Exhibit 4
AGREEMENT OF SALE
DATED SEPTEMBER 25, 1996
BETWEEN
CHILDROBICS, INC.
a corporation existing under and by virtue of the laws the State of New York
(hereinafter referred to as the "Seller"), with its principal office at 000
Xxxxx Xxxxxx, Xxxxxxxxxxx, Xxx Xxxx 00000,
AND
EXPRESS VENDING CORPORATION
a corporation existing under and by virtue of the laws the State of New Jersey,
(hereinafter referred to as the "Purchaser"), 000 Xxxxxxxx, Xxxxx 0000, Xxx
Xxxx, Xxx Xxxx 00000, to be owned in whole or in part by a publicly traded
company to be identified after the Closing, (hereinafter referred to as the
"Parent").
1. Agreement To Sell Upon the terms and conditions hereinafter set forth and on
the Closing Date (as hereinafter defined), Seller agrees to sell, transfer and
deliver to Purchaser, and Purchaser agrees to purchase, upon the terms and
conditions hereinafter set forth, One Hundred Percent (100%) of the issued and
outstanding shares (the "Shares") of FUN STATION USA OF LYNBROOK, INC., a
corporation existing under and by virtue of the laws the State of New York
(hereinafter referred to as the "Company").
2. The Assets Of The Company It is the understanding of the parties that the
Seller is representing that the assets of the Company (the "Assets") are as
follows:
(a) the inventory of merchandise, parts and supplies described in
Exhibit A-1 hereto (the "Merchandise");
(b) the equipment described in Exhibit A-2 hereto (the "Equipment");
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(c) the furniture, fixtures and improvements described in Exhibit A-3
hereto (the"Improvements");
(d) the lease described in Exhibit A-4 hereto (the "Lease");
(e) the contracts and agreements described in Exhibit A-5 hereto
(the "Contracts");
(f) the accounts receivable as described an listed in Exhibit A-6
hereto (the "Accounts Receivable");
(g) the cash accounts including but not limited to bank, brokerage,
trust and escrow accounts, as listed in Exhibit A-7;
(h) the books and records solely related to the Company;
(i) all right, title and interest of Seller in the name FUN
STATION, inclusive of any dba's, trademarks and/or any
variants or other registrations thereof (the "Names") to the
extent owned by the Company; and
(j) any and all security deposits or down payments in connection with,
including but not limited to, all leases, contracts and purchases.
3. The Liabilities of the Company It is the understanding of the parties that
the Seller is representing that the liabilities of the Company (the
"Liabilities") are as follows:
(a) the existing secured and other debt described in Exhibit B-1
attached hereto (the "Existing Secured and Other Debt");
(b) the accrued federal and state taxes as listed in Exhibit B-2
attached hereto (the "Accrued Federal and State Taxes");
(c) the litigation described in Exhibit B-3 hereto (the "Litigation");
(d) the medical claims described in Exhibit B-4 (the "Medical Claims");
(e) the accrued payroll taxes as listed in Exhibit B-5 attached hereto
(the "Accrued
Payroll Taxes");
(f) the accrued vacation pay as listed in Exhibit B-6 attached hereto
(the "Accrued Vacation Pay");
(g) the xxxxxxx'x compensation claims described in Exhibit B-7 (the
"Xxxxxxx'x Compensation Claims");
(h) the unemployment claims described in Exhibit B-8 (the
"Unemployment Claims"); and
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(i) the purchase money agreements, installment agreements or
service contracts described in Exhibit B-9 attached hereto
(the "Agreements and Contracts").
4. Purchase Price The purchase price to be paid by Purchaser to Seller for the
Shares is Three Hundred Twenty-Five Thousand Dollars ($325,000.00) payable as
follows:
(a) Five Thousand Dollars ($5,000.00) to be paid by Purchaser to
Seller on September 25, 1996, the execution date of this
Agreement;
(b) Forty-Five Thousand Dollars ($45,000.00) at the Closing (as
hereinafter defined);
(c) One Hundred Thousand Dollars ($100,000.00) evidenced by a
promissory note as provided in Exhibit C attached hereto (the
"Note") with interest payable monthly at the rate of Twelve
Percent (12%) per annum and fully payable two (2) years from the
Closing. The Note shall be secured by the assets of the Company,
which shall be evidenced by a security agreement executed by the
Company in favor of the Seller at the Closing in the form of
Exhibit D attached hereto (the "Security Agreement"). In the
event Seller desires to sell, transfer, pledge or assign the
Note then Seller shall obtain Purchasers consent, which
consent shall not be reasonably withheld. Purchaser hereby
consents to any such assignment by the Seller to Firestone
Capital or its affiliates and agrees to execute such
documents, which shall contain no additional guarantees, as
may be requested in connection with such assignment;
(d) One Hundred Fifty Thousand Dollars ($150,000.00) by the
assumption of existing debt including but not limited to
accounts payable, notes payable, loans payable, liens,
judgements, financing agreements or sales taxes payable of the
Company, including obligations with respect to the Lease. Any
amount in excess of the agreed $150,000.00 assumption of debt
and the actual amount of existing debt at the time of the
Closing will be deducted from the Note, as set forth in
Section 4(c) and if such excess is greater than the amount of
the Note, as provided in Section
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4(c), shall be deducted from the amount of cash or stock payable
pursuant to Section 4(e); and
(e) Either One Hundred Thousand Dollars ($100,000.00) by the delivery
of Twenty Five Thousand (25,000) Shares of restricted common
stock of the Parent (the "Parent Stock"), or Twenty Five Thousand
Dollars ($25,000.00) at the sole discretion of the Purchaser, due
within six (6) months after the date of Closing, however, if the
Parent is not a public company within six (6) months after the
date of Closing, the Purchaser shall be required to deliver
Twenty Five Thousand Dollars ($25,000). All parties to this
agreement acknowledge that the current value of the stock is
substantially less and possibly of minor value.
(i) In the event that the Purchaser elects or has
elected to deliver stock and the Parent Stock has a
closing bid price of less than Four Dollars ($4.00)
per share on the date on which the Seller is first
able to sell the Parent Stock either pursuant to an
effective registration statement covering the sale of
the Parent Stock by the Purchaser or pursuant to an
exemption from registration, the Purchaser agrees to
adjust the number of restricted shares issued by the
Parent by issuing such additional shares to the
Purchaser such that value of the shares of Parent
Stock issued to the Purchaser by the Parent pursuant
to this Agreement shall be equal to One Hundred
Thousand Dollars ($100,000.00), calculated by using
the average closing bid price of the shares in the
primary public marketplace as reported by a reputable
reporting service for the
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thirty (30) trading days prior to such date
multiplied by the number of shares of Parent Stock
issued to the Purchaser.
(ii) The Parent agrees to grant "piggy back" registration rights
on all shares of Parent Stock issued to Seller, pursuant to
Paragraph 4(e) hereof, on all registration statements filed
by the Parent after the date of issuance of restricted
common stock by Parent to Seller (the "Stock Transfer
Date"), other than on Form S-8. The Seller understands
that the inclusion of the shares in any registered offering
of the Parent securities is subject to the underwriters
approval, however Seller shall be allowed to register,
subject to underwriters approval, a pro rata amount of all
shares registered in such underwritten public offering by any
selling shareholders.
(iii)The Seller further agrees, that in the event the
Seller's shares of the Parent Stock are included in a
registered offering of the Parent, then the Purchaser
agrees to pay all expenses incurred by reason of the
registration of Seller's shares of the Parent Stock,
underwriting fees, commissions and discounts, on a
pro rata share basis.
(iv) In the event that, within a period of two (2) years from the
Stock Transfer Date, the sale of the shares of the Parent
Stock owned by the Seller have not been included in any
registration statement filed by the Parent, then the Parent
agrees to file, on the second year anniversary of the Stock
Transfer Date, subject to underwriters approval, a
registration statement with the Securities and Exchange
Commission covering the sale of the Parent Stock owned
by the Seller and to use its best efforts to have such
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registration statement declared effective.
5. Sales Tax If any sales tax becomes payable at or subsequent to the Closing in
connection with the transfer of any of the Shares hereunder, Purchaser shall pay
the same and shall indemnify and hold Seller harmless from and against any and
all liability in connection therewith. This provision shall survive the Closing.
6. Waiver of Bulk Transfer Requirements The parties waive compliance with the
bulk transfer provisions of the Uniform Commercial Code which may be applicable
to this transaction. Seller agrees to indemnify Purchaser against all claims
made by the creditors of Seller as result of such waiver.
7. Use of Purchase Price to Pay Encumbrances If there is any lien or encumbrance
affecting ownership of the Shares, which the Seller is obligated to pay and
discharge at or after the Closing, Seller may use any portion of the balance of
the purchase price to discharge it, or Seller may allow to the Purchaser the
amount thereof as a credit at the Closing.
8. Acceptable Funds All money payable under this agreement, unless otherwise
specified, shall be paid either:
(a) in cash, but not more than $1,000 shall be paid in cash;
(b) by good certified check of Purchaser, or official check of any
bank, savings bank, trust company, or savings and loan
association which is a member of the New York Clearing House,
payable to the direct order of Seller; or
(c) by wire transfer; or
(d) by attorney's escrow check; or
(e) as otherwise agreed to by the parties or their attorneys.
9. The Closing The "Closing" means the settlement of the obligations of
Seller and Purchaser to each other under this Agreement, including the payment
of the purchase price to Seller as provided
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in Paragraph 4 hereof and the delivery of the Closing documents provided for in
Paragraph 10 hereof. The Closing shall be held at the Law Office of Xxxxxx X.
Xxxxxxx, P.C., 000 Xxxxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000 on or about
September 25, 1996 (the "Closing Date").
10. Closing Documents At the Closing Seller shall execute and/or deliver to
Purchaser:
(a) the Shares of the Company;
(b) all documents associated with the Company; any lease, bills,
vouchers, records showing the ownership of the furniture,
furnishings, equipment, other property used in the operation of the
Company; all other books of account, records and contracts of
the Company;
(c) such other instruments as may be necessary or proper to transfer
to Purchaser all other ownership interests in the Company to be
purchased under this Agreement;
(d) unaudited financial statements for the Company as at June 30,
1996, which the Seller represents and warrants as accurately
reflecting the Company's financial position as at June 30, 1996
and which shall provide an amount representing the Company's
assets and liabilities, which the Seller warrants that the
differential between the unaudited representations of the assets
and liabilities will not differ greater than fifteen percent (15%)
from the amount representing the Company's assets and liabilities
differential contained in the audited financial statements that
will be prepared by the Company's present Certified Public
Accountants at or after the Closing, at the expense of the
Purchaser, which shall not exceed $5,000. Any amount in excess
of the agreed $5,000.00 will be adjusted to the Note, as set forth
in Section 4(c);
(e) certified copies of resolutions duly adopted by the Board of
Directors of Seller authorizing the sale of 100% of the Shares
of the Company and the performance by Seller of its
obligations hereunder; and
(f) resignations of all officers and directors of the Company.
11. At the Closing Purchaser shall execute and deliver to Seller:
(a) the Note (Exhibit C);
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(b) the Security Agreement (Exhibit D);
(c) certified copies of resolutions duly adopted by the Board of
Directors of Purchaser authorizing the purchase of the Company's
Shares and the performance by Purchaser of its obligations
hereunder; and
(d) an agreement with Group Coin, Inc. (Exhibit E) in the form
attached as Exhibit E.
12. Closing Adjustments Adjustments shall be set forth in Exhibit G and
apportioned as set forth in Exhibit G-1. Any errors or omissions in computing
apportionment's shall be corrected after the Closing. This provision shall
survive the Closing and shall be adjusted from the Note, as set forth in Section
4(c) and if such excess is greater than the amount of the Note, as provided in
Section 4(c), shall be adjusted from the amount of cash or stock payable
pursuant to Section 4(e). At the Closing date, the Company shall have no
indebtedness payable, except as set forth in Paragraph 3.
13. Representations And Warranties Of Seller Seller represents and warrants
to Purchaser as follows:
(a) Seller has full power and authority to carry out and perform its
undertakings and obligations as provided herein;
(b) No action, approval, consent or authorization of any governmental
authority is necessary for Seller to consummate the transactions
contemplated hereby;
(c) The Company is a duly organized corporation since January 24,
1995, under the laws of the State of New York and is validly
existing and in good standing and is not required to qualify
for business in any other state;
(d) The Company is the owner of all of the Assets enumerated in
Paragraph 2 hereof, free of all liens, claims and encumbrances,
except as set forth in Paragraph 3;
(e) There are no material violations or allegations of violations of
any material law or governmental rule or regulation pending
against the Company;
(f) There are no judgments, liens, suits, actions or proceedings,
contemplated or, to the knowledge of the Company, pending against
the Company, except as set forth in Judgment, Liens, Suits,
Actions and Proceedings (Exhibit F) annexed hereto;
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(g) The Company has not entered into, and is not subject to, any:
(i) written contract or agreement for the employment of any
employee of the Company;
(ii) contract with any labor union or guild;
(iii) pension, profit sharing, retirement, bonus, insurance,
or similar plan with respect to any employee of the
Company; or
(iv) similar contract or agreement affecting or relating to
the Company;
(h) The Company has not entered into, and is not subject to, any
contract, agreement or obligation which would materially effect
this Transaction;
(i) This Agreement does not place the Company in breach of any
existing contract, agreement or obligation;
(h) The Lease is in full force and effect and without any default
by the Seller thereunder, except as set forth on Exhibit F.
All copies of the Lease provided by Company to Purchaser are
true and complete copies of the original Lease as annexed
hereto on Exhibit A-4 hereto;
(i) The Contracts as itemized in Contracts Exhibit A-5 annexed
hereto, are in full force and effect and without any default
by the Seller thereunder, except as set forth on Exhibit F.
All copies of the Contracts provided by Seller to Purchaser
are true and complete copies of the original Contracts as
annexed as Exhibit A-5 hereto;
(j) The Company has filed all federal, state and local tax returns
that it is required to file by the date hereof and paid all
taxes due in said returns, except as set forth on Exhibit F;
and
(k) The Company is in compliance with all applicable environmental
laws.
14. Representations And Warranties Of Purchaser Purchaser represents and
warrants to Seller as follows:
(a) Purchaser is a corporation duly organized under the laws of
the State of New Jersey, and is validly existing and in good
standing. Purchaser has full power and authority to execute
and deliver this Agreement, to consummate the transactions
contemplated hereby and to perform its obligations under this
Agreement.
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(b) The execution and delivery by Purchaser of this Agreement and
the consummation of the transactions contemplated herein have
been duly authorized by the Board of Directors of Purchaser
and all other necessary corporate action of Purchaser will not
conflict with or breach any provision of its Articles of
Incorporation or By Laws. This Agreement constitutes the valid
and binding obligation of Purchaser enforceable against
Purchaser in accordance with its terms;
(c) No action, approval, consent or authorization of any governmental
authority is necessary for Purchaser to consummate the
transactions contemplated hereby;
(d) There are no judgments, liens, suits, actions or proceedings
pending or, to the best of Purchaser's knowledge, threatened
against Purchaser or its property.
15. No Other Representations Purchaser and Seller acknowledges that neither has
nor any representative or agent of either party has made any representation or
warranty (express or implied) regarding any matter or thing affecting or
relating to this Agreement, except as specifically set forth in this Agreement.
Purchaser has inspected the Assets. Purchaser agrees to take the Assets "as is"
and in their present condition, subject to reasonable use, wear, tear and
deterioration between now and the Closing date.
16. Conduct Of The Business Seller, until the Closing, shall:
(a) conduct the business of the Company in the normal, useful and
regular manner;
(b) use its best efforts to preserve the business and the goodwill of
the customers and suppliers of the Company and others having
relations with the Company;
(c) give Purchaser and its duly designated representatives reasonable
access to the premises of the Company; and
(d) shall not sell any of the assets of the Company as set forth
in Paragraph 2, nor incur additional debt other than normal
operating expenses, beyond those as set forth in Paragraph 3,
without the express written consent of the Purchaser or except
in the ordinary course of business.
17. Conditions To Closing The obligations of the parties to close hereunder
are subject to the
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following conditions:
(a) All of the terms, covenants and conditions are to be complied
with or performed by the parties under this Agreement on or
before the Closing and that they will continue to be complied
with or performed in all material respects, in regards to
those representations and warranties that survive the Closing;
(b) All representations or warranties of the parties herein are true
in all material respects as of the day of the Closing;
(c) On the day of the Closing, there shall be no liens or encumbrances
against the Purchased Assets, except as set forth in Paragraph 3;
(d) If Purchaser shall be entitled to decline to close the
transactions contemplated by this Agreement, but Purchaser
nevertheless shall elect to close, Purchaser shall be deemed to
have waived all claims of any nature arising from the failure of
Seller to comply with the conditions or other provisions of this
Agreement of which Purchaser shall have actual knowledge at the
Closing;
(e) Obtaining any and all consents required in order to consummate
the transaction.
18. Covenant Not To Compete The Seller covenants not to establish, open, be
engaged in, nor in any manner whatsoever become interested, directly or
indirectly, either as employee, owner, partner, agent, shareholder, director,
officer, or otherwise other than a business which is publicly traded in which
the Seller and or shareholders in the aggregate own less than one percent (1%)
of the outstanding stock, in any business, trade or occupation similar to the
business sold hereunder, for a period of two years from the Closing date,
without the expressed written consent of the Purchaser, within a fifteen (15)
mile radius of the Company's present operational location.
19. Brokerage The parties hereto represent and warrant to each other that they
have not dealt with any broker or finder in connection with this Agreement or
the transactions contemplated hereby, and no broker or any other person is
entitled to receive any brokerage commission, finder's fee or similar
compensation in connection with this Agreement or the transactions contemplated
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hereby. Each of the parties shall indemnify and hold the other parties harmless
from and against all liability, claim, loss, damage or expense, including
reasonable attorneys' fees, pertaining to any broker, finder or other person
with whom such party has dealt. The provisions of this paragraph shall survive
the Closing.
20. Assignment Purchaser shall not assign this Agreement without the prior
written consent of Seller in each instance, which consent shall not be
unreasonably withheld. Any attempted assignment without Seller' consent shall be
null and void.
21. Arbitration Any dispute or controversy arising among the parties hereto
regarding any term, covenant or condition of this Agreement or the breach
thereof (other than a dispute arising from failure to pay indebtedness under the
Note (Exhibit C) or the Security Agreement (Exhibit D) annexed hereto shall,
upon written demand of any party hereto, be submitted to and determined by
arbitration in accordance with the rules of the American Arbitration
Association, in the following manner: Each party to the dispute shall appoint an
arbitrator within five (5) days of the notice of arbitration and the arbitrators
shall meet within ten (10) days and if they cannot come to a determination, then
they shall appoint unanimously an impartial arbitrator (in the event that they
cannot agree, they shall submit a request to the Supreme Court of the State of
New York, County of New York to appoint an impartial arbitrator) and the group
of arbitrator shall meet and determine. Any award or decision rendered shall be
made by means of a written opinion explaining the arbitrators' reasons for the
award or decision, and the award or decision shall be final and binding upon the
parties hereto. The arbitrators may not amend or vary any provision of this
Agreement. Judgment upon the award or decision rendered by the arbitrators may
be entered in any court of competent jurisdiction. The arbitrator shall apply
the law of the State of New York.
22. Notices Any notice or demand required or permitted to be made or given
hereunder shall be deemed sufficiently given or made if given by personal
service or by certified or registered mail, return receipt requested, addressed,
if to Seller or Purchaser, at Seller's address first above written, or if to
Purchaser, at Purchaser's address first above written. Either party may change
its address
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by like notice to the other party. Copies of all such notices, demands and other
communications simultaneously shall be given in the aforesaid manner.
To Seller's Attorneys: Squadron, Ellenoff, Plesent, Xxxxxxxxx and Sorkin
Attorneys at Law
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
To Purchaser's Attorney: The Law Office of Xxxxxx X. Xxxxxxx, P.C.
000 Xxxxxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
23. Representations to Survive the Closing by the Seller The representations and
warranties of the Seller set forth in or made pursuant to this Agreement or any
other agreement entered into in connection herewith will remain in full force
and effect, regardless of any investigation, or statement as to the results
thereof, made by or on behalf of the Seller or controlling person and will
survive the Closing for a period of twenty-four (24) months from the day of the
Closing.
24. Indemnification by the Purchaser The Purchaser agrees to indemnify and hold
harmless the Seller from and against any liability, damage, cost or expense,
including reasonable attorney's fees inured as a result of breach by the
Purchaser of any material representation, warranty, agreement or covenant of the
Purchaser hereunder or contained in any agreement executed in connection
herewith.
25. Indemnification by the Seller The Seller agrees to indemnify and hold
harmless the Purchaser from and against any liability, damage, cost or expense,
including reasonable attorney's fees inured as a result of breach by the Seller
of any material representation, warranty, agreement or covenant
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of the Seller hereunder.
26. Counterparts This Agreement may be executed in counterparts all of which,
taken together, shall constitute a single Agreement between the parties to such
counterparts.
27. Entire Agreement This Agreement contains all of the terms agreed upon
between Seller and Purchaser with respect to the subject matter hereof. This
Agreement has been entered into after full investigation.
28. Changes Must Be In Writing This Agreement may not be altered, amended,
changed, modified, waived or terminated in any respect or particular unless the
same shall be in writing signed by the party to be bound.
29. Governing Law This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without giving effect to
conflict of laws principles thereof.
30. Binding Effect This Agreement shall not be considered an offer or an
acceptance of an offer by Seller, and shall not be binding upon Seller until
executed and delivered by both Seller and Purchaser. Upon such execution and
delivery, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective heirs, executors, administrators, successors
and permitted assigns.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the 25th day
of September 1996.
SELLER:
CHILDROBICS, INC.
/s/ Xxxxxxxxx Xxxxxxxx
-----------------------
President
PURCHASER:
EXPRESS VENDING CORP.
/s/ Xxxxxxx Xxxxxxx
-----------------------
President
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INDEX OF EXHIBITS
EXHIBIT TITLE
A - 1 Merchandise
A - 2 Equipment
A - 3 Improvements
A - 4 Lease
A - 5 Contracts
A - 6 Accounts Receivable
A - 7 Cash Accounts
B - 1 Existing Secured and Other Debt
B - 2 Accrued Federal and State Taxes
B - 3 Litigation
B - 4 Medical Claims
B - 5 Accrued Payroll Taxes
B - 6 Accrued Vacation Pay
B - 7 Xxxxxxx'x Compensation Claims
B - 8 Unemployment Claims
B - 9 Agreements and Contracts
C Note
D Security Agreement
E Group Coin, Inc. Agreement
F Judgments and Liens
G Adjustments
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