Contract relating to indebtedness (including guarantees), except for
any Contracts relating to trade receivables;

 

  (xi) each Contract containing covenants that in any way purport to restrict
SWH’s business activity or limit the freedom of SWH to engage in any line of
business or to compete with any Person or in any geographic location;

 

  (xii) each power of attorney with respect to the Business or any Asset;

 

  (xiii) each Contract with any Governmental Body;

 

  (xiv) each joint venture, partnership, or similar Contract;

 

  (xv) each Contract for the sale of any of the Assets or for the grant to any
Person of any option, right of first refusal or preferential or similar right to
purchase any of the Assets;

 

  (xvi) each Contract entered into other than in the Ordinary Course of Business
that contains or provides for an express undertaking by SWH to be responsible
for indemnification of a Person, the assumption of any Tax, Environmental,
Health and Safety Liabilities or other Liability of any person, or consequential
damages;

 

  (xvii) each Contract for capital expenditures in excess of $50,000;

 

  (xviii) each written warranty or other similar undertaking with respect to
contractual performance extended by SWH other than in the Ordinary Course of
Business;

 

  (xix) each written guaranty extended by SWH;

 

  (xx) each amendment, supplement and modification (whether oral or written) in
respect of any of the foregoing.

 

  (xxi) all other Contracts that are material to SWH, the Acquired Subsidiaries,
or the operation of the Business and not previously disclosed pursuant to this
Section 3.18.

(b) Each Material Contract is in full force and effect and is valid and
enforceable obligation of SWH and, to Seller’s Knowledge, each other Person who
is a party thereto, enforceable in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to creditors’ rights
generally and the availability of injunctive relief and other equitable
remedies. SWH is, and since January 1, 2009 has been, in compliance with all
applicable terms and requirements of each Material Contract in all material
respects, and, to the Knowledge of Seller, each other Person that has or had any
obligation or liability under any Material Contract is, and

 

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since January 1, 2009 has been, in compliance with all applicable terms and
requirements of such Contract in all material respects. No event has occurred
that (with or without notice or lapse of time) (i) may contravene, conflict with
or result in a Breach of, or give SWH or any other Person the right to declare a
default or exercise any remedy under, or to accelerate the maturity or
performance of, or payment under, or to cancel, terminate or modify, any
Material Contract; or (ii) would cause the creation of any Encumbrance affecting
SWH or the Acquired Subsidiaries. SWH has not given to or received from any
other Person, at any time, any notice regarding any actual, alleged, possible or
potential violation or Breach of, or default under, any Material Contract. There
are no material disputes pending or threatened under any Material Contract.

3.19 Insurance Policies. All policies and binders of insurance, including
property, general liability, casualty, product liability, life, health,
accident, workers’ compensation, disability insurance, environmental insurance,
bonding arrangements and umbrella insurance policies, maintained by SWH
(collectively, the “Insurance Policies”), together with descriptions of all
“self-insurance” programs, are set forth on Schedule 3.19. All premiums due on
such Insurance Policies have either been paid or, if not yet due, accrued. All
Insurance Policies are, and at all times have been, in full force and effect for
such amounts as are sufficient for compliance with all Legal Requirements and
all Contracts to which SWH is a party or by which SWH is bound. None of SWH or
any of its Affiliates is in default under, or has otherwise failed to comply
with, in any material respect, any provision contained in any such Insurance
Policy. Except as set forth on Schedule 3.19, there have been no material claims
made under the Insurance Policies. SWH has not received notice under any
Insurance Policy denying or disputing any claim (or coverage with respect
thereto) made by SWH or regarding the termination, cancellation or material
amendment of, or material premium increase with respect to, any Insurance
Policy, in each case at any time since January 1, 2010. SWH has not been refused
any insurance, nor has SWH’s coverage been limited or suspended. The Insurance
Policies taken together provide adequate insurance coverage for the Business,
Assets and operations of SWH for all risks normally insured against by a Person
carrying on the same business or businesses as SWH in the same location.

3.20 Environmental Matters. Except as disclosed in Schedule 3.20:

(a) To the Knowledge of Seller, (i) SWH is and has been in material compliance
with all Environmental Laws; (ii) SWH has not received any Order, notice or
other communication from any Person of any actual or potential violation or
failure to comply with any Environmental Law, or of any actual or threatened
obligation to undertake or bear the cost of any Environmental, Health and Safety
Liabilities with respect to any the Business (including Real Property); and
(iii) SWH has and is in material compliance with all environmental permits and
environmental authorizations necessary to operate the Business, which permits
and authorizations are in full force and effect. To the Knowledge of Seller,
there is no condition, event or circumstance that might materially prevent or
impede, after the Effective Time, the conduct of the Business as currently
conducted. With respect to any environmental permits or authorizations, to the
extent transfer will be necessary or practicable, Seller has undertaken, or will
undertake prior to the Closing Date, all measures necessary to facilitate
transferability of the same, and to the Knowledge of Seller, there is no
condition, event or circumstance that might prevent or impede the
transferability of the same. Seller has not received any notice or

 

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communication regarding any material change in the status or terms and
conditions of any environmental permits or authorizations.

(b) There are no pending or, to the Knowledge of Seller, threatened claims,
Encumbrances, or other restrictions of any nature affecting the Business or
Assets resulting from any Environmental, Health and Safety Liabilities or
arising under or pursuant to any Environmental Law with respect to or affecting
the Business or the Assets (including Real Property).

(c) SWH has not received any written citation, directive, inquiry, notice,
Order, summons, warning or other communication that relates to Hazardous
Activity, Hazardous Materials, or any alleged, actual, or potential violation or
failure to comply with any Environmental Law, or of any alleged, actual, or
potential obligation to undertake or bear the cost of any Environmental, Health
and Safety Liabilities with respect to any Real Property.

(d) To the Knowledge of Seller, there are no Environmental, Health and Safety
Liabilities with respect to any Real Property in which SWH (or any predecessor)
has an interest.

(e) To the Knowledge of Seller, there are no Hazardous Materials present on or
in the Environment at any Real Property in violation of Environmental Law,
including any Hazardous Materials contained in barrels, aboveground or
underground storage tanks, landfills, land deposits, dumps, equipment (whether
movable or fixed) or other containers, either temporary or permanent, and
deposited or located at the Real Property. Neither SWH nor, to the Knowledge of
Seller, any other Person, has permitted or conducted, or is aware of, any
Hazardous Activity conducted with respect to any Real Property or any other
property or assets (whether real, personal or mixed) in which SWH has or has had
an interest except in compliance with all applicable Environmental Laws.

(f) To the Knowledge of Seller, there has been no Release or Threat of Release,
of any Hazardous Materials with respect to the Business, Assets or any real
property currently owned, leased or operated by SWH in connection with the
Business, and SWH has not received any notice that any of the Business, Assets,
or any real property currently owned, leased or operated by SWH in connection
with the Business (including soils, groundwater, surface water, buildings and
any other structure located thereon) has been contaminated with any Hazardous
Materials which could reasonably result in any claim against, violation of
Environmental Law, or incurrence of Environmental Health and Safety Liabilities,
by SWH.

(g) SWH has not retained or assumed by contract any liabilities or obligations
of third parties under Environmental Law.

(h) To the Knowledge of Seller, there is no condition, event or circumstance
concerning the release or regulation of Hazardous Materials that might prevent,
impede or materially increase the costs associated with the ownership, lease,
operation, performance or use of the Business as currently carried out or the
Assets, or any reasonable anticipation of such condition, event or circumstance.

 

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(i) Seller has delivered or made available to Buyer true and complete copies and
results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by SWH pertaining to Hazardous Materials or Hazardous Activities in,
on, or under the Real Property, or concerning compliance, by SWH or any other
Person for whose conduct it is or may be held responsible, with Environmental
Laws.

3.21 Employees.

(a) Schedule 3.21(a) contains a complete and accurate list of the following
information for each employee, manager, leased employee and independent
contractor or consultant of SWH performing work on behalf of or with respect to
the Business (including part-time employees, each employee on short-term
disability, leave of absence or layoff status, and each former employee who is
receiving workers compensation or unemployment benefits for which SWH is
obligated) immediately prior to the Closing Date: employer; name; job title;
date of hire or engagement; current compensation or payable and any change in
compensation since January 1, 2012; sick and vacation leave that is accrued but
unused; service credited for purposes of vesting and eligibility to participate
under any Employee Benefit Plan or any Benefit Arrangement; and severance pay
due, if any, upon termination of employment.

(b) SWH has not violated the Worker Adjustment and Retraining Notification Act
(the “WARN Act”) or any similar state or local Legal Requirement.

(c) To the Knowledge of Seller, no officer, director, manager, or employee of
SWH is bound by any Contract that purports to limit the ability of such officer,
director, manager or employee to (i) engage in or continue or perform any
conduct, activity, duties or practice relating to the Business or (ii) assign to
SWH or to any other Person any rights to any invention, improvement, or
discovery used or to be used in the Business. To the Knowledge of Seller, no
former or current employee of SWH is a party to, or is otherwise bound by, any
Contract that in any way adversely affected, affects, or will affect the ability
of SWH (or, after the Closing, Buyer) to conduct the business as heretofore
carried on by SWH.

3.22 Labor Disputes; Compliance.

(a) Except as disclosed in Schedule 3.22(a), SWH is in compliance with, and has
complied in all material respects with, all Legal Requirements relating to
employment practices, terms and conditions of employment, equal employment
opportunity, nondiscrimination, immigration, wages, hours, time keeping, break
periods, working conditions benefits and collective bargaining, the payment of
social security and similar Taxes, occupational safety and health and the proper
classification and payment of employees and independent. SWH is not liable for
the payment of any Taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the foregoing Legal Requirements,
excluding any Liability that has not had, and would not reasonably be expected
to result in, a Material Adverse Change.

(b) Except as disclosed in Schedule 3.22(b), (i) SWH has not been, and is not
now, a party to any collective bargaining agreement or other labor contract;
(ii) there has not been, there is not presently pending or existing, and to
Seller’s Knowledge there is not

 

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threatened, any strike, slowdown, picketing, work stoppage or employee grievance
process involving SWH; (iii) to Seller’s Knowledge, no event has occurred or
circumstance exists that could provide the basis for any work stoppage or other
labor dispute; (iv) there is no Proceeding pending or, to Seller’s Knowledge,
threatened against or affecting SWH relating to the alleged violation of any
Legal Requirement pertaining to labor relations or employment matters, including
any charge or complaint filed with, or investigation or audit conducted by, the
United States Department of Labor, Occupational Safety and Health
Administration, Office of Federal Contract Compliance Programs, National Labor
Relations Board or any comparable Governmental Body, and there is no, and there
has not been any for the past three (3) years, organizational activity or other
labor dispute against or affecting SWH or the Business; (v) to the Knowledge of
Seller, no application or petition for an election of or for certification of a
collective bargaining agent is pending; (vi) to the Knowledge of Seller, no
grievance or arbitration Proceeding exists that might have an adverse effect
upon SWH or the Business; (vii) there is no lockout of any employees by SWH, and
no such action is contemplated by SWH; and (viii) there is no pending charge of
discrimination filed against or, to Seller’s Knowledge, threatened against SWH
with the Equal Employment Opportunity Commission or similar Governmental Body.

3.23 Intellectual Property Assets.

(a) Set forth in Schedule 3.23(a) is a list and description of all registered
trademarks, service marks, copyrights and patents and any applications for
registration of any of the foregoing, owned by SWH. SWH owns or has the right to
use any and all information, know-how, trade secrets, patents, patent
applications, inventions, discoveries, technical information, data, copyrights,
trademarks, trade names, architectural plans, software, recipes, formulae,
methods, processes, confidential or proprietary information, customer lists, and
other intangible properties that are necessary or customarily used by SWH in the
Business (“Intellectual Property Assets”) free and clear of any Encumbrances.
Schedule 3.23(a) lists the registered or pending Intellectual Property Assets
owned by SWH, and Schedule 3.23(b) lists the Intellectual Property Assets
licensed to SWH except for perpetual, paid-up licenses for commonly available
software under which SWH is the licensee. Except as set forth in
Schedule 3.23(a): (i) there have been no claims made against SWH asserting the
invalidity, abuse, misuse, or unenforceability of any of the Intellectual
Property Assets and, to Seller’s Knowledge, no grounds for any such claims
exist; (ii) SWH has not made any claim of any violation or infringement by
others of any of its Intellectual Property Assets or interests therein and, to
Seller’s Knowledge, no grounds for any such claims exist; (iii) SWH has not
received any notice that it is in conflict with, has been opposed or challenged
by, or infringing upon the intellectual property rights of others in connection
with the Intellectual Property Assets, and to Seller’s Knowledge, neither the
use of the Intellectual Property Assets nor the operation of the Business is
infringing or has infringed upon any intellectual property rights of others;
(iv) the Intellectual Property Assets are sufficient and include all
intellectual property rights necessary for SWH to lawfully conduct the Business
as presently being conducted; (v) no interest in any of SWH’s Intellectual
Property Assets has been assigned, transferred, licensed or sublicensed by SWH
to any Person other than Buyer pursuant to this Agreement; (vi) to the extent
that any item constituting part of the Intellectual Property Assets has been
registered with, filed in or issued by, any Governmental Body, such
registrations, filings or issuances are listed in Schedule 3.23(a) and were duly
made and remain in full force and effect; (vii) to Seller’s Knowledge, there has
not been any act or failure to act by

 

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SWH during the prosecution or registration of, or any other proceeding relating
to, any of the Intellectual Property Assets or of any other fact which could
render invalid or unenforceable or negate the right to issuance of any of the
Intellectual Property Assets; and (viii) to the extent any of the Intellectual
Property Assets constitutes proprietary or confidential information, SWH has
adequately safeguarded such information from disclosure consistent with local
industry practice.

(b) Schedule 3.23(b) contains a complete and accurate list and summary
description of all rights in internet domain names, user names, handles and
social media site names presently used or owned by SWH for the Business. SWH
owns or has the right to use all internet domain names, subdomains, URLs,
website names, social media site names, user names, handles, email addresses,
log-in names, passwords, pin numbers, customer numbers, and the like, or other
account information necessary to access, transfer, use and update all of the
foregoing, presently used or owned by SWH or the Business (collectively “Net
Names”). All Net Names have been registered in the name of SWH and are, and have
been, in compliance with all Legal Requirements. No Net Name has been or is now
involved in any dispute, opposition, invalidation or cancellation Proceeding
and, to Seller’s Knowledge, no such action is threatened with respect to any Net
Name. To Seller’s Knowledge, there is no domain name application pending of any
other Person which would potentially interfere with or infringe any Net Name. To
Seller’s Knowledge, (i) no Net Name has been challenged, interfered with or
threatened in any way and (ii) no Net Name infringes, interferes with or is
alleged to interfere with or infringe the trademark, copyright or domain name of
any other Person.

3.24 Relationships With Related Persons. Except as disclosed in Schedule 3.24,
no Related Person of SWH has any interest in any property (whether real,
personal or mixed and whether tangible or intangible) used in or pertaining to
the Business. No Related Person of SWH owns of record or as a beneficial owner,
an equity interest or any other financial or profit interest in any Person that
has (a) had business dealings or a material financial interest in any
transaction with SWH other than business dealings or transactions disclosed in
Schedule 3.24, each of which has been conducted in the Ordinary Course of
Business with SWH at substantially prevailing market prices and on substantially
prevailing market terms or (b) engaged in competition with SWH with respect to
any line of the products or services of SWH in any market presently served by
SWH, except for ownership of less than two percent (2%) of the outstanding
capital stock of any such competing business that is publicly traded on any
recognized exchange or in the over the counter market.

3.25 Brokers or Finders. Except as disclosed in Schedule 3.25, neither Seller
nor its Related Persons, nor any of their respective Representatives, have
incurred any obligation or liability, contingent or otherwise, for brokerage or
finders’ fees or agents’ commissions or other similar payments (a “Broker Fee”)
in connection with the Contemplated Transactions.

3.26 Suppliers. Schedule 3.26 lists the five (5) largest suppliers of SWH,
showing the approximate total sales by such supplier to SWH in the twelve
(12) most recent months. Since the date of the Balance Sheet, no supplier
required to be listed on Schedule 3.26 has (i) terminated or materially changed
its relationship with SWH; (ii) notified SWH, and SWH has no reason to believe,
that it intends to terminate or materially reduce or change the pricing, volume,
timing or other terms of its business with such SWH.

 

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3.27 Indebtedness. Except as disclosed on Schedule 3.27, SWH does not have any
Indebtedness.

3.28 Quality and Safety of Food & Beverage Products. With respect to the
Business, and except for the Custom Kitchen Liabilities which shall be assigned
to Seller at Closing and as set forth in the attached Schedule 3.28:

(a) neither SWH nor any of the Acquired Subsidiaries has received any written
notices, demands or inquiries since January 1, 2009 relating to any material
claim, duties, fines, penalties, seizures, or forfeitures involving any food or
beverage product manufactured, produced, shipped, modified, distributed,
marketed or sold by or on behalf of SWH or any of the Acquired Subsidiaries
resulting from an alleged defect, adulteration, misbranding, mispackaging,
mislabeling, or any alleged failure to warn, or from any alleged Breach of
implied warranties or representations, or any alleged noncompliance with any
applicable FDA Laws, except in each case for such notices, demands or inquiries
that are resolved or which are not expected to result in material liability to
SWH or the Acquired Subsidiaries. Except as set forth in the attached
Schedule 3.28, there has been no product recall conducted by SWH or the Acquired
Subsidiaries since January 1, 2009 with respect to any product manufactured,
produced, shipped, modified, sold, marketed or distributed by or on behalf of
SWH or the Acquired Subsidiaries, or that has resulted in Liability to Seller
equal to ten thousand dollars ($10,000) or more per occurrence or in the
aggregate of similar occurrences.

(b) each of the products sold by SWH or the Acquired Subsidiaries, or to the
Knowledge of Seller with respect to products sold but not produced by SWH or the
Acquired Subsidiaries, since January 1, 2009: (i) was produced, manufactured,
packaged, labeled, transported, stored and otherwise handled in material
compliance with applicable FDA Laws; (ii) was produced, manufactured, packaged
and labeled using materials, which, used alone or in combination with other
applicable materials in such products conform in all material respects to
applicable FDA Laws; and (iii) is in conformity in all material respects with
any warranties made in any written materials accompanying such product or in
connection with its sale.

(c) since January 1, 2009, each of SWH and the Acquired Subsidiaries has to the
extent required under applicable FDA Laws (i) provided accurate and complete
statements and representations to the Governmental Body to which they may be
subject regarding all matters relevant to product admissibility, classification,
valuation, eligibility of imported merchandise for favorable rates or other
special treatment, and country of origin; (ii) filed accurate and timely in all
material respects entries, reports, schedules and forms required to be filed
with any Governmental Body with respect to products produced by SWH or any of
the Acquired Subsidiaries; and (iii) reported and paid when due all applicable
duties under applicable Legal Requirements except to the extent any such duties
are being contested in good faith by SWH or the Acquired Subsidiaries.

(d) as of the date hereof, no material portion of the products or materials
imported by, for or on behalf of SWH for which final liquidation has not yet
occurred is, to the Knowledge of Seller, subject to a governmental antidumping
order or countervailing duty order that remains in effect or is subject to by
any pending antidumping or countervailing duty investigation by agencies of any
Governmental Body.

 

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(e) since January 1, 2009, none of the manufacturing or processing facilities of
SWH or the Acquired Subsidiaries have been shut down by a Governmental Body or
subject to import or export prohibition or, have received any FDA Form 483
notice of inspectional observations or titled or untitled warning letters from
the FDA.

3.29 No Other Representations and Warranties. Except for the representations and
warranties contained in this Article 3 (including the related portions of the
Disclosure Schedule), fraud, willful or intentional misrepresentation or
omission of Seller, neither Seller nor any other Person has made or makes any
other express or implied representation or warranty, either written or oral, on
behalf of Seller, including any representation or warranty as to the accuracy or
completeness of any information regarding Seller, SWH, or the Assets furnished
or made available to Buyer or any of its representatives or as to the future
revenue, profitability or success of the Business.

 

4. REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Seller as follows:

4.1 Organization and Good Standing. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full corporate power and authority to conduct its business as it is now
conducted and to perform its obligations hereunder.

4.2 Authority; No Conflict.

(a) This Agreement constitutes the legal, valid and binding obligation of Buyer,
enforceable against Buyer in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
or moratorium laws, other similar laws affecting creditors’ rights and general
principles of equity affecting the availability of specific performance and
other remedies. Buyer has the absolute and unrestricted right, power and
authority to execute and deliver the Transaction Documents and to perform the
Contemplated Transactions, and such action has been duly authorized by all
necessary action by Buyer’s board of directors and stockholders. All action on
the part of the officers of Buyer necessary for the execution and delivery of
the Transaction Documents, the performance of all obligations of Buyer under the
Transaction Documents to be performed as of the Closing has been taken.

(b) Neither the execution and delivery of this Agreement by Buyer nor the
consummation or performance of any of the Contemplated Transactions by Buyer
will, directly or indirectly, give any Person the right to challenge, prevent,
delay or otherwise interfere with any of the Contemplated Transactions pursuant
to, or constitute or result in a Breach (with or without notice or lapse of
time) of (iii) any provision of Buyer’s Governing Documents or any resolution
adopted by the board of directors of Buyer; (ii) any Legal Requirement or Order
to which Buyer or Buyer’s Affiliates may be subject; or (iii) any Contract to
which Buyer is a party or by which Buyer or Buyer’s Affiliates may be bound.

4.3 Certain Proceedings. There is no pending Proceeding that has been commenced
against Buyer and that challenges, or may have the effect of preventing,
delaying, making illegal

 

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or otherwise interfering with, any of the Contemplated Transactions. To Buyer’s
Knowledge, no such Proceeding has been threatened.

4.4 Brokers or Finders. Neither Buyer nor any of its Representatives have
incurred any Broker Fee in connection with the Contemplated Transactions.

4.5 Independent Investigation. Buyer has conducted its own independent
investigation, review and analysis of Seller and SWH, and acknowledges that it
has been provided adequate access to the personnel, properties, books and
records, and other documents and data of SWH and Seller for such purpose. Buyer
acknowledges and agrees that in making its decision to enter into this Agreement
and the other documents contemplated hereby and to consummate the transactions
contemplated hereby and thereby, Buyer has relied solely upon its own
investigation and the express representations and warranties of Seller set forth
in Article 3 (including the related portions of the Disclosure Schedule).

4.6 Buyer’s Operations. Buyer was organized on January 24, 2013 for purposes of
entering into this Agreement and performing the Contemplated Transactions and
has not conducted any operations or business except in connection with this
Agreement. Exhibit 4.6 attached hereto contains a true, correct and complete
copy of Buyer’s estimated pro forma balance sheet as of immediately after the
Effective Time.

 

5. COVENANTS OF SELLER PRIOR TO CLOSING

5.1 Access and Investigation. Between the Effective Date and the Closing Date,
and upon reasonable advance notice received from Buyer, Seller shall (a) afford
Buyer and its Representatives and prospective lenders and their Representatives
(collectively, “Buyer Group”) access, during regular business hours, to
(i) SWH’s personnel, properties, Contracts, Governmental Authorizations, books
and Records and other documents and data, such rights of access to be exercised
in a manner that does not unreasonably interfere with the operations of SWH and
(ii) with respect to the performance of surveys or environmental due diligence,
to the Assets (including the Real Property) for the purpose of conducting
inspections, examinations and tests, including, environmental and geological
examinations, inspections and tests; (b) furnish Buyer Group with copies of all
such Contracts, Governmental Authorizations, books and Records and other
existing documents and data as Buyer may reasonably request; (c) furnish Buyer
Group with such additional financial, Tax, operating and other relevant data and
information as Buyer may reasonably request; and (d) otherwise cooperate and
assist, to the extent reasonably requested by Buyer, with Buyer’s investigation
of the properties, assets and financial condition related to SWH. In addition,
Buyer shall have the right to have the Real Property and Tangible Personal
Property inspected by Buyer Group (other than for purposes of surveys and
environmental due diligence), at Buyer’s sole cost and expense, for purposes of
determining the physical condition and legal characteristics of the Real
Property and Tangible Personal Property. With respect to environmental and
geological examinations, inspections and tests, Buyer agrees that it will
indemnify and hold Seller harmless from and against any and all liability,
causes of action and damage to property occurring solely as a result of the
conducting of any such inspections, examinations and tests by Buyer (but not any
liability arising from the mere discovery of existing conditions of the
Property, or from any activity that could cause release of pre-existing but
reasonably unknown Hazardous Materials on or under the Property

 

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(for example, a soil boring drill that punctures a old, buried oil barrel), and
Seller waives and releases Buyer and its agents, employees, representatives,
consultants, contractors and subcontractors from all claims arising from such a
release, except to the extent such claims are caused by the negligent, willful
or unlawful acts or omissions of Buyer or its agents, employees,
representatives, consultants, contractors and subcontractors)). No investigation
by Buyer or other information received by Buyer shall operate as a waiver or
otherwise affect any representation, warranty or agreement given or made by
Seller in this Agreement.

5.2 Operation of the Business. Between the date of this Agreement and the
Closing, except as otherwise provided in this Agreement or consented to in
writing by Buyer (which consent shall not be unreasonably withheld or delayed),
Seller shall cause SWH to (x) conduct the Business in the Ordinary Course of
Business, and (y) use commercially reasonable best efforts to maintain and
preserve intact its current Business organization, operations and to preserve
the rights, franchises, goodwill and relationships of its employees, customers,
lenders, suppliers, regulators and others having relationships with the
Business. Without limiting the foregoing, from the Effective Date until the
Closing Date, Seller shall cause SWH to:

(a) conduct its business only in the Ordinary Course of Business;

(b) pay the Indebtedness, Taxes and other obligations of the Business when due;

(c) continue to collect Accounts Receivable in a manner consistent with past
practice, without discounting such Accounts Receivable;

(d) maintain the properties and assets included in the Assets in a state of
repair and condition that is consistent with the requirements and normal conduct
of the Business;

(e) not implement operational decisions which will have a Material Adverse
Effect;

(f) make no material changes in management personnel;

(g) materially comply with all Legal Requirements and contractual obligations
applicable to the operations of the Business and under the Material Contracts;

(h) continue in full force and effect the insurance coverage under the policies
set forth in Schedule 3.19 or substantially equivalent policies;

(i) except as required to comply with ERISA or to maintain qualification under
Section 401(a) of the Code, not amend, modify or terminate any Employee Benefit
Plan without the express written consent of Buyer (except as agreed in this
Agreement) and, except as required under the provisions of any Employee Benefit
Plan or Benefit Arrangement, not make any contributions to or with respect to
any Employee Benefit Plan without the express written consent of Buyer;

(j) preserve and maintain all Governmental Authorizations required for the
conduct of the Business as currently conducted or the ownership and use of the
Assets and

 

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cooperate with Buyer; and assist Buyer in identifying the Governmental
Authorizations required by Buyer to operate the business from and after the
Closing Date and transferring existing Governmental Authorizations of Seller to
Buyer, where permissible; and

(k) defend and protect the properties and assets included in the Assets from
infringement or usurpation;

(l) comply in all material respects with all Legal Requirements applicable to
the conduct of the Business or the ownership and use of the Assets;

(m) maintain all books and Records relating to the Business in the Ordinary
Course of Business; and

(n) not permit any action that would cause any of the changes, events or
conditions described in Section 3.17 to occur.

For purposes of this Section 5.2 and notwithstanding any provision of this
Agreement to the contrary, SWH’s refreshing or remodeling of Restaurants after
the Effective Date and prior to Closing and consistent with the budgets and
business plans previously provided by Seller to Buyer shall not be deemed a
Breach of this Section 5.2 or any other provision of this Agreement.

5.3 Required Approvals. As promptly as practicable after the date of this
Agreement, Seller shall make all filings required by Legal Requirements to be
made by it in order to consummate the Contemplated Transactions. Seller also
shall cooperate fully with Buyer and its Representatives and use its
commercially reasonable best efforts with respect to all filings that Buyer
elects to make or, pursuant to Legal Requirements, shall be required to make in
connection with the Contemplated Transactions. Seller also shall cooperate fully
with Buyer and its Representatives and Seller shall use its commercially
reasonable best efforts in obtaining all Material Consents.

5.4 Notification

(a) Between the Effective Date and the Closing, Seller shall promptly notify
Buyer in writing if it becomes aware of:

 

  (i) any fact, circumstance, event, action or condition the existence of which
(A) has had, or could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect, or (B) causes or constitutes, or could
reasonably be expected to cause or constitute a Breach of any of Seller’s
representations and warranties made as of the Effective Date or had that
representation or warranty been made as of the time of the occurrence of, or
Seller’s discovery of, such fact, circumstance, event, action or condition.

 

  (ii) any notice or other communication from any Person alleging that the
Consent of such person is or may be required in connection with Contemplated
Transactions;

 

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  (iii) any notice or other communication from any Governmental Body in
connection with the Contemplated Transactions;

 

  (iv) any Proceedings commenced or, to Seller’s Knowledge, threatened against,
relating to or involving or otherwise affecting SWH or the Business that, if
pending on the date of this Agreement, would have been required to have been
disclosed pursuant to Section 3.16 or that relates to the consummation of the
contemplated Transactions.

(b) During the same period, Seller also shall promptly notify Buyer of the
occurrence of any Breach of any covenant of Seller in this Article 5 or of the
occurrence of any event that may make the satisfaction of the conditions in
Article 7 impossible or unlikely.

(c) During the same period, Buyer shall also promptly notify Seller of Buyer’s
actual knowledge of the occurrence of any Breach of any representation,
warranty, or covenant of Seller under this Agreement.

(d) Buyer’s receipt or disclosure of information pursuant to this Section 5.4
shall not operate as a waiver or otherwise affect any representation, warranty
or agreement given or made by Seller in this Agreement (including Sections 9.1
and 11.2) and shall not be deemed to amend or supplement the Disclosure
Schedules.

5.5 No Negotiation. From the date of this Agreement through the earlier of the
Closing Date or the date of termination of this Agreement in accordance with
Section 9.1, Seller agrees that it shall not (and shall use its commercially
reasonable best efforts to ensure that none of its officers, directors, or
affiliates, or any investment banker, financial advisor, attorney, accountant,
or other advisor of Seller or its Affiliates (collectively, “Seller’s
Representatives”)) take, directly or indirectly, any of the following actions
with any party other than Buyer and its designees: (i) solicit, knowingly
encourage, initiate, or participate in any negotiations, inquiries, or
discussions with respect to any offer or proposal to acquire all or any
significant part of SWH, its business, material assets, the Assets, or equity
securities, whether by merger, consolidation, other business combination,
purchase of capital stock, purchase of assets, license (but excluding
non-exclusive licenses entered into in the ordinary course of business), lease,
tender or exchange offer, or otherwise (each of the foregoing, a “Restricted
Transaction”); (ii) disclose, in connection with a Restricted Transaction, any
nonpublic information to any Person other than Buyer or Buyer’s Representatives
concerning SWH’s business or properties or afford, in connection with a
Restricted Transaction, to any Person other than Buyer or Buyer’s
Representatives access to its properties, books, or records, except as required
by Legal Requirements or in accordance with a governmental request for
information; (iii) enter into or execute any agreement relating to a Restricted
Transaction; or (iv) make or authorize any public statement, recommendation, or
solicitation in support of any Restricted Transaction or any offer or proposal
relating to a Restricted Transaction other than with respect to the Contemplated
Transaction. If Seller is contacted by any third party expressing an interest in
discussing a Restricted Transaction or receives any offer or proposal with
respect to a Restricted Transaction or any request for non-public information or
inquiry that Seller reasonably believes could (if Seller responded affirmatively
to such request) lead to a proposal or offer for a Restricted

 

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Transaction, Seller shall promptly, but in no event later than one (1) Business
Day following Seller’s Knowledge of such contact, notify Buyer in writing of
such contact (a “Notice of Contact”). If Seller informs the contact that it is
subject to a signed definitive acquisition agreement containing an exclusivity
covenant and cannot discuss a proposal or offer for a Restricted Transaction and
the contact does not promptly withdraw the proposal or offer for a Restricted
Transaction, the Notice of Contact shall include the identity of the party so
contacting Seller. The Notice of Contact shall also include any information
conveyed to Seller by such third party in connection with such contact or
relating to such Restricted Transaction, and shall promptly, but in no event
later than one (1) Business Day, advise Seller of any material modification or
proposed modification thereto. Seller agrees that the rights and remedies for
noncompliance with this Section 5.5 shall include having such provision
specifically enforced by any court having equity jurisdiction, it being
acknowledged and agreed that any such Breach or threatened breach shall cause
irreparable injury to Seller and that money damages would not provide an
adequate remedy to Seller.

5.6 Resignations. Seller shall deliver to Buyer written resignations, effective
as of the Closing Date, of the officers, managers, or directors of SWH and the
Acquired Subsidiaries as requested by Buyer at least three (3) Business Days
before Closing.

5.7 Closing Conditions. From the Effective Date until the Closing, Seller shall
use commercially reasonable best efforts to take such actions as are necessary
to expeditiously satisfy the closing conditions set forth in Article 7 hereof.

5.8 Receivables. From and after the Effective Time, if Seller or any of its
Affiliates receives or collects any funds relating to any Accounts Receivable,
Seller or its Affiliate shall remit such funds to Buyer within five (5) Business
Days after receipt thereof.

5.9 Books and Records. In addition to the right of access provided to Buyer in
Section 5.1, Seller shall deliver to Buyer at the Closing or immediately
thereafter all files, documents, instruments, papers, books and Records relating
to the Business or condition of SWH or the Acquired Subsidiaries, including
financial statements, internal reports, Tax Returns and related work papers and
letters from accountants, budgets, pricing guidelines, ledgers, journals, deeds,
title policies, minute books, stock or membership certificates and books, stock
or membership transfer ledgers, Contracts, computer files and programs,
operating data and plans, and environmental studies and plans, to the extent
they exist.

5.10 Financial Statements. Seller shall deliver to Buyer the unaudited balance
sheets of SWH, statements of income, owners’ equity, and cash flow for the
period ending January 25, 2013 at least three (3) Business Days before the
Closing.

5.11 Title Review and Survey. On or prior to the Effective Date, Seller shall
have delivered to Buyer commitments for the title policies and any existing
surveys for each of the parcels of Owned Real Property. On or before the 15th
day following the Effective Date, Buyer shall notify Seller, in writing,
following review of the title commitments and surveys for the Owned Real
Property (to the extent that Buyer elects or is required to obtain surveys), of
any Encumbrances that are not Permitted Real Property Encumbrances and which do
not reasonably satisfy Buyer or its lenders (“Title Deficiency Notice”). After
receipt of a Title Deficiency

 

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Notice from Buyer, Seller may then elect, by written notice given within five
(5) days (“Title Notice Period”) following such notice that Seller agrees to
cure any such exception(s) prior to the Closing Date. If Seller does not elect
to cure any such exception(s) by written notification within the Title Notice
Period, or if Seller elects to cure any such exception(s) identified in the
Title Deficiency Notice and does not cure within a commercially reasonable
period, Buyer shall have the right to bring an indemnification claim pursuant to
the terms of Section 11 of this Agreement in the event that Buyer is damaged as
a result of Seller’s failure to cure such exception(s).

5.12 Seller’s Net Worth Covenant. For a period of eighteen (18) months after the
Closing Date, Seller shall maintain a net worth equal to at least $10,000,000,
provided that if Buyer has brought any claims for indemnification under Article
11 during such period, then, until the last of such claims has been resolved,
Seller shall maintain a net worth equal to the lesser of (a) 150% of the total
value of all such claims, or (b) $15,000,000.

 

6. COVENANTS OF BUYER PRIOR TO CLOSING

6.1 Required Approvals. As promptly as practicable after the date of this
Agreement, Buyer shall make all filings required by Legal Requirements to be
made by it in order to consummate the Contemplated Transactions. Buyer also
shall cooperate fully with Seller and use its reasonable best efforts with
respect to all filings that Seller elects to make or, pursuant to Legal
Requirements, shall be required to make in connection with the Contemplated
Transactions. Buyer also shall cooperate fully with Seller and use its
reasonable best efforts in obtaining all Material Consents, provided, however,
that Buyer shall not be required to dispose of or make any change to its
business in order to comply with this Section 6.1.

6.2 Liquor License Consent Process. For each and every Restaurant, Buyer shall,
as applicable in each state and/or local licensing jurisdiction, (i) submit
applications/forms providing notice of the change in ownership of membership
interest in SWH to all appropriate liquor license agencies, as and when required
post Closing, or (ii) obtain pre-Closing (a) approval of the change in ownership
of SWH from the liquor license agencies that require pre-Closing approval or
(b) issuance of a new license to SWH. For any Restaurant located within a
jurisdiction that requires pre-Closing approval of the change of ownership of
SWH or pre-Closing issuance of a new liquor license, in the event that Buyer is
not successful in obtaining such pre-Closing approvals from the applicable
liquor license agency or agencies, Buyer shall enter an interim beverage
management agreement with Seller, in a form customary in the relevant licensing
jurisdiction by location, substantially in the forms attached hereto as Exhibit
6.2, (“Interim Beverage Management Agreement”), which Interim Beverage
Management Agreement shall be modified as required under each state or local
licensing jurisdiction’s requirements, customs and/or practices. Pursuant to the
Interim Beverage Management Agreement(s), Buyer shall operate the Restaurants
thereunder using the liquor license(s) issued to Seller and/or SWH prior to the
change in ownership, and until such time as (a) a new license is issued to Buyer
or SWH or (b) the change in ownership of SWH is approved by the applicable
liquor license agency(ies). Buyer agrees to use its best efforts to obtain all
Liquor License Agency Approvals in as expedited a basis as possible and Seller
agrees to cooperate in Buyer’s efforts in this regard, and to provide the
information and documentation necessary in such effort. Subsequent to closing,
Buyer shall be solely responsible for renewing all liquor licenses and

 

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Permits and for the costs associated therewith, regardless of whether or not the
Liquor License Agency Approvals have been received, and Seller shall cooperate
in Buyer’s efforts to renew the licenses and permits on which Liquor License
Agency Approval has not been received, including but not limited to immediately
providing Buyer with all forms and information received by Seller related to the
licenses and by providing signatures from officers still on file with the liquor
license agencies as necessary to renew the liquor licenses and Permits. Buyer
and Seller acknowledge that in many jurisdictions, (i) submission of a notice of
change of ownership of a licensed entity does not require Liquor License Agency
Approval in order for Buyer to be permitted to continue to operate, and sell
alcohol, pending receipt of Liquor License Agency Approval and (ii) that receipt
of a formal Liquor License Agency Approval, in jurisdictions where formal
approvals are issued, of the change of ownership may take several months after
the submission of the required notices or applications.

6.3 Closing Conditions. From the Effective Date until the Closing, Buyer shall
use commercially reasonable best efforts to take such actions as are necessary
to expeditiously satisfy the closing conditions set forth in Article 8 hereof.

 

7. CONDITIONS PRECEDENT TO BUYER’S OBLIGATION TO CLOSE

Buyer’s obligation to purchase the Membership Interests and to take the other
actions required to be taken by Buyer at the Closing is subject to the
satisfaction, at or prior to the Closing, of the following conditions (any of
which may be waived by Buyer, in whole or in part):

7.1 Accuracy Of Representations. All of Seller’s representations and warranties
in this Agreement shall have been true and correct in all respects (in the case
of any representation or warranty qualified by materiality or Material Adverse
Effect) or in all material respects (in the case of any representation or
warranty not qualified by materiality or Material Adverse Effect) as of the date
of this Agreement, and shall be true and correct in all respects (in the case of
any representation or warranty qualified by materiality or Material Adverse
Effect) or in all material respects (in the case of any representation or
warranty not qualified by materiality or Material Adverse Effect) as of the time
of the Closing as if then made. The representations and warranties of Seller
contained in Sections 3.1, 3.2, 3.4, and 3.25 shall be true and correct in all
respects on and as of the date of this Agreement and on and as of the time of
Closing as if then made.

7.2 Seller’s Performance. All of the covenants and obligations that Seller is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing shall have been duly performed and complied with.

7.3 Consents. Each of the Consents identified in Schedule 7.3 (the “Material
Consents”) shall have been obtained and shall be in full force and effect.

7.4 Material Adverse Effect. From the Effective Date, there shall not have
occurred any Material Adverse Effect, nor shall any event or events have
occurred that, individually or in the aggregate, with or without the lapse of
time, could reasonably be expected to result in a Material Adverse Effect.

 

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7.5 Additional Documents. Seller shall have caused each of the documents and
instruments required by Section 2.5(a) and the following documents to be
executed, as applicable, and delivered to Buyer:

(a) The documents relating to the Conversion, duly certified as of a recent date
by the California Secretary of State;

(b) Releases of all Encumbrances on the Assets, other than Permitted
Encumbrances; and

(c) Certificates dated as of a date not earlier than the fifth (5th) Business
Day prior to the Closing as to the good standing of Seller, SWH and the Acquired
Subsidiaries and payment of all applicable state and local Taxes by SWH and the
Acquired Subsidiaries, executed by the appropriate officials of each
jurisdiction in which such Person is organized or is licensed or qualified to do
business as a foreign corporation as specified in Schedule 3.1.

7.6 No Proceedings. No Proceeding shall have been commenced against Buyer or
Seller that would prevent the Closing. No injunction or restraining order shall
have been issued by any Governmental Body, and be in effect, which restrains or
prohibits any transaction contemplated hereby.

7.7 No Conflict. Neither the consummation nor the performance of any of the
Contemplated Transactions will, directly or indirectly (with or without notice
or lapse of time), contravene or conflict with or result in a violation of or
cause Buyer or any Related Person of Buyer to suffer any adverse consequence
under (a) any applicable Legal Requirement or Order or (b) any Legal Requirement
or Order that has been published, introduced or otherwise proposed by or before
any Governmental Body.

7.8 Authorizations. Buyer shall have received such Governmental Authorizations
(excluding liquor licenses) and authorizations and Consents from any other
Persons as are necessary to allow Buyer to operate the Business from and after
the Closing.

7.9 Encumbrances. All Encumbrances relating to the Assets shall have been
released in full, other than Permitted Encumbrances, and Seller shall have
delivered to Buyer written evidence, in form satisfactory to Buyer in its sole
discretion, or the release of such Encumbrances.

7.10 Closing Certificates and Other Documents. Buyer shall have received (a) the
deliveries required by Section 5.10, and (b) the duly executed (i) Seller
Closing Certificate and (ii) Seller Secretary Certificate. Buyer shall also have
received such other documents or instruments as Buyer reasonably requests and
are reasonably necessary to consummate the Contemplated Transactions.

 

8. CONDITIONS PRECEDENT TO SELLER’S OBLIGATION TO CLOSE

Seller’s obligation to sell the Membership Interests and to take the other
actions required to be taken by Seller at the Closing is subject to the
satisfaction, at or prior to the Closing, of each of the following conditions
(any of which may be waived by Seller in whole or in part):

 

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8.1 Accuracy Of Representations. All of Buyer’s representations and warranties
in this Agreement shall have been accurate in all respects (in the case of any
representation or warranty qualified by materiality or Material Adverse Effect)
or in all material respects (in the case of any representation or warranty not
qualified by materiality or Material Adverse Effect) as of the date of this
Agreement and shall be accurate in all respects (in the case of any
representation or warranty qualified by materiality or Material Adverse Effect)
or in all material respects (in the case of any representation or warranty not
qualified by materiality or Material Adverse Effect) as of the time of the
Closing as if then made.

8.2 Buyer’s Performance. All of the covenants and obligations that Buyer is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing shall have been performed and complied with in all material
respects.

8.3 Consents. Each of the Consents identified in Schedule 8.3 shall have been
obtained and shall be in full force and effect.

8.4 No Proceedings. No Proceeding shall have been commenced against Buyer or
Seller that would prevent the Closing. No injunction or restraining order shall
have been issued by any Governmental Body, and be in effect, which restrains or
prohibits any transaction contemplated hereby.

 

9. TERMINATION

9.1 Termination Events. Subject to Section 9.2 of this Agreement, this Agreement
may be terminated by notice given prior to or at the Closing as follows:

(a) by Buyer if a material Breach of any provision of this Agreement has been
committed by Seller and such Breach (i) is not curable, or if curable, is not
cured within thirty (30) days after written notice of such Breach is given to
Seller by Buyer; and (ii) has not been waived by Buyer;

(b) by Seller if a material Breach of any provision of this Agreement has been
committed by Buyer and such Breach (i) is not curable, or if curable, is not
cured within thirty (30) days after written notice of such Breach is given to
Buyer by Seller; and (ii) has not been waived by Seller;

(c) by Buyer if any condition in Article 7 has not been satisfied as of the
Closing Date or if satisfaction of such a condition by the Closing Date is or
becomes impossible (other than through the failure of Buyer to comply with its
obligations under this Agreement), and Buyer has not waived such condition on or
before the Closing Date;

(d) by Seller if any condition in Article 8 has not been satisfied as of the
Closing Date or if satisfaction of such a condition by the Closing Date is or
becomes impossible (other than through the failure of Seller to comply with
their obligations under this Agreement), and Seller has not waived such
condition on or before the Closing Date;

(e) by mutual consent of Buyer and Seller; or

 

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(f) by Seller or Buyer if the Closing has not occurred on or before March 22,
2013, or such later date as the parties may agree upon, unless Seller or Buyer
is in material Breach of this Agreement.

(g) This Agreement may not be terminated except as specifically provided in this
Article 9 of this Agreement.

9.2 Effect Of Termination. Each party’s right of termination under Section 9.1
is in addition to any other rights it may have under this Agreement or
otherwise, and the exercise of such right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 9.1, all
obligations of the parties under this Agreement will terminate, except that the
obligations of the parties in this Section 9.2 and Articles 12 and 13 (except
for those in Section 13.5) will survive, provided, however, that, if this
Agreement is terminated because of a Breach of this Agreement by the
nonterminating party or because one or more of the conditions to the terminating
party’s obligations under this Agreement is not satisfied as a result of the
party’s failure to comply with its obligations under this Agreement, the
terminating party’s right to pursue all legal remedies will survive such
termination unimpaired.

 

10. ADDITIONAL COVENANTS

10.1 Employees And Employee Benefits.

(a) Benefits.

 

  (i) Subject to Section 10.1(c), SWH shall continue the employment of each
Active Employee as of the Closing Date and shall also reemploy any former
employee of SWH who returns from an approved long-term leave of absence under
any Employee Benefit Plan or Benefit Arrangement. Effective as of the Closing
Date, all Active Employees and any former employee of SWH, who is on long-term
disability as of the Closing Date, shall become fully vested in their entire
account balances under the Bob Evans Farms, Inc. and Affiliates 401(k)
Retirement Plan (the “BEF 401(k) Plan”), and Bob Evans Farms, Inc. will amend
such plan if necessary to achieve this result.

 

  (ii)

Subject to the terms of the Transition Services Agreement, effective as of the
Closing Date, Buyer will be solely responsible and liable for satisfying the
continuation coverage requirements for group health plan (within the meaning of
Section 4980B(g)(2) of the Code) coverage under COBRA and similar state laws for
all former Active Employees of SWH (and their respective beneficiaries and
dependents) whose “qualifying event” under COBRA first occurs after the Closing
Date; provided, however, that any COBRA obligation that arises as a result of a
“qualifying event” occurring with respect to any applicable benefits provided
under the Transition Services Agreement, the obligation for

 

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  satisfying the COBRA requirements relating to such event and such plans will
remain with Seller and/or the provider under the Transition Services Agreement,
regardless of when such “qualifying event” occurs. Seller shall remain liable to
provide COBRA continuation coverage after the Closing to each former Active
Employee or other former employee of SWH (and its respective beneficiaries and
dependents) who are receiving COBRA continuation coverage as of the Closing Date
or who are entitled to elect such coverage on account of a qualifying event
occurring prior to or on the Closing Date.

 

  (iii) Subject to the terms of the Transition Services Agreement, and except as
provided in Schedule 10.1(a)(iii), Seller or its ERISA Affiliates shall retain
all Employee Benefit Plans and Benefit Arrangements and all obligations and
liabilities that arise thereunder, as applicable. Buyer shall have no
responsibility or liability for the payment or administration of any benefits
relating to such retained Employee Benefit Plans or Benefit Arrangements,
including, any amounts owed under any Deferred Compensation Plan in which any
employee participates.

 

  (iv) SWH shall be liable for any claims made or incurred by Active Employees
and their beneficiaries until the Effective Time under any Employee Benefit Plan
or Benefit Arrangement. For purposes of the immediately preceding sentence, a
charge will be deemed incurred, in the case of hospital, medical or dental
benefits, when the services that are the subject of the charge are performed
and, in the case of other benefits (such as disability or life insurance), when
an event has occurred or when a condition has been diagnosed that entitles the
employee to the benefit.

(b) General Employee Provisions.

 

  (i) Seller and Buyer shall give any notices required by any applicable Legal
Requirements and take whatever other actions with respect to the Employee
Benefit Plans and Benefit Arrangements as may be necessary to carry out the
arrangements described in this Section 10.1.

 

  (ii) Subject to applicable Legal Requirements, Seller and Buyer shall provide
each other with such plan documents and summary plan descriptions, employee data
or other information as may be reasonably required to carry out the arrangements
described in this Section 10.1.

 

  (iii)

If any of the arrangements described in this Section 10.1 are determined by the
IRS or other Governmental Body to be

 

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  prohibited by law, Seller and Buyer shall modify such arrangements to as
closely as possible reflect their expressed intent and retain the allocation of
economic benefits and burdens to the parties contemplated herein in a manner
that is not prohibited by law.

(iv) Seller shall retain copies of all personnel records and other records that
Seller is required to retain in its possession (including health, medical,
disciplinary and evaluation records and information), as required by any
applicable Legal Requirement.

(c) No Third Party Beneficiaries. The parties hereto expressly acknowledge and
agree that no provision of this Section 10.1 or any other provision of the
Agreement shall create any third party beneficiary or other rights in either any
Active Employee (including any beneficiary or dependent thereof) or any former
employee (including any beneficiary or dependent thereof) of SWH or the Business
(including leased employees) in respect of continued employment (or resumed
employment) with the Business, and no provision of this Section 10.1 or the
Agreement shall create any such rights in any such Persons in respect of any
benefits that may be provided, directly or indirectly, under any Employee
Benefit Plan, Benefit Arrangement or any plan or arrangement which may be
established by or on behalf of Buyer. After the Effective Time, nothing
contained in this Section 10.1 shall interfere with Buyer’s right to amend,
modify or terminate any “employee benefit plan” (as defined in ERISA) or to
terminate the employment of any employee of SWH for any reason, subject to its
obligations under this Agreement and the Transition Services Agreement.

(d) Collective Bargaining Matters. Seller shall be responsible for any
obligations SWH or Seller has to conduct bargaining with any union regarding the
effects of the Contemplated Transactions. Any bargaining obligations of Buyer
with any union with respect to bargaining unit employees subsequent to the
Closing, whether such obligations arise before or after the Closing, shall be
the sole responsibility of Buyer.

10.2 Transfer Taxes. Buyer shall pay one-half and Seller shall pay one-half of
the conveyance fees, sales, use and any other similar Taxes, if any, resulting
from or payable in connection with the sale of the Membership Interests pursuant
to this Agreement, regardless of the Person on whom such Taxes are imposed by
Legal Requirements, and Buyer shall timely file or cause to be filed all
necessary documents (including all Tax Returns) with respect to such Taxes. Each
such party shall indemnify, reimburse and hold the other party harmless in
respect of any liability for payment of or failure to pay such party’s portion
of any such Taxes or fees, or the filing or failure to file of any reports
required in connection therewith as required by this Section 10.2.

10.3 Retention of and Access to Records. Buyer shall retain for a period
consistent with Buyer’s record-retention practices those Records of SWH
delivered to Buyer. Upon Seller’s reasonable request, Buyer shall provide Seller
with reasonable access to all such Records during normal business hours and upon
at least three (3) Business Days’ prior written notice. Seller shall provide
Buyer and its Representatives reasonable access to Records that were not
transferred to Buyer but relate to the Business during normal business hours and
upon at least three (3) Business Days’ prior written notice.

 

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10.4 Noncompetition, Nonsolicitation.

(a) Noncompetition. For a period commencing at the Effective Time and ending on
the fifth (5th) anniversary of the Closing Date (the “Non-Compete Term”), Seller
shall not and shall cause its Affiliates, Parent or any Acquired Subsidiary not
to, anywhere in the United States (the “Restricted Area”), directly or
indirectly invest in, own, manage, operate, finance, control, advise, render
services to or guarantee the obligations of any Person engaged in or planning to
become engaged in any restaurant, bistro, bar or grill (including carry out or
catering) which is targeted toward the upscale family casual category and that
primarily has a French décor or which has a menu that consists primarily of
signature or highlighted French-themed cuisine items (“Competing Business”);
provided, however, that Seller may purchase or otherwise acquire up to (but not
more than) 5% of any class of the securities of any Person (but may not
otherwise participate in the activities of such Person) if such securities are
listed on any national or regional securities exchange or have been registered
under Section 12(g) of the Securities Exchange Act of 1934.

(b) Nonsolicitation. For a period commencing at the Effective Time and ending on
the one (1) year anniversary of the Closing Date, neither Seller nor Buyer
shall, and each shall cause its Affiliates, Parent or any Acquired Subsidiary
not to, directly or indirectly hire, retain or attempt to hire or retain any
senior director or employee of higher rank, or of any restaurant manager of the
other or any of its Affiliates or in any way interfere with the relationship
between Buyer or Seller, as the case may be, or its Affiliate and any of their
respective senior directors or employees of higher rank or restaurant managers;
provided, however, that both Seller and Buyer hereby agree that the hiring of
any such employee of the other party hereto that responds to a general
advertisement or is recruited by a recruiting agency through a general search
that is not directed at such employee would not violate this Section 10.4(b).

(c) Modification of Covenant. If a final judgment of a court or tribunal of
competent jurisdiction determines that any term or provision contained in
Section 10.4(a) or (b) is invalid or unenforceable, then the parties agree that
the court or tribunal will have the power to reduce the scope, duration or
geographic area of the term or provision, to delete specific words or phrases or
to replace any invalid or unenforceable term or provision with a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision. This
Section 10.4(c) will be enforceable as so modified after the expiration of the
time within which the judgment may be appealed. This Section 10.4(c) is
reasonable and necessary to protect and preserve Buyer’s legitimate business
interests and the value of the Business and to prevent any unfair advantage
conferred on Seller.

10.5 Tax Matters.

(a) (i) Seller shall include the income of SWH and each of the Acquired
Subsidiaries for the Tax period ending on the Closing Date in the Bob Evans
Group’s federal consolidated income Tax Return. Seller shall prepare and file,
or cause to be prepared and filed, on a basis reasonably consistent with past
practice all Tax Returns of SWH and each Acquired Subsidiary with respect to all
Tax periods ending on or prior to the Closing Date. Buyer shall cooperate with
the filing of each such Tax Return.

 

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  (ii) With respect to income Tax Returns referred to in Section 10.5(a)(i) for
the Tax period ending on the Closing Date (including the Bob Evans Group’s
federal consolidated income Tax Return), Buyer shall cause SWH and the Acquired
Subsidiaries to prepare and provide to Seller one or more packages of
information materials as are reasonably necessary for the purpose of preparing
each such income Tax Return (the “Tax Packages”). Each Tax Package shall be
completed in all material respects in accordance with the standards that Seller
has established for its other subsidiaries. If Buyer reasonably believes that
such standards differ materially from Seller’s past practices for SWH and the
Acquired Subsidiaries, Buyer shall provide written notice to Seller setting
forth in detail the specific differences. If within ten (10) Business Days after
receipt of such notice Seller notifies Buyer that it disagrees that such
standards differ materially from Seller’s past practices, Buyer and Seller will
negotiate in good faith to resolve such dispute. If Buyer and Seller fail to
resolve such dispute within ten (10) days, such dispute shall be resolved by the
Settlement Firm in accordance with the procedures set forth in Section 2.7. If
it is agreed or determined that such standards differ materially from Seller’s
past practices for the Acquired Subsidiaries, Seller shall (at Seller’s option)
either bear all reasonable costs of preparing such Tax Packages in excess of
those that would have been incurred had they been prepared in a manner
consistent with Seller’s past practices for SWH and the Acquired Subsidiaries or
prepare such additional materials as may be necessary at its expense. Buyer
shall use reasonable efforts to deliver the Tax Packages to Seller as soon as
practicable after the Closing Date, but in no event later than the earlier of
(i) the date that is three (3) months after the Closing Date, and (ii) thirty
(30) days prior to the due date of any applicable Tax Return; provided that if
Seller notifies Buyer that Seller wishes to devote its resources (and/or those
of its agents), at Seller’s cost and expense, to facilitate the preparation of
the Tax Packages on a more expedited basis, Buyer shall reasonably cooperate
with Seller (and shall cause its Affiliates, agents, auditors, representatives,
officers and employees reasonably to cooperate with Seller), at a cost and
expense shared equally by Buyer and Seller, in order to prepare the Tax Packages
as quickly as reasonably possible thereafter.

(b) Buyer shall prepare and file, or cause to be prepared and filed, any Tax
Returns of SWH and the Acquired Subsidiaries for Tax periods that begin on or
before the Closing Date and end after the Closing Date (collectively, the
“Straddle Periods” and each a “Straddle Period”), and any other Tax Return
described in Section 10.5(c). Buyer shall deliver a draft copy of such Tax
Returns for a Straddle Period to Seller for its review at least thirty
(30) Business Days for Tax Returns filed annually, fifteen (15) Business Days
for Tax Returns filed monthly, seven (7) Business Days for Tax Returns filed
semi-monthly, and three (3) Business

 

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Days for Tax Returns filed weekly, in each case prior to the due date thereof.
Seller shall have the right to review all work papers and procedures used to
prepare any such Tax Return. Seller shall provide its comments to Buyer at least
five (5) Business Days prior to the due date of such Tax Returns and Buyer shall
make all changes reasonably requested by Seller in good faith (unless Buyer is
advised in writing by its independent outside accountants or attorneys that such
changes are contrary to applicable Legal Requirements). In the event that Buyer
and Seller are unable to resolve any dispute regarding the proper reporting of
any items on such Tax Returns, such dispute shall be resolved by the Settlement
Firm in accordance with procedures similar to those set forth in Section 2.6.
Buyer shall not permit SWH or any Acquired Subsidiary to take any action on or
after the Closing Date (other than the filing of Tax Returns in accordance with
applicable Tax law) that is likely to increase the liability of Seller or the
Bob Evans Group for Taxes (including any liability of Seller to indemnify Buyer
for Taxes under this Agreement, or any Tax liability resulting from the
reduction of a Tax attribute). Buyer shall not prepare and file, or cause to be
prepared and filed, any amendment to any Tax Return of SWH or any Acquired
Subsidiary, or make or change any Tax election with respect to Taxes of or
relating to SWH or any Acquired Subsidiary, for any Tax period beginning on or
prior to the Closing Date without the prior written consent of Seller.

(c) All real property Taxes, personal property Taxes and similar ad valorem
Taxes and obligations levied on SWH or an Acquired Subsidiary, or on Seller with
respect to the Business or the Assets, for a Straddle Period, whether such Taxes
are payable to a Governmental Body, a landlord or other third party, shall be
prorated as of the Closing Date based upon, respectively, the number of calendar
days in the portion of such Tax period ending on and including the Closing Date,
and the number of days in the portion of such Tax period commencing on the day
after the Closing Date. If the Closing occurs before the Tax rate is established
for the then-current Tax period, the proration of the corresponding Taxes shall
be on the basis of the Tax rate for the last preceding Tax period applied to the
latest assessed valuation. Buyer shall be responsible for filing all Tax Returns
relating to Taxes described in this Section 10.5(c) required to be filed after
the Effective Time.

(d) In the case of Taxes of SWH or any Acquired Subsidiary for any Straddle
Period, which Taxes are either (i) in whole or in part, based upon or measured
by income, net worth, intangibles or gains, or (ii) imposed in connection with
any sale or other transfer or assignment of property (including, without
limitation, transfer taxes), the amount of such Taxes allocable to the portion
of the Straddle Period ending on the Closing Date shall be equal to the amount
that would have been payable had the relevant Tax year or period ended on the
Closing Date.

(e) Seller is entitled to any refunds or credits relating to Taxes for which it
is liable pursuant to this Section 10.5. If Buyer receives any refunds or
credits which are the property of Seller under this Section 10.5(e), Buyer shall
promptly pay the amount of such refunds or credits, net of reasonable
out-of-pocket expenses incurred to obtain such refunds or credits, to the other
party.

10.6 Further Assurances. The parties shall cooperate reasonably with each other
and with their respective Representatives in connection with any steps required
to be taken as part of their respective obligations under this Agreement, and
shall (a) furnish upon request to each

 

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other such further information; (b) execute and deliver to each other such other
documents; and (c) do such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent of this Agreement
and the Contemplated Transactions.

 

11. INDEMNIFICATION; REMEDIES

11.1 Survival. All representations, warranties, covenants, agreements, and
obligations in this Agreement, the Disclosure Schedule, and the certificates
delivered pursuant to Section 2.5 shall survive the Closing and the consummation
of the Contemplated Transactions, subject to Section 11.10.

11.2 Indemnification And Reimbursement By Seller. Seller will indemnify and hold
harmless Buyer, and its Representatives, shareholders, Subsidiaries and Related
Persons (collectively, the “Buyer Indemnified Persons”), and will reimburse
Buyer Indemnified Persons for any loss, liability, claim, damage, expense
(including costs of investigation and defense and reasonable attorneys’ fees and
expenses), whether or not involving a Third-Party Claim (collectively,
“Damages”), arising from or in connection with:

(a) any Breach of any representation or warranty made by Seller in (i) this
Agreement, (ii) the Disclosure Schedule, (iii) any transfer instrument, or
(iv) any transfer instrument delivered pursuant to Section 2.5;

(b) any Breach of any covenant, agreement, or obligation of Seller in this
Agreement or in any transfer instrument delivered pursuant to Section 2.5;

(c) any Third-Party Claim based upon, resulting from or arising out of the
business, operations, properties, assets or obligations of Seller or any of its
Affiliates conducted, existing or arising on or prior to the Closing Date;

(d) any Broker Fee incurred by Seller, its Related Persons or their respective
Representatives in connection with any of the Contemplated Transactions;

(e) any Assumed Liabilities; or

(f) (i) any Taxes of SWH (or Seller or other Affiliate of SWH) or otherwise
relating to the Business or the Assets (including, for the avoidance of doubt,
assets of the Acquired Subsidiaries) with respect to any Tax period (or portion
thereof) ending on or before the Closing Date, except to the extent that such
Taxes are included as a liability in the computation of Closing Working Capital;
or (ii) other Taxes of SWH (or Seller or other Affiliate of SWH) due and payable
at or prior to the Effective Time that becomes a Liability of Buyer by operation
of contract or Legal Requirement, except to the extent that such Taxes are
included as a liability in the computation of Closing Working Capital.

11.3 Indemnification And Reimbursement By Buyer. Buyer will indemnify and hold
harmless Seller and its Representatives, shareholders, Subsidiaries and Related
Persons (collectively, the “Seller Indemnified Persons”), and will reimburse
Seller indemnified Persons, for any Damages arising from or in connection with:

 

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(a) any Breach of any representation or warranty made by Buyer in this Agreement
or in any certificate, document, writing or instrument delivered by Buyer
pursuant to this Agreement;

(b) any Breach of any covenant or obligation of Buyer in this Agreement or in
any other certificate, document, writing or instrument delivered by Buyer
pursuant to this Agreement;

(c) any Broker Fee incurred by Buyer (or its Representatives) in connection with
any of the Contemplated Transactions;

(d) any Buyer Transaction Expense; or

(e) any obligations of Buyer not otherwise assumed by Seller with respect to the
Active Employees.

11.4 Limitations On Amount–Seller. Except as specifically set forth in the
proviso at the end of this Section 11.4, Buyer Indemnified Persons shall not be
entitled to recover from Seller under this Article 11 for an individual claim or
group of related claims with respect to any Damages if the amount of Damages
that otherwise would be payable under this Article 11 for such claim or group of
related claims does not exceed $15,000 (such claim or group of related claims, a
“De Minimis Claim”). Seller shall also have no liability with respect to any
claim under this Agreement until the total of all Damages with respect to such
matters exceeds $225,000 (the “Indemnity Basket”, and De Minimis Claims shall
not be counted in determining whether the Indemnity Basket has been exceeded),
in which event Seller shall be liable for such Damages in excess of the
Indemnity Basket up to $5,000,000 (the “Indemnity Cap”). Notwithstanding
anything to the contrary in this Agreement, the limitations set forth in this
Section 11.4 shall not apply with respect to (i) claims arising from the
fraudulent, willful, or intentional misrepresentation or omission of Seller,
(ii) claims arising in respect of Sections 3.1, 3.2, 3.3, the first sentence
only of 3.8(a) or 3.25, (collectively, the “Fundamental Representations”),
(iii) the adjustments contemplated in Sections 2.6 and 2.7, or (iv) claims
arising in respect of Sections 11.2(d), (e), or (f).

11.5 Limitations On Amount—Buyer. Except as specially set forth in the proviso
at the end of this Section 11.5, Seller Indemnified Persons shall not be
entitled to recover from Buyer under this Article 11 for a De Minimis Claim.
Buyer shall also have no liability with respect to any claim under this
Agreement until the total of all Damages with respect to such matters exceeds
$225,000 (the “Indemnity Basket”, and De Minimis Claims shall not be counted in
determining whether the Indemnity Basket has been exceeded), in which event
Buyer shall be liable for such Damages in excess of the Indemnity Basket up to
an amount equal to the Indemnity Cap; provided, however, that the limitations
set forth in this Section 11.5 shall not apply with respect to claims arising
from the fraudulent, willful, or intentional misrepresentation or omission of
Buyer, in respect of Section 4.4 (Brokers and Finders), or in respect of
Sections 11.3(c), (d), and (e).

 

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11.6 Third-Party Claims.

(a) Promptly after receipt by a Person entitled to indemnity under Sections 11.2
or 11.3 (an “Indemnified Person”) of notice of the assertion of a Third-Party
Claim against it, such Indemnified Person shall promptly (and in any event
within ten days after receipt thereof) give notice to the Person or Persons, as
applicable, obligated to indemnify under such Section (an “Indemnifying Person”)
of the assertion of such Third-Party Claim; provided, however, that the failure
to notify the Indemnifying Person will not relieve the Indemnifying Person of
any liability that it may have to any Indemnified Person, except to the extent
that the Indemnifying Person demonstrates that the defense of such Third-Party
Claim is materially prejudiced by the Indemnified Person’s failure to give such
notice. The Indemnified Person shall promptly furnish or make available to the
Indemnifying Party all information that it has with respect to such Third-Party
Claim.

(b) If an Indemnified Person gives notice to the Indemnifying Person pursuant to
Section 11.6(a) of the assertion of a Third-Party Claim (other than such a
Third-Party Claim relating to Taxes or any Tax Return, as to which the
provisions of Section 11.6(d) shall control), the Indemnifying Person shall be
entitled to participate in the defense of such Third-Party Claim and, to the
extent that it wishes (unless (i) the Indemnifying Person is also a Person
against whom the Third-Party Claim is made and the Indemnified Person determines
in good faith that joint representation of the Indemnified Person would be
inappropriate or (ii) the Indemnifying Person fails to provide reasonable
assurance to the Indemnified Person of its financial capacity to defend such
Third-Party Claim and provide indemnification with respect to such Third-Party
Claim), to assume the defense of such Third-Party Claim with counsel
satisfactory to the Indemnified Person (except to the extent the Indemnified
Person has other issues involved in the same dispute or to the extent resolution
of the Third-Party Claim could affect liability of the Indemnified Person in
other periods or in respect of other issues). After notice from the Indemnifying
Person to the Indemnified Person of its election to assume the defense of such
Third-Party Claim, and conditioned upon continuing satisfaction of conditions
(i) and (ii) of this Section 11.6(b), the Indemnifying Person shall not, so long
as it diligently conducts such defense, be liable to the Indemnified Person
under this Article 11 for any fees of other counsel or any other expenses with
respect to the defense of such Third-Party Claim, in each case subsequently
incurred by the Indemnified Person in connection with the defense of such
Third-Party Claim. No compromise or settlement of such Third-Party Claims may be
effected by the Indemnifying Person without the Indemnified Person’s Consent,
which will not be unreasonably withheld or delayed, unless (A) there is no
finding or admission of any violation of Legal Requirement or any violation of
the rights of any Person; (B) the sole relief provided is monetary damages that
are paid in full by the Indemnifying Person; (C) the settlement could not give
rise to any other liability of the Indemnified Person; and (D) the Indemnified
Person shall have no liability with respect to any compromise or settlement of
such Third-Party Claims effected without its Consent. If notice is given to an
Indemnifying Person of the assertion of any such Third-Party Claim and the
Indemnifying Person does not, within ten (10) days after the Indemnified
Person’s notice is given (or, if later, within ten (10) days after the
Indemnified Party furnishes or makes available reasonable information it has
with respect such Third-Party Claim), give notice to the Indemnified Person of
its election to assume the defense of such Third-Party Claim, the Indemnifying
Person will be bound by any determination made in such Third-Party Claim or any
compromise or settlement effected by the Indemnified Person.

 

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(c) With respect to any Third-Party Claim subject to indemnification under this
Article 11, and subject to Section 11.6(d): (i) both the Indemnified Person and
the Indemnifying Person, as the case may be, shall keep the other Person fully
informed of the status of such Third-Party Claim and any related Proceedings at
all stages thereof where such Person is not represented by its own counsel, and
(ii) the parties agree to render to each other such assistance as they may
reasonably require of each other and to cooperate in good faith with each other
in order to ensure the proper and adequate defense of any Third-Party Claim.

(d) If any Third-Party Claim relating to Taxes for which Seller has an
indemnification obligation under Section 11.2, is asserted against Buyer, any of
its Affiliates, or any Acquired Subsidiary, Buyer shall promptly notify Seller
of such claim or demand within sufficient time that would allow Seller to timely
respond to such claim or demand, and shall give Seller such information with
respect thereto as Seller may reasonably request; provided that the failure to
give such notice shall not relieve Seller from any obligation hereunder except
where, and solely to the extent that, such failure actually prejudices the
rights of Seller. Seller may, at its own expense, participate in and, upon
notice to Buyer, assume the defense of any claim, suit, action, litigation or
proceeding (including any Tax audit) relating to Taxes for which Seller has an
indemnification obligation under Section 11.2. If Seller assumes such defense
and if the relevant claim, suit, action, litigation or proceeding relates to a
Straddle Period, Buyer shall have the right (but not the duty) to participate in
the defense thereof and to employ counsel, at its own expense, separate from the
counsel employed by Seller, and Seller shall not settle such claim without
Buyer’s prior written consent (which shall not be unreasonably withheld).
Whether or not Seller chooses to defend or prosecute any claim, all of the
parties hereto shall cooperate in the defense or prosecution thereof, to the
extent that such parties are not materially prejudiced thereby. Seller shall not
be liable under Section 11.2 for (i) any Tax claimed or demanded by any
Governmental Body, the payment of which was made without Seller’s prior written
consent (which shall not be unreasonably withheld) and for which Seller has a
valid objection to the payment, unless Seller refused to participate in the
proceedings and assume the defense, or (ii) any settlements entered into without
the consent of Seller (which shall not be unreasonably withheld), or resulting
from any claim, suit, action, litigation or proceeding in which Seller was not
permitted an opportunity to participate.

11.7 Other Claims. A claim for which a party is entitled to indemnification
hereunder for any matter not involving a Third-Party Claim may be asserted by
notice to the party from whom indemnification is sought.

11.8 Effect of Investigation. The representations, warranties and covenants of
the Indemnifying Person, and the Indemnified Person’s right to indemnification
with respect thereto, shall not be affected or deemed waived by reason of any
investigation made by or on behalf of the Indemnified Person (including by any
of its Representatives) or by reason of the fact that the Indemnified Person or
any of its Representatives knew or should have known that any such
representation, warranty, or covenant is, was, or might be Breached, or by
reason of the Indemnified Person’s waiver of any condition set forth in Article
7 or Article 8, as the case may be. Notwithstanding the foregoing sentence, if
an Indemnified Person has actual knowledge of such a Breach by the Indemnifying
Person prior to Closing, the Indemnified Person or its Representative shall give
notice as soon as practicable to the Indemnifying Person of such Breach.

 

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11.9 Right of Set-off. For the duration of the Note, Buyer shall have the right
to withhold and set off against the amount owed to Seller under the Note for any
Damages to which any Buyer Indemnified Party may be entitled under this Article
11 or any other documents or agreements contemplated by this Agreement, subject
to the following procedure: If any Buyer Indemnified Person makes a claim for
indemnity pursuant to this Article 11 (a “Set-off Claim”), Buyer shall deliver
to Seller a written notice (a “Set-off Notice”) setting forth in reasonable
detail the amount, nature and basis of the Set-off Claim by the Buyer
Indemnified Person. If Buyer has not received a written objection to such
Set-off Claim or portion thereof or the amount of such Set-off Claim from Seller
within ten (10) Business Days following Seller’s receipt of such notice, the
parties hereby agree that the amount owed to Seller by Buyer under the Note
shall be immediately reduced by an amount equal to the amount of such Set-off
Claim. If Seller in good faith delivers to Buyer a written objection (a “Dispute
Notice”) to any Set-off Claim or portion thereof or the amount of such claim
within ten (10) Business Days following Seller’s receipt of such Set-off Notice,
then the amount due to Seller under the Note shall not be reduced for such a
Set-off Claim until (i) the parties agree in writing to reduce the amount due to
Seller under the Note in respect of the Dispute Notice, or (ii) a final and
non-appealable order of any court of competent jurisdiction determines the
amount by which the amount due to Seller under the Note in respect of the
Dispute Notice shall be reduced. Notwithstanding the foregoing, if Seller
objects in part to the amount of the Set-off Claim, the amount due to Seller
under the Note shall, after the lapse of the ten (10) Business Day period, be
reduced by an amount equal to the portion of the Set-off Claim not objected to
by Seller. Upon the agreement of the parties pursuant to section (i) or an order
under section (ii) above, the amount owed to Seller under the Note shall be
reduced in accordance with such agreement or order.

11.10 Other Limitations.

(a) Solely for purposes of calculating Damages under this Article 11 (but not
for purposes of determining whether or not a Breach of a representation or
warranty exists), any Breach of a representation or warranty or covenant shall
be determined without regard to any material, Material Adverse Effect or similar
qualifier.

(b) Except with respect to any claim with respect to (i) a fraudulent, willful
or intentional misrepresentation or omission, (ii) Sections 11.2(d), (e) or (f),
or (iii) Breach of a Fundamental Representation (as to which a claim shall
survive for a period of 30 days after the applicable statute of limitations),
Liability for Breach of any of the representations and warranties made in this
Agreement will survive the Closing for a period of eighteen (18) months and
thereafter neither party hereto may bring any claim, suit or cause of action
against the other party for Breach of any of the representations and warranties
under this Agreement. To the extent that any covenants or other agreements of
Seller or Buyer are performable after the Closing, such covenants or other
agreements will survive for the periods specified.

(c) All indemnification payments under this Article 11 shall be paid by the
Indemnifying Person net of any amounts recovered by the Indemnified Party
(i) under applicable insurance policies after taking into account all
deductibles paid in connection therewith or (ii) from any other Person alleged
to be responsible therefor.

 

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(d) Notwithstanding any contrary provision in this Agreement, in no event shall
any Indemnifying Party be liable to any Indemnified Party for any Damages other
than those that directly and naturally arise from or relate to, and are the
probable and reasonably foreseeable result of the Breach or alleged Breach of
this Agreement (except, in each case, to the extent actually payable by an
Indemnified Party to a Third Person, and excluding speculative damages).

11.11 Indemnity Payment Characterization. All indemnification payments under
this Article 11 shall be deemed adjustments to the Purchase Price.

11.12 Exclusive Remedy. Except in case of a fraudulent, willful or intentional
misrepresentation or omission, the parties acknowledge and agree that their sole
and exclusive remedy with respect to any and all claims for Damages (other than
claims arising from fraud on the part of a party hereto in connection with the
Contemplated Transactions) for any Breach of any representation, warranty,
covenant, agreement or obligation set forth herein or otherwise relating to the
subject matter of this Agreement shall be pursuant to the indemnification
provisions set forth in this Article 11. Nothing in this Section 11.12 shall
limit any Person’s right to seek and obtain any equitable relief to which any
Person shall be entitled.

 

12. CONFIDENTIALITY

12.1 Definition of Confidential Information

(a) As used in this Article 12, the term “Confidential Information” includes any
and all of the following information of Seller or Buyer that has been or may
hereafter be disclosed in any form, whether in writing, orally, electronically
or otherwise, or otherwise made available by observation, inspection or
otherwise by either party (Buyer on the one hand or Seller, on the other hand)
or its Representatives (collectively, a “Disclosing Party”) to the other party
or its Representatives (collectively, a “Receiving Party”):

 

  (i) all information that is a trade secret under applicable trade secret or
other law;

 

  (ii) all information concerning product specifications, data, know-how,
formulae, compositions, processes, designs, sketches, photographs, graphs,
drawings, samples, inventions and ideas, past, current and planned research and
development, current and planned manufacturing or distribution methods and
processes, customer lists, current and anticipated customer requirements, price
lists, market studies, business plans, computer hardware, Software and computer
software and database technologies, systems, structures and architectures;

 

  (iii)

all information concerning the business and affairs of the Disclosing Party
(which includes historical and current financial statements, financial
projections and budgets, tax returns and accountants’ materials, historical,
current and projected sales, capital spending budgets and plans, business plans,
strategic plans,

 

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  marketing and advertising plans, publications, client and customer lists and
files, contracts, the names and backgrounds of key personnel and personnel
training techniques and materials, however documented), and all information
obtained from review of the Disclosing Party’s documents or property or
discussions with the Disclosing Party regardless of the form of the
communication;

 

  (iv) all notes, analyses, compilations, studies, summaries and other material
prepared by the Receiving Party to the extent containing or based, in whole or
in part, upon any information included in the foregoing; and

 

  (v) all data, notes, analyses, drafts, summaries, and reports produced as a
result of conducting environmental investigations on the Property for purposes
of the Contemplated Transactions.

(b) Any trade secrets of a Disclosing Party shall also be entitled to all of the
protections and benefits under applicable trade secret law and any other
applicable law. If any information that a Disclosing Party deems to be a trade
secret is found by a court of competent jurisdiction not to be a trade secret
for purposes of this Article 12, such information shall still be considered
Confidential Information of that Disclosing Party for purposes of this Article
12 to the extent included within the definition. In the case of trade secrets,
each of Buyer, Seller hereby waives any requirement that the other party submit
proof of the economic value of any trade secret or post a bond or other
security.

12.2 Restricted Use Of Confidential Information

(a) Each Receiving Party acknowledges the confidential and proprietary nature of
the Confidential Information of the Disclosing Party and agrees that such
Confidential Information (i) shall be kept confidential by the Receiving Party;
(ii) shall not be used for any reason or purpose other than to evaluate and
consummate the Contemplated Transactions; and (iii) without limiting the
foregoing, shall not be disclosed by the Receiving Party to any Person, except
in each case as otherwise expressly permitted by the terms of this Agreement or
with the prior written consent of an authorized representative of Seller with
respect to Confidential Information of Seller (each, a “Seller Contact”) or an
authorized representative of Buyer with respect to Confidential Information of
Buyer (each, a “Buyer Contact”). Each of Buyer and Seller shall disclose the
Confidential Information of the other party only to its Representatives who
require such material for the purpose of evaluating the Contemplated
Transactions and are informed by Buyer or Seller, as the case may be, of the
obligations of this Article 12 with respect to such information. Each of Buyer
and Seller shall (iv) enforce the terms of this Article 12 as to its respective
Representatives; (v) take such action to the extent necessary to cause its
Representatives to comply with the terms and conditions of this Article 12; and
(vi) be responsible and liable for any Breach of the provisions of this Article
12 by it or its Representatives.

 

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(b) Unless and until this Agreement is terminated, Seller shall maintain as
confidential any Confidential Information (including for this purpose any
information of Seller of the type referred to in Sections 12.1(a)(i),
12.1(a)(ii) and 12.1(a)(iii), whether or not disclosed to Buyer) of Seller
relating to any of the Business. Notwithstanding the preceding sentence, Seller
may use any Confidential Information of Seller before the Closing in the
Ordinary Course of Business, but solely in connection with the transactions
permitted by Section 5.2.

(c) From and after the Closing, the provisions of Section 12.2(a) above shall
not apply to or restrict in any manner Buyer’s use of any Confidential
Information of Seller relating to the Business.

(d) From and after the Closing, Seller shall, and shall cause its Affiliates to,
hold, and shall use its reasonable best efforts to cause its or their respective
Representatives to hold, in confidence any and all Confidential Information
concerning the Business.

12.3 Exceptions. Sections 12.2(a) and 12.2(b) do not apply to that part of the
Confidential Information of a Disclosing Party that a Receiving Party
demonstrates (a) was, is or becomes generally available to the public other than
as a result of a Breach of this Article 12 or the Confidentiality Agreement by
the Receiving Party or its Representatives; (b) was or is developed by the
Receiving Party independently of and without reference to any Confidential
Information of the Disclosing Party; or (c) was, is or becomes available to the
Receiving Party on a nonconfidential basis from a Third Party not bound by a
confidentiality agreement or any legal, fiduciary or other obligation
restricting disclosure. Seller shall not disclose any Confidential Information
of Seller relating to the Business in reliance on the exceptions in clauses (b)
or (c) above.

12.4 Legal Proceedings. If a Receiving Party becomes compelled in any Proceeding
or is requested by a Governmental Body having regulatory jurisdiction over the
Contemplated Transactions to make any disclosure that is prohibited or otherwise
constrained by this Article 12, that Receiving Party shall provide the
Disclosing Party with prompt notice of such compulsion or request so that it may
seek an appropriate protective order or other appropriate remedy or waive
compliance with the provisions of this Article 12. In the absence of a
protective order or other remedy, the Receiving Party may disclose that portion
(and only that portion) of the Confidential Information of the Disclosing Party
that, based upon advice of the Receiving Party’s counsel, the Receiving Party is
legally compelled to disclose or that has been requested by such Governmental
Body, provided, however, that the Receiving Party shall use reasonable efforts
to obtain reliable assurance that confidential treatment will be accorded by any
Person to whom any Confidential Information is so disclosed. The provisions of
this Section 12.4 do not apply to any Proceedings between the parties to this
Agreement.

12.5 Return Or Destruction Of Confidential Information. If this Agreement is
terminated, each Receiving Party shall (a) destroy all Confidential Information
of the Disclosing Party prepared or generated by the Receiving Party without
retaining a copy of any such material; (b) promptly deliver to the Disclosing
Party all other Confidential Information of the Disclosing Party, together with
all copies thereof, in the possession, custody or control of the Receiving Party
or, alternatively, with the written consent of a Contact (whichever represents
the Disclosing Party) destroy all such Confidential Information; and (c) certify
all such destruction

 

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in writing to the Disclosing Party, provided, however, that the Receiving Party
may retain a list that contains general descriptions of the information it has
returned or destroyed to facilitate the resolution of any controversies after
the Disclosing Party’s Confidential Information is returned.

 

13. GENERAL PROVISIONS

13.1 Expenses. Except as otherwise provided in this Agreement, each party to
this Agreement will bear its respective fees and expenses incurred in connection
with the preparation, negotiation, execution and performance of this Agreement
and the Contemplated Transactions, including all fees and expense of its
Representatives. Buyer shall pay all expenses in connection with its due
diligence review and inspections, including, all environmental reports,
condition reports and surveys. Buyer will pay all amounts payable to the title
insurance company that issued the title commitments, including premiums, search
fees and commitment brokerage fees if no title policies are purchased by Buyer.
Buyer shall also pay for the cost of all endorsements to title policies, if any,
and any lender title insurance policy desired by Buyer. If this Agreement is
terminated, the obligation of each party to pay its own fees and expenses will
be subject to any rights of such party arising from a Breach of this Agreement
by another party.

13.2 Public Announcements. Subject to Legal Requirements, including the rules
and regulations of the United States Securities and Exchange Commission and
NASDAQ, in each case as determined by Seller, any filing, public announcement,
press release or similar publicity with respect to this Agreement or the
Contemplated Transactions will be issued, if at all, only at such time and in
such manner as Seller shall reasonably determine; provided, that, subject to
such Legal Requirements, Seller shall provide Buyer a draft of any press release
prior to its release and shall provide Buyer a reasonable opportunity to comment
thereon. Seller and Buyer will consult and agree with each other concerning the
means by which Seller’s employees, customers, suppliers and others having
dealings with Seller will be informed of the Contemplated Transactions, and
Buyer shall have the right to be present for any such communication.

13.3 Notices. All notices, Consents, waivers and other communications required
or permitted by this Agreement shall be in writing and shall be deemed given to
a party when (a) delivered to the appropriate address by hand or by nationally
recognized overnight courier service (costs prepaid); (b) sent by e-mail with
confirmation of transmission by the transmitting equipment; or (c) received or
rejected by the addressee, if sent by certified mail, return receipt requested,
in each case to the following addresses or e-mail addresses and marked to the
attention of the person (by name or title) designated below (or to such other
address, e-mail address or person as a party may designate by notice to the
other parties):

 

If to Buyer:   Le Duff America, Inc.   12201 Merit Drive, Suite 900   Dallas,
Texas 75251   Attn:      Harry J. Martin, Jr., General Counsel   E-mail:   
  Legalnotices@leduffamerica.com

 

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with a copy to (which does not constitute notice to Buyer):   K&L Gates LLP  
1717 Main Street, Suite 2800   Dallas, Texas 75201   Attention: Soren Lindstrom
  Fax:   214-939-5849   E-mail:   soren.lindstrom@klgates.com If to Seller:  
Bob Evans Farms, Inc.   3776 South High Street   Columbus, Ohio 43207  
Attention:   Colin M. Daly, Senior Vice President, General Counsel and Corporate
Secretary with a copy to (which does not constitute notice to Seller):   Bob
Evans Farms, Inc.   3776 South High Street   Columbus, Ohio 43207   Attention:  
Kevin C. O’Neil, Vice President, Assoc. General Counsel and Asst. Corporate
Secretary   Vorys, Sater, Seymour and Pease LLP   52 East Gay Street   P.O. Box
1008   Columbus, Ohio 43216-1008   Attn:   Michael D. Martz

13.4 Governing Law; Consent to Jurisdiction. All issues and questions concerning
the construction, validity, interpretation and enforceability of this Agreement
and the exhibits and schedules hereto, and all claims and disputes arising
hereunder or thereunder or in connection herewith or therewith, whether
purporting to sound in contract or tort, or at law or in equity, shall be
governed by, and construed in accordance with, the laws of the State of
Delaware, without giving effect to any choice of law or conflict of law rules or
provisions (whether of the state of Delaware or any other jurisdiction) that
would cause the application of the Laws of any jurisdiction other than the State
of Delaware. The parties hereto hereby agree and consent to the jurisdiction of
the United States District Court for the District of Delaware, and in the
absence of such federal jurisdiction, the parties hereto hereby agree and
consent to be subject to the exclusive jurisdiction of the state courts located
in Wilmington, Delaware, and hereby waive the right to assert the lack of
personal or subject matter jurisdiction or improper venue in connection with any
such suit, action or other proceeding. In furtherance of the foregoing, each of
the parties hereto (i) waives the defense of inconvenient forum, (ii) agrees not
to commence any suit, action or other proceeding arising out of this Agreement
or any Contemplated Transactions other than in any such court, and (iii) agrees
that, to the extent permitted by applicable Legal Requirements, a final judgment
in any such suit, action or other

 

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proceeding shall be conclusive and may be enforced in other jurisdictions by
suit or judgment or in any other manner provided by law, provided that service
of process is effected upon such party as permitted by applicable Legal
Requirements. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY LITIGATION, ACTION, PROCEEDING, CROSS-CLAIM, OR COUNTERCLAIM IN ANY
COURT (WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF, RELATING
TO OR IN CONNECTION WITH (I) THIS AGREEMENT OR THE VALIDITY, PERFORMANCE,
INTERPRETATION, COLLECTION OR ENFORCEMENT HEREOF, OR (II) THE ACTIONS OF SUCH
PARTY IN THE NEGOTIATION, AUTHORIZATION, EXECUTION, DELIVERY, ADMINISTRATION,
PERFORMANCE, OR ENFORCEMENT HEREOF.

13.5 Enforcement of Agreement. Each party to this Agreement acknowledges and
agrees that the other party hereto would be irreparably damaged if any of the
provisions of this Agreement are not performed in accordance with their specific
terms and that any Breach of this Agreement by the other party hereto could not
be adequately compensated in all cases by monetary damages alone. Accordingly,
in addition to any other right or remedy to which a party hereto may be entitled
at law or in equity, it shall be entitled to enforce any provision of this
Agreement by a decree of specific performance and to temporary, preliminary and
permanent injunctive relief in connection therewith, without posting any bond or
other undertaking.

13.6 Waiver; Remedies Cumulative. The rights and remedies of the parties to this
Agreement are cumulative and not alternative. Neither any failure nor any delay
by any party in exercising any right, power or privilege under this Agreement or
any of the documents referred to in this Agreement will operate as a waiver of
such right, power or privilege, and no single or partial exercise of any such
right, power or privilege will preclude any other or further exercise of such
right, power or privilege or the exercise of any other right, power or
privilege.

13.7 Entire Agreement and Modification. This Agreement supersedes all prior
agreements, whether written or oral, among the parties with respect to its
subject matter (including any letter of intent) and constitutes (along with the
Disclosure Schedule, exhibits and other documents delivered pursuant to this
Agreement) a complete and exclusive statement of the terms of the agreement
among the parties with respect to its subject matter. This Agreement may not be
amended, supplemented, or otherwise modified except by a written agreement
executed by the party to be charged with the amendment.

13.8 Disclosure Schedule. The Schedule numbers in the Disclosure Schedule
correspond to the section numbers in the Agreement. The parties agree that
disclosure of any item in any one or more Sections of the Disclosure Schedule
shall be deemed disclosure with respect to other Sections of the Agreement if
the relevance of such disclosure to a representation or warranty is reasonably
apparent on its face. For convenience of reference only, the various Sections of
the Disclosure Schedule may be subdivided into separate subsections that relate
to the subsection of the Agreement to which such disclosures relate. Any
specification of any dollar amount in the representations and warranties
contained herein or the inclusion of any specific item in the Disclosure
Schedule is not intended to imply that such amounts or higher or lower amounts,
or the items so included or other items, are or are not material, and neither
party shall use the fact of the setting of such amounts or the fact of the
inclusion of any such item in the

 

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Disclosure Schedule in any dispute or controversy between the parties as to
whether any obligation, item or matter not described herein or included in the
Disclosure Schedule is or is not material for purposes of the Agreement. In no
event shall the listing of such agreements or other matters in the Disclosure
Schedule be deemed or interpreted to broaden or otherwise amplify Seller’s
representations and warranties, covenants or agreements contained herein. The
headings contained in the Disclosure Schedule are for convenience of reference
only and shall not be deemed to modify or affect the interpretation of the
information contained herein or in the Disclosure Schedule.

13.9 Assignments, Successors and No Third-Party Rights. No party may assign any
of its rights or delegate any of its obligations under this Agreement without
the prior written consent of the other party, except that either party may
assign any of its rights and delegate any of its obligations under this
Agreement to any of its Affiliates. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy or
claim under or with respect to this Agreement or any provision of this
Agreement, except such rights as shall inure to a successor or permitted
assignee pursuant to this Section 13.9.

13.10 Severability. If any provision of this Agreement is held invalid or
unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.

13.11 Counterparts. This Agreement may be executed in one or more counterparts,
each of which will be deemed to be an original copy of this Agreement and all of
which, when taken together, will be deemed to constitute one and the same
agreement. The exchange of copies of this Agreement and of signature pages by
facsimile transmission shall constitute effective execution and delivery of this
Agreement as to the parties and may be used in lieu of the original Agreement
for all purposes. Signatures of the parties transmitted by facsimile, email or
other means of electronic transmission shall be deemed to be their original
signatures for all purposes.

[signature page follows]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 

Buyer:

SWH MIMI’S CAFÉ HOLDING COMPANY, INC

   

SELLER:

MIMI’S CAFÉ LLC

By:  

/s/ Claude Bergeron

    By:  

/s/ Steven A. Davis

  Claude Bergeron       Steven A. Davis, Manager Title:  

 

     

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Exhibit 2.5(c)(ii) - Form of Note

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THIS PROMISSORY NOTE IS SUBJECT TO THE TERMS AND CONDITIONS OF THAT CERTAIN
SUBORDINATION AGREEMENT, DATED FEBRUARY 15, 2013, BETWEEN MCAFE HOLDING, LLC,
AND LDA HOLDING, INC. (INCLUDING EACH SUCH PARTY’S SUCCESSORS AND ASSIGNS). A
COPY OF THIS AGREEMENT IS ON FILE AT THE OFFICE OF BORROWER AND IS AVAILABLE FOR
INSPECTION AT SUCH OFFICE.

PROMISSORY NOTE

 

$30,000,000.00    February 15, 2013

FOR VALUE RECEIVED, SWH Mimi’s Café Holding Company, Inc., a Delaware
corporation (“Borrower”), having an address at 12201 Merit Drive, Suite 900,
Dallas, Texas 75251, hereby promises to pay to the order of MCafe Holding, LLC,
a Delaware limited liability company (“Lender”), having an address at 3776 South
High Street, Columbus, Ohio, 43207, the principal sum of THIRTY MILLION AND
NO/100 DOLLARS ($30,000,000.00), together with interest thereon at the Contract
Rate (as hereinafter defined), and otherwise in strict accordance with the terms
and provisions hereof.

Definitions.

Definitions. As used in this Note, the following terms shall have the following
meanings:

“Affiliate” means, with respect to Borrower, Lender or SWH, any other individual
or entity that controls, is controlled by or is under common control with
Borrower, Lender or SWH, respectively. For purposes of the foregoing, the term
“control” means holding the power to direct or cause the direction of the
management and policies of Borrower, Lender or SWH, as applicable, and whether
by ownership of equity securities, contract or otherwise.

“Available Assets” means all of Borrower’s assets (including, without
limitation, Available Cash) other than Available Proceeds,.

“Available Cash” means all cash held by Borrower, other than Available Proceeds.

“Available Proceeds” means the proceeds from the sale of all or substantially
all of the assets of SWH or the sale by Borrower of its equity interest in SWH.

“Borrower” has the meaning set forth in the introductory paragraph of this Note.

“Business Day” means a weekday, Monday through Friday, except a legal holiday or
a day on which banking institutions in Texas or Ohio are authorized or required
by law to be closed.

“Closing” has the meaning set forth in the Purchase Agreement.

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“Contract Rate” means one and one-half percent (1.5%) per annum.

“Debtor Relief Laws” means Title 11 of the United States Code, as now or
hereafter in effect, or any other applicable law, domestic or foreign, as now or
hereafter in effect, relating to bankruptcy, insolvency, liquidation,
receivership, reorganization, arrangement or composition, extension or
adjustment of debts, or similar laws affecting the rights of creditors.

“EBITDA” means, with respect to SWH, determined on a consolidated basis in
accordance with GAAP, the total (without duplication) in United States Dollars
of: (a) Net Income (as modified by the last sentence in this paragraph), plus
(b) the aggregate amount of depreciation and amortization expense for the
applicable period to the extent deducted in the determination of Net Income,
plus (c) the aggregate amount of interest expense for the applicable period to
the extent deducted in the determination of Net Income, plus (d) the aggregate
amount of income and franchise tax expense for the applicable period to the
extent deducted in the determination of Net Income, plus (e) all non-cash
expenses and non-cash charges classified as non recurring, including non-cash
extraordinary expenses and noncash impairment expenses against intangibles for
the applicable period to the extent deducted in the determination of Net Income,
minus (f) noncash credits classified as non recurring including extraordinary
income for the applicable period to the extent included in Net Income. For
purposes of calculating EBITDA for any thirteen Fiscal Period period, including
any Excess Cash Flow Period: (a) general and administrative expenses, including
marketing and pre-opening expenses of new units, shall be capped for such period
at the lesser of actual general and administrative expenses or $26,000,000;
(b) EBITDA for the period from December 26, 2012 through Closing shall be the
EBITDA generated by SWH prior to its ownership by Borrower, as calculated by
Lender; and (c) for the period from Closing through December 31, 2013, general
and administrative expenses, including marketing and pre-opening expenses of new
units, shall be capped for such period at the lesser of actual general and
administrative expense incurred during such period or the pro-rated amount based
on an annual amount of $26,000,000.

“Event of Default” has the meaning set forth in Section 5.1 hereof.

“Excess Cash Flow” means, for the applicable Excess Cash Flow Period, the
amount, if positive, equal to the EBITDA for the applicable Excess Cash Flow
Period minus $17,500,000.

“Excess Cash Flow Period” means each fiscal year of SWH, provided, however, that
the first Excess Cash Flow Period will commence on December 26, 2012 and end on
December 31, 2013. Each Excess Cash Flow Period thereafter shall be SWH’s fiscal
year which will commence on the last Wednesday of December and end on the last
Tuesday of December of the following year.

“Fiscal Period” means one of thirteen four- or five-week periods for a total of
fifty-two or fifty-three weeks in a year, designated as a “fiscal period” by
Borrower, in its regular course of business, in any fiscal year of Borrower.

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“GAAP” means generally accepted accounting principles in the United States of
America, consistently applied, as in effect at the time any determination is
made or financial statement or information is required or furnished under this
Agreement.

“Invested Funds” means the aggregate amount of cash contributed by Parent to
Borrower, as an investment or a loan. For the avoidance of doubt, “Invested
Funds” shall exclude any and all contributions, investments and loans that
Parent committed to make to Borrower, but that had not been made at the time of
a sale of the equity of SWH, the liquidation of the assets of SWH, the filing of
an insolvency proceeding for SWH or the assignment of substantially all of SWH’s
assets for the benefit of creditors.

“Lender” has the meaning set forth in the introductory paragraph of this Note.

“Loan” means the loan evidenced by this Note.

“Maturity Date” means the earlier of (i) February 15, 2020, and (ii) the sale by
Borrower of its equity interest in SWH (other than a Permitted Equity Transfer)
or the liquidation of the assets of SWH.

“Mimi’s Café Restaurants” means restaurants owned or operated by SWH.

“Net Income” means, for the applicable period and on a consolidated basis, the
net income of SWH, as determined in accordance with GAAP.

“Note” means this Promissory Note.

“Obligations” means the obligations of Borrower (a) to pay all indebtedness
arising out of, pursuant to or in connection with this Note, and all renewals,
extensions or amendments of such indebtedness or any part thereof, (b) to
perform fully all of the terms and provisions hereof, and (c) to reimburse
Lender, on demand, for all of Lender’s reasonable costs and expenses incurred
hereunder, including the reasonable fees and expenses of counsel, incurred in
connection with the enforcement of this Note.

“Parent” means LDA Holding, Inc., a Delaware corporation.

“Payment Date” means for each applicable Excess Cash Flow Period, the date which
is fifteen (15) days after the date on which Lender receives the EBITDA
Calculation (as defined in Section 3.1(b)) for such Excess Cash Flow Period then
ended in accordance with Section 3.1(b), beginning with the Excess Cash Flow
Period ending on December 31, 2013. The Payment Date will continue with respect
to each subsequent Excess Cash Flow Period until the payment in full of the
Obligations.

“Permitted Equity Transfer” means the sale or transfer by Borrower of all or
substantially all of the equity interests held by Borrower in SWH to any
Affiliate of Borrower and to which Lender has provided its prior written
consent, which consent shall not be unreasonably withheld.

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“Purchase Agreement” means that certain Membership Interest Purchase Agreement,
dated January 28, 2013, between Borrower as buyer and Lender as seller, as the
same may be amended, supplemented, or otherwise modified from time to time.

“Purchase Agreement Adjustment” means the amount of any excess provided in
Section 2.8(f) of the Purchase Agreement to be applied to this Note.

“Subordination Agreement” means that certain Subordination Agreement dated as of
the date hereof, between Parent and Lender, as the same may be amended,
supplemented or otherwise modified from time to time, respecting the
subordination of the Obligations set forth herein.

“SWH” means SWH Mimi’s Café, LLC, a Delaware limited liability company.

Rules of Construction. All terms used herein, whether used in singular or plural
form, shall be deemed to refer to the object of such term whether such is
singular or plural in nature, as the context may suggest or require. All
personal pronouns used herein, whether used in the masculine, feminine or
neutral gender, shall include all other genders; the singular shall include the
plural and vice versa.

Payment Terms.

Payments of Principal and Interest.

a. On each Payment Date occurring until the payment in full of the Obligations,
Borrower agrees to make a payment to Lender (each an “Excess Cash Flow Payment”)
in an amount equal to the Excess Cash Flow for the applicable Excess Cash Flow
Period then ended, which Excess Cash Flow Payment shall be applied, first, to
all of the costs and expenses of Lender incurred after the occurrence and during
the continuance of an Event of Default, which have not been reimbursed pursuant
hereto, second, to the accrued but unpaid interest on the Loan and, third, to
the outstanding principal balance of the Loan. The outstanding principal balance
of and all accrued but unpaid interest on the Loan shall be due and payable on
the Maturity Date.

b. Each Purchase Agreement Adjustment shall be applied (i) first, to the amount
of any Excess Cash Flow Payment then due and payable and (ii) second, to the
outstanding principal balance of this Note in the order of the maturity of each
subsequent Excess Cash Flow Payment, such that subsequent Excess Cash Flow
Payments shall be satisfied first from the amount of any Purchase Agreement
Adjustment applied to the outstanding principal balance of this Note.

Payments. All payments under this Note made to Lender shall be made in
immediately available funds in accordance with the following wire instructions:

--------------------------------------------------------------------------------

Bank: to be completed at Closing  

 

   

 

 

ABA No.:  

 

  Account No.:  

 

  Reference:  

 

 

or at such other place as Lender, in Lender’s sole discretion, may have
established by delivery of at least thirty days’ prior, written notice thereof
to Borrower from time to time, in lawful money of the United States of America,
which shall at the time of payment be legal tender in payment of all debts and
dues, public and private. Payments by check or draft shall not constitute
payment in immediately available funds until the required amount is actually
received by Lender in full. If any payment of principal or interest on the Loan
shall become due and payable on a day other than a Business Day, then such
payment shall be made on the next succeeding Business Day. Any such extension of
time for payment shall be included in computing interest which has accrued and
shall be payable in connection with such payment.

Computation Period. Interest on the Loan shall be computed on the basis of a
three hundred sixty-five (365) or, if applicable, three hundred sixty-six
(366) day year and shall accrue on the actual number of days elapsed for any
whole or partial month in which interest is being calculated. In computing the
number of days during which interest accrues, the day on which funds are
initially advanced shall be included regardless of the time of day such advance
is made, and the day on which funds are repaid shall be included unless
repayment is credited prior to the close of business on the Business Day
received. Each determination by Lender of an interest rate or fee hereunder
shall be conclusive and binding for all purposes, absent manifest error.

Prepayment. Borrower shall have the right to voluntarily prepay the
then-outstanding principal balance of the Loan in whole or in part without
penalty or premium.

Unconditional Payment with Limited Setoff. All payments made by Borrower under
this Note shall be made without setoff or counterclaim, except for the rights of
setoff (i) in favor of Borrower under Article XI of the Purchase Agreement or
(ii) which Borrower may have against Lender or any affiliate of Lender under the
Transition Services Agreement, the Supply Agreement, and the Assignment and
Assumption Agreement (as those terms are defined in the Purchase Agreement) and
for which Borrower has obtained a final, non-appealable judgment from a court of
competent jurisdiction against Lender under the Transition Services Agreement,
the Supply Agreement, or the Assignment and Assumption Agreement, and shall be
free and clear of, and exempt from, and without deduction for or on account of,
any sales, transfer, or excise taxes or assessments of any kind or nature.

Covenants.

3.1. Financial Statements and Notices. Borrower covenants and agrees that until
all Obligations are paid and satisfied in full, unless compliance shall have
been waived in writing by Lender:

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a. Borrower shall furnish to Lender (i) within thirty (30) days after the last
day of each Fiscal Period, a complete income statement for such Fiscal Period,
for Borrower, prepared by Borrower in the ordinary course of Borrower’s
business, (ii) within forty-five (45) days after the last day of each fiscal
quarter, complete quarterly consolidated financial statements of Borrower,
including an income statement and statement of cash flows for such fiscal
quarter, and the related balance sheet as at the end of such fiscal quarter,
fairly presenting the financial condition and results of operations of Borrower
as at the end of, and for such, fiscal quarter, prepared by Borrower in the
ordinary course of Borrower’s business, and (iii) within one hundred twenty
(120) days after the last day of each fiscal year, complete unaudited annual
consolidated financial statements of Borrower, including an income statement and
statement of cash flows for such fiscal year, and the related balance sheet as
at the end of such fiscal year, together with supporting notes to the extent
required by GAAP, fairly presenting the financial condition and results of
operations of Borrower, as of and for the fiscal year ended on such last date,
with all such financial statements prepared in accordance with GAAP;

b. Borrower shall furnish to Lender, within forty-five (45) days after the last
day of each fiscal quarter (but one hundred twenty days after the end of each
fiscal year), a complete and detailed computation of the consolidated EBITDA of
Borrower for the immediately preceding, consecutive thirteen Fiscal Periods (or
from December 26, 2012 through the period of such computation, if shorter than
thirteen Fiscal Periods) (an “EBITDA Calculation”) in the form of Exhibit A
attached hereto;

c. Borrower shall promptly give written notice to Lender of (i) any action,
proceeding or claim of any nature by any person or entity, or investigation by
any governmental agency or officer, with respect to which Borrower has received
written notice, which may be commenced or asserted against Borrower and which
could reasonably be expected materially and adversely to affect the condition,
financial or otherwise, of Borrower, (b) any dispute which may exist between
Borrower and any governmental regulatory body which could reasonably be expected
materially and adversely to affect the normal business operations of Borrower or
Borrower’s assets, or (iii) the occurrence of any Event of Default or any event
any event which, with the passage of time or giving of notice or both, would
give rise to an Event of Default;

d. Within fifteen (15) Business Days from Lender’s receipt of the financial
statements and EBITDA Calculation furnished by Borrower pursuant to Sections
3.1(a)(ii) and 3.1(b), respectively, Borrower shall use commercially reasonable
efforts to attend a telephonic conference call (as scheduled by either Borrower
or Lender) to discuss such financial statements and EBITDA Calculation.

3.2. Required Expenditures. Within the first eighteen (18) months from the date
of this Note, Borrower shall spend, or shall have entered into a firm commitment
to spend, an aggregate amount of at least Ten Million Dollars ($10,000,000),
received or committed from Parent to Borrower in the form of cash contributions
or loans, to fund capital expenditures on Mimi’s Café Restaurants, close Mimi’s
Café Restaurants, revamp or refresh Mimi’s Café Restaurants, or engage in the
marketing of Mimi’s Café Restaurants, all as determined to be necessary or
appropriate in SWH’s sole discretion (the “Required Expenditures”).

--------------------------------------------------------------------------------

3.3. Maintenance of Insurance. Borrower shall at all times maintain, or cause to
be maintained, (a) insurance upon all of the real and personal property of
Borrower and SWH of an insurable nature insured against such risks to the extent
that like properties are customarily insured by other companies engaged in the
same or similar business similarly situated, and (b) adequate insurance with
financially sound and responsible insurance carriers against general liability
and liability on account of damage to persons and properties under all
applicable workmen’s compensation laws, in each case as determined by Borrower
or SWH, as appropriate, in its sole discretion. Upon the reasonable request of
Lender, Borrower shall provide to Lender evidence of such insurance.

3.4. Maintenance of Records. Borrower shall, at all times, keep true, correct,
and complete financial books and records.

3.5. Dividends. Except upon the prior written consent of Lender, Borrower shall
not return any capital to its stockholders, or authorize or make any other
distribution, payment or delivery of property or cash to its stockholders, or
redeem, repurchase or otherwise declare, directly or indirectly, for a
consideration of shares of stock now or hereafter outstanding, or set aside any
funds for any of the foregoing purposes (collectively, “Distributions”), save
and except for Distributions (a) in an amount not to exceed the positive
difference between cash available for distribution and an amount that is
reasonably foreseeable to be due to Lender hereunder in the immediately
following twenty-four (24) month period and (b) to Parent under Section 6.

4. Representations and Warranties. To induce Lender to make the Loan to
Borrower, Borrower hereby represents and warrants to Lender, and its successors
and assigns, as of the date hereof, as follows (which representations and
warranties shall survive the execution and delivery hereof):

4.1. Power and Authority. Borrower is a corporation duly created under the laws
of the State of Delaware and is qualified to do business in the State of Texas.
Borrower has the full power and authority to enter into the transactions
contemplated by this Note.

4.2. No Violation. Neither the execution, delivery or performance of this Note,
nor the consummation of the transactions contemplated hereby or thereby, will
violate or contravene any provision of applicable law, or will conflict or be
inconsistent with any of the terms, covenants and conditions of any agreement,
document or instrument by which such Borrower or its property is bound or to
which it is a party, including its by-laws.

4.3. Consents. Borrower has obtained all consents necessary for the valid
execution, delivery and performance of all of the covenants and obligations set
forth in this Note. No other consent of any other party or entity is necessary
to authorize or empower Borrower to enter into this Note.

4.4. Execution of Note. This Note has been duly executed and delivered by
Borrower and constitutes the legal, valid and binding obligations of Borrower
enforceable in accordance with its terms, except to the extent that the
enforcement thereof may be limited by applicable bankruptcy, insolvency,
reorganization or similar laws affecting the enforcement of creditors’ rights
generally.

--------------------------------------------------------------------------------

5. Events of Default and Remedies.

5.1. Events of Default. The occurrence of any of the following events shall
constitute an event of default hereunder (each, an “Event of Default”):

a. Borrower shall default in the due and punctual payment of any principal or
interest of, or any other amounts due under, this Note, and such default
continues for ten (10) days after Borrower’s receipt of notice that such payment
is past due;

b. Borrower shall default in the due performance, payment or observance by it of
any term, covenant or agreement contained in this Note (other than a monetary
default described in Section 5.1(a) or a breach of Section 5.1(d)), provided
that with respect to any term, covenant or agreement, any such non-monetary
default remains unremedied (to the satisfaction of Lender in its reasonable
discretion) for thirty (30) days after the earlier of the date that Borrower has
received written notice of such default from Lender (which notice shall describe
the default which has occurred) or Borrower has actual knowledge of such
default;

c. Borrower or SWH shall suspend or discontinue all or substantially all of its
business operations;

d. A breach shall have occurred under Section 3.2;

e. Borrower or SWH, or any direct or indirect subsidiary of SWH (other than a
subsidiary formed solely or primarily for the purpose of holding a liquor
permit), shall generally fail to pay its debts as they mature, or shall file a
petition commencing a voluntary case concerning either Borrower under any
chapter of the United States Bankruptcy Code, or any involuntary case shall be
commenced against Borrower under the United States Bankruptcy Code and such
involuntary case shall not have been dismissed within 90 days after such filing;
and

f. Any representation, warranty or statement made by Borrower herein or
otherwise in writing in connection herewith, or in any financial statement,
EBITDA Calculation, certificate or statement signed by any duly authorized
officer or employee of Borrower and furnished pursuant to this Note shall be
materially false, incorrect or incomplete when made and result in a material and
adverse effect on Lender.

5.2. Remedies Upon Default. Should an Event of Default occur and be continuing,
Lender may do one or more of the following:

(a) Acceleration. Declare the entire unpaid balance of this Note immediately due
and payable, whereupon the principal of and all accrued but unpaid interest on
this Note (at the rate set forth herein) shall be forthwith due and payable
without demand, diligence, presentment for payment, notice of nonpayment,
protest, notice of protest, notice of intent to accelerate, notice of
acceleration and all other notices or further actions of any kind, all of which
are hereby expressly waived by Borrower, for itself and for any of its
successors and assigns.

--------------------------------------------------------------------------------

(b) Rights Under Applicable Laws. Exercise any and all rights afforded to Lender
by the laws of any applicable jurisdiction by this Note, by any law or in equity
or otherwise, as Lender shall deem appropriate.

(c) Litigation. File and prosecute suit against Borrower to collect the
Obligations due, and for any other remedy, legal or equitable, to which Lender
may show itself entitled.

(d) Right of Setoff. In addition to any rights now or hereafter granted under
applicable law, including without limitation common law rights of setoff, and
not by way of limitation of any such rights, if an Event of Default has occurred
and is continuing and Lender has obtained a final, non-appealable judgment from
a court of competent jurisdiction against Borrower under this Note, to set off
and to appropriate and to apply any and all indebtedness at any time held or
owing by Lender to or for the credit or the account of Borrower (including,
without limitation, any amounts then owing by Lender to either Borrower under
other contracts) against and on account of the Obligations and liabilities of
Borrower to Lender under the Note, including without limitation all claims of
any nature or description arising out of or connected with the Note,
irrespective of whether or not Lender shall have made any demand hereunder and
although said Obligations, liabilities or claims, or any of them, shall be
contingent or unmatured.

5.3. Expenses. Borrower shall pay to Lender, on demand and as part of the
Obligations, all reasonable costs and expenses, including court costs, legal
expenses and reasonable attorneys’ fees, incurred by Lender in exercising any of
its rights or remedies hereunder or enforcing any of the terms, conditions or
provisions hereof, in any event after the occurrence and during the continuance
of an Event of Default.

5.4. Acceptance. The acceptance by Lender at any time and from time to time of
part payment of the Obligations shall not be deemed to be a waiver of any Event
of Default then existing. No waiver by Lender of any Event of Default shall be
deemed to be a waiver of any other Event of Default then existing or
subsequently occurring.

5.5. Cumulative Rights. All rights available to Lender hereunder shall be
cumulative of and in addition to all of the rights granted to Lender at law, in
equity or otherwise, whether or not the Obligations are then due and payable and
whether or not Lender shall have instituted suit for collection or other action
in connection with this Note. Any or all of such rights and/or remedies may be
exercised successively or concurrently, as Lender may determine in its sole
discretion.

6. Payment Waterfall upon the Sale or Liquidation of Borrower. Except in the
case of a Permitted Equity Transfer, Borrower shall not, and shall not permit
SWH, to sell, transfer or liquidate all or substantially all of the assets of
SWH without complying with the following provisions of this Section 6. Upon any
sale or liquidation (other than a Permitted Equity Transfer) of SWH or all or
substantially all of the assets of SWH or the occurrence of an Event of Default
under Section 5.1(e), this Note shall become immediately due and payable and the
following payments shall be made in the following order [Open issue relating to
piecemeal sale]:

--------------------------------------------------------------------------------

a. if, as of the date of such occurrence, the most recent EBITDA Calculation
delivered to Lender, or required to be delivered to Lender, pursuant to
Section 3.1(b), or the most recent EBITDA Calculation for any thirteen
consecutive Fiscal Periods, shows EBITDA of SWH for such Excess Cash Flow Period
or for such thirteen consecutive Fiscal Periods to be less than $10,000,000,

(1) first, to Parent, the least of (A) the sum of the Available Proceeds and the
Available Cash, (B) the Invested Funds, and (C) $30,000,000;

(2) second, to the extent any Available Proceeds or Available Assets remain
after the payment under clause (1) above, to Lender, the least of (A) the sum of
the remaining Available Proceeds and the remaining Available Assets,
(B) $30,000,000, and (C) the Obligations then outstanding; and

(3) third, to Borrower, to the extent any Available Proceeds or Available Assets
remain after payment in full under clauses (1) and (2) above, such remaining
Available Proceeds and Available Assets; or

b. if, as of the date of such occurrence, the most recent EBITDA Calculation
delivered to Lender, or required to be delivered to Lender, pursuant to
Section 3.1(b), or the most recent EBITDA Calculation for any thirteen
consecutive Fiscal Periods, shows EBITDA of SWH for such Excess Cash Flow Period
or for such thirteen consecutive Fiscal Periods to be equal to or greater than
$10,000,000,

(1) first, to Lender, the least of (A) the sum of the Available Proceeds and the
Available Assets, (B) $30,000,000, and (C) the Obligations then outstanding; and

(2) second, to Borrower, to the extent any Available Proceeds or Available
Assets remain after payment in full under clause (1) above, such remaining
Available Proceeds and Available Assets.

Lender agrees, by its acceptance of this Note, (i) to enter into the
Subordination Agreement, (ii) that it is subject to the Subordination Agreement,
and (iii) that upon the application of the Available Proceeds and Available
Assets as set forth in this Section 6, the Obligations shall be deemed satisfied
regardless of the amount received, if any, by Lender on the Obligations, and
upon the completion of the distribution of the Available Proceeds and the
Available Assets, to deliver this Note to Borrower marked “Cancelled.”

7. Miscellaneous.

7.1. Benefit. This Note shall be binding upon and inure to the benefit of
Lender, Borrower, and their successors and assigns, provided, however, that
Borrower may not transfer or assign all or any of its rights or obligations
hereunder without the prior written consent of Lender, which consent may be
withheld by Lender in its sole discretion.

--------------------------------------------------------------------------------

7.2. Governing Law; Consent to Jurisdiction. All issues and questions concerning
the construction, validity, interpretation and enforceability of this Note, and
all claims and disputes arising hereunder or in connection herewith, whether
purporting to sound in contract or tort, or at law or in equity, shall be
governed by, and construed in accordance with, the laws of the State of
Delaware. Borrower, and by its acceptance of this Note, Lender hereby agree and
consent to the jurisdiction of the United States District Court for the District
of Delaware, and in the absence of such federal jurisdiction, hereby agree and
consent to be subject to the exclusive jurisdiction of the state courts located
in Wilmington, Delaware, and hereby waive the right to assert the lack of
personal or subject matter jurisdiction or improper venue in connection with any
such suit, action or other proceeding. In furtherance of the foregoing, each of
Borrower, and by its acceptance of this Note, Lender (i) waives the defense of
inconvenient forum, (ii) agrees not to commence any suit, action or other
proceeding arising out of this Note other than in any such court, and
(iii) agrees that, to the extent permitted by applicable requirements of law, a
final judgment in any such suit, action or other proceeding shall be conclusive
and may be enforced in other jurisdictions by suit or judgment or in any other
manner provided by law, provided that service of process is effected upon such
party as permitted by applicable law. EACH OF BORROWER, AND BY ITS ACCEPTANCE OF
THIS NOTE, LENDER HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY LITIGATION, ACTION, PROCEEDING, CROSS-CLAIM, OR COUNTERCLAIM IN ANY COURT
(WHETHER BASED ON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF, RELATING TO OR
IN CONNECTION WITH (I) THIS NOTE OR THE VALIDITY, PERFORMANCE, INTERPRETATION,
COLLECTION OR ENFORCEMENT HEREOF, OR (II) THE ACTIONS OF SUCH PARTY IN THE
NEGOTIATION, AUTHORIZATION, EXECUTION, DELIVERY, ADMINISTRATION, PERFORMANCE, OR
ENFORCEMENT HEREOF.

7.3. Entire Agreement. This Note, the Purchase Agreement, the Subordination
Agreement, and all other transaction documents executed by Borrower and Lender
pursuant to the Purchase Agreement at the Closing embody the entire agreement
between the parties with regard to the subject matter hereof, and supersede all
prior or contemporaneous agreements and understandings, oral or written,
relating to the subject matter hereof.

7.4. Invalidity of any Provision. The invalidity of any one or more phrases,
sentences, clauses, paragraphs or sections hereof shall not affect the remaining
portions of this Note or any part thereof, all of which are inserted
conditionally on their being held legally valid. In the event that one or more
of the phrases, sentences, clauses, paragraphs or sections contained herein
should be invalid, or should operate to render this Note invalid, this Note
shall be construed as if such invalid phrase or phrases, sentence or sentences,
clause or clauses, paragraph or paragraphs, or section or sections had not been
inserted therein.

7.5. Notices. All notices, consents, waivers and other communications required
or permitted by this Note shall be in writing and shall be deemed given to a
party when (a) delivered to the appropriate address by hand or by nationally
recognized overnight courier service (costs prepaid); (b) sent by e-mail with
confirmation of transmission by the transmitting equipment, provided, that any
notice of breach or of an Event of Default shall also be sent, and shall be
deemed received in accordance with, clause (a) or (c) hereof; or (c) received or
rejected

--------------------------------------------------------------------------------

by the addressee, if sent by certified mail, return receipt requested, in each
case to the following addresses or e-mail addresses and marked to the attention
of the person (by name or title) designated below (or to such other address,
e-mail address or person as a party may designate by notice to the other
parties):

 

If to Borrower:   

SWH Mimi’s Café, LLC

12201 Merit Drive, Suite 900

Dallas, Texas 75251

Attn: Harry J. Martin, Jr., General Counsel

E-mail: Legalnotices@leduffamerica.com

With a copy to (and which does not constitute notice to Borrower):   

K&L Gates LLP

1717 Main Street, Suite 2800

Dallas, Texas 75201

Attn: Soren Lindstrom

E-mail: soren.lindstrom@klgates.com

If to Lender:   

MCafe Holding, LLC

c/o Bob Evans Farms, Inc.

3776 South High Street

Columbus, Ohio 43207

Attn: Colin M. Daly, Senior Vice President,

General Counsel and Corporate Secretary

Email: colin_daly@bobevans.com

With a copy to (and which does not constitute notice to Lender):   

Bob Evans Farms, Inc.

3776 South High Street

Columbus, Ohio 43207

Attn: Kevin C. O’Neil, Vice President,

Assoc. General Counsel and Asst. Corporate Secretary

Email: kevin_oneil@bobevans.com

  

Vorys, Sater, Seymour and Pease LLP

52 East Gay Street

P.O. Box 1008

Columbus, Ohio 43216-1008

Attn: Michael D. Martz

Email: mdmartz@vorys.com

7.6. Usury Savings Clause. Under no circumstances shall the amounts paid or
agreed to be paid hereunder exceed the highest lawful rate permitted under
applicable usury law (the “Maximum Rate”) and the payment of the Obligations
hereunder are hereby limited accordingly. If under any circumstances whatsoever,
whether by reason of advancement or acceleration of the maturity of the
Obligations or otherwise, the aggregate amount paid hereunder shall include

--------------------------------------------------------------------------------

amounts which by law are deemed interest and which would exceed the Maximum
Rate, Borrower stipulates that the payment and collection of such excess amounts
shall have been and will be deemed to have been the result of a mistake on the
part of Borrower and Lender, and the party receiving such excess payments shall
promptly credit such excess (to the extent only of such interest payments in
excess of the Maximum Rate) against the unpaid principal amount of the
Obligations to which such excess may lawfully be credited, and any portion of
such excess payments not capable of being so credited shall be refunded to
Borrower.

7.7. Waiver. Neither the failure nor delay on the part of Lender in exercising
any right, power or privilege hereunder shall operate as a waiver thereof, nor
shall a single or partial exercise thereof preclude any other further exercise
of any other right, power or privilege, nor shall any course of dealing between
Lender and Borrower operate as a waiver of any right, power or privilege of
Lender.

7.8. Modification, Etc. No modification, amendment or waiver of any provision of
this Note, nor consent to any departure hereunder by Borrower, shall in any
event be effective unless the same shall be in writing and signed by Lender,
with respect to modifications and amendments, by Borrower. Any such waiver or
consent shall only be effective with respect to the specific instance and for
the specific person for which the same is given. No notice or demand made to
Borrower in any event shall entitle Borrower to any other or further notice or
demand in the same, similar or other circumstances unless required by applicable
law.

IN WITNESS WHEREOF, Borrower, intending to be legally bound hereby, has duly
executed this Note as of the day and year first written above.

 

SWH MIMI’S CAFÉ HOLDING COMPANY, INC., a Delaware Corporation By:  

DRAFT

Name:  

 

Title:  

 

--------------------------------------------------------------------------------

EXHIBIT A

 

To:   MCafe Holding, LLC, a Delaware limited liability company (“Lender”)
pursuant to that certain Promissory Note (the “Note”) dated as of February 15,
2013, from SWH Mimi’s Café, LLC, a Delaware limited liability company, as
successor by merger to Mimi’s Holding, Inc. (“Borrower”), and made payable to
Lender.

Ladies and Gentlemen:

This EBITDA Calculation is delivered to Lender pursuant to Section 3.1(b) of the
Note. Unless otherwise stated in this EBITDA Calculation, capitalized terms used
in this EBITDA Calculation are defined in the Note.

Attached hereto as Schedule 1 is a complete and detailed computation of the
consolidated EBITDA of Borrower for the period from                     ,
20    , to                     , 20     (the “Period”).

 

By:  

 

Name:  

 

Title:  

 

Dated:  

 

Schedule:

1 – EBITDA Calculation

 

-2-

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SCHEDULE 1

 

EBITDA CALCULATION

 

For the Period

 

1.       Net Income (calculated with general and administrative expenses
limitations as specified in the Note)

   $                

2.       Plus, in accordance with GAAP and to the extent deducted from Net
Income:

  

a.      Aggregate amount of depreciation and amortization expense

   $                

b.      Aggregate amount of interest expense

   $                

c.      Aggregate amount of income and franchise tax expenses

   $                

d.      All non-cash expenses and non-cash charges classified as non recurring,
including non-cash extraordinary expenses and non-cash impairment expenses
against intangibles

   $                

3.       Subtotal (line 2a + line 2b + line 2c + line 2d) =

   $                

4.       Minus, in accordance with GAAP and to the extent included in Net Income
for the Period:

  

a.      Non-cash credits classified as non recurring including extraordinary
income

   $                

[5. EBITDA from December 26, 2012 through Closing, as calculated by Lender]1

   [$              ] 

6.       Total (line 1 + line 3 - line 4a [+ line 5]1) =

   $                

 

 

1 

Only include when the period from December 26, 2012 through Closing is within
the immediately preceding twelve month period.

 

-3-