Document:

Exhibit

PURCHASE AND ASSUMPTION AGREEMENT
by and between
HOMEBRIDGE FINANCIAL SERVICES, INC.,
A New Jersey corporation
and
HOMESTREET BANK,
 a Washington state-chartered bank

Dated as of April 4, 2019

Table of Contents

	
			
	 
	Page

	ARTICLE 1: PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
	2

	Section 1.1
	Purchase and Sale of the Assets
	2

	Section 1.2
	Assumption of Liabilities
	2

	Section 1.3
	Excluded Liabilities
	3

	ARTICLE 2: CLOSING
	3

	Section 2.1
	Initial Closing and Second Closing
	3

	Section 2.2
	Closing Deliverables
	3

	Section 2.3
	Payment of Purchase Price
	5

	Section 2.4
	Purchase Price Allocation
	6

	ARTICLE 3: REPRESENTATIONS AND WARRANTIES OF SELLER
	7

	Section 3.1
	Organization; Authority
	7

	Section 3.2
	No Conflicts; Required Consents
	7

	Section 3.3
	Title to Acquired Assets; Absence of Certain Changes or Events
	8

	Section 3.4
	Condition and Sufficiency of Fixed Assets
	9

	Section 3.5
	Seller Equipment Contracts
	9

	Section 3.6
	HomeStreet Offices; Leases
	9

	Section 3.7
	Financial Information
	10

	Section 3.8
	Compliance with Laws
	10

	Section 3.9
	Litigation
	10

	Section 3.10
	Employment Benefits
	10

	Section 3.11
	Employees
	11

	Section 3.12
	Tax Matters
	12

	Section 3.13
	Information Security
	13

	Section 3.14
	Unlocked Pipeline Loans
	13

	Section 3.15
	Brokers and Finders
	13

	ARTICLE 4: REPRESENTATIONS AND WARRANTIES OF PURCHASER
	13

	Section 4.1
	Organization; Authority
	13

	Section 4.2
	No Conflicts; Required Consents
	14

	Section 4.3
	Litigation
	14

	Section 4.4
	Brokers and Finders
	14

	Section 4.5
	Sophisticated Investor
	14

	Section 4.6
	Financial Capacity
	14

	ARTICLE 5: COVENANTS
	14

	Section 5.1
	Conduct of Business Prior to Applicable Closing
	14

	Section 5.2
	Cooperation; Consents
	15

	Section 5.3
	Confidentiality
	17

	Section 5.4
	Non-Solicitation
	17

	Section 5.5
	Bulk Sales Tax Laws
	17

	Section 5.6
	Further Assurances
	17

	Section 5.7
	Borrower Information; Employee Computer Transfers Terms
	17

	Section 5.8
	Exclusivity
	18

	
			
	Section 5.9
	Reimbursement of Expenses
	18

	Section 5.10
	Covenants Regarding Transitioned Unlocked Pipeline Loans
	18

	Section 5.11
	Allocation of Lease Rents
	19

	Section 5.12
	Access to Information 
	20

	Section 5.13
	Notice of Certain Events
	20

	Section 5.14
	Retention Bonuses
	21

	Section 5.15
	Deferred Purchase Price
	21

	Section 5.16
	Closing Conditions
	22

	Section 5.17
	Sale RIght
	22

	Section 5.18
	Information Security
	22

	ARTICLE 6: EMPLOYMENT MATTERS
	22

	Section 6.1
	Employees
	22

	Section 6.2
	Continued Employment
	23

	Section 6.3
	Employee Benefit Plans; Continuing Obligations
	23

	Section 6.4
	Compensation
	24

	Section 6.5
	Transition Plan
	24

	Section 6.6
	Training of Loan Officers
	24

	Section 6.7
	No Third-Party Beneficiaries
	25

	ARTICLE 7: CLOSING CONDITIONS
	25

	Section 7.1
	Conditions to Obligations to Consummate the Initial Closing
	25

	Section 7.2
	Conditions to Obligations to Consummate the Second Closing
	26

	Section 7.3
	No Waiver
	27

	ARTICLE 8: SURVIVAL AND INDEMNIFICATION 
	27

	Section 8.1
	Survival
	27

	Section 8.2
	Indemnification by Seller
	28

	Section 8.3
	Indemnification by Purchaser
	28

	Section 8.4
	Indemnification Procedures
	29

	Section 8.5
	Indemnification Limitations
	29

	Section 8.6
	Exclusive Remedy
	31

	Section 8.7
	Tax Treatment of Indemnification Payments
	31

	Section 8.8
	Certain Tax and Other Matters
	31

	Section 8.9
	Prevailing Party
	32

	ARTICLE 9: TERMINATION
	32

	Section 9.1
	Termination
	32

	Section 9.2
	Effect of Termination
	34

	ARTICLE 10: GENERAL PROVISIONS
	34

	Section 10.1
	Definitions
	34

	Section 10.2
	Governing Law; Venue
	45

	Section 10.3
	Fees and Expenses
	45

	Section 10.4
	Notices
	45

	Section 10.5
	Assignment
	46

	Section 10.6
	No Benefit to Others
	46

	Section 10.7
	Headings; Construction; Interpretation
	46

	Section 10.8
	Counterparts
	47

	Section 10.9
	Integration of Agreement
	47

	Section 10.10
	Partial Invalidity
	47

	
			
	Section 10.11
	Public Announcements
	47

	Section 10.12
	Waiver of Jury Trial
	47

	Section 10.13
	Schedules
	48

Exhibits:

Exhibit A-1a - Wireless Equipment
Exhibit A-1b - Circuits 
Exhibit A-2 - Employee Computers  
Exhibits A-3a & A-3b - Fixed Assets
Exhibit A-4a  - Postage Equipment
Exhibit A-4b - Printers
Exhibit A-5 - HomeStreet Offices 
Exhibit B - Lien Documentation  
Exhibit C - Form of Bill of Sale
Exhibit D - Form of Lease Assignment and Assumption Agreement 
Exhibit E - Sample Net Book Value Calculation
Exhibit F - Terms to Correspondent Loan Purchase Agreement
Exhibit G - Terms to Transition Services Agreement
Exhibit H - Non-Licensed Employee Operations Mapping
Exhibit I - Viability Threshold by HomeStreet Office
Exhibit J - Borrower Data Terms
Exhibit K - Primary Region
Exhibit L - Employee Computer Transfer Terms

Schedules:

Schedule 3.2 - (Required Consents)
Schedule 3.3(b) - (Offered Employee Matters) 
Schedule 3.6(a) - (Leases)
Schedule 3.7 - (Unaudited Financial Information)
Schedule 3.10(b) - (Employee Benefit Plans)
Schedule 3.11(a) - (Terminated Employees)
Schedule 3.11(b)(i) - (Compliance with Laws with respect to Offered Employees)
Schedule 3.11(b)(ii) - (Offered Employees on Leave)
Schedule 3.11(c) - (Labor Matters)
Schedule 3.11(d) - (Liability for Misclassified Individuals)
Schedule 3.11(e) - (Severance Agreements)
Schedule 3.14 - (Unlocked Pipeline Loans)
Schedule 4.2 - (Purchaser’s Approvals)
Schedule 5.2(b) - (Applicable Vendors)
Schedule 5.4 - Non-Listed Employees
Schedule 6.1(a) - (Offered Employees)
Schedule 10.1(a) - (Key Employees) 
Schedule 10.1(b) - Reserved

PURCHASE AND ASSUMPTION AGREEMENT
THIS PURCHASE AND ASSUMPTION AGREEMENT (this “Agreement”) is made and entered into as of April 4, 2019 (“Effective Date”), by and between HomeBridge Financial Services, Inc., a New Jersey corporation (“Purchaser”) and HomeStreet Bank, a Washington state-chartered bank (“Seller”).  
WHEREAS, Seller is a commercial bank which, among other lines of business, has been engaged in the business of originating, servicing, and selling residential first mortgage loans; and 
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to purchase from Seller, certain assets of Seller related to the retail residential mortgage lending business at the HomeStreet Offices (the “Business”) for the consideration and on the terms set forth in this Agreement.
NOW THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements contained in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties, intending to be legally bound, agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES

Section 1.1    Purchase and Sale of the Assets.  Subject to the terms and conditions of this Agreement, at the applicable Closing, Seller shall sell, assign, transfer, convey and deliver to Purchaser, and Purchaser shall accept, the Acquired Assets, free and clear of all Liens, except for the Permitted Liens, being transferred at such Closing in exchange for the proportionate amount of the Purchase Price related to such Acquired Assets.  Notwithstanding anything to the contrary contained in this Agreement, at each Closing, (i) Purchaser shall  purchase only Acquired Assets located at the Financially Viable HomeStreet Offices, and (ii) hire only (x) such Loan Officers working in, or that can be transferred to, a Financially Viable HomeStreet Office acquired at such Closing, and (y) employees that are not License Required Employees sufficient to support the Financially Viable HomeStreet Offices acquired at such Closing and the Loan Officers hired at such Closing as more specifically detailed on Exhibit H hereto.  Notwithstanding anything to the contrary, the Parties hereto hereby acknowledge and agree that the provisions of this Section 1.1 shall not apply to, and shall not require Seller to convey, transfer, assign, or deliver to Purchaser any of its interest in any Excluded Assets.  For the avoidance of doubt, nothing contained in this Agreement shall require the Seller to sell, assign, transfer, convey or deliver, or Purchaser to accept or pay for, any Acquired Assets to the extent such Acquired Assets are located at any HomeStreet Office that is not Financially Viable at the Initial Closing or the Second Closing, as applicable.  

Section 1.2    Assumption of Liabilities.  In consideration for the purchase, assignment, and transfer of the Acquired Assets, Purchaser shall assume and become responsible for the timely payment, performance and satisfaction of the Liabilities (i) of Seller arising in connection with the assigned Leases, in each case, solely with respect to those Liabilities arising from and after the Initial Closing Date or the Second Closing Date, if any, and (ii) pursuant to the Purchaser Equipment Contracts (collectively, the “Assumed Liabilities”).  Notwithstanding anything to the contrary contained in this Agreement, at each Closing, Purchaser shall only assume the Assumed Liabilities relating to, arising out of or in connection with the Acquired Assets acquired at such Closing.

Section 1.3    Excluded Liabilities  For the avoidance of doubt, Seller shall not sell, assign, transfer, convey or deliver to Purchaser, and Purchaser shall not accept, assume, or be responsible for, any Excluded Liability.  Seller hereby irrevocably waives and releases, and have caused their Affiliates to waive and release, Purchaser from all such Excluded Liabilities, and Seller shall retain and be responsible for, and shall pay or otherwise discharge when due, all Excluded Liabilities. 

ARTICLE 2  
CLOSING

Section 2.1    Initial Closing and Second Closing.
  
(a)Subject to the satisfaction or waiver of the conditions set forth in Section 7.1 (other than conditions which by their nature can only be satisfied at the Initial Closing, but subject to the satisfaction or waiver thereof at the Initial Closing) and subject to the terms and conditions of this Agreement, the initial closing of the Transactions (the “Initial Closing”), shall take place at the offices of Zukerman Gore Brandeis & Crossman, LLP, located at Eleven Times Square, 15th Floor, New York, New York 10036, or by electronic transfer of executed counterparts, at 12:01 a.m., New York City time, on May 17, 2019 (or the next available date when the conditions set forth in Section 7.1 have been satisfied or waived) or at such other time, date, place, or method as the Parties may mutually agree upon in writing.  The date on which the Initial Closing is to occur is herein referred to as the “Initial Closing Date.”  

(b)If all of the Acquired Assets are not acquired by Purchaser on the Initial Closing, subject to the satisfaction or waiver of the conditions set forth in Section 7.2 (other than conditions which by their nature can only be satisfied at the Second Closing, but subject to the satisfaction or waiver thereof at the Second Closing) and subject to the terms and conditions of this Agreement, one subsequent closing (the “Second Closing”) shall take place at the offices of Zukerman Gore Brandeis & Crossman, LLP, located at Eleven Times Square, 15th Floor, New York, New York 10036, or by electronic transfer of executed counterparts, at 12:01 a.m., New York City time, on June 14, 2019 (or the next available date when the conditions set forth in Section 7.2 have been satisfied or waived) or at such other time, date, place, or method as the Parties may mutually agree upon in writing.  The date on which the Second Closing is to occur is herein referred to as a “Second Closing Date.”

Section 2.2    Closing Deliverables.

(a)    At the applicable Closing, Seller shall deliver to Purchaser the following items insofar as they relate to the Acquired Assets and Assumed Liabilities being transferred in connection with such Closing:

(i)a Bill of Sale, duly executed by Seller;

(ii)the Lease Assignment and Assumption Agreement(s), duly executed by Seller, for HomeStreet Offices for which: (A) Seller is fully released vis-à-vis the Landlord from Liabilities accruing and arising from and after the applicable Closing (either by the terms of the Lease or by agreement with the Landlord), or (B) any of Seller’s Liabilities remaining under the assigned Leases accruing and arising after the applicable Closing vis-à-vis the Landlord are limited to the remaining portion of the current term;

(iii)the Sublease Agreements, duly executed by Seller;

(iv)the Correspondent Loan Purchase Agreement, duly executed by Seller (it being agreed 

that the Parties shall only be required to deliver the Correspondent Loan Purchase Agreement on the Initial Closing Date);

(v)copies of all Required Consents (including agreements of each of the landlords under each respective Lease); 

(vi)a FIRPTA certificate, duly executed and acknowledged by an officer of Seller under penalties of perjury, in the form prescribed by Treasury Regulation Section 1.1445-(2)(b)(2), including (A) Seller’s name, address, and U.S. employer identification number and (B) certification that Seller is not a “foreign person,” provided that such certificate is not also required to be provided in respect of the Second Closing;

(vii)the Transition Services Agreement, duly executed by Seller (it being agreed that the Parties shall only be required to deliver a single Transition Services Agreement on the Initial Closing Date, which Transition Services Agreement shall apply by its terms to all of the Transactions);

(viii)Employment Agreements for each of the applicable Key Employees, duly executed by the applicable Key Employee;

(ix)certified copies of the resolutions of the board of directors of Seller authorizing the Transactions and the execution, delivery, and performance of this Agreement and the other Transaction Documents by Seller, together with incumbency certificates with respect to officers of Seller executing documents or instruments on behalf of Seller; and

(x)a Seller Closing Certificate.

(b)    At the applicable Closing, Purchaser shall deliver to Seller the following items insofar as they relate to the Acquired Assets and Assumed Liabilities being transferred at such Closing:

(i)    the Purchase Price in accordance with Section 2.3;

(ii)    the Bill of Sale, duly executed by Purchaser;

(iii)    the Lease Assignment and Assumption Agreements, duly executed by Purchaser; 

(iv)    the Sublease Agreements, duly executed by Purchaser;

(v)    the Transition Services Agreement, duly executed by Purchaser (it being agreed that the Parties shall only be required to deliver a single Transition Services Agreement on the Initial Closing Date, which Transition Services Agreement shall apply by its terms to all of the Transactions);

(vi)    the Correspondent Loan Purchase Agreement, duly executed by Purchaser Seller (it being agreed that the Parties shall only be required to deliver the Correspondent Loan Purchase Agreement on the Initial Closing Date);

(vii)    Employment Agreements for each of the applicable Key Employees, duly executed by Purchaser; and

(viii)    the Retention Bonus Agreements for each of applicable Offered Employee pursuant to Section 5.14(b), duly executed by the applicable Offered Employees and Purchaser; 

(ix)    certified copies of the resolutions of the board of directors of Purchaser authorizing the Transactions and the execution, delivery, and performance of this Agreement and the other Transaction Documents by Purchaser, together with incumbency certificates with respect to officers of Purchaser executing documents or instruments on behalf of Purchaser.
    
Section 2.3    Payment of Purchase Price. 

(a)    In full consideration for the Acquired Assets, Purchaser shall pay to Seller an amount equal to (a) the Base Purchase Price, plus (b) One Million Dollars ($1,000,000.00) (the “Premium”), minus, (c) the amount of any retention payments that Purchaser has committed to pay pursuant to and in accordance with Purchaser Retention Agreements executed by Purchaser and the applicable Offered Employees transferring to Purchaser as of such Closing Date in excess of $4,000,000.00 in the aggregate (such reduction, the “Retention Reduction to Purchase Price”), plus (d) if earned pursuant to Section 5.15, the Deferred Purchase Price Payment.  The Base Purchase Price together with the Premium, as so reduced by the  Retention Reduction to Purchase Price, and increased, if at all, by the Deferred Purchase Price Payment, shall be referred to as the “Purchase Price”.  In the event that all or any portion of the Retention Reduction to Purchase Price is allocable to the Second Closing, and application of such Retention Reduction to Purchase Price to the remaining Base Amount allocable to such Second Closing would result in a negative number, the Seller shall pay to Purchaser at the Second Closing by wire transfer of immediately available funds the amount by which the Retention Reduction to Purchase Price allocable to such Second Closing exceeds the allocable portion of Base Purchase Price that would otherwise be payable by Purchaser at the Second Closing.
 
(b)    The Parties acknowledge and agree that the Transactions may be consummated in two separate Closings, and accordingly if there are multiple Closings, Purchaser shall pay to Seller installments of the Base Purchase Price, as allocated among the HomeStreet Offices transferred in such Closing; provided that the Premium shall be payable in full at the Initial Closing, subject only to reduction pursuant to a Retention Reduction to Purchase Price.  If there is a single Closing on the Initial Closing Date pertaining to all of the Acquired Assets and Assumed Liabilities, Purchaser shall pay the entire amount of the Purchase Price, other than the Deferred Purchase Price Payment, to Seller.  The payment(s) of the Base Purchase Price (as allocated and, potentially, in installments) shall be paid in cash, by wire transfer of immediately available funds in accordance with wire transfer instructions provided by Seller at least two (2) Business Days’ prior to the applicable Closing Date based on the amounts allocated to the assets in each transferring HomeStreet Office as set forth in Exhibits A-2, A-3a and A-3b, taking into account depreciation reflected in the Net Book Value.   For the avoidance of doubt, all applicable Acquired Assets located at, or associated with, a HomeStreet Office shall transfer on the Closing Date applicable to such HomeStreet Office, other than Employee Computers assigned to Offered Employees that do not become Hired Employees on such Closing Date.
    
Section 2.4    Purchase Price Allocation.

(a)    On or prior to the Second Closing Date or, if none, the Initial Closing Date, as the case may be, Purchaser shall prepare and deliver to Seller a statement (together with all supporting documentation) setting forth the allocation of the sum of the aggregate Purchase Price paid at the Initial Closing and Second Closing, if any, plus any other amounts as required by applicable Tax Law transferred or deemed transferred to Seller among the Acquired Assets (the “Allocation Schedule”), which allocation shall be made in accordance with Section 1060 of the Code and any applicable Treasury Regulations.  If Seller does not object to the Allocation Schedule within 30 days of Seller’s receipt of the Allocation Schedule, the Allocation 

Schedule will become final and binding upon Purchaser and Seller (the “Final Allocation Schedule”).  If Seller objects in writing within such 30-day period to any item in the Allocation Schedule, Seller and Purchaser will negotiate in good faith to resolve the dispute (in which case, the agreed-upon Allocation Schedule shall be the “Final Allocation Schedule”).  If they cannot resolve the dispute within 15 days, Seller and Purchaser will engage a nationally recognized independent accounting firm mutually agreed upon by Purchaser and Seller, or if such firm cannot or will not act in such capacity, such other firm mutually acceptable to Purchaser and Seller (the “Independent Accountant”).  As promptly as practicable thereafter, but in any event within 30 days of engaging the Independent Accountant, Purchaser and Seller will each prepare and submit a presentation detailing such Party’s complete statement of proposed resolution of the dispute to the Independent Accountant.  As soon as practicable thereafter, but in any event within 30 days of the submission of each such Party’s presentation to the Independent Accountant, Purchaser and Seller will cause the Independent Accountant to choose one of such Parties’ positions or a compromise position determined by the Independent Accountant based solely upon the presentations by Purchaser and Seller (in which case, the determination of the Independent Accountant shall be considered the “Final Allocation Schedule”).  Purchaser and Seller will share the expenses of the Independent Accountant equally.  All determinations made by the Independent Accountant will be final, binding and conclusive upon Purchaser and Seller.  
(b)    Purchaser and Seller shall report the Transactions (including income Tax reporting requirements imposed pursuant to Section 1060 of the Code) in accordance with the Final Allocation Schedule.  Each of Purchaser and Seller agrees to timely file, or cause to be timely filed, IRS Form 8594 (or any comparable form under state or local Tax law) and any required attachment thereto in accordance with the Final Allocation Schedule. 
(c)    Purchaser, on the one hand, and Seller, on the other hand, each agrees not to take any position inconsistent with the Final Allocation Schedule on any Tax Returns, unless required by a final determination as defined in Section 1313 of the Code or with the consent of the other Party. Purchaser, on the one hand, and Seller, on the other hand, each agrees to promptly notify the other in writing upon receipt of notice of any pending or threatened Tax audit or assessment challenging the Final Allocation Schedule or an Updated Final Allocation Schedule.

ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Subject to any exceptions noted in the Schedules delivered corresponding to the applicable section of this Article 3, Seller represents and warrants to Purchaser as of the Effective Date and as of the Initial Closing Date and the Second Closing Date, if any, as applicable, as follows:
Section 3.1    Organization; Authority. 

(a)    Seller is a Washington state-chartered bank duly organized and validly existing under the laws of the State of Washington, with full power and authority to conduct the Business at the HomeStreet Offices as it is now being conducted, to own or use its properties and assets, and to perform all of its obligations under the Seller Equipment Contracts.  Seller is duly qualified or licensed to do business and is in good standing in each jurisdiction in which either the ownership or use of the properties owned or used by it, or the nature of the activities conducted by it, requires such licensing, qualification or good standing, except for such jurisdictions in which the failure to be so qualified or licensed would not reasonably be expected to be material to the Acquired Assets (taken as a whole) or the Business.

(b)    Seller has the full power and authority to execute, deliver and perform fully its obligations under this Agreement and the Transaction Documents and to consummate the transactions contemplated 

hereby and thereby.  The execution and delivery by Seller of this Agreement and the Transaction Documents and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized and approved by all necessary corporate action of Seller.  This Agreement has been duly executed and delivered by Seller, and (assuming due authorization, execution and delivery by Purchaser) this Agreement constitutes a legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms; except as may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar Laws affecting the enforcement of creditors’ rights generally or by general principles of equity (collectively, “Bankruptcy and Equity Exceptions”). When each Transaction Document to which Seller is or will be a party has been duly executed and delivered by Seller (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Seller enforceable against it in accordance with its terms; except as may be limited by Bankruptcy and Equity Exceptions.

Section 3.2    No Conflicts; Required Consents.
  
(a)    The execution, delivery and performance by Seller of this Agreement and the Transaction Documents, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) violate or conflict with the Constituent Documents of Seller; (b) violate or conflict with any Law applicable to Seller or the Acquired Assets; or (c) assuming receipt of the Required Consents, materially conflict with, or result in (with or without notice or lapse of time or both) any material violation of, or material default under, or give rise to a right of termination, acceleration or adverse modification of any obligation or loss of any material benefit under, any Seller Equipment Contract.  

(b)    Except as set forth on Schedule 3.2 (collectively, the “Required Consents”), no additional consent, approval, waiver, License, Order, permit, qualification, exemption, termination right or waiver,  or authorization is required to be obtained by Seller from, or notice is required to be provided by Seller to, any Person (including, without limitation, any Governmental Authority) in connection with the execution, delivery and performance by Seller of this Agreement, the Transaction Documents, and the consummation of the Transactions. 

Section 3.3    Title to Acquired Assets; Absence of Certain Changes or Events.
  
(a)    Seller owns and has good, valid, and marketable title to the Acquired Assets, free and clear of all Liens, except for the Permitted Liens.  Seller has the right to freely transfer the Acquired Assets to Purchaser pursuant to this Agreement, pending receipt of any Required Consents.  At each Closing, Purchaser will obtain good and valid title to the Acquired Assets free and clear of all Liens other than Permitted Liens.  The Fixed Assets are in good operating condition (normal wear and tear excepted).
    
(b)    Since January 1, 2018, and other than in the ordinary course of business consistent with past practice or pursuant to an Employee Benefit Plan, except as set forth on Schedule 3.3(b), there has not been, with respect to any Offered Employees:

(i)    except as otherwise contemplated by this Agreement, grant of any bonuses (including stay bonuses), whether monetary or otherwise, or increase in any wages, salary, commissions, severance, termination payments, pension or other compensation or benefits, or action to accelerate the vesting or payment of any compensation or benefits, other than normal wage increases for employees made in the ordinary course of business, consistent with past practice, or as provided for in any written agreements or required by applicable Law; 

(ii)    except as otherwise contemplated by this Agreement, adoption, modification or termination of any: (A) employment, severance, retention, compensation guarantee or other agreement, (B) Employee Benefit Plan, or (C) collective bargaining or other agreement with a union, in each case whether written or oral;

(iii)    labor strike, slowdown or work stoppage, material labor grievance, organized labor dispute, collective bargaining negotiations, or any effort by any labor organization to organize; 

(iv)    loan to (or forgiveness of any loan to), or entry into any other transaction with, any Offered Employee, other than loans made in the ordinary course of Seller’s business, consistent with past practice, on terms no less favorable to Seller than loans made to other employees of Seller; or

(v)    commitment or agreement to take any of the foregoing actions. 

Section 3.4    Condition and Sufficiency of Fixed Assets.  The Fixed Assets are in good operating condition and are adequate for the uses to which they are being put by Seller as of the applicable Closing, in each case, ordinary wear and tear excepted.  The Fixed Assets are sufficient for the purpose for which they were intended to be used by Seller prior to such Closing. 

Section 3.5    Seller Equipment Contracts.

(a)The Seller has made available to the Purchaser correct and complete copies of each Seller Equipment Contract (including all modifications, amendments, supplements, annexes and schedules thereto and written waivers thereunder).  Subject only to the effect, if any, of Bankruptcy and Equity Exceptions, each Seller Equipment Contract is valid and binding on the Seller and, to the Knowledge of Seller, the other counterparties thereto, and is in full force and effect and enforceable against the other counterparties thereto in accordance with its terms.  Neither the Seller nor, to the Knowledge of Seller, any other party to any such Seller Equipment Contract is in material breach of, or material default under, any such Seller Equipment Contract and no event has occurred that would reasonably be expected to constitute a material breach or material default (or an event which with notice or lapse of time or both would become a default) under any such Seller Equipment Contract by the Seller, or to the Knowledge of Seller, by any counterparty thereto.  Seller has neither given nor received any written notice of a material default under any Seller Equipment Contract that has not previously been cured.
  
(b)None of the counterparties to any Seller Equipment Contract is an Affiliate of Seller.

Section 3.6    HomeStreet Offices; Leases.  

(a)     Schedule 3.6(a) sets forth (x) the HomeStreet Offices leased by Seller, and (y) a true and complete list of all Leases.  Seller has delivered to Purchaser a true and complete copy of each Lease.  With respect to each Lease:

(i)    such Lease is valid, binding, enforceable, and in full force and effect, and Seller enjoys peaceful and undisturbed possession of the HomeStreet Offices;
        
(ii)    Seller is not in breach or default under such Lease and, to Seller’s Knowledge, no event has occurred or circumstance exists which, with the delivery of notice, passage of time, or both, would constitute such a breach or default, and Seller is current on rent due and payable under such Lease;

        
(iii)    Seller has not received nor given any notice of any current default or current event that with notice or lapse of time, or both, would constitute a default by Seller under any of the Leases and, to the Knowledge of Seller, no other party is currently in default thereof, and no party to any Lease has exercised any termination rights with respect thereto; 

(iv)    Seller has not subleased, assigned or otherwise granted to any Person the right to use or occupy such HomeStreet Office or any portion thereof; and

(v)    Seller has not pledged, mortgaged or otherwise granted a Lien on its leasehold interest in any HomeStreet Office.

(b)    Seller has not received any written notice of (i) material violations of building codes and/or zoning ordinances or other governmental or regulatory Laws affecting each HomeStreet Office, (ii) existing, pending or threatened condemnation proceedings affecting each HomeStreet Office, or (iii) existing, pending or threatened zoning, building code or other moratorium proceedings, or similar matters which could reasonably be expected to materially and adversely affect the ability to operate each HomeStreet Office as currently operated. Neither the whole nor any material portion of any HomeStreet Office has been damaged or destroyed by fire or other casualty.

Section 3.7    Financial Information.  The unaudited financial information documents set forth on Schedule 3.7 are based on the Files and Records of each of the HomeStreet Offices, are presented in accordance with GAAP consistently applied and are accurate and complete in all material respects.  

Section 3.8    Compliance with Laws; Licenses.  

(a)    Seller has complied, and is now complying, in all material respects with all Laws applicable to ownership and use of the Acquired Assets and Seller has not received any communication from any Governmental Authority or any Person alleging any such non-compliance. 
    
(b)    All Licenses required for the ownership and use of the Acquired Assets, if any, have been obtained by Seller and are valid and in full force and effect, and have been for five (5) years.

Section 3.9    Litigation.  There is no Litigation pending or, to Seller’s Knowledge, threatened against Seller with respect to the Acquired Assets, Leases, Seller Equipment Contracts, Assumed Liabilities, or Transactions.

Section 3.10    Employment Benefits.  

(a)    Any Employee Benefit Plan in which any Offered Employee participates is in force on the date of this Agreement and has been maintained in compliance with its terms and with the applicable provisions of ERISA, the Code and other applicable Laws.  No fact or event has occurred with respect to any such Employee Benefit Plan which would be expected to cause the loss of any tax-qualification or exemption or the imposition of any Liability, penalty or Tax under ERISA or the Code.  All contributions and premium payments that are due have been timely made to each Employee Benefit Plan.  No Employee Benefit Plan is subject to Title IV of ERISA.  

(b)    No Offered Employee who is a participant in a “group health plan” (as defined in Code Section 4980B(g)): (i) is currently receiving health care continuation coverage under COBRA, (ii) is eligible to 

receive health care continuation coverage under COBRA and with respect to whom the “election period” (as such phrase is defined in Section 54.4980B(f)(5)) has not expired, or (iii) will otherwise be an “M&A Qualified Beneficiary” (as such phrase is defined in Section 54.4980B-9, Q&A-4 of the Treasury Regulations) in connection with Transactions.  No Employee Benefit Plan that is a “welfare plan” (within the meaning of Section 3(1) of ERISA) and in which any Offered Employee participates provides post-termination or retiree benefits except benefits required under COBRA.

(c)    With respect to each Offered Employee who is a participant in an Employee Benefit Plan which constitutes a “group health plan” within the meaning of Section 5000(b)(1) of the Code, Seller or an ERISA Affiliate has complied with the notice and continuation requirements of COBRA and the regulations thereunder.

(d)    Schedule 3.10(d) contains a true and complete list of each Employee Benefit Plan.  Seller has made available to Purchaser in the Data Room: (i) a written summary of all material plan terms of each Employee Benefit Plan in which any Offered Employee participates; (ii) accurate, current and complete copies, in all material respects, of any employee handbooks applicable to any Offered Employee; and (iii) in the case of any Employee Benefit Plan that is intended to be qualified under Section 401(a) of the Code and in which any Offered Employee participates, an accurate, current and complete copy of the most recent determination, opinion or advisory letter from the Internal Revenue Service.

Section 3.11    Employees.

(a)    Seller has provided Purchaser with true and correct role descriptions and compensation ranges for the positions of the employees who provide services to Seller at the HomeStreet Offices.  Seller has provided to Purchaser a list as of five (5) business days prior to the date of this Agreement, of all Offered Employees of Seller providing services to Seller at the HomeStreet Offices, and for each such employee, his or her (i) job title, (ii) exempt/non-exempt and full-time/part-time status, (iii) annual salary or hourly wage rate, (iv) target bonus or rate of other incentive payments, (v) accrued but unused paid time off (if any), (vi) date of hire, and (vii) job location.  Schedule 3.11(a) sets forth the number of individuals, stated separately for each HomeStreet Office, whose employment with Seller terminated during the 90-day period ending on the date hereof in a manner that would constitute an “employment loss” within the meaning of WARN.
    
(b)    Except as set forth on Schedule 3.11(b)(i), with respect to the each Offered Employee, Seller is and during the last three (3) years has been in compliance in all material respects with all Laws relating to employment, employment practices, employment terms and conditions and employment termination, including, without limitation, Laws relating to equal-employment opportunity, employment discrimination, retaliation, harassment, promotion and termination, reasonable accommodation, labor relations, occupational safety and health standards, minimum wages, payment of wages, including commissions, bonuses, hours and records of hours worked, child labor, hiring, privacy, withholding and payment of social security and other similar Taxes and withholdings, leaves of absence, overtime, classification of employees as exempt or non-exempt, classification of workers as employees, temporary employees, or independent contractors, vacation, sick time, paid time off, background checks, working conditions, meal and break periods, benefits, collective bargaining, unlawful retirement or termination, classification of employees, immigration, visa, work status, employer registrations (including with respect to exclusive vendors), human rights, workers’ compensation insurance and unemployment insurance (the foregoing matters, collectively, the “Employment Matters”).  Except as set forth on Schedule 3.11(b)(ii) hereof, none of the Offered Employees is absent from work on any form of leave, including without limitation, illness, workers’ compensation, military leave, maternity leave, intermittent or continuous leave under the Family and Medical Leave Act of 1993, short-term disability, salary continuation, on layoff with recall rights or otherwise or has notified Seller of his or 

her intent to take such leave.  To Seller’s Knowledge, no Offered Employee is an undocumented alien, and Seller has obtained a Form I-9 and all ancillary information required in connection therewith with respect to each such employee.  With respect to the conduct of its business at the HomeStreet Offices, Seller has at all times complied, and is in compliance with the United States Immigration Reform and Control Act.

(c)    Except as set forth on Schedule 3.11(c), there is not presently and during the last three (3) years has not been any pending or, to the Seller’s Knowledge, threatened: (i) strike, slowdown, picketing, work stoppage, employee grievance process or similar action affecting Seller’s operation of the HomeStreet Offices; (ii) charge, grievance proceeding or other claim against or affecting Seller relating to the alleged violation of any Law pertaining to labor relations matters with respect to Seller’s operation of the HomeStreet Offices, including any charge or complaint filed by an employee or union of employees providing services to Seller at the HomeStreet Offices with the National Labor Relations Board or any comparable governmental authority; (iii) union organizational activity or other labor or employment dispute against or affecting Seller with respect to the HomeStreet Offices; or (iv) application for certification of a collective bargaining agent, petition for certification or election, or representative seeking certification or recognition with respect to the employees of Seller providing services to Seller at the HomeStreet Offices.  Seller is not a party to any collective bargaining or other union agreement covering any employee providing services to Seller at the HomeStreet Offices.

(d)    Except as set forth on Schedule 3.11(d), Seller has not incurred in the past three (3) years any material Liability arising out of the misclassification of individuals hired to provide services to Seller at the HomeStreet Offices and treating such individuals (i) as consultants or independent contractors and not as employees or (ii) as exempt employees and not as non-exempt employees, in each case, including any liability or obligation under or on account of (A) a benefit plan or (B) the failure to comply with applicable legal requirements relating to the Employment Matters with respect to any such individuals.

(e)    Except as set forth on Schedule 3.11(e), no Offered Employee is a party to any employment agreement or other agreement providing severance benefits to such employee upon the consummation of the Transactions.  Each Offered Employee is employed by Seller “at will” and each Offered Employee’s relationship with the Seller could or can be terminated without notice and without penalty.  Seller has provided true and correct copies of the form of retention or severance agreement with Offered Employees described on Schedule 3.11(e).  No Offered Employee is a party to or bound by any non-competition or similar restrictive covenants that Seller has not waived effective as of the applicable Hire Date pursuant to Section 5.14.

Section 3.12    Tax Matters.  Seller has filed on a timely basis all material Tax Returns that are or were required to be filed by it under applicable Laws with respect to the conduct of business at the HomeStreet Offices, and all such Tax Returns were correct and complete in all material respects and have been prepared in accordance with applicable Laws.  Seller has paid all material Taxes that have been required to be paid under applicable Laws with respect to its conduct of business at the HomeStreet Offices.  There are no Liens for Taxes upon any of the Acquired Assets. The Seller has withheld and paid all material Taxes required to have been withheld and paid by the Seller in connection with amounts paid and/or owing to any Person by the Seller and/or relating to any of the Acquired Assets in connection with its conduct of business at the HomeStreet Offices. This Section 3.12 constitutes the sole representations and warranties of the Seller with respect to any Tax matters, and for the avoidance of doubt, nothing in this Section 3.12 shall cause the Seller to be liable for any Taxes for any post-Closing Period.

Section 3.13    Information Security.  Seller has used commercially reasonable efforts to maintain the security and confidentiality of all confidential information used by Seller in the Business (including its customers’ personal information, or other personally identifiable information).  During the past 

three (3) years, to the Knowledge of Seller, there has been no loss, theft, or unauthorized disclosure of any such confidential information of Seller that would be material to the Business. Insofar as it relates to the Business, Seller has complied in all material respects with all Privacy Laws.
 
Section 3.14    Unlocked Pipeline Loans.  Schedule 3.14, which shall be delivered in accordance with Section 5.10, will set forth as of the date of such delivery, the name of each potential borrower who has submitted a Unlocked Pipeline Loan application for review (provided that the Unlocked Pipeline Loan is then in force and has not resulted in a closed loan) together with: (i) the name of the intended Investor, as applicable; (ii) the type of loan program and any rate which the Seller has committed to the related borrower; and (iii) the expected loan amount, in each case, if known to Seller.  The Seller has complied in all material respects with all Pipeline Loan Regulations which relate to any of the Unlocked Pipeline Loans for the applicable stage of processing.

Section 3.15    Brokers and Finders. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the Transactions except for the fees and commissions of Keefe, Bruyette & Woods, Inc., a Stifel Company, for which Seller shall be solely responsible.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as of the date hereof and as of the applicable Closing, as follows: 
Section 4.1    Organization and Qualification.  Purchaser is a corporation duly organized, validly existing, and in good standing under the Laws of the State of New Jersey.  Purchaser has the full power and authority to execute, deliver and perform fully its obligations under this Agreement and the Transaction Documents to which it is a party and to consummate the transactions contemplated hereby and thereby.  The execution and delivery by Purchaser of this Agreement and the Transaction Documents to which it is a party and the consummation by Purchaser of the transactions contemplated hereby and thereby have been duly authorized and approved by all necessary corporate action of Purchaser.  This Agreement has been duly executed and delivered by Purchaser, and (assuming due authorization, execution and delivery by Seller) this Agreement constitutes a legal, valid and binding obligation of Purchaser enforceable against Purchaser in accordance with its terms; except as may be limited by Bankruptcy and Equity Exceptions. When each Transaction Document to which Purchaser is or will be a party has been duly executed and delivered by Purchaser (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Purchaser enforceable against it in accordance with its terms; except as may be limited by Bankruptcy and Equity Exceptions.

Section 4.2    No Conflicts; Required Consents.  The execution, delivery and performance by Purchaser of this Agreement and the Transaction Documents, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) violate or conflict with the organizational documents of Purchaser; or (b) violate or conflict with any Order or Law applicable to Purchaser.  Except as set forth on Schedule 4.2 (collectively, the “Purchaser’s Approvals”, no consent, approval, waiver or authorization is required to be obtained by Purchaser from, or notice is required to be provided by Purchaser to, any Person (including any Governmental Authority) in connection with the execution, delivery and performance by Purchaser of this Agreement and the consummation of the transactions contemplated hereby.

Section 4.3    Litigation.  There is no Litigation pending or, to Purchaser’s Knowledge, threatened, against Purchaser in respect of the consummation of the Transactions.

Section 4.4    Brokers and Finders.  Purchaser has not engaged any brokers or investment bankers in respect of the Transactions.

Section 4.5    Sophisticated Investor.  Purchaser is a sophisticated investor and its bid and decision to purchase the Acquired Assets is based upon Purchaser’s own independent experience, knowledge, due diligence and evaluation of the transactions contemplated hereby, and consultations with such investment, legal, tax, accounting and other advisors as it deemed necessary.  Purchaser has relied solely on such experience, knowledge, due diligence and evaluation and has not relied on any oral or written information provided by Seller or Seller’s employees, affiliates, agents or other representatives, other than the representations and warranties made by Seller herein.

Section 4.6    Financial Capacity.  Purchaser has sufficient cash on hand or other resources of immediately available funds to enable it to make the payment of the Purchase Price and consummate the Transactions.

ARTICLE 5: COVENANTS

Section 5.1    Conduct of Business Prior to Applicable Closing.  

(a)    From the date hereof to the applicable Closing Date, and except as contemplated hereby or to the extent that Purchaser shall otherwise consent in writing, such consent not to be unreasonably withheld, Seller shall: 
(i)    operate the Business in the ordinary course of business consistent with past practices;

(ii)    maintain, defend, and protect the Acquired Assets in the same condition as they were on the Effective Date, subject to reasonable wear and tear, including remaining current with respect to all financial obligations in all material respects;

(iii)    not directly or indirectly sell, issue, transfer, assign, pledge or otherwise encumber any of the Acquired Assets except in accordance with Section 5.17; 

(iv)    maintain books and records of the Business in the ordinary course in accordance with past practice;

(v)    except to the extent required by applicable Law or in the ordinary course of business, not enter into or adopt any Employee Benefit Plan providing compensation or benefits to the Offered Employees, or amend, terminate, or waive any right of an Offered Employee under any existing Employee Benefit Plan, or enter into a Contract to any of the foregoing; 

(vi)    not (1) transfer, terminate, demote, or make a written offer to transfer, terminate, or demote any Offered Employee, other than terminations for cause in the ordinary course of business consistent with past practice; or (2) encourage any Offered Employee to resign from or terminate his or her relationship with the Seller; 

(vii)     not modify, terminate, assign, or sublease any Seller Equipment Contract or Lease, except renewals or extensions in the ordinary course of business consistent with past practice; or

(viii)    not enter into any agreement (written or oral) that, with or without the passage of time, would result in a breach of any of the covenants of this Section 5.1.

(b)    Seller and Purchaser agree that prior the applicable Closing Date, it may become necessary or advisable in the ordinary course of business for Seller to replace certain Fixed Assets or Contract Equipment.  In such event, Seller shall seek the consent of Purchaser to replace such Fixed Asset(s) or Contract Equipment, which consent shall not be unreasonably withheld, conditioned or delayed, and if so consented to, such replacement asset shall be added to the Fixed Assets or Contract Equipment hereunder and the Fixed Asset or Contract Equipment that it replaced shall be removed hereunder. 

Section 5.2    Cooperation; Consents; New Contracts.  

(a)    The Parties shall cooperate and use commercially reasonable efforts to (i) take, or cause to be taken, all appropriate action, and do, or cause to be done, all things necessary, proper or advisable under applicable Law to promptly consummate and make effective the Transactions; (ii)(A) obtain all Required Consents and Purchaser’s Approvals, (B) obtain any Licenses or approvals by the appropriate regulatory authority for the applicable state in which each applicable HomeStreet Office is located (including, without limitation, having a designated and duly licensed Sales Manager approved by such regulatory authority, and having such HomeStreet Office become State Licensed), and (C) assist any Loan Officers and loan officer assistants operating out of the HomeStreet Offices to become State Licensed as necessary to perform their functions after the applicable Hire Date; and (iii) fulfill all conditions to such Party’s obligations under this Agreement as promptly as practicable.  Purchaser shall not contact any of Seller’s employees that are not Offered Employees, customers, clients, distributers, vendors, landlords, or other business relations of Seller, except in furtherance of consummating the Transactions.  Seller shall have the right to attend any meetings (in-person or telephonic) between Purchaser and any such employees, customers, clients, distributers, vendors, landlords, or other business relations, and Purchaser shall provide to Seller reasonably sufficient notice of the same.  The Parties hereto shall not willfully take any action that will have the effect of delaying, impairing, or impeding the receipt of any required consents, authorizations, orders, and approvals. 

(b)    The Parties acknowledge and agree that Seller has certain contracts (the “Seller Equipment Contracts”) with the vendors set forth on Schedule 5.2(b) (the “Applicable Vendors”), which Seller Equipment Contracts grant Seller the right to use the wireless equipment set forth on Exhibit A-1a (“Wireless Equipment”), the circuits set forth on Exhibit A-1b (“Circuit Equipment”), postage equipment set forth on  Exhibit A-4a (“Postage Equipment”), and the copiers and printers set forth on Exhibit A-4b (“Printers”, and together with the Wireless Equipment, Circuits and Postage Equipment the “Contract Equipment”).  Prior to the Initial Closing, Purchaser and Seller shall cooperate and use commercially reasonable efforts to obtain in Purchaser’s name a contract with each of the Applicable Vendors (the “Purchaser Equipment Contracts”), which Purchaser Equipment Contracts shall each provide that (i) the applicable Contract Equipment that is subject to a Seller Equipment Contract with such Applicable Vendor shall be released from such Seller Equipment Contract, with the effect that following the applicable Closing and conditioned upon the applicable items of Contract Equipment being included in the Acquired Assets being transferred to Purchaser as of such Closing, Seller shall have no liability for such Contract Equipment to the extent arising or accruing following such Closing, and (ii) the Purchaser shall have a right to use such Contract Equipment on substantially similar terms and conditions as applicable to Seller under the Seller Equipment Contract, including a lease or service period of no less duration than the remaining lease or service period existing with respect to the applicable 

Contract Equipment under the Seller Equipment Contract.  

(c)Except as contemplated by the Transition Services Agreement, all service or maintenance contracts to which Seller is a party with respect to the Contract Equipment are not Acquired Assets and shall not transfer to Purchaser.

(d)Seller shall use commercially reasonable efforts to obtain the FHLB Consent (or confirmation from the FHLB that it will provide such consent on or prior to the Initial Closing Date), from the Effective Date and until the earlier of (i) April 25, 2019 or (ii) the date of receipt by Seller of written (including by email) notice from the FHLB that it will not provide the FHLB Consent.   From and after (i) the date of receipt by Purchaser of written notice from Seller that FHLB denied Seller’s request for the FHLB Consent or (ii) if earlier (but on or after April 25, 2019), the date of receipt by Purchaser of written notice from Seller that it has not obtained a definitive response from the FHLB regarding the FHLB Consent, and through the Initial Closing Date, (x) Purchaser shall use commercially reasonable efforts to obtain the documentation listed under item 2(b)(i) of Exhibit B and (y) Seller shall use commercially reasonable efforts to obtain from the FHLB (including written authorization from the FHLB to file the same or a written commitment by FHLB to file directly), the documentation listed under item 2(b)(ii) of Exhibit B.  No later than five (5) Business Days following the Effective Date, Purchaser shall deliver to Seller copies of the relevant covenants, prohibitions and restrictions described in item 2(b)(i) of Exhibit B. 

Section 5.3    Confidentiality.  The Parties acknowledge and agree that the Mutual Confidentiality and Non-Disclosure Agreement, dated as of January 15, 2019, by and between the Seller and Purchaser (the “NDA”) remains in full force and effect and, in addition, covenants and agrees to keep confidential, in accordance with the provisions of the NDA, any information provided to a Party by the other Party pursuant to this Agreement.  If this Agreement is terminated prior to the Closing for any reason, such NDA and the provisions of this Section shall nonetheless continue in full force and effect. 

Section 5.4    Non-Solicitation. From the Effective Date until the period ending three (3) years from the Second Closing Date (or if no Second Closing occurs, the Initial Closing Date) (the “Restricted Period”), neither Party shall, and shall not permit any of its Affiliates to, directly or indirectly solicit for employment, hire any employee of the other Party (including, but not limited to, any Offered Employee), encourage any such employee to leave such employment, or hire any such employee who has left such employment; provided that the following shall not be a breach of this Section 5.4: (i) a general solicitation for employment in newspaper advertisements, websites or other media of general solicitation not specifically targeted to employees of the other Party, (ii) following the 18-month anniversary of the applicable Hire Date with respect to Offered Employees not listed on Schedule 5.4 (the “Non-Listed Employees”), the hiring of any Non-Listed Employee resulting from such Non-Listed Employee contacting a Party independently without any solicitation by such Party, and (iii) prior to the earlier to occur of the Second Closing or the termination of this Agreement, Purchaser shall be permitted to solicit, and offer employment to the Offered Employees in accordance with this Agreement.

Section 5.5    Bulk Sales Tax Laws.  The Parties hereby waive compliance with the provisions of any bulk sales tax, bulk transfer tax or similar Laws of any jurisdiction that may otherwise be applicable with respect to the sale of any or all of the Acquired Assets to Purchaser, it being understood that any Liabilities arising out of the failure of the Parties to comply with the requirements and provisions of any bulk sales, bulk transfer or similar Laws of any jurisdiction shall be treated as Excluded Liabilities.

Section 5.6    Further Assurances.  Following the applicable Closing, each of the Parties hereto shall execute and deliver such additional documents, instruments, conveyances and assurances and 

take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the Transactions.

Section 5.7    Borrower Information; Employee Computer Transfers Terms.
  
(a)    The Parties acknowledge and agree to the terms pertaining to: (i) the provision of Borrower Information set forth on Exhibit J and (ii) the Employee Computer “swap-out” plan set forth on Exhibit L.

(b)    The Borrower Information supplied to Seller shall be delivered with specific demarcation of all borrowers ineligible for targeted solicitation and marketing campaigns for any purpose, including without limitation, refinance, home equity or insurance products (each a “Solicitation Action”).  Purchaser shall use such Borrower Information to denote the applicable borrowers in Purchaser’s Mortgage Returns database as ineligible for any Solicitation Action.  Promptly following the Initial Closing Date (and Second Closing Date with respect to any Hired Employees who transfer as of the Second Closing Date), Purchaser shall instruct each of its employees not to engage in any Solicitation Action with respect to such borrowers. 

Section 5.8    Exclusivity.  Seller shall not, and shall not permit or authorize any representative or agent of Seller to, directly or indirectly, (i) solicit, initiate, endorse, encourage or facilitate any inquiry, proposal or offer with respect to, or the making or completion of, any Acquisition Proposal, or any inquiry, proposal or offer that is reasonably likely to lead to any Acquisition Proposal, (ii) enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any Person any information or data with respect to, or otherwise cooperate in any way with, any Acquisition Proposal, (iii) approve, recommend, agree to or accept, or propose to approve, recommend, agree to or accept, any Acquisition Proposal or (iv) resolve, propose or agree to do any of the foregoing.  Seller shall, and shall cause each representative or agent of Seller to, (A) immediately cease and cause to be terminated all existing discussions or negotiations with any Person conducted heretofore with respect to any Acquisition Proposal and (B) request and confirm the prompt return or destruction of all confidential information previously furnished.  For the avoidance of doubt, this Section 5.8 shall not apply with respect to any Excluded Assets or to any employees of Seller who are not Offered Employees. 

Section 5.9    Reimbursement for Expenses.

(a)    In the event that Purchaser receives any bill or invoice pertaining to the Acquired Assets or Seller Equipment Contracts for any period prior to the applicable Closing, Purchaser shall forward such bill or invoice to Seller and Seller shall promptly either (i) satisfy directly the obligations due to the invoicing party in connection with the pre-Initial-Closing period or pre-Second-Closing period, as applicable, directly, or (ii) reimburse Purchaser for all amounts paid to such invoicing party by Purchaser that were due in connection with the pre-Initial-Closing period or pre-Second-Closing period, as applicable.  

(b)    In the event that Seller receives any bill or invoice pertaining to the Acquired Assets or Seller Equipment Contracts for any post-Initial-Closing period or post-Second-Closing period, as applicable, Seller shall forward such bill or invoice to Purchaser and Purchaser shall promptly either (i) satisfy directly the obligations due to the invoicing party in connection with any post-Initial-Closing period or post-Second-Closing, as applicable,  directly, or (ii) reimburse Seller for all amounts paid to such invoicing party by Seller that were due in connection with the post-Initial-Closing period or post-Second-Closing, as applicable.

(c)    Seller and Purchaser each agree that after the Initial Closing Date or Second Closing Date, as applicable, they will hold and will promptly transfer and deliver to the other, from time to time as 

and when received by them, any cash, checks with appropriate endorsements (using their best efforts not to convert such checks into cash), or other property that they may receive on or after the applicable Closing, which properly belongs to the other Party, including any insurance proceeds (if applicable), and will account to the other Party for all such receipts.

Section 5.10    Covenants Regarding Transitioned Unlocked Pipeline Loans.

(a)    Seller shall deliver a schedule of the Unlocked Pipeline Loans three (3) Business Days prior to the applicable Closing Date with the name of each potential borrower who has submitted a Unlocked Pipeline Loan for review together with: (i) the name of the intended Investor, if any; (ii) the type of loan program and any rate which Seller has committed to the related borrower; (iii) the expected loan amount, and (iv) if known, the closing date.    

(b)    As soon as reasonably practicable following the applicable Closing (and in no event later than three (3) Business Days following such Closing), Seller shall send a letter, which shall be approved in form and substance by Purchaser, to all loan applicants under the Unlocked Pipeline Loans advising the applicant of the pending transfer the Unlocked Pipeline Loan application to Purchaser.  Purchaser shall, promptly after transfer of an Unlocked Pipeline Loan to Purchaser, send a letter to the related applicant stating that Purchaser has received the Transitioned Pipeline Loan and identifying any additional documentation required to close the Transitioned Pipeline Loan, including any appropriate disclosures or re-disclosures from Purchaser regarding such loan or loan application.

(c)    The Parties shall work together to ensure that the transition of any Transitioned Pipeline Loan hereunder is as smooth as practicable for the applicants, avoiding any unnecessary delays or additional burdens for the applicant.  Without limiting the foregoing, the Parties shall cooperate to transfer all applicant-provided documentation and Seller-issued disclosures relating to the Transitioned Pipeline Loans to Purchaser.  The Parties shall also cooperate to transfer to Purchaser appraisals obtained by Seller with respect to the Transitioned Pipeline Loans, upon payment to Seller, by Purchaser or the loan applicant, of the lesser of (i) the appraisal cost disclosed to the loan applicant and (ii) the invoiced cost of the appraisal.  Purchaser agrees that any transferred appraisals do not constitute an opinion or representation of value by Seller, and agrees to perform its own due diligence and review regarding any transferred appraisals. 

(d)    Purchaser shall deliver all notices and disclosures required to be delivered to loan applicants for the Transitioned Pipeline Loans in accordance with applicable Law, including but not limited to notices pursuant to the Equal Credit Opportunity Act (Regulation B) notifications and other regulatory disclosures and notifications.  Purchaser acknowledges and agrees that Purchaser shall re-underwrite all Transitioned Pipeline Loans, even if Seller has previously performed underwriting on such loans.  Purchaser shall not rely on any previous loan underwriting performed by Seller, and Seller expressly disclaims the adequacy and completeness of any of its underwriting with respect to any Transitioned Pipeline Loan.

(e)    None of the Purchase Price will be allocated to the Transitioned Pipeline Loans, and the Parties expressly agree that such transfer of the Transitioned Pipeline Loans shall not constitute a brokered sale of such loan applications from Seller to Purchaser.

Section 5.11    Allocation of Lease Rents.  With respect to each Lease assigned or subleased to Purchaser hereunder, Seller and Purchaser shall each be responsible for its pro rata share of all rental payments due pursuant to such Lease during the calendar month (or other applicable rental period) in which the applicable Closing occurs.

Section 5.12    Access to Information. 

(a)    From the date hereof until the applicable Closing, Seller shall (a) afford Purchaser and its representatives reasonable access to all of the HomeStreet Offices, properties, assets, Files and Records, Contracts and other documents and data related to the Business or the Acquired Assets; (b) furnish Purchaser and its representatives with such financial, operating and other data and information related to the Business or the Acquired Assets as Purchaser or any of its representatives may reasonably request; and (c) instruct the representatives of Seller to cooperate with Purchaser in its investigation of the Business and Acquired Assets. Any investigation pursuant to this Section 5.12 (a) shall be conducted in such manner as not to interfere unreasonably with the conduct of the Business, the Acquired Assets, or any other businesses of Seller.  No investigation by Purchaser or other information received by Purchaser shall operate as a waiver or otherwise affect any representation, warranty or agreement given or made by Seller in this Agreement.

(b)    From and after the Initial Closing Date, upon Seller’s reasonable request and in connection with any (i) Tax matters or the preparation of any Tax Returns, (ii) litigation matters, including any “legal holds”, or (iii) investigation, audit, inquiry, exam or other request from a Governmental Authority, Purchaser shall provide or cause to be provided to Seller, its counsel and its accountants, reasonable access to the Files and Records included among the Acquired Assets during normal business hours and in such a manner so as not to interfere with the conduct of the businesses of Purchaser in any material respect. 

Section 5.13    Notice of Certain Events.  

(a)    From the date hereof until the earlier to occur of the Second Closing Date or the termination of this Agreement, each Party shall promptly notify the other in writing of: 

(i)any fact, circumstance, event or action the existence, occurrence or taking of which (A) has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect, (B) has resulted in, or could reasonably be expected to result in, any representation or warranty made by such Party hereunder not being true and correct in any material respect or (C) has resulted in, or could reasonably be expected to result in, the failure of  such Party’s conditions precedent to its obligation to consummate the Transactions set forth in Article 7 to be satisfied;

(ii)any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the Transactions, except the Required Consents; and

(iii)any notice or other communication from any Governmental Authority directed to such Party in connection with the Transactions.

(b)    A Party’s receipt of information pursuant to this Section 5.13 shall not operate as a waiver or otherwise affect any representation, warranty or agreement given or made by the notifying Party in this Agreement (including Sections 8.2 and 9.1(b) with respect to Purchaser, and Sections 8.3 and 9.1(c) with respect to Seller) and shall not be deemed to amend or supplement the Schedules.

Section 5.14    Retention Bonuses.
  
(a)    Effective as of the applicable Hire Date, Seller hereby waives any non-solicit or non-compete covenants or restrictions set forth in any agreements with Hired Employees listed on Schedule 3.3(b)(i).     

(b)    Purchaser shall offer retention bonuses to certain Offered Employees in an amount up to $6,000,000.00 based on a schedule to be mutually agreed by Seller and Purchaser within ten (10) Business Days of the Effective Date.  Such retention bonuses shall be payable pursuant to the terms and conditions set forth in retention bonus agreements in form and substance reasonably acceptable to Purchaser and Seller (“the “Purchaser Retention Agreements”).  Purchaser shall provide to Seller in writing once per fiscal quarter a list of each Offered Employee that is party to a Purchaser Retention Agreement that resigned or was terminated from the Purchaser’s employment for any reason or transferred his or her primary office location from a HomeStreet Office in the Primary Region to any office outside the Primary Region, in each case, during the twelve (12) month period following the Initial Closing.

(c)    Purchaser shall pay to each Hired Employee that is a party to a Purchaser Retention Agreement all amounts due and payable as and when earned pursuant to the terms and conditions set forth in the applicable Purchaser Retention Agreement.

Section 5.15    Deferred Purchase Price.

(a)    Promptly following the first anniversary of the Initial Closing, Purchaser shall deliver to Seller a statement setting forth its good faith calculation of Trailing Total Volume along with reasonable supporting documentation related thereto.   In the event that Seller disputes Purchaser’s calculation of Trailing Total Volume, Seller shall notify Purchaser and the Parties shall work in good faith for a period up to thirty (30) days to resolve any discrepancies or disagreements.  In the event that the Parties are unable to resolve any such discrepancies or disagreements during such thirty (30) day period, the Parties shall submit the matter to the Independent Accountant in accordance with the process contemplated by Section 2.4.  In the event that the Trailing Total Volume is equal to or greater than 65% of the Total Volume, Purchaser shall pay to Seller, by wire transfer of immediately available funds, $1,000,000.00 (the “Deferred Purchase Price Payment”). Subject to Section 5.15(b), the Deferred Purchase Price Payment, if payable as determined by Purchaser’s calculation of Trailing Total Volume or subsequently by agreement of the Parties or determination of the Independent Accountant, shall be paid to Seller within three (3) Business Days following the first to occur of (i) Purchaser’s determination that such amount is owed, (ii) such time as the Parties resolve any discrepancies or disagreements related thereto in accordance with this Section 5.15(a), or (iii) following the date of final determination by the Independent Accountant.  Purchaser shall not take any action or omit to take any action with the intent of reducing the Trailing Total Volume during the twelve (12) months following the Initial Closing. 

(b)    In the event the Deferred Purchase Price Payment is due to Seller, and at or prior to such time Purchaser has delivered to Seller notice of a Claim in accordance with Section 8.4, and such Claim has not been resolved, Purchaser and Seller agree that all or any portion of the Deferred Purchase Price Payment representing the Purchaser’s good faith estimate of the indemnifiable Losses that may be incurred pursuant to such unresolved Claim shall not be paid over to Seller, but shall instead be deposited with a third party escrow agent reasonably acceptable to Purchaser and Seller, to be held pending resolution of such Claim, it being agreed that the balance of the Deferred Purchase Price Payment that is not subject to dispute, if any, shall be paid to Seller as set forth in Section 5.15(a).

Section 5.16    Closing Conditions.  From the date hereof until each applicable Closing, each Party hereto shall use commercially reasonable efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in Article 7 hereof.

Section 5.17     Sale Right.  In the event the Second Closing has not occurred on or prior to June 21, 2019, the Parties acknowledge and agree any HomeStreet Office that (i) has not been acquired by 

Purchaser on or prior to such date, and (ii) as of such time, does not satisfy the viability threshold set for such HomeStreet Office set forth on Exhibit I hereto, the Seller (provided that Seller is not in material default of its obligations under this Agreement) may transfer the Lease underlying such HomeStreet Office and any Fixed Assets related to such HomeStreet Office to a third party upon the consent of Purchaser (not to be unreasonably withheld, conditioned or delayed).  In the event Purchaser does not respond to Seller’s request within five (5) Business Days of receipt of such request, Purchaser shall be deemed to have consented to such request.

Section 5.18    Information Security.  Purchaser shall use commercially reasonable efforts to maintain the security and confidentiality of all confidential information used in the business of Purchaser (including Borrower Information and its customers’ personal information and other personally identifiable information).  Purchaser shall comply in all material respects with all Privacy Laws with respect to the operation of its business. 

ARTICLE 6
EMPLOYMENT MATTERS

Section 6.1    Employees.

(a)    No later than ten (10) days following the Effective Date, Purchaser shall offer employment to each of the employees set forth on Schedule 6.1(a) (the “Offered Employees”), subject to Purchaser’s customary employee evaluation and hiring practices, appropriate regulatory licensing, and for any non-License Required Employees, as of the Initial Closing or Second Closing, as applicable, in accordance with Exhibit H hereto.  Any Offered Employees who become employees of Purchaser are hereinafter referred to collectively as “Hired Employees” and individually as a “Hired Employee”.  Immediately prior to the applicable Hire Date for each Hired Employee, Seller shall accept resignations from all Hired Employees who the Parties anticipate will commence employment with Purchaser.  In the event the Initial Closing occurs, the Hire Date for License Required Employees shall be (i) the Initial Closing Date, if (1) such License Required Employee is State Licensed prior to the Initial Closing Date, and (2) the HomeStreet Office in which such License Required Employee is employed, or a HomeStreet Office to which such License Required Employee can transfer on the Initial Closing Date, is a Financially Viable HomeStreet Office as of the Initial Closing Date, or (ii) the Second Closing Date, if such License Required Employee is not hired on the Initial Closing Date and such License Required Employee (1) is State Licensed prior to the Second Closing Date, and (2) the HomeStreet Office in which such License Required Employee is employed, or a HomeStreet Office to which such License Required Employee can transfer on the Second Closing Date is a Financially Viable HomeStreet Office as of the Second Closing Date.   The Hire Date for all employees that are ultimately hired by Purchaser in connection with the Initial Closing or the Second Closing shall be the Initial Closing Date or the Second Closing Date, as applicable, provided that Offered Employees on family or medical leave as of the applicable Closing Date shall commence employment with Purchaser as soon thereafter as practicable. 

(b)    Seller shall be responsible for, and shall pay at or prior to the applicable Closing, all Liabilities arising from or relating to any claims by or on behalf of individuals who at or prior to the applicable Hire Date, as applicable, are or were employees of Seller, in respect of all accrued but unused paid time off and vacation and severance pay (the “Termination Costs”) relating to the termination of such employees’ or former employees’ employment with Seller, or any break in service or any other event entitling someone to payments for such benefits (a “Termination”), which occurs on or prior to such Hire Date.  Except as provided 

above, nothing in this Section 6.1(b) obligates Seller to pay to the Hired Employees any Termination Costs in excess of what would otherwise be legally or contractually due to the Hired Employees at Termination of employment by Seller.  Purchaser shall be responsible for all obligations or Liabilities incurred or arising after the applicable Hire Date for each Hired Employee.

(c)    Except with regard to the Hired Employees, Seller shall be responsible for providing and discharging any and all notifications, benefits, and Liabilities to employees and Governmental Authorities required by the WARN Act that are required to be provided or discharged on or before the applicable Closing, to employees of Seller.

Section 6.2    Continued Employment.  Purchaser agrees to use commercially reasonable efforts to hire and employ a sufficient number of Offered Employees in substantially the same role with compensation no less favorable and benefits that are comparable in the aggregate to benefits that Purchaser offers to similarly situated employees of Purchaser at the time immediately prior to the Hire Date for a period of not less than ninety (90) days following the Hire Date, such that Seller does not incur liability for non-compliance with the requirements of the WARN Act as to Seller’s employees.  Nothing in this Section 6.2 shall (a) prevent the termination of any Hired Employee for cause or (b) require any Hired Employee to continue employment with Purchaser if such Hired Employee voluntarily terminates his or her employment.  In the event Purchaser terminates any Hired Employee within the first ninety (90) days following the Hire Date, Purchaser shall promptly inform Seller and shall reimburse Seller for any amounts paid by Seller to such Hired Employees in connection with Seller’s obligations under the WARN Act, if any.  Without limiting the foregoing, nothing in this Section 6.2 shall create any rights for any third party, including but not limited to the Hired Employees.

Section 6.3    Employee Benefit Plans; Continuing Obligations.
  
(a)    Immediately upon the applicable Hire Date (without any requirement to wait for any eligibility period to pass), each Hired Employee will be provided with benefits comparable to those of similarly situated employees of Purchaser immediately prior to the applicable Hire Date under Purchaser’s applicable employee benefit plans in which such similarly situated employees of Purchaser are generally eligible to participate according to the terms and the provisions of such applicable employee benefit plans, and Purchaser shall have no Liabilities or obligations for any employee benefits under any Employee Benefit Plans or any employment agreements with Seller.  Each Hired Employee will receive credit for prior service with Seller for purposes of determining benefit levels under Purchaser’s severance plan and paid time off plan(s) in which such Hired Employee is eligible to participate, if any.  Notwithstanding the foregoing, nothing in this Agreement shall require Hired Employees to be permitted to participate in any “frozen” employee benefit plans offered by Purchaser to certain of its employees.  

(b)    Neither Seller nor any of its affiliates shall commit or permit any act or omission which would reasonably be expected to give rise to any Liability or other obligation on the part of the Purchaser or any of its affiliates (or any group health plan relating to the Purchaser or any of its affiliates) as a “successor employer” (i) under COBRA or other applicable Law in connection with the Transactions, or (ii) in connection with any Employee Benefit Plan.
  
Section 6.4    Compensation.   Seller shall be solely responsible for payment of any compensation, bonus incentives or commissions to which any Key Employee would be entitled in respect of origination efforts while employed by Seller with regard to loans that close in the name of Seller from the applicable HomeStreet Office on or prior to the day that is 30 days after the Initial Closing Date or Second Closing Date, as applicable.  Purchaser shall be solely responsible for payment of any compensation, bonus 

incentives or commissions (paid in accordance with Purchaser’s compensation practices and policies then in effect) to which any Hired Employee becomes entitled in respect of any Transitioned Pipeline Loan that subsequently closes.  Seller shall be solely responsible for payment of any severance payments due under Seller’s severance plan to any employee of Seller, if any.

Section 6.5    Transition Plan.  The Parties shall work in good faith to develop a mutually acceptable and beneficial transition plan addressing administrative and operational tasks necessary to facilitate a smooth transition for all Hired Employees, including the reasonable provision by Seller of certain personnel records, as mutually agreed by the Parties and, to the extent applicable, subject to consent of the applicable employees, including, without limitation, the services contemplated under the Transition Services Agreement. 

Section 6.6    Training of Loan Officers.  Seller shall, at Seller’s cost and expense, use commercially reasonable efforts to make available training to its Loan Officers and loan officer assistants operating out of the HomeStreet Offices to assist them in preparing for tests required to become State Licensed as necessary to perform their functions after the applicable Hire Date.  Such training shall be made available sufficiently in advance of the applicable Closing Date to enable the Loan Officers and loan officer assistants to take the applicable test or tests and, if successful, to become State Licensed prior to the applicable Closing Date for their respective HomeStreet Office.  Purchaser will use commercially reasonable efforts to assist Seller in its efforts to cause the Loan Officers and loan officer assistants to become State Licensed prior to the applicable Closing Date, including responding promptly to reasonable requests from Seller for information or documents relating thereto and the making of any notifications required to be made by the Purchaser prior the applicable Closing Date.

Section 6.7    No Third-Party Beneficiaries.  Nothing contained herein, express or implied (a) shall be construed to establish, amend, or modify any benefit plan, program, agreement or arrangement, (b) shall alter or limit Purchaser’s ability to amend, modify or terminate any particular compensation or benefit plan, program, agreement or arrangement, (c) is intended to confer upon any current or former employee of Seller any right to employment or continued employment for any period of time by reason of this Agreement, or any right to a particular term or condition of employment, or (d) is intended to confer upon any individual (including employees, retirees, or dependents or beneficiaries of employees or retirees) any right as a third party beneficiary of this Agreement.  

ARTICLE 7
CLOSING CONDITIONS

Section 7.1    Conditions to Obligations to Consummate the Initial Closing.

(a)    The obligations of each Party to consummate the Initial Closing shall be subject to the fulfillment, at or prior to the Initial Closing Date, of the following conditions:

(i)    No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or Order which is in effect and has the effect of making the Transactions illegal, otherwise restraining or prohibiting consummation of the Transactions;

(ii)    No Litigation shall have been instituted seeking to prohibit, restrict or delay, or to enjoin the consummation of the Transactions; and 

(iii)    Evidence of receipt by both Purchaser and Seller of the documentation described on Exhibit B. 

(b)    The obligations of Purchaser to consummate the Initial Closing shall be subject to the fulfillment or Purchaser’s waiver, at or prior to the applicable Initial Closing Date, of each of the following conditions:
(i)    (x) the Total Licensed Volume is equal to or greater than 75% of the Total Volume, and (y) the Loan Officers taken into account for purposes of calculating such Total Licensed Volume are each Available for Work in a Financially Viable HomeStreet Office; and

(ii)    the representations and warranties of Seller contained in Article 3 were true and correct in all respects as of the date hereof and shall be true and correct in all respects as of the Initial Closing Date, with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, which shall be true and correct in all respects as of that specified date), except where the failure of such representations and warranties to be true and correct as of the Initial Closing Date, would not have a Material Adverse Effect;

(iii)    Seller shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement to be performed or complied with by it prior to or on the Initial Closing Date;

(iv)Purchaser shall have received evidence of the Required Consents for the HomeStreet Offices to be transferred on such Closing Date, in form and substance reasonably satisfactory to Purchaser, and no such Required Consent shall have been revoked;

(v)there shall not have occurred any Material Adverse Effect since the date of this Agreement; and

(vi)Seller shall have delivered to Purchaser the deliverables set forth in Section 2.2(a) required to be delivered for the Initial Closing.  

(c)    The obligations of Seller to consummate the Initial Closing shall be subject to the fulfillment or Seller’s waiver, at or prior to the Initial Closing Date, of each of the following conditions in Sections 7.1(c)(i)-(iv) below:

(i)    The representations and warranties of Purchaser contained in Article 4 were true and correct in all respects as of the date hereof and shall be true and correct in all respects as of the Initial Closing Date with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, which shall be true and correct in all respects as of that specified date), except where the failure of such representations and warranties to be true and correct as of the Initial Closing Date would not have a Material Adverse Effect;

(ii)    Purchaser shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement to be performed or complied with by it prior to or on the Initial Closing Date;

(iii)    Seller shall have received evidence of the Required Consents for the HomeStreet Office to be the transferred on such Closing Date, in form and substance reasonably satisfactory to Seller, and no such Required Consent shall have been revoked; and

(iv)    Purchaser shall have delivered to Seller the deliverables set forth in Section 2.2(b) required to be delivered as of the Initial Closing Date.

Section 7.2   Conditions to Obligations to Consummate the Second Closing.
  
(a)    The obligations of each Party to consummate the Second Closing shall be subject to the fulfillment, at or prior to the Second Closing Date of the following conditions:

(i)    The Initial Closing shall have occurred; and

(ii)    No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Law or Order which is in effect and has the effect of making the Transactions illegal, otherwise restraining or prohibiting consummation of the Transactions; and

(iii)    No Litigation shall have been instituted seeking to prohibit, restrict or delay, or to enjoin the consummation of the Transactions.

(b)    The obligations of Purchaser to consummate the Second Closing shall be subject to the fulfillment, at or prior to the Second Closing Date of the following conditions:
(i)    At least one HomeStreet Office not acquired in the Initial Closing shall have become a Financially Viable HomeStreet Office; and

(ii)    Purchaser shall have received evidence of the Required Consents for the HomeStreet Offices to be transferred on such Closing Date, in form and substance reasonably satisfactory to Purchaser, and no such Required Consent shall have been revoked;

(iii)    there shall not have occurred any Material Adverse Effect since the date of this Agreement; and

(iv)    Seller shall have delivered to Purchaser the deliverables set forth in Section 2.2(a) required to be delivered for the applicable Closing.  

(c)    The obligations of Seller to consummate the Second Closing shall be subject to the fulfillment, at or prior to the Second Closing Date of the following conditions:
(i)    Seller shall have received evidence of the Required Consents for the HomeStreet Offices to be transferred on such Closing Date, in form and substance reasonably satisfactory to Seller, and no such Required Consent shall have been revoked; and

(ii)    Purchaser shall have delivered to Seller the deliverables set forth in Section 2.2(b) required to be delivered as of the applicable Closing Date.

Section 7.3    No Waiver.   Notwithstanding anything herein to the contrary, neither Purchaser nor Seller shall be deemed to have waived its rights under Article 7 hereof unless and until such Party either provides written waivers thereof or elects to proceed to consummate the Transactions at the applicable Closing.

ARTICLE 8
SURVIVAL AND INDEMNIFICATION

Section 8.1    Survival.  All of the representations and warranties of Seller contained in Article 3 and all of the representations and warranties of Purchaser contained in Article 4 shall survive the Initial Closing Date and continue in full force and effect for a period of twenty four (24) months thereafter (the “General Survival Period”), except that the Fundamental Representations shall survive the Initial Closing Date and continue in full force and effect until the expiration of the applicable statute of limitations (after giving effect to any extensions or waivers) plus sixty (60) days (the “Special Survival Period”) and, no Person may seek indemnification under this Article 8 with respect to a breach of a representation or warranty after the expiration of the General Survival Period or Special Survival Period, as applicable. The foregoing limitations shall not apply (a) with respect to those specific pending claims for indemnification for which the requisite written notice was given by either Party to the other Party on or prior to the end of the General Survival Period or Special Survival Period, as applicable, for which the requisite written notice shall effectively toll such time limitation until such specific claims are resolved and (b) with respect to fraud by the indemnifying Party, in which case the applicable representations and warranties shall survive the Initial Closing and, if it occurs, the Second Closing Date and continue in full force and effect until the expiration of the applicable statutes of limitations (after giving effect to any extensions or waivers) plus sixty (60) days.  The Parties’ respective covenants and agreements contained in this Agreement and the Transaction Documents shall survive indefinitely until performed or the obligation to so perform shall have expired; provided, however, that any such survival shall not be deemed, directly or indirectly, to affect the General Survival Period or Special Survival Period, as applicable, for representations and warranties.

Section 8.2    Indemnification by Seller.  Subject to the other terms and conditions of this Article 8, Seller shall defend, indemnify and hold harmless Purchaser, its Affiliates and their respective stockholders, directors, officers, and employees (collectively, “Purchaser Indemnified Parties”) from and against all Losses arising from or relating to:

(a)    any inaccuracy in or breach of any of the representations or warranties of Seller contained in this Agreement, any Transaction Document, or any certificate delivered by or on behalf of the Seller pursuant to this Agreement or any Transaction Document; 

(b)    any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Seller pursuant to this Agreement or any Transaction Document; 
    
(c)    any Excluded Asset or Excluded Liability; and 
    
(d)    any Claim by the FHLB or its assignee asserting a Lien on the Acquired Assets. 

Section 8.3    Indemnification by Purchaser.  Subject to the other terms and conditions of this Article 8, Purchaser shall defend, indemnify and hold harmless Seller, its Affiliates and their respective shareholders, directors, officers, and employees (collectively, “Seller Indemnified Parties”) from and against all Losses arising from or relating to:

(a)    any inaccuracy in or breach of any of the representations or warranties of Purchaser contained in this Agreement, any Transaction Document, or any certificate delivered by or on behalf of the Purchaser pursuant to this Agreement or any Transaction Document;

(b)    any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Purchaser pursuant to this Agreement or any Transaction Document; 
    
(c)    any Assumed Liability; 
    
(d)    any failure by Purchaser to comply with applicable Law and Investor or Agency requirements in connection with the origination, underwriting, sale, pooling or securitization of any T

ransitioned Pipeline Loan; and 

(e)    any unauthorized use or disclosure of any Borrower Information or data contained on any Employee Computer following Closing.  

Section 8.4    Indemnification Procedures.  Whenever any direct or indirect claim, notice of a claim, or Litigation that could give rise to an obligation on the part of Seller, on the one hand, or Purchaser, on the other hand, to provide indemnification (“Claim”), the indemnified Party shall promptly provide written notice to the indemnifying Party of such Claim together with copies of all notices and documents (including, without limitation, court papers) received by the indemnified Party relating to the Claim.  In connection with any such Claim giving rise to indemnity hereunder resulting from or arising out of any action by a Person who is not a Party to this Agreement, the indemnifying Party, at its sole cost and expense and upon written notice to the indemnified Party, may assume the defense of any such action with counsel reasonably satisfactory to the indemnified Party (such right to assume, “Defense Assumption Right”).  The indemnifying Party shall have the right at all times to control the defense or settlement of any such action; provided that, the consent of the indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed) shall be required prior to the indemnifying Party’s approval of any settlement imposing any liability or obligation on the indemnified Party unless the settlement, by its terms, (A) obligates the indemnifying Party to pay the full amount of Losses in connection with such Claim, (B) includes a full and unconditional release of the indemnified Party in connection with such Claim; (C) does not impose injunctive or other non-monetary equitable relief against the indemnified Party, and (D) does not include a finding or admission of any violation of Law.  In the event that the indemnifying Party exercises the right to undertake any such defense against any such Claim as provided above, the indemnified Party shall cooperate with the indemnifying Party in such defense and make available to the indemnifying Party, at the indemnifying Party’s expense, all witnesses, pertinent records, materials and information in the indemnified Party’s possession or under the indemnified Party’s control relating thereto as is reasonably required by the indemnifying Party.  The indemnified Party shall be entitled to participate in the defense of any such action, with its counsel and at its own cost and expense.  If the indemnifying Party does not exercise its Defense Assumption Right, the indemnified Party may, but shall not be obligated to, defend against such action in such manner as it may deem appropriate, including, but not limited to, settling such action, after giving notice of it to the indemnifying Party, on such terms as the indemnified Party may deem reasonably appropriate and no action taken by the indemnified Party in accordance with such defense and settlement shall relieve the indemnifying Party of its indemnification obligations herein provided with respect to any damages resulting therefrom.

Section 8.5    Indemnification Limitations.
        
(a)    Seller will have no Liability pursuant to Section 8.2(a) with respect to Losses for which indemnification is provided thereunder, except to the extent the aggregate amount of such Losses exceeds an amount equal to Fifty Thousand Dollars ($50,000) (the “Basket”), and then only in respect of such excess; provided, however, such Basket shall not apply to Seller’s indemnification obligations under Section 8.2(a) to the extent related to breaches of any of the Fundamental Representations or in the case of fraud.

(b)    Seller will have no Liability pursuant to Section 8.2(a) with respect to Losses for which indemnification is provided thereunder to the extent that indemnification payments made in respect of any and all such Losses exceed, in the aggregate, an amount equal to the Purchase Price paid by Purchaser to Seller, disregarding for these purposes any Retention Reduction to Purchase Price (the “Cap”), in which case Seller will not be liable for the portion of any such Losses in excess of such Cap; provided, however, such Cap shall not apply in the case of fraud.     

(c)    Purchaser will have no Liability pursuant to Section 8.3(a) with respect to Losses for which indemnification is provided thereunder, except to the extent the aggregate amount of such Losses exceeds an amount equal to the Basket, and then only in respect of such excess; provided, however, such Basket shall not apply to Purchaser’s indemnification obligations under Section 8.3(a) to the extent related to breaches of any of the Fundamental Representations or in the case of fraud.

(d)    Purchaser will have no Liability pursuant to Section 8.3(a) with respect to Losses for which indemnification is provided thereunder to the extent that indemnification payments made in respect of any and all such Losses exceed, in the aggregate, an amount equal to the Cap, in which case Purchaser will not be liable for the portion of any such Losses in excess of such Cap; provided, however, such Cap shall not apply in the case of fraud.

(e)    Notwithstanding the fact that any indemnified Party may have the right to assert claims for indemnification under or in respect of more than one provision of this Agreement in respect of any fact, event, condition or circumstance, no indemnified Party shall be entitled to recover the amount of any Loss suffered by such indemnified party more than once, regardless of whether such Loss may be as a result of a breach of more than one representation, warranty, obligation or covenant or otherwise.  In addition, any liability for indemnification hereunder shall be determined without duplication of recovery by reason of the state of facts giving rise to such liability, or a breach of more than one representation, warranty, covenant or agreement, as applicable.

(f)    For all purposes of this Article 8, Losses shall be net of any amounts paid or payable to an indemnified Party under any insurance policy (or deemed payable pursuant to the last sentence of this Section) in connection with the facts giving rise to the right of indemnification hereunder, and each indemnified Party shall use its reasonable commercial efforts (provided that the foregoing shall not be construed to require any Party to initiate any legal action in order to meet such obligation) to recover all amounts payable from an insurer under any such insurance policy prior to seeking indemnification hereunder; provided, however, that the amount deemed to be paid under such insurance policies shall be net of the deductible for such policies; and, provided, further, that Seller shall be subrogated (and Purchaser shall and shall cause Purchaser Indemnified Parties to cause Seller to be subrogated) to the rights of the Purchaser Indemnified Parties under applicable insurance policies.

(g)    If the amount to be netted hereunder from any indemnification payment required hereunder is determined after payment by an indemnifying Party to an indemnified Party of any amount otherwise required to be paid as indemnification pursuant hereto, the indemnified Party shall repay, promptly after such determination, any amount that the indemnifying Party would not have had to pay pursuant hereto had such determination been made at the time of such payment.

(h)    Each indemnified Party shall use its commercially reasonable efforts to mitigate any indemnifiable Loss, provided, however, that the foregoing shall not be construed to require any Party to initiate any legal action in order to meet such mitigation obligation.

(i)    The amount of any Loss subject to indemnification under Sections 8.2 or 8.3 shall be calculated net of any Tax Benefit actually realized by the indemnified Party in the taxable period in which the Loss occurred or in the taxable period immediately thereafter. For purposes of this Agreement, a “Tax Benefit” means the actual reduction of Tax Liabilities (calculated on the basis of the actual reduction in cash payments for Taxes) from an increase in deductions, losses or tax credits or decrease in the income, gain or recapture of tax credits that the indemnified Party or one of its affiliates actually reported or took into account.  Notwithstanding anything to the contrary, if the Tax Return for the taxable period in which the Losses 

occurred has yet to be filed at the time that an indemnity payment is to be made, the amount of the Loss recoverable by an indemnified Party pursuant to this Article 8 with respect to an indemnity claim shall not be reduced by the amount of any Tax Benefit; and, instead, the indemnified Party shall pay to the indemnifying Party the amount of such Tax Benefit within five (5) Business Days after the filing of the Tax Return for the taxable period in which the Tax Benefit is actually realized.

(j)    For purposes of this Article 8, for purposes of determining whether an inaccuracy in or breach of any representation or warranty or for purposes of determining the amount of Losses incurred, arising out of or relating to a Claim hereunder, each representation and warranty in this Agreement and the Transaction Documents shall be read without regard and without giving effect to the term “material” or “material adverse change” or “Material Adverse Effect” or similar phrases contained in such representation or warranty.

Section 8.6    Exclusive Remedy.  Except with respect to claims based on intentional fraud, from and after the Initial Closing Date, the rights and remedies of Purchaser, and Seller, and any Purchaser Indemnified Party and any Seller Indemnified Party, under this Article 8 are exclusive and in lieu of any and all other rights and remedies which Purchaser, Seller, or any Purchaser Indemnified Party or Seller Indemnified Party, may have against each other with respect to this Agreement and with respect to the transactions contemplated hereby at law or in equity.

Section 8.7    Tax Treatment of Indemnification Payments.  All indemnification payments made by Seller under this Agreement shall be treated by the Parties as an adjustment to the Purchase Price for tax purposes, unless otherwise required by applicable Law.

Section 8.8    Certain Tax and Other Matters.

(a)    Straddle Periods.  All property Taxes related to the Acquired Assets (“Property Taxes”) for any taxable period which includes, but does not end on, the Initial Closing Date or Second Closing Date, as applicable (each a “Straddle Period”) shall be borne (i) by Seller in an amount equal to the total amount of such Taxes for the entire Straddle Period multiplied by a fraction, the numerator of which is the number of days during the Straddle Period that are in the portion ending on the Initial Closing Date or Second Closing Date, as applicable, and the denominator of which is the number of days in the Straddle Period, and (ii) by Purchaser to the extent the total amount of the Straddle Period Property Tax exceeds the portion for which Seller is liable pursuant to clause (i).  Seller shall pay any portion of Straddle Period Property Taxes for which Seller is liable pursuant to this Section 8.8(a) within fifteen (15) days of its receipt of written notice from Purchaser of the amount of such Straddle Period Property Taxes attributable to the pre-Closing period.

(b)    Transfer and Similar Taxes.  Any returns for sales, use, transfer, value added, documentary, stamp, registration or similar Taxes (“Transfer Taxes”) required to be filed by reason of the transfer of the Acquired Assets shall be timely prepared and filed by the Party primarily or customarily responsible under applicable law for filing such Tax Returns.  The Parties agree to cooperate in good faith with each other in connection with the preparation and filing of such Tax Returns, in obtaining all available exemptions from such Transfer Taxes and in timely providing each other with resale certificates and any other documents necessary to satisfy any such exemptions.  The Purchaser shall bear and pay all Transfer Taxes required to be paid by reason of the transfer of Acquired Assets hereunder in the states of Washington and Idaho and the Seller shall bear and pay all Transfer Taxes required to be paid by reason of the transfer of Acquired Assets hereunder in the states of California and Hawaii. Each Party shall indemnify and hold harmless the other Party from any loss, claim, liability, expense, or other damage attributable to such Party’s responsibilities with respect  to Transfer Taxes under this Section 8.8(b).

(c)    Cooperation.  Purchaser and Seller shall each assist the other, as may reasonably be requested by either of them, with the preparation of any Tax Return, any Tax audit, or any judicial or administrative proceedings in respect of any Tax related to the Acquired Assets.  In addition, each Party shall retain and provide the other with any records or information that may be relevant to such Tax Return, Tax audit, proceeding or determination related to the Acquired Assets.  Seller shall not, without the express written consent of Purchaser, settle or otherwise resolve any Tax audit or proceeding to the extent such resolution or settlement may increase the Tax liability of Purchaser with respect to the Acquired Assets.  The Party requesting assistance under this Section 8.8(c) shall reimburse the Party providing assistance for direct expenses incurred in providing such assistance.  

Section 8.9    Prevailing Party.  In the event that any Party brings a Litigation against the other Party as a result of any alleged breach or failure by the other Party to fulfill or perform any covenants or obligations under this Agreement, then the prevailing Party in such action shall be entitled to receive from the other Party its reasonable attorney’s fees incurred by reason of such Litigation and all costs of Litigation at both trial and appellate levels. 

ARTICLE 9
TERMINATION

Section 9.1    Termination. This Agreement may be terminated on or at any time prior to the Initial Closing Date or Second Closing Date as applicable, with respect to the Transactions pertaining to all or a portion of the HomeStreet Offices: 

(a)    by the mutual written consent of Purchaser and Seller; 

(b)    by Purchaser,

(i)    if Purchaser is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Seller pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Sections 7.1(a)-(b) or Sections 7.2(a)-(b), as applicable, and such breach, inaccuracy or failure has not been cured by Seller within thirty (30) days of Seller's receipt of written notice of such breach from Purchaser; or 

(ii)    if any condition in Sections 7.1(a)-(b) or Sections 7.2(a)-(b), as applicable, shall not have been, or if it becomes apparent that any of such conditions will not be fulfilled (in either case, other than as a result of a breach or default by Purchaser in the performance of its obligations hereunder) and the performance of such condition has not been waived by Purchaser in writing at or prior to the intended Initial Closing Date or intended Second Closing Date, as applicable; 

(c)    by Seller, 

(i)    if Seller is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Purchaser pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Sections 7.1(a) or (c) or  Sections 7.2(a) or (c), as applicable and such breach, inaccuracy or failure has not been cured by Purchaser within thirty (30) days of Purchaser’s receipt of written notice of such breach from Seller; or

(ii)    if any condition in Sections 7.1(a) or (c) or Sections 7.2(a) or (c), as applicable, shall not have been, or if it becomes apparent that any of such conditions will not be fulfilled (in either case, other than as a result of a breach or default by Seller in the performance of its obligations hereunder) and the performance of such condition has not been waived by Seller in writing at or prior to the intended Initial Closing Date or intended Second Closing Date, as applicable; 
    

(d)    by either Party (other than a Party that is in material default of its obligations under this Agreement):  
(i)    if the Initial Closing has not occurred on or prior to June 21, 2019, at any time following June 21, 2019, and 

(ii)    if the Initial Closing occurs on or prior to June 21, 2019, at any time following August 21, 2019 with respect to the Transactions pertaining to all or a portion of the remaining HomeStreet Offices;   

(e)by Purchaser or Seller in the event that (i) there shall be any Law that makes consummation of the Transactions illegal or otherwise prohibited or (ii) any Governmental Authority shall have issued an Order restraining or enjoining the Transactions, and such Order shall have become final and non-appealable.

Section 9.2    Effect of Termination.  Except as otherwise provided in this Agreement, if this Agreement is terminated pursuant to Section 9.1 hereof prior to the Initial Closing Date or Second Closing Date, as applicable, this Agreement shall forthwith become void (other than as set forth in Section 5.3, and Section 5.8, and excluding Articles 9 and 10 which shall remain in full force and effect) with respect to the Acquired Assets and Assumed Liabilities relating to the applicable HomeStreet Offices for which such termination applies, and there shall be no further Liability on the part of Purchaser or Seller to the other with respect thereto, except that no Party shall be relieved or released from any Liabilities arising out of its willful breach of any provision of this Agreement.

ARTICLE 10
GENERAL PROVISIONS

Section 10.1     Definitions.  For purposes of this Agreement, the following terms shall have the following respective meanings:

“Acquired Assets” means, the following assets which relate to, or are used or held for use in connection with the Business: (a) the Fixed Assets; (b) the Hardware, (c) the Employee Computers, (d) the Leases; (e) the Files and Records; (f) Deposits and Prepaid Expenses; (g) all rights, titles, interests, claims, actions, causes of action, benefits, and credits to the extent relating to any of the Acquired Assets, or in respect of the enforcement of rights with respect to the Acquired Assets, or any Assumed Liability, including all guarantees, warranties, indemnities and similar rights in favor of Seller in respect of any Acquired Asset or any Assumed Liability, in each case arising after the Initial Closing Date or Second Closing Date, as applicable; and (h) the Transitioned Pipeline Loans.  
“Acquisition Proposal” means any inquiry, offer or proposal from any Person relating to the direct or indirect disposition, sale or transfer of the Acquired Assets.
“Acquired HomeStreet Business” means, collectively, the business of any HomeStreet Office operated by Purchaser following the Initial Closing. 
“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term "control" (including the terms "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise; provided, however, that with respect to Seller, WMS Series LLC, a Delaware series limited liability company, shall in no event be considered to be an Affiliate hereunder.  
“Agency” means any of the FHA, the Farmers Home Administration (RHCDS or Rural Housing and Community Development Services), Fannie Mae, Freddie Mac, Ginnie Mae, the U.S. Department of Veterans Affairs, the RHS, any state housing finance authority, the Consumer Financial Protection Bureau and HUD.

“Agreement” is defined in the Preamble.
“Allocation Schedule” is defined in Section 2.4 of this Agreement.
“Applicable Vendors” is defined in Section 5.2(b) of this Agreement. 
“Assumed Liabilities” is defined in Section 1.2 of this Agreement.
“Available for Work” means a Loan Officer that is State Licensed and has accepted Purchaser’s offer of employment pursuant and subject to Section 6.1(a) and (b) hereof.
“Bank Portfolio Production” means the following categories of Mortgage Loans: “Portfolio Jumbo and Conforming,” “Portfolio Constr/Perm,” “Portfolio HELOC/HELOAN Combo,” and “Portfolio HELOC/HELOAN Standalone.” 
“Bankruptcy and Equity Exceptions” is defined in Section 3.1(b) of this Agreement. 
“Base Purchase Price” means the Net Book Value of the Acquired Assets, plus the Deposits and Prepaid Expenses. 
“Basket” is defined in Section 8.5(a) of this Agreement. 
“Bill of Sale” means a bill of sale, substantially in the form attached hereto as Exhibit C, to be executed by Seller as of the applicable Closing, to affect the transfer of tangible personal property as included in the Acquired Assets (exclusive of the Contract Equipment and Leases) to Purchaser. 
“Borrower Information” is defined in Exhibit J of this Agreement.
“Business” is defined in the Recitals.
“Business Day” means any day on which national banks are open for business in New York City.
 “Cap” is defined in Section 8.5(b) of this Agreement. 
“Circuit Equipment” is defined in Section 5.2(b) of this Agreement.
“Claim” is defined in Section 8.4(a) of this Agreement. 
“Closing Dates” means, collectively, the Initial Closing Date and the Second Closing Date (each, a “Closing Date”) at which applicable Acquired Assets and Assumed Liabilities related thereto will transfer to Purchaser. 
“Closings” means, collectively, the Initial Closing and the Second Closing (each, a “Closing”) at which the applicable Acquired Assets and Assumed Liabilities related thereto will transfer to Purchaser.  
“COBRA” means Consolidated Omnibus Budget Reconciliation Act of 1986, as amended. 
“Code” means the Internal Revenue Code of 1986, as amended.
“Constituent Documents” means, relative to a Person that is not a natural person, its certificate of incorporation, bylaws, certificate of partnership, partnership agreement, certificate of formation, limited liability company agreement, operating agreement and all shareholder agreements, voting trusts and similar 

arrangements applicable to any of such entity’s capital securities or any rights relating to any such capital securities; in each of the foregoing cases, to which such Person is a party or bound.
“Contract” means all agreements, contracts, commitments and undertakings, written or oral, including any amendments thereto, to which any Person is a party, an obligor or a beneficiary, or by which any of its assets or properties is bound.
“Contract Equipment” is defined in Section 5.2(b).
“control” is defined in Section 10.1, “Affiliates”, of this Agreement.
“Correspondent Loan Purchase Agreement” means the Correspondent Loan Purchase Agreement to be executed by Purchaser and Seller as of the Initial Closing Date pertaining to the sale of jumbo construction-to-permanent loans, in form and substance mutually agreed by the Parties but consistent with the terms set forth on Exhibit F attached hereto.
“Data Room” means that certain electronic data room managed by Keefe, Bruyette & Woods for “Project Beacon”.
“Defense Assumption Right” is defined in Section 8.4(a) of this Agreement. 
“Deferred Purchase Price Payment” is defined in Section 5.15(a) of this Agreement.
“Deposits and Prepaid Expenses” means all deposits (including security for rent, electricity, telephone or otherwise) and prepaid charges and expenses to the extent relating to the Acquired Assets and for which Purchaser has a right to recovery pursuant to the Lease and related Lease Assignment and Assumption Agreement, as the case may be, in each case as set forth on a statement to be delivered by Seller to Purchaser no later than three (3) Business Days prior to the applicable Closing.  
“Effective Date” is defined in the introduction to this Agreement.
“Employee Benefit Plan” means each of Seller’s pension, retirement, profit-sharing, deferred compensation, severance pay, vacation, bonus, retention, change in control or other incentive plan (other than plans that are stock or equity-based), medical, vision, dental or other health plan, any life insurance plan, flexible spending account, cafeteria plan, vacation, holiday, disability or any other employee benefit plan or fringe benefit plan, including any “employee benefit plan,” as that term is defined in Section 3(3) of ERISA (whether or not covered by or subject to ERISA) and any other plan, fund, policy, program, practice, custom, understanding or arrangement providing compensation or other benefits. 
“Employee Computers” means the laptop and personal computers listed on Exhibit A-2 and the Software imbedded on such computers, subject to the terms set forth on Exhibit L, and excluding any laptop or personal computers used by any Offered Employees who are not hired by Purchaser. 
“Employment Agreement” the employment agreements for the Key Employees in form and substance mutually agreed upon by the Parties.
“Employment Matters” is defined in Section 3.10(b) of this Agreement.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“Excluded Assets” means any and all assets of Seller other than the Acquired Assets, including all Seller Equipment Contracts and any Unlocked Pipeline Loans that do not become Transitioned Pipeline Loans.
“Excluded Liabilities” means any and all Liabilities of Seller of any kind or nature whatsoever other than the Assumed Liabilities including; (a) any Liabilities relating to or arising out of the Excluded Assets; (b) any Liabilities for Taxes with respect to the Acquired Assets or the conduct of the business at the HomeStreet Offices that are attributable to a taxable period ending on or before the applicable Closing Date or to the portion of a Straddle Period through such applicable Closing Date; (c) any Liabilities related to or arising out of the (i) employment by Seller or termination of employment by Seller of any of Seller’s current or former employees (including, without limitation, the Offered Employees); (ii) worker’s compensation claims of any of Seller’s current or former employees which relate to events occurring prior to the applicable Closing; (iii) severance owed to any employee of Seller terminated in connection with the Transactions; or (iv) any Liabilities arising out of the matters described on Schedule 3.11(b)(i) which relate to events occurring prior to the applicable Closing; (d) any Liabilities of Seller arising or incurred in connection with the negotiation, preparation, investigation, and performance of this Agreement or the Transaction Documents or the Transactions; (e) any Liability arising out of any Litigation pending as of Closing; (f) any Liability of any claim, suit, or other action by any stockholder or other equity holder of Seller relating to the Transactions; (g) any indebtedness of the Seller or otherwise related to the Business as of the applicable Closing; and (h) any Liability arising from or as a result of a breach or default by Seller of any Seller Equipment Contract prior to the applicable Closing, or failure of Seller to pay, perform or otherwise discharge any obligation under any Seller Equipment Contract, in each case arising prior to the applicable Closing.
“FLHB” means the Federal Home Loan Bank of Des Moines (or its predecessor in interest, the Federal Home Loan Bank of Seattle).  
“FHLB Consent” means a written agreement duly executed by the FHLB (in form and substance acceptable to Purchaser in its reasonable discretion), under which the FHLB irrevocably (i) consents to the transfer of the Acquired Assets to Purchaser free and clear of any Liens held by it and (ii) releases any and all such Liens. 
“Files and Records” means, subject to Section 5.7 of this Agreement, all original, or where not available, copies, of all books, files, records and other information of Seller relating to the Acquired Assets or the Assumed Liabilities, in any form or medium, but excluding Tax Returns of Seller.
“Financially Viable HomeStreet Office” means a State Licensed HomeStreet Office in which the Available for Work Loan Officers employed at such State Licensed HomeStreet Office, or that can be transferred to such State Licensed HomeStreet Office as of the applicable Closing, closed and funded Mortgage Loans with an aggregate Unpaid Principal Balance during the twelve (12) months preceding the Effective Date equal to or greater than the viability threshold for such HomeStreet Office set forth on Exhibit I hereto.
“Fixed Assets” means those items of furniture, fixtures, equipment, leasehold improvements, materials, supplies and other tangible personal property of Seller located at the HomeStreet Offices as set forth on Exhibits A-3a & A-3b.
“Fundamental Representations” means, (a) with respect to Seller’s representations and warranties, the representations and warranties set forth in Sections 3.1 (Organization; Authority), 3.3(a) (Title to Acquired Assets), 3.12 (Tax Matters), and 3.15 (Brokers); and (b) with respect to Purchaser’s representations and 

warranties, the representations and warranties set forth in Sections 4.1 (Organization and Qualification) and 4.4 (Brokers).
“GAAP” means generally accepted accounting principles.  
“General Survival Period” is defined in Section 8.1 of this Agreement.
“Governmental Authority” means any government, any state or political subdivision thereof, any municipal, local, city, or county government, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation or other entity owned or controlled by any of the foregoing. 
“Hardware” shall mean network routers, network switches, wireless access points, televisions, computer monitors, docking stations, keyboards, and computer mice, if any, located at the HomeStreet Offices, and any Software installed thereon. 
“Hire Date” means the date on which a Hired Employee commences employment with Purchaser.  
“Hired Employee” means the Offered Employees that accept Purchaser’s offer of employment hereunder, and the Key Employees that execute Employment Agreements hereunder.
“HomeStreet Offices” means the home loan center office locations of Seller as set forth on Exhibit A-5.  
“Independent Accountant” is defined in Section 2.4(a) of this Agreement. 
“Initial Closing” is defined in Section 2.1(b) of this Agreement.
“Initial Closing Date” is defined in Section 2.1(b) of this Agreement.
“Investor” means any Person (including an Agency) having a beneficial interest in a Mortgage Loan or a security backed by or representing an interest in a Mortgage Loan or any Person with authority to act for and on behalf of any such Person (or Agency), such as a trustee.
“Key Employees” means those employees listed on Schedule 10.1(a). 
“Knowledge” means, with (i) respect to Seller, the actual knowledge of Seller’s Chief Executive Officer, Executive Vice President and Chief Financial Officer, General Counsel (or chief legal officer), Senior Executive Vice President and Director of Single Family Lending and Executive Vice President and Director of Human Resources, in each instance after due inquiry of such person’s direct reporting personnel with responsibility for such departments; and (ii) with respect to Purchaser, the actual knowledge of Purchaser’s Chief Executive Officer, President, and General Counsel (or chief legal officer), in each instance after due inquiry of such person’s direct reporting personnel with responsibility for such  departments.  
“Law” means any code, law (including common law), ordinance, regulation, code, rule, or statute applicable to a Person or its assets, including those promulgated, interpreted or enforced by any Governmental Authority including, without limitation, those relating to consumer credit and mortgage lending. 
“Lease Assignment and Assumption Agreement” means the assignment and assumption agreement related to each of the Leases to be assigned to Purchaser, either: (i) substantially in the form attached hereto as Exhibit D, to be entered into by Seller and Purchaser, or (ii) in such other form as may be required by a 

landlord and agreed to by Seller and Purchaser, subject to in either case, for each applicable HomeStreet Office, a landlord’s consent to effect the assignment of such Lease to Purchaser.
“Leases” means the leases, subleases or licenses for each of the HomeStreet Offices.
“Liability” means any direct or indirect, primary or secondary, liability, indebtedness, obligation, penalty, cost or expense (including costs of investigation, collection and defense), claim, deficiency, guaranty or endorsement of or by any Person of any type, secured or unsecured, and whether accrued, absolute or contingent, direct or indirect, liquidated or unliquidated, matured or unmatured, or known or unknown. 
“License” means any license, permit, certificate, authorization, approval or filing to which any Person is a party or that is or may be binding on any Person or its securities, property or business. 
“License Required Employee” means any Offered Employee that is required by applicable Law to be State Licensed to originate Mortgage Loans for Purchaser.
    
“Lien” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, including any restriction on use, transfer, receipt of income or exercise of any other attribute of ownership.   
“Litigation” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, proceeding, litigation, summons, or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.
“Loan Officer” means any Offered Employee who, as an employee of Purchaser, would be required to be State Licensed by an applicable state to originate Mortgage Loans, including loan officer assistants and Sales Managers, as applicable.
 “Losses” means any direct losses, liabilities, claims, damages, penalties, fines, judgments, awards, settlements, Taxes, costs, fees or expenses (including reasonable attorneys’ fees) that are actually incurred, but excluding special, indirect consequential or punitive damages or damages for lost profits other than as actually awarded to third parties.
“Material Adverse Effect” means any change, event, fact, condition, inaccuracy or circumstance that, individually or in the aggregate, has prevented or materially impaired, or would reasonably be expected to prevent or materially impair (a) the Business; (b) the value of the Acquired Assets (taken as a whole); or (c) the ability of the Parties to consummate the transactions contemplated hereby.  Notwithstanding the foregoing, any change directly or indirectly arising out of or attributable to any of the following, alone or in the aggregate, shall not be deemed to be a “Material Adverse Effect”: (i) changes, after the date hereof, in general economic, legal, regulatory or political conditions (except to the extent such changes have a disproportionate effect on the Acquired Assets or the ability of the Parties to consummate the transactions contemplated hereby), (ii) changes, after the date hereof, in prevailing interest rates, (iii) changes, after the date hereof, in GAAP or regulatory accounting requirements applicable to banks or their holding companies generally, (iv) changes, after the date hereof, in laws, rules or regulations of general applicability or interpretations thereof by courts or governmental agencies or authorities, (v) changes, after the date hereof, in global, national or regional political conditions or in general US. National or regional or global economic or market conditions affecting banks or their holding companies generally, including changes in interest rates or exchange rates or in credit availability and liquidity, (vi) execution, announcement or consummation of the Transactions, including the impact thereof on customers, suppliers, licensors, employees and others having business relationships with the HomeStreet Offices, (vii) the commencement, occurrence, continuation or intensification of any war, 

sabotage, armed hostilities or acts of terrorism not directly involving the Acquired Assets or Assumed Liabilities, or (viii) actions by either of the Parties taken pursuant to the express requirements of this Agreement.
“Mortgage” means, with respect to a Mortgage Loan, the obligations created by any Mortgage Instrument reflecting a Lien upon real property and any other property described in such Mortgage Instrument and securing payment by a Mortgagor under a Mortgage Note.
“Mortgage Instrument” means any deed of trust, security deed, mortgage, security agreement or any other instrument that constitutes a lien on real estate securing payment by a Mortgagor of a Mortgage Note.
“Mortgage Loan” means any loan that is, or upon closing or funding will be, evidenced by a Mortgage Instrument evidencing the indebtedness of the Mortgagor under a Mortgage Note.
“Mortgage Note” means, with respect to a Mortgage Loan, a promissory note or notes, or other evidence of Indebtedness, with respect to such Mortgage Loan secured by a Mortgage or Mortgages, together with any assignment, reinstatement, extension, endorsement or modification thereof.
“Mortgagor” means, with respect to a Mortgage Loan, the obligor(s) (including any lessee(s), borrower(s) or guarantor(s)) on a Mortgage Note or under a Mortgage Loan.
“NDA” is defined in Section 5.3 of this Agreement.
“Net Book Value” means an amount equal to the book value of the Acquired Assets as of the month-end immediately prior to the applicable Closing Date, calculated in accordance with GAAP applied in a manner consistent with Seller’s Files and Records from and after February 28, 2019, and consistent with the procedures, assumptions and methodologies set forth on, or used in the calculation of, the sample calculation of Net Book Value attached hereto as Exhibit E, it being agreed (i) that in no event shall the value of any Acquired Asset be more than the amount set forth with respect to such Acquired Asset on Exhibit E and (ii) Net Book Value shall be reduced by the cost of any Employee Computers (as set forth on Exhibit A-2) that do not actually transfer to Purchaser under this Agreement.
“Offered Employee” is defined in Section 6.1(a) of this Agreement. 
“Order” means any decree, injunction, judgment, order, ruling, writ, decision or administrative decision or award of any Governmental Authority, arbitrator, to which any Person is a party or that is or may be binding on any Person or its securities, assets or business. 
“Party” means each of Purchaser and Seller, and “Parties” means Seller and Purchaser, collectively. 
“Patents” is defined in Section 10.1, “Intellectual Property”, of this Agreement.
“Permitted Liens” means those Liens that include (a) any statutory lien for Taxes or other payments that are not yet due and payable or are not yet delinquent, and/or are being contested in good faith and for which adequate reserves have been made; (b) mechanic’s, materialmen’s, carriers’, repairers’ and other liens for amounts that are not yet delinquent or are being contested in good faith; (c) encumbrances and restrictions on real property (including, but not limited to, easements, covenants, conditions, rights of way and similar restrictions) that do not interfere with the Business’ present uses or occupancy of such real property; (d) zoning, building codes and other land use laws affecting the use or occupancy of real property or the activities conducted thereon; and (e) any right, interest, lien or title of a lessor or sublessor under a Lease.

“Person” means a natural person or any legal, commercial or governmental entity, such as, but not limited to, a corporation, general partnership, joint venture, limited partnership, limited liability company, limited liability partnership, trust, business association, group acting in concert, or any person acting in a representative capacity. 
“Pipeline Loan Regulations” means (i) applicable federal, state and local Laws applicable to the origination of any Unlocked Pipeline Loan, including Laws relating to real estate settlement procedures, consumer credit protection, truth-in-lending, usury limitations, fair housing, equal credit opportunity and adjustable rate mortgages, and (ii) applicable Orders with respect to Seller pertaining to the Unlocked Pipeline Loans.
“Postage Equipment” is defined in Section 5.2(b) of this Agreement.
“Primary Region” means, collectively, the HomeStreet Offices listed on Exhibit J in the areas of North Puget Sound, South Puget Sound, Mountain West, Southwest Washington and Oregon.
“Privacy Laws” means all Laws concerning the privacy or security of personally identifiable information and all regulations promulgated and guidance issued by Governmental Authorities thereunder, including, the Federal Trade Commission Act, the Computer Fraud and Abuse Act, the Gramm-Leach-Bliley Act, the Fair Credit Reporting Act, the Fair and Accurate Credit Transaction Act, state data security Laws, state social security number protection Laws, state data breach notification Law.
“Property Taxes” is defined in Section 8.6(a) of this Agreement.
“Purchase Price” is defined in Section 2.3 of this Agreement.   
“Purchaser” is defined in the Preamble. 
“Purchaser Approvals” is defined in Section 4.2 of this Agreement.
“Purchaser Equipment Contracts” is defined in Section 5.2(b) of this Agreement.
“Purchaser Indemnified Parties” is defined in Section 8.2 of this Agreement.
“Purchaser Retention Agreements” is defined in Section 5.14(a) of this Agreement,
“Required Consents” has the meaning set forth in Section 3.2(b) of this Agreement.
“Restricted Period” is defined in Section 5.4 of this Agreement.
“Retention Reduction to Purchase Price” is defined in Section 2.3(a) of this Agreement.
“Sales Manager” means each Offered Employee who will act as a “sales manager” of an acquired HomeStreet Office after the Initial Closing Date or Second Closing Date, as applicable.
“Schedule” or “Schedules” is defined in Section 10.13 of this Agreement. 
“Seller” is defined in the Preamble.
“Seller Closing Certificate” means a certificate, dated the applicable Closing Date, and signed by a duly authorized officer of Seller, certifying that (a) each of the conditions set forth in Sections 7.2(b)(i) and (ii) have been satisfied with respect to such Closing, and (b) Seller waives any non-solicit, no-hire, non-competition, and proprietary rights and other similar covenants, if any, in all employment agreements with the Hired Employees with respect to their employment by Seller from and after the applicable Hire Date.  

For avoidance of doubt, any agreement that limits a Hired Employee’s ability to solicit employees of Seller who are still employed by Seller shall remain in full force and effect.
“Seller Equipment Contracts” is defined in Section 5.2(b) of this Agreement.
“Seller Indemnified Parties” is defined in Section 8.3 of this Agreement. 
“Solicitation Action” is defined in Section 5.7(b) of this Agreement.   
“Software” means, subject to Section 5.7 of this Agreement, all electronic data processing, information, recordkeeping, communications, telecommunications, networking, account management, inventory management, computer programs, operating systems, applications, firmware, and other such applications and software, and other code, including all source code, object code, application programming interfaces, data files, databases, protocols, specifications, and other documentation thereof.  
“Special Survival Period” is defined in Section 8.1 of this Agreement.
“State Licensed” means, (a) with respect to any Loan Officer, the status of being duly licensed to perform his or her duties for an independent mortgage originator in accordance with the Secure and Fair Enforcement for Mortgage Licensing Act in one or more states in which such person originates Mortgage Loans before the applicable Closing; and (b) with respect to any HomeStreet Office, status of being duly licensed as a residential mortgage branch office by the applicable state regulatory authorities in each of the applicable states as of the applicable Closing.   
“Sublease Agreements” means, collectively, the sublease agreements with respect to the Leases for HomeStreet Offices (i) that cannot be assigned to Purchaser as of the applicable Closing, (ii) which involve space that will be shared post-Closing by Seller and Purchaser as indicated on Schedule 3.6(a), or (iii) for which Seller cannot obtain a release from Liabilities accruing and arising from and after the applicable Closing for post-Closing periods (either by the terms of the Lease or by agreement with the Landlord), in each case to be entered into by Seller and Purchaser as of the applicable Closing, in respect of the sublease by Purchaser of the HomeStreet Offices, which subleases shall be on substantially equivalent terms to those in Seller’s Lease but limited to the remaining portion of the currently existing term with no options to extend the term, and which subleases shall provide that unless Purchaser is actively negotiating a renewal of the current term with the applicable landlord as of one month prior to the expiration of the current term, the term of such sublease shall terminate one month prior to the end of the current term, and in each case on other terms mutually agreed upon by the Parties.
“Tax” means any federal, state, county, local, or foreign tax, charge, fee, levy, impost, duty, or other assessment, including in respect of income, gross receipts, excise, employment, sales, use, transfer, recording, license, payroll, franchise, severance, documentary, stamp, occupation, windfall profits, environmental, federal highway use, commercial rent, customs duty, capital stock, paid-up capital, profits, withholding, Social Security, single business and unemployment, disability, real property, personal property, registration, ad valorem, value added, alternative or add-on minimum, estimated, or other tax or governmental fee of any kind whatsoever, imposed or required to be withheld by any Governmental Authority, including any interest, penalties, and additions imposed thereon or with respect thereto, whether disputed or not, and including any obligation to indemnify or otherwise assume or succeed to the Tax liability of any other Person. 
“Tax Benefit” is defined in Section 8.5(i) of this Agreement.
“Tax Return” 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.

“Termination” is defined in Section 6.1(b) of this Agreement.
“Termination Costs” is defined in Section 6.1(b) of this Agreement. 
“Total Licensed Volume” means, as of any date of determination, the aggregate Unpaid Principal Balance of all Mortgage Loans closed and funded by the Loan Officers in the Primary Region during the twelve (12) months preceding the Effective Date in the states in which such Loan Officers have become State Licensed on or prior to such date, excluding any Bank Portfolio Production.  
“Total Volume” means the aggregate Unpaid Principal Balance of all Mortgage Loans closed and funded by the Loan Officers during the twelve (12) months preceding the Effective Date in all HomeStreet Offices in the Primary Region, excluding any Bank Portfolio Production.
“Trailing Total Volume” means the aggregate Unpaid Principal Balance of all Mortgage Loans, excluding Bank Portfolio Production, closed and funded during the twelve (12) months following the Initial Closing Date by the Hired Employees whose primary office location prior to the applicable Hire Date was located in the Primary Region.
“Transaction Documents” means the Assignment and Assumption Agreement(s), the Bill(s) of Sale, the Lease Assignment and Assumption Agreement(s), the Transition Services Agreement, the Sublease Agreements, and the Correspondent Loan Purchase Agreement, if applicable. 
“Transactions” means the transactions contemplated by this Agreement and the Transaction Documents.
“Transfer Taxes” has the meaning set forth in Section 8.8(b) of this Agreement.
“Transition Services Agreement” means the Transition Services Agreement to be executed by Purchaser and Seller as of the Initial Closing Date in form and substance mutually agreed by the Parties but consistent with the terms set forth on Exhibit G attached hereto.
“Transitioned Pipeline Loans” means any Unlocked Pipeline Loan that is transferred, with the related Loan Officer, to Purchaser hereunder.
“Unpaid Principle Balance” means, with respect to each Mortgage Loan, as of the applicable origination date, the initial principal balance.  
“Unlocked Pipeline Loans” means the applications for Mortgage Loans (including pre-qualification applications) taken by Loan Officers of Seller and entered into the pipeline tracking system of the Seller prior to the third (3rd) Business Day prior to the applicable Closing Date, in each case, which are active but not locked, closed or funded before such time.
“WARN Act” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar applicable state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses.
“Wireless Equipment” is defined in Section 5.2(b) of this Agreement.
Section 10.2    Governing Law; Venue.  This Agreement and the Transaction Documents shall be governed by, and construed in accordance with, the Laws of the State of New York applicable to contracts executed in and to be performed in that state.  Any lawsuit or other legal action instituted by any Party hereto in connection with this Agreement shall be brought in a federal or state court of appropriate jurisdiction in New York, New York.
 

Section 10.3    Fees and Expenses.  Except as otherwise expressly set forth in this Agreement, regardless of whether the Transactions are consummated, Seller and Purchaser each shall pay their own legal fees, charges and expenses incurred in connection with the negotiation and drafting of this Agreement, the Transaction Documents, and the Transactions. 

Section 10.4    Notices.   All notices, requests, demands, and other communications hereunder shall be in writing (which shall include communications by email or telephonic facsimile) and shall be delivered (a) in person or by courier or overnight service, (b) mailed by first class registered or certified mail, postage prepaid, return receipt requested, or (c) by email or facsimile transmission with confirmation of transmission, as follows:
 
If to Seller: 
HomeStreet Bank
601 Union Street, Suite 2000
Seattle, Washington 98101
Attention: Mark K. Mason
Telephone: 206.442.5380
Email: mark.mason@homestreet.com

with a mandatory copy (which shall not constitute notice) to:
HomeStreet Bank
601 Union Street, Suite 2000
Seattle, Washington 98101
Attention: General Counsel Godfrey Evans
Telephone: 206.389.7763
Email: godfrey.evans@homestreet.com

If to Purchaser:  

HomeBridge Financial Services, Inc.
194 Wood Avenue South, Ninth Floor
Iselin, New Jersey 08830
Attention: Peter Norden, Chief Executive Officer
Email: pnorden@homebridge.com

with a mandatory copy (which shall not constitute notice) to:
Zukerman Gore Brandeis & Crossman, LLP
Eleven Times Square
15th Floor
New York, New York 10036
Attention: Nathaniel S. Gore, Esq. 
E-mail: ngore@zukermangore.com

or to such other address as the Parties hereto may designate in writing to the other in accordance with this Section 10.4.  Any Party may change the address to which notices are to be sent by giving written notice of such change of address to the other Party in the manner above provided for giving notice.  If delivered personally, by courier or by mail, the date on which the notice is delivered or received shall be deemed to be the date of delivery or, if delivered by email or facsimile transmission, the date on which the notice is sent shall be deemed to be the date of delivery. 
Section 10.5    Assignment; Successors.  This Agreement shall not be assignable by any of 

the Parties hereto without the prior written consent of the other Party.  This Agreement shall be binding upon the parties hereto and their respective successors and assigns, including any Person acquiring all or substantially all of the equity interests or assets of any Party hereto.  

Section 10.6    No Benefit to Others.  The representations, warranties, covenants, and agreements contained in this Agreement are for the sole benefit of the Parties hereto and, except in respect of indemnification in favor of the Parties’ Affiliates and their respective stockholders, directors, officers, employees, and representatives pursuant to Sections 8.2 and 8.3, and they shall not be construed as conferring any right as a third party beneficiary on any other Persons (including, without limitation, any Key Employee). 

Section 10.7    Headings; Construction; Interpretation. 

(a)    The table of contents and the captions and section headings contained in this Agreement are for reference only, are not a part of this Agreement and shall not affect in any way the meaning or interpretation of this Agreement.  All references in this Agreement to “Section” or “Article” shall be deemed to be references to a Section or Article of this Agreement. 

(b)    Words used herein, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine, or neuter, as the context requires.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.” 

(c)    Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against Purchaser or Seller, whether under any rule of construction or otherwise.  No Party to this Agreement shall be considered the draftsman.  On the contrary, this Agreement has been reviewed, negotiated and accepted by all Parties and shall be construed and interpreted according to the ordinary meaning of the words so as fairly to accomplish the purposes and intentions of the Parties. 

Section 10.8    Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall be considered one and the same Agreement, and shall become effective when one counterpart has been signed by each Party and delivered to the other Party hereto.  This Agreement and any signed agreement or instrument entered into in connection with this Agreement, and any amendments or waivers hereto or thereto, to the extent signed and delivered by means of a facsimile machine or by email delivery of a “.pdf” format data file, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person.

Section 10.9    Integration of Agreement. 

(a)    This Agreement and the Transaction Documents constitute the sole and entire agreement of the Parties with respect to the subject matter contained herein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter.  In the event of any inconsistency between the statements in the body of this Agreement and the Transaction Documents, the Exhibits and Schedules (other than an exception expressly set forth as such in the Schedules), the statements in the body of this Agreement will control.

(b)    Neither this Agreement, nor any provision hereof, may be changed, waived, discharged, supplemented, or terminated orally, but only by an agreement in writing signed by the Party against which the enforcement of such change, waiver, discharge or termination is sought.  The failure or 

delay of any Party at any time or times to require performance of any provision of this Agreement shall in no manner affect its right to enforce that provision.  No single or partial waiver by any Party of any condition of this Agreement, or the breach of any term of this Agreement or the inaccuracy of any warranty of this Agreement, whether by conduct or otherwise, in any one or more instances shall be construed or deemed to be a further or continuing waiver of any such condition, breach or inaccuracy or a waiver of any other condition, breach or inaccuracy. 

Section 10.10    Partial Invalidity.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but in case any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions of this Agreement.  

Section 10.11    Public Announcements.  Seller and Purchaser will use commercially reasonable efforts to consult with each other before issuing any press releases or otherwise making any public statements or filings with Governmental Authorities with respect to this Agreement or the transactions contemplated hereby; provided, however, that neither Party shall be prohibited from making any disclosure that such Party has reasonably determined, in consultation with legal counsel, is necessary to comply with federal or state regulatory requirements or federal securities laws and regulations.  The Parties will work in good faith to agree to the substance of a press release to be released by Seller promptly following the Initial Closing.
  
Section 10.12    Waiver of Jury Trial.  EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. 
Section 10.13    Schedules.

(a)The term “Schedules” means that certain document attached hereto (as may be modified from time to time in accordance with the terms hereof) identified as the Schedules, dated as of the date hereof, delivered by Seller to Purchaser in connection with this Agreement.  Each Section in the Schedule shall be deemed to qualify the corresponding Section of this Agreement and any other Section of this Agreement to which the application of such disclosure is reasonably apparent.  It is specifically acknowledged that the Schedule may expressly provide exceptions to a particular Section of Article 3 notwithstanding that the Section does not state “except as set forth on Schedule ‘__’” or words of similar effect.  

(b)Neither the specification of any dollar amount in any representation or warranty contained in this Agreement nor the inclusion of any specific item in the Schedules is intended to vary the definition of “Material Adverse Effect” or to imply that such amount, or higher or lower amounts, or the item so included or other items, are or are not material, and no party shall use the fact of the setting forth of any such amount or the inclusion of any such item in any dispute or controversy between the parties as to whether any obligation, item or matter not described herein or included in the Schedules is or is not material for purposes of this Agreement.  Unless this Agreement specifically provides otherwise, neither the specification of any item or matter in any representation or warranty contained in this Agreement nor the inclusion of any specific item in the Schedules is intended to imply that such item or matter, or other items or matters, are or are not in the ordinary course of business, and no party shall use the fact of the setting forth or the inclusion 

of any such item or matter in any dispute or controversy between the parties as to whether any obligation, item or matter not described herein or included in the Schedules is or is not in the ordinary course of business for purposes of this Agreement.

(c)Each Section of the Schedules is qualified in its entirety by reference to specific provisions of this Agreement and does not constitute, and shall not be construed as constituting, representations, warranties or covenants of any party, except as and to the extent provided in this Agreement.  Certain matters set forth in the Schedules are included notwithstanding that, because they do not rise above applicable materiality thresholds, they may not be required by the terms of this Agreement to be set forth herein.  All attachments to the Schedules are incorporated by reference into the Section of the Schedules in which they are referenced

 [Signature page follows]

IN WITNESS WHEREOF, each Party hereto has caused this Agreement to be executed as of the day and year first above written. 
	
		
	 
	

PURCHASER:

HOMEBRIDGE FINANCIAL SERVICES, INC.

	 
	By: /s/ Peter Norden
Name: Peter Norden
Title: Chief Executive Officer 

	 
	

	 
	SELLER:

HOMESTREET BANK

	 
	By: /s/ Mark K. Mason
Name: Mark K. Mason
Title: President and CEO

	 
	

Signature Page to Purchase and Assumption AgreementExhibit

EXECUTION COPY

                            

ASSET PURCHASE AGREEMENT

among

Here’s Wings, LLC,

B-Dubs CL, LLC, 
 
Here’s Wings Real Estate, LLC and

Seller Subsidiaries 
(as Sellers)

and 

Principal Members

and

AMC Wings, Inc. 
(as Buyer)

dated as of

February 23, 2019

	
		
	TABLE OF CONTENTS
	 

	ARTICLE I DEFINITIONS
	5

	ARTICLE II PURCHASE AND SALE
	14

	Section 2.01 Purchase and Sale of Assets.
	14

	Section 2.02 Excluded Assets.
	15

	Section 2.03 Assumed Liabilities.
	16

	Section 2.04 Excluded Liabilities.
	16

	Section 2.05 Purchase Price.
	17

	Section 2.06 Purchase Price Adjustment.
	19

	Section 2.07 Allocation of Purchase Price.
	19

	Section 2.08 Third Party Consents.
	19

	ARTICLE III CLOSING
	21

	Section 3.01 Closing.
	21

	Section 3.02 Closing Deliverables.
	21

	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF SELLERS AND PRINCIPAL MEMBER(S)
	23

	Section 4.01 Organization and Qualification of Sellers.
	23

	Section 4.02 Authority of Sellers.
	23

	Section 4.03 No Conflicts; Consents.
	23

	Section 4.04 Financial Statements.
	24

	Section 4.05 Undisclosed Liabilities.
	24

	Section 4.06 Absence of Certain Changes, Events and Conditions.
	24

	Section 4.07 Material Contracts.
	26

	Section 4.08 Title or License to Purchased Assets.
	27

	Section 4.09 Condition and Sufficiency of Assets.
	27

	Section 4.10 Real Property
	28

	Section 4.11 Intellectual Property.
	29

	Section 4.12 Suppliers.
	29

	Section 4.13 Insurance.
	29

	Section 4.14 Legal Proceedings; Governmental Orders.
	29

	Section 4.15 Compliance With Laws; Permits.
	30

	Section 4.16 Environmental Matters.
	30

	Section 4.17 Employee Benefit Matters.
	31

	Section 4.18 Employment Matters.
	32

	Section 4.19 Taxes.
	33

	Section 4.20 Brokers.
	33

	Section 4.21 Full Disclosure.
	33

	ARTICLE V REPRESENTATIONS AND WARRANTIES OF BUYER
	34

	
		
	Section 5.01 Organization of Buyer.
	34

	Section 5.02 Authority of Buyer.
	34

	Section 5.03 No Conflicts; Consents.
	34

	Section 5.04 Brokers.
	35

	Section 5.05 Legal Proceedings.
	35

	SECTION 5.06 FULL DISCLOSURE.
	35

	ARTICLE VI COVENANTS
	36

	Section 6.01 Conduct of Business Prior to the Closing.
	36

	Section 6.02 Access to Information.
	36

	Section 6.03 No Solicitation of Other Bids.
	37

	Section 6.04 Notice of Certain Events.
	37

	Section 6.05 Employees and Employee Benefits.
	38

	Section 6.06 Confidentiality.
	39

	Section 6.07 Non-competition; Non-solicitation
	39

	Section 6.08 Governmental Approvals and Consents
	40

	Section 6.09 Books and Records.
	41

	Section 6.10 Closing Conditions
	42

	Section 6.11 Public Announcements.
	42

	Section 6.12 Bulk Sales Laws.
	42

	Section 6.13 Transfer Taxes.
	42

	Section 6.14 Tax Clearance Certificates.
	43

	Section 6.15 Further Assurances.
	43

	Section 6.16 Management Agreement.
	43

	SECTION 6.17 UPDATES TO DISCLOSURE SCHEDULES.
	43

	ARTICLE VII CONDITIONS TO CLOSING
	44

	Section 7.01 Conditions to Obligations of All Parties.
	44

	Section 7.02 Conditions to Obligations of Buyer.
	44

	Section 7.03 Conditions to Obligations of Sellers.
	46

	Section 7.04 Casualty and Condemnation.
	47

	ARTICLE VIII INDEMNIFICATION
	47

	Section 8.01 Survival.
	47

	Section 8.02 Indemnification By Sellers.
	48

	Section 8.03 Indemnification By Buyer.
	48

	Section 8.04 Certain Limitations.
	49

	Section 8.05 Indemnification Procedures.
	50

	Section 8.06 Payments.
	52

	Section 8.07 Tax Treatment of Indemnification Payments.
	52

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	Section 8.08 Exclusive Remedies.
	54

	Section 8.09 Assignment of Claims.
	52

	Section 8.10 Insurance and Tax Benefits.
	52

	SECTION 8.11 MITIGATION.
	53

	Section 8.12 Recovery from Escrow.
	53

	ARTICLE IX TERMINATION
	53

	Section 9.01 Termination.
	53

	Section 9.02 Effect of Termination.
	54

	ARTICLE X MISCELLANEOUS
	54

	Section 10.01 Expenses.
	54

	Section 10.02 Notices.
	54

	Section 10.03 Interpretation.
	56

	Section 10.04 Headings.
	57

	Section 10.05 Severability.
	57

	Section 10.06 Entire Agreement.
	57

	Section 10.07 Successors and Assigns.
	57

	Section 10.08 No Third-party Beneficiaries.
	57

	Section 10.09 Amendment and Modification; Waiver.
	57

	Section 10.10 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.
	58

	Section 10.11 Specific Performance.
	58

	Section 10.12 Counterparts.
	58

	
			
	Mutual Disclosure Schedules:

	 
	 
	 

	Section 2.01(b)
	-
	Assigned Contracts

	Section 2.02
	-
	Excluded Assets

	Section 2.06
	-
	Schedule A - Inventory Unit Cost Schedule

	Section 2.07
	-
	Allocation Schedule

	 
	 
	 

	Sellers’ Disclosure Schedules:

	 
	 
	 

	Section 4.01
	-
	Organization and Qualification

	Section 4.03
	-
	No Conflicts; Consents

	Section 4.04
	-
	Financial Statements

	Section 4.05
	-
	Undisclosed Liabilities

	Section 4.06
	-
	Absence of Certain Changes, Events and Conditions

	Section 4.07(a)
	-
	Material Contracts

	Section 4.08
	-
	Title or Licenses to Purchased Assets

	Section 4.09
	-
	Condition and Sufficiency of Assets

	Section 4.10(b)
	-
	Leased Real Property

-3

	
			
	Section 4.11(a)
	-
	Intellectual Property Registrations

	Section 4.11(b)
	-
	Intellectual Property Assets

	Section 4.11(c)
	-
	Intellectual Property Licenses

	Section 4.12
	-
	Suppliers

	Section 4.13
	-
	Insurance

	Section 4.14(a)
	-
	Legal Proceedings

	Section 4.14(b)
	-
	Governmental Orders

	Section 4.15(a)
	-
	Compliance with Laws

	Section 4.15(b)
	-
	Permits

	Section 4.16(b)
	-
	Environmental Permits

	Section 4.16(c)
	-
	Release of Hazardous Materials

	Section 4.16(e)
	-
	Environmental Reports

	Section 4.17(a)
	-
	Benefit Plans

	Section 4.17(c)
	-
	ERISA Compliance

	Section 4.18(a)
	-
	Employees

	Section 4.18(b)
	-
	Collective Bargaining

	Section 4.18(c)
	-
	Compliance with Employment Laws

	Section 4.19
	-
	Taxes

	Section 4.20
	-
	Seller Brokers

	 
	 
	 

	Buyer’s Disclosure Schedules:

	Section 5.03
	-
	No Conflicts; Consents

	 
	 
	 

	 
	 
	 

	Exhibits
	:
	 

	Exhibit A
	-
	Restaurants

	Exhibit B
	-
	Escrow Agreement

	Exhibit C
	-
	Bill of Sale

	Exhibit D
	-
	Assignment and Assumption Agreement

	Exhibit E
	-
	Seller Closing Certificate

	Exhibit F
	-
	Buyer Closing Certificate

-4

ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (this “Agreement”), dated as of February 23, 2019, (“Effective Date”) is entered into among Here’s Wings, LLC, an Illinois limited liability company, B-Dubs CL, LLC, an Illinois limited liability company,  Here’s Wings Real Estate, LLC, an Illinois limited liability company and Seller Subsidiaries, as defined herein, (hereinafter collectively referred to as “Sellers” and each individually as “Seller”), the Principal Members (as defined herein) and AMC Wings, Inc. a Michigan corporation (“Buyer”).

RECITALS

WHEREAS, Sellers are engaged in the business (the “Business”) of owning, developing and operating multiple Buffalo Wild Wings franchise restaurants in Illinois, as more specifically identified on Exhibit A attached hereto (the “Restaurants”); 

WHEREAS, Sellers wish to sell and assign to Buyer, and Buyer wishes to purchase and assume from Sellers, the Business, the Restaurants and substantially all the assets used or usable by Sellers in the Business, and certain specified liabilities of the Business, subject to the terms and conditions set forth herein; and

WHEREAS, the Principal Members are the beneficial owners of a majority of the membership interests of Sellers and join this Agreement for the limited purposes set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I 
DEFINITIONS

The following terms have the meanings specified or referred to in this Article I:

“Accrued Vacation” means the value of vacation accrued by each employee based upon the number of working days worked by such employee between January 1, 2019 and the Closing Date.  2019 Accrued Vacation shall accrue on a prorata basis based upon the number of days worked prior to the Closing Date as compared to the total number of working days in Calendar Year 2019. The value of 2018 Earned Vacation and 2019 Accrued Vacation shall be calculated by multiplying the number of hours earned or accrued, as applicable, by such employee’s base hourly rate.
 
“Acquisition Proposal” has the meaning set forth in Section 6.03(a).

“Action” means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation by a Governmental Authority of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

“Actual Inventory” means the value of actual Inventory per Restaurant on average across all Restaurants as of the Pre-Closing Inventory Inspection as defined in Section 2.

“Additional Disclosures” has the meaning set forth in Section 6.17.

-5

“Affiliate” of a Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract (excluding the Franchise Agreements with Buffalo Wild Wings International, Inc.), or otherwise.

“Agreement” has the meaning set forth in the preamble.

“Allocation Schedule” has the meaning set forth in Section 2.07. 

“Assigned Contracts” has the meaning set forth in Section 2.01(b). 

“Assigned Permits” has the meaning set forth in Section 2.01(f).  

“Assignment and Assumption Agreement” has the meaning set forth in Section 3.02(a)(ii).  

“Assignment and Assumption of Lease” has the meaning set forth in Section 2.05(c). 

“Assumed Liabilities” has the meaning set forth in Section 2.03. 

“Benefit Plan” has the meaning set forth in Section 4.17(a).  

“Bill of Sale” has the meaning set forth in Section 3.02(a)(ii).  

“Books and Records” has the meaning set forth in Section 2.01(j).  

“Business” has the meaning set forth in the recitals.

“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in Detroit, Michigan, are authorized or required by Law to be closed for business.

“Buyer” has the meaning set forth in the preamble.

“Buyer Basket Exclusions” has the meaning set forth in Section 8.04(a). 

“Buyer Closing Certificate” has the meaning set forth in Section 7.03(f). 

“Buyer Indemnitees” has the meaning set forth in Section 8.02.  

“Buyer’s Accountants” means BDO USA, LLP.

“BWW” means Buffalo Wild Wings International, Inc. 

“BWW Transfer Fees” means the transfer fee payable to BWW, associated with or arising from the request for consent to transfer the Franchise Agreements and the actual transfer of store franchises, pursuant to this Agreement. 

-6

“Cash Bank” means an amount of cash necessary to conduct the Business at the Effective Time that shall be left in the registers or safes located at the Restaurants.

“Casualty Loss” has the meaning set forth in Section 7.04. 

“Closing” has the meaning set forth in Section 3.01.

“Closing Date” has the meaning set forth in Section 3.01. 

“Closing Inventory” means the Inventory amount(s) set forth on the Closing Inventory Statement. 

“Closing Inventory Statement” means a statement of Inventory, determined as of the Effective Time using Seller’s cost of such Inventory as set forth on Schedule A.   

“Closing Payment” has the meaning set forth in Section 2.05(b)(ii). 

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

“Commercially Reasonable Efforts” means, with respect to a given goal, the efforts that a reasonable person in the position of the promisor would use so as to achieve that goal within the required time period, provided, however, that an obligation to use Commercially Reasonable Efforts under this Agreement does not require the promisor to take any action or expenditure that is disproportionate or unduly burdensome.

“Contracts” means all contracts, leases, deeds, mortgages, licenses, instruments, promissory notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral.

“Direct Claim” has the meaning set forth in Section 8.05(c).

“Disclosure Schedules” means the Disclosure Schedules delivered by Sellers and Buyer concurrently with the execution and delivery of this Agreement. 

“Dollars” or “$” means the lawful currency of the United States.

“Earned Vacation” means the value of vacation earned by each employee as a result of remaining employed by Seller as of the end of December 31, 2018 in accordance with Sellers existing policies and procedures, that is not used by the Employee or otherwise paid by the Sellers prior to the Closing.  2018 Earned Vacation shall be reduced by the amount of time off taken by the Employee between January 1, 2019 and the date of Closing.

“Effective Time” means the opening of business on the Closing Date.

“Encumbrance” means any charge, claim, community property interest, pledge, condition, equitable interest, lien (statutory or other), option, security interest, mortgage, easement, encroachment, right of way, right of first refusal, or restriction of any kind on use, voting, transfer, receipt of income or exercise of any other attribute of ownership.

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“Environmental Claim” means any Action, Governmental Order, lien, fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit.

“Environmental Law” means any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation, reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any Hazardous Materials. The term “Environmental Law” includes, without limitation, the following (including their implementing regulations and any state analogs): the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. §§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.; the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990, 42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C. §§ 651 et seq.

“Environmental Notice” means any written directive, written notice of violation or infraction, or written notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit.

“Environmental Permit” means any Permit, letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made pursuant to Environmental Law.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“ERISA Affiliate” means, with respect to any Person, any other Person that, together with such first Person, would be treated as a single employer within the meaning of Section 414(b), (c), (m) or (o) of the Code.

“Escrow Agent” means the entity designated to serve as escrow agent under the Escrow Agreement.

“Escrow Agreement” means the Escrow Agreement among Buyer, Sellers and the Escrow Agent, to be executed and delivered at the Closing in the form attached hereto as Exhibit B.

“Escrow Amount” means the sum of $500,000 to be deposited with the Escrow Agent and held in escrow pursuant to the Escrow Agreement.

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“Excluded Assets” has the meaning set forth in Section 2.02. 

“Excluded Liabilities” has the meaning set forth in Section 2.04. 

“Financial Statements” has the meaning set forth in Section 4.04. 

“Financial Statements Date” has the meaning set forth in Section 4.04.

“FIRPTA Certificate” has the meaning set forth in Section 7.02(l).

“Franchise Agreement(s)” means those various franchise agreements entered into between Sellers, or Affiliates of Sellers, and BWW in connection with the Business.  

“GAAP” means United States generally accepted accounting principles in effect from time to time.

“Governmental Authority” means any federal, state, local or foreign government or political subdivision thereof, or any agency or instrumentality of such government or political subdivision, or any self-regulated organization or other non-governmental regulatory authority or quasi-governmental authority (to the extent that the rules, regulations or orders of such organization or authority have the force of Law), or any arbitrator, court or tribunal of competent jurisdiction.

“Governmental Order” means any order, writ, judgment, injunction, decree, stipulation, assessment, decision or award entered by or with any Governmental Authority.

“Hazardous Materials” means: (a) any material, substance, chemical, waste, product, derivative, compound, mixture, solid, liquid, mineral or gas, in each case, whether naturally occurring or manmade, that is hazardous, acutely hazardous, toxic, or words of similar import or regulatory effect under Environmental Laws; and (b) any petroleum or petroleum-derived products, radon, radioactive materials or wastes, asbestos in any form, lead or lead-containing materials, urea formaldehyde foam insulation and polychlorinated biphenyls.

“Indemnified Party” has the meaning set forth in Section 8.05. 

“Indemnifying Party” has the meaning set forth in Section 8.05. 

“Insurance Policies” has the meaning set forth in Section 4.13. 

“Intellectual Property” means all of the following and similar intangible property and related proprietary rights, interests and protections, however arising, pursuant to Laws: (a) trademarks, service marks, trade names, brand names, logos, trade dress and other proprietary indicia of goods and services, whether registered, unregistered or arising by Law, and all registrations and applications for registration of such trademarks, including intent-to-use applications, and all issuances, extensions and renewals of such registrations and applications; (b) internet domain names, whether or not trademarks, registered in any generic top level domain by any authorized private registrar or Governmental Authority; (c) original works of authorship in any medium of expression, whether or not published, all copyrights (whether registered, unregistered or arising by Law), all registrations and applications for registration of such copyrights, and all issuances, extensions and renewals of such registrations and applications; (d) confidential information, formulas, designs, devices, technology, know-how, research and development, inventions, methods, processes, compositions and other trade secrets, whether or not patentable; and (e) patented and patentable 

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designs and inventions, all design, plant and utility patents, letters patent, utility models, pending patent applications and provisional applications and all issuances, divisions, continuations, continuations-in-part, reissues, extensions, re-examinations and renewals of such patents and applications.

“Intellectual Property Assets” means all Intellectual Property that is owned or licensed by Sellers and used in the Business as currently conducted.

“Intellectual Property Licenses” means all licenses, sublicenses and other agreements by or through which other Persons, including Sellers’ Affiliates, grant Sellers exclusive or non-exclusive rights or interests in or to any Intellectual Property that is used in or necessary for the conduct of the Business as currently conducted.

“Intellectual Property Registrations” means all Intellectual Property Assets that are subject to any issuance, registration, application or other filing by, to or with any Governmental Authority or authorized private registrar in any jurisdiction, including registered trademarks, domain names and copyrights, issued and reissued patents and pending applications for any of the foregoing.

“Inventory” has the meaning set forth in Section 2.01(a). 

“Knowledge of Buyer” or “Buyer’s Knowledge” or any other similar knowledge qualification shall mean the actual or constructive knowledge of David Burke, Phyllis Knight and Jason Curtis after due inquiry of the individuals who would be reasonably expected to have knowledge of the relevant matters as part of their job responsibilities. 

“Knowledge of Sellers” or “Sellers’ Knowledge” or any other similar knowledge qualification shall mean the actual or constructive knowledge of John A. Weiler, Adrian Ramirez, Tom Turschman, and Eric Hedrich after due inquiry of the individuals who would be reasonably expected to have knowledge of the relevant matters as part of their job responsibilities.

“KPW” means KPW Management, Inc., an Illinois corporation.

“KPW Bifurcated HW Contracts” shall mean new contracts to be negotiated after execution of this Agreement with each third party to the KPW Contracts, substantially in the form of the KPW Contracts, but which solely support and obligate the Sellers and the Sellers’ Business and do not in any way relate to, or provide services or products to the business of, or otherwise obligate, Wings Across America, LLC (“WAA”) or WAA’s subsidiaries. 

“KPW Contracts” shall mean those contracts entered into by KPW, Sellers or another affiliated entity of Sellers that support both the business of Sellers and the separate business of Wings Across America which is not being sold pursuant to this Agreement.  

“Law” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

“Leased Real Property” has the meaning set forth in Section 4.10(a). 

“Leases” has the meaning set forth in Section 4.10(a). 

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“Liabilities” means liabilities, obligations or commitments of any nature whatsoever, asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured or otherwise.

“Losses” means direct losses, damages, liabilities, deficiencies, Actions, judgments, interest, awards, penalties, fines, costs or expenses of whatever kind, including reasonable attorneys’ fees and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; provided, however, that “Losses” shall not include any consequential, indirect, punitive or special damages, whether foreseeable or not, except in the case of fraud or to the extent actually awarded to a Governmental Authority or other third party.

“Management Agreement” has the meaning set forth in Section 6.16.

“Material Adverse Effect” means any event, occurrence, fact, condition or change that is, or would reasonably be expected to be, individually or in the aggregate, materially adverse to (a) the business, results of operations, condition (financial or otherwise) or assets of the Business, considered as a whole, or the Purchased Assets, considered as a whole, or (b) the ability of Sellers to consummate the transactions contemplated hereby on a timely basis; provided, however, that “Material Adverse Effect” shall not include any such event, occurrence, fact, condition, or change, directly or indirectly, arising out of or attributable to: (i) any changes, conditions or effects in the United States economy or securities or financial markets in general; (ii) changes, conditions or effects that generally affect the industries in which the Business operates; (iii) any change, effect or circumstance resulting from an action required or permitted by this Agreement; (iv) conditions caused by acts of terrorism or war (whether or not declared); and (v) the announcement of this Agreement; and (vi) any change in applicable law or interpretation thereof; provided that any event, occurrence, fact, condition, or change referred to in clauses (i), (ii) or (iv) above shall not have a disproportionate effect on the Business compared to other participants in the industries in which the Business operates.

“Material Contracts” has the meaning set forth in Section 4.07(a). 

“Material Suppliers” has the meaning set forth in Section 4.12.

“Multi-employer Plan” has the meaning set forth in Section 4.17(c). 

“Permits” means all permits, licenses, franchises, approvals, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

"Ordinary Course" means an action will be deemed to be taken in the ordinary course of Seller's business if: (i) such action is consistent with the past customs and practices of Seller; and (ii) such action is similar in nature and magnitude to actions customarily taken.

“Owners” has the meaning set forth in Section 2.02(p).

“Permitted Encumbrances” has the meaning set forth in Section 4.08. 

“Person” means an individual, corporation, partnership, joint venture, limited liability company, Governmental Authority, unincorporated organization, trust, association or other entity.

 “Post-Closing Adjustment” has the meaning set forth in Section 2.06(a)(iii). 

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“Pre-Closing Tax Period” means any taxable period ending before the Effective Time and, with respect to any taxable period beginning before and ending after the Effective Time, the portion of such taxable period ending immediately prior to the Effective Time.

“Preliminary Closing Inventory” has the meaning set forth in Section 2.05(b).

“Preliminary Purchase Price” has the meaning set forth in Section 2.05(a). 

“Principal Member(s)” means John A Weiler, James Dixon and Terry Winkler. 

“Proposed Closing Inventory Statement” has the meaning set forth in Section 2.06(a)(i). 

“Purchase Price” has the meaning set forth in Section 2.05(a). 

“Purchased Assets” has the meaning set forth in Section 2.01. 

“Real Property” means  the Leased Real Property.

“Release” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including, ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

“Representative” means, with respect to any Person, any and all directors, members, officers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.

“Resolution Period” has the meaning set forth in Section 2.06(a)(ii). 

“Restricted Business” means the operation of a casual or fast casual restaurant that sells or offers to dispense prepared food products that are the same as, or similar to, the type sold in Buffalo Wild Wings Restaurants, other than any Restaurant excluded from this Agreement pursuant to Section 7.04.

“Restricted Period” has the meaning set forth in Section 6.07(a). 

“Review Period” has the meaning set forth in Section 2.06(a)(ii). 

“Restaurants” has the meaning set forth in the preambles.

“Seller” or “Sellers” has the meaning set forth in the preamble.

“Seller Basket Exclusions” has the meaning set forth in Section 8.04(b). 

“Seller Closing Certificate” has the meaning set forth in Section 7.02(i). 

“Seller Indemnitees” has the meaning set forth in Section 8.03.

“Seller Subsidiaries” shall mean Here's Wings Hoffman Estates, LLC, an Illinois limited liability company; Here's Wings Mt. Prospect, LLC, an Illinois limited liability company; Here's Wings Round Lake 

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Beach, LLC, an Illinois limited liability company; Here's Wings Skokie, LLC, an Illinois limited liability company; Here's Wings Vernon Hills, LLC, an Illinois limited liability company; Here’s Wings II - Northbrook, LLC, a Illinois limited liability company, Here's Wings Old Orchard, LLC, an Illinois limited liability company; and B-Dubs RE, LLC, an Illinois limited liability company. 

 “Statement of Objections” has the meaning set forth in Section 2.06(a)(ii). 

“Statements of Operations” has the meaning set forth in Section 4.04.

“Survival Period” has the meaning set forth in Section 8.01. 

“Surviving Obligations” has the meaning set forth in Section 9.02(b). 

 “Tangible Personal Property” has the meaning set forth in Section 2.01(e). 

“Target Inventory” means Inventory valued at $30,000 per Restaurant on average across all Restaurants.

“Taxes” means all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, documentary, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties imposed, assessed or collected by or under the authority of any Governmental Authority.

“Tax Return” means any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof filed with or submitted to or required to be filed with or submitted to any Governmental Authority.

“Termination Date” has the meaning set forth in Section 9.01(b)(ii). 

“Territory” means Illinois.

“Third Party Claim” has the meaning set forth in Section 8.05(a). 

“Third Party Landlord Consents” has the meaning set forth in Section 2.05(c)(i). 

“Transaction Documents” means this Agreement, the Escrow Agreement, the Bill of Sale, the Assignment and Assumption Agreement, the Assignment and Assumption of Leases, the Management Agreement, and the other agreements, instruments and documents required to be delivered at the Closing.

“Union” has the meaning set forth in Section 4.18(b).

“WARN Act” means the federal Worker Adjustment and Retraining Notification Act of 1988, and similar state, local and foreign laws related to plant closings, relocations, mass layoffs and employment losses, including Illinois statute 820 ILCS 65.  

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ARTICLE II
PURCHASE AND SALE

Section 2.01    Purchase and Sale of Assets. Subject to the terms and conditions set forth herein, at the Closing, and upon the terms and subject to the conditions set forth in this Agreement, Sellers shall sell, assign, transfer, convey and deliver to Buyer, and Buyer shall purchase from Sellers, free and clear of any Encumbrances other than Permitted Encumbrances the Business and all right, title and interest of Sellers in, to and under all of the assets, properties and rights of every kind and nature, whether real, personal or mixed, tangible or intangible (including goodwill), wherever located and whether now existing or hereafter acquired, but specifically excluding the Excluded Assets, which are used or held for use by Sellers or their Affiliates in connection with, the Business (collectively, the “Purchased Assets”), including, the following:

(a)    all food, beverage, operating supplies, paper goods, uniforms, and other similar inventory items used or held for use in connection with the Business in each Restaurant as of the Closing Date (“Inventory”);

(b)    all Contracts set forth on Section 2.01(b) of the Disclosure Schedules, including but not limited to Franchise Agreements, Leases, KPW Bifurcated HW Contracts, and Intellectual Property Licenses (the “Assigned Contracts”), provided  Buyer acknowledges that Buyer may be obligated by Franchisor to enter into the Franchisor’s then current form of Franchise Agreement for each Restaurant; 

(c)    all Intellectual Property Assets;

(d)    all furniture, fixtures, equipment, office equipment, supplies, computers, telephones and other tangible personal property in each Restaurant as of the Closing Date (the “Tangible Personal Property”);

(e)    the Leased Real Property, including all leasehold improvements including those listed on Section 4.10 of the Disclosure Schedules;

(f)    to the extent assignable, all Permits, including liquor licenses and Environmental Permits, which are held by any Seller or any Affiliate of Sellers and required for the conduct of the Business as currently conducted or for the ownership or use of the Purchased Assets, including, those listed on Section 4.15(b) and Section 4.16(b) of the Disclosure Schedules (the “Assigned Permits”);

(g)    all rights to any Actions of any nature available to or being pursued by Sellers to the extent related to the Business, the Purchased Assets or the Assumed Liabilities, whether arising by way of counterclaim or otherwise attributable to the period on or after the Closing Date;

(h)    all prepaid expenses, credits, advance payments, claims, security, refunds, rights of recovery, rights of set-off, rights of recoupment, deposits, charges, sums and fees associated with the Assigned Contracts or Assigned Permits, prorated in all cases as provided in Section 2.05(d) and Section 3.02(b)(vi) of this Agreement;

(i)    to the extent assignable all of Sellers’ rights under warranties, indemnities and all similar rights against third parties to the extent related to any Purchased Assets;

(j)    originals or authentic copies of all books and records, including, books of account, ledgers and general, financial and accounting records, equipment maintenance files, price lists, supplier lists, 

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customer complaints and inquiry files, records and data (including all correspondence with any Governmental Authority), sales material and records, marketing and promotional surveys, and files relating to the Intellectual Property Assets and the Intellectual Property Licenses (“Books and Records”); 

(k)    all Cash Banks; and

(l)    all goodwill and the going concern value of the Business.

Section 2.02    Excluded Assets. Notwithstanding the foregoing, the Purchased Assets shall not include the following assets (collectively, the “Excluded Assets”):

(a)    other than the Cash Banks, all cash or cash equivalents (including deposits and cash in transfer from credit card sales and all cash in any automated teller machines or games at the Restaurants) except as set forth in Section 2.01(a) and all securities, bank and investment accounts;

(b)    all accounts or notes receivable held by Sellers, and any security, claim, remedy or other right related to any of such accounts or notes receivable; 

(c)    all bank accounts, bank and credit card deposits in transit, investment accounts, credit cards and debit cards;

(d)    the corporate seals, organizational documents, minute books, stock books, Tax Returns, books of account or other records having to do with the corporate organization of Sellers;

(e)    all Benefit Plans and assets attributable thereto;

(f)    subject to Section 7.04, all insurance policies and proceeds therefrom;

(g)    all rights to any Actions relating to the period prior to the Closing Date;

(h)    the other assets, properties and rights specifically set forth on Section 2.02 of the Disclosure Schedules; 

(i)    the rights which accrue or will accrue to Sellers and any Affiliates of Sellers under the Transaction Documents;

(j)    all deposits and rebates related to the Business for the period prior to the Closing Date except as set forth in Section 2.01(i); 

(k)    all accounts receivable or notes receivable held by Sellers, and any security, claim, remedy or other right related to any of such accounts receivable or notes receivable (“Accounts Receivable”);
(l)    all of Seller’s federal, state, local, and other tax returns, reports, declarations, and applications related to Taxes (“Tax Returns”) and other records which are not directly related to or reasonably necessary to the conduct of the Business; 

(m)    any tax credits, tax refunds, tax benefits, or other benefits relating to periods prior to the Closing Date; 

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(n)    employment records and personnel files of employees (provided that, with respect to certain employees designated by Buyer, such files and records shall be made available to Buyer for Buyer’s review prior to Closing in accordance with the applicable law in connection with decisions by Buyer whether or not to employ such employees); 

(o)    any related party loans listed as an asset on the books and records of any Seller;

(p)    personal computers and printers located at Owners’ homes, either corporate office, cellular telephones, email addresses and telephone numbers used by the Owners and each Owners’ spouse.  For purposes of this subsection, “Owners” shall mean John Weiler and Larry Guzik; 

(q)    Artwork and personal effects of all employees in any of the corporate offices; 

(r)    any ownership or beneficial interest in life insurance policies insuring the lives of any Owner or any Owners’ spouse; and

(s)    all assets owned by KPW, John Weiler or Larry Guzik, including all property at the corporate offices.

Section 2.03    Assumed Liabilities. Subject to the terms and conditions set forth in this Agreement, as of the Effective Time, Buyer shall assume and agree to pay, perform and discharge only the following Liabilities of Sellers or their Affiliates, respectively (collectively, the “Assumed Liabilities”), and no other Liabilities:

(a)    all Liabilities in respect of the Assigned Contracts but only to the extent that such Liabilities thereunder are required to be performed at or after the Effective Time and do not relate to any failure to perform, improper performance, warranty or other breach, default or violation by Sellers prior to the Effective Time; 

(b)    all Liabilities in respect of the Assigned Permits but only to the extent that such Liabilities thereunder are required to be performed at or after the Effective Time; 

(c)    all obligations and requirements of Sellers to remodel, upgrade or redecorate the Restaurants as required under the Franchise Agreements or as otherwise required by BWW; and

(d)    all other Liabilities expressly assumed by Buyer under the Transaction Documents.

Section 2.04    Excluded Liabilities. Notwithstanding the provisions of Section 2.03 or any other provision in this Agreement to the contrary, Buyer shall not assume and shall not be responsible to pay, perform or discharge any Liabilities of Sellers or any of their Affiliates of any kind or nature whatsoever other than the Assumed Liabilities (the “Excluded Liabilities”). Sellers shall, and shall cause each of their Affiliates to, pay and satisfy in due course all Excluded Liabilities which they are obligated to pay and satisfy.  Without limiting the generality of the foregoing and notwithstanding anything to the contrary contained elsewhere in this Agreement, Excluded Liabilities shall include, but are not limited to, the following:

(a)    All Earned Vacation and all Accrued Vacation;

(b)    The Actions listed on Section 4.14(a) of the Disclosure Schedules; 

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(c)    Any Liabilities of Sellers or their respective Affiliates for any past or present employees, agents or independent contractors of Sellers arising out of events occurring prior to the Closing Date, including but not limited to any worker’s compensation claims, employee severance claims, or immigration claims; 

(d)    Any Liabilities of Sellers for any Taxes of Sellers; and

(e)    Any Liability of Sellers of any kind or nature, whether now in existence or hereafter arising, not constituting Assumed Liabilities.

Section 2.05    Purchase Price. 

(a)    Purchase Price. The aggregate purchase price (the "Purchase Price") for the Purchased Assets shall be the Preliminary Purchase Price (defined below), as adjusted for Post-Closing Adjustment determined in accordance with the procedures set forth in Section 2.06(a) below.  For purposes hereof, the “Preliminary Purchase Price” for the Purchased Assets, shall be an amount equal to: (i) $22,540,000 [comprised of $21,530,000 for  the Purchased Assets within Here’s Wings, LLC and $1,010,000 for the Purchased Assets within B-Dubs CL, LLC], (ii) minus the amount by which Actual Inventory is less than the Target Inventory, and (iii) minus the amount of any repair credit required in accordance with Section 6.18.  

(b)    Payment of Purchase Price.  Subject to applicable reimbursement credits to Buyer and Sellers for pro-rations identified in Section 2.05(d) below, Buyer agrees to pay or deliver the Purchase Price as follows:

(i)    No later than the third Business Day immediately preceding the Closing Date, Sellers shall deliver to Buyer a written closing statement certified by a Principal Member, setting forth in detail Sellers’ good faith estimate of the Closing Inventory as of the Closing Date (the “Preliminary Closing Inventory”).  If Buyer reasonably believes the Preliminary Closing Inventory delivered by Sellers is unreasonable, Buyer and Sellers shall cooperate in good faith to resolve such dispute.  If any disputed matter cannot be resolved, the Preliminary Closing Inventory will be calculated based upon Sellers’ position concerning such disputed matter without prejudice to the right of Buyer to raise such disputed matter again in accordance with the determination of the Closing Inventory pursuant to Section 2.06(a).  

(ii)    At the Closing, Buyer shall pay to Sellers a cash closing payment (the “Closing Payment”) in an amount equal to (A) the Preliminary Purchase Price, minus (B) the Escrow Amount.  The Closing Payment shall be made to Sellers, by wire transfer of immediately available funds to the account or accounts designated in writing by Sellers. 

(iii)    The Escrow Amount shall be deposited by wire transfer of immediately available funds into an account designated by the Escrow Agent and shall be held for a period up to fifteen (15) months and distributed in accordance with the terms of the Escrow Agreement to satisfy any and all Losses incurred or sustained by, or imposed upon, the Buyer Indemnitees that are recoverable by the Buyer Indemnitees against Sellers pursuant to Article VIII. 

(c)    Additional Agreements.  As a material inducement to Sellers and Buyer to enter into this Agreement and to consummate the transactions provided for in this Agreement, at the Closing, Sellers and Buyer agree that with respect to each Lease for a Restaurant, to enter into an Assignment and Assumption of Lease in a form mutually agreed to by the parties (each, an “Assignment and Assumption of Lease”) and where required by the terms of such Lease, Sellers and Buyers will each use Commercially Reasonable 

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Efforts to cause each of the landlords to execute and deliver a consent to such assignment (the “Third Party Landlord Consents”); provided, however, Sellers shall not be required to pay any fee or consideration to such landlords in connection therewith other than nominal administrative or transfer fees and expenses to the extent required by the terms of such Leases.  Buyer agrees to use Commercially Reasonable Efforts necessary or required to obtain releases of the Principal Member (and, if applicable, his spouse), KPW, and any other guarantors from any guarantees granted or given with respect to any of the Leases set forth in Section 2.01(b) of the Disclosure Schedules and all Franchise Agreements with BWW as Franchisor and to the extent such releases are not obtained by the Closing Date, Buyer shall indemnify such guarantors as provided in Section 8.03(e).

(d)    Pro-rations.  At the Closing, Buyer and Sellers shall reimburse each other, as appropriate, for the following expenses applicable to the Business, all of which shall be prorated such that Sellers are responsible for their pro-rata share (determined on a per diem basis) of the expenses accrued prior to the Effective Time except as provided below, and Buyer is responsible for its pro-rata share (determined on a per diem basis) of the expenses accrued on and after the Effective Time except as provided below, provided, however, that the amount of the Cash Banks shall be credited against Sellers’ obligation to reimburse Buyer for such expenses:

(i)    real estate taxes and personal property taxes accrued in connection with the Leases assigned to Buyer (or its Affiliate) or otherwise accrued with respect to the Purchased Assets, based upon the number of days in the applicable taxable period owned by each party taking into account that such taxes are paid in arrears;  

(ii)    utility expenses associated with operation of the Restaurants, based upon actual amounts billed by the utilities. In connection therewith, Sellers or their Affiliates shall cause the meters for the utilities to be read as close as possible to the Closing Date and shall, to the extent meter readings are available, pay such utility expenses on the basis of such readings.  For those utility expenses that meter readings as of the Closing Date are not available, the parties will pro-rate such utility expenses on the basis of the most recently issued bills therefor which are based on meter readings no earlier than thirty (30) days before the Closing Date, and such pro-ration shall be promptly recalculated by the parties after the Closing Date upon the receipt of the next utility bills;

(iii)    rent payments and any common area charges or other similarly pro-rated charges due under the Leases assigned to Buyer (or its Affiliate) (including any percentage rent on an annualized basis, as may be adjusted for recaptured landlord allowances); 

(iv)    all payments (if any) due to BWW or to any cooperative marketing group under the Franchise Agreements assigned to Buyer (or its Affiliate) (excluding any BWW Transfer Fees) which accrue during the month of the Closing; provided, however, that to the extent such payments can be calculated as a percentage of gross sales or other operating accounts that can be segregated between Sellers and Buyer under their respective accounting systems, such payments shall be excluded from the pro-rations required by this Section 2.05(d)(iv) and be paid directly by Sellers and Buyer, as the case may be;

(v)    liquor license fees paid by any Seller or any Affiliate of Sellers prior to the Effective Time to the extent that all or any portion of such fees related to a liquor Permit assigned to Buyer (or its Affiliate) or subject to the Management Agreement with a post-Closing expiration date and are not refunded by the applicable Governmental Authority to Sellers or any Affiliate of Sellers; and 

(vi)    any other items customarily prorated, as mutually agreed upon by the parties.

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Not later than ninety (90) days after the later to occur of: (x) the Closing Date and (y) Sellers receive 2019 real estate tax bills for Cook county locations, Buyer and Sellers shall cooperate with each other to confirm whether any of the parties’ Closing estimates of the expenses pro-rated pursuant to this Section 2.05(d) should be adjusted to reflect the actual amounts of such expenses and Buyer and Sellers shall reimburse each other accordingly to properly reflect the pro-rations contemplated by this Section 2.05(d), including with respect to the actual amount of the Cash Banks on the Closing Date. 

(e)    Advance Rebates; Rebates.  In the event Sellers have received an advance rebate from a supplier which covers both a period prior to and on or after the Effective Time, such rebate shall be prorated between Sellers and Buyer in a manner consistent with the formula utilized by the particular supplier.  With respect to any other rebates, Sellers and Buyer agree that to the extent such rebate relates to the period prior to the Effective Time, such rebate shall be paid to Sellers and to the extent such rebate relates to the period on and after the Effective Date, such rebate shall be paid to Buyer.

Section 2.06    Inventory Purchase Price Adjustment.  Within 2 days prior to Closing, representatives of both Sellers and Buyer shall conduct a joint inspection of the Inventory on hand at each store to determine the value of the Actual Inventory in the stores and confirm the value of the Actual Inventory is equal to or greater than the Target Inventory (the “Pre-Closing Inventory Inspection”).  If Actual Inventory on hand as of the date of such Pre-Closing Inventory Inspection is less than the Target Inventory, then the Purchase price shall be reduced by the amount by which the Actual Inventory is less than the Target Inventory. If the Actual Inventory on hand as of the date of such Pre-Closing Inventory Inspection is equal to or greater than the Target Inventory, then no adjustment to the Purchase price shall be made. Notwithstanding any provisions in this Agreement to the contrary, Target Inventory and Actual Inventory shall be valued in accordance with average cost per unit paid by Sellers as of the Closing Date to be set forth on the form of Schedule A (“Inventory Unit Cost Schedule”) attached hereto and incorporated herein by reference.

Section 2.07    Allocation of Purchase Price. Prior to Closing, Sellers and Buyer shall mutually agree on the allocation of the Purchase Price among the Sellers and among the Purchased Assets for income Tax purposes to be shown on Section 2.07 of the Disclosure Schedules and completed prior to the Closing Date (the “Allocation Schedule”). Any adjustments to the Purchase Price pursuant to Section 2.06 herein shall be allocated in a manner consistent with the Allocation Schedule.  None of the parties shall take any position in any Tax Returns that is inconsistent with the allocations in the Allocation Schedule unless required to do so by applicable Law.  If any Governmental Authority shall challenge such allocations, Buyer and Sellers shall cooperate in good faith in responding to such challenge.  Sellers and Buyer shall give prompt written notice to the other upon their receipt of any such challenge.  

Section 2.08    Third Party Consents. To the extent that Sellers’ rights under any Contract or Permit constituting a Purchased Asset, or any other Purchased Asset, may not be assigned to Buyer without the consent of another Person which has not been obtained as of the Closing, this Agreement shall not constitute an agreement to assign the same if an attempted assignment would constitute a breach thereof or be unlawful, and Sellers, at their expense, shall use Commercially Reasonable Efforts to obtain any such required consent(s) as promptly as possible; provided Sellers shall not be required to pay any costs, fees or expenses to obtain any such consent other than nominal administrative or expense reimbursement fees. If any such consent shall not be obtained or if any attempted assignment would be ineffective or would impair Buyer’s rights under the Purchased Asset in question so that Buyer would not in effect acquire the benefit of all such rights at the Closing, Sellers, to the maximum extent permitted by Law and the Purchased Asset, shall act after the Closing as Buyer’s agent in order to obtain for it the benefits thereunder and shall cooperate, to the maximum extent permitted by Law and the Purchased Asset, with Buyer in any other reasonable 

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arrangement designed to provide such benefits to Buyer.    Notwithstanding any provision in this Section 2.08 to the contrary, Buyer shall not be deemed to have waived its rights under Section 7.02(d) hereof unless and until Buyer provides written waivers thereof.  Notwithstanding the foregoing provisions of this Section 2.08, the provisions of Section 6.17 shall govern the respective rights and obligations of the parties related to approvals or consents of Governmental Authorities to the transfer or issuance of Permits.

Section 2.09    Title Insurance; Surveys; Closing Fees.  Buyer shall pay all title insurance costs, including (a) title insurance commitments, (b) premiums for any title insurance policies with respect to the Restaurants (including owner’s policies and lender’s policies); and (c) costs associated with any endorsements required by Buyer or its lender(s).   Any closing escrow fees of the Title Company will be shared equally between Buyer and Seller.  Buyer will be responsible for any deed taxes associated with the transfer of the Assets and fees to transfer titles to personal property to name of Buyer.  To the extent that Buyer or its lenders require any surveys or environmental site assessments, Buyer shall be solely responsible for all costs associated with obtaining such surveys and environmental site assessments or any other due diligence expenses. 

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ARTICLE III
CLOSING

Section 3.01    Closing. Subject to the terms and conditions of this Agreement, the consummation of the transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of KPW at 22285 Pepper Road, Suite 307, Lake Barrington, IL 60010, or electronically if feasible, at 10:00 a.m., Central time, on the second Business Day after all of the conditions to Closing set forth in Article VII are either satisfied or waived (other than conditions which, by their nature, are to be satisfied on the Closing Date), or at such other time, date or place as Sellers and Buyer may mutually agree upon in writing. The date on which the Closing is to occur is herein referred to as the “Closing Date” and for all purposes the Closing will be deemed effective as of the Effective Time. Notwithstanding the foregoing, Buyer agrees to schedule the Closing on a permitted prepayment date under the terms of Sellers’ loan agreements with GE Capital Bank in order to avoid the imposition of any interest or premium charges accrued between the Closing Date (if other than a permitted prepayment date) and a permitted prepayment date.

Section 3.02    Closing Deliverables.

(a)    At the Closing, Sellers shall deliver to Buyer the following:

(i)    the Escrow Agreement duly executed by Sellers;

(ii)    a bill of sale in the form of Exhibit C hereto (the “Bill of Sale”) and duly executed by Sellers, and Affiliates of Sellers, as applicable, transferring the tangible personal property included in the Purchased Assets to Buyer (or designated Affiliate of Buyer);

(iii)    an assignment and assumption agreement in the form of Exhibit D hereto (the “Assignment and Assumption Agreement”) and duly executed by Sellers and the Affiliates of Sellers, as applicable, effecting the assignment to and assumption by Buyer (or designated Affiliate of Buyer) of the Purchased Assets and the Assumed Liabilities;

(iv)    with respect to each Lease, an Assignment and Assumption of Lease, duly executed by a Seller or an Affiliate of Sellers, as applicable;

(v)    the Third Party Landlord Consents, which shall include an estoppel certificate with respect to each of the Leased Real Properties dated no more than 30 days prior to the Closing Date in form and substance satisfactory to Buyer;

(vi)    the Seller Closing Certificate;

(vii)    the FIRPTA Certificate;

(viii)    releases for the Guarantees as provided for in Section 2.05(c)(1);

(ix)    the Management Agreement(s) associated with Permits to the extent applicable under the terms of Section 6.16, duly executed by a Seller or Affiliate of Seller, as applicable;

(x)    the certificates required by Section 7.02(j) and Section 7.02(k);

(xi)    copies of the KPW Bifurcated HW Contracts; and  

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(xii)    such other customary instruments, filings or documents, in form and substance reasonably satisfactory to Buyer, as may be required to give effect to the transactions, the Closing and any post-closing obligations of Sellers in accordance with the terms of this Agreement.  

(b)    At the Closing, Buyer shall deliver, or cause its designated Affiliate to deliver, to Sellers the following:

(i)    the Closing Payment;

(ii)    the Escrow Agreement duly executed by Buyer;

(iii)    the Assignment and Assumption Agreement duly executed by Buyer or a designated Affiliate of Buyer;

(iv)    with respect to each Lease, an Assignment and Assumption of Lease, duly executed by Buyer or a designated Affiliate of Buyer;

(v)    the Buyer Closing Certificate;

(vi)     the amount of any security deposits under the Leases and other deposits transferred to Buyer pursuant to this Agreement (e.g., utility deposits, liquor license deposits, etc.);

(vii)    the certificate required by Section 7.03(f);  

(viii)    the Management Agreement, to the extent applicable under the terms of Section 6.16, duly executed by Buyer or a designated Affiliate of Buyer; and 

(ix)    a certified copy of Buyer’s Articles of Incorporation issued by the Secretary of State of the State of Michigan and Bylaws;
(x)    a certificate of good standing of Buyer, issued not earlier than ten (10) days prior to the Closing Date by the Secretary of State of the State of Michigan;
(xi)    a certified copy of the resolutions of the governing body of Buyer, authorizing the execution and delivery of this Agreement and the Transaction Documents to which Buyer  is a party and the consummation of the transactions contemplated hereby and thereby;
(xii)    such other customary instruments, filings or documents, in form and substance reasonably acceptable to Sellers, as may be required to give effect to the transactions, and the Closing, and any post-closing obligations of Buyer in accordance with the terms of this Agreement.

(c)    At the Closing, Buyer shall deliver the Escrow Amount to the Escrow Agent pursuant to the Escrow Agreement, duly executed by Buyer, Sellers and the Escrow Agent.  Buyer and Seller shall each pay one-half (1/2) of the fees and costs of the Escrow Agent.

(d)    Notwithstanding the order of the deliveries by the parties set forth above, all actions and deliveries are deemed to have occurred simultaneously, and none shall be deemed to have been completed 

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until each of the Actions and deliveries set forth in this Section 3.02 have been completed or have been waived by the party entitled to make such waiver.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS AND PRINCIPAL MEMBER(S)

Except as set forth in the correspondingly numbered Sections of the Disclosure Schedules, each Seller and each Principal Member jointly and severally represents and warrants to Buyer that the statements contained in this Article IV are true and correct as of the date hereof.  

Section 4.01    Organization and Qualification of Sellers. Each Seller is duly organized, validly existing and in good standing under the Laws of the state of its organization and has full limited liability company power and authority to own, operate or lease the properties and assets now owned, operated or leased by it and to carry on its portion of the Business as currently conducted. Section 4.01 of the Disclosure Schedules sets forth each jurisdiction in which Sellers are licensed or qualified to do business, and each Seller is duly licensed or qualified to do business and is in good standing in each jurisdiction in which the ownership of the Purchased Assets or the operation of its portion of the Business as currently conducted makes such licensing or qualification necessary.

Section 4.02    Authority of Sellers. Subject to the consents set forth in Section 4.03 of the Disclosure Schedules, each Seller has full limited liability company power and authority to enter into this Agreement and the other Transaction Documents to which such Seller is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by a Seller of this Agreement and any other Transaction Document to which such Seller is a party, the performance by a Seller of its obligations hereunder and thereunder and the consummation by a Seller of the transactions contemplated hereby and thereby have been duly authorized by all requisite limited liability company action on the part of such Seller. This Agreement has been duly executed and delivered by each Seller and each Principal Member, and (assuming due authorization, execution and delivery by Buyer) this Agreement constitutes a legal, valid and binding obligation of Sellers and Principal Members enforceable against Sellers and Principal Members in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors’ rights generally and by general equitable principles. When each Transaction Document to which a Seller or a Principal Member is or will be party to has been duly executed and delivered by such Seller or Principal Member (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of such Seller or such Principal Member enforceable against it or him in accordance with its terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws of general application affecting enforcement of creditors’ rights generally and by general equitable principles.

Section 4.03    No Conflicts; Consents. Except as set forth in Section 4.03 of the Disclosure Schedules, the execution, delivery and performance by Sellers of this Agreement and the other Transaction Documents to which any Seller is a party, and the consummation of the transactions contemplated hereby and thereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the articles of organization, by-laws or other organizational documents of any Seller; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to any Seller, the Business or the Purchased Assets; (c) except as set forth in Section 4.03 of the Disclosure Schedules, require the consent, notice or other action by any Person under, conflict with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would 

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constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel any Material Contract or Permit to which Sellers are, or any Seller is, a party or by which Sellers are, or any Seller or the Business is bound, or to which any of the Purchased Assets are subject (including any Assigned Contract); or (d) result in the creation or imposition of any Encumbrance other than Permitted Encumbrances on the Purchased Assets. Except as set forth in Section 4.03 of the Disclosure Schedules or with respect to the transfer of the Assigned Permits, no consent, approval, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Sellers in connection with the execution and delivery of this Agreement or any of the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby.  

Section 4.04    Financial Statements.  Complete copies of the unaudited financial statements of Sellers, consisting of the balance sheet, income statement and statement of cash flows of the Business as of and for the twelve month period ending December 31st for the years 2016, 2017 and 2018 (the “Financial Statements”) have been delivered to Buyer, a copy of which are included in Section 4.04 of the Disclosure Schedules. The Financial Statements are based on the Books and Records of the Business, operated by Sellers, and fairly present in all material respects the financial condition of Sellers taken as a whole as of the respective dates they were prepared and the results of operations of Sellers for the periods indicated.  The date of the Financial Statements of Sellers for year ending December 31, 2018 is referred to herein as the “Financial Statements Date.”  

Section 4.05    Undisclosed Liabilities.  Except as set forth on Section 4.05 of the Disclosure Schedules, Sellers have no Liabilities with respect to the Business, except: (a) those which are adequately reflected or reserved against in the Financial Statements as of the Financial Statements Date;  (b) Liabilities arising out of or related to the transactions contemplated in this Agreement; (c) Liabilities stated in, or disclosed in connection with, any other representation or warranty contained in this Article IV or the applicable Disclosure Schedules thereto, stated with specificity; and (d) those which have been incurred in the Ordinary Course of business consistent with past practice since the Financial Statements Date and which are not, individually or in the aggregate, material in amount.  

Section 4.06    Absence of Certain Changes, Events and Conditions.  Except for the transactions contemplated by this Agreement, and except as set forth on Section 4.06 of the Disclosure Schedules, since December 31, 2018 there has not been any:

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

(b)    declaration or payment of any non-cash dividends or non-cash distributions on or in respect of any of Sellers’ capital stock or membership interests except in accordance with past practices;

(c)    material change in any method of accounting or accounting practice for the Business, except as required by GAAP or as disclosed in the notes to the Financial Statement;

(d)    material change in cash management practices and policies, practices and procedures with respect to inventory control, prepayment of expenses, payment of trade accounts payable, accrual of other expenses, and deferral of revenue;

(e)    except in the Ordinary Course of business consistent with past practices, entry into any Contract that would constitute a Material Contract without the prior consent of Buyer;

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(f)    incurrence, assumption or guarantee of any indebtedness for borrowed money in connection with the Business except: (i) unsecured current obligations and Liabilities incurred in the Ordinary Course of business consistent with past practice; and (ii) additional indebtedness under lines of credit with Wintrust Bank in connection with distributions to members including tax distributions;

(g)    transfer, assignment, sale or other disposition of any of the Purchased Assets shown or reflected in the Financial Statements, except for the sale of Inventory in the Ordinary Course of business or Tangible Personal Property in the Ordinary Course of business due to the replacement thereof;

(h)    cancellation of any debts or claims or amendment, termination or waiver of any rights, respecting Purchased Assets;

(i)    transfer, assignment or grant of any license or sublicense of any material rights under or with respect to any Intellectual Property Assets or Intellectual Property Licenses;

(j)    material damage, destruction or loss, or any material interruption in use, of any Purchased Assets, whether or not covered by insurance;

(k)    acceleration, termination, material modification to or cancellation of any Material Contract or Assigned Permit;

(l)    material capital expenditures which would constitute an Assumed Liability;

(m)    imposition of any Encumbrance (other than Permitted Encumbrances) upon any of the Purchased Assets;

(n)    except for bonuses and salary increases in Ordinary Course of Business (i) change in the terms of employment for any employee of the Business or any termination of any employees for which the aggregate costs and expenses related to such change or termination exceed $10,000, or (ii) action to accelerate the vesting or payment of any compensation or benefit for any employee, officer, director, consultant or independent contractor of the Business;

(o)    adoption, modification or termination of any: (i) employment, severance, retention or other agreement with any current or former employee, officer, director, independent contractor or consultant of the Business, except in the Ordinary Course of business consistent with past practice or in connection with severance payments to Restaurant level employees made in connection with terminations for other than good cause to provide consideration for release in accordance with past practice, (ii) Benefit Plan except to the extent required by Law or in the Ordinary Course of business, or (iii) collective bargaining or other agreement with a Union, in each case whether written or oral;

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

(q)    adoption of any plan of merger, consolidation, reorganization, liquidation or dissolution or filing of a petition in bankruptcy under any provisions of federal or state bankruptcy Law or consent to the filing of any bankruptcy petition against it under any similar Law;

(r)    purchase, lease or other acquisition of the right to own, use or lease any property or assets in connection with the Restaurants for an amount in excess of $50,000, individually (in the case of a lease, 

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per annum) or $75,000 in the aggregate (in the case of a lease, for the entire term of the lease, not including any option term), except for purchases of Inventory or supplies in the Ordinary Course of business consistent with past practice; or

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

Section 4.07    Material Contracts.

(a)    Section 4.07(a) of the Disclosure Schedules lists each of the following Contracts (x) by which any of the Purchased Assets are bound or affected or (y) to which any Seller is a party or by which it is bound in connection with the Business or the Purchased Assets (such Contracts, together with all Leases and Intellectual Property Licenses, being “Material Contracts”):

(i)    all Contracts involving aggregate consideration in excess of $50,000 and which, in each case, cannot be cancelled without penalty or without more than 90 days’ notice;

(ii)    all Contracts that provide for the indemnification of any Person or the assumption of any Tax, environmental or other Liability of any Person;

(iii)    all Contracts that relate to the acquisition or disposition of any business, a material amount of stock or assets of any other Person or any real property (whether by merger, sale of stock, sale of assets or otherwise);

(iv)    all employment agreements and Contracts with independent contractors or consultants (or similar arrangements) and which are not cancellable without material penalty or without more than 90 days’ notice;

(v)    all Contracts relating to indebtedness (including, guarantees) involving amounts in excess of $10,000;

(vi)    all Contracts with any Governmental Authority;

(vii)    all Contracts that limit or purport to limit the ability of Sellers, or any Seller, to compete in any line of business or with any Person or in any geographic area or during any period of time;

(viii)    all joint venture, partnership or similar Contracts; 

(ix)    all Contracts for the sale of any of the Purchased Assets (other than Inventory in the Ordinary Course of business) or for the grant to any Person of any option, right of first refusal or preferential or similar right to purchase any of the Purchased Assets; 

(x)    all powers of attorney with respect to the Business or any Purchased Asset; and

(xi)    the existing KPW Contracts and the KPW Bifurcated HW Contracts to be executed prior to Closing.

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(xii)    all other Contracts that are material to the Purchased Assets or the operation of the Business and not previously disclosed pursuant to this Section 4.07 and that provide for the annual receipt or expenditure of more than $10,000. 

(b)    Except for the KPW Contracts which the Sellers may not be a party to and the KPW Bifurcated HW Contracts which will not have been executed as of the Effective Date, each Material Contract is valid and binding on the applicable Seller in accordance with its terms and is in full force and effect. No Seller nor, to Sellers’ Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under) in any material respect, or has provided or received any notice of any intention to terminate, any Material Contract. No event or circumstance has occurred that, with notice or lapse of time or both, would constitute an event of default under any Material Contract or result in a termination thereof or would cause or permit the acceleration or other changes of any right or obligation or the loss of any benefit thereunder. Complete and correct copies of each Material Contract (including all modifications, amendments and supplements thereto and waivers thereunder) have been made available to Buyer. There are no material disputes pending or threatened under any Assigned Contract.

Section 4.08    Title or License to Purchased Assets. Sellers have good and valid title to, or a valid leasehold interest in, all of the Purchased Assets. Except as set forth in Section 4.08 of the Disclosure Schedules, all such Purchased Assets (including leasehold interests) are free and clear of Encumbrances except for the following (collectively referred to as “Permitted Encumbrances”):

(a)    those items set forth in Section 4.08(a) of the Disclosure Schedules;

(b)    liens for Taxes not yet due and payable or liens for Taxes being contested in good faith by appropriate procedures and for which there are adequate accruals or reserves on the Financial Statements;

(c)    mechanics’, carriers’, workmen’s, repairmen’s or other like liens arising or incurred in the Ordinary Course of business consistent with past practice or amounts that are not delinquent and which are not, individually or in the aggregate, material to the Business or the Purchased Assets;

(d)    easements, rights of way, zoning ordinances and other similar encumbrances (including covenants, conditions and restrictions of record) affecting Leased Real Property which do not, individually or in the aggregate, prohibit or materially interfere with the current operation of any Real Property and which do not render title to any Real Property unmarketable;  

(e)    liens arising under original purchase price conditional sales contracts and equipment leases with third parties entered into in the Ordinary Course of business consistent with past practice which are not, individually or in the aggregate, material to the Business or the Purchased Assets; 

(f)    leasehold mortgages on Leased Real Property to be satisfied and removed in connection with the Closing; or

(g)    restrictions arising under the Franchise Agreements or restrictions on use of Leased Real Property contained in the Leases or any other restrictions imposed by any other Assigned Contracts or Assigned Permits.  

Section 4.09    Condition and Sufficiency of Assets. To Sellers’ Knowledge, except as set forth in Section 4.09 of the Disclosure Schedules, the buildings, furniture, fixtures, equipment and other items of tangible personal property included in the Purchased Assets are in working operating condition and repair, 

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normal wear and tear excepted. Except as set forth in Section 4.09 of the Disclosure Schedules, the Purchased Assets are sufficient for the continued conduct of the Business after the Closing in substantially the same manner as conducted prior to the Closing and constitute all of the rights, property and assets necessary to conduct the Business as currently operated by the Sellers. 

Section 4.10    Real Property.  Except as provided in Section 4.10 of the Disclosure Schedules, no Seller owns any real property or holds any rights to acquire real property.  

(a)    Section 4.10(a) of the Disclosure Schedules sets forth each parcel of real property leased by any Seller or its applicable Affiliate and used in or necessary for the conduct of the Business as currently conducted (together with all rights, title and interest of Sellers or their applicable Affiliates in and to leasehold improvements relating thereto, collectively, the “Leased Real Property”), and a true and complete list of all leases, subleases, licenses, concessions and other written agreements, and to Sellers’ Knowledge any oral agreements, including all amendments, extensions renewals, guaranties and other agreements with respect thereto, pursuant to which Sellers hold any Leased Real Property (collectively, the “Leases”). Sellers or their applicable Affiliate have delivered to Buyer a true and complete copy of each Lease. With respect to each Lease, except as set forth on Section 4.10(a) of the Disclosure Schedules:

(i)    To such Seller’s Knowledge, such Lease is valid, binding, enforceable and in full force and effect, and such Seller or its applicable Affiliates enjoys peaceful and undisturbed possession of the Leased Real Property;

(ii)    To such Seller’s Knowledge, such Seller is not in breach or default under such Lease, and no event has occurred or circumstance exists which, with the delivery of notice, passage of time or both, would constitute such a breach or default, and such Seller, to its Knowledge, has paid all rent due and payable under such Lease;

(iii)    Such Seller or its applicable Affiliate has not received nor given any notice of any default or event that with notice or lapse of time, or both, would constitute a default by such Seller or its applicable Affiliate under such Lease and, to the Knowledge of such Seller, no other party is in default thereof, and no party to such Lease has exercised any termination rights with respect thereto;

(iv)    Except for subleases between Sellers and Sellers’ Affiliates, Sellers have not subleased, assigned or otherwise granted to any Person the right to use or occupy such Leased Real Property or any portion thereof; and

(v)    Except as set forth on Section 4.10(a)(v) the Disclosure Schedules, Sellers have not pledged, mortgaged or otherwise granted an Encumbrance on its leasehold interest in any Leased Real Property.

(b)    Sellers have not received any written notice of (i) material violations of building codes and/or zoning ordinances or other governmental or regulatory Laws affecting the Leased Real Property, (ii) existing, pending or threatened condemnation proceedings affecting the Leased Real Property, or (iii) existing, pending or threatened zoning, building code or other moratorium proceedings, or similar matters which could reasonably be expected to materially and adversely affect the ability to operate the Leased Real Property as currently operated. Since January 1, 2018, neither the whole nor any material portion of any Leased Real Property has been damaged or destroyed by fire or other casualty.

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(c)    To Sellers’ Knowledge, the Real Property is sufficient for the continued operation of the Business after the Closing in substantially the same manner as conducted prior to the Closing and constitutes all of the real property necessary to operate the Restaurants as currently conducted.

Section 4.11    Intellectual Property.

(a)    Except as set forth in Section 4.11(a) of the Disclosure Schedules, Sellers have no Intellectual Property Registrations and do not own Intellectual Property Assets that are material to the operation of the Business that are not registered.  

(b)    Except as set forth in Section 4.11(b) of the Disclosure Schedules, Sellers or their applicable Affiliates are the owner, exclusively or jointly with other Persons, or the licensee of all right, title and interest in and to the Intellectual Property Assets, free and clear of Encumbrances except Permitted Encumbrances. 

(c)    Except for Intellectual Property Licenses given to Sellers or their applicable Affiliate by BWW and affiliates of BWW pursuant to the Franchise Agreements, Section 4.11(c) of the Disclosure Schedules lists all other Intellectual Property Licenses material to the operation of the Business. Sellers or their applicable Affiliates have provided Buyer with true and complete copies of all such Intellectual Property Licenses. All such Intellectual Property Licenses are valid, binding and enforceable between Sellers and the other parties thereto, and Sellers and to Sellers’ Knowledge, such other parties, are in compliance in all material respects with the terms and conditions of such Intellectual Property Licenses.

Section 4.12    Suppliers. Section 4.12 of the Disclosure Schedules sets forth with respect to the Business the top fifteen (by dollar amount) distributors and suppliers to whom Sellers have paid consideration for goods or services (collectively, the “Material Suppliers”) for the periods covered by the Statements of Operations. Except as set forth in Section 4.12 of the Disclosure Schedules, Sellers have not received any notice that any of the Material Suppliers has ceased, or intends to cease, to supply goods or services material to the Business or to otherwise terminate or materially reduce its relationship with the Business.

Section 4.13    Insurance. Section 4.13 of the Disclosure Schedules sets forth (a) a true and complete list of all current policies or binders of fire, liability, “dramshop” and similar liability, umbrella liability, real and personal property, workers’ compensation, vehicular, fiduciary liability and other casualty and property insurance maintained by Sellers and relating to the Business, the Purchased Assets or the Assumed Liabilities (collectively, the “Insurance Policies”); and (b) with respect to the Business, the Purchased Assets or the Assumed Liabilities, a list of all pending claims and the claims history for Sellers since January 1, 2013. Except as set forth on Section 4.13 of the Disclosure Schedules, there are no claims related to the Business, the Purchased Assets or the Assumed Liabilities pending under any such Insurance Policies as to which coverage has been questioned, denied or disputed or in respect of which there is an outstanding reservation of rights. No Seller has received any written notice of cancellation of, premium increase with respect to, or alteration of coverage under, any of such Insurance Policies. All premiums due on such Insurance Policies have either been paid or, if not yet due, accrued. All such Insurance Policies (a) are in full force and effect and enforceable in accordance with their terms; (b) are provided by carriers who, to Seller’s Knowledge, are financially solvent; and (c) have not been subject to any lapse in coverage. No Seller is in default under, or has otherwise failed to comply with, in any material respect, any provision contained in any such Insurance Policy. The Insurance Policies are sufficient for material compliance with all applicable Laws and Material Contracts to which any Seller is a party or by which any Seller is bound. True and complete copies of the Insurance Policies have been made available to Buyer. 

Section 4.14    Legal Proceedings; Governmental Orders.

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(a)    Except as set forth in Section 4.14(a) of the Disclosure Schedules, there are no Actions pending or, to Sellers’ Knowledge, threatened against or by Sellers (a) relating to or affecting the Business, the Purchased Assets or the Assumed Liabilities or (b) that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or, to Sellers’ Knowledge, circumstances exist, that may give rise to, or serve as a basis for, any such Action.

(b)    Except as set forth in Section 4.14(b) of the Disclosure Schedules, there are no outstanding (i) Governmental Orders and (ii) no unsatisfied judgments, penalties or awards against, relating to or affecting the Business. Sellers are in compliance with the terms of each Governmental Order set forth in Section 4.14(b) of the Disclosure Schedules. To Seller’s Knowledge, no event has occurred or, circumstances exist, that may constitute or result in (with or without notice or lapse of time) a violation of any such Governmental Order.

Section 4.15    Compliance With Laws; Permits.

(a)    Except as set forth in Section 4.15(a) of the Disclosure Schedules, Sellers have been and are in compliance with all material Laws applicable to the conduct of the Business as currently conducted or the ownership and use of the Purchased Assets.

(b)    All Permits required for Sellers to conduct the Business as currently conducted or for the ownership and use of the Purchased Assets have been obtained by Sellers and are valid and in full force and effect. To Sellers’ Knowledge, all fees and charges with respect to such Permits as of the date hereof have been paid in full. Section 4.15(b) of the Disclosure Schedules lists all current Permits issued to Sellers which are related to the conduct of the Business as currently conducted or the ownership and use of the Purchased Assets, including the names of the Permits and their respective dates of issuance and expiration.  To Sellers’ knowledge, no event has occurred that, with or without notice or lapse of time or both, would reasonably be expected to result in the revocation, suspension, lapse or limitation of any Permit set forth in Section 4.15(b) of the Disclosure Schedules.

Section 4.16    Environmental Matters.

(a)    Except as may be set forth in environmental related reports and studies set forth in Disclosure Schedule 4.16(e), o Sellers’ Knowledge, the operations of Sellers with respect to the Business and the Purchased Assets are and have been in compliance with all Environmental Laws. Sellers have not received from any Person, with respect to the Business or the Purchased Assets, any: (i) Environmental Notice or Environmental Claim; or (ii) written request for information pursuant to Environmental Law, which, in each case, either remains pending or unresolved, or is the source of ongoing obligations or requirements as of the Closing Date.

(b)    To Sellers’ Knowledge, Sellers have obtained and are in material compliance with all material Environmental Permits (each of which is disclosed in Section 4.16(b) of the Disclosure Schedules) necessary for the conduct of the Business as currently conducted for the ownership, lease, operation or use of the Purchased Assets and all such Environmental Permits are in full force and effect and shall be maintained in full force and effect by Sellers through the Closing Date in accordance with Environmental Law, and to Sellers’ Knowledge, there are no conditions, events or circumstances related to Environmental Permits that might prevent or impede, after the Effective Time, the conduct of the Business as currently conducted or the ownership, lease, operation or use of the Purchased Assets.  With respect to any such Environmental Permits, Sellers will undertake prior to the Closing Date, Commercially Reasonable Efforts necessary to facilitate 

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transferability of the same, and Sellers are not aware of any condition, event or circumstance that might prevent or impede the transferability of the same, and have not received any Environmental Notice or written communication regarding any material adverse change in the status or terms and conditions of the same.

(c)    To Sellers’ Knowledge, there has been no Release of Hazardous Materials in contravention of Environmental Law with respect to the Business or the Purchased Assets or any real property currently or formerly owned, leased or operated by Sellers in connection with the Business, and Sellers has not received an Environmental Notice that any of the Business or the Purchased Assets or real property currently or formerly owned, leased or operated by Sellers in connection with the Business (including soils, groundwater, surface water, buildings and other structure located thereon) has been contaminated with any Hazardous Material which could reasonably be expected to result in an Environmental Claim against, or a violation of Environmental Law or term of any Environmental Permit by, Sellers.

(d)    Sellers have not retained or assumed, by contract or operation of law, any liabilities or obligations of third parties under Environmental Law.

(e)    Sellers have provided or otherwise made available to Buyer and listed in Section 4.16(e) of the Disclosure Schedules any and all environmental reports, studies, audits, records, sampling data, site assessments and risk assessments with respect to the Leased Real Property which are in the possession or control of Sellers related to compliance with Environmental Laws, Environmental Claims or an Environmental Notice. 

Section 4.17    Employee Benefit Matters.

(a)    Section 4.17(a) of the Disclosure Schedules contains a true and complete list of each pension, benefit, retirement, compensation, profit-sharing, deferred compensation, incentive, performance award, phantom equity, stock or stock-based, change in control, retention, severance, vacation, paid time off, fringe-benefit and other similar agreement, plan, policy, program or arrangement (and any amendments thereto), in each case whether or not reduced to writing and whether funded or unfunded, including each “employee benefit plan” within the meaning of Section 3(3) of ERISA, whether or not tax-qualified and whether or not subject to ERISA, which is or has been maintained, sponsored, contributed to, or required to be contributed to by Sellers for the benefit of any current or former employee, officer, director, retiree, independent contractor or consultant of the Business or any spouse or dependent of such individual, or under which Sellers have or may have any Liability, or with respect to which Buyer or any of its Affiliates would reasonably be expected to have any Liability, contingent or otherwise (as listed on Section 4.17(a) of the Disclosure Schedules, each, a “Benefit Plan”).

(b)    With respect to each Benefit Plan, Sellers have made available to Buyer accurate, current and complete copies of each of the following: (i) where the Benefit Plan has been reduced to writing, the plan document together with all amendments; (ii) where the Benefit Plan has not been reduced to writing, a written summary of all material plan terms; (iii) where applicable, copies of any trust agreements or other funding arrangements, custodial agreements, insurance policies and contracts, administration agreements and similar agreements, and investment management or investment advisory agreements, now in effect or required in the future as a result of the transactions contemplated by this Agreement or otherwise; (iv) copies of any summary plan descriptions, summaries of material modifications, employee handbooks and any other written communications (or a description of any oral communications) relating to any Benefit Plan; (v) in the case of any Benefit Plan that is intended to be qualified under Section 401(a) of the Code, a copy of the most recent determination, opinion or advisory letter from the Internal Revenue Service; (vi) in the case of any Benefit Plan for which a Form 5500 is required to be filed, a copy of the most recently filed Form 5500, 

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with schedules attached; (vii) actuarial valuations and reports related to any Benefit Plans with respect to the most recently completed plan years; and (viii) copies of material notices, letters or other correspondence from the Internal Revenue Service, Department of Labor or Pension Benefit Guaranty Corporation relating to the Benefit Plan.

(c)    Except as set forth in Section 4.17(c) of the Disclosure Schedules, each Benefit Plan (other than any multi-employer plan within the meaning of Section 3(37) of ERISA (each a “Multi-employer Plan”)) has been established, administered and maintained in accordance with its terms and in compliance with all applicable Laws (including ERISA and the Code). 

Section 4.18    Employment Matters.

(a)        Sellers have made available a list of all persons who are employees, independent contractors or consultants of the Business as of the date hereof, and sets forth for each such individual the following: (i) name; (ii) title or position; and (iii) hire date. Except as set forth in Section 4.18(a) of the Disclosure Schedules, as of the date hereof, all compensation, including wages, commissions and bonuses payable to employees, independent contractors or consultants of the Business for services performed on or prior to the date hereof have been paid in full or are adequately reflected on Seller’s Financial Statements and there are no outstanding agreements, understandings or commitments of Seller with respect to any compensation, commissions or bonuses. Notwithstanding any provisions in this Agreement to the contrary, Seller will pay employees the value of all Earned Vacation and Accrued Vacation upon, and in consideration for, such employee executing a full and complete release of Sellers and Sellers’ Affiliates.
(b)    Sellers are not, and have not been for the past five (5) years, a party to, bound by, or negotiating any collective bargaining agreement or other Contract with a union, works council or labor organization (collectively, “Union”), and there is not, and has not been for the past five (5) years, any Union representing or purporting to represent any employee of Sellers, and, to Sellers’ Knowledge, no Union or group of employees is seeking or has sought to organize employees for the purpose of collective bargaining. Except as set forth in Section 4.18(b) of the Disclosure Schedules, there has never been, nor has there been any threat of, any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime or other similar labor disruption or dispute affecting Sellers or any employees of the Business. To Seller’s Knowledge, Sellers have no duty to bargain with any Union.
(c)    Except as set forth in Section 4.18(c) of the Disclosure Schedules, Sellers are and have been since January 1, 2016 in compliance in all material respects with all applicable Laws pertaining to employment and employment practices to the extent they relate to employees of the Business, including all Laws relating to labor relations, equal employment opportunities, fair employment practices, employment discrimination, harassment, retaliation, reasonable accommodation, disability rights or benefits, immigration, wages, hours, overtime compensation, child labor, hiring, promotion and termination of employees, working conditions, meal and break periods, privacy, health and safety, workers’ compensation, leaves of absence and unemployment insurance. To Sellers’ Knowledge, all individuals characterized and treated by Sellers as consultants or independent contractors of the Business are properly treated as independent contractors under all applicable Laws. To Sellers’ Knowledge, all employees of the Business classified as exempt under the Fair Labor Standards Act and state and local wage and hour laws are properly classified in all material respects. Except as set forth in Section 4.18(c), there are no Actions against Sellers pending, or to the Sellers’ Knowledge, threatened to be brought or filed, by or with any Governmental Authority or arbitrator in connection with the employment of any current or former applicant, employee, consultant, volunteer, intern or independent contractor of the Business, including, any claim relating to unfair labor practices, employment discrimination, harassment, retaliation, equal pay, wages and hours or any other employment related matter arising under applicable Laws.  

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(d)    To Sellers’ Knowledge, Sellers are and have been in compliance in all material respects with all applicable immigration Laws, including Form I-9 requirements and any applicable mandatory E-Verify obligations.  For the past four years, Sellers have not been subject to or received any notice of any audit, investigations or, to Seller’s Knowledge, any other inquiries from any Governmental Authority with respect to compliance with applicable immigrations Laws.  Sellers have not received any “No-Match” letters from the Social Security Administration regarding any of Seller’s current employees and Sellers have no Knowledge of any of Seller’s current employees using a Social Security number that was not issued to the employee using it.  

Section 4.19    Taxes. Except as set forth in Section 4.19 of the Disclosure Schedules:

(a)    All Tax Returns with respect to the Business required to be filed by Sellers for any Pre-Closing Tax Period have been, or will be, timely filed after giving effect to any applicable extensions. Such Tax Returns are, or will be, true, complete and correct in all material respects. To Sellers’ Knowledge, all Taxes due and owing by Sellers (whether or not shown on any Tax Return) have been, or will be, timely paid.

(b)    To Sellers’ Knowledge, Sellers have withheld and paid all Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor, creditor, customer, shareholder or other party, and complied with all information reporting and backup withholding provisions of applicable Law.

(c)    No waivers of statutes of limitations have been given or requested with respect to any Taxes of Sellers.

(d)    All deficiencies asserted, or assessments made, against Sellers as a result of any examinations by any taxing authority have been fully paid, unless they are being validly contested.

(e)    No Seller is a party to any Action by any taxing authority. There are no pending or threatened Actions by any taxing authority against Sellers.  

(f)    There are no Encumbrances for Taxes upon any of the Purchased Assets nor, to Sellers’ Knowledge, is any taxing authority in the process of imposing any Encumbrances for Taxes on any of the Purchased Assets (other than for current Taxes not yet due and payable).

Section 4.20    Brokers.  Except as set forth in Section 4.20 of the Disclosure Schedules, for which Sellers shall be solely responsible, no broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Sellers.

Section 4.21    Full Disclosure. To Sellers’ Knowledge, no representation or warranty by Sellers in this Agreement and no statement contained in the Disclosure Schedules to this Agreement or any certificate or other document furnished or to be furnished to Buyer pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading. 

Section 4.22    No Other Representations and Warranties.  Buyer acknowledges and agrees that, except for the representations and warranties contained in this Article IV (as modified by the Disclosure 

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Schedules), neither Sellers nor any other Person has made or makes any other express or implied representation or warranty as to the accuracy or completeness of any information regarding the Sellers furnished or made available to Buyer and its Representatives and any information documents or material delivered or made available to Buyer and its Representatives in any virtual data room, management presentations, due diligence site visits or in any other form in expectation of the transactions under this Agreement or as to the future revenue, profitability or success of the Business, or any representation or warranty arising from statute or law.  Notwithstanding anything to the contrary contained herein, nothing in this Section 4.22 will in any way limit the liability of any Person for fraud, criminal activity or intentional misrepresentation.

ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER

Buyer represents and warrants to Sellers that the statements contained in this Article V are true and correct as of the date hereof and will be true and correct as of the Closing Date.

Section 5.01    Organization of Buyer. Buyer is a corporation duly organized, validly existing and in good standing under the Laws of the State of Michigan and has all requisite power and authority to own, lease and operate its properties and assets and to conduct its business as now being conducted.  

Section 5.02    Authority of Buyer. Buyer has full corporate power and authority to enter into this Agreement and the other Transaction Documents to which Buyer is a party, to carry out its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer of this Agreement and any other Transaction Document to which Buyer is a party, the performance by Buyer of its obligations hereunder and thereunder and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by all requisite corporate action on the part of Buyer. This Agreement has been duly executed and delivered by Buyer, and (assuming due authorization, execution and delivery by Sellers) this Agreement constitutes a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms. When each other Transaction Document to which Buyer or its applicable Affiliates, is or will be a party has been duly executed and delivered by Buyer or its applicable Affiliates, (assuming due authorization, execution and delivery by each other party thereto), such Transaction Document will constitute a legal and binding obligation of Buyer or its applicable Affiliates, enforceable against them in accordance with their terms.

Section 5.03    No Conflicts; Consents. Except as set forth on Section 5.03 of the Disclosure Schedules, the execution, delivery and performance by Buyer, and its applicable Affiliates of this Agreement and the other Transaction Documents to which each is a party, and the consummation of the transactions contemplated hereby and thereby, including, but not limited to the payment of the Purchase Price, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any provision of the certificate of incorporation, by-laws or other organizational documents of Buyer or its applicable Affiliates; (b) conflict with or result in a violation or breach of any provision of any Law or Governmental Order applicable to Buyer or its applicable Affiliates; or (c) require the consent, notice or other action by any Person under any Contract to which Buyer or its applicable Affiliates are a party.  No consent, approval, Permit, Governmental Order, declaration or filing with, or notice to, any Governmental Authority is required by or with respect to Buyer or its applicable Affiliates in connection with the execution and delivery of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby.

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Section 5.04    Brokers. No broker, finder or investment banker is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated by this Agreement or any other Transaction Document based upon arrangements made by or on behalf of Buyer or its applicable Affiliates.

Section 5.05    Legal Proceedings. There are no Actions pending or, to Buyer’s Knowledge, threatened against or by Buyer or any Affiliate of Buyer that challenge or seek to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement. No event has occurred or circumstances exist that may give rise or serve as a basis for any such Action.

Section 5.06    Full Disclosure. To Buyer’s Knowledge, no representation or warranty by Buyer in this Agreement or any certificate or other document furnished or to be furnished to Seller pursuant to this Agreement contains any untrue statement of a material fact, or omits to state a material fact necessary to make the statements contained therein, in light of the circumstances in which they are made, not misleading.

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ARTICLE VI
COVENANTS

Section 6.01    Conduct of Business Prior to the Closing. From the date hereof until the earlier of Closing or termination of this Agreement, except as otherwise provided in this Agreement or consented to in writing by Buyer (which consent shall not be unreasonably withheld or delayed), Sellers shall (x) conduct the Business in the Ordinary Course of business consistent with past practice; and (y) use Commercially Reasonable Efforts to maintain and preserve intact their current Business organization, operations and franchise and to preserve the rights, franchises, goodwill and relationships of their employees, customers, lenders, suppliers, regulators and others having relationships with the Business. Without limiting the foregoing, from the date hereof until the Closing Date (or the earlier termination of this Agreement in accordance with its terms), Sellers shall:

(a)    preserve and maintain all Permits required for the conduct of the Business as currently conducted or the ownership and use of the Purchased Assets;

(b)    except as being validly contested, pay the debts, Taxes and other obligations of the Business when due;

(c)    continue repair and maintenance schedules in the Ordinary Course of Sellers’ Business and take such additional action as necessary to maintain the properties and assets included in working operating condition and repair, subject to normal wear and tear;

(d)    continue in full force and effect without material modification all Insurance Policies, except as required by applicable Law;

(e)    perform in all material respects all of their obligations under all Assigned Contracts;  

(f)    maintain the Books and Records in accordance with past practice;

(g)    comply in all material respects with all Laws applicable to the conduct of the Business or the ownership and use of the Purchased Assets; 

(h)    be permitted to terminate the KPW Contracts and enter into KPW Bifurcated HW Contracts; and

(i)    not take or permit any action that would cause any of the changes, events or conditions described in Section 4.06 to occur.

Section 6.02    Access to Information.  From the date hereof until the Closing (or the earlier termination of this Agreement in accordance with its terms), Sellers shall (a) afford Buyer and its Representatives full and free access to and the right to inspect all of the Leased Real Property, properties, assets, premises, Books and Records, Contracts and other documents and data related to the Business; (b) furnish Buyer and its Representatives with such financial, operating and other data and information related to the Business as Buyer or any of its Representatives may reasonably request; and (c)  instruct Representatives of Sellers to reasonably cooperate with Buyer in its investigation of the Business.  Any investigation pursuant to this Section 6.02 shall be conducted in such manner as not to interfere unreasonably with the conduct of the Business or any other businesses of Sellers. Notwithstanding the foregoing, Buyer shall (y) provide Sellers with reasonable notice prior to the inspection of any Restaurant or Leased Real 

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Property and Sellers shall have the right to be present at any such inspection and (z) not do any invasive or subsurface testing of any Leased Real Property or discuss the contemplated transaction, the fact that a transaction is contemplated, or any issues related thereto with any Restaurant level employee, without the express written consent of Sellers (which consent shall not be unreasonably withheld, delayed or conditioned) or, if required by the terms of the Leases, consent of the applicable landlord. Buyer shall be solely responsible for all costs and expenses incurred by Buyer and its Representatives in connection with any investigation by Buyer pursuant to this Agreement.

Section 6.03    No Solicitation of Other Bids.

(a)    Sellers shall not, and shall not authorize or permit any of their Affiliates or any of their respective Representatives to, directly or indirectly, (i) encourage, solicit, initiate, facilitate or continue inquiries regarding an Acquisition Proposal; (ii) enter into discussions or negotiations with, or provide any information to, any Person concerning a possible Acquisition Proposal; or (iii) enter into any agreements or other instruments (whether or not binding) regarding an Acquisition Proposal. Sellers shall immediately cease and cause to be terminated, and shall cause their Affiliates and all of their Representatives to immediately cease and cause to be terminated, all existing discussions or negotiations with any Persons conducted heretofore with respect to an Acquisition Proposal. For purposes hereof, “Acquisition Proposal” means any inquiry, proposal or offer from any Person (other than BWW or Affiliates of BWW, or Buyer or any of its Affiliates) relating to the direct or indirect disposition, whether by sale, merger or otherwise, of all or any portion of the Business or the Purchased Assets; provided, Sellers should not be limited by anything in this Section, or any other term in this Agreement, from fulfilling its obligations under the Franchise Agreements to BWW, including its obligations to afford BWW a right of first refusal to acquire the Purchased Assets and Business thereunder.

(b)    In addition to the other obligations under this Section 6.03, Sellers shall promptly (and in any event within three (3) Business Days after receipt thereof by Sellers or their Representatives) advise Buyer orally and in writing of any Acquisition Proposal, any request for information with respect to any Acquisition Proposal, or any inquiry with respect to or which could reasonably be expected to result in an Acquisition Proposal, the material terms and conditions of such request, Acquisition Proposal or inquiry, and the identity of the Person making the same.

(c)    Sellers agree that the rights and remedies for noncompliance with this Section 6.03 shall include having such provision specifically enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such breach or threatened breach shall cause irreparable injury to Buyer and that money damages would not provide an adequate remedy to Buyer.

Section 6.04    Notice of Certain Events. From the date hereof until the Closing (or the earlier termination of this Agreement in accordance with its terms), each party shall promptly notify the other party in writing of:

(a)    any fact, circumstance, event or action the existence, occurrence or taking of which (A) has had, or would reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on such party, (B) has resulted in, or could reasonably be expected to result in, any representation or warranty made by such party hereunder not being materially true and correct or (C) has resulted in, or could reasonably be expected to result in, the failure of any of the conditions set forth in Section 7.02 or Section 7.03, as applicable, to be satisfied;

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(b)    any notice or other communication from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

(c)    any notice or other communication from any Governmental Authority in connection with the transactions contemplated by this Agreement; and

(d)    any Actions commenced or, to the applicable party’s Knowledge, threatened against, relating to or involving or otherwise affecting the Business, the Purchased Assets or the Assumed Liabilities that, if pending on the date of this Agreement, would have been required to have been disclosed pursuant to the terms of this Agreement or that relates to the consummation of the transactions contemplated by this Agreement.
  

Section 6.05    Employees and Employee Benefits.  

(a)    Commencing on the Closing Date, Sellers shall effectively terminate all employees of the Business who are actively at work at the Effective Time, and, Buyer shall (directly or through its applicable Affiliate) offer employment, on an "at will" basis, to substantially all of the Restaurant level employees and, at Buyer’s sole discretion, offer employment to such other employees of the Business as necessary not to trigger any obligation of Sellers of any nature under the WARN Act.   Notwithstanding any provisions in this Agreement to the contrary, Buyer agrees to offer employment, on an “at will” basis to such number of employees so as not to trigger any obligation of Sellers of any nature under the WARN Act.  Buyer acknowledges that Sellers will not send any notices that may be required under any WARN Act in reliance upon Buyer’s agreement to hire sufficient number of employees to ensure that no liability will arise under any WARN Act.  If Buyer does not intend to offer employment to any employee of Sellers who works in the corporate office, then it will notify Sellers at least  thirty (30)  days prior to Closing of the identities of the individuals who will not be offered employment.

(b)    Sellers shall be solely responsible, and Buyer shall have no obligations whatsoever for, any compensation or other amounts payable to any current or former employee, officer, director, independent contractor or consultant of the Business, including hourly pay, commission, bonus, salary, accrued vacation, fringe, pension or profit sharing benefits or severance pay for any period relating to the service with Sellers or their applicable Affiliates at any time prior to the Effective Time and Sellers shall pay all such amounts to all entitled persons prior to the Effective Time.  Buyer shall be solely responsible for all compensation or other amounts payable to any employee, officer, director, independent contractor or consultant of the Business hired or retained by Buyer on or after the Effective Time, including hourly pay, commission, bonus, salary, accrued vacation, fringe, pension or profit sharing benefits or severance pay for any period on or after the Effective Time.

(c)    Sellers shall remain solely responsible for the satisfaction of all claims for medical, dental, life insurance, health accident or disability benefits brought by or in respect of current or former employees, officers, directors, independent contractors or consultants of the Business or the spouses, dependents or beneficiaries thereof, which claims relate to events occurring prior to the Effective Time. Sellers also shall remain solely responsible for all workers’ compensation claims of any current or former employees, officers, directors, independent contractors or consultants of the Business which relate to events occurring prior to the Effective Time. Sellers shall pay, or cause to be paid, all such amounts to the appropriate persons as and when due.

(d)    Each employee of the Business who becomes employed by Buyer (or its applicable Affiliate) in connection with the transactions contemplated by this Agreement shall be eligible to receive the salary 

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and benefits maintained for employees of Buyer on substantially similar terms and conditions in the aggregate as are provided to similarly situated employees of Buyer.  

(e)    Each employee of the Business who becomes employed by Buyer (or its applicable Affiliate) in connection with the transaction shall be given service credit for the purpose of eligibility under the group health plan and eligibility and vesting only under the defined contribution retirement plan for his or her period of service with the Sellers prior to the Effective Time; provided, however, that (i) such credit shall be given pursuant to payroll or plan records, at the election of Buyer, in its sole and absolute discretion; and (ii) such service crediting shall be permitted and consistent with Buyer's defined contribution retirement plan.

Section 6.06    Confidentiality. The Confidentiality and Non-Disclosure between the Buyer and Company dated August 21, 2018 shall remain in full force and effect.   Sellers and the Principal Members will hold and treat, and will cause their respective officers, directors, employees, auditors and other representatives to hold and treat, in strict confidence and not use in any manner any information concerning the execution of this Agreement until such time that a press release concerning the execution of this Agreement has been issued by Buyer or its affiliates.  From and after the Closing, Buyer and Sellers shall, and shall cause their Affiliates to, hold, and shall use their reasonable best efforts to cause their respective Representatives to hold, in confidence any and all information, whether written or oral, concerning the Business, except to the extent that such information (a) is generally available to and known by the public through no fault of Buyer or Sellers, as applicable, any of their Affiliates or their respective Representatives; or (b) is lawfully acquired by Buyer or Sellers, any of their Affiliates or their respective Representatives from and after the Closing from sources which are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If any Party or any of their Affiliates or their respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, such party shall promptly notify the other party in writing and shall disclose only that portion of such information which such party is advised by its counsel in writing is legally required to be disclosed, provided that such party shall use reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

Section 6.07    Non-competition; Non-solicitation

(a)    For a period of two (2) years commencing on the Closing Date (the “Restricted Period”), Sellers and the Principal Members each shall not, and shall not permit any of their respective Affiliates to, directly or indirectly, (i) engage in or assist others in engaging in the Restricted Business in the Territory; (ii) have an interest in any Person that engages directly or indirectly in the Restricted Business in the Territory in any capacity, including as a partner, shareholder, member, employee, principal, agent, trustee or consultant; or (iii) cause, induce or encourage any material actual or prospective supplier or licensor of the Business, or any other Person who has a material business relationship with the Business, to terminate or modify any such actual or prospective relationship. Notwithstanding the foregoing, Sellers and the Principal Members each may own, directly or indirectly, solely as an investment, securities of any Restricted Business traded on any national securities exchange if Sellers are not a controlling Person of, or a member of a group which controls, such Person and does not, directly or indirectly, own 5% or more of any class of securities of such Person.

(b)    During the Restricted Period, Sellers and the Principal Members each shall not, and shall not permit any of their respective Affiliates to, directly or indirectly, hire or solicit any person who is offered employment by Buyer pursuant to Section 6.05, or is or was employed in the Business during the Restricted Period, or encourage any such employee to leave such employment or hire any such employee who has left 

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such employment, except pursuant to a general solicitation which is not directed specifically to any such employees; provided, that nothing in this Section 6.07(b) shall prevent Sellers, the Principal Members or any of their respective Affiliates from retaining the services of (i) any employee whose employment has been terminated by Buyer (or its applicable Affiliate) or (ii) after 180 days from the date of termination of employment, any employee whose employment has been terminated by the employee; or (iii) any corporate level employee of KPW as contemplated in the Management Agreement, that does not accept employment with Buyer or on a part-time basis to assist with operation of Wings Across America in Maryland.

(c)    Sellers and the Principal Members each acknowledge that a breach or threatened breach of this Section 6.07 would give rise to irreparable harm to Buyer, for which monetary damages would not be an adequate remedy, and hereby agrees that in the event of a breach or a threatened breach by Sellers or the Principal Members of any such obligations, Buyer shall, in addition to any and all other rights and remedies that may be available to it in respect of such breach, be entitled to equitable relief, including a temporary restraining order, an injunction, specific performance and any other relief that may be available from a court of competent jurisdiction (without any requirement to post bond).

(d)    Sellers and the Principal Members each acknowledge that the restrictions contained in this Section 6.07 are reasonable and necessary to protect the legitimate interests of Buyer and constitute a material inducement to Buyer to enter into this Agreement and consummate the transactions contemplated by this Agreement. In the event that any covenant contained in this Section 6.07 should ever be adjudicated to exceed the time, geographic, product or service or other limitations permitted by applicable Law in any jurisdiction, then any court is expressly empowered to reform such covenant, and such covenant shall be deemed reformed, in such jurisdiction to the maximum time, geographic, product or service or other limitations permitted by applicable Law. The covenants contained in this Section 6.07 and each provision hereof are severable and distinct covenants and provisions. The invalidity or unenforceability of any such covenant or provision as written shall not invalidate or render unenforceable the remaining covenants or provisions hereof, and any such invalidity or unenforceability in any jurisdiction shall not invalidate or render unenforceable such covenant or provision in any other jurisdiction. 

(e)    The obligations of Sellers and the Principal Members under this Section 6.07 are joint and several; provided however, that no Principal Member shall be liable for the breach of this Section 6.07 by any other Principal Member.

Section 6.08    Governmental Approvals and Consents

(a)    Each party hereto shall, as promptly as possible, (i) make, or cause to be made, all filings and submissions required under any Law applicable to such party or any of its Affiliates; and (ii) use Commercially Reasonable Efforts to obtain, or cause to be obtained, all consents, authorizations, orders and approvals from all Governmental Authorities that may be or become necessary for its execution and delivery of this Agreement and the performance of its obligations pursuant to this Agreement and the other Transaction Documents. Each party shall cooperate fully with the other party and its Affiliates in promptly seeking to obtain all such consents, authorizations, orders and approvals. The parties hereto shall not wilfully take any action that will have the effect of delaying, impairing or impeding the receipt of any required consents, authorizations, orders and approvals.

(b)    Sellers and Buyer shall use Commercially Reasonable Efforts to give all notices to, and obtain all consents from, all third parties with respect to the Franchise Agreements and Leases that are described in Section 4.03 of the Disclosure Schedules and the release of the guaranty by any lease guarantor and any guarantor of any Franchise Agreements described in Section 2.05(c) of the Disclosure Schedules.  

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Notwithstanding any provisions in this Agreement to the contrary (including but not limited to this Section 6.08 and Section 6.10),  except with respect to notice to BWW in connection with its right of first refusal to purchase the Restaurants, Sellers shall not be required to contact, and Buyer shall be prohibited from contacting, any third parties to request any consents or to provide any notices relating to the contemplated transactions until each of the following has occurred: (i) Buyer waives the conditions to closing set forth in Section 7.02(m), and (ii) BWW has waived its right of first refusal to purchase the Restaurants.   

(c)    Without limiting the generality of the parties’ undertakings pursuant to subsections (a) and (b) above, each of the parties hereto shall use Commercially Reasonable Efforts to:

(i)    respond to any inquiries by any Governmental Authority regarding antitrust or other matters with respect to the transactions contemplated by this Agreement or any other Transaction Document;

(ii)    avoid the imposition of any order or the taking of any action that would restrain, alter or enjoin the transactions contemplated by this Agreement or any other Transaction Document; and

(iii)    in the event any Governmental Order adversely affecting the ability of the parties to consummate the transactions contemplated by this Agreement or any other Transaction Document has been issued, to have such Governmental Order vacated or lifted.

(d)    All analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals made by or on behalf of either party before any Governmental Authority or the staff or regulators of any Governmental Authority, in connection with the transactions contemplated hereunder (but, for the avoidance of doubt, not including any interactions between Sellers or Buyer with Governmental Authorities in the Ordinary Course of business), shall be disclosed to the other party hereunder in advance of any filing, submission or attendance, it being the intent that the parties will consult and cooperate with one another, and consider in good faith the views of one another, in connection with any such analyses, appearances, meetings, discussions, presentations, memoranda, briefs, filings, arguments, and proposals. Each party shall give notice to the other party with respect to any meeting, discussion, appearance or contact with any Governmental Authority or the staff or regulators of any Governmental Authority, with such notice being sufficient to provide the other party with the opportunity to attend and participate in such meeting, discussion, appearance or contact.

(e)    Buyer shall use Commercially Reasonable Efforts to obtain the release of Sellers or any Affiliate(s) of Sellers, KPW and Principal Member(s) from any corporate guarantees, on-going obligations under the BWW Franchise Agreements, post-closing Lease Obligations, personal guaranties, letters of credit, or other credit enhancements of Sellers or any Affiliates of Sellers, including, but not limited to, releases by any landlord, BWW, and any third-party under any Assigned Contracts. 

(f)    Notwithstanding the foregoing, nothing in this Section 6.08 shall require, or be construed to require, Buyer or any of its Affiliates to agree to (i) sell, hold, divest, discontinue or limit, before or after the Closing Date, any assets, businesses or interests of Buyer or any of its Affiliates; (ii) any conditions relating to, or changes or restrictions in, the operations of any such assets, businesses or interests which, in either case, could reasonably be expected to result in a Material Adverse Effect or materially and adversely impact the economic or business benefits to Buyer of the transactions contemplated by this Agreement and the other Transaction Documents; or (iii) any material modification or waiver of the terms and conditions of this Agreement.

Section 6.09    Books and Records.

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(a)    In order to facilitate the resolution of any claims made against or incurred by Sellers prior to the Effective Time, or for any other reasonable purpose, for a period of four (4) years after the Effective Time, Buyer shall:

(i)    retain the Books and Records (including personnel files) relating to periods prior to the Effective Time in a manner reasonably consistent with the prior practices of Sellers; and

(ii)    upon reasonable notice, afford the Sellers’ Representatives reasonable access (including the right to make, at Sellers’ expense, photocopies), during normal business hours, to such Books and Records.

(b)    In order to facilitate the resolution of any claims made by or against or incurred by Buyer after the Effective Time, or for any other reasonable purpose, for a period of two (2) years following the Effective Time, Sellers shall:

(i)    retain the Books and Records (including personnel files) of Sellers which relate to the Business and their operations for periods prior to the Effective Time; and

(ii)    upon reasonable notice, afford the Buyer’s Representatives reasonable access (including the right to make, at Buyer’s expense, photocopies), during normal business hours, to such Books and Records.

(c)    Neither Buyer nor Sellers shall be obligated to provide the other party with access to any books or records (including personnel files) pursuant to this Section 6.09 where such access would violate any Law or be protected by attorney-client privilege.

Section 6.10    Closing Conditions From the date hereof until the Closing (or the earlier termination of the Agreement in accordance with its terms), each party hereto shall use Commercially Reasonable Efforts to take such actions as are necessary to expeditiously satisfy the closing conditions set forth in Article VII hereof.

Section 6.11    Public Announcements. Unless otherwise required by applicable Law or Securities and Exchange Commission requirements (based upon the reasonable advice of counsel), neither Buyer or Sellers shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of other (which consent shall not be unreasonably withheld or delayed), and the parties shall cooperate as to the timing and contents of any such announcement.

Section 6.12    Bulk Sales Laws. The parties hereby waive compliance with the provisions of any bulk sales, bulk transfer or similar Laws of any jurisdiction that may otherwise be applicable with respect to the sale of any or all of the Purchased Assets to Buyer.  In accordance with Section 8.02, Sellers and the Principal Members agree to indemnify and hold harmless Buyer from and against any and all Losses that may be asserted by third parties against Buyer as a result of noncompliance by Sellers with any such bulk transfer or similar Laws.   

Section 6.13    Transfer Taxes. Except as otherwise specifically provided for herein, all transfer, documentary, sales, use, stamp, registration, value added and other similar Taxes and fees (including any penalties and interest) incurred in connection with the operation of the Business or this Agreement and the other Transaction Documents shall be borne and paid by the party designated in any ordinance or statute 

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mandating any such Taxes and fees and, if no party is so designated, to be split equally between Buyer and Sellers and paid when due, and Sellers and Buyer shall, at their own expense, timely file any Tax Return or other document with respect to such Taxes or fees (and each shall cooperate with respect thereto as necessary).  

Section 6.14    Tax Clearance Certificates. Buyer hereby waives any requirement that Sellers shall notify all of the taxing authorities in the jurisdictions that impose Taxes on Sellers or where Sellers have a duty to file Tax Returns of the transactions contemplated by this Agreement in the form and manner required by such taxing authorities (a “Tax Clearance Certificate”). If any taxing authority asserts that Sellers are liable for any Tax related to a Pre-Closing Tax Period, Sellers shall promptly pay any and all such amounts, or otherwise provide permitted security to such tax authorities, and shall provide evidence to the Buyer that such liabilities have been paid in full or otherwise satisfied.  In accordance with Section 8.02, Sellers and the Principal Members agree to indemnify and hold harmless Buyer from and against any and all Losses that may be asserted by third parties against Buyer as a result of noncompliance with any such requirements. 

Section 6.15     Further Assurances. Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement and the other Transaction Documents, including, but not limited to, cooperating with each other with respect to the completion of an audit of the Business and  obtaining the transfer of all Assigned Permits to Buyer; provided that such audit shall be at Buyer’s sole cost and expense and Buyer shall reimburse Sellers for all Sellers’ external third party costs and expenses related to such audit.

Section 6.16    Management Agreement.  If, as of the Closing Date, all of the conditions set forth in Article VII have been satisfied or waived by the parties except for the requirement that Buyer receive all Permits necessary to conduct the Business, as indicated by Sellers prior to the Closing, Buyer and Sellers shall execute, or shall cause their designated Affiliates to execute, a Management Agreement in a form to be agreed upon by the parties (“Management Agreement”), pursuant to which Buyer shall operate the Business under Sellers’ existing Permits until such time as the applicable Governmental Authorities approve the transfer of such Permits to Buyer or issue new Permits to Buyer, as applicable. During such period, Buyer shall be responsible for all fees and charges to maintain any such Permits and Buyer shall indemnify, defend and hold Sellers harmless from and against any Liabilities or Losses arising from or in connection with Buyer’s operation of the Business under Sellers’ permits.  

Section 6.17    Updates to Disclosure Schedules.   Sellers shall have the right, at any time before Closing, to deliver to Buyer written updates to the Disclosure Schedules disclosing any events or developments that occurred or information learned between the date of this Agreement and the Closing Date (the “Additional Disclosures”).  If Sellers update the Disclosure Schedules after the date of this Agreement and such disclosures contain information that, absent such disclosures, would have the effect of causing the condition in Section 7.02(a) not to be satisfied, Buyer shall have the right to terminate this Agreement pursuant to Section 9.01(b)(ii).

Section 6.18    Inspection and Repair of Tangible Assets.  Within 5 days prior to Closing, Sellers and Buyer shall inspect all fixtures, equipment and tangible personal property to confirm that such assets are in working operating condition and repair, normal wear and tear excepted (the “Pre-Closing Inspection”). Any fixtures, equipment or tangible personal property which is not in working operating condition at the time of the Pre-Closing Inspection, shall be included on the failed inspection report (“Failed Inspection Report”), including a detailed description of the asset and the issue to be repaired, and disclosed in Section 

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4.09 of the Disclosure Schedules.  Sellers shall use Commercially Reasonable Efforts to repair, prior to Closing, any assets listed on the Failed Inspection Report in order to cause such assets to be in working operating condition, normal wear and tear excepted.  If Sellers are unable to repair any assets on the Failed Inspection Report prior to Closing, then, there shall be an equitable reduction in the Purchase Price to the extent sufficient to repair such remaining items on the Failed Inspection Report to bring them to working operating condition, normal wear and tear accepted.  

ARTICLE VII
CONDITIONS TO CLOSING

Section 7.01    Conditions to Obligations of All Parties. The obligations of each party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or the parties’ waiver, at or prior to the Closing, of each of the following conditions:

(a)    No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental Order which is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following completion thereof.

(b)    Subject in each case to Section 6.16 above, all any consents, authorizations, orders and approvals referred to in Section 4.03 shall have been received in form and substance reasonably satisfactory to Sellers and Buyer and no such consent, authorization, order and approval shall have been revoked.  

(c)    The waiver or expiration of any periods applicable to BWW’s right of first refusal.

Section 7.02    Conditions to Obligations of Buyer. The obligations of Buyer to consummate the transactions contemplated by this Agreement shall be subject to the fulfilment or Buyer’s waiver, at or prior to the Closing, of each of the following conditions:

(a)    Other than the representations and warranties of Sellers contained in Section 4.01, Section 4.02, and Section 4.20, the representations and warranties of Sellers contained in this Agreement, the other Transaction Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) on and as of the date hereof and as of the Effective Time with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects). The representations and warranties of Sellers contained in Section 4.01, Section 4.02, and Section 4.20 shall be true and correct in all respects on and as of the date hereof and on and as of the Effective Time with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects).

(b)    Sellers shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the other Transaction Documents to be performed or complied with by them prior to the Effective Time; provided, that, with respect to agreements, covenants and conditions that are qualified by materiality, Sellers shall have performed such agreements, covenants and conditions, as so qualified, in all respects.

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(c)    No Action shall have been commenced by any Person not a party to this Agreement against Buyer or Sellers, which would prevent the Closing. No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any transaction contemplated hereby.

(d)    All approvals, consents and waivers with respect to the Franchise Agreements and Leases that are listed on Section 4.03 of the Disclosure Schedules shall have been received, and executed counterparts thereof shall have been delivered to Buyer at or prior to the Closing.

(e)    All deliverables of Sellers required under Section 3.02(a).

(f)    From the date of this Agreement, there shall not have occurred any Material Adverse Effect, nor shall any event or events have occurred that, individually or in the aggregate, with or without the lapse of time, could reasonably be expected to result in a Material Adverse Effect.

(g)    Subject to Section 6.16, Buyer shall have received all Permits that are necessary for it to conduct the Business as conducted by Sellers as of the Closing Date; provided, however, if such Permits cannot be obtained prior to Closing, the parties shall enter into a Management Agreement as contemplated, provided that the applicable law with respect to such Permits allows Buyer or Buyer’s designee to conduct the Business as conducted by Sellers as of the Closing Date, and Buyer shall not have a right to terminate this Agreement as a result of failure to satisfy this subsection (g). 

(h)    All Encumbrances relating to the Purchased Assets shall have been released in full, other than Permitted Encumbrances, and Sellers shall have delivered to Buyer written evidence, in form satisfactory to Buyer in its reasonable discretion, of the release of such Encumbrances.  

(i)    Buyer shall have received a certificate, dated as of the Closing Date and signed by a duly authorized representative of Sellers in substantially the form attached hereto as Exhibit E, which among other things shall certify that each of the conditions set forth in Section 7.02(a) and Section 7.02(b) have been satisfied (the “Seller Closing Certificate”).

(j)    Buyer shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Sellers certifying that attached thereto are true and complete copies of all resolutions adopted by the board of directors, managers, or members of each authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby by the Sellers, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby.

(k)    Buyer shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Sellers certifying the names and signatures of the officers of Sellers authorized to sign this Agreement, the Transaction Documents and the other documents to be delivered hereunder and thereunder.

(l)    Buyer shall have received a certificate pursuant to Treasury Regulations Section 1.1445-2(b) (the “FIRPTA Certificate”) that the applicable Seller is not a foreign person within the meaning of Section 1445 of the Code duly executed by the applicable Seller.

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(m)    Buyer shall have completed the financing necessary to consummate the transactions contemplated by this Agreement. 

(n)    Buyer shall have received assurances that are satisfactory to Buyer in its reasonable discretion from key employees designated by Buyer that such employees intend to continue employment with Buyer following the Closing.  

(o)    Sellers shall have delivered to Buyer such other documents or instruments as Buyer reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.

Section 7.03    Conditions to Obligations of Sellers. The obligations of Sellers to consummate the transactions contemplated by this Agreement shall be subject to the fulfilment or Sellers’ waiver, at or prior to the Closing, of each of the following conditions:

(a)    Other than the representations and warranties of Buyer contained in Section 5.01, Section 5.02, and Section 5.04, the representations and warranties of Buyer contained in this Agreement, the other Transaction Documents and any certificate or other writing delivered pursuant hereto shall be true and correct in all respects (in the case of any representation or warranty qualified by materiality or Material Adverse Effect) or in all material respects (in the case of any representation or warranty not qualified by materiality or Material Adverse Effect) on and as of the date hereof and as of the Effective Time with the same effect as though made at and as of such date (except those representations and warranties that address matters only as of a specified date, the accuracy of which shall be determined as of that specified date in all respects). The representations and warranties of Buyer contained in Section 5.01, Section 5.02 and Section 5.04 shall be true and correct in all respects on and as of the date hereof and on and as of the Effective Time with the same effect as though made at and as of such date.

(b)    Buyer shall have duly performed and complied in all material respects with all agreements, covenants and conditions required by this Agreement and each of the other Transaction Documents to be performed or complied with by it prior to or on the Closing Date; provided, that, with respect to agreements, covenants and conditions that are qualified by materiality, Buyer shall have performed such agreements, covenants and conditions, as so qualified, in all respects. 

(c)    No Action shall have been commenced by any Person not a party to this Agreement against Buyer or Sellers, which would prevent the Closing.  No injunction or restraining order shall have been issued by any Governmental Authority, and be in effect, which restrains or prohibits any material transaction contemplated hereby.

(d)    All deliverables of Buyer required pursuant to Section 3.02(b).

(e)    Buyer shall have delivered the Escrow Amount to the Escrow Agent pursuant to Section 3.02(c).

(f)    Sellers shall have received a certificate, dated the Closing Date and signed by a duly authorized officer of Buyer, in substantially the form attached hereto as Exhibit F, that each of the conditions set forth in Section 7.03(a) and Section 7.03(b) have been satisfied (the “Buyer Closing Certificate”).

(g)    Sellers shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Buyer certifying that attached thereto are true and complete copies of all resolutions 

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adopted by the board of directors authorizing the execution, delivery and performance of this Agreement and the other Transaction Documents and the consummation of the transactions contemplated hereby and thereby by the Buyer, and that all such resolutions are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby and thereby.

(h)    Sellers shall have received a certificate of the Secretary or an Assistant Secretary (or equivalent officer) of Buyer certifying the names and signatures of the officers of Buyer authorized to sign this Agreement, the Transaction Documents and the other documents to be delivered hereunder and thereunder.

(i)    Sellers shall have entered into KPW Bifurcated HW Contracts and terminated the KPW Contracts.

(j)    Buyer shall have delivered to Sellers such other documents or instruments as Sellers reasonably request and are reasonably necessary to consummate the transactions contemplated by this Agreement.

Section 7.04    Casualty or Condemnation. 
(a)    Seller shall retain all risks and liability for damage to any of the Restaurants or any parcel of real property on which a Restaurant is located, by fire, storm, accident, or any other casualty or cause (a “Casualty Loss”) until the Effective Time. If, prior to the Effective Time, any of the Restaurants suffers a Casualty Loss which Seller and Buyer do not reasonably expect to be repaired or replaced prior to the Closing Date, then Buyer shall have the option of either (a) proceeding with the purchase of the affected Restaurant and obtaining from Seller all insurance proceeds with respect to such Casualty Loss (other than amounts arising from lost cash or inventory) and there shall be an equitable reduction in the Purchase Price to the extent that such insurance proceeds are insufficient to repair or replace the damage caused by the Casualty Loss, or (b) terminating this Agreement.

(b)    In the event of an eminent domain or condemnation proceeding which prevents a Restaurant from operating in the Ordinary Course of business, at Buyer’s election (a) Buyer may terminate this Agreement with respect to such Restaurant, as applicable, and the applicable Seller shall retain title thereto (including the rights from BWW solely with respect to such Restaurant) and the right to operate such Restaurant and there shall be an equitable reduction in the Purchase Price; or (b) Buyer may proceed to close and assume the rights of the applicable Seller as tenant with regard to such Restaurant. 

ARTICLE VIII
INDEMNIFICATION

Section 8.01    Survival. Subject to the limitations and other provisions of this Agreement, the representations and warranties contained herein shall survive the Closing and shall remain in full force and effect until the date that is fifteen (15) months from the Closing Date; provided, that the representations and warranties in Section 4.01, Section 4.02, Section 4.08, Section 4.20, Section 5.01, Section 5.02 and Section 5.04 shall survive indefinitely and the representations and warranties in Section 4.16, Section 4.17 and Section 4.19 shall survive for the full period of all applicable statutes of limitations (giving effect to any waiver, mitigation or extension thereof). No party shall be subject to any indemnification or hold harmless obligations pursuant to this Article VIII unless a claim for Losses is made by the Indemnified Party in a detailed written notice to the Indemnifying Party setting forth the estimated amount of (if reasonably practicable) and the basis for the claim delivered to the Indemnifying Party within fifteen (15) months 

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following the Closing Date (the “Survival Period”); provided, that the Survival Period shall be extended for those representations and warranties set forth above in this Section 8.01 for the periods of survival set forth herein above corresponding to such representations and warranties; provided further, that the Survival Period for any claim for breach of a covenant required to be performed subsequent to the Effective Time shall be indefinite.  Notwithstanding the foregoing, any claims for indemnification or to be held harmless hereunder that are asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching party to the breaching party prior to the expiration date of the applicable Survival Period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved.

Section 8.02    Indemnification By Sellers and Principal Members. Subject to the other terms and conditions of this Article VIII, each Seller and each Principal Member, jointly and severally, shall indemnify and defend each of Buyer and its Affiliates and their respective Representatives (collectively, the “Buyer Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Buyer Indemnitees based upon, arising out of, with respect to or by reason of:

(a)    any inaccuracy in or breach of any of the representations or warranties of Sellers or Principal Members contained in this Agreement, the other Transaction Documents or in any certificate or instrument delivered by or on behalf of Sellers or Principal Members pursuant to this Agreement, as of the date such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date;

(b)    any breach or non-fulfilment of any covenant, agreement or obligation to be performed by Sellers or their applicable Affiliates or Principal Members pursuant to this Agreement, the other Transaction Documents or any certificate or instrument delivered by or on behalf of Sellers or their applicable Affiliates or Principal Members pursuant to this Agreement or the other Transaction Documents;

(c)    any Excluded Asset or any Excluded Liability;  

(d)    any Third Party Claim based upon, resulting from or arising out of the business, operations or obligations of Sellers or any of their Affiliates (other than Assumed Liabilities) conducted, existing or arising prior to the Closing Date; 

(e)    Any Taxes with respect to the Business, Purchased Assets or Restaurants which is due, or will become due, for any period prior to the Closing Date; or

(f)    The noncompliance by Sellers with any bulk sales, bulk transfer or similar Laws.

Section 8.03    Indemnification By Buyer. Subject to the other terms and conditions of this Article VIII, Buyer shall indemnify and defend each of Sellers and their Affiliates and their respective Representatives (collectively, the “Seller Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Seller Indemnitees based upon, arising out of, with respect to or by reason of:

(a)    any inaccuracy in or breach of any of the representations or warranties of Buyer contained in this Agreement, the other Transaction Documents or in any certificate or instrument delivered by or on behalf of Buyer pursuant to this Agreement, as of the date such representation or warranty was made or as 

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if such representation or warranty was made on and as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date);

(b)    any breach or non-fulfilment of any covenant, agreement or obligation to be performed by Buyer or its applicable Affiliates pursuant to this Agreement, the other Transaction Documents or any certificate or instrument delivered by or on behalf of Buyer or its applicable Affiliates pursuant to this Agreement or the other Transaction Documents; 

(c)    the operations of Buyer (or its applicable Affiliate) under Sellers’ Permits pursuant to the Management Agreement; 

(d)    any Assumed Liability;

(e)      any liability arising under a guaranty of any lease, franchise agreement or other Assigned Contract that has not been released in accordance with the provisions of Section 2.05 (c) hereof; or
(f)    any Third Party Claim based upon, resulting from or arising out of the business operations or obligations of Buyer or any Affiliate conducted, existed or arising on or after the Closing Date; or
(g)    Any Taxes with respect to the Business, Purchased Assets or Restaurants which is due, or will become due, for any period on or after the Closing Date.

Section 8.04    Certain Limitations. The indemnification provided for in Section 8.02 and Section 8.03 shall be subject to the following limitations:

(a)    Sellers and Principal Members shall not be liable to the Buyer Indemnitees for indemnification under Section 8.02(a) (other than with respect to a claim for indemnification based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any representation or warranty in Section 4.01, Section 4.02, Section 4.08, Section 4.17, Section 4.18(c), Section 4.19 and Section 4.20 (the “Buyer Basket Exclusions”)), until the aggregate amount of all Losses in respect of indemnification under Section 8.02(a) (other than those based upon, arising out of, with respect to or by reason of the Buyer Basket Exclusions) exceeds $100,000, in which event Sellers and the Principal Members shall be required to pay or be liable for all such Losses from the first dollar.

(b)    Buyer shall not be liable to the Seller Indemnitees for indemnification under Section 8.03(a) (other than with respect to a claim for indemnification based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any representation or warranty in Section 5.01, Section 5.02, and Section 5.04 (the “Seller Basket Exclusions”)) until the aggregate amount of all Losses in respect of indemnification under Section 8.03(a) (other than those based upon, arising out of, with respect to or by reason of the Seller Basket Exclusions) exceeds $100,000, in which event Buyer shall be required to pay or be liable for all such Losses from the first dollar.

(c)    Sellers’ and Principal Members’ maximum liability to the Buyer Indemnitees for indemnification under Section 8.02(a) shall not exceed twenty percent (20%) of the Purchase Price, other than with respect to a claim for indemnification based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any representation or warranty in Section 4.01, Section 4.02, Section 4.08, Section 4.17, Section 4.19 and Section 4.20, which shall not be subject to such cap.  Without limiting the foregoing, the maximum aggregate liability of Sellers and Principal Members under Section 8.02 (including claims under Section 8.02(a)) shall not exceed the Purchase Price actually received by such Seller or such Principal Member.  

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(d)    Buyer liability to the Seller Indemnitees for indemnification under Section 8.03(a) shall not exceed twenty percent (20%) of the Purchase Price, other than with respect to a claim for indemnification based upon, arising out of, with respect to or by reason of any inaccuracy in or breach of any representation or warranty in Section 5.01, Section 5.02 and Section 5.04 which shall not be subject to such cap.  

(e)    For purposes of this Article VIII, the amount of any Losses related to any inaccuracy in or breach of any representation or warranty shall be determined without regard to any standard of materiality, Material Adverse Effect or other similar qualification contained in or otherwise applicable to such representation or warranty.

(f)    Notwithstanding any representation or warranty of Sellers herein, Sellers and Principal Members shall have no liability or obligation under this Agreement with respect to any Losses on account of any liability or obligation to the extent accounted for in the Post-Closing Adjustment for which a payment was made pursuant to Section 2.06(a).

(g)    No Indemnified Party may recover Losses more than once for any specific facts, omissions, or circumstances notwithstanding the fact that such facts, omissions or circumstances may constitute a breach of more than one (1) representation or warranty.

Section 8.05    Indemnification Procedures. The party making a claim under this Article VIII is referred to as the “Indemnified Party”, and the party against whom such claims are asserted under this Article VIII is referred to as the “Indemnifying Party.” 

(a)    Third Party Claims. If any Indemnified Party receives notice of the assertion or commencement of any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative of the foregoing (a “Third Party Claim”) against such Indemnified Party with respect to which the Indemnifying Party is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) calendar days after receipt of such notice of such Third Party Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Third Party Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of any Third Party Claim at the Indemnifying Party’s expense and by the Indemnifying Party’s own counsel, and the Indemnified Party shall cooperate in good faith in such defense.  In the event that the Indemnifying Party assumes the defense of any Third Party Claim, subject to Section 8.05(b), it shall have the right to take such action as it deems necessary to avoid, dispute, defend, appeal or make counterclaims pertaining to any such Third Party Claim in the name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third Party Claim with counsel selected by it subject to the Indemnifying Party’s right to control the defense thereof. The fees and disbursements of such counsel shall be at the expense of the Indemnified Party.  If the Indemnifying Party elects not to compromise or defend such Third Party Claim, fails to promptly notify the Indemnified Party in writing of its election to defend as provided in this Agreement, or fails to diligently prosecute the defense of such Third Party Claim, the Indemnified Party may, subject to Section 8.05(b), pay, compromise, defend such Third Party Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third Party Claim. Sellers and Buyer shall cooperate with each other in all 

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reasonable respects in connection with the defense of any Third Party Claim, including making available (subject to the provisions of Section 6.06) records relating to such Third Party Claim and furnishing, without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending party as may be reasonably necessary for the preparation of the defense of such Third Party Claim.

(b)    Settlement of Third Party Claims. Notwithstanding any other provision of this Agreement, the Indemnifying Party shall not enter into settlement of any Third Party Claim without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, conditioned or delayed), except as provided in this Section 8.05(b). If a firm offer is made to settle a Third Party Claim without leading to liability or the creation of a financial or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified Party from all liabilities and obligations in connection with such Third Party Claim and the Indemnifying Party desires to accept and agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party fails to consent to such firm offer within three (3) days after its receipt of such notice, the Indemnified Party may elect to thereafter defend or, as applicable, may continue to contest or defend such Third Party Claim and in such event, the maximum liability of the Indemnifying Party as to such Third Party Claim shall not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume defense of such Third Party Claim, the Indemnifying Party may settle the Third Party Claim upon the terms set forth in such firm offer to settle such Third Party Claim. If the Indemnified Party has assumed the defense pursuant to Section 8.05(a), it shall not agree to any settlement without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).

(c)    Direct Claims. Any Action by an Indemnified Party on account of a Loss which does not result from a Third Party Claim (a “Direct Claim”) shall be asserted by the Indemnified Party giving the Indemnifying Party reasonably prompt written notice thereof, but in any event not later than thirty (30) days after the Indemnified Party becomes aware of such Direct Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying Party shall have thirty (30) days after its receipt of such notice to respond in writing to such Direct Claim. The Indemnified Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim and the Indemnified Party shall assist the Indemnifying Party’s investigation by giving such information and assistance (including reasonable access to the Indemnified Party’s premises and personnel and the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably request. If the Indemnifying Party does not so respond within such thirty (30) day period, the Indemnifying Party shall be deemed to have rejected such claim.  In the event any Direct Claim is rejected or deemed to be rejected, or the parties are not otherwise able to settle such Direct Claim, each of the parties shall be free to pursue such rights and remedies available to them at law or in equity subject to the provisions of this Article VIII.

(d)    Cooperation. Upon a reasonable request by the Indemnifying Party, each Indemnified Party seeking indemnification hereunder in respect of any Direct Claim, hereby agrees to consult with the Indemnifying Party and act reasonably to take actions not adverse to the Indemnified Party’s financial or business interests and otherwise reasonably requested by the Indemnifying Party in order to attempt to reduce 

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the amount of Losses in respect of such Direct Claim. Any costs or expenses associated with taking such actions shall be included as Losses hereunder.

Section 8.06    Payments. Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable pursuant to this Article VIII, the Indemnifying Party shall satisfy its obligations within ten (10) Business Days of such agreement or final, non-appealable adjudication by wire transfer of immediately available funds. The parties hereto agree that should an Indemnifying Party not make full payment of any such obligations within such ten (10) Business Day period, any amount payable shall accrue interest from and including the date of agreement of the Indemnifying Party or final, non-appealable adjudication to and including the date such payment has been made at a rate per annum equal to 30-day LIBOR plus 4.00%. Such interest shall be calculated daily on the basis of a 365 day year and the actual number of days elapsed, without compounding.

Section 8.07    Tax Treatment of Indemnification Payments. All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

Section 8.08    Exclusive Remedies. Subject to Section 6.07 and Section 10.11, the parties acknowledge and agree that their sole and exclusive remedy after the Closing with respect to any and all claims (other than claims arising from fraud, criminal activity or wilful misrepresentation on the part of a party hereto in connection with the transactions contemplated by this Agreement) for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be pursuant to the indemnification provisions set forth in this Article VIII. In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement it may have against the other parties hereto and their Affiliates and each of their respective Representatives arising under or based upon any Law following the Closing, except pursuant to the indemnification provisions set forth in this Article VIII. Nothing in this Section 8.08 shall limit any Person’s right to seek and obtain any equitable relief to which any Person shall be entitled or to seek any remedy on account of any Person’s fraudulent conduct, criminal activity or intentional misrepresentation.

Section 8.09    Assignment of Claims.  If any Indemnified Party receives any payment from an Indemnifying Party in respect of any Losses pursuant to this Article VIII and such Indemnified Party could have recovered all or a part of such Losses from a third party (“Potential Contributor”) based on the underlying claim asserted against the Indemnifying Party, such Indemnified Party shall assign, on a non-recourse basis and without any representation or warranty, all of its rights to proceed against the Potential Contributor as are necessary or appropriate to permit the Indemnifying Party to recover from the Potential Contributor the amount of such payment.  Any payment received in respect of such claim shall be distributed, (i) first to Indemnifying Party in an amount equal to the aggregate payments made by such Indemnifying Party to the Indemnified Party in respect of such claim, plus costs and expenses incurred in investigating, defending or otherwise incurred in connection with addressing such claim or in pursuing a recovery from the Potential Contributor, and (ii) the balance, if any, to the Indemnified Party.

Section 8.10    Insurance and Tax Benefits.  Notwithstanding anything herein to the contrary, an Indemnifying Party shall have no liability under this Article VIII to any Indemnified Party with respect to any claim to the extent Indemnified Party (i) receives any insurance proceeds relating to such claim, (ii) receives payment or indemnification from any third party respecting the matter covered by such claim, or (iii) receives any Tax benefit in respect of the subject matter of such claim.

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Section 8.11    Mitigation.  Indemnified Parties shall, and shall cause their Affiliates to take commercially reasonable steps to mitigate any Losses incurred or sustained by Indemnified Parties that may give rise to any claims for indemnification hereunder upon becoming aware of any event that would reasonably be expected to, or does, give rise thereto, including by incurring costs only to the extent reasonably necessary to remedy the breach that gives rise to such Losses.

Section 8.12    Recovery from Escrow.  Notwithstanding anything to the contrary contained in this Agreement, Buyer Indemnitees shall recover any Losses pursuant to this Article VIII first from the Escrow Fund, and second, to the extent the Escrow Fund is insufficient, from Sellers and the Principal Members (subject to the other limitations set forth in this Article VIII).

Article VIII     
TERMINATION

Section 9.01    Termination. This Agreement may be terminated at any time prior to the Closing:

(a)    by the mutual written consent of Sellers and Buyer;

(b)    by Buyer by written notice to Sellers if:

(i)    Buyer is not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Sellers pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article VII and such breach, inaccuracy or failure has not been cured by Sellers within thirty (30) days of Sellers’ receipt of written notice of such breach from Buyer; or

(ii)    any of the conditions set forth in Section 7.01 or Section 7.02 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by August 15, 2019 (the “Termination Date”), unless such failure of any such condition shall be due to the failure of Buyer to perform or comply with any material covenant, agreement or other obligations of Buyer in this Agreement to be performed or complied with by it prior to the Closing;

(c)    by Sellers by written notice to Buyer if:

(i)    Sellers are not then in material breach of any provision of this Agreement and there has been a breach, inaccuracy in or failure to perform any representation, warranty, covenant or agreement made by Buyer pursuant to this Agreement that would give rise to the failure of any of the conditions specified in Article VII and such breach, inaccuracy or failure has not been cured by Buyer within thirty (30) days of Buyer’s receipt of written notice of such breach from Sellers; 

(ii)    any of the conditions set forth in Section 7.01 or Section 7.03 shall not have been, or if it becomes apparent that any of such conditions will not be, fulfilled by the Termination Date, unless such failure of any such conditions shall be due to the failure of Sellers to perform or comply with any material covenant, agreement or other obligations of Sellers in this Agreement to be performed or complied with by Sellers prior to the Closing; or

(iii)    BWW, in the exercise of its right of first refusal under its Franchise Agreements with Seller, attempts to reduce the Purchase Price; or compel Sellers to incur additional costs and expenses 

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not contemplated by this Agreement; or otherwise reduce or diminish the benefits of this Agreement in any material way, in which event Sellers shall have the unqualified right to terminate this Agreement with no further liability or obligation to Buyer. 

(d)    by Buyer, on the one hand, or Sellers on the other hand, by written notice to the other party if: 

(i)    there shall be any Law that makes consummation of the transactions contemplated by this Agreement illegal or otherwise prohibited and remains in effect through the Termination Date; or 

(ii)    any Governmental Authority shall have issued a Governmental Order restraining or enjoining the transactions contemplated by this Agreement, and such Governmental Order shall have become final and non-appealable or shall remain in effect through the Termination Date.

(e)    by Buyer, on the one hand, or Sellers on the other hand, by written notice to the other party if BWW provides notification to Sellers that BWW has elected to exercise its right of first refusal to acquire the Restaurants in accordance with the terms of the Franchise Agreements except in the event BWW, as part of the exercise of its right of first refusal, agrees to assume this Agreement in its entirety in which case Buyer shall be fully and completely released from all obligations under this Agreement.  

Section 9.02    Effect of Termination. In the event of the termination of this Agreement in accordance with this Article IX, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto except the provisions of Section 6.06 and Article X which are by their express terms to survive termination of this Agreement, and this Article IX, shall survive termination of this Agreement (the “Surviving Obligations”) and provided further, if the transactions contemplated by this Agreement are not closed as a result of Buyer’s failure to obtain financing as contemplated by Section 7.02(m), then Buyer agrees to pay Sellers a termination fee equal to the actual out-of-pocket expenses incurred by Sellers in connection with the execution, performance or termination of this Agreement, including all legal and accounting and any transfer fees payable to any third parties, in an amount not to exceed $100,000. 

ARTICLE X
MISCELLANEOUS

Section 10.01    Expenses.  Except as otherwise expressly provided herein, all costs and expenses, including, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.  Upon submission of this Agreement to BWW in connection with its approval and right of first refusal, Sellers and Buyer shall each submit one-half (1/2) of the required BWW Transfer Fee to BWW. Without limiting the foregoing, Buyer shall be solely responsible for (a) any fees or costs (other than Sellers’ and Buyer’s attorney’s fees) required to be paid in connection with Buyer’s financing, including any costs or expenses in connection with any agreements, consents or documents required by Buyer’s lender related to the Leases; (b) any fees or costs (other than Sellers’ and Buyer’s attorney’s fees) required to be paid for the transfer of or obtaining any new Permits (including any liquor licenses); and (c) any fees, costs or expenses (other than the BWW Transfer Fee) imposed by BWW as part of its approval of Buyer as the transferee of the Franchise Agreements.

Section 10.02    Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally 

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recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.02):

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	If to Sellers:
	Here’s Wings, LLC
Here’s Wings Real Estate, LLC
B-Dubs LLC 
22285 Pepper Rd.
Suite 307 
Lake Barrington, IL 60010 
Facsimile: (847) 381-3866
Telephone: (847) 381-3864 
E-mail: john-weiler@sbcglobal.net  
Attention:   John A. Weiler, Manager

	

with a copy to:

with a copy to:
	

Lawrence Guzik, Esq.
Attorney at Law
22285 Pepper Rd
Suite 308
Lake Barrington, IL 60010
Facsimile: (847) 381-3866
Telephone: (847) 842-8881
E-mail: lguzik1015@aol.com    

Blitz, Bardgett & Deutsch 
120 South Central Avenue - Suite 1500
St. Louis, Missouri 63105
Facsimile: (314) 881-4844
Telephone: (314) 881-4833
E-mail: rbrandt@bbdlc.com  
Attention: Robert Brandt, Esq.

	

If to Buyer:
	

AMC Wings, Inc. 
27680 Franklin Road 
Southfield, Michigan 48034 
Facsimile: (248) 223-9165 
Telephone: (833) 374-7282 ext. 718
E-mail: dgburke@drh-inc.com 
Attention:  David G. Burke, President

	

with a copy to:
	

Dykema Gossett PLLC
39577 Woodward Avenue - Suite 300
Bloomfield Hills, Michigan 48304-2820
Facsimile: 855-245-0196
Telephone: (248) 203-0859
E-mail:    drmcdonald@dykema.com .
Attention: D. Richard McDonald, Esq.

Section 10.03    Interpretation. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement 

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as a whole. Unless the context otherwise requires, references herein: (x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles and Sections of, and Disclosure Schedules and Exhibits attached to, this Agreement; (y) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof and (z) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

Section 10.04    Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

Section 10.05    Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Except as provided in Section 6.07(d), upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

Section 10.06    Entire Agreement. This Agreement and the other Transaction Documents constitute the sole and entire agreement of the parties to this Agreement with respect to the subject matter contained herein and therein, and supersede all prior and contemporaneous understandings and agreements, both written and oral, with respect to such subject matter. In the event of any inconsistency between the statements in the body of this Agreement and those in the other Transaction Documents, the Exhibits and Disclosure Schedules (other than an exception expressly set forth as such in the Disclosure Schedules), the statements in the body of this Agreement will control.

Section 10.07    Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns. No party may assign its rights or obligations hereunder without the prior written consent of the other parties, which consent shall not be unreasonably withheld or delayed; provided, however, that prior to the Closing Date, Buyer may, without the prior written consent of Sellers but with notice to Sellers, assign all or any portion of its rights under this Agreement to one or more of its direct or indirect wholly-owned subsidiaries. No assignment shall relieve the assigning party of any of its obligations hereunder.

Section 10.08    No Third-party Beneficiaries. Except as provided in Article VIII, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

Section 10.09    Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each party hereto. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving.  The failure of any party at any time to require performance of any provisions hereof shall, in no manner, affect the right at a later date to enforce the same.  No waiver by any party of any condition, or 

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breach of any provision, term, covenant, representation or warranty contained in this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed to be or construed as a further or continuing waiver of any such condition or of the breach of any other provision, term, covenant, representation or warranty of this Agreement.

Section 10.10    Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.

(a)    This Agreement shall be governed by and construed in accordance with the internal laws of the State of Illinois without giving effect to any choice or conflict of law provision or rule (whether of the State of Illinois or any other jurisdiction) that would cause the application of Laws of any jurisdiction other than those of the State of Illinois.

(b)    ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA OR THE COURTS OF THE STATE OF ILLINOIS IN EACH CASE LOCATED IN THE COUNTY OF COOK, AND EACH PARTY IRREVOCABLY SUBMITS TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

(c)    EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER TRANSACTION DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 10.10(c). 

Section 10.11    Specific Performance. The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

Section 10.12    Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A 

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signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.   

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

SELLERS:

Here’s Wings, LLC,
Here’s Wings Real Estate, LLC,
Here’s Wings Hoffman Estates, LLC
Here’s Wings Mt. Prospect, LLC
Here’s Wings Round Lake Beach, LLC
Here’s Wings Skokie, LLC
Here’s Wings Vernon Hills, LLC
Here’s Wings II – Northbrook, LLC
Here’s Wings Old Orchard, LLC
B-Dubs RE, LLC
B-Dubs CL, LLC,
each an Illinois limited liability company

By:___________________________
Name:    John A. Weiler
Title:    Manager

PRINCIPAL MEMBERS:
                            

_______________________________
John A. Weiler

_______________________________
James Dixon 

_______________________________
Terry Winkler

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BUYER:

AMC Wings, Inc.
a Michigan corporation. 

By: ____________________________
Name: _________________________
Title: ___________________________

-2

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