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SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-KSB
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: September 23, 1997
All American Food Group, Inc.
Exact name of registrant as specified in its charter
New Jersey 22-3259558
State or other jurisdiction of I.R.S. Employer
incorporation or organization ID No.
104 New Era Drive, South Plainfield, New Jersey 07080
(Address of principal executive offices)
Registrant's telephone number, including area code: (908) 757-3022
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Item 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective as of September 23, 1997, pursuant to an Agreement and Plan of
Merger, dated September 19, 1997 (the "Agreement and Plan of Merger"), by and
among All American Food Group, Inc. (the "Registrant"), St. Pete Bagels
Acquisition Corp, a wholly owned subsidiary of the Registrant ("Subsidiary"),
Sam & Son, Inc. ("Sam & Son"), Bagel Man, Inc. ("Bagel Man") and St. Pete Bagel
Co., Inc. ("St. Pete"; St. Pete, Sam & Son and Bagel Man are herein collectively
referred to as "St. Pete's Bagels") the Registrant acquired St. Pete's Bagels
through the merger of St. Pete's Bagels with and into Subsidiary in exchange
for $200,000 and 479,800 shares of the Registrant's common stock.
The 479,800 shares of common stock represents approximately 8.9% of the
outstanding common stock of the Registrant. In addition, the Registrant issued
50,000 shares of common stock as a finder's fee in connection with the
transaction.
St. Pete's Bagels is a six-store bagel chain in St. Petersburg, Florida
which has been in business since 1987 and was Tampa Bay's first bagel chain. In
addition to their stores, it operates a 6,000 square foot bagel production
facility in the St. Petersburg area.
The description contained herein of the above merger is qualified in its
entirety by reference to the Agreement and Plan of Merger filed as an exhibit
hereto.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(a) Financial Statements
The financial information described below which is required by Item 7
of Form 8-K is not yet available. The Registrant anticipates that it will file
the required financial information as soon as possible, but no later than 60
days from the date this report must be filed.
o Report of John Ralph & Associates, PA;
o Balance Sheets of St. Pete's Bagels as of September 22, 1997 and
October 31, 1996;
o Statement of Operations of St. Pete's Bagels for the period November
1, 1996 through September 22, 1997 and for the year ended October
31, 1996;
o Statement of Cash Flows of St. Pete's Bagels for the period November
1, 1996 through September 22, 1997 and for the year ended October
31, 1996.
(b) Pro Forma Financial Information
o Proforma Balance Sheet at July 31, 1997;
o Proforma Statement of Operations for the nine months ended July 31,
1997.
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(c) Exhibits
The following Exhibit is filed with this Form 8-K:
2.1 Agreement and Plan of Merger, dated September 19, 1997, between
All American Food Group, Inc,. St. Pete Bagels Acquisition Corp., Sam & Son,
Inc., Bagel Man, Inc. and St. Pete Bagel Co., Inc. (Registrant hereby agrees to
furnish supplementally to the Securities and Exchange Commission upon request a
copy of any omitted schedule or exhibit, all of which are listed in Section 4 or
Section 7 of the Agreement, respectively.)
ALL AMERICAN FOOD GROUP, INC.
By: /s/ Andrew Thorburn
Andrew Thorburn
Chairman and Chief Executive Officer
Dated: October 8, 1997
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER is made this 19th day of September, 1997,
by and among ALL AMERICAN FOOD GROUP, INC., a New Jersey corporation ("Parent"),
ST. PETE BAGELS ACQUISITION CORP., a Florida corporation ("Subsidiary" or the
"Surviving Corporation"), SAM AND SON, INC., a Florida corporation, BAGEL MAN,
INCORPORATED., a Florida corporation and ST. PETE BAGEL CO., INC., a Florida
corporation (individually, a "Target," and collectively, the "Targets"), and
KURT CUCCARO and MARY CUCCARO, his wife, and CYNTHIA CUCCARO (individually a
"Target Shareholder," and collectively, the "Target Shareholders").
The boards of directors of the Parent, Subsidiary, and the Targets have
determined that it is advisable and in their best interests of such parties and
their shareholders that Targets and Subsidiary merge into a single corporation.
Parent, Subsidiary, and Targets, therefore, desire to adopt a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended, by which Targets merge into Subsidiary in accordance with
the laws of Florida. Each of Parent, Subsidiary, and each Target is intended to
be "a party to a reorganization" within the meaning of Section 368(b) of the
Internal Revenue Code.
THEREFORE, the parties agree as follows:
Section 1. Definitions and Rules of Construction.
1.1 Definitions. As used in this Agreement and in the attached
schedules and exhibits, the following capitalized terms have the meanings
indicated below:
"ADA" means the Americans With Disabilities Act of 1990, and all
regulations promulgated pursuant thereto.
"Adverse Claims" means all charges, complaints, actions, suits,
proceedings, hearings, investigations, claims, demands, judgments, orders,
decrees, stipulations, damages, awards, dues, penalties, fines, costs, amounts
paid in settlement, liabilities (whether known or unknown, whether absolute or
contingent, whether liquidated or unliquidated, whether certain or uncertain,
whether threatened or not, whether due or to become due and whether insured or
uninsured), injunctions, claims of specific performance, liens, obligations,
taxes, losses, expenses, and fees, including, but not limited to claims
threatened, asserted or perfected resulting from or with respect to or based
upon breach of warranty, breach of contract, intentional tortious acts,
negligence, or strict liability, and all Attorneys' Fees in connection
therewith.
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"Agreement" means this Agreement and Plan of Merger, as it may be amended
from time to time, including all exhibits and schedules to which reference is
made herein. All references to a "Section" shall refer to a section of this
Agreement unless otherwise indicated. Words such as "hereby," "herein,"
"hereinafter," "hereof," "hereto," "hereunder," and "herewith" refer to this
Agreement as a whole, unless the context otherwise requires.
"Assets" means the Real Property, Leasehold Improvements, and other
personal property of each of the Targets that is described in Schedule 4.14
hereto.
"Attorneys' Fees" means all attorneys' fees, including fees associated with
paralegals and law clerks, and expenses, court costs, and fees and expenses of
expert witnesses, at both trial and appellate levels, including, but not limited
to, those arising in connection with all Obligations, Employment-Related
Liabilities, Adverse Claims, and Taxes.
"Balance Sheet" means the unaudited balance sheet of each Target for the
year ended on the Balance Sheet Date, prepared in accordance with GAAP, together
with the auditor's report thereon and all notes and schedules pertaining
thereto.
"Balance Sheet Date" means August 31, 1997.
"Benefit Plans" means all Qualified Plans, all Other Qualified Plans, and
all ERISA Plans, and (to the extent not otherwise included as ERISA Plans) all
stock ownership, stock option, stock purchase, excess benefit, voluntary
employees' beneficiary association, vacation, severance pay, bonus, deferred
compensation, non-cash compensation or other similar plan, program, or
arrangement, and any other employee benefit plan of any kind, maintained by a
Target or which is a multiple employee plan to which it makes employer
contributions with respect to its employees, or which is a terminated plan under
which Target has any present or future Obligation or Liability (other than to
make current wage or salary payments) with respect to its employees or former
employees.
"Business" means the business conducted by each Target on the date hereof,
which principally involves baking and distribution of bagels, pastries and other
foods.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, 42 U.S.C. Sections 9601 et seq.
"Closing" means the consummation of all the transactions relating to the
Merger contemplated herein other than the filing of the Articles or Certificate
of Merger of Targets and Subsidiary.
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"Closing Date" means September 19, 1997, or such other date as the parties
agree.
"Closing Documents" has the meaning set forth in Section 3.3.
"COBRA" means the Consolidated Omnibus Budget Reconciliation Act of 1985
and all regulations promulgated pursuant thereto.
"Code" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated pursuant thereto.
"Contamination" means the presence of, or Release on, under, from or to the
Real Property, of any Hazardous Substance in the environment. Contamination does
not include a Release which occurred in routine storage and use of Hazardous
Substances from time to time in the ordinary course of business, in compliance
with Environmental Laws and in compliance with good commercial practice.
"Effective Date" means the date on which the Merger becomes effective, as
provided in Section 2.1.
"Employment-Related Liabilities" means all debts, liabilities, duties or
obligations arising out of employment matters or relationships, including, but
not limited to, any payroll, salary, and wages, employee benefit plans,
unemployment compensation, workers' compensation, withholding of any income tax,
FICA, FUTA, or SUTA obligations, employee health or life insurance,
hospitalization, savings, bonus, deferred compensation, incentive compensation,
holiday, vacation, severance pay, sick pay, sick leave, disability, tuition
refund, service award, company car, scholarship, relocation, patent award, claim
with respect to Intellectual Property, fringe benefit, overtime, and all
Attorneys' Fees arising in connection therewith.
"Environmental Laws" means any and all foreign, federal, state, and local
laws, statutes, codes, ordinances, regulations, rules, policies, consent
decrees, judicial orders, administrative orders, or other requirements relating
to the environment or to human health or safety associated with the environment,
all as amended or modified from time to time. Environmental Laws include, but
are not limited to, the following statutes and all rules and regulations
relating thereto, all as amended or modified from time to time: CERCLA, as
amended by SARA, 42 U.S.C. Sections 9601-9675; RCRA, 42 U.S.C. Section
6901-6991; the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et
seq; the Clean Water Act, 33 U.S.C. Section 1321 et seq; the Clean Air Act, 42
U.S.C. Sections 7401 et seq; FIFRA, 7 U.S.C. Section 136 et seq; TSCA, 15 U.S.C.
Sections 2601-2671; the Federal Water Pollution Control Act of 1972; the Safe
Drinking Water Act of 1972, 42 U.S.C.
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Sections 300(f) et seq; the Refuse Act of 1899, 33 U.S.C. Sections 401 et seq;
and the Emergency Planning and Community Right-to-Know Act of 1966.
"EPA" means the United States Environmental Protection Agency.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and all regulations promulgated pursuant thereto.
"ERISA Plan" means all employee benefit plans, as defined in ERISA,
maintained by any Target or which is a multiple employer plan to which it makes
employee contributions with respect to its employees, or which is a terminated
plan under which Target has any present or future Obligation or Liability
(whether direct, indirect, or contingent) other than Qualified Plans and Other
Qualified Plans.
"FIFRA" means the Federal Insecticide, Fungicide and Rodenticide Act.
"Financial Statements" means the Balance Sheet, the unaudited statement of
income of each Target for the year ended as of the Balance Sheet Date, and the
statement of shareholders' equity of Target dated as of the Balance Sheet Date,
each prepared in accordance with GAAP, together with the auditor's report
thereon and all notes and schedules pertaining thereto.
"GAAP" means Generally Accepted Accounting Principles, consistently applied
throughout the periods involved.
"Hazardous Substance" means (a) any substance, the presence of which
requires investigation or remediation under any Environmental Law or under
common law; (b) any dangerous, toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise hazardous
substance which is regulated by any Environmental Law; (c) any substance, the
Release of which causes or threatens to cause a nuisance upon the Real Property
or Stores or to adjacent properties or poses or threatens to pose a hazard to
the health or safety of persons on or about the Real Property; (d) any
substance, the Release of which on to properties adjacent to the Property could
constitute a trespass by Target; and (e) urea-formaldehyde, polychlorinated
biphenyls, asbestos or asbestos-containing materials, petroleum and petroleum
products.
"Impairment" means any loss, damage, destruction, condemnation, or
diminution in the value, quantity, or quality of any Asset from any cause
whatsoever other than depreciation or amortization occurring in the ordinary
course of business.
"Leasehold Improvements" means all leasehold improvements to the Real
Property.
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"Leases" means all of such Target's rights under lease agreements or
sublease agreements pursuant to which any Target leases Real Property, and all
supplements, amendments, modifications, extensions, renewals, or restatements
thereof and any agreements affecting the same.
"Legal Requirements" means all laws, statutes, codes, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, permits, licenses,
authorizations, directions, and requirements of all governmental authorities,
officials, agencies, and officers, ordinary or extraordinary, which now or at
any time prior to Closing may be applicable to the Assets or Business or any
use, operation, or condition thereof, including the ADA and any zoning and
land-use ordinances.
"Liability" or "Liabilities" means all debts, obligations, and liabilities
of any kind (including Obligations, Employment-Related Liabilities, Taxes,
Adverse Claims, and Attorneys' Fees), whether known or unknown, absolute or
contingent, direct or indirect, liquidated or unliquidated, incurred or existing
prior to the Closing or arising from the ownership, operation, activities,
actions, or omissions of Target on or before the Closing Date.
"Lien" means (a) any encumbrance, mortgage, pledge, lien, charge, or other
security interest of any kind on, of, or in any property or assets of any
character, or the income or profits therefrom; or (b) any arrangement or
agreement that prohibits the creation of such encumbrances, mortgages, pledges,
liens, charges, or other security interest or that restricts transfer of any
property or assets.
"Merger" means the merger of Targets with and into Subsidiary, under the
terms and conditions set forth herein.
"Merger Consideration" means the consideration to be paid or distributed to
the Target Shareholders in connection with the Merger, as specified in Sections
3.4 and 3.5.
"Obligations" means all debts, duties, or obligations of any kind arising
under any agreement, including all Attorneys' Fees arising in connection
therewith.
"Other Qualified Plan" means the qualified pension and profit sharing plans
not maintained by Target but to which it makes employer contributions with
respect to its employees.
"Parent" has the meaning specified in the preamble of this Agreement.
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"Parent Common Stock" means shares of Parent's common stock, no par value.
"Parent Market Price" means the average closing price per Share of Parent
Common Stock during the ten trading days ending five trading days before the
Closing Date being $2.0842 per share.
"Parent Shares" has the meaning set forth in Section 3.4.
"Person" means a natural person, corporation, association, partnership,
limited liability company, trust, joint venture, or other legal entity.
"Qualified Plans" means the qualified pension and profit sharing plans
maintained by any Target.
"RCRA" means the Resource Conservation and Recovery Act of 1976.
"Real Property" has the meaning set forth in Section 4.9.
"Regulatory Action" means any claim, demand, action, or proceeding brought
or instigated by any governmental authority in connection with any Environmental
Law (including civil, criminal, and administrative proceedings), whether or not
seeking costs, damages, penalties, or expenses.
"Release" means the spilling, leaking, disposing, discharging, emitting,
depositing, injecting, leaching, escaping, or any other release or threatened
release, however defined, and whether intentional or unintentional, of any
Hazardous Substance into the environment.
"SARA" means the Superfund Amendments and Reauthorization Act of 1986.
"Subsidiary" has the meaning specified in the preamble of this Agreement.
"Surviving Corporation" means Subsidiary, in its capacity as the
corporation surviving the Merger.
"Target(s)" has the meaning specified in the preamble of this Agreement.
"Target Shares" has the meaning set forth in Section 3.4.
"Target Shareholders" has the meaning specified in the preamble of this
Agreement.
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"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including Taxes under Section 59A of the Code),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or added-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not, including all Attorneys' Fees
arising in connection with any dispute thereof.
"Tax Returns" means all federal, state, local, and foreign tax returns,
reports, statements, and other similar filings required to be filed by Target.
"Third Party Claims" means third party claims, actions, demands, or
proceedings (other than Regulatory Actions) based on negligence, trespass,
strict liability, nuisance, toxic tort, or detriment to human health or welfare
due to any Release of Hazardous Substances or Contamination, and whether or not
seeking costs, damages, penalties, or expenses.
"TSCA" means the Toxic Substances Control Act.
1.2 Construction. In this Agreement, words used in the singular or in
the plural include both the plural and the singular, and the masculine,
feminine, and neuter genders include all genders. The term, "including," means
"including but not limited to." Words such as "herein," "hereinafter,"
"hereunder," "hereto," "hereof," and the like refer to this Agreement as a
whole, and are not limited to any particular part of this Agreement. All parties
have engaged in the negotiation and drafting of this Agreement, and no there
shall be no presumption of construction against any party.
1.3 Section, Schedule, and Exhibit References. All references in this
Agreement to Sections, subsections, Schedules, and Exhibits constitute
references to Sections and subsections of, and Schedules and Exhibits attached
to, this Agreement, except to the extent that any such reference specifically
refers to another document. All references to Sections refer also to all
subsections of such Sections, if any.
1.4 Business Day. As used in this Agreement, the term "business day"
means any day other than a Saturday, Sunday, or legal holiday in the City of St.
Petersburg. If any time period set forth in this Agreement expires on a day
other than a business day, that period shall be extended through the next
succeeding business day.
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Section 2. Merger; Effect of Merger. On the Effective Date, Targets shall
merge with and into Subsidiary, which shall survive the Merger as the Surviving
Corporation.
2.1 Effective Date of Merger. The Merger shall become effective upon
the filing of duly executed Articles or Certificate of Merger with the Secretary
of State of Florida in accordance with the applicable laws of that state.
2.2 Effect of Merger. On the Effective Date, and as aresult of the
Merger, (a) the separate existence of each Target will cease; (b) title to all
real estate and other property, or any interest therein, owned by any Target
will be vested in the Surviving Corporation without reversion or impairment; (c)
the Surviving Corporation will thenceforth be responsible and liable for all
Liabilities of each Target; (d) any claim existing or action or proceeding
pending by or against any Target may be continued as if the Merger did not occur
or the Surviving Corporation may be substituted in the proceeding for any such
Target; (e) neither the rights of creditors nor any Liens upon the property of
any Target will be impaired by the Merger; and (f) the Target Shares shall be
converted into Parent Shares, as set forth in Section 3.4.
2.3 Surviving Corporation. Following the Merger, the existence of the
Surviving Corporation shall continue unaffected and unimpaired by the Merger,
and the Surviving Corporation shall have all the rights, privileges, immunities,
and powers, and shall be subject to all the duties and liabilities, of a
corporation organized under the laws of Florida.
2.4 Name. The name of the Surviving Corporation shall be St. Pete
Bagels Acquisition Corp.
2.5 Articles of Incorporation. The articles of incorporation of
Subsidiary, as in effect on the Effective Date, shall be the articles of
incorporation of the Surviving Corporation from and after the Effective Date,
subject to the right of the Surviving Corporation to amend its articles of
incorporation in accordance with Florida law.
2.6 Bylaws. The bylaws of Subsidiary, as in effect on the Effective
Date, shall be the bylaws of the Surviving Corporation from and after the
Effective Date, subject to the right of the Surviving Corporation to amend its
bylaws in accordance with its articles of incorporation and with Florida law.
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2.7 Directors and Officers. Until the election and qualification of
their successors, the members of the board of directors and the officers of
Subsidiary in office on the Effective Date shall continue to be the board of
directors and officers of the Surviving Corporation.
Section 3. Closing, Risk of Loss, and Conversion of Shares.
3.1 Closing. The Closing shall occur on the Closing Date, in St.
Petersburg, Florida or at such other place as the parties agree.
3.2 Risk of Loss. Risk of loss to the Assets, however caused (other
than by Subsidiary or those acting on behalf of Subsidiary), through the date of
the Closing, shall remain wholly upon Targets. Such risk shall shift to
Subsidiary at 12:00:01 a.m. on the day immediately following the Closing Date.
If all or any part of any of the Assets suffers an Impairment at or before the
Closing, Targets shall promptly notify Subsidiary, specifying the estimated
costs necessary to repair or replace any damaged or destroyed property, the
amount of insurance proceeds that are available to make such repairs and
replacements, the estimated period of time necessary to make such repairs and
replacements, and the effect of the Impairment to the Assets and the Business.
If all or a material part of the Assets suffers an Impairment at or before the
Closing, Subsidiary shall be entitled to elect either (a) to proceed to the
Closing in accordance with this Agreement, in which event all condemnation or
insurance proceeds payable with respect to the Impairment shall be owned by and
payable to the Surviving Corporation, or (b) to terminate this Agreement
pursuant to Section 11.
3.3 Documents to be Delivered at Closing. At the Closing the parties
shall execute and deliver the following documents ("Closing Documents"):
(a) Targets shall execute and deliver to Subsidiary Articles of
Merger, in form and substance reasonably acceptable to Subsidiary, for filing
with the Secretary of State of Florida.
(b) Each Target shall deliver to Subsidiary (i) an affidavit of
non-foreign status, (ii) an affidavit of exclusive possession of the Real
Property, and (iii) an affidavit that there have been no improvements to any of
the Real Property during the ninety day period immediately preceding the Closing
Date (except improvements listed on the affidavit), all in form and substance
satisfactory to Subsidiary. To the extent that any of the Real Property has been
improved during the ninety day period immediately preceding the Closing Date,
each Target shall deliver with Target's
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affidavit releases or waivers of all mechanics' liens executed by general
contractors, subcontractors, suppliers, and materialmen.
(c) Each Target shall deliver to Subsidiary an estoppel
certificate of each lessor under each Lease of Real Property and under each
lease by which any such Target leases any tangible personal property, in form
and substance satisfactory to Subsidiary, describing the property leased, the
monthly or annual rental, and the remaining term of the lease, certifying that
there is no default under the lease, and confirming that the lease will continue
in full force and effect after the Effective Date.
3.4 Conversion of Target Shares. On the Effective Date, as a result of
the Merger and without any action on the part of any Target or the Target
Shareholders, each and every issued and outstanding share of capital stock of
SAM AND SON, INC. shall be automatically converted into 239,900 shares of Parent
Common Stock which was determined by dividing $500,000.00 by the Parent Market
Price, and each outstanding share of capital stock of BAGEL MAN, INCORPORATED
shall be automatically converted into 143,940 shares of Parent Common Stock
which was determined by dividing $300,000.00 by the Parent Market Price, and
each outstanding share of capital stock of ST. PETE BAGEL CO., INC. shall be
automatically converted into 95,960 shares of Parent Common Stock which was
determined by dividing $200,000.00 by the Parent Market Price.
3.5 Additional Consideration. In addition to receipt of the Parent
Common Stock, the Target Shareholders, Kurt and Mary Cuccaro shall jointly
receive $200,000.00 cash Target Shareholder Cynthia Cuccaro shall receive
$20,000.00 cash.
3.6 Exchange of Certificates. At Closing, each Target Shareholder
shall surrender to the Exchange Agent, for cancellation, each certificate
evidencing Target Shares held by the Target Shareholder ("Target Stock
Certificate"). Upon such surrender, the Target Shareholder shall be entitled to
receive from the Exchange Agent, in exchange for the Target Stock Certificate, a
certificate evidencing the number of Parent Shares that the Target Shareholder
has the right to receive pursuant to Section 3.4, and the surrendered Target
Stock Certificate shall be cancelled. Until surrendered as contemplated by this
Section 3.6, each Target Stock Certificate shall be deemed at any time after the
Closing to represent only the right to receive, upon such surrender, the
certificate evidencing Parent Shares and cash in lieu of any fractional Parent
Shares as contemplated hereby.
3.7 No Fractional Shares. Target Shareholders shall not be entitled to
any certificate or scrip representing fractional Parent Shares upon the
surrender of Target Stock Certificates, and
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ownership of fractional Target Shares will not entitle the owner to vote or to
exercise any other rights of a shareholder of Parent. In lieu of a certificate
or scrip representing a fractional Parent Share, Parent shall pay to each Target
Shareholder who is otherwise entitled to receive a fractional Parent Share an
amount of cash equal to such fraction multiplied by the amount of the Merger
Consideration into which each Target Share has been converted.
3.8 Distributions with Respect to Unexchanged Shares. No dividends or
other distributions with respect to Parent Common Stock declared or made after
the Closing or with a record date after the Closing shall be paid to the holder
of any unsurrendered Target Stock Certificate with respect to the shares of
Parent Common Stock into which the Target Shares are converted, and no cash
payment in lieu of fractional shares shall be paid to any such holder, until the
holder of record of the Target Stock Certificate has surrendered the
certificate. Subject to the effect of applicable laws, at the appropriate time
following surrender of any such Target Stock Certificate, Parent shall pay to
the record holder of the Parent Common Stock issued in exchange therefor,
without interest, (a) the amount of any cash payable in lieu of a fractional
share of Parent Common Stock to which such holder is entitled, and (b) the
amount of any dividends or other distributions with respect to Parent Common
Stock for which the record date is after the Closing.
3.9 No Further Ownership Rights in Target Stock. The exchange of
Parent Shares and cash for Target Shares in accordance with this Agreement
constitutes full satisfaction of all rights pertaining to such Target Shares.
After the Closing, there shall be no further registration of transfers of Target
Shares on the stock transfer books of Target. If, after the Closing, Target
Stock Certificates are presented to Target or Subsidiary for any reason, they
shall be cancelled and exchanged as provided herein.
3.10 Cancellation of Target Stock. After the conversion of the Target
Shares in accordance with Section 3.4, the Target Shares shall automatically be
cancelled and retired and shall cease to exist or to be outstanding as Target
Shares, and each holder of a Target Stock Certificate shall cease to have any
rights with respect thereto, except the right to receive the applicable portion
of the Merger Consideration (without interest) upon surrender of the Target
Stock Certificate.
Section 4. Representations and Warranties of Target. As an inducement to
Parent and Subsidiary to execute this Agreement and to enter into the
transactions contemplated to take place hereunder, Targets and Target
Shareholders hereby make the following representations and warranties applicable
to them:
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4.1 (a) Organization, Standing, Qualification and Subsidiaries. Each
Target is a corporation duly organized, validly existing and in good standing
under the laws of Florida and has all requisite corporate power and authority
and is entitled to carry on its business as now being conducted and to own,
lease or operate its properties as and in the places where such business is now
conducted and such properties are now owned, leased or operated; and it is duly
qualified, licensed or domesticated and in good standing as a foreign
corporation and authorized to do business in the states where it now does
business hereto, which are the only jurisdictions where the nature of the
activities conducted by it or the character of the properties owned, leased or
operated by it require such qualification, licensing or domestication.
(b) Subsidiaries. No Target has any subsidiaries, either wholly or
partially owned. No Target has any interest, direct or indirect, and has no
commitment to purchase any interest, direct or indirect, in any other
corporation or in any partnership, joint venture or other business enterprise or
entity.
4.2 Authority. Each Target has the right, power, legal capacity, and
authority to execute, deliver, and perform its obligations under this Agreement
and the Closing Documents, and no approval or consent of, or notice to, any
Person is necessary. Each Target's execution, delivery, and performance of this
Agreement and the Closing Documents have been duly authorized by all necessary
action and will not violate any provision of its articles of incorporation or
bylaws. This Agreement is, and the other documents to be delivered by Target
pursuant hereto (when executed and delivered) will be, valid and binding
obligations of Target, enforceable against it in accordance with their terms.
4.3 Capitalization and Ownership. The aggregate number of shares of
capital stock which SAM AND SON, INC. is authorized to issue is seventy-five
hundred (7,500) shares of common stock with ten cents ($0.10) par value per
share, of which five hundred (500) shares are issued and outstanding. The
aggregate number of shares of capital stock which BAGEL MAN, INCORPORATED is
authorized to issue is ten thousand (10,000) shares of common stock with ten
cents ($0.10) par value per share, of which one thousand (1,000) shares are
issued and outstanding. The aggregate number of shares of capital stock which
ST. PETE BAGEL CO., INC. is authorized to issue is ten thousand (10,000) shares
of common stock with one dollar ($1.00) par value per share, of which five
hundred (500) shares are issued and outstanding. The presently authorized,
issued and outstanding shares of capital stock of each Company and the names and
addresses of the record and beneficial owners thereof are as set forth in
Schedule 4.3A (SAM AND SON, INC.) and Schedule 4.3B (BAGEL MAN, INCORPORATED)
and Schedule 4.3C (ST. PETE BAGEL CO., INC.).
<PAGE>
Except as set forth on such Schedules, there are no shares of any Target's
capital stock authorized, issued or outstanding, nor are there any outstanding
subscriptions, options, warrants, calls, contracts, demands, commitments,
convertible securities or other agreements or arrangements of any character or
nature whatever under which any Target or the Target Shareholders are or may
become obligated to issue, assign or transfer any shares of the capital stock of
the Company. Except as set forth on Schedules 4.3A and 4.3B, each of the
shareholders listed therein is the lawful record and beneficial owner of the
number of shares of the Target's capital stock set opposite his or her name on
such Schedule, free and clear of any liens, claims, encumbrances or restrictions
of any kind, and all of such shares are validly issued and outstanding, fully
paid and nonassessable.
4.4 Capacity of Target Shareholders. No Target Shareholder is subject
to any restraint or limitation upon the merger of any Target and no consents
from any person are required for the Merger. Each Target Shareholder has full
power, authority and legal capacity to enter into this Agreement and to perform
the obligations hereunder and to carry out the transactions contemplated hereby.
4.5 Authorization. The execution and delivery of this Agreement by the
Targets and the Target Shareholders and the consummation of the transactions
contemplated herein do not violate any order, writ, injunction or decree of any
court, administrative agency or governmental body, and constitute a valid and
binding obligation of Targets and the Target Shareholders.
4.6 Agreement Not Breaching Other Instruments. Neither the execution
and delivery nor performance of this Agreement or any of the documents called
for herein by Targets will, with or without the giving of notice or the passage
of time, or both, conflict with, result in a default, right to accelerate or
loss of rights under, or result in the creation of any lien, charge or
encumbrance pursuant to, any provision of a Target's certificate of
incorporation or by-laws or any franchise, mortgage, deed of trust, lease,
license, agreement, understanding, law, rule or regulation or any order,
judgment or decree to which any Target or any Target Shareholder is a party or
by which any of them may be bound or affected.
4.7 Litigation. Except as set forth in Schedule 4.7 attached hereto,
there is no claim, legal action, suit, arbitration, governmental investigation
or other legal or administrative proceeding, nor any order, decree or judgment
in progress, pending or in effect, or to the knowledge of any Target threatened,
against or relating to a Target, its officers, directors or employees, its
properties, assets or business or the transactions contemplated by
<PAGE>
this Agreement.
4.8 Financial Statements. Each Target has delivered to Parent the
unaudited interim financial statements of such Target dated August 31, 1997, and
each Target, other than St. Pete Bagel Co., Inc., has delivered its unaudited
annual financial statements dated December 31, 1995 and December 31, 1996,
(collectively the "Financial Statements") which Financial Statements are
attached hereto as Schedule 4.8. All of the Financial Statements, including any
notes thereto, are complete and correct and have been internally prepared from
the books and records of the Targets without audit and fairly present the
financial condition of each Target as of the dates indicated and the results of
operations covered thereby. The Financial Statements do not contain any items of
extraordinary or nonrecurring income or expense or any other income or expense
not earned or incurred in the ordinary course of business except as expressly
specified therein, and the interim Financial Statements include all adjustments,
which consist only of normal recurring accruals, necessary for such fair
presentation.
4.9 Real Property Owned and Leased. No Target owns, leases, nor claims
any interest in and to any real property except the interests in the premises
described in Schedule 4.9.
4.10 Title to Properties. Each Target has good, marketable and
insurable title to, or a leasehold interest in, all the properties and assets it
owns or uses in its business or purports to own, including, without limitation,
those reflected in its books and records and in the Balance Sheet. None of such
properties and assets are subject to any mortgage, pledge, lien, charge,
security interest, encumbrance, restriction, lease, license, easement, liability
or adverse claim of any nature whatsoever, direct or indirect, whether accrued,
absolute, contingent or otherwise, except as set forth in Schedule 4.10 attached
hereto.
4.11 Condition of Property. All the properties and assets owned,
leased or used by a Target will at Closing be in good operating condition and
repair, ordinary wear and tear excepted, and will be suitable for the purposes
intended.
4.12 Absence of Undisclosed Liabilities. Except as reflected or
reserved against on the Balance Sheet, no Target has any debts, liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of any nature
whatsoever as of the Balance Sheet Date which exceeds five hundred dollars
($500.00), including, without limitation, any foreign or domestic tax
liabilities or deferred tax liabilities incurred in respect of or measured by
the Target's income, for its period prior to the close of business on the
Balance Sheet Date or any other debts, liabilities or
<PAGE>
obligations exceeding five hundred dollars ($500.00) relating to or arising out
of any act, transaction, circumstance or state of facts which occurred or
existed on or before the Balance Sheet Date. None of the Target's employees is
now, or will by the passage of time hereafter become, entitled to receive any
vacation time, vacation pay or severance pay attributable to services rendered
prior to the Balance Sheet Date except as disclosed on the face of the Balance
Sheet or except as accrued in accordance with such Company's established customs
and practices uniformly applied. Except as set forth in Schedule 4.12, no Target
has any knowledge of any basis for any assertion against any such Target of any
material debt, liability or obligation of any nature incurred before the Balance
Sheet Date or in any amount not fully reflected on or reserved against in the
Balance Sheet.
4.13 Description of Properties, Contracts and Personnel Data. Attached
hereto as Schedules 4.13A (SAM AND SON, INC.) and 4.13B (BAGEL MAN,
INCORPORATED) and 4.13C (ST. PETE BAGEL CO., INC.) are schedules containing
accurate and complete descriptions of:
(a) All real property in which such Target has a leasehold or other
interest or which is used by the Target in connection with the operation of its
business.
(b) As of a date no earlier than August 31, 1997, all of each Target's
receivables (which shall include accounts receivable, loans receivable and any
advances), together with detailed information as to each such listed receivable
which has been outstanding for more than forty-five (45) days.
(c) All equipment, motor vehicles, and other tangible personal
property owned, leased for items having a value of or used by each Target,
setting forth with respect to all such listed property a summary description of
all leases, liens, encumbrances, restrictions and conditions relating thereto.
(d) All patent licenses, trademarks, trademark registrations, and
applications therefor, service marks, names, copyrights and copyright
applications therefor, service marks, service names, trade names, copyrights and
copyright registrations, and applications therefor, wholly or partially owned or
held by each Target or used in the operation of such Target's business.
(e) All fire, theft, casualty, liability, including fidelity and
errors and omission coverage, and other insurance policies insuring each Target,
specifying with respect to each such policy the name of the insurer, the risk
insured against, the limits of coverage, the deductible amount (if any), the
premium rate and the date through which coverage will continue by virtue of
premiums
<PAGE>
already paid.
(f) Each Target's standard forms of sales, agency, service
administration and other agreements providing for the services of an independent
contractor to which such Target is a party or by which it bound, and the names
and territories of independent contractors, including without limitation any
agents selling or facilitating the sale or distribution of memberships in the
self-insurance funds administered by the Targets.
(g) All contracts, agreements, commitments or the respective licenses
relating to trademarks, trade names, know how, formulae or copyrights,
inventions, processes, knowhow, formulae or trade secrets to which a Target is a
party or by which it is bound.
(h) All loan agreements, indentures, mortgages, pledges, conditional
sale or title retention agreements, security agreements, equipment obligations,
guaranties, leases or lease purchase agreements to which a Target is a party or
by which it is bound.
(i) All contracts, agreements and commitments, whether or not fully
performed, in respect of the issuance, sale or transfer of the capital stock,
bonds or other securities of a Target or pursuant to which a Target has acquired
any substantial portion of its business or assets.
(j) All contracts, agreements, commitments or other understandings or
arrangements outside of the ordinary course of business to which a Target is a
party or by which it or any of its property is bound or affected.
(k) All collective bargaining agreements, employment and consulting
agreements, executive compensation plans, bonus plans, deferred compensation
agreements, employee pension plans or retirement plans, employee stock options
or stock purchase plans and group life, health and accident insurance and other
employee benefit plans, agreements, arrangements or commitments, including,
without limitation, holiday, vacation and other bonus practices, to which a
Target is a party or is bound or which relate to the operation of the Target's
business, together with all Target policy manuals, employee handbooks or
employee manuals.
(l) The names and current annual salary rates of all persons
(including independent commission agents) whose annual compensation (direct or
indirect) from a Target is currently at the rate of more than $15,000 per annum
and showing separately for each such person the amounts paid or payable as
salary, bonus payments and any indirect compensation for the year ended
December, 1996; and
<PAGE>
(m) The names of each of the Target's directors and officers; the name
of each bank in which the Target has an account, together with account numbers
or in which a Target has a safe deposit box and the names of all persons
authorized to draw thereon or have access thereto; and the names of all persons,
if any, holding tax or other powers of attorney from a Target and a summary of
the terms thereof.
All such contracts, agreements, leases, licenses and commitments are valid and
binding, and, except as otherwise specified in Schedules 4.13A (SAM AND SON,
INC.) and 4.13B (BAGEL MAN, INCORPORATED) and 4.13(C) (ST. PETE BAGEL CO.,
INC.), will be unaffected by the merger hereunder of Targets into Subsidiary
hereunder so that, after such sale, The Surviving Corporation will be entitled
to the full benefits thereof. Except as disclosed in Schedules 4.13A, 4.13B and
4.13C, none of the payments required to be made under any such contract,
agreement, lease, license or commitment has been prepaid more than thirty (30)
days prior to the due date of such payment thereunder, and there is not
thereunder any existing default, or event which, after notice or lapse of time,
or both, would constitute a default or result in a right to accelerate or loss
of rights and none of such contracts, agreements, leases, licenses or
commitments is, either when considered singly or in the aggregate with others,
unduly burdensome, onerous or materially adverse to a Target's business,
properties, assets, earnings or prospects or likely, either before or after the
Closing, to result in any material loss or liability. None of the Target's
existing or completed contracts is subject to renegotiation with any
governmental body. True and complete copies of all such contracts, agreements,
leases, licenses and other documents listed on Schedules 4.13A, 4.13B and 4.13C
(together with any and all amendments thereto) are available to Parent's agents
for review in order that Purchaser may satisfy itself as to the nature and
enforceability of such commitments.
4.14 Disposition or Distribution of Assets. Except as set forth on
Schedule 4.14, there has not been since the inception of any Targets' business
any sale or other disposition or distribution of any property, contract rights
or other assets of a Target except in the ordinary course of business.
4.15 Accounts Receivable. All receivables of each Target (including
accounts receivable, loans receivable and advances) which are reflected in the
Balance Sheet, and all such receivables which will have arisen since the date
thereof, (which shall have arisen only from bona fide transactions in the
ordinary course of a Target's business) are collectible and valid receivables,
none of such receivables is subject to offset, deductions or counterclaim.
<PAGE>
4.16 Taxes. (a) As of the Closing Date, all taxes, including, without
limitation, income, property, sales, use, franchise, added value, employees'
income withholding and social security taxes, imposed by the United States or by
any state, municipality, subdivision or instrumentality of the United States,
state or other government unit or any other taxing authority, which are due or
payable by any Target prior to the Effective Date, and all interest and
penalties thereon, whether disputed or not, have been or will by the Closing
Date be paid to the full extent such interest, penalties and taxes are then
owing (and not merely accrued); all tax returns required to be filed in
connection with taxes imposed by the United States or, by any other taxing
authority, have been accurately prepared and duly and timely filed; and all
deposits required by law to be made by each Target with respect to employees'
withholding taxes have been duly made. No Target has been delinquent in the
payment of any foreign or domestic tax, assessment or governmental charge or
deposit and no Target has any tax deficiency or claim outstanding, proposed or
assessed against it, and there is no basis for any such deficiency or claim. No
Target's federal and state income tax returns have been audited for any fiscal
year. No Target has received any notice of assessment or proposed assessment in
connection with any tax returns previously filed by any such Target, and there
are no pending tax examinations of, or tax claims asserted against, any Target
or any of their respective assets. No Target has extended, or waived the
application of, any statute of limitations of any jurisdiction regarding the
assessment or collection of any taxes. There are no tax liens (other than any
liens for current taxes not yet due and payable) on any of the assets of any
Target. No Target has any knowledge of any basis for any additional assessment
of any federal, state or local taxes. Each Target has made all deposits required
by law to be made with respect to employees' withholding and other employment
taxes, including the portion of such deposits relating to taxes imposed upon
such Target.
(b) Each Target, except St. Pete Bagel Co., Inc., has delivered to
Purchaser correct and complete copies of all federal income tax returns filed,
examination reports received, and statements of deficiencies assessed against or
agreed to by each such Target or affecting each such Target related to tax years
1995 through 1996_.
(c) No Target has filed any consent under Section 341(f) of the Code,
concerning collapsible corporations. No Target has made any payments and is not
obligated to make any payments that would not be deductible under Section 280G
of the Code. Each Target has disclosed on its federal income tax returns all
positions taken therein that could give rise to a substantial understatement of
federal income tax within the meaning of Section 6661 of the Code.
<PAGE>
(d) No Target has any net operating loss carryovers, net capital loss
carryovers, unused investment or other credit, unused foreign tax, or excess
charitable contributions, except as set forth in the federal income tax returns
delivered to Parent.
(e) No Target has received any written notice from any governmental
agency or entity of any increase or proposed increase in the assessed valuation
of or tax rates applicable to any of its property from the assessed values or
tax rates in effect as of the Balance Sheet Date.
(f) No deferred taxes are recorded on any Target's books.
4.17 Disclosure. No representation or warranty by Targets or Target
Shareholders contained in this Agreement nor any statement or certificate
furnished or to be furnished by any Target or any Target Shareholder to Parent
or its representatives in connection herewith or pursuant hereto contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact required to make the statements herein or therein
contained not misleading or necessary in order to provide a prospective
purchaser of the Target Stock Certificates with adequate information as to the
Targets and their respective condition (financial and otherwise), properties,
assets, liabilities, business and prospects, and Targets and Target Shareholders
have disclosed to Parent all material adverse facts known to them relating to
the same.
4.18 Absence of Default or Renegotiation Under Contracts. As of the
date of this Agreement and on the Closing Date, no Target shall be in default in
the fulfillment of any of its obligations under any note, loan agreement,
indentured mortgage, deed of trust, lease, purchase, sale or other agreement or
contract.
4.19 Rights Valid; No Infringement. Each Target has the full right to
produce, sell and distribute all products produced, sold or distributed by it
without incurring any liability for license fees, royalties or other
compensation or for any claims of infringement of patent or trademark rights.
4.20 Absence of Claims.
(a) Product Liability and Negligence Claims. There are no claims,
complaints or actions pending or threatened against any Target for injury to
person or property resulting from the manufacture, distribution, or sale of
defective or unsafe products by a Target; nor arising out of any alleged
negligence of a Target;
<PAGE>
nor do Targets have knowledge of any facts which would provide the basis for any
such claim, complaint or action.
(b) Worker's Compensation Claims. There are no Worker's Compensation
claims or actions pending or, to Targets' knowledge, threatened against any
Target;
(c) Environmental Claims. There are no actions, claims, proceedings or
investigations, pending or, to Targets' knowledge, threatened against any Target
for either existing or alleged violation of any laws, regulations, rules or
orders concerning environmental protection or the handling or storage of
hazardous materials.
4.21 Compliance with Laws and Instruments. Except as set forth in
Schedule 4.21 attached hereto, each Target has complied with all existing laws,
rules, regulations, ordinances, orders, judgments and decrees now or hereafter
applicable to its respective business, properties or operations as presently
conducted. Neither the ownership nor use of a Target's properties nor the
conduct of its business conflicts with the rights of any other person, firm or
corporation or violates, or with or without the giving of notice or the passage
of time, or both, will violate, conflict with or result in a default, right to
accelerate or loss of rights under, any terms or provisions of its certificate
of incorporation or by-laws as presently in effect, or any lien, encumbrance,
mortgage, deed of trust, lease, license, agreement, understanding, law,
ordinance, rule or regulation, or any order, judgment or decree to which a
Target is a party or by which it may be bound or affected. No Target has any
knowledge of any proposed laws, rules, regulations, ordinances, orders,
judgments, decrees, governmental takings, condemnations or other proceedings
which would be applicable to a Target's business, operations or properties and
which might adversely affect a Target's properties, assets, liabilities,
operations or prospects, either before or after the Closing.
4.22 Broker's or Finder's Fee. No agent, broker, person or firm acting
on behalf of a Target or Target Shareholders or under the authority of any
Target or Target Shareholders will be entitled to any commission or fee from any
of the parties hereto in connection with the transactions contemplated herein.
4.23 Employee Benefit Plans. (a) Schedule 4.23 is a complete and
accurate list of each Target's Benefit Plans. Each Target has delivered to
Purchaser a complete and correct copy of each of the Benefit Plans and all
related trust agreements, insurance or annuity contracts, valuations, and other
funding agreements for each Benefit Plan.
<PAGE>
(b) All of each Target's ERISA Plans are listed in Part I of Schedule
4.23. All of each Target's Benefit Plans that are not ERISA Plans, if any, are
listed in Part II of Schedule 4.23. No entity in which the same five or fewer
shareholders own at least 80% of the Target Stock Certificates and at least 80%
of such entity sponsors or participates in a defined benefit pension plan.
Schedule 4.23 includes a listing of all expected annual contributions to the
Qualified Plans and ERISA Plans. No Target currently maintains and has not
maintained in the past any defined benefit pension plan, and is not and has not
been a party to any agreement requiring it to contribute to a multi-employer
plan within the meaning of Section 3(37) of ERISA. There are no unfunded vested
benefits under any Qualified Plan that is subject to the vesting and funding
standards of ERISA and no unfunded liabilities under any ERISA Plan for all
benefits accrued through the date of the last actuarial valuation of such ERISA
Plan (calculated on the basis of the ERISA Plan's normal funding assumptions on
such valuation). Each Target has operated in good faith compliance with a
reasonable interpretation of the continuation coverage requirements of COBRA.
Other than claims for benefits in the ordinary course, there are no pending
claims involving the ERISA Plans or Qualified Plans by any participant covered
under the ERISA Plans or Qualified Plans or otherwise involving the ERISA Plans
or Qualified Plans that allege a breach of fiduciary duties or violation of the
applicable state or federal law that may result in material liability on the
part of any Target or any Qualified Plan or ERISA Plan under ERISA or any other
law, nor to the knowledge of any Target is there any reasonable basis for such a
claim.
(c) To the knowledge of each Target, none of the ERISA Plans or
Qualified Plans or any of their related trusts, nor any Target or any trustee,
administrator, or other "party in interest" or "disqualified person" (within the
meaning of Section 3(14) of ERISA or Section 4975(e)(2) of the Code,
respectively) with respect to the ERISA Plans or Qualified Plans, has engaged in
any "prohibited transaction" (within the meaning of Section 406 of ERISA or
Section 4975(c) of the Code), which could subject any of the ERISA Plans or
Qualified Plans or related trusts, or any trustee, administrator, or other
fiduciary of any ERISA Plan or Qualified Plan, or Subsidiary or any other party
dealing with the ERISA Plans or Qualified Plans, to the penalties or excise tax
imposed on prohibited transactions by Section 502(i) of ERISA or Section 4975 of
the Code.
(d) All of each Target's Qualified Plans are listed in Part I.A. of
Schedule 4.23. In the reasonable belief of each Target, each of the Qualified
Plans meets the requirements of Section 401(a) of the Code, and the trust, if
any, forming a part of each Qualified Plan is exempt from federal income tax
under Section
<PAGE>
501(a) of the Code. A favorable determination letter has been issued by the
Internal Revenue Service within the past ten years as to the qualification under
Section 401(a) of the Code (including amendments made by ERISA), with respect to
each Qualified Plan, and each Target has delivered to Parent true and correct
copies of all such determination letters. None of the determination letters has
been revoked or modified by the Internal Revenue Service.
(e) All contributions required by law or required in accordance with
the terms of the Qualified Plans with respect to the current plan year and plan
years ended prior to the Closing Date have been made.
(f) Except pursuant to the Benefit Plans listed on Schedule 4.23 and
under COBRA, no Target has any present or future liability to former employees
or to their dependents, survivors, or beneficiaries in connection with or
arising out of any plan, compensation arrangement, or practice that any Target
maintained or adopted or to which any Target contributed prior to the date
hereof, and any Target has maintained, adopted, or contributed to any plan that
provides benefits or payments to former employees or their dependents,
survivors, or beneficiaries, except pursuant to the Benefit Plans listed on
Schedule 4.23 and under COBRA.
(g) Each Target has satisfied in all material respects all reporting
and disclosure requirements applicable under ERISA, and the Department of Labor
and Internal Revenue Service and Pension Benefit Guaranty Corporation
regulations promulgated thereunder, with respect to all ERISA Plans and
Qualified Plans, and each Target has delivered to Parent true and complete
copies of the most recently filed and disclosed Forms 5500, Forms 5500-C/R (with
exhibits), and summary plan descriptions and summaries of material modifications
for the ERISA Plans and Qualified Plans.
(h) No Qualified Plan has had any "unrelated business taxable income,"
as defined in Sections 512 through 514 of the Code. There have been no claims,
or notice of claims, filed under any fiduciary liability insurance policy
covering any Benefit Plan.
4.24 Insurance. Each Target has all of its assets and properties,
including, but not limited to, machinery, equipment and buildings, insured to
the extent reasonably required in light of such Target's assets and properties
against loss or damage and all other hazards or risks of the character
customarily insured against. All insurance policies as set forth in Schedules
4.13A, 4.13B and 4.13C attached hereto are in good standing and duly in force,
and have not previously lapsed or been terminated for non-payment of premium or
otherwise. To each Target's knowledge, no facts exist which would invalidate the
coverage provided in any of the insurance
<PAGE>
policies set forth in such Schedule for the periods of the policies covered
thereby or with respect to the coverages provided therein.
4.25 Records. The books of account, minute books, stock certificate
books and stock transfer ledgers of each Target are complete and correct in all
material respects, and, there have been no transactions involving the business
of such Target which properly should have been set forth therein and which have
not been accurately so set forth.
4.26 No Guaranties. Except as set forth on Schedule 4.26, none of the
obligations or liabilities of a Target is guaranteed by any other person, firm
or corporation, nor is a Target guaranteeing the obligations or liabilities of
any other person, firm or corporation.
4.27 Tradenames, Etc. Each Target owns or possesses outright or, the
royalty-free exclusive and perpetual licenses, or other rights, to use all
copyrights, trademarks, service marks, service names, trade names, patents,
trade secrets and other proprietary rights necessary to conduct its business as
it is presently operated. Each Target is not infringing upon or otherwise acting
adversely to any copyrights, trademarks, trademark rights, service marks,
service names, trade names, patents, patent rights, licenses, person, firm or
trade secrets or other proprietary rights owned by any other person or persons,
and there is no claim or action by any person threatened, or pending, with
respect thereto.
4.28 Transactions with Certain Persons. Except as set forth on
Schedule 4.28, or in the Financial Statements, from its inception no Target has
directly or indirectly, purchased, leased or otherwise received from, acquired
any property or obtained any services from, or sold, leased to others or
otherwise disposed of any property or furnished any services to, or otherwise
dealt with (except with respect to remuneration for services rendered as a
director, officer or employee of a Target), in the ordinary course of business
or otherwise: (i) Target Shareholders, (ii) any person, firm or corporation
which, directly or indirectly, alone or together with others, controls, is
controlled by or is under common control with a Target or Target Shareholders,
or (iii) any relative, family member of a Seller or any firm or corporation
controlled by any such individual. Except as stated in Schedule 4.28, no Target
owes any amount to, or have any contract with or commitment to, any of its
shareholders, directors, officers, employees or consultants or any person, firm
or corporation which is controlled by or under control of any such person or
persons (other than compensation for current services not yet due and payable
and reimbursement of expenses arising in the ordinary course of business), and
none of such persons owes any amount to a Target.
<PAGE>
4.29 Absence of Changes or Events. Except as set forth in Schedule
4.29 attached hereto, since the Balance Sheet Date, each Target has conducted
its business only in the ordinary course and has not:
(a) Incurred any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in the ordinary course of
business and consistent with its prior practice, none of which liabilities, in
any case or in the aggregate, adversely affects the business, liabilities or
financial condition of the Target;
(b) Discharged or satisfied any lien, charge or encumbrance other than
those then required to be discharged or satisfied, or paid any obligation or
liability, absolute, accrued, contingent or otherwise, due, or to become due,
other than current liabilities shown on the Balance Sheet and current
liabilities incurred since the Balance Sheet Date in the ordinary course of
business and consistent with its prior and current practice;
(c) Declared or made any payment of dividends or other distribution to
its shareholders or upon or in respect of any shares of its capital stock, or
purchased, retired or redeemed, or obligated itself to purchase, retire or
redeem, any of its shares of capital stock or other securities;
(d) Mortgaged, pledged or subjected to lien, charge, security interest
or any other encumbrance or restriction any of its property, business or assets,
tangible or intangible;
(e) Sold, transferred, leased to others or otherwise disposed of any
of its assets, or canceled or compromised any debt or claim, or waived or
released any right of substantial value;
(f) Received any notice of termination of any contract, lease or other
agreement or suffered any damage, destruction or loss (whether or not covered by
insurance) which, in any case or in the aggregate, has had an adverse affect on
the assets, operations or prospects of the Target;
(g) Encountered any labor union organizing activity, had any actual or
threatened employee strikes, work stoppages, slow-downs or lock-outs, or had any
material change in its relations with its employees, agents, customers or
suppliers;
(h) Transferred or granted any rights under, or entered into any
settlement regarding the breach or infringement of, any United States or foreign
license, patent, copyright, trademark,
<PAGE>
trade name, invention or similar rights, or modified any existing rights with
respect thereto;
(i) Made any material change in the rate of or other direct or
compensation, commission, bonus or other direct or indirect remuneration
payable, or paid or agreed or orally promised to pay, conditionally or
otherwise, any bonus, extra compensation, pension or severance or vacation pay,
to any shareholder, director, officer or employee, salesman, distributor or
agent of the Target;
(j) Issued or sold any shares of its capital stock or other
securities, or issued, granted or sold any options, rights or warrants with
respect thereto, or acquired any capital stock or other securities of any
corporation or any interest in any business enterprise, or otherwise made any
loan or advance to or investment in any person, firm or corporation;
(k) Made any capital expenditures or capital additions or betterments
in excess of $10,000;
(1) Changed its banking or safe deposit arrangements;
(m) Instituted, settled or agreed to settle any litigation, action or
proceeding before any court or governmental body relating to the Target or its
property;
(n) Suffered any change, event or condition which, in any case or in
the aggregate, has had or may have a materially adverse affect on the Target's
condition (financial or otherwise), properties, assets, liabilities, operations
or prospects, including, without limitation, any change in the Target's
revenues, costs, backlog or relations with its employees, agents, customers or
suppliers;
(o) Entered into any transaction, contract or commitment other than in
the ordinary course of business or paid or agreed to pay any legal, accounting,
brokerage, finder's fee, taxes or other finder's fee, taxes or other expenses in
connection with, or incurred any severance pay obligations by reason of, this
Agreement or the transactions contemplated hereby; or
(p) Entered into any agreement or made any commitment to take any of
the types of action described in subparagraphs (a) through (o) above.
4.30 Options, Warrants, Rights, Etc. Except as described in Schedule
4.30, there are no outstanding options, warrants, rights, calls or commitments
of any character whatsoever relating to the acquisition of or restriction on the
transfer of any shares of
<PAGE>
stock of any Target.
4.31 Banks. Schedule 4.31 contains a true and complete list of all
bank and other financial institutions with which a Target has a line of credit,
checking account, savings account, certificate of deposit or safe deposit box,
the account number of each account and the names of person authorized to draw
thereon or to have access thereto.
4.32 Business in the Ordinary Course After Closing. To the best
knowledge of each Target, from and after the Closing Date, the contractual
rights of each Target with its clients and other beneficial relationships
between each Target and its respective vendors, independent contractors and
employees, will continue uninterrupted and to the best knowledge of the Targets,
the level of business and revenues to be derived from the client and other
business relationships of each Target as of the date of this Agreement and the
Closing Date will remain intact or improve, provided that the surviving
corporation conducts the business of the Targets in substantially the same
manner after the Closing Date.
4.33 Permits, Licenses and Applications. Each Target possesses all
licenses, permits, and other approvals necessary for it to conduct its
respective business in all material respects as presently conducted. Schedule
4.33 contains a list of all licenses, certificates, permits, approvals, and
other authorizations held with respect to the business of each Target, true and
complete copies of which have been provided to Parent. All of those licenses,
permits, and approvals are in full force and effect, and no suspension or
revocation of any of them is threatened. None of those licenses, permits, or
approvals will be adversely affected by the transactions contemplated hereby. No
Target is in breach or violation of any terms or conditions applicable to any
such licenses, permits, or approvals. No proceeding (judicial, administrative,
or otherwise) has been commenced or, to any Target's knowledge, threatened with
respect to such licenses, permits, or approvals, nor does any state of facts
exist of which any Target is aware that could lead to a revocation, suspension,
termination, or limitation of any rights under any such licenses, permits, or
approvals. All applications and reports required to be filed by each Target with
governmental authorities have been duly filed by each such Target, and all such
applications and reports are correct and complete in all material respects and
have been prepared and filed in accordance with all applicable requirements of
federal, state, and local laws, regulations, and ordinances. True and complete
copies of all such applications and reports have been delivered to Parent.
4.34 No Violation. Each Target has complied in all material respects
with all, and is not in violation in any material
<PAGE>
respect of any, federal, state, and local laws and regulations affecting any
Target or its respective assets. No Target has received any notice of any
violation or alleged violation, and is not, to its knowledge, under any
investigation with respect to a possible violation, of any federal, state, and
local laws and regulations. Each Target has filed in a timely manner all
reports, documents, and other materials that it was required to file under any
federal, state, and local laws and regulations, except where the failure to make
such filing would not materially adversely affect the business of such Target,
and the information contained therein was correct and complete in all material
respects. Each Target possesses all records and documents that it is required to
retain under any federal, state and local laws and regulations, except where the
failure to possess such records and documents would not materially adversely
affect the business of such Target. Without limiting the generality of the
foregoing, each Target has complied in all material respects with all applicable
securities laws, antitrust laws, tax laws, workers' compensation laws,
occupational health and safety laws, and laws relating to the employment of
labor, employee civil rights, and equal employment opportunities.
4.35 Franchise Operations. The franchise operations for the franchised
St. Pete Bagel Co., Inc., (the "Franchisor") stores have been conducted
exclusively through Franchisor. Except as set forth on Schedule 4.35 hereto, to
the best of Franchisor's knowledge, at all times since Franchisor has been
offering for sale franchises for the operation of bagel store facilities,
Franchisor has been, and currently is in compliance with all material laws,
rules and regulations applicable to the offer for sale or sale of franchises in
all jurisdictions in which Franchisor has offered for sale or sold, or is
offering for sale or proposes to offer or to sell franchises. Except as set
forth on Schedule 4.35 hereto, to the best of Franchisor's knowledge, no
franchisee has a cause of action against Franchisor under applicable federal or
state laws, rules and regulations governing the offer and sale of franchises
arising out of the offer and sale of the franchise(s) purchased by such
franchisee; and Franchisor has not been charged with any violation of any state
or other applicable law or administrative regulation in respect of the offer for
sale or sale of such franchises.
Section 5. Representations and Warranties of Parent and Subsidiary. As an
inducement to Targets and Target Shareholders to execute this Agreement and to
enter into the transactions contemplated to take place hereunder, Parent and
Subsidiary hereby represent and warrant to Target that:
5.1 Organization of Parent. Parent is a corporation organized and
existing under the laws of New Jersey, with the
<PAGE>
corporate power to own and operate its assets and to carry on its business as
presently conducted. Parent is not in default under or in violation of any
provision of its articles of incorporation or bylaws.
5.2 Organization of Subsidiary. Subsidiary is a corporation organized
and existing under the laws of Florida, with the corporate power to own and
operate its assets and to carry on its business as presently conducted.
Subsidiary is not in default under or in violation of any provision of its
articles of incorporation or bylaws.
5.3 Authority. Parent and Subsidiary each has the right, power, legal
capacity, and authority to execute, deliver, and perform its obligations under
this Agreement and the Closing Documents, and no approval or consent of, or
notice to, any Person is necessary. The execution, delivery, and performance of
this Agreement and the Closing Documents by Parent and Subsidiary have been duly
authorized by all necessary action and will not violate any provision of
Parent's of Subsidiary's articles of incorporation or bylaws. This Agreement is,
and the other documents to be delivered by Parent and Subsidiary pursuant hereto
(when executed and delivered) will be, valid and binding obligations of Parent
and Subsidiary, enforceable against them in accordance with their terms.
5.4 Ownership of Subsidiary. Parent owns all the issued and
outstanding capital stock of Subsidiary. Subsidiary as formed solely for the
purposes of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
5.5 Commissions. Neither Parent nor Subsidiary has authorized any
Person to act in such a manner as to give rise to any valid claim against Target
for a brokerage commission, finder's fee, or similar payment as a result of the
transactions contemplated by this Agreement.
5.6 SEC Reports and Financial Statements. Each of Parent and its
Subsidiaries has filed with the SEC, and has heretofore made available to Target
Shareholders true and complete copies of all forms, reports, schedules,
statements and other documents required to be filed by it since January 1, 1997,
under the Exchange Act or the Securities Act (as such documents have been
amended since the time of their filing, collectively, the "Parent SEC
Documents"). The Parent SEC Documents, including without limitation any
financial statements and schedules included therein, at the time filed, (a) did
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances
<PAGE>
under which they were made, not misleading and (b) complied in all material
respects with the applicable requirements of the Exchange Act and the Securities
Act, as the case may be, and the applicable rules and regulations of the SEC
thereunder. The financial statements of Parent included in the SEC Documents
comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC), and fairly present
(subject, in the case of the unaudited statements, to normal, recurring audit
adjustments) the consolidated financial position of Parent and its consolidated
Subsidiaries as at the dates thereof and the consolidated results of their
operations and cash flows (or changes in financial position prior to the
adoption of FASB 95) for the periods then ended.
5.7 Absence of Certain Changes. Except as disclosed in the Parent SEC
Documents, since April 30, 1997, there have been no events, changes or effects
having, individually or in the aggregate, a material adverse effect on Parent
and its Subsidiaries taken as a whole.
5.8 No Undisclosed Liabilities. Except as and to the extent set forth
in the Parent's Annual Report on Form 10-K for the year ended October 31, 1997,
neither Parent nor any of its Subsidiaries had any liabilities or obligations of
any nature, whether or not accrued, contingent or otherwise, that would be
required by generally accepted accounting principles to be reflected on a
consolidated balance sheet of Parent and its Subsidiaries (including the notes
thereto). Since neither Parent nor any of its Subsidiaries has incurred any
liabilities of any nature, whether or not accrued, contingent or otherwise,
which would have, individually or in the aggregate, a material adverse effect on
Parent and its Subsidiaries taken as a whole.
5.9 Litigation. There is no suit, claim, action, proceeding or
investigation pending or, to the best knowledge of Parent, threatened against
Parent or any of its Subsidiaries before any Governmental Entity which,
individually or in the aggregate is reasonably likely to have a material adverse
effect on Parent and its Subsidiaries taken as a hole or would prevent Parent
from consummating the transactions contemplated by this Agreement. Neither
Parent nor any of its Subsidiaries is subject to any outstanding order, writ,
injunction or decree, which, insofar as can be reasonably foreseen, individually
or in the aggregate, in the future would have a material adverse effect on
Parent and its Subsidiaries taken as a hole or would prevent Parent from
<PAGE>
consummating the transactions contemplated hereby.
5.10 Permits, Licenses and Applications. Parent and its Subsidiaries
possesses all licenses, permits, and other approvals necessary for it to conduct
its respective business in all material respects as presently conducted. All of
those licenses, permits, and approvals are in full force and effect, and no
suspension or revocation of any of them is threatened. None of those licenses,
permits, or approvals will be adversely affected by the transactions
contemplated hereby. Parent and its Subsidiaries are not in breach or violation
of any terms or conditions applicable to any such licenses, permits, or
approvals. No proceeding (judicial, administrative, or otherwise) has been
commenced or, to either Parent's and its Subsidiaries' knowledge, threatened
with respect to such licenses, permits, or approvals, nor does any state of
facts exist of which either Parent or its Subsidiaries is aware that could lead
to a revocation, suspension, termination, or limitation of any rights under any
such licenses, permits, or approvals. All applications and reports required to
be filed by Parent and its Subsidiaries with governmental authorities have been
duly filed by Parent and each such Subsidiary, and all such applications and
reports are correct and complete in all material respects and have been prepared
and filed in accordance with all applicable requirements of federal, state, and
local laws, regulations, and ordinances. True and complete copies of all such
applications and reports have been delivered to Parent.
5.11 No Violation. Parent and its Subsidiaries have complied in all
material respects with all, and is not in violation in any material respect of
any, federal, state, and local laws and regulations affecting any Target or its
respective assets. Parent and none of its Subsidiaries have received any notice
of any violation or alleged violation, and is not, to its knowledge, under any
investigation with respect to a possible violation, of any federal, state, and
local laws and regulations. Parent and each of its Subsidiaries have filed in a
timely manner all reports, documents, and other materials that it was required
to file under any federal, state, and local laws and regulations, except where
the failure to make such filing would not materially adversely affect their
businesses, and the information contained therein was correct and complete in
all material respects. Parent and each Subsidiary possesses all records and
documents that it is required to retain under any federal, state and local laws
and regulations, except where the failure to possess such records and documents
would not materially adversely affect their businesses. Without limiting the
generality of the foregoing, Parent and each of its Subsidiaries have complied
in all material respects with all applicable securities laws, antitrust laws,
tax laws, workers' compensation
<PAGE>
laws, occupational health and safety laws, and laws relating to the employment
of labor, employee civil rights, and equal employment opportunities.
Section 6. Conditions to Obligations of Parent and Subsidiary.
6.1 Conditions Precedent. Parent and Subsidiary shall not be obligated
to consummate the transactions contemplated by this Agreement unless all of the
following conditions have been satisfied on or before the Closing Date:
(a) Representations and Covenants. The representations and
warranties of Targets and Target Shareholders contained in this Agreement shall
be true and correct when made and shall continue to be true and correct on the
Closing Date with the same full force and effect as if then made. Each Target
shall have performed all of its covenants and other obligations required by this
Agreement to be performed at or before the Closing. Each Target shall have
delivered to Parent and Subsidiary a certificate of the President or a Vice
President of Target, dated the Closing Date, confirming the satisfaction of this
condition.
(b) Due Diligence. The financial and business audits and
inspections of Target conducted by Parent and Subsidiary shall have revealed
that the financial condition, earnings, prospects, operations, Assets,
contracts, and Liabilities of or related to Targets are as represented in this
Agreement and that each Target's operations are and have been conducted in
accordance with normal and customary industry practices and standards.
(c) No Litigation. There shall be no Adverse Claim pending or
threatened by any governmental or regulatory agency or any other Person against
any Target in connection with the transactions contemplated by this Agreement or
that seeks to prevent, delay, condition, restrict, or change the transactions
contemplated by this Agreement or that Subsidiary, in good faith and with the
advice of counsel, believes could result in the payment of damages by Subsidiary
or the Surviving Corporation.
(d) Consents. At or prior to the Closing, each Target and
Subsidiary shall have obtained such consents, approvals, and assurances in
connection with the transactions contemplated by this Agreement as are necessary
or advisable in the opinion of Subsidiary, including approvals of applicable
regulatory bodies, each Target's lenders, landlords, and lessors, and other
parties to material contracts of any Target.
(e) Environmental Site Assessment. All environmental
<PAGE>
site assessments or inspection reports related to the Real Property delivered to
or obtained by Parent or Subsidiary shall indicate that there are no Hazardous
Substances that could adversely affect the Real Property or expose the Surviving
Corporation to any Third Party Claims or other Liabilities associated with
Hazardous Substances.
(f) Legal Matters. The transactions contemplated by this
Agreement shall be permitted by all Legal Requirements, including all applicable
securities laws.
(g) Closing Documents. At Closing, each Target shall have
executed and delivered to Parent and Subsidiary all documents required pursuant
to Section 3.3 of this Agreement.
(h) Employee Matters. There shall be no basis for an impartial,
non-union operator in Target's industry reasonably to believe that any union
organizing effort would succeed with any Target's employees who are to remain
employed by Surviving Corporation. No petition shall have been filed for any
National Labor Relations Board representation election, and no union shall have
demanded recognition as a representative of Target's employees. There shall be
no strike or work stoppage involving any of any Target's employees.
(i) No Exercise of Dissenters' Rights. None of the Target
Shareholders will have exercised, or given notice of intent to exercise, any
right to dissent to the Merger.
(j) Resignations. Subsidiary shall have received the written
resignations and written releases of claims in favor of each Target and the
Surviving Corporation of each director and officer of each Target as Subsidiary
requests on or before the Closing Date.
(k) No Adverse Change. The physical condition of the Assets,
reasonable wear and tear excepted, shall not have been, or shall not be
threatened to be, materially and adversely changed, deteriorated, or impaired,
whether as a result of fire, explosion, earthquake, disaster, accident,
litigation, labor trouble or dispute, any action by the United States or any
other governmental authority, civil disturbance, uprising, activity of armed
forces, Act of God or public enemy, or otherwise, which has not been disclosed
herein. There shall have been no change after the Balance Sheet Date in the
results of operations, Business, Assets, Liabilities, financial condition, or
affairs of the Business that has had a material adverse effect on the Assets or
the Business.
(l) Certificate of Incorporation and By-Laws. True and complete
copies of each Target's certificate of incorporation and all amendments thereto,
certified by the Secretary of State of
<PAGE>
Florida, and the By-Laws of each Target as presently in effect, certified as
true and correct by respective Secretaries of the Targets.
(m) Corporate Books and Records.
(i) All available books and records relating to each Target,
including, but not limited to, each such Target's minute books, stock transfer
records, articles of incorporation, and all amendments thereto, and by-laws and
all amendments thereto; and
(ii) Certificates from the Secretary of each Target
certifying that the documents delivered pursuant to subparagraph (i) above, are,
where available, the genuine original corporate documents specified therein.
(n) Good Standing. Good standing certificates for the Targets in
Florida and in all other jurisdictions where they are required to be qualified
to do business as of the Closing Date, dated within ten (10) days prior to the
Closing Date.
(o) Lien Search. A written report of a search conducted by a
recognized search firm of the financing statements, judgment and tax lien
records of all jurisdictions where each Target has assets or properties, showing
that the assets and properties of the Target are free and clear of all liens,
claims, and encumbrances, except for those set forth in any schedule hereto,
dated within five (5) days of the Closing Date.
(p) Consents. Targets shall assist the Surviving Corporation in
obtaining consents to the merger of Targets into the Surviving Corporation from
the parties to all mortgages, loan agreements, licenses, leases and other
material contracts of each Target where the consent of any other party to any
such contract may, in the opinion of Subsidiary's counsel, be required in order
for each such Target to continue to have the benefits of such contract after
such merger.
(q) Other Documents. All other documents certificates and
instruments required to be furnished to Subsidiary by Targets pursuant to the
terms of this Agreement, including but not limited to, assignments, contracts,
insurance policies, and such other material as Parent shall reasonably request
to effect the transactions contemplated herein.
(r) Opinion of Counsel. An opinion of counsel for Targets, dated
on the Closing Date, in a form satisfactory to Parent to the effect that:
<PAGE>
(i) Each Target is a corporation duly organized and validly
existing and in good standing under the laws of the State of Florida, and that
it has the corporate power to carry on its business as it is now being
conducted.
(ii) The Target Shareholders are the owners of all of the
issued and outstanding shares of stock of the Targets.
(iii) The execution, delivery and performance of this
Agreement by Targets have been duly and validly authorized and approved by
Targets and this Agreement have been duly and validly executed and delivered by
Targets; the execution, delivery and performance of this Agreement on the part
of Targets will not, to counsel's knowledge, without independent inquiry, result
in the breach of any term or provision of, or constitute a default under any
other agreement to which any Target or any Target Shareholder are parties.
(iv) This Agreement and the Closing Documents have been duly
executed and delivered, are valid and binding, and will effectively merge the
Targets into the Surviving Corporation.
(v) Counsel, without independent inquiry, knows of no
default by any Target to any contract, lease agreement, instrument or commitment
to which the Company is a party.
(vi) The authorized capital stock of SAM AND SON, INC.
consists of 7,500 shares of common stock, ten cents ($0.10) par value, of which
500 shares are duly and validly issued and outstanding, fully paid and
non-assessable. The authorized capital stock of the BAGEL MAN, INCORPORATED
consists of 10,000 shares of common stock, ten cents ($0.10) par value, of which
1,000 shares are duly and validly issued and outstanding, fully paid and
non-assessable. The authorized capital stock of ST. PETE BAGEL CO., INC.
consists of 10,000 shares of common stock, one dollar ($1.00) par value, of
which 500 shares are duly and validly issued and outstanding, fully paid and
non-assessable. Other than the issued and outstanding capital stock as described
in such opinion, there are no issued or outstanding shares of capital stock of
any Target nor any authorized or outstanding rights, subscriptions, calls,
unexercised preemptive rights, options or other agreements or commitments of any
kind to purchase or otherwise receive or to be issued or granting the right to
acquire any of the authorized but unissued shares of the Target. No securities
of any kind convertible into capital stock of the Target exist in favor of any
person.
6.2 Representations at Closing. Targets' and Target Shareholders'
representations and warranties contained in this
<PAGE>
Agreement shall be true as of the Closing Date as though such representations
and warranties were made at such time.
6.3 Performance of Obligations. Targets and Target Shareholders shall
have performed and complied with all agreements and conditions of this Agreement
and any other agreements to which they and Parent, Subsidiary, or their
affiliates may be a party, to be performed or complied with by Targets or Target
Shareholders prior to or on the Closing Date.
6.4 No Material Adverse Change. Since the date of this Agreement there
shall not have occurred any adverse change in the condition (financial or
otherwise), business, properties, assets or prospects of any Target.
6.5 Failure to Satisfy Conditions Precedent. If any of the conditions
precedent to Parent's and Subsidiary's obligations set forth in Sections 6.1,
6.2, 6.3, or 6.4 has not been satisfied by the Closing Date, Parent and
Subsidiary may (a) terminate this Agreement pursuant to Section 11, or (b)
waive, in Parent's and Subsidiary's sole discretion, any such condition
precedent without waiving any other condition precedent or any of Parent's or
Subsidiary's rights hereunder, or (c) extend the time period for satisfaction of
the condition precedent for up to thirty days. If Parent and Subsidiary elect to
extend the time period for satisfaction of any condition precedent, and at the
expiration of the extended time period the condition precedent still has not
been satisfied, clause (a) or (b) above shall apply. Any termination, waiver, or
extension by any party shall be valid only if set forth in a written instrument
executed by or on behalf of that party.
Section 7. Conditions to Obligations of Targets.
7.1 Conditions Precedent. Targets shall not be obligated to consummate
the transactions contemplated by this Agreement unless all of the following
conditions have been satisfied on or before the Closing Date:
(a) Representations and Covenants. The representations and warranties
of Parent and Subsidiary contained in this Agreement shall be true and correct
when made and shall continue to be true and correct on the Closing Date with the
same full force and effect as if then made. Parent and Subsidiary shall have
performed all of their covenants and other obligations required by this
Agreement to be performed at or before the Closing. Parent and Subsidiary shall
have delivered to Targets a certificate of the President or a Vice President of
Parent and Subsidiary, dated the Closing Date, confirming the satisfaction of
this condition.
<PAGE>
(b) Due Diligence. The financial and business audits and inspections
of Parent and Subsidiary conducted by Target shall have revealed that the
financial condition, earnings, prospects, operations, assets, and liabilities of
Parent and Subsidiary are as represented in this Agreement and that the
operations of Parent and Subsidiary are and have been conducted in accordance
with normal and customary industry practices and standards. Any audit,
inspection or investigation undertaken by any Target shall not limit or diminish
such Target's right to rely on the representations and warranties of Parent and
Subsidiary at any time.
(c) No Litigation. There shall be no Adverse Claim pending or
threatened by any governmental or regulatory agency or any other Person against
Parent or Subsidiary in connection with the transactions contemplated by this
Agreement or that seeks to prevent, delay, condition, restrict, or change the
transactions contemplated by this Agreement or that Target, in good faith and
with the advice of counsel, believes could result in the payment of damages by
Target or the Surviving Corporation.
(d) Consents. At or prior to the Closing, each Target and Subsidiary
shall have obtained such consents, approvals, and assurances in connection with
the transactions contemplated by this Agreement as are necessary or advisable in
the opinion of Target, including approvals of applicable regulatory bodies,
Target's lenders, landlords, and lessors, and other parties to material
Contracts of Target.
(e) Legal Matters. The transactions contemplated by this Agreement
shall be permitted by all Legal Requirements, including all applicable
securities laws.
(f) Closing Documents. At Closing, Parent and Subsidiary shall have
executed and delivered to Targets all documents required pursuant to Section 3
of this Agreement and shall have delivered instructions to the registrar and
transfer agent for its common stock, Continental Stock Transfer & Trust Company
in New York, New York, to issue the shares of Parent's stock to the Target
Shareholders required pursuant to Section 3.3 of this Agreement and the
Additional Consideration required pursuant to Section 3.5 of this Agreement.
(g) Certified Resolutions. Certified copies of resolutions duly
adopted by the Board of Directors of Parent and Subsidiary, authorizing,
ratifying and approving the terms, execution and delivery to Sellers of this
Agreement and the Closing Documents, and the consummation thereof;
<PAGE>
(h) Opinion of Counsel. An opinion of counsel for Parent and
Subsidiary dated on the Closing Date in form satisfactory to Targets to the
effect that;
(i) Parent and Subsidiary are each corporations duly organized
and validly existing and in good standing under the laws of the State of
Florida, and each has the corporate power to carry on its respective business as
now being conducted.
(ii) Parent and Subsidiary each have full power and authority to
make, execute, deliver and perform this Agreement.
(iii) The execution, delivery and performance of this Agreement
by Parent and Subsidiary have been duly and validly authorized and approved by
Parent and Subsidiary and this Agreement has been duly and validly executed and
delivered by Parent and Subsidiary; the execution, delivery and performance of
this Agreement on the part of Parent and Subsidiary will not, to counsel's
knowledge, result in the breach of any term or provision of, or constitute a
default under any other agreement to which Parent or Subsidiary is a party.
(iv) This Agreement and the Closing Documents have been duly
executed and delivered, are valid and binding, and will effectively merge the
Targets into the Surviving Corporation.
(i) Employment Agreement. Parent shall have entered into an employment
agreement with Kurt Cuccaro in the form of the employment agreement attached
hereto as Exhibit A.
7.2 Representations at Closing. Parent and Subsidiary's
representations and warranties contained in this Agreement shall be true as of
the Closing Date as though such representations and warranties were made at such
time.
7.3 Performance of Obligations. Parent and Subsidiary shall have
performed and complied with all agreements and conditions of this Agreement to
be performed or complied with by Purchaser prior to or on the Closing Date.
7.4 Failure to Satisfy Conditions Precedent. If any of the conditions
precedent to each Target's obligations set forth in Sections 7.1, 7.2 or 7.3
have not been satisfied by the Closing Date, Targets may (a) terminate this
Agreement pursuant to Section 11, or (b) waive, in Targets' sole discretion, any
such condition precedent without waiving any other condition precedent or any of
any Target's rights hereunder, or (c) extend the time period for satisfaction of
the condition precedent for up to thirty days. If Targets elect to extend the
time period for satisfaction of any
<PAGE>
condition precedent, and at the expiration of the extended time period the
condition precedent still has not been satisfied, clause (a) or (b) above shall
apply. Any termination, waiver, or extension by any party shall be valid only if
set forth in a written instrument executed by or on behalf of that party.
Section 8. Covenants of Target and Target Shareholders.
8.1 Preservation of Representations and Warranties. From the date of
this Agreement and through the Closing Date, no Target shall take any action
that would result, or is likely to result, in any of the representations and
warranties set forth in Section 4 being untrue, or in any of the conditions
precedent set forth in Section 6.1 not being satisfied.
8.2 Conditions Precedent. Each Target shall endeavor in good faith to
satisfy the conditions precedent to the obligations of Parent and Subsidiary as
set forth in Section 6.1.
8.3 Ordinary Course of Business. From the date of this Agreement and
through the Closing Date, each Target shall operate only in the ordinary course
of business, shall take all necessary actions to keep available the services of
its current employees and to preserve the Business and its goodwill and
relationships with customers, vendors, suppliers, and employees, and shall make
no material change in the operation of the Business nor enter into any contract
nor incur any Liability other than in the ordinary course of business without
the prior written consent of Subsidiary. Target shall perform all maintenance
and repairs necessary to keep the Assets in good operating condition and repair
and shall not sell or remove any Asset except in the ordinary course of
business, and then only if the Asset is replaced with similar property of at
least equal quality and utility. Each Target shall perform each repair to the
extent that it (a) would constitute a customary repair, (b) is necessary to
assure the efficient functioning of the Business, or (iii) is necessary to
comply fully with any plan of correction or work order relating to the Business
or Assets issued prior to Closing by a police or fire department, or by
sanitation, health, safety, or municipal authorities.
8.4 Dividends; Changes in Capital Stock. From the date of this
Agreement and through the Closing Date, no Target shall (a) declare, make, or
pay any dividend or other distribution or payment in respect of its capital
stock, or (b) split, combine, or reclassify any of its capital stock, or (c)
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of, or in substitution for shares of its capital stock, or (d)
repurchase, redeem, or otherwise acquire any outstanding shares of its capital
stock.
<PAGE>
8.5 Compensation. From the date of this Agreement and through the
Closing Date, no Target shall increase, or promise any increase with respect to,
any salary or other form of compensation payable or to become payable to any of
such Target's employees or directors, except in the ordinary course of business
consistent with past practices, and will not pay any bonus to any employee or
director.
8.6 Access to Property and Records. From the date of this Agreement
and through the Closing Date, each Target shall permit Subsidiary and
Subsidiary's counsel, accountants, engineers, consultants, and other authorized
representatives to have full and complete access to each Target's property and
Business premises and the documents, books, contracts, and records relating to
the Business and to make copies thereof during normal business hours in order to
permit Subsidiary to conduct its investigations relative to this Agreement. Each
Target shall deliver to Subsidiary, or any of its authorized representatives,
such additional information and copies of documents, books, contracts, and
records, and shall make such Target's senior management available to answer
questions relating to its property and Business, as may be reasonably requested
by Subsidiary or any of its authorized representatives.
8.7 Hazardous Substances. During the ten (10) days following the date
of this Agreement, each Target shall allow Subsidiary, at Subsidiary's expense,
to have the Real Property inspected to Subsidiary's reasonable satisfaction to
determine whether any Hazardous Substances are present on the Real Property.
8.8 Asset Inspections. During the ten (10) days following the date of
this Agreement, each Target shall allow Subsidiary, at Subsidiary's expense, to
conduct structural, mechanical, electrical, and plumbing inspections of the Real
Property, inspections for termites and other wood destroying organisms, and
other inspections of the Assets. If any such inspection reveals any material
damage or problem, Target shall make such repairs as are necessary to correct
the damage or problem before the Closing Date.
8.9 Title Policies; Surveys, etc.. Each Target shall furnish and
deliver to Subsidiary, no later than ten (10) days from the date of this
Agreement, copies of the following documents: any existing fee or leasehold
title insurance policies on the Real Property; any subordination,
nondisturbance, or attornment agreements in effect that would grant rights to a
mortgagee of the Real Property; and any existing staked boundary surveys of the
Real Property.
8.10 Discharge of Liabilities. At or prior to Closing,
<PAGE>
each Target shall take such actions (including using its best efforts to obtain
consents, releases, and waivers of, or giving notices to, other parties to the
contracts and retiring, satisfying, or discharging any debt) as are necessary to
assure that Subsidiary will incur no Liabilities other than (i) as set forth on
the Balance Sheet, (ii) other business Obligations incurred in the ordinary
course of business that are not, individually or in the aggregate, materially
adverse to the Business, and (iii) the executory obligations of Target existing
immediately prior to Closing.
8.11 Tax Filings and Payments. At or prior to Closing, each Target
shall prepare and file all Tax Returns required to be filed by each Target on or
before the Closing Date, and shall pay all Taxes that are due thereunder.
Subject to any applicable provisions of the Leases, each Target shall pay, on or
before the applicable due dates, all real estate Taxes due and payable on the
Real Estate, including any Liens in connection therewith.
8.12 Sales and Use Taxes. Each Target shall request from the State of
Florida Department of Revenue such confirmation reports as may be made available
to each such Target from such sales and use tax authorities with respect to the
status of each such compliance with sales and use tax return filing
requirements, tax deposits, and the existence of any outstanding assessment or
liens issued or recorded by the sale and use tax authorities of the State of
Florida. Such reports shall confirm the following: (a) that the applicable
taxing authority has determined that all sales and use tax returns of each such
Target required to be filed as of the Closing Date have been filed; (b) that all
tax liabilities or required deposits indicated on such returns have been fully
satisfied or provided for; and (c) that, as of the time of issuance of the
confirmation report, the taxing authorities are not conducting pending audits,
and are not aware of any outstanding assessments, notices of deficiencies,
claims, or demands for sales and use taxes against Target.
8.13 Third Party Notices and Consents. At or prior to the Closing,
each Target will give any notices to third parties, and will use its best
efforts to obtain any third-party consents, that are required by any contracts,
or may reasonably be requested by Subsidiary in connection with the transactions
contemplated by this Agreement. Each Target shall file, when due, all notices
and other documents required to be filed with federal, state, and local
governmental authorities in connection with the Merger and shall promptly
provide Subsidiary with copies of such filings.
8.14 Employees. Each Target shall assist and use its best efforts to
cause commitments to be made to Subsidiary at or prior to Closing by such
employees of such Target as Subsidiary, wants to
<PAGE>
continue to be employed by Surviving Corporation. At or prior to Closing, each
Target shall terminate the employment of all other employees and shall pay all
severance pay or other payments in lieu of compensation with respect to any
employees whose employment has been or will be terminated at or prior to
Closing. With respect to the termination of employees, each Target shall comply
timely with applicable requirements for notification of affected employees,
labor organizations, and designated state and local officials under the Worker
Adjustment and Retraining Notification Act of 1988.
8.15 Advise of Litigation. From the date of this Agreement and through
the Closing Date, each Target shall promptly advise Subsidiary of any Adverse
Claims to the extent such Adverse Claims may materially adversely affect the
Business. Target shall update such schedule at Closing.
8.16 Notice of Developments. From the date of this Agreement and
through the Closing Date, each Target shall give prompt written notice to
Subsidiary of any material development affecting the Assets, Liabilities,
Business, financial condition, operations, results of operations, or future
prospects of such Target or any material development affecting its ability to
consummate the transactions contemplated by this Agreement.
8.17 Insurance. Each Target shall cause the Business and the Assets to
be covered for their full replacement value until the Closing Date by adequate
physical damage, casualty, extended coverage, multi-peril, and general liability
insurance and shall cause the Business to be covered until the Closing Date by
business interruption, errors and omissions, and workers' compensation
insurance. If a claim is made for damage or injury occurring prior to the
Closing Date that is covered by such insurance, each Target shall promptly
notify Subsidiary of the claim, if the outcome of the claim may have a material
adverse effect on the Business. Subsidiary shall have the right to consult with
the insured in any negotiations or legal proceedings related to the claim.
8.18 Confidentiality. Each Target and each Target Shareholder
represents, warrants, covenants and agrees that they shall not use, disseminate
or disclose, for their own benefit, or for the benefit of any person, firm
business or other entity, any confidential information pertaining to either
Parent or Subsidiary, unless such information is first made public by Parent or
Subsidiary, or Parent or Subsidiary authorizes, in writing, the use,
dissemination or disclosure of such information. For purposes of this Section,
confidential information is information not generally known to the industry of
Parent or Subsidiary.
<PAGE>
Section 9. Covenants of Parent and Subsidiary.
9.1 Preservation of Representations and Warranties. From the date of
this Agreement and through the Closing Date, Parent and Subsidiary shall not
take any action that would result, or is likely to result, in any of the
representations and warranties set forth in Section 5 being untrue, or in any of
the conditions precedent set forth in Section 7.1 not being satisfied.
9.2 Conditions Precedent. Parent and Subsidiary shall endeavor in good
faith to satisfy the conditions precedent to the obligations of Target as set
forth in Section 7.1.
9.3 Third Party Notices and Consent. At or prior to the Closing,
Subsidiary will give any notices to third parties, and will use its best efforts
to obtain any third-party consents, that are required by any contracts to which
Subsidiary is a party or by which any of its assets are bound. Subsidiary shall
file, when due, all notices and other documents required to be filed with
federal, state, and local governmental authorities in connection with the
Merger.
9.4 Advise of Litigation. From the date of this Agreement and through
the Closing Date, Subsidiary shall promptly advise Target of any Adverse Claims
to the extent such Adverse Claims may materially adversely affect Parent.
9.5 SEC Reporting Status. Parent covenants and agrees with the Target
Shareholders to maintain its status as a registered company under Section 12(g)
of the Securities Exchange Act of 1934, as amended, so that transactions under
Rule 144 can be effected from time to time, subject to the continuity of
interests requirements applicable to merger transactions.
9.6 Confidentiality. Parent and Subsidiary each represents, warrants,
covenants and agrees that they shall not use, disseminate or disclose for their
own benefit or for the benefit of any person, firm, business or other entity,
any confidential information pertaining to any Target unless such information is
first made public by such Target or such Target authorizes, in writing, the use,
dissemination or disclosure of such information. For purposes of this Section,
confidential information is information not generally known to the industry of
Targets, and relates by way of example and not by way of limitation to Targets'
product, production, cost data, supply sources, contracts, business information
and customer lists. Parent and Subsidiary further agree that all business
information obtained from Targets and all of Targets' confidential information
shall be returned to Targets in the event, if for any reason, the Closing of
this transaction does
<PAGE>
not take place and Parent and Subsidiary agree to not keep any copies of said
business information or confidential information.
Section 10. Survival; Indemnification.
10.1 Survival of Representations, Warranties, and Covenants. The
representations, warranties, covenants, indemnification provisions, and
agreements of the parties set forth in this Agreement, or in any ancillary
agreement or Closing Document delivered pursuant hereto, shall survive the
execution and delivery of this Agreement and the ancillary agreements and
Closing Documents, the Closing, the recording of any deed or other instrument,
and any investigation made by the parties, and shall continue in full force and
effect thereafter.
10.2 Indemnification Rights and Obligations.
(a) By Target Shareholders. The Target Shareholders jointly and
severally hereby indemnify and agree to hold Parent and Subsidiary harmless for,
from, against and in respect of and shall on demand reimburse Parent or
Subsidiary, whichever the case may be, for:
(i) any and all loss, liability or damage suffered or incurred by
Parent or Subsidiary by reason of any untrue representation, breach of warranty
or nonfulfillment of any covenant by Targets or Target Shareholders contained
herein or in any certificate, document or instrument delivered to Targets or
Target Shareholders pursuant hereto or in connection herewith;
(ii) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without limitation,
reasonable legal fees and expenses, incident to any of the foregoing or in
enforcing this indemnity;
(iii) the amount by which the indebtedness of the Targets
collectively, less the sum of all of the accounts receivable and notes
receivable of the Targets collectively, exceeds $250,000.00 as of the Closing
Date as set forth on the audited financial statements to be prepared for the
Targets.
(b) By Parent and Subsidiary. Parent and Subsidiary hereby jointly and
severally agree to indemnify and hold Target Shareholders harmless from, against
and in respect of and shall on demand reimburse them for:
(i) any and all loss, liability or damage resulting from any
untrue representation, breach of warranty or nonfulfillment of any covenant or
agreement by Parent or Subsidiary contained
<PAGE>
herein or in any certificate, document or instrument delivered to Targets
hereunder;
(ii) any and all loss, liability or damage resulting from the
personal guarantees of the Target Shareholders of the obligations of Targets set
forth on Schedule 4.26 (the "Guarantees");
(iii) any and all actions, suits, proceedings, claims, demands,
assessments, judgments, costs and expenses, including, without limitation,
reasonable legal fees and expenses, incident to any of the foregoing or incurred
in investigating or attempting to avoid the same or to oppose the imposition
thereof, or in enforcing this indemnity.
(c) Notice of Claim, Assumption of Defense and Settlement of Claims.
(i) Indemnitee shall promptly give notice (an "Indemnification
Notice") in accordance with Section 10 hereof to Indemnitor after Indemnitee
shall have knowledge of any demands, claims, actions or causes of action
(singly, a "Claim" and hereinafter referred to collectively, as "Claims") which
might give rise to a Claim by Indemnitee against Indemnitor hereunder, stating
the nature and basis of said Claim and the amount thereof, to the extent known.
A failure to give notice hereunder shall not relieve the Indemnitor from any
obligation hereunder unless such failure to give notice shall materially and
adversely affect the Indemnitor's ability to defend the Claim. After the
delivery of an Indemnification Notice certifying that Indemnitee has incurred or
had asserted against it any liabilities, claims, losses, damages, costs or
expenses for which indemnity may be sought in accordance with the terms of this
Section 10 (the "Damages"), Indemnitee shall make a claim in an amount equal to
the incurred Damages or asserted Damages, as the case may be (which, in the case
of any asserted Damages shall include Indemnitee's reasonably estimated cost of
the defense thereof, hereinafter the "Estimated Defense costs"), and the
Indemnitor shall promptly reimburse Indemnitee for the Damages for which
Indemnitee has incurred and not been indemnified. In the event the amount of
such Damages are not promptly reimbursed by the Indemnitor as aforesaid, the
amount of such unreimbursed Damages shall accrue interest at a rate equal to two
percent (2%) above the applicable prime rate of Citibank, N.A.
(ii) With respect to any third party Claims made subsequent to
the date of this Agreement, the following procedures shall be observed:
(1) Promptly after delivery of an Indemnification
<PAGE>
Notice in respect of a Claim, the Indemnitor may elect, by written notice to
Indemnitee, to undertake the defense thereof with counsel reasonably
satisfactory to Indemnitee and at the sole cost and expense of the Indemnitor.
(2) Failure by the Indemnitor to notify Indemnitee of its
election to defend any such action within twenty (20) days after notice thereof
shall have been given, shall be deemed a waiver by the Indemnitor of its right
to defend and settle such action. If the Indemnitor assumes the defense of any
such Claim, its obligations hereunder as to such Claim shall be limited to
taking all steps necessary in the defense or settlement of such Claim and to
holding Indemnitee harmless from and against any and all losses, damages,
expenses and liabilities awarded in any such proceeding or arising out of any
settlement approved by the Indemnitor or any judgment in connection with such
Claim.
(3) The Indemnitor shall not, in the defense of any such
Claim, consent to the entry of any judgment (except with the prior written
consent of Indemnitee) or enter into any settlement (except with the prior
written consent of Indemnitee) which does not include as an unconditional term
thereof the giving by the claimant or the plaintiff to Indemnitee of a complete
release from all liability in respect of such Claim.
(4) If the Indemnitor does not assume the defense of a
Claim, Indemnitee may defend against or settle such Claim in such manner as it
may deem appropriate, and the Indemnitor shall promptly reimburse Indemnitee for
all expenses, legal or otherwise, incurred by Indemnitee in connection with the
defense against and settlement of such Claim, as and when the same shall be
incurred by Indemnitee. If no settlement of such Claim is made, the Indemnitor
shall promptly reimburse Indemnitee for or at Indemnitee's option, pay the
amount of any judgment rendered with respect to such Claim and all expenses,
legal or otherwise, incurred by Indemnitee in the defense against such Claim.
(d) Remedies Cumulative. The remedies provided to a party herein shall
be cumulative and shall not preclude a party from asserting any other rights or
seeking any other remedies against the Indemnitors or their successors or
assigns. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent or subsequent assertion or
employment of any other appropriate right or remedy.
Section 11. Termination. This Agreement may be terminated at any time
before the Closing Date as follows:
(a) By mutual consent of the parties hereto.
<PAGE>
(b) By the Parent and Subsidiary.
(i) If any of the conditions precedent in Article 6 hereof have
not been met by the Closing Date, provided however, if the Targets or the Target
Shareholders are diligently attempting to satisfy a condition precedent which
has not been satisfied as of the Closing Date, the Closing Date shall be
extended to a date ten (10) days after the Closing Date;
(ii) If any facts determined by Parent or Subsidiary under its
right of investigation shall have a material and adverse effect upon the value
of the properties, assets, business or prospects of either Company; or
(iii) If the contractual rights or benefits, or other assets of
any Target have been substantially altered, impaired or destroyed by any cause
whatsoever.
(c) By Targets and Target Shareholders if any of the conditions
provided in Article 7 hereof have not been met by the Closing Date, provided
however, if the Parent and Subsidiary are diligently attempting to satisfy a
condition precedent which has not been satisfied as of the Closing Date, the
Closing Date shall be extended to a date ten (10) days after the Closing Date.
Section 12. Miscellaneous.
12.1 Expenses. Except as expressly provided herein, each of the
parties shall bear its own expenses and costs (including legal and accounting
fees) that it incurs in connection with the negotiation, execution, and delivery
of this Agreement and the Closing of the transactions contemplated hereby.
Target Shareholders shall pay (a) all documentary stamp taxes and surtaxes, if
any, incident to the Merger, (b the cost of obtaining and recording any
documents to clear title to the Assets, and (c) any costs incident to the
termination of any Contracts or other Obligations.
12.2 Public Announcements. Each of the parties agrees not to make or
permit any announcement or public disclosure, and not to issue or permit
issuance of any press release, concerning this Agreement or the transactions
contemplated hereby prior to the Closing, without the prior approval of the
other parties.
12.3 Additional Agreements; Best Efforts. Subject to the terms and
conditions of this Agreement, each of the parties shall use its best efforts to
take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper, or advisable under applicable Legal Requirements to
consummate and make
<PAGE>
effective the transactions contemplated hereby, including cooperating fully with
the other parties. If at any time any further action is necessary or desirable
to carry out the purposes of this Agreement or to vest in the Surviving
Corporation full title to all Assets, rights, approvals, immunities, and
franchises of Target, each party shall take all such necessary action.
12.4 Insurance Claim. In the event that any Target shall have suffered
any loss or damage due to or arising out of fire or other casualty, which is
covered by insurance, and, notwithstanding such loss or damage, Parent and
Subsidiary consummate the transaction contemplated by this Agreement, then at
the closing, Targets shall:
(a) Duly assign to Subsidiary all of the rights of Sellers against any
insurance company pursuant to loss or damage; and
(b) Pay to Subsidiary any proceeds received from any insurance company
prior to the closing for such loss or damage.
12.5 Assignment. Subsidiary may assign this Agreement to any entity
Parent controls, controlling it, or which is under common control with it;
provided, however, that any such assignment shall in no way affect the
obligations of Parent or Subsidiary hereunder which shall remain in full force
and effect. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their successors, and with respect to Subsidiary, to its
assigns.
12.6 Amendment and Waiver. This Agreement may be amended, modified or
superseded, and any of the terms, covenants, representations, warranties or
conditions hereof may be waived, only by written instrument executed by all of
the parties hereto, or in the case of a waiver, by the party waiving compliance.
The failure of any party at any time to require performance of any provision
hereof shall in no manner affect that party's right at a later time to enforce
the same. No waiver by any party of any condition or breach of any term,
covenant, representation or warranty contained in this Agreement, whether by
conduct or otherwise, in any one or more instances shall be deemed to be or be
construed as a further or continuing waiver of any such condition or breach, or
a waiver of any other condition or of the breach of any other term, covenant,
representation or warranty of this Agreement.
12.7 Governing Law. This Agreement shall be governed by the laws of
the State of Florida. In any action relating to this Agreement the parties
hereto consent, and shall cause all entities under their control to consent, to
venue and nonexclusive jurisdiction of the Circuit Court of Pinellas County,
Florida or of the United States District Court of the Middle District of
Florida.
<PAGE>
12.8 Paragraph Headings. The paragraph headings contained herein are
for reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
12.9 Severability. The invalidity or unenforceability of any
particular word, phrase, sentence, paragraph or provision of this Agreement
shall not affect the other words, phrases, sentences, paragraphs or provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provisions were omitted and the remainder construed so as to
give them meaningful and valid effect. It is the intention of the parties that
if any particular provision of this Agreement is capable of two constructions,
one of which would render the provision void, and the other of which would
render the provision valid, the provision shall have the meaning which renders
it valid.
12.10 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed sufficiently given if sent by
certified or registered mail, postage prepaid, to the parties at the following
addresses, or to such other addresses as shall be designated in writing by any
party:
To Parent and All American Food Group, Inc.
Subsidiary: 104 New Era Drive
South Plainfield, New Jersey 07080
With a copy to: Lehman & Eilen
50 Charles Lindbergh Boulevard
Uniondale, New York 11553
Attn: Hank Gracin, Esq.
To Targets St. Pete Bagel Co. Inc.
Sam And Son, Inc.
Bagel Man, Incorporated
3244 - 44th Avenue North
St. Petersburg, Florida 33714
With a copy to: Holland & Knight LLP
200 Central Avenue, Suite 1600
St. Petersburg, FL 33701
Attn: Richard O. Jacobs.
<PAGE>
Target Kurt Cuccaro
Shareholders 5108 White Pine Circle
St. Petersburg, FL 33703
With a copy to: Holland & Knight LLP
200 Central Avenue, Suite 1600
St. Petersburg, Florida 33701
Attn: Richard O. Jacobs
Target Mary Cuccaro
Shareholders 5108 White Pine Circle
St. Petersburg, FL 33703
With a copy to: Holland & Knight LLP
200 Central Avenue, Suite 1600
St. Petersburg, Florida 33701
Attn: Richard O. Jacobs
Target Cynthia Cuccaro
Shareholders 9902 Sir Fredrick Street
Tampa, FL 33637
With a copy to: Holland & Knight LLP
200 Central Avenue, Suite 1600
St. Petersburg, Florida 33701
Attn: Richard O. Jacobs
12.11 Remedies Not Exclusive. No remedy conferred by any of the
specific provisions of this Agreement is intended to be exclusive to any other
remedy except to the extent specifically stated, and each and every remedy shall
be cumulative and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law or in equity or by statute or otherwise. The
election of any one or more remedies by any party hereto shall not constitute a
waiver of the right to pursue other available remedies.
12.12 Further Assurances. Each Target hereby agrees that from time to
time after the Closing, at the request of Parent or Subsidiary and without
further consideration, each Target shall execute, acknowledge and deliver such
other instruments of conveyance and transfer and take such other action as
Purchaser may reasonably require in order to more effectively consummate the
Merger.
12.13 Entire and Sole Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes all prior agreements,
representations, warranties and
<PAGE>
understandings, whether oral or written, express or implied, with respect to the
subject matter hereof.
12.14 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original. If less than all of the
parties have executed each counterpart but each party has executed a
counterpart, all counterparts taken together shall constitute one instrument.
12.15 Meaning of Terms. As used in this Agreement, the word
"including" always is without limitation, and the word "person" includes a
trust, corporation, partnership, joint venture, association, unincorporated
organization, government, public body, and a governmental body, agency,
authority, or department, as well as a natural person. Words of the masculine
gender are to be construed to include the correlative words of the feminine and
neuter genders, and words of the neuter gender are to be construed to include
the correlative words of the feminine and masculine genders. Words in the
singular number include words in the plural number, and words in the plural
number include words in the singular number.
IN WITNESS WHEREOF the parties have executed this Agreement as of the date
first stated above.
ALL AMERICAN FOOD GROUP, INC., a New Jersey corporation
By: ________________________________
Printed Name: ______________________
Title: _____________________________
SAM AND SON, INC., a Florida corporation
By: ________________________________
Printed Name: Kurt Cuccaro
Title: President
ST. PETE BAGEL CO., INC., a FLORIDA corporation,
By: ________________________________
Printed Name: Kurt Cuccaro
Title: President
<PAGE>
BAGEL MAN, INCORPORATED, a Florida corporation
By: ________________________________
Printed Name: Kurt Cuccaro
Title: President
____________________________________
KURT CUCCARO
____________________________________
MARY CUCCARO
____________________________________
CYNTHIA CUCCARO
ST. PETE BAGELS ACQUISITION CORP.
By:_________________________________
Printed Name: ______________________
Title: _____________________________
