UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
June 19, 2000
Commission file number: 0-10893
Crown Jewel Resources Corp.
(f/k/a ABF Energy Corp.)
a Delaware corporation
IRS Number 13-3007167
805 3RD AVENUE, 21ST Floor
New York, New York 10022
(212) 593-3100
<PAGE>
DISCLOSURE REGARDING FORWARD LOOKING STATEMENTS
This Form 8-K includes "forward-looking statements" within the meaning of
various provisions of the Securities Act. All statements, other than statements
of historical facts, included in this Form 8-K that address future activities,
events or developments, including such things as future revenues, product
development, market acceptance, responses from competitors, capital expenditures
(including the amount and nature thereof), business strategy and measures to
implement strategy, competitive strengths, goals, expansion and growth of the
Company's and its subsidiaries' business and operations, plans, references to
future success and other such matters, are forward-looking statements. These
statements are based on certain assumptions and analysis made by the Company in
light of its experience and its assessment of historical trends, current
conditions and expected future developments as well as other factors it believes
are appropriate in the circumstances. However, whether actual results will
conform to the Company expectations and predictions is subject to a number of
risks and uncertainties that may cause actual results to differ materially,
including the risks and uncertainties discussed in this Form 8-K; general
economic, market or business conditions; the opportunities (or lack thereof)
that may be presented to and pursued by the Company; competitive actions by
other companies; changes in laws or regulations; and other factors, many of
which are beyond the control of the Company. Consequently, all of the
forward-looking statements made in this Form 8-K are qualified by these
cautionary statements and there can be no assurance that the actual results
anticipated by the Company will be realized or, even if substantially realized,
that they will have the expected consequences to or effects on the Company or
its business or operations.
Item 1. Changes in control of Resgistrant
Item 2. Acquisition or Disposition of Assets
Item 5. Other Events.
The Company announced that the Board of Directors of the Company and a majority
of the shareholders of the Company approved a 1 for 125 reverse stock split
resulting in each shareholder of record receiving 1 newly issued share of common
stock for every 125 shares of common stock held.
On June 8, 2000, an agreement was entered into between the Company and Park
Vanguard LLC, a Nevada limited liability company ("Park") pursuant to which Park
simultaneously contributed $5.1 million in assets to the Company in exchange for
a 92.2% interest in the Company, or 20,000,000 shares. As a result of the
transaction, a new Board of Directors and Officers were elected as follows: Marc
A. Palazzo, President and Chairman of the Board, Zeki Kochisarli, Secretary and
Director, and Walter Greenfield, Director. The principal assets acquired are for
the manufacture of fine gold, platinum and silver jewelry and a technology that
has a proprietary process to make gem quality diamonds and enhance the color of
natural diamonds. Mr.
Palazzo is also the President of Park.
Following the contribution, ABF Energy changed its name to Crown Jewel Resources
Corp. and its new trading symbol is "CJWL".
Item 7. Financial Exhibits, Pro forma Financial Information and Exhibits.
(a) Financial statements and pro forma financial information
(i) and (ii) As of the date of filing the Current Report on
form 8-K, it is impractical for the Company to provide all of the financial
statements and pro forma financial information required by this Item
<PAGE>
7. In accordance with Item 7(a)(4) of form 8-K, such additional financial
statements and pro forma financial information will be filed by amendment to
this Form 8-K no later than 60 days after the date hereof.
(b) Exhibits
(1) Audited financial statements as of June 8, 2000.
(2) Capital Contribution Agreement and Stock Purchase Agreement
(3) Management Agreement
(4) Warrant Agreement
SIGNATURES
Pursuant to the requirement of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized in New York, New York on this 16th day of
June 2000.
CROWN JEWEL RESOURCES CORP.
/S/ MARC A. PALAZZO
Marc A. Palazzo
President
<PAGE>
EXHIBIT 1
CROWN JEWEL RESOURCES CORP. AND SUBSIDIARY
(FORMERLY "ABF ENERGY CORP.")
INDEX TO CONSOLIDATED FINANCIALS STATEMENTS
Independent Auditors' Report.................................................F-2
Consolidated Balance Sheet...................................................F-3
Consolidated Statement of Operations.........................................F-4
Consolidated Statement of Stockholders' Equity...............................F-5
Consolidated Statement of Cash Flows.........................................F-6
Notes to Consolidated Financials Statement............................F-7 - F-10
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors of
Crown Jewel Resources Corp. and Subsidiary
Englewood Cliffs, NJ
We have audited the accompanying consolidated balance sheet of Crown
Jewel Resources Corp. (formerly "ABF Energy Corp.") and subsidiary as of June 8,
2000, and the related statements of operations, stockholders' equity and cash
flows for the period January 1, 2000 through June 8, 2000. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on the financial statements based on our
audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the balance sheet referred to above presents fairly, in
all material respects, the financial position of Crown Jewel Resources Corp.
(formerly "ABF Energy Corp.") and subsidiary as of June 8, 2000 and the
consolidated results of their operations and their cash flows for the period
January 1, 2000 through June 8, 2000, in conformity with generally accepted
accounting principles.
/s/Feldman Sherb Horowitz & Co., P.C.
Feldman Sherb Horowitz & Co., P.C.
Certified Public Accountants
New York, New York
June 15, 2000
F-2
<PAGE>
CROWN JEWEL RESOURCES CORP. AND SUBSIDIARY
(FORMERLY "ABF ENERGY CORP.")
CONSOLIDATED BALANCE SHEET
JUNE 8, 2000
ASSETS
CURRENT ASSETS:
Cash $ 35,963
Marketable securities 29,979
Loan receivable 13,250
----------------
TOTAL CURRENT ASSETS 79,192
MACHINERY AND EQUIPMENT, net 2,021,116
BUILDING - OPTION TO ACQUIRE 1,100,000
INTANGIBLE ASSETS 2,000,000
----------------
$ 5,200,308
================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 10,071
Current portion of loan payable 2,999
TOTAL CURRENT LIABI 13,070
LOAN PAYABLE 20,927
STOCKHOLDERS' EQUITY:
Common stock, $.00005 par value, authorized
200,000,000 shares: 21,680,796 issued and outstanding 1,084
Paid-in capital 7,034,244
Accumulated deficit (1,841,199)
Other comprehensive income (27,818)
----------------
Total stockholders' equity 5,166,311
----------------
$ 5,200,308
================
See notes to consolidated financial statement
F-3
<PAGE>
CROWN JEWEL RESOURCES CORP. AND SUBSIDIARY
(FORMERLY "ABF ENERGY CORP.")
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD JANUARY 1, 2000 THROUGH JUNE 8, 2000
REVENUES:
Royalties $ 38,144
----------------
EXPENSES:
General and administrative 44,629
Non-cash compensation 158,000
----------------
202,629
----------------
LOSS BEFORE OTHER INCOME (EXPENSE) (164,485)
OTHER INCOME (EXPENSE):
Dividend income 810
Interest expense (515)
----------------
295
----------------
NET LOSS (164,190)
COMPREHENSIVE LOSS - unrealized loss on investments (30,881)
----------------
NET LOSS APPLICABLE TO COMMON SHAREHOLDERS $ (195,071)
================
NET LOSS PER SHARE - basic and diluted $ (0.14)
================
WEIGHTED AVERAGE SHARES OUTSTANDING 1,376,349
================
See notes to consolidated financial statements
F-4
<PAGE>
CROWN JEWEL RESOURCES CORP. AND SUBSIDIARY
(FORMERLY "ABF ENERGY CORP.")
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Common Stock
Other Total
-------------------- Paid-in Accumulated Treasury Stock Comprehensive Stockholders'
Shares Amount Capital Deficit Shares Amount Income (Loss) Equity
---------- ------- ---------- ----------- -------- -------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999 1,217,678 $ 61 $ 1,777,275 $(1,677,009) (155,840) $ (8) $ 3,063 $ 103,382
Retirement of stock (157,882) (8) 0 0 155,840 8 0 0
Issuance of common stock for services 621,000 31 157,969 0 0 0 0 158,000
Issuance of common stock for assets 20,000,000 1,000 5,099,000 0 0 0 0 5,100,000
Other comprehensive loss - unrealized
loss on investments 0 0 0 0 0 0 (30,881) (30,881)
Net loss 0 0 0 (164,190) 0 0 0 (164,190)
----------- ------- ----------- ---------- --------- ------ --------- ----------------
Balance, June 8, 2000 21,680,796 $1,084 $7,034,244 $(1,841,199) 0 $ 0 $ (27,818) $ 5,166,311
=========== ======= ========== =========== ========= ======= ========== ===============
</TABLE>
See notes to consolidated financial statements
F-5
<PAGE>
CROWN JEWEL RESOURCES CORP. AND SUBSIDIARY
(FOMERLY "ABF ENERGY CORP.)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD JANUARY 1, 2000 THROUGH JUNE 8, 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (164,190)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation 3,910
Common stock issued for services 158,000
Changes in liabilities:
Accounts payable and accrued expenses (101)
----------------
NET CASH USED IN OPERATING ACTIVITIES (2,381)
----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Decrease in marketable securities 34,190
----------------
NET CASH FLOWS PROVIDED BY INVESTING ACTIVITIES 34,190
----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in loan receivable (1,000)
Principal payments of loan payable (2,088)
----------------
NET CASH FLOWS USED IN FINANCING ACTIVITIES (3,088)
----------------
NET INCREASE IN CASH 28,721
CASH, beginning of year 7,242
----------------
CASH, end of period $ 35,963
================
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the period
for:
Interest $ 515
================
Noncash investing and financing activities:
Acquisition of assets for common stock $ 5,100,000
================
See notes to consolidated financial statements
F-6
<PAGE>
CROWN JEWEL RESOURCES CORP. AND SUBSIDIARY
(FORMERLY "ABF ENERGY CORP.")
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THE PERIOD JANUARY 1, 2000 THROUGH JUNE 8, 2000
The Company was formed for the purpose of engaging in oil and gas exploration,
the acquisition and development of oil and gas properties, and the sale of oil
and gas produced by these efforts. The Company has also organized, sold and
operated and acted as a General Partner in oil and gas limited partnerships. The
Company discontinued all of its operations during 1985. On June 8, 2000 the
Company acquired certain operating and technological assets relating to the
production of diamonds and jewelry.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Principles of Consolidation - The financial statements include the
accounts of the Company and its wholly-owned subsidiary, ABF Capital
Corp. ("Capital"). All significant intercompany transactions have been
eliminated.
(b) Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements. Actual results
could differ from those estimates.
(c) Cash and Cash Equivalents - The Company considers all highly liquid
temporary cash investments with an original maturity of three months or
less when purchased, to be cash equivalents.
(d) Short-term Investments - All marketable securities are deemed by
management to be available for sale and are reported at fair value with
net unrealized gains and losses reported within shareholders' equity.
Realized gains and losses are recorded based on the specific
identification method.
(e) Fair Value of Financial Instruments - The carrying amounts reported
in the balance sheet for cash and accrued expenses approximate fair
value based on the short-term maturity of these instruments.
(f) Intangible Assets - Intangible assets represent technology rights,
covenants not to compete, and customer lists. These assets are
amortized on a straight line basis between 5 and 15 years.
F-7
<PAGE>
(g) Impairment of Long-Lived Assets - The Company reviews long-lived
assets for impairment whenever circumstances and situations change such
that there is an indication that the carrying amounts may not be
recovered. At June 8, 2000, the Company believes that there has been no
impairments of its long-lived assets.
2. ACQUISITION
On June 8, 2000, the Company acquired certain assets from ParkVanguard
LLC ("Park"), for 20,000,000 shares of the Company's common stock.
These assets were recorded at the historical cost basis of Park. The
following table summarizes the assets acquired:
Purchase option on building $ 1,100,000
Machinery and equipment 2,000,000
Covenant not to compete 250,000
Customer list 250,000
Technology rights 1,500,000
------------------------
Total assets acquired $ 5,100,000
========================
3. LOAN RECEIVABLE
The loan receivable represents a non-interest bearing loan, payable on
demand, to a company that is controlled by a former officer/director of
the Company.
4. EQUIPMENT
Equipment is stated at cost. Depreciation is provided over the
estimated useful life of the equipment by the straight-line method. The
following is a summary of equipment at June 8, 2000:
Estimated Life Cost
Vehicle 3 years $28,154
Machinery and equipment 10 years 2,000,000
-------------------
2,028,154
Accumulated depreciation (7,038)
-------------------
Net book value $2,021,116
===================
F-8
<PAGE>
5. LOAN PAYABLE
The loan payable represents a loan collateralized by a vehicle. The
loan bears interest at the rate of 4.90% per annum and is payable in
monthly installments of $521 through September 2004. Principal payments
through maturity are as follows:
2001 $5,341
======
2002 $5,608
======
2003 $5,889
======
2004 $4,089
======
6. INCOME TAXES
The Company accounts for income taxes under Statement of Financial
Accounting Standards No. 109, Accounting for Income Taxes ("SFAS No.
109"). SFAS No. 109 requires the recognition of deferred tax assets and
liabilities for both the expected impact of differences between the
financial statements and tax basis of assets and liabilities, and for
the expected future tax benefit to be derived from tax loss and tax
credit carryforwards. SFAS No. 109 additionally requires the
establishment of a valuation allowance to reflect the likelihood of
realization of deferred tax assets. At June 8, 2000, the Company had
net deferred tax assets of $595,000. The Company has recorded a
valuation allowance for the full amount of the net deferred tax assets.
The following table illustrates the source and status of the Company's
major deferred tax assets and (liabilities):
Tax benefit of net operating loss carryforward $ 661,000
PERMANENT DIFFERENCES (66,000)
Net deferred tax assets 595,000
VALUATION ALLOWANCE (595,000)
NET DEFERRED TAX ASSET RECORDED $ -
===============
F-9
<PAGE>
The differences between income taxes computed by applying the statutory federal
income tax rate (35%) and income tax expense (benefit) in the consolidated
financial statements are:
Tax benefit computed at statutory rate $ (58,000)
Effect of permanent differences 55,000
Tax benefit of net operating loss 3,000
----------------------
$ -
======================
The Company has net operating loss carryforwards for tax purposes
totaling $1,700,000 at June 8, 2000 expiring in the year 2002.
Substantially all of the carryforwards are subject to limitations on
annual utilization because there are "equity structure shifts" or
"owner shifts" involving 5% stockholders (as these terms are defined in
Section 382 of the Internal Revenue Code), which have resulted in a
more than 50% change in ownership.
7. STOCKHOLDERS' EQUITY
On May 3, 2000, the Company retired 157,882 shares of common stock, of
these shares 155,840 were held in treasury. The remaining shares were
surrendered pursuant to a loan agreement between a shareholder and the
Company which was written off by the Company in a prior year.
On May 12, 2000, the Company issued 96,000 shares of its common stock
to an officer for services rendered. The Company valued these shares at
$0.26 and recorded $24,000 of compensation expense.
On May 23, 2000, Company the declared a 1:125 reverse stock split . All
periods presented have been retroactively restated to give effect to
this reverse stock split.
On May 24, 2000, the Company issued 525,000 shares of its common stock
to an officer for services rendered. The Company valued these shares at
$0.26 and recorded $134,000.
On June 8, 2000, the Company issued 20,000,000 shares for assets
acquired (see note 2). The shares were valued at the historical cost of
the assets acquired.
8. COMMITMENTS
On June 8, 2000 the Company entered into a five year employment
agreement with an executive. The agreement has a base salary of $80,000
for the first year, with a potential increase at the end of the first
year to $100,000 based on certain performance objectives. Additionally,
the executive earns a $25,000 bonus within fourteen days upon signing
the agreement and can earn bonuses based on the pre-tax earnings of the
Company.
Additionally, on June 8, 2000 the Company entered into a five year
employment agreement with a second executive. The agreement has a base
salary of $120,000 for the duration of the agreement. The executive can
also earn bonuses based on the pre-tax earnings of the Company.
F-10
<PAGE>
EXHIBIT 2
ASSET CONTRIBUTION AND STOCK PURCHASE AGREEMENT
THIS ASSET CONTRIBUTION AND STOCK PURCHASE AGREEMENT (THE
"AGREEMENT") is entered into effective as of the 8th day of June, 2000, by and
between park vanguard, llc., a Nevada limited liability company ("Park"), and
ABF ENERGY CORP., a Delaware corporation ("ABF").
RECITALS
A. Park has acquired, as of the date hereof, certain Personal Property,
Real Property and Intellectual Property (all as hereafter defined) all related
to manufacturing and selling gold, diamonds and jewelry (the "Business"); and
B. Park desires to contribute, assign, transfer and deliver to ABF,
subject to Section 351 of the Code, all of Park's right, title and interest to
the Personal Property, Real Property, Intellectual Property and other property
described herein in consideration of ABF's obligations hereunder.
NOW, THEREFORE, in consideration of the covenants, representations,
conditions and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
ASSET CONTRIBUTION AND PURCHASE AND SALE OF THE COMMON STOCK
1.1 CONTRIBUTION. Contemporaneously with the execution and delivery
hereof, and upon the terms and conditions hereof, Park shall contribute, assign,
transfer and deliver to ABF, and ABF shall accept, all of Park's right, title
and interest in and to the Personal Property, Real Property and Intellectual
Property of Park of every kind and description which are owned by or licensed to
Park and related to the Business as the same shall exist on the Closing Date (as
defined herein), other than the Retained Assets (defined below) or any of the
foregoing that relate solely to the Retained Assets, wherever located, whether
tangible or intangible, personal or mixed, that are owned by, leased by,
licensed to or in the possession of Park, whether or not reflected on the books
and records of Park (the collective assets, properties, rights, licenses,
permits, contracts, operations and businesses to be transferred to ABF by Park
pursuant hereto are referred to COLLECTIVELY HEREIN AS THE "PURCHASED ASSETS.")
For purposes of this Agreement, the Purchased Assets shall include without
limitation:
(a) all trade fixtures, machinery and equipment, computer equipment
(including hardware and software), office equipment and supplies, other
supplies, furniture, parts and other tangible personal property (and interests
in any of the foregoing) acquired by Park (whether or not currently used)
attributable TO THE BUSINESS, INCLUDING ALL ITEMS OF PERSONAL PROPERTY WHICH ARE
ALL SET FORTH ON SCHEDULE 1.1(A) (the "Personal Property"), and any additions or
accessions thereto or substitutions therefor or proceeds thereof;
(b) the real property and interests in real property and buildings,
structures and improvements thereon (including easements, rights-of-way, water
rights, tenements, hereditaments, appurtenances, fixtures and other real
property rights appertaining thereto) leased or owned by Park and more
particularly described on Schedule 1.1(b) (the "Real Property");
(c) all right, title and interest of Park under all contracts,
agreements, understandings,
5
<PAGE>
options, leases, licenses, sales and purchase orders, commitments and other
instruments of any kind whatsoever, whether written or oral, relating to the
Business, including the Acquisition Contracts (defined as those contracts
pursuant to which Park acquired some or all of the Purchased Assets) Material
Contracts of the Business (defined as those Contracts providing for payments to
or by Park relating to the Business which are in amounts more than $10,000
annually) which are all set forth on Schedule 1.1(c)) and all employment,
non-disclosure, non-solicitation and non-competition agreements entered into
with current and former employees of, and consultants to, Park (the
"Contracts");
(d) (i) all United States (including the individual states and
territories of the United States) and foreign registered patents, trademarks,
service marks and trade names; unregistered trademarks (including trade dress),
patent, service marks and trade names; trademark; service mark and trade name
applications; product designations; internet domain names; designs;
manufacturing processes; formulae; software; trade secrets; registered
copyrights; and unregistered copyrights (along with all transferable license
rights pertaining thereto); and other intellectual property belonging to, used
in or pertaining to the Business, and the goodwill and going concern value of
the Business in connection therewith, which are all as set forth ON SCHEDULE
1.1(D) (the "Intellectual Property");
(e) all of Park's rights, claims, credits, causes of action or
rights of set-off against third parties relating to the Purchased Assets,
whether liquidated or unliquidated, fixed or contingent, including claims
pursuant to all warranties, representations and guarantees made by suppliers,
manufacturers, contractors and other third parties in connection with products
or services purchased by or furnished to Park for use in the Business or
affecting any of the Purchased Assets;
(f) all goodwill associated with the Business or the Purchased
Assets;
(g) all other or additional privileges, rights, interest, properties
and assets owned by Park of every kind and description wherever located that are
used or intended for use in connection with, or that are necessary to or useful
in the continued conduct of, the Business as presently being conducted other
than retained assets which are set forth on Schedules 1.2).
1.2 RETAINED ASSETS. ABF expressly understands and agrees that the
assets and properties set forth on Schedules 1.2 (the "Retained Assets") shall
be excluded from the Purchased Assets.
1.3 CONTRIBUTION CONSIDERATION. At the Closing (defined below), as
consideration for the contribution of the Purchased Assets, ABF shall deliver to
Park a stock certificate evidencing 20,000,000 shares of validly issued, fully
paid and non-assessable shares of the Common Stock of ABF (the "Shares").
1.4 THE CLOSING. The closing of the contribution of the Purchased
Assets (the "Closing") and the issuance and sale of the Shares shall take place
at the offices of Greenberg Traurig LLP, One Buckhead Plaza, 3060 Peachtree
Road, Suite 1100, Atlanta, Georgia 30305, or at such other place as the parties
may mutually agree. The Closing shall be deemed effective as of 11:59 p.m. on
the date of the Closing (the "Closing Date"). Notwithstanding the foregoing, all
deliveries, payments and other transactions and documents relating to the
Closing shall be interdependent and none shall be deemed effective unless and
until all are effective (except to the extent that the party entitled to the
benefit thereof has waived satisfaction or performance thereof as a condition
precedent to the Closing), and shall be deemed to be consummated simultaneously.
1.5 ASSUMPTION OF LIABILITIES. In addition to the issuance of the
Shares, as additional consideration for the contribution of the Purchased Assets
and in reliance upon the representations, warranties and agreements set forth
herein, ABF shall assume all the liabilities of Park (other than the Retained
Liabilities (defined below) arising from the operation of the Business
(collectively, the "Assumed Liabilities"); together with those liabilities set
forth on Schedule 1.5. Such Assumed Liabilities shall include without
limitation, all trade accounts payable of the Business, all accrued liabilities
of Park relating to the
6
<PAGE>
Business; all indebtedness and indebtedness for borrowed money of Park relating
to the Business; all of the obligations and liabilities of Park arising on or
after the Closing Date pursuant to the terms of any Contract, all liabilities
relating to any employees of Park now or hereafter transferred to ABF in
connection with the Business.
1.6 RETAINED LIABILITIES. ABF does not assume, and shall not at any
time hereafter (including on or after the Closing Date) become liable for, any
liabilities of Park or any of its affiliates, other than the Assumed Liabilities
(THE "Retained Liabilities"). For the avoidance of doubt, the Retained
Liabilities including, but are not limited to, the following: (a) any liability
whether presently in existence or arising hereafter which is attributable to a
Retained Asset; (b) any liability the existence of which constitutes a breach of
any representation or warranty by Park hereunder; (c) any liability whether
currently in existence or arising hereafter relating to fees, commissions or
expenses owed to any broker, finder, investment banker, attorney or other
intermediary or advisor employed by Park or any of its affiliates in connection
with the transactions contemplated hereby or otherwise; (d) any liability,
whether currently in existence or arising hereafter, owed by Park to the members
of Park or any of their respective associates or affiliates; (e) all liabilities
and obligations of Park under this Agreement and any other agreement entered
into in connection herewith and (f) those liabilities described as retained
liabilities on schedule 1.5.
1.7 ASSIGNMENT OF CERTAIN CONTRACTS.
(A) SCHEDULE 1.7 sets forth all Contracts which Park knows (without
any investigation) to require a third party consent to assignment. Nothing
contained in this Agreement shall be construed as an attempt to agree to assign
any Contract which is by its terms non-assignable without the consent of any
other party thereto, unless such consent shall have been given. Park shall use
commercially reasonable efforts to obtain all consents necessary to effect such
assignment prior to the Closing. If ABF shall have elected to close the
transactions contemplated hereby without such consent(s), then Park shall
continue such efforts to obtain such consent(s) after the Closing and Park shall
cooperate with ABF, to the maximum extent permitted by law and the specific
Contract and at Park's cost and expense, in any reasonable arrangement designed
(i) to provide the full benefit of such Contract to ABF, and (ii) to facilitate
the collection of monies as they become due and payable to Park after the
Closing Date pursuant to every such Contract, and Park shall remit such monies
to ABF within ten (10) business days of collection.
(b) ABF, at its cost and expense, shall perform all of Park's
obligations due to be performed after the Closing Date under any such
non-assigned Contract that is included among the Assumed Liabilities to the
extent (i) ABF can perform such obligations without violating the terms of such
non-assigned Contract, and (ii) ABF is being provided the benefits of such
non-assigned Contract. To the extent Park continues its performance under such
Contract for the benefit of ABF, ABF shall pay all reasonable costs and expense
of Park's performance thereunder, and shall indemnify Park for any and all loss
or expense suffered or incurred by Park based upon, resulting from or arising
out of its performance under such Contract, except to the extent that such loss
or expense arises out of Park's willful misconduct or gross negligence.
1.8 RELATED AGREEMENTS AND OTHER DELIVERIES. In addition to the
foregoing, each of ABF and Park covenant and agree to execute the agreements and
make the deliveries described in Article V hereof at the Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF PARK
Park represents and warrants to ABF, which representations and
warranties shall survive the Closing in accordance with Section 6.1, as set
forth below.
7
<PAGE>
2.1 ORGANIZATION. Park is a limited liability company duly organized,
validly existing and in good standing under the laws of the State of Nevada.
Park has the requisite power and authority to own the Purchased Assets.
2.2 AUTHORITY. Park has the necessary power and authority to execute
and deliver this Agreement and all related agreements hereto (the "Other
Agreements") and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by Park have been duly and validly authorized
and approved by all necessary company action of Park and no other company or
member proceedings on the part of Park, its Managers or members are necessary to
authorize or approve this Agreement or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by Park
and, assuming the due authorization, execution and delivery hereof by ABF,
constitutes the legal, valid and binding obligation of Park, enforceable against
Park in accordance with its terms, subject only to bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in effect affecting the
enforceability or rights of creditors generally and to general equitable
principles which may limit the right to obtain equitable remedies.
2.3 NO CONFLICTS, REQUIRED FILINGS AND CONSENTS. The execution, delivery
and performance of this Agreement and all Other Agreements by Park, the
consummation by Park of the transactions contemplated hereby and thereby and
compliance by Park with any of the provisions hereof do not and will not: (a)
conflict with or violate the Certificate of Organization or written Operating
Agreement of Park; (b) to the knowledge of Park result in a material violation
of any statute, ordinance, rule, regulation, order, judgment or decree
applicable to Park, the Business or the Purchased Assets; (c) result in a
violation or breach of, or constitute a default (or an event that, with notice
or lapse of time or both, would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any material
contract, agreement or arrangement related to the Purchased Assets, or result in
the creation or imposition of any lien, charge, restriction, claim or
encumbrance of any nature whatsoever upon any of the Purchased Assets or the
other properties or assets of Park, which violation or breach would have a
Material Adverse Effect; or (d) require any consent, waiver, license, approval,
authorization, order, permit, registration or filing with, or notification (any
of the foregoing being a "Consent") to (i) any government or subdivision
thereof, whether domestic, foreign or multinational, or any administrative,
governmental, or regulatory authority, agency, commission, court, tribunal or
body, whether domestic, foreign or multinational (a "Governmental Entity"); or
(ii), except with respect to the Real Property, any individual, corporation,
trust, partnership, limited liability company or other entity (collectively, a
"Person"), the failure of which to obtain would have a Material Adverse Effect.
A "Material Adverse Effect" means a change in, or effect on, the operations,
affairs, prospects, financial condition, results of operations, assets,
liabilities, reserves or any other aspect of the Business or the Purchased
Assets that results in a material adverse effect on, or a material adverse
change in either the Business or the Purchased Assets.
2.4 RESERVED.
2.5 INTELLECTUAL PROPERTY. To the knowledge of Park, Park owns, or is
validly licensed or otherwise has the right to use or exploit, all of the
Intellectual Property, free of any obligation to make any payment (whether of a
royalty, license fee, compensation or otherwise). The Intellectual Property is
being transferred by Park to ABF free and clear of any liens, pledges,
mortgages, restrictions, adverse claims, security interests, rights of others
and encumbrances (including, without limitation, distribution rights)
attributable to Park. No third party has been granted or assigned by Park any
right to manufacture, assemble, reproduce, distribute, market or exploit any of
its products or services or any adaptations, translations, or derivative works
based on any of Park's products. No third party has been granted or assigned by
Park any rights to any source code belonging to Park or used in the Business,
whether upon the occurrence of a default or specified event or otherwise. Park
has not received any written complaint, claim or notice alleging any such
infringement, violation or misappropriation.
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2.6 BROKERS' FEES. Park has no liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to this transactions
contemplated by this Agreement.
2.7 LITIGATION. Other than the Real Property foreclosure and other
litigationdisclosed in the Contracts, to Park's knowledge, there is no action,
suit, claim, proceeding or investigation pending or, to the best of Park's
knowledge, threatened against or affecting Park or the Purchased Assets, at law
or in equity, or before or by any foreign or domestic, Federal, state, municipal
or other governmental court, department, commission, board, bureau, agency or
instrumentality.
2.8 TAXES. Park has duly and timely filed all federal, state and local
income, franchise, excise, real and personal property and other tax returns and
reports, including extensions, required to have been filed by Park with respect
to the Business and the Purchased Assets on or prior to the date hereof, and has
duly and timely paid all taxes and other governmental charges, and all interest
and penalties with respect thereto, set forth in such returns including, without
limitation, all taxes which Park is obligated to withhold from amounts owing to
employees, creditors and third parties.
2.9 INVESTOR REPRESENTATIONS. Park is knowledgeable, sophisticated and
experienced in business and financial matters and in investing in privately held
business enterprises; it has previously invested in securities similar to the
Shares and it acknowledges that the Shares have not been registered under the
Securities Act of 1933, as amended (the "Securities Act") and understands that
the Shares must be held indefinitely unless they are subsequently registered
under the Securities Act or such sale is permitted pursuant to an available
exemption from such registration requirement; it is able to bear the economic
risk of its investment in the Shares and is presently able to afford the
complete loss of such investment. Park holds the Shares for its own account and
not as nominee or agent for any other person and not with a view to, or for
offer or sale in connection with, any current distribution thereof (within the
meaning of the Securities Act) that would cause the original purchase of the
Shares to be in violation of the securities laws of the United States of America
or any state thereof, without prejudice, however, to its right at all times to
sell or otherwise dispose of all or any part of such Shares pursuant to a
registration statement under the Securities Act or pursuant to an exemption from
the registration requirements of the Securities Act, and subject, nevertheless,
to the disposition of its property being at all times within its control.
2.10 SCHEDULES. All Schedules attached hereto are and will be true,
correct and complete as of the Closing. Matters disclosed on any Schedule shall
be deemed disclosed on all other Schedules furnished by Park hereunder for which
the matters' relevance is reasonably ascertainable from its inclusion in the
former Schedule.
2.11 RESERVED.
2.12 PROPRIETARY INFORMATION. TO PARK'S KNOWLEDGE, no third party has
claimed or, to the best knowledge of Park has any reasonable basis to claim that
Park or, to Park's knowledge, any person employed or engaged by or affiliated
with Park or the Business has (i) violated or may be violating any of the terms
or conditions of his employment, non-competition or non-disclosure agreement
with such third party, or (ii) interfered or may be interfering in the
employment relationship between such third party and any of its present or
former employees. No third party has requested information from Park that
suggests that such a claim might be contemplated. To Park's knowledge, none of
the execution or delivery of this Agreement or any exhibit hereto, or the
carrying on of the business of Park, including the Business, as employees or
agents by any employee of Park, or the conduct or proposed conduct of the
business of Park, including the Business, will conflict with or result in a
breach of the terms, conditions or provisions of or constitute a default under
any contract, covenant or instrument under which any such person is obligated.
2.13 RESERVED.
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2.14 RESERVED.
2.15 OTHER AGREEMENTS. Except for the Management Agreement between Park and
ABF and that certain Warrant Agreement by ABF in favor of Park, each of which is
dated the date hereof, Park is assigning to ABF any written or oral:
(a) agreement with any supplier containing any provision permitting any
party other than Park to renegotiate the price or other terms, or containing any
pay-back or other similar provision, upon the occurrence of a failure by Park to
meet its obligations under the agreement when due or the occurrence of any other
event;
(b) agreement for the future purchase of fixed assets or for
the future purchase of materials, supplies or equipment in excess of its normal
operating requirements;
(c) agreement for the employment of any officer, employee or
other person (whether of a legally binding nature or in the nature of informal
understandings) on a full-time or consulting basis which is not terminable on
notice without cost or other liability to Park, except normal severance
arrangements and accrued vacation pay;
(d) bonus, pension, profit-sharing, retirement,
hospitalization, insurance, stock purchase, stock option or other plan,
agreement or understanding pursuant to which benefits are provided to any
employee of Park;
(e) agreement relating to the borrowing of money or to the
mortgaging or pledging of, or otherwise placing a lien or security interest on,
any asset of Park;
(f) guaranty of any obligation for borrowed money or
otherwise;
(g) agreement, or group of related agreements with the same
party or any group of affiliated parties, under which Park has advanced or
agreed to advance money or has agreed to lease any property as lessee or lessor;
(h) agreement or obligation (contingent or otherwise) to
issue, sell or otherwise distribute or to repurchase or otherwise acquire or
retire any share of its capital stock or any of its other equity securities;
(i) agreement under which it has granted a right of
exclusivity or otherwise has limited or restricted its right to compete with any
person in any respect; or
(j) agreement relating to any conveyance of assets or
liabilities with respect to the Business.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ABF
ABF represents and warrants to Park, which representations and
warranties shall survive the Closing in accordance with Section 6.1, as follows:
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3.1 ORGANIZATION AND QUALIFICATION. ABF is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. ABF has the requisite corporate power and authority to carry on its
business as it is now being conducted and is duly qualified or licensed to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities makes
such qualification necessary, except where failure to be so qualified would not
reasonably be expected to have a material adverse effect on ABF' assets or
business, taken as a whole.
3.2 AUTHORITY. ABF has the necessary corporate power and authority to
execute and deliver this Agreement and all Other Agreements and to consummate
the transactions contemplated hereby. The execution and delivery hereof and the
consummation of the transactions contemplated hereby by ABF have been duly and
validly authorized and approved by all necessary corporate action of ABF, and no
other corporate or shareholder proceedings on the part of ABF, its Board of
Directors or shareholders are necessary to authorize or approve this Agreement
or to consummate the transactions contemplated hereby. This Agreement has been
duly executed and delivered by ABF, and assuming the due authorization,
execution and delivery by Park, constitutes the legal, valid and binding
obligation of ABF, enforceable in accordance with its terms, subject only to
bankruptcy, insolvency, reorganization, moratoriums or similar laws at the time
in effect affecting the enforceability or right of creditors generally and by
general equitable principles which may limit the right to obtain equitable
remedies.
3.3 ABF STOCK.
(a) The authorized capital stock of ABF consists of
200,000,000 shares of Common Stock, $0.00005 par value per share (the "Common
Stock"). Immediately prior to the Closing, 1,682,012 shares of the Common Stock
will be validly issued and outstanding, fully paid and nonassessable, with no
personal liability attaching to the ownership thereof, and no other shares of
capital stock will have been authorized or issued. The stockholders of record
and holders of subscriptions, warrants, options, convertible securities, and
other rights (contingent or other) to purchase or otherwise acquire equity
securities of ABF, and the number of shares of capital stock and the number of
such subscriptions, warrants, options, convertible securities, and other such
rights held by each, are as set forth in Schedule 3.3 hereto. Except as set
forth in the attached schedules, as contemplated by this Agreement (i) no
subscription, warrant, option, convertible security, or other right (contingent
or other) to purchase or otherwise acquire equity securities of ABF is
authorized or outstanding and (ii) there is no commitment by ABF to issue
shares, subscriptions, warrants, options, convertible securities, or other such
rights or to distribute to holders of any of its equity securities any evidence
of indebtedness or asset. Except as provided for in the Certificate of
Incorporation of ABF, as in effect on the Closing Date, or as set forth in the
attached Schedules or as contemplated by this Agreement, ABF has no obligation
(contingent or other) to purchase, redeem or otherwise acquire any of its equity
securities or any interest therein or to pay any dividend or make any other
distribution in respect thereof. To ABF's knowledge, there are no voting trusts
or agreements, stockholders' agreements, pledge agreements, buy-sell agreements,
rights of first refusal, preemptive rights or proxies relating to any securities
of ABF (whether or not ABF is a party thereto). All of the outstanding
securities of ABF were issued in compliance with all applicable Federal and
state securities laws.
(b) When delivered to Park in accordance with the terms
hereof, the Shares shall be (i) duly authorized, fully paid and nonassessable,
and (ii) free and clear of any lien, charge, security interest, pledge, option,
right of first refusal, voting proxy or other voting agreement, or encumbrance
of any kind or nature (any of the foregoing, a "Lien") .
3.4 RESERVED.
3.5 NO CONFLICTS, REQUIRED FILINGS AND CONSENTS. The execution,
delivery and performance of this Agreement and all Other Agreements by ABF, the
consummation by ABF of the
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transactions contemplated hereby and thereby and compliance by ABF with any of
the provisions hereof do not and will not:
(a) conflict with or violate the Certificate of Incorporation
or bylaws of ABF;
(b) to ABF' knowledge, result in a material violation of any
statute, ordinance, rule, regulation, order, judgment or decree applicable to
ABF;
(c) require any Consent by (i) any Governmental Entity; or
(ii) any Person, the failure of which to obtain would have a material adverse
effect.
3.6 BROKERS/FINDERS FEES. ABF has no liability or obligation to pay any
fees or commissions to any broker, finder or agent with respect to this
transactions contemplated by this Agreement.
3.7 STATEMENTS TRUE AND CORRECT. Any representation or warranty made by
ABF in any certificate, exhibit, document or instrument delivered by ABF
pursuant hereto shall be deemed a representation or warranty made herein. No
representation or warranty made by ABF, nor any statement, certificate or
instrument furnished or to be furnished to ABF pursuant to this Agreement or any
other document, agreement or instrument referred to herein or therein, contains
or will contain any untrue statement of material fact or omits or will omit to
state a material fact necessary to make the statement contained therein not
misleading.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 EFFORTS; CONSENTS. Subject to the terms and conditions herein
provided, and fiduciary duties under applicable law, each of the parties hereto
agrees to use its reasonable efforts to take, or cause to be taken, all actions,
and to do, or cause to be done, all things necessary, proper or advisable, to
consummate and make effective as promptly as practicable the transactions
contemplated hereby and to cooperate with each other in connection with the
foregoing. Without limiting the generality of the foregoing, each of Park and
ABF shall use commercially reasonable efforts to (a) obtain or cause to be
obtained all Consents required to be obtained in connection with the
transactions contemplated hereby, (b) make or cause to be made all required
filings with applicable Governmental Entities, and (c) to fulfill all conditions
hereto.
DELIVERY OF BOOKS AND RECORDS. At the Closing, Park shall
provide ABF with all of the books, records, papers and instruments of whatever
nature and wherever located, whether stored in or readable or accessible by
computer or otherwise, including, but not limited to, invoices, engineering
information, sales and promotional literature, manuals and data, sales and
purchase correspondence, lists of present and former suppliers, personnel and
employment records of present and, to the extent lawful, former employees, and
documentation developed or used for accounting, marketing, engineering,
manufacturing or any other purpose that relate to the Business or the Purchased
Assets or that are required, useful or necessary in order for ABF to conduct the
Business from and after the Closing Date. From and after the Closing ABF shall
make available to Park to examine, make abstracts or copies of all of the books,
records, papers and instruments of whatever nature and wherever located, whether
stored in or readable or accessible by computer or otherwise, including, but not
limited to, invoices, engineering information, sales and promotional literature,
manuals and data, sales and purchase correspondence, lists of present and former
suppliers, personnel and employment records of present and, to the extent
lawful, former employees, and documentation developed or used for accounting,
marketing, engineering, manufacturing or any other purpose that relate to the
Business or the Purchased Assets to the extent that Park has a reasonable need
for any such information.
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4.3 LIABILITY LIMIT. Notwithstanding anything herein to the contrary,
neither party will be liable with respect to any subject matter hereof under any
contract, negligence, strict liability or other legal or equitable theory for
any special, consequential or punitive damage for lost data, business or profit,
even if the remedies provided for herein fail of their essential purpose or
either party has been advised of the possibility or probability of such damages.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Deliveries of Park. At the Closing, and as a condition to ABF's
obligations to consummate the transactions contemplated hereby, Park shall
deliver to ABF, properly executed and, except as otherwise provided, dated as of
the date hereof:
(A) THE CONTRIBUTION AND ASSIGNMENT SUBSTANTIALLY IN THE FORM OF
EXHIBIT "A" hereto (the "Contribution Agreement");
(B) THE ASSUMPTION AGREEMENT SUBSTANTIALLY IN THE FORM OF EXHIBIT
"B" hereto (the "Assumption Agreement");
(C) THE ASSIGNMENT AND ASSUMPTION OF CONTRACTS SUBSTANTIALLY IN THE
FORM OF EXHIBIT "C" hereto (the "Contract Assignment");
(D) A CLOSING CERTIFICATE OF PARK, SUBSTANTIALLY IN THE FORM
OF EXHIBIT "D" hereto; (h) such other documents as provided
in this Article or as ABF shall reasonably request.
1.2 DELIVERIES OF ABF. In addition to delivery of the Shares in
accordance with Section 1.3 and in accordance with the Stock Purchase Agreement,
at the Closing, and as a condition to Park's obligations to consummate the
transactions contemplated hereby, ABF shall deliver, or cause to be delivered,
to Park, properly executed and, except as otherwise provided, dated as of the
date hereof:
(a) the Contribution Agreement;
(b) the Assumption Agreement;
(c) the Contract Assignment;
(D) CLOSING CERTIFICATE OF ABF, SUBSTANTIALLY IN THE FORM OF EXHIBIT
"I" hereto; and (e) such other documents as provided in this Article
or as Park shall reasonably request.
ARTICLE VI:
GENERAL PROVISIONS
6.1 Survival; Recourse. The agreements contained herein shall survive
the Closing for a period of two years; and (b) the representations and
warranties made in Articles II and III shall survive the Closing for a period of
one year, and shall survive any independent investigation by the parties, and
any dissolution, merger or consolidation of Park or ABF, and shall bind the
legal representatives, assigns and successors of Park and ABF.
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6.2 FURTHER ASSURANCES. From time to time after the Closing Date, upon
the reasonable request of any party, the other party shall execute and deliver
or cause to be executed and delivered such further instruments of conveyance,
assignment and transfer and take such further action as the requesting party may
reasonably request in order to effectuate fully the purposes, terms and
conditions hereof.
6.3 NOTICES. All notices, request, demands or other communications
hereunder shall be in writing and shall be deemed to have been duly given when
delivered personally or by telecopy (with confirmation of receipt) or one (1)
day after being sent by a nationally recognized overnight delivery service or by
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
IF TO PARK: 39-40 30TH Street
Long Island City, New York 11101
Attn: Manager
With a copy a required copy
(which shall not constitute notice)
to: David M. Pedley, Esq.
Greenberg Traurig LLP
One Buckhead Plaza, Suite 1100
Atlanta, GA 30305
IF TO ABF: 39-40 30TH Street
Long Island City, New York 11101
Attn: President
or to such other address as any party may have furnished to the other in writing
in accordance with this Section 6.3.
6.4 NO THIRD PARTY BENEFICIARIES. This Agreement shall not confer any
right or remedies upon any Person other than the parties hereto and their
respective successors and permitted assigns.
6.5 ENTIRE AGREEMENT. The exhibits and schedules hereto are
incorporated herein by reference. This Agreement and the documents, schedules
and instruments referred to herein and to be delivered pursuant hereto
constitute the entire agreement between the parties pertaining to the subject
matter hereof, and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
There are no other representations or warranties, whether written or oral,
between the parties in connection with the subject matter hereof, except as
expressly set forth herein. No waiver of, or change, alteration, modification or
addition to this Agreement shall be effective unless in writing and properly
executed by the parties hereto.
6.6 ASSIGNMENTS; PARTIES IN INTEREST. Neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by any of the
parties hereto (whether by operation of law or otherwise), except as provided
herein, without the prior written consent of the other parties; any attempted
assignment otherwise is void. Subject to the preceding sentence, this Agreement
shall be binding upon and inure solely to the benefit of each party hereto, and
nothing herein, express or implied, is intended to or shall confer upon any
Person not a party hereto any right, benefit or remedy of any nature whatsoever
under or by reason hereof, except as otherwise provided herein. Notwithstanding
the foregoing, Park and ABF may assign their rights to any affiliate with the
prior written consent from the other party, which consent will not be
unreasonably withheld.
6.7 EXPENSES. Each of the parties shall pay the fees and expenses of
its respective counsel, accountants and other advisors incident to the
negotiation, drafting and execution hereof and consummation
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of the transactions contemplated hereby.
6.8 INCORPORATION OF EXHIBITS AND SCHEDULES. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
6.9 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of New York (without giving effect to the provisions
thereof relating to conflicts of law).
6.10 HEADINGS AND INTERPRETATION. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part, or
to affect the meaning or interpretation, hereof. Whenever the context may
require, any noun or pronoun used herein shall include the corresponding
masculine, feminine or neuter forms. The singular form of nouns, pronouns and
verbs shall include the plural and vice versa.
6.11 COUNTERPARTS; TELECOPIES. This Agreement may be executed by
telecopy and in two or more counterparts, each of which shall be deemed an
original but all of which taken together shall constitute a single agreement.
6.12 SEVERABILITY. If any provision, clause or part hereof or the
application thereof under certain circumstances is held invalid, illegal or
unenforceable in any respect, the validity and enforceability of the remaining
provisions hereof, or the application of any such provision, clause or part
under other circumstances, shall not be in any way affected or impaired thereby.
To the extent such determination is likely to give rise to a Material Adverse
Effect, the parties shall endeavor in good faith to replace the invalid, illegal
or unenforceable provisions with valid provisions the economic effect of which
comes as close as practical to that of the invalid, illegal or unenforceable
provision.
6.13 SIMULTANEOUS TRANSACTION. The parties acknowledge that the
transactions contemplated by this Agreement are an integral part of the closing
of the acquisition of certain assets relating to the Business and the entering
into employment agreements with each of Boris Feigelson and Zeki Kochisarli (the
"First Closings"). In the event the First Closings are not completed, as
determined in the sole discretion of Park, at the election of Park, this
Agreement shall be null and void upon the giving of written notice to the other
by Park.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, ABF and Park have caused this Agreement to be
signed and delivered by their respective duly authorized officers, all as of the
date first written above.
"Park"
PARK VANGUARD, LLC
BY: /S/ MARC A. PALAZZO
-------------------
Name: Marc A. Palazzo
Title: President
"ABF"
ABF ENERGY CORP.
BY: /S/ ADOLPH WEISSMAN
---------------------
Name: Adolph Weissman
Title: President
<PAGE>
EXHIBIT 3
MANAGEMENT AGREEMENT
This Agreement is made and entered into as of June 8th, 2000, by and
among ABF ENERGY CORP., a Delaware corporation (the "Company"), and PARK
VANGUARD, LLC, a Nevada limited liability company or its successors (the
"Manager").
PRELIMINARY STATEMENTS:
Manager intends to acquire stock of the Company representing over
eighty percent (80%) of the then issued and outstanding stock of the Company.
In connection with the foregoing transaction, the Company desires to
engage the services of the Manager on the terms and subject to the conditions
contained in this Agreement.
AGREEMENT:
In consideration of the premises and the respective mutual agreements,
covenants, representations and warranties contained in this Agreement, the
parties agree as follows:
1. APPOINTMENT OF MANAGER. The Company appoints the Manager and the
Manager accepts appointment on the terms and conditions provided in this
Agreement as the sole and exclusive manager of and consultant to the business of
the Company and its subsidiaries.
2. BOARD OF DIRECTORS SUPERVISION. The activities of the Manager to be
performed under this Agreement will be subject to the supervision of the Board
of Directors of the Company (the "BOARD") to the extent required by applicable
law or regulation and subject to reasonable policies consistent with the terms
of this Agreement adopted by the Board and in effect from time to time. Where
not required by applicable law or regulation, the Manager will not require the
prior approval of the Board to perform its duties under this Agreement.
3. AUTHORITY OF MANAGER. Subject to any limitations imposed by
applicable law or regulation, the Manager will render management, consulting and
financial and investment banking services and employee and human resources
services to the Company and its subsidiaries, which services will include advice
and assistance concerning any and all aspects of the operations, planning and
financing of the Company and its subsidiaries, as needed from time to time,
including advising the Company and its subsidiaries in their relationships with
banks and other financial institutions and with accountants, attorneys,
financial advisers and other professionals. Manager shall also have the right to
market Company products at its option. Upon the request of the Board, the
Manager will make periodic reports to the Company with respect to the management
services provided hereunder. The Manager will use its best efforts to cause its
employees and agents to provide the Company and its subsidiaries with the
benefit of their special knowledge, skill and business expertise to the extent
<PAGE>
relevant to the business and affairs of the Company and its subsidiaries. In
addition, the Manager will render advice and assistance in connection with any
acquisitions, dispositions or financing transactions undertaken by the Company
and its subsidiaries and will from time to time bring to the Company such
investment and other acquisition opportunities as the Manager deems appropriate
in its sole discretion.
4. REIMBURSEMENT OF EXPENSES; INDEPENDENT CONTRACTOR. All obligations
or expenses incurred by the Manager in the performance of its duties under this
Agreement will be for the account of, on behalf of, and at the expense of the
Company. The Manager will not be obligated to make any advance to or for the
account of the Company or to pay any sums, except out of funds held in accounts
maintained by the Company, nor will the Manager be obligated to incur any
liability or obligation for the account of the Company without assurance that
the necessary funds for the discharge of the liability or obligation will be
provided. The Manager will be an independent contractor, and nothing contained
in this Agreement will be deemed or construed (a) to create a partnership or
joint venture between the Company and the Manager, (b) to cause the Manager to
be responsible in any way for the debts, liabilities or obligations of the
Company, any of its subsidiaries or any other party, or (c) to constitute the
Manager or any of its employees as employees, officers, or agents of the Company
or any of its subsidiaries.
5. OTHER ACTIVITIES OF MANAGER; INVESTMENT OPPORTUNITIES. The Company
acknowledges and agrees that the Manager will not devote the Manager's (or any
employee, officer, director, affiliate or associate of the Manager) full time
and business efforts to the duties of the Manager specified in this Agreement,
but only so much of such time and efforts as the Manager reasonably deems
necessary. The Company further acknowledges and agrees that the Manager and its
affiliates are or may be engaged in the business of investing in, acquiring
and/or managing businesses for the Manager's own account, for the account of the
Manager's affiliates and associates and for the account of other unaffiliated
parties and that no aspect or element of these activities will be deemed to be
engaged in for the benefit of the Company nor to constitute a conflict of
interest. The Manager will be required to bring only those investments and/or
business opportunities to the attention of the Company which the Manager, in its
sole discretion, deems appropriate.
6. COMPENSATION OF MANAGER.
(a) During the term of this Agreement, the Manager will
receive annually with respect to the management of the business operations of
the Company, a cash consulting and management fee in an amount equal to the
greater of $120,000 per annum or three percent (3.0%) of the pre-tax profits of
the Company, together with its subsidiaries, determined in accordance with
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES ("BASE COMPENSATION"). The Base
Compensation will be paid to the Manager by the Company in advance in equal
quarterly installments; provided, however, that compensation shall accrue but
not be payable hereunder at any time when the Company does not have positive
cash flow. The Base Compensation will be adjusted annually during the term
hereof to reflect any increase from the previous year in the consumer price
index, with the first such adjustment to occur as of January 1, 2002. For
purposes of this Agreement, the consumer price index to be used will be the
"Consumer Price Index for New York Urban Consumers," published by
<PAGE>
the United States Department of Labor, Bureau of Labor Statistics. If the U.S.
Department of Labor ceases to prepare a consumer price index, and there is no
successor, then an equivalent index will be used, prepared by an agency of the
U.S. Government, or by a responsible financial periodical of recognized
authority, to be selected by mutual agreement of the Company and the Manager.
(b) During the term of this Agreement, to the extent that the
Manager shall provide financial or investment banking services to the Company,
the Manager shall be entitled to charge the Company fees for such services, over
and above the Base Compensation, that are equivalent to those generally charged
by providers of such services in arms-length transactions.
7. TERM. This Agreement will commence as of the date hereof and will
remain in effect until May 31, 2005, unless terminated earlier in accordance
with the provisions of this Agreement. This Agreement shall, as of June 1, 2005,
automatically renew for an additional five (5) year term unless either party
gives to the other party written notice of non-renewal on or before December 31,
2004, but not earlier than October 1, 2004.
8. TERMINATION. Either the Company or the Manager may terminate the
Manager's engagement under this Agreement in the event of the breach of any of
the terms or provisions of this Agreement by the other party, which breach is
not cured within 10 business days after notice of the same is given to the party
alleged to be in breach by the other party. If this Agreement is terminated by
the Manager because of the breach of any of the material terms or provisions
hereof by the Company, the Manager will be entitled to recover damages from the
Company and will not be required to mitigate or reduce damages by seeking or
undertaking other management arrangements or business opportunities.
9. STANDARD OF CARE. The Manager (including any person or entity acting
for or on behalf of the Manager) will not be liable for any mistakes of fact,
errors of judgment, for losses sustained by the Company or any subsidiary or for
any acts or omissions of any kind, unless caused by intentional misconduct of
the Manager or engaged in by the Manager in bad faith.
10. INDEMNIFICATION OF MANAGERS. The Company will indemnify and hold
harmless the MANAGER AND ITS PRESENT AND FUTURE OFFICERS, DIRECTORS, AFFILIATES,
EMPLOYEES AND AGENTS ("INDEMNIFIED PARTIES") to the fullest extent permitted by
corporate law as if any of the Indemnified Parties was an officer or director of
the Company. The Company will reimburse the Indemnified Parties on a monthly
basis for any cost of defending any action or investigation (including
attorneys' fees and expenses) subject to an undertaking from any such
Indemnified Party to repay the Company if such party is determined not to be
entitled to indemnity.
11. NO ASSIGNMENT. Without the consent of the Manager, the Company will
not assign, transfer or convey any of its rights, duties or interest under this
Agreement, nor will it delegate any of the obligations or duties required to be
kept or performed by it hereunder. Without the prior written consent of the
Company, the Manager will not assign, transfer or convey any of its rights,
<PAGE>
duties or interests under this Agreement, nor will it delegate any of the
obligations or duties required to be kept or performed by it hereunder.
12. NOTICES. Any notices, requests, demands and other communications
required or permitted to be given under this Agreement will be in writing and,
except as otherwise specified in writing, will be given by personal delivery,
facsimile transmission, Federal Express (or other similar courier service) or by
registered or certified mail, postage prepaid, return receipt requested (a) if
to THE COMPANY OR ANY SUBSIDIARY, TO ABF ENERGY, INC., 39-40 30TH Street, Long
Island, City, New York, New York 11101, Attention: Chief Executive Officer, and
(b) if to the Manager, Park VANGUARD, LLC, 39-40 30TH Street, Long Island City,
New York 11101, Attention: Marc A Palazzo, or to such other addresses as either
party hereto may from time to time give notice of (complying as to delivery with
the terms of this Section 12) to the other. Notice by registered or certified
mail will be effective three days after deposit in the United States mail.
Notice by any other permitted means will be effective upon receipt.
13. SEVERABILITY. If any term or provision of this Agreement or the
application thereof to any person or circumstance will, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, will not be affected thereby, and each term
and provision of this Agreement will be valid and be enforced to the fullest
extent permitted by law.
14. NO WAIVER. The failure of the Company or the Manager to seek
redress for any violation of, or to insist upon the strict performance of, any
term or condition of this Agreement will not prevent a subsequent act by the
Company or the Manager, which would have originally constituted a violation of
this Agreement by the Company or the Manager, from having all the force and
effect of any original violation. The failure by the Company or the Manager to
insist upon the strict performance of any one of the terms or conditions of the
Agreement or to exercise any right, remedy or elections herein contained or
permitted by law will not constitute or be construed as a waiver or
relinquishment for the future of such term, condition, right, remedy or
election, but the same will continue and remain in full force and effect. Except
to the extent that the Company's rights of termination are limited herein, all
rights and remedies that the Company or the Manager may have at law, in equity
or otherwise upon breach of any term or condition of this Agreement, will be
distinct, separate and cumulative rights and remedies and no one of them,
whether exercised by the Company or the Manager or not, will be deemed to be in
exclusion of any other right or remedy of the Company or the Manager.
15. ENTIRE AGREEMENT; CERTAIN TERMS. This Agreement contains the entire
agreement among the parties hereto with respect to the matters herein contained
and any agreement hereafter made will be ineffective to effect any change or
modification, in whole or in part, unless the agreement is in writing and signed
by the Company and the Manager. The terms affiliate and associate will have the
meaning attributed to those terms by the rules and regulations of the Securities
and Exchange Commission.
16. GOVERNING LAW. This Agreement will be governed by and
construed in accordance with the internal laws of the State of New York
<PAGE>
without reference to the laws of any other state.
17. INVESTMENT BY MANAGER. Nothing in this Agreement shall prevent or
restrict Manager from acquiring an equity interest, including a controlling
equity interest, in Company.
18. TIME IS OF THE ESSENCE. Time is of the essence in this Agreement.
19. DUE AUTHORIZATION. The Company represents and warrants to the
Manager that the execution, delivery and performance of this Agreement by the
Company has been duly authorized by all necessary corporate action of the
Company.
20. Arbitration. Any claim, controversy or dispute between the parties,
including, without limitation, any dispute or disagreement involving any party
hereto, or their agents, employees, officers, directors and affiliated agents
("Dispute"), whether at law, in equity or otherwise, shall be resolved by
arbitration conducted by a single arbitrator, who shall be engaged in the
practice of law. All arbitration proceedings arising from this Agreement shall
be governed by the then current rules of the American Arbitration Association
("AAA"), subject to the limitation that the arbitrator shall not have the
authority to award punitive damages. The arbitrator's award shall be final and
binding and may be entered in any court having jurisdiction thereof. The
prevailing party, as determined by the arbitrator, shall be entitled to an award
of reasonable attorneys' fees and costs. The Federal Arbitration Act, 9 U.S.C.
Secs. 1-16, not state law, shall govern the arbitratability of all Disputes. The
laws of the State of New York shall govern the construction and interpretation
of this Agreement, subject to the foregoing provision regarding the Federal
Arbitration Act. All arbitration proceedings related to any Dispute shall occur
in New York City in the State of New York.
IT IS EXPRESSLY AGREED THAT EITHER PARTY MAY SEEK INJUNCTIVE RELIEF OR
SPECIFIC PERFORMANCE OF THE OBLIGATIONS HEREUNDER TO MAINTAIN THE STATUS QUO
DURING THE PENDENCY OF ANY DISPUTE IN AN APPROPRIATE COURT OF LAW OR EQUITY
PENDING AN AWARD IN ARBITRATION. SUBJECT TO THE PRECEDING PARAGRAPH, AND SOLELY
FOR PURPOSES OF INJUNCTIVE RELIEF OR SPECIFIC PERFORMANCE, THE PARTIES
IRREVOCABLY SUBMIT TO THE JURISDICTION OF ANY COURT OF THE STATE OF NEW YORK OR
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first above written.
ABF ENERGY CORP.
BY: /S/ ADOLPH WEISSMAN
-------------------------
Name: Adolph Weissman
Title: President
PARK VANGUARD, LLC
BY:/S/ MARC A. PALAZZO
-------------------------
Marc A. Palazzo
President
<PAGE>
EXHIBIT 4
[GRAPHIC OMITTED]
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN
STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT
AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION
THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE
FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER
OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS
IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR RECEIPT
OF A NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
STOCK PURCHASE WARRANT
To Purchase Shares of Common
Stock of ABF ENERGY CORP.
Date of Issuance: June 8, 2000
The following is a statement of the rights of the holder of this Warrant and the
conditions to which this Warrant is subject, and to which the holder hereof, by
the acceptance of this Warrant, agrees:
fOR VALUE RECEIVED, ABF Energy Corp., a Delaware Corporation (the
"COMPANY"), hereby grants to Park Vanguard, LLC and its registered assigns
("Holder"), the right to purchase from the Company an aggregate of 5,000,000
validly issued, fully paid and nonassessable shares of Common STOCK ("COMMON
STOCK") of the Company at a per share price of $.1875 (which exercise price per
share or any other price as shall result from time to time from the adjustments
specified herein is referred to as the "Purchase Price") (collectively, this
"WARRANT"). This Warrant may be exercised at any time, or from time to time
after the date hereof and on or before December 31, 2003 (the "EXPIRATION
DATE").
The amount of securities purchasable under this Warrant, and the
Purchase Price, are to be determined and subject to adjustment as provided
below.
<PAGE>
1. RESERVED.
2. TITLE OF WARRANT.
Prior to the Expiration Date, and subject to compliance with applicable
laws, this Warrant and all rights hereunder are transferable, in whole or in
part, at the office or agency of the Company referred to in Section 3(a) below,
by the registered holder hereof Holder in person or by duly authorized attorney,
upon surrender of this Warrant and the Assignment Form attached hereto properly
endorsed.
3. EXERCISE OF WARRANT.
(a) The purchase rights represented by this Warrant are exercisable by
the Holder, in whole or in part, at any time before the close of business on the
Expiration Date by the surrender of this Warrant and the Notice of Exercise
attached hereto duly executed at the main office of the Company (or such other
office or agency of the Company as it may designate in writing to the Holder at
the address of the Holder appearing on the books of the Company), and upon
payment of the Purchase Price of the shares of Common Stock thereby purchased
(by cash, check, or in ACCORDANCE WITH SECTION 3(B) below), the Holder shall be
entitled to receive a certificate for the number of shares of Common Stock so
purchased. The Company agrees that upon due exercise of this Warrant by the
Holder, the shares of Common Stock so purchased shall be deemed to be issued to
the Holder as the record owner of such shares of Common Stock as of the close of
business on the date on which this Warrant is exercised.
(b) The Holder hereof may elect to receive, without the payment by such
Holder of any additional consideration, shares of Common Stock equal to the
value of this Warrant or any portion hereof by the surrender of this Warrant or
such portion to the Company, with the net issue election notice annexed hereto
duly executed, at the office of the Company. Thereupon, the Company shall issue
to the Holder such number of validly issued, fully paid and nonassessable shares
of Common Stock as is computed using the following formula:
X = Y (A-B)
-------
A
where X = issued to the Holder pursuant to this
Section 3(b).
where Y = respect of which the net issue election
is made pursuant to this section 3(b).
where A = the Fair Market Value of one share of Common Stock at the time
the net issue election is made pursuant tothis section 3(b).
<PAGE>
B = the Purchase Price in effect under this Warrant at the
time the net issue
ELECTION IS MADE PURSUANT TO THIS SECTION 3(B).
THE TERM "FAIR MARKET VALUE" of a share of Common Stock shall mean (i)
the average of the closing prices of sales of Common Stock on all securities
exchanges on which the Common Stock may at the time be listed, or, if there have
been no sales on any such exchange on any day, the average of the highest bid
and lowest asked prices on all such exchanges at the end of such day, or, if on
any day such security is not so listed, the average of the representative bid
and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, or,
if on any day such security is not quoted in the NASDAQ System, the average of
the highest bid and lowest asked prices on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar successor organization, in each such case averaged
over a period of the 10 consecutive business days prior to the day as of which
"Fair Market Value" is being determined, or (ii) if at any time such security is
not listed on any securities exchange or quoted in the NASDAQ System or the
over-the-counter market, the "Fair Market Value" will be as determined in good
faith by the Board of Directors of the Company.
(c) Certificates for shares of Common Stock purchased hereunder shall be
delivered to the Holder within a reasonable period of time after the date on
which this Warrant is exercised, but in no event shall they be delivered later
than 15 days following any date of exercise (or partial exercise) of this
Warrant.
(d) The Company covenants that all shares of Common Stock which may be
issued upon the exercise of this Warrant will be duly authorized, validly
issued, fully paid and nonassessable and free from all taxes, liens,
encumbrances and charges in respect of the issue thereof (other than taxes in
respect of any transfer occurring contemporaneously with such issue).
4. NO FRACTIONAL SHARES OR SCRIP.
No fractional shares or scrip representing fractional shares shall be issued
upon the exercise of this Warrant. With respect to any fraction of a share
called for upon the exercise of this Warrant, an amount equal to such fraction
multiplied by the current Purchase Price at which each share of Common Stock may
be purchased hereunder shall be paid in cash to the Holder.
5. CHARGES, TAXES AND EXPENSES.
Issuance of certificates for shares of Common Stock upon the exercise
of this Warrant shall be made without charge to the Holder for any issue or
transfer tax or other incidental expense in respect of the issuance of such
certificate, all of which taxes and expenses shall be paid by the Company, and
such certificates shall be issued in the name of the Holder or in such name or
names as may be directed by the Holder; provided, however, that in the event
certificates for shares of Common Stock are to be issued in a name other than
the name of the Holder, this Warrant, when surrendered for exercise, shall be
accompanied by the Assignment Form attached hereto duly executed by the Holder;
and provided further, that upon any transfer involved in the issuance or
<PAGE>
delivery of any certificates for shares of Common Stock, the Company may require
reimbursement for any tax imposed in connection with such transfer.
6. NO RIGHTS AS STOCKHOLDERS.
This Warrant does not entitle the Holder to any voting rights or other
rights as a stockholder of the Company prior to the exercise hereof.
7. EXCHANGE AND REGISTRY OF WARRANT.
This Warrant is exchangeable, upon the surrender hereof by the Holder
at the above-mentioned office or agency of the Company, for a new Warrant of
like tenor and dated as of such exchange. The Company shall maintain at such
office or agency a registry showing the name and address of the Holder. This
Warrant may be surrendered for exchange, transfer or exercise, in accordance
with its terms, at such office or agency of the Company, and the Company shall
be entitled to rely in all respects, prior to written notice to the contrary,
upon such registry.
8. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and in case of
loss, theft or destruction, of indemnity or security reasonably satisfactory to
it, and upon reimbursement to the Company of all reasonable expenses incidental
thereto, and upon surrender and cancellation of such Warrant, if mutilated, the
Company will make and deliver a new Warrant of like tenor and dated as of such
cancellation, in lieu of this Warrant. The foregoing notwithstanding, with
respect to the initial Holder of this Warrant, the Company in lieu of its rights
set forth in the preceding sentence, shall only require an affidavit of loss and
indemnity agreement from such Holder and such Holder shall not be obligated to
provide any security therefore or to pay any fees or expenses in connection
therewith.
9. SATURDAYS, SUNDAYS, HOLIDAYS, ETC.
If the last or appointed day for the taking of any action or the
expiration of any right required or granted herein shall be a Saturday, Sunday,
legal holiday or other day on which banks are required to be closed in New York,
New York, or Atlanta, Georgia., then such action may be taken or such right may
be exercised on the next succeeding day that is not a Saturday, Sunday, legal
holiday or other day on which banks are required to be closed in New York, New
York, or Atlanta, Georgia.
10. ADJUSTMENT AND TERMINATION.
(A) STOCK SPLITS AND COMBINATIONS. If the Company shall at any time
subdivide the outstanding shares of Common Stock or effect a forward stock split
by issuing stock dividends, then the number of shares of Common Stock for which
this Warrant is exercisable immediately prior to that subdivision (the "Number
of Warrant Shares") shall be proportionately increased and the
<PAGE>
purchase price therefor proportionately decreased, and if the Company shall at
any time combine the outstanding shares of Common Stock, then the Number of
Warrant Shares shall be proportionately decreased and the purchase price
therefor proportionately increased. Any adjustment under this Section 9(a) shall
become effective at the close of business on the date the subdivision or
combination becomes effective. No adjustment on account of cash dividends or
interest on the Company's Common Stock or other securities purchasable hereunder
will be made to the Purchase Price under this Warrant.
(B) RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If the Common Stock
issuable on exercise of this Warrant shall be changed into the same or a
different number of shares of any other class or classes of stock, whether by
capital reorganization, reclassification, or otherwise (other than a subdivision
or combination of shares provided for above), then the Holder of this Warrant
shall, upon its exercise, be entitled to receive, in lieu of the Common Stock
which the Holder would have become entitled to receive but for such change, that
number of shares of such other class or classes of stock which is equivalent to
the number of shares of Common Stock that would have been subject to receipt by
the Holder on exercise of this Warrant immediately prior to that change.
(C) REORGANIZATIONS, MERGERS, CONSOLIDATIONS OR SALE OF ASSETS. If at
any time there shall be a capital reorganization of the Company's Common Stock
(other than a subdivision, combination, reclassification or exchange of shares
provided for elsewhere in this Warrant) or merger or consolidation of the
Company with or into another corporation, or the sale of the Company's
properties and assets as, or substantially as, an entirety to any other person
or association, then as a part of such reorganization, merger, consolidation or
sale, lawful provision shall be made so that the Holder of this Warrant shall
thereafter be entitled to receive upon exercise of this Warrant, during the
period specified in this Warrant, the number of shares of stock or other
securities or property of the Company, or of the successor corporation or other
person resulting from such merger or consolidation, to which a Holder of the
Common Stock deliverable upon exercise of this Warrant would have been entitled
on such capital reorganization, merger, consolidation, or sale if this Warrant
had been exercised immediately prior to that reorganization, merger,
consolidation, or sale. In any such case, appropriate adjustment shall be made
in the application of the provisions of this Warrant with respect to the rights
of the Holder after the reorganization, merger, consolidation, or sale to the
end that the provisions of this Warrant (including adjustment of the Number of
Warrant Shares then in effect) shall be applicable after that event in a manner
as nearly equivalent as may be practicable.
(D) PRIOR NOTICES.
(i) Upon any adjustment of the securities issuable upon
exercise of this Warrant, Purchase Price for the shares, and/or any increase or
decrease in the number of shares of Common Stock purchasable upon the exercise
of this Warrant, the Company shall give prompt written notice thereof, by
first-class mail, postage prepaid, addressed to the Holder at the address of the
Holder as shown on the books of the Company, which such notice shall be given
not later than five calendar days following the date of any such event.
<PAGE>
(ii) At least twenty (20) days' prior notice written notice
thereof, by first-class mail, postage prepaid, addressed to the Holder at the
address of the Holder as shown on the books of the Company of any (A)
liquidation, dissolution, or winding up of the Company, whether voluntary or
involuntary, (B) sale of all or substantially all of the assets of the Company,
(C) merger or consolidation of the Company with or into any other corporation,
association or person whereafter the stockholders of the Company fail to own
fifty per cent (50%) or more of the voting power of the surviving corporation,
association or person, or (c) the sale (whether through one sale or multiple
sales to a single person or group of related persons) by the stockholders of the
Company of an aggregate of fifty per cent (50%) or more of the capital stock (by
voting power) of the Company owned by such stockholders in the aggregate
(immediately prior to such transaction or transactions).
(iii) In the event the Company fixes a record date for the
purpose of determining the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution, any security or right convertible into or entitling the
holder thereof to receive Series E Preferred Stock or other securities of the
Company, or any right to subscribe for, purchase or otherwise acquire any shares
of stock of any class or any other securities or property, or to receive any
other right, the Company shall mail to the Holder at least twenty (20) days'
prior notice written notice, by first-class mail, postage prepaid, addressed to
the Holder at the address of the Holder as shown on the books of the Company,
specifying the date on which any such record is to be taken for the purpose of
such dividend, distribution, security or right, and the amount and character of
such dividend, distribution, security or right.
(E) AUTHORIZED SHARES. The Company covenants that during the period
this Warrant is outstanding and exercisable, it will reserve from its authorized
and unissued Common Stock or other securities purchasable hereunder a sufficient
number of shares or other securities, if applicable, to provide for the issuance
of Common Stock or other securities upon the exercise of any purchase rights
under this Warrant.
11. MISCELLANEOUS.
(A) ISSUE DATE. The provisions of this Warrant shall be construed and
shall be given effect in all respects as if it had been issued and delivered by
the Company on the date hereof. This Warrant shall be binding upon any
successors or assigns of the Company. This Warrant shall constitute a contract
under the laws of the State of Delaware and for all purposes shall be construed
in accordance with and governed by the laws of said state without regard to
conflict of law principals.
(B) ACQUISITION FOR INVESTMENT. Unless a current registration statement
under the Securities Act of 1933, as amended, is in effect with respect to the
securities purchasable upon exercise of this Warrant, the Holder hereof, by
accepting this Warrant, covenants and agrees that, at the time of exercise
hereof, and at the time of any proposed transfer of securities acquired upon
exercise hereof, such Holder will deliver to the Company a written statement
that the securities acquired by the Holder upon exercise hereof are for the
account of the Holder for investment and are
<PAGE>
not acquired with a view to, or for sale in connection with, any distribution
thereof (or any portion thereof) and with no present intention (at any such
time) of offering and distributing such securities or any portion thereof. The
certificates evidencing the securities purchasable upon exercise of this
Warrant, if such securities are not subject to a current registration statement,
shall bear a legend to the effect that such securities have not been so
registered and may not be transferred except pursuant to an effective
registration statement under the Securities Act of 1933, as amended, or an
opinion of counsel satisfactory to the Company that such registration is not
required. It is stipulated that Greenberg Traurig LLP shall in any event be
considered to be counsel reasonably acceptable to the Company. The Holder will
comply with all applicable provisions of state and federal securities laws and
acknowledges that the securities acquired upon the exercise of this Warrant may
have restrictions upon its resale imposed by state and federal securities laws.
The Holder covenants and agrees that he is an "accredited investor" as defined
in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as
amended.
(C) MODIFICATION AND WAIVER. This Warrant and any provisions hereof may
be changed, waived, discharged or terminated only by an instrument in writing
signed by the Company and the Holder.
(D) NOTICES. All notices, reports and other communications required or
permitted hereunder shall be in writing and may be delivered in person, by
telecopy with written confirmation, overnight delivery service or U.S. mail, in
which event it may be mailed by first-class, certified or registered, postage
prepaid, addressed to the Holder at its address as shown on the books of the
Company or to the Company at the address listed below.
Each such notice, report or other communication shall for all purposes
under this Warrant be treated as effective or having been given when delivered
if delivered personally or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid, or, if
sent by telecopier with written confirmation, at the earlier of (i) 24 hours
after confirmation of transmission by the sending telecopier machine or (ii)
delivery of written confirmation.
(E) SEVERABILITY . It is the desire and intent of the parties that the
provisions of this Warrant be enforced to the fullest extent permissible under
the law and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, in the event that any provision of this Warrant would be
held in any jurisdiction to be invalid, prohibited or unenforceable for any
reason, such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Warrant or affecting the validity
or enforceability of such provision in any jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not be invalid,
prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Warrant or affecting the validity or enforceability of such
provision in any other jurisdiction.
<PAGE>
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
<PAGE>
IN WITNESS WHEREOF, THIS AGREEMENT HAS BEEN DULY EXECUTED AS OF THE DATE FIRST
ABOVE WRITTEN.
ABF ENERGY CORP.
BY: /s/ Adolph Weissman
-------------------
Name: Adolph Weissman
Title: President
PARK VANGUARD, LLC
By:/s/ Marc Palazzo
------------------------
Name: Marc Palazzo
Title: President
