ASSET PURCHASE AGREEMENT
THIS AGREEMENT, dated as of December ___, 1997 (the "Agreement"), is
entered into by and between NEW YORKER FROZEN DESSERTS, INC., a New York
corporation ("Purchaser"); and NEW YORKER ICE CREAM CORP., a New York
corporation ("NYIC"); and XXXXX GROUP LTD., a New York corporation ("Xxxxx"),
the parent corporation of NYIC; and XXX XXXXXXXXX, an individual ("Xx.
Xxxxxxxxx") and the sole shareholder of Xxxxx (Xxxxx, NYIC and Xx. Xxxxxxxxx
shall hereinafter collectively be referred to as "Seller"); and MIKE'S ORIGINAL,
INC., a Delaware corporation ("Mike's"), the parent corporation of Purchaser.
W I T N E S S E T H:
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WHEREAS, Seller is engaged in the business of the full service distribution
of ice cream (the "Business"); and
WHEREAS, Seller and Purchaser desire to enter into this Agreement pursuant
to which Seller proposes to sell to Purchaser and Purchaser proposes to purchase
from Seller substantially all of the assets of Seller.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
ARTICLE 1
ASSET PURCHASE AND SALE
Section 1.1 Agreement to Sell. At the Closing (as hereinafter defined) and
except as otherwise specifically provided in this Article 1, Seller shall grant,
sell, convey, assign, transfer and deliver to Purchaser, upon and subject to the
terms and conditions of this Agreement, all right, title and interest of Seller
in and to (a) the Business as a going concern, and (b) all of the assets,
properties and rights of Seller, of every kind and description, real, personal
and mixed, tangible and intangible, wherever situated (which Business, assets,
properties and rights are hereinafter collectively referred to as the "Assets
"), free and clear of all mortgages, liens, pledges, security interests,
charges, claims, restrictions and encumbrances of any nature except for the
Excluded Assets set forth in Section 1.3 hereof.
Section 1.2 Included Assets. Except as otherwise expressly set forth in
Section 1.3 hereof, the Assets shall include without limitation the following
assets, properties, and rights of Seller:
(a) All rights under any written or oral contract, agreement, lease, plan,
instrument, registration, license, certificate of occupancy, other permit or
approval of any nature, or other document, commitment, arrangement, undertaking,
practice or authorization except for such agreements that Seller has notified
Purchaser of in writing that Seller cannot transfer to Purchaser due to Seller's
inability to secure the consent to the assignment from the other party to the
Agreement;
(b) All machinery, equipment, tools, vehicles, furniture, furnishings,
leasehold improvements, goods and other tangible personal property, including,
but not limited to, the Assets set forth on Schedule 1.2 annexed hereto;
(c) All technologies, methods, formulations, databases, trade secrets,
know-how, inventions, computer software (including documentation and related
object codes) and other intellectual property;
(d) All office supplies;
(e) All rights under any patent, trademark, service xxxx, tradename or
copyrights, whether registered or unregistered, and any applications therefor
(the "Marks");
(f) All rights arising under express or implied warranties relating to the
Assets;
(g) All information, files, records, data, plans, contracts and recorded
knowledge, including client and vendor lists related to the foregoing;
(h) An irrevocable option for ten (10) years, which is hereby granted (i)
to purchase all of the issued and outstanding capital stock of NYIC for a
purchase price of One Dollar ($1.00), provided that Seller shall first divest
NYIC of all assets other than contracts for the distribution of ice cream and
other food products, including but not limited to its distribution agreements
with Haagen-Daz, Xxxxxx-Xxxxxxx and Friendlies Ice Cream, which shall be
transferred to Purchaser as an asset of NYIC upon exercise of the option, or
(ii) to have NYIC assign to Purchaser all rights under any or all ice cream or
other product distribution agreements of NYIC with its suppliers, including but
not limited to NYIC's distribution agreements with Haagen-Daz, Xxxxxx-Xxxxxxx
and Friendlies Ice Cream. This option shall survive the Closing;
(i) All right, title, licenses and interest in and to all vehicles
identified in Schedule 1.2 that are owned by American Classic Ice Cream Corp., a
New York Corporation, which hereby agrees to transfer the same to Purchaser and
shall execute this Agreement for such purpose.
Section 1.3 Excluded Assets. Notwithstanding anything to the contrary set
forth herein, the Assets shall not include any of the following (hereinafter
collectively referred to as "Excluded Assets"):
(a) The corporate seals, certificates of incorporation, minute books,
stock books, tax returns, books of account or other constituent records relating
to the corporate organization of Seller;
(b) cash and cash equivalents;
(c) All accounts, notes and other receivables; and
(d) The rights which accrue to Seller under this Agreement.
Section 1.4 Agreement to Purchase. At the Closing, Purchaser shall purchase
the Assets from Seller, upon and subject to the terms and conditions of this
Agreement and in reliance on the representations, warranties and covenants of
Seller contained herein, in exchange for the Purchase Price (as hereinafter
defined).
Section 1.5 The Purchase Price. The purchase price for the Assets shall be
Two Million ($2,000,000.00) Dollars (the "Purchase Price").
Section 1.6 Payment of Purchase Price. At the Closing, Purchaser shall pay
to NYIC Four Hundred Sixty-Five Thousand ($465,000.00) Dollars (the "Initial
Payment") of the Purchase Price by certified check. The remaining One Million
Five Hundred Thirty-Five Thousand ($1,535,000.00) Dollars of the purchase price
shall be payable to the NYIC as follows:
(a) Eight Hundred Thousand ($800,000) Dollars, plus any additional
amount to be added in accordance with Section 1.6(b) below, shall be payable in
accordance with the terms and conditions of a Promissory Note in substantially
the form of Exhibit 1.6(a)-1 annexed hereto (the "Note"), which Note shall have
a repayment term of three (3) years and shall bear interest at the rate of eight
(8%) percent per annum and which shall be secured by a purchase money security
interest as set forth in the security agreement (the "Security Agreement")
attached hereto as Exhibit 1.6(a)-2; and
(b) Purchaser shall pay to the Estate of Xxxxxx Xxxxxxxx (the
"Creditor"), the holder of the existing $735,000.00 secured loan on the
Business, an amount not to exceed Two Hundred Thousand ($200,000.00) Dollars,
and assume the obligation to repay the Creditor the remainder of such secured
loan (the "Assumed Obligation") over a term of four (4) years at an interest
rate of eight percent (8%) per annum. In the event the unpaid principal balance
on the Assumed Obligation at Closing is less than $735,000.00 as a result of
Seller's payments, the difference shall be added to the cash component of the
Purchase Price.
Section 1.7 Purchase of Seller's Inventory. In addition to the Purchase
Price, Purchaser shall, withing fifteen (15) days of the Closing, pay NYIC its
cost for the inventory and stock-in-trade of NYIC delivered to Purchaser that is
in good and saleable condition as of the Closing.
Section 1.8 Excluded Liabilities. Notwithstanding anything to the contrary
set forth herein, except as set forth in Schedule 3.4 (b) (Leases), in no event
shall Purchaser assume, incur or become responsible for any liability or
obligation of the Seller of any nature whatsoever, whether now or hereafter
existing. The liabilities and obligations of Seller which Purchaser shall not
assume, incur or become responsible for are referred to herein as "Excluded
Liabilities".
Section 1.9 Prorations. All property and ad valorem taxes, business
licenses, permits, leasehold rentals, utilities and other customarily proratable
expense of Seller relating to the Assets payable prior to or subsequent to the
Closing Date and relating to the period of time both prior to and subsequent to
the Closing Date will be prorated between Purchaser and Seller as of the Closing
Date. If the actual amount of any proratable item is not known as of the Closing
Date, such proration will be based on the previous year's assessment of such
item or such other reasonable basis for estimating such amount as the parties
may select, and the parties agree to adjust such proration and pay any
underpayment or reimburse any overpayment promptly after the actual amount
becomes known. In the event any sales, use, excise, value added or other similar
taxes become due as a result of the transactions contemplated by this Agreement,
Purchaser and Seller shall each be responsible for and shall pay one-half of all
such taxes.
Section 1.10 Allocation of Purchase Price. The parties shall agree on the
allocation for tax purposes of the Purchase Price to be paid for the Assets
prior to or upon the Closing.
ARTICLE 2
CLOSING; ITEMS TO BE DELIVERED; FURTHER ASSURANCES
Section 2.1 Closing. The consummation of the transactions contemplated by
this Agreement is herein referred to as the "Closing". The "Closing Date" shall
be the date on which the Closing occurs. The Closing shall occur within ten (10)
business days of the satisfaction or waiver of the conditions set forth in
Article 6 hereof, but in no event shall the Closing Date be a date which is
subsequent to 120 days from the date hereof. The Closing shall take place at the
office of Blau, Kramer, Wactlar & Xxxxxxxxx, P.C., 000 Xxxxxxx Xxxxxxxxxx, Xxxxx
000, Xxxxxxx, Xxx Xxxx 00000, or at such other place upon which the Purchaser
and Seller shall mutually agree.
Section 2.2 Items to be Delivered at Closing. At the Closing and subject to
the terms and conditions herein contained:
(a) Seller shall deliver to Purchaser the following:
(i) Such bills of sale with covenants of warranty, assignments,
endorsements, and other good and sufficient instruments and documents
of conveyance and transfer, in form reasonably satisfactory to
Purchaser and its counsel, as shall be necessary and effective to
transfer and assign to, and vest in purchaser all of Seller's right,
title and interest in and to the Assets, including without limitation,
(A) good and valid title in and to all of the Assets owned by Seller,
(B) good and valid leasehold interest in and to all of the Assets
leased by Seller as lessee, and (C) all of Seller's rights under all
agreements, contracts, commitments, leases, plans, bids, quotations,
proposals, instruments and other documents included in the Assets to
which Seller is a party or by which it has rights on the Closing Date;
and
(ii) All of the agreements, contracts, commitments, leases,
plans, bids, quotations, proposals, instruments, computer
programs and software, data bases whether in the form of
computer tapes or otherwise, related object and (to the
extent available) source code, manuals and guidebooks, price
books and price lists, customer and subscriber lists,
supplier lists, sales records, files, correspondence, legal
opinions, rulings issued by governmental entities, and other
documents, books, records, papers, files, office supplies
and data belonging to Seller which are part of the Assets;
(iii)Audited financial statements for Seller's last two fiscal
years; and
(iv) Estoppel certificates from the Creditor for the Assumed
Obligation and from the applicable lessors set forth in
Schedule 3.4 (b) indicating the total principal and lease
payments due under the Assumed Obligation and such leases;
(v) A Lease in form and substance satisfactory to Purchaser for
the current principal place of business of Seller as
described in Section 6.1 (j) hereof;
(vi) Certificates of the corporate secretaries of NYIC and Xxxxx
certifying that all transactions contemplated hereby have
been duly approved by the Board of Directors and
shareholders of each corporation and that the officer of
each corporation executing this Agreement is duly authorized
to do so;
(vii)Such other documentation as Purchaser may reasonably
require to assure the continuation of certain franchises
which Purchaser determines to be necessary for the continued
operations of Seller's business;
and simultaneously with such delivery, all such reasonable steps will be taken
as may be required to place Purchaser in actual possession and operating control
of the Assets.
(b) Purchaser shall deliver to Seller the following:
(i) The Initial Payment;
(ii) The Note; and
(iii)The Security Agreement.
(iv) An agreement under which Purchaser assumes the Assumed
Obligation.
(c) The parties hereto also shall deliver to each other the documents
and instruments referred to in Article 6 hereof.
Section 2.3 Further Assurances. Seller from time to time after the Closing,
at Purchaser's request, will execute, acknowledge and deliver to Purchaser such
other instruments of conveyance and transfer and will take such other actions
and execute and deliver such other documents, certifications and further
assurances as Purchaser may reasonably request in order to vest more effectively
in Purchaser, or to put Purchaser more fully in possession of, any of the
Assets. Each of the parties hereto will cooperate with the other and execute and
deliver to the other such other instruments and documents and take such other
actions as may be reasonably requested from time to time by any party hereto as
necessary to carry out, evidence and confirm the intended purposes of this
Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
NYIC represents and warrants to Purchaser as follows:
Section 3.1 Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of New York and has
all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as is now being conducted. Except as set
forth in Schedule 3.1, Seller has no subsidiaries and there are no other
entities which Seller directly or indirectly controls or is controlled by and
Seller is not a party to any joint venture and is not a partner of any
partnership. Seller is duly qualified to transact business, and is in good
standing, as a foreign corporation in each jurisdiction where the character of
its activities requires such qualification.
Section 3.2 Authorization. Seller has full corporate power and authority to
execute and deliver this Agreement and to perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by Seller and the performance by Seller of its
obligations hereunder and the consummation of the transactions provided for
herein have been duly and validly authorized by all necessary corporate action
on the part of Seller. The Board of Directors and shareholders of Seller have
approved the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by Seller and constitutes the valid and binding
agreement of Seller, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, insolvency and other similar laws affecting
the enforcement of creditors' rights generally, general equitable principles and
the discretion of courts in granting equitable remedies.
Section 3.3 Absence of Restrictions and Conflicts. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby do not violate or conflict with, constitute a breach of or
default under, result in the loss of any material benefit under, or permit the
acceleration of any obligation under, (i) any term or provision of the
Certificate of Incorporation or Bylaws of Seller; (ii) any contract or lease to
which Seller is a party; (iii) any judgment, decree or order of any court or
governmental authority or agency to which Seller is a party or by which Seller
or any of its respective properties is bound, or (iv) any statute, law,
regulation or rule applicable to Seller. No consent, approval, order or
authorization of, or registration, declaration or filing with, any governmental
agency or public or regulatory unit, agency, body or authority with respect to
Seller is required in connection with the execution, delivery or performance of
this Agreement by Seller or the consummation of the transactions contemplated
hereby.
Section 3.4 Ownership of Assets and Related Matters.
(a) Real Property. The Seller does not own any real property nor is
any ownership interest in real property included in the Assets.
(b) Leases. Schedule 3.4(b) sets forth a true and complete list of all
leases and agreements, including licensing rights, of Seller granting possession
of or rights to real or personal property included in the Assets (the "Scheduled
Leases and Licenses"). All such Scheduled Leases and Licenses are in full force
and effect and constitute the legal, valid, binding and enforceable obligations
of Seller, and are legal, valid, binding and enforceable in accordance with
their respective terms with respect to each other party thereto, in each case to
the extent material to the business and operations of the Business. There are no
existing defaults of Seller with respect to such Scheduled Leases and Licenses
or, to the knowledge of the Seller, of any of the other parties thereto.
(c) Personal Property. Seller has good and marketable title to all of
the Assets, and Seller owns the Assets free and clear of all liens, pledges,
security interests, charges, claims, restrictions and encumbrances of any nature
whatsoever.
(d) Necessary Assets. The Assets constitute all of the assets
necessary to conduct the operations of the Business in accordance with Seller's
past practices. As of the date hereof, all of the Assets are in good operating
condition and repair subject to normal wear and maintenance, are usable in the
regular and ordinary course of business and conform to all applicable laws,
ordinances, codes, rules and regulations applicable thereto.
(e) No Third Party Options. There are no existing agreements, options,
commitments or rights with, of or to any person to acquire any of the Assets or
any interest therein.
Section 3.5 Legal Proceedings. Except as set forth in Schedule 3.5, there
are no suits, actions, claims, proceedings or investigations pending, or, to the
best knowledge of the Seller, threatened against, relating to or involving the
Seller, the Business or the Assets before any court, arbitrator or
administrative or governmental body. The Business is not subject to any
judgment, decree, injunction, rule or order of any court, and, to the knowledge
of the Seller, the Seller is not subject to any governmental restriction, which
is reasonably likely to cause a material limitation on Purchaser's ability to
acquire the Assets or operate the Business after the Closing. All suits,
actions, claims, proceedings or investigations of Seller, including, but not
limited to those set forth in Schedule 3.5, shall remain the sole obligation and
responsibility of Seller before and after the Closing.
Section 3.6 Compliance with Law. Seller has all material authorizations,
approvals, licenses and orders of and from all governmental and regulatory
officers and bodies necessary to carry on the Business as it is currently being
conducted, to own the Assets and to transfer the Assets to Purchaser.
Section 3.7 Insurance. Seller believes that the Assets and the Business
have been and are insured by financially sound and reputable insurers in such
amounts and against such risks as are reasonable in relation to its business.
Seller has made available to Purchaser true and complete copies of all insurance
policies covering the Assets and/or the Business. Seller shall bear all risk of
loss to the Business and the Assets until the Closing.
Section 3.8 Environmental Matters. The operations of the Business are in
compliance in all material respects with all statutes, regulations and
ordinances relating to the protection of human health and the environment. There
has been no release of a hazardous substance into the environment at any
property owned, leased or used by the Seller (the "Premises") including, without
limitation, any such release in the soil or groundwater underlying the Premises.
There is no asbestos, polychlorinated biphenyls or underground storage tanks
located on the Premises and there have been no releases of asbestos,
polychlorinated biphenyls or materials stored in underground storage tanks,
including, without limitation, petroleum or petroleum-based materials. The
Seller has not received notice of any violation of any environmental statute or
regulation nor has it been advised of any claim or liability pursuant to any
environmental statute or regulation brought by any governmental agency or
private party with respect to the Assets or the operation of the Business.
Section 3.9 Patents, Trademarks, Trade Names. Schedule 3.9 sets forth a
true and complete list of all Marks used or owned by Seller. Seller owns, or has
the right to use pursuant to valid and effective agreements, all Marks, and all
such rights shall be assigned and transferred to Purchaser in connection with
the consummation of the transactions contemplated hereby. To the best knowledge
of the Seller, (i) no claims are pending against Seller by any person with
respect to the use of any Xxxx or challenging or questioning the validity or
effectiveness of any license or agreement relating to the same, and (ii) the
current use by Seller of the Xxxx does not infringe on the rights of any third
party.
Section 3.10 Bulk Sales Compliance. Except as set forth in Sections 1.6 and
1.8 hereof, Seller shall be responsible for and shall satisfy all claims of all
creditors of Seller arising out of transactions occurring prior to Closing.
Section 3.11 Brokers, Finders and Investment Bankers. Neither Seller nor
any of its respective officers, directors or employees has employed any broker,
finder or investment banker or incurred any liability for any investment banking
fees, financial advisory fees, brokerage fees or finders' fees in connection
with the transactions contemplated hereby.
Section 3.12 Other Liabilities. Other than the Assumed Obligation, there
are no other obligations, liabilities or claims associated with the Assets or
the Business that shall not remain with Seller and remain Seller's obligation
responsibility before and after the Closing.
Section 3.13 Disclosure. No representation, warranty or covenant made by
Seller in this Agreement, or the Schedules or Exhibits attached hereto contains
an untrue statement of a material fact or omits to state a material fact
required to be stated herein or therein or necessary to make the statements
contained herein or therein not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
Section 4.1 Organization. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Section 4.2 Authorization. Upon the duly and validly obtained approval of
the execution, delivery and performance of this Agreement from the Board of
Directors of the Purchaser: (i) Purchaser shall have full corporate power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement and to consummate the transactions contemplated hereby;
(ii) the execution and delivery of this Agreement by Purchaser and the
performance by Purchaser of its obligations hereunder and the consummation of
the transactions provided for herein shall have been duly and validly authorized
by all necessary corporate action on the part of Purchaser; and (iii) this
Agreement shall have been duly executed and delivered by Purchaser and shall
constitute the valid and binding agreement of Purchaser, enforceable against it
in accordance with its terms, subject to applicable bankruptcy, insolvency and
other similar laws affecting the enforcement of creditors' rights generally,
general equitable principles and the discretion of courts in granting equitable
remedies.
Section 4.3 Absence of Restrictions and Conflicts. The execution, delivery
and performance of this Agreement, the consummation of the transactions
contemplated by this Agreement and the fulfillment of and compliance with the
terms and conditions of this Agreement do not and will not with the passing of
time or the giving of notice or both, violate or conflict with, constitute a
breach of or default under, result in the loss of any material benefit under, or
permit the acceleration of any obligation under, (i) any term or provision of
the Certificate of Incorporation or Bylaws of Purchaser, (ii) any contract,
agreement, commitment or understanding to which Purchaser is a party or to which
it or any of its properties is subject, (iii) any judgment, decree or order of
any court or governmental authority or agency to which Purchaser is a party or
by which Purchaser or any of its respective properties is bound, or (iv) any
statute, law, regulation or rule applicable to Purchaser. No consent, approval,
order or authorization of, or registration, declaration or filing with, any
governmental agency or public or regulatory unit, agency, body or authority with
respect to Purchaser is required in connection with the execution, delivery or
performance of this Agreement by Purchaser or the consummation of the
transactions contemplated by this Agreement by Purchaser.
Section 4.4 Disclosure. No representation, warranty or covenant made by
Purchaser in this Agreement or the Schedules or Exhibits attached hereto
contains an untrue statement of a material fact or omits to state a material
fact required to be stated herein or therein or necessary to make the statements
contained herein or therein not misleading.
Section 4.5 Brokers, Finders Investment Bankers. Except for Purchaser's
agreement with Multi Venture Partners Ltd., under which Purchaser will pay a
finder's fee, neither Purchaser nor any of its respective officers, directors or
employees has employed any broker or finder in connection with this transaction.
Section 4.6 Legal Proceedings. Except as set forth in Schedule 4.6, there
are no suits, pending, or, to the best knowledge of the Purchaser, threatened
against, relating to or involving the Purchaser, before any court.
ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS
Section 5.1 Conduct of Business by Seller. From the date hereof to the
Closing Date, Seller will, except as required in connection with the
transactions contemplated by this Agreement or consented to in writing by
Purchaser:
(a) Except and only to the extent necessary to secure new product
distribution opportunities, carry on the Business in the ordinary and regular
course in substantially the same manner as heretofore conducted and not engage
in any new line of business or enter into any agreement, transaction or activity
or make any commitment with respect to the Business except those in the ordinary
and regular course of business and not otherwise prohibited under this Section
5.1 and except as otherwise consented to in writing by Purchaser;
(b) Use its reasonable efforts to preserve intact the goodwill and
business organization of the Business, to keep the officers and employees of the
Business available to Purchaser and to preserve the relationships of the
Business with customers, suppliers and others having business relations with the
Business;
(c) Not (i) sell any of the Assets, (ii) create, incur or assume any
indebtedness secured by the Assets, or (iii) grant, create, incur, or suffer to
exist any liens or encumbrances on the Assets which did not exist on the date
hereof;
(d) Not amend, modify or extend in any manner the terms of any
employment agreement with any employee of Seller;
(e) Perform in all material respects all of its obligations under all
Scheduled Leases (except those being contested in good faith) and not enter
into, assume or amend any contract or commitment that would be a Scheduled
Lease;
(f) Use its reasonable efforts to continue to maintain and service the
Assets used in the conduct of the Business in the same manner as has been its
consistent past practice; and
(g) Use its reasonable efforts to maintain its inventory of products
and stock-in-trade at normal levels in the ordinary course of business.
(h) Cooperate with Purchaser in the consummation of the purchase by
Purchaser of certain other businesses that Purchaser has identified to Seller.
Section 5.2 Financing Commitment. Upon the execution of this Agreement,
Purchaser shall diligently and expeditiously make a good faith effort to obtain
a Commitment for financing of the cash portion of the purchase price on or prior
to the Commitment Date (each of which terms are defined in Section 6.1(g)), the
proceeds of which are payable to the Purchaser no later than the Closing Date.
Purchaser will promptly notify Seller upon its receipt of a Commitment.
Section 5.3 Inspection and Access to Information. Between the date of this
Agreement and the Closing Date, Seller will provide Purchaser and its
accountants, counsel and other authorized representatives full access, during
reasonable business hours and under reasonable circumstances to any and all of
its employees, premises, properties, contracts, commitments, books, records and
other information (including tax returns filed and those in preparation) and
will cause its officers to furnish to Purchaser and its authorized
representatives any and all financial, technical and operating data and other
information pertaining to the Business, as Purchaser shall from time to time
reasonably request.
Section 5.4 Reasonable Efforts; Further Assurances; Cooperation. Subject to
the other provisions of this Agreement, the parties hereto shall each use their
reasonable, good faith efforts to perform their obligations herein and to take,
or cause to be taken or do, or cause to be done, all things necessary, proper or
advisable under applicable law to obtain all regulatory approvals and satisfy
all conditions to the obligations of the parties under this Agreement and to
cause the transactions contemplated herein to be effected on the Closing Date in
accordance with the terms hereof and shall cooperate fully with each other and
their respective officers, directors, employees, agents, counsel, accountants
and other designees in connection with any steps required to be taken as a part
of their respective obligations under this Agreement, including without
limitation:
(a) Each of Seller and Purchaser shall cause to be taken, all actions
and do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to obtain any required approval of any federal,
state, or local governmental agency or regulatory body with jurisdiction over
the transactions contemplated by this Agreement.
(b) Each party shall give prompt written notice to the other parties
hereto of (i) the occurrence, or failure to occur, of any event which occurrence
or failure would be likely to cause any representation or warranty of such party
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date hereof to the Closing Date or that will or may result
in the failure to satisfy any of the conditions specified in Article 6 hereof
and (ii) any failure of such party, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it hereunder.
(c) Seller shall secure all necessary consents of third parties to the
assignment to Purchaser of all Scheduled Leases included in the Assets.
Section 5.5 Maintenance of Seller's Corporate Existence. From the date
hereof to the Closing Date, and thereafter if requested by Purchaser, Seller
shall maintain its corporate existence in good standing with the jurisdiction of
its incorporation and enter into any agreement with Purchaser for no additional
consideration as is reasonably necessary to provide Purchaser with the full
benefit all product distribution and other agreements to which Seller is a party
and Seller shall resell and deliver to Purchaser all products purchased under
any such distribution agreement at Seller's Cost.
Section 5.6. Appointment to Board of Directors. Upon the Closing, Mike's
shall use reasonable efforts to cause its Board of Directors to appoint Xxx
Xxxxxxxxx as a member of the Board of Directors of Mike's and to provide
directors and officers liability insurance to Xx. Xxxxxxxxx and Mike's other
directors.
ARTICLE 6
CONDITIONS TO CLOSING
Section 6.1 Conditions to Obligations of Purchaser. The obligations of
Purchaser to effect the acquisition of the Business and the Assets and to assume
the Assumed Obligation shall be subject to the fulfillment at or prior to the
Closing of each of the following additional conditions:
(a) Representations and Warranties. The representations and warranties
of Seller set forth in Article 3 of this Agreement shall be true and correct as
of the date of this Agreement and as of the Closing Date as through made on and
as of the Closing Date.
(b) Performance of Obligations of Seller. Seller shall have performed
in all material respects all covenants and agreements required to be performed
by it under this Agreement.
(c) Authorization of Transactions. All corporate action necessary by
Seller to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby shall have been
duly and validly taken.
(d) Consents. All consents, authorizations, orders and approvals of
(or filings or registrations with) any governmental commission, board or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement shall have been obtained or made.
(e) Authorization by Purchaser's Board of Directors. Purchaser shall
have obtained the approval and authorization of the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby from its Board of Directors.
(f) Employment Agreement with Xxx Xxxxxxxxx. Purchaser shall have
entered into, or shall enter into on the Closing Date, an employment agreement
with Xxx Xxxxxxxxx, in substantially the form of Exhibit 6.1(f) attached hereto
(the "Employment Agreement") and the Purchaser shall have obtained the approval
and authorization of the execution, delivery and performance of the Purchaser
Employment Agreement from its Board of Directors.
(g) Financing. On or before the date which is one hundred and twenty
(120) days subsequent to the date of execution of this Agreement (the
"Commitment Date"), Purchaser shall have obtained a commitment for financing in
form and substance satisfactory to Purchaser, in Purchaser's sole discretion, to
consummate the transaction contemplated by this Agreement (the "Commitment").
(h) Due Diligence Period. On or before the date which is forty-five
(45) days subsequent to the date of execution of this Agreement, Purchaser shall
have had access to the financial and business records of Seller for Purchaser's
due diligence investigation of Seller and shall have concluded based on such
records, in its sole and absolute discretion, that there is no circumstance that
would make the transaction contemplated by this Agreement economically and
financially unfeasible for Purchaser.
(i) Certificates. Seller shall furnish Purchaser with a certificate of
its appropriate officers as to compliance with the conditions set forth in
Sections 6.1(a), (b), (c) and (d).
(j) Leases. Purchaser shall have received consents to assignment of
all Scheduled Leases or written waivers of the provisions of any Scheduled
Leases requiring the consents of third parties and Purchaser shall have entered
into an acceptable one (1) year lease with Seller's landlord at 1122-1124 and
0000-0000 Xxxxxxxx Xxxxxxxxx, Xxxxx, Xxx Xxxx (the "Premises"), for the lease of
the Premises at a monthly rental of $7,500.00 plus electric. Purchaser shall be
entitled to all rents from the current sub-tenants of such premises during the
term of such lease, and Seller or its landlord shall remain responsible for all
taxes, maintenance costs and other fees and expenses related to such Premises
during the term of the lease, except any and all electrical and freezer
maintenance. The parties agree that the landlord of the Premises may allocate
such rental income as it sees fit.
(k) Assumed Obligation. Seller shall have received the consent of the
Creditor to Purchaser's assumption of the Assumed Obligation under the terms set
forth herein.
(l) Audited Financial Statements. Purchaser shall have received
audited financial statements prepared accordance with generally accepted
accounting principles for Seller's last two fiscal years that indicate a sales
volume substantially in accordance with that indicated in the unaudited
financial statements previously made available by Seller to Purchaser. Further,
Purchaser shall have received year-to-date financial statements of Seller for
1997 that indicate an annualized sales volume substantially the same as that of
each of Seller's previous two fiscal years.
(m) Condition of Assets. All of the Assets shall be in good condition
and shall not have been subject to any loss or casualty, or, in the event of any
loss or casualty, Purchaser, in its sole and absolute discretion, shall elect to
accept substitute assets or reasonable compensation for such loss or casualty
from Seller or Seller's insurer.
Section 6.2 Conditions to Obligations of Seller. The obligations of Seller
to effect the sale of the Business and the Assets and the assignment of the
Assumed Obligation shall be subject to the fulfillment at or prior to the
Closing of each of the following additional conditions:
(a) Representations and Warranties. The representations and warranties
of Purchaser set forth in Article 4 of this Agreement shall be true and correct
as of the date of this Agreement and as of the Closing Date as through made on
and as of the Closing Date.
(b) Performance of Obligations of Purchaser. Purchaser shall have
performed in all material respects all covenants and agreements required to be
performed by it under this Agreement.
(c) Authorization of Transactions. All corporate action necessary by
Purchaser to authorize the execution, delivery and performance of this Agreement
and the consummation of the transactions contemplated hereby shall have been
duly and validly taken, including, but not limited to, the approval and
authorization of the execution, delivery and performance of this Agreement and
the Employment Agreement by the Board of Directors of the Purchaser and of
Mikes.
(d) Consents. Except as disclosed in writing to Purchaser by Seller,
all consents, authorizations, orders and approvals of (or filings or
registrations with) any governmental commission, board or other regulatory body
required in connection with the execution, delivery and performance of this
Agreement shall have been obtained or made.
(e) Employment Agreement with Xxx Xxxxxxxxx. Purchaser and Mike's
shall have entered into, or shall enter into on the Closing Date, the Employment
Agreement with Xxx Xxxxxxxxx in substantially the form of Exhibit 6.1(e)
attached hereto.
(f) Financing. Purchaser shall have received a Commitment on or prior
to the Commitment Date:
(g) Certificates. Purchaser shall furnish Seller with a certificate of
its appropriate officers as to compliance with the conditions set forth in
Sections 6.2(a), (b) and (c).
ARTICLE 7
ADDITIONAL CLOSING OBLIGATIONS
[INTENTIONALLY OMITTED]
ARTICLE 8
TERMINATION
Section 8.1 Termination and Abandonment. This Agreement may be terminated
at any time prior to the Closing:
(a) by mutual agreement of the Boards of Directors of the Purchaser and
Seller;
(b) by Seller, if the conditions set forth in Section 6.2 hereof shall not
have been complied with or performed and such noncompliance or nonperformance
shall not have been cured or eliminated (or by its nature cannot be cured or
eliminated) by Purchaser on or before the Closing Date;
(c) by Purchaser, if the conditions set forth in Section 6.1 hereof shall
not have been complied with or performed and such noncompliance or
nonperformance shall not have been cured or eliminated (or by is nature cannot
be cured or eliminated) by Seller on or before the Closing Date;
(d) by either Seller or Purchaser if a Commitment has not been received by
the Commitment Date;
(e) by Purchaser if Purchaser determines as a result of its due diligence
investigation of Seller that the transaction contemplated by this Agreement is
not economically or financially feasible for Purchaser.
Section 8.2 Specific Performance and Other Rights. The parties hereto each
acknowledge that the rights of each party to consummate the transactions
contemplated hereby are special, unique and of extraordinary character, and
that, in the event that any party violates or fails or refuses to perform any
covenant or agreement made by it herein, the non-breaching party may be without
an adequate remedy at law. The parties each agree, therefore, that in the event
that either party violates or fails or refuses to perform any covenant or
agreement made by such party herein, the non-breaching party or parties may,
subject to the terms of this Agreement and in addition to any remedies at law
for damages or other relief, institute and prosecute an action in any court of
competent jurisdiction to enforce specific performance of such covenant or
agreement or seek any other equitable relief.
Section 8.3 Effect of Termination. In the event of termination of this
Agreement pursuant to this Article 8 or as a result of Purchaser's diligence
investigation or due to Purchaser's failure to obtain a Commitment on or prior
to the Commitment Date, this Agreement shall forthwith become void and there
shall be no liability on the part of any party hereto or its respective
officers, directors or stockholders, except for obligations under Section 10.10
and this Section, all of which shall survive the termination. Notwithstanding
the foregoing, nothing contained herein shall relieve any party from liability
for any breach of any covenant or agreement in this Agreement.
ARTICLE 9
INDEMNIFICATION
Section 9.1 Indemnification Obligations of Seller. From and after the
Closing, each of NYIC, Xxxxx and Xx. Xxxxxxxxx shall jointly and severally,
indemnify and hold harmless the Purchaser and its subsidiaries and affiliates
(including Purchaser, each of their respective officers and directors,
employees, agents and representatives and each of the heirs, executors,
successors and assigns of any of the foregoing (collectively, the "Purchaser
Indemnified Parties") from, against and in respect of any and all claims,
liabilities, obligations, losses, costs, expenses, penalties, fines and other
judgments (at equity or at law) and damages whenever arising or incurred
(including, without limitation, amounts paid in settlement, costs of
investigation and reasonable attorneys' fees and expenses) arising out of or
relating to:
(a) Any Excluded Liability or any and all other liabilities and
obligations of Seller of any nature whatsoever, including but not limited to
claims under Article 6 (Bulk Transfers) of the New York Uniform Commercial Code;
(b) Any and all actions, suits, claims, or legal, administrative,
arbitration, governmental or other proceedings or investigations against any
Purchaser Indemnified Party that relate to Seller, the Assets or the Business to
the extent the principal event giving rise thereto occurred prior to the Closing
Date or which result from or arise out of any action or inaction prior to the
Closing Date of Seller or any affiliate, officer, director, employee, agent,
representative or subcontractor of Seller;
(c) Any breach of any representation, warranty, covenant, agreement or
undertaking made by Seller in this Agreement or in any certificate, agreement,
exhibit, schedule or other writing delivered by Seller to Purchaser in
connection with the matters contemplated hereby or pursuant to the provisions
hereof (collectively, the "Seller Ancillary Documents"); or
(d) Any fraud, willful misconduct, bad faith or any intentional breach
of any representation, warranty, covenant, agreement or undertaking made by the
Seller in this Agreement or the Seller Ancillary Documents.
Section 9.2 Liquidated Damages. Except as set forth in Sections 1.6 and 1.8
hereof, in the event Purchaser makes any payment to any creditor of Seller,
Seller, in addition to its indemnification responsibilities as provided herein,
shall pay to Purchaser, and shall be jointly and severally liable to Purchaser
for, liquidated damages equal to twenty percent (20%) of the aggregate amount
paid by Purchaser to each creditor of Seller.
Section 9.3 Indemnification Obligations of Purchaser. From and after the
Closing, Purchaser shall indemnify and hold harmless Seller and its subsidiaries
and affiliates, each of their respective officers, directors, employees, agents
and representatives and each of the heirs, executors, successors and assigns of
any of the foregoing (collectively, the "Seller Indemnified Parties") from,
against and in respect of any and all claims, liabilities, obligations, losses,
costs, expenses, penalties, fines and other judgments (at equity or at law) and
damages whenever arising or incurred (including, without limitation, amounts
paid in settlement, costs of investigation and reasonable attorneys' fees and
expenses) arising out of or relating to:
(a) Any and all actions, suits, claims, or legal, administrative,
arbitration, governmental or other proceedings or investigations against any
Seller Indemnified Party that relate to Purchaser or the Business to the extent
the principal event giving rise thereto occurred after the Closing Date or which
result from or arise out of any action or inaction after the Closing Date of
Purchaser or any affiliate, officer, director, employee, agent, representative
or subcontractor of Purchaser;
(b) Any breach of any representation, warranty, covenant, agreement or
undertaking made by Purchaser in this Agreement or in any certificate,
agreement, exhibit, schedule or other writing delivered by Purchaser to Seller
in connection with the matters contemplated hereby or pursuant to the provisions
hereof (collectively, the "Purchaser Ancillary Documents"); or
(c) Any fraud, willful misconduct, bad faith or any intentional breach
of any representation, warranty, covenant, agreement or undertaking made by the
Purchaser in this Agreement or the Purchaser Ancillary Documents.
Section 9.4 Notice and Opportunity to Defend. Each party seeking
indemnification hereunder shall provide prompt written notice to the other of
the indemnified party's receipt of a claim for which indemnification is sought
and shall permit the indemnifying party to defend against such claim, provided
that the indemnifying party shall remain liable for all damages, claims, costs
and expenses incurred by the indemnified party notwithstanding the indemnifying
party's defense.
Section 9.5 Jurisdiction and Forum.
(a) By the execution and delivery of this Agreement, each Indemnifying
Party irrevocably designates and appoints each of the parties set forth under
its name below as its authorized agent upon which process may be served in any
suit or proceeding arising out of or relating to this Agreement that may be
instituted in any state or federal court in the State of New York.
Seller: Xxxxxxx, Parsoff & Xxxxxx, P.C.
------ 000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Purchaser: Blau, Kramer, Wactlar & Xxxxxxxxx, P.C.
--------- 000 Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
In addition, each party agrees that service of process upon the above-designated
individuals shall be deemed in every respect effective service of process upon
such party in any such suit or proceeding. The foregoing shall not limit the
rights of any party to serve process in any other matter permitted by law.
(b) The parties hereto hereby agree that the appropriate forum and
venue for any disputes between any of the parties hereto arising out of this
Agreement shall be any state or federal court in the State of New York and each
of the parties hereto hereby submits to the personal jurisdiction of any such
court. The foregoing shall not limit the rights of any party to obtain execution
of judgment in any other jurisdiction. The parties further agree, to the extent
permitted by law, that a final and unappealable judgment against any of them in
any action or proceeding contemplated above shall be conclusive and may be
enforced in any other jurisdiction within or outside the United States by suit
on the judgment, a certified or exemplified copy of which shall be conclusive
evidence of the fact and amount of such judgment.
ARTICLE 10
MISCELLANEOUS PROVISIONS
Section 10.1 Notices. All notices, communications and deliveries hereunder
shall be made in writing signed by the party making the same, shall specify the
Section hereunder pursuant to which it is given or being made, and shall be
deemed given or made on the date delivered if delivered in person, on the date
initially sent if delivered by telecopy transmission followed by mailed
confirmation, on the date delivered if delivered by a nationally recognized
overnight courier service or on the date sent if mailed by certified mail
(return receipt requested) (with postage and other fees prepaid) as follows:
To Purchaser: New Yorker Frozen Desserts, Inc.
000 Xxxxxxx Xxxxxxxx
Xxxxxxx, XX 00000
With copy to: Blau, Kramer, Wactlar & Xxxxxxxxx, P.C.
000 Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxx, Esq.
To Seller: New Yorker Ice Cream Corp.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx, XX 00000
With copy to: Xxxxxxx, Xxxxxxx & Xxxxxx, P.C.
000 Xxxxx Xxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
or to such other representative or at such other address of a party as such
party hereto may furnish to the other parties in writing.
Section 10.2 Schedules and Exhibits. All Schedules and Exhibits annexed
hereto are hereby incorporated into this Agreement and are hereby made a part
hereof as if set out in full in this Agreement.
Section 10.3 Assignment; Successors in Interest. No assignment or transfer
by Purchaser or Seller of their respective rights and obligations hereunder
prior to the Closing shall be made except with the prior written consent of the
other parties hereto. Notwithstanding the foregoing, Purchase shall have the
right to assign this Agreement without Seller's consent to any entity whose
capital stock is publicly traded and to whose Board of Directors Xxx Xxxxx has
been elected or appointed or any entity controlled by the principal shareholders
of Purchaser. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their permitted successors and assigns, and
any reference to a party hereto shall also be a reference to a permitted
successor or assign.
Section 10.4 Investigations; Representations and Warranties. The
representations, warranties and covenants of Seller and Purchaser set forth in
this Agreement shall not be extinguished by the Closing and shall survive the
Closing Date. Notwithstanding anything to the contrary set forth in this Section
10.4, (i) the indemnification obligations of Seller and Purchaser set forth in
Sections 9.1 and 9.5, respectively, shall survive the Closing and shall
terminate on the expiration of the applicable statutes of limitation relative to
the liability relating to such indemnification obligations and (ii) this Section
10.4 shall not limit or restrict Seller or Purchaser's remedy against the other
or any other person for fraud, willful misconduct, bad faith or any other
intentional breach of any representation, warranty, covenant or agreements
contained herein.
Section 10.5 Captions. The titles and captions contained in this Agreement
are inserted herein only as a matter of convenience and for reference and in no
way define, limit, extend or describe the scope of this Agreement or the intent
of any provision hereof.
Section 10.6 Controlling Law; Integration; Amendment.
(a) This Agreement shall be governed by and construed and enforced in
accordance with the internal laws of the State of New York without reference to
New York's choice of law rules. This Agreement supersedes all negotiations,
agreements and understandings among the parties with respect to the subject
matter hereof and constitutes the entire agreement among the parties hereto.
(b) Amendments to this Agreement may be proposed by the parties hereto
by or pursuant to action taken by their respective Boards of Directors at any
time; provided, however, that this Agreement may not be amended, modified or
supplemented except by written agreement executed by each of the parties hereto.
Section 10.7 Severability. Any provision hereof which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by law, the parties hereto waive any
provision of law which renders any such provision prohibited or unenforceable in
any respect.
Section 10.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original.
Section 10.9 Waiver. At any time prior to the Closing, the parties hereto,
by or pursuant to action taken by their respective Boards of Directors, may, to
the extent legally permitted: (i) extend the time for the performance of any of
the obligations or other acts of any other party; (ii) waive any inaccuracies in
the representations or warranties of any other party contained in this Agreement
or in any document or certificate delivered pursuant hereto; (iii) waive
compliance or performance by any other party with any of the covenants,
agreements or obligations of such party contained herein; and (iv) waive the
satisfaction of any condition that is precedent to the performance by the party
so waiving of any of its obligations hereunder. Any agreement on the part of a
party hereto to any such extension or waiver shall be valid only if set forth in
an instrument in writing signed on behalf of such party. A waiver by one party
of the performance of any covenant, agreement, obligation, condition,
representation or warranty shall not be construed as a waiver of any other
covenant, agreement, obligation, condition, representation or warranty. A waiver
by any party of the performance of any act shall not constitute a waiver of the
performance of any other act or an identical act required to be performed at a
later time.
Section 10.10 Fees and Expenses. Purchaser shall pay its own fees, costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including, but not limited to, the fees, costs and expenses
of its accountants and counsel. Seller shall pay its own fees, costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby, including, but not limited to, the fees, costs and expenses
of its accountants and counsel, except that Purchaser shall select and engage an
accounting firm and shall be responsible for the payment of the accounting fees
for the auditing of Seller's financial statements for its last two fiscal years.
In the event that Purchaser is unable to secure a Commitment on or prior to the
Commitment Date and all other conditions to Purchaser's obligation to close
shall have been satisfied by such date, then, in such event Purchaser shall pay
Seller's actual and reasonable attorneys fees incurred in preparation of this
Agreement in an amount not to exceed $7,000.00.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed, as of the date first above written.
(corporate seal) NEW YORKER FROZEN DESSERTS, INC.
Attest:
By:_________________________ By:___________________________________
Title:_____________________ Title:__________________________________
(corporate seal) MIKE'S ORIGINAL, INC.
Attest:
By:_________________________ By:___________________________________
Title:_____________________ Title:__________________________________
(corporate seal) XXXXX GROUP LTD.
Attest:
By: ________________________ By:___________________________________
Title: _____________________ Title: _________________________________
(corporate seal) NEW YORKER ICE CREAM CORP.
Attest:
By:_________________________ By:___________________________________
Title:______________________ Title:_________________________________
-------------------------------------
Xxx Xxxxxxxxx, an individual
(corporate seal) AMERICAN CLASSIC ICE CREAM CORP.
Attest:
By:________________________ By:___________________________________
Title:______________________ Title:_________________________________
