ASSET PURCHASE AGREEMENT
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DRAFT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as
of_____________1997, by and between Butterwings Entertainment Group, Inc., an
Illinois corporation (the "Seller"), and TeNaKi Corp., a Minnesota corporation
(the "Buyer").
Recitals
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Buyer wishes to purchase from Seller and Seller wishes to sell to
Buyer, certain of the assets, property, rights and business of the Seller
relating to its Xxx. Xxxxxx cookie franchise operation located at 0000 Xxxxx
Xxxx Xxx., Xxxxxxxxx, Xxxxxxxxx, upon the terms and conditions of this
Agreement.
Agreement
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In consideration of the premises and the mutual covenants and agreements
hereinafter set forth, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
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For purposes of this Agreement, the following terms shall have the
following meanings.
"Assumed Liabilities" shall mean the duties, liabilities, or obligations
of Seller identified on Schedule 1A.
"Business" shall mean Seller's business of producing, marketing and
selling Xxx. Xxxxxx Cookie goods and products, from its Maplewood Mall, 0000
Xxxxx Xxxx Xxx., Xxxxxxxxx, Xxxxxxxxx location.
"Business Assets" shall mean the assets used in Seller's Business
including but not limited m all equipment, fixtures, leasehold improvements and
inventory, which items are identified on Schedule 1B, located at its Maplewood
Mall, 0000 Xxxxx Xxxx Xxx., Xxxxxxxxx, Xxxxxxxxx location.
"Closing" shall mean the consummation of the purchase and sale
transaction described herein.
"Closing Date" shall mean the date on which the Closing occurs, as
specified in Article 2.
"Confidential Information" shall mean any information or compilation of
information which is proprietary to the parties and which relates to their
existing or reasonably foreseeable business, including, but not limited to,
trade secrets and information contained in or relating to product designs,
manufacturing methods, processes, techniques, tooling, sales techniques,
marketing plans or proposals existing or potential customer lists and all other
customer information. Confidential Information shall not include information
which (i) is or becomes publicly available other than as a result of any breach
of a confidentiality obligation, (ii) is rightfully received from a third party
and not derived directly or indirectly from any breach of a confidentiality
obligation, or (iii) is independently developed by the parties without any
reference to any such in All information which either party hereto identifies as
being "confidential" or a "trade secret" shall be presumed to be Confidential
Information.
"Customer List" shall mean the list of the names and addresses of the
customers serviced by Seller and third parties who refer customers to the
Business.
"Governmental Entity" shall mean any court, administrative agency,
commission, state, municipality or other governmental authority or
instrumentality, domestic or foreign
"Liens" shall mean, with respect to the Purchased Assets, all
liabilities, claims, liens, charges, pledges, security interests, restrictions
and or other encumbrances of any kind.
"Material Adverse Effect" shall mean a material adverse effect on the
business, results of operations, financial condition or prospects of the
Business.
"Non-Compete" shall mean the covenants of Seller pursuant to Section 4.7.
"Purchase Price" shall mean the aggregate amount to be paid by Buyer to
Seller for the Purchased Assets and the Non-Compete.
"Purchased Assets" shall mean all of the assets to be purchased and sold
hereunder on the Closing Date, consisting of the Business Assets Customer List,
and Records and those items described on Schedule 1B and excluding those assets
described on the "Excluded Assets" portion of Section 1B.
"Records" shall mean all books of account, general, financial and
accounting records, files, invoices, payment authorizations, certificates of
need, correspondence to and from customers, suppliers and payors, and other data
owned by Seller on the Closing Date, which relate to the Business, Purchased
Assets or Assumed Liabilities.
ARTICLE 2
SALE OF ASSETS: CLOSING
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Section 2.1. Sale of Assets. At the Closing, Seller shall sell, assign,
transfer, convey and deliver to Buyer free and clear of all Liens, all of the
Purchased Assets.
Section 2.2. Purchase Price and Consulting Agreement Payments.
(a) Buyer shall pay to Seller the Asset Purchase Price, which shall be
thirty-six thousand and 00/100 Dollars ($36,000-00), which shall be payable in
cash or certified funds on Closing Date. Said purchase price includes the value
of the inventory on hand on the Date of Closing and a Five thousand and 00/100
Dollars ($5,000.00) transfer fee to be paid by Seller to the Xxx. Xxxxxx Cookie
Franchisor.
(b) Buyer's shall pay to Seller on the Closing, One Thousand and 00/100
Dollars ($1,000.00) as consideration for the non-competition and agreements by
the Seller.
Section 2.3. Buyers Assumptions of Liabilities. On the terms and subject
to the conditions set forth in this Agreement, and in further consideration of
the transfer of the Purchased Assets, at the Closing, Buyer shall assume only
those duties, liabilities or obligations of Seller included in the Assumed
Liabilities.
Section 2.4. Closing. The Closing shall take place at the offices of
Xxxxx Xxxxxxxxx Fry, 0000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxxx, Xxxxxxxxx, on June
1, 1997, or at such other time and location as the parties hereto shall agree in
writing.
Section 2.5. Deliveries at Closing. At the Closing, Seller shall convey,
transfer, assign and deliver to Buyer all of the Assets, including good and
merchantable title to all personal property included therein. Seller shall
deliver to Buyer:
(a) A Xxxx of Sale in the form of Exhibit A, and such assignments and
other instruments of transfer as may be reasonably satisfactory to Buyer's
counsel, and with such consents to the conveyance, transfer and assignment
thereof as may be necessary to effect the conveyance, transfer, assignment and
delivery of the Purchased Assets and to vest in Buyer the title specified in
this Section and to assure Buyer the full benefit of the Purchased Assets; and
(b) A Consent to Assignment for those Material Contracts and real estate
leases for which a consent to assignment is required, together with those
Material Contracts specifically listed on Schedule 1A. Simultaneously with the
delivery referred m in this on, Seller shall take or cause to be taken all such
actions as may reasonably be required to put Buyer in actual possession and
operating control of the Purchased Assets.
ARTICLE 3
REPRESENTATION AND WARRANTIES
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A. Seller hereby represents and warrants to Buyer as follows:
Section 3.1. Organization and Power of Seller. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Illinois, and Seller is authorized to transact business in Minnesota
and holds a Certificate of Authority issued by the State of Minnesota. Seller
has full power and authority to own its properties and conduct the business
presently being conducted by it, to execute this Agreement, and to consummate
the transactions contemplated by this Agreement.
Section 3.2. Authorization. The execution, delivery and performance of
this Agreement by Seller have been duly authorized and approved by all requisite
action on the part of Seller this Agreement constitutes the valid and binding
obligation of Seller and is enforceable against Seller in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, and other similar laws relating to or limiting
creditors' rights generally and by equitable principles.
Section 3.3. No Conflict. The execution and delivery of this Agreement
do not, and the consummation of the actions contemplated hereby and the
compliance with the terms hereof will not (a) violate any law, judgment, order,
decree, statute, ordinance, rule or regulation applicable to Seller. (b)
conflict with any provision of Seller's governing documents, (c) result in any
violation of, and will not conflict with, or result in a breach of any terms of,
or constitute a default under any mortgage, instrument or agreement to which the
Seller is a party or by which Seller or any of the Purchased Assets is bound, or
create any lien or encumbrance upon any of the Purchased Assets, or (d) require
any consent, approval, order or authorization of, or the registration,
declaration or filing with, any Governmental Entity or Other third party.
Section 3.4. Title to Purchased Assets. Seller has, or will have as of
Closing, good, valid and marketable title to all of the Purchased Assets, free
and clear of all Liens. No other party has any rights or claims to possession of
any of the Purchased Assets. None of the Purchased Assets are subject to any
option, contract, arrangement or understanding that would restrict Seller's
ability to transfer the Purchased Assets to Buyer as contemplated herein.
Section 3.5. Condition of Purchased Assets. All of the Purchased Assets
are in good operating condition and repair, ordinary wear and tear excepted, and
in the state of maintenance repair and operating condition required for the
proper operation and use thereof in the ordinary and usual course of business by
Seller.
Section 3.6. Litigation. There is not suit, action or proceeding pending
against or affecting Seller relating to the Purchased Assets or the transactions
contemplated hereby, nor is there, to the best of Seller's knowledge, any suit,
action or proceeding threatened against Seller relating to Purchased Assets.
Section 3.7. Insurance. The Business Assets included in the Purchased
Assets is insured for the Seller's benefit and will continue to be so insured
through the Closing, in amounts and against risks that are commercially
reasonable.
Section 3.8. Brokers. There are no claims for brokerage commissions,
finder's fees or similar compensation arising out of or due to any act of the
Seller in connection with the transactions contemplated by this Agreement.
Section 3.9. Compliance: Business Practices.
(a) Compliance with Laws and Regulations. Seller has conducted the
Business in accordance with applicable laws and regulations and the Xxx. Xxxxxx
Franchise Agreement, the violation of which might have a material adverse effect
upon the Business as now conducted or any of the Purchased Assets or the Assumed
Liabilities.
(b) Business Forms, Procedures, and Practices. Seller's forms,
procedures and practices are in compliance with all laws and regulations and the
Xxx. Xxxxxx Franchise Agreements, to the extent applicable, the violation of
which might have a adverse effect on the Business as now conducted or any of the
Purchased Assets, or the Assumed Liabilities.
Section 3.10. Condition of Business. Since October 1, 1996, until the
date of this Agreement:
(a) Material Change. There has been no material change in the accounting
practices of Seller, the maintenance of Records by Seller or the relationship of
the Business with customers, suppliers or others;
(b) Ordinary Course. Seller has carried on the Business in the ordinary
course in substantially the same manner as conducted as of October 1, 1996; and
(c) No Dispositions. Seller has not sold, leased or otherwise disposed
of, or agreed to sell, lease or otherwise dispose of, any material assets of the
Business except as provided in this Agreement or in the ordinary course of
business consistent with prior practice.
Section 3. 11. Bulk Sale Law. The transfer of Purchased Assets by Seller
under this Agreement is not subject to any statutory bulk sale or fraudulent
conveyance law adopted by the State of Minnesota.
Section 3.12. Financial Statements. Seller has delivered to Buyer
financial information respecting the Seller, (the "Financial Statements"), which
consist of unaudited financial statements for the Seller's Maplewood Mall, 0000
Xxxxx Xxxx Xxx., Xxxxxxxxx, Xxxxxxxxx location, as of October 6, 1996. The
Financial Statements fairly present the financial position and results of
operations of the Seller as for the periods then ended and the financial
position of the Seller at the dates thereof in accordance with generally
accepted accounting principles. The Seller has maintained its books of account
in accordance with generally accepted accounting principles consistently
applied, and such books of account are and, during the period covered by the
Financial Statements were, correct and complete in all material respects, fairly
and accurately reflect or reflected the income, expenses, assets and liabilities
of the Seller, including the nature thereof and the transactions giving rise
thereto, and provide or provided a fair and accurate basis for the preparation
of the Financial Statements. Seller's revenue accounts support the revenue
recognition shown on the Financial Statements for the period indicated and are
complete and accurate in all material respects. Seller's revenues, as reflected
in Seller's Financial Statements, are recorded at levels which are realizable
and collectable. All quantities and costing used by Seller to record the values
of the Purchased Assets are complete and accurate in all material respects.
Section 3.13. Real Estate Lease. The lease for the premises located at
the Maplewood Mall, 0000 Xxxxx Xxxx Xxx., Xxxxxxxxx, Xxxxxxxxx (the "Lease") is
valid and binding and enforceable in accordance with its terms, and to the best
of Seller's knowledge, neither Seller nor the other party to the Lease are in
material default of any of the provisions thereof.
Section 3.14. Inventories. Merchandise inventories are consistently
represented in the Financial Statements at their proper cost. Seller represents
that the inventory, within normal tolerance for minor clerical errors, exists as
and is verifiable by physical count.
Section 3.15. Pre-Xxxx. Seller has not prebilled or received prepayment
for products to be sold, services to be rendered or expenses to be incurred
subsequent to the Closing Date.
Section 3.16. Patents, Trademarks, Trade Secrets, etc. Seller owns no
patents, patent applications, trademarks, trademark registrations, applications
for trademark registration, service marks, service xxxx registrations,
applications for service xxxx registration, trade names, registered copyrights
and any other intellectual property rights or licenses needed to operate the
Business or holds the franchise rights for the use of such marks.
Section 3.17. Material Contracts. Schedule 3.17 lists all of the
contacts leases (including, but not limited to, the Lease), arrangements and
understandings including, without limitation, sales orders, purchase orders and
distribution agreements which are material to and relate to the Business as it
is conducted by Seller, each of which was entered into, arrived at or conducted
on behalf of Seller with appropriate authority in accordance with Seller's
customary practices. No sales order contains or entitled the customer to any
discount, credit, rebate or allowance of any kind or nature that reflects
prepayment made by a customer. To Seller's and Owners' knowledge, neither Seller
nor the other parties to such contracts, arrangements and understandings are in
material default thereof.
Section 3.18. Labor. Seller is not, and, as of the Closing Date will not
be, a party to any employment or consulting agreement or to any collective
bargaining agreement, nor are its employees members of a collective bargaining
unit or union, nor has there been any recent unionization activity. Seller has
substantially complied with all laws relating to the employment of labor,
including provisions relating to wages, hours, collective bargaining, and the
payment of unemployment compensation and workers' compensation amounts and
social security, withholding and similar taxes, and is not liable for any
arrears of wages, compensation fund contributions or any taxes or Penalties for
failure to comply with such laws. To the best knowledge of Seller and Owners,
none of employees of Seller has given any notice or made any threat, or
otherwise revealed an intent to cancel or otherwise terminate his relationship
with Seller, or given notice or expressed an interest not to accept employment
with Buyer as of the Closing, or to thereafter cancel or otherwise terminate his
employment with Buyer. At the Closing Date, all employees of Seller which Buyer
has notified will be hired by Buyer as of the Closing will be free effective as
of Closing, of all employment obligations to Seller and. will be free to become
employees of Buyer.
Section 3.19. Taxes. Seller has failed or will timely file all tax
returns and reports required by federal, state or local law and has paid, or
made adequate provision for the payment of, all taxes, interest, penalties,
assessments or deficiencies due in connection therewith. No Lien on the
Purchased Assets will result from, nor will any transferee liability attach to
the Purchased Assets by virtue of, any failure to file any return required to be
filed or payment required to be paid with respect to the Seller for any and all
taxes, levies, imports, duties, franchise, license and registration fees,
charges or withholdings of any nature.
Section 3.20. Statements Not Misleading. Seller and Owners have
disclosed all facts, events or transactions which are material to the
Purchased Assets and the Business. No representation or warranty of Seller or
of Owners, or document furnished by Seller and Owners hereunder is false or
inaccurate in any material respect or contains or will contain any untrue
statement of a material fact or omits or will omit to state any fact necessary
to the herein or in not misleading.
B. Buyer hereby represents and warrants to Seller as follows:
Section 3.21. Organization and Power of Buyer. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Minnesota, and Buyer is authorized to transact business in Minnesota.
Buyer has full power and authority to own its properties and conduct the
business presently being conducted by it, to consummate the transactions
contemplated by this Agreement.
Section 3.22. Authorization. The execution, delivery and performance of
this Agreement by Buyer have been duly authorized and approved by all requisite
action on the part of Buyer, this Agreement constitutes the valid and binding
obligation of Buyer and is enforceable against Buyer in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium, and other similar laws relating to or limiting
creditors' rights generally and by equitable principles.
Section 3.23. No Conflict. The execution and delivery of this Agreement
do not, and the consummation of the transactions contemplated hereby and the
compliance with the terms hereof will not (a) violate any law, judgment, order,
decree, statute, ordinance, rule or regulation applicable to Buyer or either
Owner, (b) conflict with any provision of Buyer's governing documents, (c)
result in any violation of, and will not conflict with, or result in a breach of
any terms of, or constitute a default under any mortgage, instrument or
agreement to which the Buyer is a party or by which Buyer or any of the
Purchased Assets is bound, or create any lien or encumbrance upon any of the
Purchased Assets, or (d) require any consent, approval, order or authorization
of, or the registration, declaration or filing with, any Governmental Entity or
other third party.
Section 3.24. Litigation. There is suit action or proceeding pending
against or affecting Buyer relating to the Purchased Assets or the transactions
contemplated hereby, nor is there, to the best of Buyer's knowledge, any suit,
action or proceeding threatened against Buyer relating to the Purchased Assets.
Section 3.25. Brokers. There are no claims for brokerage commissions,
finder's fees or similar compensation arising out of or due to any act of the
Buyer in connection with transactions contemplated by this Agreement.
ARTICLE 4
COVENANTS
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Section 4.l. Conduct of Business. During the period from the date of
this Agreement and continuing until the Closing. Seller agrees (except as
expressly provided in this Agreement or the Schedules hereto or to the extent
that Buyer shall otherwise consent in writing) that:
(a) Ordinary Course. Seller shall carry on the Business in the ordinary
course in substantially the same manner as presently conducted, maintain the
Records in substantially the same manner as presently and preserve the
relationships of the Business with customers, suppliers and others.
(b) No Dispositions. Seller shall not sell, lease or otherwise dispose
of, or agree to sell, lease or otherwise dispose of, any of the Purchased
Assets, except in the ordinary course of business consistent with prior
practice.
(c) Other Actions. Seller shall take no action that would or might
result in any of its representations and warranties so forth in this Agreement
becoming untrue (including the accuracy of the Schedules), in any of the
conditions to Closing set forth in Article 6 not being satisfied, or in any of
the Purchased Assets becoming materially less valuable.
(d) Compliance with Laws. Seller shall comply with all laws, rules and
regulations of any Governmental Entity applicable to the Purchased Assets or the
conduct of the Business.
(e) Advice of Changes. Seller shall promptly advise Buyer in writing of
the occurrence of any matter or event that is material to the Business, the
Purchased Assets, or to the closing conditions or the representations and
warranties in this Agreement.
Section 4.2. Access to Information. From and after the date of this
Agreement until the Closing Date, Seller shall afford to Buyer and to Buyer's
counsel, accountants and other authorized representatives, full access to the
facilities, properties, contracts, books, records, key personal, customers and
suppliers of the Business and shall allow them to examine and obtain copies of
any and all documents pertaining or relating to the Purchased Assets and Assumed
Liabilities in order that Buyer and its authorized representatives, in
conducting the Due Diligence Review, may have full opportunity to make such
reasonable investigations as they shall desire to make of the affairs of Seller.
All access will be scheduled by mutual agreement, not unreasonably refused, and
shall be scheduled so as not to unreasonably interfere with the operation of
Seller's business.
Section 4.3. Further Assurances. Seller will execute and deliver all
such other and additional instruments, notices, releases, undertakings, consents
and other documents, and do all such other acts and things, as may be reasonably
requested by Buyer as necessary to assure to Buyer all the rights and interests
granted or intended to be granted under this Agreement. Seller shall take or
shall cause to be taken such other reasonable actions as Buyer may require more
effectively to transfer, convey and assign to, and vest in, Buyer, and put Buyer
in possession of, the Purchased Assets as contemplated by this Agreement. In the
event that any Purchased Assets cannot be fully and effectively transferred to
Buyer without the consent of a third party or parties, and if at the Closing
Buyer shall have waived its right to receive at the Closing such consent, Seller
shall thereafter be obligated to use its best efforts to assure Buyer the
benefits of such contract, commitment, other arrangement or other Purchased
Asset.
Section 4.4. Passage of Title and Risk of Loss. Legal title, equitable
title, and risk of loss with respect to the property and rights to be
transferred hereunder shall not pass to Buyer until the property or right is
transferred at the Closing and possession thereof is delivered to Buyer.
Section 4.5. Allocation of Purchase Price. Within one hundred twenty
(120) days after the Closing (unless required sooner to meet the reasonable IRS
filing requirements of one of the parties) the parties agree to complete
duplicate IRS Form 8594 ("Asset Acquisition Statement") as required by Section
1060 of the Internal Revenue Code. The parties further agree to make no change
or alteration of the Form 8594 and to file no Supplement Statement Form 8594
without at least fifteen (15) days prior written notice to the other party of
the nature and extent of the changes, which notice shall include the revised or
Supplemental Statement Form 8594.
Section 4.6. Expenses. Whether or not the Closing takes place, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense. Any
sales, use or other transfer taxes applicable to the conveyance and transfer
from Seller to Buyer of the Purchased Assets and any other transfer or
documentary taxes or any filing or recording fees applicable to such conveyance
and transfer shall be paid by Seller.
4.7. Seller's Non-Compete.
(a) Non-Competition. For a period of three (3) years from the Closing
Date, except as Buyer may otherwise consent in writing, Seller shall not,
directly or indirectly, as a principal, agent, partner, member, shareholder,
trustee, consultant, independent contractor, or otherwise: (i) own, manage,
operate, control or otherwise be in any manner affiliated or connected with, or
engage or participate in the ownership, management, operation or control of (as
independent contractor, or otherwise), any business or entity which as one of
its business activities competes, directly or indirectly, with Buyer in the
Business within Fifteen (15) miles of any location from which Seller operated
the Business on the Closing Date; (ii) attempt to sell, offer, or provide
products or services which are or are related to floral products to any person
or entity listed on the Customer List; or (iii) lend money, loans, make gifts of
money or other property, or otherwise lend financial or other assistance in any
form to any person, firm, association, partnership, venture, corporation or
other business entity who is engaged or will within the period prescribed above
engage in any of the activities prohibited by clause (i) or (ii).
(b) Confidentiality. All data and information that Seller has obtained
regarding the Business, including the Customer List, information relating to the
requirements of customers on the Customer List and all other information
regarding the affairs of the Business, shall be held in confidence by Seller,
and Seller shall not divulge any of such information to anyone except Buyer or
its representatives.
(c) Injunctive Relief. Seller acknowledges that any violation of any
provision of this Section 4.7 will cause irreparable harm to Buyer, that damages
for such harm will be incapable of precise measurement and that, as a result,
Seller will not have an adequate remedy at law to redress the harm caused by
such violations. Therefore, in the event of Seller's violation of Section 4.7,
Seller agrees that, in addition to its other remedies, Buyer shall be entitled
to injunctive relief, including but not limited to temporary restraining orders
and/or preliminary or permanent injunctions to restrain or enjoin any such
violation. Seller agrees to and hereby does submit to jurisdiction before any
state or federal court of record in Hennepin County, Minnesota, and Seller
hereby waives any right to raise the question of jurisdiction and venue in any
action that Buyer may bring in such court against Seller.
In addition to other relief to which it shall be entitled, Buyer shall
be entitled to recover from Seller the costs and reasonable attorney's fees
incurred by Buyer in seeking (i) enforcement of this Section 4.7 and (ii) relief
from Seller's violation of any restriction contained in this Section 4.7.
(d) Severability. Should any clause, portion or paragraph of this
Section 4.7 be unenforceable or invalid for any reason, such unenforceability or
invalidity shall not affect the enforceability or validity of the remainder of
this Section 4.7. Should any particular covenant or restriction, including but
not limited to the covenants and restrictions of Section 4.7(a) and 4.7(b), be
held to be unreasonable or unenforceable for any reason, including without
limitation the time period, geographical area and scope of activity covered by
such covenant, then such covenant or restriction shall be given effect and
enforced to the greatest extent that would be reasonable and enforceable.
Section 4.8. Post-Closing Access to Records. From and after the Closing
Date, Buyer shall afford Seller and Owners reasonable access to the Records
conveyed as part of the Purchased Assets for purposes of tax audit, governmental
investigation, litigation not involving (directly or indirectly) Buyer as an
adverse or conflicting party, or for any other reasonable business purpose not
involving an interest which is adverse or conflicting with the interests of
Buyer, in the discretion of Buyer. Unless otherwise consented to by Buyer in
writing, Seller shall hold in strict confidence all non-public information and
documents contained in such Records, and shall not disclose the same to any
third party except to governmental officials as may be legally required. All
access will be scheduled by mutual agreement, not to unreasonably with the
operation of Seller's business. Buyer shall maintain the Records in accordance
with its standard record retention policies, but will retain specific Records
for a longer period if reasonably required and identified by Seller in writing
(provided Buyer reserves the right to require Seller to pay the storage expense
for such longer period)
Section 4.9. Audit of Financial Statements. Buyer shall have the right,
at its expense and by an accounting firm of its election, to have an audit done
of Seller's Financial Statements, including the financial statements of Seller
ending with the Closing Date. Seller shall afford to Buyer and to Buyer's
accountants and other authorized representatives, full access to Seller's books,
records, and key personnel and shall allow and obtain copies of any and all
necessary documents in order that Buyer and its representatives can conduct the
required audit.
ARTICLE 5
CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS
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All obligations of Buyer under this Agreement are subject to the
fulfillment, prior to or at the Closing Date, of each of the following
conditions:
Section 5.1. Representations and Warranties. All representations and
warranties of Seller contained in this Agreement shall have been true and shall
be true in all material respects at and as of the Closing Date, except as
otherwise specifically contemplated by this Agreement. Seller shall have
compiled in all material respects with all covenants and conditions required to
be performed or complied with by it prior to or at the Closing Date. Seller
shall furnish Buyer with an appropriate certificate to the foregoing effect a3
of the Closing Date.
Section 5.2. Litigation Affecting Closing. No action, suit or proceeding
shall be pending or, to the best of Seller's knowledge, threatened by or before
any court or Governmental Entity in which it is sought to restrain or prohibit
or to obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby.
Section 5.3. Instruments of Sale, Etc. Buyer shall have received such
instruments of sale, conveyance, transfer and assignment satisfactory to counsel
for Buyer as are necessary or desirable to vest in Buyer title to all of the
Purchased Assets or to confirm the status of title to the Purchased Assets.
Section 5.4. Consents. Buyer shall have received all consents required
by this Agreement for the transfer or assignment of all of the Purchased Assets
or the transactions contemplated hereby, including but not limited to, the
consent of the Xxx. Xxxxxx Cookies franchisor to become a franchisee and to
approve the sale contemplated hereby.
Section 5.5. No Material Adverse Change. Since the date of this
Agreement, there shall not have occurred any Material Adverse Change.
Section 5.6. Employees. Seller shall have terminated, effective upon
Closing, the employment of all employees of the Business and paid all
compensation or other money due to such employees with respect to their
employment and termination by Seller, and shall have cooperated with Buyer in
Buyer's efforts to hire such employees as Buyer deems desirable for the
continuation of the Business.
Section 5.7. Satisfactory Pre-Closing Due Diligence. Buyer has concluded
its preclosing due diligence with regard to Seller and its Business, and Buyer
and Buyer's counsel have been satisfied that the same has not revealed any
problems, liabilities or obligations of Seller that would have a material
adverse impact on the financial condition, operations or property of Seller or
its Business, such due diligence and conclusion, however, shall not relieve
Seller or Owners from liability for breach of any of the representations,
covenants or warranties hereof.
Section 5.8. Satisfactory Approval of Re: Xxx. Xxxxxx Franchise. Buyer
has concluded its review of the Xxx. Xxxxxx Franchise Agreement and is satisfied
that the terms of which meet with Buyer's approval, obtaining the necessary
approvals from the Xxx. Xxxxxx Franchisor for the transaction contemplated
hereby, obtaining the necessary grant of franchise rights for Buyer to operate
the Xxx. Xxxxxx franchise, and completing the necessary training with regard to
the operation of the Xxx. Xxxxxx franchise.
ARTICLE 6
CONDITIONS PRECEDENT TO SELLER'S OBILGATIONS
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All obligations of the Seller under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
Section 6. 1. Litigation Affecting Closing. No action, suit or
proceeding shall be pending or threatened by or before any court or Governmental
Entity in which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with this Agreement or the consummation of the
transactions contemplated hereby.
Section 6.2. Released From Assumed Liabilities. Seller shall have
obtained a release from the liabilities and obligations of the Assumed
Liabilities, effective upon Buyer's assumption thereof from each of the other
parties to the Assumed Liabilities.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 7.1. Termination Events. This Agreement may be terminated on
written notice by Buyer or Seller, if the Closing shall not have occurred on or
before May 1, 1997 (the "Termination Date"), or such other date to which this
Agreement has been extended by agreement of the parties. In addition, this
Agreement may be terminated on written notice, on or before the Closing Date:
(a) By the mutual consent of the parties hereto; or
(b) By Buyer, if the conditions set forth in Article 5 are not satisfied
(or are incapable of being satisfied) on or before the Termination Date, without
fault of Buyer; or
(c) By Seller, if the conditions set forth in Article 6 are not
satisfied (or are incapable of being satisfied) on or before the Termination
Date, without fault of Seller.
Section 7.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.1 hereof, this Agreement shall forthwith
become void and them shall be no liability on the part of Buyer or Seller or
their respective officers or directors, except that the agreements contained in
Section 7.6 hereof shall survive the termination hereof.
Section 7.3. Amendment. This Agreement may be amended only by the
parties hereto by an instrument in writing signed by or on behalf of each of the
parties hereto.
Section 7.4. Waiver. Any term or provision of this Agreement may at any
time be waived in writing by the party or parties who are entitled to the
benefits being waived.
Section 7.5. Return of Documents. In the event that the sale of the
Purchased Assets is not consummated for any reason whatsoever, or if this
Agreement is terminated for any reason whatsoever, each party will return to the
other party on a timely basis all documents, agreements, instruments or other
written information concerning the other party that was obtained from such other
party.
Section 7.6. Nondisclosure. In the event that this Agreement is
terminated or the sale of the Purchased Assets is not consummated for any reason
whatsoever, Buyer and Seller, and their respective employees, agents, and
assigns, agree to hold in confidence and not to disclose, furnish communicate,
make accessible to any person or use in any way for either party's own or
another's benefit any Confidential Information of the other party or permit the
same to be used in competition with the party which owns such Confidential
Information.
ARTICLE 8
MISCELLANEOUS
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Section 8.1. Notices. All notices, requests, demands and other
communications hereunder shall be in writing and delivered personally or sent by
certified mail, postage prepaid to the addresses set forth below:
To Buyer: TeNaKi Corp.
0000 Xxxx Xxxxxxxx Xxxxxx
Xxxxx Xx. Xxxx, XX 00000
with copy to: Raw Xxxxxxxxx Xxx
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
To Seller: Butterwings Entertainment Group, Inc.
0000 Xxxxxxxx Xxxxxx, Xxxxx X
Xxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx
Section 8.2. Entire Agreement. This Agreement (including the Schedules
and Exhibits hereto) constitutes the sole understanding of the parties with
respect to the subject matter hereof.
Section 8.3. Counterparts: Expenses. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Each party shall
pay all its own fees and bear all its own expenses incurred in connection with
this Agreement and the transactions contemplated hereby.
Section 8.4. Parties in Interest: Assignment. This Agreement shall inure
to the benefit of, and be binding upon, the parties hereto and their respective
successors and assigns, provided that any assignment of this Agreement of the
rights-hereunder by any party hereto without the written consent of the other
parties shall be void.
Section 8.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota.
Section 8.6. Schedules and Headings. All of Schedules and Exhibits
attached hereto are a part of this Agreement and all of the matters contained
therein are incorporated herein by reference. The descriptive headings of the
several Articles and Sections of this Agreement are inserted for convenience
only and do not constitute part of this Agreement.
Section 8.7. Indemnification by Seller. Seller agrees to indemnify and
hold Buyer harmless from and against any order, action, cost, claim, damage,
disbursement, expense, liability, loss, deficiency, obligation, penalty, fine,
assessment or settlement of any kind or nature, whether foreseeable or
unforeseeable, including, but not limited to, any and all attorney fees, costs,
and other, expenses directly or indirectly, as a result of, or upon or arising
from (i) any inaccuracy or breach or non-performance of any of the
representations, warranties, covenants or agreements made by Seller in or
pursuant to this Agreement, (ii) any order, action, cost, claim, damage,
liability or Lien arising prior to the Closing whether asserted prior to, on, or
after the Closing, (iii) any third party claims in respect to the Business or
Purchased Assets, or regarding the conduct of the Business, prior to the Closing
that are asserted prior to, on or after the Closing, or (iv) any loss or
liability by Seller's negligence or failure to comply with its obligations under
this Agreement prior to, the Closing that are asserted prior to, on or after the
Closing.
Section 8.8. Indemnification by Buyer. Buyer agrees to indemnify and
hold Seller harmless from and against any order, action, cost, claim, damage,
disbursement, expense, liability, loss, deficiency, obligation, penalty, fine,
assessment or settlement of any kind or nature whether foreseeable or
unforeseeable, including, but not limited to, any and all attorney fees, costs,
and other expenses, directly or indirectly, as a result of, or based upon or
arising from (i) and inaccuracy in or breach or non-performance of any of the
representations, warranties, covenants or agreements made with Buyer in or
pursuant to this Agreement,(ii) any order, action, cost, claim, damage liability
or Lien arising after the Closing, (iii) any third party claims in respect to
the Business or Purchased Assets, regarding the conduct of the Business, arising
after the Closing, or (iv) any loss or liability caused by Buyer's negligence or
failure to comply with its obligations under this Agreement, which arise after
the Closing.
Section 8.9. Survival. The representation and warranties contained in
Article 3, the covenants contained in Article 4 (with the exception of Section
4.7), and indemnification provisions contained in Section 8.7 and 8.8 shall
survive the Closing for a period of one (1) year following the Closing Date. The
covenants in Section 4.7 shall survive the Closing for the periods stated
therein.
Section 8.10. Public Announcement. No public announcement or other
public disclosure shall be made, prior to the Closing, of this transaction or
the terms and conditions thereof, except as mutually agreed by the parties or as
may be required by applicable law.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the date first above written.
BUTTERWINGS ENTERTAINMENT GROUP, INC. TENAKI CORP.
By: /s/ Xxxxx Xxxxxxx By:_________________________
---------------------
Its President Its
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CONSENTED TO:
XXX. XXXXXX DEVELOPMENT CORPORATION
By: __________________________
Its ____________________
SCHEDULE 1A
ASSUMED LIABILITIES
Lease for premises located at 0000 Xxxxx Xxxx Xxx., Xxxxxxxxx, Xxxxxxxxx, dated
April 5, 1991.
SCHEDULE 1B
PURCHASED ASSETS
I. Purchased Assets
The Purchased Assets include all of assets of any kind or nature, used
or useful in the Business, including, without limitation, the following assets,
but excluding the assets described below as "Excluded":
a. Tangible Property/Equipment
All tangible personal property and fixtures of every kind, nature and
description, including without limitation, all machinery, equipment, computers,
parts, furniture, trade fixtures and general supplies, located at 0000 Xxxxx
Xxxx Xxx., Xxxxxxxxx, Xxxxxxxxx;
b. Inventory
All inventory, including prepaid and in-transit items, of materials and
supplies, spare parts, shipping containers and materials, packaging, and
finished products relating to the Seller's Business, located at 0000 Xxxxx Xxxx
Xxx., Xxxxxxxxx, Xxxxxxxxx;
c. Contracts
All customer contracts, agreements, and engagements, the lease for the
premises at 0000 Xxxxx Xxxx Xxx., Xxxxxxxxx, Xxxxxxxxx and all other contracts,
agreements, leases and licenses relating to the Business ("Contracts"),
including, without limitation, all of the contracts, etc. listed on Schedule
3.17 of the Asset Purchase Agreement, together with all claims or rights of
action now existing or hereinafter arising out of such contracts or agreements
or the performance thereof, the benefit of all open orders placed with Seller,
the benefit of all purchase orders placed by Seller for products of the type
included in the inventory being acquired hereunder, all warranties extended and
representations made to Seller by third parties to the extent assignable, and
all rights, remedies, setoffs, allowances, reworkings, discount;
d. General Intangibles
All claims and rights against third parties relating to, or arising out
of the Business, together with any and all security interests, liens of
mortgages granted or otherwise available to Seller as security for the
collection of any of the Purchased Assets; security deposits, investment
securities; permits; approvals; variances provider numbers; Seller's existing
telephone numbers; trademarks, service marks, and all substantially similar
names and marks; and all copyrights, patents, trade secrets, inventions,
discoveries, know-how and other Intellectual Property rights relating to the
Business;
e. Records
All logs, books, records, files, customer lists, and histories, supplier
lists, and files, engineering and design drawings, and all sales literature and
sales aids, product sheets and documentation, product displays, advertising
materials, manuals, computer and electronic data processing materials and
programs, correspondence, and all other Records as defined in Asset Purchase
Agreement;
f. Goodwill
All of the know-how and goodwill of the Business, including, without
limitation, the exclusive right for Buyer to hold itself out as the successor to
the Business of Seller.
II. Excluded Assets
a. Accounts Receivable.
b. Cash on hand and in bank accounts.
c. Corporate records of Seller.
SCHEDULE 3.17
MATERIAL CONTRACTS
Party Date Agreement Type
REAL ESTATE LEASES
Date Premises Description
4/5/91 0000 Xxxxx Xxxx Xxx., Xxxxxxxxx, Xxxxxxxxx, legally described as:
EXHIBIT A
XXXX OF SALE, ASSIGNMENT AND CONVEYANCE
Effective as of _____________
WHEREAS, TeNaKi Corp. ("Buyer") and Butterwings Group, Inc., an Illinois
corporation ("Seller"), have entered into an Asset Purchase Agreement dated as
of __________(which, together with the Exhibits thereto. is hereinafter referred
to as the "Asset Purchase Agreement"); and
WHEREAS, the Asset Purchase Agreement contemplates and provides for the
assignment, transfer and conveyance to Buyer of the assets of Seller used or
useful in the business of the Seller (the "Business);
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Seller does hereby grant, bargain, sell, transfer, convey, assign
and deliver to Buyer, as of the date, first above appearing, all of Seller's
right, title and interest whatever kind and character, in and to the assets
described on Schedule 1B hereto (the "Purchased Assets"):
TO HAVE AND TO HOLD unto Buyer. its successors and assigns forever all
of the Purchased Assets hereby granted, bargained, sold, transferred, conveyed,
assigned and delivered.
Seller hereby irrevocably makes, constitutes and appoints Buyer the true
and lawful Attorney of Seller, with full Power of substitution, for and in the
name and stead of Seller but on behalf and for the benefit of Buyer, to demand
and receive from time to time any and all property, tangible and intangible,
constituting any of the Purchased Assets and to give receipts and releases for
and in respect of the same and any part thereof and, from time to time, to
institute and prosecute in the name of Seller, but at the expense and for the
benefit of Buyer, any and all proceedings at law, in equity or otherwise which
Buyer may deem proper to collect, assert or enforce any claim, right or title of
any kind in of any of the Purchased Assets and to defend and compromise any and
all actions, suits or proceedings hereafter instituted in respect of any of the
Purchased Assets and to do all such acts and things in relation to the Purchased
Assets as Buyer shall deem desirable, except in all cases as otherwise
contemplated by the Asset Purchase Agreement.
Seller hereby covenants and agrees to execute and deliver to Buyer such
other instruments of conveyance, assignment and transfer as Buyer may reasonably
request in order to more fully vest in Buyer all and singular the rights and
properties hereby granted, bargained, sold, transferred , conveyed, assigned and
delivered.
This Xxxx of Sale, Assignment and Conveyance shall be deemed to have
been executed and delivered in the State of Minnesota and shall be governed by
and construed in accordance with the internal laws, as opposed to the rules
governing conflicts of laws, of the State of Minnesota.
The Xxxx of Sale, Assignment and Conveyance shall be binding upon Seller
and its successors and assigns.
IN WITNESS WHEREOF, Seller has caused this instrument to be signed in
its name by its proper and duly authorized corporate officer as of the _________
day of ____________, 19__.
BUTTERWINGS ENTERTAINMENT GROUP
By: /s/ Xxxxx Xxxxxxx
---------------------
Its President
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