JOINT VENTURE AGREEMENT
This Agreement is made as of the 27th day of October, 1998, by and
among NEW YORK BAGEL ENTERPRISES, INC., a Kansas corporation ("NYBE") and
WESTERN COUNTRY CLUBS, INC., a Colorado corporation ("WCCI").
R E C I T A L S:
A. NYBE and WCCI have agreed to form a joint venture for the purpose of
converting various New York Bagel Cafe-Registered Trademark- restaurants into
Atomic Burrito-Registered Trademark- restaurants; and
B. WCCI shall cause its subsidiary, Atomic Burrito, Inc., an Oklahoma
corporation, to negotiate in good faith with NYBE, such that it is contemplated
that NYBE shall be granted a master license to develop Atomic Burrito-Registered
Trademark- restaurants; and
C. The parties are entering into this Agreement to set forth their mutual
understanding and agreements with respect to the terms and conditions of such
joint venture.
NOW, THEREFORE, in consideration of the mutual covenants and promises set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
DEFINITIONS
In addition to the other definitions contained herein, the following
definitions shall apply for purposes of this Agreement:
1.1 AFFILIATE. "Affiliate," when such term is used with respect to
another Person which is a legal entity, means (a) any Person who directly or
indirectly Controls, is Controlled by or is under common Control with such other
Person, (b) any Person who is a director or officer of a privately-owned
company, member in or trustee of, or who serves in a similar capacity with
respect to, such other Person, or (c) any Person who directly or indirectly is
the beneficial owner of 20% or more of such other Person. When the term
"Affiliate" is used with respect to another Person who is an individual, it
means any corporation, partnership, limited liability company, trust or other
entity of which such other Person serves as an officer, director, general
partner, manager, trustee or in a similar capacity.
1.2 ANCILLARY AGREEMENTS. "Ancillary Agreements" means all of the
agreements executed and delivered by NYBE and/or WCCI, pursuant to this
Agreement or in connection with the transactions contemplated by this Agreement.
1.3 CAPITAL INVESTMENT SCHEDULE. "Capital Investment Schedule" means
the schedule attached as Schedule 3.2.
1.4 CLOSING. "Closing" means the closing of the transactions provided
for in this Agreement, which shall take place on the Closing Date at the offices
of NYBE in Wichita, Kansas, or such other place as the parties may agree upon.
1.5 CLOSING DATE. "Closing Date" means the date on which a Closing
occurs.
1.6 CONTROL. "Control" as applied to a Person means the direct or
indirect ownership of more than 50% of the voting common stock (in the case of a
corporation) or other voting interests (in the case of a legal entity which is
not a corporation).
1.7 DEVELOPMENT TERM. "Development Term" means the twelve (12) month
period commencing on December 1, 1998. However, either party may terminate this
Agreement during the Development Term immediately upon written notice if either
party materially fails to perform its duties hereunder. Providing, such
termination shall not affect the obligations of WCCI and NYBE to complete the
conversion of any Facilities then under construction.
1.8 FACILITY. "Facility" means the leased premises and improvements
thereon constituting New York Bagel Cafe-Registered Trademark- restaurants,
identified in Schedule 1.8, which are to be converted into Atomic
Burrito-Registered Trademark- restaurants pursuant to or as contemplated by this
Agreement.
1.9 LICENSE AGREEMENT. "License Agreement" means the License Agreement
substantially the form of Exhibit "A," attached hereto.
1.10 NYBE RESPONSIBILITIES SCHEDULE. "NYBE Responsibilities Schedule"
means the schedule attached as Exhibit 3.4(A).
1.11 OPERATING AGREEMENT. "Operating Agreement" means an Operating
Agreement in substantially the form of Exhibit "B," attached hereto.
1.12 PERCENTAGE INTEREST. "Percentage Interest" means, as applied to
the Project Entity, the ownership interest of NYBE or WCCI in such Project
Entity.
1.13 PERSON. "Person" means a natural person, corporation, trust,
partnership, limited liability company, governmental entity (or agency, branch
or department thereof) or any other legal entity.
1.14 PROJECT ENTITY. "Project Entity" means any limited partnership,
limited liability company or other entity which, directly or indirectly, owns
the Facilities.
1.15 TERRITORY. "Territory" means the geographic area described on the
attached Schedule 1.15.
1.16 WCCI'S RESPONSIBILITIES SCHEDULE. "WCCI's Responsibilities
Schedule" means the schedule attached as Exhibit 3.4(B).
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ARTICLE 2
PURPOSE OF JOINT VENTURE
The parties are entering into the joint venture contemplated by this
Agreement in order for NYBE and WCCI, through a jointly owned limited liability
company to convert, own, operate and finance, the Facilities in targeted market
areas throughout the Territory. The Facilities that shall be subject to
conversion to Atomic Burrito-Registered Trademark- restaurants pursuant to the
terms of this Agreement are set forth in the attached Schedule 1.8.
ARTICLE 3
COVENANTS
3.1 FORMATION AND CAPITALIZATION OF PROJECT ENTITY. At the Closing,
NYBE and WCCI shall form the Project Entity contemplated by this Agreement by
entering into the Operating Agreement. It is contemplated by the parties that
the Operating Agreement will contain a provision for incentivising store level
managers by allowing them to participate in the net profits of particular
Facilities.
3.2 CAPITALIZATION OF PROJECT ENTITY. During the Development Term, the
parties shall make mandatory capital contributions to the Project Entity as more
fully set forth in the Capital Investment Schedule, attached hereto as Schedule
3.2, unless the parties otherwise agree. Neither NYBE nor WCCI shall have
any obligation to make any expenditure, provide capital or loan funds to the
Project Entity, except as may specifically be required by this Agreement, any
Ancillary Agreement (including the Operating Agreement), by applicable law, or
as otherwise agreed by NYBE and WCCI from time to time.
3.3 PROJECT ENTITY FINANCING. In the event it is deemed necessary by
the parties hereto, the parties will use their best efforts to cause the Project
Entity to obtain the necessary financing; and the parties hereto shall jointly
be the guarantors of such financing if a guaranty is required.
3.4 RESPONSIBILITIES OF THE PARTIES.
A) NYBE shall be responsible for the duties and activities set forth
on the NYBE Responsibilities Schedule. To the extent that NYBE is
to be reimbursed or compensated for such services, the terms and
conditions of same shall be set forth on the NYBE Responsibilities
Schedule.
B) WCCI shall be responsible for the duties and activities set forth
on the WCCI's Responsibilities Schedule. To the extent that WCCI
is to be reimbursed or compensated for such services, the terms and
conditions of same shall be set forth on the WCCI Responsibilities
Schedule.
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C) All charges associated with the foregoing services provided by NYBE
or WCCI or any Affiliate shall be paid by the Project Entity or as
agreed on by both parties in writing.
3.5 FACILITY DEVELOPMENT. With respect to the Facilities, WCCI shall
begin construction on converting the Facilities pursuant to the following
development schedule (*):
A) December 1, 1998 Facility located at 000 Xxxxx Xxxx Xxxx,
Xxxxxxx, Xxxxxx
B) December 15, 1998 Facility located at 0000 Xxxxx Xxxxxxxx,
Xxxxx, Xxxxxxxx
C) January 15, 1999 Facility located at 0000 Xxxx 00xx Xxxxxx,
Xxxxx, Xxxxxxxx (**)
D) March 1, 1999 Facility to be selected at sole discretion of
WCCI, no later than January 1, 1999
E) May 1, 1999 Facility to be selected at sole discretion of
WCCI, no later than January 1, 1999
F) July 1, 1999 Facility to be selected at sole discretion of
WCCI, no later than January 1, 1999
G) September 15, 1999 Facility to be selected at sole discretion of
WCCI, no later than January 1, 1999
H) December 1, 1999 Facility to be selected at sole discretion of
WCCI, no later than January 1, 1999
In the event WCCI elects not to develop the Facilities identified as (G) and (H)
above, WCCI shall pay to NYBE the sum of Two Thousand Five Hundred Dollars
($2,500.00) per Facility and, shall
------------------------
(*)Prior to the commencement of construction on any Facility, WCCI shall
obtain a bid for the costs and expenses associated with the conversion and
opening of that Facility and shall deliver such bid to NYBE. It is understood
and agreed by the parties hereto that WCCI shall pay the first One Hundred Fifty
Thousand Dollars ($150,000.00) of the conversion costs with respect to any
particular Facility, and the Project Entity shall pay the additional costs and
expenses associated with the conversion. In the event WCCI fails to meet the
development schedule, its obligation to contribute the first One Hundred Fifty
Thousand Dollars ($150,000) shall increase each month by the amount of rent for
the particular Facility that is behind schedule until such time as construction
begins.
(**)Notwithstanding anything to the contrary contained herein, it is
understood and agreed by the parties hereto that WCCI shall pay seventy percent
(70%) and NYBE shall pay thirty percent (30%), respectively, of the pre-opening
costs and expenses, relating to the construction and opening of this Facility.
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thereafter be released from its obligation to convert these Facilities. WCCI
shall have the right to substitute Facilities into the development schedule, or
rearrange the order in which the Facilities are to be developed, provided that
the development schedule timing is not affected.
3.6 OPERATION OF FACILITIES. The Project Entity shall be solely
responsible for all costs and expenses associated with (i) funding each Facility
after the completion of the construction, these expenses include, without
limitation, all pre-opening marketing activities, pre-opening cost of inventory
and all post-opening operational expenses; (ii) the assumption of the lease
agreement for a particular Facility from the earlier of the respective dates set
forth in Section 3.5 or the date construction begins for a particular Facility
(if acceptable to the landlord, the Project Entity shall enter into a new lease
agreement (on terms no less favorable than those experienced by NYBE), at which
time NYBE shall be released from its obligations under the current lease;
provided, if NYBE is to remain or otherwise guaranty any such lease agreement,
then WCCI shall also, jointly and severally, guaranty such lease agreement); and
(iii) paying for all insurance and utility expenses with respect to each
Facility. In addition to the foregoing, it is understood by the parties that
WCCI shall have operational control (at the store level), relative to the
day-to-day operation of the converted Facilities.
3.7 ADDITIONAL NYBE RESTAURANTS. During the Development Term, NYBE
shall pursue the disposition of NYBE restaurants. In the event NYBE identifies
a disposition plan for any of it restaurants (other than the Facilities), which
NYBE intends on pursuing, NYBE shall notify WCCI of its intent to dispose of
that specific NYBE restaurant; and WCCI shall have fourteen (14) days from the
date of such notice to evaluate such NYBE restaurant. In the event WCCI is
interested in such NYBE restaurant, WCCI shall notify NYBE of its desire to
convert such NYBE restaurant to an Atomic Burrito-Registered Trademark-
restaurant and the parties shall either (i) amend this Agreement and insert such
NYBE restaurant into the development schedule or (ii) WCCI shall, with the
consent of NYBE, have the right to convert such NYBE restaurant outside of this
Agreement. If NYBE does not consent to option (ii), the parties shall enter
into a subsequent Joint Venture Agreement with NYBE having the relative
percentage ownership that the offer to purchase such NYBE restaurant by a third
party or the fair marker value of such NYBE Restaurant's assets, as the case may
be, bears to the total costs associated with the conversion of such NYBE
restaurant. Also, NYBE shall have the right to contribute cash to the
subsequent Joint Venture in an amount necessary to bring its ownership
percentage up to forty percent (40%). Provided, however, in the event WCCI
elects to convert such NYBE restaurant, the construction of such NYBE restaurant
shall begin no later than one hundred twenty (120) days from the date WCCI
receives notice from NYBE of its rights hereunder.
3.8 MASTER LICENSING AGREEMENT. As partial consideration for this
Agreement, the parties hereby agree that NYBE and Atomic Burrito, Inc., shall
enter into a Master Licensing Agreement pursuant to which NYBE shall have the
right to license or develop up to fifty (50) Atomic Burrito-Registered
Trademark- restaurants within an exclusive territory. It is contemplated by the
parties that this Master Licensing Agreement shall be executed no later than the
earlier of (i) December 1, 1998, or (ii) the date the first Facility's lease is
assumed by the Project Entity.
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3.9 RESTRICTIONS ON TRANSFERABILITY OF INTERESTS. From and after the
Closing Date, neither NYBE nor WCCI shall transfer its ownership interest in the
Project Entity except to the other party; provided, however, that either party
may transfer a portion of its interest to an Affiliate prior to the exercise of
a put or call option pursuant to Section 3.11 so as to preserve the existence of
the Project Entity following such purchase. A transfer means any disposition of
an interest or any interest therein, including, without limitation, any sale,
gift, assignment, pledge or encumbrance, whether such disposition occurs
voluntarily, by operation of law or otherwise.
3.10 NON-COMPETITION.
A) During the period in which the Project Entity is a licensee of
WCCI, without the prior written consent of NYBE, WCCI shall not
directly or indirectly own, operate, develop, construct, manage or
participate in the ownership, development, construction, operation
or management of any restaurant engaged in the sale of bagels or
bagel related products located in the Territory.
B) During the period in which the Project Entity is a licensee of
WCCI, without the prior written consent of NYBE, WCCI shall not
directly or indirectly own, operate, develop, construct, manage or
participate in the ownership, development, construction, operation
or management of quick service fresh-mex Mexican restaurants,
located within the Designated Market Area or Areas identified by
the then current Xxxxxxx Well Map, published by the X.X. Xxxxxxx
Company, in which the Project Entity is operating an Atomic
Burrito-Registered Trademark- restaurant.
C) The restrictions on WCCI set forth in Section 3.10(A) and (B) shall
also apply to any entities or Persons directly or indirectly
controlled by WCCI.
D) The restrictions set forth in Section 3.10(A) are subject to the
following exceptions:
i) such restrictions shall not be considered violated by reason
of WCCI owning and/or constructing any restaurant engaged in
the sale of bagels or bagel related products, located
outside the Territory;
ii) such restrictions shall not be considered violated by reason
of WCCI owning less than a five percent (5%) interest in a
legal entity that owns, develops, constructs, operates or
manages any restaurant engaged in the sale of bagels or
bagel related products;
E) During the period in which the Project Entity is a licensee of
WCCI, without the prior written consent of WCCI, NYBE shall not
directly or indirectly own, operate, develop, construct, manage or
participate in the ownership, development, construction, operation
or management of quick service fresh-mex Mexican restaurants
located in the Territory.
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F) The restrictions on NYBE set forth in Section 3.10(E) shall also
apply to any entities or Persons directly or indirectly controlled
by NYBE.
G) The restrictions set forth in Section 3.10(E) shall not be
considered violated by reason of NYBE owning less than a five
percent (5%) interest in a legal entity that owns, develops,
constructs, operates or manages any quick service fresh-mex Mexican
restaurants;
H) Each party hereby agrees that the restrictions set forth in this
Section 3.10 are founded on valuable consideration and are
reasonable in duration and geographic area in view of the
circumstances under which this Agreement is executed and that such
restrictions are necessary to protect the legitimate interests of
the parties. In the event that any provision of this Section 3.10
is determined to be invalid by any arbitrator or court of competent
jurisdiction, the provisions of this Section 3.10 shall be deemed
to have been amended and the parties agree to execute any documents
and take whatever action is necessary to evidence such amendment,
so as to eliminate or modify any such invalid provision and to
carry out the intent of this Section 3.10 to render the terms of
this Section 3.10 enforceable in all respects as so modified.
I) Each party acknowledges and agrees that irreparable injury may
result to the other party and/or a Project Entity if the other
party breaches any covenant contained in this Section 3.10 and that
the remedy at law for the breach of any such covenant will be
inadequate. Therefore, if any party shall engage in any act in
violation of any of the provisions of this Section 3.10, the other
party shall be entitled, in addition to such other remedies and
damages as may be available to either or both of them at law or
under this Agreement, to injunctive relief to enforce the
provisions of this Section 3.10.
3.11 CONFIDENTIALITY. The parties will at all times hold and cause
their consultants and advisors to hold in confidence the information contained
in this Agreement. In addition, each party (the "receiving party") will at all
times hold and cause its advisors and representatives to hold in strict
confidence all documents, materials and other information concerning the other
parties (the "disclosing party"), which have been or will be furnished by the
disclosing party to the receiving parties or their employees, advisors and
representatives in connection with the transactions contemplated by this
Agreement and which are designated as confidential. All such information shall
be disclosed by a receiving party only to its employees, advisors and
representatives engaged in the evaluation of such information. If the
transactions contemplated by this Agreement are not consummated, regardless of
the reason therefor, such confidence will be maintained by the receiving party,
except to the extent such information (a) was previously known to the receiving
party prior to disclosure by the disclosing party, (b) is in the public domain
through no fault of the receiving party, (c) is lawfully acquired by the
receiving party from a third party under no obligation of confidence to the
disclosing party, or (d) is required by any law or by any governmental or
judicial body to be disclosed. Such documents and information will not be used
to the detriment of the disclosing party or otherwise in any manner and all
documents, materials and other written
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information provided by the disclosing party to the receiving party,
including all copies and extracts thereof, will be returned to the disclosing
party immediately upon its written request.
3.12 FURTHER ASSURANCES. Following the Closing, each party shall
execute such further documents and perform such further acts as may be
reasonably necessary to consummate the transactions contemplated by this
Agreement and the Ancillary Agreements in accordance with the terms hereof and
thereof and to more effectively carry out the transactions contemplated hereby
and thereby.
3.13 LIENS AND ENCUMBRANCES. Each of NYBE and WCCI, acquiring an
interest in the Project Entity, agrees to keep its ownership interest in each
such entity free and clear from any and all security interests, liens and
restrictions in favor of third parties.
3.14 PUBLIC STATEMENT. NYBE and WCCI shall consult with each other
prior to issuing any press release or making any other public statement
(including, direct communications with third parties) with respect to the
transactions contemplated hereby and will not issue any such release or make any
such statement without the approval of the other party, except as required
pursuant to any state or federal securities law or by the rules and regulations
of any relevant securities exchange or quotation system upon which a party's
securities are then traded. NYBE and WCCI acknowledge that its breach of the
provisions of this Section 3.14, may result in the assessment of fines,
penalties and/or civil liabilities by the Securities and Exchange Commission,
state securities commissions, and others.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES AND ADDITIONAL
COVENANTS OF NYBE
NYBE hereby represents and warrants to WCCI, as of the date of this
Agreement and further covenants that NYBE shall hereafter represent and warrant
to WCCI as of the Closing Date that:
4.1 ORGANIZATION. NYBE is a corporation validly existing and in good
standing under the laws of the State of Kansas and has full corporate power and
corporate authority to conduct its business as presently conducted and to become
an owner of the Project Entity. NYBE is duly qualified to transact business as
a foreign corporation in the State of domicile of each Facility.
4.2 AUTHORIZATION; ENFORCEABILITY. The execution, delivery and
performance by NYBE of this Agreement and the Ancillary Agreements are within
the corporate power of NYBE and have been duly authorized by all necessary
corporate action by NYBE. This Agreement and the Ancillary Agreements, when
executed and delivered by NYBE, will be the valid and binding obligations of
NYBE, enforceable against NYBE in accordance with their respective terms.
4.3 NO VIOLATION OR CONFLICT. The execution, delivery and performance
by NYBE of this Agreement and of the Ancillary Agreements will not conflict with
or violate any law, judgment, order, or decree, the Articles of Incorporation or
Bylaws of NYBE, or any contract or agreement to which either is a party or by
which it is respectively bound.
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4.4 BROKERS. NYBE has not incurred any brokers', finders' or any
similar fee in connection with the transactions contemplated by this Agreement
or the Ancillary Agreements.
4.5 LITIGATION. There is no litigation, arbitration, proceeding,
governmental investigation, citation or action of any kind pending or, to the
knowledge of NYBE, proposed or threatened, against NYBE which could have a
material adverse effect on the transactions contemplated hereby. There is no
action, suit or proceeding against NYBE by any person or entity which questions
the validity, legality or propriety of the transactions contemplated by this
Agreement or the Ancillary Agreements.
4.6 GOVERNMENTAL APPROVALS. No permission, approval, determination,
consent or waiver by, or any declaration, filing or registration with, any
governmental or regulatory authority is required on the part of NYBE in
connection with its execution and delivery of this Agreement and the Ancillary
Agreements and the consummation by it of the transactions contemplated hereby
and thereby.
4.7 REQUIRED CONSENTS. There are no approvals or consents which NYBE
is required to obtain from any third parties to enter into this Agreement or the
Ancillary Agreements which have not been obtained.
4.8 REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT AT CLOSING. Except
as specifically disclosed by NYBE to WCCI in writing prior to or at the Closing
Date with respect to matters arising after the date of this Agreement, the
representations and warranties of NYBE set forth in this Article 4 shall be true
and correct as of the Closing.
4.9 DISPOSITION OF NYBE FACILITIES. Except as otherwise contemplated
herein, during the Development Term, NYBE shall not dispose of any New York
Bagel Cafe-Registered Trademark- restaurant without giving WCCI a first option,
which option shall be exercised if at all within ninety (90) days of receipt of
written notification by NYBE, to convert such New York Bagel Cafe-Registered
Trademark- restaurant(s) into Atomic Burrito-Registered Trademark- restaurant(s)
pursuant to the terms of a subsequent Join Venture Agreement, substantially in
the form of this Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES AND ADDITIONAL
COVENANTS OF WCCI
WCCI hereby represents and warrants to NYBE, as of the date of this
Agreement, and further covenants that WCCI shall hereinafter represent and
warrant to NYBE as of the Closing Date that:
5.1 ORGANIZATION. WCCI is a corporation, validly existing and in good
standing under the laws of the State of Colorado and has full power and
authority to conduct its business as presently conducted and to become an owner
of the Project Entity. WCCI is duly qualified to transact business as a foreign
corporation in the State of domicile of each Facility.
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5.2 AUTHORIZATION; ENFORCEABILITY. The execution, delivery and
performance by WCCI of this Agreement and the Ancillary Agreements are within
the power of WCCI and have been duly authorized by all necessary action by WCCI.
This Agreement and the Ancillary Agreements, when executed and delivered by
WCCI, will be the valid and binding obligations of WCCI, enforceable against it
in accordance with their respective terms.
5.3 NO VIOLATION OR CONFLICT. The execution, delivery and performance
by WCCI of this Agreement and the Ancillary Agreements will not conflict with or
violate any judgment, order or decree, the Articles of Incorporation or Bylaws
of WCCI, or any contract or agreement to which WCCI is a party or by which WCCI
is bound.
5.4 NO BROKER. WCCI has not incurred any brokers', finders' or any
similar fee in connection with the transactions contemplated by this Agreement
or the Ancillary Agreements.
5.5 NO LITIGATION. There is no litigation, arbitration, proceeding,
governmental investigation, citation or action of any kind pending or, to the
knowledge of WCCI, proposed or threatened, against WCCI which could have a
material adverse effect on the transactions contemplated hereby. There is no
action, suit or proceeding by any person or governmental agency against WCCI
which questions the legality, validity or propriety of the transactions
contemplated by this Agreement or the Ancillary Agreements.
5.6 GOVERNMENTAL APPROVALS. No permission, approval, determination,
consent or waiver by, or any declaration, filing or registration with, any
governmental or regulatory authority is required on the part of WCCI in
connection with its execution and delivery of this Agreement and the Ancillary
Agreements and the consummation by it of the transactions contemplated hereby
and thereby.
5.7 REQUIRED CONSENTS. There are no approvals or consents which WCCI
is required to obtain from third parties to enter into this Agreement or the
Ancillary Agreements which have not been obtained.
5.8 REPRESENTATIONS AND WARRANTIES TRUE AND CORRECT AT CLOSING. Except
as specifically disclosed by WCCI to NYBE in writing prior to or at the Initial
Closing Date with respect to matters arising after the date of this Agreement,
the representations and warranties of WCCI set forth in this Article 5 shall be
true and correct as of the Closing.
ARTICLE 6
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF WCCI
Each and every obligation of WCCI to be performed on the Closing Date shall
be subject to the satisfaction prior to or at Closing of the following
conditions:
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6.1 COMPLIANCE WITH AGREEMENT. NYBE shall have performed and complied
with all of its obligations under this Agreement which are to be performed or
complied with by it prior to or at Closing.
6.2 PROCEEDINGS AND INSTRUMENTS SATISFACTORY. All proceedings,
corporate or otherwise, to be taken by NYBE in connection with the transactions
contemplated by this Agreement, and all documents incident thereto, shall be
reasonably satisfactory in form and substance to WCCI, and NYBE shall have made
available to WCCI for examination the originals or true and correct copies of
all documents which WCCI may reasonably request and NYBE can reasonably obtain
in connection with the transactions contemplated by this Agreement.
6.3 NO LITIGATION. No investigation, suit, action or other proceeding
shall be threatened or pending before any court or governmental agency that
seeks restraint, prohibition, damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby.
6.4 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by NYBE in this Agreement shall be true and correct as of the Closing Date
with the same force and effect as though such representations and warranties had
been made on the Closing Date.
6.5 DELIVERIES AT CLOSING. NYBE, as the case may be, shall have
delivered or caused to be delivered to WCCI the documents provided for in this
Agreement, together with such certificates and documents of officers of NYBE and
of public officials as shall be reasonably requested by WCCI's counsel to
establish the existence and status of NYBE and the due authorization by NYBE of
this Agreement, the Ancillary Agreements to which either is a party and the
consummation by NYBE of the transactions contemplated hereby and thereby.
ARTICLE 7
CONDITIONS PRECEDENT TO THE OBLIGATIONS
OF NYBE
Each and every respective obligation of NYBE to be performed on the Closing
Date shall be subject to the satisfaction prior to or at the Closing of the
following conditions:
7.1 COMPLIANCE WITH AGREEMENT. WCCI shall have performed and complied
with all of its obligations under this Agreement which are to be performed or
complied with by it prior to or at such Closing.
7.2 PROCEEDINGS AND INSTRUMENTS SATISFACTORY. All proceedings to be
taken by WCCI in connection with the transactions contemplated by this
Agreement, and all documents incident thereto, shall be reasonably satisfactory
in form and substance to NYBE, and WCCI shall have made available to NYBE for
examination the originals or true and correct copies of all documents which NYBE
may reasonably request and WCCI can reasonably obtain in connection with the
transactions contemplated by this Agreement.
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7.3 NO LITIGATION. No investigation, suit, action or other proceeding
shall be threatened or pending before any court or governmental agency that
seeks restraint, prohibition, damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated hereby.
7.4 REPRESENTATIONS AND WARRANTIES. The representations and warranties
made by WCCI in this Agreement shall be true and correct as of the Closing Date
with the same force and effect as though such representations and warranties had
been made on the Closing Date.
7.5 DELIVERIES AT CLOSING. WCCI shall have delivered or caused to be
delivered to NYBE the documents provided for in this Agreement, together with
such certificates and documents of officers of WCCI and of public officials as
shall be reasonably requested by either NYBE's counsel to establish the
existence and status of WCCI and the due authorization by WCCI of this
Agreement, the Ancillary Agreement to which it is a party and the consummation
by WCCI of the transactions contemplated hereby or thereby.
ARTICLE 8
CLOSING; DELIVERIES AT CLOSING
8.1 CLOSING. The Closing shall occur on the date the parties hereto
may mutually agree upon in writing.
8.2 ACTIONS AT CLOSING. At the Closing, NYBE and/or WCCI, as
applicable, shall take or cause to be taken the following actions:
A) OPERATING AGREEMENT. NYBE and WCCI shall enter into the Operating
Agreement pursuant to which NYBE and WCCI shall form the Project
Entity. In addition, at the Closing NYBE and WCCI shall remit the
capital contributions to the Project Entity referred to in the
Capital Investment Schedule.
B) OTHER ACTIONS AND DELIVERIES. Each party shall have deliver or
cause to be delivered to the other party such other certificates
and documents as may be reasonably requested by such other party's
counsel to establish the existence and status of the first party,
the due authorization by the first party of this Agreement and the
Ancillary Agreements to which the first party is a party and the
consummation by the first party of the transactions contemplated
hereby and thereby.
ARTICLE 9
INDEMNIFICATION
9.1 WCCI'S INDEMNITY. WCCI hereby agrees to indemnify NYBE for and
hold it harmless from and against any and all losses, damages, costs, expenses,
liabilities, obligations and claims of any kind (including, without limitation,
reasonable attorneys' fees and other reasonable legal costs and expenses) which
they may at any time suffer or incur, or become subject to, as a result of or in
connection with:
12
A) any breach or inaccuracy of any of the representations and
warranties made by WCCI in this Agreement or in any Ancillary
Agreement;
B) any failure by WCCI to carry out, perform, satisfy or discharge any
of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement or under any Ancillary Agreement;
C) any payments by NYBE, with respect to any obligations of a Project
Entity which is jointly owned by NYBE and WCCI, which at the time
of payment have been jointly guaranteed by NYBE and WCCI, to the
extent such payments by either or both of them exceed NYBE's
proportionate share of such obligations, based on its Percentage
Interest in such Project Entity; or
D) any suit, action or other proceeding brought by any Person against
NYBE, arising out of, or in any way related to, any of the matters
referred to in Section 9.1(A), 9.1(B) or 9.1(C) hereof.
9.2 NYBE'S INDEMNITY. NYBE hereby agrees to indemnify WCCI for and
hold it harmless from and against any and all losses, damages, costs, expenses,
liabilities, obligations and claims of any kind (including without limitation,
reasonable attorneys' fees and other reasonable legal costs and expenses) which
they may at any time suffer or incur, or become subject to, as a result of or in
connection with:
A) any breach or inaccuracy of any of the representations and
warranties made by NYBE in this Agreement or in any Ancillary
Agreement;
B) any failure by NYBE to carry out, perform, satisfy or discharge any
of its covenants, agreements, undertakings, liabilities or
obligations under this Agreement or under any Ancillary Agreement;
C) any payments by WCCI with respect to any obligations of the Project
Entity which have been jointly guaranteed by WCCI and NYBE, to the
extent such payments exceed WCCI's proportionate share of such
obligations, based on its Percentage Interest in the Project
Entity; or
D) any suit, action or other proceeding brought by any Person against
WCCI, arising out of, or in any way related to, any of the matters
referred to in Section 9.2(A), 9.2(B) or 9.2(C) hereof.
9.3 PROVISIONS REGARDING INDEMNITIES.
A) The indemnification obligations of WCCI and NYBE under Sections 9.1
and 9.2, respectively, shall survive for the applicable statute of
limitations. Delivery of any written demand for indemnification by
an indemnified party shall toll the survival
13
period for the subject of the particular demand and, once notice is
given, the indemnified party may pursue the particular claim to its
conclusion to the extent permitted by applicable law.
B) The indemnified party shall promptly notify the indemnifying party
in writing and in reasonable detail of any claim, demand, action or
proceeding for which indemnification will be sought under Section
9.1 or Section 9.2 of this Agreement, and if such claim, demand,
action or proceeding is a third party claim, demand, action or
proceeding, the indemnifying party will have the right at its
expense to assume the defense thereof using counsel reasonably
acceptable to the indemnified party. The indemnified party shall
have the right to participate, at its own expense, with respect to
any such third party claim, demand, action or proceeding. In
connection with any such third party claim, demand, action or
proceeding, the parties shall cooperate with each other and provide
each other with access to relevant books and records in their
possession. No such third party claim, demand, action or
proceeding shall be settled without the prior written consent of
the indemnified party, such consent not to be unreasonably withheld
or delayed.
ARTICLE 10
TERMINATION
10.1 TERMINATION. The parties acknowledge that time is of the essence
hereof. This Agreement may be terminated and the transactions contemplated
hereby may be abandoned at any time hereafter as follows:
A) by mutual written agreement of NYBE and WCCI;
B) by WCCI if any of the conditions set forth in Article 6 of this
Agreement have not been timely fulfilled by NYBE; or
C) by NYBE if any of the conditions set forth in Article 7 of this
Agreement have not been timely fulfilled by WCCI.
In the event of termination by WCCI or NYBE pursuant to Section 10.1(B) or
10.1(C), respectively, as a result of a breach by the other party of any of its
representations, warranties, agreements or obligations contained herein, the
terminating party shall be entitled to any remedies available to it at law or in
equity.
ARTICLE 11
MISCELLANEOUS
11.1 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other
agreements and documents executed in connection herewith, constitute the entire
agreement between the parties pertaining to the subject matter of this
Agreement, and supersedes all prior agreements, promises, covenants,
arrangements, communications, representations or warranties, whether oral or
written,
14
by any officer, employee or representative of any party hereto. No
amendment, supplement, modification or waiver of this Agreement shall be
binding unless executed in writing by the party to be bound thereby.
11.2 FEES AND EXPENSES. Whether or not the transactions contemplated by
this Agreement are consummated, and except as expressly provided herein or in
any Ancillary Agreement, each of the parties hereto shall pay the fees and
expenses of its respective counsel, accountants, brokers, consultants,
investment bankers and other experts incident to the negotiation of this
Agreement. However, the Project Entity shall be responsible for the fees and
expenses related to the preparation of this Agreement and the consummation of
the transactions contemplated by this Agreement.
11.3 APPLICABLE LAW. All questions concerning the construction,
validity, and interpretation of this Agreement and the performance of the
obligations imposed by this Agreement shall be governed by the internal law, not
the law of conflicts, of the State of Kansas.
11.4 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned by
any of the parties hereto without the prior written consent of the other party,
whether by operation of law or otherwise.
11.5 FACILITY ATMOSPHERE. The Project Entity shall take input from
executive management of NYBE, concerning the tenant improvements with respect to
ensuring that the improvements will result in an "adult friendly," yet fun,
friendly and festive atmosphere. NYBE hereby agrees that WCCI shall have the
right to determine if it is appropriate to serve alcohol at any or all of the
Facilities.
11.6 NOTICES. Each notice, request, demand or other communication
("Notice") by either party to the other party pursuant to this Agreement shall
be in writing and shall be personally delivered or sent by U.S. certified mail,
return receipt requested, postage prepaid, or by nationally recognized overnight
commercial courier, charges prepaid, or by facsimile transmission (but each such
Notice sent by facsimile transmission shall be confirmed by sending an original
thereof to the other party by U.S. mail or commercial courier as provided herein
no later than the following business day), addressed to the address of the
receiving party set forth below or to such other address as such party shall
have communicated to the other party in accordance with this Section. Any
Notice hereunder shall be deemed to have been given and received on the date
when personally delivered, on the date of sending when sent by facsimile, on the
third business day following the date of sending when sent by mail or on the
first business day following the date of sending when sent by commercial
courier.
If to WCCI: Western Country Clubs, Inc.
0000 X.X. Xxxxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Attn: Xxxxx X. Xxxxxxxxx
15
With a copy to: Xxxx Xxxxxx, Esq.
0000 X.X. Xxxxxxxxxx, Xxxxx 0000
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
If to NYBE: New York Bagel Enterprises, Inc.
000 Xxxx 0xx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Facsimile: 000-000-0000
Attn: Xxxxxx X. Xxxxxx
With a copy to: Xxxxxxx X. Xxxxxx
Klenda, Mitchell, Xxxxxxxxx & Xxxxxxxx, L.L.C.
1600 Epic Center
000 Xxxxx Xxxx Xxxxxx
Xxxxxxx, Xxxxxx 00000
Facsimile: 000-000-0000
11.7 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but such counterparts
shall together constitute but one and the same Agreement.
11.8 HEADINGS. The Article and Section headings shall be deemed an
original, but such counterparts shall together constitute but one and the same
Agreement.
11.9 CONSTRUCTION. Common nouns shall be deemed to refer to the
masculine, feminine, neuter, singular and plural, as the identity of the person
may in the context require. References to Sections herein include all
subsections which are subsidiary to the Section referred to. No provision of
this Agreement shall be construed in favor of or against any party hereto by
reason of the extent to which any such party or its counsel participated in the
drafting thereof.
11.10 SEVERABILITY. If any provision, clause or part of this Agreement,
or the application thereof under certain circumstances, is held invalid, the
remainder of this Agreement, or the application of such provision, clause or
part under other circumstances, shall not be affected thereby unless such
invalidity materially impairs the ability of the parties to consummate the
transactions contemplated by this Agreement.
11.11 KNOWLEDGE. Any representation, warranty, covenant or statement
which is made to the knowledge of any party to this Agreement shall require that
such party make reasonable investigation and inquiry with respect thereto to
ascertain the correctness and validity thereof.
11.12 SURVIVAL. All representations and warranties of the parties
contained in this Agreement or made pursuant to this Agreement shall survive the
Closing Date and the consummation of the transactions contemplated by this
Agreement for the applicable statute of limitations. All obligations under this
Agreement which expressly or implicitly by their nature
16
survive the expiration or termination of this Agreement shall continue in
full force and effect subsequent to and notwithstanding the expiration or
termination of this Agreement and until they are satisfied in full or by
their nature expire.
11.13 WAIVER OF COMPLIANCE. Any failure of NYBE or WCCI to comply with
any obligation, covenant, agreement or condition contained herein may be
expressly waived in writing by WCCI or NYBE, respectively, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure.
11.14 THIRD PARTIES. Except as specifically set forth or referred to
herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any Person other than the parties hereto and their
successors or assigns, any rights or remedies under or by reason of this
Agreement.
11.15 COSTS OF LITIGATION. In the event of any litigation arising among
the parties concerning this Agreement, the non-prevailing party shall pay the
reasonable attorney's fees and costs incurred by the prevailing party (or
parties) incurred as an incident to such litigation.
11.16 GUARANTY. In the event that either WCCI or NYBE causes a
subsidiary to enter into this Agreement, WCCI and/or NYBE, as the case may be,
hereby absolutely and unconditionally guarantees the due and punctual payment of
all amounts and the due and punctual performance of all of its obligation owed
under this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
NEW YORK BAGEL ENTERPRISES, INC.
By /s/ Xxxxxx X. Xxxxxx
-------------------------------------------
Xxxxxx X. Xxxxxx, Chief Executive Officer
"NYBE"
WESTERN COUNTRY CLUBS, INC.
By /s/ Xxxxx X. Xxxxxxxxx
-------------------------------------------
Xxxxx X. Xxxxxxxxx, Chief Executive Officer
"WCCI"
17
EXHIBIT A
LICENSE AGREEMENT
EXHIBIT B
OPERATING AGREEMENT
EXHIBIT 1.15
EXCLUSIVE TERRITORY
This Agreement covers the Facilities located in:
1. Tulsa, Oklahoma
2. Manhattan and Wichita, Kansas
3. Lubbock, Waco, Austin, Midland, Temple and San Antonio, Texas
4. Springfield, Missouri
5. Nashville, Tennessee
Schedule 1.18
FACILITIES
0000 Xxxxx Xxxxxxx Xxxxx Xxxxx, Xxxxxx, Xxxxx
000 Xxxx Xxxxxx, Xxxxxxx, Xxxxx
0000 Xxxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxx
00000 Xxxxx Xxxxxxxx Xxxxxxxxx, #000, Xxxxxx, Xxxxx
0000 Xxxxxx Xxxxxx, Xxxxxxx, Xxxxx
0000 Xxxx Xxxx Xxxxx, Xxxx, Xxxxx
000 Xxxx Xxxxx Xxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxx
0000 Xxxxx Xxxxxxxx, Xxxxxxxxxxx, Xxxxxxxx
0000 Xxxx Xxxxxxxx, Xxxxxxxxxxx, Xxxxxxxx
0000 Xxxx Xxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx
0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxx
0000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxx
SCHEDULE 3.2
CAPITAL INVESTMENT SCHEDULE
As to the Project Facility, the parties shall contribute capital as follows:
NYBE
Within ten (10) days prior to the commencement of construction on any
Facility, NYBE shall contribute to the Project Entity (i) any and all
leases and leasehold improvements with respect to that Facility and (ii)
any and all equipment located at the Facility which WCCI identifies as
useful and desired for the operation of the Atomic Burrito-Registered
Trademark- restaurant at the Facility. All equipment not identified for
contribution by WCCI shall remain the sole property of NYBE, and NYBE shall
have the right to remove, at its sole cost and expense, said equipment at
any time.
WCCI
WCCI shall be required to contribute funds, on an ongoing basis, to the
Project Entity in amounts sufficient to cover the conversion costs of the
Facilities. It is contemplated by the parties hereto that the funds will
be in an amount necessary to cover the costs of construction and
pre-opening expenses, including, without limitation, all fixtures,
equipment, signage, required tenant improvements, training expenses,
pre-opening travel expenses and small wares.
EXHIBIT 3.4(A)
NYBE RESPONSIBILITIES SCHEDULE
Perform all accounting functions for the Project Entity, including, without
limitation, cash management, bank account reconciliation and preparation of
monthly internal unaudited financial statements. In consideration for
performing these services, the Project Entity shall be pay a fee of one percent
(1%) of Net Sales to NYBE, up to a maximum of One Thousand Dollars ($1,000.00)
per Facility, per month. WCCI shall have the right to terminate NYBE's right to
perform these accounting functions if NYBE sells all or substantially all of
its assets.
EXHIBIT 3.4(B)
WCCI'S RESPONSIBILITIES SCHEDULE
Design, construct and open the Atomic Burrito restaurants contemplated by this
Agreement
Hire, supervise, manage and oversee the day to day operations of the Atomic
Burrito restaurants developed pursuant to this Agreement.
