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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): September 8, 1998
(August 24, 1998)
MRS. FIELDS' ORIGINAL COOKIES, INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 333-45179 87-0552899
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(State or other jurisdiction (Commission File Number) (IRS Employer
incorporation) Identification No.)
2855 East Cottonwood Parkway, Suite 400
Salt Lake City, Utah 84121-7050
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (801) 736-5600
Not Applicable
(Former name or former address, if changed since last report)
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<PAGE>
Item 2. Acquisition or Disposition of Assets
On August 24, 1998, Mrs. Fields' Original Cookies, Inc. a Delaware
corporation (the "Company"), acquired 100% of the capital stock and subordinated
indebtedness of Cookies USA, Inc. a Delaware corporation ("Cookies USA"), for an
aggregate purchase price of approximately $18.4 million, pursuant to a
Securities Purchase Agreement (the "Purchase Agreement"), dated as of August 13,
1998 among the Company, Cookies USA, and the individuals and entities identified
as sellers therein. Prior to August 24, 1998 Cookies USA owned 100% of Great
American Cookie Company, Inc., a Delaware corporation ("Great American"), which
is a leading operator and franchisor of mall-based specialty retail cookie
outlets. Upon consummation of the purchase of Cookies USA, the Company caused
Cookies USA to be merged with and into the Company, as a result of which Great
American became a direct wholly owned subsidiary of the Company. In related
transactions, the Company also consummated the purchase of all of the capital
stock of two Great American franchisees, Deblan Corporation, a Delaware
corporation ("Deblan"), and Chocolate Chip Cookies of Texas, Inc., a Texas
corporation ("Chocolate Chip"), for aggregate consideration of approximately
$15.0 million (including the repayment of approximately $0.6 million of debt).
Upon consummation of the purchases of Deblan and Chocolate Chip, the Company
caused Deblan and Chocolate Chip to be merged with and into Great American. To
facilitate these acquisitions the Company used part of the proceeds of an
offering of $40.0 million in aggregate principal amount of its Series C 10 1/8%
Senior Notes, together with part of the contribution of the net proceeds of an
offering of unit securities of its parent, Mrs. Fields' Holding Company, Inc..
The Company also entered into agreements with entities controlled by another
Great American franchisee (the "Asset Purchase Agreements") providing for the
sale of eight Great American stores to the Company for a total purchase price of
$1.75 million. The sale of the eight stores is expected to occur within 30 days
after the purchase of Cookies USA. The franchisee was also a holder of Cookies
USA securities and a party to the Purchase Agreement.
The foregoing summary should be read in conjunction with and is
qualified by reference to the Purchase Agreement, to the stock purchase
agreements between the Company and the holders of the capital stock of Deblan
and Chocolate Chip, and to the Asset Purchase Agreements, which are set forth as
exhibits to this report.
In connection with the contemplated acquisition of Cookies USA, the
Company commenced a tender offer on August 17, 1998 for all of the outstanding
$40.0 million in aggregate principal amount of Great American's 10 7/8% Senior
Secured Notes due 2001 (the "Notes"). On August 24, 1998, the Company purchased
approximately $33.5 million of the Notes that had been tendered through August
20, 1998 and an additional $5.4 million of the Notes that had been tendered
through August 21, 1998. A press release describing the Company's acceptance of
the Notes is set forth as an exhibit to this report.
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Item 7. Financial Statements and Exhibits
Item 7 (a) Financial statements of business acquired
The financial statements required by this item are not
included with this report because it is impracticable to
provide them at the time of this filing. The financial
statements will be filed by amendment not later than 60 days
after the date this report is filed.
Item 7 (b) Pro forma financial information
The pro forma financial information required by this item are
not included with this report because it is impracticable to
provide them at the time of this filing. The pro forma
financial information will be filed by amendment not later
than 60 days after the date this report is filed.
Item 7 (c) Exhibits
Exhibit 2.1 Securities Purchase Agreement, dated as of August 13,
1998, by and among Cookies USA, Inc., the Individuals and
Entities identified therein as the Sellers and Mrs. Fields'
Original Cookies, Inc. (Schedules and exhibits to the
agreement have been omitted from this filing and will be
furnished to the Securities and Exchange Commission upon
request.)
Exhibit 2.2 Stock Purchase Agreement among Mrs. Fields' Original Cookies,
Inc., as Buyer, and Jake Tortorice of Chocolate Chip Cookies
of Texas, Inc. as Seller
Exhibit 2.3 Stock Purchase Agreement among Mrs. Fields' Original Cookies,
Inc., as Buyer, and Lawrence J. Cohen, Mildred S. Cohen,
Jerome E. Mouton, Steven J. Bryan and Jason A. Piltzmaker,
holders of all outstanding capital stock of Deblan Corporation
, as Sellers
Exhibit 2.4 Asset Purchase Agreement between Mrs. Fields' Original Cookies
, Inc. and ASK & MSK Family Limited Partnership-II(B), Ltd.
Exhibit 2.5 Asset Purchase Agreement between Mrs. Fields' Original Cookies
, Inc. and Crossroads Cookies, Inc.
Exhibit 2.6 Asset Purchase Agreement between Mrs. Fields' Original Cookies
, Inc. and Hot Barton and Northpark Cookies, Inc.
Exhibit 2.7 Asset Purchase Agreement between Mrs. Fields' Original Cookies
, Inc. and Northpark Cookies, Inc.
Exhibit 2.8 Asset Purchase Agreement between Mrs. Fields' Original Cookies
, Inc. and Quail Springs Cookies, Inc.
Exhibit 2.9 Asset Purchase Agreement between Mrs. Fields' Original Cookies
, Inc. and Westgate Cookies, Inc.
Exhibit 99.1 Press Release of Mrs. Fields' Original Cookies, Inc., dated
August 25, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MRS. FIELDS' ORIGINAL COOKIES, INC.
Date: September 8, 1998 /s/Michael R. Ward
Michael R. Ward, VP & Legal Counsel
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EXHIBIT INDEX
Item 7 (c) Exhibits
Exhibit 2.1 Securities Purchase Agreement, dated as of August 13,
1998, by and among Cookies USA, Inc., the Individuals and
Entities identified therein as the Sellers and Mrs. Fields'
Original Cookies, Inc. (Schedules and exhibits to the
agreement have been omitted from this filing and will be
furnished to the Securities and Exchange Commission upon
request.)
Exhibit 2.2 Stock Purchase Agreement among Mrs. Fields' Original Cookies,
Inc., as Buyer, and Jake Tortorice of Chocolate Chip Cookies
of Texas, Inc. as Seller
Exhibit 2.3 Stock Purchase Agreement among Mrs. Fields' Original Cookies,
Inc., as Buyer, and Lawrence J. Cohen, Mildred S. Cohen,
Jerome E. Mouton, Steven J. Bryan and Jason A. Piltzmaker,
holders of all outstanding capital stock of Deblan Corporation
, as Sellers
Exhibit 2.4 Asset Purchase Agreement between Mrs. Fields' Original Cookies
, Inc. and ASK & MSK Family Limited Partnership-II(B), Ltd.
Exhibit 2.5 Asset Purchase Agreement between Mrs. Fields' Original Cookies
, Inc. and Crossroads Cookies, Inc.
Exhibit 2.6 Asset Purchase Agreement between Mrs. Fields' Original Cookies
, Inc. and Hot Barton and Northpark Cookies, Inc.
Exhibit 2.7 Asset Purchase Agreement between Mrs. Fields' Original Cookies
, Inc. and Northpark Cookies, Inc.
Exhibit 2.8 Asset Purchase Agreement between Mrs. Fields' Original Cookies
, Inc. and Quail Springs Cookies, Inc.
Exhibit 2.9 Asset Purchase Agreement between Mrs. Fields' Original Cookies
, Inc. and Westgate Cookies, Inc.
Exhibit 99.1 Press Release of Mrs. Fields' Original Cookies, Inc., dated
August 25, 1998.
EXHIBIT 2.1
SECURITIES PURCHASE AGREEMENT
BY AND AMONG
COOKIES USA, INC.,
THE INDIVIDUALS AND ENTITIES IDENTIFIED HEREIN AS
THE SELLERS
AND
MRS. FIELDS' ORIGINAL COOKIES, INC.
DATED AS OF
AUGUST 13, 1998
<PAGE>
SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of July 30, 1998, by
and among Cookies USA, Inc., a Delaware corporation (the "Company"), the Sellers
(as hereinafter defined) and Mrs.
Fields' Original Cookies, Inc., a Delaware corporation ("Buyer").
WHEREAS, the individuals and entities identified on Annex A
hereto (the "Sellers") own in the respective amounts indicated thereon (i) all
of the outstanding shares of common stock, par value $0.01 per share, of the
Company (the "Company Common Stock"), (ii) all of the outstanding shares of the
Junior Class A Preferred Stock of the Company and the Junior Class B Preferred
Stock of the Company (together, the "Junior Preferred Stock"), (iii) all of the
outstanding shares of the Senior Convertible Preferred Stock of the Company (the
"Senior Preferred Stock"), and (iv) all of the outstanding $10 million aggregate
principal amount of the Senior Subordinated Notes of the Company (the "Senior
Subordinated Notes" and, together with the Company Common Stock, the Junior
Preferred Stock and the Senior Preferred Stock, the "Company Securities");
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WHEREAS, the Company owns all of the outstanding shares of
common stock (the "Subsidiary Common Stock"), no par value, of Great American
Cookie Company, Inc., a Delaware corporation (the "Subsidiary"); and
WHEREAS, Buyer desires to purchase, and the Sellers desire to
sell to Buyer, all of the Company Securities owned by them upon the terms and
conditions hereinafter set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements hereinafter set forth, and intending
to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
SALE OF STOCK AND TERMS OF PAYMENT
. Upon the terms and subject to the satisfaction of the
conditions contained in this Agreement, at the Closing (as hereinafter defined),
each Seller will sell, assign, transfer and deliver to Buyer, and Buyer will
purchase and acquire from such Seller, free and clear of all Liens (as
hereinafter defined), all of the shares and/or principal amount of Company
Securities owned by such Seller. Notwithstanding anything in this Agreement to
the contrary, prior to the Closing Date, any Seller may transfer all or part of
the Company Securities owned by such Seller, subject to all of such Sellers'
rights and obligations under this Agreement, to any other Seller. Each Seller
agrees to give prompt written notice (which in no event shall be later than two
business days before the Closing) to Buyer of any such transfer of Company
Securities.
I.2 Consideration
(a) Upon the terms and subject to the satisfaction of the
conditions contained in this Agreement and subject to adjustment as set forth in
Sections 1.2(b) and 1.2(c), in consideration of the aforesaid sale, assignment,
transfer and delivery of the Company Securities, at the Closing Buyer will pay
or cause to be paid to the respective Sellers the following amounts, in each
case allocated among the holders of each class of the Company Securities on a
pro rata basis as of the Closing Date (as hereinafter defined):
(i) $10,000,000 in the aggregate for all of the
outstanding Senior Subordinated Notes, plus the aggregate amount of any
accrued but unpaid interest thereon through the Closing;
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(ii) $5,150,000 in the aggregate for all shares of
the Senior Preferred Stock outstanding on the Closing Date (including
all accrued but unpaid dividends);
(iii) $3,250,000 in the aggregate for all shares of
the Junior Preferred Stock outstanding on the Closing Date (including
all accrued but unpaid dividends); and
(iv) $0 for all shares of the Company Common Stock
outstanding on the Closing Date.
(b) In the event that the aggregate amount of all Expenses (as
hereinafter defined) shall exceed $200,000, in addition to any other adjustment
required by this Section 1.2, the consideration payable pursuant to Section
1.2(a) shall be reduced by 100% of such excess. For purposes of this Agreement,
"Expenses" shall include all professional fees and expenses paid or payable by
the Company in connection with this Agreement and the transactions contemplated
hereby, including without limitation those expenses of the Sellers contemplated
to be paid by the Company pursuant to Section 5.6, it being agreed that
"Expenses" shall not include the fees and expenses of Price Waterhouse LLP,
legal and accounting expenses incurred in the ordinary course of business,
expenses actually paid on or prior to March 29, 1998 and the Company's share of
the HSR Act fee payable pursuant to Section 5.1.
<PAGE>
(c) By a written notice from any Seller to Buyer on or prior
to the Closing Date, such Seller may elect to reallocate the aggregate payments
to be received by such Seller pursuant to Sections 1.2(a)(ii), 1.2(a)(iii) and
1.2(a)(iv), or elect to apply such payments against any adjustments pursuant to
Section 1.2(b), among the different classes of Company Securities to be
purchased pursuant to such Sections. In the absence of any such notice, any
adjustments pursuant to Section 1.2(b) shall be applied to reduce payments under
Section 1.2(a)(iii).
I.3 The Seller's Release (a) Each Seller hereby confirms and agrees that,
effective upon such Seller's receipt of the consideration payable to such Seller
pursuant to Section 1.2, any and all claims such Seller or any of its partners,
trustees, beneficiaries, shareholders, affiliates, directors or officers may
have against the Company, the Subsidiary and their respective shareholders,
affiliates, directors and officers as of the Closing Date will be deemed fully
discharged and released. Without limiting the foregoing, the claims so released
include without limitation any claims under any employment or bonus agreement,
any franchise agreement, any license agreement or any other Affiliated
Arrangement (as hereinafter defined), and any claims in respect of any failure
to timely pay dividends or interest or to perform covenants, or any options or
other rights to acquire securities of the Company or the Subsidiary (the
"Options"), but do not include any of the rights of Sellers pursuant to Section
1.4 or statutory indemnification rights or contractual indemnification rights
under agreements that are identified on Schedule 1.3.
(b) TJC Management Corp. hereby waives its right to receive
any payment under the Management Agreement, including any fee accrued on the
Company's balance sheet as of June 30, 1998.
<PAGE>
I.4 Other Matters. Buyer hereby agrees that, in the event the
Closing shall occur, Buyer shall (a) as of the Closing Date, cede to Messrs.
Coles and Karp the Subsidiary's rights to purchase Atlanta Braves tickets
provided that Messrs. Coles and Karp pay for any tickets which the Subsidiary
has committed to purchase as of such date as and when any such payments are due,
(b) permit Messrs. Coles and Karp to continue at their respective expense
(including for these purposes insurance and administrative costs) their
participation in the Subsidiary's health insurance program, subject to Buyer's
right to provide such coverage under Buyer's health insurance program until
November 30, 1998, (c) permit Messrs. Coles and Karp to each receive Great
American cookies without charge in accordance with past practice, provided that
as to cookies obtained from any store other than the GACC stores at Cumberland
Mall in Atlanta, Georgia, at Town Center at Cobb in Kennesaw, Georgia, at
Perimeter Mall in Atlanta, Georgia and at Sarasota Square in Sarasota, Florida,
cookies must be purchased by Messrs. Coles and Karp and store receipts must be
promptly provided to Mrs. Fields in order for reimbursement to be received, (d)
grant to Messrs. Coles and Karp a right of first refusal to purchase for cash
the Subsidiary's batter facility (exclusive of all equipment and furnishings and
otherwise "as is, where is") should the Subsidiary determine to sell such
facility within the two year period following the Closing, such right to be
exercisable for 60 days following Messrs. Coles' and Karp's receipt of notice of
a proposed sale of such facility to a third party but only on the same terms and
subject to the same conditions as offered by such third party and subject to the
further covenant by Messrs. Karp and Coles that they shall not use the batter
facility in connection with any business, individual, partnership, firm,
corporation or other entity which is engaged, directly or indirectly, in a
business that is in competition with Buyer, and (e) pay to David Barr any and
all amounts owing to him pursuant to any and all agreements set forth on 3.16(k)
in effect immediately prior to the Closing.
I.5. The Company and the Sellers other than Messrs. Coles and Karp shall
take such action as shall be necessary under the relevant governing agreements
to cause all of the Warrants to be cancelled on the Closing Date. Buyer shall
assist and cooperate, and shall cause its financial advisors to assist and
cooperate, with the Company and the Sellers with respect to the foregoing
matters.
<PAGE>
ARTICLE II
THE PRE-CLOSING AND CLOSING
I.1 Time and Place of Pre-Closing and Closing
(a) Upon the terms and subject to the satisfaction of the
conditions contained in this Agreement, the pre-closing of the transactions
contemplated by this Agreement (the "Pre-Closing") will take place at the
offices of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York,
New York 10022, at 10:00 A.M. (local time) on the date on which Buyer executes
the purchase agreements (the "Financing Agreements") pursuant to which Buyer is
obtaining financing (the "Financing"), or at such other place or time as the
parties may agree. At the Pre-Closing, the parties will deliver into an escrow
(the "Pre-Closing Escrow") the various documents to be delivered at the Closing,
with documents to be delivered by Sellers or the Company to be held Mayer, Brown
& Platt and with documents to be delivered by Buyer to be held by counsel to
Buyer. The date and time at which the Pre-Closing actually occurs is hereinafter
referred to as the "Pre-Closing Date."
(b) Upon the terms and subject to the satisfaction of the
conditions contained in this Agreement, the closing of the transactions
contemplated by this Agreement (the "Closing") will take place at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York
10022, at 10:00 A.M. (local time) on the date on which the closing occurs under
the Financing Agreements, or at such other place or time as the parties may
agree. The date and time at which the Closing actually occurs is hereinafter
referred to as the "Closing Date." For accounting purposes only, the
transactions contemplated by this Agreement will be deemed to have occurred on
June 30, 1998.
<PAGE>
I.2 Deliveries by the Seller's and the Company(a)he SeIn the event that
each of the conditions to the Sellers' obligations to close hereunder are met as
of the Pre-Closing Date, each Seller hereby authorizes Mayer, Brown & Platt to
cause to be delivered into the Pre-Closing Escrow the following documents in
respect of such Seller that are being delivered as of the date hereof to Mayer,
Brown & Platt (the "Escrowed Seller Documents"): the certificate or certificates
representing the Company Securities set forth beside the name of such Seller on
Annex A hereto, duly executed in blank or accompanied by duly executed
instruments of transfer, and any other documents (including without limitation
written releases from First National Bank of Boston) that are necessary to
transfer to Buyer good, valid and marketable title to such Company Securities,
free and clear of any lien, charge, security interest, pledge, mortgage,
encumbrance, claim, option, limitation or restriction of any kind (collectively,
"Liens"), with all necessary transfer tax stamps affixed or accompanied by
evidence that all securities transfer taxes have been paid.
(b) At the Pre-Closing, the Company will deliver or cause to
be delivered into the Pre-Closing Escrow the following (the "Escrowed Company
Documents"):
<PAGE>
(i) the stock book, stock ledger, minute book and
corporate seal of each of the Company and the Subsidiary;
(ii) resignations effective as of the Closing Date
from all directors and officers of the Company and the Subsidiary;
(iii) such documents as are reasonably requested by
Buyer to implement the Financing and the Senior Note Tender Offer (as
hereinafter defined);
(iv) executed Settlement Agreement and Releases in
the form of Annex B hereto from franchisees of the Subsidiary and
related investors sufficient to satisfy the Franchisee Condition (as
hereinafter defined); and
(v) such other documents, instruments and writings as
are required to be delivered by the Company at or prior to the Closing
Date pursuant to Section 6.2 or otherwise required in connection
herewith.
<PAGE>
(c) The Company and each Seller hereby authorizes Mayer, Brown
& Platt to cause to be delivered at the Closing the Escrowed Seller Documents
and the Escrowed Company Documents in return for the Escrowed Buyer Documents
(as hereinafter defined) and the wire transfers contemplated by Section 2.3(b).
II.3 Deliveries by Buyer.
(a) At the Pre-Closing, Buyer will deliver into the
Pre-Closing Escrow such documents, instruments and writings as are required to
be delivered by Buyer at or prior to the Closing Date pursuant to Section 6.3 or
otherwise required in connection herewith (the "Escrowed Buyer Documents").
(b) At the Closing, Buyer shall deliver to the Sellers the
Escrowed Buyer Documents and wire transfers of immediately available funds to
such accounts of the Sellers which are designated in writing by each Seller at
least two business days prior to the Closing in an amount representing the
aggregate payments to be made pursuant to Section 1.2 in return for the Escrowed
Seller Documents and the Escrowed Company Documents.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
AND THE SELLERS
The Company makes to Buyer the representations and warranties
set forth in Sections 3.1 to 3.24 and the Sellers severally but not jointly make
to Buyer the representations and warranties set forth in Section 3.25.
<PAGE>
III.1 Organization;Qualification. The Company and the Subsidiary are each
corporations duly organized, validly existing and in good standing under the
laws of the State of Delaware, and have full corporate power and authority and
possess all governmental franchises, licenses, permits, authorizations and
approvals to enable them to use their corporate names and to own, lease, or
otherwise hold their properties and to operate their properties and carry on
their business as are now being conducted, other than such franchises, licenses,
permits, authorizations and approvals the lack of which, individually or in the
aggregate, would not reasonably be expected to have a material adverse effect on
the business, results of operations, or financial condition of the Company or
the Subsidiary (a "Material Adverse Effect"). The Company and the Subsidiary are
duly qualified or licensed to do business as foreign corporations and are in
good standing in each jurisdiction in which the property owned, leased or
operated by them or the nature of the business conducted by them makes such
qualification or licensing necessary, except in each case in those jurisdictions
where the failure to be so duly qualified or licensed and in good standing would
not reasonably be expected to have a Material Adverse Effect. Schedule 3.1 sets
forth, as of the date of this Agreement, each jurisdiction in which the Company
and the Subsidiary are qualified to do business as foreign corporations. The
Company has heretofore delivered to Buyer complete and correct copies of the
Certificate of Incorporation and By-Laws of each of the Company and the
Subsidiary as currently in effect and evidence of qualification to do business
as a foreign corporation in each jurisdiction in which the Company or the
Subsidiary are so qualified.
<PAGE>
III.2 The Company's Capitalization
(a) The authorized capital stock of the Company consists of
(i) 115,000 shares of Company Common Stock, of which 82,800 shares are issued
and outstanding and no shares are held in treasury, (ii) 10,500 shares of Senior
Preferred Stock, all of which are issued and outstanding, (iii) 2,500 shares of
Junior Class A Preferred Stock, all of which are issued and outstanding, and
(iv) 750 shares of Junior Class B Preferred Stock, all of which are issued and
outstanding. The Sellers own all of the issued and outstanding shares of Company
Common Stock, Junior Preferred Stock and Senior Preferred Stock. All outstanding
shares of capital stock of the Company are validly issued, fully paid and
nonassessable. Other than as set forth in (i) the Company's Certificate of
Incorporation and By-Laws as currently in effect, (ii) the Subscription and
Stockholders Agreement, dated as of December 10, 1993, among the Company and
certain of its stockholders, (iii) the Warrants, pursuant to which 7,200 shares
of Company Common Stock are issuable (collectively, the "Capitalization
Documents"), and (iv) the Options, pursuant to which 11,200 shares of Company
Common Stock are issuable, there is no subscription, option, warrant, call,
right, agreement or commitment relating to the issuance, sale, delivery or
transfer by the Company or, to the Company's knowledge, any Seller (including
any right of conversion or exchange under any outstanding security or other
instrument) of any class of capital stock of the Company or the payment of money
based on the value of any class of capital stock of the Company. There are no
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any outstanding shares of capital stock of the Company other
than as set forth in the Capitalization Documents.
<PAGE>
(b) The authorized capital stock of the Subsidiary consists of
2,000 shares of the Subsidiary Common Stock, of which 210 are issued and
outstanding and no shares are held in treasury. The Company owns all of the
issued and outstanding shares of the Subsidiary Common Stock. All outstanding
shares of the Subsidiary Common Stock are validly issued, fully paid and
nonassessable. There is no subscription, option, warrant, call, right, agreement
or commitment relating to the issuance, sale, delivery or transfer by the
Subsidiary or the Company (including any right of conversion or exchange under
any outstanding security or other instrument) of any class of capital stock of
the Subsidiary. There are no outstanding contractual obligations of the
Subsidiary to repurchase, redeem or otherwise acquire any outstanding shares of
capital stock of the Subsidiary.
III.3 Titke to Stock. The Sellers own the Company Securities, free and
clear of any Liens. At the Closing, Buyer will acquire good, valid and
marketable title to the respective Company Securities sold by each Seller, free
and clear of any Liens. The Company owns, and at the Closing will own, the
Subsidiary Common Stock, free and clear of any Liens.
<PAGE>
III.4 Authority Relative to this Agreement. The Company has full power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and, assuming that this Agreement
constitutes a valid and binding agreement of Buyer and each Seller, constitutes
a valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms.
III.5 Subsidiaries and Equity Investments; Affiliates. Other than the
Subsidiary or as set forth on Schedule 3.5, the Company does not own or have any
right to acquire at any time by any means, directly or indirectly, any interest
or investment in any corporation, partnership, joint venture or other business
association or entity.
<PAGE>
III.6 Consents and Approvals; No Violation. (a) Except as set forth in
Schedule 3.6(a), neither the execution and delivery of this Agreement by the
Company nor the sale by the Sellers of the Company Securities pursuant to this
Agreement will (i) conflict with or result in any breach of (with or without
notice or lapse of time, or both) any provision of the Certificate of
Incorporation or By-Laws of the Company or the Certificate of Incorporation or
By-Laws of the Subsidiary, (ii) require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority, except where the failure to obtain such consent, approval,
authorization or permit, or to make such filing or notification, would not
reasonably be expected to have a Material Adverse Effect, (iii) result in a
violation of or default under (with or without notice or lapse of time, or both)
or give rise to any right of termination, cancellation or acceleration or result
in the creation of any Lien under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, license, agreement or other instrument or
obligation (other than with respect to any leases of real property or an
interest therein (the "Leases"), to which this representation shall not apply)
to which the Company or the Subsidiary is a party or by which the Company or the
Subsidiary or any of their assets may be bound, except for such defaults or
rights of termination, cancellation or acceleration or Liens as to which
requisite waivers or consents have been obtained or which, in the aggregate,
would not reasonably be expected to have a Material Adverse Effect, or (iv)
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to the Company, the Subsidiary or any of their assets, which
violation would reasonably be expected to have a Material Adverse Effect.
<PAGE>
(b) Except for the filings by the Company and Buyer required
by the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and except as set forth in Schedule 3.6(b), no declaration, filing
or registration with, or notice to, or authorization, consent or approval of,
any governmental or regulatory body or authority is necessary for the
consummation by the Company or the Sellers of the transactions contemplated
hereby, other than such filings, registrations, authorizations consents or
approvals which, if not obtained or made, would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
III.7 Reports. The Subsidiary has filed, pursuant to the Securities Act of
1933, as amended (the "Securities Act"), or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), as the case may be, all material forms,
statements, reports and documents (including all exhibits, amendments and
supplements thereto) (the "SEC Documents") required to be filed by them with
respect to the business and operations of the Subsidiary under each of the
Securities Act and the Exchange Act, and the respective rules and regulations
thereunder, and all of the SEC Documents complied in all material respects with
all applicable requirements of the Securities Act or the Exchange Act, as the
case may be, and the appropriate act and the rules and regulations thereunder in
effect on the date each such report was filed. At the respective dates they were
filed, none of the SEC Documents contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The consolidated financial statements of
the Subsidiary included in the SEC Documents complied as to form in all material
respects with the applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared in accordance
with generally accepted accounting principles ("GAAP") consistently applied
throughout the period involved (except as may be indicated therein or in the
notes thereto) and fairly present the consolidated financial position, results
of operations and cash flows of the Subsidiary as of the dates or for the
periods indicated therein, subject, in the case of the unaudited statements, to
normal year-end adjustments and the absence of certain footnote disclosures.
<PAGE>
III.8 Financial Statements. The Company has previously furnished to Buyer
audited balance sheets of the Company and the Subsidiary as of June 29, 1997,
June 30, 1996 and June 29, 1995 and the related audited statements of
operations, changes in stockholders' equity and cash flows of the Company and
the Subsidiary for the fiscal periods then ended, together with the respective
reports thereon of Price Waterhouse LLP, the Company's and the Subsidiary's
independent auditors. The Company has also furnished unaudited balance sheets of
the Company and the Subsidiary for the fiscal quarters ended December 31, 1997
and March 29, 1998, together with the related unaudited operations, changes in
stockholders' equity and cash flows of the Company and the Subsidiary. The
balance sheet of the Company as of March 29, 1998, together with the balance
sheet of the Subsidiary as of March 29, 1998 are hereinafter referred to as the
"Company Balance Sheets." Each of the balance sheets included in the financial
statements referred to in this Section 3.8 (including the related notes thereto)
presents fairly the financial position of the Company or of the Subsidiary as of
their respective dates, and the other related statements included therein
(including the related notes thereto) present fairly the results of operations,
changes in financial position and cash flows for the periods then ended, all in
conformity with GAAP applied on a consistent basis, except as otherwise noted
therein or in the notes thereto and subject, in the case of unaudited
statements, to normal year-end adjustments and the absence of certain footnote
disclosures. All such financial statements are or will be complete in all
material respects and have been prepared from, and are in accordance with, the
books of account and records of the Company and the Subsidiary. Since June 30,
1997, neither the Company nor the Subsidiary has made any change in its
accounting practices or policies applied in the preparation of its financial
statements.
<PAGE>
III.9 Undisclosed Liabilities. Except as set forth in Schedule 3.9, neither
the Company nor the Subsidiary has any liability or obligation, secured or
unsecured (whether absolute, accrued, contingent or otherwise, and whether due
or to become due), of a nature required by GAAP to be reflected in a corporate
balance sheet or disclosed in the notes thereto, except for those that either
(i) are accrued or reserved against in the Company Balance Sheets or disclosed
in the notes thereto in accordance with GAAP or (ii) were incurred in the
ordinary course of business consistent with past practice, whether before or
after the date of the Company Balance Sheet. Neither the Company nor the
Subsidiary is directly or indirectly liable upon or with respect to (by
discount, repurchase agreements or otherwise), or obligated in any other way to
provide funds in respect of, or to guarantee or assume, any material debt,
obligation or dividend of any person, except for those that are accrued or
reserved against in the Company Balance Sheets or disclosed in the notes thereto
in accordance with GAAP. Schedule 3.9 sets forth the amounts of any accrued but
unpaid interest and/or dividends on the Senior Notes or the Company Securities
as of March 29, 1998.
<PAGE>
III.10 Adsence of Certain Changes or Events. Except (a) as set forth in
Schedule 3.10, or in the SEC Documents, and (b) as otherwise contemplated by
this Agreement, since the date of the Company Balance Sheets there has not been:
(i) any Material Adverse Effect; (ii) any declaration, setting aside or payment
of any dividend or other distribution (whether in cash, stock, property or any
combination thereof) in respect of any class of capital stock of the Company or
of the Subsidiary, or any redemption or other acquisition by the Company or the
Subsidiary of any shares of capital stock of the Company or the Subsidiary, or
any payment by the Company or the Subsidiary to any Seller in its capacity as a
stockholder; (iii) any damage, destruction or casualty loss, whether covered by
insurance or not, which had a Material Adverse Effect; (iv) any increase in the
rate or terms of compensation or other benefits payable or to become payable by
the Company or the Subsidiary to their directors, officers or key employees,
except increases occurring in the ordinary course of business in accordance with
their customary practices; (v) any entry into any agreement, commitment or
transaction (including without limitation any borrowing, capital expenditure or
capital financing) by the Company or the Subsidiary, which is material to the
Company or the Subsidiary, except (a) Leases and (b) agreements, commitments or
transactions in the ordinary course of business or as contemplated herein; (vi)
any change by the Company or the Subsidiary, in their respective accounting
methods, principles or practices except as required by GAAP; or (vii) any sale,
franchise, relocation or closure of any store of the Subsidiary. Since March 29,
1998, each of the Company and the Subsidiary has conducted its business in the
ordinary course, consistent with past practice, and has made all reasonable
efforts to preserve its relationships with customers, suppliers and others with
whom it deals, the absence of which would be reasonably likely to have a
Material Adverse Effect, and neither the Company nor the Subsidiary has taken
any action that, if taken after the date hereof unless otherwise consistent with
the transactions contemplated hereby, would constitute or result in a material
breach of any of the covenants set forth herein.
<PAGE>
III.11 Personal Property. Schedule 3.11 sets forth as of the date of this
Agreement a complete and correct list of each item of machinery, equipment,
furniture, fixtures and other tangible personal property owned, leased or used
by the Company or the Subsidiary having an original purchase cost or aggregate
lease cost to the Company or the Subsidiary exceeding $25,000 (the "Machinery
and Equipment"). Except as set forth on Schedule 3.11, the Company or the
Subsidiary own outright and have good, valid and marketable title, free and
clear of all Liens (other than Permitted Exceptions (as hereinafter defined)),
to the Machinery and Equipment as owned by them and to all the machinery,
equipment, furniture, fixtures, inventory, receivables and other tangible or
intangible personal property reflected on the Company Balance Sheets and all
such property acquired since the date thereof, except for sales and dispositions
in the ordinary course of business consistent with past practice since the date
of the Company Balance Sheets, except to the extent that any such failure to
have good title would not, in the aggregate with any and all such failures,
reasonably be expected to have a Material Adverse Effect. None of the Liens
listed on Schedule 3.11 materially adversely affects the conduct of the business
of the Company or the Subsidiary. Except as set forth in Schedule 3.11, each of
the Company and the Subsidiary holds good and transferable leaseholds in all of
the Machinery and Equipment as leased by it, in each case under valid and
enforceable leases. The Machinery and Equipment and other personal property now
owned, leased, or used by the Company or the Subsidiary are sufficient and
adequate to carry on their businesses as presently conducted and all items
thereof are in good operating condition and repair (normal wear and tear
excepted). Neither the Company nor the Subsidiary holds any personal property of
any other person, firm or corporation pursuant to any consignment or similar
arrangement.
<PAGE>
III.12 Real Property. (a) Schedule 3.12(a) sets forth a true and complete
list of all real properties owned by the Company and the Subsidiary. The Company
or the Subsidiary has good, valid and marketable title to all real properties
shown in Schedule 3.12(a). Other than as set forth on Schedule 3.12(a), none of
the real properties owned by the Company or the Subsidiary is subject to any
Liens (other than Permitted Exceptions), and none of such real properties is
subject to any easements, rights of way, licenses, grants, building or use
restrictions, exceptions, reservations, limitations or other impediments which
materially adversely affect the value thereof or which materially interfere with
or impair the present and continued use thereof in the usual and normal conduct
of the business of the Company or the Subsidiary. All buildings, structures,
improvements and fixtures owned by the Company or the Subsidiary are in good
operating condition and repair (normal wear and tear excepted).
(b) Schedule 3.12(b) lists, as of the date of this Agreement,
all Leases under which the Company or the Subsidiary is a lessee or lessor.
Except as set forth in Schedule 3.12(b) or as may result from the consummation
of the transactions contemplated hereby, all such Leases are valid, binding and
enforceable obligations of the Company or the Subsidiary in accordance with
their terms, and to the Company's and the Subsidiary's knowledge, are in full
force and effect, there are no existing defaults by the Company or the
Subsidiary thereunder, and no event has occurred which (whether with or without
notice, lapse of time or both) would constitute a default thereunder, except in
each case for defaults which individually or in the aggregate would not have a
Material Adverse Effect.
<PAGE>
III.13 Insurance. All policies of fire, liability, workmen's compensation
and other forms of insurance owned or held by and insuring the Company or the
Subsidiary are listed on Schedule 3.13. Except as set forth in Schedule 3.13,
all policies of fire, liability, workmen's compensation and other forms of
insurance owned or held by and insuring the Company and the Subsidiary are in
full force and effect, all premiums with respect thereto covering all periods up
to and including the date as of which this representation is being made have
been paid (other than retroactive premiums which may be payable with respect to
comprehensive general liability and workmen's compensation insurance policies),
and no notice of cancellation or termination has been received with respect to
any such policy which was not replaced on substantially similar terms prior to
the date of such cancellation. Other than as set forth on Schedule 3.13, such
policies are valid, outstanding and enforceable policies and will not in any way
be affected by, or terminate or lapse by reason of, the transactions
contemplated by this Agreement. Except as described in Schedule 3.13, as of the
date of this Agreement neither the Company nor the Subsidiary has been refused
any insurance with respect to its assets or operations nor has their coverage
been limited in any material respect by any insurance carrier to which either of
them has applied for any such insurance or with which it has carried insurance
during the last three years. The Company and the Subsidiary have heretofore made
available to Buyer true and complete copies of all such policies.
<PAGE>
III.14 Environmental Matters.
(a) Each of the Company and the Subsidiary is in compliance
with all applicable Environmental Laws (which compliance includes, but is not
limited to, the possession by the Company and the Subsidiary of all permits and
other governmental authorizations ("Environmental Permits") required under
applicable Environmental Laws, and compliance with the terms and conditions
thereof), except where failure to be in compliance would not reasonably be
expected to have a Material Adverse Effect. Other than as set forth on Schedule
3.14, since January 1, 1995, neither the Company nor the Subsidiary has received
any communication (written or oral), whether from a governmental authority,
citizens group, employee or otherwise, alleging that the Company or the
Subsidiary is not in such compliance, and there are no past or present actions,
activities, circumstances, conditions, events or incidents that may prevent or
interfere with such compliance in the future in all material respects. All
Environmental Permits and other governmental authorizations currently held by
the Company and the Subsidiary pursuant to applicable Environmental Laws are
identified in Schedule 3.14(a).
(b) There is no Environmental Claim pending or threatened
against the Company or the Subsidiary, or, to the best knowledge of the Company
and the Subsidiary, against any person or entity whose liability for any
Environmental Claim the Company or the Subsidiary has or may have retained or
assumed either contractually or by operation of law, which would reasonably be
expected to have a Material Adverse Effect.
(c) There are no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the Release or presence of any Hazardous Material which could form the basis of
any Environmental Claim against the Company or the Subsidiary, or to the best
knowledge of the Company and the Subsidiary, against any person or entity whose
liability for any Environmental Claim the Company or the Subsidiary has or may
have retained or assumed either contractually or by operation of law which would
reasonably be expected to have a Material Adverse Effect.
<PAGE>
(d) The Company has delivered or otherwise made available for
inspection to Buyer true, complete and correct copies and results of all "Phase
One" reports relating to the Subsidiary's batter facility and any reports,
studies, analyses, tests or monitoring possessed or initiated by the Company or
the Subsidiary pertaining to Hazardous Materials in, on, beneath or adjacent to
any property currently or formerly owned, operated or leased by the Company or
the Subsidiary, or regarding the Company's or the Subsidiary's compliance with
applicable Environmental Laws.
(e) Definitions.
(i) "Environmental Claim" means any claim, action,
cause of action, investigation or notice (written or oral) by any
person or entity alleging potential liability (including, without
limitation, potential liability for investigatory costs, remediation
costs, governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or
resulting from (A) the presence, or Release of any Hazardous Materials
at any location, whether or not owned or operated by the Company or the
Subsidiary, or (B) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.
(ii) "Environmental Laws" means all federal, state,
local and foreign laws and regulations relating to pollution or
protection of human health or the environment, including, without
limitation, laws relating to Releases or threatened Releases of
Hazardous Materials or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, Release, disposal,
transport or handling of Hazardous Materials and all laws and
regulations with regard to recordkeeping, notification, disclosure and
reporting requirements respecting Hazardous Materials.
(iii) "Hazardous Materials" means all substances
defined as Hazardous Substances, Oils, Pollutants or Contaminants in
the National Oil and Hazardous Substances Pollution Contingency Plan,
40 C.F.R. ' 300.5, or defined as such by, or regulated as such under,
any Environmental Law.
(iv) "Release" means any release, spill, emission,
discharge, leaking, pumping, injection, deposit, disposal, dispersal,
leaching or migration into the indoor or outdoor environment or into or
out of any property, including the movement of Hazardous Materials
through or in the air, soil, surface water, groundwater or property.
<PAGE>
III.15 Labor Matters.
(a) (i) There is no labor strike, dispute, or work stoppage or
lockout actually pending or, to the Company's or the Subsidiary's knowledge,
threatened, against or affecting the Company and the Subsidiary, and since
January 1, 1995 there has not been any such action; (ii) to the Company's and
the Subsidiary's knowledge, no union organizational campaign is in progress with
respect to the employees of the Subsidiary; (iii) the Company and the Subsidiary
are in compliance in all material respects with all laws applicable to the
Company and the Subsidiary with respect to employment and employment practices,
terms and conditions of employment and wages and hours, and are not engaged in
any unfair labor practice; and (iv) there is no charge, complaint or other
proceeding involving the Company or the Subsidiary or, to the Company's or the
Subsidiary's knowledge, threatened, before the National Labor Relations Board,
the Equal Employment Opportunity Commission or any state or local agency
responsible for the prevention of unlawful employment practices.
(b) Neither the Company nor the Subsidiary is a party to any
labor union or collective bargaining agreement.
(c) Neither the Company nor the Subsidiary has any liability
under the Worker Adjustment and Retraining Act or any similar state law relating
to employment termination in connection with a mass layoff or plant closing
("WARN").
I.16 ERISA; Benefit Plans.
(a) Schedule 3.16(a) contains a list of all "employee pension
benefit plans" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (sometimes referred to herein as
"Pension Plans"), "employee welfare benefit plans" (as defined in Section 3(1)
of ERISA), bonus, stock option, stock purchase and deferred compensation plans
or arrangements, and other employee fringe benefit plans (all the foregoing
being herein referred to as "Benefit Plans") maintained, or contributed to, by
the Company, the Subsidiary or any entity that is treated as under common
control with the Company or the Subsidiary under Section 414(b), (c), (m) or (o)
of the Internal Revenue Code of 1986, as amended (the "Code"), for the benefit
of, or relating to, any employees or former employees of the Company or the
Subsidiary. The Company has delivered to Buyer true, complete and correct copies
of (i) each Benefit Plan (or, in the case of any unwritten Benefit Plan, a
description thereof), (ii) the most recent determination letter received from
the Internal Revenue Service, (iii) the latest actuarial evaluations, (iv) the
most recent annual report on Form 5500 filed with the Internal Revenue Service
with respect to each Benefit Plan (if any such report was required), including
Schedule A and Schedule B thereto, (v) the most recent summary plan description
for each Benefit Plan for which such a summary plan description is required and
(vi) each trust agreement and group annuity contract relating to any Benefit
Plan.
<PAGE>
(b) Each Benefit Plan has been administered in all material
respects in accordance with its terms and the applicable provisions of ERISA and
the Code. Except as disclosed in Schedule 3.16(b)(i), all material reports,
returns and similar documents with respect to the Benefit Plans required to be
filed with any governmental agency or distributed to any Benefit Plan
participant have been duly and timely filed or distributed. Except as disclosed
in Schedule 3.16(b)(ii), there are no investigations by any governmental agency,
termination proceedings or other claims (except for benefits payable in the
normal operation of the Benefit Plans), suits or proceedings or against or
involving any Benefit Plan or asserting any rights or claims to benefits under
any Benefit Plan that could reasonably give rise to any material liability and,
to the Company's and the Subsidiary's knowledge, there are no facts that could
reasonably give rise to any material liability in the event of any such
investigation, claim, suit or proceeding.
(c) Except as disclosed in Schedule 3.16(c), all contributions
to, and payments from, the Benefit Plans that may have been required to be made
in accordance with the Benefit Plans have been timely made.
(d) No "prohibited transaction" (as defined in Section 4975 of
the Code or Section 406 of ERISA) has occurred that involves the assets of any
Benefit Plan and that could subject the Company or the Subsidiary or any of
their employees or, to the Company's and the Subsidiary's knowledge, a trustee,
administrator or other fiduciary of any trusts created under any Benefit Plan,
to any material tax or penalty on prohibited transactions imposed by Section
4975 of ERISA or the sanctions imposed under Title I of ERISA. None of the
Company, the Subsidiary or any trustee, administrator or other fiduciary of any
Benefit Plan nor any agent of any of the foregoing has engaged in any
transaction or acted or failed to act in a manner that could subject the Company
or the Subsidiary to any material liability for breach of fiduciary duty under
ERISA or any other applicable law. No liability under Title IV of ERISA has been
incurred by the Company, the Subsidiary or their affiliates within six years
prior to the date hereof that has not been satisfied in full, and no condition
exists that presents a material risk of incurring such liability.
(e) Except as disclosed in Schedule 3.16(e), at no time within
the five years preceding the Closing Date has either of the Subsidiary or the
Company been required to contribute to any "multiemployer plan" (as defined in
Section 4001(a)(3) of ERISA) or incurred any withdrawal liability, within the
meaning of Section 4201 of ERISA, which liability has not been fully paid as of
the date hereof, or announced an intention to withdraw, but not yet completed
such withdrawal, from any multiemployer plan.
(f) Neither the Company nor the Subsidiary contributes to a
Pension Plan that is subject to Section 302 of ERISA or Section 412 of the Code.
<PAGE>
(g) With respect to any Benefit Plan that is an employee
welfare benefit plan, except as disclosed in Schedule 3.16(g), (1) no such
Benefit Plan is funded through a welfare benefits fund, as such term is defined
in Section 419(e) of the Code, and (2) each such Benefit Plan that is a group
health plan, as such term is defined in Section 5000(b)(1) of the Code, complies
with the applicable requirements of Section 4980B(f) of the Code.
(h) Neither the Company nor the Subsidiary has incurred any
liability under Section 4062(b) of ERISA to the Pension Benefit Guaranty
Corporation in connection with any Benefit Plan which is subject to Title IV of
ERISA. Except as set forth in Schedule 3.16(h), the Internal Revenue Service has
issued a letter for each Benefit Plan determining that such plan is exempt from
United States Federal Income Tax under Sections 401(a) and 501(a) of the Code,
and there has been no occurrence since the date of any such determination letter
which has adversely affected such qualification.
(i) Except as set forth in Schedule 3.16(i), neither the
Company, the Subsidiary nor any of their affiliates maintains or contributes to,
or has any liability (fixed, contingent or otherwise, under any current or
former plan) for, medical, health or life insurance benefits for terminated
employees of the Company or the Subsidiary or for present employees of the
Company or the Subsidiary after termination of their employment (other than any
such welfare benefits provided pursuant to Code Section 4980B or ERISA Sections
601-608).
(j) Schedule 3.16(j) contains a true and complete list, as of
the date of this Agreement, showing the names of all employees who during the
last fiscal year received, or in the current fiscal year are expected to
receive, compensation (including commissions and bonuses) in excess of $50,000.
Except as disclosed on Schedule 3.16(j), neither the Company nor the Subsidiary
has agreed to increase the salary payable to any employee listed on Schedule
3.16 by more than five percent.
(k) The Company has made available to Buyer true and complete
copies of all contracts, agreements, plans or arrangements covering any employee
or former employee of the Company or the Subsidiary with "change of control" or
similar provisions or providing for "stay on" bonuses or severance payments
(each, a "Change of Control Arrangement"). No Change of Control Arrangement
individually or collectively could give rise to the payment of any amount that
would not be deductible pursuant to the terms of Section 280G of the Code.
<PAGE>
(l) Except as disclosed in Schedule 3.16(l) or as a result of
the transactions contemplated hereby, there has been no amendment to or
announcement by the Company, the Subsidiary or any of their affiliates relating
to a change in employee participation or coverage or benefits under any Benefit
Plan that is reasonably expected to increase materially the expense of
maintaining such Benefit Plan above the level of expense incurred in respect
thereof for the fiscal year ended June 29, 1997.
III.17 Certain Contracts and Arrangements. (a) Schedule 3.17(a) sets forth,
as of the date of this Agreement, a true and complete list of all contracts to
which the Company or the Subsidiary is a party relating to the business or
assets of the Company or the Subsidiary (except, with respect to clauses (ii)
and (iv) below, any of the foregoing calling for aggregate payments of less than
$50,000), including, without limitation, all written or oral, express or implied
(i) contracts not made in the ordinary course of business consistent with past
practice; (ii) purchase, supply and customer contracts; (iii) contracts relating
to the borrowing of money or for lines of credit; (iv) contracts involving
leases and subleases of real or personal property; (v) contracts for the sale of
any assets other than in the ordinary course of business consistent with past
practice or for the grant of any options or preferential rights to purchase any
assets, property or rights; (vi) contracts granting any power of attorney with
respect to the affairs of either the Company or the Subsidiary; (vii) suretyship
contracts, working capital maintenance or other forms of guaranty contracts;
(viii) contracts limiting or restraining the Company or the Subsidiary from
engaging or competing in any lines of business or with any person, firm, or
corporation; (ix) partnership and joint venture contracts; (x) employment
contracts; (xi) indentures, mortgages, notes, installment obligations, or other
instruments relating to the borrowing of money in excess of $50,000 by the
Company or the Subsidiary; (xii) contracts which have remaining terms, as of the
date of this Agreement, of over one year in length of obligation on the part of
the Company or the Subsidiary and provide for aggregate payments in excess of
$50,000; (xiii) franchise contracts; and (xiv) all amendments, modifications,
extensions or renewals of any of the foregoing. To the knowledge of the Company
and the Subsidiary, each of such contracts is valid, binding and enforceable
against the parties thereto in accordance with its terms, and in full force and
effect on the date hereof.
<PAGE>
(b) Except as set forth on Schedule 3.17(b), the Company and
the Subsidiary have performed all obligations required to be performed by them
to date under, and are not in default in respect of, any of such contracts, and
no event has occurred which, with due notice or lapse of time or both, would
constitute such a default other than defaults which would not, individually or
in the aggregate, have a Material Adverse Effect. Except as set forth on
Schedule 3.17(b), no other party to any such contract is in default in respect
thereof, and no event has occurred which, with due notice or lapse of time or
both, would constitute such a default other than defaults which would not,
individually or in the aggregate, have a Material Adverse Effect. The Company
has made available to Buyer or its representatives true and complete originals,
copies or accurate summaries of all such contracts.
III.18 Intellectual Property. Schedule 3.18 sets forth a true and complete
list of all material patents, trademarks (registered or unregistered), trade
names (registered or unregistered), service marks (registered or unregistered),
registered copyrights and computer software applications (excluding noncritical,
uncustomized shrink-wrap or off-the-shelf software) owned or used by or licensed
to the Company or the Subsidiary, and all license agreements related thereto to
which the Company or the Subsidiary is a party (collectively, the "Intellectual
Property"), and, with respect to trademarks, contains a list of all
jurisdictions in which such trademarks are registered or applied for by the
Company or the Subsidiary and all corresponding registration and application
numbers. Except as disclosed on Schedule 3.18 or as provided in any agreement
listed on Schedule 3.18, each of the Company and the Subsidiary owns or has the
right to use, without payment to any other party, the Intellectual Property used
in or necessary for the conduct of its business and the consummation of the
transactions contemplated hereby will not, by itself, materially alter or impair
any such rights. Except as disclosed on Schedule 3.18, all Intellectual Property
owned or used by the Company and the Subsidiary is free and clear of all Liens
arising through actions of the Company or the Subsidiary. Except as disclosed on
Schedule 3.18, to the knowledge of the Company and the Subsidiary, no material
claims or other proceedings are pending or threatened against the Company or the
Subsidiary by any third party person or entity with respect to the ownership,
validity, enforceability or the right to use any Intellectual Property.
<PAGE>
III.19 Customers, Suppliers and Competitors. Schedule 3.19 sets forth a
complete and correct list of (a) the ten largest suppliers of the Subsidiary by
dollar volume for the latest fiscal year, (b) the ten largest franchisees of the
Subsidiary by dollar volume of royalties paid to the Subsidiary for the latest
fiscal year and (c) all suppliers or franchisees who since June 29, 1997 have
terminated any agreement, contract or other arrangement with the Subsidiary or
with whom the Subsidiary has terminated any agreement, contract or other
arrangement resulting in aggregate payments in any fiscal year in excess of
$50,000, in each case with or without cause, prior to the stated expiration
thereof. Except as disclosed in Schedule 3.19, since January 1, 1998, the
Subsidiary has not at any time delivered to, or received from, any supplier or
franchisee any formal notice or written allegation of a default or breach with
respect to any agreement, contract or other arrangement, and none of such
suppliers or franchisees has delivered any formal notice stating its intention
to terminate or change significantly its relationship with the Subsidiary.
III.20 Legal Proceedings, etc. Except as set forth in Schedule 3.20, there
are no claims, actions, or proceedings pending, or investigations pending or, to
the knowledge of the Company and the Subsidiary, threatened, against or relating
to the Company or the Subsidiary before any court, governmental or regulatory
authority or body acting in an adjudicative capacity, which (a) relate to or
involve more than $50,000, (b) seek any injunctive relief, or (c) relate to the
transactions contemplated by this Agreement. Except as disclosed on Schedule
3.20, neither the Company nor the Subsidiary is in default under any material
judgment, order or decree of any court, administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign, applicable
to the Company or the Subsidiary.
<PAGE>
III. Tax Matters. All material tax and information returns, reports and
other documents required to have been filed by the Company and the Subsidiary
(either separately or as part of a consolidated, unitary, combined or similar
group) with the United States, any state and local governmental authority and
any foreign jurisdiction ("Returns") have been duly and timely filed, and each
such Return is accurate and complete in all material respects. Copies of Returns
for the fiscal years ended June 29, 1997, June 30, 1996 and June 29, 1995 which
relate to the income of the Company and the Subsidiary have been made available
to Buyer or its representatives, and such copies are accurate and complete in
all material respects as of the date hereof. The Company has also made available
to Buyer correct and complete copies of all material notices and correspondence
sent or received since January 1, 1995 by the Company or the Subsidiary to or
from any federal, state, local or foreign tax authorities. Except as set forth
in Schedule 3.21, each of the Company and the Subsidiary has paid in full all
income, franchise, business, property, sales, use, value-added, withholding,
payroll, excise, capital and other taxes shown to be due and payable on said
Returns, and all penalties, assessments or deficiencies of every nature and
description incurred with respect to such taxes, except to the extent that the
Company or the Subsidiary, as the case may be, has established on its books
appropriate reserves for such amounts in accordance with GAAP. The United States
federal and state income tax Returns of the Company and the Subsidiary (or such
Returns for the consolidated group of which the Company and the Subsidiary is a
member) have been audited, and the audits thereof completed or the statute of
limitations has run, for all years through 1993. Except as set forth on Schedule
3.21, neither the Company nor the Subsidiary has received any notice of
deficiency or assessment from any taxing authority with respect to liabilities
for taxes of the Company or the Subsidiary which have not been fully paid or
finally settled, and any such deficiencies have been paid or are being contested
in good faith and have been adequately reserved. Except as set forth in Schedule
3.21, neither the Company nor the Subsidiary is a party to any agreement with
respect to the sharing or allocation of taxes or tax costs. There are no liens
for any material amount of federal, state, local or foreign taxes upon the
property or assets of the Company or the Subsidiary, except liens for taxes not
yet due or delinquent or the validity of which is being contested in good faith
by appropriate proceedings. Except as set forth on Schedule 3.21, there are no
outstanding waivers or comparable consents given by the Company or the
Subsidiary regarding the application of the statute of limitations with respect
to any federal, state, local or foreign taxes or Returns. Except as set forth on
Schedule 3.21, no power of attorney has been granted by the Company or the
Subsidiary with respect to any matter relating to federal, state, local or
foreign taxes that is currently in force. Except as set forth on Schedule 3.21,
neither the Company nor the Subsidiary has been a member of any other
consolidated, unitary, combined or similar group for federal, state, local or
foreign tax purposes for any taxable period for which the statute of limitations
has not yet expired.
<PAGE>
III.22 Arrangements with Directors, Officers and Affiliates. Except for the
agreements and other arrangements disclosed in Schedule 3.22 (the "Affiliate
Arrangements"), as of the date hereof, there are no agreements or other
arrangements between the Company or the Subsidiary, on the one hand, and any
director, officer, employee, stockholder or other affiliate, as defined in Rule
405 under the Securities Act (an "Affiliate," or, collectively, "Affiliates"),
of the Company or the Subsidiary, on the other hand, including, without
limitation, management agreements and loans to or by the Company or the
Subsidiary from or to any of such persons. Except as disclosed in Schedule 3.22,
since January 1, 1995, none of the officers or directors of the Company or the
Subsidiary, or any spouse or immediate relative of any of such persons, has been
a director or officer of, or has had any direct interest in, any firm,
corporation, association or business enterprise which during such period has
been a supplier, customer or sales agent of the Company or the Subsidiary or has
competed with or been engaged in any business of the kind being conducted by the
Company or the Subsidiary. Except as disclosed in Schedule 3.22, no Affiliate of
the Company or the Subsidiary owns or has any rights in or to any of the assets,
properties or rights used by the Company or the Subsidiary in its ordinary
course of business.
<PAGE>
III.23 Comploance with Law. Except as set forth in Schedule 3.23 and except
with respect to environmental matters which are covered exclusively by Section
3.14, the operations of the Company and the Subsidiary are being conducted in
accordance with all franchising and other applicable laws, regulations, orders
and other requirements of all courts and other governmental or regulatory
authorities having jurisdiction over the Company and the Subsidiary and their
assets, properties and operations, except where non-compliance with such laws,
regulations, orders and other requirements would not reasonably be expected to
have a Material Adverse Effect. Except as set forth in Schedule 3.23 and except
with respect to environmental matters which are covered exclusively by Section
3.14, neither the Company nor the Subsidiary has received notice within the past
year of any violation of any such law, regulation, order or other legal
requirement, or is in default with respect to any order, writ, judgment, award,
injunction or decree of any federal, state or local court or governmental or
regulatory authority or arbitrator, domestic or foreign, applicable to the
Company or the Subsidiary or any of their assets, properties or operations,
except for such violations or defaults that do not have a Material Adverse
Effect.
III.24 Fees and Commissions. No broker, finder or other person is entitled
to any brokerage fees, commissions or finder's fees in connection with the
transaction contemplated hereby by reason of any action taken by the Company or
the Subsidiary. Schedule 3.24 sets forth a complete and accurate list of all
transaction expenses (including management or other fees payable to the Sellers
or their respective Affiliates pursuant to any Affiliate Arrangement) previously
or to be paid or reimbursed by the Company or the Subsidiary on their own behalf
or on the behalf of the Sellers in connection with the transactions contemplated
by this Agreement (the "Company Transaction Expenses").
<PAGE>
III.25 Representations of the Sellers . Each Seller represents severally
and not jointly that:
(a) Such Seller has all requisite power and authority to own
and to dispose of the Company Securities owned by such Seller.
(b) The number of shares and/or principal amount of the
Company Securities owned by such Seller as of the date of this Agreement is set
forth beside the name of such Seller on Annex A hereto. Except as set forth on
Schedule 3.25(b), such Seller owns his respective Company Securities, free and
clear of any Liens, and at the Closing, Buyer will acquire good, valid and
marketable title to the Company Securities owned by such Seller, free and clear
of any Liens.
(c) Such Seller has full power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby
and to sell to Buyer such Seller's Company Securities. This Agreement has been
duly and validly executed and delivered by such Seller and, assuming that this
Agreement constitutes a valid and binding agreement of Buyer, the Company and
each other Seller, constitutes a valid and binding agreement of such Seller,
enforceable against such Seller in accordance with its terms, except (i) as such
enforceability may be limited by bankruptcy, insolvency, moratorium and other
similar laws affecting or relating to enforcement of creditors' rights generally
and (ii) as such enforceability may be limited by general principles of equity,
regardless of whether asserted in a proceeding in equity or at law.
(d) Neither the execution and delivery of this Agreement by
such Seller nor the sale by such Seller of the Company Securities owned by such
Seller pursuant to this Agreement at the Closing will (i) conflict with or
result in any breach of (with or without notice or lapse of time, or both) any
provision of the Certificate of Incorporation, By-Laws or similar governing
documents of such Seller which is not a natural person, (ii) except for filings
required under the HSR Act, require any consent, approval, authorization or
permit of, or filing with or notification to, any governmental or regulatory
authority by such Seller, except where the failure to obtain such consent,
approval, authorization or permit, or to make such filing or notification, would
not reasonably be expected to have a Material Adverse Effect, (iii) result in a
violation of or default under (with or without notice or lapse of time, or both)
or give rise to any right of termination, cancellation or acceleration or result
in the creation of any Lien under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, license, agreement or other instrument or
obligation to which such Seller is a party or by which such Seller or any of its
assets may be bound, except for such defaults or rights of termination,
cancellation or acceleration or Liens as to which requisite waivers or consents
have been obtained or which, in the aggregate, would not reasonably be expected
to have a Material Adverse Effect, or (iv) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to such Seller or any of its
assets, which violation would reasonably be expected to have a Material Adverse
Effect.
(e) No broker, finder or other person is entitled to any
brokerage fees, commissions or finder's fees in connection with the transaction
contemplated hereby by reason of any action taken by such Seller.
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Sellers as follows:
IV.1 Organization. Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware. Buyer has
heretofore delivered to the Company complete and correct copies of the
Certificate of Incorporation and By-Laws of Buyer as currently in effect.
IV.2 Authority Relative to this Agreement. Buyer has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Buyer, and no other corporate
proceedings on the part of Buyer are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by Buyer and, assuming that this Agreement
constitutes a valid and binding agreement of the Sellers, constitutes a valid
and binding agreement of Buyer, enforceable against Buyer in accordance with its
terms, except (i) as such enforceability may be limited by bankruptcy,
insolvency, moratorium and other similar laws affecting or relating to
enforcement of creditors' rights generally and (ii) as such enforceability may
be limited by general principles of equity, regardless of whether asserted in a
proceeding in equity or at law.
IV.3 Consents and Approvals; No Violation. (a) Except as set forth in
Schedule 4.3, neither the execution and delivery of this Agreement by Buyer nor
the purchase by Buyer of the Company Securities pursuant to this Agreement will
(i) conflict with or result in any breach of (with or without notice or lapse of
time, or both) any provision of the Articles of Incorporation or By-Laws of
Buyer, (ii) require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority, (iii) result
in a violation of or default under (with or without notice or lapse of time, or
both), or give rise to any right of termination, cancellation or acceleration
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement or other instrument or obligation to which Buyer
is a party or by which Buyer or any of its assets may be bound, except for such
defaults or rights of termination, cancellation or acceleration as to which
requisite waivers or consents have been obtained, or (iv) violate any order,
writ, injunction, decree, statute, rule or regulation applicable to Buyer.
<PAGE>
(b) Except as set forth in Schedule 4.3, and except for the
filings by the Sellers and Buyer required by the HSR Act, no declaration, filing
or registration with, or notice to, or authorization, consent or approval of,
any governmental or regulatory body or authority is necessary for the
consummation by Buyer of the transactions contemplated hereby.
IV.4 Acquisition of Stock for Investment. Buyer is acquiring the Company
Securities for investment and not with a view toward, or for sale in connection
with, any distribution thereof, nor with any present intention of distributing
or selling such Company Securities. Buyer agrees that the Company Securities may
not be sold, transferred, offered for sale, pledged, hypothecated or otherwise
disposed of without registration under the Securities Act, except pursuant to an
exemption from such registration available under the Securities Act.
IV.5 Financing. Buyer has provided to the Company and the Sellers accurate
information as to its plans to obtain the Financing.
IV.6 Fees and Commissions. Buyer represents and warrants that no broker,
finder or other person is entitled to any brokerage fees, commissions or
finder's fees in connection with the transaction contemplated hereby by reason
of any action taken by Buyer.
IV.7 Knowledge of Inaccuracies. Buyer represents and warrants that as of
the date of this Agreement it has no actual knowledge that any of the
representations or warranties of the Company, the Subsidiary or any of the
Sellers in this Agreement are inaccurate or that any of such parties are in
breach of any agreement or covenant contained in this Agreement.
<PAGE>
ARTICLE V
COVENANTS OF THE PARTIES
V.1 HSR Act Compliance. The parties shall resist vigorously (including,
without limitation, the institution or defense of legal proceedings) any
assertion that the transactions contemplated herein constitute a violation of
the antitrust laws, all to the end of expediting consummation of the
transactions contemplated herein. The costs and expenses of compliance with this
Section 5.1 shall be borne by the Company, in the case of costs and expenses of
the Company or the Sellers, or by Buyer, in the case of costs and expenses of
Buyer, except that 50% of the fees previously paid in connection with the
notifications required to be filed in connection with the HSR Act shall be
reimbursed by the Company.
V.2 Conduct of Business of the Company. Except as described in Schedule
5.2, during the period from the date of this Agreement to the Closing Date, the
Company will conduct its business and operations according to its ordinary
course of business consistent with past practice and will cause the Subsidiary
to conduct its business and operations according to its ordinary course of
business consistent with past practice and to keep its retail operations
substantially intact. The Company will cause the Subsidiary to maintain in
inventory, at all times prior to the Closing Date, quantities of raw materials
and other supplies and materials sufficient to allow Buyer to continue and
operate the business of the Subsidiary, after the Closing Date, free from any
shortage of such items (assuming Buyer continues to purchase such items after
the Closing Date in the ordinary course of business consistent with past
practice). The Company will use commercially reasonable efforts to preserve
intact the business organization of the Subsidiary and its goodwill, and keep
available the services of its present officers and key employees, and preserve
intact the business relationships with suppliers, customers and others having a
business relationship with the Subsidiary or the Company, and will also maintain
its present relationship in all material respects with the Subsidiary and the
Company. Without limiting the generality of the foregoing, and, except as
contemplated in this Agreement or as described in Schedule 5.2, prior to the
Closing Date, without the prior written consent of Buyer, the Company will not,
and will not permit the Subsidiary to:
(a) make any change in its Certificate of
Incorporation or By-Laws, issue any additional shares of capital stock
or equity security or grant any option, warrant, or right to acquire
any capital stock or equity securities, or issue any security
convertible into or exchangeable for its capital stock, or alter any
material term of any of its outstanding securities or make any change
in its outstanding shares of capital stock or other ownership interests
in its capitalization, whether by reason of a reclassification,
recapitalization, stock split or combination, exchange or readjustment
of shares, stock dividend or otherwise, or declare, set aside or pay
any dividend or other distribution (whether in cash, stock or property
or any combination thereof) in respect of its capital stock, or redeem
or otherwise acquire any shares of its capital stock;
<PAGE>
(b) (i) create, incur or assume any indebtedness for
money borrowed, including obligations in respect of capital leases; or
(ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the
obligations of any other person; provided, that the Subsidiary and the
Company may endorse negotiable instruments in the ordinary course of
business consistent with past practice;
(c) sell, franchise, move or close any of its stores
or make any other sale, assignment, transfer, abandonment or other
conveyance of any of its assets having a fair market value in excess of
$50,000 or any material part thereof, except transactions pursuant to
existing contracts set forth in the Schedules and dispositions of
inventory or of worn-out or obsolete equipment for fair or reasonable
value in the ordinary course of business consistent with past practice;
(d) subject any of its assets, or any part thereof,
to any Lien, or suffer such to be imposed, except for Permitted
Exceptions and such Liens as may arise in the ordinary course of
business consistent with past practice which will not, individually or
in the aggregate, have a Material Adverse Effect;
<PAGE>
(e) acquire any assets, raw materials or properties,
or enter into any other transaction in an amount in excess of $10,000
individually or $25,000 in the aggregate, other than in the ordinary
course of business consistent with past practice;
(f) (i) increase the rate or terms of compensation
payable or to become payable by the Subsidiary or the Company to its
directors, officers or key employees, except increases occurring in the
ordinary course of business in accordance with its customary practices
(which shall include normal periodic performance reviews and related
compensation and benefit increases); or (ii) increase the rate or terms
of any bonus, insurance, pension or other employee benefit plan,
payment or arrangement made to, for or with any such directors,
officers or key employees;
(g) enter into any agreement, commitment or
transaction (including without limitation any borrowing, capital
expenditure or capital financing) relating to the business, operations
or financial condition of the Subsidiary or the Company other than in
the ordinary course of business consistent with past practice;
(h) pay, loan or advance any amount to, or sell,
transfer or lease any properties or assets to, or enter into any
agreement or arrangement with, any of its Affiliates;
(i) make any change in any method of accounting or
accounting principle, method, estimate or practice, except for any such
change required by reason of a concurrent change in GAAP, or write-down
the value of any inventory or write-off as uncollectible any accounts
receivable, except in the ordinary course of business consistent with
past practice;
(j) settle, release or forgive any claim or
litigation or waive any right involving an amount greater than $50,000;
(k) amend in any material respect or terminate any of
the agreements identified in Schedule 3.17 other than in the ordinary
course of business consistent with past practice;
(l) commence actual construction of any new
facilities other than those identified on Schedule 5.2;
(m) engage in any activity which would cause a
material change in the regulatory status of the Subsidiary or the
Company which would be reasonably expected to have a Material Adverse
Effect; or
(n) commit itself to do any of the foregoing in any
manner.
<PAGE>
V.3 Access to Information
(a) Between the date of this Agreement and the Closing Date,
the Company will and will cause the Subsidiary to, during ordinary business
hours and upon reasonable notice, (i) give Buyer and its accountants, counsel,
environmental consultants, financial advisors and other authorized
representatives (the "Buyer Representatives") reasonable access to all books,
records, plants, offices and other facilities and properties of the Company to
which Buyer is permitted access by law, (ii) permit Buyer to make such
reasonable inspections thereof as Buyer may reasonably request, (iii) cause its
officers and advisors to furnish Buyer with such financial and operating data
and other information with respect to the business and properties of the
Subsidiary and the Company as Buyer may from time to time reasonably request,
(iv) cause its officers and advisors to furnish Buyer a copy of each report,
schedule or other document filed with or received by them from the SEC with
respect to the Subsidiary and the Company; provided, however, that (A) any such
investigation shall be conducted in such a manner as not to interfere
unreasonably with the operation of the business of the Subsidiary and the
Company, (B) the Subsidiary and the Company shall not be required to take any
action which would constitute a waiver of the attorney-client privilege, and (C)
the Subsidiary and the Company need not supply Buyer with any information which
the Subsidiary or the Company, as the case may be, is under a legal obligation
not to supply.
(b) All information furnished to or obtained by Buyer and the
Buyer Representatives pursuant to this Section 5.3 shall be subject to the
provisions of the Confidentiality Agreement, dated May 10, 1997, between the
Company and Buyer (the "Confidentiality Agreement") and shall be treated as
"Information" (as defined in the Confidentiality Agreement). In the event that
this Agreement shall be terminated without the Closing having occurred, Buyer
agrees that for a period of one year from the date of this Agreement it will not
use "Information" (as defined in the Confidentiality Agreement) to compete with
the Company's franchisees to obtain lease renewals in the malls where the
Company's franchised stores are presently located as of the date of this
Agreement.
<PAGE>
V.4 Insurance. The Company shall keep, and shall cause the Subsidiary to
keep, all insurance policies set forth on Schedule 3.13, or replacements
therefor with reputable firms and providing no lesser coverage (in amount or
scope), in full force and effect through the close of business on the Closing
Date.
V.5 WARN Act. To the extent required by law, the Company shall cause the
Subsidiary to timely give any required notices under the WARN Act relating to
any "plant closing" or "mass layoff" (as those terms are defined in WARN)
arising prior to the Closing.
V.6 Expenses. Except as specifically provided in this Agreement, whether or
not the transactions contemplated hereby are consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be borne by the party incurring such costs and expenses. The
Company shall be liable for the legal, accounting and professional fees of the
Sellers specified on Schedule 5.6 hereto.
V.7 Further Assurances. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use all commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the sale of Company Common Stock
pursuant to this Agreement. From time to time after the date hereof, without
further consideration, the Sellers will, at Buyer's expense, execute and deliver
such documents to Buyer as Buyer may reasonably request in order more
effectively to vest in Buyer good title to the Company Securities. From time to
time after the date hereof, without further consideration, Buyer will, at its
own expense, execute and deliver such documents to the Sellers as the Sellers
may reasonably request in order more effectively to consummate the sale of the
Company Securities pursuant to this Agreement.
V.8 Public Statements. The parties shall consult with each other prior to
issuing any public announcement, statement or other disclosure with respect to
this Agreement or the transactions contemplated hereby and shall not issue any
such public announcement, statement or other disclosure prior to such
consultation, except as may be required by law and except that the parties may
make public announcements, statements or other disclosures with respect to this
Agreement and the transactions contemplated hereby to the extent and under the
circumstances in which the parties are expressly permitted by the
Confidentiality Agreement to make disclosures of "Information" (as defined in
the Confidentiality Agreement).
<PAGE>
V.9 Consents and Approvals.
(a) The Company and Buyer shall cooperate with each other and
(i) promptly prepare and file all necessary documentation, (ii) effect all
necessary applications, notices, petitions and filings and execute all
agreements and documents, (iii) use all commercially reasonable efforts to
obtain all necessary permits, consents, approvals and authorizations of all
governmental bodies and (iv) use all commercially reasonable efforts to obtain
all necessary Environmental Permits, Permits, consents, approvals and
authorizations of all other parties, in the case of each of the foregoing
clauses (i), (ii), (iii) and (iv), necessary or advisable to consummate the
transactions contemplated by this Agreement or required by the terms of any
note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
concession, contract, lease or other instrument to which the Company or Buyer or
any of its subsidiaries is a party or by which any of them is bound. Without
limiting the foregoing, the Company shall cooperate with Buyer in connection
with Buyer's efforts to obtain the Financing and to successfully complete the
Senior Note Tender Offer (as hereinafter defined), such cooperation to include
without limitation (i) facilitating due diligence investigations by potential
financing sources, (ii) assuring cooperation by the Company's and the
Subsidiary's independent accountants in any audit of the Company's and the
Subsidiary's, financial statements by Arthur Andersen LLP and providing
customary consents, comfort letters and access to work papers, and (iii)
executing and delivering any required supplemental indenture and other documents
in connection with the Financing and the Senior Note Tender Offer.
(b) The Sellers shall have the right but not the obligation to
review and approve in advance all characterizations of the information relating
to the Subsidiary and the Company, and each of the Sellers and Buyer shall have
the right but not the obligation to review and approve in advance all
characterizations of the information relating to the transactions contemplated
by this Agreement, which appear in any filing made in connection with the
transactions contemplated hereby or in the Offering Memorandum relating to the
Financing. The Sellers and Buyer agree that they will consult with each other
with respect to the obtaining of all such necessary Environmental Permits,
consents, approvals and authorizations of all third parties and governmental
bodies. The Sellers and Buyer shall designate separate counsel with respect to
all applications, notices, petitions and filings (joint or otherwise), relating
to this Agreement and the transactions contemplated hereby, on behalf of the
Sellers, the Subsidiary or the Company, on the one hand, and Buyer, on the other
hand, with all governmental bodies.
(c) The parties hereto shall consult with each other prior to
proposing or entering into any stipulation or agreement with any Federal, State
or local governmental authority or agency or any third party in connection with
any Federal, State, or local governmental consents and approvals legally
required for the consummation of the transactions contemplated hereby and shall
not propose or enter into any such stipulation or agreement without the other
party's prior written consent, which consent shall not be unreasonably withheld.
<PAGE>
V.10 Sales and Transfer Taxes. All securities and other transfer taxes
incurred in connection with this Agreement and the transactions contemplated
hereby shall be borne by the Company. Buyer will file all necessary tax returns
and other documentation with respect to all such transfer taxes, and, if
required by applicable law, the Sellers will join in the execution of any such
tax returns or other documentation, subject to their reasonable prior review
thereof and opportunity to comment thereon.
V.11 Supplemental Information. From time to time prior to the Closing Date
and upon becoming aware of any such matter, condition or occurrence, the Company
and the Subsidiary will promptly disclose to Buyer, and Buyer will promptly
disclose to the Company, (i) any material development affecting the ability of
such party to consummate the transactions contemplated by this Agreement, (ii)
any matter, condition, occurrence or knowledge which, if existing or occurring
at the date of this Agreement, would have been required to be excepted from any
representation and warranty contained herein in order for such representation or
warranty to be true and correct on the date hereof or otherwise set forth or
described in the respective Schedule or (iii) any breach of any covenant or
agreement contained in this Agreement of which such party has knowledge.
V.12 Employees. . Buyer agrees that it will cause the Subsidiary to honor
the agreements and arrangements with its employees that are identified in
Schedule 3.16. Notwithstanding the foregoing, it is understood that nothing in
this Agreement shall prohibit or restrict Buyer from terminating the employment
of any of the Subsidiary's employees, changing compensation levels or other
terms and conditions of employment (other than service credit for past
employment with the Subsidiary) subsequent to the Closing Date, subject to the
obligations of Buyer and the Subsidiary with respect to the items identified on
Schedule 3.16. Nothing in this Section 5.12, express or implied, is intended to
confer or shall confer upon any of the Subsidiary's employees or former
employees any rights or remedies of any nature or kind whatsoever under or by
reason of this Agreement, including, without limitation, any rights of
employment.
<PAGE>
ARTICLE VI
CLOSING CONDITIONS
VI.1 Conditions to Each Party's Obligations to Effect the
Transactions Contemplated HerebThe respective obligations of each party to
effect the transactions contemplated hereby shall be subject to no preliminary
or permanent injunction or other order or decree by any federal or state court
which prevents the consummation of the transactions contemplated hereby having
been issued and remaining in effect (each party agreeing to use its reasonable
best efforts to have any such injunction, order or decree lifted), and no
statute, rule or regulation having been enacted by any Federal, State, or local
governmental agency in the United States which prohibits the consummation of the
transactions contemplated hereby.
V.I.2 Conditions to Obligations of Buyer
(a) The obligation of Buyer to effect the transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Pre-Closing Date of the following additional conditions:
(i) Buyer shall have entered into the Financing Agreements;
(ii) Buyer shall have received binding and irrevocable
tenders and consents from the holders of not less than
75% of the Subsidiary's outstanding 10f% Senior Secured
Notes due 2001 (the "Senior Notes") to sell their
Senior Notes to Buyer and to consent to such amendments
to or waivers under the Indenture under which the
Senior Notes were issued as Buyer determines are
necessary to facilitate the Financing (such tender
offer and consent solicitation, collectively, the
"Senior Note Tender Offer");
<PAGE>
(iii) Buyer shall received executed Settlement
Agreement and Releases in the form of Annex B hereto from franchisees
of the Subsidiary and related investors accounting for at least 80% of
the Subsidiary's franchisees, excluding for such purposes the
franchisees owned or controlled by any of the Sellers or other
significant franchisees that have already been received;
(iv) the Company shall have provided to Buyer the
information necessary to permit the calculation of any adjustments
pursuant to Section 1.2(b);
(v) the Company shall have provided evidence
reasonably satisfactory to Buyer that all of the Warrants have been
cancelled consistent with Section 1.5 and that the Affiliate
Arrangements identified on Schedule 6.2(a)(v) other than the Franchise
Agreements for franchisees in which Mr. Karp is an investor, as amended
in accordance with Annex B hereto, have been terminated effective not
later than the Closing Date with no additional amounts payable
thereunder by the Company or the Subsidiary; and
(vi) the Company and the Sellers shall have performed
and complied with in all material respects the covenants and agreements
contained in this Agreement required to be performed and complied with
by it or them at or prior to the Closing Date, the representations and
warranties of the Company and the Sellers set forth in this Agreement
shall be true and correct in all material respects as of the date of
this Agreement and as of the Pre-Closing Date as though made at and as
of the Pre-Closing Date, there shall not have occurred and be
continuing a Material Adverse Effect, and Buyer shall have received a
certificate to the foregoing effect signed by an authorized officer of
the Company.
(b) The obligation of Buyer to effect the transactions
contemplated by this Agreement shall be subject to the fulfillment at or prior
to the Closing Date of the following additional conditions:
(i) the delivery to it of the Escrowed Seller Documents and
the Escrowed Company Documents; and
(ii) the Company and the Sellers shall have performed and
complied with in all material respects the covenants and
agreements contained in this Agreement required to be
performed and complied with by it or them at or prior to the
Closing Date.
<PAGE>
VI.3 Conditions to Obligations of the Sellers
The obligation of the Sellers to effect the transactions contemplated by this
Agreement shall be subject to the fulfillment at or prior to the Pre-Closing
Date of the following additional conditions:
(a) Buyer shall have performed in all material respects its
covenants and agreements contained in this Agreement required to be performed at
or prior to the Pre-Closing Date; and
(b) the representations and warranties of Buyer set forth in
this Agreement shall be true and correct in all material respects as of the date
of this Agreement and as of the Closing Date as though made at and as of the
Closing Date, and the Company and the Sellers the Sellers shall have received a
certificate to that effect signed by an authorized officer of Buyer.
ARTICLE VII
TERMINATION AND ABANDONMENT
VII.1 Termination
(a This Agreement may be terminated at any time prior to the
Closing Date, by mutual written consent of Buyer, the Company and the Sellers.
<PAGE>
(b This Agreement may be terminated by the Company, Buyer or
the Sellers if the transactions contemplated hereby shall not have been
consummated on or before August 24, 1998; provided that the right to terminate
this Agreement under this Section 7.1(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Closing Date to occur on or before such
date.
(c This Agreement may be terminated by either the Company or
Buyer if any court of competent jurisdiction in the United States or any State
shall have issued an order, judgment or decree permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated hereby and such
order, judgment or decree shall have become final and nonappealable.
(d This Agreement may be terminated by Buyer if there has been
a material violation or breach by the Company or the Sellers of any agreement,
representation or warranty contained in this Agreement which has rendered the
satisfaction of any condition to the obligations of Buyer impossible and such
violation or breach has not been waived by Buyer.
(e This Agreement may be terminated by the Company or the
Sellers if there has been a material violation or breach by Buyer of any
agreement, representation or warranty contained in this Agreement which has
rendered the satisfaction of any condition to the obligations of the Sellers
impossible and such violation or breach has not been waived by the Sellers.
VII.2 Procedure and Effect of Termination. In the event of termination of
this Agreement and abandonment of the transactions contemplated hereby by either
or both of the parties pursuant to Section 7.1, written notice thereof shall
forthwith be given by the terminating party to the other party and this
Agreement shall terminate and the transactions contemplated hereby shall be
abandoned, without further action by any of the parties hereto. If this
Agreement is terminated as provided herein:
<PAGE>
(a none of the parties hereto nor any of their
respective directors, officers or affiliates, as the case may be, shall
have any liability or further obligation to the other party or any of
their respective directors, officers or affiliates, as the case may be,
pursuant to this Agreement, except for liability for any breach of this
Agreement and except in each case as stated in this Section 7.2 and in
Sections 5.3(b), 5.6 and 5.8; provided, that the sole recourse of Buyer
with respect to any such liability arising out of this Section 7.2(a)
shall be to assert a claim against the Company (which shall be
responsible for any breaches by the Company or by the Sellers) and not
the Sellers; and
(b all filings, applications and other submissions
made pursuant to this Agreement, to the extent practicable, shall be
withdrawn from the agency or other person to which they were made.
ARTICLE VIII
INDEMNIFICATION
VIII.1 Coverage. Each of the Sellers, severally, but not jointly, shall
indemnify, defend and hold harmless Buyer from all damages, liabilities, losses,
costs, expenses (including all reasonable fees), claim or cause of action
("Losses") arising out of or resulting from, or shall pay or become obligated to
pay any sum on account of, any breach of representation and warranty as to such
Seller in Section 3.25.
VIII.2 Limitation of Liability. Any Seller's liability with respect to
indemnification in Section 8.1 shall be limited to that portion of the cash
purchase price received for Company Securities sold by such Seller.
<PAGE>
ARTICLE IX
MISCELLANEOUS PROVISIONS
IX.1 Amendment and Modification. Subject to applicable law, this Agreement
may be amended, modified or supplemented only by written agreement of the
Company, the Sellers and Buyer.
IX.2 Waiver of Compliance; Consents. . Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled to
the benefits thereof only by a written instrument signed by the party granting
such waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
IX.3 No Survival or Representations and Warranties. . Each and every
representation and warranty contained in this Agreement and each and every
covenant contained in this Agreement (other than the covenants in Section
5.3(b), 5.6, 5.8 and 5.12 and the representations and warranties in Section
3.25) shall expire with, and be terminated and extinguished by, (i) the
consummation of the sale of the Company Securities pursuant to this Agreement
and shall not survive the Closing Date, or (ii) the termination of this
Agreement pursuant to Section 7.1 or otherwise.
IX.4 Notices. . All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by facsimile
transmission or mailed by registered or certified mail (return receipt
requested), postage prepaid, to the parties at the following addresses or
facsimile numbers (or at such other address or facsimile number for a party as
shall be specified by like notice; provided that notices of a change of address
shall be effective only upon receipt thereof):
<PAGE>
(a If to Buyer, to: Mrs. Fields' Original Cookies, Inc. 2855 East Cottonwood
Parkway, Suite 400 Salt Lake City, Utah 84121 facsimile no.: (801) 736-5943
Attention: Mr. Larry A. Hodges
with copies to:
Mrs. Fields' Original Cookies, Inc.
2855 East Cottonwood Parkway, Suite 400
Salt Lake City, Utah 84121
facsimile no.: (801) 736-5943
Attention: Legal Department
Capricorn Management, G.P.
30 East Elm Street
Greenwich, Connecticut 06830
facsimile no.: (203) 861-6671
Attention: Mr. Herbert S. Winokur, Jr.
and
Skadden, Arps, Slate, Meagher
& Flom LLP
919 Third Avenue
New York, New York 10022
facsimile no.: (212) 735-2000
Attention: Randall H. Doud, Esq.
(b if to the Company or the Sellers, to:
Cookies USA, Inc.
c/o The Jordan Company
9 West 57th Street, Suite 4000
New York, New York 10019
facsimile no.: (212) 755-5263
Attention: Mr. Adam Max
with copies to:
Mayer Brown & Platt
1675 Broadway
New York, New York 10019-5820
facsimile no.: (212) 262-1910
Attention: Martin J. Collins, Esq., and
Michael Coles
2450 Kirk Lane
Kennesaw, Georgia 30144, and
Arthur S. Karp
7902 Sanderling Road
Sarasota, Florida 34242
<PAGE>
IX.5 Assignment. . This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but, except to the extent specifically
provided in Section 1.1, neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any party hereto, including by
operation of law, without the prior written consent of the other party, nor is
this Agreement intended to confer upon any other person except the parties
hereto any rights or remedies hereunder.
IX.6 Governing Law. . This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (regardless of the laws that
might otherwise govern under applicable New York principles of conflicts of law)
as to all matters, including but not limited to matters of validity,
construction, effect, performance and remedies.
IX.7 Counterparts. . This Agreement may be executed in two counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
IX.8 Interpretation. . The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement. All references to Schedules are to the Disclosure Schedule
delivered by the Company to Buyer as of the date of this Agreement, as they may
be amended pursuant to Section 5.11 subject to Buyer's rights under Section
7.1(d). As used in this Agreement, the term "person" shall mean and include an
individual, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization and a governmental entity or any department or
agency thereof. As used in this Agreement, the term "Permitted Exceptions" shall
mean and include (i) those exceptions to title to the properties and assets of
the Company listed in Schedule 3.11; (ii) all exceptions, restrictions,
easements, rights of way and encumbrances set forth in title reports or title
insurance binders which have been made available to Buyer; (iii) mortgages,
liens, pledges, charges, encumbrances and restrictions which secure debt that is
reflected as a liability on the Company Balance Sheet or which are otherwise
reflected in the Company Balance Sheet or disclosed in the notes thereto; (iv)
mortgages, liens, pledges, charges, encumbrances and restrictions incurred in
connection with the Company's purchase of properties and assets after the date
of the Company Balance Sheet securing all or a portion of the purchase price
therefor; (v) statutory liens for current taxes or assessments not yet due or
delinquent or the validity of which is being contested in good faith by
appropriate proceedings; (vi) mechanics', carriers', workers', repairers' and
other similar liens arising or incurred in the ordinary course of business
relating to obligations as to which there is no default on the part of the
Company; (vii) zoning, entitlement and other land use and environmental
regulations by governmental authorities and (viii) such other liens,
imperfections in title, charges, easements, restrictions and encumbrances which
do not materially detract from the value of or materially interfere with the
present use of any property subject thereto or affected thereby that is material
to the business, operations or financial condition of the Company or which
relate to properties that are not material to the Company and do not, in the
aggregate have a Material Adverse Effect. As used in this Agreement, the term
"subsidiary" when used in reference to any other person shall mean any
corporation of which outstanding securities having ordinary voting power to
elect a majority of the Board of Directors of such corporation are owned
directly or indirectly by such other person.
<PAGE>
IX.9 Entire Agreement. . This Agreement, including the documents,
Schedules, certificates and instruments referred to herein, and the
Confidentiality Agreement embody the entire agreement and understanding of the
parties hereto in respect of the transactions contemplated by this Agreement.
There are no restrictions, promises, representations, warranties, covenants or
undertakings, other than those expressly set forth or referred to herein or
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such transactions other than the
Confidentiality Agreement.
<PAGE>
IN WITNESS WHEREOF, the Company, the Sellers and Buyer have
caused this agreement to be signed by their respective duly authorized officers
as of the date first above written.
MRS. FIELDS' ORIGINAL COOKIES,
INC.
By /s/Larry A. Hodges
Name: Larry A. Hodges
Title: CEO
COOKIES USA, INC.
By /s/Adam E. Max
Name: Adam E. Max
Title: VP
THE SELLERS:
LEUCADIA INVESTORS, INC.
By /s/Joseph A. Orlardo
Name: Joseph A. Orlardo
Title: Vice President
JOHN W. JORDAN, II REVOCABLE TRUST
By /s/John W. Jordan
Name: John W. Jordan
Title:
UNIVERSITY OF NOTRE DAME/THE JOHN
W. JORDAN II FUND
By: /s/E. William Beauchamze
Name: E. William Beauchamze
Title: EVP
/s/David W. Zalaznick
David W. Zalaznick
/s/Johnathan F. Boucher
Jonathan F. Boucher
/s/John R. Lowden
John R. Lowden
<PAGE>
DELEWARE CHARTER GUARANTEE & TRUST
CO. F/B/O JOHN R. LOWDEN
By:/s/John R. Lowden
Name: John R. Lowden
Title: Trustee
/s/Adam E. Max
Adam E. Max
/s/John M. Camp
John M. Camp
JOHN M. CAMP III, PROFIT SHARING PLAN, 1/1/88, JOHN M. CAMP III, TRUSTEE
By /s/John M. Camp
Name: John M. Camp
Title: Trustee
/s/A. Richard Caputo, Jr.
A. Richard Caputo, Jr.
JAMES E. JORDAN, JR. PROFIT SHARING PLAN & TRUST
By /s/James E. Jordan, Jr.
Name: James E. Jordan, Jr.
Title: Trustee
PAUL RODZEVIK PROFIT SHARING PLAN & TRUST
By /s/Paul Rodzevik
Name: Paul Rodzedvik
Title: Trustee
/s/Thomas H. Quinn
Thomas H. Quinn
JII PARTNERS
By /s/Thomas H. Quinn
Name: Thomas H. Quinn
Title:
MCIT (EXISTING POOL) LIMITED
By /s/James E. Jordan
Name: James E. Jordan
Title: Director
<PAGE>
COOKIES USA PARTNERS, L.P.
By Jefferies & Company, Inc. Its General Partner
By /s/Jerry M. Gluck
Name: Jerry M. Gluck
Title: Executive Vice President
/s/Michael J. Coles
Michael J. Coles
/s/Arthur S. Karp
Arthur S. Karp
GEORGIA COOKIES, INC.
By /s/Arthur S. Karp
Name: Arthur S. Karp
Title: President
THE ARTHUR S. KARP FAMILY FOUNDATION, INC.
By /s/Arthur S. Karp
Name: Arthur S. Karp
Title: Chair
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE ISALE OF STOCK AND TERMS OF PAYMENT....................................2
1.1 The Sale.......................................................2
1.2 Consideration..................................................3
1.3 The Sellers' Releases..........................................5
1.4 Other Matters..................................................6
1.5 Warrants.......................................................8
ARTICLE II
THE PRE-CLOSING AND CLOSING....................................................8
2.1 Time and Place of Pre-Closing and Closing......................8
2.2 Deliveries by the Sellers and the Company.....................10
2.3 Deliveries by Buyer...........................................12
ARTICLE IIIREPRESENTATIONS AND WARRANTIES OF THE COMPANYAND THE SELLERS.......12
3.1 Organization; Qualification...................................13
3.2 The Company's Capitalization..................................14
3.3 Title to Stock. ..............................................16
3.4 Authority Relative to this Agreement..........................16
3.5 Subsidiaries and Equity Investments; Affiliates...............17
3.6 Consents and Approvals; No Violation..........................17
3.7 Reports.......................................................19
3.8 Financial Statements..........................................20
3.9 Undisclosed Liabilities.......................................22
3.10 Absence of Certain Changes or Events.........................23
3.11 Personal Property............................................25
3.12 Real Property................................................26
3.13 Insurance....................................................28
3.14 Environmental Matters........................................29
3.15 Labor Matters. ..............................................33
3.16 ERISA; Benefit Plans.........................................34
3.17 Certain Contracts and Arrangements...........................40
3.18 Intellectual Property........................................42
3.19 Customers, Suppliers and Competitors.........................44
3.20 Legal Proceedings, etc.......................................44
3.21 Tax Matters..................................................45
<PAGE>
3.22 Arrangements with Directors, Officers
and Affiliates............................................48
--------------
3.23 Compliance with Law..........................................49
-------------------
3.24 Fees and Commissions.........................................50
--------------------
3.25 Representations of the Sellers...............................50
------------------------------
ARTICLE IVREPRESENTATIONS AND WARRANTIES OF BUYER.............................53
4.1 Organization..................................................53
4.2 Authority Relative to this Agreement. ........................53
4.3 Consents and Approvals; No Violation..........................54
4.4 Acquisition of Stock for Investment...........................56
4.5 Financing. ...................................................56
4.6 Fees and Commissions..........................................56
4.7 Knowledge of Inaccuracies.....................................56
ARTICLE VCOVENANTS OF THE PARTIES.............................................57
5.1 HSR Act Compliance............................................57
5.2 Conduct of Business of the Company............................57
5.3 Access to Information.........................................63
5.4 Insurance.....................................................64
5.5 WARN Act......................................................65
5.6 Expenses......................................................65
5.7 Further Assurances. ..........................................65
5.8 Public Statements.............................................66
5.9 Consents and Approvals........................................67
5.10 Sales and Transfer Taxes.....................................69
5.11 Supplemental Information.....................................70
5.12 Employees....................................................70
ARTICLE VICLOSING CONDITIONS..................................................71
6.1 Conditions to Each Party's Obligations to
Effect the Transactions Contemplated Hereby................71
-------------------------------------------
6.2 Conditions to Obligations of Buyer............................72
----------------------------------
6.3 Conditions to Obligations of the Sellers......................74
----------------------------------------
<PAGE>
ARTICLE VIITERMINATION AND ABANDONMENT........................................75
7.1 Termination...................................................75
7.2 Procedure and Effect of Termination...........................77
ARTICLE VIIIINDEMNIFICATION...................................................78
8.1 Coverage. ...................................................78
8.2 Limitation of Liability. ....................................78
ARTICLE IXMISCELLANEOUS PROVISIONS............................................79
9.1 Amendment and Modification. ..................................79
9.2 Waiver of Compliance; Consents................................79
9.3 No Survival of Representations and Warranties.................79
9.4 Notices.......................................................80
9.5 Assignment....................................................81
9.6 Governing Law.................................................82
9.7 Counterparts..................................................82
9.8 Interpretation................................................82
9.9 Entire Agreement..............................................84
STOCK PURCHASE AGREEMENT
AMONG
MRS. FIELDS' ORIGINAL COOKIES, INC.,
as Buyer,
AND
JAKE TORTORICE
of
CHOCOLATE CHIP COOKIES OF TEXAS, INC.
as Seller
EFFECTIVE FOR ACCOUNTING PURPOSES AS OF
June 30, 1998
<PAGE>
TABLE OF CONTENTS
PAGE
1. Definitions......................................................... 1
2. Purchase and Sale of Company Shares................................. 6
(a) Basic Transaction.......................................... 6
(b) Purchase Price............................................. 6
(c) Credits At Closing......................................... 7
(d) The Closing................................................ 7
(e) The Escrow................................................. 7
(f) Deliveries at the Closing.................................. 8
(g) Post Closing Adjustment.................................... 8
3. Representations and Warranties Concerning the Transaction........... 10
(a) Representations and Warranties of the Seller............... 10
(i) Authorization of Transaction...................... 10
(ii) Noncontravention.................................. 10
(iii) Brokers' Fees..................................... 10
(iv) Company Shares.................................... 10
(v) Absence of Indebtedness and Claims................ 11
(b) Representations and Warranties of the Buyer................ 11
(i) Organization of the Buyer......................... 11
(ii) Authorization of Transaction...................... 11
(iii) Non-Contravention................................. 11
(iv) Brokers' Fees..................................... 11
(v) Investment........................................ 12
4. Representations and Warranties Concerning the Company............... 12
(a) Organization, Qualification, and Corporate Power........... 12
(b) Capitalization............................................. 13
(c) Non-Contravention.......................................... 13
(d) Brokers' Fees.............................................. 13
(e) Title to Assets............................................ 13
(f) Financial Statements; Working Capital...................... 13
(g) Events Subsequent to Most Recent Fiscal Year End........... 14
(h) Undisclosed Liabilities.................................... 16
<PAGE>
(i) Legal Compliance........................................... 17
(j) Tax Matters................................................ 17
(k) Real Property.............................................. 19
(l) Intellectual Property...................................... 20
(m) Tangible Assets............................................ 23
(n) Inventory.................................................. 23
(o) Contracts.................................................. 23
(p) Notes and Accounts Receivable.............................. 24
(q) Powers of Attorney......................................... 24
(r) Insurance.................................................. 25
(s) Litigation................................................. 25
(t) Product Warranty........................................... 26
(u) Product Liability.......................................... 26
(v) Employees.................................................. 26
(w) Employee Benefit........................................... 26
(x) Guaranties................................................. 28
(y) Environment, Health, and Safety............................ 29
(z) Certain Business Relationships with the Company............ 29
(aa) Disclosure................................................. 29
5. Pre-Closing Covenants............................................... 30
(a) General.................................................... 30
(b) Notices and Consents....................................... 30
(c) Operation of Business...................................... 30
(d) Preservation of Business................................... 32
(e) Full Access................................................ 32
(f) Notice of Developments..................................... 32
(g) Exclusivity................................................ 32
6. Post-Closing Covenants.............................................. 32
(a) General.................................................... 32
(b) Litigation Support......................................... 33
(c) Transition................................................. 33
(d) Confidentiality............................................ 33
(e) Covenant Not to Compete.................................... 34
(f) Employees.................................................. 35
(g) Franchise and License Fees................................. 36
<PAGE>
7. Conditions to Obligation to Close................................... 36
(a) Conditions to Obligation of the Buyer...................... 36
(b) Conditions to Obligation of the Seller..................... 38
8. Remedies for Breaches of This Agreement............................. 39
(a) Survival of Representations and Warranties................. 39
(b) Indemnification Provisions for Benefit of the Buyer........ 39
(c) Indemnification Provisions for Benefit of the Seller....... 39
(d) Matters Involving Third Parties............................ 40
(e) Determination of Adverse Consequences...................... 41
(f) Certain Set-Off Rights..................................... 41
(g) Other Indemnification Provisions........................... 42
9. Termination......................................................... 42
(a) Termination of Agreement................................... 42
(b) Effect of Termination...................................... 43
10. Miscellaneous....................................................... 43
(a) Press Releases and Public Announcements.................... 43
(b) No Third-Party Beneficiaries............................... 44
(c) Entire Agreement........................................... 44
(d) Succession and Assignment.................................. 44
(e) Counterparts............................................... 44
(f) Headings................................................... 44
(g) Notices.................................................... 44
(h) Governing Law.............................................. 45
(i) Amendments and Waivers..................................... 45
(j) Severability............................................... 45
(k) Expenses................................................... 46
(l) Construction............................................... 46
(m) Incorporation of Exhibits, Annexes, and Schedules.......... 46
(n) Specific Performance....................................... 46
(o) Dispute Resolution......................................... 46
(p) Submission to Jurisdiction................................. 48
(q) Attorneys' Fees............................................ 48
(r) Joinder of Spouse.......................................... 48
<PAGE>
EXHIBITS
A List of Related Transactions
B Escrow Agreement
C Financial Statements of the Company
D Form of Opinion of the Seller?s Counsel
ANNEXES
I Exceptions to Seller's Representations
II Exceptions to Buyer's Representations
DISCLOSURE SCHEDULE
2(c) Credits at Closing
4(a) List of Present and Proposed Retail Store Sites;
List of Directors and Officers
4(b) Company Shares
4(g)(xiii) Permitted Company Distributions
4(j)(iii) Tax Returns
4(j)(vii) Bases in Assets, Losses, Credits
4(k)(ii) Real Property Leased or Subleased
4(l)(iii) Intellectual Property
4(l)(iv) Licenses From Third Parties
4(o) Contracts
4(p) Notes and Accounts Receivable
4(r) Insurance
4(s) Litigation
4(w) Employee Benefit Plans
<PAGE>
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT entered into effective for
accounting purposes as of June 30, 1998 (the "Effective Date"), and for all
other purposes, on the Closing Date (defined herein) by and between Mrs. Fields'
Original Cookies, Inc. a Delaware corporation (the "Buyer"), and Jake Tortorice
(the "Seller"). The Buyer and the Seller are referred to collectively herein as
"Party" in the singular and "Parties" in the plural.
The Seller owns one hundred percent (100%) of the issued
outstanding capital stock of Chocolate Chip Cookies of Texas, Inc., a Texas
corporation (the "Company").
This Agreement contemplates a transaction in which the Buyer will
purchase from the Seller, and the Seller will sell to the Buyer, all of the
issued and outstanding capital stock of the Company in return for cash and other
consideration set forth herein.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints, claims,
demands, injunctions, judgments, orders, decrees, rulings, damages,
dues, penalties, fines, costs, amounts paid in settlement,
Liabilities, obligations, Taxes, liens, losses, expenses, and fees,
including court costs and attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations promulgated under the Securities Exchange Act.
"Affiliated Group" means any affiliated group within the
meaning of Code Sec. 1504, or any similar group defined under a
similar provision of state, local or foreign law.
"Arbitrator" has the meaning set forth in 2(g)(ii).
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction
that forms or could form the basis for any specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Buyer Indemnified Parties" has the meaning set forth in
8(b) below.
<PAGE>
"Closing" has the meaning set forth in 2(d) below.
"Closing Date" has the meaning set forth in 2(d) below.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface above.
"Company Share" means any share of the Common Stock, par
value $1.00 per share, of the Company.
"Confidential Information" means any information
concerning the businesses and affairs of the Company that is not
already generally available to the public.
"Controlled Group of Corporations" has the meaning set forth
in Code Sec. 1563.
"Deferred Payments" has the meaning set forth in 2(b)(ii)
below.
"Disclosure Schedule" has the meaning set forth in 4 below.
"Effective Date" has the meaning set forth in the preface
above.
"Employee Benefit Plan" means any (a) nonqualified
deferred compensation or retirement plan or arrangement which is an
Employee Pension Benefit Plan, (b) qualified defined contribution
retirement plan or arrangement which is an Employee Pension Benefit
Plan, (c) qualified defined benefit retirement plan or arrangement
which is an Employee Pension Benefit Plan (including any
Multiemployer Plan), or (d) Employee Welfare Benefit Plan or
"Employee Pension Benefit Plan" has the meaning set forth in
ERISA Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in
ERISA Sec. 3(1).
"Environmental, Health, and Safety Laws" means the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, the Resource Conservation and Recovery Act of 1976,
and the Occupational Safety and Health Act of 1970, each as
amended, together with all other laws (including rules,
regulations, codes, plans, injunctions, judgments, orders, decrees,
rulings, and charges thereunder) of federal, state, local, and
foreign governments (and all agencies thereof) concerning pollution
or protection of the environment, public health and safety, or
employee health and safety, including laws relating to emissions,
discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground water,
or lands or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, or chemical, industrial,
hazardous, or toxic materials or wastes.
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Escrow Account" has the meaning set forth in 2(e) below.
"Escrow Agent" has the meaning set forth in 2(e) below.
"Escrow Agreement" has the meaning set forth in 2(e) below.
"Escrowed Buyer Documents" has the meaning set forth in
2(d)(i) below.
"Escrowed Seller Documents" has the meaning set forth in
2(d)(i) below.
"Excess Loss Account" has the meaning set forth in Treas.
Reg. 1.1502-19.
"Extremely Hazardous Substance" has the meaning set forth in
Sec. 302 of the Emergency Planning and Community
Right-to-Know Act of 1986, as amended.
"Fiduciary" has the meaning set forth in ERISA Sec. 3(21).
"Financial Statements" has the meaning set forth in 4(f)
below.
"Franchisee Litigation" refers to any pending or
threatened claims, liabilities or litigation asserted against the
Buyer by or on behalf of the Seller, the Company, Great American
Cookie Company or any area developer, franchisee, licensee or agent
thereof, including without limitation, all of the claims asserted,
or that could be asserted, in that certain action styled Robert and
Sheila Goldberg vs. Great American Cookie Company and Mrs. Fields'
Original Cookies, Inc., et al., Case No. MER-L-3502-97, pending in
Superior Court of New Jersey, Law Division, Mercer County.
"GAAP" means United States generally accepted accounting
principles as in effect from time to time.
"GACC" means any person or entity, including without
limitation, Great American Cookie Company or its parent or
affiliated entities, that has entered into any franchise or related
agreements with Seller.
"Indemnified Party" has the meaning set forth in 8(d) below.
<PAGE>
"Indemnifying Party" has the meaning set forth in 8(d)
below.
"Intellectual Property" means (a) all inventions (whether
patentable or unpatentable and whether or not reduced to practice),
all improvements thereto, and all patents, patent applications, and
patent disclosures, together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos,
trade names, and corporate names, together with all translations,
adaptations, derivations, and combinations thereof and including
all goodwill associated therewith, and all applications,
registrations, and renewals in connection therewith, (c) all
copyrightable works, all copyrights, and all applications,
registrations, and renewals in connection therewith, (d) all mask
works and all applications, registrations, and renewals in
connection therewith, (e) all trade secrets and confidential
business information (including ideas, research and development,
know-how, recipes, formulas, production processes and techniques,
technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software
(including data and related documentation), (g) all other
proprietary rights, and (h) all copies and tangible embodiments
thereof (in whatever form or medium).
"Knowledge" means actual knowledge after reasonable
investigation.
"Liability" means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), including any liability for
Taxes.
"Most Recent Balance Sheet" means the balance sheet
contained within the Most Recent Financial Statements.
"Most Recent Financial Statements" has the meaning set forth
in 4(f) below.
"Most Recent Fiscal Month End" has the meaning set forth in
4(f) below.
"Most Recent Fiscal Year End" has the meaning set forth in
4(f) below.
"Multiemployer Plan" has the meaning set forth in ERISA Sec.
3(37).
"Notice of Disagreement" has the meaning set forth in
2(g)(ii)
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including
with respect to quantity and frequency).
<PAGE>
"Party" or "Parties" has the meaning set forth in the
preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a corporation,
limited liability company, an association, a joint stock
company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department,
agency, or political subdivision thereof).
"Pre-Closing" has the meaning set forth in 2(d)(i) below.
"Pre-Closing Date" has the meaning set forth in 2(d)(i)
below.
"Pre-Closing Escrow" has the meaning set forth in 2(d)(i)
below.
"Prohibited Transaction" has the meaning set forth in ERISA
Sec. 406 and Code Sec. 4975.
"Purchase Price" has the meaning set forth in 2(b) below.
"Related Transactions" means the transactions described on
Exhibit A to be entered into among the Buyer and any other
Persons and closed concurrently or in conjunction with the
transactions that are the subject of this Agreement.
"Reportable Event" has the meaning set forth in ERISA Sec.
4043.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than
(a) mechanic's, materialmen's, and similar liens, (b) liens
for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate
proceedings, (c) purchase money liens and liens securing
rental payments under capital lease arrangements, and (d)
other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Seller" has the meaning set forth in the preface above.
"Store" or "Stores" has the meaning set forth in 4(a) below.
"Store Leases" has the meaning set forth in 4(k)(ii)(a)
below.
<PAGE>
"Subsidiary" means any (A) corporation with respect to which
a specified Person (or a Subsidiary thereof) owns a majority
of the common stock or has the power to vote or direct the
voting of sufficient securities to elect a majority of the
directors, or (B) limited liability company of which a
specified Person (or a Subsidiary thereof) is a member or
managing member, or (C) any other entity in which the
Company has any ownership interest.
"Tax" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits,
environmental (including taxes under Code Sec. 59A), customs
duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real
property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including
any interest, penalty, or addition thereto, whether disputed
or not.
"Tax Return" means any return, declaration, report, claim
for refund, or information return or statement relating to
Taxes, including any schedule or attachment thereto, and
including any amendment thereof.
"Third Party Claim" has the meaning set forth in 8(d) below.
"Working Capital" means the Company's current assets
(comprised of the Company's cash, inventory, and other
current assets set forth on the Most Recent Balance Sheet),
less the Company's (i) current liabilities (comprised of
accounts payable, notes payable and other current
liabilities set forth on the Most Recent Balance Sheet), and
(ii) long-term debt, as of the date indicated.
"Working Capital Amount" has the meaning set forth in
2(g)(i).
"Working Capital Requirement" has the meaning set forth in
2(f)(iii).
"Working Capital Statement" has the meaning set forth in
2(g)(i).
2. Purchase and Sale of Company Shares.
(a) Basic Transaction. On and subject to the terms and
conditions of this Agreement, for the consideration
specified below in this 2, the Buyer agrees to purchase from
the Seller, and the Seller agrees to sell to the Buyer, 250
Company Shares, representing all of the issued and
outstanding Company Shares.
(b) Purchase Price. The purchase price to be paid by the Buyer
to the Seller for the Company Shares shall be Three Million
Nine Hundred Sixty-Five Thousand Dollars ($3,965,000.00)
(the "Purchase Price"), payable by wire transfer or delivery
of other immediately available funds, of which:
<PAGE>
(i) Three Million Five Hundred Sixty-Five Thousand
Dollars ($3,565,000.00) shall be paid by the Buyer to the
Seller at the Closing, less the amount of any credits to
be applied against the Purchase Price at Closing pursuant
to 2(c) below; and
(ii) Four Hundred Thousand Dollars ($400,000.00)
shall be deposited into the Escrow Account (the "Deferred
Payments") for disbursement to the Seller subject to the
terms and conditions of 2(e) below and the Escrow
Agreement.
The Purchase Price shall be subject to adjustment pursuant to 2(g)
below. In addition, the Parties agree that $10,000 of the Purchase
Price shall be allocated to the non-compete agreement of the Seller
set forth in Section 6(e), below.
. The following credit shall be applied against the portion of the
Purchase Price payable at Closing pursuant to 2 (b) above:
(i) the costs, if any, that the Company will incur
after Closing to complete the construction of, and obtain
a certificate of occupancy for, a store that the Company
intends to construct and open for business prior to the
Closing at Prien Lake, Louisiana, provided that such
credit shall not exceed $100,000. The amount of the credit
shall be equal to the difference between the total
budgeted construction costs as of the date of the Closing
as set forth on Schedule 2(c), less the amount thereof
actually paid by the Company as of the date of the
Closing. Such amounts as are paid by the Company prior to
the Closing shall be subject to verification during the
Post Closing Adjustment process described in ?2(g), below,
and to the extent that the actual costs paid by the
Company prior to Closing are less than or greater than the
amount claimed to be paid at the Closing, then Buyer or
Seller, as applicable, shall pay such amount to the other
Party in accordance with the final sentence of 2(g)(i),
below. Notwithstanding the previous sentence the amount
paid to Buyer shall not cause the Seller to pay an amount
that, together with the credit described in the first
sentence of this 2(c)(i), exceeds $100,000.
<PAGE>
. (d) The Pre-Closing and the Closing
(i) The Pre-Closing.
Upon the terms and subject to the
satisfaction of the conditions contained in this
Agreement, the pre-closing of the transactions
contemplated by this Agreement (the "Pre-Closing")
will take place at the offices Jones, Waldo,
Holbrook & McDonough ("Buyer's Counsel"), 170
South Main St., Suite 1500 Salt Lake City, UT at
10:00 A.M. (local time) on or about July 10, 1998,
or at such other place or time as the parties may
agree. At the Pre-Closing, the Parties will
deliver into an escrow (the "Pre-Closing Escrow")
the various documents to be delivered by Seller,
the Company, or Buyer (which documents will be
executed as required and undated), to be held by
Buyer's Counsel. The date and time at which the
Pre-Closing actually occurs is hereinafter
referred to as the "Pre-Closing Date".
The Seller hereby authorizes Buyer's
Counsel to cause to be delivered into the
Pre-Closing Escrow the documents and items in
respect of the Seller described in Section 7(a)
(the "Escrowed Seller Documents"). At the
Pre-Closing, Buyer will deliver to the Pre-Closing
Escrow such documents, instruments and writings as
are required to be delivered at the Closing by
Buyer at or prior to the Closing Date pursuant to
Section 7(b) or otherwise required in connection
herewith (the "Escrowed Buyer Documents").
(ii) The Closing.
Upon delivery of all of the Escrowed
Seller Documents and Escrowed Buyer Documents, and
the Closing of the Related Transactions, then the
closing of the transactions contemplated by this
Agreement (the "Closing") shall take place at the
offices of Buyer's Counsel on the date of the
closing of the Related Transactions, or such other
date as the Buyer and the Seller may mutually
determine (the "Closing Date"). The deliveries to
be made at Closing are described in Section 2(f)
below.
(e) The Escrow/The Escrow Agreement. At the Closing, the
Deferred Payment shall be deposited into escrow (the
"Escrow Account") established by the Buyer and the Seller
prior to the Closing with Centennial Bank (the "Escrow
Agent") at its offices located at 46th Harrison Street,
Ogden, Utah 84403, for disbursement subject to the terms
and conditions set forth in and that certain escrow
agreement executed by the Parties and the Escrow Agent on
or before the Closing substantially in the form and
substance of Exhibit B hereto (the "Escrow Agreement").
Subject to the terms and conditions of this Agreement and
the Escrow Agreement, the Deferred Payments, less all
amounts that after Closing may be paid or recouped from or
set-off against the Deferred Payments pursuant to ? 8(f)
below, shall be paid from the Escrow Account in two (2)
equal installments on or before the first and the second
annual anniversary, respectively, of the Closing Date. The
Closing Date shall be set forth in the Escrow Agreement.
<PAGE>
(f) Deliveries at the Closing. At the Closing, (i) the
Buyer's Counsel will deliver to the Buyer the various
certificates, instruments, and documents referred to in
7(a) below, including the Escrowed Seller Documents
being held in the Pre-Closing Escrow, (ii) the Buyer's
Counsel will deliver to the Seller the various
certificates, instruments, and documents referred to in
7(b) below, including the Escrowed Buyer Documents
being held in the Pre-Closing Escrow, and (iii) the
Buyer will deliver to the Seller the Purchase Price
specified in 2(b)(i) above and will deliver to the
Escrow Agent the Deferred Payments specified in
2(b)(ii) above. All of the documents described in (i)
and (ii) will be dated by Buyer's Counsel as of the
Closing Date.
(g) Post Closing Adjustment. The Purchase Price shall be
subject to adjustment after the Closing as follows:
(i) Within thirty (30) days after the Closing
Date, the Buyer shall prepare and deliver to the Seller a
statement (the "Working Capital Statement") prepared by
the Buyer's independent auditors showing the amount of the
Seller's Working Capital (the "Working Capital Amount") as
of the close of business on the Closing Date. If the
Working Capital Amount is less than the Working Capital
Requirement, the Purchase Price shall be decreased through
a reduction in the portion of the Purchase Price payable
at the Closing pursuant to 2(b)(i) above to the extent
that the Working Capital Amount is less than the Working
Capital Requirement. Conversely, if the Working Capital
Amount is greater than the Working Capital Requirement,
the Purchase Price shall be increased by an increase in
the portion of the Purchase Price payable at the Closing
pursuant to 2(b)(i) above to the extent that the Working
Capital Amount is greater than the Working Capital
Requirement. The Working Capital Amount shall be subject
to verification of the value of assets included in the
Working Capital Statement (e.g., inventory, equipment and
spare parts shall be reduced for damage or obsolescence,
and accounts receivable shall be reduced for bad debts).
The Buyer shall pay to the Seller any such increase in the
Purchase Price, and the Seller shall repay to the Buyer
any such decrease in the Purchase Price, within five
business days following the determination of the amount of
such adjustment pursuant to this 2(g).
(ii) The Seller shall assist the Buyer and its
independent auditors in the preparation of the Working
Capital Statement, and the Buyer shall provide the Seller
<PAGE>
and its independent auditors access at all reasonable
times to the personnel, properties, books and records of
the Acquired Business for such purpose. The Seller's
independent auditors may participate in the preparation of
the Working Capital Statement; provided, however, that the
Seller acknowledges that the Buyer shall have the primary
responsibility and authority for preparing the Working
Capital Statement and the Buyer's independent auditors
shall have the primary responsibility and authority for
certifying the Working Capital Statement. During the
five-day period following the Seller's receipt of the
Working Capital Statement, the Seller and its independent
auditors will be permitted to review the working papers of
the Buyer's independent auditors relating to the Working
Capital Statement. The Working Capital Statement shall
become final and binding upon the parties on the fifth day
following receipt thereof by the Seller unless the Seller
gives written notice of its disagreement (a "Notice of
Disagreement") with respect to the Working Capital
Statement to the Buyer prior to such date. Any Notice of
Disagreement shall specify in reasonable detail the nature
of any disagreement so asserted and shall be accompanied
by a letter from the Seller's independent auditors
indicating that they concur with each of the positions
taken by the Seller in the Notice of Disagreement. If a
Notice of Disagreement is received by the Buyer in a
timely manner, then the Working Capital Statement (as
revised in accordance with clause (A) or (B) below) shall
become final and binding upon the parties on the earlier
of (A) the date the parties hereto resolve in writing any
differences they have with respect to any matter specified
in the Notice of Disagreement or (B) the date any disputed
matters are finally resolved in writing by the Arbitrator
(as defined below). During the five-day period following
the delivery of a Notice of Disagreement, the Seller and
the Buyer shall seek in good faith to resolve in writing
any differences which they may have with respect to any
matter specified in the Notice of Disagreement. At the end
of such five-day period, the Seller and the Buyer shall
submit to an arbitrator (the "Arbitrator") for review and
resolution any and all matters that remain in dispute. The
Arbitrator shall be such nationally recognized independent
public accounting firm as shall be agreed upon by the
parties hereto in writing. The Seller and the Buyer shall
jointly request that the arbitration be conducted in Salt
Lake City, Utah in accordance with the procedures of the
American Arbitration Association. The Arbitrator shall
render a decision resolving the matters submitted to the
Arbitrator within 25 days following submission thereto.
The cost of any arbitration (including the fees of the
Arbitrator) pursuant to this Section 2(g)(ii) shall be
borne 50% by the Buyer and 50% by the Seller, except that
each party shall bear all fees and expenses attributable
to any expert witness retained by such party but not the
other party. The fees and disbursements of the Buyer's
independent auditors incurred in connection with their
certification of the adjusted Working Capital Statement
shall be borne by the Buyer, and the fees and
disbursements of the Seller's independent auditors
incurred in connection with their review of the Working
Capital Statement or certification of any Notice of
Disagreement shall be borne by the Seller.3.
Representations and Warranties Concerning the Transaction.
<PAGE>
(a) Representations ans Warranties Concerning the
Transaction. The Seller represents and warrants to the
Buyer that the statements contained in this 3(a) are
correct and complete as of the date of execution of
this Agreement and will be correct and complete as of
the Effective Date and as of the Closing Date, except
as set forth in Annex I attached hereto.
(i) Authorization of Transaction. The Seller has full
power and authority to execute and deliver this Agreement
and to perform his obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the
Seller, enforceable in accordance with its terms and
conditions. The Seller need not give any notice to, make any
filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order
to consummate the transactions contemplated by this
Agreement.
(ii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any
constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency or court
to which the Seller is subject, or (B) conflict with, result
in a breach of, constitute a default under, result in the
acceleration of, create in any party, the right to
accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license,
instrument or other arrangement to which the Seller is a
party or by which he is bound or to which any of his assets
is subject.
(iii) Broker's Fees. The Seller has no Liability or
obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions
contemplated by this Agreement for which the Buyer could
become liable or obligated.
(iv) Company Shares. The Seller holds of record and
owns beneficially the number of Company Shares set forth in
4(b) of the Disclosure Schedule, free and clear of any
restrictions on transfer (other than any restrictions under
the Securities Act and state securities laws), Taxes,
Security Interests, options, warrants, purchase rights,
contracts, commitments, equities, claims and demands. The
Seller is not a party to any option, warrant, purchase
right, or other contract or commitment that could require
the Seller to sell, transfer or otherwise dispose of any
capital stock of the Company (other than this Agreement).
The Seller is not a party to any voting trust, proxy, or
other agreement or understanding with respect to the voting
of any capital stock of the Company. Upon delivery of the
certificates representing the Company Shares, Buyer will
acquire valid, marketable title thereto, free and clear of
any liens, encumbrances and claims of third parties.
<PAGE>
(v) Absence of Indebtedness and Claims. Seller is not
indebted to Company or any of its affiliates, and is not
indebted to Seller or any of his affiliates, if any, and the
Seller has no claims against the Company.
(b) Representations and Warranties of the Buyer. The Buyer
represents and warrants to the Seller that the
statements contained in this 3(b) are correct and
complete as of the date of execution of this Agreement
and will be correct and complete as of the Effective
Date and as of the Closing Date, except as set forth in
Annex II attached hereto.
(i) Organization of the Buyer. The Buyer is a
corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its
incorporation.
(ii) Authorization of the Transaction. The Buyer has
full power and authority (including full corporate power and
authority) to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement
constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and
conditions. The Buyer need not give any notice to, make any
filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in order
to consummate the transactions contemplated by this
Agreement.
(iii) Noncontravention. Neither the execution and the
delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will (A) violate any
constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge or other restriction
of any government, governmental agency or court to which the
Buyer is subject or any provision of its charter or bylaws
or, (B) conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any
Party, the right to accelerate, terminate, modify, or
cancel, or require any notice under any agreement, contract,
lease, license, instrument or other arrangement to which the
Buyer is a party or by which it is bound or to which any of
its assets is subject.
(iv) Broker's Fees. The Buyer has no Liability or
obligation to pay any fees or commissions to any broker,
finder or agent with respect to the transactions
contemplated by this Agreement for which Seller could become
liable or obligated.
<PAGE>
(v) Investment. The Buyer is not acquiring the Company
Shares with a view to or for sale in connection with any
distribution thereof within the meaning of the Securities
Act.
(4) Representations and Warranties Concerning the Company. The Seller
represents and warrants to the Buyer that the statements contained in this 4 are
correct and complete as of the date of execution of this Agreement and will be
correct and complete as of the Effective Date and as of the Closing Date, except
as set forth in the disclosure schedule delivered by the Seller to the Buyer on
the date hereof and initialed by the Parties (the "Disclosure Schedule").
Nothing in the Disclosure Schedule shall be deemed adequate to disclose an
exception to a representation or warranty made herein, however, unless the
Disclosure Schedule identifies the exception with reasonable particularity and
describes the relevant facts in reasonable detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be deemed adequate to disclose an exception to
a representation or warranty made herein (unless the representation or warranty
has to do with the existence of the document or other item itself). The
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this 4.
(a) Organization, Qualification, and Corporate Power.
The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the
jurisdiction of its incorporation. The Company is duly
authorized to conduct business and is in good standing under
the laws of each jurisdiction where such qualification is
required. The Company has full corporate power and authority
and all licenses, permits, and authorizations necessary to
carry on the businesses in which it is engaged and in which
it presently proposes to engage and to own and use the
properties owned, used, leased or operated by it, including,
without limitation, all of its existing and proposed retail
stores (collectively, "Store" in the singular and "Stores"
in the plural), each of which is listed on 4(a) of the
Disclosure Schedule and appropriately designated thereon as
an existing or proposed Store location. Schedule 4(a) also
lists each retail store or location at which the Company has
ceased operating the Acquired Business during the three (3)
year period prior to the Most Recent Fiscal Month End.
Schedule 4(a) of the Disclosure Schedule lists the
directors and officers of the Company. The Seller has delivered to
the Buyer correct and complete copies of the charter and bylaws of
the Company (as amended to date). The minute books (containing the
records of meetings of the stockholders, the board of directors,
and any committees of the board of directors), the stock
certificate books, and the stock record books of the Company are
correct and complete. The Company is not in default under or in
violation of any provision of its charter or bylaws.
There are no, nor have there ever been any, Subsidiaries of the
Company.
<PAGE>
(b) Capitalization. The entire authorized capital stock of the Company
consists of 1,000,000 Company Shares, of which 250 Company Shares are
issued and outstanding, and none of which is held in treasury. All of the
issued and outstanding Company Shares have been duly authorized, are
validly issued, fully paid, and non-assessable, and are held of record as
set forth in 4(b) of the Disclosure Schedule. There are no outstanding or
authorized options, warrants, purchase rights, subscription rights,
conversion rights, exchange rights, or other contracts or commitments that
could require the Company to issue, sell or otherwise cause to become
outstanding any of its capital stock. There are no outstanding or
authorized stock appreciation, phantom stock, profit participation or
similar rights with respect to the Company. There are no voting trusts,
proxies, or other agreements or understandings with respect to the voting
of the capital stock of the Company.
(c) Non-Contravention. Neither the execution nor the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (i) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which the Company is subject
or any provision of the charter or bylaws of the Company or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate,
modify, or cancel, or require any notice under any agreement, franchise
agreement, contract, lease, sublease, license, instrument or other
arrangement to which the Company is a party or by which it is bound or to
which any of its assets is subject (or result in the imposition of any
Security Interest upon any of its assets). The Company does not need to
give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order for
the Parties to consummate the transactions contemplated by this Agreement.
(d) Broker's Fees. The Company has no Liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement.
(e) Title to Assets. The Company has good and marketable title to, or
a valid leasehold interest in, the properties and assets used by it,
located on its premises, or shown on the Most Recent Balance Sheet or
acquired after the date thereof, free and clear of all Security Interests,
except for properties and assets disposed of in the Ordinary Course of
Business since the date of the Most Recent Balance Sheet.
<PAGE>
(f) Financial Statements; Working Capital Requirement
(i) Attached hereto as Exhibit C are the following
financial statements (collectively the "Financial
Statements"): (i) unaudited balance sheets and statements
of income, changes in stockholders' equity, and cash flow
as of and for the fiscal years ended September 30, 1995,
September 30, 1996, and September 30, 1997 (the "Most
Recent Fiscal Year End") for the Company; and (ii)
unaudited balance sheets and statements of income, changes
in stockholders' equity, and cash flow (the "Most Recent
Financial Statements") as of and for the six (6) months
ended March 31, 1998 (the "Most Recent Fiscal Month End")
for the Company.
(ii) The Financial Statements (including the notes
thereto) have been prepared in accordance with GAAP
applied on a consistent basis throughout the periods
covered thereby, present fairly the financial condition of
the Company as of such dates and the results of operations
of the Company for such periods, are correct and complete,
and are consistent with the books and records of the
Company (which books and records are correct and
complete); provided, however, that the Most Recent
Financial Statements are subject to normal year-end
adjustments (which will not be material individually or in
the aggregate) and lack footnotes and other presentation
items.
(iii) As of the Closing Date, the Company shall
have Working Capital in an amount not less than $25,000
(the "Working Capital Requirement"). The Seller represents
and warrants that working capital in the amount of the
Working Capital Requirement is adequate for the operation
of the Company's business after the Closing in the same
manner as presently conducted.
(g) Events Subsequent to Most Recent Fiscal Year End. Since the Most
Recent Fiscal Year End, there has not been any material adverse change in
the business, financial condition, operations, results of operations or
future prospects of the Company. Without limiting the generality of the
foregoing, since that date:
(i) the Company has not sold, leased, transferred or
assigned any of its assets, tangible or intangible, other
than for a fair consideration in the Company's Ordinary
Course of Business;
(ii) the Company has not entered into any agreement,
contract, lease or license (or series of related agreements,
contracts, leases and licenses) outside the Company's
Ordinary Course of Business;
(iii) no party (including the Company) has accelerated,
terminated, modified, or canceled any agreement, contract,
lease or license (or series of related agreements,
contracts, leases, and licenses) involving more than $1,000
to which the Company is a party or by which any of them is
bound;
(iv) the Company has not granted any Security Interest
in any of its assets, tangible or intangible;
<PAGE>
(v) the Company has not made any capital expenditure
(or series of related capital expenditures), other than for
the build-out of the Prien Lake Store that will not exceed
$100,000, either involving more than $1,000 or outside the
Company's Ordinary Course of Business;
(vi) the Company has not made any capital investment
in, any loan to, or any acquisition of the securities or
assets of, any other Person (or series of related capital
investments, loans and acquisitions) either involving more
than $1,000 or outside the Company's Ordinary Course of
Business;
(vii) the Company has not issued any note, bond or
other debt security or created, incurred, assumed or
guaranteed any indebtedness for borrowed money or
capitalized lease obligation either involving more than
$1,000 singly or $5,000 in the aggregate;
(viii) the Company has not delayed or postponed the
payment of accounts payable and other Liabilities outside
the Company's Ordinary Course of Business;
(ix) the Company has not canceled, compromised, waived
or released any right or claim (or series of related rights
and claims) either involving more than $1,000 or outside the
Company's Ordinary Course of Business;
(x) the Company has not granted any license or
sublicense of any rights under or with respect to any
Intellectual Property except as set forth in ? 4(o) of the
Disclosure Schedule setting forth each of the Company's
franchise, sub-franchise, area developer and other similar
documents.
(xi) there has been no change made or authorized in the
charter or bylaws of the Company;
(xii) the Company has not issued, sold, or otherwise
disposed of any of its capital stock, or granted any
options, warrants or other rights to purchase or obtain
(including upon conversion, exchange or exercise) any of its
capital stock;
(xiii) except as set forth in Schedule 4(g)(xiii) with
respect to distributions permitted by the Company to Seller
before Closing, subject to the Working Capital Requirement
set forth in 4(f) above, the Company has not declared, set
aside, or paid any dividend or made any distribution with
respect to its capital stock (whether in cash or in kind) or
redeemed, purchased or otherwise acquired any of its capital
stock;
<PAGE>
(xiv) the Company has not experienced any damage,
destruction, or loss (whether or not covered by insurance)
to its property;
(xv) the Company has not made any loan to, or
entered into any other transaction with, any of its
directors, officers and employees outside the Company's
Ordinary Course of Business;
(xvi) the Company has not entered into any employment
contract or collective bargaining agreement, written or
oral, or modified the terms of any existing such contract or
agreement;
(xvii) the Company has not granted any increase in
the base compensation of any of its directors, officers,
and employees outside the Company's Ordinary Course of
Business;
(xviii) except as set forth in Schedule 4(g)(xiii) with
respect to distributions permitted by the Company to Seller
before Closing, subject to the Working Capital Requirement
set forth in 4(f) above, the Company has not adopted,
amended, modified or terminated any bonus, profit-sharing,
incentive, severance, or other plan, contract or commitment
for the benefit of any of its directors, officers, and
employees (or taken any such action with respect to any
other Employee Benefit Plan);
(xix) the Company has not made any other change in
employment terms for any of its directors, officers or
employees outside the Company's Ordinary Course of Business;
(xx) the Company has not made or pledged to make any
charitable or other capital contribution outside the
Company's Ordinary Course of Business;
(xxi) there has not been any other material occurrence,
event, incident, action, failure to act or transaction
outside the Company's Ordinary Course of Business; and
(xxii) the Company has not committed to any of the
foregoing.
(h) Undisclosed Liabilities. The Company has no Liability (and, to the
Knowledge of the Seller, there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim
or demand against any of them giving rise to any Liability), except for (i)
Liabilities set forth on the face of the Most Recent Balance Sheet, and
(ii) Liabilities which have arisen after the Most Recent Fiscal Month End
in the Company's Ordinary Course of Business (none of which results from,
arises out of, relates to, is in the nature of, or was caused by any breach
of contract, breach of warranty, tort, infringement or violation of law).
<PAGE>
(i) Legal Compliance. To the Knowledge of the Seller, each of the
Company and its respective predecessors and Affiliates has complied with
all applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder)
of federal, state, local, and foreign governments (and all agencies
thereof), and no action, suit, proceeding, hearing, investigation, charge,
complaint, claim, demand, or notice has been filed or commenced against any
of them alleging any failure so to comply.
(j) Tax Matters
(i) The Company has filed all Tax Returns that it was required to
file. All such Tax Returns were correct and complete in all respects.
All Taxes owed by the Company (whether or not shown on any Tax Return)
have been paid. The Company is not currently the beneficiary of any
extension of time within which to file any Tax Return. No claim has
ever been made by an authority in a jurisdiction where the Company
does not file Tax Returns that it is or may be subject to taxation by
that jurisdiction. There are no Security Interests on any of the
assets of the Company that arose in connection with any failure (or
alleged failure) to pay any Tax.
(ii) The Company has withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing to any
employee, independent contractor, creditor, stockholder or other third
party.
(iii) None of the Seller, nor any director, or officer (or
employee responsible for Tax matters) of the Company expects any
authority to assess any additional Taxes for any period for which Tax
Returns have been filed. There is no dispute or claim concerning any
Tax Liability of the Company either (A) claimed or raised by any
authority in writing or (B) as to which any of the Seller, the
directors and officers (and employees responsible for Tax matters) of
the Company has Knowledge based upon personal contact with any agent
of such authority. 4(j)(iii) of the Disclosure Schedule lists all
federal, state, local, and foreign income Tax Returns filed with
respect to the Company, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently are the
subject of audit. The Seller has delivered to the Buyer correct and
complete copies of all federal income Tax Returns, examination
reports, and statements of deficiencies assessed against or agreed to
by the Company.
<PAGE>
(iv) The Company has not waived any statute of limitations in
respect of Taxes or agreed to any extension of time with respect to a
Tax assessment or deficiency.
(v) The Company has not filed a consent under Code Sec. 341(f)
concerning collapsible corporations. The Company has not made any
payments, nor is it obligated to make any payments, nor is it a party
to any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Code Sec. 280G.
The Company has not been a United States real property holding
corporation within the meaning of Code Sec. 897(c)(2) during the
applicable period specified in Code Sec. 897(c)(1)(A)(ii). The Company
is not a party to any Tax allocation or sharing agreement. The Company
(A) has not been a member of an Affiliated Group filing a consolidated
federal income Tax Return or (B) has no Liability for the Taxes of any
Person (other than the Company) under Treas. Reg. 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(vi) 4(j) of the Disclosure Schedule sets forth the following
information with respect to the Company as of the most recent
practicable date (as well as on an estimated pro forma basis as of the
Closing giving effect to the consummation of the transactions
contemplated hereby):
(A) the basis of the Company in its assets;
(B) the amount of any net operating loss, net capital loss,
unused investment or other credit, or excess charitable
contribution allocable to the Company.
(vii) The unpaid Taxes of the Company
(A) did not, as of the Most Recent Fiscal Month End, exceed
the reserve for Tax Liability (rather than any reserve for
deferred Taxes established to reflect timing differences
between book and Tax income) set forth on the face of the
Most Recent Balance Sheet; and
(B) do not exceed that reserve as adjusted for the passage
of time through the Closing Date in accordance with the past
custom and practice of the Company in filing its Tax
Returns.
(k) Real Property
(i) The Company does not own any real property or interests in
real property.
<PAGE>
(ii) 4(k)(ii) of the Disclosure Schedule lists and describes
briefly all real property
(a) leased or subleased to the Company, including without
limitation, each of the leases or subleases covering the premises of
each of the Stores (the "Store Leases"), or
(b) leased or subleased by the Company to third parties,
including the Company's franchisees and area developers. The Seller
has delivered to the Buyer correct and complete copies of the leases
and the subleases listed in 4(k)(ii) of the Disclosure Schedule (as
amended to date). With respect to each lease and sublease listed in
4(k)(ii) of the Disclosure Schedule;
(A) the lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(B) subject to the receipt of consents set forth in
4(k)(ii) of the Disclosure Schedule, to the Knowledge of the
Seller, the lease or sublease will continue to be legal,
valid, binding, enforceable, and in full force and effect on
identical terms following the consummation of the
transactions contemplated hereby, which transactions will
not violate the terms thereof;
(C) neither the Seller, the landlord, nor, to the
Knowledge of the Seller, any other party to the lease or
sublease is in breach or default, and no event has occurred
which, with notice or lapse of time, would constitute a
breach or default or permit termination, modification, or
acceleration thereunder;
(D) neither the Seller, the landlord, nor, to the
Knowledge of the Seller, any other party to the lease or
sublease, has repudiated any provision thereof;
(E) there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or sublease;
(F) with respect to each sublease, the representations
and warranties set forth in subsections (A) through (E)
above are true and correct with respect to the underlying
lease;
<PAGE>
(G) the Company has not assigned, transferred,
conveyed, mortgaged, deeded in trust or encumbered any
interest in the leasehold or subleasehold; and
(H) to the Knowledge of the Seller, all facilities
leased or subleased thereunder have received all approvals
of governmental authorities (including licenses and permits)
required in connection with the operation thereof and have
been operated and maintained in accordance with applicable
laws, rules and regulations.
(iii) all facilities leased or subleased thereunder are supplied with
utilities and other services necessary for the operation of said
facilities.
(l) Intellectual Property
(i) The Company owns or has the right to use pursuant to license,
sublicense, agreement or permission all Intellectual Property necessary or
desirable for the operation of the businesses of the Company as presently
conducted and as presently proposed to be conducted. Each item of
Intellectual Property owned or used by the Company immediately prior to the
Closing hereunder will be owned or available for use by the Company on
identical terms and conditions immediately subsequent to the Closing
hereunder. The Company has taken all necessary and desirable action to
maintain and protect each item of Intellectual Property that it owns or
uses.
(ii) To the Knowledge of the Seller, the Company has not interfered
with, infringed upon, misappropriated, or otherwise come into conflict with
any Intellectual Property rights of third parties, and none of the Seller,
the directors, or officers (and employees with responsibility for
Intellectual Property matters) of the Company has ever received any charge,
complaint, claim, demand, or notice alleging any such interference,
infringement, misappropriation, or violation (including any claim that the
Company must license or refrain from using any Intellectual Property rights
of any third party). To the Knowledge of any of the Seller and the
directors and officers (and employees with responsibility for Intellectual
Property matters) of the Company, no third party has interfered with,
infringed upon, misappropriated, or otherwise come into conflict with any
Intellectual Property rights of the Company.
(iii) 4(l)(iii) of the Disclosure Schedule identifies each patent or
registration which has been issued to the Company with respect to any of
its Intellectual Property, identifies each pending patent application or
application for registration which the Company has made with respect to its
Intellectual Property, and identifies each license, agreement, or other
<PAGE>
permission which the Company has granted to any third party with respect to
any of its Intellectual Property (together with any exceptions). The Seller
has delivered to the Buyer correct and complete copies of all such patents,
registrations, applications, licenses, agreements, and permissions (as
amended to date) and has made available to the Buyer correct and complete
copies of all other written documentation evidencing ownership and
prosecution (if applicable) of each such item. 4(l)(iii) of the Disclosure
Schedule also identifies each trade name or unregistered trademark used by
the Company in connection with any of its businesses. With respect to each
item of Intellectual Property required to be identified in 4(l)(iii) of the
Disclosure Schedule:
(A) the Company possesses all right, title, and
interest in and to the item, free and clear of any Security
Interest, license or other restriction;
(B) the item is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand
is pending or to the Knowledge of any of the
Seller and the directors and officers (and
employees with responsibility for Intellectual
Property matters) of the Company, is threatened
which challenges the legality, validity,
enforceability, use or ownership of the item; and
(D) the Company has never agreed to indemnify any
Person for or against any interference, infringement,
misappropriation or other conflict with respect to the item.
(iv) 4(l)(iv) of the Disclosure Schedule identifies each item of
Intellectual Property that any third party owns and that the Company
uses pursuant to any license, sublicense, agreement (including without
limitation, each franchise agreement to which the Company is a party)
or permission. The Seller has delivered to the Buyer correct and
complete copies of all such licenses, sublicenses, agreements, and
permissions (as amended to date). With respect to each item of
Intellectual Property required to be identified in 4(l)(iv) of the
Disclosure Schedule:
(A) to the Knowledge of the Seller, the license,
sublicense, agreement, or permission covering the item is
legal, valid, binding, enforceable and in full force and
effect;
<PAGE>
(B) to the Knowledge of the Seller, the license,
sublicense, agreement, or permission will continue to be
legal, valid, binding, enforceable and in full force and
effect on identical terms following the Closing;
(C) the Seller and, to the Knowledge of the Seller, no
other party to the license, sublicense, agreement or
permission is in breach or default, and no event has
occurred which with notice or lapse of time would constitute
a breach or default or permit termination, modification, or
acceleration thereunder;
(D) neither the Seller nor, to the Knowledge of the
Seller, any other party to the license, sublicense,
agreement or permission has repudiated any provision
thereof;
(E) with respect to each sublicense, the
representations and warranties set forth in subsections (A)
through (D) above are true and correct with respect to the
underlying license;
(F) to the Knowledge of the Seller, the underlying item
of Intellectual Property is not subject to any outstanding
injunction, judgment, order, decree, ruling or charge;
(G) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand is pending
or, to the Knowledge of the Seller, is threatened, which
challenges the legality, validity or enforceability of the
underlying item of Intellectual Property; and
(H) the Company has not granted any sublicense or
similar right with respect to the license, sublicense,
agreement or permission.
(v) To the Knowledge of any of the Seller and the directors
and officers (and employees with responsibility for Intellectual
Property matters) of the Company, the Intellectual Property of
the Company will not interfere with, infringe upon,
misappropriate or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of the
continued operation of its business as presently conducted and as
presently proposed to be conducted.
(m) Tangible Assets. The Company owns or leases all premises,
machinery, equipment, and other tangible assets necessary for the conduct
of its business as presently conducted and as presently proposed to be
conducted. To the Knowledge of the Seller, each such tangible asset is free
from defects, has been maintained in accordance with normal industry
practice, is in good operating condition and repair (subject to normal wear
and tear), and is suitable for the purposes for which it presently is used
and presently is proposed to be used.
<PAGE>
(n) Inventory. The inventories and supplies of the Company are
merchantable and fit for the purpose for which they were procured, and none
of which is slow-moving, obsolete, damaged or defective, subject only to
the reserve for inventory writedown set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past custom
and practice of the Company.
(o) Contracts. 4(o) of the Disclosure Schedule lists the following
contracts and other agreements to which the Company is a party:
(i) each contract or agreement of any kind or nature entered into
by any of the Company and Affiliates thereof, with any franchisee,
subfranchisee, or area developer of the Company or any officer,
principal, owner, shareholder or representative of any such franchisee
or area developer.
(ii) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease
payments in excess of $1,000 per annum;
(iii) any agreement (or group of related agreements) for the
purchase or sale of materials, commodities, supplies, products or
other personal property, or for the furnishing or receipt of services,
the performance of which will extend over a period of more than one
year, result in a material loss to the Company, or involve
consideration in excess of $1,000;
(iv) any agreement concerning a partnership or joint venture;
(v) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of
$1,000 or under which it has imposed a Security Interest on any of its
assets, tangible or intangible; (vi) any agreement concerning
confidentiality or noncompetition;
(vii) any agreement with any of the Seller and their Affiliates
(other than the Company);
(viii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers, and employees;
<PAGE>
(ix) any collective bargaining agreement;
(x) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $15,000 or providing severance benefits;
(xi) any agreement under which it has advanced or loaned any
amount to any of its directors, officers, or employees;
(xii) any agreement under which the consequences of a default or
termination could have a material adverse effect on the business,
financial condition, operations, results of operations, or future
prospects of the Company; or
(xiii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $1,000.
The Seller has delivered to the Buyer a correct and complete copy of each
written agreement listed in 4(o) of the Disclosure Schedule (as amended to
date) and a written summary setting forth the terms and conditions of each
oral agreement referred to in 4(o) of the Disclosure Schedule. With respect
to each such agreement: (A) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (B) the agreement will continue
to be legal, valid, binding, enforceable and in full force and effect on
identical terms following the consummation of the transactions contemplated
hereby; (C) no party is in breach or default, and no event has occurred
which with notice or lapse of time would constitute a breach or default, or
permit termination, modification or acceleration, under the agreement; and
(D) no party has repudiated any provision of the agreement.
(p) Notes and Accounts Receivable. Except as disclosed in 4(p) of the
Disclosure Schedule, the Company has no notes or accounts receivable.
(q) Powers of Attorney. There are no outstanding powers of attorney
executed on behalf of the Company.
(r) Insurance. 4(r) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers' compensation
coverage and bond and surety arrangements) to which the Company has been a
party, a named insured, or otherwise the beneficiary of coverage at any
time within the past three (3) years:
(i) the name, address, and telephone number of the agent;
<PAGE>
(ii) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage
was on a claims made, occurrence, or other basis) and amount
(including a description of how deductibles and ceilings are
calculated and operate) of coverage; and
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements,
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect; (B) the policy will
continue to be legal, valid, binding, enforceable, and in full force and
effect on identical terms through the date of the Closing; (C) neither the
Company nor, to the Knowledge of the Seller, any other party to the policy
is in breach or default (including with respect to the payment of premiums
or the giving of notices), and no event has occurred which, with notice or
the lapse of time, would constitute such a breach or default, or permit
termination, modification, or acceleration, under the policy; and (D) no
party to the policy has repudiated any provision thereof. The Company has
been covered during the past three (3) years by insurance in scope and
amount customary and reasonable for the businesses in which it has engaged
during the aforementioned period. 4(r) of the Disclosure Schedule describes
any self-insurance arrangements affecting the Company.
(s) Litigation. 4(s) of the Disclosure Schedule sets forth each
instance in which any of the Seller and the Company (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii)
is a party or is threatened to be made a party to any action, suit,
proceeding, hearing, or investigation of, in, or before any court or
quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction or before any arbitrator. None of the actions, suits,
proceedings, hearings, and investigations set forth in 4(s) of the
Disclosure Schedule could result in any material adverse change in the
business, financial condition, operations, results of operations or future
prospects of the Company. None of the Seller and the directors and officers
(and employees with responsibility for litigation matters) of the Company
has any reason to believe that any such action, suit, proceeding, hearing
or investigation may be brought or threatened against the Company.
(t) Product Warranty. Each product made, sold or delivered by the
Company has been in conformity with all applicable laws, statutes,
regulations, retail food industry standards and all express and implied
warranties, and the Company has no Liability (and, to the Knowledge of the
Seller, there is no Basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or demand
against any of them giving rise to any Liability) for damages in connection
therewith, subject only to the reserve for product warranty claims set
forth on the face of the Most Recent Balance Sheet as adjusted for the
passage of time through the Closing Date in accordance with the past custom
and practice of the Company.
<PAGE>
(u) Product Liability. The Company has no Liability (and, to the
Knowledge of the Seller, there is no Basis for any present or future
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
or demand against the Company giving rise to any Liability) arising out of
any injury to individuals or property as a result of the possession,
consumption or use of any product made, sold or delivered by the Company.
(v) Employees
(i) To the Knowledge of any of Seller and the directors and
officers (and employees with responsibility for employment matters) of
the Company, no executive, key employee (including any store manager),
or group of employees has any plans to terminate employment with the
Company. The Company has not committed any unfair labor practice.
(ii) 4(v)(ii) sets forth the accrued vacation and sick and
personal leave (if any) of each of the Company's employees.
(w) Employee Benefits
(i) 4(w) of the Disclosure Schedule lists each Employee Benefit
Plan that the Company maintains or to which the Company contributes.
(A) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form and in
operation in all respects with the applicable requirements
of ERISA, the Code, and other applicable laws.
(B) All required reports and descriptions (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's,
and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of Part 6 of Subtitle B of
Title I of ERISA and of Code Sec. 4980B have been met with
respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
<PAGE>
(C) All contributions (including all employer
contributions and employee salary reduction contributions)
which are due have been paid to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing
Date which are not yet due have been paid to each such
Employee Pension Benefit Plan or accrued in accordance with
the past custom and practice of the Company. All premiums or
other payments for all periods ending on or before the
Closing Date have been paid with respect to each such
Employee Benefit Plan which is an Employee Welfare Benefit
Plan.
(D) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan meets the requirements of a
"qualified plan" under Code Sec. 401(a) and has received,
within the last four years, a favorable determination letter
from the Internal Revenue Service.
(E) The market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan
equals or exceeds the present value of all vested and
nonvested Liabilities thereunder determined in accordance
with PBGC methods, factors, and assumptions applicable to an
Employee Pension Benefit Plan terminating on the date for
determination.
(F) The Seller has delivered to the Buyer correct and
complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received
from the Internal Revenue Service, the most recent Form 5500
Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each
such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the Company
maintains or ever has maintained or to which any of them contributes,
ever has contributed, or ever has been required to contribute:
(A) No such Employee Benefit Plan which is an Employee
Pension Benefit Plan has been completely or partially
terminated or been the subject of a Reportable Event as to
which notices would be required to be filed with the PBGC.
No proceeding by the PBGC to terminate any such Employee
Pension Benefit Plan has been instituted or threatened.
(B) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. No Fiduciary has
any Liability for breach of fiduciary duty or any other
failure to act or comply in connection with the
administration or investment of the assets of any such
Employee Benefit Plan. No action, suit, proceeding, hearing,
or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending or
threatened. None of the Seller and the directors and
officers (and employees with responsibility for employee
benefits matters) of the Company has any Knowledge of any
Basis for any such action, suit, proceeding, hearing, or
investigation.
<PAGE>
(C) The Company has not incurred, and none of the
Seller and the directors and officers (and employees with
responsibility for employee benefits matters) of the Company
has any reason to expect that the Company will incur, any
Liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal
Liability) or under the Code with respect to any such
Employee Benefit Plan which is an Employee Pension Benefit
Plan.
(iii) The Company does not contribute to, never has
contributed to, and never has been required to contribute to, any
Multiemployer Plan or has any Liability (including withdrawal
Liability) under any Multiemployer Plan.
(iv) The Company does not maintain, never has maintained or
contributed to, and never has been required to contribute to any
Employee Welfare Benefit Plan providing medical, health, or life
insurance or other welfare-type benefits for current or future
retired or terminated employees, their spouses, or their
dependents (other than in accordance with Code Sec. 4980B).
(x) Guaranties. The Company is not a guarantor or otherwise liable for
any Liability or obligation (including indebtedness) of any other Person.
(y) Environment, Health, and Safety
(i) To the Knowledge of the Seller, each of the Company and its
predecessors and Affiliates has complied with all Environmental,
Health, and Safety Laws, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been
filed or commenced against the Company alleging any failure so to
comply. Without limiting the generality of the preceding sentence,
each of the Company and, to the Knowledge of the Seller, each of the
Company's predecessors and Affiliates, has obtained and been in
compliance with all of the terms and conditions of all permits,
licenses, and other authorizations which are required under, and has
complied with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules, and
timetables which are contained in, all Environmental, Health, and
Safety Laws.
<PAGE>
(ii) To the Knowledge of the Seller, the Company has no Liability
(and none of the Company and its predecessors and Affiliates has
handled or disposed of any substance, arranged for the disposal of any
substance, exposed any employee or other individual to any substance
or condition, or owned or operated any property or facility in any
manner that could form the Basis for any present or future action,
suit, proceeding, hearing, investigation, charge, complaint, claim, or
demand against the Company giving rise to any Liability) for damage to
any site, location, or body of water (surface or subsurface), for any
illness of or personal injury to any employee or other individual, or
for any reason under any Environmental, Health, and Safety Law.
(iii) To the Knowledge of the Seller, all properties and
equipment used in the business of the Company and its predecessors and
Affiliates have been free of asbestos, PCB'S, methylene chloride,
trichloroethylene, 1,2-transdichloroethylene, dioxins, dibenzofurans,
and Extremely Hazardous Substances.
(z) Certain Business Relationships with the Company. None of the
Seller or his Affiliates has been involved in any business arrangement or
relationship with the Company within the past 12 months, and none of the
Seller or his Affiliates owns any asset, tangible or intangible, which is
used in the business of the Company.
(aa) Disclosure. The representations and warranties contained in this
4 do not contain any untrue statement of a material fact or omit to state
any material fact necessary in order to make the statements and information
contained in this 4 not misleading.
(5) Pre-Closing Covenants. The Parties agree as follows with respect to the
period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use his or its best efforts to
take all action and to do all things necessary in order to consummate and
make effective the transactions contemplated by this Agreement (including
satisfaction, but not waiver, of the closing conditions set forth in 7
below).
(b) Notices and Consents. The Seller will cause the Company to give
any notices to third parties, and will cause the Company to use its best
efforts to obtain any third-party consents, that the Buyer may request in
connection with the matters referred to in ? 4(c) above. Each of the
Parties will (and the Seller will cause the Company to) give any notices
to, make any filings with, and use its best efforts to obtain any
authorizations, consents, and approvals of governments and governmental
agencies in connection with the matters referred to in 3(a)(ii), 3(b)(iii),
and 4(c) above.
<PAGE>
(c) Operation of Business. The Seller will not cause or permit the
Company to engage in any practice, take any action or enter into any
transaction outside the Company's Ordinary Course of Business. Without
limiting the generality of the foregoing, except with the written consent
of the Buyer, the Seller will not cause or permit the Company to:
(i) sell, lease, transfer or assign any of its assets, tangible
or intangible, other than the sale of its inventory in the Company's
Ordinary Course of Business;
(ii) enter into, or terminate, modify, accelerate or cancel, any
agreement, contract, lease or license to which the Company is a party
or by which it is bound;
(iii) grant or permit any new Security Interest to be placed upon
any of its assets, tangible or intangible;
(iv) close, or permit the closure of, any of its Stores or other
premises upon which any of its business operations are presently
conducted; commit to or acquire any new Store or new Store sites;
(v) fail to maintain inventories and supplies necessary for the
proper and continuing conduct of the Company's operations before and
after the Closing in the manner in which it is presently conducted;
(vi) make any capital expenditure (or series of related capital
expenditures) other than in the Company's Ordinary Course of Business;
(vii) make any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions);
(viii) issue any note, bond or other debt security or create,
incur, assume, or guarantee any indebtedness for borrowed money or
capitalized lease obligation;
(ix) delay or postpone the payment of accounts payable and other
Liabilities outside the Company's Ordinary Course of Business;
(x) cancel, compromise, waive or release any right or claim (or
series of related rights and claims);
(xi) grant any license or sublicense of any rights under or with
respect to any Intellectual Property;
<PAGE>
(xii) make or authorize any change in the charter or bylaws of
the Company;
(xiii) issue, sell or otherwise dispose of the Company's capital
stock, or grant any options, warrants, or other rights to purchase or
obtain (including upon conversion, exchange or exercise) the Company's
capital stock;
(xiv) declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock (whether in cash or in
kind) or redeem, purchase or otherwise acquire any of its capital
stock;
(xv) make any loan to, or enter into any other transaction or
agreement with, any of its directors, officers and employees outside
the Company's Ordinary Course of Business;
(xvi) make any distributions other than in the ordinary course of
business for payroll expenditures;
(xvii) grant any increase in the compensation of any of its
directors, officers and employees; or adopt, amend, modify or
terminate any bonus, profit-sharing, incentive, severance, or other
plan, contract, or commitment for the benefit of any of its directors,
officers, and employees (or take any such action with respect to any
other Employee Benefit Plan); or make any other change in employment
terms for any of its directors, officers, and employees;
(xviii) otherwise take any action or engage in any transaction
outside the Company's Ordinary Course of Business; or
(xix) otherwise engage in any practice, take any action, or enter
into any transaction of the sort described in 4(g) above.
(d) Preservation of Business. The Seller will cause the Company to
keep its business and properties substantially intact, including its
present operations, physical facilities, working conditions, and
relationships with lessors, licensors, suppliers, customers, and employees.
(e) Full Access. The Seller will permit, and the Seller will cause the
Company to permit, representatives of the Buyer to have full access to all
premises, properties, personnel, books, records (including Tax records),
contracts and documents of or pertaining to the Company.
(f) Notice of Developments. The Seller will give (or will cause to be
given) prompt written notice to the Buyer of any material adverse
development causing a breach of any of the representations and warranties
in 4 above. Each Party will give prompt written notice to the other of any
material adverse development causing a breach of any of his or its own
representations and warranties in 3 above. No disclosure by any Party
pursuant to this 5(f), however, shall be deemed to amend or supplement
Annex I, Annex II, or the Disclosure Schedule or to prevent or cure any
misrepresentation, breach of warranty, or breach of covenant.
<PAGE>
(g) Exclusivity. The Seller will not (and the Seller will not cause or
permit the Company to) (i) solicit, initiate, or encourage the submission
of any proposal or offer from any Person relating to the acquisition of any
capital stock or other voting securities, or any substantial portion of the
assets of, the Company (including any acquisition structured as a merger,
consolidation, or share exchange) or (ii) participate in any discussions or
negotiations regarding, furnish any information with respect to, assist or
participate in, or facilitate in any other manner any effort or attempt by
any Person to do or seek any of the foregoing. The Seller will not vote his
Company Shares in favor of any such acquisition, whether structured as a
merger, consolidation, or share exchange. The Seller will notify the Buyer
immediately if any Person makes any proposal, offer, inquiry, or contact
with respect to any of the foregoing.
6. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing.
(a) General. In case at any time after the Closing any further action
is necessary or desirable to carry out the purposes of this Agreement, each
of the Parties will take such further action (including the execution and
delivery of such further instruments and documents) as any other Party may
request, all at the sole cost and expense of the requesting Party (unless
the requesting Party is entitled to indemnification therefor under 8
below). The Seller acknowledges and agrees that from and after the Closing
the Buyer will be entitled to possession of all documents, books, records
(including Tax records), agreements and financial data of any sort relating
to the Company.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection
with (i) any transaction contemplated under this Agreement or (ii) any
fact, situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction on or
prior to the Closing Date involving the Company, each of the other Parties
will cooperate with him or it and his or its counsel in the contest or
defense, make available their personnel, and provide such testimony and
access to their books and records as shall be necessary in connection with
the contest or defense, all at the sole cost and expense of the contesting
or defending Party (unless the contesting or defending Party is entitled to
indemnification therefor under 8 below).
<PAGE>
(c) Transition. The Seller will not take (and will not permit the
Company to take) any action that is designed or intended to have the effect
of discouraging any lessor, sublessor, sub-lessee, licensor, licensee,
franchisee, customer, supplier, or other business associate of the Company
from maintaining the same business relationships with the Company after the
Closing as it maintained with the Company prior to the Closing. The Seller
will refer all customer and vendor inquiries relating to the businesses of
the Company to the Buyer from and after the Closing.
(d) Confidentiality. The Seller will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential
Information except in connection with this Agreement, and deliver promptly
to the Buyer or destroy, at the request and option of the Buyer, all
tangible embodiments (and all copies) of the Confidential Information which
are in his possession. In the event that the Seller is requested or
required (by oral question or request for information or documents in any
legal proceeding, interrogatory, subpoena, civil investigative demand, or
similar process) to disclose any Confidential Information, the Seller will
notify the Buyer promptly of the request or requirement so that the Buyer
may seek an appropriate protective order or waive compliance with the
provisions of this 6(d). If, in the absence of a protective order or the
receipt of a waiver hereunder, the Seller is, on the advice of counsel,
compelled to disclose any Confidential Information to any tribunal, the
Seller may disclose the Confidential Information to the tribunal; provided,
however, that the Seller shall use his best efforts to obtain, at the
request of the Buyer, an order or other assurance that confidential
treatment will be accorded to such portion of the Confidential Information
required to be disclosed as the Buyer shall designate. The foregoing
provisions shall not apply to any Confidential Information which is
generally available to the public immediately prior to the time of
disclosure.
(e) Covenant Not to Compete
(i) The Seller will not "directly or indirectly compete" with the
Buyer for a period of four (4) years from and after the Closing Date.
(ii) For purposes of this Agreement, the phrase "directly or
indirectly compete" shall include:
(A) owning, managing, operating, or controlling, or
participating in the ownership, management, operation, or control
of, or being connected with or having any interest in, as a
stockholder, director, officer, employee, agent, consultant,
assistant, advisor, sole proprietor, partner or otherwise, any
retail baked goods business, or any shopping-mall-based food
business (including as a franchisee or franchisor, and other than
any existing business of the Seller not acquired hereunder or) at
present or in the future, or any affiliate of the Buyer; and
<PAGE>
(B) soliciting or attempting to solicit the services of any
employees of Buyer or any affiliate of Buyer; provided, however,
that no owner of less than 1% of the outstanding stock of any
publicly traded corporation shall be deemed to engage solely by
reason thereof in any of its businesses.
(iii) Notwithstanding the foregoing subsections (i) and (ii),
"directly or indirectly compete" shall not include that certain
existing retail bakery business and related operations (the "Bakery")
presently owned and operated by Dorian C. Cotlar as Rao's Bakery at
2596 Calder, Beaumont, Texas:
(A) in which the Seller directly acquires and owns a
controlling interest (whether by reason of an asset or stock
acquisition, by merger or otherwise);
(B) that is operated by or on behalf of the Seller as and at
a single retail location (and not as a franchisor), either at its
present site or at a single alternate site that is not within a
one (1) mile radius of any existing or future retail cookie
concept store of the Buyer or its Affiliates; provided that the
Seller shall not be required to close the Bakery if the Buyer or
its Affiliates open any such store within a one (1) mile radius
of the bakery; and
(C) which does not make, distribute, sell or offer for sale
any cookie, cookie-like or decorated cookie products, or pretzels
of any type or form, other than those made, distributed, offered
for sale or sold pursuant to a franchise or license agreement
with the Buyer or one of its Affiliates. Notwithstanding the
restrictions set forth in this clause (C), the Seller shall be
entitled to sell non-branded cookie, cookie-like or decorated
cookie products, provided that: (1) the Seller shall be a
franchisee or licensee of the Buyer or one of its Affiliates; and
(2) the Seller shall pay a three percent (3%) royalty to the
Buyer or its Affiliates on all sales of non-branded cookie,
cookie-like or decorated cookie products sold by the Bakery;
provided further that such right to sell non-branded cookie,
cookie-like or decorated cookie products shall terminate within
on the six (6) month anniversary of the Closing Date.
(iv) If the final judgment of a court of competent jurisdiction
declares that any term or provision of this 6(e) is invalid or
unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power
to reduce the scope, duration, or area of the term or provision, to
delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid
and enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time
within which the judgment may be appealed. The Seller agrees not to
assert any defense based on a lack of or inadequacy of consideration
with respect to the enforcement of the Seller's covenants in this
6(e).
<PAGE>
(f) Employees. Effective upon the Closing, the Buyer agrees to cause
the Company to offer continuing employment to the Company's store-level
employees (including store managers), upon the same terms and conditions as
their at-will employment prior to the Closing. Nothing set forth in this
Agreement is intended to obligate the Company, or to create any agreement
between the Company or the Buyer and any employee of the Company, for
continuing employment of any such employee, or to limit the Company's right
to terminate of any such employee for any reason at any time after the
Closing. The Seller or an Affiliate of the Seller shall be entitled to
offer employment to any executive or management-level employee of the
Company whose employment the Buyer determines not to continue after the
Closing Date (each such person being a "Discontinued Employee"); provided
however, that the Seller shall pay, or reimburse the Company for its
payment of, all severance benefits paid or payable by the Company to the
Discontinued Employee; provided further that, neither the Seller nor an
Affiliate of the Seller shall employ or solicit the employment of any such
employee of the Company until the Buyer has notified the Seller in writing
that such person is or will become a Discontinued Employee.
(g) Franchise and License Fees. The Buyer agrees not to charge (or
permit any of the Buyer's Affiliates) to charge the Seller customary
charges imposed by the Buyer (or the Buyer's Affiliates) for the granting
of any franchise or license agreement described in 6(e)(iii)(D) above that
the Buyer or Buyer's Affiliates in their sole discretion may grant after
the Closing to the Seller (or an entity directly owned or controlled by the
Seller).
7. Conditions to Obligation to Close
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in 3(a) and 4
above shall be true and correct in all material respects at and as of
the Closing Date;
<PAGE>
(ii) the Seller shall have performed and complied with all of his
covenants hereunder in all material respects through the Closing;
(iii) the Company shall have procured all of the third party
consents specified in 5(b) above, including without limitation, the
consent of Company's landlords with respect to each of the Store
Leases, and GACC, and the Store Leases (including those listed on
Schedule 4(k)(ii)), agreements and other rights to use and occupy real
property shall be satisfactory to the Buyer, including, without
limitations, the Store located at Victoria Mall;
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction or before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would
(A) prevent consummation of any of the transactions
contemplated by this Agreement;
(B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation;
(C) affect adversely the right of the Buyer to own the
Company Shares and to control the Company ; or
(D) affect adversely the right of the Company to own its
assets and to operate its businesses (and no such injunction,
judgment, order, decree, ruling, or charge shall be in effect);
(v) the Seller shall have delivered to the Buyer a certificate to
the effect that each of the conditions specified above in 7(a)(i)-(iv)
above is satisfied in all respects;
(vi) the Parties and the Company shall have received all
authorizations, consents, and approvals of governments and
governmental agencies referred to in 3(a)(ii), 3(b)(iii), and 4(c)
above;
(vii) the Buyer shall have received from counsel to the Seller an
opinion in form and substance as set forth in Exhibit D attached
hereto, addressed to the Buyer, and dated as of the Closing Date;
(viii) at least five (5) business days prior to the Closing, the
Buyer shall have received the resignations, effective as of the
Closing, of the Company's officers and directors;
<PAGE>
(ix) the Buyer shall have obtained on terms and conditions
satisfactory to it all of the financing it needs in order to
consummate the transactions contemplated hereby and the Related
Transactions;
(x) the closing of each of the Related Transactions shall have
occurred, or each of the conditions for the closing of the Related
Transactions concurrently with the Closing of the transactions
contemplated by this Agreement, shall have been satisfied or waived to
the Buyer's satisfaction;
(xi) the Franchisee Litigation shall have been settled on terms
and pursuant to documents satisfactory to the Buyer and the Seller;
(xii) the Buyer's due diligence investigation of the Seller and
the Company shall have been completed to the Buyer's satisfaction;
(xiii) the Seller shall deliver to the Buyer stock certificates
representing all of the issued and outstanding Company shares,
endorsed in blank or accompanied by duly executed assignment
instruments;
(xiv) all voting trusts, proxies and other agreements or
understandings with respect to the voting of capital stock of the
Company shall have been terminated before the Closing;
(xv) the Company and the Seller shall deliver the stock book,
stock ledger, minute book, and corporate seal of the Company; and
(xvi) all actions to be taken by the Seller in connection with
consummation of the transactions contemplated hereby and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby will be satisfactory in
form and substance to the Buyer.
The Buyer may waive any condition specified in this 7(a) if he executes a
writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Seller. The obligation of the
Seller to consummate the transactions to be performed by him in connection
with the Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in 3(b) above
shall be true and correct in all material respects at and as of the
Closing Date;
(ii) the Buyer shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
<PAGE>
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative agency
of any federal, state, local, or foreign jurisdiction for before any
arbitrator wherein an unfavorable injunction, judgment, order, decree,
ruling, or charge would (A) prevent consummation of any of the
transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);
(iv) the Buyer shall have delivered to the Seller a certificate
to the effect that each of the conditions specified above in
7(b)(i)-(iii) above is satisfied in all respects;
(v) the Parties and the Company shall have received all
authorizations, consents, and approvals of governments and
governmental agencies referred to in 3(a)(ii), 3(b)(iii), and 4(c)
above;
(vi) the closing of each of the Related Transactions shall have
occurred, or each of the conditions for the closing of the Related
Transaction concurrently with the closing of the transactions
contemplated by this Agreement shall have been satisfied or waived to
the Seller's satisfaction;
(vii) the condition set forth in 7(a)(xi) shall have been
satisfied; and
(viii) all actions to be taken by the Buyer in connection with
consummation of the transactions contemplated hereby, and all
certificates, opinions, instruments, and other documents required to
effect the transactions contemplated hereby, will be reasonably
satisfactory in form and substance to the Seller.
The Seller may waive any condition specified in this 7(b) if they execute a
writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this Agreement
shall survive the Closing hereunder (even if the damaged Party knew or had
reason to know of any misrepresentation or breach of warranty at the time
of Closing) and continue thereafter in full force and effect for a period
of two (2) years, except those representations and warranties relating to
Taxes, which shall continue in full force and effect thereafter subject to
any applicable statutes of limitations.
<PAGE>
(b) Indemnification Provision for Benefit of the Buyer. The Seller
agrees to indemnify the Buyer, its Affiliates and each of its officers,
directors, employees and agents (collectively, the "Buyer Indemnified
Parties") and hold them harmless from any Adverse Consequences suffered or
incurred by any of them to the extent arising from:
(i) any breach (or in the event any third party alleges facts
that, if true, would mean the Seller has breached) of any of its
representations, warranties and covenants contained in this Agreement,
in the Disclosure Schedule, or in any certificate, instrument or other
document delivered pursuant hereto or thereto;
(ii) any breach of any covenant of the Seller contained in this
Agreement requiring performance after the Closing Date;
(iii) any Liability of the Company for the unpaid Taxes of any
Person (other than the Company) under Treas. Reg. 1.1502-6 (or any
similar provision of state, local, or foreign law), as a transferee or
successor, by contract, or otherwise.
(c) Indemnification Provisions for Benefit of the Seller. The Buyer
agrees to indemnify the Seller, its Affiliates and each of its officers,
directors, employees and agents and hold them harmless from any Adverse
Consequences suffered or incurred by any of them to the extent arising
from:
(i) any breach (or in the event any third party alleges facts
that, if true, would mean the Buyer has breached) of any of its
representations, warranties and covenants contained in this Agreement,
in the Disclosure Schedule, or in any certificate, instrument or other
document delivered pursuant hereto or thereto; and
(ii)any breach of any covenant of the Buyer contained in this
Agreement requiring performance after the Closing Date.
(d) Matters Involving Third Parties
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may
give rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this ? 8, then the Indemnified Party shall
promptly notify the Indemnifying Party thereof in writing; provided,
however, that no delay on the part of the Indemnified Party in
notifying any Indemnifying Party shall relieve the Indemnifying Party
from any obligation hereunder unless (and then solely to the extent)
the Indemnifying Party thereby is prejudiced.
<PAGE>
(ii) Any Indemnifying Party will have the right to defend the
Indemnified Party against the Third Party Claim with counsel of its
choice satisfactory to the Indemnified Party so long as
(A) the Indemnifying Party notifies the Indemnified Party in
writing within 15 days after the Indemnified Party has given
notice of the Third Party Claim that the Indemnifying Party will
indemnify the Indemnified Party from and against the entirety of
any Adverse Consequences the Indemnified Party may suffer
resulting from, arising out of, relating to, in the nature of, or
caused by the Third Party Claim;
(B) the Indemnifying Party provides the Indemnified Party
with evidence acceptable to the Indemnified Party that the
Indemnifying Party will have the financial resources to defend
against the Third Party Claim and fulfill its indemnification
obligations hereunder;
(C) the Third Party Claim involves only money damages and
does not seek an injunction or other equitable relief;
(D) settlement of, or an adverse judgment with respect to,
the Third Party Claim is not, in the good faith judgment of the
Indemnified Party, likely to establish a precedential custom or
practice materially adverse to the continuing business interests
of the Indemnified Party; and
(E) the Indemnifying Party conducts the defense of the Third
Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the defense
of the Third Party Claim in accordance with 8(d)(ii) above,
(A) the Indemnified Party may retain separate co-counsel at
its sole cost and expense and participate in the defense of the
Third Party Claim;
(B) the Indemnified Party will not consent to the entry of
any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnifying Party (not to be withheld unreasonably); and
(C) the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the
Indemnified Party (not to be withheld unreasonably).
<PAGE>
(iv) In the event any of the conditions in 8(d)(ii) above is or
becomes unsatisfied, however,
(A) the Indemnified Party may defend against, and consent to
the entry of any judgment or enter into any settlement with
respect to, the Third Party Claim in any manner it reasonably may
deem appropriate (and the Indemnified Party need not consult
with, or obtain any consent from, any Indemnifying Party in
connection therewith);
(B) the Indemnifying Parties will reimburse the Indemnified
Party promptly and periodically for the costs of defending
against the Third Party Claim (including reasonable attorneys'
fees and expenses); and
(C) the Indemnifying Parties will remain responsible for any
Adverse Consequences the Indemnified Party may suffer resulting
from, arising out of, relating to, in the nature of, or caused by
the Third Party Claim to the fullest extent provided in this 8.
(e) Determination of Adverse Consequences. The Parties shall take into
account the time cost of money (using the Applicable Rate as the discount
rate) in determining Adverse Consequences for purposes of this 8. In
addition, the Parties shall take into account the benefits of a Tax to a
Party alleging Adverse Consequences.
(f) Certain Set-Off Rights. At the Buyer's election, payments, if any,
to be made by the Seller under this 8 shall be made by reducing, on a
dollar-for-dollar basis, any unpaid balance of any of the Deferred Payments
by the amount of all or any portion of any Adverse Consequences the Buyer
may suffer or incur. All such indemnification payments under this 8 shall
be deemed adjustments to the Purchase Price. Notwithstanding the foregoing,
before any set-off rights may be exercised, the Buyer shall give written
notice of any claim for indemnification hereunder, specifying in reasonable
detail the grounds for indemnification and the amount of the set-off, and
the Seller may object to any such set-off by responding in writing within
fifteen (15) days after receipt of the Buyer's notice. If the Seller fails
to object within the fifteen (15) day period specified, the Seller shall
waive any right to object to the Buyer's right of indemnification hereunder
or the amount of the set-off. If Seller disputes either the Buyer's right
to indemnification, or the amount of the set-off, or both, then Escrow
Agent shall retain the amount of the set-off pending resolution of the
dispute, and Buyer and Seller shall negotiate in good faith to resolve all
issues in dispute. If, after a period of fifteen (15) days following the
date on which Seller gives Buyer notice of its objection to Seller's
indemnification hereunder, any such matter remains in dispute, then parties
shall employ the dispute resolution procedures set forth in 10 of this
Agreement. Each Party agrees to make available to the other Party and the
attorneys and accountants of the other Party, within a reasonable time
after a request is made, all books and records which are reasonably
required by the requesting Party to evaluate a claim for indemnification or
objection hereunder.
<PAGE>
(g) Other Indemnification Provisions. The foregoing indemnification,
set off and recoupment provisions are in addition to, and not in derogation
of, any statutory, equitable, or common law remedy any Buyer may have for a
breach of representation, warranty or covenant. The Seller hereby agrees
that he will not make any claim for indemnification against the Company by
reason of the fact that he was a director, officer, employee, or agent of
any such entity or was serving at the request of any such entity as a
partner, trustee, director, officer, employee, or agent of another entity
(whether such claim is for judgments, damages, penalties, fines, costs,
amounts paid in settlement, losses, expenses, or otherwise and whether such
claim is pursuant to any statute, charter document, bylaw, agreement, or
otherwise) with respect to any action, suit, proceeding, complaint, claim,
or demand brought by the Buyer against such Seller (whether such action,
suit, proceeding, complaint, claim, or demand is pursuant to this
Agreement, applicable law, or otherwise).
(h) Indemnification Limitations. Notwithstanding the foregoing to the
contrary, the Seller shall not be required to indemnify the Buyer
Indemnified Parties from any Adverse Consequences pursuant to 8(b) until
the Buyer Indemnified Parties have individually or collectively suffered
Adverse Consequences in excess of a $38,000 aggregate threshold. If the
$38,000 threshold is met, then Seller shall indemnify the Buyer Indemnified
Parties for the initial $38,000 together with any amounts required to be
paid in excess thereof, on a dollar-for dollar basis.
9. Termination
(a) Termination of Agreement. The Parties may terminate this Agreement
as provided below:
(i) The Buyer and the Seller may terminate this Agreement by
mutual written consent at any time prior to the Closing;
(ii) The Buyer may terminate this Agreement at any time prior to
July 10, 1998 by giving written notice to the Seller if the Buyer is
not satisfied in its sole discretion with the results of its
continuing business, legal and accounting due diligence investigation
regarding the Company;
<PAGE>
(iii) The Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing (A) in the event
the Seller has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, the
Buyer has notified the Seller of the breach, and the breach has
continued without cure for a period of fifteen (15) days after the
notice of breach; or (B) if the Closing shall not have occurred on or
before September 30, 1998, by reason of the failure of any condition
precedent under 7(a) hereof (unless the failure results primarily from
the Buyer itself breaching any representation, warranty, or covenant
contained in this Agreement);
(iv) The Buyer may terminate this Agreement by giving written
notice to the Seller at any time prior to the Closing in the event
that any of the Related Transactions shall be terminated or fail to
close for any reason, including without limitation, any cause, action
or reason attributable to the Buyer; and
(v) The Seller may terminate this Agreement by giving written
notice to the Buyer at any time prior to the Closing (A) in the event
the Buyer has breached any material representation, warranty, or
covenant contained in this Agreement in any material respect, the
Seller has notified the Buyer of the breach, and the breach has
continued without cure for a period of fifteen (15) days after the
notice of breach; or (B) if the Closing shall not have occurred on or
before September 30, 1998, by reason of the failure of any condition
precedent under 7(b) hereof (unless the failure results primarily from
the Seller themselves breaching any representation, warranty, or
covenant contained in this Agreement).
(b) Effect of Termination. If any Party terminates this Agreement
pursuant to 9(a) above, all rights and obligations of the Parties under
this Agreement and the Escrow Agreement shall terminate without any
Liability of any Party to any other Party (except for any Liability of any
Party then in breach).
10. Miscellaneous
(a) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject
matter of this Agreement prior to the Closing without the prior written
approval of the Buyer and the Seller; provided, however, that any Party may
make any public disclosure it believes in good faith is required by
applicable law (in which case the disclosing Party will use its best
efforts to advise the other Parties prior to making the disclosure).
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their
respective successors and permitted assigns.
<PAGE>
(c) Entire Agreement. This Agreement (including the documents referred
to herein) constitutes the entire agreement among the Parties and
supersedes any prior understandings, agreements, or representations by or
among the Parties, written or oral, to the extent they related in any way
to the subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon
and inure to the benefit of the Parties named herein and their respective
successors and permitted assigns. No Party may assign either this Agreement
or any of his or its rights, interests, or obligations hereunder without
the prior written approval of the Buyer and the Seller; provided, however,
that the Buyer may (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates and (ii) designate one or more
of its Affiliates to perform its obligations hereunder (in any or all of
which cases the Buyer nonetheless shall remain responsible for the
performance of all of its obligations hereunder).
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning
or interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given if (and
then two business days after) it is sent by registered or certified mail,
return receipt requested, postage prepaid, and addressed to the intended
recipient as set forth below:
If to the Seller:Chocolate Chip Cookies of Texas, Inc.
ATTN: Jake Tortorice
308-C Parkdale Mall
Beaumont, TX 77706
Copy to: Mehaffy & Weber
Attn: Kurt M. Andreason
2615 Calder Avenue
P.O. Box 16
Beaumont, TX 77704
<PAGE>
If to the Buyer: Mrs. Fields' Original Cookies, Inc.
ATTN: Legal Department
2855 East Cottonwood Parkway, Suite 400
Salt Lake City, UT 84121-7050
Copy to: Jones, Waldo, Holbrook & McDonough
ATTN: Glen D. Watkins
1500 Wells Fargo Plaza
170 So. Main Street
Salt Lake City, UT 84101
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set
forth above using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail,
or electronic mail), but no such notice, request, demand, claim, or
other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any Party may
change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Utah
without giving effect to any choice or conflict of law provision or
rule (whether of the State of Utah or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than
the State of Utah.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and
signed by the Buyer and the Seller. No waiver by any Party of any
default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.
(k) Expenses. Each of the Parties will bear his or its own costs
and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated
hereby. The Seller agrees that the Company has not borne nor will it
bear any of the Seller?s costs and expenses (including any of his
legal fees and expenses) in connection with this Agreement or any of
the transactions contemplated hereby.
<PAGE>
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the Parties and no presumption
or burden of proof shall arise favoring or disfavoring any Party by
virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. The Parties
intend that each representation, warranty, and covenant contained
herein shall have independent significance. If any Party has breached
any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty,
or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall
not detract from or mitigate the fact that the Party is in breach of
the first representation, warranty, or covenant.
(m) Incorporation of Exhibits, Annexes, and Schedules. The
Exhibits, Annexes, and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
(n) Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the
event any of the provisions of this Agreement are not performed in
accordance with their specific terms or otherwise are breached.
Accordingly, each of the Parties agrees that the other Parties shall
be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted
in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter in addition to any other
remedy to which they may be entitled, at law or in equity.
(o) Dispute Resolution. Any dispute arising out of or relating to
this Agreement, including, but not limited to, claims for
indemnification pursuant to Section 8 shall be resolved in accordance
with the procedures specified in this Section 10, which shall be sole
and exclusive procedures for the resolution of any such disputes.
(i) The parties shall attempt in good faith to resolve any
dispute arising out of or relating to this Agreement promptly by
negotiation between the Seller and his appointed representatives
and executives of Buyer who, if possible, are at a higher level
of management than the persons with direct responsibility for
administration of this Agreement.
<PAGE>
(A) Any Party may give the other Party written notice
of any dispute not resolved in the normal course of
business. Within 15 days after delivery of the notice, the
receiving Party shall submit to the other a written
response. The notice and response shall include (1) a
statement of each Party's position and a summary of
arguments supporting that position, and (2) the name and
title of the executive who will represent that Party and of
any other person who will accompany the executive. Within 30
days after delivery of the disputing Party's notice, the
executives of both parties shall meet at a mutually
acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the
dispute. All reasonable requests for information made by one
Party to the other will be honored.
(B) If the matter has not been resolved by these
persons within sixty (60) days of the disputing Party's
notice, or if the parties fail to meet within thirty (30)
days of the disputing Party's notice, either party may
initiate mediation as provided hereinafter.
(C) All negotiations pursuant to this clause are
confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules of
Evidence and State rules of evidence.
(ii) If the dispute has not been resolved by negotiation as
provided herein, the parties shall endeavor to settle the dispute
by nonbinding mediation and to bear equally the costs of the
mediation. The parties will jointly appoint a mutually acceptable
mediator promptly after a request for mediation is made by any
Party. The parties agree to participate in the mediation and all
related negotiations in good faith.
(iii) If the dispute has not been resolved by non-binding
means as provided herein within 90 days of the initiation of such
procedure, either Party may initiate litigation (upon 30 days'
written notice to the other Party); provided, however, that if
one Party has requested the other to participate in a non-binding
procedure and the other has failed to participate, the requesting
Party may initiate litigation before expiration of the above
period.
(iv) The procedures specified in this (o) shall be the sole
and exclusive procedures for the resolution of disputes between
the parties arising out of or relating to this Agreement;
provided, however, that a Party, without prejudice to the above
procedures, may file a complaint (for statute of limitations or
venue reasons) or to seek temporary or preliminary injunctive or
other provisional judicial relief, if in its sole judgment such
action is necessary to avoid irreparable damage or to preserve
the status quo. Despite such action the parties will continue to
participate in good faith in the procedures specified in this
Section.
<PAGE>
(v) All applicable statues of limitation and defenses based
upon the passage of time shall be tolled while the procedures
specified in this Section are pending. The parties will take such
action, if any, required to effectuate such tolling.
(vi) Each Party is required to continue to perform its
obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement.
(p) Submission to Juridiction. Each of the Parties submits to the
jurisdiction of any state or federal court sitting in the jurisdiction
of the defendant in such proceeding, in any action or proceeding
arising out of or relating to this Agreement or the Escrow Agreement
and agrees that all claims in respect of the action or proceeding may
be heard and determined in any such court. Each Party also agrees not
to bring any action or proceeding arising out of or relating to this
Agreement or the Escrow Agreement in any other court. Each of the
Parties waives any defense of inconvenient forum to the maintenance of
any action or proceeding so brought and waives any bond, surety, or
other security that might be required of any other Party with respect
thereto. Each Party agrees that a final judgment in any action or
proceeding so brought shall be conclusive and may be enforced by suit
on the judgment or in any other manner provided by law or at equity.
(q) Attorney's Fees. Should any litigation be commenced with
respect to any matters governed by this Agreement or the Escrow
Agreement, the Party prevailing shall be entitled, in addition to such
other relief as may be granted, to a reasonable sum for such Party's
attorneys' fees and expenses determined by the court in such
litigation.
(r) Joinder of Spouse. The spouse of certain of the Seller is
executing this Agreement to acknowledge its fairness and that it is in
her best interest to bind her community property interest, if any, to
the terms of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
BUYER: MRS. FIELDS' ORIGINAL COOKIES, INC.
By:/s/Michael R. Ward
Its:VP
SELLER:
/s/Jake Tortorice
Jake Tortorice
/s/Mary Tortorice
[Spouse]
STOCK PURCHASE AGREEMENT
AMONG
MRS. FIELDS' ORIGINAL COOKIES, INC.,
as Buyer,
and
LAWRENCE J. COHEN, MILDRED S. COHEN, JEROME E. MOUTON,
STEVEN J. BRYAN and JASON A. PILTZMAKER,
holders of all outstanding capital stock
of
DEBLAN CORPORATION,
as Sellers
EFFECTIVE FOR ACCOUNTING PURPOSES AS OF
June 30, 1998
<PAGE>
TABLE OF CONTENTS
1. Definitions......................................................... 1
2. Purchase and Sale of Company Shares................................. 7
(a) Basic Transaction.......................................... 7
(b) Purchase Price............................................. 7
(c) Working Capital Requirement................................ 8
(d) Purchase Price Adjustment for Liabilities.................. 8
(e) Purchase Price Adjustment Statement........................ 8
(f) Review of Purchase Price Adjustment Statement. ............ 8
(g) Payment of Adjustments. .................................. 9
(h) The Pre-Closing and the Closing............................ 9
(i) The Escrow/The Escrow Agreement............................ 10
(j) Deliveries at the Closing.................................. 10
3. Representations and Warranties Concerning the Transaction........... 11
(a) Representations and Warranties of the Sellers.............. 11
(i) Authorization of Transaction...................... 11
(ii) Noncontravention.................................. 11
(iii) Brokers' Fees..................................... 11
(iv) Company Shares.................................... 11
(v) Absence of Indebtedness and Claims................ 12
(b) Representations and Warranties of the Buyer................ 12
(i) Organization of the Buyer......................... 12
(ii) Authorization of Transaction...................... 12
(iii) Non-Contravention................................. 12
(iv) Brokers' Fees..................................... 13
(v) Investment........................................ 13
4. Representations and Warranties Concerning the Company............... 13
(a) Organization, Qualification, and Corporate Power........... 13
(b) Capitalization............................................. 14
(c) Non-Contravention.......................................... 14
(d) Brokers' Fees.............................................. 15
(e) Title to Assets............................................ 15
<PAGE>
(f) Financial Statements....................................... 15
(g) Events Subsequent to Most Recent Fiscal Year End........... 15
(h) Undisclosed Liabilities.................................... 18
(i) Legal Compliance........................................... 18
(j) Tax Matters................................................ 18
(k) Real Property.............................................. 20
(l) Intellectual Property...................................... 21
(m) Tangible Assets............................................ 23
(n) Inventory.................................................. 23
(o) Contracts.................................................. 23
(p) Notes and Accounts Receivable.............................. 25
(q) Powers of Attorney......................................... 25
(r) Insurance.................................................. 25
(s) Litigation................................................. 26
(t) Product Warranty........................................... 26
(u) Product Liability.......................................... 26
(v) Employees.................................................. 27
(w) Employee Benefit........................................... 27
(x) Guaranties................................................. 29
(y) Environment, Health, and Safety............................ 29
(z) Certain Business Relationships with the Company............ 30
(aa) Disclosure................................................. 30
5. Pre-Closing Covenants............................................... 30
(a) General.................................................... 30
(b) Notices and Consents....................................... 30
(c) Operation of Business...................................... 30
(d) Preservation of Business................................... 32
(e) Full Access................................................ 32
(f) Notice of Developments..................................... 32
(g) Exclusivity................................................ 33
6. Post-Closing Covenants.............................................. 33
(a) General.................................................... 33
(b) Litigation Support......................................... 33
(c) Transition................................................. 34
(d) Confidentiality............................................ 34
(e) Covenant Not to Compete.................................... 34
<PAGE>
7. Conditions to Obligation to Close................................... 35
(a) Conditions to Obligation of the Buyer...................... 35
(b) Conditions to Obligation of the Sellers.................... 38
8. Remedies for Breaches of This Agreement............................. 39
(a) Survival of Representations and Warranties................. 39
(b) Indemnification Provisions for Benefit of the Buyer........ 39
(c) Indemnification Provision for Benefit of the Sellers....... 40
(d) Indemnification Limitations................................ 40
(e) Matters Involving Third Parties............................ 41
(f) Determination of Adverse Consequences...................... 42
(g) Officer/Director Indemnification........................... 42
(h) Certain Set-Off Rights..................................... 43
(i) Other Indemnification Provisions........................... 43
(j) Sellers' Release of Claims................................. 44
(k) Release and Indemnification from Guaranties. ............. 44
9. Termination......................................................... 44
(a) Termination of Agreement................................... 44
(b) Effect of Termination...................................... 45
10. Miscellaneous....................................................... 45
(a) Press Releases and Public Announcements.................... 45
(b) No Third-Party Beneficiaries............................... 46
(c) Entire Agreement........................................... 46
(d) Succession and Assignment.................................. 46
(e) Counterparts............................................... 46
(f) Headings................................................... 46
(g) Notices.................................................... 46
(h) Governing Law.............................................. 47
(i) Amendments and Waivers..................................... 47
(j) Severability............................................... 47
(k) Expenses................................................... 47
(l) Construction............................................... 48
(m) Incorporation of Exhibits, Annexes, and Schedules.......... 48
(n) Specific Performance....................................... 48
(o) Dispute Resolution......................................... 48
(p) Submission to Jurisdiction................................. 50
(q) Attorneys' Fees............................................ 50
(r) Joinder of Spouse.......................................... 50
<PAGE>
EXHIBITS
A List of Related Transactions
B Escrow Agreement
C [Intentionally Blank]
D Financial Statements of the Company
E Form of Opinion of the Sellers' Counsel
F Allocation of Purchase Price
ANNEXES
I Exceptions to Sellers Representations
II Exceptions to Buyers Representations
SCHEDULES
4(a) Organization
4(b) Capitalization
4(c) Non-Contravention
4(e) Title to Assets
4(g) Absence of Changes
4(j) Tax Returns
4(k)(ii) Real Property Leased or Subleased
4(l)(i) Intellectual Property
4(l)(iii) Intellectual Property Licenses to Third Parties
4(l)(iv) Licenses From Third Parties
4(o) Contracts
4(q) Powers of Attorney
4(r) Insurance
4(s) Litigation
4(v) Accrued Leave
4(w) Employee Benefit Plans
4(x) Guaranties
4(z) Certain Business Relationships
5(c) Operation of Business
5(d) Preservation of Business
5(f) Notice of Developments
7(a)(viii) Resigning Officers and Directors
7(b)(vi) Excluded Assets
<PAGE>
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("Agreement") effective for accounting
purposes as of June 30, 1998 (the "Effective Date"), and for all other purposes,
on the Closing Date (defined herein), by and among Mrs. Fields' Original
Cookies, Inc. a Delaware corporation (the "Buyer"), Deblan Corporation, a
Delaware corporation (the "Company"), and Lawrence J. Cohen ("Cohen"), Mildred
S. Cohen, Jerome E. Mouton, Steven J. Bryan and Jason A. Piltzmaker (referred to
herein individually as a "Seller" and collectively as the "Sellers"). The Buyer
and the Sellers are referred to collectively herein as the "Parties."
The Sellers own one hundred percent (100%) of the issued
outstanding capital stock of the Company.
This Agreement contemplates a transaction in which the Buyer will
purchase from the Sellers, and the Sellers will sell to the Buyer, all of the
issued and outstanding capital stock of the Company in return for cash and other
consideration set forth herein.
Now, therefore, in consideration of the premises and the mutual
promises herein made, and in consideration of the representations, warranties,
and covenants herein contained, the Parties agree as follows.
1. Definitions.
"Adverse Consequences" means all actions, suits,
proceedings, hearings, investigations, charges, complaints,
claims, demands, injunctions, judgments, orders, decrees,
rulings, damages, dues, penalties, fines, costs, amounts
paid in settlement, Liabilities, obligations, Taxes, liens,
losses, expenses, and fees, including court costs and
attorneys' fees and expenses.
"Affiliate" has the meaning set forth in Rule 12b-2 of
the regulations promulgated under the Securities Exchange
Act.
"Affiliated Group" means any affiliated group within
the meaning of Code Sec. 1504, or any similar group defined
under a similar provision of state, local or foreign law.
"Basis" means any past or present fact, situation,
circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or
transaction that forms or could form the basis for any
specified consequence.
"Buyer" has the meaning set forth in the preface above.
"Buyer's Counsel" has the meaning set forth in 2(h)
below.
<PAGE>
"Closing" has the meaning set forth in 2(h) below.
"Closing Date" has the meaning set forth in 2(h) below.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Cohen" has the meaning set forth in the preface above.
"Company" has the meaning set forth in the preface
above.
"Company Share" means any share of the Common Stock,
Ten Cents ($.10) par value per share, of the Company.
"Company's Closing Liabilities" means two obligations
of the Company to Premier Bank, N.A., on the Closing Date in
the approximate amounts of $8,000 and $624,000,
respectively.
"Confidential Information" means any information
concerning the businesses and affairs of the Company that is
not generally available to the public.
"Controlled Group of Corporations" has the meaning set
forth in Code Sec. 1563.
"Deferred Intercompany Transaction" has the meaning set
forth in Treas. Reg. 1. 1502-13.
"Disclosure Schedule" has the meaning set forth in 4
below.
"Discrepancy Notice" has the meaning set forth in 2(f)
below.
"Effective Date" has the meaning set forth in the
preface above.
"Employee Benefit Plan" means any (a) nonqualified
deferred compensation or retirement plan or arrangement
which is an Employee Pension Benefit Plan, (b) qualified
defined contribution retirement plan or arrangement which is
an Employee Pension Benefit Plan, (c) qualified defined
benefit retirement plan or arrangement which is an Employee
Pension Benefit Plan (including any Multiemployer Plan), or
(d) Employee Welfare Benefit Plan or
"Employee Pension Benefit Plan" has the meaning set
forth in ERISA Sec. 3(2).
"Employee Welfare Benefit Plan" has the meaning set
forth in ERISA Sec. 3(1).
<PAGE>
"Environmental, Health, and Safety Laws" means the
Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Resource Conservation and
Recovery Act of 1976, and the Occupational Safety and Health
Act of 1970, each as amended, together with all other laws
(including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder)
of federal, state, local, and foreign governments (and all
agencies thereof) concerning pollution or protection of the
environment, public health and safety, or employee health
and safety, including laws relating to emissions,
discharges, releases, or threatened releases of pollutants,
contaminants, or chemical, industrial, hazardous, or toxic
materials or wastes into ambient air, surface water, ground
water, or lands or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants, or
chemical, industrial, hazardous, or toxic materials or
wastes.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"Escrow Account" has the meaning set forth in 2(i)
below.
"Escrow Agent" has the meaning set forth in 2(i) below.
"Escrow Agreement" has the meaning set forth in 2(i)
below.
"Escrowed Buyer Documents" has the meaning set forth in
2(h)(i) below.
"Escrowed Deferred Payments" has the meaning set forth
in 2(b)(ii) below.
"Escrowed Seller Documents" has the meaning set forth
in 2(h)(i) below.
"Excess Loss Account" has the meaning set forth in
Treas, Reg. 1.1502-19.
"Excluded Assets" has the meaning set forth in 7(b)(vi)
below.
"Extremely Hazardous Substance" has the meaning set
forth in Sec. 302 of the Emergency Planning and Community
Right-to-Know Act of 1986, as amended.
"Fiduciary" has the meaning set forth in ERISA Sec.
3(21).
"Financial Statements" has the meaning set forth in
4(f) below.
"Franchisee Litigation" refers to any pending or
threatened claims, liabilities or litigation asserted
against the Buyer by or on behalf of the Sellers, the
Company, Great American Cookie Company or any area
developer, franchisee, licensee or agent thereof, including
without limitation, all of the claims asserted, or that
could be asserted, in that certain action styled Robert and
Sheila Goldberg v. Great American Cookie Company, Mrs.
Fields' Original Cookies, Inc. et al., Case No.
MER-L-3502-97, pending in The Superior Court of New Jersey,
Law Division, Mercer County.
<PAGE>
"GAAP" means United States generally accepted
accounting principles as in effect from time to time.
"GACC" means any person or entity, including without
limitation Great American Cookie Company or its parent or
affiliated entities.
"Indemnified Party" has the meaning set forth in 8(e)
below.
"Indemnifying Party" has the meaning set forth in 8(e)
below.
"Intellectual Property" means (a) all inventions
(whether patentable or unpatentable and whether or not
reduced to practice), all improvements thereto, and all
patents, patent applications, and patent disclosures,
together with all reissuances, continuations,
continuations-in-part, revisions, extensions, and
reexaminations thereof, (b) all trademarks, service marks,
trade dress, logos, trade names, and corporate names,
together with all translations, adaptations, derivations,
and combinations thereof and including all goodwill
associated therewith, and all applications, registrations,
and renewals in connection therewith, (c) all copyrightable
works, all copyrights, and all applications, registrations,
and renewals in connection therewith, (d) all mask works and
all applications, registrations, and renewals in connection
therewith, (e) all trade secrets and confidential business
information (including ideas, research and development,
know-how, recipes, formulas, production processes and
techniques, technical data, designs, drawings,
specifications, customer and supplier lists, pricing and
cost information, and business and marketing plans and
proposals), (f) all computer software (including data and
related documentation), (g) all other proprietary rights,
and (h) all copies and tangible embodiments thereof (in
whatever form or medium).
"Knowledge" means actual knowledge after reasonable
investigation.
"Liability" means any liability (whether known or
unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due),
including any liability for Taxes.
"Most Recent Balance Sheet" means the balance sheet
contained within the Most Recent Financial Statements.
<PAGE>
"Most Recent Financial Statements" has the meaning set
forth in 4(f) below.
"Most Recent Fiscal Month End" has the meaning set
forth in 4(f) below.
"Most Recent Fiscal Year End" has the meaning set forth
in 4(f) below.
"Multiemployer Plan" has the meaning set forth in ERISA
Sec. 3(37).
"Office Suite Lease" means that certain Lease
Agreement, dated April 23, 1990, as amended, by and between
the Company and Resolution Trust Corporation as Receiver of
University Federal Savings Association, covering those
certain premises more particularly described therein at 8300
FM 1960, Houston, Texas.
"Ordinary Course of Business" means the ordinary course
of business consistent with past custom and practice
(including with respect to quantity and frequency).
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, a partnership, a
corporation, limited liability company, an association, a
joint stock company, a trust, a joint venture, an
unincorporated organization, or a governmental entity (or
any department, agency, or political subdivision thereof).
"Pre-Closing" has the meaning set forth in 2(h) below.
"Pre-Date" has the meaning set forth in 2(h) below.
"Pre-Closing Escrow" has the meaning set forth in 2(h)
below.
"Prohibited Transaction" has the meaning set forth in
ERISA Sec. 406 and Code Sec. 4975.
"Purchase Price" has the meaning set forth in 2(b)
below.
"Purchase Price Adjustment for Liabilities" has the
meaning set forth in 2(d) below.
"Purchase Price Adjustment for Working Capital" has the
meaning set forth in 2(c)(ii) below.
"Purchase Price Adjustment Statement" has the meaning
set forth in 2(e) below.
<PAGE>
"Related Transactions" means the transactions described
on Exhibit A to be entered into among any of the Buyer and
other Persons and closed concurrently or in conjunction with
the transactions that are the subject of this Agreement.
"Reportable Event" has the meaning set forth in ERISA
Sec. 4043.
"Securities Act" means the Securities Act of 1933, as
amended.
"Securities Exchange Act" means the Securities Exchange
Act of 1934, as amended.
"Security Interest" means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other than
(a) mechanic's, materialmen's, and similar liens, (b) liens
for Taxes not yet due and payable or for Taxes that the
taxpayer is contesting in good faith through appropriate
proceedings, (c) purchase money liens and liens securing
rental payments under capital lease arrangements, and (d)
other liens arising in the Ordinary Course of Business and
not incurred in connection with the borrowing of money.
"Seller" and "Sellers" have the meaning set forth in
the preface above.
"Store" or "Stores" has the meaning set forth in 4(a)
below.
"Store Leases" has the meaning set forth in 4(k)(ii)
below.
"Subsidiary" means any (A) corporation with respect to
which a specified Person (or a Subsidiary thereof) owns a
majority of the common stock or has the power to vote or
direct the voting of sufficient securities to elect a
majority of the directors, or (B) limited liability company
of which a specified Person (or a Subsidiary thereof) is a
member or managing member, or (C) any other entity in which
the Company has any ownership interest.
"Tax" means any federal, state, local, or foreign
income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Code Sec.
59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever,
including any interest, penalty, or addition thereto,
whether disputed or not.
"Tax Return" means any return, declaration, report,
claim for refund, or information return or statement
relating to Taxes, including any schedule or attachment
thereto, and including any amendment thereof.
<PAGE>
"Third Party Claim" has the meaning set forth in 8(e)
below.
"Working Capital" means the excess of Company's current
assets (consisting of the Company's cash, accounts
receivable, inventories and other current assets set forth
on the Most Recent Balance Sheet), less the Company's
current liabilities (consisting of the Company's accounts
payables, accrued liabilities, and other current liabilities
(excluding the Company's Closing Liabilities)).
2. Purchase and Sale of Company Shares.
(a) Basic Transaction. On and subject to the terms and
conditions of this Agreement, for the consideration specified
below in this 2, the Buyer agrees to purchase from each of the
Sellers, and each of the Sellers agrees to sell to the Buyer, all
of the Company Shares owned by each such Seller, in the aggregate
constituting all of the issued and outstanding Company Shares.
(b) Purchase Price. Subject to the adjustments set forth in
2(c)(ii) and 2(d) below, in consideration for the delivery of the
Company Shares, the Buyer agrees to pay and deliver to the
Sellers at the Closing the aggregate consideration consisting of
Ten Million Four Hundred Sixty-Five Thousand Dollars
($10,465,000.00) (the "Purchase Price"), payable to the Sellers
by wire transfer or delivery of other immediately available
funds, of which:
(i) Nine Million Four Hundred Sixty-Five Thousand
Dollars ($9,465,000.00) shall be paid by the Buyer to the
Sellers at the Closing, allocated among the Sellers in the
manner set forth on Exhibit F attached hereto; and
(ii) One Million Dollars ($1,000,000.00) shall be
deposited by the Buyer into the Escrow Account (the
"Escrowed Deferred Payments") for disbursement to Cohen
contingent upon and subject to the terms and conditions of
2(f) below and the Escrow Agreement.
(c) Working Capital Requirement
(i) Upon the Closing Date, the Company shall have
Working Capital in an amount not less than Four Hundred
Thousand Dollars ($400,000.00) which Cohen represents and
warrants, based on the Company's historical experience, is
an adequate amount of working capital for the operation of
the Company's business after the Closing in the same
manner as presently conducted.
<PAGE>
(ii) To the extent that the amount, if any, by
which the Company's Working Capital as of the Closing Date
is less than Four Hundred Thousand Dollars ($400,000.00),
the Purchase Price shall be decreased by such amount; to
the extent that the amount, if any, by which the Company's
Working Capital as of the Closing Date is greater than
Four Hundred Thousand Dollars ($400,000.00), the Purchase
Price shall be increased by such amount; the adjustment to
the Purchase Price based on the Working Capital as
described herein shall be referred to as the "Purchase
Price Adjustment for Working Capital".
(d) Purchase Price Adjustment for Liabilities. To the extent
that the amount, if any, by which the Company's Closing
Liabilities are less than One Million Dollars ($1,000,000.00),
the Purchase Price shall be increased by such amount; to the
extent that the amount, if any, by which the Company's Closing
Liabilities are greater than One Million Dollars ($1,000,000.00),
the Purchase Price shall be decreased by such amount; the
adjustment to the Purchase Price based on the Company's Closing
Liabilities as described herein shall be referred to as the
"Purchase Price Adjustment for Liabilities".
(e) Purchase Price Adjustment Statement. Within thirty (30)
days after the Closing, the Buyer shall cause the Company's
accountants, at the Company's expense to, prepare and deliver to
Cohen a statement (the "Purchase Price Adjustment Statement")
based on the financial statements of the Company, prepared in
accordance with GAAP, and showing (i) the calculation of the
amount of the Company's current assets and current liabilities as
of the Closing Date, (ii) the calculation of the Company's
Closing Liabilities, (iii) the calculation of the Purchase Price
Adjustment for Working Capital, if any, (iv) the calculation of
the Purchase Price Adjustment for Liabilities, if any.
(f) Review of Purchase Price Adjustment Statement. Cohen
shall have the right to review the Purchase Price Adjustment
Statement (and supporting work papers) and provide written notice
to the Buyer of Sellers' objections, if any, with respect to any
error, omission or other discrepancy in the Purchase Price
Adjustment Statement (the "Discrepancy Notice") until twenty (20)
days following the Sellers' receipt of the Purchase Price
Adjustment Statement. The Buyer and the Sellers shall work
together in good faith to resolve any such dispute and agree on
the final Purchase Price Adjustment Statement. In the event that
the Buyer and the Sellers cannot agree on the final Purchase
Price Adjustment Statement within ten (10) days after delivery of
the Sellers' Discrepancy Notice, the Buyer and Sellers shall
refer the disputed issue or issues to a national independent
public accounting firm (other than the regular accountants for
any Party or any accountants who prepared the Purchase Price
Adjustment Statement) which is reasonably acceptable to each
Party (the "Arbitrating Accountants") within fifteen (15) days
following delivery of the Sellers' Discrepancy Notice. The
Arbitrating Accountants shall be instructed to render a decision,
which shall be binding upon both parties, within twenty (20)
days. Each Party shall be entitled to present any information or
analysis concerning the matter in good faith to the Arbitrating
Accountants with a copy concurrently provided to the other Party.
The Buyer and Sellers shall each bear their own fees and
expenses, and the fees and expenses of the Arbitrating
Accountants shall be shared equally by the Buyer and the Sellers.
<PAGE>
(g) Payment of Adjustments. Any amount payable to the
Sellers or the Buyer resulting from the Purchase Price Adjustment
for Working Capital or the Purchase Price Adjustment for
Liabilities set forth in 2(c)(ii) and 2(d) above shall be paid to
the appropriate Party via wire transfer or other immediately
available funds, within ten (10) days after the Purchase Price
Adjustment for Working Capital or the Purchase Price Adjustment
for Liabilities, as appropriate, is finally determined. No
interest will be payable in respect of the Purchase Price
Adjustment for Working Capital or the Purchase Price Adjustment
for Liabilities.
(h) The Pre-Closing and the Closing
(i) The Pre-Closing.
Upon the terms and subject to the
satisfaction of the conditions contained in this
Agreement, the pre-closing of the transactions
contemplated by this Agreement (the "Pre-Closing")
will take place at the offices Jones, Waldo,
Holbrook & McDonough ("Buyer's Counsel"), 170
South Main St., Suite 1500 Salt Lake City, UT at
10:00 A.M. (local time) on or about July 30, 1998,
or at such other place or time as the parties may
agree. At the Pre-Closing, the Parties will
deliver into an escrow (the "Pre-Closing Escrow")
the various documents to be delivered at the
Closing by Sellers, the Company, or Buyer (which
documents will be executed as required, and
undated), to be held by Buyer's Counsel; provided
that the documents described in 7(a)(iii) need not
be delivered to the Pre-Closing but shall be
delivered by the Closing. The date and time at
which the Pre-Closing actually occurs is
hereinafter referred to as the "Pre-Closing Date".
Each Seller hereby authorizes Buyer's
Counsel to cause to be delivered into the
Pre-Closing Escrow the documents and items in
respect of the Sellers described in Section 7(a)
(the "Escrowed Seller Documents"). At the
Pre-Closing, Buyer will deliver in the Pre-Closing
Escrow such documents, instruments and writings as
are required to be delivered at the Closing by
Buyer at or prior to the Closing Date pursuant to
Section 7(b) or otherwise required in connection
herewith (the "Escrowed Buyer Documents"). At the
Closing, Buyer shall deliver to the Sellers the
Escrowed Buyer Documents and the portion of the
Purchase Price to be paid at the Closing as
described in Section 2(b)(i).
<PAGE>
(ii) The Closing.
Upon delivery of all of the Escrowed
Seller Documents and Escrowed Buyer Documents and
the closing of the Related Transactions, and
satisfaction of the conditions to Closing set
forth in Section 7(a) then the closing of the
transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of
Buyer's Counsel on the date of the closing of the
Related Transactions, or such other date as the
Buyer and the Sellers may mutually determine (the
"Closing Date"). The deliveries to be made at
Closing are described in 2(j) below.
(i) The Escrow/The Escrow Agreement. The Escrowed Deferred Payments
shall be deposited into an escrow (the "Escrow Account") established by the
Buyer and the Sellers prior to the Closing with Centennial Bank (the
"Escrow Agent") at its offices located at 46th and Harrison Streets, Ogden,
Utah 84403, for disbursement subject to the terms and conditions set forth
in that certain escrow agreement executed by the Parties and the Escrow
Agent on or before the Closing substantially in the form and substance of
Exhibit B hereto (the "Escrow Agreement"). Subject to the terms and
conditions of the Escrow Agreement, the Escrowed Deferred Payments, less
all amounts that after the Closing may be recouped from or set-off against
the Escrowed Deferred Payments pursuant to 8(h) below, shall be payable
from the Escrow Account in two (2) equal installments on the first and the
second annual anniversary, respectively, of the Closing Date. The Closing
Date shall be set forth in the Escrow Agreement.
(j) Deliveries at the Closing. At the Closing, (i) Buyer's Counsel
will deliver to the Buyer the various certificates, instruments, and
documents referred to in 7(a) below, including the Escrowed Seller
Documents being held in the Pre-Closing Escrow, (ii) Buyer's Counsel will
deliver to the Sellers the various certificates, instruments, and documents
referred to in 7(b) below, including the Escrowed Buyer Documents, being
held in the Pre-Closing Escrow, and (iii) the Buyer will deliver to the
Sellers the Purchase Price specified in 2(b)(i) above and will deliver to
the Escrow Agent the Escrowed Deferred Payments specified in 2(b)(ii)
above. All of the documents described in (i) and (ii) will be dated by
Buyer's Counsel as of the Closing Date.
<PAGE>
3. Representations and Warranties Concerning the Transaction.
(a) Representations and warranties Concerning the Transaction. Each of
the Sellers represents and warrants to the Buyer, jointly and severally
with the other Sellers, that the statements contained in this 3(a) are
correct and complete as of the date of execution of this Agreement and will
be correct and complete as of the Effective Date and as of the Closing
Date, except as set forth in Annex I attached hereto.
(i) Authorization of Transaction. Each of the Sellers has full power
and authority to execute and deliver this Agreement and to perform his or
her obligations hereunder. This Agreement constitutes the valid and legally
binding obligation of each of the Sellers, enforceable in accordance with
its terms and conditions. The Sellers need not give any notice to, make any
filing with, or obtain any authorization, consent, or approval of any
government or governmental agency in order to consummate the transactions
contemplated by this Agreement.
(ii) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby,
will (A) violate any constitution, statute, regulation, rule, injunction,
judgment, order, decree, ruling, charge, or other restriction of any
government, governmental agency or court to which any of the Seller's is
subject, or (B) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to
which any of the Seller's is a party or by which he or she is bound or to
which any of his or her assets is subject.
(iii) Broker's Fees. The Sellers have no Liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement for which the Buyer could
become liable or obligated.
(iv) Company Shares. The Sellers hold of record and own beneficially
the number of Company Shares set forth next to his or her name in 4(b) of
the Disclosure Schedule, free and clear of any restrictions on transfer
(other than any restrictions under the Securities Act and state securities
laws), Taxes, Security Interests, options, warrants, purchase rights,
contracts, commitments, equities, claims and demands. None of the Sellers
is a party to any option, warrant, purchase right, or other contract or
commitment that could require any Seller to sell, transfer or otherwise
dispose of any capital stock of the Company (other than this Agreement).
None of the Sellers is a party to any voting trust, proxy, or other
agreement or understanding with respect to the voting of any capital stock
of the Company. Upon delivery of the certificates representing the Company
Shares, Buyer will acquire valid, marketable title thereto, free and clear
of any liens, encumbrances and claims of third parties.
<PAGE>
(v) Absence of Indebtedness and Claims. Except as set forth on Annex I
attached hereto, none of the Sellers is indebted to the Company or any of
its Affiliates, and is not indebted to any Seller or any of his or her
Affiliates, if any, and no Seller has any claims against the Company.
(b) Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Sellers that the statements contained in this 3(b) are correct
and complete as of the date of execution of this Agreement and will be correct
and complete as of the Effective Date and as of the Closing Date, except as set
forth in Annex II attached hereto.
(i) Organization of the Buyer. The Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of
Delaware.
(ii) Authorization of Transaction. The Buyer has full power and
authority (including full corporate power and authority) to execute and
deliver this Agreement and to perform its obligations hereunder. This
Agreement constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and conditions. The Buyer
need not give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any government or governmental
agency in order to consummate the transactions contemplated by this
Agreement.
(iii) Non-Contravention. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions contemplated
hereby, will (A) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge or other restriction of
any government, governmental agency or court to which the Buyer is subject
or any provision of its charter or bylaws or, (B) conflict with, result in
a breach of, constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate, modify, or cancel,
or require any notice under any agreement, contract, lease, license,
instrument or other arrangement to which the Buyer is a party or by which
it is bound or to which any of its assets is subject.
(iv) Broker's Fees. The Buyer has no Liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which Sellers could become
liable or obligated.
(v) Investment. The Buyer is not acquiring the Company Shares with a
view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act.
<PAGE>
(4) Representations and Warranties Concerning the Company. Each of the
Sellers represents and warrants to the Buyer that the statements contained in
this 4 are correct and complete as of the date of execution of this Agreement
and will be correct and complete as of the Effective Date and as of the Closing
Date, except as set forth in the disclosure schedule delivered by the Sellers to
the Buyer on the date hereof and initialed by the Parties (the "Disclosure
Schedule"). Nothing in the Disclosure Schedule shall be deemed adequate to
disclose an exception to a representation or warranty made herein, however,
unless the Disclosure Schedule identifies the exception with reasonable
particularity and describes the relevant facts in reasonable detail. Without
limiting the generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to disclose an
exception to a representation or warranty made herein (unless the representation
or warranty has to do with the existence of the document or other item itself).
The Disclosure Schedule will be arranged in paragraphs corresponding to the
lettered and numbered paragraphs contained in this 4.
(a) Organization, Qualification, and Corporate Power. The Company
is a corporation duly organized, validly existing, and in good
standing under the laws of Delaware. The Company is duly authorized to
conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required. The Company has
full corporate power and authority and all licenses, permits, and
authorizations necessary to carry on the businesses in which it is
engaged and in which it presently proposes to engage and to own and
use the properties owned, used, leased or operated by it, including,
without limitation, all of its existing and proposed retail stores
(collectively, "Store" in the singular or "Stores" in the plural),
each of which is listed on 4(a) of the Disclosure Schedule and
appropriately designated thereon as an existing or proposed Store
location. Schedule 4(a) also lists each retail store or location at
which the Company has ceased operating its business during the three
(3) year period prior to the Most Recent Fiscal Month End, and the
Company has no liability arising from any such retail store that the
Company has ceased operating.
Schedule 4(a) of the Disclosure Schedule lists the directors and
officers of the Company. Cohen has delivered to the Buyer correct and
complete copies of the charter and bylaws of the Company (as amended
to date). Except as disclosed on Schedule 4(a), the minute books
(containing the records of meetings of the stockholders, the board of
directors, and any committees of the board of directors) are correct
and complete in all material respects. Except as disclosed on Schedule
4(a), the stock record books of the Company are correct and complete
in all respects and accurately reflect the record ownership and, to
the knowledge of the Sellers, the beneficial ownership of all the
outstanding Company Shares. The Company is not in default under or in
violation of any provision of its charter or bylaws.
<PAGE>
The Company has one Subsidiary, AFGG, Inc., a Texas corporation
("AFGG"). AFGG is a dormant corporation and does not have any assets
or liabilities, and has never had any operations in Texas or any other
jurisdiction. Schedule 4(a) sets forth the interest of the Company and
the capitalization of the Company's Subsidiary.
(b) Capitalization. The entire authorized capital stock of the
Company consists of one hundred ten thousand (110,000) Company Shares,
of which ninety-seven thousand eight hundred (97,800) Company Shares
are issued and outstanding and no Company Shares are held in treasury.
All of the issued and outstanding Company Shares have been duly
authorized, are validly issued, fully paid, and non-assessable, and
are held of record as set forth in 4(b) of the Disclosure Schedule.
There are no outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require the Company to
issue, sell or otherwise cause to become outstanding any of its
capital stock. There are no outstanding or authorized stock
appreciation, phantom stock, profit participation or similar rights
with respect to the Company. There are no voting trusts, proxies, or
other agreements or understandings with respect to the voting of the
capital stock of the Company which shall not have been terminated
prior to the Closing.
(c) Non-Contravention. Except as set forth on Schedule 4(c),
neither the execution nor the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (i) violate
any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Company is subject or any
provision of the charter or bylaws of the Company, or (ii) conflict
with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
agreement (including without limitation, any franchise agreement),
contract, lease or sublease (including without limitation, any Store
Lease or sublease), license, instrument or other arrangement to which
the Company is a party or by which it is bound or to which any of its
assets is subject (or result in the imposition of any Security
Interest upon any of its assets). Except as set forth on Schedule
4(c), the Company does not need to give any notice to, make any filing
with, or obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement.
(d) Broker's Fees. The Company has no Liability or obligation to
pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement.
(e) Title to Assets. Except as set forth on Schedule 4(e), the
Company has good and marketable title to, or a valid leasehold
interest in, the properties and assets used by it, located on its
premises, or shown on the Most Recent Balance Sheet or acquired after
the date thereof, free and clear of all Security Interests, except for
properties and assets disposed of in the Ordinary Course of Business
since the date of the Most Recent Balance Sheet.
<PAGE>
(f) Financial Statements. Attached hereto as Exhibit D are the
following financial statements (collectively the "Financial
Statements"): (i) audited balance sheets and statements of income,
changes in stockholders' equity, and cash flow as of and for the
fiscal years ended December 31, 1995, December 31, 1996 and December
31, 1997 (the "Most Recent Fiscal Year End") for the Company; and (ii)
unaudited balance sheets and statements of income (the "Most Recent
Financial Statements") as of and for the four (4) months ended April
30, 1998 (the "Most Recent Fiscal Month End") for the Company.
The Financial Statements (including the notes thereto) have been
prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered thereby, present fairly the financial
condition of the Company as of such dates and the results of
operations of the Company for such periods, are correct and complete,
and are consistent with the books and records of the Company (which
books and records are correct); provided, however, that the Most
Recent Financial Statements lack footnotes and other presentation
items. Each of the matters set forth in 2(c) shall be true and correct
upon and immediately after the Closing.
(g) Events Subsequent to Most Recent Fiscal Year End. Except as
set forth on Schedule 4(g), since the Most Recent Fiscal Year End,
there has not been any material adverse change in the business,
financial condition, operations, results of operations or future
prospects of the Company. Without limiting the generality of the
foregoing, since that date:
(i) the Company has not sold, leased, transferred
or assigned any of its assets, tangible or intangible,
other than for a fair consideration in the Company's
Ordinary Course of Business;
(ii) the Company has not entered into any
agreement, contract, lease or license (or series of
related agreements, contracts, leases and licenses)
outside the Company's Ordinary Course of Business;
(iii) no party (including the Company) has
accelerated, terminated, modified, or canceled any
agreement, contract, lease or license (or series of
related agreements, contracts, leases or licenses)
involving more than $1,000.00 to which the Company is a
party or by which any of them is bound;
(iv) the Company has not granted any Security
Interest upon any of its assets, tangible or intangible;
<PAGE>
(v) the Company has not made any capital
expenditure (or series of related capital expenditures)
either involving more than $1,000.00 or outside the
Company's Ordinary Course of Business;
(vi) the Company has not made any capital
investment in, any loan to, or any acquisition of the
securities or assets of, any other Person (or series of
related capital investments, loans and acquisitions)
either involving more than $1,000.00 or outside the
Company's Ordinary Course of Business;
(vii) the Company has not issued any note, bond or
other debt security or created, incurred, assumed or
guaranteed any indebtedness for borrowed money or
capitalized lease obligation either involving more than
$1,000.00 singly or $5,000.00 in the aggregate;
(viii) the Company has not delayed or postponed
the payment of accounts payable and other Liabilities
outside the Company's Ordinary Course of Business;
(ix) the Company has not canceled, compromised,
waived or released any right or claim (or series of
related rights and claims) either involving more than
$1,000.00 or outside the Company's Ordinary Course of
Business;
(x) the Company has not granted any license or
sublicense of any rights under or with respect to any
Intellectual Property except as set forth in ? 4(l)(iii)
of the Disclosure Schedule setting forth each of the
Company's franchise, sub-franchise, area developer and
other similar documents.
(xi) there has been no change made or authorized
in the charter or bylaws of the Company;
(xii) the Company has not issued, sold, or
otherwise disposed of any of its capital stock, or granted
any options, warrants or other rights to purchase or
obtain (including upon conversion, exchange or exercise)
any of its capital stock;
(xiii) the Company has not declared, set aside, or
paid any dividend or made any distribution with respect to
its capital stock (whether in cash or in kind) or
redeemed, purchased or otherwise acquired any of its
capital stock;
(xiv) the Company has not experienced any damage,
destruction, or loss (whether or not covered by insurance)
to its property;
<PAGE>
(xv) the Company has not made any loan to, or
entered into any other transaction with, any of its
directors, officers and employees outside the Company's
Ordinary Course of Business;
(xvi) the Company has not entered into any
employment contract or collective bargaining agreement,
written or oral, or modified the terms of any existing
such contract or agreement;
(xvii) the Company has not granted any increase in
the base compensation of any of its directors, officers or
employees outside the Company's Ordinary Course of
Business;
(xviii) the Company has not adopted, amended,
modified or terminated any bonus, profit-sharing,
incentive, severance, or other plan, contract or
commitment for the benefit of any of its directors,
officers or employees (or taken any such action with
respect to any other Employee Benefit Plan);
(xix) the Company has not made any other change in
employment terms for any of its directors, officers or
employees outside the Company's Ordinary Course of
Business;
(xx) the Company has not made or pledged to make
any charitable or other capital contribution outside the
Company's Ordinary Course of Business;
(xxi) there has not been any other material
occurrence, event, incident, action, failure to act or
transaction outside the Company's Ordinary Course of
Business; and
(xxii) the Company has not committed to any of the
foregoing.
(h) Undisclosed Liabilities. To the Knowledge of the Sellers, the
Company has no Liability (and there is no Basis for any present or
future action, suit, proceeding, hearing, investigation, charge,
complaint, claim or demand against any of them giving rise to any
Liability), except for (i) Liabilities set forth on the face of the
Most Recent Balance Sheet (rather than in any notes thereto), and (ii)
Liabilities which have arisen after the Most Recent Fiscal Month End
in the Company's Ordinary Course of Business (none of which results
from, arises out of, relates to, is in the nature of, or was caused by
any breach of contract, breach of warranty, tort, infringement or
violation of law), and (iii) other Liabilities, which are not,
individually or in the aggregate, material to the Company. For
purposes of this subsection (iii), the term "material" shall mean any
Liabilities singly in excess of $2,500.00 or in the aggregate in
excess of $10,000.00.
<PAGE>
(i) Legal Matters. To the Knowledge of the Sellers, the Company
has complied, in all material respects, with all applicable laws
(including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder) of federal, state,
local, and foreign governments (and all agencies thereof), and no
action, suit, proceeding, hearing, investigation, charge, complaint,
claim, demand, or notice has been filed or commenced against any of
them alleging any failure so to comply.
(j) Tax Matters. Except as disclosed on Schedule 4(j):s
(i) The Company has filed all Tax Returns that it
was required to file. All such Tax Returns were correct
and complete in all respects. All Taxes owed by the
Company (whether or not shown on any Tax Return) have been
paid. The Company is not currently the beneficiary of any
extension of time within which to file any Tax Return. No
claim has ever been made by an authority in a jurisdiction
where the Company does not file Tax Returns that it is or
may be subject to taxation by that jurisdiction. There are
no Security Interests on any of the assets of the Company
that arose in connection with any failure (or alleged
failure) to pay any Tax.
(ii) The Company has withheld and paid all Taxes
required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent
contractor, creditor, stockholder or other third party.
(iii) None of the Sellers, directors or officers
(or employees responsible for Tax matters) of the Company
expects any authority to assess any additional Taxes for
any period for which Tax Returns have been filed. There is
no dispute or claim concerning any Tax Liability of the
Company either (A) claimed or raised by any authority in
writing or (B) as to which any of the Sellers, the
directors and officers (and employees responsible for Tax
matters) of the Company has Knowledge based upon personal
contact with any agent of such authority. 4(j) of the
Disclosure Schedule lists all federal, state, local, and
foreign income Tax Returns filed with respect to the
Company, indicates those Tax Returns that have been
audited, and indicates those Tax Returns that currently
are the subject of audit. Cohen has delivered to the Buyer
correct and complete copies of all federal income Tax
Returns, examination reports, and statements of
deficiencies assessed against or agreed to by the Company.
(iv) The Company has not waived any statute of
limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency.
<PAGE>
(v) The Company has not filed a consent under Code
Sec. 341(f) concerning collapsible corporations. The
Company has not made any payments, nor is it obligated to
make any payments, nor is it a party to any agreement that
under certain circumstances could obligate it to make any
payments that will not be deductible under Code Sec. 280G.
The Company has not been a United States real property
holding corporation within the meaning of Code Sec.
897(c)(2) during the applicable period specified in Code
Sec. 897(c)(1)(A)(ii). The Company is not a party to any
Tax allocation or sharing agreement. The Company (A) has
not been a member of an Affiliated Group filing a
consolidated federal income Tax Return or (B) has no
Liability for the Taxes of any Person (other than the
Company) under Treas. Reg. 1.1502-6 (or any similar
provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
(vi) 4(j) of the Disclosure Schedule sets forth
the following information with respect to the Company as
of the most recent practicable date (as well as on an
estimated pro forma basis as of the Closing giving effect
to the consummation of the transactions contemplated
hereby):
(A) the basis of the Company in its assets;
(B) the amount of any net operating loss, net capital
loss, unused investment or other credit, unused foreign tax,
or excess charitable contribution allocable to the Company.
(vii) The unpaid Taxes of the Company
(A) did not, as of the Most Recent Fiscal
Month End, exceed the reserve for Tax Liability
(rather than any reserve for deferred Taxes
established to reflect timing differences between
book and Tax income) set forth on the face of the
Most Recent Balance Sheet (rather than in any
notes thereto); and
(B) do not exceed that reserve as
adjusted for the passage of time through the
Closing Date in accordance with the past custom
and practice of the Company in filing its Tax
Returns.
. (k) Real Property
(i) The Company does not own any real property or
interests in real property.
<PAGE>
(ii) 4(k)(ii) of the Disclosure Schedule lists and
describes briefly all real property (a) leased or subleased
to the Company including without limitation, each of the
leases or subleases covering the premises of each of the
Stores (collectively, the "Store Leases"), and (b) leased or
subleased by the Company to third parties, including the
Company's franchisees and area developers. Cohen has
delivered to the Buyer correct and complete copies of the
leases and the subleases listed in 4(k)(ii) of the
Disclosure Schedule (as amended to date). With respect to
each lease and sublease listed in 4(k)(ii) of the Disclosure
Schedule:
(A) to the Knowledge of the Sellers, the
lease or sublease is legal, valid, binding,
enforceable, and in full force and effect;
(B) subject to the receipt of consents
set forth in 4(k)(ii) of the Disclosure Schedule,
to the Knowledge of the Sellers, the lease or
sublease will continue to be legal, valid,
binding, enforceable, and in full force and effect
on identical terms following the consummation of
the transactions contemplated hereby, which
transactions will not violate the terms thereof;
(C) to the Knowledge of the Sellers, no
party to the lease or sublease is in breach or
default, and no event has occurred which, with
notice or lapse of time, would constitute a breach
or default or permit termination, modification, or
acceleration thereunder;
(D) to the Knowledge of the Sellers, no
party to the lease or sublease has repudiated any
provision thereof;
(E) to the Knowledge of the Sellers,
there are no disputes, oral agreements, or
forbearance programs in effect as to the lease or
sublease;
(F) to the Knowledge of the Sellers, with
respect to each sublease, the representations and
warranties set forth in subsections (A) through
(E) above are true and correct with respect to the
underlying lease;
(G) the Company has not assigned,
transferred, conveyed, mortgaged, deeded in trust
or encumbered any interest in the leasehold or
subleasehold; and
(H) to the Knowledge of the Sellers, all
facilities leased or subleased thereunder have
received all approvals of governmental authorities
(including licenses and permits) required in
connection with the operation thereof and have
been operated and maintained in accordance with
applicable laws, rules and regulations.
<PAGE>
(iii) all facilities leased or subleased
thereunder are supplied with utilities and other services
necessary for the operation of said facilities.
(l) Intellectual Property
(i) The Company owns or has the right to use
pursuant to license, sublicense, agreement or permission
all Intellectual Property necessary or desirable for the
operation of the businesses of the Company as presently
conducted and as presently proposed to be conducted. Each
item of Intellectual Property owned or used by the Company
immediately prior to the Closing hereunder will be owned
or available for use by the Company on identical terms and
conditions immediately subsequent to the Closing
hereunder. 4(l)(i) of the Disclosure Schedule lists each
item of Intellectual Property owned, licensed by or used
by the Company, and sets forth whether it is owned or
licensed to the Company.
(ii) To the Knowledge of the Sellers, the Company
has not interfered with, infringed upon, misappropriated,
or otherwise come into conflict with any Intellectual
Property rights of third parties. The Company has never
received any charge, complaint, claim, demand, or notice
alleging any such interference, infringement,
misappropriation, or violation (including any claim that
the Company must license or refrain from using any
Intellectual Property rights of any third party). To the
Knowledge of the Sellers, no third party has interfered
with, infringed upon, misappropriated, or otherwise come
into conflict with any Intellectual Property rights of the
Company.
(iii) The Company has no patents or applications
for registration. ? 4(l)(iii) of the Disclosure Schedule
identifies each license, agreement or other permission
which the Company has granted to any third party with
respect to any of its Intellectual Property (together with
any exceptions). Cohen has delivered to the Buyer correct
and complete copies of all such registrations,
applications, licenses, agreements, and permissions (as
amended to date) and has made available to the Buyer
correct and complete copies of all other written
documentation evidencing ownership of each such item.
4(l)(iii) of the Disclosure Schedule also identifies each
trade name or unregistered trademark used by the Company
in connection with any of its businesses. With respect to
each item of Intellectual Property required to be
identified in 4(l)(iii) of the Disclosure Schedule:
(A) the Company possesses all right,
title, and interest in and to the item, free and
clear of any Security Interest, license or other
restriction;
<PAGE>
(B) the item is not subject to any
outstanding injunction, judgment, order, decree,
ruling or charge;
(C) no action, suit, proceeding, hearing,
investigation, charge, complaint, claim or demand
is pending or to the Knowledge of any of the
Sellers and the directors and officers (and
employees with responsibility for Intellectual
Property matters) of the Company, is threatened
which challenges the legality, validity,
enforceability, use or ownership of the item; and
(D) the Company has never agreed to
indemnify any Person for or against any
interference, infringement, misappropriation or
other conflict with respect to the item.
(iv) 4(l)(iv) of the Disclosure Schedule
identifies each item of Intellectual Property that any
third party owns and that the Company uses pursuant to any
license, sublicense, agreement (including without
limitation each franchise or related agreement to which
the Company is a party), or permission. The Seller has
delivered to the Buyer correct and complete copies of all
such licenses, sublicenses, agreements, and permissions
(as amended to date). With respect to each item of
Intellectual Property required to be identified in
4(l)(iv) of the Disclosure Schedule:
(A) the license, sublicense, agreement,
or permission covering the item is legal, valid,
binding, enforceable and in full force and effect;
(B) the license, sublicense, agreement,
or permission will continue to be legal, valid,
binding, enforceable and in full force and effect
on identical terms following the Closing;
(C) to the Knowledge of the Sellers, no
party to the license, sublicense, agreement or
permission is in breach or default, and to the
Knowledge of the Sellers, no event has occurred
which with notice or lapse of time would
constitute a breach or default or permit
termination, modification, or acceleration
thereunder; and
(D) no party to the license, sublicense,
agreement or permission has repudiated any
provision thereof;
(E) to the Knowledge of the Sellers, the
underlying item of Intellectual Property is not
subject to any outstanding injunction, judgment,
order, decree, ruling or charge;
<PAGE>
(F) to the Knowledge of the Sellers, no
action, suit, proceeding, hearing, investigation,
charge, complaint, claim or demand is pending or
is threatened which challenges the legality,
validity or enforceability of the underlying item
of Intellectual Property; and
(G) the Company has not granted any
sublicense or similar right with respect to the
license, sublicense, agreement or permission.
(v) To the Knowledge of the Sellers, the
Intellectual Property of the Company will not interfere
with, infringe upon, misappropriate or otherwise come into
conflict with, any Intellectual Property rights of third
parties as a result of the continued operation of its
business as presently conducted and as presently proposed
to be conducted.
(m) Tangible assets. The Company owns or leases all premises,
machinery, equipment, and other tangible assets necessary for the conduct
of its business as presently conducted and as presently proposed to be
conducted. Each such tangible asset is free from defects, has been
maintained in accordance with normal industry practice, is in good
operating condition and repair (subject to normal wear and tear), and is
suitable for the purposes for which it presently is used and presently is
proposed to be used.
(n) Inventory. The inventories and supplies of the Company are
merchantable and fit for the purpose for which they were procured, and none
of which is slow-moving, obsolete, damaged or defective, subject only to
the reserve for inventory writedown set forth on the face of the Most
Recent Balance Sheet (rather than in any notes thereto) as adjusted for the
passage of time through the Closing Date in accordance with the past custom
and practice of the Company.
(o) Contracts. 4(o) of the Disclosure Schedule lists the following
contracts and other agreements to which the Company is a party:
(i) each contract or agreement of any kind or nature entered into
by any of the Company and Affiliates thereof, with any franchisee,
sub-franchisee or area developer of the Company or any officer,
principal, owner, shareholder or representative of any such franchisee
or area developer;
(ii) any agreement (or group of related agreements) for the lease
of personal property to or from any Person providing for lease
payments in excess of $1,000.00 per annum;
(iii) any agreement (or group of related agreements) for the
purchase or sale of materials, commodities, supplies, products or
other personal property, or for the furnishing or receipt of services,
the performance of which will extend over a period of more than one
year, result in a material loss to the Company, or involve
consideration in excess of $1,000.00;
<PAGE>
(iv) any agreement concerning a partnership or joint venture;
(v) any agreement (or group of related agreements) under which it
has created, incurred, assumed, or guaranteed any indebtedness for
borrowed money, or any capitalized lease obligation, in excess of
$1,000.00 or under which it has imposed a Security Interest on any of
its assets, tangible or intangible;
(vi) any agreement concerning confidentiality or noncompetition;
(vii) any agreement with any of the Sellers or their Affiliates
(other than the Company);
(viii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors,
officers or employees;
(ix) any collective bargaining agreement;
(x) any agreement for the employment of any individual on a
full-time, part-time, consulting, or other basis providing annual
compensation in excess of $15,000.00 or providing severance benefits;
(xi) any agreement under which it has advanced or loaned any
amount to any of its directors, officers or employees;
(xii) any agreement under which the consequences of a default or
termination could have a material adverse effect on the business,
financial condition, operations, results of operations, or future
prospects of the Company; or
(xiii) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $1,000.00.
Cohen has delivered to the Buyer a correct and complete copy of each
written agreement listed in 4(o) of the Disclosure Schedule (as
amended to date) and a written summary setting forth the terms and
conditions of each oral agreement referred to in 4(o) of the
Disclosure Schedule. With respect to each such agreement: (A) the
agreement is legal, valid, binding, enforceable, and in full force and
effect; (B) the agreement will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following
the consummation of the transactions contemplated hereby; (C) no party
is in breach or default, and, to the Knowledge of the Sellers, no
event has occurred which with notice or lapse of time would constitute
a breach or default, or permit termination, modification or
acceleration, under the agreement; and (D) neither the Company, nor to
the Knowledge of the Sellers, has any other party repudiated any
provision of the agreement.
<PAGE>
(p) Notes and Accounts Receivable. All notes and accounts
receivable of the Company are reflected properly on its books and
records, are valid receivables subject to no setoffs or counterclaims,
are current and collectible, and will be collected in accordance with
their terms at their recorded amounts, subject only to the reserve for
bad debts set forth on the face of the Most Recent Balance Sheet
(rather than in any notes thereto) as adjusted for the passage of time
through the Closing Date in accordance with the past custom and
practice of the Company.
(q) Powers of Attorney. Except as set forth in 4(q) of the
Disclosure Schedule, there are no outstanding powers of attorney
executed on behalf of the Company.
(r) Insurance. 4(r) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including
policies providing property, casualty, liability, and workers'
compensation coverage and bond and surety arrangements) to which the
Company has been a party, a named insured, or otherwise the
beneficiary of coverage at any time within the past three (3) years:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and
the name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage
was on a claims made, occurrence, or other basis) and amount of
coverage; and
(v) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal,
valid, binding, enforceable, and in full force and effect; (B) the
policy will continue to be legal, valid, binding, enforceable, and in
full force and effect on identical terms through the date of the
Closing; (C) neither the Company, nor to the Knowledge of the Sellers,
is any other party to the policy in breach or default (including with
respect to the payment of premiums or the giving of notices), and, to
the Knowledge of the Sellers, no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or
permit termination, modification, or acceleration, under the policy;
and (D) neither the Company, nor to the Knowledge of the Sellers, has
any other party to the policy repudiated any provision thereof. The
Company has been covered during the past three (3) years by insurance
in scope and amount customary and reasonable for the businesses in
which it has engaged during the aforementioned period. 4(r) of the
Disclosure Schedule describes any self-insurance arrangements
affecting the Company.
<PAGE>
(s) Litigation. 4(s) of the Disclosure Schedule sets forth each
instance in which any of the Sellers and the Company (i) is subject to
any outstanding injunction, judgment, order, decree, ruling, or charge
or (ii) is a party or is threatened to be made a party to any action,
suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal,
state, local or foreign jurisdiction or before any arbitrator. None of
the actions, suits, proceedings, hearings, and investigations set
forth in 4(s) of the Disclosure Schedule could result in any material
adverse change in the business, financial condition, operations,
results of operations or future prospects of the Company. None of the
Sellers has any reason to believe that any such action, suit,
proceeding, hearing or investigation may be brought or threatened
against the Company.
(t) Product Warranty. Each product made, sold or delivered by the
Company has been in conformity with all applicable laws, statutes,
regulations, retail food industry standards, and to the Knowledge of
the Sellers, the Company has no Liability (and there is no Basis for
any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against any of them
giving rise to any Liability) for damages in connection therewith.
(u) Product Liability. To the Knowledge of the Sellers, the
Company has no Liability (and there is no Basis for any present or
future action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against giving rise to any Liability)
arising out of any injury to individuals or property as a result of
the possession, consumption or use of any product made, sold or
delivered by the Company.
(v) Employees
(i) To the Knowledge of the Sellers, no executive, key
employee (including any Store manager), or group of employees has
any plans to terminate employment with the Company. To the
Knowledge of the Sellers, the Company has not committed any
unfair labor practice.
<PAGE>
(ii) 4(v)(ii) of the Disclosure Schedule sets forth the
accrued vacation and sick and personal leave (if any) of each of
the Company's employees.
(w) Employee Benefit
(i) 4(w) of the Disclosure Schedule lists each Employee
Benefit Plan that the Company maintains or to which the Company
contributes.
(A) Each such Employee Benefit Plan (and each related
trust, insurance contract, or fund) complies in form and in
operation in all material respects with the applicable
requirements of ERISA, the Code, and other applicable laws.
(B) All required reports and descriptions (including
Form 5500 Annual Reports, Summary Annual Reports, PBGC-1's,
and Summary Plan Descriptions) have been filed or
distributed appropriately with respect to each such Employee
Benefit Plan. The requirements of Part 6 of Subtitle B of
Title I of ERISA and of Code Sec. 4980B have been met with
respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan.
(C) All contributions (including all employer
contributions and employee salary reduction contributions)
which are due have been paid to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan and all
contributions for any period ending on or before the Closing
Date which have been paid to each such Employee Pension
Benefit Plan or accrued in accordance with the past custom
and practice of the Company. All premiums or other payments
for all periods ending on or before the Closing Date have
been paid with respect to each such Employee Benefit Plan
which is an Employee Welfare Benefit Plan.
(D) Each such Employee Benefit Plan which is an
Employee Pension Benefit Plan meets the requirements of a
"qualified plan" under Code Sec. 401(a) and has received,
within the last four years, a favorable determination letter
from the Internal Revenue Service.
(E) The market value of assets under each such Employee
Benefit Plan which is an Employee Pension Benefit Plan
equals or exceeds the present value of all vested and
nonvested Liabilities thereunder determined in accordance
with PBGC methods, factors, and assumptions applicable to an
Employee Pension Benefit Plan terminating on the date for
determination.
<PAGE>
(F) The Seller has delivered to the Buyer correct and
complete copies of the plan documents and summary plan
descriptions, the most recent determination letter received
from the Internal Revenue Service, the most recent Form 5500
Annual Report, and all related trust agreements, insurance
contracts, and other funding agreements which implement each
such Employee Benefit Plan.
(ii) With respect to each Employee Benefit Plan that the
Company maintains or ever has maintained or to which it
contributes, ever has contributed, or ever has been required to
contribute:
(A) No such Employee Benefit Plan which is an Employee
Pension Benefit Plan has been completely or partially
terminated or been the subject of a Reportable Event as to
which notices would be required to be filed with the PBGC.
No proceeding by the PBGC to terminate any such Employee
Pension Benefit Plan has been instituted or threatened.
(B) There have been no Prohibited Transactions with
respect to any such Employee Benefit Plan. No Fiduciary has
any Liability for breach of fiduciary duty or any other
failure to act or comply in connection with the
administration or investment of the assets of any such
Employee Benefit Plan. No action, suit, proceeding, hearing,
or investigation with respect to the administration or the
investment of the assets of any such Employee Benefit Plan
(other than routine claims for benefits) is pending or
threatened. None of the Seller and the directors and
officers (and employees with responsibility for employee
benefits matters) of the Company has any Knowledge of any
Basis for any such action, suit, proceeding, hearing, or
investigation.
(C) The Company has not incurred, and none of the
Seller and the directors and officers (and employees with
responsibility for employee benefits matters) of the Company
has any reason to expect that the Company will incur, any
Liability to the PBGC (other than PBGC premium payments) or
otherwise under Title IV of ERISA (including any withdrawal
Liability) or under the Code with respect to any such
Employee Benefit Plan which is an Employee Pension Benefit
Plan.
(iii) The Company does not contribute to, never has
contributed to, and never has been required to contribute to, any
Multiemployer Plan or has any Liability (including withdrawal
Liability) under any Multiemployer Plan.
<PAGE>
(iv) The Company does not maintain, never has maintained or
contributed to, and never has been required to contribute to any
Employee Welfare Benefit Plan providing medical, health, or life
insurance or other welfare-type benefits for current or future
retired or terminated employees, their spouses, or their
dependents (other than in accordance with Code Sec. 4980B).
(x) Guaranties. The Company is not a guarantor or otherwise
liable for any Liability or obligation (including indebtedness) of any
other Person.
(y) Environment, Health, and Safety
(i) To the Knowledge of the Sellers, the Company has
complied in all material respects with all Environmental, Health,
and Safety Laws, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has
been filed or commenced against the Company alleging any failure
so to comply. To the Knowledge of the Sellers, without limiting
the generality of the preceding sentence, the Company has
obtained and been in compliance with all of the terms and
conditions of all permits, licenses, and other authorizations
which are required under, and has complied with all other
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules, and timetables which are
contained in, all Environmental, Health, and Safety Laws.
(ii) To the Knowledge of the Sellers, the Company has no
Liability (and none of the Company and its predecessors and
Affiliates has handled or disposed of any substance, arranged for
the disposal of any substance, exposed any employee or other
individual to any substance or condition, or owned or operated
any property or facility in any manner that could form the Basis
for any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against the
Company giving rise to any Liability) for damage to any site,
location, or body of water (surface or subsurface), for any
illness of or personal injury to any employee or other
individual, or for any reason under any Environmental, Health,
and Safety Law.
(iii) To the Knowledge of the Sellers, all properties and
equipment used in the business of the Company have been free of
asbestos, PCBs, methylene chloride, trichloroethylene,
1,2-transdichloroethylene, dioxins, dibenzofurans, and Extremely
Hazardous Substances.
(z) Certain Business Relationships with the Company. Except as
disclosed in ? 4(z) of the Disclosure Schedule, none of the Sellers
has been involved in any business arrangement or relationship with the
Company within the past 12 months, and none of the Sellers owns any
asset, tangible or intangible, which is used in the business of the
Company.
<PAGE>
(aa) Disclosure. The representations and warranties contained in
this 4 do not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
and information contained in this 4 not misleading.
5. Pre-Closing Convenants. The Parties agree as follows with respect
to the period between the execution of this Agreement and the Closing.
(a) General. Each of the Parties will use his or its best efforts
to take all action and to do all things necessary in order to
consummate and make effective the transactions contemplated by this
Agreement (including satisfaction, but not waiver, of the closing
conditions set forth in 7 below).
(b) Notices and Consents. The Sellers will cause the Company to
give any notices to third parties, and will cause the Company to use
its best efforts to obtain any third-party consents, that the Buyer
may request in connection with the matters referred to in ? 4(c)
above. Each of the Parties will (and the Sellers will cause the
Company to) give any notices to, make any filings with, and use its
best efforts to obtain any authorizations, consents, and approvals of
governments and governmental agencies in connection with the matters
referred to in 3(a)(ii), 3(b)(iii), and 4(c) above.
(c) Operations of Business. Except as disclosed on 5(c) of the
Disclosure Schedule, the Sellers will not cause or permit the Company
to engage in any practice, take any action or enter into any
transaction outside the Company's Ordinary Course of Business. Without
limiting the generality of the foregoing, except with the written
consent of the Buyer, or as disclosed on 5(c) of the Disclosure
Schedule, the Sellers will not cause or permit the Company to:
(i) sell, lease, transfer or assign any of its assets,
tangible or intangible, other than the sale of its inventory in
the Company's Ordinary Course of Business;
(ii) enter into, or terminate, modify, accelerate or cancel,
any agreement, contract, lease or license to which the Company is
a party or by which it is bound;
(iii) grant or permit any new Security Interest to be
imposed upon any of its assets, tangible or intangible;
<PAGE>
(iv) close, or permit the closure of, any of its stores or
other premises upon which any of its business operations are
presently conducted; commit to or acquire any new store or new
store sites;
(v) fail to maintain inventories and supplies necessary for
the proper and continuing conduct of the Company's operations
before and after the Closing in the manner in which it is
presently conducted;
(vi) make any capital expenditure (or series of related
capital expenditures) other than in the Company's Ordinary Course
of Business;
(vii) make any capital investment in, any loan to, or any
acquisition of the securities or assets of, any other Person (or
series of related capital investments, loans, and acquisitions);
(viii) issue any note, bond or other debt security or
create, incur, assume, or guarantee any indebtedness for borrowed
money or capitalized lease obligation;
(ix) delay or postpone the payment of accounts payable and
other Liabilities outside the Company's Ordinary Course of
Business;
(x) cancel, compromise, waive or release any right or claim
(or series of related rights and claims);
(xi) grant any license or sublicense of any rights under or
with respect to any Intellectual Property;
(xii) make or authorize any change in the charter or bylaws
of the Company;
(xiii) issue, sell or otherwise dispose of the Company's
capital stock, or grant any options, warrants, or other rights to
purchase or obtain (including upon conversion, exchange or
exercise) the Company's capital stock;
(xiv) declare, set aside, or pay any dividend or make any
distribution with respect to its capital stock (whether in cash
or in kind) or redeem, purchase or otherwise acquire any of its
capital stock;
(xv) make any loan to, or enter into any other transaction
or agreement with, any of its directors, officers and employees
outside the Company's Ordinary Course of Business;
<PAGE>
(xvi) make any distributions other than in the ordinary
course of business for payroll expenditures;
(xvii) grant any increase in the compensation of any of its
directors, officers and employees; or adopt, amend, modify or
terminate any bonus, profit-sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its
directors, officers, and employees (or take any such action with
respect to any other Employee Benefit Plan); or make any other
change in employment terms for any of its directors, officers,
and employees;
(xviii) otherwise take any action or engage in any
transaction outside the Company's Ordinary Course of Business; or
(xix) otherwise engage in any practice, take any action, or
enter into any transaction of the sort described in 4(g) above.
(d) Preservation of Business. Except as disclosed on 5(d) of the
Disclosure Schedule, the Sellers will cause the Company to keep its
business and properties substantially intact, including its present
operations, physical facilities, working conditions, and relationships
with lessors, licensors, suppliers, customers, and employees.
(e) Full Access. The Sellers will permit, and the Sellers will
cause the Company to permit, representatives of the Buyer to have full
access to all premises, properties, personnel, books, records
(including Tax records), contracts and documents of or pertaining to
the Company at all reasonable times.
(f) Notice of developments. The Sellers will give (or will cause
to be given) prompt written notice to the Buyer of any material
adverse development causing a breach of any of the representations and
warranties in 4 above. Each Party will give prompt written notice to
the other Parties of any material adverse development causing a breach
of any of his or its own representations and warranties in 3 above. No
disclosure by any Party pursuant to this 5(f), however, shall be
deemed to amend or supplement Annex I, Annex II, or the Disclosure
Schedule or to prevent or cure any misrepresentation, breach of
warranty, or breach of covenant.
(g) Exclusivity. Prior to the earlier of the termination of this
Agreement in accordance with 9 below or the Closing Date, the Sellers
will not (and the Sellers will not cause or permit the Company to) (i)
solicit, initiate, or encourage the submission of any proposal or
offer from any Person relating to the acquisition of any capital stock
or other voting securities, or any substantial portion of the assets
of, the Company (including any acquisition structured as a merger,
consolidation, or share exchange); or (ii) participate in any
discussions or negotiations regarding, furnish any information with
respect to, assist or participate in, or facilitate in any other
manner any effort or attempt by any Person to do or seek any of the
foregoing; or (iii) vote their Company Shares in favor of any such
acquisition, whether structured as a merger, consolidation, or share
exchange. The Sellers will promptly notify (and will cause the Company
to promptly notify) the Buyer immediately if any Person makes any
proposal, offer, inquiry, or contact with respect to any of the
foregoing.
<PAGE>
6. Post-Closing Covenants. The Parties agree as follows with respect to the
period following the Closing.
(a) General. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this
Agreement, each of the Parties will take such further action
(including the execution and delivery of such further instruments and
documents) as any other Party may reasonably request, all at the sole
cost and expense of the requesting Party (unless the requesting Party
is entitled to indemnification therefor under 8 below). The Sellers
acknowledge and agree that from and after the Closing the Buyer will
be entitled to possession of all documents, books, records (including
Tax records), agreements and financial data of any sort relating to
the Company.
(b) Litigation Support. In the event and for so long as any Party
actively is contesting or defending against any action, suit,
proceeding, hearing, investigation, charge, complaint, claim, or
demand in connection with (i) any transaction contemplated under this
Agreement or (ii) any fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction on or prior to the Closing Date
involving the Company, each of the other Parties will cooperate with
him or it and his or its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to
their books and records as shall be necessary in connection with the
contest or defense, all at the sole cost and expense of the contesting
or defending Party (unless the contesting or defending Party is
entitled to indemnification therefor under ? 8 below).
(c) Transition. The Sellers will not (and will not permit the
Company to) take any action that is designed or intended to have the
effect of discouraging any lessor, sublessor, sub-lessee, licensor,
licensee, franchisee, customer, supplier, or other business associate
of the Company from maintaining the same business relationships with
the Company after the Closing as it maintained with the Company prior
to the Closing. The Sellers will refer all customer and vendor
inquiries relating to the businesses of the Company to the Buyer from
and after the Closing. In addition, Cohen agrees to provide reasonable
personal post-Closing transition assistance to the Company, commencing
on the Closing Date through and including the anniversary date hereof
in 2002. The Company shall be responsible for paying to Cohen any
reasonable expenses for such assistance but shall not otherwise
compensate Cohen for such assistance.
<PAGE>
(d) Confidentiality. Each of the Sellers will treat and hold as
such all of the Confidential Information, refrain from using any of
the Confidential Information except in connection with this Agreement,
and deliver promptly to the Buyer or destroy, at the request and
option of the Buyer, all tangible embodiments (and all copies) of the
Confidential Information which are in his or her possession. In the
event that the Seller is requested or required (by oral question or
request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar
process) to disclose any Confidential Information, such Seller will
notify the Buyer promptly of the request or requirement so that the
Buyer may seek an appropriate protective order or waive compliance
with the provisions of this 6(d). If, in the absence of a protective
order or the receipt of a waiver hereunder, such Seller is, on the
advice of counsel, compelled to disclose any Confidential Information
to any tribunal, such Seller may disclose the Confidential Information
to the tribunal; provided, however, that the disclosing Seller shall
use his or her best efforts to obtain, at the request of the Buyer, an
order or other assurance that confidential treatment will be accorded
to such portion of the Confidential Information required to be
disclosed as the Buyer shall designate. The foregoing provisions shall
not apply to any Confidential Information which is generally available
to the public immediately prior to the time of disclosure.
(e) Covenant Not to Compete. Cohen will not "directly or
indirectly compete" with the Buyer for a period of four (4) years from
and after the Closing Date. For purposes of this Agreement, the phrase
"directly or indirectly compete" shall include: (i) owning, managing,
operating, or controlling, or participating in the ownership,
management, operation, or control of, or being connected with or
having any interest in, as a stockholder, director, officer, employee,
agent, consultant, assistant, advisor, sole proprietor, partner or
otherwise, other than as a franchisee of the Buyer or an Affiliate of
the Buyer, (A) any mall-based business involving the retail sale of
cookies, pretzels, cinnamon rolls or bread products (collectively, a
"Mall-Based Competing Business"), or (B) any non-mall based business
involving the retail sale of cookies, pretzels or cinnamon roll
products (collectively, a "Non-Mall-Based Competing Business"); and
(ii) soliciting or attempting to solicit the services of any employee
of the Buyer or any affiliate of the Buyer; provided, however, that
Cohen shall not be deemed to be "directly or indirectly competing"
with Buyer:
(i) if Cohen is the owner of less than 1% of the outstanding
stock of any publicly traded corporation and he shall not be
deemed to engage solely by reason thereof in any of its
businesses;
<PAGE>
(ii) so long as Cohen has not breached the solicitation
provisions set forth above and has affirmatively encouraged each
of such individuals to continue his employment with the Buyer or
an Affiliate of the Buyer, Cohen shall not be prohibited from
providing financing for, owning up to twenty-five percent (25%)
of, or rendering consulting services to, any business other than
a Mall-Based Competing Business or Non-Mall-Based Competing
Business (or as a franchisee of the Buyer or an Affiliate of the
Buyer) organized and principally owned by any one or more of the
following five named individuals: Jerome E. Mouton, Steven J.
Bryan, Jason A. Piltzmaker, Robert Fortner and Steve Backstrom;
or
(iii) if Cohen is providing consulting services to (A) a
mall-based business that is not a Mall-Based Competing Business,
or (B) a Non-Mall- Based Competing Business so long as its
cookie, pretzel and cinnamon roll product sales, in the
aggregate, do not at any time exceed five percent (5%) of its
total sales.
If the final judgment of a court of competent jurisdiction
declares that any term or provision of this ? 6(e) is invalid or
unenforceable, the Parties agree that the court making the
determination of invalidity or unenforceability shall have the power
to reduce the scope, duration, or area of the term or provision, to
delete specific words or phrases, or to replace any invalid or
unenforceable term or provision with a term or provision that is valid
and enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision, and this Agreement
shall be enforceable as so modified after the expiration of the time
within which the judgment may be appealed.
7. Conditions to Obligation to Close
(a) Conditions to Obligation of the Buyer. The obligation of the
Buyer to consummate the transactions to be performed by it in
connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in 3(a) and
4 above shall be true and correct in all material respects at and
as of the Closing Date;
(ii) each of the Sellers shall have performed and complied
with all of his or her covenants hereunder in all material
respects through the Closing;
(iii) the Company shall have procured all of the third party
consents specified in 5(b) above including without limitation,
consent of each of the Company's landlords and GACC with respect
to each of the Store Leases (including those listed on 4(c) of
the Disclosure Schedule), all of which shall be satisfactory to
the Buyer;
<PAGE>
(iv) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction or
before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would
(A) prevent consummation of any of the transactions
contemplated by this Agreement;
(B) cause any of the transactions contemplated by this
Agreement to be rescinded following consummation;
(C) affect adversely the right of the Buyer to own the
Company Shares and to control the Company; or
(D) affect adversely the right of the Company to own
its assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall
be in effect);
(v) each of the Sellers shall have delivered to the Buyer a
certificate to the effect that each of the conditions specified
above in 7(a)(i)-(iv) above is satisfied in all respects;
(vi) the Parties and the Company shall have received all
other authorizations, consents, and approvals of governments and
governmental agencies referred to in 3(a)(ii), 3(b)(ii), and 4(c)
above;
(vii) the Buyer shall have received from counsel to the
Sellers an opinion substantially in the form set forth in Exhibit
E attached hereto, addressed to the Buyer, and dated as of the
Closing Date;
(viii) at least five (5) business days prior to the Closing,
the Buyer shall have received the resignations, effective as of
the Closing, of the Company's directors and the officers set
forth on 7(a)(viii) of the Disclosure Schedule;
(ix) the Buyer shall have obtained on terms and conditions
satisfactory to it all of the financing it needs in order to
consummate the transactions contemplated hereby and the Related
Transactions;
(x) the closing of each of the Related Transactions shall
have occurred, or each of the conditions for the closing of the
Related Transactions concurrently with the Closing of the
transactions contemplated by this Agreement shall have been
satisfied or waived to the Buyer's satisfaction;
<PAGE>
(xi) the Franchisee Litigation shall have been settled upon
terms and dismissed with prejudice and on the merits pursuant to
documents executed and satisfactory to the Buyer;
(xii) the Buyer's due diligence investigation of the Sellers
and the Company shall have been completed to the Buyer's
satisfaction;
(xiii) all actions to be taken by the Sellers in connection
with consummation of the transactions contemplated hereby, and
all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby, will be
reasonably satisfactory in form and substance to the Buyer;
(xiv) the capital stock of AFGG, Inc. shall have been
transferred by the Company to Cohen or his designee pursuant to
instruments satisfactory to the Buyer;
(xv) all voting trusts, proxies and other agreements or
understandings with respect to the voting of the capital stock of
the Company shall have been terminated before the Closing;
(xvi) the Sellers shall deliver to the Buyer stock
certificates representing all of the issued and outstanding
Company Shares, endorsed in blank or accompanied by duly executed
assignment documents;
(xvii) the Company and Cohen shall have entered into an
agreement with the landlord under the Office Suite Lease,
satisfactory to the Buyer, removing the Company as a party
thereto, providing for the release of the Company from all past
and future duties, obligations and liabilities thereunder, and
providing for the Buyer's use of two offices without charge to
the Buyer as mutually agreed therein for the lesser of a period
of one year after the Closing Date or so long as Cohen or an
Affiliate of Cohen is a tenant thereunder; and
(xviii) the Company and the Sellers shall deliver the stock
book, stock ledger, minute book, and corporate seal of the
Company.
The Buyer may waive any condition specified in this 7(a) if it
executes a writing so stating at or prior to the Closing.
Notwithstanding the foregoing, the Parties agree that the satisfaction
of the conditions at the Closing set forth in 7(a)(iii), (x), and
(xi), and the Closing of the transactions contemplated by this
Agreement are intended to occur simultaneously. Therefore, if all of
the conditions set forth in this section 7(a) (other than those set
forth in 7(a)(iii), (x) and (xi)) are satisfied at the Pre-Closing and
remain satisfied through the Closing, then all conditions set forth in
this 7(a) shall be deemed to have been satisfied when the conditions
in 7(a)(iii), (x), and (xi) have been satisfied.
<PAGE>
(b) Conditions to Obligation of the Sellers. The obligation of
the Sellers to consummate the transactions to be performed by them in
connection with the Closing is subject to satisfaction of the
following conditions:
(i) the representations and warranties set forth in 3(b)
above shall be true and correct in all material respects at and
as of the Closing Date;
(ii) the Buyer shall have performed and complied with all of
its covenants hereunder in all material respects through the
Closing;
(iii) no action, suit, or proceeding shall be pending or
threatened before any court or quasi-judicial or administrative
agency of any federal, state, local, or foreign jurisdiction for
before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this
Agreement or (B) cause any of the transactions contemplated by
this Agreement to be rescinded following consummation (and no
such injunction, judgment, order, decree, ruling, or charge shall
be in effect);
(iv) the Buyer shall have delivered to the Sellers a
certificate to the effect that each of the conditions specified
above in 7(b)(i)-(iii) above is satisfied in all respects;
(v) the Parties and the Company shall have received all
other authorizations, consents, and approvals of governments and
governmental agencies referred to in 3(a)(ii), 3(b)(iii), and
4(c) above;
(vi) the Company shall have transferred the Excluded Assets,
described on Schedule 7(b)(vi) attached hereto, to Cohen prior to
the Closing Date;
(vii) the closing of each of the Related Transactions shall
have occurred, or each of the conditions for the closing of the
Related Transaction concurrently with the closing of the
transactions contemplated by this Agreement shall have been
satisfied or waived to the Sellers' satisfaction; and
(viii) all actions to be taken by the Buyer in connection
with consummation of the transactions contemplated hereby, and
all certificates, opinions, instruments, and other documents
required to effect the transactions contemplated hereby, will be
reasonably satisfactory in form and substance to the Sellers.
<PAGE>
The Sellers may waive any condition specified in this 7(b) if all of
them execute a writing so stating at or prior to the Closing.
8. Remedies for Breaches of This Agreement
(a) Survival of Representations and Warranties. All of the
representations and warranties of the Parties contained in this
Agreement shall survive the Closing hereunder (even if the damaged
Party knew or had reason to know of any misrepresentation or breach of
warranty at the time of Closing) and continue in full force and effect
for a period of two (2) years thereafter, except for representations
regarding the Company's Tax Liabilities, which representations will
expire and be terminated on the date of expiration of the statute of
limitations for collection of such Tax Liabilities.
(b) Indemnification Provisions for Benefit of the Buyer. Cohen
and Mildred S. Cohen, jointly and severally, shall indemnify, save and
hold harmless each of the Buyer, its Affiliates and each of its
officers, directors, employees, agents, legal representatives,
advisors, consultants, successors and assigns (collectively, the
"Buyer Indemnified Parties"), from any Adverse Consequences suffered
or incurred by any of them to the extent arising from, out of or in
any manner connected with or based on:
(i) any breach of any of the representations, warranties and
covenants of any of the Sellers contained in this Agreement, in
the Disclosure Schedule or in any certificate, instrument or
other document delivered pursuant hereto or thereto;
(ii) any breach of any covenant of any of the Sellers
contained in this Agreement requiring performance after the
Closing Date; and
(iii) any Liability of the Company for the unpaid Taxes of
any Person (other than the Company) under Treas. Reg. 1.1502-6
(or any similar provision of state, local, or foreign law), as a
transferee or successor, by contract, or otherwise.
In addition, Cohen and Mildred S. Cohen, jointly and severally, agree
to indemnify, save and hold harmless the Buyer, its Affiliates and the
Buyer Indemnified Parties from any Adverse Consequences arising out of
each of the Tax Matters described in Schedule 4(j).
(c) Indemnificaiton Provision for Benefit of the Sellers. Subject
to the provisions of 8(b) and 8(d), the Buyer shall indemnify, save
and hold harmless each of the Sellers and their respective heirs,
legal representatives, agents, advisors, consultants, successors and
assigns (collectively the "Seller Indemnified Parties"), up to a
maximum of $1,000,000 in the aggregate, from and against all Adverse
Consequences arising from, out of or in any manner connected with or
based on:
<PAGE>
(i) any breach of any of the Buyer's representations,
warranties and covenants contained in this Agreement, in the
Disclosure Schedule or in any certificate, instrument or other
document delivered pursuant hereto or thereto;
(ii) any breach of any covenant of the Buyer contained in
this Agreement requiring performance after the Closing Date; and
(iii) any Adverse Consequence arising after the Closing Date
under Store Leases (but not under the Office Suite Lease) under
which Cohen remains a party or guarantor after the Closing;
provided, however, the $1,000,000 limitation in this ?8(c) shall
not apply to the Buyer's indemnification obligations under this
clause (iii).
(d) Indemnification Limitations Notwithstanding the foregoing to
the contrary, (i) none of the Sellers shall be required to indemnify
the Buyer Indemnified Parties from any Adverse Consequences pursuant
to 8(b) until any of the Buyer Indemnified Parties has suffered
Adverse Consequences in excess of a $100,000.00 aggregate threshold;
and (ii) the aggregate liability of the Sellers to the Buyer pursuant
to this 8 shall not exceed $1,000,000. For purposes of clause (i)
above, the Seller shall be obligated to indemnify the Buyer for the
first $100,000 of Adverse Consequences only if arising from (i) unpaid
rent (including percentage rent accrued up to the Closing Date),
defaults or other claims arising from time periods prior to the
Closing Date; or (ii) Taxes; provided that the Sellers, jointly and
severally, agree to indemnify, save and hold harmless the Buyer, its
Affiliates and the Buyer Indemnified Parties from any Adverse
Consequences arising of out the Tax Matters described in Schedule 4(j)
on a dollar-for-dollar basis.
(e) Matters Involving Third Parties
(i) If any third party shall notify any Party (the
"Indemnified Party") with respect to any matter (a "Third Party
Claim") which may give rise to a claim for indemnification
against any other Party (the "Indemnifying Party") under this 8,
then the Indemnified Party shall promptly notify the Indemnifying
Party thereof in writing; provided, however, that no delay on the
part of the Indemnified Party in notifying any Indemnifying Party
shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the Indemnifying
Party thereby is prejudiced.
(ii) Any Indemnifying Party will have the right to defend
the Indemnified Party against the Third Party Claim with counsel
of its choice satisfactory to the Indemnified Party so long as
<PAGE>
(A) the Indemnifying Party notifies the Indemnified
Party in writing within 15 days after the Indemnified Party
has given notice of the Third Party Claim that the
Indemnifying Party will indemnify the Indemnified Party from
and against the entirety of any Adverse Consequences the
Indemnified Party may suffer resulting from, arising out of,
relating to, in the nature of, or caused by the Third Party
Claim;
(B) the Indemnifying Party provides the Indemnified
Party with evidence acceptable to the Indemnified Party that
the Indemnifying Party will have the financial resources to
defend against the Third Party Claim and fulfill its
indemnification obligations hereunder;
(C) the Third Party Claim involves only money damages
and does not seek an injunction or other equitable relief;
(D) settlement of, or an adverse judgment with respect
to, the Third Party Claim is not, in the good faith judgment
of the Indemnified Party, likely to establish a precedential
custom or practice materially adverse to the continuing
business interests of the Indemnified Party; and
(E) the Indemnifying Party conducts the defense of the
Third Party Claim actively and diligently.
(iii) So long as the Indemnifying Party is conducting the
defense of the Third Party Claim in accordance with 8(c)(ii)
above,
(A) the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in
the defense of the Third Party Claim;
(B) the Indemnified Party will not consent to the entry
of any judgment or enter into any settlement with respect to
the Third Party Claim without the prior written consent of
the Indemnifying Party (not to be withheld unreasonably);
and
(C) the Indemnifying Party will not consent to the
entry of any judgment or enter into any settlement with
respect to the Third Party Claim without the prior written
consent of the Indemnified Party (not to be withheld
unreasonably).
(iv) In the event any of the conditions in 8(c)(ii) above is
or becomes unsatisfied, however,
<PAGE>
(A) the Indemnified Party may defend
against, and consent to the entry of any judgment
or enter into any settlement with respect to, the
Third Party Claim in any manner it reasonably may
deem appropriate (and the Indemnified Party need
not consult with, or obtain any consent from, any
Indemnifying Party in connection therewith);
(B) the Indemnifying Parties will
reimburse the Indemnified Party promptly and
periodically for the costs of defending against
the Third Party Claim (including reasonable
attorneys' fees and expenses); and
(C) the Indemnifying Parties will remain
responsible for any Adverse Consequences the
Indemnified Party may suffer resulting from,
arising out of, relating to, in the nature of, or
caused by the Third Party Claim to the fullest
extent provided in this 8.
(f) Determination of Adverse Consequences. The Parties shall
take into account the time cost of money in determining Adverse
Consequences for purposes of this 8.
(g) Officer/Director Indemnification. The Buyer covenants
and agrees that it will cause the Company to perform the
Company's obligations with respect to indemnification of the
Sellers who are officers or directors of the Company (as existing
up to the Closing Date) to the extent required by the Company's
Articles of Incorporation, Bylaws, and the Delaware General
Corporation Law (the "Corporate Code") as existing on the Closing
Date. Notwithstanding anything in this Agreement to the contrary,
and except as set forth in the next sentence, the sole obligation
with respect to indemnification of officers and directors of the
Company shall be as set forth in the preceding sentence, and
Buyer shall have no personal obligation to indemnify such
officers and directors; however, Buyer hereby agrees that it
shall indemnify those Sellers that were officers and directors of
the Company existing up to the Closing Date, to the extent
required by the Articles of Incorporation, Bylaws, and the
Corporate Code, for all claims and damages arising after the
Closing Date and attributable to conduct or omissions of the
Company arising after the Closing Date. The indemnification set
forth in this subsection (g) is subject to the following
limitations: (i) no Seller shall be entitled to indemnification
in the event that the claim for indemnification results from a
breach of a representation, warranty, or covenant made by any
Seller; and (ii) shall not exceed $250,000, in the aggregate for
all Sellers (together with any non-Seller officers and/or
directors of the Company who receive indemnification other than
through this Agreement).
<PAGE>
(h) Certain Off-Set Rights. At the Buyer's election,
payments, if any, to be made by Cohen and Mildred S. Cohen under
this 8 may be made by reducing, on a dollar-for-dollar basis, any
unpaid balance of any of the Escrowed Deferred Payments, by the
amount of all or any portion of any Adverse Consequences the
Buyer may suffer or incur. All such indemnification payments
under this 8 shall be deemed adjustments to the Purchase Price.
Notwithstanding the foregoing, before any set-off rights may be
exercised, the Buyer shall give written notice to Cohen (and to
the Escrow Agent so long as it holds or controls any Escrow
Funds) of any claim for indemnification hereunder, specifying in
reasonable detail the grounds for indemnification and the amount
of the set-off, and Cohen may object to any such set-off by
delivering his written objection to the Buyer (and to the Escrow
Agent so long as it holds or controls any Escrow Funds) within
thirty (30) days after Cohen's receipt of the Buyer's notice. If
Cohen fails to object within the thirty (30) day period
specified, Cohen and Mildred S. Cohen shall waive any right to
object to the Buyer's right of indemnification hereunder or the
amount of the set-off. If Cohen disputes either the Buyer's right
to indemnification, or the amount of the set-off, or both, then
Escrow Agent shall retain the amount of the set-off pending
resolution of the dispute, and Buyer and Seller shall negotiate
in good faith to resolve all issues in dispute. If, after a
period of thirty (30) days following the date on which Cohen and
Mildred S. Cohen give Buyer notice of their objection to Seller's
indemnification hereunder, any such matter remains in dispute,
the parties shall employ the dispute resolution procedures set
forth in 10 of this Agreement. Each such Party agrees to make
available to the other Party and the attorneys and accountants of
the other such Party, within a reasonable time after a request is
made, all books and records which are reasonably required by such
requesting Party to evaluate a claim for indemnification or
objection hereunder.
(i) Other Indemnification Provisions. The foregoing
indemnification, set off and recoupment provisions are in
addition to, and not in derogation of, any statutory, equitable,
or common law remedy any Buyer may have for breach of a
representation, warranty or covenant.
(j) Seller's Release of Claims. Effective as of the Closing
Date, each of the Sellers hereby (i) releases, acquits and
forever discharges the Company from any and all liabilities,
obligations, indebtedness, claims, demands, actions or causes of
action arising from or relating to any event, occurrence, act,
omission or condition occurring or existing on or prior to the
Closing Date, including, without limitation, any claim for
indemnity or contribution from the Company in connection with the
obligations or liabilities of the Sellers hereunder, except for
(A) the indemnification provided by 8(c) hereof and any other
contractual obligations of the Buyer to the Sellers set forth in
this Agreement, and (B) interests in benefit plans to which any
of the Sellers are entitled; (ii) waives all breaches, defaults
or violations of each agreement, if any, among or between
shareholders applicable to the Company Shares and agrees that any
and all such agreements are terminated as of the Closing Date,
and (iii) waives any and all preemptive or other rights to
acquire any shares of stock of the Company and releases any and
all claims arising in connection with any prior default,
violation or failure to comply with or satisfy any such
preemptive or other rights.
<PAGE>
(k) Release and Indemnification from Guarantie. The Buyer
shall use reasonable efforts and cooperate with the Sellers to
have each of the Sellers released, as of the Closing Date, from
all guaranties (including any pledges of assets by any of them
for debts or obligations of the Company) listed on 4(x) of the
Disclosure Schedule attached hereto. From and after the Closing,
Buyer will defend, indemnify and hold each of the Sellers and the
Company harmless from and against any claims made or threatened
to be made, or loss incurred, in connection with any such
guaranty, which obligations shall be separate and apart from
those provided in 8.
9. Termination
(a) Termination of Agreement. The Parties may terminate this
Agreement as provided below:
(i) The Buyer and the Sellers may terminate this
Agreement by mutual written consent at any time prior to the
Closing;
(ii) The Buyer may terminate this Agreement at any time
prior to the Closing by giving written notice to the Sellers
if the Buyer is not satisfied in its sole discretion with
the results of its continuing business, legal and accounting
due diligence investigation regarding the Company;
(iii) The Buyer may terminate this Agreement by giving
written notice to the Sellers at any time prior to the
Closing (A) in the event any of the Sellers has breached any
material representation, warranty, or covenant contained in
this Agreement in any material respect, the Buyer has
notified the Sellers of the breach, and the breach has
continued without cure for a period of fifteen (15) days
after the notice of breach; or (B) if the Closing shall not
have occurred on or before September 30, 1998, by reason of
the failure of any condition precedent under 7(a) hereof
(unless the failure results primarily from the Buyer itself
breaching any representation, warranty, or covenant
contained in this Agreement);
(iv) The Buyer may terminate this Agreement by giving
written notice to the Sellers at any time prior to the
Closing in the event that any of the Related Transactions
shall be terminated or fail to close for any reason,
including without limitation, any cause, action or reason
attributable to the Buyer; and
<PAGE>
(v) The Sellers, owning, collectively, not less
than 95% of the Company Shares acting collectively, may
terminate this Agreement on behalf of all Sellers (and
under such circumstance this Agreement shall terminate
with respect to all Sellers) by giving written notice to
the Buyer at any time prior to the Closing (A) in the
event the Buyer has breached any material representation,
warranty, or covenant contained in this Agreement in any
material respect, the Sellers have notified the Buyer of
the breach, and the breach has continued without cure for
a period of fifteen (15) days after the notice of breach;
or (B) if the Closing shall not have occurred on or before
September 30, 1998, by reason of the failure of any
condition precedent under 7(b) hereof (unless the failure
results primarily from any of the Sellers breaching any
representation, warranty, or covenant contained in this
Agreement).
(b) Effect of Termination. If any Party terminates this
Agreement pursuant to 9(a) above, all rights and obligations of
the Parties under this Agreement and the Escrow Agreement shall
terminate without any Liability of any Party to any other Party
(except for any Liability of any Party then in breach).
10. Miscellaneous
(a) Press Releases and Public Announcements. No Party shall
issue any press release or make any public announcement relating
to the subject matter of this Agreement prior to the Closing
without the prior written approval of the Buyer and the Seller;
provided, however, that any Party may make any public disclosure
it believes in good faith is required by applicable law (in which
case the disclosing Party will use its best efforts to advise the
other Parties prior to making the disclosure).
(b) No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the
Parties and their respective successors and permitted assigns.
(c) Entire Agreement. This Agreement (including the
documents referred to herein) constitutes the entire agreement
among the Parties and supersedes any prior understandings,
agreements, or representations by or among the Parties, written
or oral, to the extent they related in any way to the subject
matter hereof.
(d) Succession and Assignment. This Agreement shall be
binding upon and inure to the benefit of the Parties named herein
and their respective successors and permitted assigns. No Party
may assign either this Agreement or any of his or its rights,
interests, or obligations hereunder without the prior written
approval of the Buyer and the Seller; provided, however, that the
Buyer may (i) assign any or all of its rights and interests
hereunder to one or more of its Affiliates and (ii) designate one
or more of its Affiliates to perform its obligations hereunder
(in any or all of which cases the Buyer nonetheless shall remain
responsible for the performance of all of its obligations
hereunder).
<PAGE>
(e) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
(f) Headings. The section headings contained in this
Agreement are inserted for convenience only and shall not affect
in any way the meaning or interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and
other communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder shall be
deemed duly given if (and then two business days after) it is
sent by registered or certified mail, return receipt requested,
postage prepaid, and addressed to the intended recipient as set
forth below:
If to any of the Sellers: Deblan Corporation
c/o Lawrence J. Cohen
8300 F.M. 1960 West, Suite 300
Houston, TX 77070
Copy to: Chamberlain, Hrdlicka, White, Williams & Martin
ATTN: James J. Spring, III
1400 Two Allen Center
1200 Smith Street
Houston, TX 77002-4310
If to the Buyer:Mrs. Fields' Original Cookies, Inc.
ATTN: Legal Department
2855 E. Cottonwood Parkway, Suite 400
Salt Lake City, UT 84121
Copy to: Jones, Waldo, Holbrook & McDonough
ATTN: Glen D. Watkins
1500 Wells Fargo Plaza
170 So. Main Street
Salt Lake City, UT 84101
Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set
forth above using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail,
or electronic mail), but no such notice, request, demand, claim, or
other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any Party may
change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other
Parties notice in the manner herein set forth.
<PAGE>
(h) Governing Law. This Agreement shall be governed by and
construed in accordance with the domestic laws of the State of Utah
without giving effect to any choice or conflict of law provision or
rule (whether of the State of Utah or any other jurisdiction) that
would cause the application of the laws of any jurisdiction other than
the State of Utah.
(i) Amendments and waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and
signed by the Buyer and each of the Sellers. No waiver by any Party of
any default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to extend to
any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction shall
not affect the validity or enforceability of the remaining terms and
provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction.
(k) Expenses. Each of the Parties will bear his or its own costs
and expenses (including legal fees and expenses) incurred in
connection with this Agreement and the transactions contemplated
hereby.
(l) Construction. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity
or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the Parties and no presumption
or burden of proof shall arise favoring or disfavoring any Party by
virtue of the authorship of any of the provisions of this Agreement.
Any reference to any federal, state, local, or foreign statute or law
shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context requires otherwise. The word
"including" shall mean including without limitation. The Parties
intend that each representation, warranty, and covenant contained
herein shall have independent significance. If any Party has breached
any representation, warranty, or covenant contained herein in any
respect, the fact that there exists another representation, warranty,
or covenant relating to the same subject matter (regardless of the
relative levels of specificity) which the Party has not breached shall
not detract from or mitigate the fact that the Party is in breach of
the first representation, warranty, or covenant.
<PAGE>
(m) Incorporation of Exhibits, Annexes, and Schedules. The
Exhibits, Annexes, and Schedules identified in this Agreement are
incorporated herein by reference and made a part hereof.
(n) Specific Performance. Each of the Parties acknowledges and
agrees that the other Parties would be damaged irreparably in the
event any of the provisions of this Agreement are not performed in
accordance with their specific terms or otherwise are breached.
Accordingly, each of the Parties agrees that the other Parties shall
be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions hereof in any action instituted
in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter in addition to any other
remedy to which they may be entitled, at law or in equity.
(o) Dispute Resolution. Any dispute arising out of or relating to
this Agreement, including, but not limited to, claims for
indemnification pursuant to Section 8 shall be resolved in accordance
with the procedures specified in this Section 10, which shall be sole
and exclusive procedures for the resolution of any such disputes.
(i) The parties shall attempt in good faith to resolve any
dispute arising out of or relating to this Agreement promptly by
negotiation between the Seller and his appointed representatives
and executives of the Buyer who, if possible, are at a higher
level of management than the persons with direct responsibility
for administration of this Agreement.
(A) Any Party may give the other Party written notice
of any dispute not resolved in the normal course of
business. Within 15 days after delivery of the notice, the
receiving Party shall submit to the other a written
response. The notice and response shall include (1) a
statement of each Party's position and a summary of
arguments supporting that position, and (2) the name and
title of the executive who will represent that Party and of
any other person who will accompany the executive. Within 30
days after delivery of the disputing Party's notice, the
executives of both parties shall meet at a mutually
acceptable time and place, and thereafter as often as they
reasonably deem necessary, to attempt to resolve the
dispute. All reasonable requests for information made by one
Party to the other will be honored.
(B) If the matter has not been resolved by these
persons within sixty (60) days of the disputing Party's
notice, or if the parties fail to meet within thirty (30)
days of the disputing Party's notice, either Party may
initiate mediation as provided hereinafter.
<PAGE>
(C) All negotiations pursuant to this clause are
confidential and shall be treated as compromise and
settlement negotiations for purposes of the Federal Rules of
Evidence and State rules of evidence.
(ii) If the dispute has not been resolved by negotiation as
provided herein, the Parties shall endeavor to settle the dispute
by nonbinding mediation and to bear equally the costs of the
mediation. The Parties will jointly appoint a mutually acceptable
mediator promptly after a request for mediation is made by any
Party. The Parties agree to participate in the mediation and all
related negotiations in good faith.
(iii) If the dispute has not been resolved by non-binding
means as provided herein within 90 days of the initiation of such
procedure, either Party may initiate litigation (upon 30 days'
written notice to the other Party); provided, however, that if
one Party has requested the other to participate in a non-binding
procedure and the other has failed to participate, the requesting
Party may initiate litigation before expiration of the above
period.
(iv) The procedures specified in this 10(o) shall be the
sole and exclusive procedures for the resolution of disputes
between the Parties arising out of or relating to this Agreement;
provided, however, that a Party, without prejudice to the above
procedures, may file a complaint (for statute of limitations or
venue reasons) or to seek temporary or preliminary injunctive or
other provisional judicial relief, if in its sole judgment such
action is necessary to avoid irreparable damage or to preserve
the status quo. Despite such action, the Parties will continue to
participate in good faith in the procedures specified in this
Section.
(v) All applicable statues of limitation and defenses based
upon the passage of time shall be tolled while the procedures
specified in this Section are pending. The Parties will take such
action, if any, required to effectuate such tolling.
(vi) Each Party is required to continue to perform its
obligations under this Agreement pending final resolution of any
dispute arising out of or relating to this Agreement.
(p) Submission to Juridiction. Any action or proceeding arising
out of or relating to this Agreement shall be heard and determined in
any state or federal court sitting (i) in Salt Lake City, Utah, with
respect to actions or proceedings in which the Buyer is named as a
defendant, or (ii) in Houston, Texas, with respect to actions or
proceedings in which any of the Sellers is named as a defendant. Each
of the Parties submits to the jurisdiction of any such state or
federal court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other
court. Each of the Parties waives any defense of inconvenient forum to
the maintenance of any action or proceeding so brought and waives any
bond, surety, or other security that might be required of any other
Party with respect thereto. Each Party agrees that a final judgment in
any action or proceeding so brought shall be conclusive and may be
enforced by suit on the judgment or in any other manner provided by
law or at equity.
<PAGE>
(q) Attorney's Fees. Should any litigation be commenced with
respect to any matters governed by this Agreement or the Escrow
Agreement, the Party prevailing shall be entitled, in addition to such
other relief as may be granted, to a reasonable sum for such Party's
attorneys' fees and expenses determined by the court in such
litigation.
(r) Joinder of Spouse. The spouse of certain of the Sellers is
executing this Agreement to acknowledge its fairness and that it is in
such spouse's best interests to bind such spouse's community property
interest, if any, to the terms of this Agreement.
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement as
of the date first above written.
BUYER: MRS. FIELDS' ORIGINAL COOKIES, INC.
By:/s/Michael R. Ward
Its: VP
SELLERS:
/s/Lawrence J. Cohen
Lawrence J. Cohen
/s/Mildred S. Cohen
Mildred S. Cohen
/s/Jerome E. Mouton
Jerome E. Mouton
<PAGE>
/s/Martha Mouton
[SPOUSE]
/s/Steven J. Bryan
Steven J. Bryan
/s/Elizabeth R. Bryan
[SPOUSE]
/s/Jason A. Piltzmaker
Jason A. Piltzmaker
/s/Michele Piltzmaker
[SPOUSE]
EXHIBIT 2.4
ASSET PURCHASE AGREEMENT
Dated as of July 29, 1998
between
MRS. FIELDS' ORIGINAL COOKIES, INC.
as Buyer,
and
ASK & MSK FAMILY LIMITED PARTNERSHIP-II(B), LTD.
as Seller
<PAGE>
TABLE OF CONTENTS
Page
1. Purchase, Sale and Assumption....................................... 1
2. Closing; Transactions to be Effected................................ 4
3. Conditions to Closing............................................... 5
4. Representations and Warranties of the Seller........................ 6
5. Representations and Warranties of the Buyer......................... 7
6. Payment of Taxes and Liabilities.................................... 7
7. Employment of Employees............................................. 8
8. Assignment.......................................................... 8
9. No Third-Party Beneficiaries........................................ 8
10. Expenses............................................................ 8
11. Amendments; Waiver.................................................. 9
12. Notices............................................................. 9
13. Interpretation...................................................... 10
14. Counterparts........................................................ 10
15. Entire Agreement.................................................... 10
16. Fees................................................................ 10
17. Severability........................................................ 10
18. Attorney's Fees..................................................... 10
19. [Intentionally Omitted]............................................. 10
20. Governing Law....................................................... 11
21. Remedies............................................................ 11
22. Release of the Seller............................................... 11
Exhibits:
A -........List of Stores
B -........Bill of Sale and Allocation of Purchase Price
Disclosure Schedules:
?1(c)(ii).........Assumed Liabilities
?4(b) .........Title to Acquired Assets
?4(c) .........Litigation
<PAGE>
ASSET PURCHASE AGREEMENT
MRS. FIELDS' ORIGINAL COOKIES, INC.
ASSET PURCHASE AGREEMENT ("Agreement"), dated as of July 29, 1998, by
and between MRS. FIELDS' ORIGINAL COOKIES, INC., a Delaware corporation
("Buyer"), and ASK & MSK FAMILY LIMITED PARTNERSHIP-II(B), LTD., a Florida
limited partnership ("Seller"); each a "party" in the singular and "parties" in
the plural.
A. The Seller is a franchisee of Great American Cookie Company, Inc., a
Delaware corporation ("Franchisor").
B. The parties desire that the Buyer purchase from the Seller, and that the
Seller sell to the Buyer, the Acquired Assets (defined below), and that the
Buyer assume the Assumed Liabilities (defined below), upon the terms and subject
to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto hereby agree as follows:
1. Purchase, Sale and Assumption.
(a) Purchase and Sale. On the terms and subject to the
conditions of this Agreement, the Seller agrees to sell, transfer,
assign and deliver to the Buyer, and the Buyer agrees to accept and
purchase from the Seller, at the Closing (defined below), free and
clear of Liens (defined below), the assets of the Seller used and
employed by the Seller in the operation of its retail cookie business
at each of the stores, and any related carts and kiosks (each a
"Store"; collectively, the "Stores") listed on Exhibit A, as follows
(such assets and properties being herein called, collectively, the
"Acquired Assets"): (i) all leasehold rights, interests, improvements,
fixtures, signage, easements, rights-of-way and other appurtenances
thereto, including without limitation those governed by each of the
real property leases, covering the respective premises of each of the
Stores, which at the Closing shall be assigned by the Seller to the
Buyer (or its designated affiliates) and assumed by the Buyer; (ii) all
tangible personal property, such as machinery, equipment, supplies,
inventories (unless designated by the Buyer on or before the Closing as
an Excluded Asset), furniture and tools; (iii) all agreements,
contracts and instruments (but excluding the Franchise Agreements
described on Exhibit A between the Seller and Great American Cookie
Company, Inc. ("Franchisor"), and any related license, development and
guarantee agreements, as amended (collectively, the "Franchise
Agreements")) that are assumed in writing by the Buyer at the Closing;
(iv) all customer and vendor lists; (v) all recipes, techniques,
processes, methods of production and commercialization, training
methods and know-how owned by the Seller; (vi) store change funds in
the aggregate amount of $251.00 per Store (collectively, the "Store
Cash"); (vii) deposits made in connection with lease, utility service
and other similar agreements; (viii) rebates and prepaid expenses; (ix)
all inventory of batter and other ingredients, paper wares and other
items on hand or on order and all cookies, other baked goods, completed
goods and work in process (collectively, the "Inventory"). The Acquired
Assets shall be transferred and conveyed to the Buyer at the Closing,
free and clear of all Liens (as defined below), pursuant to a bill of
sale (the "Bill of Sale") substantially in the form of Exhibit B.
<PAGE>
(b) Excluded Assets. The Acquired Assets shall include only
those assets of the Seller specifically described in Section 1(a)
above. Notwithstanding anything to the contrary expressed or implied
herein, the Acquired Assets shall not include the following assets of
the Seller: (i) all cash on hand or on deposit, whether at a Store or
in bank accounts, other than the Store Cash; (ii) all rights and claims
of the Seller under the Franchise Agreements; (iii) all rights and
claims of the Seller with respect to the Excluded Liabilities (defined
below); (iv) the Seller's rights under this Agreement; (v) all of the
Seller's corporate records, books, ledgers, books of account, tax
returns and information relating thereto, files, documents,
correspondence; and (vi) any other assets of the Seller not directly
used in the conduct of the Seller's retail cookie business at the
Stores. The assets of the Seller that are not included within the
Acquired Assets are herein referred to as the "Excluded Assets."
(c) Assumed Liabilities. On the terms and subject to the
conditions of this Agreement, the Buyer agrees to assume, at and
effective from the Closing, the Assumed Liabilities. The term "Assumed
Liabilities" means, collectively, the following liabilities and
obligations of the Seller: (i) all obligations under the agreements,
contracts, leases, licenses, and other arrangements referred to in the
description of Acquired Assets either (A) to furnish goods, services
and other non-cash benefits to another party after Closing, or (B) to
pay for goods, services and other non-cash benefits that another party
will furnish to the Acquired Business after Closing; and (ii) all other
liabilities of the Seller assumed in writing and listed on Schedule
1(c)(ii).
(d) Excluded Liabilities. The term "Excluded Liabilities"
means any liability or obligation of the Seller that is not an Assumed
Liability.
(e) Purchase Price. The purchase price for the Acquired Assets
(the "Purchase Price") shall be the sum of (i) Eight Hundred Sixteen
Thousand Dollars ($816,000.00), plus; (ii) Seven Hundred Fifty-Three
Dollars ($753.00) representing the amount of the "Store Cash", plus
(iii) the value of the Inventory, determined as provided in Section
1(f) below, plus (iv) the aggregate amount of all deposits and prepaid
expenses that are included in the Acquired Assets, determined as of the
close of business as of the day immediately preceding the date on which
the Closing shall occur. The Purchase Price shall be allocated among
the Stores in accordance with Exhibit A.
<PAGE>
(f) Determination of Inventory Value. Immediately following
the close of business on the day preceding the date on which the
Closing is to occur, the Buyer and the Seller shall jointly count and
value the Inventory. The Inventory shall be valued at the Seller's cost
thereof.
(g) Proration. All utility charges, rental charges, Taxes, and
other like items assessed or payable with respect to any of the
Acquired Assets for the period in which the Closing occurs shall be
prorated as of the date of Closing between the Buyer and the Seller.
The parties shall use their commercially reasonable best efforts to
determine the amount of any such prorated items as of the Closing and
shall, to the extent of information available at the time of Closing,
prorate such items between them as herein provided. To the extent
information relating to such prorated items is not available at the
time of Closing, the parties shall, as soon as practical after the
Closing, examine all relevant books and records in order to make the
determination of the apportionments of such prorated items as herein
provided. Payment of any such items which are not apportioned and
prorated at the Closing shall be made to the appropriate party by check
within thirty (30) days after such determination. Proration of ad
valorem taxes (whether assessed against real property interests or
personal property) shall be determined based upon previous year's
taxes.
(h) Certain Consents. To the extent that the Seller's rights
under any agreement, contract, commitment, lease, permit, real property
lease or other Acquired Asset to be assigned to the Buyer hereunder may
not be assigned without the consent of another person which has not
been obtained prior to the Closing, and which is important to the
ownership, use or disposition by the Buyer of an Acquired Asset, this
Agreement shall not constitute an agreement to assign the same if an
attempted assignment would constitute a breach thereof or be unlawful,
and the Seller, at the Buyer's expense, shall use its commercially
reasonable efforts to obtain any such required consent(s) as promptly
as possible. If any such consent shall not be obtained or if any
attempted assignment would be ineffective or would impair the Buyer's
rights under the Acquired Asset in question so that the Buyer would not
in effect acquire the benefit of all such rights, the Seller, to the
maximum extent permitted by law and the specific Acquired Asset, and at
the Buyer's expense, shall act after the Closing as the Buyer's agent
in order to obtain for the Buyer the benefits thereunder.
<PAGE>
(i) Further Assurances. The Seller from time to time after the
Closing, at the Buyer's request and expense, will execute, acknowledge,
and deliver to the Buyer such other instruments of conveyance and
transfer and will take such other actions and execute and deliver such
other documents, certifications, and further assurances as the Buyer
may reasonably require in order to vest more effectively in the Buyer,
or to put the Buyer more fully in possession of, any of the Acquired
Assets, or to better enable the Buyer to complete, perform, or
discharge any of the Assumed Liabilities. Each of the parties hereto
will cooperate with the other and execute and deliver to the other
parties hereto such other instruments and documents and take such other
actions as may be reasonably requested from time to time by any other
party hereto as necessary to carry out, evidence, and confirm the
intended purposes of this Agreement.
(j) Bulk Sales. The parties intend and agree that the purchase
and sale of the Acquired Assets is excluded from the requirements of
so-called "Uniform Commercial Code - Bulk Transfers" laws (the "Bulk
Sales Laws"). However, to the extent that the Bulk Sales Laws apply,
the parties hereby waive any compliance therewith. In consideration of
the Buyer's agreement to waive any such compliance:
(i) the Seller shall furnish to the Buyer before the
Closing a list, certified by a financial officer of the Seller
having knowledge thereof, setting forth the Seller's accounts
payable (and pay-off amounts therefor) as of the Closing
(including, without limitation, all accounts with and
liabilities to any persons that may have a remedy under the
Bulk Sales Laws, if applicable, with respect to the
transactions contemplated by this Agreement (collectively, the
"Vendor Accounts")); and
<PAGE>
(ii) the Seller hereby agrees that, each of the
Vendor Accounts shall be paid in full at the Closing from the
Purchase Price, unless (A) the Seller has a good faith dispute
with respect to any Vendor Accounts, in which case a portion
of the Purchase Price sufficient to fully pay each of the
disputed Vendor Accounts will be withheld at the Closing and
deposited into and thereafter disbursed from an escrow
administered by an independent escrow agent established
pursuant to mutually agreed instructions of the Buyer and the
Seller; or (B) the payoff amount cannot be ascertained or
verified by the Closing Date, in which case the amount
reasonably estimated by the Buyer and the Seller that is
necessary to fully pay all amounts accrued through the Closing
with respect to any such Vendor Accounts shall be withheld
from the Purchase Price and deposited into and disbursed from
an escrow established in the manner specified in the preceding
clause (A) of this Section 1(f)(ii).
2. Closing; Transactions to be Effected.
(a) Closing. The closing (the "Closing") of the purchase and
sale of the Acquired Assets and the Buyer's assumption of the Assumed
Liabilities shall be held at the offices of Alston & Bird, in Atlanta,
Georgia, at a time and date established by agreement of the parties
within ten (10) business days after all of the conditions to the
Closing set forth in Section 3 below are satisfied or waived. The date
on which the Closing shall occur is hereinafter referred to as the
"Closing Date".
(b) Transactions to be Effected. At the Closing, on the terms
and subject to the conditions of this Agreement:
(i) the Seller shall deliver to the Buyer an
appropriately executed and authenticated Bill of Sale and such
other instruments of sale, assignment, transfer and conveyance
to the Buyer of the Acquired Assets as the Buyer or its
counsel may reasonably request, such instruments to be
reasonably satisfactory in form to the Buyer and its counsel;
(ii) the Buyer shall deliver to the Seller the
Purchase Price by wire transfer to a bank account which shall
be designated in writing by the Seller at least two business
days prior to the Closing Date; and
<PAGE>
(iii) the Buyer shall use its commercially reasonable
best efforts to cause the Franchisor to terminate the
Franchise Agreements as of the Closing and to release the
Seller from any and all obligations thereunder (other than the
payment of franchisee fees payable thereunder for any periods
ending on or prior to the date of Closing). The Agreement
pursuant to which such Franchise Agreements are terminated and
such obligations of the Seller thereunder are released shall
be in form and substance reasonably satisfactory to the Seller
and its counsel. The Seller agrees to pay to the Franchisor at
the time of Closing all franchise fees payable under or with
respect to such Franchise Agreements for all periods ending on
or prior to the date of Closing.
3. Conditions to Closing.
(a) Buyer's Obligation. The obligation of the Buyer to
purchase the Acquired Assets is subject to the satisfaction (or
waiver by the Buyer) as of the Closing of the following
conditions:
(i) The representations and warranties of the Seller
made in this Agreement shall be true and correct as of the
date hereof and on and as of the Closing, as though made on
and as of the Closing Date, and the Seller shall have
performed or complied in all material respects with all
obligations and covenants required by this Agreement to be
performed or complied with by the Seller by the time of the
Closing; and the Seller shall have delivered to the Buyer a
certificate dated the Closing Date, signed by an authorized
officer or representative of the Seller, confirming the
foregoing;
(ii) No injunction or order of any court or
administrative agency of competent jurisdiction shall be
threatened or in effect, and no statute, rule or regulation of
any governmental authority of competent jurisdiction shall
have been promulgated or enacted, as of the Closing which
restrains, prohibits or adversely affects the purchase and
sale of the Acquired Assets; and
<PAGE>
(iii) The Buyer shall have completed the acquisition
of all of the stock of Cookies USA, and shall have completed
its senior notes offering in the current anticipated amount of
$40,000,000.
(b) Seller's Obligation. The obligation of the Seller to sell,
assign, transfer and deliver the Acquired Assets to the Buyer is
subject to the satisfaction or waiver as of the Closing of the
following conditions:
(i) The representations and warranties of the Buyer
made in this Agreement shall be true and correct as of the
date hereof and on and as of the Closing, as though made on
and as of the Closing Date, and the Buyer shall have performed
or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or
complied with by the Buyer by the time of the Closing; and the
Buyer shall have delivered to the Seller a certificate dated
the Closing Date and signed by an authorized officer of the
Buyer confirming the foregoing; and
(ii) The conditions contemplated by Section 3(a)(ii)
shall have been satisfied; and
(iii) The Franchise Agreements shall have been
terminated as of the Closing and the Seller shall have been
released from all liability thereunder (other than the payment
of franchise fees accrued and unpaid to the date of the
Closing), and the Seller shall have received a document
evidencing such termination and release in form and substance
reasonably satisfactory to the Seller and its counsel.
4. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Buyer that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the disclosure schedule delivered by the
Seller to the Buyer on the date hereof (the "Disclosure Schedule").
<PAGE>
(a) Organization and Standing of the Seller. The Seller is a
limited partnership duly formed, validly existing and in good standing
under the laws of Florida. All acts and other proceedings required to
be taken by the Seller to authorize the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly and properly taken.
(b) Title to Acquired Assets. Except as set forth in Schedule
4(b), the Seller has good and marketable title to the Acquired Assets,
free and clear of all mortgages, liens, claims, security interests,
pledges, restrictions, charges or encumbrances of any nature whatsoever
(collectively, "Liens"). At the Closing, the Buyer shall acquire the
Acquired Assets free and clear of all Liens.
(c) Litigation. Schedule 4(c) sets forth a list of all
lawsuits, claims, proceedings or investigations pending, or, to the
knowledge of the Seller, threatened, as of the date of this Agreement,
against or affecting any of the Acquired Assets.
5. Representations and Warranties of the Buyer. The Buyer hereby
represents and warrants to the Seller as follows:
(a) Authority. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. The Buyer has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby and thereby. All corporate acts and other
proceedings required to be taken by the Buyer to authorize the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby and thereby have
been duly and properly taken.
(b) Actions and Proceedings, etc. There are no actions, suits,
claims or proceedings pending or, to the best knowledge of the Buyer,
threatened against the Buyer, which are likely to have a material
adverse effect on the ability of the Buyer to consummate the
transactions contemplated hereby.
<PAGE>
. 6. Payment of Taxes and Liabilities
(a) Taxes.
(i) The Seller shall be liable for and promptly pay
Taxes applicable to any of the Acquired Assets or the business
conducted by the Seller with the Acquired Assets, in each case
attributable to taxable years or periods (including partial
periods) ending at the time of or prior to the Closing. The
Buyer shall be liable for and shall pay all Taxes applicable
to the Acquired Assets or the business conducted by the Buyer
with the Acquired Assets that are attributable to taxable
years or periods (including partial periods) beginning
immediately after the Closing. For purposes of this Agreement,
"Taxes" shall mean federal, state, local or foreign income,
gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or
add-on minimum, ad valorem, transfer or excise tax, or any
other tax, customs, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any governmental authority.
(ii) Notwithstanding paragraph (i), any sales Tax,
use Tax, property transfer or gains Tax, statutory transferee
liabilities arising from the purchase of the Acquired Assets,
documentary stamp Tax or similar Tax attributable to the sale
or transfer of the Acquired Assets or the business conducted
by the Seller with the Acquired Assets shall be paid by the
Seller.
(iii) The Seller or the Buyer, as the case may be,
shall provide prompt reimbursement for any Tax paid by one
party, all or a portion of which is the responsibility of the
other party in accordance with the terms of this Section 6(a).
Within a reasonable time prior to the payment of any such Tax,
the party paying such Tax shall give notice to the other party
of the Tax payable and the portion which is the liability of
each such party or parties, although failure to do so will not
relieve such party or parties from its liability hereunder
except to the extent such party is materially adversely
affected thereby.
(b) Other Liabilities.
(i) The Seller shall be liable for and shall pay all
Excluded Liabilities, Vendor Accounts and Bulk Sales
Liabilities.
<PAGE>
(ii) The Buyer shall be liable for and shall pay all
Assumed Liabilities.
7. Employment of Employees. On the date of Closing, the Buyer shall
offer employment to substantially all of the salaried and non-salaried employees
of the Seller who are employed in the operation of the Stores. The employment
offered by the Buyer shall be "at will," and the Buyer shall be under no
obligation to continue such employment following the date of Closing. The Seller
shall terminate the employment of all of its salaried and non-salaried employees
who are employed in the operation of the Stores as of the close of business on
the date of Closing, and the Seller shall be responsible for all wages,
salaries, and other benefits, if any, due and owing to such Employees for all
periods ending on or prior to the date of Closing. Additionally, the Buyer shall
cause all Store managers who become employed by the Buyer to be covered,
commencing on the first day of such employment, under the Buyer's health and
medical welfare and benefit plans without any waiting period, with a waiver of
pre-existing conditions, and otherwise on the same terms as such insurance
coverages are provided generally to the employees of the Buyer.
8. Assignment. This Agreement and the rights and obligations hereunder
shall not be assignable or transferable by the Buyer or the Seller, other than
to an affiliate of either, without the prior written consent of the other party
hereto.
9. No Third-Party Beneficiaries. Except as provided for released
parties in Section 22, this Agreement is for the sole benefit of the parties
hereto and their permitted assigns and nothing herein expressed or implied shall
give or be construed to give to any person or entity, other than the parties
hereto and such assigns, any legal or equitable rights hereunder.
10. Expenses. Whether or not the transactions contemplated hereby are
consummated, except as otherwise expressly provided in this Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
11. Amendments; Waiver. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by all of the
parties. No waiver by any party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
<PAGE>
12. Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered by hand or sent
prepaid telex, cable or telecopy, or sent, postage prepaid, by registered,
certified or express mail, or reputable overnight courier service and shall be
deemed given when so delivered by hand, telexed, cabled or telecopied, or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows:
(i) if to the Seller:
Mr. Arthur S. Karp
7902 Sanderling Road
Sarasota, FL 34242
Telecopy: (941) 346-3049
with a copy to:
Alston & Bird
1 Atlanta Center
1201 West Peachtree Street
Atlanta, GA 30309-3424
Attn: Sidney J. Nurkin
Telecopy: (404) 881-7777
(ii) if to the Buyer:
Mrs. Fields' Original Cookies
2855 E. Cottonwood Parkway, Suite 400
Salt Lake City, Utah 84121
Attention: Legal Department
Telecopy: (801) 736-5945
with a copy to:
Jones, Waldo, Holbrook & McDonough, P.C.
170 South Main Street, Suite 1500
Salt Lake City, Utah 84101
Attention: Glen D. Watkins
Telecopy: (801) 328-0537
13. Interpretation. The headings contained in this Agreement, in any
exhibit or Schedule hereto and in the table of contents to this Agreement, are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
<PAGE>
14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.
15. Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, representations and understandings,
written or oral, relating to such subject matter. The exhibits, annexes and
Schedules identified in this Agreement are hereby incorporated by reference.
16. Fees. Each party hereto hereby agrees, represents and warrants that
no person has acted in connection with this Agreement or the transactions
contemplated hereby as a broker or finder and that no person is entitled to any
brokerage fee, finder's fee or commission with respect thereto. The parties
further agree to hold the other party harmless from any damages, claims or
expenses asserted against such party as a result of any person claiming a
commission or finder's fee for the transactions contemplated herein.
17. Severability. If any provision of this Agreement or the application
of any such provision to any person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.
18. Attorney's Fees. Should any litigation be commenced with respect to
any matters governed by this Agreement, the party prevailing shall be entitled,
in addition to such other relief as may be granted, to a reasonable sum for such
party's attorneys' fees and expenses determined by the court in such litigation.
19. [Intentionally Omitted]
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Georgia applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
21. Remedies. Each of the parties acknowledges and agrees that each
other party would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties agrees that each other
party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof, having jurisdiction over the parties and the
matter, in addition to any other remedy to which it may be entitled, at law or
in equity.
22. Release of the Seller. The Buyer, and its successors and assigns,
in consideration of the benefits afforded to it in consequence of the execution
of this Agreement, does hereby release and waive, irrevocably, any and all
rights, claims, causes of action, of every kind and nature, whether or not known
or anticipated or asserted or unasserted, that they or any of them has or may
have, directly or indirectly, against the Seller and, as applicable, its
partners, officers, agents and directors (said partners, officers, agents and
directors being intended beneficiaries of this provision), but excluding rights,
claims and causes of action arising out of or in relation to the breach or
inaccuracy of any representation or warranty made by the Seller in this
Agreement or the breach of any agreement or undertaking of the Seller set forth
in the Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
SELLER: BUYER:
ASK & MSK FAMILY LIMITED MRS. FIELDS' ORIGINAL COOKIES, INC.,
PARTNERSHIP-II(B), LTD., a Delaware corporation
a Florida limited partnership
By: American Cookie Retailers, Inc.,
a __________ corporation,
general partner
By:/s/Arthur S. Karp By:/s/Michael R. Ward
Its:President Its:VP
EXHIBIT 2.5
ASSET PURCHASE AGREEMENT
Dated as of July 29, 1998
between
MRS. FIELDS' ORIGINAL COOKIES, INC.
as Buyer,
and
CROSSROADS COOKIES, INC.
as Seller
<PAGE>
TABLE OF CONTENTS
Page
1. Purchase, Sale and Assumption....................................... 1
2. Closing; Transactions to be Effected................................ 4
3. Conditions to Closing............................................... 5
4. Representations and Warranties of the Seller........................ 6
5. Representations and Warranties of the Buyer......................... 7
6. Payment of Taxes and Liabilities.................................... 7
7. Employment of Employees............................................. 8
8. Assignment.......................................................... 8
9. No Third-Party Beneficiaries........................................ 9
10. Expenses............................................................ 9
11. Amendments; Waiver.................................................. 9
12. Notices............................................................. 9
13. Interpretation...................................................... 10
14. Counterparts........................................................ 10
15. Entire Agreement.................................................... 10
16. Fees................................................................ 10
17. Severability........................................................ 10
18. Attorney's Fees..................................................... 11
19. [Intentionally Omitted]............................................. 11
20. Governing Law....................................................... 11
21. Remedies............................................................ 11
22. Release of the Seller............................................... 12
Exhibits:
A -........Bill of Sale
Disclosure Schedules:
?1(c)(ii).........Assumed Liabilities
?4(b) .........Title to Acquired Assets
?4(c) .........Litigation
<PAGE>
ASSET PURCHASE AGREEMENT
MRS. FIELDS' ORIGINAL COOKIES, INC.
ASSET PURCHASE AGREEMENT ("Agreement"), dated as of July 29, 1998, by
and between MRS. FIELDS' ORIGINAL COOKIES, INC., a Delaware corporation
("Buyer"), and CROSSROADS COOKIES, INC., a Georgia corporation ("Seller"); each
a "party" in the singular and "parties" in the plural.
A. The Seller is a franchisee of Great American Cookie Company, Inc., a
Delaware corporation ("Franchisor").
B. The parties desire that the Buyer purchase from the Seller, and that the
Seller sell to the Buyer, the Acquired Assets (defined below), and that the
Buyer assume the Assumed Liabilities (defined below), upon the terms and subject
to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto hereby agree as follows:
<PAGE>
1. Purchase, Sale and Assumption.
(a) Purchase and Sale. On the terms and subject to the
conditions of this Agreement, the Seller agrees to sell, transfer,
assign and deliver to the Buyer, and the Buyer agrees to accept and
purchase from the Seller, at the Closing (defined below), free and
clear of Liens (defined below), the assets of Seller used and employed
by the Seller in the operation of its retail cookie business, and any
related carts and kiosks, located at the Crossroads Mall, Oklahoma
City, Oklahoma (the "Store") as follows (such assets and properties
being herein called, collectively, the "Acquired Assets"): (i) all
leasehold rights, interests, improvements, fixtures and signage,
including without limitation those governed by the lease for the Store
which at the Closing shall be assigned by the Seller to the Buyer (or
its designated affiliates) and assumed by the Buyer; (ii) all tangible
personal property, such as machinery, equipment, supplies, inventories
(unless designated by the Buyer on or before the Closing as an Excluded
Asset), furniture and tools; (iii) all agreements, contracts and
instruments (but excluding the Franchise Agreement, dated April 17,
1992, between the Seller and Great American Cookie Company, Inc.
("Franchisor"), and any related license, development and guarantee
agreements, as amended (collectively, the "Franchise Agreements")) that
are assumed in writing by the Buyer at the Closing; (iv) all customer
and vendor lists; (v) all recipes, techniques, processes, methods of
production and commercialization, training methods and know-how owned
by the Seller; (vi) store change funds in the aggregate amount of
$251.00 per Store (the "Store Cash"); (vii) deposits made in connection
with lease, utility service and other similar agreements; (viii)
rebates and prepaid expenses; (ix) all inventory of batter and other
ingredients, paper wares and other items on hand or on order and all
cookies, other baked goods, completed goods and work in process
(collectively, the "Inventory"). The Acquired Assets shall be
transferred and conveyed to the Buyer at the Closing, free and clear of
all Liens (as defined below), pursuant to a bill of sale (the "Bill of
Sale") substantially in the form of Exhibit A.
<PAGE>
(b) Excluded Assets. The Acquired Assets shall include only
those assets of Seller specifically described in Section 1(a) above.
Notwithstanding anything to the contrary expressed or implied herein,
the Acquired Assets shall not include the following assets of the
Seller: (i) all cash on hand or on deposit, whether at a Store or in
bank accounts, other than the Store Cash; (ii) all rights and claims of
the Seller under the Franchise Agreements; (iii) all rights and claims
of the Seller with respect to the Excluded Liabilities (defined below);
(iv) the Seller's rights under this Agreement; (v) all of the Seller's
corporate records, books, ledgers, books of account, tax returns and
information relating thereto, files, documents, correspondence; and
(vi) any other assets of the Seller not directly used in the conduct of
the Seller's retail cookie business at the Store. The assets of the
Seller that are not included within the Acquired Assets are herein
referred to as the "Excluded Assets."
(c) Assumed Liabilities. On the terms and subject to the
conditions of this Agreement, the Buyer agrees to assume, at and
effective from the Closing, the Assumed Liabilities. The term "Assumed
Liabilities" means, collectively, the following liabilities and
obligations of the Seller: (i) all obligations under the agreements,
contracts, leases, licenses, and other arrangements referred to in the
description of Acquired Assets either (A) to furnish goods, services
and other non-cash benefits to another party after Closing, or (B) to
pay for goods, services and other non-cash benefits that another party
will furnish to the Acquired Business after Closing; and (ii) all other
liabilities of the Seller assumed in writing and listed on Schedule
1(c)(ii).
(d) Excluded Liabilities. The term "Excluded Liabilities"
means any liability or obligation of the Seller that is not an Assumed
Liability.
(e) Purchase Price. The purchase price for the Acquired Assets
(the "Purchase Price") shall be the sum of (i) Eighty-Two Thousand
Dollars ($82,000.00), plus (ii) Two Hundred Fifty-One Dollars ($251.00)
representing the amount of the "Store Cash", plus (iii) the value of
the Inventory, determined as provided in Section 1(f) below, plus (iv)
the aggregate amount of all deposits and prepaid expenses that are
included in the Acquired Assets, determined as of the close of business
as of the day immediately preceding the date on which the Closing shall
occur.
(f) Determination of Inventory Value. Immediately following
the close of business on the day preceding the date on which the
Closing is to occur, the Buyer and the Seller shall jointly count and
value the Inventory. The Inventory shall be valued at Seller's cost
thereof.
<PAGE>
(g) Proration. All utility charges, rental charges, Taxes, and
other like items assessed or payable with respect to any of the
Acquired Assets for the period in which the Closing occurs shall be
prorated as of the date of Closing between the Buyer and the Seller.
The parties shall use their commercially reasonable best efforts to
determine the amount of any such prorated items as of the Closing and
shall, to the extent of information available at the time of Closing,
prorate such items between them as herein provided. To the extent
information relating to such prorated items is not available at the
time of Closing, the parties shall, as soon as practical after the
Closing, examine all relevant books and records in order to make the
determination of the apportionments of such prorated items as herein
provided. Payment of any such items which are not apportioned and
prorated at the Closing shall be made to the appropriate party by check
within thirty (30) days after such determination. Proration of ad
valorem taxes (whether assessed against real property interests or
personal property) shall be determined based upon previous year's
taxes.
(h) Certain Consents. To the extent that the Seller's rights
under any agreement, contract, commitment, lease, permit, real property
lease or other Acquired Asset to be assigned to the Buyer hereunder may
not be assigned without the consent of another person which has not
been obtained prior to the Closing, and which is important to the
ownership, use or disposition by the Buyer of an Acquired Asset, this
Agreement shall not constitute an agreement to assign the same if an
attempted assignment would constitute a breach thereof or be unlawful,
and the Seller, at the Buyer's expense, shall use its commercially
reasonable efforts to obtain any such required consent(s) as promptly
as possible. If any such consent shall not be obtained or if any
attempted assignment would be ineffective or would impair the Buyer's
rights under the Acquired Asset in question so that the Buyer would not
in effect acquire the benefit of all such rights, the Seller, to the
maximum extent permitted by law and the specific Acquired Asset, and at
the Buyer's expense, shall act after the Closing as the Buyer's agent
in order to obtain for the Buyer the benefits thereunder.
<PAGE>
(i) Further Assurances. The Seller from time to time after the
Closing, at the Buyer's request and expense, will execute, acknowledge,
and deliver to the Buyer such other instruments of conveyance and
transfer and will take such other actions and execute and deliver such
other documents, certifications, and further assurances as the Buyer
may reasonably require in order to vest more effectively in the Buyer,
or to put the Buyer more fully in possession of, any of the Acquired
Assets, or to better enable the Buyer to complete, perform, or
discharge any of the Assumed Liabilities. Each of the parties hereto
will cooperate with the other and execute and deliver to the other
parties hereto such other instruments and documents and take such other
actions as may be reasonably requested from time to time by any other
party hereto as necessary to carry out, evidence, and confirm the
intended purposes of this Agreement.
(j) Bulk Sales. The parties intend and agree that the purchase
and sale of the Acquired Assets is excluded from the requirements of
so-called "Uniform Commercial Code - Bulk Transfers" laws (the "Bulk
Sales Laws"). However, to the extent that the Bulk Sales Laws apply,
the parties hereby waive any compliance therewith. In consideration of
the Buyer's agreement to waive any such compliance:
(i) the Seller shall furnish to the Buyer before the
Closing a list, certified by a financial officer of the Seller
having knowledge thereof, setting forth the Seller's accounts
payable (and pay-off amounts therefor) as of the Closing
(including, without limitation, all accounts with and
liabilities to any persons that may have a remedy under the
Bulk Sales Laws, if applicable, with respect to the
transactions contemplated by this Agreement (collectively, the
"Vendor Accounts")); and
(ii) the Seller hereby agrees that, each of the
Vendor Accounts shall be paid in full at the Closing from the
Purchase Price, unless (A) the Seller has a good faith dispute
with respect to any Vendor Accounts, in which case a portion
of the Purchase Price sufficient to fully pay each of the
disputed Vendor Accounts will be withheld at the Closing and
deposited into and thereafter disbursed from an escrow
administered by an independent escrow agent established
pursuant to mutually agreed instructions of the Buyer and the
Seller; or (B) the payoff amount cannot be ascertained or
verified by the Closing Date, in which case the amount
reasonably estimated by the Buyer and the Seller that is
necessary to fully pay all amounts accrued through the Closing
with respect to any such Vendor Accounts shall be withheld
from the Purchase Price and deposited into and disbursed from
an escrow established in the manner specified in the preceding
clause (A) of this Section 1(f)(ii).
<PAGE>
2. Closing; Transactions to be Effected.
(a) Closing. The closing (the "Closing") of the purchase and
sale of the Acquired Assets and the Buyer's assumption of the Assumed
Liabilities shall be held at the offices of Alston & Bird, in Atlanta,
Georgia, at a time and date established by agreement of the parties
within ten (10) business days after all of the conditions to the
Closing set forth in Section 3 below are satisfied or waived. The date
on which the Closing shall occur is hereinafter referred to as the
"Closing Date".
(b) Transactions to be Effected. At the Closing, on the terms
and subject to the conditions of this Agreement:
(i) the Seller shall deliver to the Buyer an
appropriately executed and authenticated Bill of Sale and such
other instruments of sale, assignment, transfer and conveyance
to the Buyer of the Acquired Assets as the Buyer or its
counsel may reasonably request, such instruments to be
reasonably satisfactory in form to the Buyer and its counsel;
(ii) the Buyer shall deliver to the Seller the
Purchase Price by wire transfer to a bank account which shall
be designated in writing by the Seller at least two business
days prior to the Closing Date; and
(iii) the Buyer shall use its commercially reasonable
best efforts to cause the Franchisor to terminate the
Franchise Agreements as of the Closing and to release the
Seller from any and all obligations thereunder (other than the
payment of franchisee fees payable thereunder for any periods
ending on or prior to the date of Closing). The Agreement
pursuant to which such Franchise Agreements are terminated and
such obligations of the Seller thereunder are released shall
be in form and substance reasonably satisfactory to the Seller
and its counsel. The Seller agrees to pay to the Franchisor at
the time of Closing all franchise fees payable under or with
respect to such Franchise Agreements for all periods ending on
or prior to the date of Closing.
<PAGE>
3. Conditions to Closing.
(a) Buyer's Obligation. The obligation of the Buyer to
purchase the Acquired Assets is subject to the satisfaction (or
waiver by the Buyer) as of the Closing of the following
conditions:
(i) The representations and warranties of the Seller
made in this Agreement shall be true and correct as of the
date hereof and on and as of the Closing, as though made on
and as of the Closing Date, and the Seller shall have
performed or complied in all material respects with all
obligations and covenants required by this Agreement to be
performed or complied with by the Seller by the time of the
Closing; and the Seller shall have delivered to the Buyer a
certificate dated the Closing Date, signed by an authorized
officer or representative of the Seller, confirming the
foregoing;
(ii) No injunction or order of any court or
administrative agency of competent jurisdiction shall be
threatened or in effect, and no statute, rule or regulation of
any governmental authority of competent jurisdiction shall
have been promulgated or enacted, as of the Closing which
restrains, prohibits or adversely affects the purchase and
sale of the Acquired Assets; and
(iii) The Buyer shall have completed the acquisition
of all of the stock of Cookies USA, and shall have completed
its senior notes offering in the current anticipated amount of
$40,000,000.
(b) Seller's Obligation. The obligation of the Seller to sell,
assign, transfer and deliver the Acquired Assets to the Buyer is
subject to the satisfaction or waiver as of the Closing of the
following conditions:
<PAGE>
(i) The representations and warranties of the Buyer
made in this Agreement shall be true and correct as of the
date hereof and on and as of the Closing, as though made on
and as of the Closing Date, and the Buyer shall have performed
or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or
complied with by the Buyer by the time of the Closing; and the
Buyer shall have delivered to the Seller a certificate dated
the Closing Date and signed by an authorized officer of the
Buyer confirming the foregoing;
(ii) The conditions contemplated by Section 3(a)(ii)
shall have been satisfied; and
(iii) The Franchise Agreements shall have been
terminated as of the Closing and the Seller shall have been
released from all liability thereunder (other than the payment
of franchise fees accrued and unpaid to the date of the
Closing), and the Seller shall have received a document
evidencing such termination and release in form and substance
reasonably satisfactory to the Seller and its counsel.
4. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Buyer that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the disclosure schedule delivered by the
Seller to the Buyer on the date hereof (the "Disclosure Schedule").
(a) Organization and Standing of the Seller. The Seller is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation or incorporation. All
acts and other proceedings required to be taken by the Seller to
authorize the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and properly taken.
(b) Title to Acquired Assets. Except as set forth in Schedule
4(b), the Seller has good and marketable title to the Acquired Assets,
free and clear of all mortgages, liens, claims, security interests,
pledges, restrictions, charges or encumbrances of any nature whatsoever
(collectively, "Liens"). At the Closing, the Buyer shall acquire the
Acquired Assets free and clear of all Liens.
<PAGE>
(c) Litigation. Schedule 4(c) sets forth a list of all
lawsuits, claims, proceedings or investigations pending, or, to the
knowledge of the Seller, threatened, as of the date of this Agreement,
against or affecting any of the Acquired Assets.
5. Representations and Warranties of the Buyer. The Buyer hereby
represents and warrants to the Seller as follows:
(a) Authority. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. The Buyer has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby and thereby. All corporate acts and other
proceedings required to be taken by the Buyer to authorize the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby and thereby have
been duly and properly taken.
(b) Actions and Proceedings, etc. There are no actions, suits,
claims or proceedings pending or, to the best knowledge of the Buyer,
threatened against the Buyer, which are likely to have a material
adverse effect on the ability of the Buyer to consummate the
transactions contemplated hereby.
. 6. Payment of Taxes and Liabilities
(a) Taxes.
(i) The Seller shall be liable for and promptly pay
Taxes applicable to any of the Acquired Assets or the business
conducted by the Seller with the Acquired Assets, in each case
attributable to taxable years or periods (including partial
periods) ending at the time of or prior to the Closing. The
Buyer shall be liable for and shall pay all Taxes applicable
to the Acquired Assets or the business conducted by the Buyer
with the Acquired Assets that are attributable to taxable
years or periods (including partial periods) beginning
immediately after the Closing. For purposes of this Agreement,
"Taxes" shall mean federal, state, local or foreign income,
gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or
add-on minimum, ad valorem, transfer or excise tax, or any
other tax, customs, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any governmental authority.
<PAGE>
(ii) Notwithstanding paragraph (i), any sales Tax,
use Tax, property transfer or gains Tax, statutory transferee
liabilities arising from the purchase of the Acquired Assets,
documentary stamp Tax or similar Tax attributable to the sale
or transfer of the Acquired Assets or the business conducted
by the Seller with the Acquired Assets shall be paid by the
Seller.
(iii) The Seller or the Buyer, as the case may be,
shall provide prompt reimbursement for any Tax paid by one
party, all or a portion of which is the responsibility of the
other party in accordance with the terms of this Section 6(a).
Within a reasonable time prior to the payment of any such Tax,
the party paying such Tax shall give notice to the other party
of the Tax payable and the portion which is the liability of
each such party or parties, although failure to do so will not
relieve such party or parties from its liability hereunder
except to the extent such party is materially adversely
affected thereby.
(b) Other Liabilities.
(i) The Seller shall be liable for and shall pay all
Excluded Liabilities, Vendor Accounts and Bulk Sales
Liabilities.
(ii) The Buyer shall be liable for and shall pay all
Assumed Liabilities.
7. Employment of Employees. On the date of Closing, the Buyer shall
offer employment to substantially all of the salaried and non-salaried employees
of the Seller who are employed in the operation of the Store. The employment
offered by the Buyer shall be "at will," and the Buyer shall be under no
obligation to continue such employment following the date of Closing. The Seller
shall terminate the employment of all of its salaried and non-salaried employees
who are employed in the operation of the Store as of the close of business on
the date of Closing, and the Seller shall be responsible for all wages,
salaries, and other benefits, if any, due and owing to such Employees for all
periods ending on or prior to the date of Closing. Additionally, the Buyer shall
cause all Store managers who become employed by the Buyer to be covered,
commencing on the first day of such employment, under the Buyer's health and
medical welfare and benefit plans without any waiting period, with a waiver of
pre-existing conditions, and otherwise on the same terms as such insurance
coverages are provided generally to the employees of the Buyer.
<PAGE>
8. Assignment. This Agreement and the rights and obligations hereunder
shall not be assignable or transferable by the Buyer or the Seller, other than
to an affiliate of either, without the prior written consent of the other party
hereto.
9. No Third-Party Beneficiaries. Except as provided for released
parties in Section 22, this Agreement is for the sole benefit of the parties
hereto and their permitted assigns and nothing herein expressed or implied shall
give or be construed to give to any person or entity, other than the parties
hereto and such assigns, any legal or equitable rights hereunder.
10. Expenses. Whether or not the transactions contemplated hereby are
consummated, except as otherwise expressly provided in this Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
11. Amendments; Waiver. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by all of the
parties. No waiver by any party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
12. Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered by hand or sent
prepaid telex, cable or telecopy, or sent, postage prepaid, by registered,
certified or express mail, or reputable overnight courier service and shall be
deemed given when so delivered by hand, telexed, cabled or telecopied, or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows:
(i) if to the Seller:
Mr. Arthur S. Karp
7902 Sanderling Road
Sarasota, FL 34242
Telecopy: (941) 346-3049
with a copy to:
Alston & Bird
1 Atlanta Center
1201 West Peachtree Street
Atlanta, GA 30309-3424
Attn: Sidney J. Nurkin
Telecopy: (404) 881-7777
(ii) if to the Buyer:
Mrs. Fields' Original Cookies
2855 E. Cottonwood Parkway, Suite 400
Salt Lake City, Utah 84121
Attention: Legal Department
Telecopy: (801) 736-5945
with a copy to:
Jones, Waldo, Holbrook & McDonough, P.C.
170 South Main Street, Suite 1500
Salt Lake City, Utah 84101
Attention: Glen D. Watkins
Telecopy: (801) 328-0537
<PAGE>
13. Interpretation. The headings contained in this Agreement, in any
exhibit or Schedule hereto and in the table of contents to this Agreement, are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.
15. Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, representations and understandings,
written or oral, relating to such subject matter. The exhibits, annexes and
Schedules identified in this Agreement are hereby incorporated by reference.
16. Fees. Each party hereto hereby agrees, represents and warrants that
no person has acted in connection with this Agreement or the transactions
contemplated hereby as a broker or finder and that no person is entitled to any
brokerage fee, finder's fee or commission with respect thereto. The parties
further agree to hold the other party harmless from any damages, claims or
expenses asserted against such party as a result of any person claiming a
commission or finder's fee for the transactions contemplated herein.
17. Severability. If any provision of this Agreement or the application
of any such provision to any person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.
18. Attorney's Fees. Should any litigation be commenced with respect to
any matters governed by this Agreement, the party prevailing shall be entitled,
in addition to such other relief as may be granted, to a reasonable sum for such
party's attorneys' fees and expenses determined by the court in such litigation.
19. [Intentionally Omitted].
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Georgia applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
<PAGE>
21. Remedies. Each of the parties acknowledges and agrees that each
other party would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties agrees that each other
party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof, having jurisdiction over the parties and the
matter, in addition to any other remedy to which it may be entitled, at law or
in equity.
[Intentionally Left Blank]
<PAGE>
22. Release of the Seller. The Buyer, and its successors and assigns,
in consideration of the benefits afforded to it in consequence of the execution
of this Agreement, does hereby release and waive, irrevocably, any and all
rights, claims, causes of action, of every kind and nature, whether or not known
or anticipated or asserted or unasserted, that they or any of them has or may
have, directly or indirectly, against the Seller and, as applicable, its
partners, officers, agents and directors (said partners, officers, agents and
directors being intended beneficiaries of this provision), but excluding rights,
claims and causes of action arising out of or in relation to the breach or
inaccuracy of any representation or warranty made by the Seller in this
Agreement or the breach of any agreement or undertaking of the Seller set forth
in the Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
SELLER: BUYER:
CROSSROADS COOKIES, INC. MRS. FIELDS' ORIGINAL COOKIES, INC.
By:/s/Arthur S. Karp By:/s/Michael R. Ward
Its:President Its:VP
EXHIBIT 2.6
ASSET PURCHASE AGREEMENT
Dated as of July 29, 1998
between
MRS. FIELDS' ORIGINAL COOKIES, INC.
as Buyer,
and
HOT BARTON AND NORTHPARK COOKIES, INC.
as Seller
<PAGE>
TABLE OF CONTENTS
Page
1. Purchase, Sale and Assumption....................................... 1
2. Closing; Transactions to be Effected................................ 4
3. Conditions to Closing............................................... 5
4. Representations and Warranties of the Seller........................ 6
5. Representations and Warranties of the Buyer......................... 7
6. Payment of Taxes and Liabilities.................................... 7
7. Employment of Employees............................................. 8
8. Assignment.......................................................... 8
9. No Third-Party Beneficiaries........................................ 9
10. Expenses............................................................ 9
11. Amendments; Waiver.................................................. 9
12. Notices............................................................. 9
13. Interpretation...................................................... 10
14. Counterparts........................................................ 10
15. Entire Agreement.................................................... 10
16. Fees................................................................ 10
17. Severability........................................................ 10
18. Attorney's Fees..................................................... 11
19. [Intentionally Omitted]............................................. 11
20. Governing Law....................................................... 11
21. Remedies............................................................ 11
22. Release of the Seller............................................... 12
Exhibits:
A -........Bill of Sale
Disclosure Schedules:
?1(c)(ii).........Assumed Liabilities
?4(b) .........Title to Acquired Assets
?4(c) .........Litigation
<PAGE>
ASSET PURCHASE AGREEMENT
MRS. FIELDS' ORIGINAL COOKIES, INC.
ASSET PURCHASE AGREEMENT ("Agreement"), dated as of July 29, 1998, by
and between MRS. FIELDS' ORIGINAL COOKIES, INC., a Delaware corporation
("Buyer"), and HOT BARTON AND NORTHPARK COOKIES, INC., a Georgia corporation
("Seller"); each a "party" in the singular and "parties" in the plural.
A. The Seller is a franchisee of Great American Cookie Company, Inc., a
Delaware corporation ("Franchisor").
B. The parties desire that the Buyer purchase from the Seller, and that the
Seller sell to the Buyer, the Acquired Assets (defined below), and that the
Buyer assume the Assumed Liabilities (defined below), upon the terms and subject
to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto hereby agree as follows:
1. Purchase, Sale and Assumption.
(a) Purchase and Sale. On the terms and subject to the
conditions of this Agreement, the Seller agrees to sell, transfer,
assign and deliver to the Buyer, and the Buyer agrees to accept and
purchase from the Seller, at the Closing (defined below), free and
clear of Liens (defined below), the assets of Seller used and employed
by the Seller in the operation of its retail cookie business, and any
related carts and kiosks, located at Menlo Park Mall, Edison Park, New
Jersey (the "Store") as follows (such assets and properties being
herein called, collectively, the "Acquired Assets"): (i) all leasehold
rights, interests, improvements, fixtures and signage, including
without limitation those governed by the lease for the Store which at
the Closing shall be assigned by the Seller to the Buyer (or its
designated affiliates) and assumed by the Buyer; (ii) all tangible
personal property, such as machinery, equipment, supplies, inventories
(unless designated by the Buyer on or before the Closing as an Excluded
Asset), furniture and tools; (iii) all agreements, contracts and
instruments (but excluding the Franchise Agreement, dated September 6,
1991, between the Seller and Great American Cookie Company, Inc.
("Franchisor"), and any related license, development and guarantee
agreements, as amended (collectively, the "Franchise Agreements")) that
are assumed in writing by the Buyer at the Closing; (iv) all customer
and vendor lists; (v) all recipes, techniques, processes, methods of
production and commercialization, training methods and know-how owned
by the Seller; (vi) store change funds in the aggregate amount of
$251.00 per Store (the "Store Cash"); (vii) deposits made in connection
with lease, utility service and other similar agreements; (viii)
rebates and prepaid expenses; (ix) all inventory of batter and other
ingredients, paper wares and other items on hand or on order and all
cookies, other baked goods, completed goods and work in process
(collectively, the "Inventory"). The Acquired Assets shall be
transferred and conveyed to the Buyer at the Closing, free and clear of
all Liens (as defined below), pursuant to a bill of sale (the "Bill of
Sale") substantially in the form of Exhibit A.
<PAGE>
(b) Excluded Assets. The Acquired Assets shall include only
those assets of Seller specifically described in Section 1(a) above.
Notwithstanding anything to the contrary expressed or implied herein,
the Acquired Assets shall not include the following assets of the
Seller: (i) all cash on hand or on deposit, whether at a Store or in
bank accounts, other than the Store Cash; (ii) all rights and claims of
the Seller under the Franchise Agreements; (iii) all rights and claims
of the Seller with respect to the Excluded Liabilities (defined below);
(iv) the Seller's rights under this Agreement; (v) all of the Seller's
corporate records, books, ledgers, books of account, tax returns and
information relating thereto, files, documents, correspondence; and
(vi) any other assets of the Seller not directly used in the conduct of
the Seller's retail cookie business at the Store. The assets of the
Seller that are not included within the Acquired Assets are herein
referred to as the "Excluded Assets."
(c) Assumed Liabilities. On the terms and subject to the
conditions of this Agreement, the Buyer agrees to assume, at and
effective from the Closing, the Assumed Liabilities. The term "Assumed
Liabilities" means, collectively, the following liabilities and
obligations of the Seller: (i) all obligations under the agreements,
contracts, leases, licenses, and other arrangements referred to in the
description of Acquired Assets either (A) to furnish goods, services
and other non-cash benefits to another party after Closing, or (B) to
pay for goods, services and other non-cash benefits that another party
will furnish to the Acquired Business after Closing; and (ii) all other
liabilities of the Seller assumed in writing and listed on Schedule
1(c)(ii).
(d) Excluded Liabilities. The term "Excluded Liabilities"
means any liability or obligation of the Seller that is not an Assumed
Liability.
<PAGE>
(e) Purchase Price. The purchase price for the Acquired Assets
(the "Purchase Price") shall be the sum of (i) One Hundred Thirty-Six
Thousand Dollars ($136,000.00), plus (ii) Two Hundred Fifty-One Dollars
($251.00) representing the amount of the "Store Cash", plus (iii) the
value of the Inventory, determined as provided in Section 1(f) below,
plus (iv) the aggregate amount of all deposits and prepaid expenses
that are included in the Acquired Assets, determined as of the close of
business as of the day immediately preceding the date on which the
Closing shall occur.
(f) Determination of Inventory Value. Immediately following
the close of business on the day preceding the date on which the
Closing is to occur, the Buyer and the Seller shall jointly count and
value the Inventory. The Inventory shall be valued at Seller's cost
thereof.
(g) Proration. All utility charges, rental charges, Taxes, and
other like items assessed or payable with respect to any of the
Acquired Assets for the period in which the Closing occurs shall be
prorated as of the date of Closing between the Buyer and the Seller.
The parties shall use their commercially reasonable best efforts to
determine the amount of any such prorated items as of the Closing and
shall, to the extent of information available at the time of Closing,
prorate such items between them as herein provided. To the extent
information relating to such prorated items is not available at the
time of Closing, the parties shall, as soon as practical after the
Closing, examine all relevant books and records in order to make the
determination of the apportionments of such prorated items as herein
provided. Payment of any such items which are not apportioned and
prorated at the Closing shall be made to the appropriate party by check
within thirty (30) days after such determination. Proration of ad
valorem taxes (whether assessed against real property interests or
personal property) shall be determined based upon previous year's
taxes.
(h) Certain Consents. To the extent that the Seller's rights
under any agreement, contract, commitment, lease, permit, real property
lease or other Acquired Asset to be assigned to the Buyer hereunder may
not be assigned without the consent of another person which has not
been obtained prior to the Closing, and which is important to the
ownership, use or disposition by the Buyer of an Acquired Asset, this
Agreement shall not constitute an agreement to assign the same if an
attempted assignment would constitute a breach thereof or be unlawful,
and the Seller, at the Buyer's expense, shall use its commercially
reasonable efforts to obtain any such required consent(s) as promptly
as possible. If any such consent shall not be obtained or if any
attempted assignment would be ineffective or would impair the Buyer's
rights under the Acquired Asset in question so that the Buyer would not
in effect acquire the benefit of all such rights, the Seller, to the
maximum extent permitted by law and the specific Acquired Asset, and at
the Buyer's expense, shall act after the Closing as the Buyer's agent
in order to obtain for the Buyer the benefits thereunder.
<PAGE>
(i) Further Assurances. The Seller from time to time after the
Closing, at the Buyer's request and expense, will execute, acknowledge,
and deliver to the Buyer such other instruments of conveyance and
transfer and will take such other actions and execute and deliver such
other documents, certifications, and further assurances as the Buyer
may reasonably require in order to vest more effectively in the Buyer,
or to put the Buyer more fully in possession of, any of the Acquired
Assets, or to better enable the Buyer to complete, perform, or
discharge any of the Assumed Liabilities. Each of the parties hereto
will cooperate with the other and execute and deliver to the other
parties hereto such other instruments and documents and take such other
actions as may be reasonably requested from time to time by any other
party hereto as necessary to carry out, evidence, and confirm the
intended purposes of this Agreement.
(j) Bulk Sales. The parties intend and agree that the purchase
and sale of the Acquired Assets is excluded from the requirements of
so-called "Uniform Commercial Code - Bulk Transfers" laws (the "Bulk
Sales Laws"). However, to the extent that the Bulk Sales Laws apply,
the parties hereby waive any compliance therewith. In consideration of
the Buyer's agreement to waive any such compliance:
(i) the Seller shall furnish to the Buyer before the
Closing a list, certified by a financial officer of the Seller
having knowledge thereof, setting forth the Seller's accounts
payable (and pay-off amounts therefor) as of the Closing
(including, without limitation, all accounts with and
liabilities to any persons that may have a remedy under the
Bulk Sales Laws, if applicable, with respect to the
transactions contemplated by this Agreement (collectively, the
"Vendor Accounts")); and
(ii) the Seller hereby agrees that, each of the
Vendor Accounts shall be paid in full at the Closing from the
Purchase Price, unless (A) the Seller has a good faith dispute
with respect to any Vendor Accounts, in which case a portion
of the Purchase Price sufficient to fully pay each of the
disputed Vendor Accounts will be withheld at the Closing and
deposited into and thereafter disbursed from an escrow
administered by an independent escrow agent established
pursuant to mutually agreed instructions of the Buyer and the
Seller; or (B) the payoff amount cannot be ascertained or
verified by the Closing Date, in which case the amount
reasonably estimated by the Buyer and the Seller that is
necessary to fully pay all amounts accrued through the Closing
with respect to any such Vendor Accounts shall be withheld
from the Purchase Price and deposited into and disbursed from
an escrow established in the manner specified in the preceding
clause (A) of this Section 1(f)(ii).
<PAGE>
2. Closing; Transactions to be Effected.
(a) Closing. The closing (the "Closing") of the purchase and
sale of the Acquired Assets and the Buyer's assumption of the Assumed
Liabilities shall be held at the offices of Alston & Bird, in Atlanta,
Georgia, at a time and date established by agreement of the parties
within ten (10) business days after all of the conditions to the
Closing set forth in Section 3 below are satisfied or waived. The date
on which the Closing shall occur is hereinafter referred to as the
"Closing Date".
(b) Transactions to be Effected. At the Closing, on the terms
and subject to the conditions of this Agreement:
(i) the Seller shall deliver to the Buyer an
appropriately executed and authenticated Bill of Sale and such
other instruments of sale, assignment, transfer and conveyance
to the Buyer of the Acquired Assets as the Buyer or its
counsel may reasonably request, such instruments to be
reasonably satisfactory in form to the Buyer and its counsel;
(ii) the Buyer shall deliver to the Seller the
Purchase Price by wire transfer to a bank account which shall
be designated in writing by the Seller at least two business
days prior to the Closing Date; and
(iii) the Buyer shall use its commercially reasonable
best efforts to cause the Franchisor to terminate the
Franchise Agreements as of the Closing and to release the
Seller from any and all obligations thereunder (other than the
payment of franchisee fees payable thereunder for any periods
ending on or prior to the date of Closing). The Agreement
pursuant to which such Franchise Agreements are terminated and
such obligations of the Seller thereunder are released shall
be in form and substance reasonably satisfactory to the Seller
and its counsel. The Seller agrees to pay to the Franchisor at
the time of Closing all franchise fees payable under or with
respect to such Franchise Agreements for all periods ending on
or prior to the date of Closing.
<PAGE>
3. Conditions to Closing.
(a) Buyer's Obligation. The obligation of the Buyer to
purchase the Acquired Assets is subject to the satisfaction (or
waiver by the Buyer) as of the Closing of the following
conditions:
(i) The representations and warranties of the Seller
made in this Agreement shall be true and correct as of the
date hereof and on and as of the Closing, as though made on
and as of the Closing Date, and the Seller shall have
performed or complied in all material respects with all
obligations and covenants required by this Agreement to be
performed or complied with by the Seller by the time of the
Closing; and the Seller shall have delivered to the Buyer a
certificate dated the Closing Date, signed by an authorized
officer or representative of the Seller, confirming the
foregoing;
(ii) No injunction or order of any court or
administrative agency of competent jurisdiction shall be
threatened or in effect, and no statute, rule or regulation of
any governmental authority of competent jurisdiction shall
have been promulgated or enacted, as of the Closing which
restrains, prohibits or adversely affects the purchase and
sale of the Acquired Assets; and
(iii) The Buyer shall have completed the acquisition
of all of the stock of Cookies USA, and shall have completed
its senior notes offering in the current anticipated amount of
$40,000,000.
(b) Seller's Obligation. The obligation of the Seller to sell,
assign, transfer and deliver the Acquired Assets to the Buyer is
subject to the satisfaction or waiver as of the Closing of the
following conditions:
<PAGE>
(i) The representations and warranties of the Buyer
made in this Agreement shall be true and correct as of the
date hereof and on and as of the Closing, as though made on
and as of the Closing Date, and the Buyer shall have performed
or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or
complied with by the Buyer by the time of the Closing; and the
Buyer shall have delivered to the Seller a certificate dated
the Closing Date and signed by an authorized officer of the
Buyer confirming the foregoing;
(ii) The conditions contemplated by Section 3(a)(ii)
shall have been satisfied; and
(iii) The Franchise Agreements shall have been
terminated as of the Closing and the Seller shall have been
released from all liability thereunder (other than the payment
of franchise fees accrued and unpaid to the date of the
Closing), and the Seller shall have received a document
evidencing such termination and release in form and substance
reasonably satisfactory to the Seller and its counsel.
4. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Buyer that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the disclosure schedule delivered by the
Seller to the Buyer on the date hereof (the "Disclosure Schedule").
(a) Organization and Standing of the Seller. The Seller is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation or incorporation. All
acts and other proceedings required to be taken by the Seller to
authorize the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and properly taken.
<PAGE>
(b) Title to Acquired Assets. Except as set forth in Schedule
4(b), the Seller has good and marketable title to the Acquired Assets,
free and clear of all mortgages, liens, claims, security interests,
pledges, restrictions, charges or encumbrances of any nature whatsoever
(collectively, "Liens"). At the Closing, the Buyer shall acquire the
Acquired Assets free and clear of all Liens.
(c) Litigation. Schedule 4(c) sets forth a list of all
lawsuits, claims, proceedings or investigations pending, or, to the
knowledge of the Seller, threatened, as of the date of this Agreement,
against or affecting any of the Acquired Assets.
5. Representations and Warranties of the Buyer. The Buyer hereby
represents and warrants to the Seller as follows:
(a) Authority. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. The Buyer has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby and thereby. All corporate acts and other
proceedings required to be taken by the Buyer to authorize the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby and thereby have
been duly and properly taken.
(b) Actions and Proceedings, etc. There are no actions, suits,
claims or proceedings pending or, to the best knowledge of the Buyer,
threatened against the Buyer, which are likely to have a material
adverse effect on the ability of the Buyer to consummate the
transactions contemplated hereby.
. 6. Payment of Taxes and Liabilities
(a) Taxes.
(i) The Seller shall be liable for and promptly pay
Taxes applicable to any of the Acquired Assets or the business
conducted by the Seller with the Acquired Assets, in each case
attributable to taxable years or periods (including partial
periods) ending at the time of or prior to the Closing. The
Buyer shall be liable for and shall pay all Taxes applicable
to the Acquired Assets or the business conducted by the Buyer
with the Acquired Assets that are attributable to taxable
years or periods (including partial periods) beginning
immediately after the Closing. For purposes of this Agreement,
"Taxes" shall mean federal, state, local or foreign income,
gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or
add-on minimum, ad valorem, transfer or excise tax, or any
other tax, customs, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any governmental authority.
<PAGE>
(ii) Notwithstanding paragraph (i), any sales Tax,
use Tax, property transfer or gains Tax, statutory transferee
liabilities arising from the purchase of the Acquired Assets,
documentary stamp Tax or similar Tax attributable to the sale
or transfer of the Acquired Assets or the business conducted
by the Seller with the Acquired Assets shall be paid by the
Seller.
(iii) The Seller or the Buyer, as the case may be,
shall provide prompt reimbursement for any Tax paid by one
party, all or a portion of which is the responsibility of the
other party in accordance with the terms of this Section 6(a).
Within a reasonable time prior to the payment of any such Tax,
the party paying such Tax shall give notice to the other party
of the Tax payable and the portion which is the liability of
each such party or parties, although failure to do so will not
relieve such party or parties from its liability hereunder
except to the extent such party is materially adversely
affected thereby.
(b) Other Liabilities.
(i) The Seller shall be liable for and shall pay all
Excluded Liabilities, Vendor Accounts and Bulk Sales
Liabilities.
(ii) The Buyer shall be liable for and shall pay all
Assumed Liabilities.
7. Employment of Employees. On the date of Closing, the Buyer shall
offer employment to substantially all of the salaried and non-salaried employees
of the Seller who are employed in the operation of the Store. The employment
offered by the Buyer shall be "at will," and the Buyer shall be under no
obligation to continue such employment following the date of Closing. The Seller
shall terminate the employment of all of its salaried and non-salaried employees
who are employed in the operation of the Store as of the close of business on
the date of Closing, and the Seller shall be responsible for all wages,
salaries, and other benefits, if any, due and owing to such Employees for all
periods ending on or prior to the date of Closing. Additionally, the Buyer shall
cause all Store managers who become employed by the Buyer to be covered,
commencing on the first day of such employment, under the Buyer's health and
medical welfare and benefit plans without any waiting period, with a waiver of
pre-existing conditions, and otherwise on the same terms as such insurance
coverages are provided generally to the employees of the Buyer.
<PAGE>
8. Assignment. This Agreement and the rights and obligations hereunder
shall not be assignable or transferable by the Buyer or the Seller, other than
to an affiliate of either, without the prior written consent of the other party
hereto.
9. No Third-Party Beneficiaries. Except as provided for released
parties in Section 22, this Agreement is for the sole benefit of the parties
hereto and their permitted assigns and nothing herein expressed or implied shall
give or be construed to give to any person or entity, other than the parties
hereto and such assigns, any legal or equitable rights hereunder.
10. Expenses. Whether or not the transactions contemplated hereby are
consummated, except as otherwise expressly provided in this Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
11. Amendments; Waiver. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by all of the
parties. No waiver by any party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
12. Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered by hand or sent
prepaid telex, cable or telecopy, or sent, postage prepaid, by registered,
certified or express mail, or reputable overnight courier service and shall be
deemed given when so delivered by hand, telexed, cabled or telecopied, or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows:
(i) if to the Seller:
Mr. Arthur S. Karp
7902 Sanderling Road
Sarasota, FL 34242
Telecopy: (941) 346-3049
with a copy to:
Alston & Bird
1 Atlanta Center
1201 West Peachtree Street
Atlanta, GA 30309-3424
Attn: Sidney J. Nurkin
Telecopy: (404) 881-7777
(ii) if to the Buyer:
Mrs. Fields' Original Cookies
2855 E. Cottonwood Parkway, Suite 400
Salt Lake City, Utah 84121
Attention: Legal Department
Telecopy: (801) 736-5945
with a copy to:
Jones, Waldo, Holbrook & McDonough, P.C.
170 South Main Street, Suite 1500
Salt Lake City, Utah 84101
Attention: Glen D. Watkins
Telecopy: (801) 328-0537
<PAGE>
13. Interpretation. The headings contained in this Agreement, in any
exhibit or Schedule hereto and in the table of contents to this Agreement, are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.
15. Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, representations and understandings,
written or oral, relating to such subject matter. The exhibits, annexes and
Schedules identified in this Agreement are hereby incorporated by reference.
16. Fees. Each party hereto hereby agrees, represents and warrants that
no person has acted in connection with this Agreement or the transactions
contemplated hereby as a broker or finder and that no person is entitled to any
brokerage fee, finder's fee or commission with respect thereto. The parties
further agree to hold the other party harmless from any damages, claims or
expenses asserted against such party as a result of any person claiming a
commission or finder's fee for the transactions contemplated herein.
17. Severability. If any provision of this Agreement or the application
of any such provision to any person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.
18. Attorney's Fees. Should any litigation be commenced with respect to
any matters governed by this Agreement, the party prevailing shall be entitled,
in addition to such other relief as may be granted, to a reasonable sum for such
party's attorneys' fees and expenses determined by the court in such litigation.
19. [Intentionally Omitted].
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Georgia applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
21. Remedies. Each of the parties acknowledges and agrees that each
other party would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties agrees that each other
party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof, having jurisdiction over the parties and the
matter, in addition to any other remedy to which it may be entitled, at law or
in equity.
[Intentionally Left Blank]
<PAGE>
22. Release of the Seller. The Buyer, and its successors and assigns,
in consideration of the benefits afforded to it in consequence of the execution
of this Agreement, does hereby release and waive, irrevocably, any and all
rights, claims, causes of action, of every kind and nature, whether or not known
or anticipated or asserted or unasserted, that they or any of them has or may
have, directly or indirectly, against the Seller and, as applicable, its
partners, officers, agents and directors (said partners, officers, agents and
directors being intended beneficiaries of this provision), but excluding rights,
claims and causes of action arising out of or in relation to the breach or
inaccuracy of any representation or warranty made by the Seller in this
Agreement or the breach of any agreement or undertaking of the Seller set forth
in the Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
SELLER: BUYER:
HOT BARTON AND NORTHPARK MRS. FIELDS' ORIGINAL COOKIES, INC.
COOKIES, INC.
By:/s/Arthur S. Karp By:/s/Michael R. Ward
Its:President Its:VP
EXHIBIT 2.7
ASSET PURCHASE AGREEMENT
Dated as of July 29, 1998
between
MRS. FIELDS' ORIGINAL COOKIES, INC.
as Buyer,
and
NORTHPARK COOKIES, INC.
as Seller
<PAGE>
TABLE OF CONTENTS
Page
1. Purchase, Sale and Assumption....................................... 1
2. Closing; Transactions to be Effected................................ 4
3. Conditions to Closing............................................... 5
4. Representations and Warranties of the Seller........................ 6
5. Representations and Warranties of the Buyer......................... 7
6. Payment of Taxes and Liabilities.................................... 7
7. Employment of Employees............................................. 8
8. Assignment.......................................................... 9
9. No Third-Party Beneficiaries........................................ 9
10. Expenses............................................................ 9
11. Amendments; Waiver.................................................. 9
12. Notices............................................................. 9
13. Interpretation...................................................... 10
14. Counterparts........................................................ 10
15. Entire Agreement.................................................... 10
16. Fees................................................................ 10
17. Severability........................................................ 11
18. Attorney's Fees..................................................... 11
19. Joint and Several Obligations....................................... 11
20. Governing Law....................................................... 11
21. Remedies............................................................ 11
22. Release of the Seller............................................... 12
Exhibits:
A -........Bill of Sale
Disclosure Schedules:
?1(c)(ii).........Assumed Liabilities
?4(b) .........Title to Acquired Assets
?4(c) .........Litigation
<PAGE>
ASSET PURCHASE AGREEMENT
MRS. FIELDS' ORIGINAL COOKIES, INC.
ASSET PURCHASE AGREEMENT ("Agreement"), dated as of July 29, 1998, by
and between MRS. FIELDS' ORIGINAL COOKIES, INC., a Delaware corporation
("Buyer"), and NORTHPARK COOKIES, INC., an inactive Iowa corporation ("NCI"),
and Hot Barton & Northpark Cookies, Inc., a Georgia corporation ("HBNCI"), the
sole shareholder of and successor in interest to Northpark Cookies, Inc.
(collectively, the "Seller"); each a "party" in the singular and "parties" in
the plural.
A. The Seller is a franchisee of Great American Cookie Company, Inc., a
Delaware corporation ("Franchisor").
B. The parties desire that the Buyer purchase from the Seller, and that the
Seller sell to the Buyer, the Acquired Assets (defined below), and that the
Buyer assume the Assumed Liabilities (defined below), upon the terms and subject
to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto hereby agree as follows:
1. Purchase, Sale and Assumption.
(a) Purchase and Sale. On the terms and subject to the
conditions of this Agreement, the Seller agrees to sell, transfer,
assign and deliver to the Buyer, and the Buyer agrees to accept and
purchase from the Seller, at the Closing (defined below), free and
clear of Liens (defined below), the assets of Seller used and employed
by the Seller in the operation of its retail cookie business, and any
related carts and kiosks, located at Northpark Mall, Davenport, Iowa
(the "Store") as follows (such assets and properties being herein
called, collectively, the "Acquired Assets"): (i) all leasehold rights,
interests, improvements, fixtures and signage, including without
limitation those governed by the lease for the Store which at the
Closing shall be assigned by the Seller to the Buyer (or its designated
affiliates) and assumed by the Buyer; (ii) all tangible personal
property, such as machinery, equipment, supplies, inventories (unless
designated by the Buyer on or before the Closing as an Excluded Asset),
furniture and tools; (iii) all agreements, contracts and instruments
(but excluding the Franchise Agreement, dated August 12, 1981, between
the Seller and Great American Cookie Company, Inc. ("Franchisor"), and
any related license, development and guarantee agreements, as amended
(collectively, the "Franchise Agreements")), that are assumed in
writing by the Buyer at the Closing; (iv) all customer and vendor
lists; (v) all recipes, techniques, processes, methods of production
and commercialization, training methods and know-how owned by the
Seller; (vi) store change funds in the aggregate amount of $251.00 per
Store (the "Store Cash"); (vii) deposits made in connection with lease,
utility service and other similar agreements; (viii) rebates and
prepaid expenses; (ix) all inventory of batter and other ingredients,
paper wares and other items on hand or on order and all cookies, other
baked goods, completed goods and work in process (collectively, the
"Inventory"). The Acquired Assets shall be transferred and conveyed to
the Buyer at the Closing, free and clear of all Liens (as defined
below), pursuant to a bill of sale (the "Bill of Sale") substantially
in the form of Exhibit A.
<PAGE>
(b) Excluded Assets. The Acquired Assets shall include only
those assets of Seller specifically described in Section 1(a) above.
Notwithstanding anything to the contrary expressed or implied herein,
the Acquired Assets shall not include the following assets of the
Seller: (i) all cash on hand or on deposit, whether at a Store or in
bank accounts, other than the Store Cash; (ii) all rights and claims of
the Seller under the Franchise Agreements; (iii) all rights and claims
of the Seller with respect to the Excluded Liabilities (defined below);
(iv) the Seller's rights under this Agreement; (v) all of the Seller's
corporate records, books, ledgers, books of account, tax returns and
information relating thereto, files, documents, correspondence; and
(vi) any other assets of the Seller not directly used in the conduct of
the Seller's retail cookie business at the Store. The assets of the
Seller that are not included within the Acquired Assets are herein
referred to as the "Excluded Assets."
(c) Assumed Liabilities. On the terms and subject to the
conditions of this Agreement, the Buyer agrees to assume, at and
effective from the Closing, the Assumed Liabilities. The term "Assumed
Liabilities" means, collectively, the following liabilities and
obligations of the Seller: (i) all obligations under the agreements,
contracts, leases, licenses, and other arrangements referred to in the
description of Acquired Assets either (A) to furnish goods, services
and other non-cash benefits to another party after Closing, or (B) to
pay for goods, services and other non-cash benefits that another party
will furnish to the Acquired Business after Closing; and (ii) all other
liabilities of the Seller assumed in writing and listed on Schedule
1(c)(ii).
(d) Excluded Liabilities. The term "Excluded Liabilities"
means any liability or obligation of the Seller that is not an Assumed
Liability.
<PAGE>
(e) Purchase Price. The purchase price for the Acquired Assets
(the "Purchase Price") shall be the sum of (i) One Hundred Twenty-One
Thousand Dollars ($121,000.00), plus (ii) Two Hundred Fifty-One Dollars
($251.00) representing the amount of the "Store Cash", plus (iii) the
value of the Inventory, determined as provided in Section 1(f) below,
plus (iv) the aggregate amount of all deposits and prepaid expenses
that are included in the Acquired Assets, determined as of the close of
business as of the day immediately preceding the date on which the
Closing shall occur.
(f) Determination of Inventory Value. Immediately following
the close of business on the day preceding the date on which the
Closing is to occur, the Buyer and the Seller shall jointly count and
value the Inventory. The Inventory shall be valued at Seller's cost
thereof.
(g) Proration. All utility charges, rental charges, Taxes, and
other like items assessed or payable with respect to any of the
Acquired Assets for the period in which the Closing occurs shall be
prorated as of the date of Closing between the Buyer and the Seller.
The parties shall use their commercially reasonable best efforts to
determine the amount of any such prorated items as of the Closing and
shall, to the extent of information available at the time of Closing,
prorate such items between them as herein provided. To the extent
information relating to such prorated items is not available at the
time of Closing, the parties shall, as soon as practical after the
Closing, examine all relevant books and records in order to make the
determination of the apportionments of such prorated items as herein
provided. Payment of any such items which are not apportioned and
prorated at the Closing shall be made to the appropriate party by check
within thirty (30) days after such determination. Proration of ad
valorem taxes (whether assessed against real property interests or
personal property) shall be determined based upon previous year's
taxes.
<PAGE>
(h) Certain Consents. To the extent that the Seller's rights
under any agreement, contract, commitment, lease, permit, real property
lease or other Acquired Asset to be assigned to the Buyer hereunder may
not be assigned without the consent of another person which has not
been obtained prior to the Closing, and which is important to the
ownership, use or disposition by the Buyer of an Acquired Asset, this
Agreement shall not constitute an agreement to assign the same if an
attempted assignment would constitute a breach thereof or be unlawful,
and the Seller, at the Buyer's expense, shall use its commercially
reasonable efforts to obtain any such required consent(s) as promptly
as possible. If any such consent shall not be obtained or if any
attempted assignment would be ineffective or would impair the Buyer's
rights under the Acquired Asset in question so that the Buyer would not
in effect acquire the benefit of all such rights, the Seller, to the
maximum extent permitted by law and the specific Acquired Asset, and at
the Buyer's expense, shall act after the Closing as the Buyer's agent
in order to obtain for the Buyer the benefits thereunder.
(i) Further Assurances. The Seller from time to time after the
Closing, at the Buyer's request and expense, will execute, acknowledge,
and deliver to the Buyer such other instruments of conveyance and
transfer and will take such other actions and execute and deliver such
other documents, certifications, and further assurances as the Buyer
may reasonably require in order to vest more effectively in the Buyer,
or to put the Buyer more fully in possession of, any of the Acquired
Assets, or to better enable the Buyer to complete, perform, or
discharge any of the Assumed Liabilities. Each of the parties hereto
will cooperate with the other and execute and deliver to the other
parties hereto such other instruments and documents and take such other
actions as may be reasonably requested from time to time by any other
party hereto as necessary to carry out, evidence, and confirm the
intended purposes of this Agreement.
(j) Bulk Sales. The parties intend and agree that the purchase
and sale of the Acquired Assets is excluded from the requirements of
so-called "Uniform Commercial Code - Bulk Transfers" laws (the "Bulk
Sales Laws"). However, to the extent that the Bulk Sales Laws apply,
the parties hereby waive any compliance therewith. In consideration of
the Buyer's agreement to waive any such compliance:
<PAGE>
(i) the Seller shall furnish to the Buyer before the
Closing a list, certified by a financial officer of the Seller
having knowledge thereof, setting forth the Seller's accounts
payable (and pay-off amounts therefor) as of the Closing
(including, without limitation, all accounts with and
liabilities to any persons that may have a remedy under the
Bulk Sales Laws, if applicable, with respect to the
transactions contemplated by this Agreement (collectively, the
"Vendor Accounts")); and
(ii) the Seller hereby agrees that, each of the
Vendor Accounts shall be paid in full at the Closing from the
Purchase Price, unless (A) the Seller has a good faith dispute
with respect to any Vendor Accounts, in which case a portion
of the Purchase Price sufficient to fully pay each of the
disputed Vendor Accounts will be withheld at the Closing and
deposited into and thereafter disbursed from an escrow
administered by an independent escrow agent established
pursuant to mutually agreed instructions of the Buyer and the
Seller; or (B) the payoff amount cannot be ascertained or
verified by the Closing Date, in which case the amount
reasonably estimated by the Buyer and the Seller that is
necessary to fully pay all amounts accrued through the Closing
with respect to any such Vendor Accounts shall be withheld
from the Purchase Price and deposited into and disbursed from
an escrow established in the manner specified in the preceding
clause (A) of this Section 1(f)(ii).
<PAGE>
2. Closing; Transactions to be Effected.
(a) Closing. The closing (the "Closing") of the purchase and
sale of the Acquired Assets and the Buyer's assumption of the Assumed
Liabilities shall be held at the offices of Alston & Bird, in Atlanta,
Georgia, at a time and date established by agreement of the parties
within ten (10) business days after all of the conditions to the
Closing set forth in Section 3 below are satisfied or waived. The date
on which the Closing shall occur is hereinafter referred to as the
"Closing Date".
(b) Transactions to be Effected. At the Closing, on the terms
and subject to the conditions of this Agreement:
(i) the Seller shall deliver to the Buyer an
appropriately executed and authenticated Bill of Sale and such
other instruments of sale, assignment, transfer and conveyance
to the Buyer of the Acquired Assets as the Buyer or its
counsel may reasonably request, such instruments to be
reasonably satisfactory in form to the Buyer and its counsel;
(ii) the Buyer shall deliver to the Seller the
Purchase Price by wire transfer to a bank account which shall
be designated in writing by the Seller at least two business
days prior to the Closing Date; and
(iii) the Buyer shall use its commercially reasonable
best efforts to cause the Franchisor to terminate the
Franchise Agreements as of the Closing and to release the
Seller from any and all obligations thereunder (other than the
payment of franchisee fees payable thereunder for any periods
ending on or prior to the date of Closing). The Agreement
pursuant to which such Franchise Agreements are terminated and
such obligations of the Seller thereunder are released shall
be in form and substance reasonably satisfactory to the Seller
and its counsel. The Seller agrees to pay to the Franchisor at
the time of Closing all franchise fees payable under or with
respect to such Franchise Agreements for all periods ending on
or prior to the date of Closing.
<PAGE>
3. Conditions to Closing.
(a) Buyer's Obligation. The obligation of the Buyer to
purchase the Acquired Assets is subject to the satisfaction (or
waiver by the Buyer) as of the Closing of the following
conditions:
(i) The representations and warranties of the Seller
made in this Agreement shall be true and correct as of the
date hereof and on and as of the Closing, as though made on
and as of the Closing Date, and the Seller shall have
performed or complied in all material respects with all
obligations and covenants required by this Agreement to be
performed or complied with by the Seller by the time of the
Closing; and the Seller shall have delivered to the Buyer a
certificate dated the Closing Date, signed by an authorized
officer or representative of the Seller, confirming the
foregoing;
(ii) No injunction or order of any court or
administrative agency of competent jurisdiction shall be
threatened or in effect, and no statute, rule or regulation of
any governmental authority of competent jurisdiction shall
have been promulgated or enacted, as of the Closing which
restrains, prohibits or adversely affects the purchase and
sale of the Acquired Assets; and
(iii) The Buyer shall have completed the acquisition
of all of the stock of Cookies USA, and shall have completed
its senior notes offering in the current anticipated amount of
$40,000,000.
(b) Seller's Obligation. The obligation of the Seller to sell,
assign, transfer and deliver the Acquired Assets to the Buyer is
subject to the satisfaction or waiver as of the Closing of the
following conditions:
(i) The representations and warranties of the Buyer
made in this Agreement shall be true and correct as of the
date hereof and on and as of the Closing, as though made on
and as of the Closing Date, and the Buyer shall have performed
or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or
complied with by the Buyer by the time of the Closing; and the
Buyer shall have delivered to the Seller a certificate dated
the Closing Date and signed by an authorized officer of the
Buyer confirming the foregoing;
<PAGE>
(ii) The conditions contemplated by Section 3(a)(ii)
shall have been satisfied; and
(iii) The Franchise Agreements shall have been
terminated as of the Closing and the Seller shall have been
released from all liability thereunder (other than the payment
of franchise fees accrued and unpaid to the date of the
Closing), and the Seller shall have received a document
evidencing such termination and release in form and substance
reasonably satisfactory to the Seller and its counsel.
4. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Buyer that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the disclosure schedule delivered by the
Seller to the Buyer on the date hereof (the "Disclosure Schedule").
(a) Organization and Standing of the Seller. HBNCI, a Seller,
is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation. NCI, a Seller,
is an inactive Iowa corporation not eligible for a certificate of
existence, and is not in good standing under the laws of Iowa. HBNCI is
the sole shareholder of and the successor in interest to NCI. All acts
and other proceedings required to be taken by the Seller to authorize
the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been duly and
properly taken.
(b) Title to Acquired Assets. Except as set forth in Schedule
4(b), the Seller has good and marketable title to the Acquired Assets,
free and clear of all mortgages, liens, claims, security interests,
pledges, restrictions, charges or encumbrances of any nature whatsoever
(collectively, "Liens"). At the Closing, the Buyer shall acquire the
Acquired Assets free and clear of all Liens.
(c) Litigation. Schedule 4(c) sets forth a list of all
lawsuits, claims, proceedings or investigations pending, or, to the
knowledge of the Seller, threatened, as of the date of this Agreement,
against or affecting any of the Acquired Assets.
<PAGE>
5. Representations and Warranties of the Buyer. The Buyer hereby
represents and warrants to the Seller as follows:
(a) Authority. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. The Buyer has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby and thereby. All corporate acts and other
proceedings required to be taken by the Buyer to authorize the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby and thereby have
been duly and properly taken.
(b) Actions and Proceedings, etc. There are no actions, suits,
claims or proceedings pending or, to the best knowledge of the Buyer,
threatened against the Buyer, which are likely to have a material
adverse effect on the ability of the Buyer to consummate the
transactions contemplated hereby.
. 6. Payment of Taxes and Liabilities
(a) Taxes.
(i) The Seller shall be liable for and promptly pay
Taxes applicable to any of the Acquired Assets or the business
conducted by the Seller with the Acquired Assets, in each case
attributable to taxable years or periods (including partial
periods) ending at the time of or prior to the Closing. The
Buyer shall be liable for and shall pay all Taxes applicable
to the Acquired Assets or the business conducted by the Buyer
with the Acquired Assets that are attributable to taxable
years or periods (including partial periods) beginning
immediately after the Closing. For purposes of this Agreement,
"Taxes" shall mean federal, state, local or foreign income,
gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or
add-on minimum, ad valorem, transfer or excise tax, or any
other tax, customs, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any governmental authority.
<PAGE>
(ii) Notwithstanding paragraph (i), any sales Tax,
use Tax, property transfer or gains Tax, statutory transferee
liabilities arising from the purchase of the Acquired Assets,
documentary stamp Tax or similar Tax attributable to the sale
or transfer of the Acquired Assets or the business conducted
by the Seller with the Acquired Assets shall be paid by the
Seller.
(iii) The Seller or the Buyer, as the case may be,
shall provide prompt reimbursement for any Tax paid by one
party, all or a portion of which is the responsibility of the
other party in accordance with the terms of this Section 6(a).
Within a reasonable time prior to the payment of any such Tax,
the party paying such Tax shall give notice to the other party
of the Tax payable and the portion which is the liability of
each such party or parties, although failure to do so will not
relieve such party or parties from its liability hereunder
except to the extent such party is materially adversely
affected thereby.
(b) Other Liabilities.
(i) The Seller shall be liable for and shall pay all
Excluded Liabilities, Vendor Accounts and Bulk Sales
Liabilities.
(ii) The Buyer shall be liable for and shall pay all
Assumed Liabilities.
7. Employment of Employees. On the date of Closing, the Buyer shall
offer employment to substantially all of the salaried and non-salaried employees
of the Seller who are employed in the operation of the Store. The employment
offered by the Buyer shall be "at will," and the Buyer shall be under no
obligation to continue such employment following the date of Closing. The Seller
shall terminate the employment of all of its salaried and non-salaried employees
who are employed in the operation of the Store as of the close of business on
the date of Closing, and the Seller shall be responsible for all wages,
salaries, and other benefits, if any, due and owing to such Employees for all
periods ending on or prior to the date of Closing. Additionally, the Buyer shall
cause all Store managers who become employed by the Buyer to be covered,
commencing on the first day of such employment, under the Buyer's health and
medical welfare and benefit plans without any waiting period, with a waiver of
pre-existing conditions, and otherwise on the same terms as such insurance
coverages are provided generally to the employees of the Buyer.
<PAGE>
8. Assignment. This Agreement and the rights and obligations hereunder
shall not be assignable or transferable by the Buyer or the Seller, other than
to an affiliate of either, without the prior written consent of the other party
hereto.
9. No Third-Party Beneficiaries. Except as provided for released
parties in Section 22, this Agreement is for the sole benefit of the parties
hereto and their permitted assigns and nothing herein expressed or implied shall
give or be construed to give to any person or entity, other than the parties
hereto and such assigns, any legal or equitable rights hereunder.
10. Expenses. Whether or not the transactions contemplated hereby are
consummated, except as otherwise expressly provided in this Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
11. Amendments; Waiver. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by all of the
parties. No waiver by any party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
<PAGE>
12. Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered by hand or sent
prepaid telex, cable or telecopy, or sent, postage prepaid, by registered,
certified or express mail, or reputable overnight courier service and shall be
deemed given when so delivered by hand, telexed, cabled or telecopied, or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows:
(i) if to the Seller:
Mr. Arthur S. Karp
7902 Sanderling Road
Sarasota, FL 34242
Telecopy: (941) 346-3049
with a copy to:
Alston & Bird
1 Atlanta Center
1201 West Peachtree Street
Atlanta, GA 30309-3424
Attn: Sidney J. Nurkin
Telecopy: (404) 881-7777
(ii) if to the Buyer:
Mrs. Fields' Original Cookies
2855 E. Cottonwood Parkway, Suite 400
Salt Lake City, Utah 84121
Attention: Legal Department
Telecopy: (801) 736-5945
with a copy to:
Jones, Waldo, Holbrook & McDonough, P.C.
170 South Main Street, Suite 1500
Salt Lake City, Utah 84101
Attention: Glen D. Watkins
Telecopy: (801) 328-0537
13. Interpretation. The headings contained in this Agreement, in any
exhibit or Schedule hereto and in the table of contents to this Agreement, are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
<PAGE>
14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.
15. Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, representations and understandings,
written or oral, relating to such subject matter. The exhibits, annexes and
Schedules identified in this Agreement are hereby incorporated by reference.
16. Fees. Each party hereto hereby agrees, represents and warrants that
no person has acted in connection with this Agreement or the transactions
contemplated hereby as a broker or finder and that no person is entitled to any
brokerage fee, finder's fee or commission with respect thereto. The parties
further agree to hold the other party harmless from any damages, claims or
expenses asserted against such party as a result of any person claiming a
commission or finder's fee for the transactions contemplated herein.
17. Severability. If any provision of this Agreement or the application
of any such provision to any person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.
18. Attorney's Fees. Should any litigation be commenced with respect to
any matters governed by this Agreement, the party prevailing shall be entitled,
in addition to such other relief as may be granted, to a reasonable sum for such
party's attorneys' fees and expenses determined by the court in such litigation.
19. Joint and Several Obligations. The representations, warranties,
covenants and undertakings of the Seller under this Agreement and the Bill of
Sale constitute joint and several obligations of NCI and HBNCI.
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Georgia applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
<PAGE>
21. Remedies. Each of the parties acknowledges and agrees that each
other party would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties agrees that each other
party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof, having jurisdiction over the parties and the
matter, in addition to any other remedy to which it may be entitled, at law or
in equity.
[Intentionally Left Blank]
22. Release of the Seller. The Buyer, and its successors and assigns,
in consideration of the benefits afforded to it in consequence of the execution
of this Agreement, does hereby release and waive, irrevocably, any and all
rights, claims, causes of action, of every kind and nature, whether or not known
or anticipated or asserted or unasserted, that they or any of them has or may
have, directly or indirectly, against the Seller and, as applicable, its
partners, officers, agents and directors (said partners, officers, agents and
directors being intended beneficiaries of this provision), but excluding rights,
claims and causes of action arising out of or in relation to the breach or
inaccuracy of any representation or warranty made by the Seller in this
Agreement or the breach of any agreement or undertaking of the Seller set forth
in the Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
SELLER: BUYER:
NORTHPARK COOKIES, INC. MRS. FIELDS' ORIGINAL COOKIES, INC.
By:/s/Arthur S. Karp By:/s/Michael R. Ward
Its: President Its:VP
EXHIBIT 2.8
ASSET PURCHASE AGREEMENT
Dated as of July 29, 1998
between
MRS. FIELDS' ORIGINAL COOKIES, INC.
as Buyer,
and
QUAIL SPRINGS COOKIES, INC.
as Seller
<PAGE>
TABLE OF CONTENTS
Page
1. Purchase, Sale and Assumption....................................... 1
2. Closing; Transactions to be Effected................................ 4
3. Conditions to Closing............................................... 5
4. Representations and Warranties of the Seller........................ 6
5. Representations and Warranties of the Buyer......................... 7
6. Payment of Taxes and Liabilities.................................... 7
7. Employment of Employees............................................. 8
8. Assignment.......................................................... 8
9. No Third-Party Beneficiaries........................................ 9
10. Expenses............................................................ 9
11. Amendments; Waiver.................................................. 9
12. Notices............................................................. 9
13. Interpretation...................................................... 10
14. Counterparts........................................................ 10
15. Entire Agreement.................................................... 10
16. Fees................................................................ 10
17. Severability........................................................ 10
18. Attorney's Fees..................................................... 11
19. [Intentionally Omitted]............................................. 11
20. Governing Law....................................................... 11
21. Remedies............................................................ 11
22. Release of the Seller............................................... 12
Exhibits:
A -........Bill of Sale
Disclosure Schedules:
'1(c)(ii).........Assumed Liabilities
'4(b) .........Title to Acquired Assets
'4(c) .........Litigation
<PAGE>
ASSET PURCHASE AGREEMENT
MRS. FIELDS' ORIGINAL COOKIES, INC.
ASSET PURCHASE AGREEMENT ("Agreement"), dated as of July 29, 1998, by
and between MRS. FIELDS' ORIGINAL COOKIES, INC., a Delaware corporation
("Buyer"), and QUAIL SPRINGS COOKIES, INC., a Georgia corporation ("Seller");
each a "party" in the singular and "parties" in the plural.
A. The Seller is a franchisee of Great American Cookie Company, Inc., a
Delaware corporation ("Franchisor").
B. The parties desire that the Buyer purchase from the Seller, and that the
Seller sell to the Buyer, the Acquired Assets (defined below), and that the
Buyer assume the Assumed Liabilities (defined below), upon the terms and subject
to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto hereby agree as follows:
<PAGE>
1. Purchase, Sale and Assumption.
(a) Purchase and Sale. On the terms and subject to the
conditions of this Agreement, the Seller agrees to sell, transfer,
assign and deliver to the Buyer, and the Buyer agrees to accept and
purchase from the Seller, at the Closing (defined below), free and
clear of Liens (defined below), the assets of Seller used and employed
by the Seller in the operation of its retail cookie business, and any
related carts and kiosks, located at Quail Springs Mall, Oklahoma City,
Oklahoma (the "Store") as follows (such assets and properties being
herein called, collectively, the "Acquired Assets"): (i) all leasehold
rights, interests, improvements, fixtures and signage, including
without limitation those governed by the lease for the Store which at
the Closing shall be assigned by the Seller to the Buyer (or its
designated affiliates) and assumed by the Buyer; (ii) all tangible
personal property, such as machinery, equipment, supplies, inventories
(unless designated by the Buyer on or before the Closing as an Excluded
Asset), furniture and tools; (iii) all agreements, contracts and
instruments (but excluding the Franchise Agreement, dated April 16,
1992, between the Seller and Great American Cookie Company, Inc.
("Franchisor"), and any related license, development and guarantee
agreements, as amended (collectively, the "Franchise Agreements")) that
are assumed in writing by the Buyer at the Closing; (iv) all customer
and vendor lists; (v) all recipes, techniques, processes, methods of
production and commercialization, training methods and know-how owned
by the Seller; (vi) store change funds in the aggregate amount of
$251.00 per Store (the "Store Cash"); (vii) deposits made in connection
with lease, utility service and other similar agreements; (viii)
rebates and prepaid expenses; (ix) all inventory of batter and other
ingredients, paper wares and other items on hand or on order and all
cookies, other baked goods, completed goods and work in process
(collectively, the "Inventory"). The Acquired Assets shall be
transferred and conveyed to the Buyer at the Closing, free and clear of
all Liens (as defined below), pursuant to a bill of sale (the "Bill of
Sale") substantially in the form of Exhibit A.
(b) Excluded Assets. The Acquired Assets shall include only
those assets of Seller specifically described in Section 1(a) above.
Notwithstanding anything to the contrary expressed or implied herein,
the Acquired Assets shall not include the following assets of the
Seller: (i) all cash on hand or on deposit, whether at a Store or in
bank accounts, other than the Store Cash; (ii) all rights and claims of
the Seller under the Franchise Agreements; (iii) all rights and claims
of the Seller with respect to the Excluded Liabilities (defined below);
(iv) the Seller's rights under this Agreement; (v) all of the Seller's
corporate records, books, ledgers, books of account, tax returns and
information relating thereto, files, documents, correspondence; and
(vi) any other assets of the Seller not directly used in the conduct of
the Seller's retail cookie business at the Store. The assets of the
Seller that are not included within the Acquired Assets are herein
referred to as the "Excluded Assets."
<PAGE>
(c) Assumed Liabilities. On the terms and subject to the
conditions of this Agreement, the Buyer agrees to assume, at and
effective from the Closing, the Assumed Liabilities. The term "Assumed
Liabilities" means, collectively, the following liabilities and
obligations of the Seller: (i) all obligations under the agreements,
contracts, leases, licenses, and other arrangements referred to in the
description of Acquired Assets either (A) to furnish goods, services
and other non-cash benefits to another party after Closing, or (B) to
pay for goods, services and other non-cash benefits that another party
will furnish to the Acquired Business after Closing; and (ii) all other
liabilities of the Seller assumed in writing and listed on Schedule
1(c)(ii).
(d) Excluded Liabilities. The term "Excluded Liabilities"
means any liability or obligation of the Seller that is not an Assumed
Liability.
(e) Purchase Price. The purchase price for the Acquired Assets
(the "Purchase Price") shall be the sum of (i) Ninety Thousand Dollars
($90,000.00), plus (ii) Two Hundred Fifty-One Dollars ($251.00)
representing the amount of the "Store Cash", plus (iii) the value of
the Inventory, determined as provided in Section 1(f) below, plus (iv)
the aggregate amount of all deposits and prepaid expenses that are
included in the Acquired Assets, determined as of the close of business
as of the day immediately preceding the date on which the Closing shall
occur.
(f) Determination of Inventory Value. Immediately following
the close of business on the day preceding the date on which the
Closing is to occur, the Buyer and the Seller shall jointly count and
value the Inventory. The Inventory shall be valued at Seller's cost
thereof.
<PAGE>
(g) Proration. All utility charges, rental charges, Taxes, and
other like items assessed or payable with respect to any of the
Acquired Assets for the period in which the Closing occurs shall be
prorated as of the date of Closing between the Buyer and the Seller.
The parties shall use their commercially reasonable best efforts to
determine the amount of any such prorated items as of the Closing and
shall, to the extent of information available at the time of Closing,
prorate such items between them as herein provided. To the extent
information relating to such prorated items is not available at the
time of Closing, the parties shall, as soon as practical after the
Closing, examine all relevant books and records in order to make the
determination of the apportionments of such prorated items as herein
provided. Payment of any such items which are not apportioned and
prorated at the Closing shall be made to the appropriate party by check
within thirty (30) days after such determination. Proration of ad
valorem taxes (whether assessed against real property interests or
personal property) shall be determined based upon previous year's
taxes.
(h) Certain Consents. To the extent that the Seller's rights
under any agreement, contract, commitment, lease, permit, real property
lease or other Acquired Asset to be assigned to the Buyer hereunder may
not be assigned without the consent of another person which has not
been obtained prior to the Closing, and which is important to the
ownership, use or disposition by the Buyer of an Acquired Asset, this
Agreement shall not constitute an agreement to assign the same if an
attempted assignment would constitute a breach thereof or be unlawful,
and the Seller, at the Buyer's expense, shall use its commercially
reasonable efforts to obtain any such required consent(s) as promptly
as possible. If any such consent shall not be obtained or if any
attempted assignment would be ineffective or would impair the Buyer's
rights under the Acquired Asset in question so that the Buyer would not
in effect acquire the benefit of all such rights, the Seller, to the
maximum extent permitted by law and the specific Acquired Asset, and at
the Buyer's expense, shall act after the Closing as the Buyer's agent
in order to obtain for the Buyer the benefits thereunder.
(i) Further Assurances. The Seller from time to time after the
Closing, at the Buyer's request and expense, will execute, acknowledge,
and deliver to the Buyer such other instruments of conveyance and
transfer and will take such other actions and execute and deliver such
other documents, certifications, and further assurances as the Buyer
may reasonably require in order to vest more effectively in the Buyer,
or to put the Buyer more fully in possession of, any of the Acquired
Assets, or to better enable the Buyer to complete, perform, or
discharge any of the Assumed Liabilities. Each of the parties hereto
will cooperate with the other and execute and deliver to the other
parties hereto such other instruments and documents and take such other
actions as may be reasonably requested from time to time by any other
party hereto as necessary to carry out, evidence, and confirm the
intended purposes of this Agreement.
<PAGE>
(j) Bulk Sales. The parties intend and agree that the purchase
and sale of the Acquired Assets is excluded from the requirements of
so-called "Uniform Commercial Code - Bulk Transfers" laws (the "Bulk
Sales Laws"). However, to the extent that the Bulk Sales Laws apply,
the parties hereby waive any compliance therewith. In consideration of
the Buyer's agreement to waive any such compliance:
(i) the Seller shall furnish to the Buyer before the
Closing a list, certified by a financial officer of the Seller
having knowledge thereof, setting forth the Seller's accounts
payable (and pay-off amounts therefor) as of the Closing
(including, without limitation, all accounts with and
liabilities to any persons that may have a remedy under the
Bulk Sales Laws, if applicable, with respect to the
transactions contemplated by this Agreement (collectively, the
"Vendor Accounts")); and
(ii) the Seller hereby agrees that, each of the
Vendor Accounts shall be paid in full at the Closing from the
Purchase Price, unless (A) the Seller has a good faith dispute
with respect to any Vendor Accounts, in which case a portion
of the Purchase Price sufficient to fully pay each of the
disputed Vendor Accounts will be withheld at the Closing and
deposited into and thereafter disbursed from an escrow
administered by an independent escrow agent established
pursuant to mutually agreed instructions of the Buyer and the
Seller; or (B) the payoff amount cannot be ascertained or
verified by the Closing Date, in which case the amount
reasonably estimated by the Buyer and the Seller that is
necessary to fully pay all amounts accrued through the Closing
with respect to any such Vendor Accounts shall be withheld
from the Purchase Price and deposited into and disbursed from
an escrow established in the manner specified in the preceding
clause (A) of this Section 1(f)(ii).
<PAGE>
2. Closing; Transactions to be Effected.
(a) Closing. The closing (the "Closing") of the purchase and
sale of the Acquired Assets and the Buyer's assumption of the Assumed
Liabilities shall be held at the offices of Alston & Bird, in Atlanta,
Georgia, at a time and date established by agreement of the parties
within ten (10) business days after all of the conditions to the
Closing set forth in Section 3 below are satisfied or waived. The date
on which the Closing shall occur is hereinafter referred to as the
"Closing Date".
(b) Transactions to be Effected. At the Closing, on the terms
and subject to the conditions of this Agreement:
(i) the Seller shall deliver to the Buyer an
appropriately executed and authenticated Bill of Sale and such
other instruments of sale, assignment, transfer and conveyance
to the Buyer of the Acquired Assets as the Buyer or its
counsel may reasonably request, such instruments to be
reasonably satisfactory in form to the Buyer and its counsel;
(ii) the Buyer shall deliver to the Seller the
Purchase Price by wire transfer to a bank account which shall
be designated in writing by the Seller at least two business
days prior to the Closing Date; and
(iii) the Buyer shall use its commercially reasonable
best efforts to cause the Franchisor to terminate the
Franchise Agreements as of the Closing and to release the
Seller from any and all obligations thereunder (other than the
payment of franchisee fees payable thereunder for any periods
ending on or prior to the date of Closing). The Agreement
pursuant to which such Franchise Agreements are terminated and
such obligations of the Seller thereunder are released shall
be in form and substance reasonably satisfactory to the Seller
and its counsel. The Seller agrees to pay to the Franchisor at
the time of Closing all franchise fees payable under or with
respect to such Franchise Agreements for all periods ending on
or prior to the date of Closing.
<PAGE>
3. Conditions to Closing.
(a) Buyer's Obligation. The obligation of the Buyer to
purchase the Acquired Assets is subject to the satisfaction (or
waiver by the Buyer) as of the Closing of the following
conditions:
(i) The representations and warranties of the Seller
made in this Agreement shall be true and correct as of the
date hereof and on and as of the Closing, as though made on
and as of the Closing Date, and the Seller shall have
performed or complied in all material respects with all
obligations and covenants required by this Agreement to be
performed or complied with by the Seller by the time of the
Closing; and the Seller shall have delivered to the Buyer a
certificate dated the Closing Date, signed by an authorized
officer or representative of the Seller, confirming the
foregoing;
(ii) No injunction or order of any court or
administrative agency of competent jurisdiction shall be
threatened or in effect, and no statute, rule or regulation of
any governmental authority of competent jurisdiction shall
have been promulgated or enacted, as of the Closing which
restrains, prohibits or adversely affects the purchase and
sale of the Acquired Assets; and
(iii) The Buyer shall have completed the acquisition
of all of the stock of Cookies USA, and shall have completed
its senior notes offering in the current anticipated amount of
$40,000,000.
<PAGE>
(b) Seller's Obligation. The obligation of the Seller to sell,
assign, transfer and deliver the Acquired Assets to the Buyer is
subject to the satisfaction or waiver as of the Closing of the
following conditions:
(i) The representations and warranties of the Buyer
made in this Agreement shall be true and correct as of the
date hereof and on and as of the Closing, as though made on
and as of the Closing Date, and the Buyer shall have performed
or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or
complied with by the Buyer by the time of the Closing; and the
Buyer shall have delivered to the Seller a certificate dated
the Closing Date and signed by an authorized officer of the
Buyer confirming the foregoing;
(ii) The conditions contemplated by Section 3(a)(ii)
shall have been satisfied; and
(iii) The Franchise Agreements shall have been
terminated as of the Closing and the Seller shall have been
released from all liability thereunder (other than the payment
of franchise fees accrued and unpaid to the date of the
Closing), and the Seller shall have received a document
evidencing such termination and release in form and substance
reasonably satisfactory to the Seller and its counsel.
4. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Buyer that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the disclosure schedule delivered by the
Seller to the Buyer on the date hereof (the "Disclosure Schedule").
<PAGE>
(a) Organization and Standing of the Seller. The Seller is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation or incorporation. All
acts and other proceedings required to be taken by the Seller to
authorize the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and properly taken.
(b) Title to Acquired Assets. Except as set forth in Schedule
4(b), the Seller has good and marketable title to the Acquired Assets,
free and clear of all mortgages, liens, claims, security interests,
pledges, restrictions, charges or encumbrances of any nature whatsoever
(collectively, "Liens"). At the Closing, the Buyer shall acquire the
Acquired Assets free and clear of all Liens.
(c) Litigation. Schedule 4(c) sets forth a list of all
lawsuits, claims, proceedings or investigations pending, or, to the
knowledge of the Seller, threatened, as of the date of this Agreement,
against or affecting any of the Acquired Assets.
5. Representations and Warranties of the Buyer. The Buyer hereby
represents and warrants to the Seller as follows:
(a) Authority. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. The Buyer has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby and thereby. All corporate acts and other
proceedings required to be taken by the Buyer to authorize the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby and thereby have
been duly and properly taken.
<PAGE>
(b) Actions and Proceedings, etc. There are no actions, suits,
claims or proceedings pending or, to the best knowledge of the Buyer,
threatened against the Buyer, which are likely to have a material
adverse effect on the ability of the Buyer to consummate the
transactions contemplated hereby.
. 6. Payment of Taxes and Liabilities
(a) Taxes.
(i) The Seller shall be liable for and promptly pay
Taxes applicable to any of the Acquired Assets or the business
conducted by the Seller with the Acquired Assets, in each case
attributable to taxable years or periods (including partial
periods) ending at the time of or prior to the Closing. The
Buyer shall be liable for and shall pay all Taxes applicable
to the Acquired Assets or the business conducted by the Buyer
with the Acquired Assets that are attributable to taxable
years or periods (including partial periods) beginning
immediately after the Closing. For purposes of this Agreement,
"Taxes" shall mean federal, state, local or foreign income,
gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or
add-on minimum, ad valorem, transfer or excise tax, or any
other tax, customs, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any governmental authority.
(ii) Notwithstanding paragraph (i), any sales Tax,
use Tax, property transfer or gains Tax, statutory transferee
liabilities arising from the purchase of the Acquired Assets,
documentary stamp Tax or similar Tax attributable to the sale
or transfer of the Acquired Assets or the business conducted
by the Seller with the Acquired Assets shall be paid by the
Seller.
<PAGE>
(iii) The Seller or the Buyer, as the case may be,
shall provide prompt reimbursement for any Tax paid by one
party, all or a portion of which is the responsibility of the
other party in accordance with the terms of this Section 6(a).
Within a reasonable time prior to the payment of any such Tax,
the party paying such Tax shall give notice to the other party
of the Tax payable and the portion which is the liability of
each such party or parties, although failure to do so will not
relieve such party or parties from its liability hereunder
except to the extent such party is materially adversely
affected thereby.
(b) Other Liabilities.
(i) The Seller shall be liable for and shall pay all
Excluded Liabilities, Vendor Accounts and Bulk Sales
Liabilities.
(ii) The Buyer shall be liable for and shall pay all
Assumed Liabilities.
7. Employment of Employees. On the date of Closing, the Buyer shall
offer employment to substantially all of the salaried and non-salaried employees
of the Seller who are employed in the operation of the Store. The employment
offered by the Buyer shall be "at will," and the Buyer shall be under no
obligation to continue such employment following the date of Closing. The Seller
shall terminate the employment of all of its salaried and non-salaried employees
who are employed in the operation of the Store as of the close of business on
the date of Closing, and the Seller shall be responsible for all wages,
salaries, and other benefits, if any, due and owing to such Employees for all
periods ending on or prior to the date of Closing. Additionally, the Buyer shall
cause all Store managers who become employed by the Buyer to be covered,
commencing on the first day of such employment, under the Buyer's health and
medical welfare and benefit plans without any waiting period, with a waiver of
pre-existing conditions, and otherwise on the same terms as such insurance
coverages are provided generally to the employees of the Buyer.
8. Assignment. This Agreement and the rights and obligations hereunder
shall not be assignable or transferable by the Buyer or the Seller, other than
to an affiliate of either, without the prior written consent of the other party
hereto.
<PAGE>
9. No Third-Party Beneficiaries. Except as provided for released
parties in Section 22, this Agreement is for the sole benefit of the parties
hereto and their permitted assigns and nothing herein expressed or implied shall
give or be construed to give to any person or entity, other than the parties
hereto and such assigns, any legal or equitable rights hereunder.
10. Expenses. Whether or not the transactions contemplated hereby are
consummated, except as otherwise expressly provided in this Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
11. Amendments; Waiver. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by all of the
parties. No waiver by any party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
12. Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered by hand or sent
prepaid telex, cable or telecopy, or sent, postage prepaid, by registered,
certified or express mail, or reputable overnight courier service and shall be
deemed given when so delivered by hand, telexed, cabled or telecopied, or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows:
(i) if to the Seller:
Mr. Arthur S. Karp
7902 Sanderling Road
Sarasota, FL 34242
Telecopy: (941) 346-3049
with a copy to:
Alston & Bird
1 Atlanta Center
1201 West Peachtree Street
Atlanta, GA 30309-3424
Attn: Sidney J. Nurkin
Telecopy: (404) 881-7777
(ii) if to the Buyer:
Mrs. Fields' Original Cookies
2855 E. Cottonwood Parkway, Suite 400
Salt Lake City, Utah 84121
Attention: Legal Department
Telecopy: (801) 736-5945
with a copy to:
Jones, Waldo, Holbrook & McDonough, P.C.
170 South Main Street, Suite 1500
Salt Lake City, Utah 84101
Attention: Glen D. Watkins
Telecopy: (801) 328-0537
<PAGE>
13. Interpretation. The headings contained in this Agreement, in any
exhibit or Schedule hereto and in the table of contents to this Agreement, are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.
15. Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, representations and understandings,
written or oral, relating to such subject matter. The exhibits, annexes and
Schedules identified in this Agreement are hereby incorporated by reference.
16. Fees. Each party hereto hereby agrees, represents and warrants that
no person has acted in connection with this Agreement or the transactions
contemplated hereby as a broker or finder and that no person is entitled to any
brokerage fee, finder's fee or commission with respect thereto. The parties
further agree to hold the other party harmless from any damages, claims or
expenses asserted against such party as a result of any person claiming a
commission or finder's fee for the transactions contemplated herein.
17. Severability. If any provision of this Agreement or the application
of any such provision to any person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.
18. Attorney's Fees. Should any litigation be commenced with respect to
any matters governed by this Agreement, the party prevailing shall be entitled,
in addition to such other relief as may be granted, to a reasonable sum for such
party's attorneys' fees and expenses determined by the court in such litigation.
<PAGE>
19. [Intentionally Omitted].
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Georgia applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
21. Remedies. Each of the parties acknowledges and agrees that each
other party would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties agrees that each other
party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof, having jurisdiction over the parties and the
matter, in addition to any other remedy to which it may be entitled, at law or
in equity.
[Intentionally Left Blank]
<PAGE>
22. Release of the Seller. The Buyer, and its successors and assigns,
in consideration of the benefits afforded to it in consequence of the execution
of this Agreement, does hereby release and waive, irrevocably, any and all
rights, claims, causes of action, of every kind and nature, whether or not known
or anticipated or asserted or unasserted, that they or any of them has or may
have, directly or indirectly, against the Seller and, as applicable, its
partners, officers, agents and directors (said partners, officers, agents and
directors being intended beneficiaries of this provision), but excluding rights,
claims and causes of action arising out of or in relation to the breach or
inaccuracy of any representation or warranty made by the Seller in this
Agreement or the breach of any agreement or undertaking of the Seller set forth
in the Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
SELLER: BUYER:
QUAIL SPRINGS COOKIES, INC. MRS. FIELDS' ORIGINAL COOKIES, INC.
By:/s/Arthur S. Karp By:/s/Michael R. Ward
Its: President Its:VP
EXHIBIT 2.9
ASSET PURCHASE AGREEMENT
Dated as of July 29, 1998
between
MRS. FIELDS' ORIGINAL COOKIES, INC.
as Buyer,
and
WESTGATE COOKIES, INC.
as Seller
<PAGE>
TABLE OF CONTENTS
Page
1. Purchase, Sale and Assumption....................................... 1
2. Closing; Transactions to be Effected................................ 4
3. Conditions to Closing............................................... 5
4. Representations and Warranties of the Seller........................ 6
5. Representations and Warranties of the Buyer......................... 7
6. Payment of Taxes and Liabilities.................................... 7
7. Employment of Employees............................................. 8
8. Assignment.......................................................... 8
9. No Third-Party Beneficiaries........................................ 9
10. Expenses............................................................ 9
11. Amendments; Waiver.................................................. 9
12. Notices............................................................. 9
13. Interpretation...................................................... 10
14. Counterparts........................................................ 10
15. Entire Agreement.................................................... 10
16. Fees................................................................ 10
17. Severability........................................................ 10
18. Attorney's Fees..................................................... 11
19. [Intentionally Omitted]............................................. 11
20. Governing Law....................................................... 11
21. Remedies............................................................ 11
22. Release of the Seller............................................... 12
Exhibits:
A -........Bill of Sale
Disclosure Schedules:
?1(c)(ii).........Assumed Liabilities
?4(b) .........Title to Acquired Assets
?4(c) .........Litigation
<PAGE>
ASSET PURCHASE AGREEMENT
MRS. FIELDS' ORIGINAL COOKIES, INC.
ASSET PURCHASE AGREEMENT ("Agreement"), dated as of July 29, 1998, by
and between MRS. FIELDS' ORIGINAL COOKIES, INC., a Delaware corporation
("Buyer"), and WESTGATE COOKIES, INC., a Texas corporation ("Seller"); each a
"party" in the singular and "parties" in the plural.
A. The Seller is a franchisee of Great American Cookie Company, Inc., a
Delaware corporation ("Franchisor").
B. The parties desire that the Buyer purchase from the Seller, and that the
Seller sell to the Buyer, the Acquired Assets (defined below), and that the
Buyer assume the Assumed Liabilities (defined below), upon the terms and subject
to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, the parties hereto hereby agree as follows:
1. Purchase, Sale and Assumption.
(a) Purchase and Sale. On the terms and subject to the
conditions of this Agreement, the Seller agrees to sell, transfer,
assign and deliver to the Buyer, and the Buyer agrees to accept and
purchase from the Seller, at the Closing (defined below), free and
clear of Liens (defined below), the assets of Seller used and employed
by the Seller in the operation of its retail cookie business, and any
related carts and kiosks, located at Westgate Mall, Amarillo, Texas
(the "Store") as follows (such assets and properties being herein
called, collectively, the "Acquired Assets"): (i) all leasehold rights,
interests, improvements, fixtures and signage, including without
limitation those governed by the lease for the Store which at the
Closing shall be assigned by the Seller to the Buyer (or its designated
affiliates) and assumed by the Buyer; (ii) all tangible personal
property, such as machinery, equipment, supplies, inventories (unless
designated by the Buyer on or before the Closing as an Excluded Asset),
furniture and tools; (iii) all agreements, contracts and instruments
(but excluding the Franchise Agreement, dated February 1, 1993, between
the Seller and Great American Cookie Company, Inc. ("Franchisor"), and
any related license, development and guarantee agreements, as amended
(collectively, the "Franchise Agreements")) that are assumed in writing
by the Buyer at the Closing; (iv) all customer and vendor lists; (v)
all recipes, techniques, processes, methods of production and
commercialization, training methods and know-how owned by the Seller;
(vi) store change funds in the aggregate amount of $251.00 per Store
(the "Store Cash"); (vii) deposits made in connection with lease,
utility service and other similar agreements; (viii) rebates and
prepaid expenses; (ix) all inventory of batter and other ingredients,
paper wares and other items on hand or on order and all cookies, other
baked goods, completed goods and work in process (collectively, the
"Inventory"). The Acquired Assets shall be transferred and conveyed to
the Buyer at the Closing, free and clear of all Liens (as defined
below), pursuant to a bill of sale (the "Bill of Sale") substantially
in the form of Exhibit A.
<PAGE>
(b) Excluded Assets. The Acquired Assets shall include only
those assets of Seller specifically described in Section 1(a) above.
Notwithstanding anything to the contrary expressed or implied herein,
the Acquired Assets shall not include the following assets of the
Seller: (i) all cash on hand or on deposit, whether at a Store or in
bank accounts, other than the Store Cash; (ii) all rights and claims of
the Seller under the Franchise Agreements; (iii) all rights and claims
of the Seller with respect to the Excluded Liabilities (defined below);
(iv) the Seller's rights under this Agreement; (v) all of the Seller's
corporate records, books, ledgers, books of account, tax returns and
information relating thereto, files, documents, correspondence; and
(vi) any other assets of the Seller not directly used in the conduct of
the Seller's retail cookie business at the Store. The assets of the
Seller that are not included within the Acquired Assets are herein
referred to as the "Excluded Assets."
(c) Assumed Liabilities. On the terms and subject to the
conditions of this Agreement, the Buyer agrees to assume, at and
effective from the Closing, the Assumed Liabilities. The term "Assumed
Liabilities" means, collectively, the following liabilities and
obligations of the Seller: (i) all obligations under the agreements,
contracts, leases, licenses, and other arrangements referred to in the
description of Acquired Assets either (A) to furnish goods, services
and other non-cash benefits to another party after Closing, or (B) to
pay for goods, services and other non-cash benefits that another party
will furnish to the Acquired Business after Closing; and (ii) all other
liabilities of the Seller assumed in writing and listed on Schedule
1(c)(ii).
(d) Excluded Liabilities. The term "Excluded Liabilities"
means any liability or obligation of the Seller that is not an Assumed
Liability.
(e) Purchase Price. The purchase price for the Acquired Assets
(the "Purchase Price") shall be the sum of (i) Five Hundred Five
Thousand Dollars ($505,000.00), plus (ii) Two Hundred Fifty-One Dollars
($251.00) representing the amount of the "Store Cash", plus (iii) the
value of the Inventory, determined as provided in Section 1(f) below,
plus (iv) the aggregate amount of all deposits and prepaid expenses
that are included in the Acquired Assets, determined as of the close of
business as of the day immediately preceding the date on which the
Closing shall occur.
(f) Determination of Inventory Value. Immediately following
the close of business on the day preceding the date on which the
Closing is to occur, the Buyer and the Seller shall jointly count and
value the Inventory. The Inventory shall be valued at Seller's cost
thereof.
<PAGE>
(g) Proration. All utility charges, rental charges, Taxes, and
other like items assessed or payable with respect to any of the
Acquired Assets for the period in which the Closing occurs shall be
prorated as of the date of Closing between the Buyer and the Seller.
The parties shall use their commercially reasonable best efforts to
determine the amount of any such prorated items as of the Closing and
shall, to the extent of information available at the time of Closing,
prorate such items between them as herein provided. To the extent
information relating to such prorated items is not available at the
time of Closing, the parties shall, as soon as practical after the
Closing, examine all relevant books and records in order to make the
determination of the apportionments of such prorated items as herein
provided. Payment of any such items which are not apportioned and
prorated at the Closing shall be made to the appropriate party by check
within thirty (30) days after such determination. Proration of ad
valorem taxes (whether assessed against real property interests or
personal property) shall be determined based upon previous year's
taxes.
(h) Certain Consents. To the extent that the Seller's rights
under any agreement, contract, commitment, lease, permit, real property
lease or other Acquired Asset to be assigned to the Buyer hereunder may
not be assigned without the consent of another person which has not
been obtained prior to the Closing, and which is important to the
ownership, use or disposition by the Buyer of an Acquired Asset, this
Agreement shall not constitute an agreement to assign the same if an
attempted assignment would constitute a breach thereof or be unlawful,
and the Seller, at the Buyer's expense, shall use its commercially
reasonable efforts to obtain any such required consent(s) as promptly
as possible. If any such consent shall not be obtained or if any
attempted assignment would be ineffective or would impair the Buyer's
rights under the Acquired Asset in question so that the Buyer would not
in effect acquire the benefit of all such rights, the Seller, to the
maximum extent permitted by law and the specific Acquired Asset, and at
the Buyer's expense, shall act after the Closing as the Buyer's agent
in order to obtain for the Buyer the benefits thereunder.
(i) Further Assurances. The Seller from time to time after the
Closing, at the Buyer's request and expense, will execute, acknowledge,
and deliver to the Buyer such other instruments of conveyance and
transfer and will take such other actions and execute and deliver such
other documents, certifications, and further assurances as the Buyer
may reasonably require in order to vest more effectively in the Buyer,
or to put the Buyer more fully in possession of, any of the Acquired
Assets, or to better enable the Buyer to complete, perform, or
discharge any of the Assumed Liabilities. Each of the parties hereto
will cooperate with the other and execute and deliver to the other
parties hereto such other instruments and documents and take such other
actions as may be reasonably requested from time to time by any other
party hereto as necessary to carry out, evidence, and confirm the
intended purposes of this Agreement.
<PAGE>
(j) Bulk Sales. The parties intend and agree that the purchase
and sale of the Acquired Assets is excluded from the requirements of
so-called "Uniform Commercial Code - Bulk Transfers" laws (the "Bulk
Sales Laws"). However, to the extent that the Bulk Sales Laws apply,
the parties hereby waive any compliance therewith. In consideration of
the Buyer's agreement to waive any such compliance:
(i) the Seller shall furnish to the Buyer before the
Closing a list, certified by a financial officer of the Seller
having knowledge thereof, setting forth the Seller's accounts
payable (and pay-off amounts therefor) as of the Closing
(including, without limitation, all accounts with and
liabilities to any persons that may have a remedy under the
Bulk Sales Laws, if applicable, with respect to the
transactions contemplated by this Agreement (collectively, the
"Vendor Accounts")); and
(ii) the Seller hereby agrees that, each of the
Vendor Accounts shall be paid in full at the Closing from the
Purchase Price, unless (A) the Seller has a good faith dispute
with respect to any Vendor Accounts, in which case a portion
of the Purchase Price sufficient to fully pay each of the
disputed Vendor Accounts will be withheld at the Closing and
deposited into and thereafter disbursed from an escrow
administered by an independent escrow agent established
pursuant to mutually agreed instructions of the Buyer and the
Seller; or (B) the payoff amount cannot be ascertained or
verified by the Closing Date, in which case the amount
reasonably estimated by the Buyer and the Seller that is
necessary to fully pay all amounts accrued through the Closing
with respect to any such Vendor Accounts shall be withheld
from the Purchase Price and deposited into and disbursed from
an escrow established in the manner specified in the preceding
clause (A) of this Section 1(f)(ii).
<PAGE>
2. Closing; Transactions to be Effected.
(a) Closing. The closing (the "Closing") of the purchase and
sale of the Acquired Assets and the Buyer's assumption of the Assumed
Liabilities shall be held at the offices of Alston & Bird, in Atlanta,
Georgia, at a time and date established by agreement of the parties
within ten (10) business days after all of the conditions to the
Closing set forth in Section 3 below are satisfied or waived. The date
on which the Closing shall occur is hereinafter referred to as the
"Closing Date".
(b) Transactions to be Effected. At the Closing, on the terms
and subject to the conditions of this Agreement:
(i) the Seller shall deliver to the Buyer an
appropriately executed and authenticated Bill of Sale and such
other instruments of sale, assignment, transfer and conveyance
to the Buyer of the Acquired Assets as the Buyer or its
counsel may reasonably request, such instruments to be
reasonably satisfactory in form to the Buyer and its counsel;
(ii) the Buyer shall deliver to the Seller the
Purchase Price by wire transfer to a bank account which shall
be designated in writing by the Seller at least two business
days prior to the Closing Date; and
(iii) the Buyer shall use its commercially reasonable
best efforts to cause the Franchisor to terminate the
Franchise Agreements as of the Closing and to release the
Seller from any and all obligations thereunder (other than the
payment of franchisee fees payable thereunder for any periods
ending on or prior to the date of Closing). The Agreement
pursuant to which such Franchise Agreements are terminated and
such obligations of the Seller thereunder are released shall
be in form and substance reasonably satisfactory to the Seller
and its counsel. The Seller agrees to pay to the Franchisor at
the time of Closing all franchise fees payable under or with
respect to such Franchise Agreements for all periods ending on
or prior to the date of Closing.
<PAGE>
3. Conditions to Closing.
(a) Buyer's Obligation. The obligation of the Buyer to
purchase the Acquired Assets is subject to the satisfaction (or
waiver by the Buyer) as of the Closing of the following
conditions:
(i) The representations and warranties of the Seller
made in this Agreement shall be true and correct as of the
date hereof and on and as of the Closing, as though made on
and as of the Closing Date, and the Seller shall have
performed or complied in all material respects with all
obligations and covenants required by this Agreement to be
performed or complied with by the Seller by the time of the
Closing; and the Seller shall have delivered to the Buyer a
certificate dated the Closing Date, signed by an authorized
officer or representative of the Seller, confirming the
foregoing;
(ii) No injunction or order of any court or
administrative agency of competent jurisdiction shall be
threatened or in effect, and no statute, rule or regulation of
any governmental authority of competent jurisdiction shall
have been promulgated or enacted, as of the Closing which
restrains, prohibits or adversely affects the purchase and
sale of the Acquired Assets; and
(iii) The Buyer shall have completed the acquisition
of all of the stock of Cookies USA, and shall have completed
its senior notes offering in the current anticipated amount of
$40,000,000.
<PAGE>
(b) Seller's Obligation. The obligation of the Seller to sell,
assign, transfer and deliver the Acquired Assets to the Buyer is
subject to the satisfaction or waiver as of the Closing of the
following conditions:
(i) The representations and warranties of the Buyer
made in this Agreement shall be true and correct as of the
date hereof and on and as of the Closing, as though made on
and as of the Closing Date, and the Buyer shall have performed
or complied in all material respects with all obligations and
covenants required by this Agreement to be performed or
complied with by the Buyer by the time of the Closing; and the
Buyer shall have delivered to the Seller a certificate dated
the Closing Date and signed by an authorized officer of the
Buyer confirming the foregoing;
(ii) The conditions contemplated by Section 3(a)(ii)
shall have been satisfied; and
(iii) The Franchise Agreements shall have been
terminated as of the Closing and the Seller shall have been
released from all liability thereunder (other than the payment
of franchise fees accrued and unpaid to the date of the
Closing), and the Seller shall have received a document
evidencing such termination and release in form and substance
reasonably satisfactory to the Seller and its counsel.
4. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Buyer that the statements contained in this
Section 4 are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date (as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the disclosure schedule delivered by the
Seller to the Buyer on the date hereof (the "Disclosure Schedule").
<PAGE>
(a) Organization and Standing of the Seller. The Seller is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its formation or incorporation. All
acts and other proceedings required to be taken by the Seller to
authorize the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby have been duly
and properly taken.
(b) Title to Acquired Assets. Except as set forth in Schedule
4(b), the Seller has good and marketable title to the Acquired Assets,
free and clear of all mortgages, liens, claims, security interests,
pledges, restrictions, charges or encumbrances of any nature whatsoever
(collectively, "Liens"). At the Closing, the Buyer shall acquire the
Acquired Assets free and clear of all Liens.
(c) Litigation. Schedule 4(c) sets forth a list of all
lawsuits, claims, proceedings or investigations pending, or, to the
knowledge of the Seller, threatened, as of the date of this Agreement,
against or affecting any of the Acquired Assets.
5. Representations and Warranties of the Buyer. The Buyer hereby
represents and warrants to the Seller as follows:
(a) Authority. The Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware. The Buyer has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions
contemplated hereby and thereby. All corporate acts and other
proceedings required to be taken by the Buyer to authorize the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby and thereby have
been duly and properly taken.
(b) Actions and Proceedings, etc. There are no actions, suits,
claims or proceedings pending or, to the best knowledge of the Buyer,
threatened against the Buyer, which are likely to have a material
adverse effect on the ability of the Buyer to consummate the
transactions contemplated hereby.
<PAGE>
. 6. Payment of Taxes and Liabilities
(a) Taxes.
(i) The Seller shall be liable for and promptly pay
Taxes applicable to any of the Acquired Assets or the business
conducted by the Seller with the Acquired Assets, in each case
attributable to taxable years or periods (including partial
periods) ending at the time of or prior to the Closing. The
Buyer shall be liable for and shall pay all Taxes applicable
to the Acquired Assets or the business conducted by the Buyer
with the Acquired Assets that are attributable to taxable
years or periods (including partial periods) beginning
immediately after the Closing. For purposes of this Agreement,
"Taxes" shall mean federal, state, local or foreign income,
gross receipts, property, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or
add-on minimum, ad valorem, transfer or excise tax, or any
other tax, customs, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any
interest or penalty, imposed by any governmental authority.
(ii) Notwithstanding paragraph (i), any sales Tax,
use Tax, property transfer or gains Tax, statutory transferee
liabilities arising from the purchase of the Acquired Assets,
documentary stamp Tax or similar Tax attributable to the sale
or transfer of the Acquired Assets or the business conducted
by the Seller with the Acquired Assets shall be paid by the
Seller.
(iii) The Seller or the Buyer, as the case may be,
shall provide prompt reimbursement for any Tax paid by one
party, all or a portion of which is the responsibility of the
other party in accordance with the terms of this Section 6(a).
Within a reasonable time prior to the payment of any such Tax,
the party paying such Tax shall give notice to the other party
of the Tax payable and the portion which is the liability of
each such party or parties, although failure to do so will not
relieve such party or parties from its liability hereunder
except to the extent such party is materially adversely
affected thereby.
(b) Other Liabilities.
(i) The Seller shall be liable for and shall pay all
Excluded Liabilities, Vendor Accounts and Bulk Sales
Liabilities.
(ii) The Buyer shall be liable for and shall pay all
Assumed Liabilities.
<PAGE>
7. Employment of Employees. On the date of Closing, the Buyer shall
offer employment to substantially all of the salaried and non-salaried employees
of the Seller who are employed in the operation of the Store. The employment
offered by the Buyer shall be "at will," and the Buyer shall be under no
obligation to continue such employment following the date of Closing. The Seller
shall terminate the employment of all of its salaried and non-salaried employees
who are employed in the operation of the Store as of the close of business on
the date of Closing, and the Seller shall be responsible for all wages,
salaries, and other benefits, if any, due and owing to such Employees for all
periods ending on or prior to the date of Closing. Additionally, the Buyer shall
cause all Store managers who become employed by the Buyer to be covered,
commencing on the first day of such employment, under the Buyer's health and
medical welfare and benefit plans without any waiting period, with a waiver of
pre-existing conditions, and otherwise on the same terms as such insurance
coverages are provided generally to the employees of the Buyer.
8. Assignment. This Agreement and the rights and obligations hereunder
shall not be assignable or transferable by the Buyer or the Seller, other than
to an affiliate of either, without the prior written consent of the other party
hereto.
9. No Third-Party Beneficiaries. Except as provided for released
parties in Section 22, this Agreement is for the sole benefit of the parties
hereto and their permitted assigns and nothing herein expressed or implied shall
give or be construed to give to any person or entity, other than the parties
hereto and such assigns, any legal or equitable rights hereunder.
10. Expenses. Whether or not the transactions contemplated hereby are
consummated, except as otherwise expressly provided in this Agreement, all costs
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses.
11. Amendments; Waiver. No amendment of any provision of this Agreement
shall be valid unless the same shall be in writing and signed by all of the
parties. No waiver by any party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation, or breach of
warranty or covenant hereunder or affect in any way any rights arising by virtue
of any prior or subsequent such occurrence.
<PAGE>
12. Notices. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered by hand or sent
prepaid telex, cable or telecopy, or sent, postage prepaid, by registered,
certified or express mail, or reputable overnight courier service and shall be
deemed given when so delivered by hand, telexed, cabled or telecopied, or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows:
(i) if to the Seller:
Mr. Arthur S. Karp
7902 Sanderling Road
Sarasota, FL 34242
Telecopy: (941) 346-3049
with a copy to:
Alston & Bird
1 Atlanta Center
1201 West Peachtree Street
Atlanta, GA 30309-3424
Attn: Sidney J. Nurkin
Telecopy: (404) 881-7777
(ii) if to the Buyer:
Mrs. Fields' Original Cookies
2855 E. Cottonwood Parkway, Suite 400
Salt Lake City, Utah 84121
Attention: Legal Department
Telecopy: (801) 736-5945
with a copy to:
Jones, Waldo, Holbrook & McDonough, P.C.
170 South Main Street, Suite 1500
Salt Lake City, Utah 84101
Attention: Glen D. Watkins
Telecopy: (801) 328-0537
<PAGE>
13. Interpretation. The headings contained in this Agreement, in any
exhibit or Schedule hereto and in the table of contents to this Agreement, are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more such counterparts have been signed by
each of the parties and delivered to the other party.
15. Entire Agreement. This Agreement contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, representations and understandings,
written or oral, relating to such subject matter. The exhibits, annexes and
Schedules identified in this Agreement are hereby incorporated by reference.
16. Fees. Each party hereto hereby agrees, represents and warrants that
no person has acted in connection with this Agreement or the transactions
contemplated hereby as a broker or finder and that no person is entitled to any
brokerage fee, finder's fee or commission with respect thereto. The parties
further agree to hold the other party harmless from any damages, claims or
expenses asserted against such party as a result of any person claiming a
commission or finder's fee for the transactions contemplated herein.
17. Severability. If any provision of this Agreement or the application
of any such provision to any person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.
18. Attorney's Fees. Should any litigation be commenced with respect to
any matters governed by this Agreement, the party prevailing shall be entitled,
in addition to such other relief as may be granted, to a reasonable sum for such
party's attorneys' fees and expenses determined by the court in such litigation.
<PAGE>
19. [Intentionally Omitted].
20. Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Georgia applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
21. Remedies. Each of the parties acknowledges and agrees that each
other party would be damaged irreparably in the event any of the provisions of
this Agreement are not performed in accordance with their specific terms or
otherwise are breached. Accordingly, each of the parties agrees that each other
party shall be entitled to an injunction or injunctions to prevent breaches of
the provisions of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof in any action instituted in any court of the
United States or any state thereof, having jurisdiction over the parties and the
matter, in addition to any other remedy to which it may be entitled, at law or
in equity.
[Intentionally Left Blank]
<PAGE>
22. Release of the Seller. The Buyer, and its successors and assigns,
in consideration of the benefits afforded to it in consequence of the execution
of this Agreement, does hereby release and waive, irrevocably, any and all
rights, claims, causes of action, of every kind and nature, whether or not known
or anticipated or asserted or unasserted, that they or any of them has or may
have, directly or indirectly, against the Seller and, as applicable, its
partners, officers, agents and directors (said partners, officers, agents and
directors being intended beneficiaries of this provision), but excluding rights,
claims and causes of action arising out of or in relation to the breach or
inaccuracy of any representation or warranty made by the Seller in this
Agreement or the breach of any agreement or undertaking of the Seller set forth
in the Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
SELLER: BUYER:
WESTGATE MALL, INC. MRS. FIELDS' ORIGINAL COOKIES, INC.
By:/s/Arthur S. Karp By:/s/Michael R. Ward
Its:President Its:VP
EXHIBIT 99.1
[MFOC LOGO]
FOR IMMEDIATE RELEASE CONTACT:
Larry Hodges
Mrs. Fields' Original Cookies, Inc.
2855 E. Cottonwood Parkway
Salt Lake City, UT 84121
Tel: (800) 343-5377
MRS FIELDS' ORIGINAL COOKIES, INC. ANNOUNCES
ACCEPTANCE FOR PAYMENT OF SENIOR SECURED NOTES
DUE 2001 OF GREAT AMERICAN COOKIE COMPANY, INC.
TENDERED THROUGH AUGUST 21 AND RECEIPT OF REQUISITE
CONSENTS TO AMEND INDENTURE GOVERNING THE NOTES
SALT LAKE CITY, UTAH, August 25, 1998 - Mrs. Fields' Original Cookies,
Inc. today announced that on August 24, 1998 it had accepted for payment all
Notes that had been validly tendered as of 12:00 midnight, New York City time,
on August 21, 1998, pursuant to its previously announced offer to purchase all
of the outstanding Senior Secured Notes due 2001 of Great American Cookie
Company, Inc. at a cash price equal to $1,040 per $1,000 principal amount, plus
interest accrued and unpaid to (but excluding) the date of payment. According to
The Bank of New York, the depositary for the offer to purchase, approximately
$33.5 million aggregate principal amount of Notes had been tendered and accepted
for payment as of 12:00 midnight, New York City time, on August 20, 1998. The
Company accepted for payment an additional approximately $5.4 million aggregate
principal amount of Notes that had been tendered through 12:00 midnight, New
York City time, on August 21, 1998. Payment for such Notes and the consents
related thereto will be made to tendering holders promptly. The Company will
continue to accept tenders of Notes and deliveries of consents and will pay for
such Notes and consents thereafter validly tendered and delivered promptly after
the expiration date of the offer to purchase, regardless of whether the
remaining conditions to the offer to purchase have been satisfied.
The Company also announced that consents from the holders of a majority
of the outstanding Notes have been received in connection with the solicitation
of consents made in conjunction with the offer to purchase to amend and waive
certain provisions of the indenture pursuant to which the Notes were issued. A
supplemental indenture containing the proposed amendments and proposed waivers
was executed by Great American and the trustee for the indenture on August 24th.
The proposed amendments and proposed waivers, however, will not become binding
until all validly tendered Notes are accepted for purchase by the Company, which
is expected to occur promptly after the expiration of the offer to purchase. The
offer to purchase will expire at 12:00 midnight, New York City time, on
September 14, 1998, unless extended.
Holders of Notes may obtain information relating to the solicitation by
contacting Jefferies & Company, Inc., the dealer manager for the offer and the
solicitation agent for the solicitation, collect at (310) 575-2000.
