STOCK PURCHASE AGREEMENT
AMONG
XXX. XXXXXX' ORIGINAL COOKIES, INC.,
as Buyer,
and
XXXXXXXX X. XXXXX, XXXXXXX X. XXXXX, XXXXXX X. XXXXXX,
XXXXXX X. XXXXX and XXXXX X. XXXXXXXXXX,
holders of all outstanding capital stock
of
DEBLAN CORPORATION,
as Sellers
EFFECTIVE FOR ACCOUNTING PURPOSES AS OF
June 30, 1998
TABLE OF CONTENTS
1. Definitions......................................................... 1
2. Purchase and Sale of Company Shares................................. 7
(a) Basic Transaction.......................................... 7
(b) Purchase Price............................................. 7
(c) Working Capital Requirement................................ 8
(d) Purchase Price Adjustment for Liabilities.................. 8
(e) Purchase Price Adjustment Statement........................ 8
(f) Review of Purchase Price Adjustment Statement. ............ 8
(g) Payment of Adjustments. .................................. 9
(h) The Pre-Closing and the Closing............................ 9
(i) The Escrow/The Escrow Agreement............................ 10
(j) Deliveries at the Closing.................................. 10
3. Representations and Warranties Concerning the Transaction........... 11
(a) Representations and Warranties of the Sellers.............. 11
(i) Authorization of Transaction...................... 11
(ii) Noncontravention.................................. 11
(iii) Brokers' Fees..................................... 11
(iv) Company Shares.................................... 11
(v) Absence of Indebtedness and Claims................ 12
(b) Representations and Warranties of the Buyer................ 12
(i) Organization of the Buyer......................... 12
(ii) Authorization of Transaction...................... 12
(iii) Non-Contravention................................. 12
(iv) Brokers' Fees..................................... 13
(v) Investment........................................ 13
4. Representations and Warranties Concerning the Company............... 13
(a) Organization, Qualification, and Corporate Power........... 13
(b) Capitalization............................................. 14
(c) Non-Contravention.......................................... 14
(d) Brokers' Fees.............................................. 15
(e) Title to Assets............................................ 15
(f) Financial Statements....................................... 15
(g) Events Subsequent to Most Recent Fiscal Year End........... 15
(h) Undisclosed Liabilities.................................... 18
(i) Legal Compliance........................................... 18
(j) Tax Matters................................................ 18
(k) Real Property.............................................. 20
(l) Intellectual Property...................................... 21
(m) Tangible Assets............................................ 23
(n) Inventory.................................................. 23
(o) Contracts.................................................. 23
(p) Notes and Accounts Receivable.............................. 25
(q) Powers of Attorney......................................... 25
(r) Insurance.................................................. 25
(s) Litigation................................................. 26
(t) Product Warranty........................................... 26
(u) Product Liability.......................................... 26
(v) Employees.................................................. 27
(w) Employee Benefit........................................... 27
(x) Guaranties................................................. 29
(y) Environment, Health, and Safety............................ 29
(z) Certain Business Relationships with the Company............ 30
(aa) Disclosure................................................. 30
5. Pre-Closing Covenants............................................... 30
(a) General.................................................... 30
(b) Notices and Consents....................................... 30
(c) Operation of Business...................................... 30
(d) Preservation of Business................................... 32
(e) Full Access................................................ 32
(f) Notice of Developments..................................... 32
(g) Exclusivity................................................ 33
6. Post-Closing Covenants.............................................. 33
(a) General.................................................... 33
(b) Litigation Support......................................... 33
(c) Transition................................................. 34
(d) Confidentiality............................................ 34
(e) Covenant Not to Compete.................................... 34
7. Conditions to Obligation to Close................................... 35
(a) Conditions to Obligation of the Buyer...................... 35
(b) Conditions to Obligation of the Sellers.................... 38
8. Remedies for Breaches of This Agreement............................. 39
(a) Survival of Representations and Warranties................. 39
(b) Indemnification Provisions for Benefit of the Buyer........ 39
(c) Indemnification Provision for Benefit of the Sellers....... 40
(d) Indemnification Limitations................................ 40
(e) Matters Involving Third Parties............................ 41
(f) Determination of Adverse Consequences...................... 42
(g) Officer/Director Indemnification........................... 42
(h) Certain Set-Off Rights..................................... 43
(i) Other Indemnification Provisions........................... 43
(j) Sellers' Release of Claims................................. 44
(k) Release and Indemnification from Guaranties. ............. 44
9. Termination......................................................... 44
(a) Termination of Agreement................................... 44
(b) Effect of Termination...................................... 45
10. Miscellaneous....................................................... 45
(a) Press Releases and Public Announcements.................... 45
(b) No Third-Party Beneficiaries............................... 46
(c) Entire Agreement........................................... 46
(d) Succession and Assignment.................................. 46
(e) Counterparts............................................... 46
(f) Headings................................................... 46
(g) Notices.................................................... 46
(h) Governing Law.............................................. 47
(i) Amendments and Waivers..................................... 47
(j) Severability............................................... 47
(k) Expenses................................................... 47
(l) Construction............................................... 48
(m) Incorporation of Exhibits, Annexes, and Schedules.......... 48
(n) Specific Performance....................................... 48
(o) Dispute Resolution......................................... 48
(p) Submission to Jurisdiction................................. 50
(q) Attorneys' Fees............................................ 50
(r) Joinder of Spouse.......................................... 50
EXHIBITS
A List of Related Transactions
B Escrow Agreement
C [Intentionally Blank]
D Financial Statements of the Company
E Form of Opinion of the Sellers' Counsel
F Allocation of Purchase Price
ANNEXES
I Exceptions to Sellers Representations
II Exceptions to Buyers Representations
SCHEDULES
4(a) Organization
4(b) Capitalization
4(c) Non-Contravention
4(e) Title to Assets
4(g) Absence of Changes
4(j) Tax Returns
4(k)(ii) Real Property Leased or Subleased
4(l)(i) Intellectual Property
4(l)(iii) Intellectual Property Licenses to Third Parties
4(l)(iv) Licenses From Third Parties
4(o) Contracts
4(q) Powers of Attorney
4(r) Insurance
4(s) Litigation
4(v) Accrued Leave
4(w) Employee Benefit Plans
4(x) Guaranties
4(z) Certain Business Relationships
5(c) Operation of Business
5(d) Preservation of Business
5(f) Notice of Developments
7(a)(viii) Resigning Officers and Directors
7(b)(vi) Excluded Assets
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("Agreement") effective for accounting
purposes as of June 30, 1998 (the "Effective Date"), and for all other purposes,
on the Closing Date (defined herein), by and among Xxx. Xxxxxx' Original
Cookies, Inc. a Delaware corporation (the "Buyer"), Deblan Corporation, a
Delaware corporation (the "Company"), and Xxxxxxxx X. Xxxxx ("Xxxxx"), Xxxxxxx
X. Xxxxx, Xxxxxx X. Xxxxxx, Xxxxxx X. Xxxxx and Xxxxx X. Xxxxxxxxxx (referred to
herein individually as a "Seller" and collectively as the "Sellers"). The Buyer
and the Sellers are referred to collectively herein as the "Parties."
The Sellers own one hundred percent (100%) of the issued
outstanding capital stock of the Company.
This Agreement contemplates a transaction in which the Buyer will
purchase from the Sellers, and the Sellers will sell to the Buyer, all of the
issued and outstanding capital stock of the Company in return for cash and other
consideration set forth herein.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts
paid in settlement, Liabilities, obligations, Taxes, liens,
losses, expenses, and fees, including court costs and
attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of
the regulations promulgated under the Securities Exchange
Act.
"Affiliated Group" means any affiliated group within
the meaning of Code Sec. 1504, or any similar group defined
under a similar provision of state, local or foreign law.
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or
transaction that forms or could form the basis for any
specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Buyer's Counsel" has the meaning set forth in 2(h)
below.
"Closing" has the meaning set forth in 2(h) below.
"Closing Date" has the meaning set forth in 2(h) below.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Xxxxx" has the meaning set forth in the preface above.
"Company" has the meaning set forth in the preface
above.
"Company Share" means any share of the Common Stock,
Ten Cents ($.10) par value per share, of the Company.
"Company's Closing Liabilities" means two obligations
of the Company to Premier Bank, N.A., on the Closing Date in
the approximate amounts of $8,000 and $624,000,
respectively.
"Confidential Information" means any information
concerning the businesses and affairs of the Company that is
not generally available to the public.
"Controlled Group of Corporations" has the meaning set
forth in Code Sec. 1563.
"Deferred Intercompany Transaction" has the meaning set
forth in Treas. Reg. 1. 1502-13.
"Disclosure Schedule" has the meaning set forth in 4
below.
"Discrepancy Notice" has the meaning set forth in 2(f)
below.
"Effective Date" has the meaning set forth in the
preface above.
"Employee Benefit Plan" means any (a) nonqualified
deferred compensation or retirement plan or arrangement
which is an Employee Pension Benefit Plan, (b) qualified
defined contribution retirement plan or arrangement which is
an Employee Pension Benefit Plan, (c) qualified defined
benefit retirement plan or arrangement which is an Employee
Pension Benefit Plan (including any Multiemployer Plan), or
(d) Employee Welfare Benefit Plan or
"Employee Pension Benefit Plan" has the meaning set
forth in ERISA Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set
forth in ERISA Sec. 3(1).
"Environmental, Health, and Safety Laws" means the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Resource Conservation and
Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws
(including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder)
of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the
environment, public health and safety, or employee health
and safety, including laws relating to emissions,
discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or
wastes.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"Escrow Account" has the meaning set forth in 2(i)
below.
"Escrow Agent" has the meaning set forth in 2(i) below.
"Escrow Agreement" has the meaning set forth in 2(i)
below.
"Escrowed Buyer Documents" has the meaning set forth in
2(h)(i) below.
"Escrowed Deferred Payments" has the meaning set forth
in 2(b)(ii) below.
"Escrowed Seller Documents" has the meaning set forth
in 2(h)(i) below.
"Excess Loss Account" has the meaning set forth in
Treas, Reg. 1.1502-19.
"Excluded Assets" has the meaning set forth in 7(b)(vi)
below.
"Extremely Hazardous Substance" has the meaning set
forth in Sec. 302 of the Emergency Planning and Community
Right-to-Know Act of 1986, as amended.
"Fiduciary" has the meaning set forth in ERISA Sec.
3(21).
"Financial Statements" has the meaning set forth in
4(f) below.
"Franchisee Litigation" refers to any pending or
threatened claims, liabilities or litigation asserted
against the Buyer by or on behalf of the Sellers, the
Company, Great American Cookie Company or any area
developer, franchisee, licensee or agent thereof, including
without limitation, all of the claims asserted, or that
could be asserted, in that certain action styled Xxxxxx and
Xxxxxx Xxxxxxxx v. Great American Cookie Company, Xxx.
Xxxxxx' Original Cookies, Inc. et al., Case No.
MER-L-3502-97, pending in The Superior Court of New Jersey,
Law Division, Xxxxxx County.
"GAAP" means United States generally accepted
accounting principles as in effect from time to time.
"GACC" means any person or entity, including without
limitation Great American Cookie Company or its parent or
affiliated entities.
"Indemnified Party" has the meaning set forth in 8(e)
below.
"Indemnifying Party" has the meaning set forth in 8(e)
below.
"Intellectual Property" means (a) all inventions
(whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto, and all
patents, patent applications, and patent disclosures,
together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks,
trade dress, logos, trade names, and corporate names,
together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill
associated therewith, and all applications, registrations,
and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations,
and renewals in connection therewith, (d) all mask works and
all applications, registrations, and renewals in connection
therewith, (e) all trade secrets and confidential business
information (including ideas, research and development,
know-how, recipes, formulas, production processes and
techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and
cost information, and business and marketing plans and
proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights,
and (h) all copies and tangible embodiments thereof (in
whatever form or medium).
"Knowledge" means actual knowledge after reasonable
investigation.
"Liability" means any liability (whether known or
unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due),
including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet
contained within the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set
forth in 4(f) below.
"Most Recent Fiscal Month End" has the meaning set
forth in 4(f) below.
"Most Recent Fiscal Year End" has the meaning set forth
in 4(f) below.
"Multiemployer Plan" has the meaning set forth in ERISA
Sec. 3(37).
"Office Suite Lease" means that certain Lease
Agreement, dated April 23, 1990, as amended, by and between
the Company and Resolution Trust Corporation as Receiver of
University Federal Savings Association, covering those
certain premises more particularly described therein at 0000
XX 0000, Xxxxxxx, Xxxxx.
"Ordinary Course of Business" means the ordinary course
of business consistent with past custom and practice
(including with respect to quantity and frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a
corporation, limited liability company, an association, a
joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or
any department, agency, or political subdivision thereof).
"Pre-Closing" has the meaning set forth in 2(h) below.
"Pre-Date" has the meaning set forth in 2(h) below.
"Pre-Closing Escrow" has the meaning set forth in 2(h)
below.
"Prohibited Transaction" has the meaning set forth in
ERISA Sec. 406 and Code Sec. 4975.
"Purchase Price" has the meaning set forth in 2(b)
below.
"Purchase Price Adjustment for Liabilities" has the
meaning set forth in 2(d) below.
"Purchase Price Adjustment for Working Capital" has the
meaning set forth in 2(c)(ii) below.
"Purchase Price Adjustment Statement" has the meaning
set forth in 2(e) below.
"Related Transactions" means the transactions described
on Exhibit A to be entered into among any of the Buyer and
other Persons and closed concurrently or in conjunction with
the transactions that are the subject of this Agreement.
"Reportable Event" has the meaning set forth in ERISA
Sec. 4043.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Exchange Act" means the Securities Exchange
Act of 1934, as amended.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than
(a) mechanic's, materialmen's, and similar liens, (b) liens
for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate
proceedings, (c) purchase money liens and liens securing
rental payments under capital lease arrangements, and (d)
other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Seller" and "Sellers" have the meaning set forth in
the preface above.
"Store" or "Stores" has the meaning set forth in 4(a)
below.
"Store Leases" has the meaning set forth in 4(k)(ii)
below.
"Subsidiary" means any (A) corporation with respect to
which a specified Person (or a Subsidiary thereof) owns a
majority of the common stock or has the power to vote or
direct the voting of sufficient securities to elect a
majority of the directors, or (B) limited liability company
of which a specified Person (or a Subsidiary thereof) is a
member or managing member, or (C) any other entity in which
the Company has any ownership interest.
"Tax" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Code Sec.
59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto,
whether disputed or not.
"Tax Return" means any return, declaration, report,
claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in 8(e)
below.
"Working Capital" means the excess of Company's current
assets (consisting of the Company's cash, accounts
receivable, inventories and other current assets set forth
on the Most Recent Balance Sheet), less the Company's
current liabilities (consisting of the Company's accounts
payables, accrued liabilities, and other current liabilities
(excluding the Company's Closing Liabilities)).
2. Purchase and Sale of Company Shares.
(a) Basic Transaction. On and subject to the terms and
conditions of this Agreement, for the consideration specified
below in this 2, the Buyer agrees to purchase from each of the
Sellers, and each of the Sellers agrees to sell to the Buyer, all
of the Company Shares owned by each such Seller, in the aggregate
constituting all of the issued and outstanding Company Shares.
(b) Purchase Price. Subject to the adjustments set forth in
2(c)(ii) and 2(d) below, in consideration for the delivery of the
Company Shares, the Buyer agrees to pay and deliver to the
Sellers at the Closing the aggregate consideration consisting of
Ten Million Four Hundred Sixty-Five Thousand Dollars
($10,465,000.00) (the "Purchase Price"), payable to the Sellers
by wire transfer or delivery of other immediately available
funds, of which:
(i) Nine Million Four Hundred Sixty-Five Thousand
Dollars ($9,465,000.00) shall be paid by the Buyer to the
Sellers at the Closing, allocated among the Sellers in the
manner set forth on Exhibit F attached hereto; and
(ii) One Million Dollars ($1,000,000.00) shall be
deposited by the Buyer into the Escrow Account (the
"Escrowed Deferred Payments") for disbursement to Xxxxx
contingent upon and subject to the terms and conditions of
2(f) below and the Escrow Agreement.
(c) Working Capital Requirement
(i) Upon the Closing Date, the Company shall have
Working Capital in an amount not less than Four Hundred
Thousand Dollars ($400,000.00) which Xxxxx represents and
warrants, based on the Company's historical experience, is
an adequate amount of working capital for the operation of
the Company's business after the Closing in the same
manner as presently conducted.
(ii) To the extent that the amount, if any, by
which the Company's Working Capital as of the Closing Date
is less than Four Hundred Thousand Dollars ($400,000.00),
the Purchase Price shall be decreased by such amount; to
the extent that the amount, if any, by which the Company's
Working Capital as of the Closing Date is greater than
Four Hundred Thousand Dollars ($400,000.00), the Purchase
Price shall be increased by such amount; the adjustment to
the Purchase Price based on the Working Capital as
described herein shall be referred to as the "Purchase
Price Adjustment for Working Capital".
(d) Purchase Price Adjustment for Liabilities. To the extent
that the amount, if any, by which the Company's Closing
Liabilities are less than One Million Dollars ($1,000,000.00),
the Purchase Price shall be increased by such amount; to the
extent that the amount, if any, by which the Company's Closing
Liabilities are greater than One Million Dollars ($1,000,000.00),
the Purchase Price shall be decreased by such amount; the
adjustment to the Purchase Price based on the Company's Closing
Liabilities as described herein shall be referred to as the
"Purchase Price Adjustment for Liabilities".
(e) Purchase Price Adjustment Statement. Within thirty (30)
days after the Closing, the Buyer shall cause the Company's
accountants, at the Company's expense to, prepare and deliver to
Xxxxx a statement (the "Purchase Price Adjustment Statement")
based on the financial statements of the Company, prepared in
accordance with GAAP, and showing (i) the calculation of the
amount of the Company's current assets and current liabilities as
of the Closing Date, (ii) the calculation of the Company's
Closing Liabilities, (iii) the calculation of the Purchase Price
Adjustment for Working Capital, if any, (iv) the calculation of
the Purchase Price Adjustment for Liabilities, if any.
(f) Review of Purchase Price Adjustment Statement. Xxxxx
shall have the right to review the Purchase Price Adjustment
Statement (and supporting work papers) and provide written notice
to the Buyer of Sellers' objections, if any, with respect to any
error, omission or other discrepancy in the Purchase Price
Adjustment Statement (the "Discrepancy Notice") until twenty (20)
days following the Sellers' receipt of the Purchase Price
Adjustment Statement. The Buyer and the Sellers shall work
together in good faith to resolve any such dispute and agree on
the final Purchase Price Adjustment Statement. In the event that
the Buyer and the Sellers cannot agree on the final Purchase
Price Adjustment Statement within ten (10) days after delivery of
the Sellers' Discrepancy Notice, the Buyer and Sellers shall
refer the disputed issue or issues to a national independent
public accounting firm (other than the regular accountants for
any Party or any accountants who prepared the Purchase Price
Adjustment Statement) which is reasonably acceptable to each
Party (the "Arbitrating Accountants") within fifteen (15) days
following delivery of the Sellers' Discrepancy Notice. The
Arbitrating Accountants shall be instructed to render a decision,
which shall be binding upon both parties, within twenty (20)
days. Each Party shall be entitled to present any information or
analysis concerning the matter in good faith to the Arbitrating
Accountants with a copy concurrently provided to the other Party.
The Buyer and Sellers shall each bear their own fees and
expenses, and the fees and expenses of the Arbitrating
Accountants shall be shared equally by the Buyer and the Sellers.
(g) Payment of Adjustments. Any amount payable to the
Sellers or the Buyer resulting from the Purchase Price Adjustment
for Working Capital or the Purchase Price Adjustment for
Liabilities set forth in 2(c)(ii) and 2(d) above shall be paid to
the appropriate Party via wire transfer or other immediately
available funds, within ten (10) days after the Purchase Price
Adjustment for Working Capital or the Purchase Price Adjustment
for Liabilities, as appropriate, is finally determined. No
interest will be payable in respect of the Purchase Price
Adjustment for Working Capital or the Purchase Price Adjustment
for Liabilities.
(h) The Pre-Closing and the Closing
(i) The Pre-Closing.
Upon the terms and subject to the
satisfaction of the conditions contained in this
Agreement, the pre-closing of the transactions
contemplated by this Agreement (the "Pre-Closing")
will take place at the offices Jones, Waldo,
Xxxxxxxx & XxXxxxxxx ("Buyer's Counsel"), 000
Xxxxx Xxxx Xx., Xxxxx 0000 Xxxx Xxxx Xxxx, XX at
10:00 A.M. (local time) on or about July 30, 1998,
or at such other place or time as the parties may
agree. At the Pre-Closing, the Parties will
deliver into an escrow (the "Pre-Closing Escrow")
the various documents to be delivered at the
Closing by Sellers, the Company, or Buyer (which
documents will be executed as required, and
undated), to be held by Buyer's Counsel; provided
that the documents described in 7(a)(iii) need not
be delivered to the Pre-Closing but shall be
delivered by the Closing. The date and time at
which the Pre-Closing actually occurs is
hereinafter referred to as the "Pre-Closing Date".
Each Seller hereby authorizes Buyer's
Counsel to cause to be delivered into the
Pre-Closing Escrow the documents and items in
respect of the Sellers described in Section 7(a)
(the "Escrowed Seller Documents"). At the
Pre-Closing, Buyer will deliver in the Pre-Closing
Escrow such documents, instruments and writings as
are required to be delivered at the Closing by
Buyer at or prior to the Closing Date pursuant to
Section 7(b) or otherwise required in connection
herewith (the "Escrowed Buyer Documents"). At the
Closing, Buyer shall deliver to the Sellers the
Escrowed Buyer Documents and the portion of the
Purchase Price to be paid at the Closing as
described in Section 2(b)(i).
(ii) The Closing.
Upon delivery of all of the Escrowed
Seller Documents and Escrowed Buyer Documents and
the closing of the Related Transactions, and
satisfaction of the conditions to Closing set
forth in Section 7(a) then the closing of the
transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of
Buyer's Counsel on the date of the closing of the
Related Transactions, or such other date as the
Buyer and the Sellers may mutually determine (the
"Closing Date"). The deliveries to be made at
Closing are described in 2(j) below.
(i) The Escrow/The Escrow Agreement. The Escrowed Deferred Payments
shall be deposited into an escrow (the "Escrow Account") established by the
Buyer and the Sellers prior to the Closing with Centennial Bank (the
"Escrow Agent") at its offices located at 46th and Xxxxxxxx Xxxxxxx, Xxxxx,
Xxxx 00000, for disbursement subject to the terms and conditions set forth
in that certain escrow agreement executed by the Parties and the Escrow
Agent on or before the Closing substantially in the form and substance of
Exhibit B hereto (the "Escrow Agreement"). Subject to the terms and
conditions of the Escrow Agreement, the Escrowed Deferred Payments, less
all amounts that after the Closing may be recouped from or set-off against
the Escrowed Deferred Payments pursuant to 8(h) below, shall be payable
from the Escrow Account in two (2) equal installments on the first and the
second annual anniversary, respectively, of the Closing Date. The Closing
Date shall be set forth in the Escrow Agreement.
(j) Deliveries at the Closing. At the Closing, (i) Buyer's Counsel
will deliver to the Buyer the various certificates, instruments, and
documents referred to in 7(a) below, including the Escrowed Seller
Documents being held in the Pre-Closing Escrow, (ii) Buyer's Counsel will
deliver to the Sellers the various certificates, instruments, and documents
referred to in 7(b) below, including the Escrowed Buyer Documents, being
held in the Pre-Closing Escrow, and (iii) the Buyer will deliver to the
Sellers the Purchase Price specified in 2(b)(i) above and will deliver to
the Escrow Agent the Escrowed Deferred Payments specified in 2(b)(ii)
above. All of the documents described in (i) and (ii) will be dated by
Buyer's Counsel as of the Closing Date.
3. Representations and Warranties Concerning the Transaction.
(a) Representations and warranties Concerning the Transaction. Each of
the Sellers represents and warrants to the Buyer, jointly and severally
with the other Sellers, that the statements contained in this 3(a) are
correct and complete as of the date of execution of this Agreement and will
be correct and complete as of the Effective Date and as of the Closing
Date, except as set forth in Annex I attached hereto.
(i) Authorization of Transaction. Each of the Sellers has full power
and authority to execute and deliver this Agreement and to perform his or
her obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of each of the Sellers, enforceable in accordance with
its terms and conditions. The Sellers need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
(ii) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency or court to which any of the Seller's is
subject, or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to
which any of the Seller's is a party or by which he or she is bound or to
which any of his or her assets is subject.
(iii) Broker's Fees. The Sellers have no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Buyer could
become liable or obligated.
(iv) Company Shares. The Sellers hold of record and own beneficially
the number of Company Shares set forth next to his or her name in 4(b) of
the Disclosure Schedule, free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act and state securities
laws), Taxes, Security Interests, options, warrants, purchase rights,
contracts, commitments, equities, claims and demands. None of the Sellers
is a party to any option, warrant, purchase right, or other contract or
commitment that could require any Seller to sell, transfer or otherwise
dispose of any capital stock of the Company (other than this Agreement).
None of the Sellers is a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any capital stock
of the Company. Upon delivery of the certificates representing the Company
Shares, Buyer will acquire valid, marketable title thereto, free and clear
of any liens, encumbrances and claims of third parties.
(v) Absence of Indebtedness and Claims. Except as set forth on Annex I
attached hereto, none of the Sellers is indebted to the Company or any of
its Affiliates, and is not indebted to any Seller or any of his or her
Affiliates, if any, and no Seller has any claims against the Company.
(b) Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Sellers that the statements contained in this 3(b) are correct
and complete as of the date of execution of this Agreement and will be correct
and complete as of the Effective Date and as of the Closing Date, except as set
forth in Annex II attached hereto.
(i) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of
Delaware.
(ii) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and conditions. The Buyer
need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this
Agreement.
(iii) Non-Contravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other restriction of
any government, governmental agency or court to which the Buyer is subject
or any provision of its charter or bylaws or, (B) conflict with, result in
a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument or other arrangement to which the Buyer is a party or by which
it is bound or to which any of its assets is subject.
(iv) Broker's Fees. The Buyer has no Liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which Sellers could become
liable or obligated.
(v) Investment. The Buyer is not acquiring the Company Shares with a
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act.
(4) Representations and Warranties Concerning the Company. Each of the
Sellers represents and warrants to the Buyer that the statements contained in
this 4 are correct and complete as of the date of execution of this Agreement
and will be correct and complete as of the Effective Date and as of the Closing
Date, except as set forth in the disclosure schedule delivered by the Sellers to
the Buyer on the date hereof and initialed by the Parties (the "Disclosure
Schedule"). Nothing in the Disclosure Schedule shall be deemed adequate to
disclose an exception to a representation or warranty made herein, however,
unless the Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made herein (unless the representation
or warranty has to do with the existence of the document or other item itself).
The Disclosure Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this 4.
(a) Organization, Qualification, and Corporate Power. The Company
is a corporation duly organized, validly existing, and in good
standing under the laws of Delaware. The Company is duly authorized to
conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required. The Company has
full corporate power and authority and all licenses, permits, and
authorizations necessary to carry on the businesses in which it is
engaged and in which it presently proposes to engage and to own and
use the properties owned, used, leased or operated by it, including,
without limitation, all of its existing and proposed retail stores
(collectively, "Store" in the singular or "Stores" in the plural),
each of which is listed on 4(a) of the Disclosure Schedule and
appropriately designated thereon as an existing or proposed Store
location. Schedule 4(a) also lists each retail store or location at
which the Company has ceased operating its business during the three
(3) year period prior to the Most Recent Fiscal Month End, and the
Company has no liability arising from any such retail store that the
Company has ceased operating.
Schedule 4(a) of the Disclosure Schedule lists the directors and
officers of the Company. Xxxxx has delivered to the Buyer correct and
complete copies of the charter and bylaws of the Company (as amended
to date). Except as disclosed on Schedule 4(a), the minute books
(containing the records of meetings of the stockholders, the board of
directors, and any committees of the board of directors) are correct
and complete in all material respects. Except as disclosed on Schedule
4(a), the stock record books of the Company are correct and complete
in all respects and accurately reflect the record ownership and, to
the knowledge of the Sellers, the beneficial ownership of all the
outstanding Company Shares. The Company is not in default under or in
violation of any provision of its charter or bylaws.
The Company has one Subsidiary, AFGG, Inc., a Texas corporation
("AFGG"). AFGG is a dormant corporation and does not have any assets
or liabilities, and has never had any operations in Texas or any other
jurisdiction. Schedule 4(a) sets forth the interest of the Company and
the capitalization of the Company's Subsidiary.
(b) Capitalization. The entire authorized capital stock of the
Company consists of one hundred ten thousand (110,000) Company Shares,
of which ninety-seven thousand eight hundred (97,800) Company Shares
are issued and outstanding and no Company Shares are held in treasury.
All of the issued and outstanding Company Shares have been duly
authorized, are validly issued, fully paid, and non-assessable, and
are held of record as set forth in 4(b) of the Disclosure Schedule.
There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Company to
issue, sell or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation or similar rights
with respect to the Company. There are no voting trusts, proxies, or
other agreements or understandings with respect to the voting of the
capital stock of the Company which shall not have been terminated
prior to the Closing.
(c) Non-Contravention. Except as set forth on Schedule 4(c),
neither the execution nor the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) violate
any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any
provision of the charter or bylaws of the Company, or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
agreement (including without limitation, any franchise agreement),
contract, lease or sublease (including without limitation, any Store
Lease or sublease), license, instrument or other arrangement to which
the Company is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any Security
Interest upon any of its assets). Except as set forth on Schedule
4(c), the Company does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(d) Broker's Fees. The Company has no Liability or obligation to
pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.
(e) Title to Assets. Except as set forth on Schedule 4(e), the
Company has good and marketable title to, or a valid leasehold
interest in, the properties and assets used by it, located on its
premises, or shown on the Most Recent Balance Sheet or acquired after
the date thereof, free and clear of all Security Interests, except for
properties and assets disposed of in the Ordinary Course of Business
since the date of the Most Recent Balance Sheet.
(f) Financial Statements. Attached hereto as Exhibit D are the
following financial statements (collectively the "Financial
Statements"): (i) audited balance sheets and statements of income,
changes in stockholders' equity, and cash flow as of and for the
fiscal years ended December 31, 1995, December 31, 1996 and December
31, 1997 (the "Most Recent Fiscal Year End") for the Company; and (ii)
unaudited balance sheets and statements of income (the "Most Recent
Financial Statements") as of and for the four (4) months ended April
30, 1998 (the "Most Recent Fiscal Month End") for the Company.
The Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby, present fairly the financial
condition of the Company as of such dates and the results of
operations of the Company for such periods, are correct and complete,
and are consistent with the books and records of the Company (which
books and records are correct); provided, however, that the Most
Recent Financial Statements lack footnotes and other presentation
items. Each of the matters set forth in 2(c) shall be true and correct
upon and immediately after the Closing.
(g) Events Subsequent to Most Recent Fiscal Year End. Except as
set forth on Schedule 4(g), since the Most Recent Fiscal Year End,
there has not been any material adverse change in the business,
financial condition, operations, results of operations or future
prospects of the Company. Without limiting the generality of the
foregoing, since that date:
(i) the Company has not sold, leased, transferred
or assigned any of its assets, tangible or intangible,
other than for a fair consideration in the Company's
Ordinary Course of Business;
(ii) the Company has not entered into any
agreement, contract, lease or license (or series of
related agreements, contracts, leases and licenses)
outside the Company's Ordinary Course of Business;
(iii) no party (including the Company) has
accelerated, terminated, modified, or canceled any
agreement, contract, lease or license (or series of
related agreements, contracts, leases or licenses)
involving more than $1,000.00 to which the Company is a
party or by which any of them is bound;
(iv) the Company has not granted any Security
Interest upon any of its assets, tangible or intangible;
(v) the Company has not made any capital
expenditure (or series of related capital expenditures)
either involving more than $1,000.00 or outside the
Company's Ordinary Course of Business;
(vi) the Company has not made any capital
investment in, any loan to, or any acquisition of the
securities or assets of, any other Person (or series of
related capital investments, loans and acquisitions)
either involving more than $1,000.00 or outside the
Company's Ordinary Course of Business;
(vii) the Company has not issued any note, bond or
other debt security or created, incurred, assumed or
guaranteed any indebtedness for borrowed money or
capitalized lease obligation either involving more than
$1,000.00 singly or $5,000.00 in the aggregate;
(viii) the Company has not delayed or postponed
the payment of accounts payable and other Liabilities
outside the Company's Ordinary Course of Business;
(ix) the Company has not canceled, compromised,
waived or released any right or claim (or series of
related rights and claims) either involving more than
$1,000.00 or outside the Company's Ordinary Course of
Business;
(x) the Company has not granted any license or
sublicense of any rights under or with respect to any
Intellectual Property except as set forth in ? 4(l)(iii)
of the Disclosure Schedule setting forth each of the
Company's franchise, sub-franchise, area developer and
other similar documents.
(xi) there has been no change made or authorized
in the charter or bylaws of the Company;
(xii) the Company has not issued, sold, or
otherwise disposed of any of its capital stock, or granted
any options, warrants or other rights to purchase or
obtain (including upon conversion, exchange or exercise)
any of its capital stock;
(xiii) the Company has not declared, set aside, or
paid any dividend or made any distribution with respect to
its capital stock (whether in cash or in kind) or
redeemed, purchased or otherwise acquired any of its
capital stock;
(xiv) the Company has not experienced any damage,
destruction, or loss (whether or not covered by insurance)
to its property;
(xv) the Company has not made any loan to, or
entered into any other transaction with, any of its
directors, officers and employees outside the Company's
Ordinary Course of Business;
(xvi) the Company has not entered into any
employment contract or collective bargaining agreement,
written or oral, or modified the terms of any existing
such contract or agreement;
(xvii) the Company has not granted any increase in
the base compensation of any of its directors, officers or
employees outside the Company's Ordinary Course of
Business;
(xviii) the Company has not adopted, amended,
modified or terminated any bonus, profit-sharing,
incentive, severance, or other plan, contract or
commitment for the benefit of any of its directors,
officers or employees (or taken any such action with
respect to any other Employee Benefit Plan);
(xix) the Company has not made any other change in
employment terms for any of its directors, officers or
employees outside the Company's Ordinary Course of
Business;
(xx) the Company has not made or pledged to make
any charitable or other capital contribution outside the
Company's Ordinary Course of Business;
(xxi) there has not been any other material
occurrence, event, incident, action, failure to act or
transaction outside the Company's Ordinary Course of
Business; and
(xxii) the Company has not committed to any of the
foregoing.
(h) Undisclosed Liabilities. To the Knowledge of the Sellers, the
Company has no Liability (and there is no Basis for any present or
future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against any of them giving rise to any
Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto), and (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End
in the Company's Ordinary Course of Business (none of which results
from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement or
violation of law), and (iii) other Liabilities, which are not,
individually or in the aggregate, material to the Company. For
purposes of this subsection (iii), the term "material" shall mean any
Liabilities singly in excess of $2,500.00 or in the aggregate in
excess of $10,000.00.
(i) Legal Matters. To the Knowledge of the Sellers, the Company
has complied, in all material respects, with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof), and no
action, suit, proceeding, hearing, investigation, charge, complaint,
claim, demand, or notice has been filed or commenced against any of
them alleging any failure so to comply.
(j) Tax Matters. Except as disclosed on Schedule 4(j):s
(i) The Company has filed all Tax Returns that it
was required to file. All such Tax Returns were correct
and complete in all respects. All Taxes owed by the
Company (whether or not shown on any Tax Return) have been
paid. The Company is not currently the beneficiary of any
extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a jurisdiction
where the Company does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction. There are
no Security Interests on any of the assets of the Company
that arose in connection with any failure (or alleged
failure) to pay any Tax.
(ii) The Company has withheld and paid all Taxes
required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party.
(iii) None of the Sellers, directors or officers
(or employees responsible for Tax matters) of the Company
expects any authority to assess any additional Taxes for
any period for which Tax Returns have been filed. There is
no dispute or claim concerning any Tax Liability of the
Company either (A) claimed or raised by any authority in
writing or (B) as to which any of the Sellers, the
directors and officers (and employees responsible for Tax
matters) of the Company has Knowledge based upon personal
contact with any agent of such authority. 4(j) of the
Disclosure Schedule lists all federal, state, local, and
foreign income Tax Returns filed with respect to the
Company, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently
are the subject of audit. Xxxxx has delivered to the Buyer
correct and complete copies of all federal income Tax
Returns, examination reports, and statements of
deficiencies assessed against or agreed to by the Company.
(iv) The Company has not waived any statute of
limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency.
(v) The Company has not filed a consent under Code
Sec. 341(f) concerning collapsible corporations. The
Company has not made any payments, nor is it obligated to
make any payments, nor is it a party to any agreement that
under certain circumstances could obligate it to make any
payments that will not be deductible under Code Sec. 280G.
The Company has not been a United States real property
holding corporation within the meaning of Code Sec.
897(c)(2) during the applicable period specified in Code
Sec. 897(c)(1)(A)(ii). The Company is not a party to any
Tax allocation or sharing agreement. The Company (A) has
not been a member of an Affiliated Group filing a
consolidated federal income Tax Return or (B) has no
Liability for the Taxes of any Person (other than the
Company) under Treas. Reg. 1.1502-6 (or any similar
provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(vi) 4(j) of the Disclosure Schedule sets forth
the following information with respect to the Company as
of the most recent practicable date (as well as on an
estimated pro forma basis as of the Closing giving effect
to the consummation of the transactions contemplated
hereby):
(A) the basis of the Company in its assets;
(B) the amount of any net operating loss, net capital
loss, unused investment or other credit, unused foreign tax,
or excess charitable contribution allocable to the Company.
(vii) The unpaid Taxes of the Company
(A) did not, as of the Most Recent Fiscal
Month End, exceed the reserve for Tax Liability
(rather than any reserve for deferred Taxes
established to reflect timing differences between
book and Tax income) set forth on the face of the
Most Recent Balance Sheet (rather than in any
notes thereto); and
(B) do not exceed that reserve as
adjusted for the passage of time through the
Closing Date in accordance with the past custom
and practice of the Company in filing its Tax
Returns.
. (k) Real Property
(i) The Company does not own any real property or
interests in real property.
(ii) 4(k)(ii) of the Disclosure Schedule lists and
describes briefly all real property (a) leased or subleased
to the Company including without limitation, each of the
leases or subleases covering the premises of each of the
Stores (collectively, the "Store Leases"), and (b) leased or
subleased by the Company to third parties, including the
Company's franchisees and area developers. Xxxxx has
delivered to the Buyer correct and complete copies of the
leases and the subleases listed in 4(k)(ii) of the
Disclosure Schedule (as amended to date). With respect to
each lease and sublease listed in 4(k)(ii) of the Disclosure
Schedule:
(A) to the Knowledge of the Sellers, the
lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(B) subject to the receipt of consents
set forth in 4(k)(ii) of the Disclosure Schedule,
to the Knowledge of the Sellers, the lease or
sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect
on identical terms following the consummation of
the transactions contemplated hereby, which
transactions will not violate the terms thereof;
(C) to the Knowledge of the Sellers, no
party to the lease or sublease is in breach or
default, and no event has occurred which, with
notice or lapse of time, would constitute a breach
or default or permit termination, modification, or
acceleration thereunder;
(D) to the Knowledge of the Sellers, no
party to the lease or sublease has repudiated any
provision thereof;
(E) to the Knowledge of the Sellers,
there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or
sublease;
(F) to the Knowledge of the Sellers, with
respect to each sublease, the representations and
warranties set forth in subsections (A) through
(E) above are true and correct with respect to the
underlying lease;
(G) the Company has not assigned,
transferred, conveyed, mortgaged, deeded in trust
or encumbered any interest in the leasehold or
subleasehold; and
(H) to the Knowledge of the Sellers, all
facilities leased or subleased thereunder have
received all approvals of governmental authorities
(including licenses and permits) required in
connection with the operation thereof and have
been operated and maintained in accordance with
applicable laws, rules and regulations.
(iii) all facilities leased or subleased
thereunder are supplied with utilities and other services
necessary for the operation of said facilities.
(l) Intellectual Property
(i) The Company owns or has the right to use
pursuant to license, sublicense, agreement or permission
all Intellectual Property necessary or desirable for the
operation of the businesses of the Company as presently
conducted and as presently proposed to be conducted. Each
item of Intellectual Property owned or used by the Company
immediately prior to the Closing hereunder will be owned
or available for use by the Company on identical terms and
conditions immediately subsequent to the Closing
hereunder. 4(l)(i) of the Disclosure Schedule lists each
item of Intellectual Property owned, licensed by or used
by the Company, and sets forth whether it is owned or
licensed to the Company.
(ii) To the Knowledge of the Sellers, the Company
has not interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Intellectual
Property rights of third parties. The Company has never
received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement,
misappropriation, or violation (including any claim that
the Company must license or refrain from using any
Intellectual Property rights of any third party). To the
Knowledge of the Sellers, no third party has interfered
with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of the
Company.
(iii) The Company has no patents or applications
for registration. ? 4(l)(iii) of the Disclosure Schedule
identifies each license, agreement or other permission
which the Company has granted to any third party with
respect to any of its Intellectual Property (together with
any exceptions). Xxxxx has delivered to the Buyer correct
and complete copies of all such registrations,
applications, licenses, agreements, and permissions (as
amended to date) and has made available to the Buyer
correct and complete copies of all other written
documentation evidencing ownership of each such item.
4(l)(iii) of the Disclosure Schedule also identifies each
trade name or unregistered trademark used by the Company
in connection with any of its businesses. With respect to
each item of Intellectual Property required to be
identified in 4(l)(iii) of the Disclosure Schedule:
(A) the Company possesses all right,
title, and interest in and to the item, free and
clear of any Security Interest, license or other
restriction;
(B) the item is not subject to any
outstanding injunction, judgment, order, decree,
ruling or charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand
is pending or to the Knowledge of any of the
Sellers and the directors and officers (and
employees with responsibility for Intellectual
Property matters) of the Company, is threatened
which challenges the legality, validity,
enforceability, use or ownership of the item; and
(D) the Company has never agreed to
indemnify any Person for or against any
interference, infringement, misappropriation or
other conflict with respect to the item.
(iv) 4(l)(iv) of the Disclosure Schedule
identifies each item of Intellectual Property that any
third party owns and that the Company uses pursuant to any
license, sublicense, agreement (including without
limitation each franchise or related agreement to which
the Company is a party), or permission. The Seller has
delivered to the Buyer correct and complete copies of all
such licenses, sublicenses, agreements, and permissions
(as amended to date). With respect to each item of
Intellectual Property required to be identified in
4(l)(iv) of the Disclosure Schedule:
(A) the license, sublicense, agreement,
or permission covering the item is legal, valid,
binding, enforceable and in full force and effect;
(B) the license, sublicense, agreement,
or permission will continue to be legal, valid,
binding, enforceable and in full force and effect
on identical terms following the Closing;
(C) to the Knowledge of the Sellers, no
party to the license, sublicense, agreement or
permission is in breach or default, and to the
Knowledge of the Sellers, no event has occurred
which with notice or lapse of time would
constitute a breach or default or permit
termination, modification, or acceleration
thereunder; and
(D) no party to the license, sublicense,
agreement or permission has repudiated any
provision thereof;
(E) to the Knowledge of the Sellers, the
underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment,
order, decree, ruling or charge;
(F) to the Knowledge of the Sellers, no
action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or
is threatened which challenges the legality,
validity or enforceability of the underlying item
of Intellectual Property; and
(G) the Company has not granted any
sublicense or similar right with respect to the
license, sublicense, agreement or permission.
(v) To the Knowledge of the Sellers, the
Intellectual Property of the Company will not interfere
with, infringe upon, misappropriate or otherwise come into
conflict with, any Intellectual Property rights of third
parties as a result of the continued operation of its
business as presently conducted and as presently proposed
to be conducted.
(m) Tangible assets. The Company owns or leases all premises,
machinery, equipment, and other tangible assets necessary for the conduct
of its business as presently conducted and as presently proposed to be
conducted. Each such tangible asset is free from defects, has been
maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used and presently is
proposed to be used.
(n) Inventory. The inventories and supplies of the Company are
merchantable and fit for the purpose for which they were procured, and none
of which is slow-moving, obsolete, damaged or defective, subject only to
the reserve for inventory writedown set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past custom
and practice of the Company.
(o) Contracts. 4(o) of the Disclosure Schedule lists the following
contracts and other agreements to which the Company is a party:
(i) each contract or agreement of any kind or nature entered into
by any of the Company and Affiliates thereof, with any franchisee,
sub-franchisee or area developer of the Company or any officer,
principal, owner, shareholder or representative of any such franchisee
or area developer;
(ii) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease
payments in excess of $1,000.00 per annum;
(iii) any agreement (or group of related agreements) for the
purchase or sale of materials, commodities, supplies, products or
other personal property, or for the furnishing or receipt of services,
the performance of which will extend over a period of more than one
year, result in a material loss to the Company, or involve
consideration in excess of $1,000.00;
(iv) any agreement concerning a partnership or joint venture;
(v) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of
$1,000.00 or under which it has imposed a Security Interest on any of
its assets, tangible or intangible;
(vi) any agreement concerning confidentiality or noncompetition;
(vii) any agreement with any of the Sellers or their Affiliates
(other than the Company);
(viii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers or employees;
(ix) any collective bargaining agreement;
(x) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $15,000.00 or providing severance benefits;
(xi) any agreement under which it has advanced or loaned any
amount to any of its directors, officers or employees;
(xii) any agreement under which the consequences of a default or
termination could have a material adverse effect on the business,
financial condition, operations, results of operations, or future
prospects of the Company; or
(xiii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $1,000.00.
Xxxxx has delivered to the Buyer a correct and complete copy of each
written agreement listed in 4(o) of the Disclosure Schedule (as
amended to date) and a written summary setting forth the terms and
conditions of each oral agreement referred to in 4(o) of the
Disclosure Schedule. With respect to each such agreement: (A) the
agreement is legal, valid, binding, enforceable, and in full force and
effect; (B) the agreement will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby; (C) no party
is in breach or default, and, to the Knowledge of the Sellers, no
event has occurred which with notice or lapse of time would constitute
a breach or default, or permit termination, modification or
acceleration, under the agreement; and (D) neither the Company, nor to
the Knowledge of the Sellers, has any other party repudiated any
provision of the agreement.
(p) Notes and Accounts Receivable. All notes and accounts
receivable of the Company are reflected properly on its books and
records, are valid receivables subject to no setoffs or counterclaims,
are current and collectible, and will be collected in accordance with
their terms at their recorded amounts, subject only to the reserve for
bad debts set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) as adjusted for the passage of time
through the Closing Date in accordance with the past custom and
practice of the Company.
(q) Powers of Attorney. Except as set forth in 4(q) of the
Disclosure Schedule, there are no outstanding powers of attorney
executed on behalf of the Company.
(r) Insurance. 4(r) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which the
Company has been a party, a named insured, or otherwise the
beneficiary of coverage at any time within the past three (3) years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage
was on a claims made, occurrence, or other basis) and amount of
coverage; and
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal,
valid, binding, enforceable, and in full force and effect; (B) the
policy will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms through the date of the
Closing; (C) neither the Company, nor to the Knowledge of the Sellers,
is any other party to the policy in breach or default (including with
respect to the payment of premiums or the giving of notices), and, to
the Knowledge of the Sellers, no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration, under the policy;
and (D) neither the Company, nor to the Knowledge of the Sellers, has
any other party to the policy repudiated any provision thereof. The
Company has been covered during the past three (3) years by insurance
in scope and amount customary and reasonable for the businesses in
which it has engaged during the aforementioned period. 4(r) of the
Disclosure Schedule describes any self-insurance arrangements
affecting the Company.
(s) Litigation. 4(s) of the Disclosure Schedule sets forth each
instance in which any of the Sellers and the Company (i) is subject to
any outstanding injunction, judgment, order, decree, ruling, or charge
or (ii) is a party or is threatened to be made a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator. None of
the actions, suits, proceedings, hearings, and investigations set
forth in 4(s) of the Disclosure Schedule could result in any material
adverse change in the business, financial condition, operations,
results of operations or future prospects of the Company. None of the
Sellers has any reason to believe that any such action, suit,
proceeding, hearing or investigation may be brought or threatened
against the Company.
(t) Product Warranty. Each product made, sold or delivered by the
Company has been in conformity with all applicable laws, statutes,
regulations, retail food industry standards, and to the Knowledge of
the Sellers, the Company has no Liability (and there is no Basis for
any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them
giving rise to any Liability) for damages in connection therewith.
(u) Product Liability. To the Knowledge of the Sellers, the
Company has no Liability (and there is no Basis for any present or
future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against giving rise to any Liability)
arising out of any injury to individuals or property as a result of
the possession, consumption or use of any product made, sold or
delivered by the Company.
(v) Employees
(i) To the Knowledge of the Sellers, no executive, key
employee (including any Store manager), or group of employees has
any plans to terminate employment with the Company. To the
Knowledge of the Sellers, the Company has not committed any
unfair labor practice.
(ii) 4(v)(ii) of the Disclosure Schedule sets forth the
accrued vacation and sick and personal leave (if any) of each of
the Company's employees.
(w) Employee Benefit
(i) 4(w) of the Disclosure Schedule lists each Employee
Benefit Plan that the Company maintains or to which the Company
contributes.
(A) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form and in
operation in all material respects with the applicable
requirements of ERISA, the Code, and other applicable laws.
(B) All required reports and descriptions (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's,
and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of Part 6 of Subtitle B of
Title I of ERISA and of Code Sec. 4980B have been met with
respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(C) All contributions (including all employer
contributions and employee salary reduction contributions)
which are due have been paid to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing
Date which have been paid to each such Employee Pension
Benefit Plan or accrued in accordance with the past custom
and practice of the Company. All premiums or other payments
for all periods ending on or before the Closing Date have
been paid with respect to each such Employee Benefit Plan
which is an Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan meets the requirements of a
"qualified plan" under Code Sec. 401(a) and has received,
within the last four years, a favorable determination letter
from the Internal Revenue Service.
(E) The market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan
equals or exceeds the present value of all vested and
nonvested Liabilities thereunder determined in accordance
with PBGC methods, factors, and assumptions applicable to an
Employee Pension Benefit Plan terminating on the date for
determination.
(F) The Seller has delivered to the Buyer correct and
complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received
from the Internal Revenue Service, the most recent Form 5500
Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each
such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the
Company maintains or ever has maintained or to which it
contributes, ever has contributed, or ever has been required to
contribute:
(A) No such Employee Benefit Plan which is an Employee
Pension Benefit Plan has been completely or partially
terminated or been the subject of a Reportable Event as to
which notices would be required to be filed with the PBGC.
No proceeding by the PBGC to terminate any such Employee
Pension Benefit Plan has been instituted or threatened.
(B) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. No Fiduciary has
any Liability for breach of fiduciary duty or any other
failure to act or comply in connection with the
administration or investment of the assets of any such
Employee Benefit Plan. No action, suit, proceeding, hearing,
or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending or
threatened. None of the Seller and the directors and
officers (and employees with responsibility for employee
benefits matters) of the Company has any Knowledge of any
Basis for any such action, suit, proceeding, hearing, or
investigation.
(C) The Company has not incurred, and none of the
Seller and the directors and officers (and employees with
responsibility for employee benefits matters) of the Company
has any reason to expect that the Company will incur, any
Liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal
Liability) or under the Code with respect to any such
Employee Benefit Plan which is an Employee Pension Benefit
Plan.
(iii) The Company does not contribute to, never has
contributed to, and never has been required to contribute to, any
Multiemployer Plan or has any Liability (including withdrawal
Liability) under any Multiemployer Plan.
(iv) The Company does not maintain, never has maintained or
contributed to, and never has been required to contribute to any
Employee Welfare Benefit Plan providing medical, health, or life
insurance or other welfare-type benefits for current or future
retired or terminated employees, their spouses, or their
dependents (other than in accordance with Code Sec. 4980B).
(x) Guaranties. The Company is not a guarantor or otherwise
liable for any Liability or obligation (including indebtedness) of any
other Person.
(y) Environment, Health, and Safety
(i) To the Knowledge of the Sellers, the Company has
complied in all material respects with all Environmental, Health,
and Safety Laws, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has
been filed or commenced against the Company alleging any failure
so to comply. To the Knowledge of the Sellers, without limiting
the generality of the preceding sentence, the Company has
obtained and been in compliance with all of the terms and
conditions of all permits, licenses, and other authorizations
which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are
contained in, all Environmental, Health, and Safety Laws.
(ii) To the Knowledge of the Sellers, the Company has no
Liability (and none of the Company and its predecessors and
Affiliates has handled or disposed of any substance, arranged for
the disposal of any substance, exposed any employee or other
individual to any substance or condition, or owned or operated
any property or facility in any manner that could form the Basis
for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the
Company giving rise to any Liability) for damage to any site,
location, or body of water (surface or subsurface), for any
illness of or personal injury to any employee or other
individual, or for any reason under any Environmental, Health,
and Safety Law.
(iii) To the Knowledge of the Sellers, all properties and
equipment used in the business of the Company have been free of
asbestos, PCBs, methylene chloride, trichloroethylene,
1,2-transdichloroethylene, dioxins, dibenzofurans, and Extremely
Hazardous Substances.
(z) Certain Business Relationships with the Company. Except as
disclosed in ? 4(z) of the Disclosure Schedule, none of the Sellers
has been involved in any business arrangement or relationship with the
Company within the past 12 months, and none of the Sellers owns any
asset, tangible or intangible, which is used in the business of the
Company.
(aa) Disclosure. The representations and warranties contained in
this 4 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
and information contained in this 4 not misleading.
5. Pre-Closing Convenants. The Parties agree as follows with respect
to the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use his or its best efforts
to take all action and to do all things necessary in order to
consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing
conditions set forth in 7 below).
(b) Notices and Consents. The Sellers will cause the Company to
give any notices to third parties, and will cause the Company to use
its best efforts to obtain any third-party consents, that the Buyer
may request in connection with the matters referred to in ? 4(c)
above. Each of the Parties will (and the Sellers will cause the
Company to) give any notices to, make any filings with, and use its
best efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with the matters
referred to in 3(a)(ii), 3(b)(iii), and 4(c) above.
(c) Operations of Business. Except as disclosed on 5(c) of the
Disclosure Schedule, the Sellers will not cause or permit the Company
to engage in any practice, take any action or enter into any
transaction outside the Company's Ordinary Course of Business. Without
limiting the generality of the foregoing, except with the written
consent of the Buyer, or as disclosed on 5(c) of the Disclosure
Schedule, the Sellers will not cause or permit the Company to:
(i) sell, lease, transfer or assign any of its assets,
tangible or intangible, other than the sale of its inventory in
the Company's Ordinary Course of Business;
(ii) enter into, or terminate, modify, accelerate or cancel,
any agreement, contract, lease or license to which the Company is
a party or by which it is bound;
(iii) grant or permit any new Security Interest to be
imposed upon any of its assets, tangible or intangible;
(iv) close, or permit the closure of, any of its stores or
other premises upon which any of its business operations are
presently conducted; commit to or acquire any new store or new
store sites;
(v) fail to maintain inventories and supplies necessary for
the proper and continuing conduct of the Company's operations
before and after the Closing in the manner in which it is
presently conducted;
(vi) make any capital expenditure (or series of related
capital expenditures) other than in the Company's Ordinary Course
of Business;
(vii) make any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions);
(viii) issue any note, bond or other debt security or
create, incur, assume, or guarantee any indebtedness for borrowed
money or capitalized lease obligation;
(ix) delay or postpone the payment of accounts payable and
other Liabilities outside the Company's Ordinary Course of
Business;
(x) cancel, compromise, waive or release any right or claim
(or series of related rights and claims);
(xi) grant any license or sublicense of any rights under or
with respect to any Intellectual Property;
(xii) make or authorize any change in the charter or bylaws
of the Company;
(xiii) issue, sell or otherwise dispose of the Company's
capital stock, or grant any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange or
exercise) the Company's capital stock;
(xiv) declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock (whether in cash
or in kind) or redeem, purchase or otherwise acquire any of its
capital stock;
(xv) make any loan to, or enter into any other transaction
or agreement with, any of its directors, officers and employees
outside the Company's Ordinary Course of Business;
(xvi) make any distributions other than in the ordinary
course of business for payroll expenditures;
(xvii) grant any increase in the compensation of any of its
directors, officers and employees; or adopt, amend, modify or
terminate any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its
directors, officers, and employees (or take any such action with
respect to any other Employee Benefit Plan); or make any other
change in employment terms for any of its directors, officers,
and employees;
(xviii) otherwise take any action or engage in any
transaction outside the Company's Ordinary Course of Business; or
(xix) otherwise engage in any practice, take any action, or
enter into any transaction of the sort described in 4(g) above.
(d) Preservation of Business. Except as disclosed on 5(d) of the
Disclosure Schedule, the Sellers will cause the Company to keep its
business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships
with lessors, licensors, suppliers, customers, and employees.
(e) Full Access. The Sellers will permit, and the Sellers will
cause the Company to permit, representatives of the Buyer to have full
access to all premises, properties, personnel, books, records
(including Tax records), contracts and documents of or pertaining to
the Company at all reasonable times.
(f) Notice of developments. The Sellers will give (or will cause
to be given) prompt written notice to the Buyer of any material
adverse development causing a breach of any of the representations and
warranties in 4 above. Each Party will give prompt written notice to
the other Parties of any material adverse development causing a breach
of any of his or its own representations and warranties in 3 above. No
disclosure by any Party pursuant to this 5(f), however, shall be
deemed to amend or supplement Annex I, Annex II, or the Disclosure
Schedule or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.
(g) Exclusivity. Prior to the earlier of the termination of this
Agreement in accordance with 9 below or the Closing Date, the Sellers
will not (and the Sellers will not cause or permit the Company to) (i)
solicit, initiate, or encourage the submission of any proposal or
offer from any Person relating to the acquisition of any capital stock
or other voting securities, or any substantial portion of the assets
of, the Company (including any acquisition structured as a merger,
consolidation, or share exchange); or (ii) participate in any
discussions or negotiations regarding, furnish any information with
respect to, assist or participate in, or facilitate in any other
manner any effort or attempt by any Person to do or seek any of the
foregoing; or (iii) vote their Company Shares in favor of any such
acquisition, whether structured as a merger, consolidation, or share
exchange. The Sellers will promptly notify (and will cause the Company
to promptly notify) the Buyer immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the
foregoing.
6. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing.
(a) General. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action
(including the execution and delivery of such further instruments and
documents) as any other Party may reasonably request, all at the sole
cost and expense of the requesting Party (unless the requesting Party
is entitled to indemnification therefor under 8 below). The Sellers
acknowledge and agree that from and after the Closing the Buyer will
be entitled to possession of all documents, books, records (including
Tax records), agreements and financial data of any sort relating to
the Company.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or
demand in connection with (i) any transaction contemplated under this
Agreement or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date
involving the Company, each of the other Parties will cooperate with
him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to
their books and records as shall be necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting
or defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under ? 8 below).
(c) Transition. The Sellers will not (and will not permit the
Company to) take any action that is designed or intended to have the
effect of discouraging any lessor, sublessor, sub-lessee, licensor,
licensee, franchisee, customer, supplier, or other business associate
of the Company from maintaining the same business relationships with
the Company after the Closing as it maintained with the Company prior
to the Closing. The Sellers will refer all customer and vendor
inquiries relating to the businesses of the Company to the Buyer from
and after the Closing. In addition, Xxxxx agrees to provide reasonable
personal post-Closing transition assistance to the Company, commencing
on the Closing Date through and including the anniversary date hereof
in 2002. The Company shall be responsible for paying to Xxxxx any
reasonable expenses for such assistance but shall not otherwise
compensate Xxxxx for such assistance.
(d) Confidentiality. Each of the Sellers will treat and hold as
such all of the Confidential Information, refrain from using any of
the Confidential Information except in connection with this Agreement,
and deliver promptly to the Buyer or destroy, at the request and
option of the Buyer, all tangible embodiments (and all copies) of the
Confidential Information which are in his or her possession. In the
event that the Seller is requested or required (by oral question or
request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, such Seller will
notify the Buyer promptly of the request or requirement so that the
Buyer may seek an appropriate protective order or waive compliance
with the provisions of this 6(d). If, in the absence of a protective
order or the receipt of a waiver hereunder, such Seller is, on the
advice of counsel, compelled to disclose any Confidential Information
to any tribunal, such Seller may disclose the Confidential Information
to the tribunal; provided, however, that the disclosing Seller shall
use his or her best efforts to obtain, at the request of the Buyer, an
order or other assurance that confidential treatment will be accorded
to such portion of the Confidential Information required to be
disclosed as the Buyer shall designate. The foregoing provisions shall
not apply to any Confidential Information which is generally available
to the public immediately prior to the time of disclosure.
(e) Covenant Not to Compete. Xxxxx will not "directly or
indirectly compete" with the Buyer for a period of four (4) years from
and after the Closing Date. For purposes of this Agreement, the phrase
"directly or indirectly compete" shall include: (i) owning, managing,
operating, or controlling, or participating in the ownership,
management, operation, or control of, or being connected with or
having any interest in, as a stockholder, director, officer, employee,
agent, consultant, assistant, advisor, sole proprietor, partner or
otherwise, other than as a franchisee of the Buyer or an Affiliate of
the Buyer, (A) any mall-based business involving the retail sale of
cookies, pretzels, cinnamon rolls or bread products (collectively, a
"Mall-Based Competing Business"), or (B) any non-mall based business
involving the retail sale of cookies, pretzels or cinnamon roll
products (collectively, a "Non-Mall-Based Competing Business"); and
(ii) soliciting or attempting to solicit the services of any employee
of the Buyer or any affiliate of the Buyer; provided, however, that
Xxxxx shall not be deemed to be "directly or indirectly competing"
with Buyer:
(i) if Xxxxx is the owner of less than 1% of the outstanding
stock of any publicly traded corporation and he shall not be
deemed to engage solely by reason thereof in any of its
businesses;
(ii) so long as Xxxxx has not breached the solicitation
provisions set forth above and has affirmatively encouraged each
of such individuals to continue his employment with the Buyer or
an Affiliate of the Buyer, Xxxxx shall not be prohibited from
providing financing for, owning up to twenty-five percent (25%)
of, or rendering consulting services to, any business other than
a Mall-Based Competing Business or Non-Mall-Based Competing
Business (or as a franchisee of the Buyer or an Affiliate of the
Buyer) organized and principally owned by any one or more of the
following five named individuals: Xxxxxx X. Xxxxxx, Xxxxxx X.
Xxxxx, Xxxxx X. Xxxxxxxxxx, Xxxxxx Xxxxxxx and Xxxxx Xxxxxxxxx;
or
(iii) if Xxxxx is providing consulting services to (A) a
mall-based business that is not a Mall-Based Competing Business,
or (B) a Non-Mall- Based Competing Business so long as its
cookie, pretzel and cinnamon roll product sales, in the
aggregate, do not at any time exceed five percent (5%) of its
total sales.
If the final judgment of a court of competent jurisdiction
declares that any term or provision of this ? 6(e) is invalid or
unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power
to reduce the scope, duration, or area of the term or provision, to
delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid
and enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time
within which the judgment may be appealed.
7. Conditions to Obligation to Close
(a) Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in 3(a) and
4 above shall be true and correct in all material respects at and
as of the Closing Date;
(ii) each of the Sellers shall have performed and complied
with all of his or her covenants hereunder in all material
respects through the Closing;
(iii) the Company shall have procured all of the third party
consents specified in 5(b) above including without limitation,
consent of each of the Company's landlords and GACC with respect
to each of the Store Leases (including those listed on 4(c) of
the Disclosure Schedule), all of which shall be satisfactory to
the Buyer;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would
(A) prevent consummation of any of the transactions
contemplated by this Agreement;
(B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation;
(C) affect adversely the right of the Buyer to own the
Company Shares and to control the Company; or
(D) affect adversely the right of the Company to own
its assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall
be in effect);
(v) each of the Sellers shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified
above in 7(a)(i)-(iv) above is satisfied in all respects;
(vi) the Parties and the Company shall have received all
other authorizations, consents, and approvals of governments and
governmental agencies referred to in 3(a)(ii), 3(b)(ii), and 4(c)
above;
(vii) the Buyer shall have received from counsel to the
Sellers an opinion substantially in the form set forth in Exhibit
E attached hereto, addressed to the Buyer, and dated as of the
Closing Date;
(viii) at least five (5) business days prior to the Closing,
the Buyer shall have received the resignations, effective as of
the Closing, of the Company's directors and the officers set
forth on 7(a)(viii) of the Disclosure Schedule;
(ix) the Buyer shall have obtained on terms and conditions
satisfactory to it all of the financing it needs in order to
consummate the transactions contemplated hereby and the Related
Transactions;
(x) the closing of each of the Related Transactions shall
have occurred, or each of the conditions for the closing of the
Related Transactions concurrently with the Closing of the
transactions contemplated by this Agreement shall have been
satisfied or waived to the Buyer's satisfaction;
(xi) the Franchisee Litigation shall have been settled upon
terms and dismissed with prejudice and on the merits pursuant to
documents executed and satisfactory to the Buyer;
(xii) the Buyer's due diligence investigation of the Sellers
and the Company shall have been completed to the Buyer's
satisfaction;
(xiii) all actions to be taken by the Sellers in connection
with consummation of the transactions contemplated hereby, and
all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby, will be
reasonably satisfactory in form and substance to the Buyer;
(xiv) the capital stock of AFGG, Inc. shall have been
transferred by the Company to Xxxxx or his designee pursuant to
instruments satisfactory to the Buyer;
(xv) all voting trusts, proxies and other agreements or
understandings with respect to the voting of the capital stock of
the Company shall have been terminated before the Closing;
(xvi) the Sellers shall deliver to the Buyer stock
certificates representing all of the issued and outstanding
Company Shares, endorsed in blank or accompanied by duly executed
assignment documents;
(xvii) the Company and Xxxxx shall have entered into an
agreement with the landlord under the Office Suite Lease,
satisfactory to the Buyer, removing the Company as a party
thereto, providing for the release of the Company from all past
and future duties, obligations and liabilities thereunder, and
providing for the Buyer's use of two offices without charge to
the Buyer as mutually agreed therein for the lesser of a period
of one year after the Closing Date or so long as Xxxxx or an
Affiliate of Xxxxx is a tenant thereunder; and
(xviii) the Company and the Sellers shall deliver the stock
book, stock ledger, minute book, and corporate seal of the
Company.
The Buyer may waive any condition specified in this 7(a) if it
executes a writing so stating at or prior to the Closing.
Notwithstanding the foregoing, the Parties agree that the satisfaction
of the conditions at the Closing set forth in 7(a)(iii), (x), and
(xi), and the Closing of the transactions contemplated by this
Agreement are intended to occur simultaneously. Therefore, if all of
the conditions set forth in this section 7(a) (other than those set
forth in 7(a)(iii), (x) and (xi)) are satisfied at the Pre-Closing and
remain satisfied through the Closing, then all conditions set forth in
this 7(a) shall be deemed to have been satisfied when the conditions
in 7(a)(iii), (x), and (xi) have been satisfied.
(b) Conditions to Obligation of the Sellers. The obligation of
the Sellers to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in 3(b)
above shall be true and correct in all material respects at and
as of the Closing Date;
(ii) the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects through the
Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction for
before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge shall
be in effect);
(iv) the Buyer shall have delivered to the Sellers a
certificate to the effect that each of the conditions specified
above in 7(b)(i)-(iii) above is satisfied in all respects;
(v) the Parties and the Company shall have received all
other authorizations, consents, and approvals of governments and
governmental agencies referred to in 3(a)(ii), 3(b)(iii), and
4(c) above;
(vi) the Company shall have transferred the Excluded Assets,
described on Schedule 7(b)(vi) attached hereto, to Xxxxx prior to
the Closing Date;
(vii) the closing of each of the Related Transactions shall
have occurred, or each of the conditions for the closing of the
Related Transaction concurrently with the closing of the
transactions contemplated by this Agreement shall have been
satisfied or waived to the Sellers' satisfaction; and
(viii) all actions to be taken by the Buyer in connection
with consummation of the transactions contemplated hereby, and
all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby, will be
reasonably satisfactory in form and substance to the Sellers.
The Sellers may waive any condition specified in this 7(b) if all of
them execute a writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this
Agreement shall survive the Closing hereunder (even if the damaged
Party knew or had reason to know of any misrepresentation or breach of
warranty at the time of Closing) and continue in full force and effect
for a period of two (2) years thereafter, except for representations
regarding the Company's Tax Liabilities, which representations will
expire and be terminated on the date of expiration of the statute of
limitations for collection of such Tax Liabilities.
(b) Indemnification Provisions for Benefit of the Buyer. Xxxxx
and Xxxxxxx X. Xxxxx, jointly and severally, shall indemnify, save and
hold harmless each of the Buyer, its Affiliates and each of its
officers, directors, employees, agents, legal representatives,
advisors, consultants, successors and assigns (collectively, the
"Buyer Indemnified Parties"), from any Adverse Consequences suffered
or incurred by any of them to the extent arising from, out of or in
any manner connected with or based on:
(i) any breach of any of the representations, warranties and
covenants of any of the Sellers contained in this Agreement, in
the Disclosure Schedule or in any certificate, instrument or
other document delivered pursuant hereto or thereto;
(ii) any breach of any covenant of any of the Sellers
contained in this Agreement requiring performance after the
Closing Date; and
(iii) any Liability of the Company for the unpaid Taxes of
any Person (other than the Company) under Treas. Reg. 1.1502-6
(or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
In addition, Xxxxx and Xxxxxxx X. Xxxxx, jointly and severally, agree
to indemnify, save and hold harmless the Buyer, its Affiliates and the
Buyer Indemnified Parties from any Adverse Consequences arising out of
each of the Tax Matters described in Schedule 4(j).
(c) Indemnificaiton Provision for Benefit of the Sellers. Subject
to the provisions of 8(b) and 8(d), the Buyer shall indemnify, save
and hold harmless each of the Sellers and their respective heirs,
legal representatives, agents, advisors, consultants, successors and
assigns (collectively the "Seller Indemnified Parties"), up to a
maximum of $1,000,000 in the aggregate, from and against all Adverse
Consequences arising from, out of or in any manner connected with or
based on:
(i) any breach of any of the Buyer's representations,
warranties and covenants contained in this Agreement, in the
Disclosure Schedule or in any certificate, instrument or other
document delivered pursuant hereto or thereto;
(ii) any breach of any covenant of the Buyer contained in
this Agreement requiring performance after the Closing Date; and
(iii) any Adverse Consequence arising after the Closing Date
under Store Leases (but not under the Office Suite Lease) under
which Xxxxx remains a party or guarantor after the Closing;
provided, however, the $1,000,000 limitation in this ?8(c) shall
not apply to the Buyer's indemnification obligations under this
clause (iii).
(d) Indemnification Limitations Notwithstanding the foregoing to
the contrary, (i) none of the Sellers shall be required to indemnify
the Buyer Indemnified Parties from any Adverse Consequences pursuant
to 8(b) until any of the Buyer Indemnified Parties has suffered
Adverse Consequences in excess of a $100,000.00 aggregate threshold;
and (ii) the aggregate liability of the Sellers to the Buyer pursuant
to this 8 shall not exceed $1,000,000. For purposes of clause (i)
above, the Seller shall be obligated to indemnify the Buyer for the
first $100,000 of Adverse Consequences only if arising from (i) unpaid
rent (including percentage rent accrued up to the Closing Date),
defaults or other claims arising from time periods prior to the
Closing Date; or (ii) Taxes; provided that the Sellers, jointly and
severally, agree to indemnify, save and hold harmless the Buyer, its
Affiliates and the Buyer Indemnified Parties from any Adverse
Consequences arising of out the Tax Matters described in Schedule 4(j)
on a dollar-for-dollar basis.
(e) Matters Involving Third Parties
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification
against any other Party (the "Indemnifying Party") under this 8,
then the Indemnified Party shall promptly notify the Indemnifying
Party thereof in writing; provided, however, that no delay on the
part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the Indemnifying
Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend
the Indemnified Party against the Third Party Claim with counsel
of its choice satisfactory to the Indemnified Party so long as
(A) the Indemnifying Party notifies the Indemnified
Party in writing within 15 days after the Indemnified Party
has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from
and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party
Claim;
(B) the Indemnifying Party provides the Indemnified
Party with evidence acceptable to the Indemnified Party that
the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its
indemnification obligations hereunder;
(C) the Third Party Claim involves only money damages
and does not seek an injunction or other equitable relief;
(D) settlement of, or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith judgment
of the Indemnified Party, likely to establish a precedential
custom or practice materially adverse to the continuing
business interests of the Indemnified Party; and
(E) the Indemnifying Party conducts the defense of the
Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with 8(c)(ii)
above,
(A) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in
the defense of the Third Party Claim;
(B) the Indemnified Party will not consent to the entry
of any judgment or enter into any settlement with respect to
the Third Party Claim without the prior written consent of
the Indemnifying Party (not to be withheld unreasonably);
and
(C) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written
consent of the Indemnified Party (not to be withheld
unreasonably).
(iv) In the event any of the conditions in 8(c)(ii) above is
or becomes unsatisfied, however,
(A) the Indemnified Party may defend
against, and consent to the entry of any judgment
or enter into any settlement with respect to, the
Third Party Claim in any manner it reasonably may
deem appropriate (and the Indemnified Party need
not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith);
(B) the Indemnifying Parties will
reimburse the Indemnified Party promptly and
periodically for the costs of defending against
the Third Party Claim (including reasonable
attorneys' fees and expenses); and
(C) the Indemnifying Parties will remain
responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the fullest
extent provided in this 8.
(f) Determination of Adverse Consequences. The Parties shall
take into account the time cost of money in determining Adverse
Consequences for purposes of this 8.
(g) Officer/Director Indemnification. The Buyer covenants
and agrees that it will cause the Company to perform the
Company's obligations with respect to indemnification of the
Sellers who are officers or directors of the Company (as existing
up to the Closing Date) to the extent required by the Company's
Articles of Incorporation, Bylaws, and the Delaware General
Corporation Law (the "Corporate Code") as existing on the Closing
Date. Notwithstanding anything in this Agreement to the contrary,
and except as set forth in the next sentence, the sole obligation
with respect to indemnification of officers and directors of the
Company shall be as set forth in the preceding sentence, and
Buyer shall have no personal obligation to indemnify such
officers and directors; however, Buyer hereby agrees that it
shall indemnify those Sellers that were officers and directors of
the Company existing up to the Closing Date, to the extent
required by the Articles of Incorporation, Bylaws, and the
Corporate Code, for all claims and damages arising after the
Closing Date and attributable to conduct or omissions of the
Company arising after the Closing Date. The indemnification set
forth in this subsection (g) is subject to the following
limitations: (i) no Seller shall be entitled to indemnification
in the event that the claim for indemnification results from a
breach of a representation, warranty, or covenant made by any
Seller; and (ii) shall not exceed $250,000, in the aggregate for
all Sellers (together with any non-Seller officers and/or
directors of the Company who receive indemnification other than
through this Agreement).
(h) Certain Off-Set Rights. At the Buyer's election,
payments, if any, to be made by Xxxxx and Xxxxxxx X. Xxxxx under
this 8 may be made by reducing, on a dollar-for-dollar basis, any
unpaid balance of any of the Escrowed Deferred Payments, by the
amount of all or any portion of any Adverse Consequences the
Buyer may suffer or incur. All such indemnification payments
under this 8 shall be deemed adjustments to the Purchase Price.
Notwithstanding the foregoing, before any set-off rights may be
exercised, the Buyer shall give written notice to Xxxxx (and to
the Escrow Agent so long as it holds or controls any Escrow
Funds) of any claim for indemnification hereunder, specifying in
reasonable detail the grounds for indemnification and the amount
of the set-off, and Xxxxx may object to any such set-off by
delivering his written objection to the Buyer (and to the Escrow
Agent so long as it holds or controls any Escrow Funds) within
thirty (30) days after Xxxxx'x receipt of the Buyer's notice. If
Xxxxx fails to object within the thirty (30) day period
specified, Xxxxx and Xxxxxxx X. Xxxxx shall waive any right to
object to the Buyer's right of indemnification hereunder or the
amount of the set-off. If Xxxxx disputes either the Buyer's right
to indemnification, or the amount of the set-off, or both, then
Escrow Agent shall retain the amount of the set-off pending
resolution of the dispute, and Buyer and Seller shall negotiate
in good faith to resolve all issues in dispute. If, after a
period of thirty (30) days following the date on which Xxxxx and
Xxxxxxx X. Xxxxx give Buyer notice of their objection to Seller's
indemnification hereunder, any such matter remains in dispute,
the parties shall employ the dispute resolution procedures set
forth in 10 of this Agreement. Each such Party agrees to make
available to the other Party and the attorneys and accountants of
the other such Party, within a reasonable time after a request is
made, all books and records which are reasonably required by such
requesting Party to evaluate a claim for indemnification or
objection hereunder.
(i) Other Indemnification Provisions. The foregoing
indemnification, set off and recoupment provisions are in
addition to, and not in derogation of, any statutory, equitable,
or common law remedy any Buyer may have for breach of a
representation, warranty or covenant.
(j) Seller's Release of Claims. Effective as of the Closing
Date, each of the Sellers hereby (i) releases, acquits and
forever discharges the Company from any and all liabilities,
obligations, indebtedness, claims, demands, actions or causes of
action arising from or relating to any event, occurrence, act,
omission or condition occurring or existing on or prior to the
Closing Date, including, without limitation, any claim for
indemnity or contribution from the Company in connection with the
obligations or liabilities of the Sellers hereunder, except for
(A) the indemnification provided by 8(c) hereof and any other
contractual obligations of the Buyer to the Sellers set forth in
this Agreement, and (B) interests in benefit plans to which any
of the Sellers are entitled; (ii) waives all breaches, defaults
or violations of each agreement, if any, among or between
shareholders applicable to the Company Shares and agrees that any
and all such agreements are terminated as of the Closing Date,
and (iii) waives any and all preemptive or other rights to
acquire any shares of stock of the Company and releases any and
all claims arising in connection with any prior default,
violation or failure to comply with or satisfy any such
preemptive or other rights.
(k) Release and Indemnification from Guarantie. The Buyer
shall use reasonable efforts and cooperate with the Sellers to
have each of the Sellers released, as of the Closing Date, from
all guaranties (including any pledges of assets by any of them
for debts or obligations of the Company) listed on 4(x) of the
Disclosure Schedule attached hereto. From and after the Closing,
Buyer will defend, indemnify and hold each of the Sellers and the
Company harmless from and against any claims made or threatened
to be made, or loss incurred, in connection with any such
guaranty, which obligations shall be separate and apart from
those provided in 8.
9. Termination
(a) Termination of Agreement. The Parties may terminate this
Agreement as provided below:
(i) The Buyer and the Sellers may terminate this
Agreement by mutual written consent at any time prior to the
Closing;
(ii) The Buyer may terminate this Agreement at any time
prior to the Closing by giving written notice to the Sellers
if the Buyer is not satisfied in its sole discretion with
the results of its continuing business, legal and accounting
due diligence investigation regarding the Company;
(iii) The Buyer may terminate this Agreement by giving
written notice to the Sellers at any time prior to the
Closing (A) in the event any of the Sellers has breached any
material representation, warranty, or covenant contained in
this Agreement in any material respect, the Buyer has
notified the Sellers of the breach, and the breach has
continued without cure for a period of fifteen (15) days
after the notice of breach; or (B) if the Closing shall not
have occurred on or before September 30, 1998, by reason of
the failure of any condition precedent under 7(a) hereof
(unless the failure results primarily from the Buyer itself
breaching any representation, warranty, or covenant
contained in this Agreement);
(iv) The Buyer may terminate this Agreement by giving
written notice to the Sellers at any time prior to the
Closing in the event that any of the Related Transactions
shall be terminated or fail to close for any reason,
including without limitation, any cause, action or reason
attributable to the Buyer; and
(v) The Sellers, owning, collectively, not less
than 95% of the Company Shares acting collectively, may
terminate this Agreement on behalf of all Sellers (and
under such circumstance this Agreement shall terminate
with respect to all Sellers) by giving written notice to
the Buyer at any time prior to the Closing (A) in the
event the Buyer has breached any material representation,
warranty, or covenant contained in this Agreement in any
material respect, the Sellers have notified the Buyer of
the breach, and the breach has continued without cure for
a period of fifteen (15) days after the notice of breach;
or (B) if the Closing shall not have occurred on or before
September 30, 1998, by reason of the failure of any
condition precedent under 7(b) hereof (unless the failure
results primarily from any of the Sellers breaching any
representation, warranty, or covenant contained in this
Agreement).
(b) Effect of Termination. If any Party terminates this
Agreement pursuant to 9(a) above, all rights and obligations of
the Parties under this Agreement and the Escrow Agreement shall
terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
10. Miscellaneous
(a) Press Releases and Public Announcements. No Party shall
issue any press release or make any public announcement relating
to the subject matter of this Agreement prior to the Closing
without the prior written approval of the Buyer and the Seller;
provided, however, that any Party may make any public disclosure
it believes in good faith is required by applicable law (in which
case the disclosing Party will use its best efforts to advise the
other Parties prior to making the disclosure).
(b) No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the
Parties and their respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire agreement
among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written
or oral, to the extent they related in any way to the subject
matter hereof.
(d) Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein
and their respective successors and permitted assigns. No Party
may assign either this Agreement or any of his or its rights,
interests, or obligations hereunder without the prior written
approval of the Buyer and the Seller; provided, however, that the
Buyer may (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates and (ii) designate one
or more of its Affiliates to perform its obligations hereunder
(in any or all of which cases the Buyer nonetheless shall remain
responsible for the performance of all of its obligations
hereunder).
(e) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
(f) Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall be
deemed duly given if (and then two business days after) it is
sent by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set
forth below:
If to any of the Sellers: Deblan Corporation
c/o Xxxxxxxx X. Xxxxx
8300 F.M. 0000 Xxxx, Xxxxx 000
Xxxxxxx, XX 00000
Copy to: Chamberlain, Hrdlicka, White, Xxxxxxxx & Xxxxxx
ATTN: Xxxxx X. Spring, III
1400 Two Xxxxx Center
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
If to the Buyer:Xxx. Xxxxxx' Original Cookies, Inc.
ATTN: Legal Department
0000 X. Xxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, XX 00000
Copy to: Jones, Waldo, Xxxxxxxx & XxXxxxxxx
ATTN: Xxxx X. Xxxxxxx
0000 Xxxxx Xxxxx Xxxxx
000 Xx. Xxxx Xxxxxx
Xxxx Xxxx Xxxx, XX 00000
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set
forth above using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail,
or electronic mail), but no such notice, request, demand, claim, or
other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any Party may
change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Utah
without giving effect to any choice or conflict of law provision or
rule (whether of the State of Utah or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than
the State of Utah.
(i) Amendments and waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and
signed by the Buyer and each of the Sellers. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.
(k) Expenses. Each of the Parties will bear his or its own costs
and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated
hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the Parties and no presumption
or burden of proof shall arise favoring or disfavoring any Party by
virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. The Parties
intend that each representation, warranty, and covenant contained
herein shall have independent significance. If any Party has breached
any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty,
or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall
not detract from or mitigate the fact that the Party is in breach of
the first representation, warranty, or covenant.
(m) Incorporation of Exhibits, Annexes, and Schedules. The
Exhibits, Annexes, and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
(n) Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the
event any of the provisions of this Agreement are not performed in
accordance with their specific terms or otherwise are breached.
Accordingly, each of the Parties agrees that the other Parties shall
be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted
in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter in addition to any other
remedy to which they may be entitled, at law or in equity.
(o) Dispute Resolution. Any dispute arising out of or relating to
this Agreement, including, but not limited to, claims for
indemnification pursuant to Section 8 shall be resolved in accordance
with the procedures specified in this Section 10, which shall be sole
and exclusive procedures for the resolution of any such disputes.
(i) The parties shall attempt in good faith to resolve any
dispute arising out of or relating to this Agreement promptly by
negotiation between the Seller and his appointed representatives
and executives of the Buyer who, if possible, are at a higher
level of management than the persons with direct responsibility
for administration of this Agreement.
(A) Any Party may give the other Party written notice
of any dispute not resolved in the normal course of
business. Within 15 days after delivery of the notice, the
receiving Party shall submit to the other a written
response. The notice and response shall include (1) a
statement of each Party's position and a summary of
arguments supporting that position, and (2) the name and
title of the executive who will represent that Party and of
any other person who will accompany the executive. Within 30
days after delivery of the disputing Party's notice, the
executives of both parties shall meet at a mutually
acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the
dispute. All reasonable requests for information made by one
Party to the other will be honored.
(B) If the matter has not been resolved by these
persons within sixty (60) days of the disputing Party's
notice, or if the parties fail to meet within thirty (30)
days of the disputing Party's notice, either Party may
initiate mediation as provided hereinafter.
(C) All negotiations pursuant to this clause are
confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules of
Evidence and State rules of evidence.
(ii) If the dispute has not been resolved by negotiation as
provided herein, the Parties shall endeavor to settle the dispute
by nonbinding mediation and to bear equally the costs of the
mediation. The Parties will jointly appoint a mutually acceptable
mediator promptly after a request for mediation is made by any
Party. The Parties agree to participate in the mediation and all
related negotiations in good faith.
(iii) If the dispute has not been resolved by non-binding
means as provided herein within 90 days of the initiation of such
procedure, either Party may initiate litigation (upon 30 days'
written notice to the other Party); provided, however, that if
one Party has requested the other to participate in a non-binding
procedure and the other has failed to participate, the requesting
Party may initiate litigation before expiration of the above
period.
(iv) The procedures specified in this 10(o) shall be the
sole and exclusive procedures for the resolution of disputes
between the Parties arising out of or relating to this Agreement;
provided, however, that a Party, without prejudice to the above
procedures, may file a complaint (for statute of limitations or
venue reasons) or to seek temporary or preliminary injunctive or
other provisional judicial relief, if in its sole judgment such
action is necessary to avoid irreparable damage or to preserve
the status quo. Despite such action, the Parties will continue to
participate in good faith in the procedures specified in this
Section.
(v) All applicable statues of limitation and defenses based
upon the passage of time shall be tolled while the procedures
specified in this Section are pending. The Parties will take such
action, if any, required to effectuate such tolling.
(vi) Each Party is required to continue to perform its
obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement.
(p) Submission to Juridiction. Any action or proceeding arising
out of or relating to this Agreement shall be heard and determined in
any state or federal court sitting (i) in Salt Lake City, Utah, with
respect to actions or proceedings in which the Buyer is named as a
defendant, or (ii) in Houston, Texas, with respect to actions or
proceedings in which any of the Sellers is named as a defendant. Each
of the Parties submits to the jurisdiction of any such state or
federal court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other
court. Each of the Parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought and waives any
bond, surety, or other security that might be required of any other
Party with respect thereto. Each Party agrees that a final judgment in
any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment or in any other manner provided by
law or at equity.
(q) Attorney's Fees. Should any litigation be commenced with
respect to any matters governed by this Agreement or the Escrow
Agreement, the Party prevailing shall be entitled, in addition to such
other relief as may be granted, to a reasonable sum for such Party's
attorneys' fees and expenses determined by the court in such
litigation.
(r) Joinder of Spouse. The spouse of certain of the Sellers is
executing this Agreement to acknowledge its fairness and that it is in
such spouse's best interests to bind such spouse's community property
interest, if any, to the terms of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
BUYER: XXX. XXXXXX' ORIGINAL COOKIES, INC.
By:/s/Xxxxxxx X. Xxxx
Its: VP
SELLERS:
/s/Xxxxxxxx X. Xxxxx
Xxxxxxxx X. Xxxxx
/s/Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
/s/Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
/s/Xxxxxx Xxxxxx
[SPOUSE]
/s/Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
/s/Xxxxxxxxx X. Xxxxx
[SPOUSE]
/s/Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxxxxx
/s/Xxxxxxx Xxxxxxxxxx
[SPOUSE]
