SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
SCHEDULE l3D
Under the Securities Exchange Act of 1934
(Amendment No. __)*
WILLIAM GREENBERG, JR. DESSERTS AND CAFES, INC.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
393631-10-6
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(CUSIP Number)
Alan Wovsaniker
Lowenstein, Sandler, Kohl,
Fisher & Boylan, P.A.
65 Livingston Avenue
Roseland, New Jersey 07068
(201) 992-8700
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(Name, Address and Telephone Number
of Person Authorized to Receive
Notices and Communications)
January 23, 1997
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(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule l3G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule l3d-1(a) for other parties to whom copies are
to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP NO. 393631-10-6
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1) Names of Reporting Persons (S.S. or I.R.S. Identification Nos. of Above
Persons):
Philip Grabow
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2) Check the Appropriate Box if a Member of a Group (See Instructions):
(a) Not Applicable
(b) Not Applicable
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3) SEC Use Only
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4) Source of Funds (See Instructions):OO (See Item 3)
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5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d)
or 2(e):
Not Applicable
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6) Citizenship or Place of Organization:
United States
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Number of 7) Sole Voting Power: 850,000*
Shares Beneficially -----------------------------------------------
Owned by 8) Shared Voting Power: 0
Each Reporting -----------------------------------------------
Person With: 9) Sole Dispositive Power: 850,000*
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10) Shared Dispositive Power: 0
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11) Aggregate Amount Beneficially Owned by Each Reporting Person:
850,000*
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12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See
Instructions):
Not Applicable
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13) Percent of Class Represented by Amount in Row (11):
24.5%
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14) Type of Reporting Person (See Instructions): IN
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* Includes 500,000 shares of common stock of the Company owned directly by
Mr. Grabow and warrants exercisable by Mr. Grabow to purchase an
additional 350,000 shares of the common stock of the Company.
<PAGE>
Item 1: Security and Issuer:
This statement relates to both the common stock of William Greenberg, Jr.
Desserts and Cafes, Inc. (the "Company") and warrants to purchase shares of the
common stock of the Company. The issuer has principal executive offices located
at 535 West 47th Street, New York, New York 10036.
Item 2: Identity and Background
a) Name: Philip Grabow
b) Residence or Business Address:
c/o J.M. Specialties, Inc.
222 New Road
Parsippany, NJ 07054
c) Occupation: Chief Executive Officer and President
William Greenberg, Jr. Desserts and Cafes, Inc.
533 West 47th Street
New York, New York 10036
d) Convictions: None
e) Civil Proceedings: None
f) Citizenship: United States
Item 3: Source and Amount of Funds or Other Consideration
On January 17, 1997, the Company entered into a stock purchase agreement
(the "Stock Purchase Agreement") with Mr. Grabow, pursuant to which, on January
23, 1997, the Company consummated the purchase from Mr. Grabow of all of the
outstanding shares of J.M. Specialties, Inc., a New Jersey corporation ("JMS"),
in exchange for (i) $900,000 in cash, (ii) 500,000 shares (the "Shares") of the
common stock of the Company and (iii) 350,000 warrants (the "Warrants")
exercisable for shares of common stock of the Company (the "Transaction").
Item 4: Purpose of Transaction
The purpose of the Transaction was for the Company to acquire Mr. Grabow's
business and provide Mr. Grabow an opportunity to participate in the management
of the Company. In connection therewith, effective January 23, 1997, Mr. Grabow
was elected to serve as a director of the Company and as its President and Chief
Executive Officer. Also in connection with the Stock Purchase Agreement, the
Company transferred all of the business and assets owned by the Company prior to
the Transaction to a wholly-owned subsidiary in exchange for all of the issued
and outstanding shares of common stock of such entity (the "Subsidiary"). As a
result, the Company currently acts as holding company with two wholly-owned
subsidiaries, JMS and the Subsidiary. Other than as set forth in the preceding
sentences, Mr. Grabow does not have any present plans or intentions which relate
to or would result in any of the transactions required to be described in Item 4
of Schedule 13D.
Item 5: Interest in Securities of the Issuer
As of January 28, 1997, there were 3,121,050 shares of common stock of the
Company issued and outstanding. Mr. Grabow beneficially owns 850,000 shares of
the common stock of the Company, or 24.5% of the issued and outstanding shares
of the common stock of the Company.
Item 6: Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
See Item 4 for information regarding the Stock Purchase Agreement pursuant
to which Mr. Grabow received the Shares and the Warrants.
In connection with the Stock Purchase Agreement, Mr. Grabow and the Company
entered into (i) a warrant agreement, dated as of January 23, 1997, regarding
without limitation the exercise, transferability and redemption of the Warrants
and (ii) a registration rights agreement, dated as of January 23, 1997,
regarding the terms of the registration of the Warrants.
Item 7: Material to be filed as exhibits.
(A) Stock Purchase Agreement, dated as of January 17, 1997, by and
between the Company and Philip Grabow, without exhibits.
(B) Warrant Agreement, dated as of January 23, 1997, by and between
the Company and Philip Grabow, without exhibits.
(C) Registration Rights Agreement, dated as of January 23, 1997, by
and between the Company and Philip Grabow.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned hereby certifies that the information set forth in
this statement is true, complete and correct.
January 29, 1997
/s/ Philip Grabow
_____________________________
Philip Grabow
ATTENTION: INTENTIONAL MISSTATEMENTS OR OMISSIONS OF FACT CONSTITUTE FEDERAL
CRIMINAL VIOLATIONS (SEE 18 U.S.C. 1001).
EXHIBIT A
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of January 17, 1997 between William
Greenberg Jr. Desserts and Cafes, Inc., a New York corporation with offices at
533 West 47th Street, New York, New York 10036 (the "Buyer"), and Philip Grabow
(the "Seller"):
W I T N E S S E T H:
WHEREAS, J.M. Specialties, Inc., a New Jersey corporation (the
"Company"), is engaged in the business of producing a line of dessert batter and
frozen-finished dessert products (the "Business" or "Business of the Company")
and the Buyer is engaged in the business of producing a broad line of premium
quality pastries, cakes, pies, cookies and other assorted desserts which are
produced by hand at its bakery, and marketed through its three retail stores in
New York City, its institutional/wholesale division, and its mail order division
(the "Business of the Buyer");
WHEREAS, the Seller desires to sell and the Buyer desires to purchase
from Seller, all of the issued and outstanding capital stock of the Company (the
"JMS Shares") on the terms and subject to the conditions set forth herein;
WHEREAS, certain terms used herein are defined in Article IX hereof,
NOW, THEREFORE, in consideration of the mutual promises, covenants and
other agreements contained herein, the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE; CLOSING
SECTION 1.1 Purchase and Sale of JMS Shares. Subject to the terms and
conditions set forth herein, Seller agrees to sell, transfer and deliver to the
Buyer, and the Buyer agree to purchase, acquire and accept from Seller, the JMS
Shares.
SECTION 1.2 Purchase Price. The purchase price (the "Purchase Price")
payable by the Buyer to the Seller for the JMS Shares shall consist of the
following:
(a) Buyer shall pay to Seller the sum of $900,000 in cash,
payable at the Closing. Buyer shall deliver said sum by cashier's or certified
check made payable to the order of Seller or by wire transfer to Seller.
<PAGE>
(b) Buyer shall issue unregistered shares of its common stock,
par value $.001 per share (the "Buyer Common Stock") to Seller in an amount
equal to 500,000 shares of Buyer Common Stock.
(c) Buyer shall issue 350,000 common stock purchase warrants
(the "Warrants") to Seller. The Warrants, which will be substantially in the
form of Exhibit A hereto, will entitle the holders thereof to purchase one share
of Buyer Common Stock at the exercise price of $2.50 per share until December
31, 2000.
SECTION 1.3 Closing. The closing (the "Closing") of the transactions
contemplated hereby shall take place at the offices of Baer Marks & Upham LLP,
805 Third Avenue, New York, New York at 10 a.m. local time, on January 23, 1997
(the "Closing Date"). All transactions occurring on the Closing Date shall be
deemed to have taken place concurrently.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that:
SECTION 2.1 Organization and Power. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the state of
New Jersey, and has full power and authority (corporate or otherwise) to own its
assets and to carry on the Business of the Company as presently conducted.
SECTION 2.2 Authority Relative to this Agreement. Seller has full power,
capacity and authority to execute and deliver this Agreement and each other
document contemplated hereby and to which it is a party (the "Transaction
Documents") and to consummate the transactions contemplated hereby and thereby
(the "Contemplated Transactions"). The execution and delivery of this Agreement
and the consummation of the Contemplated Transactions have been duly and validly
authorized by Seller and no other proceeding on the part of Seller (or any other
Person) is necessary to authorize the execution and delivery by Seller of this
Agreement or the consummation of the Contemplated Transactions. This Agreement
has been duly and validly executed and delivered by Seller, and (assuming the
valid execution and delivery of this Agreement by the other parties hereto)
constitutes the legal, valid and binding agreement of Seller enforceable against
Seller in accordance with its terms except as such obligations and their
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforcement of creditors' rights
generally and except that the availability of equitable remedies, including
specific performance, is subject to the discretion of the court before which any
proceeding therefor may be brought (whether at law or in equity).
<PAGE>
SECTION 2.3 Capitalization. The authorized capital stock of the Company
consists of 2,000 shares of Common Stock, no par value (the "Company Common
Stock"), of which 200 shares are issued and outstanding and are owned by Seller.
The JMS Shares constitute 100% of the issued and outstanding capital stock of
the Company. There are no voting trusts or other agreements or understandings
with respect to the voting of the capital stock of the Company. There are no
outstanding (i) securities of the Company convertible into or exchangeable for
capital stock or voting securities of the Company, or (ii) options, warrants or
other rights to acquire from the Company, and no obligation of the Company to
issue, any capital stock or securities convertible into or exchangeable for
capital stock or other voting securities of the Company. There are no
outstanding obligations of the Company to repurchase, redeem or otherwise
acquire any securities of the Company. The Company does not have any equity
interest in any other Person.
SECTION 2.4 Title to and Validity of the JMS Shares. The JMS Shares have
been duly authorized, validly issued, fully paid and are nonassessable and were
not issued in violation of any preemptive or similar rights. Seller owns and
holds title to such JMS Shares free and clear of any Lien of any kind and, at
the Closing against payment for same, Buyer will acquire title to the JMS
Shares, free and clear of any Lien of any kind. The JMS Shares are not subject
to any restrictions on transferability other than restrictions imposed by (a)
the Securities Act of 1933, as amended (the "1933 Act") and (b) applicable state
securities laws.
SECTION 2.5 No Conflicts; Consents. The execution and delivery by Seller of
this Agreement and the performance of Seller's obligations hereunder will not
(i) if the consents set forth on Schedule 2.5 hereto (the "Seller Required
Consents") are obtained, require Seller to obtain any consent, approval or
action of or waiver from, or make any filing with, or give any notice to, any
Governmental Body or any other Person; (ii) violate, conflict with or result in
the breach of any of the terms of, result in a material modification of the
effect of, or otherwise cause the termination of, give any other contracting
party the right to terminate, or constitute (with notice or lapse of time or
both) a default under, any material Contract to which either Seller or the
Company is a party or by or to which any of them may be bound or subject, or
result in the creation of any Lien upon the JMS Shares or upon any property of
the Company, except for any of the foregoing which, individually or in the
aggregate, do not and would not have a material adverse effect on the Condition
of the Company; (iii) violate any Order of any Governmental Body against, or
binding upon, Seller or the Company, or their respective properties or business;
or (iv) violate any Law of any Governmental Body applicable to Seller or the
Company.
SECTION 2.6 Charter Documents and Corporate Records. (a) Seller has
heretofore (i) delivered to Buyer true and complete copies of the Certificate of
Incorporation and By-laws, or comparable instruments, of the Company as in
effect on the date hereof together with all amendments thereto, and (ii) have
made available to Buyer for inspection the true and complete minute books and
stock ledger of the Company.
<PAGE>
(b) Since January 1, 1995 all financial, business and accounting books and
records relating to the Company of whatever kind have been accurately kept and
completed in all material respects, and there are no material inaccuracies or
discrepancies of any kind contained or reflected therein.
SECTION 2.7 Litigation. There is no litigation, proceeding, judgment, order
or decree pending or, to the knowledge of Seller, threatened against the Seller
or Company or to which Seller or the Company is a party, with respect to the
Contemplated Transactions or which, individually or in the aggregate, has or may
have a material adverse effect on the Condition of the Company. Except as set
forth on Schedule 2.7, there are no judgements of record against the Company
(or, insofar as it relates to the Business of the Company, the Seller), nor has
any petition in bankruptcy or an insolvency proceeding been filed by or against
it, nor has it made any general assignment for the benefit of creditors.
SECTION 2.8 Financial Condition. (a) Seller has delivered to Buyer (i) the
audited balance sheet of the Company as of December 31, 1995 and 1994, and the
related statements of income and retained earnings, and cash flows for the years
then ended and (ii) the unaudited balance sheet of the Company as at September
30, 1996 and 1995 and the related statements of income and retained earnings and
cash flows for the periods then ended, (collectively, the "Company Financial
Statements"), a copy of which is annexed hereto as Schedule 2.8A hereto. The
Company Financial Statements are true, complete and correct in all material
respects and fairly present the financial condition of the Company as of such
date and its results of operations for the periods then ended. Except as
specifically set forth in the Company Financial Statements or in Schedule 2.8B,
the Company Financial Statements have been prepared in accordance with GAAP
applied consistently throughout the relevant periods.
(b) Except as set forth in Schedule 2.8C, as of the date of the Company
Balance Sheet, the Company did not have any Liabilities that were not fully and
adequately reflected or reserved against on the Company Balance Sheet, and the
Company has not, except in the ordinary course of business consistent with past
practice, incurred any Liabilities since such date.
(c) There is set forth on Schedule 2.8D: (i) a brief description of each
Liability in the amount of $50,000 or more outstanding on the date hereof; (ii)
the name and address of the creditor, if any; and (iii) the amount thereof.
SECTION 2.9 Taxes. Except as set forth on Schedule 2.9: (a) The Company has
filed, or will file, all Returns required to be filed by the Company on or
before the Closing Date with respect to Taxes. All Tax Returns of the Company
filed or to be filed by the Company prior to the Closing Date were, and will be,
true and correct in all material respects as of the date on which they were, or
are, filed.
<PAGE>
(b) The Company and the Seller have paid, or will pay on or before the
Closing Date, all Taxes shown to be due on all Returns described in Section
2.9(a) above, which are filed on or before the Closing Date.
(c) All Tax deficiencies asserted or assessed against the Company have been
paid or finally settled.
(d) All of the Company's Returns have been audited by the IRS or the
relevant state and local Tax Authorities or, except for the Company's Returns
filed in connection with fiscal years ending in 1993, 1994 and 1995, closed by
applicable statutes of limitation, and all Liabilities for Taxes asserted by the
IRS (or the relevant Tax Authority) have been satisfied.
(e) There is no outstanding request for any extension of time within which
to pay Taxes of the Company not yet paid.
(f) There has been no waiver or extension of any applicable statute of
limitations for the assessments or collection of any Company's Taxes.
(g) There is no pending or, to the best of Seller's knowledge, threatened
action, audit, proceeding or investigation for the assessment or collection of
Taxes of the Company.
(h) The Company has not taken, and will not take, any action not in
accordance with past practice nor engaged in any activity outside the ordinary
course of business that would have the effect of (i) deferring any Tax Liability
for the Company from any taxable period of the Company ending on or before the
Closing Date to any taxable period ending after the Closing Date; (ii) deferring
the recognition of any item of income from any Taxable period of the Company
ending on or before the Closing Date to any Taxable period ending after the
Closing Date; or (iii) accelerating the recognition of any item of loss,
deduction or credit from any Taxable period of the Company ending after the
Closing Date to any Taxable period ending on or before the Closing Date.
(i) No consent has been filed under Section 341(f) of the Code with respect
to the Company.
(j) The Company is not and never has been a member or included in any
consolidated combined or unitary group for purposes of filing Tax Returns or
paying Taxes at anytime. The Company has no liability for Taxes of any other
person under Treasury Regulations Section 1.1502-6 (or any similar provisions of
state or foreign laws), or as a transferee of such person, or under any other
provisions of laws or tax sharing, indemnity or similar Contracts.
(k) The Company is not required to include in income any adjustment
pursuant to Sections 481(a) of the Code by reason of a change in accounting
method nor does the Seller
<PAGE>
or the Company have any knowledge that the IRS (or the relevant Tax Authority)
has proposed, or is considering, any such change in accounting method.
SECTION 2.10 Permits. Schedule 2.10 sets forth each material permit,
license, consent, approval, or order of or from or registration with, any
Governmental Body, that is required or necessary for or to the conduct of the
Business of the Company or ownership or use of any of the Company's properties
or assets (collectively, "Permits"). Each Permit listed on Schedule 2.10 is in
full force and effect until the expiration date set forth thereon. Except as is
set forth on Schedule 2.10, no violations are or have been recorded in respect
of any Permit, and no proceeding, investigation, or request for information
which may lead to a proceeding is pending or, to the knowledge of Seller,
threatened, to revoke or limit any Permit.
SECTION 2.11 Absence of Certain Changes. Since the Company Balance
Sheet date, except as contemplated by this Agreement or as disclosed in Schedule
2.11, the Company has conducted its business in the ordinary course consistent
with past practices and there has not been:
(a) Any event (other than those events affecting the dessert industry
generally) that has had a material adverse effect on the operations of the
Company, individually or in the aggregate;
(b) Any amendment to the Certificate of Incorporation or By-laws of
the Company or any amendment to any term of any outstanding security of the
Company;
(c) Any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company which,
individually or in the aggregate has had or will reasonably be expected to have
a material adverse effect on its operations;
(d) Any (i) incurrence, assumption or guarantee by the Company of any
debt other than in the ordinary course of business in amounts and on terms
consistent with past practices, (ii) issuance or sale of any securities
convertible into or exchangeable for debt securities of the Company, or (iii)
issuance or sale of options or other rights to acquire from the Company,
directly or indirectly, debt securities of the Company or any securities
convertible or exchangeable for any such debt securities.
(e) Any creation, incurrence or assumption by the Company of any Lien
and any asset other than (i) Liens for Taxes not yet due or being contested in
good faith (and for which adequate reserves have been established); (ii) Liens
which do not materially detract from the value of such asset as now used, or
materially interfere with any present or intended use of such asset; or (iii)
warehousemen's, mechanics, carriers', landlords' repairmen's or other similar
Liens arising in the ordinary course of business;
<PAGE>
(f) Any making or forgiving of any loan, advance or capital
contributions to or investment in any Person other than loans, advances or
capital contributions to or investments in wholly-owned subsidiaries made in the
ordinary course of business consistent with past practices;
(g) Except in the ordinary course of business, any transaction or
commitment made, or any Contract entered into, by the Company relating to its
assets or business (including the acquisition or disposition of any substantial
assets) or any relinquishments by the Company or other party of any Contract or
other right;
(h) Any change in any method of accounting or accounting practice by
the Company or its marketing practices;
(i) Any assumption or guarantee of the obligations of any Person;
(j) Any grant of any severance or termination pay to any employee of
the Company, any entering into of any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
employee of the Company or any increase in benefits payable under any existing
severance or termination pay policies or employment agreements, or any increase
in compensation, bonus or other benefits payable to any employee of the Company,
other than routine increases for employees in the ordinary course of business or
disclosed to Buyer in writing prior to the date hereof or on any Schedule;
(k) Any intentional waiver of any material right under any Contract of
the type required to be set forth on any Schedule;
(l) Except for any changes made in the ordinary course of business,
any material change in any business policies of the Company, including pricing,
purchasing, production, personnel, sales or product acquisition/return policies;
(m) Except in the ordinary course of business, any payment, directly
or indirectly, of any Liability before the same became due in accordance with
its terms;
(n) Any termination or failure to renew, or the receipt of any written
threat (that was not subsequently withdrawn) to terminate or fail to renew, any
Contract that is or was material to the operation; or
(o) Any agreement or arrangement made by Seller to take any action
which, if taken prior to the date hereof, would have made any representation or
warranty in this Section untrue or incorrect in any material respect.
SECTION 2.12 Properties. (a) The Company does not own any real
property. Schedule 2.12A sets forth a complete list and brief description of all
real property leased or
<PAGE>
operated by the Company (the "Company Leased Real Property"). With respect to
the Company Leased Real Property, Schedule 2.12A also sets forth the date of
each lease and any amendments thereto, the term thereof, including any renewal
options, options to purchase, rights of first refusal, and the aggregate monthly
rental payable thereunder.
(b) With respect to the Company Leased Real Property and the Company's
operations thereat, except as set forth in Schedule 2.12A:
(i) To the knowledge of Seller, there are no violations of any Law
(including but not limited to zoning and setback requirements) where the effect
of any such violation, individually or in the aggregate, would have a materially
adverse effect on the Condition of the Company;
(ii) To the knowledge of Seller, the Company has obtained and complied
with all Permits and Orders, except where the failure to obtain such Permits and
Orders or comply therewith, individually or in the aggregate, would not have a
material adverse effect on the Condition of the Company;
(iii) To the knowledge of Seller, all buildings, structures and other
improvements located thereon that are leased are in working condition and
repair, reasonable wear and tear excepted, except where such failure to be in
working condition and repair, reasonable wear and tear excepted, would not have
a material adverse effect on the Condition of the Company, and the Company has
not done or performed, or caused to be done or performed, any work or required
any services within the past year except for which payment in full has been made
and lien waivers obtained;
(iv) To the knowledge of Seller, there is no pending or threatened
Claim (including third party Claims), or any existing condition or basis which
may give rise to any such Claim, or which may otherwise result in the imposition
of a Lien or forfeiture of any of the Company Leased Real Property, or otherwise
prohibit, restrict or materially interfere with its use as presently conducted
except for Claims which would not have a material adverse effect on the
Condition of the Company;
(v) The Company has a valid and existing leasehold interest in the
Company Leased Real Property subject to no Liens except for Company Permitted
Liens.
(c) Seller has heretofore provided to Buyer a complete and correct
list and description of all tangible property (the "Company Tangible Property")
owned or used by the Company or to which the Company holds an option to acquire
having a value individually of $10,000 or more or $25,000 or more in the
aggregate in case of any group of similar items of Company Tangible Property,
including, without limitation, all machinery, equipment, furniture, furnishings,
leasehold improvements, fixtures and vehicles. All Company Tangible Property has
been maintained in the ordinary course and is in working order, reasonable wear
and tear excepted, except for a nonmaterial portion of such Company Tangible
Property that may be
<PAGE>
undergoing repairs or maintenance in the ordinary course and except where such
failure to maintain would not have a material adverse effect on the Condition of
the Company.
(d) Schedule 2.12B sets forth the date of each lease of Company
Tangible Property and any amendments thereto, the term thereof including renewal
options, options to purchase and the aggregate monthly rent payable thereunder.
(e) Except as set out in Schedule 2.12C, the Company has good title to
all Company Tangible Property reflected on the Company Balance Sheet or acquired
after the Company Balance Sheet date except for Company Tangible Property sold
or disposed of since the Company Balance Sheet date in the ordinary course of
business consistent with past practice. The Company has good title to all raw
materials, work in process or finished Company products located at the premises
of any Contractor. Except as set forth on Schedule 2.12C, none of such Company
Tangible Property is subject to any Liens, except for the following
(collectively, "Company Permitted Liens"):
(i) Liens disclosed on the Company Balance Sheet or the notes thereto;
(ii) Liens for Taxes not yet due or payable or being contested in good
faith (and for which adequate reserves have been established on the Company
Balance Sheet);
(iii) Liens, easements, zoning or other planning restrictions or
limitations on use or other irregularities in title, none of which materially
detracts from the value of such Assets as now used, or materially interferes
with any present use of such Assets;
(iv) Liens arising in the ordinary course of business which do not
materially detract from the value of such Assets as now used or materially
interfere with any present use of such Assets; and
(v) Liens of carriers, warehousemen, mechanics, materialmen, vendors,
lessors and landlords incurred in the ordinary course of business.
SECTION 2.13 Intangible Property. The Company does not own or use any
patents, trademarks, registered copyrights, service marks or trade names except
as listed on Schedule 2.13.
SECTION 2.14 Insurance Policies. Except as set forth on Schedule 2.14,
there are no insurance policies in effect with respect to the Company or the
Business of the Company. To the knowledge of Seller, all insurance policies in
effect with respect to the Company or the Business of the Company are in full
force and effect. Neither the Company nor Seller knows of any threatened
termination of, or premium increase with respect to, any of such policies. True
and complete copies of all of such policies have been made available to Buyer.
<PAGE>
SECTION 2.15 Contracts. (a) Except for (i) purchase orders with
suppliers or sales orders from customers arising in the ordinary course of
business and (ii) Contracts pursuant to the terms of which Company is to make or
receive payments not in excess of $35,000 per annum, Schedule 2.15 sets forth as
of the date hereof a complete and accurate list and description of all Contracts
to which the Company is a party or by or to which it or its assets or properties
are bound or subject, including, without limitation:
(i) Contracts with any current or former shareholder, officer,
director, employee, independent contractor, consultant, agent or other
representative or with any Affiliate of any of the foregoing;
(ii) Contracts with any labor union or association representing any
employee;
(iii) Contracts for the purchase of materials, supplies, equipment,
merchandise or services in excess of $35,000 for any one individual item;
(iv) Other than in the ordinary course of business: (A) Contracts for
the sale of any of its assets or properties or business or (B) Contracts for the
grant to any Person of any preferential rights to purchase any of its assets or
properties;
(v) Partnership or joint venture Contracts;
(vi) Contracts under which the Company agrees to indemnify any party;
(vii) Contracts under which the Company agrees to share Tax liability
of or with any party;
(viii) Contracts that cannot be cancelled without liability, premium
or penalty;
(ix) Contracts that can be cancelled only on 60 days' or more notice;
(x) Any special financial arrangements with the largest (in terms of
sales volume) 25 customers, referral sources or third party payors of the
Company that is outside of the Company's published policies including, but not
limited to, any arrangements relating to chargebacks, allowances and payment
terms;
(xi) Contracts with any Person to advertise or market the Company's
products or services other than in the ordinary course of business;
(xii) Contracts containing covenants not to compete in any line of
business or with any Person in any geographical area (or not to solicit or
accept any business) or covenants of any other Person not to compete in any line
of business or in any geographical area (or not to solicit or accept any
business);
<PAGE>
(xiii) Contracts relating to the acquisition of any operating business
or the capital shares of any other Person;
(xiv) Options for the purchase or sale of any asset, tangible or
intangible;
(xv) Contracts requiring the payment to any Person of an override or
similar commission or fee;
(xvi) Contracts relating to all Liabilities;
(xvii) Contracts with customers, referral sources, third party payors,
independent suppliers, contractors and manufacturers other than in the ordinary
course of business;
(xviii) Sales agency, licensing, representative or distributorship
Contracts;
(xix) Contracts for the payment of fees or other consideration to any
officer or director of Seller or to any other entity in which any of the
foregoing has an interest;
(xx) management Contracts and other similar agreements with any
Person;
(xxi) Any other Contracts not made in the ordinary course of business
or pursuant to the terms of which there is either a current or future obligation
or right of the Company to make payments or receive payments in excess
(individually or, in the case of any group of similar items, in the aggregate)
of $35,000 throughout the term thereof. Schedule 2.15 also lists and describes
the status of all Contracts currently in negotiation or proposed by the Company
as to which there exists a draft agreement, letter of intent or similar
instrument and which is of a type which if entered into by the Company would be
required to be listed on Schedule 2.15 or on any other Schedule (the "Proposed
Contracts").
(b) There are no Contracts, other than those set forth on Schedule
2.15, and on any other Schedule hereto, that are required to be disclosed
hereunder. Except as set forth on Schedule 2.15, to the knowledge of Seller, all
such Contracts and all Contracts reflected on any other Schedule hereto are
valid, subsisting, in full force and effect and binding upon the Company, and,
to the knowledge of Seller, on the other parties thereto in accordance with
their terms, and the Company has paid in all respects or accrued all amounts due
thereunder and has satisfied in all respects or provided for all of its
liabilities and obligations thereunder to be satisfied or provided for through
the date hereof, and is not in default under any of them in any material
respect, nor, to the knowledge of the Seller, is any other party to any such
Contract in default thereunder in any respect, nor, to the knowledge of the
Seller, does any condition exist that with notice or lapse of time or both would
constitute a default thereunder.
(c) There have been delivered to Buyer, true and complete copies of
(i) all of the Contracts required to be set forth on Schedule 2.15 or on any
other Schedule and (ii) the
<PAGE>
most recent draft, letter of intent or term sheet of all of the Proposed
Contracts required by the provisions of Section 2.15(a)(xxi) to be set forth on
Schedule 2.15.
SECTION 2.16 Suppliers, Customers and Contractors. Schedule 2.16A
lists, by dollar volume paid for the 12 months ended December 31, 1995, the 15
largest raw material suppliers and the 25 largest customers of the Company.
Schedule 2.16B lists the names and addresses of those Contractors retained by
the Company involving payments, for the 12 months ended December 31, 1995, in
excess of $50,000. Except as set forth on Schedule 2.16C: (i) no supplier or
Contractor has refused to provide credit, or has suspended the provision of
credit, to the Company or as a result of the failure or delay in payment of
amounts due to such suppliers or Contractors; (ii) all amounts owing to such
suppliers and Contractors, if not in dispute, have been paid in accordance with
their respective terms; (iii) no Person within the last twelve months has
threatened in writing to cancel, or otherwise terminate, the relationship of
such Person with the Company, and (iv) no Person during the last twelve months
has decreased materially or, to the knowledge of Seller, threatened in writing
to decrease or limit materially, its relationship with the Company or, to the
knowledge of Seller, intends to decrease or limit materially its services or
supplies to the Company or its usage or purchase of the services or products of
the Company.
SECTION 2.17 Employee Benefits Plans. Except as set forth on Schedule
2.17, neither the Company nor any other company or entity which together with
the Seller constitutes a member of the Company's "controlled group" (within the
meaning of Sections 4001(a)(14) and/or (b) of ERISA, and/or Sections 414(b),
(c), (m) or (o) of the Code (hereinafter referred to collectively as the
"Company Group")), has at any time adopted, maintained, or has any present or
future obligation to contribute to or make payment under, any employee pension
benefit, employee welfare benefit, pension, profit sharing, retirement, deferred
compensation, stock purchase, stock option, incentive, bonus, sabbatical leave,
vacation, severance (including, without limitation, arrangements providing for
benefits in the event of a change of ownership in whole or in part of the
Company), disability, hospitalization, medical insurance, relocation, child
care, educational assistance or other employee benefit plan as defined in
Section 3(3) of ERISA or any such employment benefit program or other fringe
benefit, or any employment, consulting, or service contract of any kind
whatsoever. No member of the Company Group is or has been within the last five
years obligated to contribute to any employee pension benefit plan subject to
Title IV of ERISA (other than a multiemployer plan). No member of the Company
Group currently has or has had, within the immediately preceding six (6) years,
any obligation to contribute to any multiemployer plan as defined in Section
4001(a)(3) of ERISA or any employee benefit plan subject to Sections 4063 or
4064 of ERISA. No member of the Company Group has completely or partially
withdrawn from any multiemployer plan. The Company has no obligation to or on
behalf of any retired or former employee with regard to any disability (long or
short term), hospitalization, medical, dental or life insurance plans (whether
insured or self-insured) or other employee welfare plan as defined in Section
3(1) of ERISA maintained by the Seller, other than as may be required by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, Section
4980B of the Code, Part 6 of Subtitle B of Title I of ERISA and the regulations
thereunder.
<PAGE>
SECTION 2.18 Company Receivables. All the accounts receivable of the
Company (the "Company Receivables") reflected in the Company Balance Sheet and
all Company Receivables that have arisen since the Company Balance Sheet date
(except such Company Receivables as have been collected since such date) are
valid and enforceable claims, and constitute bona fide Company Receivables
resulting from the sale of goods and services in the ordinary course of business
in conformity with applicable purchase orders, agreements and specifications. To
the knowledge of Seller, except as set forth in Schedule 2.18, the Company
Receivables are subject to no valid defense, offsets, returns, allowances or
credits of any kind other than in the ordinary course of business and are fully
collectible within 90 days from the date they are invoiced except to the extent
of the amount of the reserve for doubtful accounts reflected in the Company
Balance Sheet, it being understood and agreed that nothing contained herein
shall be deemed to guarantee the collectibility of the Company Receivables.
Seller has heretofore delivered to Buyer a Schedule as at September 30, 1996
setting forth the total amount of Company Receivables and a Schedule of the
aging of such Company Receivables based on 0-30 days, 31-60 days, 61-90 days and
over 90 days.
SECTION 2.19 Inventories. The inventories of the Company reflected in
the Company Balance Sheet and all material inventory items acquired since the
Company Balance Sheet date consist of raw materials, supplies, work-in-process
and finished goods of such quality and in such quantities as are being used or
are reasonably anticipated to be usable, or are being sold or are suitable for
sale, in the ordinary course of its business. Such inventories are valued at the
lower of cost or market and were determined in accordance with GAAP consistently
applied. Since the Company Balance Sheet date, the Company has continued to
replenish its inventories in a normal and customary manner consistent with prior
practice and prudent business judgment. The Company has established adequate
reserves for inventory that no longer constitutes part of their current line.
The amount of such reserves and the methodology used to determine same have been
disclosed in writing by Seller to Buyer with specific reference to this Section
2.19.
SECTION 2.20 Employment-Related Matters. Schedule 2.20 sets forth (a)
a true and correct list of the name and total annual compensation of each
officer, director and employee of the Company and each officer, director and
employee of the Company engaged to operate the Business of the Company, and (b)
any payments or commitments (whether formal or informal) to pay any severance or
termination pay to any such Persons or to any other Person. The Company is not a
party to any Contract with any union or other labor organization or other
representative of its employees. There is no unfair labor practice charge or
complaint pending or, to the knowledge of Seller, threatened against the
Company. There is no labor strike, slowdown, work stoppage or other material
labor controversy in effect, to the knowledge of Seller, threatened against or
otherwise affecting the Company. To the knowledge of Seller, the Company is in
compliance in all material respects with all applicable Laws, policies,
procedures, Contracts, relating to employment, terms and conditions of
employment and with the proper withholding and remission to the proper Taxing
Authority of all sums required to be withheld from employees or Persons deemed
to be employees under applicable Tax Laws respecting such withholding. The
<PAGE>
Company has paid in full to all of its employees all wages, salaries,
commissions, bonuses, benefits and other compensation due and payable to such
employees on or prior to the date hereof.
SECTION 2.21 Related Party Transactions. Except as set forth on
Schedule 2.21, neither the Company nor the Seller is a party to any contract
that gives rise to current obligations thereunder (whether or not in writing) or
any other transaction between the Company, on the one hand, and any officer,
director, shareholder or former shareholder of the Company or any Affiliate of
any of them, on the other hand that gives rise to current obligations
thereunder.
SECTION 2.22 Potential Conflicts of Interest. Except as set forth in
Schedule 2.22, no officer or director, no spouse of any such officer, director,
nor, to the knowledge of Seller, no entity Controlled by one or more of the
foregoing:
(a) owns directly or indirectly, any interest in (excepting less than
1% stock holdings for investment purposes in securities of publicly held and
traded companies), or is an officer, director, employee or consultant of, any
Person that carries on business in competition with the Company;
(b) owns, directly or indirectly, in whole or in part, any material
asset that the Company uses in the conduct of its business; or
(c) has any material Claim whatsoever against, or owes any amount to
the Company, except for claims in the ordinary course of business such as for
accrued vacation pay and accrued benefits under employee benefit plans.
SECTION 2.23 Compliance with Laws. To the knowledge of Seller, the
Company is not in violation of any Order or Law of any Governmental Body
applicable to it or affecting the Business or the Company, except for such
violations which individually or in the aggregate do not and would not have a
material adverse effect on the Condition of the Company.
SECTION 2.24 Environmental Matters. To the knowledge of Seller: (i)
the Company is currently and at all times in the past has operated in compliance
with all applicable Laws relating to the protection of human health and safety,
the environment or hazardous or toxic substances or waste, pollutants or
contaminants (collectively, "Environmental Laws"); (ii) the Company currently is
not, nor has it in the past produced, used, stored, handled or disposed of, in
connection with the operation of its business or the use of its assets or
otherwise, any hazardous substances or hazardous wastes other than in incidental
amounts which do not and will not individually or in the aggregate have a
material adverse effect on the Condition of the Company, nor have any such
substances or wastes been dumped, buried or otherwise disposed of or stored on
or under any of its real property or other assets by the Company, or, to
Seller's knowledge, by any other Person, other than in incidental amounts which
do not and will not individually or in the aggregate have a material adverse
effect on the Condition of the Company; (iii) the Company has not received any
notification of any asserted present or past failure to so
<PAGE>
comply with Environmental Laws; (iv) no Lien has attached to and no basis exists
for the attachment of a Lien to, any revenues of the Company or any of its
assets pursuant to Environmental Laws; and (v) there has not been any Phase I,
Phase II or other environmental report conducted by or on behalf of the Company
with respect to any of its properties or assets.
SECTION 2.25 Prohibited Payments. Neither the Seller nor any officer,
director, employee or agent of the Company has offered, paid or agreed to pay
any illegal payment or other illegal consideration to any supplier or other
third party in connection with the Business of the Company, or engaged in any
other illegal practice with respect to the Business of the Company.
SECTION 2.26 Finders Fees. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of Seller who might be entitled to any fee or commission from the
Seller upon consummation of the Contemplated Transactions, other than those
listed on Schedule 2.26.
SECTION 2.27 Acquisition for Investment. Seller is acquiring the
shares of Buyer Common Stock and the Warrants (collectively, "Buyer Securities")
for his own account and not with a present intention to make any sale,
disposition, distribution or other transfer of Buyer Securities in a manner that
will be in violation of any applicable securities laws, and understands that the
Buyer Securities have not been registered under the 1933 Act or under the
securities laws of any state.
SECTION 2.28 Disclosure. Neither this Agreement nor any other
Transaction Document, the Exhibits or Schedules hereto or thereto, the Company
Financial Statements nor any other financial statements, documents, certificates
or statements furnished to Buyer by Seller in connection with the Contemplated
Transactions contains any untrue statement of a material fact or omits to state
a material fact necessary in order to make the statements contained herein or
therein not misleading. There are no facts which materially adversely affect the
Condition of the Company which have not been set forth herein, or in any Exhibit
or Schedule hereto, or in any certificate or statement furnished to Buyer by
Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller that:
SECTION 3.1 Acquisition for Investment. Buyer is acquiring the JMS
Shares for its own account and not with a present intention to make any sale,
disposition, distribution or other transfer of the JMS Shares in a manner that
will be in violation of any applicable securities laws, and understands that the
JMS Shares have not been registered under the 1933 Act or under the securities
laws of any state.
<PAGE>
SECTION 3.2 Authority Relative to This Agreement. Buyer has full
corporate power and authority to execute and deliver this Agreement and each
other Transaction Document to which it is a party and to consummate the
Contemplated Transactions. The execution and delivery of this Agreement and the
consummation of the Contemplated Transactions to which Buyer is a party have
been duly and validly authorized and approved by the Board of Directors and
shareholders of Buyer and no other corporate proceedings on the part of Buyer
are necessary to authorize the execution and delivery by Buyer of this Agreement
or the consummation of the Contemplated Transactions to which Buyer is a party.
This Agreement has been duly and validly executed and delivered by Buyer and
(assuming the valid execution and delivery of this Agreement by the other
parties hereto) constitutes the legal, valid and binding agreement of Buyer,
enforceable against Buyer in accordance with its terms, except as such
obligations and their enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
enforcement of creditors' rights generally and except that the availability of
equitable remedies, including specific performance, is subject to the discretion
of the court before which any proceeding therefor may be brought (whether at law
or in equity).
SECTION 3.3 Buyer Common Stock. The Buyer Common Stock to be issued as
part of the Purchase Price is validly authorized and, when issued and delivered
in accordance with this Agreement, will be validly issued, fully paid and
non-assessable and will not be issued in violation of any preemptive rights,
rights of first refusal or other contractual restrictions of any kind of the
shareholders of Buyer, and Seller will receive good title to the Buyer Common
Stock free and clear of all Liens.
SECTION 3.4 No Conflicts; Consents. The execution and delivery by Buyer
of this Agreement and the performance of Buyer's obligations hereunder will not
(i) if the consents set forth on Schedule 3.4 hereto (the "Buyer Required
Consents") are obtained, require Buyer to obtain any consent, approval or action
of or waiver from, or make any filing with, or give any notice to, any
Governmental Body or any other Person; (ii) violate, conflict with or result in
the breach of any of the terms of, result in a material modification of the
effect of, or otherwise cause the termination of, give any other contracting
party the right to terminate, or constitute (with notice or lapse of time or
both) a default under, any material Contract to which Buyer is a party or by or
to which it may be bound or subject, or result in the creation of any Lien upon
the Buyer Common Stock or upon any property of Buyer, except for any of the
foregoing which, individually or in the aggregate, do not and would not have a
material adverse effect on the financial condition of Buyer; (iii) violate any
Order of any Governmental Body against, or binding upon, Buyer, or its
properties or business; or (iv) violate any Law of any Governmental Body
applicable to Buyer.
SECTION 3.5 Reports and Financial Statements. The Buyer has previously
furnished Seller with true and complete copies of its (i) Annual Report on Form
10-K for the year ended December 31, 1995, as filed with the Securities and
Exchange Commission (the "Commission"), (ii) Quarterly Reports on Form 10-Q for
the quarters ended March 31, 1996, June 30, 1996 and September 30, 1996, as
filed with the Commission, (iii) proxy statements related to all meetings of its
<PAGE>
shareholders (whether annual or special) since December 31, 1995 and (iv) all
other reports or registration statements filed by the Buyer with the Commission
since December 31, 1995, except registration statements on Form S-8 relating to
employee benefit plans, which are all the documents (other than preliminary
material) that Buyer was required to file with the Commission since that date
(clauses (i) through (iv) being referred to herein collectively as the "Buyer
SEC Reports"). As of their respective dates, the Buyer SEC Reports complied in
all material respects with the requirements of the 1933 Act or the Securities
Exchange Act of 1934, as the case may be, and the rules and regulations of the
Commission thereunder applicable to such Buyer SEC Reports. As of their
respective dates, the Buyer SEC Reports did not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. The audited financial statements and
unaudited interim financial statements of the Buyer included in the Buyer SEC
Reports comply as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission with
respect thereto, and the financial statements included in the Buyer SEC Reports,
have been prepared in accordance with GAAP applied on a consistent basis (except
as may be indicated therein or in the notes thereto) and fairly present the
financial position of the Buyer and its subsidiaries as at the dates thereof and
the results of their operations and changes in financial position for the
periods then ended subject, in the case of the unaudited interim financial
statements, to normal year-end audit adjustments and any other adjustments
described therein.
SECTION 3.6 Finders Fees. There is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf of Buyer who might be entitled to any fee or commission from Buyer
upon consummation of the Contemplated Transactions, other than those listed on
Schedule 3.6.
SECTION 3.7 Taxes. Except as set forth on Schedule 3.7: (a) The Buyer
has filed, or will file, all of the Returns required to be filed by the Buyer on
or before the Closing Date with respect to its Taxes. All the Returns filed or
to be filed by the Buyer prior to the Closing Date were, and will be, true and
correct in all material respects as of the date on which they were, or are,
filed.
(b) The Buyer has paid, or will pay on or before the Closing Date, all
the Taxes shown to be due on all Returns described in Section 3.8(a) above,
which are filed on or before the Closing Date.
(c) All Tax deficiencies asserted or assessed against the Buyer or any
past or present Affiliates of the Buyer have been paid or finally settled.
(d) All of Buyer's Returns have been audited by the IRS or the
relevant state and local Tax Authorities or, except for Buyer's Returns filed in
connection with its fiscal years
<PAGE>
ending in 1993, 1994 and 1995, closed by applicable statutes of limitation, and
all Liabilities for Taxes asserted by the IRS (or the relevant Tax Authority)
have been satisfied.
(e) There is no outstanding request for any extension of time within
which to pay Taxes of Buyer not yet paid.
(f) There has been no waiver or extension of any applicable statute of
limitations for the assessments or collection of any of Buyer's Taxes.
(g) There is no pending or, to the best of Buyer's knowledge,
threatened action, audit, proceeding or investigation for the assessment or
collection of Buyer's Taxes.
(h) No consent has been filed under Section 341(f) of the Code with
respect to the Buyer.
(i) The Buyer is not a party to any Tax allocation or sharing
agreements.
(j) The Buyer is not required to include in income any adjustment
pursuant to Sections 481(a) of the Code by reason of a change in accounting
method nor does the Buyer have any knowledge that the IRS (or the relevant Tax
Authority) has proposed, or is considering, any such change in accounting
method.
SECTION 3.8 Absence of Certain Changes. Since the Buyer Balance Sheet
date, except as contemplated by this Agreement or as disclosed on Schedule 3.8,
the Buyer has conducted its business in the ordinary course consistent with past
practices and there has not been:
(a) Any event (other than those events affecting the dessert industry
generally) that has had or would reasonably be expected to have a material
adverse effect on the operations of the Buyer, individually or in the aggregate;
(b) Any amendment to the Certificate of Incorporation or By-laws of
the Buyer or any amendment to any term of any outstanding security of the Buyer;
(c) Any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Buyer which,
individually or in the aggregate has had or will reasonably be expected to have
a material adverse effect on its operations;
(d) Any (i) incurrence, assumption or guarantee by the Buyer of any
debt other than in the ordinary course of business in amounts and on terms
consistent with past practices, (ii) issuance or sale of any securities
convertible into or exchangeable for debt securities of the Buyer, or (iii)
issuance or sale of options or other rights to acquire from the Buyer, directly
or indirectly, debt securities of the Buyer or any securities convertible or
exchangeable for any such debt securities.
<PAGE>
(e) Any creation, incurrence or assumption by the Buyer of any Lien
and any asset other than (i) Liens for Taxes not yet due or being contested in
good faith (and for which adequate reserves have been established); (ii) Liens
which do not materially detract from the value of such asset as now used, or
materially interfere with any present or intended use of such asset; or (iii)
warehousemen's, mechanics, carriers', landlords' repairmen's or other similar
Liens arising in the ordinary course of business;
(f) Any making or forgiving of any loan, advance or capital
contributions to or investment in any Person other than loans, advances or
capital contributions to or investments in wholly-owned subsidiaries made in the
ordinary course of business consistent with past practices;
(g) Except in the ordinary course of business, any transaction or
commitment made, or any Contract entered into, by the Buyer relating to its
assets or business (including the acquisition or disposition of any substantial
assets) or any relinquishments by the Buyer or other party of any Contract or
other right;
(h) Any change in any method of accounting or accounting practice by
the Buyer or its marketing practices;
(i) Any assumption or guarantee of the obligations of any Person;
(j) Any grant of any severance or termination pay to any employee of
the Buyer, any entering into of any employment, deferred compensation or other
similar agreement (or any amendment to any such existing agreement) with any
employee of the Buyer or any increase in benefits payable under any existing
severance or termination pay policies or employment agreements, or any increase
in compensation, bonus or other benefits payable to any employee of the Buyer,
other than routine increases for employees in the ordinary course of business or
disclosed to Seller in writing prior to the date hereof or on any Schedule;
(k) Any intentional waiver of any material right under any material
Contract;
(l) Except for any changes made in the ordinary course of business,
any material change in any business policies of the Buyer, including pricing,
purchasing, production, personnel, sales or product acquisition/return policies;
(m) Except in the ordinary course of business, any payment, directly
or indirectly, of any Liability before the same became due in accordance with
its terms;
(n) Any termination or failure to renew, or the receipt of any written
threat (that was not subsequently withdrawn) to terminate or fail to renew, any
Contract that is or was material to operations; or
<PAGE>
(o) Any agreement or arrangement made by Buyer to take any action
which, if taken prior to the date hereof, would have made any representation or
warranty in this Section untrue or incorrect in any material respect.
SECTION 3.9 Insurance Policies. Except as set forth on Schedule 3.9,
there are no insurance policies in effect with respect to the Buyer. All
insurance policies in effect with respect to the Buyer are all in full force and
effect. The Buyer does not know of any threatened termination of, or premium
increase with respect to, any of such policies. True and complete copies of all
of such policies have been made available to Seller.
SECTION 3.10 Contracts. (a) Except for (i) purchase orders with
suppliers or sales orders from customers arising in the ordinary course of
business and (ii) Contracts pursuant to the terms of which Buyer is to make or
receive payments not in excess of $35,000 per annum, Schedule 3.10 sets forth as
of the date hereof a complete and accurate list and description of all Contracts
to which the Buyer is a party or by or to which it or its assets or properties
are bound or subject, including, without limitation:
(i) Contracts with any current or former shareholder, officer,
director, employee, independent contractor, consultant, agent or other
representative or with any Affiliate of any of the foregoing;
(ii) Contracts with any labor union or association representing any
employee;
(iii) Contracts for the purchase of materials, supplies, equipment,
merchandise or services in excess of $35,000 for any one individual item;
(iv) Other than in the ordinary course of business: (A) Contracts for
the sale of any of its assets or properties or business or (B) Contracts for the
grant to any Person of any preferential rights to purchase any of its assets or
properties;
(v) Partnership or joint venture Contracts;
(vi) Contracts under which the Buyer agrees to indemnify any party;
(vii) Contracts under which the Buyer agrees to share Tax liability of
or with any party;
(viii) Contracts that cannot be cancelled without liability, premium
or penalty;
(ix) Contracts that can be cancelled only on 60 days' or more notice;
(x) Any special financial arrangements with the largest (in terms of
sales volume) 25 customers, referral sources or third party payors of the Buyer
that is outside of the
<PAGE>
Buyer's published policies including, but not limited to, any arrangements
relating to chargebacks, allowances and payment terms;
(xi) Contracts with any Person to advertise or market the Buyer's
products or services other than in the ordinary course of business;
(xii) Contracts containing covenants not to compete in any line of
business or with any Person in any geographical area (or not to solicit or
accept any business) or covenants of any other Person not to compete in any line
of business or in any geographical area (or not to solicit or accept any
business);
(xiii) Contracts relating to the acquisition of any operating business
or the capital shares of any other Person;
(xiv) Options for the purchase or sale of any asset, tangible or
intangible;
(xv) Contracts requiring the payment to any Person of an override or
similar commission or fee;
(xvi) Contracts relating to all Liabilities;
(xvii) Contracts with customers, referral sources, third party payors,
independent suppliers, contractors and manufacturers other than in the ordinary
course of business;
(xviii) Sales agency, licensing, representative or distributorship
Contracts;
(xix) Contracts for the payment of fees or other consideration to any
officer or director of Buyer or to any other entity in which any of the
foregoing has an interest;
(xx) management Contracts and other similar agreements with any
Person;
(xxi) Any other Contracts not made in the ordinary course of business
or pursuant to the terms of which there is either a current or future obligation
or right of the Buyer to make payments or receive payments in excess
(individually or, in the case of any group of similar items, in the aggregate)
of $35,000 throughout the term thereof. Schedule 3.10 also lists and describes
the status of all Contracts currently in negotiation or proposed by Buyer as to
which there exists a draft agreement, letter of intent or similar instrument and
which is of a type which if entered into by the Buyer would be required to be
listed on Schedule 3.10 or on any other Schedule (the "Proposed Contracts").
(b) There are no Contracts, other than those set forth on Schedule
3.10, and on any other Schedule hereto, that are required to be disclosed
hereunder. Except as set forth on Schedule 3.10, to the knowledge of Buyer, all
such Contracts and all Contracts reflected on
<PAGE>
any other Schedule hereto are valid, subsisting, in full force and effect and
binding upon the Buyer, and, to the knowledge of Buyer, on the other parties
thereto in accordance with their terms, and the Buyer has paid in all respects
or accrued all amounts due thereunder and has satisfied in all respects or
provided for all of its liabilities and obligations thereunder to be satisfied
or provided for through the date hereof, and is not in default under any of them
in any material respect, nor, to the knowledge of the Buyer, is any other party
to any such Contract in default thereunder in any respect, nor, to the knowledge
of the Buyer, does any condition exist that with notice or lapse of time or both
would constitute a default thereunder.
(c) There have been delivered to Seller, true and complete copies of
(i) all of the Contracts required to be set forth on Schedule 3.10 or on any
other Schedule and (ii) the most recent draft, letter of intent or term sheet of
all of the Proposed Contracts required by the provisions of Section 3.10(a)(xxi)
to be set forth on Schedule 3.10.
SECTION 3.11 Suppliers, Customers and Contractors. Schedule 3.11A
lists, by dollar volume paid for the 12 months ended December 31, 1995, the 15
largest raw material suppliers and the 25 largest customers of the Buyer or
Buyer Subsidiary. Schedule 3.11B lists the names and addresses of those
Contractors retained by the Buyer involving payments, for the 12 months ended
December 31, 1995, in excess of $50,000. Except as set forth on Schedule 3.11C:
(i) no supplier or Contractor has refused to provide credit, or has suspended
the provision of credit, to the Buyer or as a result of the failure or delay in
payment of amounts due to such suppliers or Contractors; (ii) all amounts owing
to such suppliers and Contractors, if not in dispute, have been paid in
accordance with their respective terms; (iii) no Person within the last twelve
months has threatened in writing to cancel, or otherwise terminate, the
relationship of such Person with the Buyer or any of the Buyer Subsidiaries, and
(iv) no Person during the last twelve months has decreased materially or, to the
knowledge of Buyer, threatened in writing to decrease or limit materially, its
relationship with the Buyer or, to the knowledge of Buyer, intends to decrease
or limit materially its services or supplies to the Buyer or its usage or
purchase of the services or products of the Buyer.
SECTION 3.12 Employee Benefits Plans. Except as set forth on Schedule
3.12, neither the Buyer nor any other company or entity which together with the
Buyer constitutes a member of the Buyer's "controlled group" (within the meaning
of Sections 4001(a)(14) and/or (b) of ERISA, and/or Sections 414(b), (c), (m) or
(o) of the Code (hereinafter referred to collectively as the "Buyer Group")),
has at any time adopted, maintained, or has any present or future obligation to
contribute to or make payment under, any employee pension benefit, employee
welfare benefit, pension, profit sharing, retirement, deferred compensation,
stock purchase, stock option, incentive, bonus, sabbatical leave, vacation,
severance (including, without limitation, arrangements providing for benefits in
the event of a change of ownership in whole or in part of the Buyer),
disability, hospitalization, medical insurance, relocation, child care,
educational assistance or other employee benefit plan as defined in Section 3(3)
of ERISA or any program or other fringe benefit, or any employment, consulting,
service or other contract of any kind whatsoever. No member of the Buyer Group
is or has been within the last five years obligated to contribute to any
employee pension benefit plan subject to Title IV of ERISA (other
<PAGE>
than a multiemployer plan). No member of the Buyer Group currently has or has
had, within the immediately preceding six (6) years, any obligation to
contribute to any multiemployer plan as defined in Section 4001(a)(3) of ERISA
or any employee benefit plan subject to Sections 4063 or 4064 of ERISA. No
member of the Buyer Group has completely or partially withdrawn from any
multiemployer plan. The Buyer has no obligation to or on behalf of any retired
or former employee with regard to any disability (long or short term),
hospitalization, medical, dental or life insurance plans (whether insured or
self-insured) or other employee welfare plan as defined in Section 3(1) of ERISA
maintained by the Buyer, other than as may be required by the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended, Section 4980B of the
Code, Part 6 of Subtitle B of Title I of ERISA and the regulations thereunder.
SECTION 3.13 Buyer Receivables. All the accounts receivable of the
Buyer (the "Buyer Receivables") reflected in the Buyer Balance Sheet and all
Buyer Receivables that have arisen since the Buyer Balance Sheet date (except
such Buyer Receivables as have been collected since such date) are valid and
enforceable claims, and constitute bona fide Buyer Receivables resulting from
the sale of goods and services in the ordinary course of business in conformity
with applicable purchase orders, agreements and specifications. To the knowledge
of Seller, except as set forth in Schedule 3.13, the Buyer Receivables are
subject to no valid defense, offsets, returns, allowances or credits of any kind
other than in the ordinary course of business and are fully collectible within
90 days from the date they are invoiced except to the extent of the amount of
the reserve for doubtful accounts reflected in the Buyer Balance Sheet, it being
understood and agreed that nothing contained herein shall be deemed to guarantee
the collectibility of the Buyer Receivables. Buyer has heretofore delivered to
Seller a Schedule as at September 30, 1996 setting forth the total amount of
Buyer Receivables and a Schedule of the aging of such Buyer Receivables based on
0-30 days, 31-60 days, 61-90 days and over 90 days.
SECTION 3.14 Inventories. The inventories of the Buyer reflected in
the Buyer Balance Sheet and all material inventory items acquired since the
Buyer Balance Sheet date consist of raw materials, supplies, work-in-process and
finished goods of such quality and in such quantities as are being used or are
reasonably anticipated to be usable, or are being sold or are suitable for sale,
in the ordinary course of its business. Such inventories are valued at the lower
of cost or market and were determined in accordance with GAAP consistently
applied. Since the Buyer Balance Sheet date, the Buyer and each of the Buyer
Subsidiaries have continued to replenish its inventories in a normal and
customary manner consistent with prior practice and prudent business judgment.
The Buyer and each Buyer Subsidiary have established adequate reserves for
inventory that no longer constitutes part of their current line. The amount of
such reserves and the methodology used to determine same have been disclosed in
writing by Seller to Buyer with specific reference to this Section 3.14.
SECTION 3.15 Employment-Related Matters. Schedule 3.15 sets forth (a)
a true and correct list of the name and total annual compensation of each
officer, director and employee of the Buyer and each officer, director and
employee of the Buyer engaged to operate the Business of the Buyer, and (b) any
payments or commitments (whether formal or informal) to pay any severance or
termination pay to any such Persons or to any other Person. The Buyer
<PAGE>
is not a party to any Contract with any union or other labor organization or
other representative of its employees. There is no unfair labor practice charge
or complaint pending or, to the knowledge of Buyer, threatened against the
Buyer. There is no labor strike, slowdown, work stoppage or other material labor
controversy in effect, to the knowledge of Buyer, threatened against or
otherwise affecting the Buyer. To the knowledge of Buyer, Buyer is in compliance
in all material respects with all applicable Laws, policies, procedures,
Contracts, relating to employment, terms and conditions of employment and with
the proper withholding and remission to the proper Taxing Authority of all sums
required to be withheld from employees or Persons deemed to be employees under
applicable Tax Laws respecting such withholding. The Buyer has paid in full to
all of its employees all wages, salaries, commissions, bonuses, benefits and
other compensation due and payable to such employees on or prior to the date
hereof.
SECTION 3.16 Compliance with Laws. To the knowledge of Buyer, the
Buyer is not in violation of any Order or Law of any Governmental Body
applicable to it or affecting the Business of the Buyer or the Buyer, except for
such violations which individually or in the aggregate do not and would not have
a material adverse effect on the Condition of the Buyer.
SECTION 3.17 Environmental Matters. To the knowledge of Buyer: (i) the
Buyer is currently and at all times in the past has operated in compliance with
all Environmental Laws; (ii) the Buyer currently is not, nor has it in the past
produced, used, stored, handled or disposed of, in connection with the operation
of its business or the use of its assets or otherwise, any hazardous substances
or hazardous wastes other than in incidental amounts which do not and will not
individually or in the aggregate have a material adverse effect on the Condition
of the Buyer, nor have any such substances or wastes been dumped, buried or
otherwise disposed of or stored on or under any of its real property or other
assets by the Buyer or any of its Affiliates, or, to Buyer's knowledge, by any
other Person, other than in incidental amounts which do not and will not
individually or in the aggregate have a material adverse effect on the Condition
of the Buyer; (iii) the Buyer has not received any notification of any asserted
present or past failure to so comply with Environmental Laws; (iv) no Lien has
attached to and no basis exists for the attachment of a Lien to, any revenues of
the Buyer or any of its assets pursuant to Environmental Laws; and (v) there has
not been any Phase I, Phase II or other environmental report conducted by or on
behalf of the Buyer with respect to any of its properties or assets.
SECTION 3.18 Disclosure. Neither this Agreement nor any other
Transaction Document, the Exhibits or Schedules hereto or thereto, nor any other
documents, certificates or statements furnished to Seller by Buyer in connection
with the Contemplated Transactions contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the statements
contained herein or therein not misleading. There are no facts which materially
adversely affect the Buyer which have not been set forth herein, or in any
Exhibit or Schedule hereto, or in any certificate or statement furnished to
Seller by Buyer.
<PAGE>
ARTICLE IV
COVENANTS AND AGREEMENTS
SECTION 4.1 Conduct of Business; Certain Restrictions. (a) From and
after the date hereof and until the Closing Date, Seller hereby covenants and
agrees with Buyer that, unless Buyer otherwise agrees in writing:
(i) The Company will carry on its business and activities diligently
and in substantially the same manner as has been previously carried out, and
shall not make or institute any unusual or novel methods of purchase, sale,
lease, management, accounting or operation that will vary materially from those
methods used by it as of the date of this Agreement, except as may be required
by the provisions of the Agreement.
(ii) The Company will use its reasonable efforts to preserve its
business organization intact, to keep available its present officers and
employees, and to preserve its present relationships with suppliers,
customers and others having business relationships with it.
(b) In furtherance of, and not in limitation of the provisions set
forth in Section 4.1(a):
(i) The Company will continue to carry its existing insurance,
insuring its assets, business and properties, subject to variations in amounts
required by the ordinary operations of its business.
(ii) The Company shall not cause, permit or suffer any of their
respective assets to become subject to any additional Lien other than in the
ordinary course of business.
(iii) The Company shall not in any one month (A) sell or dispose of
any capital assets having a fair market value individually in excess of $25,000
or a fair market value in the aggregate for all such capital assets in excess of
$50,000, (B) make any capital expenditures for any single item having a cost in
excess of $25,000 or all items in the aggregate having a cost in excess of
$50,000 or enter into a lease with capital or other equipment providing for
rentals aggregating more than $25,000 per annum for all such leases or (C)
otherwise transfer, sell, distribute or otherwise dispose of any of its assets
or properties, other than in the ordinary course of business.
(iv) The Company shall not enter into any material Contract or modify,
amend, cancel or terminate any of its existing material Contracts.
(v) The Company shall not modify its practices with respect to the
collection of receivables or the discharge of payables or take any other action,
out of the ordinary course, that would affect its cash position, other than any
action contemplated hereby;
<PAGE>
(vi) Except in the ordinary course of business, the Company shall not:
(A) write off as uncollectible any notes, trade accounts or other receivables or
(B) write off or dispose of any inventory.
(vii) The Company shall not cancel or compromise any debt or Claim or
settle or discharge any balance sheet receivable for less than the stated
amount, except in the ordinary course of business, or otherwise cancel,
compromise or waive any Claims or rights of substantial value.
(viii) The Company shall not create or incur any indebtedness for
borrowed money other than pursuant to an existing line of credit, or guaranty,
indemnify or otherwise become liable for any obligation of any third party.
(ix) Except for credit extended to customers in the ordinary course of
business, and under normal credit terms, the Company shall not make any loans,
advances or extensions of credit to any Person.
(x) All Company Tangible Property shall be used, maintained and
repaired in the usual and ordinary course.
(xi) With respect to its employees, the Company will not (A) make,
institute, agree to or change any bonus, profit sharing, pension, retirement,
severance, termination, "parachute" or similar arrangement or plan for employees
and (B) except and in accordance with past practices and in similar amounts,
increase the compensation payable or to become payable to any employee.
(xii) The Company will not (A) amend its certificate of incorporation
or bylaws, (B) issue or sell any shares of capital stock, (C) issue, sell or
create any warrants, obligations, subscriptions, options, convertible securities
or other agreements or commitments under which any additional shares of capital
stock of any class may be directly or indirectly authorized, issued or sold, (D)
declare, set aside or pay any dividend or make any distribution, directly or
indirectly, in respect of its capital stock; (E) directly or indirectly
purchase, redeem or otherwise acquire any shares of its capital stock or (F)
enter into any Contract obligating it to do any of the foregoing prohibited
acts.
(c) From and after the date hereof and until the Closing Date, Buyer
hereby covenants and agrees with Seller that, unless Seller otherwise agrees in
writing:
(i) The Buyer will carry on its business and activities diligently and
in substantially the same manner as has been previously carried out, and shall
not make or institute any unusual or novel methods of purchase, sale, lease,
management, accounting or operation that will vary materially from those methods
used by it as of the date of this Agreement, except as may be required by the
provisions of the Agreement.
<PAGE>
(ii) The Buyer will use its reasonable efforts to preserve its
business organization intact, to keep available its present officers and
employees, and to preserve its present relationships with suppliers, customers
and others having business relationships with it.
(d) In furtherance of, and not in limitation of the provisions set
forth in Section 4.1(c):
(i) The Buyer will continue to carry its existing insurance, insuring
its assets, business and properties, subject to variations in amounts required
by the ordinary operations of its business.
(ii) The Buyer shall not cause, permit or suffer any of their
respective assets to become subject to any additional Lien other than in the
ordinary course of business.
(iii) The Buyer shall not in any one month (A) sell or dispose of any
capital assets having a fair market value individually in excess of $25,000 or a
fair market value in the aggregate for all such capital assets in excess of
$50,000, (B) make any capital expenditures for any single item having a cost in
excess of $25,000 or all items in the aggregate having a cost in excess of
$50,000 or enter into a lease with capital or other equipment providing for
rentals aggregating more than $25,000 per annum for all such leases or (C)
otherwise transfer, sell, distribute or otherwise dispose of any of its assets
or properties, other than in the ordinary course of business.
(iv) The Buyer shall not enter into any material Contract or modify,
amend, cancel or terminate any of its existing material Contracts.
(v) The Buyer shall not modify its practices with respect to the
collection of receivables or the discharge of payables or take any other action,
out of the ordinary course, that would affect its cash position, other than any
action contemplated hereby;
(vi) Except in the ordinary course of business, the Buyer shall not:
(A) write off as uncollectible any notes, trade accounts or other receivables or
(B) write off or dispose of any inventory.
(vii) The Buyer shall not cancel or compromise any debt or Claim or
settle or discharge any balance sheet receivable for less than the stated
amount, except in the ordinary course of business, or otherwise cancel,
compromise or waive any Claims or rights of substantial value.
(viii) The Buyer shall not create or incur any indebtedness for
borrowed money other than pursuant to an existing line of credit, or guaranty,
indemnify or otherwise become liable for any obligation of any third party.
<PAGE>
(ix) Except for credit extended to customers in the ordinary course of
business, and under normal credit terms, the Buyer shall not make any loans,
advances or extensions of credit to any Person.
(x) All tangible property of the Buyer shall be used, maintained and
repaired in the usual and ordinary course.
(xi) Except as set forth on Schedule 4.1A, with respect to its
employees, the Buyer will not (A) make, institute, agree to or change any bonus,
profit sharing, pension, retirement, severance, termination, "parachute" or
similar arrangement or plan for employees and (B) except and in accordance with
past practices and in similar amounts, increase the compensation payable or to
become payable to any employee.
(xii) The Buyer will not (A) amend its certificate of incorporation or
bylaws, (B) issue or sell any shares of capital stock, (C) issue, sell or create
any warrants, obligations, subscriptions, options, convertible securities or
other agreements or commitments under which any additional shares of capital
stock of any class may be directly or indirectly authorized, issued or sold, (D)
declare, set aside or pay any dividend or make any distribution, directly or
indirectly, in respect of its capital stock; (E) directly or indirectly
purchase, redeem or otherwise acquire any shares of its capital stock or (F)
enter into any Contract obligating it to do any of the foregoing prohibited
acts.
SECTION 4.2 Corporate Examinations and Investigations. (a) Prior to
the Closing Date, Seller agrees that Buyer shall be entitled, through the
directors, officers, Affiliates, employees, attorneys, accountants,
representatives, lenders, consultants and other agents (collectively,
"Representatives") of Buyer to make such investigation of the assets, the
Business and operations of the Company, and such examination of the books,
records and financial condition of the Company, as Buyer reasonably deems
necessary. Any such investigation and examination shall be conducted at
reasonable times, under reasonable circumstances and upon reasonable notice, and
Seller shall, and shall cause the Company to, cooperate fully therein. In that
connection, Seller shall make available and shall cause the Company to make
available to the Representatives of Buyer during such period, without however
causing any unreasonable interruption in the operations of the Company, all such
information and copies of such documents and records concerning the affairs of
the Company as such Representatives may reasonably request, shall permit the
Representatives of Buyer access to the assets of the Company and all parts
thereof and to its employees, customers, suppliers and others, and shall cause
the Company's Representatives to cooperate fully in connection with such review
and examination.
(b) Prior to the Closing Date, Buyer agrees that Seller shall be
entitled, through the Representatives of Seller to make such investigation of
the assets, the business and operations of the Buyer, and such examination of
the books, records and financial condition of the Buyer, as Seller reasonably
deems necessary. Any such investigation and examination shall be conducted at
reasonable times, under reasonable circumstances and upon reasonable notice,
<PAGE>
and Buyer shall cooperate fully therein. In that connection, Buyer shall make
available to the Representatives of Seller during such period, without however
causing any unreasonable interruption in the operations of the Buyer, all such
information and copies of such documents and records concerning the affairs of
the Buyer as such Seller Representatives may reasonably request, shall permit
the Representatives of Seller access to the assets of the Buyer and all parts
thereof and to its employees, customers, suppliers and others, and shall cause
the Buyer's Representatives to cooperate fully in connection with such review
and examination.
SECTION 4.3 Additional Financial Statements. (a) Prior to the Closing
Date, as soon as available and in any event within thirty (30) calendar days
after the end of each quarterly accounting period of the Company ending after
the date of the most recent interim statement included in the Company Financial
Statements, Seller shall furnish Buyer with unaudited financial statements of
the Company for such month in the form routinely prepared by the Company,
consistent with prior practice, for the Company's board of directors or lenders.
(b) Prior to the Closing Date, as soon as available and in any event
within thirty (30) calendar days after the end of each quarterly accounting
period of the Buyer ending after the date of the most recent interim statement
included in the Buyer Financial Statements, Buyer shall furnish Seller with
unaudited financial statements of the Buyer for such month in the form routinely
prepared by the Buyer, consistent with prior practice, for the Buyer's board of
directors or lenders.
SECTION 4.4 Efforts to Consummate. Subject to the terms and conditions
herein, each party hereto, without payment or further consideration, shall use
its reasonable, good faith efforts to take or cause to be taken all action and
to do or cause to be done all things necessary, proper or advisable under
applicable Laws, Permits and Orders to consummate and make effective, as soon as
reasonably practicable, the Contemplated Transactions, including, but not
limited to, the obtaining of all Seller Required Consents and Buyer Required
Consents and Permits or consents of any third party, whether private or
governmental, required in connection with such party's performance of such
transactions and each party hereto shall cooperate with the other in all of the
foregoing.
SECTION 4.5 Negotiations with Others. From and after the date hereof
and until this Agreement shall have been terminated in accordance with its
terms, Seller agrees that he will not, directly or indirectly, and will not
permit the Company, directly or indirectly, to, encourage or solicit any
inquiries or proposals by or engage in any discussions or negotiations with, or
enter into any other Contract or understanding with, any Person concerning an
Acquisition Proposal. Seller shall advise Buyer of any written proposal or offer
to enter into an Acquisition Proposal.
SECTION 4.6 Notices of Certain Events. Prior to the Closing Date, each
of Seller and Buyer shall promptly notify the other of:
<PAGE>
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
Contemplated Transactions;
(b) any notice or other communication from any Governmental Body in
connection with the Contemplated Transactions;
(c) the commencement or written threat of any litigation against
Buyer, Seller or the Company; and
(d) any event, condition or circumstance occurring from the date
hereof through the Closing Date that would constitute a violation or breach of
any representation or warranty, whether made as of the date hereof or as of the
Closing Date, or that would constitute a violation or breach of any covenant of
any party contained in this Agreement.
SECTION 4.7 Confidentiality. (a) Buyer, on the one hand, and Seller,
on the other hand, each shall hold in strict confidence, and shall use its best
efforts to cause all its Representatives to hold in strict confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of Law, all information concerning Company and Seller (in the case
of Buyer) and Buyer (in the case of the Company and Seller) which is created or
obtained prior to, on or after the dates hereof in connection with the
Contemplated Transactions, and Buyer and Seller each shall not use or disclose
to others, or permit the use of or disclosure of, any such information created
or obtained except (i) to its officers, directors, employees, Representatives,
and lending institutions who need to know such information in connection with
this Agreement, and (ii) to the extent that such information can be shown to
have been (A) previously known by Buyer or Seller, as the case may be, or (B) in
the public domain through no fault of Buyer or Seller, as the case may be, or
any of their respective Representatives.
(b) If the Contemplated Transactions are consummated, Seller shall
hold in strict confidence, and shall use its best efforts to cause all its
Representatives to hold in strict confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of Law, all
information concerning the Buyer and Seller shall not use or disclose to others,
or permit the use of or disclosure of any such information except to the extent
that such information can be shown to have been in the public domain through no
fault of Seller or any of his Representatives.
(c) If the Contemplated Transactions are consummated, Buyer shall hold
in strict confidence, and shall use its best efforts to cause all its
Representatives to hold in strict confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of Law, all
information concerning the Business and Buyer shall not use or disclose to
others, or permit the use of or disclosure of any such information except to the
extent that such information can be shown to have been in the public domain
through no fault of Buyer or any of his Representatives.
<PAGE>
SECTION 4.8 Expenses. Except as otherwise specifically provided in
this Agreement, Buyer and Seller shall each bear their respective expenses
incurred in connection with the preparation, execution and performance of this
Agreement and the Contemplated Transactions, including, without limitation, all
fees and expenses of their respective attorneys, accountants and other agents.
SECTION 4.9 Books and Records. From and after the Closing, Buyer and
Seller, at the expense of the requesting party, shall make available to each
other (including the right to make copies) any and all books and records of or
relating to the Company or the Business reasonably requested in connection with
(a) any matter for which indemnification is claimed or (b) any inquiry or
investigation by any Governmental Body. Buyer and Seller shall retain, or cause
to be retained, for as long as any taxable year in the Tax period (including
partial periods) that ends on or prior to the Closing Date, shall remain open
for assessment of Taxes, any material records or information which may be
relevant to any such Tax returns or audits or other examinations by any Tax
Authority relating to the Company or the Business, and shall not dispose of any
such Tax Returns, books or records relating to the Company or the Business
during such period.
SECTION 4.10 Corporate Restructuring. (a) Concurrent with the closing
of the Contemplated Transactions, all the business and assets of Buyer will be
contributed to a newly organized corporation, initially to be named WGJ Desserts
and Cafes, Inc. (the "Buyer Subsidiary"), in exchange for all issued and
outstanding capital stock of the Buyer Subsidiary. For purposes of this Section
4.10 and Section 5.1(e), "Buyer", for convenience, will be referred to as the
"Buyer Holding Company".
(b) Concurrent with the consummation of the corporate restructuring
referred to in Section 4.10(a), the Board of Directors of the Buyer Holding
Company and its officers, and the Board of Directors and officers of each Buyer
Subsidiary, will be reconstituted in the manner set forth on Section 5.1(e).
(c) Promptly after the Closing Date, Buyer will call a shareholder's
meeting to seek the consent of such shareholders to a change in the name of the
Buyer Holding Company to "Creative Foods, Inc." or such other name to which
Seller and Buyer may agree. Concurrently with the change of name of the Buyer
Holding Company, the name of the Buyer Subsidiary will be changed to "William
Greenberg Jr. Desserts and Cafes, Inc."
SECTION 4.11 Delivery of Missing Schedules. (a) Seller and Buyer
acknowledge that on the date of the execution and delivery of this Agreement,
the Schedules referred to herein either have not been delivered or have been
delivered in an incomplete fashion. Each party agrees to use its respective
diligent efforts to complete and deliver to the other its respective disclosure
Schedules to this Agreement.
(b) Any new or completed Schedule delivered pursuant to the terms
hereof shall be delivered pursuant to a notice specifically identifying the
section number in the
<PAGE>
Agreement to which the Schedule relates. Any Schedule delivered pursuant to the
provisions of this Section 4.11(b), unless the provisions of Section 4.11(c) are
invoked, shall be deemed to have been originally attached as Schedules to this
Agreement.
(c) Each party shall have the right to terminate this Agreement, upon
giving written notice to that effect to the other, as follows:
(i) by Buyer, if any material Schedule owing by Seller is not
delivered to Buyer on or before January 22, 1997, or if any Schedule that is
delivered reflects, in the reasonable opinion of Buyer, a material Liability or
effects a material adverse change; and
(ii) by Seller, if any material Schedule owing by Buyer is not
delivered to Seller on or before January 22, 1997, or if any Schedule that is
delivered reflects, in the reasonable opinion of Seller, a material Liability or
effects a material adverse change.
(d) In the event that this Agreement shall be terminated pursuant to
Section 4.10(c), any further obligations of the parties under this Agreement
shall terminate without further liability of any party hereunder except that the
covenants and agreements contained in Sections 4.7 and 4.8 shall survive the
termination hereof.
ARTICLE V
CONDITIONS TO CLOSING
SECTION 5.1 Conditions to the Obligations of Seller and Buyer. The
obligations of Buyer and Seller to consummate the Contemplated Transactions are
subject to the satisfaction of the following conditions, which, in the case of
Section 5.1(b), may be waived by Buyer and Seller:
(a) No Injunction. No provision of any applicable Law and no Order
shall prohibit the consummation of the Contemplated Transactions.
(b) No Proceeding or Litigation. No Claim instituted by any Person
shall have been commenced or pending against Seller, the Company, Buyer or any
of their respective Affiliates, officers or directors which Claim seeks to
restrain, prevent, change or delay in any material respect the Contemplated
Transactions or seeks to challenge any of the material terms or provisions of
this Agreement or seeks material damages in connection with any of such
transactions.
(c) Corporate Restructuring. Concurrent with the closing of the
Contemplated Transactions, the corporate restructuring described in Section
4.10(a) shall have been consummated.
<PAGE>
(d) Financing. Buyer shall have received financing in a minimum amount
of $1,750,000 from the private placement ("Private Placement") of common stock
purchase warrants substantially in the form of the Warrants to consummate the
financing.
(e) Officers and Directors. (i) Richard Fechtor shall have resigned as
a member of the Board of Directors of the Buyer Holding Company and any of its
subsidiaries and, in his place, a designee of Fechtor, Detwiler & Co., Inc.
shall have been elected. In addition, the size of the Board of Directors of
Buyer and Buyer Subsidiary shall have been increased to five members and the
Seller shall have been elected to the vacancy occasioned on each Board of
Directors thereby. Maria Marfuggi and Stephen Fass shall have been elected to
the Board of Directors of the Company.
(ii) The officers of the Buyer Holding Company shall be as follows:
Philip Grabow President and Chief Executive Officer
Maria Marfuggi Executive Vice President and Secretary
Stephen Fass Executive Vice President
(iii) The officers of the Company shall be as follows:
Philip Grabow Chief Executive Officer
Maria Marfuggi President
Stephen Fass Executive Vice President and Secretary
(iv) The officers of the Buyer Subsidiary shall be as follows:
Philip Grabow Chief Executive Officer
Stephen Fass President
Maria Marfuggi Executive Vice President and Secretary
SECTION 5.2 Conditions to the Obligations of Seller. All obligations
of Seller hereunder are subject, at its option, to the fulfillment prior to or
at the Closing of each of the following conditions:
(a) Performance. Buyer shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or prior to
the Closing Date.
(b) Representations and Warranties. The representations and warranties
of Buyer contained in this Agreement and in any certificate or other writing
delivered by Buyer pursuant hereto shall be true in all material respects at and
as of the Closing Date as if made at and as of such time.
(c) Purchase Price. Buyer shall have paid the cash Purchase Price to
the Seller in accordance with Section 1.2 hereof.
<PAGE>
(d) Delivery of Buyer Securities. Buyer shall have delivered to Seller
certificates evidencing the Buyer Securities.
(e) Registration Rights Agreement. Buyer and Seller shall have entered
into a registration rights agreement substantially in accordance with the form
of Exhibit B hereto.
(f) Employment Agreement. Buyer and Seller shall have entered into an
employment agreement substantially in the form of Exhibit C hereto.
(g) Legal Opinion. Seller shall have received a legal opinion from
counsel to Buyer substantially in the form of Exhibit D hereto.
(h) Required Consents. Buyer shall have obtained all Buyer Required
Consents in connection with the Contemplated Transactions.
(i) Interequity Partners, L.P. The 6% option rights of Interequity
Partners, L.P. ("Interequity"), as evidenced in the Warrant to Purchase Capital
Stock of William Greenberg Jr. Desserts and Cafes, Inc. granted to Interequity
dated as of October 18, 1995 (the "Interequity Warrant") shall have either been
discharged or otherwise restructured to the reasonable satisfaction of Seller
and evidence with respect to the forgoing, in a form reasonably acceptable to
the Seller should have been provided to the Seller.
(j) Working Capital for the Company. Buyer shall have contributed
$600,000 as working capital for the Company.
(k) Delivery of Warrants to Employees of the Company. There shall have
been delivered to employees of the Company identified on Schedule 5.2, common
stock purchase warrants substantially upon the terms and in the form of the
Warrants covering a total of 50,000 shares of Buyer Common Stock.
(l) Documentation. There shall have been delivered to the Seller the
following:
(i) a certificate from the Buyer confirming the matters set forth in
Sections 5.2(a), (b) and (h);
(ii) such other instruments and documents, in form and substance
reasonably satisfactory to Seller, as Seller shall have reasonably requested.
(m) Certain Lock-Up Restrictions. (i) Maria Marfuggi shall have
entered into an agreement with the Buyer Holding Company pursuant to which she
shall have agreed not to sell any of her shares of Buyer Common Stock for a
period of six months from the Closing Date except that Maria Marfuggi shall be
permitted to sell:
<PAGE>
(A) an unlimited number of shares of Buyer Common Stock through
private transactions;
(B) 25,000 shares of Buyer Common Stock pursuant to Rule 144 of the
1933 Act;
(C) 25,000 additional shares of Buyer Common Stock pursuant to Rule
144 of the 1993 Act, with the consent of the entire board of directors of the
Buyer Holding Company.
The foregoing restrictions will immediately terminate if there is any material
change in the terms of her employment.
(ii) Stephen Fass shall have entered into an agreement with the Buyer
Holding Company pursuant to which he shall have agreed not to sell any of his
shares of Buyer Common Stock for a period of six months from the Closing Date.
The foregoing restrictions will immediately terminate if there is any material
change in the terms of his employment.
SECTION 5.3 Conditions to the Obligations of Buyer. All obligations of
Buyer hereunder are subject, at their option, to the fulfillment prior to or at
the Closing of each of the following conditions:
(a) Performance. Seller shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or prior to
the Closing Date.
(b) Representations and Warranties. The representations and warranties
of Seller contained in this Agreement and in any certificate or other writing
delivered by Seller pursuant hereto shall be true in all material respects at
and as of the Closing Date as if made at and as of such time.
(c) Fairness Opinion. Buyer shall have received an opinion from Rickel
& Co. to the effect that the consideration being paid to Seller for the Business
is fair to Buyer and its stockholders from a financial point of view.
(d) Required Consents. Seller shall have obtained all Seller Required
Consents in connection with the Contemplated Transactions.
(e) Certificates; Documentation. There shall have been delivered to
Buyer the following:
(i) stock certificates representing the JMS Shares, accompanied by
stock powers duly executed in favor of Buyer (in the amounts set forth on
Schedule A), in proper form for transfer, with appropriate required stock
transfer tax stamps, if any, affixed at the expense of the Seller;
<PAGE>
(ii) a certificate from the Seller confirming the matters set forth in
Sections 5.3(a), (b) and (d);
(iii) a certificate from the Secretary of the Company certifying that
attached to such certificate are (A) true and correct copies of the Certificate
of Incorporation and By-Laws of the Company, with all amendments to date, and
(B) the names and signatures of all of the duly elected or appointed officers
and directors of the Company;
(iv) a certificate from the Secretary of State of the State of New
Jersey, dated as near to the date of this Agreement as possible certifying that
the Company is in good standing in the State of New Jersey; and
(v) such other instruments and documents, in form and substance
reasonably satisfactory to Buyer, as Buyer shall have reasonably requested.
(f) Delivery of Warrants to Employees of the Buyer. There shall have
been delivered to Stephen Fass, Maria Marfuggi and Raymond McKinstry common
stock purchase warrants substantially upon the terms and in the form of the
Warrants covering 50,000 shares of Buyer Common Stock each (150,000 shares of
Buyer Common Stock in total).
(g) Legal Opinion of Seller's Counsel. Buyer shall have received an
opinion from Seller's counsel, substantially in the form of Exhibit E hereto.
ARTICLE VI [Intentionally Omitted]
ARTICLE VII
TERMINATION
SECTION 7.1 Termination. This Agreement may be terminated and the
Contemplated Transactions may be abandoned at any time prior to the Closing:
(a) By mutual written consent of Seller and Buyer;
(b) By Seller, if (i) there has been a material misrepresentation or
breach of warranty on the part of Buyer in the representations and warranties
contained herein and such material misrepresentation or breach of warranty, if
curable, is not cured within 30 days after written notice thereof from Seller;
(ii) Buyer has committed a material breach of any covenant imposed upon it
hereunder and fails to cure such breach within 30 days after written notice
thereof from Seller; or (iii) any condition to Seller's obligations hereunder
becomes incapable of fulfillment through no fault of Seller and is not waived by
Seller;
<PAGE>
(c) By Buyer, if (i) there has been a material misrepresentation or
breach of warranty on the part of Seller in the representations and warranties
contained herein and such material misrepresentation or breach of warranty, if
curable, is not cured within 30 days after written notice thereof from Buyer;
(ii) Seller has committed a material breach of any covenant imposed upon it
hereunder and fails to cure such breach within 30 days after written notice
thereof from Buyer; or (iii) any condition to Buyer's obligations hereunder
becomes incapable of fulfillment through no fault of Buyer and is not waived by
Buyer;
(d) By Seller, if Buyer (or its agent) shall not have received, either
in escrow or in binding subscriptions, subscriptions of at least $1,750,000 from
investors in the Private Placement by no later than the close of business on
January 22, 1997.
(e) By Seller or by Buyer, if there shall be any Law that makes
consummation of the Contemplated Transactions illegal or otherwise prohibited,
or if any Order enjoining Buyer or Seller from consummating the Contemplated
Transactions is entered and such Order shall have become final and
nonappealable; and
(f) By Seller or Buyer, if the Closing shall not have occurred on or
before February 28, 1997.
SECTION 7.2 Effect of Termination; Right to Proceed. In the event that
this Agreement shall be terminated pursuant to Section 7.1, all further
obligations of the parties under the Agreement shall terminate without further
liability of any party hereunder except (i) to the extent that a party has made
a material misrepresentation hereunder or committed a breach of the material
covenants and agreements imposed upon it hereunder; (ii) to the extent that any
condition to a party's obligations hereunder became incapable of fulfillment
because of the breach by the other party of its obligations hereunder and (iii)
that the covenants and agreements contained in Sections 4.7 and 4.8 shall
survive the termination hereof. In the event that a condition precedent to its
obligation is not met, nothing contained herein shall be deemed to require any
party to terminate this Agreement, rather than to waive such condition precedent
and proceed with the Contemplated Transactions.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Mediation. In the event of a dispute arising out of this
Agreement, the parties agree to participate in mediation pursuant to the
mediation rules of the American Arbitration Association. Participation in good
faith in such a mediation proceeding shall be a condition precedent to the
initiation by either party of legal proceedings. The costs and expenses
associated with the mediation shall be shared equally by the parties.
<PAGE>
SECTION 8.2 Notices. (a) Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally by
hand or by recognized overnight courier, telecopied or mailed (by registered or
certified mail, postage prepaid) as follows:
(i) if to Buyer, one copy to:
William Greenberg Jr. Desserts
& Cafes, Inc.
533 West 47th Street
New York, New York 10036
Attention: Stephen Fass, President
Telephone: (212) 586-7600
Fax No.: (212) 586-2418
with a simultaneous copy to:
Baer Marks & Upham LLP
805 Third Avenue
New York, New York 10022
Attention: Samuel F. Ottensoser, Esq.
Telephone: (212) 702-5962
Fax No.: (212) 702-5941
(ii) if to Seller, one copy to:
J.M. Specialties
222 New Road
Parsippany, New Jersey 07054
Attention: Philip Grabow, President
Telephone: (201) 808-8268
Fax No.: (201) 808-0203
with a simultaneous copy to:
Lowenstein, Sandler, Kohl,
Fisher & Boylan
65 Livingston Avenue
Roseland, New Jersey 07065
Attention: Alan Wovsaniker
Telephone: (201) 992-8700
Fax No.: (201) 992-5820
<PAGE>
(b) Each such notice or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier number
specified in Section 8.2(a) (with confirmation of transmission) or (ii) if given
by any other means, when delivered at the address specified in Section 8.2(a).
Any party by notice given in accordance with this Section 8.2 to the other party
may designate another address (or telecopier number) or person for receipt of
notices hereunder. Notices by a party may be given by counsel to such party.
SECTION 8.3 Entire Agreement. This Agreement (including the Schedules
and Exhibits hereto), contains the entire agreement between the parties with
respect to the subject matter hereof and related transactions and supersedes all
prior agreements, written or oral, with respect thereto.
SECTION 8.4 Waivers and Amendments; Non-Contractual Remedies;
Preservation of Remedies. This Agreement may be amended, superseded, cancelled,
renewed or extended, and the terms hereof may be waived, only by a written
instrument signed by the parties hereto or, in the case of a waiver, by the
party waiving compliance. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof. Nor shall
any waiver on the part of any party of any such right, power or privilege, nor
any single or partial exercise of any such right, power or privilege, preclude
any further exercise thereof or the exercise of any other such right, power or
privilege. Except as otherwise provided herein, the rights and remedies herein
provided are cumulative and are not exclusive of any rights or remedies that any
party may otherwise have at law or in equity. The rights and remedies of any
party based upon, arising out of or otherwise in respect of any inaccuracy in or
breach of any representation, warranty, covenant or agreement contained in this
Agreement shall in no way be limited by the fact that the act, omission,
occurrence or other state of facts upon which any claim of any such inaccuracy
or breach is based may also be the subject matter of any other representation,
warranty, covenant or agreement contained in this Agreement (or in any other
agreement between the parties) as to which there is no inaccuracy or breach.
SECTION 8.5 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such State, without regard
to the conflict of laws rules thereof.
SECTION 8.6 Waiver of Jury Trial. In connection with any suit, action
or proceeding arising out of or in connection herewith, the parties waive the
right to trial by jury.
SECTION 8.7 Binding Effect; No Assignment. This Agreement and all of
its provisions, rights and obligations shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors, heirs and
legal representatives. This Agreement may not be assigned by a party without the
express written consent of the others and any purported assignment, unless so
consented to, shall be void and without effect. Nothing herein express or
implied is intended or shall be construed to confer upon or to give anyone other
than the parties hereto and their respective heirs, legal representatives and
successors any rights or
<PAGE>
benefits under or by reason of this Agreement, and no other Person shall
have any right to enforce any of the provisions of this Agreement.
SECTION 8.8 Exhibits. All Exhibits and Schedules attached hereto are
hereby incorporated by reference into, and made a part of, this Agreement. The
disclosure contained in any one Schedule to this Agreement, if by its
description in such Schedule is clearly applicable to other Sections of this
Agreement, will also be deemed to have been made with respect to such other
Sections even if such disclosure is not repeated in any other Schedules.
SECTION 8.9 Severability. If any provision of this Agreement for any
reason shall be held to be illegal, invalid or unenforceable, such illegality
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such illegal, invalid or unenforceable provision had never
been included herein.
SECTION 8.10 Counterparts. The Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
ARTICLE IX
DEFINITIONS
SECTION 9.1 Definitions. (a) The following terms, as used herein, have
the following meanings:
"Acquisition Proposal" shall mean any proposal for the acquisition of,
or merger or other business combination involving the Company or the sale of the
JMS Shares or the sale of any Controlling equity interest in, or the Business or
substantially all the assets of, the Company, other than the transactions
contemplated by this Agreement.
"Affiliate" of any Person shall mean any other Person directly or
indirectly through one or more intermediary Persons, Controlling, Controlled by
or under common control with such Person.
"Agreement" or "this Agreement" shall mean, and the words "herein",
"hereof" and "hereunder" and words of similar import shall refer to, this
agreement as it from time to time may be amended.
"Assets" shall mean properties, rights, interests and assets of every
kind, real, personal or mixed, tangible and intangible.
<PAGE>
"Buyer Balance Sheet" shall means the balance sheet dated September
30, 1996 included in the Buyer Financial Statements.
"Buyer Financial Statements" shall mean the audited balance sheet of
the Company as of December 31, 1995 and 1994, and the related statements of
income and retained earnings, and cash flows for the years then ended and (ii)
the unaudited balance sheet of the Company as at September 30, 1996 and 1995 and
the related statements of income and retained earnings and cash flows for the
periods then ended
"Buyer Subsidiary" or "Buyer Subsidiaries" shall mean any corporation
or other business venture or majority of the voting stock of which is owned,
directly or indirectly, by the Buyer.
"Claims" shall mean any actions, suits, claims, counterclaims or
legal, administrative or arbitral proceedings or investigations of any kind.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company Balance Sheet" shall means the balance sheet dated September
30, 1996 included in the Company Financial Statements.
"Condition of the Buyer" shall mean the business (including the
continued operation thereof in the manner currently conducted), assets,
properties, prospects, condition (financial or otherwise) or the results of
operations of the Buyer.
"Condition of the Company" shall mean the business (including the
continued operation thereof in the manner currently conducted), assets,
properties, prospects, condition (financial or otherwise) or the results of
operations of the Company.
"Contract" shall mean any contract, agreement, indenture, note, bond,
lease, conditional sale contract, mortgage, license, franchise, instrument,
commitment or other binding agreement, whether written or oral, including all
amendments thereto.
"Contractor" shall mean a person retained to design, create, assemble,
produce, package or deliver products.
"Control" with respect to any Person, shall mean the power to direct
the management and policies of such Person, directly or indirectly, by or
through stock ownership, agency or otherwise, or pursuant to or in connection
with an agreement, arrangement or understanding (written or oral) with one or
more other Persons by or through stock ownership, agency or otherwise; and the
terms "controlling" and "controlled" shall have meanings correlative to the
foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
<PAGE>
"GAAP" shall mean generally accepted accounting principles.
"Governmental Body" shall mean any government or political subdivision
thereof whether federal, state, local or foreign, or any agency or
instrumentality of any such government or political subdivision or any court or
arbitrator.
"IRS" shall mean the Internal Revenue Service.
The term "knowledge" with respect to (a) any individual shall mean
actual knowledge and (b) any corporation shall mean the actual knowledge of the
directors or the executive officers of such corporation; and "knows" has a
correlative meaning.
"Law" shall mean any law, statute, code, ordinance, rule, regulation
or other requirement.
"Liability" or "Liabilities" shall mean any direct or indirect
indebtedness, liability, assessment, claim, loss, damage, deficiency, obligation
or responsibility, fixed or unfixed, choate or inchoate, liquidated or
unliquidated, secured or unsecured, accrued, absolute, actual or potential,
contingent or otherwise (including any liability under any guaranties, letters
of credit, performance credits or with respect to insurance loss accruals).
"Lien" shall mean, with respect to any asset or interest, any
mortgage, lien (including mechanics, warehousemen, laborers and landlords
liens), claim, pledge, charge, security interest, preemptive right, right of
first refusal, option, judgment, title defect, or encumbrance of any kind in
respect of or affecting such asset or interest.
"Order" shall mean any order, judgment, injunction, award, citation,
decree, consent or writ.
"Person" shall mean an individual, corporation, partnership, joint
venture, limited liability company, association, trust, unincorporated
organization or other entity, including a government or political subdivision or
an agency or instrumentality thereof.
"Regulations" shall mean the Income Tax Regulations issued with
respect to the Code.
"Return" or "Returns" shall mean returns, reports, and information
statements with respect to Taxes required to be filed with the IRS or any other
Tax Authority.
"Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") shall mean (i) any net income, gross income, gross receipts, sales,
use, ad valorem, transfer, transfer gains, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, rent, recording,
occupation, premium, real or personal property, intangibles, environmental or
windfall profits tax, alternative or add-on minimum tax, customs duty or other
tax, fee, duty, levy, impost, assessment or charge of any kind whatsoever
(including but not limited to taxes
<PAGE>
assessed to real property and water and sewer rents relating thereto), together
with any interest and any penalty, addition to tax or additional amount imposed
by any Governmental Body (domestic or foreign) (a "Tax Authority") responsible
for the imposition of any such tax); (ii) any liability for the payment of any
amount of the type described in the immediately preceding clause (i) as a result
of the Company or the Buyer or its Subsidiaries, as the case may be, being a
member of an affiliated or combined group with any other corporation at any time
on or prior to the Closing Date and (iii) any liability of the Company for the
payment of any amounts of the type described in the immediately preceding clause
(i) as a result of a contractual obligation to indemnify any other Person.
(b) The following terms are defined in the following sections of this
Agreement:
Term Section
1933 Act 2.4
Business Recital
Buyer Recital
Buyer Common Stock 1.2(b)
Buyer Group 3.11
Buyer Holding Company 4.10(a)
Buyer Required Consents 3.4
Buyer Securities 2.27
Buyer SEC Reports 3.5
Closing 1.3
Closing Date 1.3
Commission 3.5
Company Recital
Company Common Stock 2.3
Company Financial Statements 2.8(a)
Company Leased Real Property 2.12
Company Permitted Liens 2.12(e)
Company Receivables 2.18
Company Tangible Property 2.12(c)
Contemplated Transactions 2.2
Employment Agreement 5.1(f)
Environmental Laws 2.24
Group 2.17
JMS Shares Recital
Market Value 1.2(b)
Permits 2.10(a)
Proposed Contracts 2.15(a)(xxi)
Purchase Price 1.2
Representatives 4.2(a)
<PAGE>
Seller Required Consents 2.5
Seller Recital
Transaction Documents 2.2
Warrants 1.2(c)
SECTION 9.2 Interpretation. Unless the context otherwise requires, the
terms defined in Section 9.1 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms defined herein. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation".
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Stock Purchase
Agreement as of the date set forth above.
BUYER:
WILLIAM GREENBERG JR. DESSERTS AND
CAFES, INC.
By: /s/Stephen Fass, President
______________________________
Stephen Fass, President
SELLER:
/s/Philip Grabow
__________________________________
Philip Grabow
<PAGE>
EXHIBIT B
WARRANT AGREEMENT
WARRANT AGREEMENT, dated as of January 23, 1997, between WILLIAM
GREENBERG JR. DESSERTS & CAFES, INC., a New York corporation (the "Company"),
and PHILIP GRABOW (the "Holder").
WHEREAS, the Company desires to provide for the issuance of Warrants
to the Holder upon the terms and conditions provided herein,
NOW, THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
SECTION 1. Definitions. As used herein, the following terms shall have
the following meanings, unless the context shall otherwise require:
1.1 "Affiliate" shall mean any person or entity who controls, is
controlled by or is under common control with, the Company. For purposes of this
definition, "control" means the power to direct the management and policies of
any person or entity, directly or indirectly, whether through the ownership of
securities, by contract or otherwise.
1.2 "Common Stock" shall mean stock of the Company of any class,
whether now or hereafter authorized, which has the right to participate in the
voting (other than by reason of the happening of any contingency) and in the
distribution of earnings and assets of the Company without limit as to amount or
percentage.
1.3 "Exercise Date" shall mean the date on which the Company shall
have received both (i) the Warrant Certificate representing this Warrant, with
the exercise form thereon duly executed by the Holder hereof or his attorney
duly authorized in writing, and (ii) payment in cash or by check made payable to
the Company, of the amount in lawful money of the United States of America equal
to the applicable Purchase Price.
1.4 "Initial Warrant Exercise Date" shall mean January 23, 1997.
1.5 "Market Price" per share of Common Stock on any date means the
average of the daily closing prices for 30 consecutive trading days commencing
45 trading days before the date of such computation. The closing price for each
day shall be the last reported sales price regular way or, in case no such
reported sale takes place on such day, the average of the closing bid and asked
prices regular way for such day, in each case on the principal national
securities exchange on which the securities are listed or admitted to trading
or, if not so listed or admitted to trading, the last sale price regular way for
the security published by Nasdaq or if no such sale takes place on such day, the
mean between the closing bid and asked prices for the security as published by
Nasdaq. In the absence of one or more such quotations, the Company shall
determine the Market Price in good faith, based on the best information
available to it.
1.6 "Purchase Price" shall mean, subject to modification and
adjustment as provided in Section 8, $2.50 and further subject to the Company's
right, in its sole discretion, to decrease the Purchase Price for a period of
not less than 30 days on not less than 30 days' prior written notice to the
Registered Holder.
1.7 "Registered Holder" shall mean the person in whose name any
certificate representing the Warrants shall be registered on the books
maintained by the Company pursuant to Section 6.
1.8 "Subsidiary" or "Subsidiaries" shall mean any corporation or
corporations, as the case may be, of which stock having ordinary power to elect
a majority of the Board of Directors of such corporation (regardless of whether
or not at the time stock of any other class or classes of such corporation shall
have or may have voting power by reason of the happening of any contingency) is
at the time directly or indirectly owned by the Company or by one or more
Subsidiaries, or by the Company and one or more Subsidiaries.
1.9 "Warrant Certificate" shall mean a certificate representing each
of the Warrants substantially in the form annexed hereto as Exhibit A.
1.10 "Warrant Expiration Date" shall mean December 31, 2000 or, if
such date in the State of New York be a holiday or a day on which banks are
authorized to close, then 5:00 p.m. (New York time) on the next following day
which in the State of New York is not a holiday or a day on which banks are
authorized to close, subject to the Company's right, prior to the Warrant
Expiration Date, in its sole discretion, to extend such Warrant Expiration Date
on five (5) business days prior written notice to the Registered Holders.
SECTION 2. Warrants and Issuance of Warrant Certificates
2.1 One Warrant shall initially entitle the Registered Holder of the
Warrant Certificate representing such Warrant to purchase at the Purchase Price
therefor from the Initial Warrant Exercise Date until the Warrant Expiration
Date one share of Common Stock upon the exercise thereof, subject to
modification and adjustment as provided in Section 8.
2.2 The Company shall issue Warrant Certificates representing 350,000
Warrants to the Registered Holder to purchase up to an aggregate of 350,000
shares of Common Stock (subject to modification and adjustment as provided in
Section 8).
2.3 From time to time, up to the Warrant Expiration Date, as the case
may be, the Company shall countersign and deliver Warrant Certificates in
required denominations of one or whole number multiples thereof to the person
entitled thereto in connection with any transfer or exchange permitted under
this Agreement. Except as provided in Section 7 hereof, no Warrant Certificates
shall be issued except (i) Warrant Certificates initially issued pursuant to
Section 2.2 hereof, (ii) Warrant Certificates issued upon any transfer or
exchange of Warrants, (iii) Warrant Certificates issued in replacement of lost,
stolen, destroyed or mutilated Warrant Certificates pursuant to Section 7, and
(iv) at the option of the Company, Warrant Certificates in such form as may be
approved by its Board of Directors, to reflect any adjustment or change in the
Purchase Price, the number of shares of Common Stock purchasable upon exercise
of the Warrants therefor made pursuant to Section 8 hereof.
SECTION 3. Form and Execution of Warrant Certificates
3.1 The Warrant Certificates shall be substantially in the form
annexed hereto as Exhibit A (the provisions of which are hereby incorporated
herein) and may have such letters, numbers or other marks of identification or
designation and such other legends, summaries or endorsements printed,
lithographed or engraved thereon as the Company may deem appropriate and as are
not inconsistent with the provisions of this Agreement, or as may be required to
comply with any law or with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which the Warrants may be
listed, or to conform to usage. The Warrant Certificates shall be dated the date
of issuance thereof (whether upon initial issuance, transfer, exchange or in
lieu of mutilated, lost, stolen or destroyed Warrant Certificates).
3.2 Each Warrant originally issued and each Warrant issued upon direct
or indirect transfer or in substitution for any Warrant, and each certificate
for shares of Common Stock issued upon the exercise of any Warrant and each
certificate issued upon the direct or indirect transfer of any such shares shall
be stamped or otherwise imprinted with a legend in substantially the form set
forth on the Warrant Certificate annexed as Exhibit A hereto.
3.3 Warrant Certificates shall be executed on behalf of the Company by
its Chairman of the Board, President or any Vice President and by its Treasurer
or an Assistant Treasurer or its Secretary or an Assistant Secretary, by manual
signatures or by facsimile signatures printed thereon, and shall have imprinted
thereon a facsimile of the Company's seal.
SECTION 4. Exercise
4.1 Warrants in denominations of one or whole number multiples thereof
may be exercised commencing at any time on or after the Initial Warrant Exercise
Date, but not after the Warrant Expiration Date, upon the terms and subject to
the conditions set forth herein (including the provisions set forth in Section 5
hereof) and in the applicable Warrant Certificate. A Warrant shall be deemed to
have been exercised immediately prior to the close of business on the Exercise
Date, provided that the Warrant Certificate representing such Warrant, with the
exercise form thereon (substantially in the form of Exhibit B hereto) duly
executed by the Registered Holder thereof or his attorney duly authorized in
writing, together with payment in cash or by check made payable to the Company,
of an amount in lawful money of the United States of America equal to the
applicable Purchase Price has been received in good funds by the Company. The
person entitled to receive the securities deliverable upon such exercise shall
be treated for all purposes as the holder of such securities as of the close of
business on the Exercise Date. If more than one Warrant Certificate shall be
exercised at one time by the same Registered Holder, the number of full shares
of Common Stock which shall be issuable upon exercise thereof shall be computed
on the basis of the aggregate number of full shares of Common Stock issuable
upon such exercise. As soon as practicable on or after the Exercise Date, the
Company shall cause to be issued to the person or persons entitled to receive
the same a Common Stock certificate or certificates for the shares of Common
Stock deliverable upon such exercise, and the Company shall deliver the same to
the person or persons entitled thereto.
4.2 The Company shall not be obligated to issue any fractional share
interests or fractional Warrant interests upon the exercise of any Warrant or
Warrants, nor shall it be obligated to issue scrip or pay cash in lieu of
fractional interests. Any fraction equal to or greater than one-half shall be
rounded up to the next full share or Warrant, as the case may be, and any
fraction less than one-half shall be eliminated.
SECTION 5. Reservation of Shares; Charges; etc.
5.1 The Company covenants that it will at all times reserve and keep
available out of its authorized Common Stock, solely for the purpose of issue
upon exercise of Warrants, such number of shares of Common Stock as shall then
be issuable upon the exercise of all outstanding Warrants. The Company covenants
that all shares of Common Stock which shall be issuable upon exercise of the
Warrants shall, at the time of delivery thereof and upon payment of the Purchase
Price with respect thereto, be duly and validly issued and fully paid and
nonassessable and free from all preemptive or similar rights, taxes, liens and
charges with respect to the issue thereof except for taxes and other charges
payable by the holder as provided in Section 5.2, and that upon issuance such
shares shall be listed on each securities exchange, if any, on which the other
shares of outstanding Common Stock of the Company are then listed.
5.2 The Company shall pay all documentary, stamp or similar taxes and
other governmental charges that may be imposed with respect to the issuance of
Warrants, or the issuance or delivery of any shares of Common Stock upon
exercise of the Warrants; provided, however, that if shares of Common Stock are
to be delivered in a name other than the name of the Registered Holder of the
Warrant Certificate representing any Warrant being exercised, then no such
delivery shall be made unless the person requesting the same has paid to the
Company the amount of transfer taxes or charges incident thereto, if any.
SECTION 6. Exchange and Registration of Transfer
6.1 Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Warrants or, subject to
the restrictions on transfer set forth in the legend imprinted on the Warrant
Certificate, may be transferred in whole or in part. Warrant Certificates to be
so exchanged shall be surrendered to the Company at 533 West 47th Street, New
York, New York 10036, and the Company shall execute, issue and deliver in
exchange therefor the Warrant Certificate or Certificates which the Registered
Holder making the exchange shall be entitled to receive.
6.2 The Company shall keep, at such office, books in which, subject to
such reasonable regulations as it may prescribe, it shall register Warrant
Certificates and the transfer thereof. Upon due presentment for registration of
transfer of any Warrant Certificate at such office, the Company shall execute
and shall issue and deliver to the transferee or transferees a new Warrant
Certificate or Certificates representing an equal aggregate number of Warrants.
6.3 With respect to any Warrant Certificates presented for
registration of transfer, an assignment form substantially in the form of
Exhibit C shall be duly endorsed or be accompanied by a written instrument or
instruments of transfer, in form satisfactory to the Company, duly executed by
the Registered Holder thereof or his attorney duly authorized in writing.
6.4 No service charge shall be made for any exchange or registration
of transfer of Warrant Certificates. However, the Company may require payment of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith.
6.5 All Warrant Certificates surrendered for exercise or for exchange
shall be promptly canceled by the Company.
6.6 Prior to due presentment for registration or transfer thereof, the
Company may deem and treat the Registered Holder of any Warrant Certificate as
the absolute owner thereof of each Warrant represented thereby (notwithstanding
any notations of ownership or writing thereon made by anyone other than the
Company) for all purposes and shall not be affected by any notice to the
contrary.
SECTION 7. Loss or Mutilation. Upon receipt by the Company of evidence
satisfactory to it of the ownership of and the loss, theft, destruction or
mutilation of any Warrant Certificate and (in the case of loss, theft or
destruction) of indemnity satisfactory to it, and (in case of mutilation) upon
surrender and cancellation thereof, the Company shall execute and deliver in
lieu thereof a new Warrant Certificate representing an equal aggregate number of
Warrants. Applicants for a substitute Warrant Certificate shall also comply with
such other reasonable regulations and pay such other reasonable charges as the
Company may prescribe.
SECTION 8. Adjustment of Purchase Price and Number of Shares of Common
Stock Deliverable.
8.1 (a) Except as hereinafter provided, in the event the Company
shall, at any time or from time to time after the date hereof, sell or issue any
shares of Common Stock for a consideration per share less than 95% of the Market
Price or issue any shares of Common Stock as a stock dividend to the holders of
Common Stock, or subdivide or combine the outstanding shares of Common Stock
into a greater or lesser number of shares (any such sale, issuance, subdivision
or combination being herein called a "Change of Shares"), then, and thereafter
upon each further Change of Shares, the Purchase Price for the Warrants (whether
or not the same shall be issued and outstanding) in effect immediately prior to
such Change of Shares shall be changed to a price (including any applicable
fraction of a cent to the nearest cent) determined by multiplying the Purchase
Price in effect immediately prior to such Change of Shares by a fraction the
numerator of which shall be the sum of (i) the total number of shares of Common
Stock outstanding immediately prior to such Change of Shares, and (ii) the
aggregate consideration, if any, received by the Company upon such Change of
Shares divided by the Market Price immediately prior to such Change of Shares,
and the denominator of which shall be the total number of shares of Common Stock
outstanding immediately after such Change of Shares; provided, however, that in
no event shall the Purchase Price be adjusted pursuant to this computation to an
amount in excess of the Purchase Price in effect immediately prior to such
computation, except in the case of a combination of outstanding shares of Common
Stock.
(b) For the purposes of any adjustment to be made in accordance with
Section 8.1(a) the following provisions shall be applicable:
(i) In case of the issuance or sale of shares of Common Stock (or of
other securities deemed hereunder to involve the issuance or sale of shares of
Common Stock) for a consideration part or all of which shall be cash, the amount
of the cash portion of the consideration therefor deemed to have been received
by the Company shall be (A) the subscription price, if shares of Common Stock
are offered by the Company for subscription, or (B) the public offering price
(before deducting therefrom any compensation paid or discount allowed in the
sale, underwriting or purchase thereof by underwriters or dealers or others
performing similar services), if such securities are sold to underwriters or
dealers for public offering without a subscription offering, or (C) the gross
amount of cash actually received by the Company for such securities in any other
case, in each case, without deduction for any expenses incurred by the Company
in connection with such transaction.
(ii) In case of the issuance or sale (otherwise than as a dividend or
other distribution on any stock of the Company) of shares of Common Stock (or of
other securities deemed hereunder to involve the issuance or sale of shares of
Common Stock) for a consideration part or all of which shall be other than cash,
the amount of the consideration therefor other than cash deemed to have been
received by the Company shall be the value of such consideration as determined
in good faith by the Board of Directors of the Company.
(iii) Shares of Common Stock issuable by way of dividend or other
distribution on any stock of the Company shall be deemed to have been issued
immediately after the opening of business on the day following the record date
for the determination of shareholders entitled to receive such dividend or other
distribution and shall be deemed to have been issued without consideration.
(iv) The reclassification of securities of the Company other than
shares of Common Stock into securities including shares of Common Stock shall be
deemed to involve the issuance of such shares of Common Stock for a
consideration other than cash immediately prior to the close of business on the
date fixed for the determination of security holders entitled to receive such
shares, and the value of the consideration allocable to such shares of Common
Stock shall be determined as provided in Section 8.1(b)(ii).
(v) The number of shares of Common Stock at any one time outstanding
shall be deemed to include the aggregate maximum number of shares issuable
(subject to readjustment upon the actual issuance thereof) upon the exercise of
options, rights or warrants and upon the conversion or exchange of convertible
or exchangeable securities.
(c) Upon each adjustment of the Purchase Price pursuant to this
Section 8, the number of shares of Common Stock purchasable upon the exercise of
each Warrant shall be the number derived by multiplying the number of shares of
Common Stock purchasable immediately prior to such adjustment by the Purchase
Price in effect prior to such adjustment and dividing the product so obtained by
the applicable adjusted Purchase Price.
8.2 Except as hereinafter provided, in case the Company shall at any
time after the date hereof issue options, rights or warrants to subscribe for
shares of Common Stock, or issue any securities convertible into or exchangeable
for shares of Common Stock, for a consideration per share (determined as
provided in Section 8.1 and as provided below) less than 95% of the Market Price
in effect immediately prior to the earlier of the issuance of such options,
rights or warrants, or such convertible or exchangeable securities or the record
date therefor, or without consideration (including the issuance of any such
securities by way of dividend or other distribution), the Purchase Price for the
Warrants (whether or not the same shall be issued and outstanding) in effect
immediately prior to the issuance of such options, rights or warrants, or such
convertible or exchangeable securities, as the case may be, shall be reduced to
a price determined by making the computation in accordance with the provisions
of Section 8.1 hereof, provided that:
(a) The aggregate maximum number of shares of Common Stock, as the
case may be, issuable or that may become issuable under such options, rights or
warrants (assuming exercise in full even if not then currently exercisable or
currently exercisable in full) shall be deemed to be issued and outstanding at
the time such options, rights or warrants were issued, for a consideration equal
to the minimum purchase or exercise price per share provided for in such
options, rights or warrants at the time of issuance, plus the consideration, if
any, received by the Company upon the issuance of such options, rights or
warrants (without deduction for expenses incurred or amounts paid to any
underwriter by the Company in connection with such issuance); provided, however,
that upon the expiration or other termination of such options, rights or
warrants, if any thereof shall not have been exercised, the number of shares of
Common Stock deemed to be issued and outstanding pursuant to this Section 8.2(a)
(and for the purposes of Section 8.1(b)(v) hereof) shall be reduced by the
number of shares as to which options, warrants and/or rights shall have expired,
and such number of shares shall no longer be deemed to be issued and
outstanding, and the Purchase Price then in effect shall forthwith be readjusted
and thereafter be the price that it would have been had adjustment been made on
the basis of the issuance only of the shares actually issued plus the shares
remaining issuable upon the exercise of those options, rights or warrants as to
which the exercise rights shall not have expired or terminated unexercised.
(b) The aggregate maximum number of shares of Common Stock issuable or
that may become issuable upon conversion or exchange of any convertible or
exchangeable securities (assuming conversion or exchange in full even if not
then currently convertible or exchangeable in full) shall be deemed to be issued
and outstanding at the time of issuance of such securities, for a consideration
equal to the consideration received by the Company upon the issuance of such
securities (without deduction for expenses incurred or amounts paid to any
underwriter in connection with such issuance), plus the minimum consideration,
if any, receivable by the Company upon the conversion or exchange thereof;
provided, however, that upon the termination of the right to convert or exchange
such convertible or exchangeable securities (whether by reason of redemption or
otherwise), the number of shares of Common Stock deemed to be issued and
outstanding pursuant to this Section 8.2(b) (and for the purposes of
Section 8.1(b)(v) hereof) shall be reduced by the number of shares as to which
the conversion or exchange rights shall have expired or terminated unexercised,
and such number of shares shall no longer be deemed to be issued and
outstanding, and the Purchase Price then in effect shall forthwith be readjusted
and thereafter be the price that it would have been had adjustment been made on
the basis of the issuance only of the shares actually issued plus the shares
remaining issuable upon conversion or exchange of those convertible or
exchangeable securities as to which the conversion or exchange rights shall not
have expired or terminated unexercised.
(c) If any change shall occur in the price per share provided for in
any of the options, rights or warrants referred to in Section 8.2(a), or in the
price per share or ratio at which the securities referred to in Section 8.2(b)
are convertible or exchangeable (in either case, other than changes in such
prices or ratios arising pursuant to antidilution adjustments in such options,
rights, warrants, convertible or exchangeable securities or the instruments
pursuant to which they were issued, provided that such options, rights,
warrants, convertible or exchangeable securities or instruments pursuant to
which they were issued do not contain antidilution provisions any more favorable
to the holder thereof than those contained herein) such options, rights or
warrants or conversion or exchange rights, as the case may be, to the extent not
theretofore exercised, shall be deemed to have expired or terminated on the date
when such price change became effective in respect of shares not theretofore
issued pursuant to the exercise or conversion or exchange thereof, and the
Company shall be deemed to have issued upon such date new options, rights or
warrants or convertible or exchangeable securities.
8.3 In case of any reclassification or change of outstanding shares of
Common Stock issuable upon exercise of the Warrants (other than a change in par
value, or from par value to no par value, or from no par value to par value or
as a result of a subdivision or combination), or in case of any consolidation or
merger of the Company with or into another corporation (other than a merger in
which the Company is the continuing corporation and which does not result in any
reclassification or change of the then outstanding shares of Common Stock or
other capital stock issuable upon exercise of the Warrants (other than a change
in par value, or from par value to no par value, or from no par value to par
value or as a result of subdivision or combination)) or in case of any sale or
conveyance to another corporation of the property of the Company as an entirety
or substantially as an entirety, then, as a condition of such reclassification,
change, consolidation, merger, sale or conveyance, the Company, or such
successor or purchasing corporation, as the case may be, shall make lawful and
adequate provision whereby the Registered Holder of each Warrant then
outstanding shall have the right thereafter to receive on exercise of such
Warrant the kind and amount of securities and property receivable upon such
reclassification, change, consolidation, merger, sale or conveyance by a holder
of the number of securities issuable upon exercise of such Warrant immediately
prior to such reclassification, change, consolidation, merger, sale or
conveyance. Such provisions shall include provision for adjustments which shall
be as nearly equivalent as may be practicable to the adjustments provided for in
Sections 8.1 and 8.2. The above provisions of this Section 8.3 shall similarly
apply to successive reclassification and changes of shares of Common Stock and
to successive consolidations, mergers, sales or conveyances.
8.4 Irrespective of any adjustments or changes in the Purchase Price
or the number of shares of Common Stock purchasable upon exercise of the
Warrants, the Warrant Certificates theretofore and thereafter issued shall
continue to express the Purchase Price per share and the number of shares
purchasable thereunder as the Purchase Price per share and the number of shares
purchasable thereunder were expressed in the Warrant Certificates when the same
were originally issued.
8.5 After each adjustment of the Purchase Price pursuant to this
Section 8, the Company will promptly prepare a certificate signed by the
Chairman or President, and by the Treasurer or an Assistant Treasurer or the
Secretary or an Assistant Secretary, of the Company setting forth: (i) the
Purchase Price as so adjusted, (ii) the number of shares of Common Stock
purchasable upon exercise of each Warrant, after such adjustment, and (iii) a
brief statement of the facts accounting for such adjustment. The Company will
cause a brief summary thereof to be sent by ordinary first class mail to each
Registered Holder at his last address as it shall appear on the books of the
Company. No failure to mail such notice nor any defect therein or in the mailing
thereof shall affect the validity thereof except as to the holder to whom the
Company failed to mail such notice, or except as to the holder whose notice was
defective. The affidavit of the Secretary or an Assistant Secretary of the
Company that such notice has been mailed shall, in the absence of fraud, be
prima facie evidence of the facts stated therein.
8.6 No adjustment of the Purchase Price or in the number of shares of
Common Stock issuable upon exercise of the Warrants shall be made as a result of
or in connection with (a) the issuance or sale of shares of Common Stock
pursuant to options, warrants, stock purchase agreements and convertible or
exchangeable securities outstanding, in effect or issued on the date hereof or
authorized to be issued after the date hereof pursuant to the provisions of this
Section 8.6, (b) the issuance of options to purchase shares of Common Stock,
whether or not such options were outstanding on the date hereof, issued in
connection with any outstanding stock option plan or similar plan, (c) the
issuance or sale of shares of Common Stock upon the exercise of options referred
to in Section 8.6(b) above, (d) the issuance of shares of Common Stock
underlying any option or warrant in effect or provided for as of the date
hereof, or (e) the issuance or sale of shares of Common Stock if the amount of
said adjustment shall be less than $.10, provided, however, that in such case,
any adjustment that would otherwise be required then to be made shall be carried
forward and shall be made at the time of and together with the next subsequent
adjustment that shall amount, together with any adjustment so carried forward,
to at least $.10. In addition, Registered Holders shall not be entitled to cash
dividends paid by the Company prior to the exercise of any Warrant or Warrants
held by them.
SECTION 9. Redemption of Warrants.
9.1 Redemption by the Company. (a) Commencing six months from the date
of this Agreement and from time to time thereafter, the Company will have the
right on not less than 30 days prior written notice to redeem the Warrants in
the installments set forth below, at a redemption price of $.10 per Warrant,
exercisable once every three months, if the Common Stock trades at the
designated levels set forth below for at least five trading days prior to the
end of the month proceeding the date on which the redemption right may be
exercised. The number of Warrants that may be redeemed from all Holders and the
designated price levels are as follows:
Amount of Warrants that may If the Common Stock trades for
be redeemed from all Holders the prescribed period at or
(expressed as a percentage above the indicated prices below
of the original amount issued)
20% $5.50
20% $6.00
20% $6.50
20% $7.00
20% $7.50
(b) In case the Company shall desire to exercise its rights to so
redeem the Warrants, its shall mail a notice of redemption to each of the
Registered Holders of the Warrants to be redeemed, first class, postage prepaid,
not later than 30 days prior to the date fixed for redemption (the "Redemption
Date"), at their last address as they shall appear on the records of the
Company. Any notice mailed in the manner provided herein shall be conclusively
presumed to have been duly given whether or not the Registered Holder receives
such notice.
(c) The notice of redemption shall state: (i) the redemption price,
(ii) the Redemption Date, (iii) the place where the Warrant Certificates shall
be delivered and the redemption price paid; and (iv) that the right to exercise
the Warrant shall terminate at 5 p.m. (New York City time) on the business day
immediately preceding the Redemption Date. No failure to mail such notice nor
any defect therein or in the mailing thereof shall affect the validity of the
proceedings for such redemption except as to a Holder (A) to whom notice was not
mailed or (B) whose notice was defective. An affidavit of the Secretary or an
Assistant Secretary of the Company that notice of redemption has been mailed, in
the absence of fraud, shall be prima facie evidence of the facts stated therein.
(d) Any right to exercise a Warrant that has been called for
redemption shall terminate at 5 p.m. (New York City time) on the business day
immediately preceding the Redemption Date. On and after the Redemption Date,
Holders of the redeemed Warrants shall have no further rights except to receive,
upon surrender of the redeemed Warrant, the redemption price.
(e) From and after the Redemption Date, the Company shall, at the
price specified in the notice of redemption, upon presentation and surrender to
the Company by or on behalf of the Registered Holder thereof of one or more
Warrants to be redeemed, deliver or cause to be delivered to or upon the written
order of such Holder a sum in cash equal to the redemption price of each such
Warrant. From and after the Redemption Date and upon the deposit or setting
aside by the Company of a sum sufficient to redeem all the Warrants called for
redemption, such Warrants shall expire and become void and all rights hereunder
and under the Warrant Certificates, except the right to receive payment of the
redemption price, shall cease.
9.2 Redemption at the Election of Holders. (a) During the sixty-day
period prior to the Warrant Expiration Date (unless the Warrants shall
theretofore have been redeemed or exercised), each Holder will have the right to
require the Company to repurchase the Warrants from such Holder for a
consideration consisting of $.10 per Warrant plus .40 of a share of Common
Stock.
(b) In the case a Holder shall desire to exercise such right, it shall
give written notice thereof the Company, first class, postage prepaid at the
then principal office of the Company.
(c) The Holder's notice, to be effective, shall specify the number of
Warrants to be repurchased by the Company and shall be accompanied by the
Warrant Certificates relating thereto duly endorsed for transfer to the Company.
(d) Any right to exercise a Warrant that has been surrendered to the
Company pursuant to the provisions of Section 9.2(c) shall terminate on the date
of such surrender (the "Surrender Date"). On and after the Surrender Date,
Holders of the surrendered Warrants shall have no further rights except to
receive the redemption price consisting of cash and Common Stock.
(e) Promptly after the Surrender Date, the Company shall cause to be
delivered to or upon the written order of such Holder a sum in cash equal to the
redemption price for each Warrant plus a Certificate evidencing .40 share of
Common Stock for each Warrant. From and after the Surrender Date and upon the
deposit or setting aside by the Company of a sum sufficient to repurchase all
Warrants called for repurchase, such Warrants shall expire and become void and
all rights hereunder and under the Warrant Certificates, except the right to
receive payment of the redemption price and the applicable number of shares of
Common Stock, shall cease.
SECTION 10. Modification of Agreement. This Agreement may not be
modified, supplemented or altered in any respect except with the consent in
writing of the Registered Holders and the Company.
SECTION 11. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first-class postage prepaid, or delivered to a
telegraph office for transmission if to the Registered Holder of a Warrant
Certificate, at the address of such holder as shown on the registry books
maintained by the Company; if to the Company at 535 West 47th Street, 6th Floor,
New York, New York 10036, Attention: President, or at such other address as may
have been furnished to the Registered Holder in writing by the Company.
SECTION 12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to conflicts of laws.
SECTION 13. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the Company and the holders from time to time of Warrant
Certificates. Except as hereinafter stated, nothing in this Agreement is
intended or shall be construed to confer upon any other person any right, remedy
or claim or to impose upon any other person any duty, liability or obligation.
SECTION 14. Counterparts. This Agreement may be executed in one or
more counterparts, which taken together shall constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this Warrant
Agreement to be duly executed as of the 23rd day of January, 1997.
WILLIAM GREENBERG JR. DESSERTS & CAFES, INC.
By: /s/Stephen Fass, President
___________________________________
Stephen Fass, President
/s/Philip Grabow
____________________________________
Philip Grabow
EXHIBIT C
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of January 23, 1997, by and
between William Greenberg Jr. Desserts & Cafes, Inc., a New York corporation
(the "Company"), and Philip Grabow (the "Holder"):
WHEREAS, pursuant to the Stock Purchase Agreement dated January 17,
1997 (which, together with the exhibits thereto or referred to therein and any
amendment or supplement thereto, is referred to herein as the "Stock Purchase
Agreement"), the Company is offering 350,000 Warrants (as that term is defined
and described in the Stock Purchase Agreement) at a purchase price of $2.50 per
Warrant for an aggregate gross purchase price of $825,000 for the sale of all
the Warrants; and
WHEREAS, pursuant to the Stock Purchase Agreement, the Company is
giving 500,000 Shares of Buyer Common Stock (as that term is defined and
described in the Stock Purchase Agreement) as part of the Purchase Price; and
WHEREAS, pursuant to a Warrant Agreement dated of even date herewith
(the "Warrant Agreement") between the Company and the Holder, the Holder has
purchased Warrants;
WHEREAS, as further inducement for the Holders to purchase Warrants
from the Company, the Company desires to undertake to register the shares of
common stock of the Company, par value $.001 per share, issuable upon exercise
of the Warrants (the "Shares") under the Securities Act of 1933, as amended, and
the rules and regulations thereunder (collectively, the "Securities Act"), in
accordance with, and subject to, the terms and conditions hereof.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and in the Warrant Agreement, the Company and the
Holder hereby agree as follows:
1. Registration Rights
(a) "Piggyback Registration." If the Company at any time after the
expiration of six months from the date hereof proposes to file a registration
statement under the Securities Act (other than a registration statement on Form
S-4 or Form S-8 (or any successor thereto) or in connection with an exchange
offer of securities solely to existing stockholders or employees of the
Company), the Company shall strongly request that the managing underwriter (if
any) of such underwritten offering include the Shares in such registration. If
such managing underwriter agrees to include any of the Shares in the offering,
the Company shall at such time give prompt written notice to all Holders of its
intention to effect such registration and of such Holders' rights under such
proposed registration, and upon the request of any Holder delivered to the
Company within twenty (20) days after giving such notice (which request shall
specify the Shares intended to be disposed of by such Holder and the intended
method of disposition thereof), the Company shall include such Shares held by
each such Holder requested to be included in such registration; provided,
however, that:
(i) If, at any time after giving such written notice of the Company's
intention to register any of the Holder's Shares and prior to the effective date
of the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register or to delay the
registration of such Shares, at its sole election, the Company may give written
notice of such determination to each Holder and thereupon shall be relieved of
its obligation to register any Shares issued or issuable in connection with such
registration (but not from its obligation to pay registration expenses in
connection therewith or to register the Shares in a subsequent registration);
and in the case of a determination to delay a registration shall thereupon be
permitted to delay registering any Shares for the same period as the delay in
respect of securities being registered for the Company's own account.
(ii) If the managing underwriter in such underwritten offering shall
advise the Company that it declines to include a portion or all of the Shares
requested by the Holders to be included in the registration statement, then
distribution of all or a specified portion of the Shares shall be excluded from
such registration statement (in case of an exclusion as to a portion of such
Shares, such portion to be allocated among such Holders in proportion to the
respective numbers of Shares requested to be registered by each such Holder). In
such event the Company shall give the Holder prompt notice of the number of
Shares excluded.
(b) Demand Registration. To the extent that all the Holder's Shares
have not been registered pursuant to Section 1(a), at any time commencing six
(6) months from the date hereof, the Holders of the Shares shall have the right,
on one occasion, exercisable by written notice to the Company from the Holders
of a majority in interest of the unregistered Shares, to have the Company
prepare and file with the Securities and Exchange Commission (the "Commission")
a registration statement on Form S-1 (or other appropriate form), and such other
documents, including a prospectus, as may be necessary in the opinion of both
counsel for the Company and counsel for the Holders, in order to comply with the
provisions of the Securities Act, so as to permit a public offering and sale,
for a period of nine (9) months, of the Shares. Notwithstanding the foregoing,
if the Company shall furnish to the Holders demanding registration under this
Section 1(b) a certificate signed by the president of the Company stating that
in the good faith judgment of the Board of Directors of the Company, it would be
materially detrimental to the Company and its shareholders for such registration
statement to be filed at that time, and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to defer
the commencement of such a filing for a period of not more than 180 days after
receipt of the request of such Holders.
(c) Cooperation with Company. Each Holder hereby agrees to cooperate
with the Company in all respects in connection with this Agreement, including,
timely supplying all information reasonably requested by the Company and
executing and returning all documents reasonably requested in connection with
the registration and sale of the Shares.
2. Registration Procedures. In connection with the registration of any
of the Shares under the Securities Act in accordance with this Agreement, the
Company shall (except as otherwise provided in this Agreement):
(a) prepare and file with the Commission a registration statement (and
concurrently provide a copy thereof to the Holder) and use commercially
reasonable efforts to have such registration statement declared effective and
the Company will notify the Holder, (i) when such registration statement has
become effective; and (ii) when any post-effective amendment to such
registration statement becomes effective;
(b) for a period of 9 months (if requested by the Holder) from the
effective date of the registration statement or such shorter period which will
terminate when all the Shares of the Holder covered by such registration
statement have been sold pursuant thereto, keep such registration statement
continuously effective and current and from time to time amend or supplement the
registration statement and the prospectus in connection therewith to the extent
necessary to permit the completion within said period in compliance with the
Securities Act and the rules and regulations adopted thereunder of the sale or
distribution of the Shares with respect to which such registration statement
shall have become effective in accordance with the intended method or methods of
disposition by the Holder. If at any time the Commission should institute or
threaten to institute any proceedings for the purpose of issuing, or should
issue, a stop order suspending the effectiveness of any such registration
statement, the Company will promptly notify the Holder and will use its
commercially reasonable efforts to prevent the issuance of any such stop-order
or to obtain the withdrawal thereof as soon as practicable. The Company will
advise the Holder promptly of any order or communication of any public board or
body addressed to the Company suspending or threatening to suspend the
qualification of the Shares for sale in any jurisdiction;
(c) furnish to each Holder such numbers of copies of the prospectus,
including a preliminary prospectus or any amendment or supplement to any
prospectus, in conformity with the requirements of the Securities Act, and such
other documents, as such Holder may reasonably request in order to facilitate
the public sale or other disposition of the securities owned by such Holder and
the Company consents to the use of such materials by the Holder;
(d) use diligent efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as each Holder shall request, and do any and all
other acts and things which may be necessary or advisable to enable such Holder
to consummate the public sale or other disposition in such jurisdictions of the
securities owned by such Holder, except that the Company shall not for any such
purpose be required to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified or to file therein any general
consent to service of process;
(e) use diligent efforts to list such securities on any securities
exchange on which any securities of the Company is then listed, if the listing
of such securities is then permitted under the rules of such exchange;
(f) enter into and perform its obligations under an underwriting
agreement, if the offering is an underwritten offering, in usual and customary
form, with the managing underwriter or underwriters of such underwritten
offering;
(g) notify each Holder of Shares covered by such registration
statement, at any time when a prospectus relating thereto covered by such
registration statement is required to be delivered under the Securities Act, of
the happening of any event of which it has knowledge as a result of which the
prospectus included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances then existing; and
(h) furnish, at the request of any Holder on the date the Shares are
delivered to the underwriters for sale pursuant to such registration or, if such
Shares are not being sold through underwriters, on the date the unlegended
Shares are delivered to the Holders, (i) an opinion, dated such date, of the
counsel representing the Company for the purpose of such registration, addressed
to the underwriters, if any, and to the Holder making such request, covering
such legal matters with respect to the registration in respect of which such
opinion is being given as the Holder of such Shares may reasonably request and
are customarily included in such an opinion and (ii) letters, dated,
respectively, (A) the effective date of the registration statement and (B) the
date the Shares are delivered to the underwriters, or to the Holders, as the
case may be, for sale pursuant to such registration, from a firm of independent
certified public accountants of recognized standing selected by the Company,
addressed to the underwriters, if any, and to the Holder making such request,
covering such financial, statistical and accounting matters with respect to the
registration in respect of which such letters are being given as the Holder of
such Shares may reasonably request and are customarily included in such letters;
and
(i) take such other actions as shall be reasonably requested by any
Holder to facilitate the registration and sale of the Shares; provided, however,
that the Company shall not be obligated to take any actions not specifically
required elsewhere herein which in the aggregate would cost in excess of $5,000.
3. Expenses. All expenses incurred in any registration of the Holders'
Shares under this Agreement shall be paid by the Company, including, without
limitation, printing expenses, fees and disbursements of counsel for the
Company, expenses of any audits to which the Company shall agree or which shall
be necessary to comply with governmental requirements in connection with any
such registration; provided, however, the Company shall not be liable for (a)
any discounts or commissions to any underwriter; (b) any stock transfer taxes
incurred with respect to Shares sold in the offering; or (c) the fees and
expenses of counsel for any Holder.
4. Indemnification. In the event any Shares are included in a
registration statement pursuant to this Agreement:
(a) Company Indemnity. The Company shall indemnify and hold harmless
each Holder, the affiliates, officers, directors and partners of each Holder,
any underwriter (as defined in the Securities Act) for such Holder, and each
person, if any, who controls such Holder or underwriter (within the meaning of
the Securities Act or the Securities Exchange Act of 1934 (the "Exchange Act"),
against any losses, claims, damages or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statements including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, (iii) any violation or alleged violation
by the Company of the Securities Act or the Exchange Act, or (iv) any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law, and the Company shall reimburse
each such Holder, affiliate, officer or director or partner, underwriter or
controlling person for any legal or other expenses incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company shall not be liable to
any Holder in any such case for any such loss, claim, damage, liability or
action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder or any
other officer, director or controlling person thereof.
(b) Holder Indemnity. Each Holder shall indemnify and hold harmless
the Company, its affiliates, its counsel, officers, directors, shareholders and
representatives, any underwriter (as defined in the Securities Act) and each
person, if any, who controls the Company or the underwriter (within the meaning
of the Securities Act or the Exchange Act), against any losses, claims, damages,
or liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or any state securities law, and each Holder
shall reimburse the Company, its affiliates, its counsel, officers, directors,
shareholders and representatives, any underwriter (as defined in the Securities
Act) and each person, if any, who controls the Company or the underwriter
(within the meaning of the Securities Act or the Exchange Act), for any legal or
other expenses incurred by them in connection with investigating or defending
any such loss, claim, damage, liability or action; insofar as such losses,
claims, damages or liabilities (or actions and respect thereof) arise out of or
are based upon any statements or information provided by such Holder to the
Company in writing concerning the Holder and its Shares in connection with the
offer or sale of Shares.
(c) Notice, Right to Defend. Promptly after receipt by an indemnified
party under this Section 4 of notice of the commencement of any action
(including any governmental action), such indemnified party shall, if a claim in
respect thereof is to be made against any indemnifying party under this Section
4, deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in and if
the indemnifying party agrees in writing that it will be responsible for any
costs, expenses, judgments, damages and losses incurred by the indemnified party
with respect to such claim, jointly with any other indemnifying party similarly
noticed, to assume the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall have the right to
retain its own counsel, with the fees and expenses to be paid by the
indemnifying party, if the indemnified party reasonably believes that
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of any liability to the indemnified
party under this Agreement only if and to the extent that such failure is
prejudicial to its ability to defend such action, and the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Agreement.
(d) Contribution. If the indemnification provided for in this
Agreement is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
hand in connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relevant fault of the indemnifying party and the indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, the amount any Holder shall be obligated to
contribute pursuant to the Agreement shall be limited to an amount equal to the
proceeds to such Holder of the Shares sold pursuant to the registration
statement which gives rise to such obligation to contribute (less the aggregate
amount of any damages which the Holder has otherwise been required to pay in
respect of such loss, claim, damage, liability or action or any substantially
similar loss, claim, damage, liability or action arising from the sale of such
Shares).
(e) Survival of Indemnity. The indemnification provided by this
Agreement shall be a continuing right to indemnification and shall survive the
registration and sale of any Shares by any person entitled to indemnification
hereunder and the expiration or termination of this Agreement.
5. Assignment of Registration Rights. The rights of the Holders under
this Agreement, including the rights to cause the Company to register Shares,
may not be assigned without the prior written consent of the Company, which
consent may not be unreasonably withheld.
6. Notices. (a) All communications under this Agreement shall be in
writing and shall be mailed by registered or certified mail, postage prepaid, or
telecopied with confirmation of receipt or delivered by hand or by overnight
delivery service.
(b) Any notice so addressed, when mailed by registered or certified
mail shall be deemed to be given three days after so mailed, when telecopied
shall be deemed to be given when transmitted, or when delivered by hand or
overnight shall be deemed to be given when delivered.
7. Successors and Assigns. Except as otherwise expressly provided
herein, this Agreement shall inure to the benefit of and be binding upon the
successors and permitted assigns of the Company and each of the Holders.
8. Amendment and Waiver. This Agreement may be amended, and the
observance of any term of this Agreement may be waived, but only with the
written consent of the Company and the Holders representing a majority of the
Shares; provided, however, that no such amendment or waiver shall take away any
registration right of any Holder of Shares or reduce the amount of reimbursable
costs to any Holder of Shares in connection with any registration hereunder
without the consent of such Holder; further provided, however, that without the
consent of any other Holder of Shares, any Holder may from time to time enter
into one or more agreements amending, modifying or waiving the provisions of
this Agreement if such action does not adversely affect the rights or interest
of any other Holder of Shares. No delay on the part of any party in the exercise
of any right, power or remedy shall operate as a waiver thereof, nor shall any
single or partial exercise by any party of any right, power or remedy preclude
any other or further exercise thereof, or the exercise of any other right, power
or remedy.
9. Counterparts. One or more counterparts of this Agreement may be
signed by the parties, each of which shall be an original but all of which
together shall constitute one and same instrument.
10. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York and the undersigned hereby
consents to the jurisdiction of the courts of the State of New York and/or the
United States District Court for the Southern District of New York.
11. Invalidity of Provisions. If any provision of this Agreement is or
becomes invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not be
affected thereby.
12. Headings. The headings in this Agreement are for convenience of
reference only and shall not be deemed to alter or affect the meaning or
interpretation of any provisions hereof.
WILLIAM GREENBERG JR. DESSERTS & CAFES, INC.
REGISTRATION RIGHTS AGREEMENT SIGNATURE PAGE
IN WITNESS HEREOF, the undersigned have executed this Registration Rights
Agreement as of the 23rd day of January, 1997.
WILLIAM GREENBERG JR. DESSERTS & CAFES, INC.
By: /s/ Stephen Fass, President
___________________________________
Stephen Fass, President
/s/ Philip Grabow
___________________________________
Philip Grabow
