FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
BY AND BETWEEN
CBB ACQUISITION CORP.,
NEW WORLD COFFEE-MANHATTAN BAGEL, INC.,
AND
AFC ENTERPRISES, INC.
THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT is made this 27th day of
August, 1999, effective as of the 13th day of August, 1999, by and among CBB
ACQUISITION CORP., a New Jersey corporation having offices located at 000
Xxxxxxxxxx Xxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000 ("Purchaser"), NEW WORLD
COFFEE- MANHATTAN BAGEL, INC., ("New World"), a Delaware corporation, having
offices located at 000 Xxxxxxxxxx Xxx Xxxx, Xxxxxxxxx, Xxx Xxxxxx 00000
("Guarantor"), and AFC ENTERPRISES, INC., a Minnesota corporation having offices
located at Xxx Xxxxxxxxx Xxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000 ("Seller").
RECITALS
A. On July 26, 1999, the parties hereto entered into an Asset Purchase
Agreement (the "Asset Purchase Agreement") pursuant to which Seller agreed to
sell and Purchaser agreed to purchase the Purchased Assets. Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed to
them under the Asset Purchase Agreement.
B. The parties desire to make certain amendments to the Asset Purchase
Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual agreements, covenants,
representations and warranties hereinafter contained, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
1. The Asset Purchase Agreement is hereby amended by deleting Section
1.1(d) in its entirety and substituting therefor the following:
"(d) all of Seller's right, title and interest under the promissory
notes listed on Schedule 1.1(d) (the "Transferred Receivables"). The
parties acknowledge and agree that, notwithstanding anything herein to
the contrary, Seller shall retain all right, title and interest in all
accounts receivable, other than the Transferred Receivables, which are
incurred as of the Closing date from CBB Franchisees (the "Retained
Receivables"). In addition, Seller shall be entitled to retain copies
of all books, records and documents relating to the Retained
Receivables;"
2. The Asset Purchase Agreement is hereby further amended by deleting
Section 1.1(l) in its entirety and substituting therefor the following:
"(l) Notwithstanding the foregoing, Seller shall retain any claim or
defense (except for any economic benefit arising after the Closing
under the Transferred Agreements and the Transferred Receivables, which
shall remain with Purchaser) arising out of or related to (i) the
Transferred Agreements for actions brought against Seller; or (ii) the
Retained Receivables."
3. The Asset Purchase Agreement is hereby further amended by deleting
Section 2.1 in its entirety and substituting therefor the following:
"2.1 Purchase Price. In consideration of the sale, assignment,
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transfer, conveyance and delivery of the Purchased Assets by Seller to
Purchaser, and in reliance upon the representations, warranties, covenants
and agreements made herein by Seller to Purchaser, Purchaser agrees to pay
Seller at Closing and Seller agrees to accept from Purchaser in full
payment thereof, the sum of Three Million Nine Hundred Thousand
($3,900,000) Dollars (the "Purchase Price") subject to Purchase Price
Adjustments set forth in Section 2.5 below, payable as follows:
(a) Two Million Four Hundred Thousand ($2,400,000) Dollars
(less the Downpayment referred to in Article 2A and accrued interest
thereon which shall be paid by Escrowee to Seller at the Closing) by wire
transfer; and
(b) One Million Five Hundred Five Thousand ($1,500,000)
Dollars by delivery to Seller at Closing of a promissory note in the form
annexed to the Disclosure Statement as Exhibit 2.1(b) (the "Balance Note"
or the "Promissory Note"). Reference herein to the Promissory Notes shall
be deemed to refer to the Promissory Note.
4. The Asset Purchase Agreement is hereby further amended by deleting
Section 2.2 ("Holdback") in its entirety.
5. The Asset Purchase Agreement is hereby further amended by adding to the
end of Section 2.3 thereof, the following:
"At the Closing, Seller and Purchaser shall execute a Subordination
Agreement in the form attached to the Disclosure Statement as Exhibit
2.3(C) (the "Subordination Agreement")."
6. The Asset Purchase Agreement is hereby further amended by deleting
Section 2.5(b)("Adjustment for Collection of Transferred Accounts Receivable")
in its entirety.
7. The Asset Purchase Agreement is hereby amended by changing the date
"August 13, 1999" in Sections 2A.2(a), 2A.2(b), 8(d) and 8(e) to "12:00 p.m.
Eastern Daylight Savings Time on August 27, 1999."
8. The Asset Purchase Agreement is hereby further amended by deleting
Section 2.A.1(h) in its entirety and substituting the following in lieu thereof:
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"(h) Notwithstanding the foregoing, the provisions provided in this
Article 2A.1 shall not apply and the Escrowee shall, within one (1)
business day following receipt of evidence of such termination and
satisfaction of any requirements of the Bank, deliver to the Purchaser, by
check or wire transfer, One Hundred Thousand Dollars of the Downpayment
(the "Refundable Portion of the Downpayment"), plus any accrued interest
thereon, and shall deliver to Seller, by check or wire transfer, the
remaining Fifty Thousand Dollars ($50,000) of the Downpayment (the
"Nonrefundable Portion of the Downpayment"), plus any accrued interest
thereon, without offset or reduction with respect to both payments, if the
Agreement is terminated pursuant to the provisions of 2A.2(a) and (b).
9. The Asset Purchase Agreement is hereby further amended by deleting
Section 2.A.2(c) in its entirety and substituting the following in lieu thereof:
"(c) The Downpayment will be applied as follows:
(i) In the event this Agreement is terminated pursuant to paragraphs (a)
and (b) of this Section 2A.2, or if Purchaser terminates this Agreement by
delivery of written notice to Seller on or before 5:00 p.m. Eastern
Daylight Savings Time on August 31, 1999 by reason of any CBB Franchisee
Litigation (hereinafter defined), Purchaser shall be entitled to an
immediate refund of the Refundable Portion of the Downpayment, together
with accrued interest thereon, and Seller shall be entitled to immediate
payment of the Nonrefundable Portion of the Downpayment, together with
accrued interest thereon. As used herein "CBB Franchisee Litigation" shall
mean a legal proceeding commenced by any CBB Franchisee against any party
to this Agreement on or before August 31, 1999, seeking to prevent the
consummation of the transaction contemplated hereby or to materially modify
the terms of such transaction.
(ii) If the Agreement does not terminate pursuant to paragraphs (a) and
(b) of this Section 2A.2 or by reason of any CBB Franchisee Litigation and
the Closing occurs, the entire Downpayment, together with any accrued
interest thereon, shall be applied towards the purchase price cash due at
Closing.
(iii) If Seller refuses to close for any reason (other than a material
breach by Purchaser of this Agreement) or if Seller materially breaches this
Agreement and Purchaser declines to close, Purchaser shall be entitled to the
return of the entire Downpayment, together with any accrued interest thereon.
(iv) If Purchaser refuses to close by August 31, 1999 or another date
mutually agreed to between Seller and Purchaser and Seller is not in
material breach of this Agreement, Seller's sole remedy shall be to receive
and retain the entire Downpayment, together with any accrued interest
thereon, as liquidated damages, it being agreed that Seller's damages in
case of Purchaser's default might be impossible to ascertain and that the
Downpayment constitutes a fair and reasonable amount of damages under the
circumstances and is not a penalty."
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10. The Asset Purchase Agreement is hereby further amended by deleting
Section 3.2(c)(ii) in its entirety and inserting the following in lieu thereof:
"(ii) a receivables report for the Transferred Receivables in the
form of Schedule 1.1(d) reflecting payments on the Transferred Receivables
more than thirty (30) days past due as of the last day of the previous week
and a receivables report for the Scheduled Franchise Agreements and the
Additional Franchise Agreements in the form included in Schedule 3.2(c)
reflecting royalty and Ad Fund payments more than thirty (30) days past due
as of the last day of the previous week."
11. The Asset Purchase Agreement is hereby further amended by changing the
reference to "Exhibit 4.1(i)" in Section 4.1(h) to "Exhibit 4.1(h)."
12. The Asset Purchase Agreement is hereby further amended by deleting
Section 4.1(i) in its entirety and substituting therefor the following:
"(i) the Subordination Agreement, duly executed by Seller;"
13. The Asset Purchase Agreement is hereby further amended by deleting
Section 4.1(k) in its entirety and substituting therefor the following:
"(k) a Consent to Purchaser's Collateral Assignment of the Asset
Purchase Agreement in the form attached to the Disclosure Statement as
Exhibit 4.1(k), duly executed by Seller;"
14. The Asset Purchase Agreement is hereby further amended by deleting
Section 4.2(a) in its entirety and substituting the following in lieu thereof:
"(a) Two Million Four Hundred Thousand ($2,400,000) Dollars, less
the Downpayment and accrued interest thereon, by wire transfer to Seller;".
15. The Asset Purchase Agreement is hereby further amended by changing the
reference to "Schedule 4.2(g)" in Section 4.2(g) to "Exhibit 4.2(g)".
16. The Asset Purchase Agreement is hereby further amended by deleting
Section 5.6 in its entirety and substituting the following in lieu thereof:
5.6 Financial Statements. Attached hereto as Schedule 5.6 are
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copies of Seller's (i) statement of cash flow for sales and royalties
collected, all on a store by store basis, for the fiscal years ending in
December, 1997 and December, 1998, and for six 4 week periods ending in
June, 1998 and June, 1999; and (ii) on a store by store basis, an
accounting of the Advertising Fund, an aged accounts receivable for the
Advertising Fund for the Scheduled Franchise Agreements; and a list of all
outstanding unpaid bills and all outstanding financial commitments not
billed by vendors or suppliers, as of August 20, 1999 (the "Outstanding Ad
Fund Obligations") (hereinafter the statements and accountings attached
hereto as Schedule 5.6 and described in the foregoing clauses (i) and (ii)
are collectively referred to as the "Financial Statements"). The Financial
Statements correctly and completely reflect Seller's books and records, and
are accurate and complete in all material respects for the periods
indicated. The
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Financial Statements with respect to sales figures are accurate and
complete in all material respects for the periods indicated, assuming the
sales figures received by Seller from the CBB Franchisees are accurate and
assuming any Third Party Reports relied on for the preparation of the
Financial Statements are accurate. Seller does not make any representations
as to the accuracy of the sales figures prepared by the CBB Franchisees.
Notwithstanding anything herein to the contrary, in the event that the
Outstanding Ad Fund Obligations exceed the sum of the cash in the
Advertising Fund as of the date of Closing plus all amounts collected by
the Advertising Fund between the date of Closing and October 31, 1999,
Purchaser may, at its option, offset the excess from the next payment due
under the Promissory Note or invoice Seller for the amount of the excess,
which invoice shall be payable in full within thirty (30) days following
Seller's receipt thereof.
17. The Asset Purchase Agreement is hereby further amended by deleting
Section 5.7 in its entirety and substituting the following in lieu thereof:
"5.7 Receivables. All of the Transferred Receivables result from the
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sale of inventory, and services in the ordinary course of business. Except
for any amounts owed by the parties to any bankruptcy proceeding described
in Schedule 5.21, Seller has no knowledge that such Transferred Receivables
are not collectible in the full amount thereof in the ordinary course of
business, but Seller does not warrant the collectability thereof. "
18. The Asset Purchase Agreement is hereby further amended by adding to
the end of Section 5.14 thereof the following:
"At the request of Purchaser, Seller shall use commercially reasonable
efforts to obtain the agreements of the vendors listed in Schedule 5.14(b)
to continue to supply the CBB Franchisees under the current terms and
conditions of the Agreements listed in Schedule 5.14(b). In no event shall
"commercially reasonable efforts" be construed to require Seller to make
any payments to such vendors or any other party in order to obtain such
agreements."
19. The Asset Purchase Agreement is hereby further amended by changing the
word "and" in Sections 5.26 and 5.27 to "or" so that the definition of
"Knowledge" in such Sections shall be construed to mean the actual knowledge of
any one of the persons designated therein.
20. This Amendment may be executed in any number of counterparts, each of
which, when executed, shall be deemed to be an original, and all of which
together shall be deemed to be one and the same instrument. Execution and
delivery of this Amendment may be made by facsimile transmission in such
counterparts and the signatures thereon shall be deemed original.
21. Except as herein amended, the Asset Purchase Agreement shall remain in
full force and effect and is hereby ratified and confirmed.
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IN WITNESS WHEREOF, the undersigned have executed this First Amendment to
Asset Purchase Agreement as of the date first written above.
CBB ACQUISITION CORP.
By:________________________________
R. Xxxxx Xxxxxx, President
AFC ENTERPRISES, INC.
By:________________________________
Name:
Title:
NEW WORLD COFFEE-MANHATTAN
BAGEL, INC.
By:_________________________________
R. Xxxxx Xxxxxx, Chief Executive
Officer
Escrowee is made a party to this Amendment for the sole purpose of agreeing
to be bound by the amendments to Section 2.A.1 of the Asset Purchase Agreement.
XXXXX XXXXXXX XXXXXX XXXXXXX &
XXXXXXXXX, P.C.
By:________________________________
Xxxx Xxxxxxxx, Vice-President
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