EXHIBIT 2.2
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("Agreement") is entered into effective as of
April 24, 1998 by and among ALOHA PACIFIC, INC., a California corporation, or
its designee ("Purchaser" or "Buyer"), on the one hand and CHILDREN'S
WONDERLAND, INC., a California Corporation ("Seller"), XXXXXXX X XXXXXXXX, an
individual ("KBitticks"), and XXXXX XXXXXXXX, an individual ("DBitticks"), on
the other hand. KBitticks and DBitticks are collectively referred to hereinafter
as the "Xxxxxxxx".
RECITALS
A. Seller is the owner and operator of a licensed child care center located
at 000 Xxxxxxxxx Xxxxx, Xxxxxx, Xxxxxxxxxx, 00000, and another licensed child
care center located at 0000 Xx Xxxx Xxxxxx, Xxxxxxxx Xxxxx, Xxxxxxxxxx, 00000
(the "Woodland Hills Center") which do business under the name "Children's
Wonderland" (collectively, the "Centers"). Seller is the owner of another
licensed child care center located at 0000 Xxxx Xxxxxx Xxx, Xxxx Xxxxx,
Xxxxxxxxxx, which also does business as Children's Wonderland (the "Gold River
Center"). KBitticks and DBitticks are the Chairman of the Board and President
(Chief Executive Officer), respectively, of Seller.
B. Purchaser desires to purchase, and Seller desires to sell to Purchaser,
all upon the terms and conditions hereinafter set forth, all of the business,
properties and assets of the Centers.
C. Purchaser further desires to purchase the non-exclusive right to use the
name "Children's Wonderland" and the use of all of Seller's intellectual
property on the terms and conditions hereinafter set forth.
D. Purchaser desires to acquire an option to purchase the Gold River
Center.
E. Seller desires to have an option to re-acquire the Woodland Hills
Center.
TERMS AND CONDITIONS
NOW THEREFORE, in consideration of the mutual promises hereinafter set
forth and for other good and valuable consideration had and received, the
parties agree as follows:
ARTICLE I
TRANSFER OF ASSETS. ASSUMPTION OF LIABILITIES
1.1 TRANSFER OF ASSETS. On the terms and subject to the conditions in this
Agreement and on the Closing Date (as hereinafter defined), Seller will convey,
transfer, assign and deliver to Purchaser all of the business, properties and
assets of the Centers, tangible or intangible (collectively the "Subject
Assets"), with the exception of the "Excluded Assets" as defined in Section 1.2
below.
Without limiting the generality of the foregoing, the Subject Assets
shall include:
(a) all personal property, inventory and equipment located at or
relating to the business of each of the Centers identified in Schedule 1.1(a)
attached hereto;
(b) all of Seller's interest in all real property leases, vehicle and
equipment leases related to each of the Centers identified in Schedule 1.l(b)
attached hereto;
(c) all customer lists, student contracts, toys and games and teaching
materials and related aids not proprietary to Seller located and/or used at each
of the Centers;
(d) all books and records, including all computer programs relating to
the Seller's business at each of the Centers;
(e) all accounts receivable attributable to services provided at the
Centers arising on and after the Closing Date and prepaid client deposits (if
applicable) for services relating to the Centers arising on and after the
Closing Date;
(f) the goodwill of the business for each of the Centers;
(g) the perpetual right of Purchaser to use the name "Children's
Wonderland" in connection with the operation of the Centers and the Gold River
Center, if applicable;
(h) the right to use all of Seller's intellectual property, including
curriculum, policies and procedures, in perpetuity, except that such
intellectual property rights may not be transferred or assigned to an unrelated
third party without the express written consent of Seller, which consent shall
not be unreasonably withheld; and
(i) All leasehold improvements located at the Centers.
1.2 USE OF THE NAME "CHILDREN'S WONDERLAND"/MANAGEMENT OF NEW CENTERS.
(a) As provided for in 1.1(g) above, Purchaser shall have the
perpetual right to use the name "Children's Wonderland" in connection with the
operation of the Centers and the Gold River Center, which right is not
assignable or transferable to an unrelated third party without the express
written consent of Seller, which consent shall not be unreasonably withheld.
(b) Purchaser shall have the perpetual right to use the name
"Children's Wonderland" for future child care centers which Purchaser may open
provided that Seller manages such Centers or provided that Purchaser pays a
one-time fee in the amount of $10,000 for each such future child care center
which Seller does not manage, which amount shall be payable to Seller in cash
prior to utilization of the name "Children's Wonderland" at such center. Said
purchase price shall only be paid to the extent and in the event Buyer utilizes
the name "Children's Wonderland" on respective future centers.
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(c) If Purchaser opens any additional centers, it shall not retain any
independent company to manage any such centers until and unless Seller has been
offered and has rejected the opportunity to manage such centers upon the same
terms and conditions as the independent company proposes to manage such centers.
Nothing contained herein shall preclude Purchaser from managing such centers
itself. In any event, any center operated by and for Purchaser and which uses
the "Children's Wonderland" name shall be operated in such a way as to not
materially impair the goodwill, if any, associated with that name.
1.3 EXCLUDED ASSETS. There shall be excluded from the Subject Assets being
purchased hereunder all of the following assets of Seller as of the Closing (the
"Excluded Assets"): Seller's cash, accounts receivable attributable to services
provided by Seller with respect to the Centers prior to the Closing Date and
those assets, if any, listed on Schedule 1.3.
1.4 ASSUMPTION OF LIABILITIES. Purchaser shall assume and be responsible
for only those obligations and liabilities of Seller attributable to the Centers
after the Closing Date described in Schedule 1.4 (the "Assumed Obligations").
Purchaser does not assume any of the liabilities incurred by Seller prior to the
Closing Date which are not Assumed Obligations, including, without limitation,
any and all tax liabilities.
1.5 METHOD OF CONVEYANCE AND TRANSFER OF SUBJECT ASSETS. The conveyance,
transfer and delivery of the Subject Assets will be effected by appropriate
bills of sale, endorsements, transfers, assignments and other instruments, all
in such form as Purchaser reasonably requests, vesting in Purchaser, or any
designated affiliates of Purchaser, good and marketable title to the Subject
Assets, free and clear of any and all covenants, agreements, leases, conditions,
easements, liens, charges, security interests, title retention instruments
adverse claims or interests, or other title defects, contractual defaults or
restrictions of any kind or nature whatsoever, except for the liens relating to
the Assumed Liabilities (collectively "Liens").
1.6 FURTHER ASSURANCES. Seller, at any time and from time to time after the
Closing Date, upon request of Purchaser, will do, execute, acknowledge and
deliver, all such further acts, assignments, transfers, conveyances, powers of
attorney and assurances as may be reasonably required for the better conveying,
transferring, and delivering to Purchaser, or to its successors and assigns, and
for aiding and assisting in collecting and reducing to possession, all the
Subject Assets.
1.7 ACCOUNTS RECEIVABLE. Accounts receivable of Seller for services
provided with respect to the Centers prior to the Closing Date shall remain the
property of Seller ("Seller's Accounts Receivable"). Purchaser shall cooperate
with Seller in the collection of Seller's Accounts Receivable, and all payments
on Seller's Accounts Receivable received by Purchaser after the Closing Date
shall immediately, upon the receipt thereof be paid by Purchaser to Seller. In
addition, any payments on accounts receivable purchased by Purchaser hereunder
which are received by Seller after the Closing Date shall immediately be paid by
Seller to Purchaser.
1.8 EMPLOYEES. Seller acknowledges and agrees that, as of the Closing Date,
Seller will no longer be conducting Seller's business at the location of the
Centers. Prior to the Closing Date, Seller has notified the employees engaged on
a full or part time basis at any of the Centers (all of whom are identified on
the Seller's most recent payroll register, a copy of which is attached hereto as
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Schedule 1.8), that their employment with Seller in connection with the Centers
will terminate as of the Closing Date. Seller agrees that on the Closing Date,
it will pay or have paid all compensation and benefits (including all accrued
sick leave and vacation pay) owing to such employees up to the Closing Date.
Seller shall be responsible for giving any and all notices and complying with
the provisions of the WARN Act if applicable. Purchaser shall have the right
(but not the obligation) to hire any or all of Seller's employees who work at
the Centers and Seller shall assist Purchaser in doing so.
1.9 OPTION ON GOLD RIVER CENTER. Seller hereby grants to Purchaser an
option to purchase the assets of the Gold River Center upon the following terms
and conditions:
(a) The option must be exercised by way of a notice given by Purchaser
pursuant to Article X hereof within 90 business days of the Closing Date.
(b) If Purchaser exercises the option, then the purchase price shall
be a maximum of up to $250,000 payable as follows:
(i) Cancellation of the loan made pursuant to Article 1.10(a);
(ii) Purchaser shall assume the existing real property lease
(subject to landlord approval) of Gold River Center and all of Seller's
obligations under lease of equipment used at the Gold River Center; provided,
however, that, to the extent such obligations under the assumed equipment leases
exceed $75,000, Purchaser shall be entitled to offset such excess amount against
the Management Fee (as defined hereafter) otherwise owing by Purchase to Seller;
(iii) Subject to the terms of this Article 1.9(iii), Purchaser
shall have an obligation to make a maximum of up to an aggregate of $125,000 of
payments to Seller. Such payments, if any, shall be made on a monthly basis to
the extent that the Net Cash Flow (as defined in Article 9.1.4 hereof) from the
Gold River Center, during the 24 month period following the exercise of such
option, exceeds $20,000 in any such month. To the extent that the Net Cash Flow
for the Gold River Center for any such month exceeds $25,000, then Purchaser's
obligation is limited to $5,000 for that month, and the excess of Net Cash Flow
over $25,000 for any such month shall not carry over to the following month(s).
In no event shall Purchaser have any obligation to make any further payments to
Seller after the expiration of 25 months from the date on which the option is
exercised.
(c) No payments shall be due to Gold River Center except as set forth
above.
1.10 OPTION CONSIDERATION. As of the Closing Date and as consideration for
the option, Purchaser agrees to make a loan to Seller in the amount of $50,000
on the following terms and conditions:
(a) The loan will be non-interest bearing;
(b) The loan will be secured by all of Seller's interest in the assets
of the Gold River Center, and Purchaser may file an UCC-1 Statement to that
effect, and Seller shall execute a security agreement and promissory note in
form satisfactory to Purchaser.
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1.11 If Purchaser does not exercise the option to purchase the Gold River
Center, the $50,000 loan made pursuant to Article 1.10 shall, at the sole
discretion of Purchaser, be cancelled and offset against any Management Fee
otherwise owing by Purchaser to Seller.
ARTICLE II
PURCHASE PRICE AND PAYMENT: CLOSING
2.1 PURCHASE PRICE. As the entire consideration for the transfer and
assignment by Seller of the Subject Assets, for the assumption by Purchaser of
the Assumed Obligations and for the representations, warranties and covenants of
Seller set forth herein, Purchaser, subject to satisfaction or waiver of the
conditions set forth herein, shall pay to Seller the net purchase amount of up
to Four Hundred Seventy Thousand Dollars ($470,000), payable as follows: (a)
$350,000 cash to be paid to Seller at Closing; and (b) a maximum aggregate
amount of up to $120,000 to be paid by Purchaser to Seller based upon the Net
Cash Flow of the Centers as described hereafter. Such $120,000 amount, if any,
shall be paid on a monthly basis for 24 months from and after the Closing Date,
if and to the extent that the Net Cash Flow from the Centers exceeds $40,000 for
the prior month but in no event more than $5,000 per month and without any
carry-over with respect to any excess cash flow (i.e., Net Cash Flow in excess
of $45,000 per month). Of the Purchase Price amount, One Hundred Forty-Four
Thousand ($144,000) is allocated to the acquisition of the Oxnard, California
center, and Three Hundred Twenty-Six Thousand ($326,000) is allocated to the
acquisition of the Woodland Hills, California center. To the extent the entire
$120,000 is not earned by Seller during the aforementioned 24-month period,
there shall be a proportionate reduction in the aforementioned allocation of the
purchase price between the Centers.
2.2 ALLOCATION OF PURCHASE PRICE. Purchaser will allocate the purchase
price amount for the Subject Assets and the Assumed Obligations in accordance
with Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"),
based on the reasonable fair market value of each asset and the liabilities to
be assumed. Purchaser will advise the Seller of the allocations when determined.
Purchaser and Seller will each attach a copy of such information or forms as are
required to be filed pursuant to Section 1060 of the Code to the tax returns
filed covering the period in which the transfer of the Subject Assets and the
Assumed Obligations occur. Seller and Purchaser will report the sale and
purchase of the Subject Assets and the assumption of the Assumed Obligations in
accordance with the allocations determined by Purchaser for all federal, state
and local tax purposes. Seller, and Purchaser, on the other hand, will indemnify
and hold each other harmless, from and against any and all losses, liabilities
and expenses, including, without limitation, attorneys fees and additional
income taxes, interest and penalties that may be incurred by the indemnified
party as a result of the failure of the indemnifying paw to so report the sale
and purchase of the Subject Assets and the assumption of the Assumed
Obligations.
2.3 TRANSFER TAXES. All applicable sales, use and transfer taxes, if any,
arising by reason of the transfer of the Subject Assets and the assumption of
the Assumed Obligations under this Agreement shall be borne by Seller.
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2.4 CLOSING. The closing of the transactions contemplated by this Agreement
(the "Closing") will take place at the offices of Seller, 00000 Xxxxxxxx Xxxxx,
Xxxxx 000, Xxxxxx, Xxxxxxxxxx 00000, on April 30, 1998 or receipt of both
Landlords' consents, whichever later occurs (the "Closing Date").
ARTICLE III
REPRESENTATIONS, WARRANTIES OF SELLER AND XXXXXXXX
Seller represents and warrants to Purchaser as of the Closing Date, as
follows:
3.1 ORGANIZATION AND STANDING. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of California.
Seller has full power and authority to carry on the Seller's business at each of
the Centers as and where conducted and to own or lease and operate the Subject
Assets at and where owned or leased and operated by it. Seller is duly licensed
and qualified and is in good standing in the State of California, which
constitutes the only jurisdiction in which the conduct of Seller's business at
the Centers and the nature of the Subject Assets requires the Seller to be so
qualified.
3.2 AUTHORITY OF SELLER: CONSENTS. The execution, delivery and consummation
of transactions contemplated in this Agreement and the other documents
contemplated herein to be executed by Seller has been duly authorized in
accordance with all applicable laws and the Articles of Incorporation and Bylaws
of the Seller, and no further corporate action is necessary on the part of
Seller, or the Board of Directors or shareholders of Seller to make this
Agreement valid and binding on Seller and enforceable against Seller in
accordance with its terms (subject to bankruptcy, insolvency, reorganization and
other similar laws affecting creditor's rights generally and to general
principles in equity). On the Closing Date, Seller shall deliver to Purchaser
certified copies of its Board of Directors, resolutions authorizing the
execution and performance by Seller of this Agreement. The execution, delivery
and consummation of this Agreement and the other Agreements to be executed by
Seller (i) does not violate the Articles of Incorporation or Bylaws of Seller,
(ii) does not and will not, with the passage of time, the giving of notice or
otherwise, result in a violation or breach of, or constitute a default under,
any, term or provision of any mortgage, deed of trust, lease, instrument, order,
judgment, decree, rule, regulation, law, contract, Agreement or any other
restriction to which Seller is a party or to which the Seller or any of its
respective assets are subject or bound, (iii) will not result in the creation of
any Lien upon any of the Subject Assets, and (iv) will not result in any
acceleration or termination of any loan or security interest agreement to which
Seller is a party, or to which Seller or any of its respective assets are
subject or bound. Except as set forth in Schedule 3.2 attached hereto, no
approval or consent of any person, firm or other entity or governmental body is
or was required to be obtained by Seller for the authorization of this Agreement
or the consummation by Seller of the transactions contemplated in this
Agreement. To the extent that approval of the Department of Social Services or
any other governmental or regulatory agency is required in connection with the
transactions contemplated herein. Seller will use its best efforts to assist
Purchaser in obtaining such approval.
3.3 TITLE OF ASSETS CONDITION OF ASSETS. Except as set forth in Schedule
3.3 attached hereto, Seller owns and possesses as of the Closing Date, all
right, title and interest in and to the Subject Assets free and clear of any and
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all Liens with the exception of the Assumed Obligations. Seller has as of the
Closing Date the right, power and capacity to sell, convey, transfer, assign and
deliver to Purchaser the Subject Assets free and clear of any and all Liens,
with the exception of the Assumed Obligations. All tangible assets included in
the Subject Assets are in Seller's possession or under its control.
3.4 FINANCIAL STATEMENTS. The financial statements for the Centers and the
Gold River Center for the months of July through February, are attached hereto
as Schedule 3.4 (collectively the "Financial Statements"). The Financial
Statements (i) have been prepared on a consistent basis during the periods
involved, (ii) present fairly the operations of the business of each Center and
the Gold River Center, and results of its operations, (iii) are consistent with
the books and records of Seller; and (iv) reflect all necessary adjustments for
the fair presentation of the Centers and the Gold River Center's financial
position as of the date thereof and the results of their operations for the
periods covered thereby.
3.5 ABSENCE OF CERTAIN CHANGES. Since the date of the Financial Statements
and except as otherwise disclosed by Seller to Purchaser in Schedule 3.5
attached hereto: (i) there has not been any material adverse change in the
business or in the condition (financial or otherwise), assets, liabilities,
results of operations or prospects of the Seller's business conducted at the
Centers, and (ii) there has not occurred any event or governmental regulation or
order which could cause such a change, nor, to the knowledge of Seller, is the
occurrence of any such event, regulation or order threatened. Without limiting
the generality of the foregoing, since the date of the Financial Statements,
there has not been:
(a) any mortgage or pledge of, or any other lien, charge or
encumbrance of any kind, on any of the Subject Assets;
(b) any sale or transfer of any assets, including the Subject Assets,
or settlement, cancellation or release of any indebtedness owing to Seller in
connection with the Seller's business as conducted at the Centers;
(c) any material amendment or termination of any contract, Agreement
or license, to which Seller is a party in connection with the Seller's business
or to which Seller or any of the Subject Assets are subject or bound;
(d) any commitment made (through negotiations or otherwise) or any
liability incurred to any labor union or similar organization of employees by
Seller;
(e) any material change in compensation, wages or benefits paid or
payable to any employee of Seller who are involved in the business of the
Centers;
(f) any material adverse change collection loss experience related to
the accounts receivable arising from Seller's business conducted at the Centers;
(g) any material loss, damage or destruction to the Subject Assets
(whether or not covered by insurance);
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(h) an transaction outside of the ordinary course of Seller's business
related to the business of the Centers;
(i) any discharge or satisfaction by Seller of any lien, encumbrance,
obligation or liability (accrued, absolute, fixed or contingent) other than
those incurred in connection with the ordinary course of operation of the
Centers;
(j) any change in Seller's accounting methods or practices;
(k) any purchase of fixed assets; or
(l) to the best of Seller's or the Xxxxxxxx' knowledge, any other
event or condition of any character which materially adversely affects the
Centers or the Gold River Center.
3.6 ABSENCE OF UNDISCLOSED LIABILITIES. Except as set forth on the
Financial Statements and Schedule 3.6 attached hereto, and except for trade
payables incurred by Seller subsequent to the date of the Financial Statements
in the ordinary, course of business, including the Assumed Obligations, none of
the assets or properties of Seller comprising the Subject Assets are subject to,
any liabilities or adverse claims or obligations (whether accrued, absolute,
contingent or otherwise). There are no facts known to Seller that might
reasonably serve as a basis, in whole or in part, for any liabilities or
obligations not disclosed in this Agreement, or in the Financial Statements, or
in information relating to the Centers that has been otherwise disclosed to
Purchaser.
3.7 LITIGATION. There are no suits, actions, legal or administrative
proceedings, arbitrations or governmental investigations of any nature
whatsoever pending or, to the knowledge of Seller or the Xxxxxxxx, threatened in
connection with the Seller's business at the Centers or the Subject Assets.
Seller has not received any notice that Seller is the subject of any
governmental investigation in connection with the Seller's business at the
Centers. Seller is not subject to any order writ, injunction or decree of any
court, or of any federal, state, local or other governmental department,
commission, board, bureau, agency or instrumentality), domestic or foreign, in
connection with the business conducted at the Centers or the Subject Assets.
3.8 EMPLOYMENT MATTERS.
(a) Seller is not a party to, participant in, or bound by, any
collective bargaining agreement, union contract, pension, profit sharing
arrangement or material employment, deferred compensation, termination,
severance or similar personnel arrangement related to the Centers' personnel.
(b) Seller has not received, in connection with the Centers, notice of
any, active, pending, or threatened administrative or judicial proceedings under
Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment
Act: the Fair Labor Standards Act, the Occupational Safety and Health Act, the
National Labor Relations Act, or any other federal, state or local law
(including. common law), ordinance or regulation relating to employees of Seller
with respect to the business of the Centers.
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(c) The relation of Seller with its employees at the Centers is good
and there are no pending or, to the knowledge of Seller or the Xxxxxxxx,
threatened labor difficulties.
3.9 EMPLOYEE BENEFIT PLANS AND OTHER PLANS.
(a) For purposes of this Section, the following definitions apply:
(i) "Benefit Plan" means each deferred compensation, pension
profit-sharing and retirement plan, each plan, arrangement or policy for the
provision of bonuses and/or severance benefits, each "employee benefits plan"
(defined in ERISA Section 3(3)) and each fringe benefit plan (including, without
limitation, a hospitalization, insurance, stock option or stock purchase plan)
that Seller maintains, contributes to, has liability with respect to, or has an
obligation to contribute to;
(ii) "COBRA" means the Consolidated Omnibus Budget Reconciliation
Act of 1985;
(iii) "ERISA" means the Employee Retirement Income Security Act
of 1974 as amended;
(b) Seller has not directly or indirectly acted in any manner or
incurred any obligation or liability, and will not directly or indirectly act in
any, manner in the future or incur any obligation or liability in the future
with respect to any Benefit Plan which has or could give rise to any liens on
any of the Subject Assets, or which could result in any liability or obligation
o Purchaser, whether arising out of the establishment, operation, administration
or termination of such Benefit Plan or the transactions contemplated by this
Agreement.
(c) Seller has timely, provided or will timely provide all notices and
continuation of health benefit coverage required to be provided to employees,
former employees or the beneficiaries or dependents of such employees or former
employees, under Part 6 of Subtitle B of Title I of ERISA or, as applicable,
COBRA to the extent such notices and continuation of health benefit coverage are
required to be provided by reason of the events occurring prior to or on the
Closing Date or by reason of the transactions contemplated by this Agreement. To
the extent required by COBRA, Seller will treat its employees and their
dependents and beneficiaries as of the Closing Date as having incurred a
"qualifying event" (within the meaning of ERISA Section 603 and, as applicable,
Code Section 4980B(f)(3)) on the Closing Date. Seller will continue the health
benefit coverage required by, COBRA. Seller will periodically, upon request,
provide Purchaser with evidence, to the satisfaction of Purchaser, of compliance
with the above provision. Seller will indemnify and hold harmless Purchaser and
its shareholders, directors, officers, employees and agents against, any costs,
expenses, losses, damages and liabilities incurred or suffered by any of them,
directly or indirectly, including, without limitation, reasonable legal fees and
expenses, with respect to any failure of Seller to 6omply with the requirements
of this Section or COBRA.
3.10 INSURANCE. Schedule 3.11 attached hereto sets forth a true and correct
list of all of the policies of insurance covering the Seller's business at tee
Centers and Subject Assets presently in force, including declarations pages
which indicate the (i) risk insured against, (ii) name of Carrier, (iii) policy
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number, (iv) amount of coverage, (v) expiration date and (vi) the property, if
any, insured, indicating as to each whether it insures on an "occurrence" or a
"claims made" basis. All of the insurance policies set forth on Schedule 3.11
are in full for and effect as of the Closing Date and all premiums, retention
amounts and other related expenses due have been paid, and Seller has not
received any notice of cancellation with respect to any of the policies. Seller
has not been refused any insurance in connection with the business conducted at
any of the Centers or the Subject Assets by any insurance carrier. To the
knowledge of Seller or the Xxxxxxxx, there are no circumstances existing which
would enable any insurer to avoid liability under Seller's policies.
3.11 LICENSES. Each of the Centers has all necessary licenses and permits
required by Federal, State and other governmental and health related agencies
necessary to carry on its business (all of which are identified on Schedule 3.12
attached hereto), and no licenses have been revoked, are under suspension or
have been under suspension during the past five (5) years.
3.12 CASUALTY OCCURRENCES. There have been no occurrences during the last
six (6) years of alleged damages to persons or property involving the education
services offered by Seller, including, but not limited to, the educational
services offered through the Centers.
3.13 BUSINESS RELATIONS. Seller has no reason to believe that the customers
of the business of the Centers will not continue to do business with Purchaser
after the Closing at levels and on terms at least equal to those enjoyed by
Seller.
3.14 COMPLIANCE WITH LAW. Seller has complied with all laws, relations,
rules and orders of any governmental department or agency or any other
commission, board, agency or instrumentality, federal, state or local, or other
requirements of law affecting the Seller's business, the Subject Assets and the
Assumed Obligations and is not in default under or in violation of any provision
of any federal, state or local law, regulation, rule or order affecting the
Business, nor does Seller require the consent of any governmental agency to this
Agreement.
3.15 LICENSES AND RIGHTS. Seller possess all franchises, licenses,
easements, permits and other authorizations from governmental or regulatory,
authorities (either domestic or foreign) and from all other persons or entities
that are necessary to permit it to engage in the Seller's business as presently
conducted in and at all locations of the Centers.
3.16 BROKERAGE AND FINDER'S FEES. Seller has not incurred any liability to
any broker, director or agent for any brokerage fees, finder's fee, or
commissions with respect to the transactions contemplated by this Agreement.
3.17 LEASES. Seller is not in default under located at the Centers, and all
such leases are valid and binding obligations of Seller.
3.18 ENVIRONMENTAL MATTERS. Seller (a) has not caused or allowed the
generation, treatment, storage, or disposal of hazardous substances at any of
the Centers except in accordance with local, state, and federal statutes and
regulations; (b) has not caused or allowed the release of any toxic or hazardous
substance or substances onto, or near any of the Centers; (c) is in compliance
with all applicable permits laws, rules and relations regarding the handling of
hazardous substances located at or near the Centers as of the Closing Date; (d)
has not received inquiry or notice nor does it have any reason to suspect or
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believe it will receive inquiry or notice of any actual or potential
proceedings, claims, or lawsuits arising in connection with Subject Assets and
or out of its operations or business as conducted at the Centers: (e) has not,
or has it ever been, subject to the release of any hazardous substance at any of
the Centers; and (f) is currently not operating or required to be operating
under any compliance order, schedule, decree .or agreement, any consent decree,
order, or Agreement, and/or correction action decree, order or agreement issued
or entered into under any, federal, state or local statute, regulation or
ordinance regarding the environment and/or health or safe in the workplace.
3.19 MATERIAL MISSTATEMENTS OR OMISSIONS. No representations or warranties
made by Seller or the Xxxxxxxx in this Agreement or in any document statement,
certificate, schedule, chart, list, letter, compilation or other document
furnished or to be furnished to Purchaser in connection with the transactions
governed by this Agreement, contain any untrue statement of a material fact, or
omit to state a material fact necessary to make the statements or fact contained
therein, in light of the circumstances under which they were made, not
misleading.
3.20 TAXES. As of the Closing, all tax obligations of the Seller which
relate in any way to the operation or ownership of the Centers or which could
directly or indirectly have an effect on or result in a lien against the Subject
Assets will have been paid or satisfied by Seller. In addition, any sales or use
taxes relating to the transfer of the Subject Assets made pursuant hereto shall
be paid by Seller.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser hereby represents and warrants to Seller as of the Closing Date
as follows:
4.1 ORGANIZATION AND GOOD STANDING OF PURCHASER. Purchaser is in Good
Standing under the laws of the State of California and has as of the Closing
Date, the full power and authority to carry on its business as and where now
conducted and where anticipated by this Agreement.
4.2 AUTHORITY OF PURCHASER. The execution, delivery and consummation of
this Agreement by Purchaser has been authorized by the board of directors of
Purchaser in accordance with all applicable laws and the Articles of
Incorporation and Bylaws of Purchaser and no further corporate action is
necessary on the part of Purchaser to make this Agreement valid and binding on
Purchaser and enforceable against Purchaser in accordance with its terms.
4.3 EXECUTION, DELIVER, AND BINDING EFFECT. This Agreement has been duly
executed and delivered by, Purchaser and constitutes a legal, valid and binding
obligation of Purchaser enforceable in accordance with its terms (subject to
bankruptcy, insolvency, reorganization and other similar laws affecting
creditor's rights generally).
4.4 BROKERAGE AND FINDER'S FEES. Neither Purchaser nor any shareholder,
officer, director or agent of Purchaser has incurred any liability to any
broker, finder or agent for any brokerage fees, finder's fees or commissions
with respect to the transactions contemplated by this Agreement.
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ARTICLE V
CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER
The obligations of Purchaser under this Agreement are, at its option,
subject to satisfaction of the following conditions at or prior to the Closing
Date:
5.1 The Warranties and representations made herein by Seller to Purchaser,
including but not limited to those set forth in Article III, shall be true and
correct on and as of the Closing Date, and Seller shall have performed and
complied with all agreements and covenants contained herein on their part
required to be performed or complied with as of the Closing Date.
5.2 No investigation, proceeding or litigation, at law or in equity, by any
governmental or regulatory commission, agency or other body or authority or by
any other person, firm, corporation or other entity, shall be pending on the
Closing Date which challenges the consummation of the transactions contemplated
by this Agreement or which claims damages against Purchaser or Seller as a
result of consummation of the transactions contemplated hereby, or which has a
material adverse affect upon any of the operations of Seller related to the
Centers or the Subject Assets.
5.3 With respect to each of the Centers, except as provided for in
paragraph 7.9, Purchaser shall have received such approvals, consents,
authorizations, waivers and permits from any person, necessary or appropriate in
order to enable Purchaser to acquire the Subject Assets and operate the Centers
in the manner provided herein without the imposition of any conditions which
Purchaser might reasonably consider to be material and adverse.
5.4 There shall be no material casualty or damage to or destruction of any
of the Subject Assets.
5.5 All proceedings to be taken in connection with the consummation of the
transactions contemplated by this Agreement, and all certificates, documents and
instruments incidental thereto, shall be reasonably satisfactory in form and
substance to Purchaser and its counsel and Purchaser shall have received copies
such documents and instruments as Purchaser and its counsel may reasonably
request in connection with such transactions.
5.6 RECEIPT OF DOCUMENTS BY PURCHASER. Purchaser has received:
(a) Certified copies of resolutions duly adopted by the Board of
Directors of Seller approving this Agreement and the transactions contemplated
under it;
(b) Uniform Commercial Code Termination Statements and/or other
documentation in form and substance satisfactory to Purchaser terminating any
and all Liens that max affect any of the Subject Assets;
(c) Purchaser shall have received from Seller a certificate dated the
Closing Date, in a form acceptable to Purchaser, certifying that the conditions
set forth above have been fulfilled; and
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(d) Purchaser shall have received any other documents which Purchaser
deems necessary to consummate the transactions contemplated in this Agreement.
5.7 INSTRUMENTS OF TRANSFER AND DELIVERY OF THE SUBJECT ASSETS. Seller
shall have delivered to Purchaser good and sufficient instruments of transfer
relating to the Subject Assets. The instruments of transfer shall be in form and
substance reasonably satisfactory to Purchaser and its counsel.
5.8 LEASE AMENDMENTS AND ASSIGNMENT. On or prior to the Closing, Seller
will furnish Purchaser with estoppel certificates and consents to assignment in
form(s) reasonably acceptable to Purchaser, from each landlord, indicating,
among other things, that (i) the Centers' lease Agreements are in full force and
effect, (ii) that Seller is current in its rental obligations; and (iii) the
landlord expressly consents the assignment of the applicable lease from Seller
to purchaser. In addition, on or prior to the Closing, Seller will furnish
Purchaser with an amendment to the Lease for the Oxnard Center providing for a
waiver or deferral, on terms acceptable to Purchaser, of a $2,000 per month rent
increase. If necessary in order to obtain the approval of any landlord to the
assignment of any lease relating to the Centers or the Gold River Center, Seller
shall agree to remain jointly and severally liable with Purchaser (or its
assignee or designee), in which event Purchaser (or its assignee or designee)
shall be obligated to indemnify Seller of any liability which may be imposed
upon Seller as a result Seller's continuing liability under the lease(s).
ARTICLE VI
CONDITIONS PRECEDENT TO OBLIGATION OF SELLER
The obligations of Seller under this Agreement are, at its option, subject
to satisfaction of the following conditions at or prior to the Closing Date:
6.1 No investigation, proceeding or litigation, at law or in equity, by any
governmental or relation commission, agency or other body or authority or by any
other person, firm, corporation or other entity shall be pending on the Closing
Date which challenges the consummation of this transactions contemplated by this
agreement or which claims damages against Purchaser or Seller as a result of the
consummation of the transactions contemplated hereby, or which adversely affects
any of the operations of the Subject Assets.
6.2 The warranties and representations made herein by Purchaser to Seller
shall be true and correct on and as of the Closing Date with the same effect as
if such warranties and representations had been made on and as of the Closing
Date, and Purchaser shall have performed and complied with all agreements and
covenants contained herein on its part required to be performed or complied with
on or prior to the Closing Date.
6.3 All proceedings to be taken in connection with the consummation of the
transactions contemplated by this Agreement, and all certificates, documents,
and instruments incidental thereto, shall be reasonably satisfactory in form and
substance to Seller and its counsel and Seller shall have received copies of
such documents and instruments as Seller and its counsel may, reasonably request
in connection with such transactions.
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ARTICLE VII
CONDUCT OF SELLER'S BUSINESS PRIOR TO CLOSING
The Seller contains and agrees that, since the date of the most recent
Financial Statement and except as Purchaser shall have otherwise consented
hereto in writing:
7.1 ORDINARY COURSE. The business of Seller at the Centers has been
conducted diligently in the ordinary course, and Seller has used its best
efforts to preserve its ongoing business relationships.
7.2 NO NEW AMENDMENTS. No contract, agreement, obligation, lease, license
or other commitment has been entered into or assumed by or on behalf of Seller
which related to or affects the Centers, except for contracts in the ordinary
course of business.
7.3 TAX RETURNS: COMPLIANCE. Seller has duly and timely filed all reports
or returns required to be filed with federal, state, foreign, local and other
authorities and has promptly paid all federal, state, foreign and local tax
assessments and governmental charges lawfully levied or assessed upon it or its
properties or upon any pan thereof, except taxes or charges being contested in
good faith by appropriate proceedings and for which adequate provision has been
made and has duly observed and conformed to all lawful requirements of any
governmental authority relating to its properties or to the operation and
conduct of its business and all covenants, terms and conditions upon or under
which any of its properties are held.
7.4 MAINTENANCE. All buildings, offices and other real property and all
machinery, equipment fixtures, motor vehicles and other property of the Seller
have been kept and maintained in good operating condition, repair and working
order, ordinary wear and tear excepted.
7.5 INSURANCE. The Seller has continued to maintain in full force and
effect for all Centers, all policies of insurance then in effect, or renewals
thereof or equivalent policy.
7.6 NO SALES OR MERGERS. Seller has not entered into any other Agreements
to sell the Subject Assets or any or all of the Centers.
7.7 NO BORROWING OR CAPITAL EXPENDITURES WITHOUT PURCHASER'S CONSENT.
Seller has not incurred any debt which could impact the Subject Assets. In
addition, Seller has not made any capital expenditures out of the ordinary
course of business.
7.8 EMPLOYEE COMPENSATION. Seller has, not made any material changes in the
compensation of employees working at the Centers.
7.9 REGULATORY APPROVAL. Seller has taken whatever action as may be
necessary to obtain the approval of any and all applicable governmental or
regulatory, agencies for the transactions contemplated in this Agreement and for
the ownership and operation of the Centers by Purchaser, except the approval of
the Department of Social Services; provided, however, that immediately following
the Closing Date, Seller shall use its best efforts to assist Purchaser in
expeditiously obtaining such approval form the Department of Social Services.
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ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES, INDEMNITIES
8.1 SURVIVAL OF REPRESENTATIONS AND WARRANTS. Notwithstanding the Closing
of the transactions contemplated under this Agreement, or any investigation made
by or on behalf of the Purchaser, the representations and warranties of Seller
contained in this Agreement or in any certificate, schedule, list, or other
document furnished pursuant to this Agreement, will survive the Closing and
continue for a period of two (2) years thereafter.
8.2 INDEMNIFICATION.
(a) Seller covenants and agrees to indemnify, defend and hold harmless
Purchaser, its affiliates and its shareholders, directors, officers employees
and agents ("Purchaser Indemnities") from any and all costs, expenses, losses,
damages and liabilities incurred or suffered, directly or in directly, by any,
of them (including, without limitation, actual legal fees and expenses) arising
out of, in connection with, resulting from or attributable to the following
("Indemnified Losses"): (1) the breach of, or misstatement in, any one or more
of the representations or warranties of Seller made in or pursuant to this
Agreement, (2) the breach of any one or more of the covenants of Seller made in
or pursuant to this Agreement, (3) any claims, demands, suits, investigations,
proceedings or actions by any third party containing or relating to allegations
that, if true, would constitute a breach of, or misstatement in, any one or more
of the representations or warranties of Seller or the Xxxxxxxx made in or
pursuant to this Agreement and (4) any trade payables, obligations or
liabilities of Seller of any nature whatsoever (whether accrued, absolute,
contingent or otherwise), except the Assumed Obligations. All Indemnified Losses
shall be payable on demand and without limiting Purchaser's other rights and
remedies may be offset by Purchaser against any amount that might otherwise be
payable by Purchaser to Seller.
(b) As security for payment of any Indemnified Losses and for valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Xxxxxxxx agree that, as of the Closing Date, $400,000 principal amount of all
promissory notes payable by Seller to the Xxxxxxxx (collectively the "Xxxxxxxx
Notes") and all documents reflecting or consisting of security therefor (the
"Xxxxxxxx Security Documents") are to be pledged or assigned as collateral to
Purchaser. On the Closing Date, the originals of the Xxxxxxxx Notes shall be
delivered to Purchaser along with a duly executed pledge agreement or assignment
in form reasonably satisfactory to Purchaser. The pledge or assignment of the
Xxxxxxxx Notes and the Xxxxxxxx Security Documents shall terminate on the
receipt of a license by Purchaser from the California Department of Social
Services to operate the Centers. In addition, if necessary, to enable Seller to
obtain dependent financing, provided that Seller is not involved in a
bankruptcy, Purchaser shall release or reassign the Xxxxxxxx Notes and the
Xxxxxxxx Security Documents. Under such circumstances, Purchaser shall release
or reassign. $1 of the Xxxxxxxx Notes and the Xxxxxxxx Security, Documents for
each dollar in financing obtained by Seller.
(c) Purchaser will indemnify, and hold harmless the Seller in respect
of, claims, losses, expenses, cots, obligations and liabilities they may incur
by reason of Purchaser's breach of or failure to perform an), of its warranties
or covenants in this Agreement, or by reason of any act or omission of Purchaser
15
or any of it successors or assigns, after the Closing Date, that constitutes a
breach under any lease, contact, order, or other agreement to which it is a
party or by which it is bound at the Closing Date, but only to the extent to
which Purchaser expressly assumes these obligations, duties, and liabilities
under this Agreement.
ARTICLE IX
OTHER AGREEMENTS OF THE PARTIES
9.1 MOVEMENT SERVICE AGREEMENT.
9.1.1 RETENTION OF SELLER BY PURCHASER. For the term specified in
Article 9.1.2 hereof, Purchaser agrees to retain Seller to perform "Management
Services" for the Purchaser with respect to the Centers, and Seller agrees to
render the Manager Services on behalf of Purchaser. For purposes of Article 9.1,
Management Services shall mean any and all of the day-to-day management end
operational services which were conducted by Seller with respect to the business
operations of the Centers immediately prior to the Closing Date including,
without limitation, the timely payment of all obligations of or relating to the
Centers as they come due. Seller shall utilize its best efforts on behalf of
Purchaser in satisfaction of Seller's duties hereunder and shall perform such
duties in an efficient faithful and businesslike manner and in a manner which
does not otherwise materially or adversely reflect upon the business reputation
or integrity of Purchaser or the Centers.
9.1.2 TERM. Subject to the provisions of Article 9.1.3 hereof, the
term of Seller's retention under this Article 9.1 shall be for a period of two
(2) years, commencing as of the date hereof and continuing for a period of two
(2) years thereafter.
9.1.3 TERMINATION OF AGREEMENT.
9.1.3.1 TERMINATION FOR CAUSE. Notwithstanding the provisions of
Article 9.1.2 hereof, Purchaser may terminate the retention of Seller under
Article 9.1 for Cause (as hereinafter defined), effective upon written notice to
Seller. For purposes of this Article 9.1.3.1, termination for "Cause" shall mean
termination because of the good faith finding by the Purchaser's Board of
Directors that:
(a) Seller shall have been grossly negligent in the conduct
of its duties on behalf of Purchaser hereunder or shall have failed to perform
the duties assigned to it hereunder, which negligence or failure to perform
shall not have been cured within fifteen (15) days after delivery by Purchaser
of written notice thereof to Seller;
(b) Seller shall have failed to comply with any of the
material provisions of Article 9.1, which breach shall not have been cured
within fifteen (15) days after delivery by Purchaser of written notice thereof
to Seller;
(c) Seller files a petition in bankruptcy or petition or
application in any tribunal for the appointment of a custodian, receiver or
trustee for a substantial part of its assets or suffers the filing of such
petition or application or the commencement of any such proceeding against it in
16
which an order for relief is entered or which remain undismissed for a period of
thirty (30) days or more;
(d) Neither KBitticks nor DBitticks is employed by Seller;
or
(e) Seller has received (or is credited with having received
as a result of offsets by Purchaser of amounts owing by Seller to Purchaser
under this Agreement) an aggregate of $250,000 in Management Fees under Article
9.1.4.
9.1.3.2 TERMINATION WITHOUT CAUSE. Notwithstanding the provisions
of Article 9.1.2 hereof, Purchaser may terminate Seller's retention under
Article 9.1 without cause, effective upon written notice thereof to Seller. If
Purchaser so terminates Seller during the term of Article 9.1, Purchaser agrees
to continue to pay Seller the amounts then required to be paid Seller as
specified in Article 9.1.4. Such Management Fee shall be payable by Purchaser to
Seller in accordance with the terms and conditions of Article 9.1.4.
9.1.3.3 EFFECT OF TERMINATION. Except as set forth in Article
9.3.2 hereof, Purchaser shall not be obligated to make any payments to Seller
after termination of its retention pursuant to any of the provisions of Article
9.1 hereof, other than Seller's accrued Management Fees, if any, through the
effective date of Seller's termination hereunder.
9.1.4 MANAGEMENT FEE. In consideration of the Management Services to
be rendered by Seller to Purchaser under Article 9.1, Purchaser agrees to pay to
Seller a monthly fee ("Management Fee") equal to ninety percent (90%) of the
aggregate Net Cash Flow of the Centers. For purposes of this Article 9.4 and
Articles 1.9 and 2.1, the term "Net Cash Flow" shall mean the aggregate
expenditures) of the Centers or Gold River Center, as the case may be. Under no
circumstances shall the aggregate Management Fee exceed $250,000.
9.1.5 INSPECTION OF RECORDS. Commencing as of the Closing Date and
continuing until the date upon which Purchaser receives a license to operate the
Centers from the Department of Social Services ("DSS Approval"), Seller will be
responsible for all accounting and bookkeeping for the Centers. Purchaser will
be entitled to audit the relevant records prepared by Seller in order to permit
Purchaser to determine the accuracy of Seller's computation of the monthly
Management Fee hereunder. All costs and expenses associated with such audit
shall be borne by Purchaser, unless it is determined in Purchaser's reasonable
discretion that a material computational error has been made by Seller, in which
all reasonable costs and expenses incurred by Purchaser shall be borne by
Seller. Effective as of the date of receipt by Purchaser of DSS Approval, all
accounting and bookkeeping functions relating to the Centers may, at the sole
discretion of Purchaser, be assumed by Purchaser and all reasonable costs
associated with such accounting and bookkeeping functions shall thereafter be
deemed to be an expense in determining Net Cash Flow of the Centers.
9.1.6 PAYMENT OF MANAGEMENT FEE. The monthly Management Fee payable by
Purchaser to Seller hereunder shall be paid by the 10th day of the month
immediately following the month upon which the monthly Management Fee in
question was earned.
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9.1.7 SPACE IN OXNARD. During such time as Seller is managing the Centers,
Purchaser shall make space available to Seller, at no cost to Seller, at the
Oxnard Center to enable Seller to manage the Centers and to conduct its other
business.
9.2 NON-COMPETITION AGREEMENT.
(a) As a material inducement to Purchaser to enter into this
Agreement, Seller and the Xxxxxxxx agree for itself/themselves and for each of
Seller's respective subsidiaries and affiliates that for a period of five
(5)years from and after the Closing Date it/they will not, directly or
indirectly:
(i) engage in, carry on or have any interest in child care
business in the Covenant Territory (as hereinafter defined);
(ii) enter into, engage in, or be employed by or consul: with any
child care business in the Covenant Territory;
(iii) induce any customers of the Centers to refuse to continue
to use the services of the Centers;
(iv) solicit employees of the Centers for employment.
As used herein, the term "Covenant Territory" shall mean a radius of three (3)
miles on a straight line from each and every one of the Centers acquired
pursuant however, that Seller's existing child care facilities to this Agreement
provided; however, that Seller's existing child care facilities (and any
interest the Xxxxxxxx have in such Centers) are exempt from this non-competition
provision. The parties acknowledge that the length of time pertaining to all
prohibitions in this Article 9.2 are reasonable and necessary for the legitimate
protection of Purchaser's business and interests.
(b) Seller and the Xxxxxxxx expressly agree and understand that the
remedy at law for any breach by Seller or the Xxxxxxxx of this Article 9.2 will
be inadequate and that the damages flowing from such breach are not readily
susceptible to being measured in monetary terms. Accordingly, it is acknowledged
that upon violation or threatened violation of this Article 9.2, purchaser will
be entitled, among other remedies, to immediate injunctive relief and may obtain
a temporary restraining order and injunction restraining any breach or
threatened breach without the necessity of posting bond. Nothing contained
herein will be deemed to limit Purchaser's remedies at law or in equity for any
breach by Seller or the Xxxxxxxx of any of the provisions of this Agreement.
(c) In the event any court of competent jurisdiction determines that
the specified time period or geographical area set forth in this Article 9.2
unreasonable, arbitrary, or against public policy, then a lesser time period or
geographical area that is determined by the court to be reasonable,
non-arbitrary and not against public policy may be enforced.
(d) In the event that Seller or the Xxxxxxxx violate any provision of
this Article 9.2 as to which there is a specific time period during which Seller
or the Xxxxxxxx are prohibited from taking certain actions or engaging in
18
certain activities, then, in such event the violation will toll the running of
the time period from the date of the violation until the violation ceases.
9.3 NONDISCLOSURE OF CONFIDENTIAL INFORMATION. From and after the Closing
Date, Seller and Purchaser agree not to disclose, disseminate, divulge, discuss,
copy or otherwise use or suffer to be used, in competition with, or harmful to
the interests of the other, any information (written or oral), documents, lists
or the business of the Seller and Purchaser except as (a) may otherwise be in
the public domain; (b) may be necessary for tax filing and/or reporting
purposes; or (c) may otherwise be required by law.
9.4 PARTIAL TERMINATION OF SECURITY INTEREST BY XXXXXXXX. As of the Closing
Date, the Xxxxxxxx shall deliver to Purchaser a UCC-2 Financing Statement
reflecting the termination/release of any and all security interests the
Xxxxxxxx have in the Subject Assets.
9.5 OPTION TO REPURCHASE.
9.5.1 Seller shall have an option exercisable only within 6 months of
the date hereof, to re-acquire the assets associated with the Woodland Hills
Center transferred pursuant to this Agreement:
9.5.2 If Seller exercises such option, the price to be paid by Seller
shall be equal to the amount of all cash paid or provided by Purchaser to Seller
hereunder, including the $50,000 loan made pursuant to Article 1.10, the
$350,000 cash paid pursuant to Article 2.1, all payments of Net Cash Flow made
pursuant to Article 2.1, and all management fees paid pursuant to Article 9.1.4.
In addition, the price shall include all capital expenditures, advances, fees
and cost which purchaser may have made, paid or incurred relating to the Centers
or the Gold River Center, or the acquisition thereof, prior to the time of the
payment of the price.
9.5.3 If Seller exercises such option, the price must be paid in cash
at the time the option is exercised and without offset of any kind.
9.6 USE OF CASH PROCEEDS RECEIVED AT CLOSING. Seller hereby acknowledges
and agrees that the cash proceeds received from Purchaser on the Closing Date
shall first be used to pay any and all tax liens of Seller (estimated to be
$400,000), before such proceeds are used to pay any other claims or liabilities
of Seller.
ARTICLE X
MISCELLANEOUS
10.1 All notices, requests, demands and other communications under this
Agreement must be in writing and will be deemed duly given, unless otherwise
expressly indicated to the contrary by this Agreement, (i) when personally
delivered, (ii) upon receipt of a facsimile transmission with a confirmed
transmission answer back, (iii) three (3) days after having been deposited in
the United States mail, certified or registered, return receipt requested,
postage prepaid, or (iv) one (1) business day after having been dispatched by a
national recognized overnight courier service, addressed to the parties or their
19
permitted assigns at the following addresses (or at such other address or number
as is given in writing by either parry to the other)when accompanied by
facsimile transmission as follows:
To Purchaser: Aloha Pacific, Inc.
000 Xxxxxxx Xxxxxx
Xxxxx Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Facsimile (000) 000-0000
With a Copy To: Xxxxx X. Xxxxxx, Esq.
Xxxxx & Xxxxxxxxxx
000 Xxxxxxxx Xxxx., 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Facsimile (000) 000-0000
To Seller: Children's Wonderland, Inc.
X.X. Xxx 0000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxx
Chief Executive Officer
Facsimile (000) 000-0000
With a copy to: Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx, Xxxxxxxxx, Xxxx,
Chizever & Xxxxxxxx
0000 Xxxxxxxx Xxxxxxxxx, Xxxxxxxxx
Xxxxxxx Xxxxx, XX 00000
Facsimile (000) 000-0000
10.2 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which will bc deemed to be an original but all of which
together will constitute one and the same document.
10.3 CAPTIONS AND ARTICLE HEADINGS. Captions and Article headings are for
convenience only, are not a part of this Agreement and may not be used in
construing, it.
10.4 WAIVERS. Any failure by any of the parties to comply with any of the
obligations, agreements or conditions set forth in this Agreement may be waived
only by a writing executed by the party for whose benefit the obligation,
agreement or condition is intended, but any such waiver will not be deemed a
waiver of any other obligation, agreement or condition contained herein.
10.5 AMENDMENTS. Supplements or Modifications. Each of the parties agrees
to cooperate in the effectuation of the transactions contemplated under this
Agreement and to execute any and all additional documents and take such
additional action as is reasonably necessary or appropriate for such purposes.
20
10.6 ENTIRE AGREEMENT. This Agreement, including any certificate, schedule,
exhibit or other document delivered pursuant to its terms, constitutes the
entire agreement between the parties hereto regarding the subject matter hereof
and supersedes all previous agreements. There are no verbal Agreements,
representations, warranties, undertakings or Agreements between the parties.
This Agreement may not be amended or modified in any respect, except by a
written instrument signed by the parties to this Agreement.
10.7 GOVERNING LAW. This Agreement, the construction, interpretation and
enforcement thereof and the rights of the parties thereto shall be determined
under, governed by and construed in accordance with the laws of the State of
California without regard to principles of conflicts of law.
10.8 ASSIGNMENT: THIRD PARTIES: BINDING EFFECT. The rights of Seller and
Purchaser under this Agreement are not assignable nor are their duties delegable
without the prior written consent of the other, which consent shall not be
unreasonably withheld, and any attempted assignment or delegation without such
consent will be null and void. Nothing contained in this Agreement is intended
to convey upon any person or entity, other than the parties and their successors
in interest and permitted assigns, any rights or remedies under or by reason of
this Agreement. All covenants, Agreements, representations and warranties of the
parties contained in this Agreement are binding on and will inure to the benefit
of Purchaser and Seller, and their respective successors and permitted assigns.
10.9 EXPENSES. Except as otherwise provided, each parry will bear their own
respective expenses, including, without limitation, legal and accounting fees,
in connection with the preparation and negotiation of, and transactions
contemplated under, this Agreement.
10.10 DISPUTE RESOLUTION AND JURY TRIAL WAIVER. Any dispute concerning this
Agreement shall be resolved by non-appealable arbitration. Unless the parties
mutually agree upon an. arbitrator, the arbitrator shall be selected by
J.A.M.S./Endispute. A judgment may be entered based on an arbitration award. The
arbitrator shall have the power to decide any and all issues, including any
issues concerning arbitrability and shall have the power to issue legal,
equitable and/or provisional relief and remedies. The arbitrator shall have full
discretion to decide all procedural questions, including the nature and scope of
discovery, if any.
10.11 REMEDIES NOT EXCLUSIVE. To the extent that Seller or the Xxxxxxxx
breaches any obligation, representation or warranty, Purchaser may, INTER ALIA,
offset the damage caused thereby against an), obligation which it may have t6
Seller. No remedy conferred by any of the specific provisions of this Agreement
is intended to be exclusive of any other remedy, and each and every remedy will
be cumulative and will be in addition to every remedy given under this Agreement
or now or subsequently existing, at law or in equity, by statute or otherwise.
The election of any one or more remedies by Purchaser or Seller will not
constitute a waiver of the right to pursue other available remedies.
10.12 SUBMISSION OF AGREEMENT FOR REVIEW. This Agreement shall not be
binding upon either party until fully executed.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
date first written above.
"PURCHASER"
By:
---------------------------------------
Xxxxx X. Xxxxxxxx, President
"SELLER"
By:
---------------------------------------
Xxxxx Xxxxxxxx, Chief Executive Officer
"XXXXXXXX"
-------------------------------------------
Xxxxxxx Xxxxxxxx, an individual
-------------------------------------------
Xxxxx Xxxxxxxx, an individual
22
The following is a list briefly identifying the contents of the Schedules
omitted from this EXHIBIT 2.2. The Registrant agrees to furnish supplementally a
copy of any omitted Schedules to the Commission upon its request.
SCHEDULE 1.1(A): Personal Property and Equipment at the Centers
SCHEDULE 1.1(B): Vehicle and Equipment Leases
SCHEDULE 1.3: Excluded Assets
SCHEDULE 1.4: Assumed Liabilities
SCHEDULE 1.8: Seller's Most Recent Payroll Register
SCHEDULE 3.2: Approvals required to be obtained by the Seller
SCHEDULE 3.4: Financial Statements for the Centers
SCHEDULE 3.7: Litigation
SCHEDULE 3.11: Insurance
SCHEDULE 3.12: Necessary Licenses and Permits
