Document:

20130627 8K Employment Contracts Exhibit 10.2

		

			 

		

		
			Exhibit 10.2
		

		
			NORTHFIELD BANK
		

		
			EMPLOYMENT AGREEMENT
		

		
			This employment agreement (this “Agreement”) is made effective as of the 1st day of July, 2013 (the “Effective Date”), by and between Northfield Bank (the “Bank”), a federally-chartered savings bank with its principal offices at 1731 Victory Boulevard, Staten Island, New York 10314-3598, and Kenneth J. Doherty(“Executive”). 
		

		
			WITNESSETH:
		

		
			WHEREAS, the Bank is a wholly-owned subsidiary of Northfield Bancorp, Inc., a stock holding company chartered in the state of Delaware (the “Company”); and  
		

		
			WHEREAS, Executive and the Bank entered into an employment agreement (the “Prior Agreement”) dated July 1, 2012, pursuant to which Executive serves as an Executive Vice President and Chief Lending Officer of the Bank; and
		

		
			WHEREAS, the Bank and Executive believe it is in the best interests of the Bank to renew the Prior Agreement, and Executive is willing to continue to serve in the employ of the Bank on a full-time basis as Executive Vice President and Chief Lending Officer on the terms and conditions hereinafter set forth. 
		

		
			NOW, THEREFORE, in consideration of the mutual premises and covenants herein contained, and upon the other terms and conditions hereinafter provided, the parties hereby agree as follows:
		

			
			
				 1.
			

			
			
			POSITION AND RESPONSIBILITIES. 

		
			 
		

		
			During the term of Executive’s employment hereunder, Executive agrees to serve as an Executive Vice President and Chief Lending Officer of the Bank.  Executive shall perform administrative and management services for the Bank which are customarily performed by persons in a similar executive officer capacity. During said period, Executive also agrees to serve as an officer and/or director of any subsidiary of the Bank or the Company, if elected.
		

			
			
				 2.
			

			
			
			TERM OF EMPLOYMENT.

		
			 
		

		
			          (a)   The term of Executive’s employment under this Agreement shall commence as of the Effective Date and shall continue thereafter for a period of three (3) years.  Commencing on the first anniversary date of this Agreement (the “Anniversary Date”) and continuing on each Anniversary Date thereafter, the Board of Directors of the Bank (the “Board”) shall evaluate the services of the Executive and make a determination as to whether the term of this Agreement shall renew for an additional year such that the remaining term of this Agreement is always three (3) years.  The Compensation Committee comprised of independent board members (as defined in applicable listing standards for the trading market on which the Company’s stock is trading) will conduct a performance evaluation and review of Executive annually for purposes of 
		

		 

		

			

		

 

		determining whether to give notice not to extend the term of this Agreement, and the results thereof shall be included in the minutes of the Compensation Committee meeting.  The Compensation Committee will present its findings to the Board and the independent members (as defined above) of the full Board must approve the renewal or nonrenewal.  If a determination is made not to renew this Agreement with the Executive, the Company must provide a Non Renewal Notice at least thirty (30) days and not more than sixty (60) days prior to such Anniversary Date, in which case the term of this Agreement shall become fixed and shall end three (3) years following such Anniversary Date.
		

		
			          (b)   Notwithstanding anything contained in this Agreement to the contrary, either Executive or the Bank may terminate Executive’s employment with the Bank at any time during the term of this Agreement, subject to the terms and conditions of this Agreement.
		

		
			 
		

			
			
				 3.
			

			
			
			COMPENSATION AND REIMBURSEMENT. 

		
			 
		

		
			          (a)   The compensation specified under this Agreement shall constitute consideration paid by the Bank in exchange for duties described in Section 1 of this Agreement.  The Bank shall pay Executive, as compensation, a salary of not less than $280,000 per year (“Base Salary”).  Base Salary shall include any amounts of compensation deferred by Executive under any employee benefit plan or deferred compensation arrangement maintained by the Bank.  Such Base Salary shall be payable bi-weekly or, if different, in accordance with the Bank’s customary payroll practices.  During the term of this Agreement, Executive’s Base Salary shall be reviewed at least annually by the 31st day of each January.  Such review shall be conducted by the Board or by a committee designated by the Board.  The committee or the Board may increase (but not decrease) Executive’s Base Salary at any time.  Any increase in Base Salary shall become the “Base Salary” for purposes of this Agreement.  The Board may engage the services of an independent consultant to determine the appropriate Base Salary.  In addition to the Base Salary provided in this Section 3(a), the Bank shall also provide Executive with all such other benefits as are provided uniformly to full-time employees of the Bank, on the same basis (including cost) that such benefits are provided to other senior officers of the Bank. 
		

		
			          (b)   In addition to the Base Salary provided for in Section 3(a), the Bank will provide Executive with the opportunity to participate in employee benefit plans, arrangements and perquisites substantially equivalent to those in which Executive was participating or otherwise deriving a benefit from immediately prior to the beginning of the term of this Agreement, and any other employee benefit plans, arrangements and perquisites suitable for the Bank’s senior executives adopted by the Bank subsequent to the Effective Date, and the Bank will not, without Executive’s prior written consent, make any changes in such plans, arrangements or perquisites which would adversely affect Executive’s rights or benefits thereunder, without separately providing for an arrangement that ensures Executive receives, or will receive, the economic value that Executive would otherwise lose as a result of such adverse effect, unless such changes apply equally to all other employees or senior officers of the Bank.  Without limiting the generality of the foregoing provisions of this Section 3(b), Executive shall be entitled to participate in or receive benefits under any employee benefit plans, whether tax-qualified or otherwise, including, but not limited to, retirement plans, supplemental retirement plans, deferred compensation plans, pension plans, profit-sharing plans, employee stock ownership plans, stock 
		

		 

		

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		award or stock option plans, health-and-accident plans, medical coverage or any other employee benefit plan or arrangement made available by the Bank in the future to its senior executives and key management employees, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements (including designation by the Board of eligibility to participate, if applicable).  Executive shall also be entitled to incentive compensation and bonuses as provided in any plan or arrangement of the Bank in which Executive is eligible to participate (and he shall be entitled to a pro rata distribution under any incentive compensation or bonus plan as to any year in which a termination of employment occurs, other than Termination for Just Cause).  Nothing paid to Executive under any such plans or arrangements will be deemed to be in lieu of other compensation to which Executive is entitled under this Agreement. 
		

		
			          (c)   In addition to the Base Salary provided for by Section 3(a) and other compensation and benefits provided for by Section 3(b), the Bank shall pay or reimburse Executive for all reasonable expenses incurred by Executive in performing his obligations under this Agreement in accordance with the Bank’s reimbursement policies.  Such reimbursements shall be made promptly by the Bank, and in any event, not later than March 15 of the year immediately following the calendar year in which Executive incurred such expense.
		

		
			          (d)   Executive shall be entitled to paid time off in accordance with the standard policies of the Bank for senior executive officers, but in no event less than thirty (30) days paid time off during each year of employment.  Executive shall receive his Base Salary and other benefits during periods of paid time off.  Executive shall also be entitled to paid legal holidays in accordance with the policies of the Bank.  Executive shall also be entitled to sick leave in accordance with the policies of the Bank, but in no event less than the number of days of sick leave per year to which Executive was entitled at the Effective Date of this Agreement.
		

		
			 
		

			
			
				 4.
			

			
			
			OUTSIDE ACTIVITIES.

		
			 
		

		
			          During the term of his employment hereunder, except for periods of absence occasioned by illness, reasonable vacation periods and reasonable leaves of absence approved by the Board, Executive shall devote substantially all his business time, attention, skill, and efforts to the faithful performance of his duties hereunder.  Executive also may serve as a member of the board of directors of business, trade association, community and charitable organizations subject to the annual approval of the Board; provided that in each case such service shall not materially interfere with the performance of his duties under this Agreement or present any conflict of interest. Executive shall provide to the Board annually a list of all organizations for which Executive serves as a director or in a similar capacity for purposes of obtaining the Board’s approval of Executive’s service on the boards of such organizations. Such service to and participation in outside organizations shall be presumed for these purposes to be for the benefit of the Bank, and the Bank shall reimburse Executive his reasonable expenses associated therewith, except for such items that are tax deductible by the Executive as charitable contributions.  
		

		
			 
		

			
			
				 5.
			

			
			
			PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION. 

		
			 
		

		 

		

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			          (a)   Upon the occurrence of an Event of Termination (as herein defined) during Executive’s term of employment under this Agreement, the provisions of this Section 5 shall apply.  As used in this Agreement, an “Event of Termination” shall mean and include any of the following: 
		

		
			(i)    the termination by the Bank of Executive’s full-time employment hereunder for any reason other than termination governed by Section 6 (Termination for Just Cause) or termination governed by Section 7 (Termination for Disability or Death); or
		

		
			(ii)    Executive’s resignation from the Bank’s employ for any of the following reasons (each of which shall be deemed a “Good Reason”): 
		

			
			
				 (A)
			

			
			
			the failure to elect or reelect or to appoint or reappoint Executive to the positions set forth under Section 1; 

			
			
				 (B)
			

			
			
			a material change in Executive’s functions, duties, or responsibilities with the Bank, which change would cause Executive’s position to become one of lesser responsibility, importance, or scope from the position and attributes thereof described in Section 1, above;  

			
			
				 (C)
			

			
			
			a relocation of Executive’s principal place of employment by more than 30 miles from the corporate office located at 581 Main Street, Woodbridge, New Jersey;

			
			
				 (D)
			

			
			
			a material reduction in the benefits and perquisites to Executive from those being provided as of the Effective Date of this Agreement, other than a reduction that is part of a Bank-wide reduction in pay or benefits;

			
			
				 (E)
			

			
			
			a liquidation or dissolution of the Company or the Bank, other than a liquidation or dissolution that is caused by a reorganization which does not affect the status of Executive; or 

			
			
				 (F)
			

			
			
			a material breach of this Agreement by the Bank. 

		
			Upon the occurrence of any event described in clauses (A), (B), (C), (D), (E) or (F), above, Executive shall have the right to elect to terminate his employment under this Agreement by resignation upon not less than sixty (60) days prior written Notice of Termination, as defined in Section 9(a), given within six (6) full calendar months after the event giving rise to said right to elect.  Thereafter, the Bank shall have thirty (30) days to cure the Good Reason, which period may be waived by the Bank.  If the Bank cures, the Executive’s right to resign and receive a payment shall be eliminated.  Notwithstanding the preceding in the event of a continuing breach of this Agreement by the Bank, Executive, after giving due notice within the prescribed time frame of an initial event 
		

		 

		

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		specified above, shall not waive any of his rights under this Agreement and this Section solely by virtue of the fact that Executive has submitted his resignation, provided Executive has remained in the employment of the Bank and is engaged in good faith discussions to resolve any occurrence of an event described in clauses (A), (B), (C), (D) or (F) above.
		

		
			 
		

		
			(iii)             Executive’s resignation for Good Reason or Executive’s involuntary termination of employment by the Bank on the effective date of, or at any time following, a Change in Control of the Bank or the Company during the term of this Agreement, provided that in the case of Executive’s resignation for Good Reason, the Executive provides a Notice of Termination and follows the procedures set forth in Section 5(a)(ii) above.  For these purposes, a Change in Control of the Bank or the Company shall mean a change in control of a nature that: (i) would be required to be reported in response to Item 5.01 of the current report on Form 8-K, as in effect on the date hereof, pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”); or (ii) without limitation such a Change in Control shall be deemed to have occurred at such time as (a) any “person” (as the term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 25% or more of the combined voting power of Company’s outstanding securities except for any securities purchased by the Bank’s employee stock ownership plan or trust; or (b) individuals who constitute the Board of Directors of the Company on the date hereof (the “Incumbent Board”) cease for any reason to constitute at least a majority thereof, provided that any person becoming a director subsequent to the date hereof whose election was approved by a vote of at least a majority of the directors shall be, for purposes of this clause (b), considered as though he were a member of the Incumbent Board; or (c) a plan of reorganization, merger, consolidation, sale of all or substantially all the assets of the Bank or the Company or similar transaction in which the Bank or Company is not the surviving institution occurs; or (d) a proxy statement is distributed soliciting proxies from stockholders of the Company, by someone other than the current management of the Company, seeking stockholder approval of a plan of reorganization, merger or consolidation of the Company or similar transaction with one or more corporations or financial institutions, and as a result of such proxy solicitation, a plan of reorganization, merger, consolidation or similar transaction involving the Company is approved by the requisite vote of the Company’s stockholders; or (e) a tender offer is made for 25% or more of the voting securities of the Company and the shareholders owning beneficially or of record 25% or more of the outstanding securities of the Company have tendered or offered to sell their shares pursuant to such tender offer and such tendered shares have been accepted by the tender offeror. 
		

		 

		

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			          (b)     Upon the occurrence of an Event of Termination, on the Date of Termination, as defined in Section 9(b), the Bank shall be obligated to pay Executive, or, in the event of his subsequent death, his beneficiary or beneficiaries, or his estate, as the case may be, as severance pay or liquidated damages, or both, an amount equal to the sum of: (i) his earned but unpaid salary as of the date of his termination of employment with the Bank; (ii) the benefits, if any, to which he is entitled as a former employee under the employee benefit plans and programs and compensation plans and programs maintained for the benefit of the Bank’s or Company’s officers and employees; (iii) the remaining payments that Executive would have earned, in accordance with Sections 3(a) and 3(b), if he had continued his employment with the Bank for a thirty-six (36) month period following his termination of employment, and had earned a bonus and/or incentive award in each year equal in amount to the average bonus and/or incentive award earned by him over the three calendar years preceding the year in which the termination occurs in the case of a termination pursuant to Section 5(a)(i) or 5(a)(ii), or the highest annual bonus and/or incentive award earned by him in any of the three calendar years preceding the year in which the termination occurs in the case of a termination pursuant to Section 5(a)(iii); and (iv) the annual contributions or payments that would have been made on Executive’s behalf to any employee benefit plans of the Bank or the Company as if Executive had continued his employment with the Bank for a thirty-six (36) month period following his termination of employment, based on contributions or payments made (on an annualized basis) at the Date of Termination.  Any payments hereunder shall be made in a lump sum within thirty (30) days after the Date of Termination, or in the event Executive is a Specified Employee (within the meaning of Treasury Regulations §1.409A-1(i)), and to the extent necessary to avoid penalties under Code Section 409A, no payment shall be made to Executive prior to the first day of the seventh month following Executive’s Date of Termination.  Such payments shall not be reduced in the event Executive obtains other employment following termination of employment.
		

		
			          (c)   Upon the occurrence of an Event of Termination, the Bank will cause to be continued life insurance and non-taxable, medical and dental and disability coverage substantially identical to the coverage maintained by the Bank for Executive and his family prior to Executive’s termination.  Such coverage shall continue at the Bank’s expense for a period of thirty-six (36) months from the Date of Termination.    If the Bank cannot provide one or more of the benefits set forth in this paragraph because Executive is no longer an employee, applicable rules and regulations prohibit such benefits or the payment of such benefits in the manner contemplated, would subject the Bank or Executive to penalties, then the Bank shall pay the Executive a cash lump sum payment reasonably estimated to be equal to the value of such benefits.  Such cash lump sum payment shall be made in a lump sum within thirty (30) days after the Date of Termination (or if later, the date on which it is determined that providing such benefits would subject the Bank or Executive to penalties), or in the event Executive is a Specified Employee (with the meaning of Treasury Regulation Section 1.409A-1(i)), and to the extent necessary to avoid penalties under Code Section 409A, no payment shall be made to Executive prior to the first day of the seventh month following Executive's Date of Termination.
		

		
			          (d)   Notwithstanding anything herein to the contrary, in no event shall the aggregate payments or benefits to be made or afforded to Executive under this Agreement, either as a stand-alone benefit or when aggregated with other payments to, or for the benefit of Executive, constitute an “excess parachute payment” under Code Section 280G, or any successor thereto, and in order to avoid such a result, Executive’s benefits hereunder shall be reduced, if necessary, 
		

		 

		

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		to an amount, the value of which is one dollar ($1.00) less than an amount equal to three (3) times Executive’s “base amount,” as determined in accordance with Code Section 280G.  The allocation of the reduction required hereby shall be determined by Executive, provided, however, that if it is determined that such election by Executive shall be in violation of Code Section 409A, the allocation of the required reduction shall be pro-rata.
		

		
			 
		

		
			         (e)   For purposes of Section 5, an “Event of Termination” as used herein shall mean “Separation from Service” as defined in Code Section 409A and the Treasury Regulations promulgated thereunder, provided, however, that the Bank and Executive reasonably anticipate that the level of bona fide services Executive would perform after termination would permanently decrease to a level that is less than 50% of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period.  
		

		
			 
		

			
			
				 6.
			

			
			
			TERMINATION FOR JUST CAUSE. 

		
			 
		

		
			          (a)   The term “Termination for Just Cause” shall mean termination because of Executive’s personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, material breach of the Bank’s Code of Ethics, material violation of the Sarbanes-Oxley requirements for officers of public companies that in the reasonable opinion of the Chief Executive Officer of the Bank or the Board will likely cause substantial financial harm or substantial injury to the reputation of the Bank, willfully engaging in actions that in the reasonable opinion of the Chief Executive Officer of the Bank or the Board will likely cause substantial financial harm or substantial injury to the business reputation of the Bank, intentional failure to perform stated duties, willful violation of any law, rule or regulation (other than routine traffic violations or similar offenses) or final cease-and-desist order, or material breach of any provision of the contract. 
		

		
			          (b)   Notwithstanding Section 6(a), the Bank may not terminate Executive for Just Cause unless and until there shall have been delivered to him a Notice of Termination which shall include a copy of a resolution duly adopted by the affirmative vote of not less than a majority of the entire membership of the Board at a meeting of the Board called and held for that purpose, finding that in the good faith opinion of the Board, Executive was guilty of conduct justifying Termination for Just Cause and specifying the particulars thereof in detail.  Executive shall not have the right to receive compensation or other benefits for any period after Termination for Just Cause.  During the period beginning on the date of the Notice of Termination for Just Cause pursuant to this Section 6(b) through the Date of Termination, any unvested stock options and related limited rights granted to Executive under any stock option plan shall not be exercisable nor shall any unvested awards granted to Executive under any stock benefit plan of the Bank, the Company or any subsidiary or affiliate thereof, vest.  At the Date of Termination, any such unvested stock options and related limited rights and any such unvested awards shall become null and void and shall not be exercisable by or delivered to Executive at any time subsequent to such Termination for Just Cause.  In the Event of Executive’s Termination for Just Cause, Executive shall resign as a director of the Company and the Bank, and as a director and/or officer of any subsidiary or affiliate of the Company and/or the Bank.
		

		
			 
		

		 

		

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				 7.
			

			
			
			TERMINATION FOR DISABILITY OR DEATH.

		
			 
		

		
			          (a)   The Bank or Executive may terminate Executive’s employment after having established Executive’s Disability.  For purposes of this Agreement, “Disability” shall be deemed to have occurred if: (i) Executive is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death, or last for a continuous period of not less than 12 months; (ii) by reason of any medically determinable physical or mental impairment that can be expected to result in death, or last for a continuous period of not less than 12 months, Executive is receiving income replacement benefits for a period of not less than three months under an accident and health plan covering employees of the Bank; or (iii) Executive is determined to be totally disabled by the Social Security Administration.  
		

		
			          (b)   In the event of such Disability, Executive’s obligation to perform services under this Agreement will terminate.  In the event of such termination, Executive shall receive the benefits provided under any disability program sponsored by the Company or the Bank.  To the extent such benefits are less than Executive’s Base Salary, as defined in Section 3(a) on the effective Date of Termination and less than sixty-six and two-thirds percent (66 2/3%) of Executive’s Base Salary after the first year following termination, Executive shall  receive as a supplement to such disability benefit the difference between the benefits provided under any disability program sponsored by the Company or the Bank and (x) his Base Salary, as defined in Section 3(a), at the rate in effect on the Date of Termination for a period of one (1) year following the Date of Termination by reason of Disability, and (y) sixty-six and two-thirds percent (66 2/3%) of Executive’s Base Salary after the first year following termination through the earliest to occur of the date of Executive’s death, recovery from such Disability, or the date Executive attains age 65.  In calculating the payments due Executive under this Section 7(b), if the disability insurance payments are excludable from Executive’s income for federal income tax purposes, such amounts shall be tax adjusted, assuming a combined federal, state and city tax rate of 38%, for purposes of determining the reduction in the payments due under this Agreement to reflect the tax-free nature of the disability insurance payment – by way of illustration, a $100 tax-free disability insurance payment shall reduce the payment due under this Agreement by $161.30).  In addition, in the event of termination due to Executive’s Disability, the Bank will continue to provide to Executive and his dependents for a period of one (1) year, the non-taxable medical, dental and other health benefits that were provided by the Bank to Executive and Executive’s family prior to the occurrence of Executive’s Disability, on the same terms (including cost to Executive) that were being provided to Executive immediately prior to the termination (except to the extent such benefits are changed in their application to all continuing employees of the Bank).
		

		
			          (c)   In the event of Executive’s death during the term of this Agreement, his estate, legal representatives or named beneficiary or beneficiaries (as directed by Executive in writing) shall be paid Executive’s Base Salary, as defined in Section 3(a), at the rate in effect at the time of Executive’s death for a period of one (1) year from the date of Executive’s death, and the Bank will continue to provide Executive’s family the same non-taxable medical, dental, and other health benefits that were provided by the Bank to Executive’s family immediately prior to Executive’s death, on the same terms, including cost, as if Executive were actively employed by the Bank, except to the extent the terms (including cost) of such benefits are changed in their 
		

		 

		

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		application to all continuing employees of the Bank, such coverage to continue  for a period of one (1) year after the date of Executive’s death.
		

		
			          (d)   If the Bank cannot provide one or more of the non-taxable medical, dental or other health benefits set forth in Subsection (b) or (c) above because Executive is no longer an employee, applicable rules and regulations prohibit such benefits or the payment of such benefits in the manner contemplated, would subject the Bank or Executive to penalties, then the Bank shall pay the Executive a cash lump sum payment reasonably estimated to be equal to the value of such benefits, in the same manner as set forth in Section 5(c) above.
		

		
			 
		

			
			
				 8.
			

			
			
			TERMINATION UPON RETIREMENT.

		
			 
		

		
			Termination of Executive’s employment based on “Retirement” shall mean termination of Executive’s employment on or after age 65 and in accordance with a retirement policy established by the Board with Executive’s consent with respect to him.  Upon termination of Executive based on Retirement, no amounts or benefits shall be due Executive under this Agreement, and Executive shall be entitled to all benefits under any retirement plan of the Bank and other plans to which Executive is a party.
		

		
			 
		

			
			
				 9.
			

			
			
			NOTICE. 

		
			 
		

		
			          (a)   Any notice required under this Agreement shall be in writing and hand-delivered to the other party.  Any termination by the Bank or by Executive shall be communicated by Notice of Termination to the other party hereto.  For purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of Executive’s employment under the provision so indicated.
		

		
			          (b)   “Date of Termination” shall mean (A) if Executive’s employment is terminated for Disability, thirty (30) days after a Notice of Termination is given (provided that he shall not have returned to the performance of his duties on a full-time basis during such thirty (30) day period), and (B) if his employment is terminated for any other reason, the date specified in the Notice of Termination.
		

		
			          (c)   If the party receiving a Notice of Termination desires to dispute or contest the basis or reasons for termination, the party receiving the Notice of Termination must notify the other party within thirty (30) days after receiving the Notice of Termination that such a dispute exists, and shall pursue the resolution of such dispute in good faith and with reasonable diligence pursuant to Section 20 of this Agreement.  During the pendency of any such dispute, neither the Company nor the Bank shall be obligated to pay Executive compensation or other payments beyond the Date of Termination.
		

		
			 
		

			
			
				 10.
			

			
			
			POST-TERMINATION OBLIGATIONS. 

		
			 
		

		
			Executive shall, upon reasonable notice, furnish such information and assistance honestly and in good faith to the Bank or the Company as may reasonably be required by the Bank or the 
		

		 

		

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		Company in connection with any litigation in which it or any of its subsidiaries or affiliates is, or may become, a party.  All payments and benefits to Executive under this Agreement shall be subject to Executive’s compliance with this Section 10 for one (1) full year after the earlier of the expiration of this Agreement or termination of Executive’s employment with the Bank.  
		

		
			 
		

			
			
				 11.
			

			
			
			NON-COMPETITION AND NON-DISCLOSURE. 

		
			 
		

		
			          (a)   As a material inducement for the Bank to enter into this Agreement, upon any termination of Executive’s employment hereunder pursuant to the terms of this Agreement, other than a termination of Executive’s employment under Sections 5(a)(iii) or 6 of this Agreement, Executive agrees not to compete with the Bank for a period of two (2) years following such termination in any city, town or county in which Executive’s normal business office is located and the Bank has an office or has filed an application for regulatory approval to establish an office, determined as of the effective date of such termination, except as agreed to pursuant to a resolution duly adopted by the Board.  Executive agrees that during such period and within said cities, towns and counties, Executive shall not work for or advise, consult or otherwise serve with, directly or indirectly, any entity whose business materially competes with the depository, lending or other business activities of the Bank.  Executive further agrees that for a period of two (2) years following any termination of employment, he shall not directly or indirectly, solicit, hire, or entice any of the following to cease, terminate, or reduce any relationship with the Bank or the Company or to divert any business from the Bank or the Company: (i) any person who was an employee of the Bank or the Company during the term of this Agreement; or (ii) any customer or client of the Bank or the Company.  Further, Executive will not directly or indirectly disclose the names, addresses, telephone numbers, compensation, or other arrangements between the Bank or the Company and any individual or entity described in Sections (i) and (ii) of this Section 11(a).  The parties hereto, recognizing that irreparable injury will result to the Bank, its business and property in the event of Executive’s breach of this Subsection agree that in the event of any such breach by Executive, the Bank will be entitled, in addition to any other remedies and damages available, to an injunction to restrain the violation hereof by Executive, Executive’s partners, agents, servants, employees and all persons acting for or under the direction of Executive.  Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to the Bank for such breach or threatened breach, including the recovery of damages from Executive. 
		

		
			          (b)   Executive recognizes and acknowledges that the knowledge of the business activities, plans for business activities, and all other proprietary information of the Bank or the Company as it may exist from time to time, are valuable, special and unique assets of the business of the Bank or the Company.  Executive will not, during or after the term of his employment, disclose any knowledge of the past, present, planned or considered business activities or any other similar proprietary information of the Bank or the Company to any person, firm, corporation, or other entity for any reason or purpose whatsoever unless expressly authorized by the Board of Directors or required by law.  Notwithstanding the foregoing, Executive may disclose any knowledge of banking, financial and/or economic principles, concepts or ideas which are not solely and exclusively derived from the business plans and activities of the Bank or the Company.  Further, Executive may disclose information regarding the business activities of the Bank or the Company to any bank regulator having regulatory jurisdiction over the activities of the Bank or the Company, pursuant to a formal regulatory request.  In the event of a breach, or 
		

		 

		

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		threatened breach, by Executive of the provisions of this Section, the Bank or the Company will be entitled to an injunction restraining Executive from disclosing, in whole or in part, the knowledge of the past, present, planned or considered business activities of the Bank or the Company, or any other similar proprietary information, or from rendering any services to any person, firm, corporation, or other entity to whom such knowledge, in whole or in part, has been disclosed or is threatened to be disclosed.  Nothing herein will be construed as prohibiting the Bank from pursuing any other remedies available to the Bank for such breach or threatened breach, including the recovery of damages from Executive. 
		

		
			 
		

			
			
				 12.
			

			
			
			SOURCE OF PAYMENTS. 

		
			 
		

		
			All payments provided in this Agreement shall be timely paid in cash or check from the general funds of the Bank.  The Company, however, unconditionally guarantees payment and provision of all amounts and benefits due hereunder to Executive and, if such amounts and benefits due from the Bank are not timely paid or provided by the Bank, such amounts and benefits shall be paid or provided by the Company. 
		

		
			 
		

			
			
				 13.
			

			
			
			EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS. 

		
			 
		

		
			This Agreement contains the entire understanding between the parties hereto and supersedes any prior employment agreement between the Bank or any predecessor of the Bank and Executive, including the Prior Agreement, except that this Agreement shall not affect or operate to reduce any benefit, compensation, tax indemnification or other provision inuring to the benefit of Executive under any agreement between Executive, the Bank or the Company.  No provision of this Agreement shall be interpreted to mean that Executive is subject to receiving fewer benefits than those available to him without reference to this Agreement. 
		

		
			 
		

			
			
				 14.
			

			
			
			NO ATTACHMENT.

		
			 
		

		
			          (a)   Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect. 
		

		
			          (b)   This Agreement shall be binding upon, and inure to the benefit of, Executive and the Bank and their respective successors and assigns.
		

		
			 
		

			
			
				 15.
			

			
			
			MODIFICATION AND WAIVER. 

		
			 
		

		
			          (a)   This Agreement may not be modified or amended except by an instrument in writing signed by the parties hereto. 
		

		
			          (b)   No term or condition of this Agreement shall be deemed to have been waived, nor shall there be any estoppel against the enforcement of any provision of this Agreement, except by written instrument of the party charged with such waiver or estoppel.  No such written waiver shall be deemed a continuing waiver unless specifically stated therein, and each such waiver 
		

		 

		

			11

		

 

		shall operate only as to the specific term or condition waived and shall not constitute a waiver of such term or condition for the future as to any act other than that specifically waived. 
		

		
			 
		

			
			
				 16.
			

			
			
			REQUIRED PROVISIONS. 

		
			 
		

		
			          (a)   The Bank's Board may terminate Executive's employment at any time and for any reason, but any termination by the Bank's Board, other than Termination for Just Cause, shall not prejudice Executive's right to compensation or other benefits under this Agreement.  
		

		
			 
		

		
			          (b)   If Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the Bank's affairs by a notice served under Section 8(e)(3) (12 U.S.C. 1818(e)(3)) or 8(g) (12 U.S.C. 1818(g)) of the Federal Deposit Insurance Act, the Bank's obligations under this Agreement shall be suspended as of the date of service, unless stayed by appropriate proceedings.  If the charges in the notice are dismissed, the Bank may in its discretion (i) pay Executive all or part of the compensation withheld while its contract obligations were suspended and (ii) reinstate (in whole or in part) any of the obligations which were suspended.
		

		
			 
		

		
			          (c)   If Executive is removed and/or permanently prohibited from participating in the conduct of the Bank's affairs by an order issued under Section 8(e) (12 U.S.C. 1818(e)) or 8(g) (12 U.S.C.1818(g)) of the Federal Deposit Insurance Act, all obligations of the Bank under this Agreement shall terminate as of the effective date of the order, but vested rights of the contracting parties shall not be affected.
		

		
			 
		

		
			          (d)   If the Bank is in default as defined in Section 3(x) (12 U.S.C. 1813(x)(1)) of the Federal Deposit Insurance Act, all obligations of the Bank under this Agreement shall terminate as of the date of default, but this paragraph shall not affect any vested rights of the contracting parties.
		

		
			 
		

		
			          (e)   All obligations of the Bank under this Agreement may be terminated, except to the extent determined that continuation of the contract is necessary for the continued operation of the institution, by the Federal Deposit Insurance Corporation if it enters into an agreement to provide assistance to or on behalf of the Bank.  Any rights of the parties that have already vested, however, shall not be affected by such action.
		

		
			 
		

		
			          (f)   Any payments made to Executive pursuant to this Agreement, or otherwise, are subject to and conditioned upon compliance with 12 U.S.C. Section 1828(k) and any rules and regulations promulgated thereunder, including 12 C.F.R. Part 359, and to the extent applicable, 12 C.F.R. §163.39.
		

		
			 
		

			
			
				 17.
			

			
			
			SEVERABILITY.

		
			 
		

		
			If, for any reason, any provision of this Agreement, or any part of any provision, is held invalid, such invalidity shall not affect any other provisions of this Agreement or any part of such provision not held so invalid, and each such other provision and part thereof shall to the full extent consistent with law continue in full force and effect. 
		

		

		

		 

		

			12

		

 

		 
		

			
			
				 18.
			

			
			
			HEADINGS FOR REFERENCE ONLY.

		
			 
		

		
			The headings of sections and paragraphs herein are included solely for convenience of reference and shall not control the meaning or interpretation of any of the provisions of this Agreement. 
		

		
			 
		

			
			
				 19.
			

			
			
			GOVERNING LAW.

		
			 
		

		
			This Agreement shall be governed by the laws of the State of New York, without regard to its conflict of law principles, unless superseded by federal law or otherwise specified herein.
		

		
			 
		

			
			
				 20.
			

			
			
			ARBITRATION.

		
			 
		

		
			Any dispute or controversy arising under or in connection with this Agreement shall be settled exclusively by binding arbitration, as an alternative to civil litigation and without any trial by jury to resolve such claims, conducted by a single arbitrator selected by mutual agreement of Executive and the Bank, sitting in a location selected by Executive within fifty (50) miles from the main office of the Bank, in accordance with the rules of the American Arbitration Association’s National Rules for the Resolution of Employment Disputes (“National Rules”) then in effect.  Judgment may be entered on the arbitrator’s award in any court having jurisdiction. 
		

		
			 
		

			
			
				 21.
			

			
			
			PAYMENT OF COSTS AND LEGAL FEES AND REINSTATEMENT OF BENEFITS. 

		
			 
		

		
			In the event any dispute or controversy arising under or in connection with Executive’s termination is resolved in favor of Executive, whether by judgment, arbitration or settlement, Executive shall be entitled to the payment of: (1) all legal fees incurred by Executive in resolving such dispute or controversy; (2) any back-pay, including salary, bonuses and any other cash compensation, fringe benefits and any compensation and benefits due Executive under this Agreement; and (3) any other compensation otherwise due Executive as a result of a breach of this Agreement by the Bank. Any payments pursuant to this Section 21 shall occur no later than two and one-half months after the dispute is settled or resolved in Executive’s favor.  
		

		
			 
		

			
			
				 22.
			

			
			
			INDEMNIFICATION. 

		
			 
		

		
			          (a)   The Bank and the Company shall provide Executive (including his heirs, executors and administrators) with coverage under a standard directors’ and officers’ liability insurance policy at its expense.  The Bank shall indemnify Executive (and his heirs, executors and administrators) to the fullest extent permitted under Office of the Comptroller of the Currency (OCC) regulations, or its successors, against all expenses and liabilities reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his having been a director or officer of the Bank (whether or not he continues to be a director or officer at the time of incurring such expenses or liabilities), such expenses and liabilities to include, but not be limited to, advancement of legal fees and expenses, 
		

		 

		

			13

		

 

		judgments, court costs and attorneys’ fees and the cost of reasonable settlements, provided, however, the Bank or Company shall not be required to indemnify or reimburse Executive for legal expenses or liabilities incurred in connection with an action, suit or proceeding arising from any illegal or fraudulent act committed by Executive.     Any such indemnification shall be made consistent with  OCC regulations, or its successors, and Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. §1828(k), and the regulations issued thereunder in 12 C.F.R. Part 359.
		

		
			          (b)   Notwithstanding the foregoing, no indemnification shall be made unless the Bank or Company gives the OCC, or its successors, at least sixty (60) days’ notice of its intention to make such indemnification.  Such notice shall state the facts on which the action arose, the terms of any settlement, and any disposition of the action by a court.  Such notice, a copy thereof, and a certified copy of the resolution containing the required determination by the Board of the Bank or Company, and shall be sent to the regional director of the OCC, or its successors, who shall promptly acknowledge receipt thereof.  The notice period shall run from the date of such receipt.  No such indemnification shall be made if the OCC, or its successors, advises the Bank or Company in writing within such notice period, of its objection thereto. 
		

		
			 
		

			
			
				 23.
			

			
			
			SUCCESSOR TO THE BANK. 

		
			 
		

		
			The Bank shall require any successor or assignee, whether direct or indirect, by purchase, merger, consolidation or otherwise, to all or substantially all the business or assets of the Bank, expressly and unconditionally to assume and agree to perform the Bank’s obligations under this Agreement, in the same manner and to the same extent that the Bank would be required to perform if no such succession or assignment had taken place. 
		

		
			 
		

			
			
				 24.
			

			
			
			NON WAIVER.

		
			 
		

		
			The failure of one party to insist upon or enforce strict performance by the others of any provision of this Agreement or to exercise any right, remedy or provision of this Agreement will not be interpreted or construed as a waiver or relinquishment to any extent of such party’s right to enforce or rely upon same in that or any other instance.
		

		

		

		 

		

			14

		

 

		IN WITNESS WHEREOF the Bank and Executive have signed (or caused to be signed) this Agreement on the Effective Date.
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						Attest:

					
					
						Northfield Bank

				
	
					
						 

					
					
						 

				
	
					
						/s/ M. Eileen Bergin

					
					
						By:   /s/ John W. Alexander

				
	
					
						Secretary

					
					
						Title: John W. Alexander, Chairman & CEO

				

		
			 
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						Attest:

					
					
						Executive

				
	
					
						 

					
					
						 

				
	
					
						/s/ M. Eileen Bergin

					
					
						            /s/ Kenneth J. Doherty

				
	
					
						Secretary

					
					
						Kenneth J. Doherty, Executive Vice President and Chief Lending Officer

				

		
			 
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						 

					
					
						Northfield Bancorp, Inc

				
	
					
						 

					
					
						(The Company is executing this Agreement only for

				
	
					
						 

					
					
						purposes of acknowledging the obligations of the

				
	
					
						 

					
					
						Company hereunder.)

				

		
			 
		

		
			 
		

			
					
						 

					
					
						 

				
	
					
						Attest:

					
					
						 

				
	
					
						 

					
					
						 

				
	
					
						/s/ M. Eileen Bergin

					
					
						By:   /s/ John W. Alexander

				
	
					
						Secretary

					
					
						Title: John W. Alexander, Chairman & CEO

				

		
			 
		

		 

		

			15ex101to8k07428_07012013.htm

Exhibit 10.1

 

STOCK PURCHASE AGREEMENT

dated July 1, 2013

between

BIGLARI HOLDINGS INC.

and

SARDAR BIGLARI

 

  

  

  

 

Table of Contents

 

	  	
Page

	  	  
	  	  
	
ARTICLE I SALE OF STOCK

	
2

	  	  
	
Section 1.1

	
Sale of Shares

	
2

	
Section 1.2

	
Purchase Price

	
2

	
Section 1.3

	
Tax Elections

	
2

	  	  	  
	
ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER

	
2

	  	  
	
Section 2.1

	
Organization, Existence and Good Standing

	
2

	
Section 2.2

	
Capitalization and Ownership of Shares

	
3

	
Section 2.3

	
Authorization

	
3

	
Section 2.4

	
Approvals and Consents; No Breach

	
3

	
Section 2.5

	
Financial Statements

	
4

	
Section 2.6

	
Liabilities

	
4

	
Section 2.7

	
Absence of Certain Changes

	
5

	
Section 2.8

	
Taxes and Tax Returns

	
5

	
Section 2.9

	
Permits

	
6

	
Section 2.10

	
Legal Proceedings, Claims, Investigations

	
6

	
Section 2.11

	
Material Contracts

	
6

	
Section 2.12

	
Employee Benefit Plans

	
7

	
Section 2.13

	
Title to Property

	
8

	
Section 2.14

	
Intellectual Property

	
8

	
Section 2.15

	
Insurance

	
8

	
Section 2.16

	
Environmental Matters

	
8

	
Section 2.17

	
Illegal Payments

	
8

	
Section 2.18

	
Brokers

	
8

	  	  	  
	
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER

	
9

	  	  
	
Section 3.1

	
Authorization

	
9

	
Section 3.2

	
Approvals and Consents; No Breach

	
9

	
Section 3.3

	
Litigation

	
9

	
Section 3.4

	
Brokers

	
9

	
Section 3.5

	
Investment Intent

	
9

	
Section 3.6

	
No Knowledge of Inaccuracies

	
9

	
ARTICLE IV INDEMNIFICATION

	
10

	  	  
	
Section 4.1

	
Survival

	
10

	
Section 4.2

	
Indemnification.

	
10

	
Section 4.3

	
Indemnification Procedures

	
11

	
Section 4.4

	
Subrogation

	
12

	
Section 4.5

	
Exclusive Remedy

	
12

	
Section 4.6

	
Other Limitations

	
12

 

  

i

  

 

Table of Contents

(continued)

 

	  	  	  
	
ARTICLE V GENERAL PROVISIONS

	
13

	  	  
	
Section 5.1

	
Entire Agreement

	
13

	
Section 5.2

	
Waiver

	
13

	
Section 5.3

	
Governing Law and Arbitration

	
13

	
Section 5.4

	
Binding Effect; Assignment

	
13

	
Section 5.5

	
Expenses

	
13

	
Section 5.6

	
Headings

	
13

	
Section 5.7

	
Counterparts.

	
13

	
Section 5.8

	
Notice

	
13

	  	  	  

EXHIBITS

 

Exhibit A                                Defined Terms

 

  

ii

  

 

STOCK PURCHASE AGREEMENT

 

STOCK PURCHASE AGREEMENT (the “Agreement”), dated this 1st day of July, 2013, by and between Biglari Holdings Inc., an Indiana corporation (“Seller”), and Sardar Biglari (“Purchaser”).

 

WITNESSETH:

 

WHEREAS, on April 30, 2010, Seller purchased from Purchaser 1,000 shares of common stock, no par value (the “Shares”), of Biglari Capital Corp., a Texas corporation (“Biglari Capital”), for a purchase price equal to (i) $1.00 plus (ii) the Adjusted Capital (as such term is defined in the Amended and Restated Agreement of Limited Partnership, dated as of July 1, 2002, of Lion Fund (the “Partnership Agreement”)) balance of Biglari Capital, in its capacity as general partner of Lion Fund (as defined below), as of April 30, 2010, plus (iii) the total Incentive Reallocation (as defined in, and calculated in accordance with Section 5.02 of, the Partnership Agreement) for the period from January 1, 2010 through the close of business on the April 30, 2010;

 

WHEREAS, since such date, Seller has been, and currently is, the sole shareholder of Biglari Capital;

 

WHEREAS, Biglari Capital is the general partner of The Lion Fund, L.P., a Delaware limited partnership (“Lion Fund” and together with Biglari Capital, the “Companies”);

 

WHEREAS, Seller now desires to sell to Purchaser, and Purchaser now desires to purchase from Seller, the Shares, all upon the terms and subject to the conditions set forth in this Agreement;

 

WHEREAS, on June 1, 2013 (the “Distribution Date”), Biglari Capital distributed to Seller substantially all of its partnership interests in Lion Fund (including, without limitation, its Adjusted Capital balance in its capacity as general partner of Lion Fund, as of the close of business on the day prior to the Distribution Date) and retained solely a $100,000 general partner interest in Lion Fund; and

 

WHEREAS, the Governance, Compensation and Nominating Committee of Seller, which is comprised solely of all of the independent directors of Seller, has determined that this Agreement and the transactions contemplated hereby are advisable and in the best interests of Seller and its shareholders and has unanimously approved this Agreement and such transactions.

 

NOW, THEREFORE, in consideration of the premises and of the respective representations, warranties, and agreements contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:

 

  

  

  

 

ARTICLE I

 

SALE OF STOCK

 

Section 1.1            Sale of Shares.  Upon the terms and conditions hereinafter set forth, Seller hereby sells, and Purchaser hereby purchases, the Shares.  Seller is delivering to Purchaser a certificate or certificates representing the Shares, duly endorsed in blank for transfer or accompanied by a separate stock power duly executed in blank for transfer.  Seller shall execute and deliver any such other certificates, instruments or documents, and to do and perform such other and further acts as shall be deemed necessary or desirable in order to effect the transfer of the Shares pursuant to this Agreement.

 

Section 1.2            Purchase Price.  The purchase price for the Shares is $1,700,000.  The purchase price is being paid in cash concurrently with the execution and delivery of this Agreement.

 

Section 1.3            Tax Elections.  At the request of Purchaser, the parties shall make, or cause to be made, an election under Section 338(h)(10) and/or Section 336(e) of the Code (and any corresponding election under state, local, and foreign tax law) with respect to the transactions contemplated hereby and shall, in the event any such election is made and to the extent required, mutually determine the allocation of the purchase price paid pursuant to Section 1.2 to and among Biglari Capital’s and the Lion Fund’s assets.  In the event of any such election, no party hereto shall file any return or take a position with any taxing authority or in connection with any tax-related litigation that is inconsistent with this Section 1.3, unless required to do so pursuant to a determination within the meaning of Section 1313(a) of the Code.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller represents and warrants to Purchaser as follows:

 

Section 2.1            Organization, Existence and Good Standing.

 

(a)           Biglari Capital is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Texas.  Seller has heretofore provided Purchaser with true and complete copies of Biglari Capital’s Articles of Incorporation (certified by the Secretary of State of the State of Texas) and By-laws, each as amended through the date hereof.  Biglari Capital is not in default under or in violation of any provisions of its Articles of Incorporation or By-laws.  Biglari Capital has all corporate power and authority to own, operate and lease its properties and to carry on its business as the same is now being conducted.  Biglari Capital is duly qualified or licensed to do business and is in good standing as a foreign corporation in those jurisdictions in which the conduct of its business or the ownership or leasing of its properties requires it to be so qualified or licensed, except for such jurisdictions where the failure to be so qualified or licensed would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Biglari Capital.

 

  

2

  

 

(b)           Lion Fund is a limited partnership duly formed, validly existing and in good standing under the laws of the State of Delaware.  Seller has heretofore provided Purchaser with true and complete copies of Lion Fund’s Certificate of Limited Partnership (certified by the Secretary of State of the State of Delaware) and Partnership Agreement as in effect on the date hereof.  Lion Fund is not in default under or in violation of any provisions of its Certificate of Limited Partnership or Partnership Agreement.  Lion Fund has all partnership power and authority to own, operate and lease its properties and to carry on its business as the same is now being conducted.  Lion Fund is duly qualified or licensed to do business and is in good standing as a foreign limited partnership in those jurisdictions in which the conduct of its business or the ownership or leasing of its properties requires it to be so qualified or licensed, except for such jurisdictions where the failure to be so qualified or licensed would not reasonably be expected, individually or in the aggregate, to have a Material Adverse Effect on Lion Fund.

 

Section 2.2            Capitalization and Ownership of Shares.  The authorized capital stock of Biglari Capital consists of 100,000 shares of common stock, no par value, of which 1,000 shares are issued and outstanding.  All of Biglari Capital’s issued and outstanding capital stock is duly authorized, validly issued, fully-paid and non-assessable.  There is no security, option, warrant, right, call, subscription, agreement, commitment or understanding of any nature whatsoever, fixed or contingent, that directly or indirectly (a) calls for the issuance, sale, pledge or other disposition by Biglari Capital of any of its capital stock or any securities convertible into, or other rights to acquire, any such capital stock, (b) relates to the voting or control of such capital stock or rights or (c) obligates Biglari Capital to grant, offer or enter into any of the foregoing.  There are no actions, suits, proceedings or claims pending or, to the Knowledge of Seller, threatened with respect to or in any manner affecting the ownership by Seller of the Shares or the sale of the Shares by Seller to Purchaser.  The Shares are solely owned of record and beneficially by Seller and are free and clear of all Liens and subject to no options, agreements or restrictions with respect to transferability.

 

Section 2.3           Authorization.  Seller has all requisite power, legal capacity and authority to enter into this Agreement and to perform its obligations hereunder.  This Agreement constitutes the legal, valid and binding obligation of Seller, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors' rights generally and the fact that equitable remedies or relief (including without limitation, the remedy of specific performance) are subject to the discretion of the court from which such relief may be sought.

 

Section 2.4            Approvals and Consents; No Breach.

 

(a)           No action, approval, consent or authorization, including, but not limited to, any action, approval, consent or authorization by any governmental or quasi-governmental agency, commission, board, bureau, or instrumentality (each, a “Governmental Authority”) is necessary or required as to Seller in order to constitute this Agreement as a valid, binding and enforceable obligation of Seller in accordance with its terms, except for those that have been taken or obtained or will be taken or obtained on a timely basis after the date hereof.

 

(b)           Neither the execution and delivery of this Agreement, nor the consummation by Seller of the transactions contemplated hereby, nor compliance by Seller with any of the provisions hereof, will violate or cause a default under any statute (domestic or foreign), judgment, order, writ, decree, rule or regulation of any Governmental Authority applicable to Seller or either of the Companies or any of their respective assets or properties; breach or conflict with any of the terms, provisions or conditions of the Articles of Incorporation or By-Laws of Biglari Capital or the Certificate of Limited Partnership or Partnership Agreement of Lion Fund; or violate, conflict with or breach any agreement, contract, mortgage, instrument, indenture or license to which Seller or either of the Companies is a party or by which Seller or either of the Companies is or may be bound, or constitute a default (in and of itself or with the giving of notice, passage of time or both) thereunder, or result in the creation or imposition of any encumbrance upon, or give to any other party or parties any claim, interest or right, including rights of termination or cancellation in, or with respect to, the Shares or any of the assets or properties of either of the Companies.

 

  

3

  

 

Section 2.5            Financial Statements.

 

(a)           Seller has previously provided to Purchaser the unaudited balance sheet of Biglari Capital at December 31, 2012 and the related unaudited profit and loss statement for the fiscal year then ended (collectively, the “Biglari Capital Financial Statements”).  The balance sheet included in the Biglari Capital Financial Statements, in all material respects, fairly presents the financial position of Biglari Capital as of its date, and the profit and loss statement included in the Biglari Capital Financial Statements fairly presents the results of operations of Biglari Capital for the period presented therein, all in conformity with GAAP, applied on a consistent basis during the period involved, except as otherwise noted therein. The Biglari Capital Financial Statements, including in all cases the notes thereto, (x) are true, correct and complete, and (y) are in accordance with the books and records of Biglari Capital.

 

(b)           Seller has previously provided to Purchaser (i) the Statement of Assets and Liabilities of Lion Fund at December 31, 2012 and the related Condensed Schedule of Investments in Securities at December 31, 2012, Statement of Operations for the Year Ended December 31, 2012, Statement of Changes in Partners’ Capital for the Year Ended December 31, 2012 and Statement of Cash Flows For the Year Ended December 31, 2012, together with the report of Deloitte & Touche  LLP thereon, and (ii) the Statement of Assets and Liabilities of Lion Fund at March 31, 2013 (collectively, the “Lion Fund Financial Statements”).  Each statement of assets and liabilities included in the Lion Fund Financial Statements, in all material respects, fairly presents the financial position of Lion Fund as of its date, and the other related statements included in the Lion Fund Financial Statements fairly present the information contained therein of Lion Fund for the periods presented therein, all in conformity with GAAP, applied on a consistent basis during the periods involved, except as otherwise noted therein. The Lion Fund Financial Statements, including in all cases the notes thereto, (x) are true, correct and complete, and (y) are in accordance with the books and records of Lion Fund.

 

Section 2.6            Liabilities.

 

(a)           Biglari Capital has no liability or obligation of any nature (whether liquidated, unliquidated, accrued, absolute, contingent or otherwise and whether due or to become due) except:

 

  

4

  

 

(i)          those set forth or reflected in the Biglari Capital Financial Statements that have not been paid or discharged since the date thereof; and

 

(ii)         current liabilities arising in the ordinary and usual course of business subsequent to December 31, 2012 that are accurately reflected on Biglari Capital’s books and records in a manner consistent with past practice.

 

(b)           Lion Fund has no liability or obligation of any nature (whether liquidated, unliquidated, accrued, absolute, contingent or otherwise and whether due or to become due) except:

 

(i)           those set forth or reflected in the Lion Fund Financial Statements that have not been paid or discharged since the date thereof; and

 

(ii)         current liabilities arising in the ordinary and usual course of business subsequent to March 31, 2013 that are accurately reflected on Lion Fund’s books and records in a manner consistent with past practice.

 

Section 2.7            Absence of Certain Changes.  Except as contemplated by this Agreement, since December 31, 2012, (a) the Companies have conducted their businesses in the ordinary course and consistent with past practices; and (b) there has not been:

 

(i)          any change in their business, operations, prospects or financial position, except such changes that, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect on either of the Companies considered separately;

 

(ii)         any change in the Companies’ financial or accounting practices or policies, except as required by law;

 

(iii)        any agreement by either of the Companies (in writing or otherwise) to take any action that, if taken, would render any of the representations set forth in this Section 2.7 untrue;

 

(iv)        other than in the usual and ordinary course of business, any increase in amounts payable by either of the Companies to or for the benefit of, or committed to be paid by either of the Companies to or for the benefit of, any officer, consultant, agent or employee of either of the Companies, in any capacity, or in any benefits granted under any bonus, profit sharing, pension, retirement, deferred compensation, insurance, or other direct or indirect benefit plan with respect to any such person; or

 

(v)         any transaction entered into or carried out other than in the ordinary and usual course of the business of the Companies including, without limitation, any transaction resulting in the incurrence of liabilities or obligations.

 

  

5

  

 

Section 2.8            Taxes and Tax Returns.

 

(a)          The Companies have timely filed all material Tax Returns required to be filed by either of them since April 30, 2010 and have paid all Taxes of any kind shown to be due on such tax returns or otherwise required to be paid.

 

(b)          Since April 30, 2010, the Companies have complied in all material respects with all applicable laws relating to information reporting with respect to payments made to third parties and the withholding of and payment of withheld taxes and have timely withheld from employee wages and other payments and paid over to the proper governmental authority all amounts required to be so withheld and paid over for all periods under all applicable laws.

 

Section 2.9           Permits.  With such exceptions as are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on the Companies as a whole, (a) all Permits that are presently required for the operation of either of the Companies’ businesses, as currently conducted, have been duly obtained and are in full force and effect; and (b) there is no Action pending or, to the Knowledge of Seller, overtly threatened against either of the Companies to terminate the rights of either of the Companies under any such Permits.

 

Section 2.10          Legal Proceedings, Claims, Investigations.  With such exceptions as are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on the Companies as a whole, (a) there is no Action pending, or to the Knowledge of Seller, threatened against (i) either of the Companies or their respective assets and properties, or (ii) any director, officer or employee thereof or Seller relating to either of the Companies; (b) neither of the Companies is in violation of or default under any laws, ordinances, regulations, judgments, injunctions, orders or decrees (including without limitation, any immigration laws or regulations) of any court, governmental department, commission, agency, instrumentality or arbitrator applicable to it; and (c) neither of the Companies is currently subject to any judgment, order, injunction or decree of or settlement enforceable by any court, arbitral authority, administrative agency or governmental authority.

 

Section 2.11          Material Contracts.

 

(a)           The following contracts of either of the Companies as of the date of this Agreement are referred to as the “Material Contracts”:

 

(i)          all management and employment contracts and contracts with independent contractors or consultants (or similar arrangements) that are not cancelable without penalty or further payment and without more than 90 days’ notice;

 

(ii)         all contracts that expressly limit the ability of either of the Companies to compete in any line of business or with any Person in any geographic area;

 

(iii)        any contract pursuant to which either of the Companies makes or receives payments in an amount in excess of $25,000 per year;

 

(iv)        contracts to which either of the Companies is a party relating to loans or advances to, or investments in, any other Person;

 

  

6

  

 

(v)         credit agreements, notes, indentures, security agreements, pledges, guarantees of or agreements to assume any debt or obligation of others, or similar documents relating to indebtedness for borrowed money (including interest rate or currency swaps, hedges or straddles or similar transactions), to which either of the Companies is a party;

 

(vi)        severance or termination contracts or any other agreement or employee benefit plan that contain any severance or termination pay liability or obligation for employees of either of the Companies;

 

(vii)       any contract pursuant to which either of the Companies has a power of attorney outstanding or any obligation or liability (whether absolute, accrued, contingent or otherwise) as surety, co-signer, endorser, co-maker, indemnitor or otherwise in respect of the obligation of any person, corporation, partnership, joint venture, association, organization or other entity;

 

(viii)      any contract that has or would be expected to have a Material Adverse Effect on the Companies or the conduct of their businesses;

 

(ix)         any contract between the Companies, or either of them, and Seller or any affiliate of Seller (other than Purchaser and his affiliates);

 

(x)          any contract that is otherwise material to the Companies and not previously disclosed pursuant to this Section 2.11.

 

(b)           Neither the Companies nor, to the Knowledge of Seller, any other party to any Material Contract is in breach thereof or default thereunder.

 

(c)           Each Material Contract is the legal, valid and binding obligation of the Company party thereto and, to the Knowledge of Seller, each other party thereto, enforceable against them in accordance with their respective terms, subject to applicable laws relating to bankruptcy, insolvency, reorganization, moratorium or other similar legal requirement relating to or affecting creditors’ rights generally and except as such enforceability is subject to general principles of equity (regardless of whether enforceability is considered in a proceeding in equity or at law).

 

Section 2.12          Employee Benefit Plans.

 

(a)           All material employee benefit plans, arrangements and policies maintained by Biglari Capital for employees who perform services solely for Biglari Capital (the “Employees”) are collectively referred to as the “Benefit Plans.”

 

(b)           With such exceptions as are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on Biglari Capital, since April 30, 2010:  (i) each Benefit Plan has been established and administered substantially in accordance with its terms and in compliance with all applicable laws; and (ii) no audit or investigation by any Governmental Authority is pending, or to the Knowledge of Seller, threatened with respect to any Benefit Plan.

 

  

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Section 2.13          Title to Property.

 

(a)           Biglari Capital does not own or lease any real property.

 

(b)           The Companies have good title to, or valid leasehold interests in, all material properties and assets owned or leased by the Companies, except for those that are no longer used or useful in the conduct of their businesses, in each case free of all Liens.

 

Section 2.14          Intellectual Property.  To the Knowledge of Seller, Seller owns or has the right to use all Intellectual Property used in the conduct of Biglari Capital’s business without any conflict with the rights of others, in each case with such exceptions as are not, individually or in the aggregate, reasonably likely to have a Material Adverse Effect on Biglari Capital and subject to limitations contained in any applicable license agreement; provided, however, that no representation or warranty is made as to the extent to which ownership of or right to use any particular Intellectual Property includes the exclusive right to use such Intellectual Property.

 

Section 2.15          Insurance.  Biglari Capital is not in default with respect to any provision contained in any insurance policy, and to the Knowledge of Seller has not failed to give any notice or present any claim under any insurance policy in due and timely fashion.  Each such policy is in full force and effect.  All payments with respect to such policies are current and Biglari Capital has not received any notice threatening a suspension, revocation, modification or cancellation of any such policy.

 

Section 2.16          Environmental Matters.  Biglari Capital is not the subject of, or, to the Knowledge of Seller, being threatened to be the subject of (i) any enforcement proceeding, or (ii) any investigation, brought in either case under any Environmental Laws, or (iii) any third party claim relating to environmental conditions on or off the properties of Biglari Capital.  Biglari Capital is not aware and has not been notified of any conditions on or off the properties of Biglari Capital that will give rise to any liabilities, known or unknown, under any Environmental Laws, or as the result of any claim of any third party.  For the purposes of this Section 2.17, an investigation shall include, but is not limited to, any written notice received by Biglari Capital that relates to the onsite or offsite disposal, release, discharge or spill of any Hazardous Material.

 

Section 2.17          Illegal Payments.  Since April 30, 2010, Biglari Capital has not, directly or indirectly, paid or delivered any fee, commission or other sum of money or item of property, however characterized, to any finder, agent, government official or other party, in the United States of America or any other country, that is in any manner related to the business or operations of Biglari Capital, which Biglari Capital knows or has reason to believe to have been illegal under any federal, state or local laws or the laws of any other country having jurisdiction.

 

Section 2.18          Brokers.  All negotiations relative to the Agreement and the transactions contemplated hereby have been carried on by or on behalf of Seller in such a manner as not to give rise to any claim against Purchaser or the Shares for a finder’s fee, brokerage commission, advisory fee or other similar payment.

 

  

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ARTICLE III

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser represents and warrants to Seller as follows:

 

Section 3.1            Authorization.  Purchaser has all requisite power, legal capacity and authority to enter into this Agreement and to perform his obligations thereunder.  This Agreement constitutes the legal, valid and binding obligation of Purchaser, enforceable against him in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally and the fact that equitable remedies or relief (including without limitation, the remedy of specific performance) are subject to the discretion of the court form which such relief may be sought.

 

Section 3.2            Approvals and Consents; No Breach.  (a) No action, approval, consent or authorization, including, but not limited to, any action, approval, consent or authorization by any Governmental Authority is necessary or required as to Purchaser in order to constitute this Agreement as a valid, binding and enforceable obligation of Purchaser in accordance with its terms, except for those that have been taken or obtained or will be taken or obtained on a timely basis after the date hereof.

 

(b)           Neither the execution and delivery of this Agreement, nor the consummation by Purchaser of the transactions contemplated hereby, nor compliance by Purchaser with any of the provisions hereof, will violate or cause a default under any statute (domestic or foreign), judgment, order, writ, decree, rule or regulation of any Governmental Authority applicable to Purchaser or any of his material properties; or violate, conflict with or breach any agreement, contract, mortgage, instrument, indenture or license to which Purchaser is a party or by which Purchaser is or may be bound, or constitute a default (in and of itself or with the giving of notice, passage of time or both) thereunder.

 

Section 3.3            Litigation.  There is no Action pending or, to the Knowledge of Purchaser, threatened against Purchaser, at law or in equity, before any Governmental Authority, that would have an adverse effect on Purchaser’s ability to perform any of its obligations under this Agreement or upon the consummation of the transactions contemplated hereby.

 

Section 3.4            Brokers.  All negotiations relative to this Agreement and the transactions contemplated hereby have been carried on by or on behalf of Purchaser in such a manner as not to give rise to any claim against Seller for a finder’s fee, brokerage commission, advisory fee or other similar payment.

 

Section 3.5            Investment Intent.

 

(a)           The Shares are being acquired for Purchaser’s own account, and not for the account of any other Person, and not with a view to, or for sale in connection with, any distribution or resale to others within the meaning of Section 2(11) or Rule 502(d) promulgated under the Securities Act of 1933, as amended (the “Securities Act”).  The sale of the Shares is intended to be exempt from registration under the Securities Act by virtue of Section 4(2) thereof.  Purchaser is an “accredited investor” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act.

 

  

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(b)           Seller has provided to Purchaser all documents and information that Purchaser has requested relating to Biglari Capital.  Purchaser has not relied on Seller or any of its affiliates or representatives for any tax or legal advice in connection with the purchase of the Shares.

 

Section 3.6            No Knowledge of Inaccuracies.  As of the date hereof, Purchaser does not have any Knowledge that any of Seller’s representations and warranties set forth in Article II of this Agreement are inaccurate.

 

ARTICLE IV

 

INDEMNIFICATION

 

Section 4.1            Survival.  The representations and warranties contained in this Agreement and the indemnity obligations for the inaccuracy or breach of such representations and warranties contained in Sections 4.2(a) and 4.2(b) shall terminate on, and no claim or Action with respect thereto may be brought after, the day that immediately precedes the first anniversary of this Agreement, except that such obligation of indemnity provided herein with respect to the representations and warranties contained in Sections 2.8 and 2.12 shall not terminate until the expiration of the statute of limitations applicable to the items contained therein.  If, prior to the termination of any obligation to indemnify as provided for herein, written notice of a claimed inaccuracy or breach is given by the party seeking indemnification including in detail the basis therefor (the “Indemnified Party”) to the party from whom indemnification is sought (the “Indemnifying Party”) or an Action based upon a claimed inaccuracy or breach is commenced against the Indemnified Party, the Indemnified Party shall not be precluded from pursuing such claimed breach or Action, or from recovering from the Indemnifying Party (whether through the courts or otherwise) on the claim or Action, by reason of the termination otherwise provided for above.

 

Section 4.2            Indemnification.

 

(a)           Seller shall indemnify and hold harmless Purchaser from, and reimburse Purchaser for, any Losses as a result of the inaccuracy or breach of any representation or warranty of Seller contained in Article II of this Agreement.  Except as provided in the next succeeding sentence, Seller shall not be responsible for any Losses under Section 4.2(a) until the cumulative aggregate amount of such Losses exceeds $100,000 (the “Basket Amount”), in which case Seller shall then be liable only for such Losses in excess of the Basket Amount.  Notwithstanding the provisions of the previous sentence, Seller shall indemnify and hold harmless Purchaser from, and reimburse Purchaser for, any Losses that are the direct and proximate result of any inaccuracy or breach of any representation of Seller contained in Sections 2.2 and 2.6 without regard for the Basket Amount.

 

  

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(b)           Purchaser shall indemnify and hold harmless Seller from, and reimburse Seller for, any Losses as a result of the inaccuracy or breach of any representation or warranty of Purchaser contained in Article III of this Agreement.

 

Section 4.3            Indemnification Procedures.

 

(a)           As promptly as practicable, and in any event within 30 days, after Purchaser or Seller shall receive any notice of, or otherwise become aware of, the commencement of any Action, the assertion of any claim, the occurrence of any event, the existence of any fact or circumstance, or the incurrence of any Loss, for which indemnification is provided (assuming, only for the purposes of this Section 4.3(a), that the Basket Amount was zero) by Section 4.2(a) or (b) hereof (an “Indemnification Event”), the Indemnified Party shall give written notice (an “Indemnification Claim”) to the Indemnifying Party describing in reasonable detail the Indemnification Event and the basis on which indemnification is sought.  If the Indemnifying Party is not so notified by the Indemnified Party within 30 days after the date of the receipt by the Indemnified Party of notice of, or of the Indemnified Party otherwise becoming aware of, any particular Indemnification Event, the Indemnifying Party shall be relieved of all liability hereunder in respect of such Indemnification Event (or the facts or circumstances giving rise thereto) to the extent that such Indemnifying Party is prejudiced or harmed as a consequence of such failure in any material respect (and, to such extent, all Losses resulting from such Indemnification Event shall thereafter be disregarded for purposes of determining whether the Basket Amount has been exceeded), and in any event the Indemnifying Party shall not be liable for any expenses incurred during the period in which the Indemnified Party was overdue in giving, and had not given, such notice.

 

(b)           If any Indemnification Event involves the claim of a third party (a “Third-Party Claim”), the Indemnifying Party shall (whether or not the Indemnified Party is entitled to claim indemnification under Section 4.2(a) or (b), as the case may be) be entitled to, and the Indemnified Party shall provide the Indemnifying Party with the right to, participate in, and assume sole control over, the defense and settlement of such Third-Party Claim (with counsel reasonably satisfactory to the Indemnified Party); provided, however, that:  (i) the Indemnified Party shall be entitled to participate in the defense of such Third-Party Claim and to employ counsel at its own expense to assist in the handling of such Third-Party Claim; and (ii) the Indemnifying Party shall obtain the prior written approval of the Indemnified Party before entering into any settlement of such Third-Party Claim or ceasing to defend against such Third-Party Claim if the Indemnified Party would not thereby receive from the claimant an unconditional release from all further liability in respect of such Third-Party Claim.  After written notice by the Indemnifying Party to the Indemnified Party of its election to assume control of the defense of any such Third-Party Claim, the Indemnifying Party shall not be liable hereunder to indemnify any Person for any legal or other expenses subsequently incurred in connection therewith.  If the Indemnifying Party does not assume sole control over the defense or settlement of such Third-Party Claim as provided in this Section 4.3(b) within a reasonable period of time, or, after assuming such control, fails to defend against such Third-Party Claim (it being agreed that settlement of such Third-Party Claim does not constitute such a failure to defend), the Indemnified Party shall have the right (as to itself) to defend and, upon obtaining the written consent of the Indemnifying Party, settle the claim in such manner as it may deem appropriate, and the Indemnifying Party shall promptly reimburse the Indemnified Party therefor in accordance with (and to the extent provided in) Section 4.2(a) or (b), as appropriate.

 

  

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(c)           The Indemnified Party and the Indemnifying Party shall each cooperate fully with the other in the defense of any Third-Party Claim pursuant to Section 4.3(b).  Without limiting the generality of the foregoing, each such Person shall furnish the other such Person (at the expense of the Indemnifying Party) with such documentary or other evidence as is then in its or any of its affiliates’ possession as may reasonably be requested by the other Person for the purpose of defending against any such Third-Party Claim.

 

Section 4.4            Subrogation.  Upon payment of any amount pursuant to any Indemnification Claim, the Indemnifying Party shall be subrogated, to the extent of such payment, to all of the Indemnified Party’s rights of recovery (and, if Seller is the Indemnifying Party, the Indemnified Party shall cause Seller to be subrogated to all of the rights of recovery of Purchaser and the Companies) against any third party with respect to the matters to which such Indemnification Claim relates.

 

Section 4.5            Exclusive Remedy.  The rights and remedies of Purchaser and Seller under this Article IV are exclusive and in lieu of any and all other rights and remedies that Purchaser or Seller, as the case may be, may have against the other, under this Agreement or otherwise.  All claims for indemnification must be asserted, if at all, in good faith and in accordance with the provisions of Section 4.3(a) and, to the extent applicable to such claims, within the relevant time period set forth in Section 4.1(a).

 

Section 4.6            Other Limitations.

 

(a)           If at any time subsequent to the receipt by an Indemnified Party of an indemnity payment hereunder, such Indemnified Party receives any recovery, settlement or other similar payment with respect to the Loss for which it received such indemnity payment (the “Recovery”), such Indemnified Party shall promptly pay to the Indemnifying Party an amount equal to the amount of such Recovery, less any expense incurred by such Indemnified Party in connection with such Recovery, but in no event shall any such payment exceed the amount of such indemnity payment.

 

(b)           The Indemnified Party shall use reasonable efforts to minimize and mitigate any Losses for which indemnification is sought hereunder.  Each party hereto agrees that, for so long as such party has any right of indemnification under this Article IV, it shall not voluntarily or by discretionary action accelerate the timing or increase the cost of any obligation of any other party under this Article IV, except to the extent that such action is taken (x) for a reasonable legitimate purpose and not with a purpose of discovering a condition that would constitute an inaccuracy or  breach of any representation, warranty, covenant or agreement of any other party hereto or (y) in response to a discovery by such party, without violation of the immediately preceding clause (x), of meaningful evidence of a condition that constitutes an inaccuracy or breach of any representation, warranty, covenant or agreement of any other party hereunder.  Notwithstanding anything to the contrary herein, the Indemnifying Party shall not be obligated to indemnify an Indemnified Party for any Losses to the extent arising from any such voluntary or discretionary action, other than as so excepted.

 

  

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ARTICLE V

 

GENERAL PROVISIONS

 

Section 5.1            Entire Agreement.  This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter contained herein and supersedes all prior oral or written agreements, if any, between the parties hereto with respect to such subject matter and is not intended to confer upon any other person any rights or remedies hereunder.  Any amendments hereto or modifications hereof must be made in writing and executed by each of the parties hereto.

 

Section 5.2            Waiver.  Any failure by Seller or Purchaser to enforce any rights hereunder shall not be deemed a waiver of such rights.

 

Section 5.3            Governing Law and Arbitration.  This Agreement shall be governed by, and construed in accordance with, the laws of the State of Indiana, without giving effect to that body of law relating to choice of laws.  Any controversy, dispute or claim between the parties relating to this Agreement shall be resolved by binding arbitration in Indiana, in accordance with the rules of the American Arbitration Association.

 

Section 5.4            Binding Effect; Assignment.  This Agreement and the various rights and obligations arising hereunder shall inure to the benefit of and be binding upon Seller and Purchaser and their respective successors and assigns.  This Agreement may not be assigned by either party without the prior written consent of the other party, provided, that Purchaser may assign any of his rights under this Agreement to an affiliate without such prior written consent, provided, however, that no such assignment shall relieve Purchaser of his obligations hereunder.

 

Section 5.5            Expenses.  All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses.

 

Section 5.6            Headings.  The headings or captions contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

 

Section 5.7            Counterparts.  This Agreement may be executed (including by facsimile and .pdf) in two or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

 

Section 5.8            Notice.  Any notice hereunder by either party to the other shall be given in writing by personal delivery, or certified mail, return receipt requested, or overnight courier, or facsimile, in any case delivered to the applicable address set forth below:

 

  

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(a)           To Seller:

 

Biglari Holdings Inc.

17802 IH 10 West, Suite 400

San Antonio, Texas  78257

Attention:      Controller

Facsimile:       (210) 344-3411

(b)           To Purchaser:

 

Sardar Biglari

c/o Biglari Capital Corp.

17802 IH 10 West, Suite 400

San Antonio, Texas  78257

Facsimile:       (210) 344-3411

or to such other persons or other addresses as either party may specify to the other in writing.  Any such notice shall be deemed to have been given upon receipt.

 

 

[SIGNATURE PAGE FOLLOWS]

 

  

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the day and year first above written.

 

	
BIGLARI HOLDINGS INC.

	  
	  
	
By:

	
/s/ Bruce Lewis

	
Name:

	
Bruce Lewis

	
Title:

	
Controller

	  
	  
	  
	  
	
/s/ Sardar Biglari

	
SARDAR BIGLARI

 

 

  

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EXHIBIT A

 

DEFINED TERMS

 

For purposes of the Agreement to which this Exhibit A is attached, the following terms shall have the respective meanings specified below.

 

“Action” means an action, arbitration, audit, hearing, suit or proceeding, at law or in equity.

 

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

 

“GAAP” means generally accepted United States accounting principles, consistently applied and consistent with past practice.

 

“Hazardous Material” means solid waste disposal, toxic substances, hazardous substances, hazardous materials, hazardous waste, toxic chemicals, pollutants and contaminants.

 

“Intellectual Property” means trademarks, trade names, service marks, domain names, patents, copyrights, applications therefor and licenses or other rights in respect thereof.

 

“Knowledge” of any Person means the actual knowledge of such Person without investigation.

 

“Lien” means any lien, pledge, mortgage, security interest or encumbrance.

 

“Losses” means all losses, damages, liabilities and claims, and fees, costs and expenses related thereto.  Notwithstanding anything to the contrary contained in the Agreement:  (a) Losses shall not include lost profits or consequential, incidental, special, indirect or punitive damages and no “multiple of profits” or “multiple of cash flow” or similar valuation methodology shall be used in calculating the amount of any Losses; and (b) the amount of any Losses under Article IV shall be determined:  (i) on a Net After-Tax Basis; and (ii) net of any amounts recovered or recoverable by the Indemnified Party under any contract with a third party or under any insurance policies, indemnities or other reimbursement arrangements with respect to such Losses.

 

“Material Adverse Effect” means any event, circumstance, change in or effect, individually or in the aggregate, that is or is reasonably likely to be materially adverse to the results of operations or the financial condition of an entity or entities, as applicable; provided, however, that none of the following or the results thereof, either alone or in combination, shall be considered in determining whether there has been a “Material Adverse Effect”:  (a) events, circumstances, changes or effects that generally affect the industries in which the entity or entities operate (including legal and regulatory changes), (b) any change or modification in law or interpretation thereof, (c) general economic or political conditions or events, circumstances, changes or effects affecting the securities markets generally, (d) changes in GAAP after the date of this Agreement, (f) changes arising from the consummation of the transactions contemplated by, or the announcement of, this Agreement, (g) any circumstance, change or effect that results from any action taken pursuant to or in accordance with this Agreement or at the request of Purchaser or (h) changes caused by a material worsening of current conditions caused by acts of terrorism or war (whether or not declared) occurring after the date of this Agreement.

 

  

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“Net After-Tax Basis” means, with respect to the calculation of any indemnification payment owed to any party pursuant to the Agreement, calculation thereof in a manner taking into account any Taxes owing by the Indemnified Party as a result of receipt or accrual of the indemnity payment and any savings in Taxes realized or reasonably realizable by the Indemnified Party as a result of the indemnified liability.

 

“Permits” means all licenses, permits, orders, consents, approvals, registrations, authorizations, qualifications and filings which are required to be made with or required under applicable law.

 

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated organization or government or any agency or political subdivision thereof.

 

“Taxes” means all taxes, charges, fees, levies and other assessments, including, without limitation, income, gross receipts, excise, property, sales, use, license, payroll and franchise taxes, imposed by the United States, or any state, local or foreign government or subdivision or agency thereof whether computed on a unitary, combined or any other basis; and such term shall include any interest and penalties or additions to tax.

 

“Tax Returns” means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

 

  

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