Exhibit 99.2
AMENDED AND RESTATED AGREEMENT
This Agreement (the "Agreement") is made and entered into on the 22nd day of
August 2001 by and among PARAMARK ENTERPRISES, INC., a Delaware corporation
("Paramark") with an address at c/o Xxxxxxx X. Xxxxxxxxx, 000 Xxxx Xxxxxx,
Xxxxxxxxxx, XX 00000, XXXXXXX X. XXXXXXXXX ("Loccisano") with an address at 000
Xxxx Xxxxxx, Xxxxxxxxxx, XX 00000, XXXX X. XXXXXXXX ("Xxxxxxxx") with an address
at 0 Xxxxxx Xxxxx, Xxxxxxx, XX 00000, XXXX XXXXXX, XXXXXXX XXXXXX and XXXX
XXXXXX (collectively "Xxxxxx") with an address at 0000 Xxxxx Xxxxxxxxxx Xxxxx
Xxxx, Xxxxx 000, Xxxxx Xxxxxxx, XX 00000
RECITALS
A On June 28, 2001 the parties hereto entered into an agreement (the
"Agreement");
B. The parties desire to Amend and Restate the Agreement as more particularly
set forth below;
C. All references in this document hereinafter to the "Agreement" shall be
deemed to be references to this Amended and Restated Agreement
ARTICLE 1
DEFINED TERMS
1.1 CERTAIN DEFINED TERMS. Certain terms used in this Agreement shall have the
respective meanings ascribed to them as more particularly set forth below:
"Board Guarantee" means the agreement of Xxxxxx, jointly and severally, by their
execution of this Agreement, that Loccisano and Xxxxxxxx may immediately
designate four (4) additional members to the Successor Board (as defined in
Section 4.2)of Paramark, all upon any failure of Xxxxxx to fulfill an obligation
under this Agreement that is secured by the Board Guarantee.
"Xxxxxx Street Agreement" means that certain Asset Purchase and Sale and
Security Agreement, dated October 9, 2000 by and among Paramark Enterprises,
Inc., Xxxxxx Street Companies, Inc. and NV Commercial LLC, a copy of which
Xxxxxx Street Agreement is annexed hereto as EXHIBIT C.
"D&O Insurance" means that certain Directors and Officers Liability Insurance
Policy currently maintained by Paramark with Chubb Insurance Company under
policy number 8182-62-95-FPO and requiring an annual premium payment of
$40,000.00
"Escrow Account" means that certain bank account to be set up in a commercial
banking institution located in the State of New Jersey, the sole signatories of
which account shall be Loccisano and Xxxxxxxx.
"Xxxxxxxx Shares" means the 187,339 shares of issued and outstanding stock of
Paramark owned by Xxxxxxxx, Xxxxxxxx Xxxxxxxx (Xxxxxxxx'x spouse) or by any
trust whose beneficiaries are either Xxxxxxxx, Xxxxxxxx Xxxxxxxx or their
children.
"Lady Baltimore Action" means that certain legal action titled Xxxxxxxxx
International, Inc. d/b/a Lady Baltimore Bakery, et al. vs. Paramark
Enterprises, Inc., et al. being maintained In the Superior Court for the State
of California in and for the City and County of Marin, under Case No. 006365
"Loccisano Shares" means the 1,431,924 shares of issued and outstanding stock of
Paramark owned by Loccisano, Xxxx Xxxxxxxxx (Xxxxxxxxx'x spouse) or by any trust
whose beneficiaries are either Loccisano, Xxxx Xxxxxxxxx or their children.
"Xxxxxx Guarantee" means that certain guarantee by Xxxxxx of the payments under
the Consulting Agreements, the Stock Restriction Fee and the Employment
Agreements (each as hereinafter defined), the form of which guarantee is annexed
hereto as EXHIBIT B.
"Minimum Trade Price" means a public market bid price of not less than $0.20 per
share for the issued and outstanding common stock of Paramark being in effect
for any consecutive thirty (30) day period in the one (1) year immediately
ensuing after the date of the Transaction Closing.
"Rich Products Agreement" means that certain Asset Purchase Agreement, dated
October 9, 2000, between Rich Products Manufacturing Corporation, Rich Products
Corporation and Starbake, Inc.
"Rich Transaction Proxy Statement" means that certain Proxy Statement, dated
November 15, 2000, issued by Paramark and describing, inter alia, the Rich
Products Agreement and the Xxxxxx Street Agreement.
"Transaction Closing" means the date set forth in Article 8 of this Agreement.
"Company Stock" means all authorized but unissued shares of common stock of
Paramark, which shares have not been registered with the Securities and Exchange
Commission and which shares are therefor deemed to be restricted shares for the
purpose of trading thereof and bear an appropriate legend accordingly.
ARTICLE 2
PURCHASE AND SALE OF PARAMARK COMMON STOCK BY XXXXXX
2.1 PURCHASE AND SALE OF COMPANY STOCK. Xxxxxx hereby agree to purchase from
Paramark, and Paramark agrees to sell to Xxxxxx, 500,000 shares of Company Stock
(the "Purchased Company Stock"), at a price of $.06 per share resulting in an
aggregate consideration payable to Paramark of $30,000 (the "Company Stock
Purchase Price").
2.2 CLOSING ON COMPANY STOCK. Xxxxxx shall pay the Company Stock Purchase Price
to Paramark, and simultaneously therewith the Purchased Company Stock will be
issued by Paramark, all to occur at the Transaction Closing. The entire Company
Stock Purchase Price shall be deposited into the Escrow Account..
2
2.3 PUT FOR THE SALE OF LOCCISANO AND/OR XXXXXXXX SHARES. During the Put Option
Period, as described and defined immediately below, Loccisano and/or Xxxxxxxx
shall have the right, jointly and severally, to offer to sell to Xxxxxx or
Paramark up to one half (1/2) of each of the Loccisano Shares and the Xxxxxxxx
Shares (the "Loccisano/Xxxxxxxx Sale Offer"). Within fifteen (15) days of
receipt of the Loccisano/Xxxxxxxx Sale Offer (in a manner consistent with the
Notice provisions set forth in the last Article of this Agreement), from either
Loccisano, Xxxxxxxx or both of them, Xxxxxx shall be obligated to acquire the
shares represented by the Loccisano/Xxxxxxxx Sale Offer directly, or shall cause
Paramark to acquire same, and shall pay the consideration therefor
simultaneously therewith as more particularly set forth hereinbelow.
2.4 PUT OPTION PERIOD. The "Put Option Period", as used herein, shall be the
earlier to occur of either of the following:
a. The sixty (60) days immediately ensuing after the completion of the
Minimum Trade Price period assuming the Tender Offer is not commenced; or
b. The thirty (30) day period immediately ensuing after the completion of the
Tender Offer (as defined below)
2.5 PURCHASE PRICE AND PAYMENT FOR THE LOCCISANO AND XXXXXXXX SHARES. At
Xxxxxx'x option, Xxxxxx or Paramark will pay, for the Loccisano Shares and the
Xxxxxxxx Shares, the following sum and in the following manner: $0.20 per share
for the Loccisano and Xxxxxxxx Shares that are the subject of the
Loccisano/Xxxxxxxx Sale Offer within five (5) days of receiving notice of the
Loccisano/Xxxxxxxx Sale Offer.
2.6 GUARANTEE BY XXXXXX, ETC. OF DEFERRED PAYMENT OPTION. Each and every
obligation of Xxxxxx or Paramark under the Deferred Payment Option is hereby
secured by the Xxxxxx Guarantee.
ARTICLE 3
TENDER OFFER
3.1 TENDER OFFER TO PARAMARK SHAREHOLDERS. Xxxxxx hereby agree and undertake to
cause Paramark, no later than twelve (12) months after the Transaction Closing
(the "Tender Offer Date"), to issue a tender offer (the "Tender Offer") to all
holders of issued and outstanding stock of Paramark for the acquisition of all
of such stock at a price of $0.20 per share. Xxxxxx shall be obligated to make
the Tender Offer only if the Minimum Trade Price has not been met on or before
the Tender Offer Date. Loccisano and Xxxxxxxx, in consideration of the put
option each holds pursuant to Section 2.3 hereinabove, hereby agree not to
tender their stocks in response to the Tender Offer.
3.2 GUARANTEE OF TENDER OFFER. Each and every obligation of Paramark under the
Tender Offer is hereby secured by the Board Guarantee.
3.3 RESTRICTION ON ADDITIONAL SHARE PURCHASES BY XXXXXX. Xxxxxx shall not
purchase, or offer to purchase, any securities of Paramark during the period to
commence on the
3
date of this Agreement and to expire on the earlier of: (a) the achievement of
the Minimum Trade Price or (b) the completion of the Tender Offer (if required).
ARTICLE 4
BOARD OF DIRECTORS
4.1 RESIGNATION OF CURRENT BOARD. All current members of the Board of Directors
of Paramark shall resign thirty (30) days after the Transaction Closing.
4.2 SUCCESSOR BOARD APPOINTED BY XXXXXX. Upon the foregoing resignation of the
current Board of Directors of Paramark, the members of a new Board of Directors
for Paramark shall be immediately appointed and they shall be Xxxx Xxxxxx, Xxxx
Xxxxxx and Xxxxxxx Xxxxxx (the "Successor Board"). The Successor Board shall
consist of said three (3) members until the earlier of the achievement of the
Minimum Trade Price or completion of the Tender Offer. Upon the appointment of
the Successor Board all the current officers of Paramark shall resign and the
following individual shall be appointed to the following offices in their stead:
Xxxx Xxxxxx CEO, Chairman of the Board and President
Xxxxxxx Xxxxxx Vice President and CFO
Xxxx Xxxxxx Vice President and Secretary
ARTICLE 0
XXXXXX XXXXXX AND RICH PRODUCTS AGREEMENTS PAYMENTS IN ESCROW
5.1 PAYMENTS TO BE MADE INTO ESCROW ACCOUNT. All payments due and owing to
Paramark, after the Transaction Date, pursuant to the Xxxxxx Street Agreement
and the Rich Products Agreement shall be made into the Escrow Account (the
"Escrow Payments"). The Escrow Payments shall be used for each and all of the
following purposes (the "Escrow Obligations"):
a. All legal and accounting fees accrued on behalf of Paramark up to the
Transaction Date;
b. All outstanding trade payable obligations of Paramark, and its wholly
owned subsidiary Starbake, Inc., as of the Transaction Date;
c. All legal fees due and owing on behalf of Paramark, Loccisano and Xxxxxxxx
pursuant to the Lady Baltimore Action and any sums that may have to be
paid in settlement of, or pursuant to a judgment rendered under, the Lady
Baltimore Action;
d. All sums due and owing to Loccisano and/or Xxxxxxxx by Paramark pursuant
to their respective employment agreements (the "Employment Agreements"),
as more particularly set forth in the Rich Transaction Proxy Statement.
e. The excess D&O Insurance premium, if any.
4
5.2 TERMINATION OF ESCROW ACCOUNT. The Escrow Account shall terminate upon the
occurrence of each and all of the following:
a. Fulfillment of all the Escrow Obligations;
b. Completion of the Tender Offer (if required pursuant to its terms); and
Any sums remaining in the Escrow Account after the occurrence of each and all of
the foregoing shall be delivered to Paramark for use by Paramark solely in
payment of Paramark's ongoing operating expenses. In no event may any such sums
delivered to Paramark be used to make any payments to Loccisano and/or Xxxxxxxx
under the Deferred Payment Option. Nothing set forth herein shall be deemed to
be a limitation of Paramark's obligations with regard to each and all of the
matters set forth in this Section and to the extent there are insufficient funds
in the Escrow Account to make all of the foregoing payments then Paramark shall
continue to remain obligated for such payments
5.3 CONTINGENT ON AGREEMENT OF XXXXXX STREET AND RICH PRODUCTS. The obligation
to proceed to the Transaction Closing shall be contingent on Xxxxxx Street
Companies, Inc. and Rich Products Manufacturing Corporation agreeing, in
writing, to make all payments that remain due and owing pursuant to the Xxxxxx
Street Agreement and the Rich Products Agreement directly into the Escrow
Account (the "Rich Products and Xxxxxx Street Consent").
ARTICLE 6
LOCCISANO/XXXXXXXX RESTRICTION, CONSULTING AGREEMENT,
EMPLOYMENT AGREEMENTS, ETC.
6.1 RESTRICTION ON SALE OF LOCCISANO AND XXXXXXXX SHARES. Loccisano and Xxxxxxxx
hereby agree that, for a period:
a. that will terminate upon the completion of the Tender Offer (if a Tender
Offer must occur pursuant to this Agreement); or
b. that will terminate sixty (60) days after the completion of the Minimum
Trade Price Period, if no Tender Offer occurs because the Minimum Trade
Price has been met
Loccisano and Xxxxxxxx shall not offer to sell, except pursuant to the
Loccisano/Xxxxxxxx Sale Offer, any of their respective Loccisano Shares and
Xxxxxxxx Shares except for quarterly sales than shall not exceed 40,000
Loccisano Shares and 20,000 Xxxxxxxx Shares. In consideration therefore, Xxxxxx
shall pay Loccisano and Xxxxxxxx an aggregate fee of $66,000.00 payable in
twelve (12) equal monthly installments commencing with the Transaction Closing
(the "Stock Sale Restriction Fee"). Payment of the Stock Sale Restriction Fee
shall be secured by the Xxxxxx Guarantee.
6.2 LOCCISANO AND XXXXXXXX CONSULTING AGREEMENTS. Xxxxxx hereby agrees to retain
the services of Loccisano and Xxxxxxxx to act as consultants to Xxxxxx to aid in
the transition of management control of Paramark to Xxxxxx. Xxxxxxxxx and
Xxxxxxxx shall provide their
5
respective consulting services to Xxxxxx pursuant to the Consulting Agreements
annexed hereto as EXHIBITS E & F respectively, which Consulting Agreements will
provide for an aggregate payment to Loccisano and Xxxxxxxx of $24,000.00 payable
in twelve (12) equal monthly installments commencing with the Transaction
Closing. All payments under the Consulting Agreements shall be secured by the
Xxxxxx Guarantee
6.3 FURTHER SECURITY FOR SUMS DUE AND OWING PURSUANT TO THE EMPLOYMENT
AGREEMENTS. Paramark's obligation to make the payments due to Loccisano and
Xxxxxxxx pursuant to the Employment Agreements will be secured, simultaneously
with the Transaction Closing, by an irrevocable assignment by Paramark to
Loccisano and Xxxxxxxx of payments due and owing to Paramark pursuant to the
Rich Products Agreement (the "Rich Products Assignment"). The Rich Products
Assignment shall provide and include:
a. An irrevocable assignment and conveyance to Loccisano and Xxxxxxxx of a
portion of each payment, due and owing to Paramark pursuant to the Rich
Products Agreement, sufficient to make the corresponding payments then
coming due under the Employment Agreements;
b. Written acknowledgement by Rich Products Manufacturing Corporation of the
foregoing irrevocable assignment and conveyance.
c. A first priority security interest granted by Paramark to Loccisano and
Xxxxxxxx in all payments due and owing to Paramark under the Rich Products
Agreement.
In consideration for the foregoing, Loccisano and Xxxxxxxx agree that Paramark
shall have no further obligations to make the payments due and owing under the
Employment Agreements other than from all payments remaining due and owing
pursuant to the Rich Products Agreement and/or the Xxxxxx Street Agreement
6.4 LADY BALTIMORE ACTION. Loccisano and Xxxxxxxx are hereby appointed effective
as of the Transaction Closing, jointly and severally, as agents of Paramark with
exclusive authority to take any and all actions and execute any all documents in
connection with the defense and/or prosecution of the Lady Baltimore Action
including, but not limited to, payment of all legal fees incurred, entry into a
settlement and all other matters related to the Lady Baltimore Action, all upon
the following terms and conditions:
a. Paramark shall remain liable for all legal fees incurred in the
representation of Loccisano and Xxxxxxxx in the Lady Baltimore Action;
b. Any payments made by Loccisano and/or Xxxxxxxx in connection with the
foregoing agency shall be made from the Escrow Account;
c. In the event payments under the Lady Baltimore Action shall, or may
exceed, the amounts available from the Escrow Account then, before taking
further action that shall lead to any liability on the part of Paramark
for such payments, Loccisano and/or Xxxxxxxx shall be required to obtain
the consent of Xxxxxx, which consent will not be unreasonably withheld or
delayed.
6
ARTICLE 7
REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
7.1 REPRESENTATIONS AND WARRANTIES OF PARAMARK. Paramark warrants and represents
to Xxxxxx, all to its knowledge and without making any independent inquiries in
connection with this Agreement, that as of the date hereof and as of the Closing
Date::
a. Corporate Status. Paramark is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware.
b. Power and Authority. Paramark has the corporate power, authority and legal
right to execute, deliver and perform this Agreement and the execution,
delivery and performance of this Agreement by Paramark have been duly
authorized by all necessary corporate action. This Agreement has been duly
executed and delivered by a duly authorized officer of Paramark, and this
Agreement constitutes, and such instruments when executed and delivered
will constitute, legal, valid and binding obligations of Paramark
enforceable against Paramark in accordance with their respective terms.
7.2 REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS OF XXXXXX. Xxxxxx represent and
warrant and undertake to Paramark, Loccisano and Xxxxxxxx, jointly and
severally, as of the date of this Agreement as follows:
a. Full Disclosure and Access. Xxxxxx acknowledge and confirm that they have
been granted full disclosure and access by Paramark, Loccisano and
Xxxxxxxx with respect to any and all matters required to enable Xxxxxx to
enter into the transactions contemplated by this Agreement and that Xxxxxx
have completed all of their due diligence with regard to all matters
related thereto.
b Lady Baltimore Action. Xxxxxx acknowledge and confirm that the amount of
damages, costs and/or settlement fees that may be the obligation of
Paramark pursuant to the Lady Baltimore Action are unknown and uncertain
as of this date and no representations to the contrary have been made to
Xxxxxx.
c D&O Insurance. Xxxxxx will maintain the policy of D&O Insurance in full
force and effect for a period of not less than three hundred and sixty
five (365) days after the Transaction Closing and Loccisano, Xxxxxxxx Xxxx
Xxxxxxxx and Xxxx Xxxxxxx (the "Current Board") shall continue to be named
as insureds thereunder during said period. Loccisano and Xxxxxxxx shall be
designated as simultaneous recipients for all notices by the insurer under
the D&O Insurance. If the premiums during said period for the D&O
Insurance shall require additional payments solely because of the
continued insurance of the members of the Current Board then any such
excess shall be paid from the Escrow Account. If Xxxxxx and/or Paramark do
not make the payments required to maintain the D&O Insurance then
Loccisano and/or Xxxxxxxx may make same and such payments shall be
reimbursed through and secured by the Xxxxxx Guarantee.
d. Net Worth Statements. Annexed hereto as EXHIBIT H current net worth
statements for
7
each Xxxxxx and which net worth statements are hereby certified by Xxxxxx
be accurate and complete in all respects
x. Xxxxxxxxx as Observer of Successor Board. Until the earlier of the
achievement of the Minimum Bid Price or the completion of the Tender Offer
(if required), Loccisano shall serve as an unpaid and nonvoting observer
at all meetings of the Successor Board and shall participate in all
meetings of such Successor Board either personally or via telephone and if
such participation is personal then Paramark shall pay all reasonable
travel and lodging expenses of Loccisano in connection with same.
f. Paramark filing secured by Board Guarantee. Until the earlier of the
achievement of the Minimum Trade Price or completion of the Tender Offer,
the Board Guarantee shall secure, after the Transaction Closing,
Paramark's obligation to timely file and/or prepare, when required, any
reports with the Securities and Exchange Commission, any tax returns
and/or any certified financial statements.
g. Bankruptcy Filing. The Successor Board shall not cause Paramark to file a
voluntary petition in bankruptcy or to make a general assignment for the
benefit of its creditors, nor shall the Successor Board acquiesce in the
involuntary filing of bankruptcy petition against Paramark by its
creditors (the "Bankruptcy Filing"), without obtaining the prior written
consent of Loccisano and Xxxxxxxx (however this restriction shall expire
on the later to occur of (x) the achievement of the Minimum Trade Price or
(y) the completion of the Tender Offer) (z) the expiration of the
thirteenth full month ensuing after the Transaction Closing. In the event
a Bankruptcy Filing occurs in violation of this subsection, then the
Xxxxxx Guarantee shall apply to any payments remaining due and owing under
the Employment Agreements to the extent such payments are not made or are
delayed because of the Bankruptcy Filing except that the Xxxxxx Guarantee
shall not apply to such Employment Agreement payments to the extent the
Bankruptcy Filing occurs after, and in the event, of an entry of a
judgment against Paramark in the Lay Baltimore Action in excess of
$400,000.
h. Assistance in Registration of Loccisano and Xxxxxxxx Shares. After the
earlier of the achievement of the Minimum Trade Price or the completion of
the Tender Offer, the Successor Board shall cause Paramark to render any
and all assistance that may be required by Loccisano and/or Xxxxxxxx, to
register the Loccisano Shares and/or the Xxxxxxxx Shares in accordance
with applicable rules and regulations of the Securities and Exchange
Commission and such assistance shall be rendered without cost to Loccisano
and Xxxxxxxx.
(i) Accredited Investor. Each of the Lovitos is an accredited investor as the
term is defined in Rule 501(a) of the Regulation D of the Rules and
Regulations of the Securities and Exchange Commission as of the date
hereof, a copy of which is attached hereto, and is sufficiently
experienced in financial and business matters to be capable of evaluating
the merits and numerous and substantial risks of this highly speculative
investment in Paramark.
(j) Evaluation of Merits of Transaction. Each of the Lovitos and his purchaser
representative, if any, have evaluated the merits and substantial risks of
this proposed
8
investment in Paramark, including those risks particular to his personal
situation, and has determined that this investment is suitable for him,
despite its highly speculative nature. Each of the Lovitos has a
substantial net worth and adequate financial resources for an investment
of this character, and at this time each of the Lovitos could bear a
complete loss of his investment. Further, each of the Lovitos will
continue to have, after making his investment in Paramark, adequate means
of providing for his current needs and of those dependent on him, and
possible personal contingencies.
(k) Sufficient Information about Paramark. Each of the Lovitos is aware of
Paramark's business affairs and financial condition and has acquired
sufficient information about Paramark, its management, financial
condition, business and operations, and substantial risks associated with
the investment in Paramark to reach an informed and knowledgeable decision
to acquire the Purchased Common Stock. Each of the Lovitos is acquiring
the Purchased Common Stock for investment for his own account only and not
with a view to, or for resale in connection with, any "distribution"
thereof within the meaning of the Securities Act of 1933, as amended (the
"Securities Act").
(l) Restricted Securities. Each of the Lovitos acknowledges and understands
that the Purchased Common Stock constitutes "restricted securities" under
the Securities Act and has not been registered under the Securities Act in
reliance upon a specific exemption therefrom, which exemption depends
upon, among other things, the bona fide nature of the Xxxxxx'x investment
intent as expressed herein. Each of the Lovitos understands that, in the
view of the Securities and Exchange Commission, the statutory basis for
such exemption may be unavailable if the representation by any of the
Lovitos was predicated solely upon a present intention to hold the
Purchased Common Stock for the minimum capital gains period specified
under tax statutes, for a deferred sale, for or until an increase or
decrease in the market price of the Purchased Common Stock, or for a
period of one year or any other fixed period in the future. Each of the
Lovitos further understands that the Purchased Common Stock must be held
indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available. Each of the
Lovitos further acknowledges and understands that Paramark is under no
obligation to register the Purchased Common Stock. Each of the Lovitos
understands that the certificate evidencing the Purchased Common Stock
will be imprinted with a legend which prohibits the transfer of the
Purchased Common Stock unless they are registered or such registration is
not required in the opinion of counsel satisfactory to Paramark and any
other legend required under applicable state securities laws.
(m) Rule 144. Each of the Lovitos is familiar with the provisions of Rule 144
promulgated under the Securities Act, which, in substance, permits limited
public resale of "restricted securities" acquired, directly or indirectly
from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 144, as currently in effect,
provides that an affiliate of Paramark or a person who has beneficially
owned the securities for at least one year but less than two years is
entitled to sell within in any three month period a number of shares that
does not exceed the greater of one percent of the then outstanding shares
of Paramark or the average weekly trading volume during the four weeks
9
preceding the sale upon compliance with the applicable requirements of
Rule 144. No assurance can be given that Paramark will meet the
requirements of Rule 144 necessary to be met by Paramark in order to
permit sales pursuant to Rule 144. A person who is not an affiliate of
Paramark at any time during the three months prior to the sale and has
beneficially owned the Securities for at least two years, may sell such
shares without regarding to the limitations imposed by Rule 144. The
Lovitos understand and acknowledge that each of them would be considered
an affiliate for purposes of Rule 144.
(n) Registration Requirement if Rule 144 Not Satisfied. Each of the Lovitos
further understands that in the event all of the applicable requirements
of Rule 144 are not satisfied, registration under the Securities Act,
compliance with Regulation A, or some other registration exemption will be
required; and that, notwithstanding the fact that Rule 144 is not
exclusive, the Staff of the Securities and Exchange Commission has
expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise than pursuant
to Rule 144 will have a substantial burden of proof in establishing that
an exemption from registration is available for such offers or sales, and
that such persons and their respective brokers who participate in such
transactions do so at their own risk. Each of the Lovitos understands that
no assurances can be given that any such other registration exemption will
be available in such event.
(o) Legend. Each of the Lovitos acknowledges that the Purchased Company Stock
will contain the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE SECURITIES LAWS
OF ANY STATE AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED UNLESS THERE IS
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND ANY APPLICABLE
STATE SECURITIES LAWS COVERING SUCH SECURITIES OR THE COMPANY RECEIVES AN
OPINION OF COUNSEL (SATISFACTORY TO THE COMPANY AND ITS COUNSEL), STATING
THAT SUCH SALE, TRANSFER OR ASSIGNMENT IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
7.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations, warranties,
covenants and agreements made by the parties in this Agreement shall survive the
Transaction Closing.
ARTICLE 8
TRANSACTION CLOSING
8.1 PRECONDITIONS AND DATE OF TRANSACTION CLOSING. The Transaction Closing is
preconditioned upon, and shall occur immediately after, the occurrence of each
and all of the following (unless otherwise stated below):
10
a. Consent and approval of the transactions contemplated hereunder by the
existing Board of Directors of Paramark;
b. Receipt of the Rich Products and Xxxxxx Street Consent; and
c. Receipt of confirmation by Paramark from its counsel that all
preconditions to the Transaction Closing have been satisfied.
8.2 POST CLOSING REQUIREMENTS. Paramark agrees to take and the Lovitos agree to
cause Paramark to take the following steps following the closing within the
timeframes specified below:
a. Not less than ten (10) days having transpired after Paramark completes any
and all required notices and filings arising out of this Agreement,
including but not necessarily limited to, all notices to Paramark
shareholders and filing with the Securities and Exchange Commission,
including but not necessarily limited to, all notices and filings required
pursuant to Rule 14f-1 of the Proxy Rules of the Securities and Exchange
Commission;
b. The filing by Paramark with the Securities and Exchange Commission Form
8-K with Item 5 disclosure promptly after the Transaction Closing;
c. The filing by Paramark with the Securities and Exchange Commission Form
8-K with Item 1 disclosure five (5) days after the appointment of the
Successor Board; and
ARTICLE 9
MISCELLANEOUS
9.1 DEFAULT. The Board Guarantee shall secure, in addition to any items
specifically set forth above, all obligations and undertaking of Paramark and/or
Xxxxxx hereunder, commencing with the Transaction Closing and terminating on the
latter of the achievement of the Minimum Trade Price or the completion of the
Tender Offer, except that the Board Guarantee shall not secure the making of all
payments under the Deferred Payment Option, the Stock Restriction Fee and the
Consulting Agreements.
9.2 BROKERS' AND FINDERS' FEES. The parties hereto represent to each other that
all negotiations relative to this Agreement have been carried on by the parties
directly without the intervention of any person who may be entitled to any
brokerage or finder's fee or other commission in respect of this Agreement or
the consummation of the transactions contemplated hereby. Each party agrees to
indemnify and hold harmless the other party, as the case may be, against any and
all claims, losses, liabilities and expenses which may be asserted against or
incurred by them as a result of any party's dealings, arrangements or agreements
with any such person or entity.
9.3 EXPENSES. The parties shall pay their own expenses incidental to the
preparation of this Agreement, the carrying out of the provisions of this
Agreement and the consummation of the transactions contemplated hereby.
11
9.4 CONTENTS OF AGREEMENT; PARTIES IN INTEREST; ETC. This Agreement sets forth
the entire understanding of the parties with respect to the transactions
contemplated hereby. It shall not be amended or modified except by written
instrument duly executed by each of the parties hereto. Any and all previous
agreements and understanding between or among the parties regarding the subject
matter hereof, whether written or oral, are superseded by this Agreement.
9.5 ASSIGNMENT AND BINDING EFFECT. No party to this Agreement shall assign this
Agreement nor any part of it, nor delegate any obligation imposed by this
Agreement without the prior written consent of the other. All of the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the successors and assigns of the respective parties
hereto.
9.6 WAIVER. Any term or provision of this Agreement may be waived at any time by
the party or parties entitled to the benefit thereof by a written instrument
duly executed by such party or parties.
9.7 NOTICES. Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and
shall be deemed given only if delivered personally, by guaranteed overnight
courier or sent by fax or by registered or certified mail, postage prepaid, to
the parties respective address set forth hereinabove or to such other address as
the addressee may have specified in a notice duly given to the sender as
provided herein. Such notice, request, demand, waiver, consent, approval or
other communication will be deemed to have been given as of the date so
delivered or faxed.
9.8 GOVERNING LAW. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws, and in the courts, of the State of New
Jersey with regard to any and all matters, issues, claims and controversies
relating thereto.
9.9 NO BENEFIT TO OTHERS. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto and their heirs, administrators, legal representatives, successors and
assigns, and they shall not be construed as conferring any rights on any other
persons.
9.10 SEVERABILITY. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
9.11 COUNTERPARTS. This Agreement may be executed in any number of counterparts
and any parties hereto may execute any such counterpart, each of which when
executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
This Agreement shall become binding when one or more counterparts taken together
shall have been executed and delivered by the parties. It shall not be necessary
in making proof of this Agreement or any counterpart hereof to produce or
account for any of the other counterparts.
12
9.12 COMPLIANCE WITH FLORIDA BLUE SKY LAWS. The transactions contemplated herein
are subject to compliance with applicable Blue Sky laws of the State of Florida.
Each of the Lovitos acknowledges and agrees that the stock purchase described in
Section 2.1 is subject to a three (3) day right of rescission described below
commencing upon the receipt of consideration by Paramark and as a result the
Purchased Company Shares shall bear the following legend:
PURSUANT TO SECTION 517.061(11)(A)(5) OF THE FLORIDA SECURITIES ACT, ANY
SALE IN THE STATE OF FLORIDA IS VOIDABLE BY THE PURCHASER IN SUCH SALE
EITHER WITHIN THREE (3) DAYS AFTER THE FIRST TENDER OF CONSIDERATION IS
MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF THE ISSUER, OR AN ESCROW
AGENT OR WITHIN THREE (3) DAYS AFTER THE AVAILABILITY OF THAT PRIVILEGE IS
COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER. TO ACCOMPLISH THIS
WITHDRAWAL, A SUBSCRIBER NEED ONLY SEND A LETTER OR TELEGRAM TO THE
COMPANY AT THE ADDRESS SET FORTH IN THIS DOCUMENT INDICATING HIS INTENTION
TO WITHDRAW.
SUCH LETTER OR TELEGRAM SHOULD BE SENT AND POSTMARKED PRIOR TO THE END OF
THE AFOREMENTIONED THIRD BUSINESS DAY. IT IS ADVISABLE TO SEND SUCH LETTER
BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO ENSURE THAT IT IS RECEIVED
AND ALSO TO EVIDENCE THE TIME IT WAS MAILED. IF THE REQUEST IS MADE
ORALLY, IN PERSON OR BY TELEPHONE TO AN OFFICER OF THE COMPANY, A WRITTEN
CONFIRMATION THAT THE REQUEST HAS BEEN RECEIVED SHOULD BE REQUESTED.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date
first written.
PARAMARK ENTERPRISES, INC.
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Xxxx X. Xxxxxxxx, President
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------------------
XXXXXXX X. XXXXXXXXX
/s/ Xxxx X. Xxxxxxxx
------------------------------------
XXXX X. XXXXXXXX
13
/s/ Xxxx Xxxxxx
------------------------------------
XXXX XXXXXX
/s/ Xxxx Xxxxxx
------------------------------------
XXXX XXXXXX
/s/ Xxxxxxx Xxxxxx
------------------------------------
XXXXXXX XXXXXX
14
Exhibit B
August 22, 2001
UNCONDITIONAL GUARANTY OF PAYMENT AND PERFORMANCE
1. FOR AND IN CONSIDERATION OF the sum of Ten and No/10 Dollars ($10.00)
and other good and valuable consideration paid or delivered to the undersigned
(hereinafter individually and collectively referred to as "Guarantor"), the
receipt and sufficiency whereof are hereby acknowledged by Guarantor, and for
the purpose of seeking to induce XXXXXXX X. XXXXXXXXX ("Xxxxxxxxx") with an
address at 000 Xxxx Xxxxxx, Xxxxxxxxxx, XX 00000 and XXXX X. XXXXXXXX
("Xxxxxxxx") with an address at 0 Xxxxxx Xxxxx, Xxxxxxx, XX 00000, (Loccisano
and Xxxxxxxx are collectively and individually referred to herein as
"Beneficiary"), to:
A. Induce Beneficiary to enter into and close upon a certain Amended and
Restated Agreement (the "Acquisition Agreement"), dated August 22, 2001, and
entered into between Paramark Enterprises, Inc. ("Paramark"), Guarantor and
Beneficiary, a copy of which Acquisition Agreement is annexed hereto and
incorporated by reference, as EXHIBIT A; and
B. Which entry and closing by Beneficiary under the Acquisition Agreement
is to the direct interest and advantage of Guarantor,
Guarantor, jointly, severally and unconditionally does hereby
unconditionally guarantee to Beneficiary, jointly and severally and to
Beneficiary's respective successors, successors-in-title and assigns the
following (the "Obligations"):
C. The full and prompt payment when due, whether by acceleration or
otherwise, of all sums due and owing to each Beneficiary pursuant to the Stock
Sale Restriction Fee referenced in Section 6.1 of the Acquisition Agreement;
D. The full and prompt payment when due, whether by acceleration or
otherwise, of all sums due and owing to each Beneficiary pursuant to the
Consulting Agreements referenced in Section 6.2 of the Acquisition Agreement;
E. The full and prompt payment when due, whether by acceleration or
otherwise, of all sums due and owing to each Beneficiary pursuant to the
Employment Agreements referenced in Section 6.3 of the Acquisition Agreement;
and
F. Guarantor further agrees to pay Beneficiary all expenses (including
reasonable attorneys' fees actually incurred) paid or incurred d by Beneficiary
in endeavoring to collect the amounts set forth in Subsections C through E
hereinabove that are guaranteed hereby, or any portion thereof, or to enforce
this Guaranty.
2. Guarantor hereby consents and agrees that Beneficiary may at any time,
and from time to time, without notice to or further consent from Guarantor,
either with or without consideration, surrender any property or other security
of like kind or of any kind or nature whatsoever held by it or by any person,
firm or corporation on its behalf or for its account, securing any of the
Obligations; modify any of the Obligations; extend or renew the Obligations
for any period; grant releases, compromises and indulgences with respect to any
of the Obligaqtions to any persons or entities now or hereafter liable
thereunder or hereunder; or release any Guarantor or any other guarantor of the
Obligations. No such action which Beneficiary shall take or fail to take in
connection with the Obligations, or any of them, or any security for the payment
of the Obligations, shall release Guarantor's obligations hereunder, affect this
Guaranty in any way or afford Guarantor any recourse against Beneficiary. The
provisions of this Guaranty shall extend and be applicable to all renewals,
amendments, extensions, consolidations and modifications of the Obligations, and
any and all references herein to the Obligations shall be deemed to include any
such renewals, extensions, amendments, consolidations or modifications thereof.
3. Guarantor hereby waives and agrees not to assert or take advantage of
(a) the defense of the statute of limitations in any action hereunder or for the
payment and performance of any of the Obligations hereby guaranteed; (b) any,
defense that may arise by reason of the incapacity, lack of authority, death or
disability of Guarantor or any other person or entity, (c) any defense based on
the failure of Beneficiary to give notice of the existence, creation or
incurring of any new or additional indebtedness or obligation or of any action
or non-action on the part of any person whomsoever, in connection with any
Obligations hereby guaranteed; (d) acceptance or notice of acceptance of this
Guaranty by Beneficiary; (e) notice of presentment and demand for payment of any
of the Obligations hereby guaranteed; (f) protest and notice of dishonor or of
default to Guarantor or to any other party with respect to the performance of
the Obligations hereby guaranteed; (g) any and all other notices whatsoever to
which Guarantor might otherwise be entitled; and (h) any defense based on lack
of due diligence by Beneficiary in collection, protection or realization upon
any collateral securing the Obligations.
4. This is a guaranty of payment and performance and not of collection.
The liability of Guarantor under this Guaranty shall be direct and immediate and
not conditional or contingent upon the pursuit of any remedies against any other
person, nor against securities or liens available to Beneficiary, its
successors, successors-in-title, endorsees or assigns. In the event of a default
under the Obligations, or any of them, Beneficiary shall have the right to,
enforce its rights, powers and remedies thereunder or hereunder or under any
other instrument now or hereafter evidencing, securing or otherwise relating to
the transactions contemplated by the Obligations, in any order, and all rights,
powers and remedies available to the Beneficiary in such event shall be
nonexclusive and cumulative of all other rights, powers and remedies provided
thereunder or hereunder or by law or in equity.
5. Guarantor hereby authorizes Beneficiary, without notice to Guarantor,
to apply all payments and credits received regarding the Obligations from any
party or from Guarantor or realized from any security in such manner and in such
priority as Beneficiary in its sole judgment shall see fit.
6. The books and records of Beneficiary showing the accounts between
Beneficiary, Paramark and Guarantor shall be admissible in evidence in any
action or proceeding hereon as prima facie proof of the items set forth therein.
B-2
7. Guarantor agrees that this Guaranty shall be governed by and construed
and enforced in accordance with the substantive, and not the conflicts, laws of
the State of New Jersey.
8. Guarantor hereby (a) submits to personal jurisdiction in the State of
New Jersey for the enforcement of this Guaranty, and (b) waives any and all
personal rights under the law of any state to object to jurisdiction within the
State of New Jersey for the purposes of litigation to enforce this Guaranty.
Nothing contained herein, however, shall prevent Beneficiary from bringing any
action or exercising any rights against any security and against Guarantor
personally, and against any property of Guarantor, within any other state.
Initiating such proceeding or taking such action in any other state shall in no
event constitute a waiver of the agreement contained herein that the laws of the
State of New Jersey shall govern the rights and obligations of Guarantor and
Beneficiary hereunder or of the submission herein made by Guarantor to personal
jurisdiction within the State of New Jersey.
9. Each Guarantor warrants and represents to Beneficiary that all
financial statements heretofore delivered to Beneficiary were true and correct
in all material respects on the date delivered to Beneficiary and remain true
and correct in all material respects as of the date hereof.
10. Each Guarantor waives, for himself and family, any and all homestead
and exemption rights which he or his family may have under or by virtue of the
Constitution or the laws of the United States of America or of any state as
against this Guaranty or any renewal hereof, or any indebtedness represented
hereby, and does transfer, convey and assign to Beneficiary a sufficient amount
of such homestead or exemption as may be allowed, including such homestead or
exemption as may be set apart in bankruptcy, to pay all amounts due hereunder in
full, with all costs of collection, and does hereby direct any trustee in
bankruptcy having possession of such homestead or exemption to deliver to
Beneficiary a sufficient amount of property or money set apart as exempt to pay
the Obligations guaranteed hereby, or any renewal thereof and does hereby
appoint Beneficiary his attorney-in-fact to claim any and all homestead
exemptions allowed by law.
11. As security for the liabilities and obligations of Guarantor
hereunder, Guarantor hereby transfers and conveys to Beneficiary any and all
balances, credits, deposits, accounts, items and monies of Guarantor now or
hereafter in the possession or control of or otherwise with Beneficiary, and
Beneficiary is hereby given a lien upon, security title to and a security
interest in all property of Guarantor of every kind and description now or
hereafter in the possession or control of Beneficiary for any reason, including
all dividends and distributions of or other rights in connection therewith.
Beneficiary may, without demand or notice of any kind, at any time or from time
to time, when any amount shall be due and payable hereunder by Guarantor,
appropriate and apply toward the payment of such amount, and in such order of
application as Beneficiary may from time to time elect, any property, balances,
credits, deposits, accounts, items or monies of Guarantor in the possession or
control of Beneficiary for any purpose.
12. This Guaranty may not be changed orally, and no obligation of
Guarantor can be released or waived by Beneficiary or any officer or agent of
Beneficiary, except by a writing
B-3
signed by a Beneficiary. This Guaranty shall be irrevocable by Guarantor until
all the Obligations guaranteed hereby have been fully paid. This Guaranty
contains the entire agreement by, between and among Guarantor and Beneficiary
with respect to the subject matter hereof, and any prior or contemporaneous
agreement by, between or among Guarantor and Beneficiary not contained herein,
shall have no force or effect.
13. Each Guarantor hereby transfers and assigns to Beneficiary any right
of contribution which any Guarantor may have against any other Guarantor.
14. The provisions of this Guaranty shall be binding upon each Guarantor
and his successors, successors-in-title, heirs, legal representatives and
assigns and shall inure to the benefit of Beneficiary, its successors,
successors-in-title, heirs, legal representatives and assigns. This Guaranty
shall in no event be impaired by any change which may arise by reason of the
death of any Guarantor or Beneficiary.
15. If from any circumstances whatsoever fulfillment of any provisions of
this Guaranty, at the time performance of such provision shall be due, shall
involve transcending the limit of validity presently prescribed by any
applicable usury statute or any other applicable law, with regard to obligations
of like character and amount, then ipso facto the obligation to be fulfilled
shall be reduced to the limit of such validity, so that in no event shall any
exaction be possible under this Guaranty that is in excess of the current limit
of such validity, but such obligation shall be fulfilled to the limit of such
validity. The provisions of this paragraph shall control every other provision
of this Guaranty.
16. All references to Guarantor and Beneficiary shall be deemed to be
references to the individual Guarantor or Beneficiary, or any or all of them, as
the context may require. The rights and obligations of each Guarantor and
Beneficiary are joint and severally and may be enforced by the Beneficiary
jointly or severally against each Guarantor, jointly or severally.
17. Time is of the essence of this Guaranty.
IN WITNESS WHEREOF, each Guarantor has executed this Guaranty the day and
year first above written.
/s/ Xxxx Xxxxxx
------------------------------------
XXXX XXXXXX
/s/ Xxxx Xxxxxx
------------------------------------
XXXX XXXXXX
/s/ XXXXXXX XXXXXX
------------------------------------
XXXXXXX XXXXXX
B-4
Exhibit C
ASSETS PURCHASE AND SALE AND SECURITY AGREEMENT
This Assets Purchase and Sale Agreement and Xxxx of Sale (the "Agreement") is
made and entered into on the 12th day of October 2000 by and among PARAMARK
ENTERPRISES, INC., a Delaware corporation ("Seller") with an address at Xxx
Xxxxxx Xxxxx, Xxxxxxxx, Xxx Xxxxxx 00000 and XXXXXX STREET COMPANIES, INC, a
Nevada corporation ("Purchaser") with an address at 0000 Xxxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxxx 00000 and NV COMMERCIAL LLC, a Nevada limited liability
company ("NVC LLC") with an address at 0000 X. Xxxxxx, Xxxxx, 000, Xxx Xxxxx,
Xxxxxx 00000
R E C I T A L S
A. Seller, through a wholly owned subsidiary Starbake, Inc., manufactures and
sells at wholesale, at and from its commercial bakery facility located at 0000
Xxxxxxxxxx Xxxxx, Xx Xxxxx, Xxxxxxxxxx (the "Bakery") a certain bakery product
known as "Pull-Apart Cakes";
B. Seller desires to sell, and Purchaser desires to Purchase, all right, title
and interest to the "Pull-Apart Cakes" including any and all know how, equipment
and customer lists related thereto (collectively the "Assets"), all as more
particularly set forth hereinbelow.
NOW, THEREFORE, in consideration of the recitals and of the representations,
warranties, covenants and agreements contained, and intending to be legally
bound, the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE; ROYALTIES
1.1 AGREEMENT TO SELL. Subject to the terms and conditions of this Agreement,
Seller hereby grants, sells, conveys, assigns, transfers and delivers to
Purchaser (the "Transfer"), and Purchaser accepts the Transfer and assumes all
liabilities arising therefrom, all of Seller's right, title and interest in and
to:
(a) the recipe, ingredient list and manufacturing instructions utilized by
Seller in the manufacture of "Pull-Apart Cakes";
(b) the equipment utilized by Seller at the Bakery to manufacture the
Pull-Apart Cakes, namely a Rondo Make-Up Line, a Rondo Compass 3000
Sheeter and a Rondo PG 101 Climator (the "Equipment");
(c) Seller's rights and obligations under the leases for the Equipment, copies
of which are annexed hereto as EXHIBIT A (the "Equipment Leases");
(d) Seller's obligation to purchase a certain existing inventory of private
labeled master cases for the Pull-Apart Cakes manufactured prior hereto by
Sayco Container Corporation and Matco United, Inc. (collectively the
"Packaging Manufacturers") until the entire existing inventory of the
Master Cases held by the Packaging Manufacturers shall have been exhausted
C-1
(e) all of Seller's rights, title and interest in and to the Broker Agreements
pursuant to which the Pull-Apart Cakes are marketed to Seller's customers,
copies of which agreements are annexed hereto as EXHIBIT B;
(f) all raw materials, packaging or finished goods (the "Inventory") related
solely to the Pull-Apart Cakes and on hand at the Bakery on the Closing
Date, as hereinafter defined;
All of the foregoing are hereinafter collectively referred to as the "Assets."
1.2 PURCHASE PRICE; PAYMENT
a. Assets other than Inventory The purchase price for all of the Assets
(excluding Inventory) shall be payment by the Purchaser to the Seller of
the Royalties, as described and defined in Section 1.3 hereinbelow.
b. Inventory. At the Closing Seller and Purchaser shall determine the amount
of the Inventory being turned over to Purchaser and Purchaser shall pay to
Seller at the Closing, in addition to the sums set forth in Section 1.2(a)
hereinabove, for all of the Inventory an amount equal to the cost of
acquisition of the Inventory by Seller.
c. Equipment Lease Adjustments; Assignment Fees. Seller shall be responsible
for all payments under the Equipment Leases through the day prior to the
Closing Date, Purchaser shall be responsible for all payments under the
Equipment Leases commencing on the Closing Date and Seller and Purchaser
shall make a cash adjustment for same accordingly at the Closing.
Purchaser shall also pay any fees assessed by the lessors under the
Equipment Leases in connection with said lessors granting their consent to
the assumption of the Equipment Leases by Purchaser.
d. Equipment Lease Security Deposits. To the extent that Seller has
delivered, to the respective lessors under the Equipment Leases, security
deposits and/or prepaid rent deposits (collectively the "Security
Deposits"), and such Security Deposits continue to be held by the
respective lessors as of the Closing then Purchaser shall reimburse Seller
at the Closing for the full amount of said Security Deposits.
e. Contingent Equipment Lease License. If, as of the Closing Date, Seller
shall not have obtained the consent of the lessors under the Equipment
Leases (the "Lessor Consent") for the assignment of the Equipment Leases
to Purchaser then, until such consent is obtained (i) Purchaser shall take
possession of the Equipment at the Closing pursuant to a temporary license
granted by Seller by its execution of this Agreement and (ii) Purchase
shall make all payments required under the Equipment Leases to Seller at
least ten (10) days before their respective due dates. If the Lessor
Consent is not obtained by Seller then this Agreement shall terminate and
the same termination procedure shall be utilized as set forth in Section
6.2 hereinbelow or at Buyer's option, Buyer may elect to buy-out equipment
leases according to the same terms and procedures set forth in Section
1.3.
C-2
1.3 EQUIPMENT LEASE FOR CERTAIN EQUIPMENT SOLD BY RONDO, INC.
a. License for Rondo Equipment Lease. Purchaser acknowledges that the Lessor
pursuant to the Equipment Lease for certain Equipment (the "Rondo Equipment")
whose named vendor is Rondo, Inc. (the "Rondo Equipment Lease") will not allow
assignment of same to Purchaser without a personal guarantee by Purchaser, which
personal guarantee Purchaser is unwilling to render. Therefore purchaser shall
assume the liabilities for the Rondo Equipment Lease, and will take possession
of the Equipment thereunder, pursuant to a license from Seller and will make the
required monthly lease payments to Seller, in the amount of $2,183.77, at least
ten days before such lease payments become due under the Rondo Equipment Lease.
b. Buy-Out of Rondo Equipment Lease. Seller hereby unconditionally undertakes to
buy-out the obligations under the Rondo Equipment Lease no later than April 1,
2001 so that all obligations of Seller under the Rondo Equipment Lease shall be
terminated no later than April 1, 2001.
c. Seller's Security Interest in Rondo Equipment. In furtherance of the
foregoing, Purchaser hereby grants to Seller a security interest in the Rondo
Equipment subject only to the security interest of the lessor under the Rondo
Equipment Lease and Purchaser will execute and pay for the filing of a UCC-1
Financing Statement evidencing such security interest.
d. GUARANTEE BY NVC LLC. NVC LLC hereby guarantees (the "NVC LLC Guarantee") to
Seller, and is executing this Agreement solely in its capacity as such
guarantor, all obligations of Purchaser related to or arising out of the Rondo
Equipment and the Rondo Equipment Lease. The NVC LLC Guarantee is unconditional
and Seller may seek performance under the NVC LLC Guarantee simultaneously with
seeking to enforce the obligation of Purchaser subject to such guarantee
1.4. ROYALTIES.
a. Payment of Royalties. In consideration of the Transfer of the Assets to
Purchaser by Seller, Purchaser shall pay to Seller a royalty fee (the "Royalty
Fee"), in the amounts and for the period more specifically set forth below, of
Licensee's Net Sales (defined below) of Pull Apart Cakes.
b. Amount and Duration of Royalty Fee. The Royalty Fee shall be payable for the
period commencing on the Closing Date and through and including November 30,
2004. The Royalty Fee shall be equal to (i) five percent (5%) of all Net Sales
made to existing customers (and their respective affiliates and subsidiaries) of
Seller, which existing customers are set forth on EXHIBIT C annexed hereto and
(ii) one and a half percent (1.5%) of all Net Sales made to all other customers
c. Net Sales Defined. Net Sales shall mean the gross sales price charged by
Purchaser for the Pull Apart Cakes, regardless of collection of revenue, less
returns and rebates, if any.
d. When Payment Made. Purchaser shall pay to Seller all royalties due on a
monthly basis. The monthly royalty for any given month (or for the first partial
month if the Closing takes place in the middle of a month) shall be paid on the
tenth (10th) day of each month for the Net Sales of the preceding month.
C-3
e. Sales Report, Audits, etc.. Purchaser shall submit to Seller on the fifteenth
(15th) day of each month a sales report detailing the sales of Pull-Apart Cakes
during the preceding month. The sales report shall be in the form specified by
Seller, and shall include, at a minimum, the gross revenues, net sales, and the
unit counts of all sales during the prior month and sales figures by customer.
Purchaser shall preserve all books and records regarding the business operations
under this Agreement for four (4) years from the date of their preparation.
Seller reserves the right to audit or inspect the books and records of Purchaser
at any time. If any such audit reveals an underpayment of the Royalty Fee by
more than two percent (2%) then Purchaser shall be responsible for all costs and
expenses associated with the audit.
ARTICLE 2
CLOSING, ITEMS TO BE DELIVERED
2.1 CLOSING. The closing (the "Closing") of the sale and purchase of the Assets
shall take place simultaneously with the execution of this Agreement and shall
be deemed to have occurred upon the completion of each and all of the following:
a. Receipt by both Seller and Purchaser of counterpart fully executed copies
of this Agreement not later than October 20, 2000;
b. Receipt by Seller of the payments and adjustments required pursuant to
Sections 1.2(b) through 1.2(d) of this Agreement; and
c. Delivery of control of the Assets to Purchaser at the Bakery
The date of the Closing is sometimes referred to as the "Closing Date."
2.2 ITEMS TO BE DELIVERED AT CLOSING. At the Closing and subject to the terms
and conditions contained in this Agreement:
(a) Seller Deliveries. Seller will deliver to the Purchaser the Assets at the
Bakery (Purchaser shall be solely responsible for any costs associated
with transferring the Assets from the Bakery to Purchaser's business
premises);
(b) Purchaser Deliveries. The Purchaser will deliver to Seller payment for the
Inventory by certified check or wire transfer:
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF SELLER. Seller warrants and represents to
Purchaser, all to its knowledge and without making any independent inquiries in
connection with this Agreement, that as of the date hereof and as of the Closing
Date::
(a) Seller is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.
C-4
(b) Seller has the corporate power, authority and legal right to execute,
deliver and perform this Agreement and the execution, delivery and performance
of this Agreement by Seller have been duly authorized by all necessary corporate
action. This Agreement has been duly executed and delivered by a duly authorized
officer of Seller, and this Agreement constitutes, and such instruments when
executed and delivered will constitute, legal, valid and binding obligations of
Seller enforceable against Seller in accordance with their respective terms.
(c) Seller has good, valid and marketable title to the Assets, all in the form
described hereinabove.
3.2 REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. Purchaser represents and
warrants to Seller, jointly and severally, as of the date of this Agreement as
follows:
(a) Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the State of Nevada. Seller has qualified to do
business as a foreign corporation in the State of California.
(b) Purchaser has the corporate power, authority and legal right to execute,
deliver and perform this Agreement and the execution, delivery and performance
of this Agreement by Purchaser have been duly authorized by all necessary
corporate action. This Agreement has been duly executed and delivered by a duly
authorized officer of Purchaser, and this Agreement constitutes, and such
instruments when executed and delivered will constitute, legal, valid and
binding obligations of Purchaser enforceable against Purchaser in accordance
with their respective terms.
(c) Purchaser has been given full disclosure, by Seller or Seller's
representatives, with regard to the Business and the Assets sufficient in order
for Seller to enter into this Agreement and acquire the Assets.
(d) Purchaser acknowledges that it is acquiring all of the tangible and
intangible Assets in their AS IS physical and legal condition without any
representation or warranty by Seller whatsoever except as may be specifically
set forth in this Agreement.
(e) Purchaser acknowledges that Seller has made no representations with regard
to the nature or success of the Pull-Apart Cakes or income to be derived from
the sale thereof and Purchaser is acquiring same with the sole intent of relying
on its own efforts and abilities in maintaining and continuing the sale of
Pull-Apart Cakes.
3.3 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations, warranties,
covenants and agreements made by the parties in this Agreement shall survive the
Closing.
ARTICLE 4
INDEMNIFICATION
4.1 INDEMNIFICATION BY SELLER. From and after the Closing, Seller will indemnify
and hold harmless Purchaser against and in respect of (a) any and all
liabilities and obligations of any nature whatsoever relating to the Assets
prior to the Closing; (b) any and all actions, suits, claims, or legal,
administrative, arbitration, governmental or other proceedings or investigations
against Seller and relating to the Assets and which result from or arise out of
any event, occurrence, action, inaction or transaction
C-5
occurring prior to the Closing Date; (c) any and all actions, suits, claims,
proceedings, investigations, demands, assessments, audits, fines, judgments,
costs and other expenses (including, without limitation, reasonable legal fees
and expenses) incident to any of the foregoing or to the enforcement of this
Section 4.1.
4.2 INDEMNIFICATION BY THE PURCHASER. From and after the Closing, the Purchaser
will indemnify and hold harmless Seller against and in respect of (a) any and
all liabilities and obligations of any nature whatsoever relating to the
Purchaser or the Purchaser's business, prior to the Closing; (b) any and all
actions, suits, claims, or legal, administrative, arbitration, governmental or
other proceedings or investigations against any to Purchaser, the Purchaser's
business or the Assets and which result from or arise out of any event,
occurrence, action, inaction or transaction occurring after the Closing Date;
(c) any and all actions, suits, claims, proceedings, investigations, demands,
assessments, audits, fines, judgments, costs and other expenses (including,
without limitation, reasonable legal fees and expenses) incident to any of the
foregoing or to the enforcement of this Section 4.2.
4.3 PROCEDURE. Notice must be given within a reasonable time after discovery of
any fact or circumstance on which a party could claim indemnification ("Claim"
or "Claims"). If the party, in order to fulfill its obligations to the other
party must take legal action or if the party is involved in legal action, the
outcome of which could give rise to its seeking indemnification, one party shall
consult with the other party with respect to such legal action and allow it to
participate therein.
No Claim for which indemnification is asserted shall be settled or compromised
without the written consent of Seller and the Purchaser; provided, however, if a
party does not consent to a bona fide settlement proposed by the other, the
other party shall be liable for indemnification only to the lesser of the final
judgment or the amount to be paid in settlement.
Subject to the provisions of the Section, neither party shall have recourse for
indemnification until the Claims are fully and finally resolved. For a period of
thirty (30) days following the giving of the notice of such Claim, the Purchaser
and Seller shall attempt to resolve any differences they may have with respect
to such Claim. If a resolution is not reached within the thirty (30) day period
(unless the parties agree to extend the period), the matter may be submitted to
a court of competent jurisdiction.
A Claim shall be deemed finally resolved in the event a matter is submitted to a
court, upon the entry of judgment by a court of final authority.
ARTICLE 5
NON-COMPETITION AGREEMENT
5.1 NON-COMPETITION AND NON-DISCLOSURE. Following the Closing Date, Seller and
its officers, directors, employees, subsidiaries and affiliates agree, that for
a period of four (4) years after the Closing Date, it will not:
a. Engage or become interested, directly or indirectly, in the manufacturing
or sale of bakery products materially identical to the Pull-Apart Cakes
anywhere in the United States if such engagement would result in the sale
of Competing Products in United States;
C-6
b. Divulge, communicate, or utilize for the benefit of anyone other than the
Purchaser, any confidential information of or pertaining to the Assets.
5.2 EQUITABLE REMEDIES. Seller specifically acknowledges and agrees that the
remedy at law for any breach of any provision of this Article 5 by Seller will
be inadequate and that Purchaser, in addition to any other relief available to
it, shall be entitled to the issuance of a restraining order or any other
similar equitable relief by any court of proper jurisdiction with regard to such
breach.
ARTICLE 6
TRANSACTION SUBJECT AND CONTINGENT ON TRANSACTION WITH RICH PRODUCTS
6.1 TRANSACTION CONTINGENT ON RICH PRODUCTS TRANSACTION. Purchaser acknowledges
and understands that this Agreement is contingent on Seller closing on an Asset
Purchase Agreement being entered into approximately simultaneously herewith
between Seller and Rich Products Manufacturing Corporation (the "Rich Products
Transaction").
Pursuant to the Rich Products Transaction Seller is conveying its remaining
interests in the Bakery to Rich Products Manufacturing Corporation ("Rich
Products"). In the event the Rich Products Transaction does not close by
February 28, 2001, for any reason whatsoever including a willful default
thereunder by Seller, then this Agreement shall be terminated and Purchaser
shall be obligated to reconvey the Assets to Seller, all as more particularly
set forth hereinbelow.
6.2 PROCEDURE IN THE EVENT OF TERMINATION OF THE RICH PRODUCTS TRANSACTION. If
Purchaser shall receive written notice (the "Termination Notice") from Seller,
or Seller's counsel, at any time up to February 28, 2001, that the Rich Products
Transaction has been terminated then each and all of the following shall occur
or shall be deemed to have occurred:
a. All right, title and interest to the Assets shall be deemed to have been
automatically reconveyed to Seller simultaneously with the Termination
Notice.
b. Seller and Purchaser shall make immediate arrangements for the Seller's
repurchase from Purchaser of the Inventory, at cost, as then existing,
c. Purchaser shall have no obligation to make any further payments of Royalty
Fees after the date of its receipt of the Termination Notice even if such
Royalty Fees would otherwise have been due and payable to Seller. However
Seller shall have no obligation to refund any Royalty Fees forwarded by
Purchaser to Seller prior to Purchaser's receipt of the Termination
Notice.
d. Purchaser shall fully cooperate with Seller in effectuating the intent of
this Article VI so that Seller may reassume control of the Assets as same
was held by Seller prior to the Closing.
ARTICLE 7
MISCELLANEOUS
C-7
7.1 BROKERS' AND FINDERS' FEES. Seller represents and warrant to the Purchaser,
and Purchaser represents and warrants to Seller that all negotiations relative
to this Agreement have been carried on by the parties directly without the
intervention of any person who may be entitled to any brokerage or finder's fee
or other commission in respect of this Agreement or the consummation of the
transactions contemplated hereby. Seller agrees to indemnify and hold harmless
Purchaser, and Purchaser agrees to indemnify and hold harmless Seller, as the
case may be, against any and all claims, losses, liabilities and expenses which
may be asserted against or incurred by them as a result of either party's
dealings, arrangements or agreements with any such person or entity.
7.2 SALES, TRANSFER AND DOCUMENTARY TAXES, ETC. Neither Seller nor the Purchaser
shall be responsible for the other's sales, transfer or documentary taxes, if
any, due as a result of the transfer of the Assets to the Purchaser.
7.3 EXPENSES. The parties shall pay their own expenses incidental to the
preparation of this Agreement, the carrying out of the provisions of this
Agreement and the consummation of the transactions contemplated hereby.
7.4 CONTENTS OF AGREEMENT; PARTIES IN INTEREST; ETC. This Agreement sets forth
the entire understanding of the parties with respect to the transactions
contemplated hereby. It shall not be amended or modified except by written
instrument duly executed by each of the parties hereto. Any and all previous
agreements and understanding between or among the parties regarding the subject
matter hereof, whether written or oral, are superseded by this Agreement.
7.5 ASSIGNMENT AND BINDING EFFECT. Neither Seller nor Purchaser shall assign
this Agreement nor any part of it, nor delegate any obligation imposed by this
Agreement without the prior written consent of the other. All of the terms and
provisions of this Agreement shall be binding upon and inure to the benefit of
and be enforceable by the successors and assigns of Seller and Purchaser.
7.6 WAIVER. Any term or provision of this Agreement may be waived at any time by
the party or parties entitled to the benefit thereof by a written instrument
duly executed by such party or parties.
7.7 NOTICES. Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and
shall be deemed given only if delivered personally, by guaranteed overnight
courier or sent by fax or by registered or certified mail, postage prepaid, to
Seller's and Purchaser's respective address set forth hereinabove or to such
other address as the addressee may have specified in a notice duly given to the
sender as provided herein. Such notice, request, demand, waiver, consent,
approval or other communication will be deemed to have been given as of the date
so delivered or faxed.
7.8 GOVERNING LAW. This Agreement shall be governed by and interpreted and
enforced in accordance with the laws, and in the courts, of the State of New
Jersey with regard to any and all matters, issues, claims and controversies
relating to, or arising out of, payments due to Seller hereunder, control of the
Assets by the party entitled to same as the case may be pursuant to this
Agreement and indemnification of Seller by Purchaser pursuant to Section 4.2
hereinabove. This Agreement shall be governed by and interpreted and enforced in
accordance with the laws, and in the courts, of the State of California with
regard to all other matters hereunder.
C-8
7.9 NO BENEFIT TO OTHERS. The representations, warranties, covenants and
agreements contained in this Agreement are for the sole benefit of the parties
hereto and their heirs, administrators, legal representatives, successors and
assigns, and they shall not be construed as conferring any rights on any other
persons.
7.10 SEVERABILITY. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent of such
invalidity or unenforceability without invalidating or rendering unenforceable
the remaining provisions hereof, and any such invalidity or unenforceability in
any jurisdiction shall not invalidate or render unenforceable such provision in
any other jurisdiction.
7.11 COUNTERPARTS. This Agreement may be executed in any number of counterparts
and any parties hereto may execute any such counterpart, each of which when
executed and delivered shall be deemed to be an original and all of which
counterparts taken together shall constitute but one and the same instrument.
This Agreement shall become binding when one or more counterparts taken together
shall have been executed and delivered by the parties. It shall not be necessary
in making proof of this Agreement or any counterpart hereof to produce or
account for any of the other counterparts.
IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date
first written.
SELLER:
PARAMARK ENTERPRISES, INC..
By: /s/ Xxxx X. Xxxxxxxx
------------------------------------
Xxxx X. Xxxxxxxx, President
PURCHASER:
XXXXXX STREET BAKING COMPANY
By: /s/ Xxxx Xxxxxx
------------------------------------
Xxxx Xxxxxx, President
GUARANTOR:
NV COMMERCIAL LLC
By:
---------------------------
C-9
Exhibit D
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of October 9, 2000,
between Rich Products Manufacturing Corporation, a Delaware corporation d/b/a
Xxx Xxxxxxx Desserts, with its principal office located at 0000 Xxxxxxx Xxxxxx,
Xxxxxxx, Xxx Xxxx ( "Buyer"), Rich Products Corporation, a Delaware corporation
with its principal office located at 0000 Xxxxxxx Xxxxxx, Xxxxxxx, Xxx Xxxx (
"RPC") and Starbake, Inc., a Delaware corporation, with its principal office
located at 0000 Xxxxxxxxxx Xxxxx, Xx Xxxxx, Xxxxxxxxxx, ("Starbake"), a wholly
owned subsidiary of Paramark Enterprises, Inc., a Delaware corporation with its
principal office located at One ("Paramark"). Paramark and Starbake are
hereinafter collectively referred to as "Seller"
W I T N E S S E T H :
WHEREAS, Seller is engaged in the business of manufacturing and selling
certain bakery goods and other food products, including cinnamon rolls,
cinnachips, bundt cakes, brownies, sheet cakes, iced cakes, decorated cakes,
torte cakes, rugulach and cobblers (collectively, the "Business");
WHEREAS, Seller desires to sell to Buyer and Buyer desires to purchase
from Seller, certain assets of the Business, all on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the representations and warranties
made herein, and of the mutual benefits to be derived hereby, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF THE ASSETS
1.1 Assets. Subject to and upon the terms and conditions set forth in this
Agreement, at the Closing, Seller will sell, transfer, convey, assign and
deliver to Buyer good and marketable title, free and clear of all liens,
liabilities, encumbrances, security interests, claims, and other restrictions,
and Buyer will purchase or acquire from Seller, all right, title and interest of
Seller in and to (i) the assets listed in Schedule 1.1 hereto (the "Specified
Assets") and (ii) the properties, assets and rights of every nature, kind and
description, tangible and intangible (including goodwill), whether real,
personal or mixed, whether accrued, contingent or otherwise
D-1
and whether now existing or hereinafter acquired (other than the Excluded
Assets, as such term is defined below) primarily relating to or used or held for
use in connection with the Business as the same may exist on the Closing Date
and all in their AS IS condition without any representation and warranty
whatsoever except as may be specifically set forth in this Agreement
(collectively, the "Assets"). Buyer will agree to buy certain items of finished
goods inventory, ingredients and packaging inventory as shall be mutually agreed
upon by Buyer and Seller (the "Inventory").
1.2 Excluded Assets. Seller will retain and not transfer to Buyer in
connection with this Agreement (a) cash and cash equivalents, (b) accounts
receivable, and (c) Seller's corporate records, minute books, stock books and
tax returns, (except to the extent that such records are necessary for Buyer to
operate the Business after the Closing, Buyer shall be entitled to make one copy
of such necessary documentation in accordance with Section 4.1.3 hereto).
1.3 Parties to Act as Collection Agents for Other Parties Accounts
Receivable. To the extent that either party to this Agreement receives payment,
after the Closing, on an account receivable that was actually due and owing to
the other party, the receiving party shall hold such accounts receivable payment
in trust for the other party and shall turn same over to the other party as soon
as practicable after the receipt thereof.
1.4 Allocation of Accounts Receivable Payments from Shared Customers. In
furtherance of the intent of Section 1.4 hereinabove, if either party receives a
payment on an accounts receivable after the Closing and such payment is (i) from
a customer of the Business that purchased bakery products from the Business both
before and after the Closing and (ii) the payment received is not designated as
a payment on a specific invoice or invoices submitted by either Seller or Buyer,
then each of such payments shall be applied by the receiving party thereof as
follows:
(a) First to any amounts due and owing from said customer to the
receiving party pursuant to invoices that are outstanding for more than thirty
(30) days and that relate solely to the Business; and
(b) Thereafter, to amounts due and owing to the non-receiving party
by the same customer on accounts receivable relating solely to the Business.
ARTICLE II
CLOSING
2.1 Place and Date. The closing (the "Closing") of the sale and purchase
of the Assets shall take place at 10:00 a.m. p.d.t. within seven (7) business
days of Seller having
D-2
obtained the consent of its shareholders to this transaction, as more
specifically set forth below. If personal appearances are required, the Closing
will occur at 1150 Niagara Street, Buffalo, New York, or, if such appearances
are not required, such other time and place upon which the parties may mutually
agree in writing.
2.2 Purchase Price. On the terms and subject to the conditions set forth
in this Agreement, Buyer agrees to pay or cause to be paid to Seller, an
aggregate of Xxx Xxxxxxx Xxxx Xxxxxxx Xxxxxx Xxxxxx Dollars (U.S. $1,900,000),
payable by wire transfer to accounts designated by Seller as follows:
a. $900,000.00 at the Closing;
d. $125,000.00 on or before each of June 1st and December 1st of each
of 2001, 2002, 2003 and 2004.
2.2A RPC Guarantee. Subject to Section 4.1.8 below, RPC hereby guarantees
(the "RPC Guarantee"):
a. All payments owing to Seller from Buyer under this Agreement and the
License Agreement;
b. All payments due and owing pursuant to the Consulting Agreements
described hereinbelow in Section 4.3.6;
c. The obligation of Buyer to proceed to Closing pursuant to this
Agreement.
The RPC Guarantee is unconditional, except as it may be limited by the
potential offsets arising out of Section 4.1.8 of this Agreement, and Seller may
seek performance under the RPC Guarantee simultaneously with seeking to enforce
the obligation of Buyer subject to the RPC Guarantee
2.3 Meaning of Closing. Closing, as used in this Agreement, shall mean, as
the context requires, either (a) the date of Closing on this Agreement or (b)
the date of entry into the License Agreement between Seller and Buyer as
described in Section 4.3.7 below.
2.4 Assumption of Liabilities. Buyer will assume the liabilities of Seller
specifically set forth and identified on Schedule 2.4 and Schedule 2.4.1 hereto
(collectively, the "Assumed Liabilities"). Except for the Assumed Liabilities,
Buyer will not assume, be liable for, or become responsible for any liability of
Seller of any nature, whether accrued, absolute, contingent or otherwise.
2.5 Equipment and Other Lease Security Deposits. Certain of the Assumed
Liabilities
D-3
consist of Seller's liabilities under equipment leases, and/or car leases and or
the lease for the premises in La Jolla, California, where the Business is
maintained by Seller (collectively the "Assumed Leases), all as more
particularly set forth on Schedule 2.4. To the extent that Seller has delivered
to the respective lessors under any or all of the Assumed Leases, the security
deposits and/or prepaid rent deposits set forth on Schedule 2.4 hereto
(collectively the "Security Deposits"), and such Security Deposits continue to
be held by the respective lessors as of the Closing, then Buyer shall reimburse
Seller at the Closing for the full amount of said Security Deposits.
2.6 Adjustment for Assumed Liabilities. Seller shall be responsible for
all payments under the Assumed Liabilities through the day prior to the Closing
Date, Buyer shall be responsible for all payments under the Assumed Liabilities
commencing on the Closing Date and Seller shall make a cash adjustment for same
accordingly at the Closing.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of Seller. Seller represents and
warrants to Buyer as follows:
3.1.1 General Representations.
(a) Corporate Status. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
with full corporate power and authority to carry on its business and to own or
lease and to operate its properties as and in the places where such business is
conducted and such properties are owned, leased or operated.
(b) Authority Relative to Agreement. The execution, delivery
and performance of this Agreement and all other agreements, certificates and
instruments contemplated hereby (collectively, the "Ancillary Agreements") by
Seller and consummation by Seller of the transactions contemplated hereby and
thereby have been duly and effectively authorized by all necessary action, and
this Agreement constitutes, and each Ancillary Agreement when executed will
constitute, a legal, valid and binding obligation of Seller enforceable against
it in accordance with its respective terms.
3.1.2 Financial Statements. The balance sheet of Seller as at July
31, 2000 (the "Interim Balance Sheet") and the related statement of income for
the seven month period then ended (including the notes thereto) (the "Interim
Statements") and the audited balance sheet of Seller as of December 31, 1999
(the "Audited Balance Sheet") and the related statements of
D-4
income for the calendar year then ended (the "Audited Statements") heretofore
delivered by Seller to Buyer, are accurate and complete in all respects and
present fairly the financial position of Seller as of such dates and the results
of its operations and changes in its financial position for such periods, and
have been prepared in conformity with generally accepted accounting principles.
December 31, 1999 is sometimes hereinafter referred to as the "Audited Balance
Sheet Date".
3.1.3 Absence of Changes. Since the Audited Balance Sheet Date,
Seller has conducted the Business only in the ordinary course consistent with
prior practice and has not, on behalf of, in connection with or relating to the
Business or the Assets:
(a) to the best knowledge of Seller, suffered any event which
has or may have a material adverse effect on the Business or the Assets (a
"Material Adverse Affect");
(b) incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in connection with the
purchase of goods or services in the ordinary course of business consistent with
prior practice, none of which liabilities, in any case or in the aggregate,
could have a Material Adverse Effect;
(c) discharged or satisfied any lien other than those then
required to be discharged or satisfied, or paid any obligation or liability,
absolute, accrued, contingent or otherwise, whether due or to become due, other
than current liabilities shown on the Audited Balance Sheet and current
liabilities incurred since the Audited Balance Sheet Date in the ordinary course
of business, consistent with prior practice;
(d) mortgaged, pledged or subjected to lien, any property,
business or assets, tangible or intangible, held in connection with the
Business;
(e) sold, transferred, leased to others or otherwise disposed
of any of the Assets, except for inventory sold in the ordinary course of
business, or canceled or compromised any debt or claim, or waived or released
any right of substantial value;
(f) received any notice of termination of any contracts, lease
or other agreement or suffered any damage, destruction or loss (whether or not
covered by insurance) which, in any case or in the aggregate, has had a Material
Adverse Effect;
(g) transferred or granted any rights under, or entered into
any settlement regarding the breach or infringement of, any Intellectual
Property, or modified any existing rights with respect thereto;
D-5
(h) made any change in the rate of compensation, commission,
bonus or other direct or indirect remuneration payable, or paid or agreed or
orally promised to pay, conditionally or otherwise, any bonus, incentive,
retention or other compensation, retirement, welfare, fringe or severance
benefit or vacation pay, to or in respect of any shareholder, director, officer,
employee, distributor or agent of Seller relating to the Business;
(i) encountered any labor union organizing activity, had any
actual or threatened employee strikes, work stoppages, slowdowns or lockouts, or
had any material change in its relations with its employees, agents, customers
or suppliers;
(j) failed to replenish inventories and supplies in a normal
and customary manner consistent with its prior practice and prudent business
practices prevailing in the industry, or made any purchase commitment in excess
of the normal, ordinary and usual requirements of its business or at any price
in excess of the then current market price or upon terms and conditions more
onerous than those usual and customary in the industry;
(k) instituted, settled or agreed to settle any litigation,
action or proceeding before any court or governmental body relating to the
Business or the Assets other than in the ordinary course of business consistent
with past practices but not in any case involving amounts in excess of $10,000;
(l) entered into any transaction, contract or commitment other
than in the ordinary course of business.
3.1.4 Litigation. There is no action, claim, demand, suit,
proceeding, arbitration, grievance, citation, summons, subpoena, inquiry or
investigation of any nature, civil, criminal, regulatory or otherwise, in law or
in equity, pending or to the best knowledge of Seller threatened against or
relating to Seller in connection with the Assets or the Business or against or
relating to the transactions contemplated by this Agreement, and Seller does not
know or have reason to be aware of any basis for the same. No fines or penalties
have been asserted against Seller with respect to the Business under any
environmental law or any foreign, federal, state or local law relating to
occupational health or safety.
3.1.5 Operation of the Business. (a) Seller has conducted the
Business only through Seller and not through any other divisions or any direct
or indirect Affiliate of Seller and (b) no part of the Business is operated by
Seller through any entity other than Seller. An "Affiliate" of an entity is any
person or entity (a "Person") that controls, is under common control with, or is
controlled by such entity.
3.1.6 Assets. Seller has good and marketable title to all of the
Assets free and clear of any and all liens, except as set forth on Schedule
3.1.6 hereto. The Assets comprise all
D-6
assets and services required for the continued procedural conduct of the
Business by Buyer in materially the same manner as currently being conducted by
Seller. The Assets, taken as a whole, constitute all the properties and assets
relating to or used or held for use in connection with the Business during the
past twelve months (except inventory sold, cash disposed of, accounts receivable
collected, prepaid expenses realized, contracts fully performed, properties or
assets replaced by equivalent or superior properties or assets, in each case in
the ordinary course of business, employees not hired by Buyer, and the Excluded
Assets).
3.1.7 Inventories. To the best knowledge of Seller, (a) all items
included in the Inventory are of good, usable and merchantable quality in all
material respects and do not include obsolete or discontinued items and (b)all
such items of Inventory are of such quality as to meet the quality control
standards of Buyer and any applicable governmental quality control standards.
All items included in the Inventory that are finished goods are saleable as
current inventories at the current prices thereof in the ordinary course of
business. All items included in the Inventory are recorded on the books of the
Business at the lower of cost or market value on a consistent basis.
3.1.8 Product Warranties. Except for warranties under applicable
law,(a) there are no warranties express or implied, written or oral, with
respect to the products of the Business and (b) there are no pending or, to the
best knowledge of Seller, threatened claims with respect to any such warranty,
and to the best knowledge of Seller, Seller has no liability with respect to any
such warranty, whether known or unknown, absolute, accrued, contingent or
otherwise and whether due or to become due.
3.1.9 Intellectual Property.
(a) Title. To the best knowledge of Seller, none of the items
of intellectual property comprising part of the Assets as listed in Schedule
3.1.9 hereto (collectively, the "Intellectual Property") are subject to any
outstanding licenses, liens, encumbrances, claims or other restrictions or
rights of others, and there are no pending or, to the best knowledge of Seller,
threatened challenges to any of the Intellectual Property. To the best knowledge
of Seller, the Business as heretofore conducted does not infringe or constitute,
and has not infringed or constituted, an unlawful invasion of any rights of any
Person and no notice of any such infringement or invasion has been received by
Seller. Seller has the right to use, free and clear of the claims or rights of
others, all Intellectual Property. To the best knowledge of Seller, the
Intellectual Property constitutes all such property necessary to conduct the
Business as heretofore conducted.
(b) Transfer. Immediately after the Closing, Buyer will own
all of the Intellectual Property, free from any liens, claims and encumbrances
and on the same terms and conditions as in effect prior to the Closing.
D-7
(c) No Infringement. To the best knowledge of Seller, The
conduct of the Business does not infringe or otherwise conflict with any rights
of any Person in respect of any Intellectual Property. To the best knowledge of
Seller, None of the Intellectual Property is being infringed or otherwise used
or available for use, by any other Person.
(d) No Intellectual Property Litigation. No claim or demand of
any Person has been made nor is there any proceeding that is pending, or to the
knowledge of Seller after due inquiry, threatened, nor is there a reasonable
basis therefor, which (i) challenges the rights of Seller in respect of any
Intellectual Property, (ii) asserts that Seller is infringing or otherwise in
conflict with, or is, required to pay any royalty, license fee, charge or other
amount with regard to, any Intellectual Property, or (iii) claims that any
default exists under any agreement related to any of the Intellectual Property.
The Intellectual Property is not subject to any outstanding order, ruling,
decree, judgment or stipulation by or with any court, arbitrator, or
administrative agency, or has been the subject of any litigation within the last
five years, whether or not resolved in favor of Seller.
3.1.10 Insurance. Seller has delivered to Buyer a complete and
correct list and summary description of all insurance policies maintained by
Seller for the benefit of or in connection with the Assets or the Business
together with all riders and amendments thereto. Such policies are in full force
and effect, and all premiums due thereon have been paid. Seller has complied in
all material respects with the terms and provisions of such policies.
3.1.11 Leases.
(a) Seller has delivered to Buyer a correct and complete copy
of the Lease Agreement concerning Seller's commercial bakery facility located at
0000 Xxxxxxxxxx Xxxxx, Xx Xxxxx, Xxxxxxxxxx, including without limitation, any
amendments or addendum's thereto (the "Lease").
(b) The Lease is legal, valid, binding, enforceable, and in
full force and effect. Neither Seller nor, to the best of Seller's knowledge,
any other party is in default, violation or breach in any respect under the
Lease, and, to the best of Seller's knowledge, no event has occurred and is
continuing that constitutes or, with notice or the passage of time or both,
would constitute a default, violation or breach in any respect under the Lease.
3.1.12 Employees, Labor Matters, Etc. Seller is not a party to or
bound by any collective bargaining agreement and there are no labor unions or
other organizations representing, purporting to represent or, to the best of
Seller's knowledge, attempting to represent any employees employed in the
operation of the Business. There has not occurred or, to the best of Seller's
knowledge, been threatened any material strike, slowdown, picketing, work
stoppage,
D-8
concerted refusal to work overtime or other similar labor activity with respect
to any employees employed in the operation of the Business. There are no labor
disputes currently subject to any grievance procedure, arbitration or litigation
and there is no representation petition pending or, to the best knowledge of
Seller, threatened with respect to any employee employed in the operation of the
Business. Seller has complied with all provisions of applicable law pertaining
to the employment of employees, including, without limitation, all such laws
relating to labor relations, equal employment, fair employment practices,
entitlements, prohibited discrimination or other similar employment practices or
acts, except for any failure so to comply that, individually or together with
all such other failures, has not and will not result in a material liability or
obligation on the part of Buyer or the Business.
3.1.13 Employment by Buyer. Upon the Closing, Buyer may, but shall
have no obligation to, offer employment to any employee of Seller.
3.1.14 Liability. Regardless of whether Buyer offers employment to
any employee of Seller, Seller shall retain and pay all obligations and
liabilities arising out of Seller's employment of its employees and the
termination thereof, including, but not limited to obligations and liabilities
for all claims with respect to wages, benefits, workers compensation,
disability, unemployment insurance and related matters, regardless of when any
such claims are made.
3.1.15 Employment of Seller's Employees.
(a) For a period of two (2) years from the Closing Date,
Seller will not, and will not permit any of its Affiliates to, solicit, offer to
employ or retain the services of or otherwise interfere with the relationship of
Buyer with any Person employed by or otherwise engaged to perform services for
Buyer in connection with the operation of the Business.
(b) Neither Buyer nor any of its Affiliates shall have any
liability with respect to any employee of Seller or benefit plan of Seller or
any of its Affiliates or any claim thereof or related thereto. From and after
the Closing, Seller and its Affiliates shall, jointly and severally, remain
solely responsible for any and all benefit liabilities in respect of such
employees, and their beneficiaries and dependents, relating to or arising in
connection with or as a result of: (i) the employment or the actual or
constructive termination of employment of any such employee by Seller; (ii) the
participation in or accrual of benefits or compensation under, or the failure to
participate in or to accrue compensation or benefits under, any benefit plan or
other employee or retiree benefit or compensation plan, program, practice,
policy, agreement or arrangement of Seller or any of its Affiliates ; or (iii)
accrued but unpaid salaries, wages, bonuses, incentive compensation, vacation or
sick pay or other compensation or payroll items (including, without limitation,
deferred compensation), except, in any such case, to the extent any such
liability is (x) specifically assumed by Buyer pursuant to this Agreement or (y)
reflected on
D-9
the Audited Balance Sheet or relates to services rendered and arose after the
Audited Balance Sheet Date in the ordinary course of business, consistent with
the prior practice of Seller and in accordance with this Agreement (applied as
if the provisions of Section 4.1 had been in effect from the close of business
on the Audited Balance Sheet Date through the Closing Date).
3.1.16 Employee Benefit Plans and Related Matters.
(a) Employee Benefit Plans. Schedule 3.1.16 sets forth a true
and complete list of each "employee benefit plan", as such term is defined in
section 3(3) of the Employee Income Retirement Security Act ("ERISA"), whether
or not subject to ERISA, and each bonus, incentive or deferred compensation,
severance, termination, retention, change of control, stock option, stock
appreciation, stock purchase, phantom stock or other equity-based, performance
or other employee or retiree benefit or compensation plan, program, arrangement,
agreement, policy or understanding, whether written or unwritten, that provides
or may provide benefits or compensation in respect of any employee or former
employee employed or formerly employed in the operation of the Business or the
beneficiaries or dependents of any such employee or former employee (such
employees, former employees, beneficiaries and dependents collectively, the
"Employees") or under which any of the Employees is or may become eligible to
participate or derive a benefit and that is or has been maintained or
established by Seller or any other trade or business, whether or not
incorporated, which, together with Seller is or would have been at any date of
determination occurring within the preceding six years treated as a single
employer under section 414 of the Internal Revenue Code (the "Code") (such other
trades and businesses collectively, the "Related Persons"), or to which Seller
or any Related Person contributes or is or has been obligated or required to
contribute or with respect to which Seller or the Business may have any
liability or obligation (collectively, the "Plans"). With respect to each such
Plan, Seller has provided Buyer complete and correct copies of: all written
Plans; descriptions of all unwritten Plans; all trust agreements, insurance
contracts or other funding arrangements; the two most recent actuarial and trust
reports; the two most recent Forms 5500 and all schedules thereto; the most
recent IRS determination letter; current summary plan descriptions; all material
communications received from or sent to the Internal Revenue Service (the
"IRS"), the Pension Benefit Guaranty Corporation or the Department of Labor
(including a written description of any oral communication); an actuarial study
of any post-employment life or medical benefits provided under any such Plan, if
any; statements or other communications regarding withdrawal or other multi
employer plan liabilities, if any; and all amendments and modifications to any
such document Seller has not communicated to any Employee of any intention or
commitment to modify any Plan or to establish or implement any other employee or
retiree benefit or compensation arrangement.
(b) Qualification. Each Plan (including all amendments
thereto) intended to be qualified under section 401(a) of the Code, and the
trust (if any) forming a part thereof, has received a favorable determination
letter from the IRS as to its qualification under
D-10
the Code and to the effect that each such trust is exempt from taxation under
section 501(a) of the Code, and nothing has occurred since the date of such
determination letter that could adversely affect such qualification or
tax-exempt status.
(c) Compliance; Liability.
(i) No Plan is subject to section 412 of the Code or
section 302 or Title IV of ERISA.
(ii) No liability has been or is expected to be
incurred by Seller, any of its Affiliates or the
Business (either directly or indirectly, including
as a result of an indemnification obligation)
under or pursuant to Title I or IV of ERISA or the
penalty, excise tax or joint and several liability
provisions of the Code relating to employee
benefit plans that could, following the Closing,
become or remain a liability of the Business or
become a liability of Buyer or of any employee
benefit plan established or contributed to by
Buyer and, to the best knowledge of Seller and its
Affiliates after due inquiry, no event,
transaction or condition has occurred or exists
that could result in any such liability to the
Business or, following the Closing, Buyer.
(iii) Each of the Plans has been operated and
administered in all respects in compliance with
all applicable laws, except for any failure so to
comply that, individually or together with all
other such failures, has not and will not result
in a material liability or obligation on the part
of the Business, or, following the Closing, Buyer,
and has not had or resulted in, and will not have
or result in, a Material Adverse Effect. There are
no material pending or, to the best knowledge of
Seller after due inquiry, threatened claims by or
on behalf of any of the Plans, by any Employee or
otherwise involving any such Plan or the assets of
any Plan (other than routine claims for benefits).
(iv) No Plan is a "multiemployer plan" as defined in
Section 414(f) of the Code or Sections 3(37) or
4001(a)(3) of ERISA or is a "multiple employer
plan" within the meaning of Section 413(c) of the
Code or Sections 4063,
D-11
4064 or 4066 of ERISA.
(v) All contributions required to have been made by
Seller and each Related Person to any Plan under
the terms of any such Plan or pursuant to any
applicable collective bargaining agreement or
applicable law have been made within the earliest
time prescribed by any such Plan, agreement or
applicable law.
(vi) No Employee is or may become entitled to
post-employment benefits of any kind by reason of
employment in the Business, including, without
limitation, death or medical benefits (whether or
not insured), other than (a) coverage provided
pursuant to the terms of any Plan specifically
identified as providing such coverage in Schedule
3.1.16 or mandated by section 4980B of the Code
(b) retirement benefits payable under any Plan
qualified under section 401(a) of the Code or (c)
deferred compensation accrued as a liability on
the Audited Balance Sheet or incurred after the
Audited Balance Sheet Date in the ordinary course
of business consistent with the prior practice of
Seller, pursuant to the terms of a Plan. The
consummation of the transactions contemplated by
this Agreement, will not result in an increase in
the amount of compensation or benefits or the
acceleration of the vesting or timing of payment
of any compensation or benefits payable to or in
respect of any Employee.
3.1.17 Records. The minute books of Seller insofar as they relate to
or affect the Business and the Assets are substantially complete and correct in
all material respects. The books of account of Seller, insofar as they relate to
or affect the Business and the Assets, are true, complete and correct in all
material respects.
3.1.18 Disclosure. No representation or warranty by Seller contained
in this Agreement nor any statement or certificate furnished or to be furnished
by or on behalf of Seller to Buyer or its representatives in connection herewith
or pursuant hereto contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact required to make the
statements contained herein or therein not misleading.
D-12
ARTICLE IV
COVENANTS
4.1 Covenants of Seller.
4.1.1 Conduct of Business. From the date hereof to the Closing Date,
except as expressly permitted or required by this Agreement or as otherwise
consented to by Buyer in writing, Seller will:
(a) carry on the Business in, and only in, the ordinary
course, in substantially the same manner as heretofore conducted, and use all
reasonable efforts to preserve intact its present business organization,
maintain its properties in good operating condition and repair, keep available
the services of its present officers and significant employees, and preserve its
relationship with customers, suppliers and others having business dealings with
it, to the end that its goodwill and going business shall be in all material
respects unimpaired following the Closing;
(b) pay accounts payable and other obligations of the Business
when they become due and payable in the ordinary course of business consistent
with prior practice;
(c) perform in all material respects all of its obligations
under all contracts and other agreements and instruments relating to or
affecting the Business or the Assets, and comply in all material respects with
all applicable laws applicable to it, the Assets or the Business;
(d) not enter into or assume any material agreement, contract
or instrument relating to the Business, or enter into or permit any material
amendment, supplement, waiver or other modification in respect thereof;
(e) not grant (or commit to grant) any increase in the
compensation (including incentive or bonus compensation) of any employee
employed in the operation of the Business or institute, adopt or amend (or
commit to institute, adopt or amend) any compensation or benefit plan, policy,
program or arrangement or collective bargaining agreement applicable to any such
employee; and
(f) not take any action or omit to take any action, which
action or omission would result in a breach of any of the representations and
warranties set forth in Section 3.1.3.
4.1.2 No Solicitation. During the term of this Agreement, Seller,
any of its Affiliates or any Person acting on its behalf shall not (i) solicit
or encourage any inquiries or
D-13
proposals for, or enter into any discussions with respect to, the acquisition of
any properties and assets held for use in connection with, necessary for the
conduct of, or otherwise material to, the Business or (ii) furnish or cause to
be furnished any non-public information concerning the Business to any Person
(other than Buyer and its agents and representatives), other than in the
ordinary course of business or pursuant to applicable law and after prior
written notice to Buyer. Seller shall not sell, transfer or otherwise dispose
of, grant any option or proxy to any Person with respect to, create any lien,
claim or encumbrance upon, or transfer any interest in, any Asset, other than in
the ordinary course of business and consistent with this Agreement.
4.1.3 Access and Information.
(a) So long as this Agreement remains in effect, Seller will
(and will cause its Affiliates, respective accountants, counsel, consultants,
employees and agents to) give Buyer, Buyer's prospective lenders and investors,
and their respective accountants, counsel, consultants, employees and agents,
full access during normal business hours to, and furnish them with all
documents, records, work papers and information with respect to, all of such
Person's properties, assets, books, contracts, commitments, reports and records
relating to the Business, as Buyer shall from time to time reasonably request.
In addition, Seller will permit Buyer, Buyer's prospective lenders and
investors, and their respective accountants, counsel, consultants, employees and
agents, reasonable access to such personnel of Seller during normal business
hours as may be necessary or useful to Buyer in its review of the properties,
assets and business affairs of the Business and the above-mentioned documents,
records and information. Seller will keep Buyer generally informed as to the
affairs of the Business.
(b) Seller will retain all books and records relating to the
Business in accordance with Seller's record retention policies as presently in
effect. During the four-year period beginning on the Closing Date, Seller shall
not dispose of or permit the disposal of any such books and records not required
to be retained under such policies without first giving sixty (60) days' prior
written notice to Buyer offering to surrender the same to Buyer at Buyer's
expense.
4.1.4 Public Announcements. Except for the filing of an accurate
registration statement with the Securities and Exchange Commission (the "SEC")
and as required by Applicable Law, Seller shall not, and it shall not permit any
Affiliate to, make any public announcement in respect of this Agreement or the
transactions contemplated hereby without the prior written consent of Buyer,
which consent shall not be unreasonably withheld or delayed.
4.1.5 Further Actions.
(a) Seller agrees to use all reasonable good faith efforts to
take all actions and to do all things necessary, proper or advisable to
consummate the transactions
D-14
contemplated hereby.
(b) Seller will, as promptly as practicable, file or supply,
or cause to be filed or supplied, all applications, notifications and
information required to be filed or supplied by Seller pursuant to applicable
law in connection with this Agreement.
(c) Seller, as promptly as practicable, will use all
reasonable efforts to obtain, or cause to be obtained, all consents necessary
for the parties to consummate the transactions contemplated by this Agreement.
Buyer agrees to use reasonable commercial efforts to assist Seller in obtaining
such consents.
(d) Seller will coordinate and cooperate with Buyer in
exchanging such information and supplying such reasonable assistance as may be
reasonably requested by Buyer in connection with this Agreement.
4.1.6 Further Assurances. Following the Closing, Seller shall, and
shall cause its Affiliates to, from time to time, execute and deliver such
additional instruments, documents, conveyances or assurances and take such other
actions as shall be necessary, or otherwise reasonably requested by Buyer, to
confirm and assure the rights and obligations provided for in this Agreement,
and render effective the consummation of the transactions contemplated thereby.
4.1.7 Bulk Sales. In lieu of complying with the provisions of the
California Commercial Code relating to Bulk Sales, Seller covenants and agrees
to defend, hold harmless and indemnify Buyer from and against any and all loss,
liability, damage or claim whatsoever arising out of the failure or alleged
failure to comply with said provisions of the California Commercial Code
(including, but without limitation, claims, actions or suits by Creditors of
Seller) and all reasonable costs and expenses including, but without limitation,
reasonable attorneys' fees incident thereto.
4.1.8 Setoff. Seller further agrees in the event that in addition to
the remedies set forth in this Agreement, and without limiting any other remedy
Buyer and/or RPC may have as a result of a breach by Seller of the foregoing
covenants, Buyer and/or RPC may set off the costs, expenses, losses, liabilities
and damages incurred by Buyer and/or RPC (but only to the extent such costs,
expenses, losses, liabilities and damages represent actual out of pocket costs
paid by Buyer and/or RPC to unaffiliated third parties) as a result of any
breach or failure to pay by Seller relating to the payment of any amounts owing
to Buyer and/or RPC, whether under this Agreement or otherwise.
4.2 Covenants of Buyer.
D-15
4.2.1 Public Announcements. Prior to the Closing, except as required
by Applicable Law, Buyer shall not, and shall not permit its Affiliates to, make
any public announcement in respect of this Agreement or the transactions
contemplated hereby without the prior written consent of Seller, which consent
shall not be unreasonably withheld.
4.2.2 Further Actions.
(a) Buyer agrees to use all reasonable good faith efforts to
take all actions and to do all things necessary, proper or advisable to
consummate the transactions contemplated hereby.
(b) Buyer will, as promptly as practicable, file or supply, or
cause to be filed or supplied, all applications, notifications and information
required to be filed or supplied by Buyer pursuant to applicable law in
connection with this Agreement.
(c) Buyer will coordinate and cooperate with Seller in
exchanging such information and supplying such reasonable assistance as may be
reasonably requested by Seller in connection with this Agreement.
4.2.3 Further Assurances. Following the Closing, Buyer shall, and
shall cause its Affiliates to, from time to time, execute and deliver such
additional instruments, documents, conveyances or assurances and take such other
actions as shall be necessary, or otherwise reasonably requested by Seller, to
confirm and assure the rights and obligations provided for in this Agreement,
and render effective the consummation of the transactions contemplated thereby.
4.3 Other Covenants and Conditions of Closing.
4.3.1 Subsequent Monthly Financial Statements. Seller's monthly
financial statements for each month after July 31, 2000 shall have been provided
to Buyer and shall (a) contain no liabilities different in kind or in scope from
the liabilities set forth in the Audited Balance Sheet, and (b) confirm and be
consistent with the information concerning the Business (including the projected
results of operations) previously provided to Buyer by Seller prior to the date
hereof.
4.3.2 Corporate Proceedings. Buyer shall have received a certificate
of the Secretary of Seller certifying that Seller has adopted necessary
resolutions on a director and shareholder level authorizing the transaction
contemplated herein.
4.3.3 Transfer Documents. Seller shall have delivered to Buyer at
the Closing all documents, certificates and agreements necessary to transfer to
Buyer good and marketable
D-16
title to the Assets, free and clear of any and all liens, claims and
encumbrances thereon, including without limitation:
(a) a xxxx of sale, assignment and general conveyance, in form
and substance reasonably satisfactory to Buyer, dated the Closing Date, with
respect to the Assets; and
(b) assignments of all assumed contracts that are a part of
the Assumed Liabilities, including the Lease in the form attached as Exhibit
4.3.3(b), and assignments of the Intellectual Property and any other agreements
and instruments constituting Assets, dated the Closing Date, assigning to Buyer
all of Seller's right, title and interest therein and thereto, with any required
consents included.
4.3.4 Consents and Estoppel. Buyer shall have received consents to
the assignment of the Lease to Buyer from the lessor of the Lease. Buyer shall
also have received estoppel certificates addressed to Buyer and from the lessor
of the Lease, dated within 45 days of the Closing Date, identifying the Lease
documents and any amendments thereto, stating that the Lease is in full force
and effect and, to the best knowledge of the lessor, that Seller is not in
default under the Lease and no event has occurred that, with notice or lapse of
time or both, would constitute a default by Seller under the Lease and
containing any other information reasonably requested by Buyer.
4.3.5 Corporate Proceedings. All corporate proceedings shall be
reasonably satisfactory in substance and form to both parties, and their
respective counsel, and each such party shall have received all such documents
and instruments, or copies thereof, certified if requested, as may be reasonably
requested.
4.3.6 Consulting Agreements. Seller and Buyer shall have entered
into the four (4) year consulting agreements in substantially the same form as
the forms of Consulting Agreements attached as Exhibit 4.3.6.
4.3.7 License Agreement. Simultaneous with the execution of this
Agreement, Seller and Buyer shall have entered into the License Agreement
attached as Exhibit 4.3.7 hereto.
ARTICLE V
TERMINATION
5.1 Termination. This Agreement may be terminated at any time prior to the
Closing Date:
D-17
(a) by the written agreement of Buyer and Seller;
(b) by either Seller or Buyer by written notice to the other
party if the transactions contemplated hereby shall not have been consummated
pursuant hereto by December 31, 2000, unless (i) such date shall be extended by
the mutual written consent of Seller and Buyer (ii) Seller shall, at such time,
be actively engaged in soliciting the approval of the shareholder's of its
parent company to the transaction contemplated by this Agreement in which event
the Agreement may not be terminated unless the said shareholders refuse to grant
said approval within a reasonable time after December 31, 2000;
(c) by Buyer by written notice to Seller if the
representations and warranties of Seller shall not have been true and correct in
all respects (in the case of any representation or warranty containing any
materiality qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification) as of the date
when made; or
(d) by Seller by written notice to Buyer if the
representations and warranties of Buyer shall not have been true and correct in
all respects (in the case of any representation or warranty containing any
materiality qualification) or in all material respects (in the case of any
representation or warranty without any materiality qualification) as of the date
when made.
5.2 Effect of Termination. In the event of the termination of this
Agreement, this Agreement shall become void and have no effect, without any
liability to any Person in respect hereof or of the transactions contemplated
hereby on the part of any party hereto, or any of its directors, officers,
employees, agents, consultants, representatives, advisers, stockholders or
Affiliates, except for any liability resulting from such party's breach of this
Agreement.
ARTICLE VI
NON-COMPETITION AGREEMENT
6.1 Non-competition and Non-disclosure. Following the Closing Date, Seller
agrees not to:
a. engage or become interested, directly or indirectly, as owner,
employee, partner, through stock ownership (except ownership of less than one
percent (1%) of the number of shares outstanding of any securities which are
listed for trading on any securities exchange), investment of capital, lending
of money or property, rendering of services, or otherwise, whether alone or in
association with others, in the operation of any business engaged in the
manufacturing of bakery products materially the same as the bakery products that
are a part of the Business as of
D-18
the date of Closing anywhere in the United States of America (the "Territory");
b. solicit or accept orders for services competitive to those
heretofore provided or sold by the Seller as a part of the Business anywhere in
the Territory from any then or previous customer of the Seller or otherwise
induce or attempt to induce any such customer to reduce such customer's
patronage of the Business; or
c. divulge, communicate, or utilize for the benefit of anyone other
than the Buyer, any confidential information of or pertaining to the Business or
any of its customers.
6.2 Equitable Remedies. Seller specifically acknowledges and agrees that
the remedy at law for any breach of any provision of this Article VI will be
inadequate and that Buyer, as applicable, in addition to any other relief
available to it, shall be entitled to the issuance of a restraining order or any
other similar equitable relief by any court of proper jurisdiction.
ARTICLE VII
MISCELLANEOUS
7.1 Indemnification.
(a) By Seller. Seller covenants and agrees to defend,
indemnify and hold harmless Buyer, its officers, directors, employees, agents,
advisers, representatives and Affiliates (collectively, the "Buyer Indemnities")
from and against, and pay or reimburse Buyer Indemnities for, any and all
claims, liabilities, obligations, losses, fines, costs, royalties, proceedings,
deficiencies or damages (whether absolute, accrued, conditional or otherwise and
whether or not resulting from third party claims) including out-of-pocket
expenses and reasonable attorneys' and accountants' fees incurred in the
investigation or defense of any of the same or in asserting any of their
respective rights hereunder (collectively, "Losses"), resulting from or arising
out of, but not limited to:
(i) any inaccuracy of any representation or warranty
made by Seller herein;
(ii) any failure of Seller to perform any covenant or
agreement hereunder or fulfill any other
obligation in respect hereof;
(iii) any liabilities (other than the Assumed
Liabilities);
(iv) any of the Excluded Assets;
D-19
(iv) any and all Taxes of Seller;
(vi) any and all Benefit Liabilities in respect of
Employees;
(vii) all liabilities and costs arising out of the
operations of the Business prior to the Closing
Date or relating to the Excluded Assets; and
(viii) any product liability claim with respect to
products manufactured or sold or events occurring
prior to the Closing.
(b) By Buyer. Buyer covenants and agrees to defend, indemnify
and hold harmless Seller and its officers, directors, employees, agents,
advisers, representatives and Affiliates (collectively, the "Seller
Indemnities") from and against any and all Losses resulting from or arising out
of:
(i) any inaccuracy in any representation or warranty
by Buyer made herein;
(ii) any failure of Buyer to perform any covenant or
agreement hereunder or fulfill any other
obligation in respect hereof;
(iii) the operation of the Business by Buyer or Buyer's
ownership, operation or use of the Assets or
performance under the Assumed Liabilities or
employment of any Employees employed by Buyer or
product liability claim with respect to products
manufactured or sold by Buyer, provided such
activities and or liabilities follow or arise out
of Buyer's actions after the Closing Date, and
except to the extent such Losses result from or
arise out of any liabilities of Seller.
(c) Indemnification Procedures. In the case of any claim
asserted by a third party against a party entitled to indemnification under this
Agreement (the "Indemnified Party"), notice shall be given by the Indemnified
Party to the party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowledge of any claim
as to which indemnity may be sought, and the Indemnified Party shall permit the
Indemnifying Party (at the expense of such Indemnifying Party) to assume the
defense
D-20
of any claim or any litigation resulting therefrom, provided that (i) the
counsel for the Indemnifying Party who shall conduct the defense of such claim
or litigation shall be reasonably satisfactory to the Indemnified Party, (ii)
the Indemnified Party may participate in such defense at such Indemnified
Party's expense, and (iii) the omission by any Indemnified Party to give notice
as provided herein shall not relieve the Indemnifying Party of its
indemnification obligation under this Agreement except to the extent that such
omission results in a failure of actual notice to the Indemnifying Party and
such Indemnifying Party is materially damaged as a result of such failure to
give notice. Except with the prior written consent of the Indemnified Party, no
Indemnifying Party, in the defense of any such claim or litigation, shall
consent to entry of any judgment or enter into any settlement 'that provides for
injunctive or other non-monetary relief affecting the Indemnified Party or that
does not include as an unconditional term thereof the giving by each claimant or
plaintiff to such Indemnified Party of a release from all liability with respect
to such claim or litigation. In the event that the Indemnified Party shall in
good faith determine that the conduct of the defense of any claim subject to
indemnification hereunder or any proposed settlement of any such claim by the
Indemnifying Party might be expected to affect adversely the Indemnified Party's
Tax liability or the ability of Buyer to conduct the Business, or that the
Indemnified Party may have available to it one or more defenses or counterclaims
that are inconsistent with one or more of those that may be available to the
Indemnifying Party in respect of such claim or any litigation relating thereto,
the Indemnified Party shall have the right at all times to take over and assume
control over the defense, settlement, negotiations or litigation relating to any
such claim at the sole cost of the Indemnifying Party, provided that if the
Indemnified Party does so take over and assume control, the Indemnified Party
shall not settle such claim or litigation without the written consent of the
Indemnifying Party, such consent not to be unreasonably withheld. In the event
that the Indemnifying Party does not accept the defense of any matter as above
provided, the Indemnified Party shall have the full right to defend against any
such claim or demand and shall be entitled to settle or agree to pay in full
such claim or demand. In any event, the Indemnifying Party and the Indemnified
Party shall cooperate in the defense of any claim or litigation and the records
of each shall be available to the other with respect to such defense.
7.2 Survival of Representations and Warranties, Etc. The representations
and warranties contained in Article III of this Agreement shall survive the
execution and delivery of this Agreement for a period of two (2) years after the
Closing Date.
7.3 Expenses. Seller, on the one hand, and Buyer, on the other hand, shall
bear their respective expenses, costs and fees (including attorneys', auditors'
and financial commitment fees) in connection with the transactions contemplated
hereby, including the preparation, execution and delivery of this Agreement and
compliance herewith (the "Transaction Expenses"), whether or not the
transactions contemplated hereby shall be consummated.
7.4 Severability. If any provision of this Agreement, including any
phrase,
D-21
sentence, clause, section or subsection is inoperative or unenforceable for any
reason, such circumstances shall not have the effect of rendering the provision
in question inoperative or unenforceable in any other case or circumstance, or
of rendering any other provision or provisions herein contained invalid,
inoperative, or unenforceable to any extent whatsoever.
7.5 Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if (a) delivered
personally, (b) mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or (c) sent by next-day or overnight mail or
delivery or (d) sent by telecopy or telegram.
(i) if to Buyer to,
Rich Products Manufacturing Corporation
0000 Xxxxxxx Xxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxxxxx, Xx.
(ii) if to Seller to,
Starbake, Inc.
c/o Paramark Enterprises, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxx X. Xxxxxxxx, President
With a copy to:
Xxxx Xxxxxx, Esq.
000-00 Xxxxx Xxxxxxxx
Xxx Xxxxxx Xxxxx, Xxx Xxxx 00000
or, in each case, at such other address as may be specified in writing to the
other parties hereto. All such notices, requests, demands, waivers and other
communications shall be deemed to have been received (w)if by personal delivery
on the day after such delivery, (x) if by certified or registered mail, on the
seventh business day after the mailing thereof, (y) if by next-day or overnight
mail or delivery, on the day delivered, (z) if by telecopy or telegram, on the
next day following the day on which such telecopy or telegram was sent, provided
that a copy is also sent by certified or registered mail.
7.7 Headings. The headings contained in this Agreement are for purposes of
D-22
convenience only and shall not affect the meaning or interpretation of this
Agreement.
7.7 Entire Agreement. This Agreement constitutes the entire agreement and
supersede all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.
7.8 Counterparts. This Agreement may be executed in several counterparts,
each of which shall be deemed an original and all of which shall together
constitute one and the same instrument.
7.9 Governing Law, Etc. This Agreement shall be governed in all respects,
including as to validity, interpretation and effect, by the law of the State of
California, without giving effect to the conflict of laws rules thereof.
7.10 Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, successors and
permitted assigns.
7.11 Assignment. This Agreement shall not be assignable or otherwise
transferable by any party hereto without the prior written consent of the other
party hereto, provided that Buyer may assign this Agreement effective on the
Closing Date to any Affiliate of Buyer, provided, that no assignment shall in
any way affect Buyer's obligations or liabilities under this Agreement.
7.12 No Third Party Beneficiaries. Except as provided in Section 8.2 with
respect to indemnification of Indemnified Parties hereunder, nothing in this
Agreement shall confer any rights upon any Person other than the parties hereto
and their respective heirs, successors and permitted assigns.
7.13 Amendment; Waivers, Etc. No amendment, modification or discharge of
this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by the party against whom enforcement of the
amendment, modification, discharge or waiver is sought. Any such waiver shall
constitute a waiver only with respect to the specific matter described in such
writing and shall in no way impair the rights of the party granting such waiver
in any other respect or at any other time. Neither the waiver by any of the
parties hereto of a breach of or a default under any of the provisions of this
Agreement, nor the failure by any of the parties, on one or more occasions, to
enforce any of the provisions of this Agreement or to exercise any right or
privilege hereunder, shall be construed as a waiver of any other breach or
default of a similar nature, or as a waiver of any of such provisions, rights or
privileges hereunder. The rights and remedies herein provided are cumulative and
are not exclusive of any rights or remedies that any party may otherwise have at
law or in equity. The rights and remedies of any party based upon, arising out
of or otherwise in respect of any inaccuracy or breach of any representation,
warranty, covenant or agreement or failure to fulfill any condition shall in no
way
D-23
be limited by the fact that the act, omission, occurrence or other state of
facts upon which any claim of any such inaccuracy or breach is based may also be
the subject matter of any other representation, warranty, covenant or agreement
as to which there is no inaccuracy or breach. The representations and warranties
of Seller shall not be affected or deemed waived by reason of any investigation
made by or on behalf of Buyer (including but not limited to by any of its
advisors, consultants or representatives) or by reason of the fact that Buyer or
any of such advisors, consultants or representatives knew or should have known
that any such representation or warranty is or might be inaccurate.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
RICH PRODUCTS MANUFACTURING STARBAKE, INC.
CORP.
By By /s/ Xxxx X. Xxxxxxxx
------------------------ -------------------------------
Title Title President
--------------------- -----------------------------
RICH PRODUCTS CORPORATION PARAMARK ENTERPRISES, INC.
By By /s/ Xxxx X. Xxxxxxxx
------------------------ -------------------------------
Title Title President
--------------------- -----------------------------
D-24
Exhibit E
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement"), dated as of August 22, 2001,
between XXXX XXXXXX, XXXXXXX XXXXXX and XXXX XXXXXX (collectively "Xxxxxx") with
an address at 0000 Xxxxx Xxxxxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxx Xxxxxxx, XX
00000 and XXXXXXX X. XXXXXXXXX("Consultant"), an individual with his principal
address at 00 Xxxxxxx Xxxxx, Xxxxxxxxxxx, XX 00000
RECITALS
A. Simultaneously herewith the parties hereto, Xxxx X. Xxxxxxxx and
Paramark Enterprises, Inc. ("Paramark") are closing on a transaction (the
"Acquisition Transaction") pursuant to which, inter alia, Xxxxxx (i) is
acquiring 500,000 shares of Paramark common stock and (b) will become the
officers and the members of the Board of Directors of Paramark;
B. Prior to the full consummation of the Acquisition Transaction,
Consultant is and was, since 1992, the Chairman of the Board of Directors and
the Chief Executive Officer of Paramark;
X. Xxxxxx desires to benefit from the foregoing expertise of the
Consultant and the Consultant desires to provide such expertise to Xxxxxx, upon
the terms and subject to the conditions as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and intending to be legally bound hereby, the parties hereto agree as follows:
1. Engagement of Consultant. Xxxxxx and Consultant agree that during the
Consulting Term (as defined in Section 2 hereof) Xxxxxx shall engage the
Consultant and the Consultant shall render to Xxxxxx such services as are
reasonably requested by Xxxxxx from time to time with respect to aiding and
advising Xxxxxx in the transition of management control of Paramark to Xxxxxx.
The Consultant hereby accepts such engagement and agrees to devote such time as
is necessary to the performance of his duties hereunder, but in no event in
excess of the following parameters:
a. Up to ten (10) working days of on site consulting during each year of
the Consulting Term, as and to the extent requested by Xxxxxx in writing, at
Paramark's place of business but not more than two (2) consecutive days of work
in each event unless Consultant voluntarily agrees to extend said limitation at
his sole discretion.
b. Reasonable telephone and written consulting services, as requested by
Xxxxxx in writing.
2. Consulting Term. Subject to the provisions in Section 4 hereof, the term of
this Agreement
E-1
shall commence on the date hereof and shall continue for a period of twelve (12)
months from the date hereof (the "Consulting Term").
3. Compensation and Expenses. During the Consulting Term, as compensation for
its services hereunder, the Consultant will be paid Eighteen Thousand Dollars
($18,000) payable in twelve (12) equal monthly installments commencing on the
date of this Consulting Agreement and each every thirty (30) days thereafter
until fully paid (the "Compensation"). The Consultant will not receive nor be
entitled to any increases to the Compensation for any reason whatsoever. Xxxxxx
will reimburse Consultant for all pre-approved out of pocket expenses incurred
by Consultant in providing the services hereunder including all travel, lodging
and meal expenses arising out of on-site consulting.
4. Termination. Any provision of this Agreement to the contrary notwithstanding,
Xxxxxx may terminate this consulting arrangement only as a result of a
commission by the Consultant of an act of fraud upon, or willful misconduct
toward Xxxxxx or Paramark.
5. Independent Contractor. This Agreement does not create, and shall not be
construed as creating, any relationship of agency, partnership, or employment
between the parties. Xxxxxx and Consultant enter this Agreement as and shall
remain independent parties. Neither party shall have the right or authority to
assume, create, or enlarge any obligation or commitment on behalf of the other
and shall not represent itself as having the authority to bind the other in any
manner.
6. Notices. If it is necessary at any time during the Consulting Term for the
Consultant or Xxxxxx to give notice to the other party hereto, such notice must
be given in writing delivered in person or mailed by certified mail, return
receipt requested, to the addresses first set forth above or such other address
of which one party may notify the other in writing. Notices are effective when
personally delivered or when placed in the mail.
7. Governing Law. This Agreement will be construed and interpreted in accordance
with the laws of the State of New Jersey, without regard to conflicts of law
principles.
8. Severability, Amendment, Integration. Should any provision of this Agreement
be adjudged to any extent invalid by any competent tribunal, such provision will
be deemed modified to the extent necessary to make it enforceable. This
Agreement may not be modified or varied except by an agreement in writing signed
by the party against whom enforcement of such modification is sought. This
Agreement sets forth all of the promises, covenants, agreements, conditions and
undertakings between the parties hereto relating to the subject matter hereof
and supersedes all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written regarding such
subject matter.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
E-2
-------------------------------------
XXXXXXX X. XXXXXXXXX
------------------------------------
XXXX XXXXXX
------------------------------------
XXXX XXXXXX
------------------------------------
XXXXXXX XXXXXX
E-3
Exhibit F
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement"), dated as of August 22, 2001,
between XXXX XXXXXX, XXXXXXX XXXXXX and XXXX XXXXXX (collectively "Xxxxxx") with
an address at 0000 Xxxxx Xxxxxxxxxx Xxxxx Xxxx, Xxxxx 000, Xxxxx Xxxxxxx, XX
00000 and XXXX X. XXXXXXXX("Consultant"), an individual with his principal
address at 0 Xxxxxx Xxxxx, Xxxxxxx, XX 00000
RECITALS
A. Simultaneously herewith the parties hereto, Xxxxxxx. X. Xxxxxxxxx and
Paramark Enterprises, Inc. ("Paramark") are closing on a transaction (the
"Acquisition Transaction") pursuant to which, inter alia, Xxxxxx (i) is
acquiring 500,000 shares of Paramark common stock and (b) will become the
officers and the members of the Board of Directors of Paramark;
B. Prior to the full consummation of the Acquisition Transaction,
Consultant is and was, since 1992, a member of the Board of Directors, the Chief
Financial Officer and President of Paramark;
X. Xxxxxx desires to benefit from the foregoing expertise of the
Consultant and the Consultant desires to provide such expertise to Xxxxxx, upon
the terms and subject to the conditions as hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and intending to be legally bound hereby, the parties hereto agree as follows:
1. Engagement of Consultant. Xxxxxx and Consultant agree that during the
Consulting Term (as defined in Section 2 hereof) Xxxxxx shall engage the
Consultant and the Consultant shall render to Xxxxxx such services as are
reasonably requested by Xxxxxx from time to time with respect to aiding and
advising Xxxxxx in the transition of management control of Paramark to Xxxxxx.
The Consultant hereby accepts such engagement and agrees to devote such time as
is necessary to the performance of his duties hereunder, but in no event in
excess of the following parameters:
a. Up to ten (10) working days of on site consulting during each year of
the Consulting Term, as and to the extent requested by Xxxxxx in writing, at
Paramark's place of business but not more than two (2) consecutive days of work
in each event unless Consultant voluntarily agrees to extend said limitation at
his sole discretion.
b. Reasonable telephone and written consulting services, as requested by
Xxxxxx in writing.
F-1
2. Consulting Term. Subject to the provisions in Section 4 hereof, the term of
this Agreement shall commence on the date hereof and shall continue for a period
of twelve (12) months from the date hereof (the "Consulting Term").
3. Compensation and Expenses. During the Consulting Term, as compensation for
its services hereunder, the Consultant will be paid Six Thousand Dollars
($6,000) payable in twelve (12) equal monthly installments commencing on the
date of this Consulting Agreement and each every thirty (30) days thereafter
until fully paid (the "Compensation"). The Consultant will not receive nor be
entitled to any increases to the Compensation for any reason whatsoever. Xxxxxx
will reimburse Consultant for all pre-approved out of pocket expenses incurred
by Consultant in providing the services hereunder including all travel, lodging
and meal expenses arising out of on-site consulting.
4. Termination. Any provision of this Agreement to the contrary notwithstanding,
Xxxxxx may terminate this consulting arrangement only as a result of a
commission by the Consultant of an act of fraud upon, or willful misconduct
toward Xxxxxx or Paramark.
5. Independent Contractor. This Agreement does not create, and shall not be
construed as creating, any relationship of agency, partnership, or employment
between the parties. Xxxxxx and Consultant enter this Agreement as and shall
remain independent parties. Neither party shall have the right or authority to
assume, create, or enlarge any obligation or commitment on behalf of the other
and shall not represent itself as having the authority to bind the other in any
manner.
6. Notices. If it is necessary at any time during the Consulting Term for the
Consultant or Xxxxxx to give notice to the other party hereto, such notice must
be given in writing delivered in person or mailed by certified mail, return
receipt requested, to the addresses first set forth above or such other address
of which one party may notify the other in writing. Notices are effective when
personally delivered or when placed in the mail.
7. Governing Law. This Agreement will be construed and interpreted in accordance
with the laws of the State of New Jersey, without regard to conflicts of law
principles.
8. Severability, Amendment, Integration. Should any provision of this Agreement
be adjudged to any extent invalid by any competent tribunal, such provision will
be deemed modified to the extent necessary to make it enforceable. This
Agreement may not be modified or varied except by an agreement in writing signed
by the party against whom enforcement of such modification is sought. This
Agreement sets forth all of the promises, covenants, agreements, conditions and
undertakings between the parties hereto relating to the subject matter hereof
and supersedes all prior and contemporaneous agreements and understandings,
inducements or conditions, express or implied, oral or written regarding such
subject matter.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
F-2
-------------------------------------
XXXX X. XXXXXXXX
------------------------------------
XXXX XXXXXX
------------------------------------
XXXX XXXXXX
------------------------------------
XXXXXXX XXXXXX
F-3
