ASSET PURCHASE AGREEMENT
This agreement ("AGREEMENT"), is made and entered into on this 5th day of June,
1998, but to be made effective as of the 31st day of July, 1998, by and among
ROCKY MOUNTAIN CHOCOLATE FACTORY, INC., a corporation organized under the laws
of the State of Colorado, ("SELLER "), RESORT CONFECTIONS, INC., a Colorado
corporation ("RC" or "PURCHASER") and Xxxxxxx Xxx Xxxxxxx and Xxxxxxxx X.
Xxxxxxx, the sole shareholders of RC (collectively referred to as "GRUESERS").
(Seller, Purchaser and Gruesers shall be collectively referred to as "PARTIES").
RECITALS:
A. WHEREAS, Seller owns and operates 10 theme candy stores under the
name and xxxx "FUZZIWIG'S CANDY FACTORY" ("COMPANY OWNED STORES") and Seller is
the franchisor under two franchise agreements for two additional FUZZIWIG'S
CANDY FACTORY stores ("FRANCHISED STORES"); and Seller owns certain assets
designated for use in connection with the operation of the Company Owned Stores
("ASSETS");
B. WHEREAS, Seller is desirous of selling to Purchaser and Purchaser is
desirous of purchasing from Seller substantially all of the assets owned by
Seller and used in connection with the operation of the Company Owned Stores,
Seller's rights as the franchisor under the franchise agreements governing the
Franchised Stores and the Assets (collectively referred to as the "FUZZIWIG'S
SYSTEM"), upon the terms and conditions and for the consideration set forth
herein; and
C. WHEREAS, Seller also owns and operates a chocolate manufacturing
facility and serves as the franchisor for a total of over 175 chocolate stores
which operate under the name and xxxx "ROCKY MOUNTAIN CHOCOLATE FACTORY" ("RMCF
SYSTEM"), but none of Seller's ROCKY MOUNTAIN CHOCOLATE FACTORY stores, no
interest in Seller's chocolate manufacturing business nor any of Seller's
interests as franchisor in any of its franchised ROCKY MOUNTAIN CHOCOLATE
FACTORY stores are being sold by Seller nor purchased by Purchaser under the
terms of this Agreement.
NOW THEREFORE, for and in consideration of the mutual promises and
covenants contained herein, and for other good and valuable consideration, and
subject to the terms and conditions of this Agreement, the Parties hereto agree
as follows:
1. PURCHASE AND SALE
1.1 ASSETS TO BE SOLD AND PURCHASED. Subject to and upon the terms and
conditions contained herein, at the Closing (defined below), Seller shall sell,
transfer, assign, convey and deliver to the Purchaser, free and clear of all
adverse claims, security interests, liens and encumbrances except as disclosed
to, assumed or approved by Purchaser pursuant to the terms of this Agreement,
and the Purchaser shall purchase, accept and acquire from Seller, all of the
Purchased Assets (defined below) all of which are owned and used by Seller in
connection with the operation of the Fuzziwig's System. The Exhibits and
Schedules referenced in this Agreement shall be compiled, in accordance with all
applicable statues, rules and regulations, between the date this Agreement is
signed and the Closing Date. All Exhibits and Schedules shall be attached to
this Agreement on the Closing Date. The term "PURCHASED ASSETS" more
specifically includes:
a. COMPANY OWNED STORES. Except as specifically excluded herein,
all right, title and interest of Seller in and to the personal property and all
other improvements located at the 10 addresses of the Company Owned Stores set
forth on EXHIBIT I attached hereto, subject to all rights of the lessors to such
improvements in accordance with the terms of each lease agreement governing each
of the Company Owned Stores, copies of which lease agreements are attached
hereto as EXHIBIT II.
i. INVENTORY AND SUPPLIES. All inventory and supplies owned
by Seller which are located on the premises of the Company Owned Stores as of
Closing or which are part of the Assets and are located in various warehouses in
Durango, Colorado, as of Closing, but are designated for use in connection with
the operation of the Company Owned Stores, all of which are described in
SCHEDULE 1.1.a.i hereto;
ii. FURNITURE, FIXTURES AND EQUIPMENT. All right, title and
interest of Seller in and to the furniture, furnishings, trade fixtures,
animated figures, leasehold improvements and equipment, including cash
registers, computers, telephones and fax machines, which are used by Seller in
connection with the operation of the Company Owned Stores and are located at the
addresses set forth on EXHIBIT I as of Closing;
2
iii. RECORDS. All books and records which are on the premises
of the Company Owned Stores relating to the Purchased Assets as of Closing and
photocopies of applicable books and business records of the Company Owned Stores
relating to the Purchased Assets as of Closing, as reasonably requested; and
iv. GOVERNMENTAL LICENSES, PERMITS AND APPROVALS. To the
extent transferable, all governmental licenses, certificates of public
convenience, operating permits, approvals and similar permits and approvals
issued to Seller in connection with and directly relating to the operation of
the Company Owned Stores, all of which are described on SCHEDULE 1.1.a.iv
hereto.
b. FUZZIWIG'S SYSTEM. The following assets of the Fuzziwig's System
shall also be included in the Purchased Assets:
i. INTELLECTUAL PROPERTY. All of Seller's right, title and
interest in and to the trademarks and service marks used in connection with the
operation of the Fuzziwig's System, two of which are registered with the United
States Patent and Trademark Office, and other marks, trade names and
applications for the foregoing, if any, as of Closing (collectively, "MARKS"),
including the use of the name "FUZZIWIG'S CANDY FACTORY," all of which are
described in SCHEDULE 1.1.b.i hereto;
ii. PROPRIETARY INFORMATION. All of Seller's rights to the
Fuzziwig's System's supplier lists, franchisee operations manuals, franchisee
training manuals, the Fuzziwig's System Uniform Franchise Offering Circular
("UFOC") and advertising and marketing materials attached hereto as SCHEDULE
1.1.b.ii;
iii. GOODWILL. All of Seller's goodwill arising out of the
use of the Marks as of the date of Closing; and
iv. RELATED CONTRACTUAL RIGHTS. To the extent they are
transferable according to their respective terms, all of Seller's rights and
interest in, to or under the contracts, agreements, leases, commitments and
licenses directly relating to the Purchased Assets and described in SCHEDULE
1.1.b.iv hereto.
3
C. FRANCHISE AGREEMENTS. Seller's interest in and under two
franchise agreements, copies of which are attached in SCHEDULE 1.1.c hereto, in
which Seller is the franchisor of two FUZZIWIG'S CANDY FACTORY stores.
1.2 EXCLUDED ASSETS. Notwithstanding anything herein to the contrary, the
following assets of Seller shall not be conveyed to or purchased by Purchaser:
a. ORDINARY COURSE OF BUSINESS DISPOSITIONS. Properties, assets,
rights or interests otherwise included in the definition of Purchased Assets
which Seller shall have sold, transferred or disposed of prior to the Closing
Date, defined below, in the ordinary course of business and not in breach of
this Agreement.
b. ACCOUNTS RECEIVABLE. All accounts receivable of any kind or
nature generated by Company Owned Stores and all cash on hand in the Company
Owned Stores through the Closing Date.
c. NO OTHER ASSETS. Other than the Purchased Assets described in
Section 1.1 and the Schedules and Exhibits mentioned therein, no other assets of
Seller shall be sold or assigned.
1.3 NONASSIGNABLE PERMITS, LICENSES, LEASES AND CONTRACTS.
a. NONASSIGNABILITY. To the extent that any lease, contract,
license, permit, approval or any other property or contractual interest
otherwise constituting a part of the Purchased Assets is not capable of being
assigned or transferred, or if such assignment or transfer or attempted
assignment or transfer would constitute a breach thereof or a violation of any
law, decree, order, regulation or other governmental edict, this Agreement shall
not constitute an assignment or transfer thereof, or an attempted assignment or
transfer thereof, and such lease, contract, license, permit, approval, or
interest shall be excluded from the definition of Purchased Assets and shall not
be sold to Purchaser hereunder. Notwithstanding the foregoing, if any Company
Owned Store lease is not assignable, the Parties will enter into a sublease or
take such other action as is reasonably necessary to provide the Parties with
the intended benefit of this Agreement with respect thereto.
b. SELLER TO USE REASONABLE EFFORTS. After this Agreement has been
signed by all Parties, Seller will exercise reasonable efforts, and Purchaser
will cooperate with
4
Seller, to obtain any consents and waivers of third parties and to resolve
any impracticalities arising in connection with the assignments and transfers
of the Purchased Assets as contemplated hereunder and to obtain any other
material consents and waivers necessary to convey to Purchaser any of the
Purchased Assets. The Parties acknowledge that after this Agreement has been
signed by all Parties, Seller will attempt to obtain third party consents to
the assignment of the leases for the premises of the Company Owned Stores and
other contracts, permits and licenses related to the Purchased Assets, but
Seller makes no guarantees that any such consents will be obtained prior to
the Closing Date.
1.4 ASSUMPTION OF LIABILITIES.
a. ASSUMED OBLIGATIONS. Except as otherwise provided in this
Agreement, Purchaser and its successors and permitted assigns will assume
effective as of the day after the Closing Date, and thereafter will promptly and
fully pay and satisfy in accordance with their respective terms, all
liabilities, obligations, contracts and commitments of Seller directly affecting
or arising out of the operation of the Company Owned Stores and the Franchised
Stores, as of the Closing Date, based on Seller's usual and ordinary accounting
practices, as listed in SCHEDULE 1.4.a to this Agreement.
b. SALES TAXES. Purchaser will be responsible for all sales tax
liability incurred by reason of the transfer of the Purchased Assets
contemplated by this Agreement.
c. PURCHASER'S INDEMNIFICATION. Purchaser and Gruesers, jointly and
severally, agree that they shall indemnify and hold Seller harmless from and
against any and all claims, liabilities, costs, expenses and damages (including
reasonable attorneys' fees) relating to or arising from: (i) any liability
assumed by Purchaser or Gruesers under the terms of this Agreement; (ii) any
breach of representations, warranties or covenants made by Purchaser or Gruesers
as set forth in this Agreement; and (iii) the ownership, use or operation of the
Company Owned Stores, the Franchised Stores or any other Purchased Assets, or
any other actions taken by Purchaser or Gruesers, after Closing.
d. SELLER'S INDEMNIFICATION. Seller hereby agrees to indemnify
Purchaser and Gruesers and to hold Purchaser and Gruesers harmless from and
against, any and all
5
claims, expenses and damages (including reasonable attorneys' fees) incurred
by Purchaser and Gruesers, arising from or related to:
i. obligations or liabilities of Seller not assumed by
another Party under the terms of this Agreement or otherwise listed in the
Exhibits and Schedules that are part of this Agreement;
ii. any breach of representations, warranties or covenants
made by Seller as set forth in this Agreement; and
iii. ownership, use or operation of the Company Owned Stores,
the Franchised Stores or any other Purchased Assets or any other actions taken
by Seller related to the Purchased Assets on or before Closing.
1.5 PURCHASE PRICE AND PAYMENT TERMS.
a. PURCHASE PRICE. The total consideration ("PURCHASE PRICE")
payable to Seller by Purchaser for the Purchased Assets shall be One Million
Six Hundred Thousand Dollars (US $1,600,000). The Purchase Price shall be paid
in the following manner:
i. A downpayment toward the Purchase Price in the amount of
$25,000 has been delivered to Seller prior to the execution of this Agreement,
which amount is refundable until June 11, 1998 when this Agreement is signed by
Purchaser; afterwards, it is nonrefundable;
ii. $75,000 in immediately available funds at the Closing;
iii. $80,000 in the form of a Promissory Note, attached as
EXHIBIT III, to be paid in a lump sum with interest at 8 1/2% per annum
payable six months after the Closing Date ("NOTE"); and
iv. The balance of $1,420,000 of the Purchase Price shall be
paid in the form of a like kind exchange of the assets of four ROCKY MOUNTAIN
CHOCOLATE FACTORY Stores owned by the Purchaser and Gruesers listed on SCHEDULE
1.5.a.iv. attached hereto ("EXCHANGED ASSETS"). Subject to and upon the
conditions contained herein, at the Closing, Gruesers and Purchaser shall
transfer, assign, convey and deliver to Seller, free and clear of all adverse
claims, security interests, liens and encumbrances except as disclosed to,
assumed or approved by Seller pursuant to the terms of this Agreement, and
Seller shall accept
6
and acquire from Gruesers and Purchaser, all of the Exchanged Assets, which
are owned and operated by Gruesers and Purchaser in the form of four ROCKY
MOUNTAIN CHOCOLATE FACTORY Stores ("XXXXXXX'X STORES"). The term "EXCHANGED
ASSETS" more specifically includes (i) all right, title and interest of
Gruesers and Purchaser in and to the personal property and all other
improvements located at the four addresses of the Xxxxxxx'x Stores set forth
on EXHIBIT IV attached hereto, subject to all rights of the lessors to such
improvements in accordance with the terms of each lease agreement governing
each of the Xxxxxxx'x Stores, copies of which lease agreements are attached
hereto as EXHIBIT V; (ii) all inventory and supplies owned by Gruesers and
Purchaser which are located on the premises of the Xxxxxxx'x Stores as of
Closing and all other assets which may be located elsewhere but are
designated for use in connection with the operation of the Xxxxxxx'x Stores,
all of which are described in SCHEDULE 1.5.a.iv. attached hereto; (iii) all
right, title and interest of Gruesers and Purchaser in and to the furniture,
furnishings, trade fixtures, leasehold improvements and equipment, including
cash registers, computers, telephones and fax machines, which are used by
Gruesers and Purchaser in connection with the operation of the Xxxxxxx'x
Stores; (iv) all books and records which are on the premises of the Xxxxxxx'x
Stores relating to the Exchanged Assets as of Closing and photocopies of
applicable books and business records of the Xxxxxxx'x Stores relating to the
Exchanged Assets as of Closing, as reasonably requested; (v) to the extent
transferable, all governmental licenses, certificates of public convenience,
operating permits, approvals and similar permits and approvals issued to
Gruesers and/or Purchaser in connection with and directly relating to the
operation of the Xxxxxxx'x Stores, all of which are described on SCHEDULE
1.5.a.iv. hereto; and (vi) all of the Xxxxxxx'x right, title and interest in,
to or under the Franchise Agreements which govern the Xxxxxxx'x Stores, and
all other rights and interests in, to or under other contracts, agreements,
leases, commitments and licenses directly relating to the Exchanged Assets
and described in SCHEDULE 1.5.a.iv. hereto. Notwithstanding anything herein
to the contrary, all accounts receivable of any kind or nature generated by
the Xxxxxxx'x Stores and all cash on hand in the Xxxxxxx'x Stores through the
Closing Date and all other properties, assets, rights or interests of the
Gruesers and Purchaser which shall not be included in the definition of
Exchanged Assets, shall not be conveyed to Seller hereunder.
7
b. NONASSIGNABILITY. To the extent that any lease, contract,
license, permit, approval or any other property or contractual interest
otherwise constituting a part of the Exchanged Assets is not capable of being
assigned or transferred, or if such assignment or transfer or attempted
assignment or transfer would constitute a breach thereof or a violation of any
law, decree, order, regulation or other governmental edict, this Agreement shall
not constitute an assignment or transfer thereof, or an attempted assignment or
transfer thereof, and such lease, contract, license, permit, approval, or
interest shall be excluded from the definition of Exchanged Assets and shall not
be transferred to Seller hereunder. Notwithstanding the foregoing, if any of
the Xxxxxxx'x Store leases are not assignable, the Parties will enter into a
sublease or take such other action as is reasonably necessary to provide the
Parties with the intended benefit of this Agreement with respect thereto.
c. PURCHASER TO USE REASONABLE EFFORTS. After this Agreement has
been signed by all Parties, Purchaser will exercise reasonable efforts, and
Purchaser will cooperate with Purchaser, to obtain any consents and waivers of
third parties and to resolve any impracticalities arising in connection with the
assignments and transfers of the Exchanged Assets as contemplated hereunder and
to obtain any other material consents and waivers necessary to convey to Seller
any of the Exchanged Assets. The Parties acknowledge that after this Agreement
has been signed by all Parties, Purchaser will attempt to obtain third party
consents to the assignment of the leases for the premises of the Xxxxxxx'x
Stores and other contracts, permits and licenses related to the Exchanged
Assets, but Purchaser makes no guarantees that any such consents will be
obtained prior to the Closing Date.
d. ASSUMED OBLIGATIONS. Except as otherwise provided in this
Agreement, Seller and its successors and permitted assigns will assume effective
as of the day after the Closing Date, and thereafter will promptly and fully pay
and satisfy in accordance with their respective terms, all liabilities,
obligations, contracts and commitments of Gruesers and Purchaser directly
affecting or arising out of the operation of the Xxxxxxx'x Stores, as of the
Closing Date, based on the Gruesers usual and ordinary accounting practices, as
listed on SCHEDULE 1.5.d. attached to this Agreement.
8
e. ALLOCATION OF PURCHASE PRICE. The Purchase Price shall be
allocated among the Purchased Assets as reasonably agreed by the Parties on
the Closing Date. Seller and Purchaser mutually agree to file all applicable
federal tax forms following the Closing Date, including all those related to
the like kind exchange.
f. NOTE. The Note securing $80,000 of the Purchase Price shall
be a negotiable promissory note and shall provide in part that, upon any
uncured default in any payment of principal or interest, the entire amount of
principal and interest, at the option of the holder of the Note, shall become
immediately due; that if action is instituted on the Note, Purchaser agrees
to pay all reasonable costs and attorneys' fees, and that Purchaser shall
have the option to prepay, without penalty, all or any portion of the unpaid
balance.
1.6 CLOSING. Subject to the conditions precedent set forth herein, the
Closing ("CLOSING") shall take place at Seller's offices, 000 Xxxxxx Xxxxx,
Xxxxxxx, Xxxxxxxx 00000 on July 31, 1998 at a time mutually agreed by the
parties or such earlier or later date and time mutually agreed to by the
parties ("CLOSING DATE"). This Agreement shall be effective and binding when
signed by all Parties on June 11, 1998.
1.7 ASSUMPTION OF OWNERSHIP AND POSSESSION. Purchaser shall take
ownership, possession and control of the Purchased Assets and shall take
possession of the Company Owned Stores as of the day after the Closing Date,
August 1, 1998. Seller shall take ownership, possession and control of the
Exchanged Assets as of the day after the Closing Date, August 1, 1998. All
deliveries which are practicable shall be made at the Closing.
1.8 CONTINUING OBLIGATIONS. The Parties acknowledge and agree that the
purpose of this Agreement and related agreements is to convey and deliver to
Purchaser the assets, properties, rights and interests of Seller, real and
personal, tangible and intangible, necessary to, relating to or used solely
with respect to the operation of the Fuzziwig's System. Accordingly, Seller
agrees that, should any such thing by inadvertence not be conveyed or
delivered to Purchaser at the Closing, it will do such acts as shall be
necessary to promptly effect the conveyance and delivery of all such things.
The Parties also acknowledge and agree that the purpose of this Agreement and
related agreements is to convey and deliver to Seller the assets, properties,
rights and interests of Gruesers and Purchaser, real and personal, tangible
9
and intangible, necessary to, relating to or used solely with respect to the
operation of the Xxxxxxx'x Stores. Accordingly, Gruesers and Purchaser agree
that, should any such thing by inadvertence not be conveyed or delivered to
Seller at the Closing, they will do such acts as shall be necessary to
promptly effect the conveyance and delivery of all such things.
1.9 EMPLOYEE MATTERS. Seller will take all actions necessary to
terminate all of Seller's employees who are employed at the Company Owned
Stores effective as of the Closing Date. Seller will be responsible for all
employees' compensation, benefits and taxes up to the Closing Date including,
but not limited to, accrued vacation pay, sick pay, and accrued personal
leave. Purchaser intends to employ Seller's employees after the Closing, but
the creation and terms of any employment relationship after the Closing shall
be Purchaser's responsibility. Similarly with respect to employees employed
at the Xxxxxxx'x Stores, Purchaser and Gruesers will take all actions
necessary to terminate all of such employees effective as of the Closing
Date. Gruesers and Purchaser will be responsible for all such employees'
compensation, benefits and taxes up to the Closing Date including, but not
limited to, accrued vacation pay, sick pay, and accrued personal leave.
Seller intends to employ Purchaser's employees after the Closing, but the
creation and terms of any employment relationship after the Closing shall be
Seller's responsibility.
2. NONCOMPETITION AGREEMENT
Simultaneously with the Closing of the transactions herein contemplated,
Purchaser, Gruesers and Seller shall enter into a Noncompetition Agreement in
the form of EXHIBIT VI hereto which shall provide, in part, that Seller shall
not engage, either directly or indirectly, in ownership or operation of theme
candy stores for 18 months following the Closing Date and that neither RC nor
the Gruesers will engage, either directly or indirectly, in ownership or
operation of stores competitive with the stores in the ROCKY MOUNTAIN
CHOCOLATE FACTORY System for 18 months following the Closing Date, subject to
the terms of this Agreement.
3. REPRESENTATIONS AND WARRANTIES
Seller hereby represents and warrants that the following are true and
correct as of the date hereof and will be true and correct through the
Closing Date as if made on that date:
10
a. CORPORATE STATUS. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Colorado, with all requisite corporate power and authority to carry on its
Fuzziwig's System business.
b. LITIGATION. There are no claims, actions, suits, proceedings,
or investigations pending or threatened against or affecting the Fuzziwig's
System in any court or by or before any federal, state, municipal or other
governmental department, commission, board, bureau, agency or other
instrumentality, domestic or foreign, or arbitration tribunal or other forum
which, if determined adversely to Seller, would materially affect Purchaser's
ability to operate the Fuzziwig's System immediately after Closing as it is
now being conducted. There are no judgments, decrees, injunctions, writs,
orders or other mandates outstanding which would materially affect
Purchaser's ability to operate the Fuzziwig's System immediately after the
Closing.
c. ESTOPPEL. All statements made by Seller in this Agreement, or
in any Exhibit or Schedule hereto, or in any document or certificate required
to be executed and delivered under this Agreement, are true, correct and
complete to the best of its knowledge as of the date of this Agreement and
will be so as of the Closing Date.
d. COMPLIANCE WITH LAWS AND PERMITS. To the best of its
knowledge, Seller has complied in all material respects with all laws,
regulations and rules, orders, judgments, writs, decrees or injunctions of
federal, state and municipal governments or any department, agency or other
instrumentality thereof, applicable to the Fuzziwig's System and has not done
or omitted to do any act or acts which are in violation of any of the
foregoing. Seller has obtained all federal, state and municipal licenses and
permits necessary to operate the Company Owned Stores and to operate as the
franchisor of the Franchised Stores, is not in violation of any such license
or permit and has not received any notification that any revocation or
limitation thereof is pending or threatened, except where the failure to
obtain the same, or violation, revocation, or limitation thereof, would not
have a materially adverse effect on the Fuzziwig's System as a whole.
Notwithstanding the foregoing, the Parties acknowledge that the effectiveness
of Seller's Fuzziwig's System UFOC and many of Seller's state franchise
registrations have expired or are due to expire on or shortly after June 1,
1998.
11
e. LEASES AND CONTRACTS. Seller is not the owner, lessor or
sublessor with respect to the premises of any of the Company Owned Stores or
the Franchised Stores. All leases for the premises of the Company Owned
Stores are valid and binding agreements of Seller, there is no material
breach or violation of or default under any provision of any such lease, and
no fact or event has occurred which would materially affect Seller's interest
in or under any such lease. Seller owns good and merchantable title to all
such leasehold interests free and clear of all material mortgages, liens,
pledges, restrictions, charges or encumbrances of any nature. Seller has no
other leasehold interests in real or personal property or contract rights
which are material to the operation of the Purchased Assets. Purchaser shall
be responsible for a maximum of $500 per lease for costs associated with
assigning said leases and Seller shall pay all costs over and above $500
related to said lease assignments.
f. TRADEMARKS AND COPYRIGHTS. Attached to this Agreement as
SCHEDULE 3.f is a description of all registered trademarks, service marks,
copyrights, trade names and licenses and applications pending therefor, owned
by Seller, which are used in the operation of the Fuzziwig's System.
Assignments for each such registered trademark and service xxxx and copies of
all other rights or applications shall be furnished to Purchaser on the
Closing Date. Seller owns all trademarks, trade names, service marks and
copyrights used in the operation of the Fuzziwig's System and, to the best
of Seller's knowledge, such use does not conflict with, infringe upon or
violate the rights of any third party in a manner which might have a
materially adverse effect upon the Fuzziwig's System.
g. AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by Seller of this Agreement and any other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by Seller's Board of Directors
and its shareholders, if required by law or Seller's bylaws. This Agreement
and all other agreements contemplated hereby have been or will be as of the
Closing Date duly executed and delivered by Seller and constitutes and will
constitute legal, valid and binding obligations of Seller, enforceable
against it in accordance with their respective terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights
generally and by
12
general principles of equity that may limit availability of certain equitable
remedies in certain instances.
h. RESTRICTIVE COVENANTS. Prior to the consummation of the
proposed transaction, Seller shall operate the Fuzziwig's System and use the
Purchased Assets in the ordinary and usual course of business without unusual
commitments and in compliance with all applicable laws, rules and regulations.
i. CONSENTS; APPROVALS; CONFLICT. No consent, approval,
authorization or order of any court or governmental agency or other body is
required for Seller to consummate the sale of the Purchased Assets. Neither
the execution, delivery or performance of this Agreement shall conflict
with, or constitute a breach of, and no prior approval is necessary by or
under, Seller's articles of incorporation or bylaws, as amended to date, or
any note, mortgage, indenture, deed of trust, lease, obligation, or other
agreement or instrument to which Seller is a party or by which it is bound
nor, to the best of Seller's knowledge, any existing law, rule, regulation,
or any decree of any court or governmental department, agency, commission,
board or bureau, having jurisdiction over Seller. To the best of Seller's
knowledge, Seller is not required to give any notice to, or make any filing
with, or obtain any authorization, consent or approval of, any government or
governmental agency in order for the parties to consummate the transactions
contemplated by this Agreement.
j. ASSETS SOLD "AS-IS." To the best of Seller's knowledge, the
inventories, supplies and equipment which constitute a part of the Purchased
Assets are usable in the ordinary course of business. The Parties
acknowledge and agree that the Purchased Assets are being sold "as-is,
where-is" with no warranties or guaranties except that Seller shall warrant
that the Purchased Assets will be in good operating condition on the Closing
Date. EXCEPT AS EXPRESSLY SET FORTH HEREIN, SELLER MAKES NO REPRESENTATIONS
OR WARRANTIES (EXPRESS OR IMPLIED) AS TO THE CONDITION, REPAIR, QUANTITIES,
SALEABILITY, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY OF
THE PURCHASED ASSETS.
k. TITLE TO ASSETS. Seller shall have on the Closing Date, good
and marketable title to all of the Purchased Assets and said Purchased Assets
owned by it shall not
13
be subject to any material mortgage, lien, pledge, lease, security interest
or encumbrance, except as disclosed to Purchaser.
l. TAXES.
i. PAYMENT OF TAXES. All Taxes, defined below, of Seller
relating to the Company Owned Stores, Franchised Stores and Purchased Assets
relating to periods or portions thereof ending on or before the Closing Date,
have been paid, or will have been paid, or an adequate reserve established
therefor in conformity with generally accepted accounting principles
consistently applied, and Seller has no liability for Taxes in excess of the
amounts so paid or reserves so established. All Taxes that Seller has been
required to collect or withhold have been duly collected or withheld and, to
the extent required when due, have been or will be duly paid to the proper
taxing authority.
ii. DEFINITION OF TAXES. For purposes of this Agreement,
"Taxes" shall mean all federal, state, local, foreign and other taxes,
levies, imposts, assessments, impositions or other similar government
charges, including, without limitation, income, estimated income, business,
occupation, franchise, real property, payroll, personal property, sales,
transfer, stamp, use, employment, commercial rent or withholding, occupancy,
premium, gross receipts, profits, windfall profits, deemed profits, license,
lease, severance, capital, production, corporation, ad valorem, excise, duty
or other taxes, including interest, penalties and additions thereto.
m. ASSISTANCE FOLLOWING THE CLOSING DATE. Seller will provide
the services of its employee, Xx. Xxxx Xxxxxxxx, for not more than 7.5 hours
per day and not more than a total of 35 hours per week, Monday through
Friday, during the six months following the Closing Date, to consult with the
Purchaser in its assumption and operation of the Purchased Assets. Purchaser
shall pay all of Xx. Xxxxxxxx'x travel and related expenses, but her salary
shall continue to be paid by Seller during this period. For six months after
the Closing Date, Seller shall grant limited access to Purchaser to RMCF
Creative Services for a total of not more than 20 hours per month, regarding
in-store and merchandise product promotion. Purchaser shall further be
entitled to limited consulting services for a maximum of 10 hours per month
from one or both of C. Xxxx Xxxxxx and X.X. Xxxx combined, for a period of
one
14
year after the Closing Date. In addition, if Purchaser gives written notice
to Seller in accordance with the terms of this Agreement on or before October
31, 1998 that Purchaser intends to close one or two of the Company Owned
Stores, Seller will pay or reimburse Purchaser for up to a maximum of 60% of
the costs and expenses, including attorneys fees, associated with terminating
the lease agreement(s) for the Company Owned Store(s) which is/are closing.
Seller's payment will apply only to the costs of terminating the lease
agreements and not to any other costs or expenses of terminating Company
Owned Store operations, and it shall apply to no more than two of the Company
Owned Stores, regardless of how many Company Owned Stores are closed.
4. PURCHASER'S AND GRUESERS' REPRESENTATIONS AND WARRANTIES
Purchaser and Gruesers hereby represent and warrant that the following
are true and correct as of the date hereof and will be true and correct
through the Closing Date as if made on that date.
a. CORPORATE STATUS. Purchaser is duly organized, validly
existing and in good standing under the laws of the state in which it is
organized, with all requisite power and authority to carry on its respective
businesses in which it is engaged, to own the respective properties it owns,
and is duly qualified and licensed to do business and is in good standing in
all jurisdictions where the nature of its business makes such qualifications
necessary.
b. AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by Purchaser of this Agreement and any other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by all requisite corporate
action of Purchaser. This Agreement and any other agreement contemplated
hereby have been or will be as of the Closing Date, duly executed and
delivered by Purchaser and Gruesers and constitutes and will constitute
legal, valid and binding obligations of Purchaser and Gruesers and is
enforceable against them in accordance with their respective terms.
c. CONSENTS; APPROVALS, CONFLICTS. No consent, approval,
authorization or order of any court or governmental agency or other body is
required for Purchaser or Gruesers to execute and perform their obligations
under this Agreement. Neither the
15
execution, delivery, consummation or performance of this Agreement shall
conflict with or constitute a breach of, and no prior approval is necessary
by or under, Purchaser's organizational documents or the articles of
incorporation or bylaws, as amended to date, or any note, mortgage,
indenture, deed of trust, lease, obligation or other agreement or instrument
to which Purchaser or Gruesers are a party or by which any of them is bound
nor, to the best of Purchaser's and Xxxxxxx'x knowledge and belief, any
existing law, rule, regulation, or any decree of any court or government
department, agency, commission, board or bureau, domestic or foreign, having
jurisdiction over Purchaser or Gruesers. Neither Gruesers nor Purchaser is
required to give any notice to, or make any filing with, or obtain any
authorization, consent or approval of any government agency in order for the
Parties to consummate the transactions contemplated by this Agreement.
d. LITIGATION. There are no claims, actions, suits, proceedings, or
investigations pending or threatened against or affecting the Exchanged Assets
or the Xxxxxxx'x Stores in any court or by or before any federal, state,
municipal or other governmental department, commission, board, bureau, agency or
other instrumentality, domestic or foreign, or arbitration tribunal or other
forum which, if determined adversely to Gruesers and/or Purchaser would
materially affect Seller's ability to operate the Xxxxxxx'x Stores immediately
after Closing as they are now being operated. There are no judgments, decrees,
injunctions, writs, orders or other mandates outstanding which would materially
affect Seller's ability to operate the Xxxxxxx'x Stores immediately after the
Closing.
e. ESTOPPEL. All statements made by Gruesers and Purchaser in this
Agreement, or in any Exhibit or Schedule hereto, or in any document or
certificate required to be executed and delivered under this Agreement, are
true, correct and complete to the best of their knowledge as of the date of this
Agreement and will be so as of the Closing Date.
f. COMPLIANCE WITH LAWS AND PERMITS. To the best of their
knowledge, Gruesers and Purchaser have complied in all material respects with
all laws, regulations and rules, orders, judgments, writs, decrees or
injunctions of federal, state and municipal governments or any department,
agency or other instrumentality thereof, applicable to the Xxxxxxx'x Stores and
have not done or omitted to do any act or acts which are in violation of
16
any of the foregoing. Gruesers and Purchaser have obtained all federal,
state and municipal licenses and permits necessary to operate the Xxxxxxx'x
Stores, are not in violation of any such license or permit and have not
received any notification that any revocation or limitation thereof is
pending or threatened, except where the failure to obtain the same, or
violation, revocation, or limitation thereof, would not have a materially
adverse effect on the Xxxxxxx'x Stores.
g. LEASES AND CONTRACTS. Neither Purchaser nor Gruesers are the
owner, lessor or sublessor with respect to the premises of any of the Xxxxxxx'x
Stores. All leases for the premises of the Xxxxxxx'x Stores are valid and
binding agreements of Gruesers and/or Purchaser, there is no material breach or
violation of or default under any provision of any such lease, and no fact or
event has occurred which would materially affect Xxxxxxx'x or Purchaser's
interest in or under any such lease. Gruesers and/or Purchaser own good and
merchantable title to all such leasehold interests free and clear of all
material mortgages, liens, pledges, restrictions, charges or encumbrances of any
nature. Neither Purchaser nor Gruesers have any other leasehold interests in
real or personal property or contract rights which are material to the operation
of the Exchanged Assets. Seller shall be responsible for a maximum of $500 per
lease for costs associated with assigning said leases to Seller and Purchaser
shall pay all costs over and above $500 related to said lease assignments.
h. TRADEMARKS AND COPYRIGHTS. Attached to this Agreement as
SCHEDULE 4.h is a description of all registered trademarks, service marks,
copyrights, trade names and licenses and applications pending therefor, if any,
which are used in the operation of the Xxxxxxx'x Stores which are not licensed
by Seller to Gruesers under the terms of the franchise agreements governing the
Xxxxxxx'x Stores. Assignments for each such registered trademark and service
xxxx and copies of all other rights or applications shall be furnished to Seller
on the Closing Date.
i. AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by Purchaser and Gruesers of this Agreement and any other agreements
contemplated hereby, and the consummation of the transactions contemplated
hereby and thereby, have been duly authorized by Purchaser's Board of Directors
and its shareholders, if required by law or
17
Purchaser's bylaws. This Agreement and all other agreements contemplated
hereby have been or will be as of the Closing Date duly executed and
delivered by Purchaser and Gruesers and constitute and will constitute legal,
valid and binding obligations of Purchaser and Gruesers, enforceable against
them in accordance with their respective terms, except as enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors' rights generally and by general
principles of equity that may limit availability of certain equitable
remedies in certain instances.
j. RESTRICTIVE COVENANTS. Prior to the consummation of the proposed
transactions, Gruesers and Purchaser shall operate the Xxxxxxx'x Stores and use
the Exchanged Assets in the ordinary and usual course without unusual
commitments and in compliance with all applicable laws, rules and regulations.
k. CONSENTS; APPROVALS; CONFLICT. No consent, approval,
authorization or order of any court or governmental agency or other body is
required for Gruesers or Purchaser to consummate the exchange of the Exchanged
Assets. Neither the execution, delivery or performance of this Agreement shall
conflict with, or constitute a breach of, and no prior approval is necessary by
or under, Purchaser's articles of incorporation or bylaws, as amended to date,
or any note, mortgage, indenture, deed of trust, lease, obligation, or other
agreement or instrument to which Purchaser or Gruesers are a party or by which
they are bound nor, to the best of Gruesers and Purchaser's knowledge, any
existing law, rule, regulation, or any decree of any court or governmental
department, agency, commission, board or bureau, having jurisdiction over the
Exchanged Assets. To the best of Xxxxxxx'x and Purchaser's knowledge, they are
not required to give any notice to, or make any filing with, or obtain any
authorization, consent or approval of, any government or governmental agency in
order for the Parties to consummate the transactions contemplated by this
Agreement.
l. ASSETS SOLD "AS-IS". To the best of Xxxxxxx'x and Purchaser's
knowledge, the inventories, supplies, equipment and other items which constitute
the Exchanged Assets are usable in the ordinary course of business. The Parties
acknowledge and agree that the Exchanged Assets are being sold "as-is, where-is"
with no warranties or guaranties except that Gruesers and Purchaser shall
warrant that the Exchanged Assets will be
18
in good operating condition on the Closing Date. EXCEPT AS EXPRESSLY SET
FORTH HEREIN, GRUESERS AND PURCHASER MAKE NO REPRESENTATIONS OR WARRANTIES
(EXPRESS OR IMPLIED) AS TO THE CONDITION, REPAIR, QUANTITIES, SALEABILITY,
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY OF THE EXCHANGED
ASSETS.
m. TITLE TO ASSETS. Gruesers and/or Purchaser shall have on the
Closing Date, good and marketable title to all of the Exchanged Assets and said
Exchanged Assets shall not be subject to any material mortgage, lien, pledge,
lease, security interest or encumbrance, except as disclosed to Seller.
n. PAYMENT OF TAXES. All Taxes of the Gruesers and/or Purchaser
relating to the Xxxxxxx'x Stores and the Exchanged Assets relating to periods or
portions thereof ending on or before the Closing Date, have been paid, or will
have been paid, or an adequate reserve established therefor in conformity with
generally accepted accounting principles consistently applied, and neither
Purchaser nor Gruesers have any liability for Taxes in excess of the amounts so
paid or reserves so established. All Taxes that Gruesers and/or Purchaser have
been required to collect or withhold have been duly collected or withheld and,
to the extent required when due, have been or will be duly paid to the proper
taxing authority.
o. MISCELLANEOUS. The execution and performance of this Agreement
and compliance with the provisions hereof will not violate, with or without
giving notice and/or the passage of time, any provisions of law applicable to
Seller. There are no pending or threatened litigations, actions or claims which
do or might threaten Seller's ability to perform its obligations under this
Agreement. All statements made by Seller in this Agreement, or in any Exhibit
or Schedule hereto, or in any document or certificate executed and delivered
herewith, are true, correct and complete as of the date of this Agreement and
will be so as of the Closing Date. All copies of documents provided and to be
provided by Seller are and shall be true and correct copies of such documents.
p. NO OTHER REPRESENTATIONS OR WARRANTIES. Seller acknowledges that
it has done its own due diligence investigation of the Xxxxxxx'x and Purchaser's
records related to the Exchanged Assets and, based on this investigation, is
satisfied that all pertinent
19
information and records have been made available to it. Seller acknowledges
that in determining to enter into this Agreement it has relied only on this
investigation and the representations, warranties, and information contained
in this Agreement and Schedules and Exhibits attached to this Agreement.
Other than the representations and warranties contained in this Agreement and
in the franchise agreements between the Gruesers and Seller and in the
Schedules and Exhibits attached to this Agreement, no other warranties are,
or have been, made to or are relied upon by Seller in entering into this
Agreement.
5. CONDITIONS TO OBLIGATIONS OF THE PARTIES; DELIVERIES
All obligations of the Parties under this Agreement are subject to the
fulfillment, prior to the Closing Date, of all conditions precedent and to
performance of all covenants and agreements and completion of all deliveries
contemplated herein, unless specifically waived in writing by the Parties
entitled to performance of the covenant or delivery of the documents.
Purchaser's obligations to purchase and pay for the Purchased Assets are further
subject to the representations and warranties of Seller being true and correct
in all material respects on the Closing Date, and the obligation of Seller to
sell, transfer, assign, convey and deliver the Purchased Assets is further
subject to the representations and warranties of Purchaser being true and
correct in all material respects on the Closing Date. Conversely, Seller's
obligations to accept the Exchanged Assets are further subject to the
representations and warranties of Gruesers and Purchaser being true and correct
in all material respects on the Closing Date, and the obligation of Gruesers and
Purchaser to transfer, assign, convey and deliver the Exchanged Assets is
further subject to the representations and warranties of the Seller being true
and correct in all material respects on the Closing Date.
a. PERFORMANCE OF COVENANTS AND CONDITIONS. Seller shall have
performed, satisfied and complied with all covenants, agreements and conditions
required by this Agreement to be performed or complied with or satisfied by
Seller on or before the Closing Date. Purchaser and Gruesers shall each have
performed, satisfied and complied with all covenants, agreements and conditions
required by this Agreement to be performed or complied with or satisfied by one
or both of them on or before the Closing Date.
20
b. ABSENCE OF CERTAIN CHANGES. Prior to the Closing Date, there
shall not have been:
i. Any material adverse change in the Purchased Assets or
the business conducted by Seller or occurrence of any event which materially
adversely affects the Fuzziwig's System;
ii. Any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the Purchased Assets;
iii. Any material mortgage, pledge or subjection to lien of
any of the Purchased Assets;
iv. Any sale or transfer of any of the Purchased Assets,
except in the ordinary course of business;
v. No action, suit or proceeding before any court or any
governmental body or authority pertaining to the transactions contemplated in
this Agreement or its consummation or materially affecting the business or
Purchased Assets shall have been instituted or threatened on or before the
Closing Date;
vi. Any material adverse change in the Exchanged Assets or
the business conducted by Gruesers and Purchaser or occurrence of any event
which materially adversely affects the Xxxxxxx'x Stores;
vii. Any damage, destruction or loss, whether or not covered
by insurance, materially and adversely affecting the Exchanged Assets;
viii. Any material mortgage, pledge or subjection to lien of
any of the Exchanged Assets;
ix. Any sale or transfer of any of the Exchanged Assets,
except in the ordinary course of business; and
x. No action, suit or proceeding before any court or any
governmental body or authority pertaining to the transactions contemplated in
this Agreement or its consummation or materially affecting the Xxxxxxx'x Stores
or Exchanged Assets shall have been instituted or threatened on or before the
Closing Date.
21
c. CERTIFICATES OF RELEASE. Purchaser shall have received from
Seller appropriate certificates of release or clearance, as may reasonably be
requested by Purchaser, indicating that Seller is not obligated for the payment
of any tax or fee due to any governmental agency. Seller shall have received
from Gruesers and/or Purchaser, appropriate certificates of release or
clearance, as may reasonably be requested by Seller, indicating that Gruesers
and Purchaser are not obligated for the payment of any tax or fee due to any
governmental agency.
6. DELIVERIES
6.2. DELIVERIES TO PURCHASER. At the Closing, the following documents
shall be delivered to Purchaser by Seller:
i. A certificate executed by an authorized officer of
Seller, dated the Closing Date, certifying that Seller's representations and
warranties in this Agreement and information in the attached Schedules and
Exhibits are then true and correct in all material respects to the best of his
or her knowledge and belief and that Seller has complied with all agreements
and conditions required by this Agreement and all related agreements to be
performed or complied with by it;
ii. Fully executed originals of the Noncompetition Agreement
among the Parties and assignments, in appropriate form, for all Marks, properly
executed and acknowledged;
iii. All Schedules and Exhibits which relate to the Purchased
Assets, properly filled out (if a Schedule or Exhibit does not apply, it should
nonetheless be attached and marked "not applicable");
iv. Any consents and/or assignments of leases related to the
Company Owned Stores which are available as of the Closing Date;
v. Any assignments of contracts related to the Company Owned
Stores which are available as of the Closing Date;
vi. Assignments of the two Franchise Agreements which relate
to the Franchised Stores;
22
vii. Xxxx of Sale, Assumption and Assignment in the form
attached hereto as EXHIBIT VII; and
viii. Certificates of Release.
6.2. DELIVERIES TO SELLER. At the Closing, the following documents shall
be delivered to Seller by Purchaser:
i. the Purchase Price;
ii. a certificate executed by an authorized officer of
Purchaser dated the Closing Date, certifying that the representations and
warranties of Purchaser contained in this Agreement and information in the
attached Schedules and Exhibits are then true and correct in all material
respects to the best of his or her knowledge and belief and that Purchaser has
complied with all agreements and conditions required by this Agreement and all
related agreements to be performed or complied with by it;
iii. fully executed assignments, in appropriate form, for any
trade names, telephone numbers, telephone directory listings, and any other
trade marks or service marks used in the operation of the Xxxxxxx'x Stores,
properly executed and acknowledged;
iv. all Schedules and Exhibits which relate to the Exchanged
Assets, properly filled out (if a Schedule or Exhibit does not apply, it should
nonetheless be attached and marked "not applicable");
v. any consents and/or assignments of leases related to the
Xxxxxxx'x Stores which are available as of the Closing Date;
vi. any assignments of contracts related to the Xxxxxxx'x
Stores which are available as of the Closing Date;
vii. Xxxx of Sale, Assumption and Assignment; and
viii. Certificates of Release.
7. COVENANTS
7.1 EXECUTION OF THIS AGREEMENT. The Parties hereto each will use its
best efforts to cause this Agreement and all related agreements to become
effective, and all transactions herein and therein contemplated to be
consummated, in accordance with its, and their terms, to obtain all required
consents, waivers and authorizations of governmental entities and other
23
third parties, to make all filings and give all notices to those regulatory
authorities or other third parties which may be necessary or reasonably
required in order to effect the transactions contemplated in this Agreement,
and to comply with all federal, local and state laws, rules and regulations
as may be applicable to the contemplated transactions.
7.2 COVENANTS OF THE GRUESERS. The Gruesers shall sell or otherwise
divest, in accordance with the terms of their respective franchise agreements
with Seller, all of the Gruesers' right, title and interest in and to the two
ROCKY MOUNTAIN CHOCOLATE FACTORY Stores owned by the Gruesers which are not part
of the Exchanged Assets, no later than 18 months after the Closing Date,
provided, however, that Gruesers may sell these two Stores to their children if
they comply with the transfer provisions in the franchise agreements governing
these Stores. All post-termination covenants, duties and obligations of the
Gruesers set forth in the franchise agreements governing these two Stores shall
apply to the Gruesers except to the extent enforcement thereof is waived by
Seller in this Agreement and in addition, the noncompetition agreement among all
of the Parties hereto shall apply to the Gruesers and all other Parties to this
Agreement. So long as the Gruesers and Purchaser are in compliance with the
terms of this Agreement and related agreements, Seller waives its rights to
enforce the Xxxxxxx'x post-termination covenants in its franchise agreements
with the Gruesers to the extent that the Gruesers will be allowed to own and
operate the Company Owned Stores and the Franchised Stores and the Purchased
Assets and do and perform all other acts contemplated in this Agreement.
8. TERMINATION.
8.1 GROUNDS FOR TERMINATION. This Agreement shall terminate:
i. By mutual written consent of Purchaser, RC and Seller at
any time prior to the Closing; or
ii. By written notice from any Party to the other Parties if
all the conditions precedent to its respective obligations hereunder have not
been satisfied or waived prior to the Closing Date; or
24
iii. By written notice from the terminating Party to all other
Parties if, prior to the Closing Date, any Party is in breach of any material
representation, warranty or covenant contained in this Agreement in any material
respect.
8.2 EFFECT OF TERMINATION. If any Party terminates this Agreement
pursuant to Section 8.1 above, all obligations of the Parties remaining
hereunder shall terminate without any liability of any Party to any other Party,
except for any liability of any Party then in breach. Upon termination of this
Agreement for any reason, (i) the covenants of the Parties concerning the
confidentiality and proprietary nature of all documents and other information
furnished hereunder shall remain in force except as to information which has
otherwise become public knowledge, and (ii) each Party shall promptly return all
documents received from any other Party in connection with this Agreement and
all copies thereof. This Section constitutes a covenant of the Parties, and any
Party may judicially enforce it.
9. MISCELLANEOUS PROVISIONS
a. AMENDMENTS. This Agreement shall be amended, modified, or
supplemented only by an instrument in writing executed by the Parties.
b. ASSIGNMENT. This Agreement and any right or obligation created
hereby or in any agreement entered into in connection with the transactions
contemplated hereby, shall not be assignable by any Party hereto without the
consent of all Parties not seeking the assignment. No such assignment shall
relieve the assignor of any obligations created by this Agreement.
c. PARTIES IN INTEREST; NO THIRD PARTY BENEFICIARIES. Except as
otherwise provided herein, the terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the Parties and their respective
heirs, legal representatives, successors and assigns. Neither this Agreement nor
any other agreement contemplated hereby shall be deemed to confer upon any
person not a party hereto or thereto any rights or remedies hereunder or
thereunder.
d. ENTIRE AGREEMENT. This Agreement, including the Exhibits and
Schedules hereto, and the agreements contemplated hereby constitute the entire
agreement of the Parties regarding the subject matter hereof, and supersede all
prior agreements and
25
understandings, both written and oral, among the Parties, or any of them,
with respect to the subject matter hereof.
e. SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Further, in
lieu of such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement a provision, as similar in terms to such
illegal, invalid, or unenforceable provision as may be possible and be legal,
valid and enforceable.
f. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations, warranties and covenants contained herein shall survive the
Closing and all statements contained in any certificate, schedule, exhibit or
other instrument delivered by or on behalf of the Purchaser, Gruesers or Seller,
and, notwithstanding any provision in this Agreement to the contrary, shall
survive the Closing, for a period of 18 months, except for representations and
warranties relating to taxes, which shall survive for the period of any
applicable statutes of limitation.
g. GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of Colorado. If any action is brought to enforce or
interpret any term of this Agreement, venue shall be in the City and County of
Denver, Colorado.
h. CAPTIONS. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
i. GENDER AND NUMBER, ETC.. Whenever the context requires, the
gender of all words used herein shall include the masculine, feminine and
neuter, and the number of all words shall include the singular and plural. Use
of the words "herein," "hereof," "hereto" and the like in this Agreement shall
be construed as references to this Agreement as a whole and not to any
particular Article, Section or provision of this Agreement, unless otherwise
noted.
26
j. CONFIDENTIALITY. Each Party shall keep this Agreement and its
terms and all documents delivered in connection with this Agreement
confidential, and shall make no press release, private or public disclosure,
either written or oral, regarding the transactions contemplated by this
Agreement without the prior knowledge and consent of the other parties hereto;
provided that the foregoing shall not prohibit any disclosure (i) by press
release, filing or otherwise that is required by federal securities laws, or
rules governing issuers of stock listed on the NASDAQ system and (ii) to
attorneys, accountants, investment bankers or other agents of the Parties
assisting the Parties in connection with the transactions contemplated by this
Agreement. In the event that the transactions contemplated hereby are not
consummated for any reason whatsoever, the Parties hereto agree not to disclose
or use any confidential information they may have concerning the affairs of the
other Parties, except for information that is required by law to be disclosed.
k. NOTICE. Any notice or communication hereunder or in any
agreement entered into in connection with the transactions contemplated hereby
must be in writing and given by depositing the same in the United States mail,
addressed to the Parties to be notified, postage prepaid and certified with
return receipt requested, by facsimile transmission or by delivery by use of a
messenger which regularly retains its delivery receipts. Such notice shall be
deemed received on the date on which it is delivered to the addressee. For
purposes of notice, the addresses of the Parties shall be:
IF TO SELLER: Rocky Mountain Chocolate Factory, Inc.
000 Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attn: C. Xxxx Xxxxxx,
Executive Vice President
Fax: (000) 000-0000
WITH A COPY TO: Xxxxx X. Xxxxxx, Esq.
Xxxxx XxXxxxxxxx, P.C.
0000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
27
IF TO PURCHASER: Resort Confections, Inc.
c/o William Don and Xxxxxxxx X. Xxxxxxx
P. O. Box 882829
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
l. NO FINDERS. Each Party represents and warrants to the others and
agrees that it has not employed or engaged, and will not employ or engage, any
person as a finder or broker in connection with the transactions contemplated
herein, and that no person is entitled to compensation as a finder or broker.
Each Party hereby indemnifies the other Parties and holds the other Parties
harmless from and against any claims of any third persons claiming to have acted
as a finder or broker in connection with the transactions herein contemplated,
and such indemnity shall include all expenses, costs and damages arising from or
related to such claims, including reasonable attorneys' fees.
m. EXPENSES. Except as otherwise provided in this Agreement, the
Parties shall each bear their own fees and expenses incurred in connection with
the transactions contemplated in this Agreement.
n. COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument. Execution and delivery of
this Agreement by exchange of facsimile copies bearing facsimile signatures of a
party shall constitute a valid and binding execution and delivery of this
Agreement by such Party and shall be enforceable as original documents.
o. PREVAILING PARTY CLAUSE. In the event of any litigation or
proceeding arising as a result of the breach of this Agreement or the failure to
perform hereunder, or failure or untruthfulness of any representation or
warranty herein, the Party or Parties prevailing in such litigation or
proceeding shall be entitled to collect the costs and expenses of bringing or
defending such litigation or proceeding, including reasonable attorney's fees,
from the Party or Parties not prevailing.
28
p. CONSTRUCTION. The language used in this Agreement will be deemed
to be the language chosen by the Parties to express their mutual intent, and no
rule of strict construction will be applied against any Party. The Parties
intend that each representation, warranty and covenant contained herein shall
have independent significance. If any Party has breached any representation,
warranty or covenant contained herein in any respect, the fact that there exists
another representation, warranty or covenant relating to the same subject matter
(regardless of the relative levels of specificity) which the Party has not
breached shall not detract from or mitigate the fact that the Party is in breach
of the first representation, warranty or covenant.
q. INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and
Schedules identified in this Agreement are incorporated herein by reference and
made a part hereof.
r. SPECIFIC PERFORMANCE. Each of the Parties acknowledges and
agrees that the other Party will be damaged irreparably in the event any of the
provisions of this Agreement are not performed in accordance with specific terms
or otherwise breached. Accordingly, each of the Parties agrees that the other
Party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any manner instituted in any court of the
United States or any state thereof having jurisdiction over the Parties and the
matter in addition to any other remedy to which it may be entitled, at law or in
equity.
s. WAIVER OF BULK SALES COMPLIANCE. The Parties shall conduct the
sale and exchange of assets in compliance with any applicable state bulk sales
laws.
(Signatures on following page)
29
(SIGNATURE PAGE TO PURCHASE AGREEMENT)
IN WITNESS WHEREOF, the Parties have executed this Asset Purchase Agreement
as of the date first set forth above.
ROCKY MOUNTAIN CHOCOLATE RESORT CONFECTIONS, INC.
FACTORY, INC.
By: By:
------------------------------- ----------------------------------
C. Xxxx Xxxxxx, Executive Vice Xxxxxxx Xxx Xxxxxxx, President
President
--------------------------------- ---------------------------------
XXXXXXX XXX XXXXXXX, INDIVIDUALLY XXXXXXXX X. XXXXXXX, INDIVIDUALLY
30
