Exhibit (c)
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ASSET PURCHASE AGREEMENT
by and among
RAMSEY KARATE CENTER, INC.,
and
NORTHERN BERGEN KARATE, INC.
Dated as of December 17, 1996
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TABLE OF CONTENTS
Page
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ARTICLE I - DEFINITIONS, PURCHASE OF THE
ASSETS, ASSUMPTION OF ASSUMED LIABILITIES,
PURCHASE PRICE; CLOSING ADJUSTMENTS;
CONDITION OF ASSETS...............................................1
1.1. Certain Definitions................................................1
1.2. Transfer of the Assets.............................................3
1.3. Assumption by Buyer of Certain
Liabilities.......................................................4
1.4. Non-Assumed Liabilities............................................4
1.5. Purchase Price for the Assets......................................4
1.6. Intentionally Omitted..............................................4
1.7. Limitations on Assignment; Further
Assurance.........................................................4
1.8 Condition of Assets and Business ..................................4
1.9 Management Operating Agreement.....................................4
ARTICLE II - CLOSING...........................................................5
2.1. The Closing........................................................5
2.2. Additional Actions to be Taken on
the Closing Date...................................................5
ARTICLE III - REPRESENTATIONS AND WARRANTIES
OF THE SELLER...................................................6
3.1. Organization and Qualification.....................................6
3.2. Subsidiaries and Affiliates........................................6
3.3. Validity and Execution of Agreement................................6
3.4. Litigation.........................................................6
3.5. The Assets.........................................................6
3.6. Contracts and Other Agreements.....................................6
3.7. Real Estate........................................................7
3.8. Disclosure.........................................................7
3.9. Survival...........................................................7
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
OF THE BUYER.....................................................7
4.1. Organization and Qualification.....................................7
4.2. Validity and Execution of Agreement................................7
4.3. No Conflict........................................................8
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4.4. Litigation.........................................................8
4.5. Disclosure.........................................................8
4.6. Survival...........................................................8
ARTICLE V - INDEMNIFICATION....................................................8
5.1. Indemnification....................................................8
5.2. Method of Asserting Claims.........................................9
ARTICLE VI - POST-CLOSING COVENANTS OF THE PARTIES............................11
6.1. Confidentiality...................................................11
6.2. Non-Competition ..................................................11
6.3. Operation of the Business ........................................12
ARTICLE VII - CONDITIONS PRECEDENT TO THE CLOSING ............................12
7.1. Consents; Stockholder Approval ...................................12
7.2. No Suits or Actions ..............................................12
ARTICLE VIII - MISCELLANEOUS..................................................12
8.1. No Other Representations..........................................12
8.2. Sales and Transfer Taxes..........................................13
8.3. Post-Closing Further Assurances...................................13
8.4. Notices...........................................................13
8.5. Publicity.........................................................14
8.6. Entire Agreement..................................................14
8.7. Waivers and Amendments............................................14
8.8. Governing Law.....................................................14
8.9. Binding Effect; No Assignment.....................................14
8.10. Variations in Pronouns............................................14
8.11. Counterparts......................................................14
8.12. Exhibits and Schedules............................................15
8.13. Effect of Disclosure on Schedules.................................15
8.14. Headings..........................................................15
8.15. Severability of Provisions........................................15
8.16. Brokers...........................................................15
8.17 Termination ......................................................15
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TABLE OF CONTENTS
(Continued)
EXHIBIT A - BILL OF SALE
EXHIBIT B - LANDLORD'S CONSENT
EXHIBIT C - SECURED PROMISSORY NOTE
EXHIBIT D- ESCROW AGREEMENT
EXHIBIT E - GUARANTEE
EXHIBIT F- OPERATING AGREEMENT
SCHEDULES
1.1(a) - Excluded Assets
1.1(b) - Permitted Liens
1.2 - Assets
1.3(b) - Assumed Liabilities
3.4 - Litigation - Seller and Subsidiaries
3.6 - Material Agreements
3.7 - Real Estate
4.4 - Litigation - Buyer
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated December 17, 1996 by and between RAMSEY
KARATE CENTER, INC., a New Jersey corporation (the "Seller"), and NORTHERN
BERGEN KARATE, INC., a New Jersey corporation (the "Buyer").
W I T N E S E T H :
WHEREAS, the Seller is engaged in the business of owning and operating a
martial arts instruction center located at 91 Interstate Rte. 17, Ramsey, NJ
(the "Business"); and
WHEREAS, the Seller owns certain assets comprising the Assets (as
hereinafter defined) which are related to the conduct of the Business; and
WHEREAS, the Seller wishes to sell, and the Buyer wishes to acquire the
Assets and assume certain liabilities of the Seller comprising the Assumed
Liabilities (as hereinafter defined) on terms and conditions set forth below.
NOW, THEREFORE, in consideration of the mutual terms, conditions and other
agreements set forth herein, the Seller and the Buyer hereby agree as follows:
ARTICLE I
DEFINITIONS; PURCHASE OF THE ASSETS;
ASSUMPTION OF ASSUMED LIABILITIES; PURCHASE PRICE;
CLOSING ADJUSTMENTS; CONDITION OF ASSETS
1.1. Certain Definitions. As used in this Agreement, the following terms
have the following meanings unless the context otherwise requires:
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person; provided,
however, that for purposes of Section 3.2, controlling or controlled shall be
deemed to occur if any Person holds or has the right to vote ten (10%) percent
or more of the voting stock of such other Person.
"Assets" has the meaning specified in Section 1.2.
"Assigned Contracts" executory contracts (including without limitation,
licenses and purchase orders) set forth on Schedule 3.6, unless indicated
otherwise therein.
"Bill of Sale" means an instrument substantially in the form of Exhibit A
attached hereto.
"Business" has the meaning specified in the Recitals.
"Business Day" means any day other than a Saturday, Sunday or other day on
which commercial banks are authorized or required by law to close in New York
City.
"Buyer" has the meaning specified in the introductory paragraph of this
Agreement.
"Claim Notice" has the meaning specified in Section 5.2(a).
"Closing" has the meaning specified in Section 2.1(a).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Excluded Assets" means those assets of the Seller or an Affiliate of
Seller set forth on Schedule 1.1(a).
"Governmental or Regulatory Body" means any government or political
subdivision thereof, whether federal, state, county, local or foreign, or any
agency, authority or instrumentality of any such government or political
subdivision.
"Guarantee" means an instrument substantially in the form of Exhibit E
attached hereto.
"Indemnified Party" has the meaning specified in Section 5.2.
"Indemnifying Party" has the meaning specified in Section 5.2.
"IRS" means the Internal Revenue Service.
"Landlord's Consent" means an instrument substantially in the form of
Exhibit B attached hereto.
"Leases" has the meaning specified in Section 3.7.
"Liabilities" has the meaning specified in Section 1.3.
"Lien" means any lien, pledge, hypothecation, mortgage, security interest,
claim, lease, charge, option, right of first refusal, easement, servitude,
transfer restriction under any stockholder or similar agreement, encumbrance or
any other restriction or limitation whatsoever.
"Losses" has the meaning specified in Section 5.1.
"Material Adverse Effect" means any change or changes or effect or effects
that individually or in the aggregate are or may reasonably be expected to be
materially adverse to (a) the Assets, operations, income or conditions
(financial or otherwise) of the Business or the transactions contemplated by
this Agreement or (b) the ability of the Seller to perform its obligations under
this Agreement.
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"Material Agreements" has the meaning specified in Section 3.6.
"Non-Assumed Liabilities" has the meaning specified in Section 1.4.
"Permitted Liens" means (a) Liens for taxes not yet due and (b) the Liens
set forth on Schedule 1.1(b).
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental or Regulatory Body or other entity.
"Plan" means any plan, fund, program, understanding, policy, arrangement,
contract or commitment, whether qualified or not qualified for federal income
tax purposes, whether formal or informal, whether for the benefit of a single
individual or more than one individual, which is in the nature of (a) an
employee pension benefit plan (as defined in ERISA ss. 3(2)) (b) an employee
welfare benefit plan (as defined in ERISA ss. 3(1)) or (c) an incentive,
deferred compensation, or other benefit arrangement for employees, former
employees, their dependents or their beneficiaries.
"Purchase Price" has the meaning specified in Section 1.5.
"Real Estate Documents" has the meaning specified in Section 3.7.
"Seller" has the meaning specified in the introductory paragraph of this
Agreement.
"Tax" or "Taxes" mean all taxes, charges, fees, levies or other
assessments imposed by any federal, state, local or foreign Taxing Authority,
including, without limitation, gross income, gross receipts, income, capital,
excise, property (tangible and intangible), sales, transfer, value added,
employment, payroll and franchise taxes and such terms shall include any
interest, penalties or additions attributable to or imposed on or with respect
to such assessments.
"Tax Return" means any return, report, information return, or other
document (including any related or supporting information) filed or required to
be filed with any federal, state, or local governmental entity or other
authority in connection with the determination, assessment or collection of any
Tax (whether or not such Tax is imposed on the Seller) or the administration of
any laws, regulations or administrative requirements relating to any Tax.
1.2 Transfer of the Assets. Subject to the terms and conditions set forth
in this Agreement, the Seller agrees that, on the Closing Date, the Seller shall
transfer, assign, convey and deliver to the Buyer, and Buyer agrees that, on the
Closing Date, Buyer shall acquire and accept from the Seller, all of the assets
owned, used or held by the Seller to conduct the Business and as set forth on
Schedule 1.2, other than the Excluded Assets (the "Assets"), free and clear of
all Liens, other than Permitted Liens.
1.3 Assumption by the Buyer of Certain Liabilities. Subject to the terms
and conditions set forth in this Agreement, Buyer agrees that, on the date
hereof, Buyer shall assume and
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thereafter pay, perform or discharge, as the case may be, the following
obligations and liabilities of the Seller outstanding on the date hereof (the
"Assumed Liabilities"):
(a) all obligations and liabilities of the Seller arising out of, or in
connection with, the Assigned Contracts except with regard to
student contracts where Buyer only assumes the obligation to provide
martial arts instruction; and
(b) all liabilities of the Seller reflected on Schedule 1.3 (b) attached
hereto.
1.4 Non-Assumed Liabilities. The Buyer shall not assume nor be responsible
for any liabilities or obligations of the Seller or any of its Affiliates other
than the Assumed Liabilities (the "Non-Assumed Liabilities") and those
liabilities and obligations that arise from the Buyer's operation and management
of the Assets.
1.5 Purchase Price for the Assets. The consideration for the Assets shall
be the (i) assumption by the Buyer of the Assumed Liabilities; (ii) the payment
of the Buyer of $5,000 in immediately availible funds on the Closing Date (the
"Cash Amount"); and (iii) the delivery by the Buyer to the Seller on the Closing
Date of a secured promissory note in the aggregate principal amount of $95,000
(the "Note") in the form attached hereto as Exhibit C. The Cash Amount shall be
deposited on the date hereof with Bernstein & Wasserman, LLP, as escrow agent,
pursuant to the terms of that certain Escrow Agreement, a form of which is
attached hereto as Exhibit D.
1.6 Guarantee. The Buyer's obligations under the Note shall be guaranteed
by Daniel Schulmann, substantially in the form of the guarantee attached hereto
as Exhibit E.
1.7 Limitations on Assignment; Further Assurance. To the extent that the
assignment of any Assigned Contract to be assigned to the Buyer, as provided
herein, shall require the consent of another party thereto, this Agreement shall
not constitute an agreement to assign the same if an attempted assignment would
constitute a breach thereof. The Seller agrees that it will use all reasonable
efforts to obtain the written consent of all necessary parties to the assignment
to the Buyer of all Assigned Contracts.
1.8 Condition of Assets and Business. Buyer acknowledges that before
entering into this Agreement Buyer has inspected the Assets and the operation,
income and expenses of the Business and all other matters affecting or relating
to this transaction as Buyer deemed necessary. Buyer also acknowledges that
Buyer is fully familiar with the condition of the Assets and the Business and,
except as set forth in Section 3.5, agrees to accept the same "AS IS" and in
their present condition.
1.9 Operating Agreement. Simultaneous with the execution of this
Agreement, the Buyer and the Seller shall enter into that certain Operating
Agreement, a form of which is attached hereto as Exhibit F.
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ARTICLE II
CLOSING
2.1 The Closing. (a) Subject to the satisfaction of the conditions set
forth in Article VII hereof, the consummation of the transactions contemplated
by this Agreement (the "Closing") shall be held at 10:00 a.m. (New York City
time) on March 31, 1997 at 40 Eisenhower Drive, Paramus, New Jersey. In the
event that the condition contained in Section 7.1 is not satisfied by March 31,
1997, the Closing may be extended by Seller to the date upon which such
condition is satisfied, but in no event later than May 31, 1997 (such date and
time of Closing being referred to herein as the "Closing Date").
(b) At the Closing, the Seller shall execute and deliver or cause to be
executed and delivered to the Buyer, all documents and instruments necessary to
transfer to the Buyer, all of the right, title and interest of the Seller in and
to the Assets, including, without limitation:
(i) the Bill of Sale signed by the Seller; and
(ii) each Landlord's Consent, signed by the Seller.
(c) At the Closing:
(i) the Escrow Agent shall pay the Cash Amount to the Seller;
(ii) the Buyer shall execute and deliver to the Seller the Note;
(iii) the Buyer shall deliver to the Seller a fully executed
Guarantee; and
(iv) the Buyer shall assume the Assumed Liabilities.
2.2 Additional Actions to be Taken on the Closing Date.
(a) Liens/Consents. The Seller shall have satisfied and discharged all
Liens on the Assets, except for Permitted Liens and provided the Buyer with
evidence of such satisfaction and discharge as well as all necessary consents to
transfer or assign the Assets to Buyer, in form and substance satisfactory to
the Buyer.
(b) Shareholder Approval. The Seller shall have received the affirmative
vote of a majority of voting stock outstanding of its parent corporation, Master
Glazier's Karate International, Inc., to the transactions contemplated by this
agreement (the "Shareholder Approval"). Notwithstanding the foregoing, the
Seller agrees to sell the Assets to the Buyer upon the terms and conditions set
forth herein despite failure to receive the Shareholder Approval.
(c) Landlord Consent. The Seller shall have received the consent of the
landlord of Seller's principal place of business to the assignment of its lease
(the "Lease") to the Buyer.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
The Seller represents and warrants to the Buyer as follows:
3.1 Organization and Qualification. Seller is a corporation validly
existing and in good standing under the laws of the State of New Jersey and has
all requisite corporate power and authority to (a) own, lease and operate their
properties and assets as they are now owned, leased and operated and (b) carry
on their business as now presently conducted and as proposed to be conducted.
Seller is duly qualified to do business in each jurisdiction in which the nature
of its business or properties makes such qualification necessary, except where
the failure to do so would not have a Material Adverse Effect.
3.2 Subsidiary and Affiliates. There are no subsidiaries of the Seller.
3.3. Validity and Execution of Agreement. The Seller has the full legal
right, capacity and power and all requisite corporate authority and approval
required to enter into, execute and deliver this Agreement and any other
agreement or instrument contemplated hereby, and to perform fully its
obligations hereunder and thereunder. This Agreement and such other agreements
and instruments have been duly executed and delivered by Seller and each
constitutes the valid and binding obligation of Seller enforceable against it in
accordance with its terms.
3.4 Litigation. Except as set forth on Schedule 3.4, there are no
outstanding orders, judgments, injunctions, investigations, awards or decrees of
any court, Governmental or Regulatory Body or arbitration tribunal by which the
Seller, or any of its securities, assets, properties or business is bound.
Except as set forth on Schedule 3.4, there are no actions, suits, claims,
investigations, legal, administrative or arbitral proceedings pending or, to the
best knowledge of the Seller, threatened (whether or not the defense thereof or
liabilities in respect thereof are covered by insurance) against or affecting
the Seller, or any of its assets or properties, that, individually or in the
aggregate, could, if determined adversely to the Seller, reasonably be expected
to have a Material Adverse Effect, nor, to the best knowledge of the Seller, are
there any facts which could reasonably be expected to give rise to any such
action, suit, claim, investigation or legal, administrative or arbitral
proceeding.
3.5 The Assets. The Seller owns outright and has good and marketable title
(except for leasehold interests specifically set forth on Schedules 3.6 and 3.7)
to all of the Assets free and clear of any Lien, other than Permitted Liens. The
Assignment and Assumption Agreement and such other conveyancing documents as
shall have been executed and delivered to the Buyer will convey good and
marketable title to the Assets, free and clear of any Liens, except for
Permitted Liens.
3.6 Contracts and Other Agreements. Schedule 3.6 sets forth all written
agreements (and, to the best knowledge of the Seller, any oral agreement) and
arrangements that materially affect
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the operations of the Business or which are binding upon any of the Assets
(collectively, the "Material Agreements").
3.7 Real Estate. Schedule 3.7 sets forth a list of (a) all real property
owned by the Seller; (b) all leases, subleases or other agreements (the
"Leases") under which the Seller is a lessor or lessee of any real property; (c)
all options held by the Seller or contractual obligations on its respective part
to purchase or acquire any interest in real property (as set forth on Schedule
3.7) and (d) all options granted by the Seller or contractual obligations on any
such Persons' part to sell or dispose of any interest in real property (as set
forth on Schedule 3.7) (collectively, the "Real Estate Documents"). All of the
Real Estate Documents, true, correct and complete copies of which have been
delivered or made available to the Buyer, are in full force and effect and the
Seller has not received any notice of any default thereunder, nor does the
Seller anticipate any such notice of default. Except for each Landlords'
Consent, no approval or consent of any person is needed for the Real Estate
Documents to continue to be in full force and effect and such documents will not
become unenforceable by the Buyer following the consummation of the transactions
contemplated by this Agreement by virtue of the assignment thereof to the Buyer.
3.8 Disclosure. Neither the representations or warranties of the Seller
set forth in this Agreement, nor any Schedule to this Agreement made pursuant
thereto contains an untrue statement of a material fact or omits a material fact
necessary to make the statements contained herein or therein not misleading. All
statements, documents, certificates or other items prepared or supplied by the
Seller with respect to the transactions contemplated hereby are true, correct
and complete and contain no untrue statement of a material fact or omit a
material fact necessary to make the statements contained therein not misleading.
3.9 Survival. All of the representations and warranties of the Seller
contained herein shall survive the Closing Date until the date upon which the
liability to which any claim relating to any such representation or warranty is
barred by all applicable statutes of limitations.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE BUYER
The Buyer represents and warrants to the Seller as follows:
4.1 Organization and Qualification of the Buyer. The Buyer is a
corporation validly existing and in good standing under the laws of the State of
New Jersey and has all requisite corporate power and authority to (a) own, lease
and operate its properties and assets as they are now owned, leased and operated
and (b) carry on its business as now presently conducted and is duly qualified
to do business in each jurisdiction in which the nature of its business or
properties makes such qualification necessary.
4.2 Validity and Execution of Agreement. The Buyer has the full legal
right, capacity and power and all requisite corporate authority and approval
required to enter into, execute and
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deliver this Agreement and any other agreement or instrument contemplated
hereby, and to perform fully its obligations hereunder and thereunder. The board
of directors of the Buyer has approved the transactions contemplated by this
Agreement and each of the other agreements required to be entered into pursuant
hereto by the Buyer. This Agreement and such other agreements and instruments
have been duly executed and delivered by the Buyer and each constitutes the
valid and binding obligation of the Buyer enforceable against it in accordance
with its terms.
4.3 No Conflict. Neither the execution and delivery of this Agreement nor
the performance by the Buyer of the transactions contemplated herein will (a)
violate or conflict with any of the provisions of its Certificate of
Incorporation or By-Laws or other organizational documents; and (b) violate or
conflict with any provision of any law, rule, regulation, order, judgment,
decree or ruling of any court or federal, state or local Governmental or
Regulatory Body applicable to the Buyer.
4.4 Litigation. There are no outstanding orders, judgments, injunctions,
investigations, awards or decrees of any court, Governmental or Regulatory Body
or arbitration tribunal by which the Buyer, or any of its securities, assets,
properties or business are bound. There are no actions, suits, claims,
investigations, legal, administrative or arbitral proceedings pending or, to the
best knowledge of the Buyer, threatened (whether or not the defense thereof or
liabilities in respect thereof are covered by insurance) against or affecting
the Buyer, or any of its assets or properties, that, individually or in the
aggregate, could, if determined adversely to the Buyer, reasonably be expected
to have a material adverse effect on the business or the assets, operations or
income of the Buyer, nor to the best knowledge of the Buyer, are there any facts
which could reasonably be expected to give rise to any such action, suit, claim,
investigation, or legal, administrative or arbitral proceeding.
4.5 Disclosure. Neither the representations or warranties of the Buyer set
forth in this Agreement, nor any Schedule to this Agreement made pursuant
thereto, contains an untrue statement of a material fact or omits a material
fact necessary to make the statements contained herein or therein not
misleading. All statements, documents, certificates or other items prepared or
supplied by the Buyer with respect to the transactions contemplated hereby are
true, correct and complete and contain no untrue statement of a material fact or
omit a material fact necessary to make the statements contained therein not
misleading.
4.6 Survival. All of the representations and warranties of the Buyer
contained herein shall survive the Closing Date until the date upon which the
liability to which any claim relating to any such representation or warranty is
barred by all applicable statutes of limitations.
ARTICLE V
INDEMNIFICATION
5.1 Indemnification. (a) The Seller and its parent corporation, Master
Glazier's Karate International, Inc., agree to indemnify, defend and hold
harmless the Buyer and its respective directors, officers, employees,
shareholders and any Affiliates of the foregoing, and their successors
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and assigns (collectively, the "Buyer Group") from and against any and all
losses, liabilities, expenses, claims, Liens or other obligations of any nature
whatsoever (hereinafter individually, a "Loss" and collectively, "Losses")
suffered or incurred by the Buyer Group which, directly or indirectly, arise out
of, result from or relate to (i) the operation of the business prior to the
signing date of this Agreement, (ii) any material inaccuracy in or any breach of
any representation or warranty of the Seller contained in Article III of this
Agreement or in any other document contemplated by this Agreement, (iii) any
claim brought by a shareholder of the Selling Group, and (iv) any claim, action,
suit or proceeding brought against the Buyer Group by the United States
Securities and Exchange Commission involving the transactions contemplated
hereby.
(b) The Buyer agrees to indemnify, defend and hold harmless the Seller and
its parent corporation, Master Glazier, and their respective directors,
officers, employees, and shareholders, and any Affiliates of the foregoing, and
their successors and assigns from and against any and all Losses suffered or
incurred by them which, directly or indirectly, arise out of, result from or
relate to (i) any inaccuracy in or any breach of any representation or warranty
of the Buyer contained in Article IV and (ii) the operation of the Business
following the date hereof, except for student refunds, which shall be governed
by Section 5.1 (d).
(c) Notwithstanding any provision to the contrary of this Agreement or in
any other agreement entered into on the date hereof between Seller's Affiliates
and Buyer's Affiliates or in any document contemplated by this Agreement or such
other agreements (collectively, the "Purchase Documents"), the obligations of
the Selling Group to indemnify, defend and hold harmless the Buyer Group
pursuant to the Purchase Documents shall not exceed the amount of the Purchase
Price paid to the Seller and its Affiliates pursuant to the Purchase Documents,
other than the obligations to indemnify the Buyer Group for Losses relating to
any tax liabilities and actions taken by the S.E.C. or other securities
authorities (which shall not be so limited as provided herein).
(d) The Seller and Master Glazier's Karate International, Inc., it parent
corporation, agree to indemnify, defend and hold harmless the Buyer and its
respective directors, officers, employees, shareholders and any Affiliates of
the foregoing, and their successors and assigns from and against any losses
arising from the refund of any money paid to the Seller by any student of the
Karate Center, transferred hereby from Seller to Buyer, under a student contract
with the Seller. Should a claim for a refund be made by such student, Buyer
shall immediately notify Seller and Seller shall indemnify Buyer from such loss
if Buyer is unsuccessful in defending such claim and it is determined that the
loss is not the fault of the Buyer. A claim shall not be determined to be the
fault of the Buyer if it results from the intial change in instructors,
instructional style or schedule of instruction, or a conflict in personalities
between the instructor and the student. A claim based on the intentional
misconduct or negligence of the Buyer, its employees or independent contractors
shall be considered to be the fault of the Buyer. Should a claim be made by a
student who did not contract with the Seller, any such loss shall be the sole
responsibility of the Buyer, with no recourse or indemnification from the
Seller.
5.2 Method of Asserting Claims. The party making a claim under this
Article V is referred to as the "Indemnified Party" and the party against whom
such claims are asserted under this
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Article V is referred to as the "Indemnifying Party". All claims by any
Indemnified Party under this Article V shall be asserted and resolved as
follows:
(a) In the event that any claim or demand for which an Indemnifying Party
would be liable to an Indemnified Party hereunder is asserted against or sought
to be collected from such Indemnified Party by a third party, said Indemnified
Party shall with reasonable promptness notify in writing the Indemnifying Party
of such claim or demand, specifying the nature of the specific basis for such
claim or demand, and the amount or the estimated amount thereof to the extent
then feasible (which estimate shall not be conclusive of the final amount of
such claim and demand; any such notice, together with any notice given pursuant
to Section 5.2(b) hereof, collectively being the "Claim Notice"); provided,
however, that any failure to give such Claim Notice will not be deemed a waiver
of any rights of the Indemnified Party except to the extent the rights of the
Indemnifying Party are actually prejudiced. The Indemnifying Party, upon request
of the Indemnified Party, shall retain counsel (who shall be reasonably
acceptable to the Indemnified Party) to represent the Indemnified Party, and
shall pay the fees and disbursements of such counsel with regard thereto,
provided, further, that any Indemnified Party is hereby authorized prior to the
date on which it receives written notice from the Indemnifying Party designating
such counsel, to retain counsel, whose reasonable fees and expenses shall be at
the expense of the Indemnifying Party, to file any motion, answer or other
pleading and take such other action which it reasonably shall deem necessary to
protect its interests or those of the Indemnifying Party until the date on which
the Indemnified Party receives such notice from the Indemnifying Party. After
the Indemnifying Party shall retain such counsel, the Indemnified Party shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless (i) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to the
retention of such counsel or (ii) the named parties of any such proceeding
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them.
The Indemnifying Party shall not, in connection with any proceedings or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one such firm for the Indemnified Party (except to the
extent the Indemnified Party retained counsel to protect its (or the
Indemnifying Party's) rights prior to the selection of counsel by the
Indemnifying Party). The Indemnified Party agrees to cooperate with the
Indemnifying Party and its counsel in contesting any claim or demand which the
Indemnifying Party defends. No claim or demand may be settled by an Indemnifying
Party or, where permitted pursuant to this Agreement, by an Indemnified Party
without the consent of the Indemnified Party in the first case or the consent of
the Indemnifying Party in the second case, which consent shall not be
unreasonably withheld, unless such settlement shall be accompanied by a complete
release of the Indemnified Party in the first case or the Indemnifying Party in
the second case.
(b) In the event any Indemnified Party shall have a claim against any
Indemnifying Party hereunder which does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnified Party shall send a Claim Notice with respect to such claim to the
Indemnifying Party. If the Indemnifying Party does not dispute such claim, the
amount of such claim shall be paid to the Indemnified Party within twenty (20)
days of receipt of the Claim Notice.
10
(c) So long as any right to indemnification exists pursuant to this
Article V, the affected parties each agree to retain all books, records,
accounts, instruments and documents reasonably related to the Claim Notice. In
each instance, the Indemnified Party shall have the right to be kept informed by
the Indemnifying Party and its legal counsel with respect to all significant
matters relating to any legal proceedings. Any information or documents made
available to any party hereunder, which information is designated as
confidential by the party providing such information and which is not otherwise
generally available to the public, or which information is not otherwise
lawfully obtained from third parties or not already within the knowledge of the
party to whom the information is provided (unless otherwise covered by the
confidentiality provisions of any other agreement among the parties hereto, or
any of them), and except as may be required by applicable law or requested by
third party lenders to such party, shall not be disclosed to any third Person
(except for the representatives of the party being provided with the
information, in which event the party being provided with the information shall
request its representatives not to disclose any such information which it
otherwise required hereunder to be kept confidential).
ARTICLE VI
POST-CLOSING COVENANTS OF THE PARTIES
6.1 Confidentiality. (a) From and after the Closing Date, the Seller and
its shareholders shall not disclose or furnish to any other Person, except to
the respective directors, officers, employees, accountants and lawyers of the
Seller and except to the extent required by law or by order of any court or
governmental agency or regulatory authority, any information relating to the
operations or financial status of the Business of Buyer including customer lists
which is not specifically a matter of public record.
(b) The Buyer shall not disclose or furnish to any Person, except to the
respective directors, officers, employees, accountants and lawyers of Buyer and
except to the extent required by law or by order of any court or governmental
agency, any information relating to the operations or financial status of the
Seller and its Affiliates which is not specifically a matter of public record.
6.2 Non-Competition. The Seller acknowledges that the Seller's ownership
of the Assets and its operation of the Business has brought it in close contact
with certain confidential affairs of the Business not readily available to the
public, and the Buyer would not purchase the Assets, but for the agreements and
covenants of the Seller and its shareholders contained in this Section 6.2. The
Seller and Master Glazier's Karate International, Inc. shall not directly or
indirectly, for a period of time equal to the remaining term of the Lease so
long as the same is in full force and effect including any renewal thereof, (i)
engage in any business similar to the Business within the State of New Jersey,
(ii) acquire a proprietary interest in any Person having a facility located
within the State of New Jersey engaged in activities similar to the Business as
a partner, officer, director, shareholder, principal, agent, trustee,
consultant, lender or in any other relationship or capacity, except for
investments by the Seller or its Subsidiaries or Affiliates in securities traded
on a national stock exchange or the over the counter market which do not exceed
five (5) percent of the total outstanding shares of such securities.
11
Mark Glazier, individually, shall not directly or indirectly, for a period
of five (5) years, (i) engage in any business similar to the Business within a
five (5) mile radius of any place of operations of the Buyer or any of its
Affiliates, (ii) acquire a proprietary interest in any Person having a facility
located within a five (5) mile radius of the Buyer or any of its Affiliates
engaged in activities similar to the Business as a partner, officer, director,
shareholder, principal, agent, trustee, lender or in any other relationship or
capacity.
Notwithstanding anything to the contrary contained herein, Mark Glazier,
individually, shall not under any circumstances engage in, or acquire a
proprietary interest in any Person engaged in more than two (2) businesses, or a
business having more than two (2) facilities engaged in activities similar to
the Business within the State of New Jersey during the twenty four (24) month
period immediately succeeding the date hereof; and further, Mark Glazier,
individually, shall not engage in any business or acquire a proprietary interest
in any Person engaged in activities similar to the Business within a five (5)
mile radius of the Business for the term of the Lease affecting the Business
(which has been assigned to Buyer) including any renewal thereof.
If any court determines that this covenant, or any part thereof, is
unenforceable because of the duration of such provision or the area covered
thereby, such court shall have the power to reduce the duration or area of such
provision and, in its reduced form, such provision shall then be enforceable and
shall be enforced.
6.3 Operation of the Business; Access to Records. The Buyer shall maintain
and operate the business in accordance with past practice. The Buyer shall
permit Seller and its agents to inspect its books and records (upon reasonable
notice and during reasonable times) in order to review the contracts assigned to
Educational Funding Co.
6.4 Non-Solicitation. Seller and its Affiliates agree that for the term of
the Lease assigned by Seller to Buyer, they shall not employ or attempt to
employ any person who is or shall become an employee of the Buyer or its
Affiliates within the one (1) year period from and after the date hereof.
6.5 Non-Interference. Seller and its Affiliates agree that they shall not
enter into negotiations for leased premises for the purpose of commencing the
operation of a business similar to the Business if Buyer or one of its
Affiliates is currently engaged in negotiations for said premises and provided
written notice of such fact to Seller or its Affiliates.
6.6 Consulting. Nothing contained in this Article VI, should be construed
to prohibit Mark Glazier, individually, from engaging in, performing, or
providing martial arts "consulting" services to martial arts business owners. As
used herein, the term "consulting" shall under no circumstances be construed to
permit Mark Glazier to own or operate, in any capacity, a martial arts school in
violation of the covenants set forth above.
ARTICLE VII
12
CONDITIONS PRECEDENT TO THE CLOSING
Section 7. Conditions Precedent to Parties's Obligations. The obligations of
Seller to sell the Assets is subject to the fulfillment, prior to or at the
Closing Date, of each of the following conditions, any one or portion of which
may be waived in writing by the Seller:
7.1 Consents; Stockholder Approval. The Seller shall have obtained all
necessary consents to assignments of all parties to material contracts with the
Seller, including but not limited to the Landlord's Consent. Additionally, as
required by law, the Seller shall have obtained the Shareholder Approval.
Notwithstanding the foregoing, the Seller agrees to sell the Assets to the Buyer
upon the terms and conditions set forth herein despite failure to receive
Shareholder Approval.
7.2 No Suits or Actions. At the Closing Date, no suit, action, or other
proceeding shall have been threatened or instituted to restrain, enjoin, or
otherwise prevent the consummation of this Agreement or the transactions
contemplated hereby. Additionally, there shall be no other action, suit, claim,
investigation or legal, administrative or arbitral proceeding , either pending
or threatened, against the Seller or the Buyer, except as listed on Schedules
3.4 and 4.4. Further, there shall have been no change in any such action, suit,
claim, investigation or legal, administrative or arbitral proceeding as listed
on Schedules 3.4 and 4.4 that would have a Material Adverse Effect on the
Business of the Seller or the Buyer.
ARTICLE VIII
MISCELLANEOUS
8.1 No Other Representations. In entering into this Agreement, Buyer has
not been induced by and has not relied upon any representations, warranties or
statements, express or implied, made by the Seller or any agent, employee or
other representative of the Seller or by any broker or any other person
representing or purporting to represent the Seller, that are not expressly set
forth in this Agreement, whether or not any said representations, warranties or
statements were made in writing or orally. Buyer hereby acknowledges that the
Seller shall only be liable to the Buyer with respect to the representations,
warranties or statements of the Seller contained in this Agreement or in the
Schedules annexed hereto.
8.2 Sales and Transfer Taxes. All required filings under any applicable
Federal, state, foreign or local sales tax, stamp tax or similar laws or
regulations shall be made in a timely manner by the party responsible therefor
under such laws and regulations, and, at the Closing, such party shall deliver
to the other parties either (a) proof of the payment of any sales tax assessed
pursuant to such filings or (b) statements of no sales tax due, as the case may
be. The parties agree to pay any and all transfer, sales or stamp taxes and any
similar taxes or assessments imposed on the transfer of the Assets and the
Assumed Liabilities in accordance with the terms of this Agreement, such taxes
and assessments to be borne entirely by the Buyer.
13
8.3 Post-Closing Further Assurances. At any time and from time to time
after the Closing Date at the request of either party, and without further
consideration, the other party will execute and deliver, or cause the execution
and delivery of, such other instruments of sale, transfer, conveyance,
assignment and confirmation and take or cause to be taken such other action as
the party requesting the same may reasonably deem necessary or desirable in
order to transfer, convey and assign more effectively to the requesting party
all of the property and rights intended to be conveyed to such party pursuant to
the provisions of this Agreement.
8.4 Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder shall be in writing and shall be
given personally, telegraphed, telefaxed, sent by facsimile transmission or sent
by prepaid air courier or certified, registered or express mail, postage
prepaid. Any such notice shall be deemed to have been given (a) when received,
if delivered in person, telegraphed, telexed, sent by facsimile transmission and
confirmed in writing within three (3) Business Days thereafter or sent by
prepaid air courier or (b) three (3) Business Days following the mailing
thereof, if mailed by certified first class mail, postage prepaid, return
receipt requested, in any such case as follows (or to such other address or
addresses as a party may have advised the other in the manner provided in this
Section 8.4):
If to Seller, to:
Master Glazier's Karate International, Inc.
377 Hoes Lane
Piscataway Centre
Piscataway, NJ 08854
Attn: Mark Glazier
Telephone Number (908) 354-2349
Telecopier Number (908) 981-8982
with copies to:
Bernstein & Wasserman, LLP
950 Third Avenue
New York, NY 10022
Attn: Alan N. Forman, Esq.
Telephone Number (212) 826-0730
Telecopier Number (212) 371-4730
If to Buyer to:
Tiger Schulmann's Karate
40 Eisenhower Drive
Paramus, New Jersey 07652
Attn: Danny Schulmann
14
8.5 Publicity. No publicity release or announcement concerning this
Agreement or the transactions contemplated hereby shall be made without advance
approval thereof by the Buyer and the Seller.
8.6 Entire Agreement. This Agreement (including the Exhibits and
Schedules) and the agreements, certificates and other documents delivered
pursuant to this Agreement contain the entire agreement among the parties with
respect to the transactions described herein, and supersede all prior
agreements, written or oral, with respect thereto.
8.7 Waivers and Amendments. This Agreement may be amended, superseded,
canceled, 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.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New Jersey, without regard to
principles of conflicts of law.
8.9 Binding Effect; No Assignment. This Agreement shall be binding upon
and inure to the benefit of the parties and their respective successors, assigns
and legal representatives. This Agreement is not assignable except by operation
of law and any other purported assignment shall be null and void.
8.10 Variations in Pronouns. All pronouns and any variations thereof refer
to the masculine, feminine or neuter, singular or plural, as the context may
require.
8.11 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all of the parties hereto.
8.12 Exhibits and Schedules. The Exhibits and Schedules are a part of this
Agreement as if fully set forth herein. All references herein to Sections,
subsections, clauses, Exhibits and Schedules shall be deemed references to such
parts of this Agreement, unless the context shall otherwise require.
8.13 Effect of Disclosure on Schedules. Any item disclosed on any Schedule
shall only be deemed to be disclosed in connection with (a) the specific
representation and warranty to which such Schedule is expressly referenced, (b)
any specific representation and warranty which expressly cross-references such
Schedule and (c) any specific representation and warranty to which any other
Schedule to this Agreement is expressly referenced if such other Schedule
expressly cross-references such Schedule.
15
8.14 Headings. The headings in this agreement are for reference only, and
shall not affect the interpretation of this Agreement.
8.15 Severability of Provisions. If any provision or any portion of any
provision of this Agreement or the application of such provision or any portion
thereof to any Person or circumstance, shall be held invalid or unenforceable,
the remaining portion of such provision and the remaining provisions of this
Agreement, or the application of such provision or portion of such provision as
is held invalid or unenforceable to persons or circumstances other than those as
to which it is held invalid or unenforceable, shall not be affect thereby.
8.16 Brokers. Each party hereto represents and warrants that no broker or
finder is entitled to any brokerage or finder's fee or other commission from
such party, based on agreements, arrangements or undertakings made by such
party, in connection with the transactions contemplated hereby.
8.17 Termination. This Agreement may be terminated (i) upon written
consent of the parties, or (ii) by Seller or Buyer, in the event that the
conditions contained in Article VII have not been satisfied by May 31, 1997
(such date being the "Termination Date").
16
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
NORTHERN BERGEN KARATE, INC.
By: /s/ Danny Schulmann
---------------------------------
Name: Danny Schulmann
Title: President
RAMSEY KARATE CENTER, INC.
By: /s/ Mark Glazier
---------------------------------
Name: Mark Glazier
Title: President
As to Section 6.2 only:
/s/ Mark Glazier
-------------------------------------
Mark Glazier, individually
As to Section 6.2 only:
MASTER GLAZIER'S KARATE INTERNATIONAL, INC.
By: /s/ Mark Glazier
---------------------------------
Name: Mark Glazier
Title: President
17
Schedule 1.1 (a)
Excluded Assets
All pictures, photographs, newspaper articles, and manuals bearing the
proprietary logo or tradename of the Buyer.
18
Schedule 1.1(b)
Permitted Liens
None
19
Schedule 1.2
Assets
Asset Purchase Price Allocation
- ----- -------------------------
Current Lease Term $72,250.00
Renewal Term $12,750.00
Equipment $ 5,000.00
Leasehold Improvements $10,000.00
The term "Equipment" as used above refers to all furniture, fixtures, and
personal property of the Seller situated within the premises described in
Schedule 3.7 on the date hereof, exclusive of those items of constituting
Excluded Assets listed in Schedule 1.1(a).
20
Schedule 1.3(b)
Assumed Liabilites
Buyer assumes all liabilities associated with:
1. All obligations to teach martial arts to current students of the
Business
2. The Seller's obligation to pay telephone bills for lines currently
existing at the Business; and
3. The Seller's obligation to pay for Yellow Pages advertising.
21
Schedule 3.4
Litigation
None
22
Schedule 3.6
Material Agreements
*1. All student contracts for martial arts instruction. [Attach list]
*2. That certain Lease Agreement dated August 21, 1995 by and between
the Seller and Gabrellian Associates.
- ----------
* indicates Assigned Contracts, except for contracts assigned to Educational
Funding Co. (a copy of which is attached).
23
Schedule 3.7
Real Estate
Lease by and between Gabrellian Associates, as Landlord, and Ramsey Karate
Centers, Inc., dated August 21, 1995 for a term of five (5) years with two (2)
renewal periods of five (5) years each. The Lease is for approximately thrity
six hundred (3,600) square feet of space located at the Interstate Shopping
Center, 91 Rte 17, Ramsey, NJ.
24
Schedule 4.4
Litigation
None
25
EXHIBIT A
BILL OF SALE
KNOW ALL MEN BY THESE PRESENTS, that RAMSEY KARATE CENTER, INC., a New
Jersey corporation, (the "Seller") for and in consideration of the sum of Ten
Dollars ($10.00) and other good and valuable consideration, the receipt of which
is hereby acknowledged by these presents, and pursuant to an Asset Purchase
Agreement dated December 17, 1996 ("Purchase Agreement") between Seller and
NORTHERN BERGEN KARATE, INC. a New Jersey corporation ("Buyer") (except as
otherwise provided herein, all capitalized terms contained and not defined
herein shall have herein the respective meanings ascribed to them in the
Purchase Agreement), hereby transfers, conveys, assigns and delivers unto Buyer
all of the right, title and interest of Seller in and to the Assets.
Seller agrees to cooperate with Buyer in obtaining any consents or waivers
of third parties necessary to transfer to Buyer all property and rights provided
to be transferred to Buyer under the Purchase Agreement.
TO HAVE AND TO HOLD the Assets unto Buyer, its successors and assigns, for
its use and its use forever.
At any time and from time to time after the date hereof at the request of
Buyer, and without further consideration, Seller shall execute and deliver such
other instruments of transfer, conveyance, assignment and confirmation and take
such other action as Buyer may reasonably request as necessary or desirable in
order to more effectively transfer, convey and assign to Buyer, and to confirm
Buyer's title to or rights in, all of the Assets, and to put Buyer in actual
possession and operating control thereof.
IN WITNESS WHEREOF, the parties have caused this Bill of Sale to be
executed as of December 17, 1996.
RAMSEY KARATE CENTER, INC.
By: /s/ Mark Glazier
----------------------------
Name: Mark Glazier
Title: President
ACCEPTED THIS 17th DAY
OF DECEMBER, 1996
NORTHERN BERGEN KARATE, INC.
By: /s/ Danny Schulmann
---------------------------
Name: Danny Schulmann
Title: President
EXHIBIT B
LANDLORD'S CONSENT
FIRST AMENDMENT TO LEASE AND ASSIGNMENT
THIS FIRST AMENDMENT TO LEASE AND ASSIGNMENT, made as of the 13th day of
December, 1996, by and between GABRELLIAN ASSOCIATES, a New Jersey partnership,
having an office address at 95 Route 17 South, Paramus, New Jersey 07652
(hereinafter "Landlord") and RAMSEY KARATE CENTERS, INC., a New Jersey
corporation, having an office address at c/o Master Glaziers Karate
International, Inc., 570 North Broad Street, Suite 16, Elizabeth, New Jersey
07208 (hereinafter referred to as "Tenant"), and NORTHERN BERGEN KARATE, INC.,
having an office address at Franklin Turnpike & Route 17, Ramsey, New Jersey
07446 (hereinafter "Assignee").
WITNESSETH:
WHEREAS, by that certain agreement of lease dated August ___, 1995,
Landlord leased to Tenant certain premises located in the Interstate Shopping
Center, Ramsey, New Jersey (hereinafter the "Lease"); and
WHEREAS, Tenant is desirous of assigning the Lease to Assignee; and
WHEREAS, Landlord, Tenant, and Assignee are desirous of amending lease in
certain respects prior to its assignment.
NOW THEREFORE, in consideration of the sum of Ten Dollars ($10.00) and
other good and valuable consideration paid by each party to the other, the
receipt and sufficiency whereof are hereby acknowledged by all parties,
Landlord, Tenant, and Assignee do hereby covenant and agree as follows:
1. All of the recital clauses hereinabove set forth are hereby incorporated by
reference as though set forth verbatim and at length herein.
2. Upon the Effective Date (as hereinafter defined), the Lease will be amended
to reflect all of the provisions as set forth herein.
3. Item A(14) of the Preamble is hereby deleted in its entirety and in its place
and stead substituted therefor is the following:
"Tenant's Address: c/o Tiger Schulmann's Karate Centers, 40 Eisenhower
Drive, Paramus, New Jersey 07653"
4. Item A(15) of the Preamble is hereby deleted in its entirety and in its place
and substituted therefor is the following:
"Tenant's Trade Name: Tiger Schulmann's Karate"
5. Paragraph 1A of the Lease is hereby amended by deleting from the last
sentence the words "without giving Tenant prior notice thereof"
6. Tenant does hereby assign, transfer, and convey to Assignee all of Tenant's
right, title, and interest in and to the Lease, as herein amended, with said
assignment to be deemed effective as of the Effective Date. Landlord and Tenant
hereby warrant and represent that the Lease is in full force and effect.
Landlord further warrants that to its actual knowledge there are no defaults
thereunder on the part of Tenant as of the date of this agreement, and that
pre-existing defaults, if any, have been cured as of the date hereof. Tenant
further warrants that there are no defaults thereunder on the part of Landlord
as of the date of this agreement, and that pre-existing defaults, if any, have
been cured as of the date hereof.
7. Assignee hereby accepts the assignment of the Lease, and does hereby assume,
as of the Effective Date, all of the rights and obligations of Tenant
thereunder, as amended herein, for the balance of the term and any renewal
thereof.
8. By its execution hereof, Landlord hereby consents to the within assignment,
and waives the notice and recapture provisions set forth in section 11 of the
Lease with respect to this assignment.
9. The parties hereto acknowledge and agree that the Guarantor's obligations
under the guarantee shall extend for a period of one (1) year from and after the
date that the Demised Premises are vacated by Tenant, its successors, assigns,
and any other occupants claiming through or under Tenant. Tenant shall remain
liable for the term and any renewal periods actually exercised.
10. Upon the execution hereof, Tenant shall pay Landlord Seven Hundred Fifty
Dollars ($750.00) in satisfaction of Tenant's obligations under Paragraph 11(H)
of the Lease.
11. As used herein, the term "Effective Date" shall mean the date this First
Amendment to Lease and Assignment has been fully executed and delivered to each
party hereunder.
12. As amended herein, the Lease is ratified, confirmed, and continues to remain
in full force and effect.
13. This First Amendment to Lease and Assignment Agreement (the "Agreement") is
subject to and contingent upon final approval of the terms and conditions
contained herein by the Board of Directors of Master Glazier's Karate
International, Inc. ("Board Approval"). If Board Approval is not obtained by on
or before March 31, 1997, Tenant shall notify Landlord and Assignee in writing
sent by regular and certified mail to their respective addresses (set forth
above for Assignee and in the Lease for Landlord) that Board Approval has not
been obtained, in which event: (i) the terms and conditions of the
Agreement shall be deemed as of the first day of the calendar month immediately
following delivery of the notice (the "Termination Date") to be ab initio null
and void and of no further force and effect, and (ii) Assignee shall surrender
and Tenant shall resume possession of the premises on the Termination Date. If
Tenant fails to deliver to Landlord notice by on or before March 31, 1997, time
being of the essence, that it has not obtained Board Approval by March 31, 1997,
or if Tenant delivers written notice to Landlord that it has obtained Board
Approval at any time prior to March 31, 1997, the terms of this Agreement shall
be deemed non-contingent and shall remain in full force and effect. Until Board
Approval has been obtained or notice is timely sent that it has not been
obtained, Tenant, Assignee and Landlord shall be bound to this Agreement. In all
events the Seven Hundred Fifty Dollars ($750.00) paid to Landlord simultaneously
herewith pursuant to the provisions of Paragraph 11(H) of the Lease shall be
non-refundable.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
GABRELLIAN ASSOCIATES
By: /s/ Mark Gabrellian
-------------------------------
Mark Gabrellian
RAMSEY KARATE CENTERS, INC.
By: /s/ Mark Glazier
-------------------------------
Mark Glazier - President
NORTHERN BERGEN KARATE, INC.
By: /s/ Danny Schulmann
-------------------------------
Danny Schulmann - President
MASTER GLAZIER'S KARATE
INTERNATIONAL, INC. (Guarantor)
By: /s/ Mark Glazier
-------------------------------
Mark Glazier, President
EXHIBIT C
SECURED PROMISSORY NOTE
SECURED PROMISSORY NOTE
$95,000 ______________, 1997
New York, NY
FOR VALUE RECEIVED, NORTHERN BERGEN KARATE, INC., together with its
successors and assigns (the "Buyer"), hereby unconditionally promises to pay to
the order of RAMSEY KARATE CENTER, INC., together with their successors and
assigns (the "Seller"), in lawful currency of the United States of America, at
the Seller offices at 377 Hoes Lane, Piscataway Centre, Piscataway, New Jersey,
08854,or at such other address as shall be designated by the Seller in a written
notice to the Buyer, by thirty months following the Initial Payment Date, as
that term is defined herein (the "Maturity Date"), the principal sum of $95,000
without interest on the principal amount hereof. The outstanding principal
amount shall be paid on the first day of each calendar month in thirty (30)
equal installments of $3,166.67, commencing on the first day of the calendar
month following the Closing, but under no circumstances within thirty (30) days
of the Closing (the "Initial Payment Date") and ending on the Maturity Date.
This Note is being delivered in connection with the closing of the transactions
contemplated by that certain Asset Purchase Agreement dated December 17, 1996
between the Buyer and the Seller (the "Asset Purchase Agreement"). Capitalized
terms not otherwise defined shall have the meaning ascribed to them in the Asset
Purchase Agreement.
SECTION 1. Default, Acceleration. In the event that: (i) the Buyer shall
fail to pay any principal hereunder for a period of five (5) days after such
payment is due; or (ii) the Buyer shall fail to observe or perform any of the
covenants of the Buyer contained herein
for a period of ten (10) days after written notice thereof from Seller; or (iii)
the Buyer shall file a petition or enter into any voluntary case under any
bankruptcy or similar law; or (iv) there is commenced against the Buyer an
involuntary case or other similar proceeding under any bankruptcy or similar law
which remains undismissed for a period of sixty (60) days, then and in any such
event (an "Event of Default"), upon written notice to the Buyer from the Seller,
the principal amount hereof and all other amounts due hereunder, shall become
immediately due and payable without any further demand, presentment, protest,
notice of protest, dishonor, notice of dishonor or notice of any other kind, all
of which are hereby expressly waived by the Buyer.
SECTION 2. Optional Prepayment. At its option, the Buyer may prepay at any
time all or any part of the principal amount of this Secured Promissory Note,
without premium or penalty, upon two (2) days prior written notice to the
Seller.
SECTION 3. Mandatory Prepayment. In the event that the Buyer shall elect
to sell all or any part of the Collateral (as hereinafter defined) outside of
the ordinary course of business in accordance with the terms of this Secured
Promissory Note, the net cash proceeds of any such sale (after allowance for any
federal, state and local income taxes payable with respect to such sale) shall
be applied by the Buyer as a mandatory prepayment of the outstanding principal
amount of this Secured Promissory Note.
SECTION 4. Pledge; Security Interest. In order to secure the payment and
performance in full of all of the obligations under this Secured Promissory
Note, whether existing as of this date or any time thereafter, the Buyer hereby
pledges and assigns to the Seller, and grants to the Seller a continuing
security interest in, the following Assets (as defined in the Asset Purchase
Agreement)
2
of the Selling Group acquired by the Buyer in the Asset Purchase Agreement,
dated even date herewith (the "Collateral"):
(a) Accounts The proceeds of and each and every right of the Buyer
to the payment of money, whether such right to payment now exists or
hereafter arises, whether such right to payment arises out of a sale,
lease or other disposition of goods or other Asset by the Buyer, out of a
rendering of services by the Buyer, out of a loan by the Buyer, out of the
overpayment of taxes or other liabilities of the Buyer, or otherwise
arises under any contract or agreement, whether such right to payment is
or is not already earned by performance, and howsoever such right to
payment may be evidenced, together with all other rights and interests
(including all liens and security interests) which the Buyer may at any
time have by law or agreement against any account the Buyer or other
obligor obligated to make any such payment or against any of the property
of such account the Buyer or other obligor; all including, but not limited
to, all present and future debt instruments, chattel papers and accounts
of the Buyer which arise from the Assets purchased by the Buyer from the
Seller;
(b) Chattel Paper Any writing or writings evidencing both a monetary
obligation and a security interest in or a lease of specific goods now
owned or hereafter acquired by the Buyer in relation to the operation of
the Business;
(c) Equipment and Fixtures Goods used or bought for use primarily in
the Business (as defined in the Asset Purchase Agreement), whether or not
an interest therein arises under real property law, now owned or hereafter
acquired by the Buyer in relation to the Business;
3
(d) General Intangibles Any personal property other than goods,
accounts, contract rights, chattel paper, documents, instruments and
money, including, but not limited to, things in or choices of actions,
licenses, rights of all types under leases and license agreements and all
manufacturing and processing rights, patents, patent rights, licenses,
trademarks, trade names and copyrights now owned or hereafter acquired
which relate to the Business acquired from the Seller;
(e) Inventory All personal property now owned or hereafter acquired
by the Buyer in relation to the Business acquired from the Seller which is
held for sale or lease, or furnished or to be furnished under contracts of
service, or held as raw materials, work in process or materials used or
consumed or to be used or consumed in the Business, and all returned or
repossessed goods;
(f) Leasehold Improvements All improvements made by the Buyer to any
leasehold of the Buyer acquired from the Seller, including, but not
limited to, all structures, buildings, accessions, accessories,
attachments, parts, equipment and repairs now or hereafter attached,
affixed or made to any leasehold, whether or not an interest therein
arises under real property law;
(g) Property in Possession of Selling Group Property of every kind
and description in which the Buyer has or may acquire any interest, now or
hereafter at any time in the possession or control of the Seller for any
reason, including, without limitation, instruments, money, documents or
other property deposited with or delivered to Seller as collateral, for
safekeeping or for collection or exchange for other property; and all
dividends and distributions on, or other rights in connection with such
property;
4
(h) Customer and Mailing Lists All lists and compilations (whether
compiled in writing, magnetic tape or discs or otherwise) pertaining to
actual or potential customers, subscribers or others in which the Buyer
has or may acquire an interest in relation to the Business acquired from
the Seller;
(i) Proceeds All property received upon the sale, exchange,
collection or other disposition of Collateral or proceeds of Collateral
(including, but not limited to, insurance payable by reason of loss or
damage to the Collateral) whether cash or non-cash proceeds, including,
but not limited to, Inventory, Equipment or Fixtures acquired with cash
proceeds; and
(j) Products Goods manufactured, processed, assembled or commingled
with any of the foregoing Collateral; together with (i) all substitutions
and replacements for and proceeds of any and all of the foregoing
property, and in the case of all tangible Collateral, all accessions,
accessories, attachments, parts, equipment and repairs now or hereafter
attached or affixed to or used in connection with any such goods, and (ii)
all warehouse receipts, bills of lading and other documents of title now
or hereafter covering such assets.
SECTION 5. Security for Obligations. The pledge and security interest
granted pursuant to this Secured Promissory Note secures the payment of all
obligations of the Buyer under this Secured Promissory Note (all such
obligations of the Buyer being herein called the "Obligations").
SECTION 6. Financing Statements. Uniform Commercial Code financing
statements and any other instruments or documents deemed advisable by Seller to
perfect and continue its security interest in the Pledge Collateral.
5
SECTION 7. Further Assurances. The Buyer agrees that at any time and from
time to time, the Buyer will promptly execute and deliver all further
instruments and documents, and take all further action, that may be reasonably
necessary, or that the Seller may reasonably request, in order to perfect and
preserve any security interest granted or purported to be granted hereby or to
enable the Seller to exercise and enforce its rights and remedies hereunder with
respect to any Collateral.
SECTION 8. Covenants.
8.1 Affirmative Covenants. As long as there remains any amount outstanding
under the Note, the Buyer shall, unless waived in writing by the Seller:
(a) Maintenance of Corporate Existence. Conduct the same general
type of business as that now being carried on by the Buyer and maintain
its separate corporate existence in good standing under the laws of the
State of New Jersey and in such other states as the Buyer may now be
qualified to conduct business or may later have to be qualified.
(b) Taxes. Pay and discharge as the same shall become due and
payable, all taxes, assessments and other governmental charges and levies
against or on any of its property, as well as claims of any kind which, if
unpaid, might become a lien upon any of its properties, unless such tax,
levy, charge, assessment or lien is being contested in good faith by the
Buyer and is supported by an adequate book reserve. The Buyer shall make
or cause to be made all required withholding deposits.
(c) Notices. As soon as possible, but in no event later than 5 days
after obtaining knowledge thereof, give notice to the Seller of-
(i) The commencement of any litigation relating to the Buyer
involving claimed damages in excess of $100,000;
6
(ii) The commencement of any material arbitration or
governmental proceeding or investigation not previously disclosed to
the Seller which has been instituted or, to the knowledge of the
Buyer, is threatened against the Buyer or its property;
(iii) Any actual or threatened Event of Default under this
Agreement (provided, however, that such notice shall in no event be
construed as delaying the occurrence of any Event of Default or
changing the rights and remedies of the Seller with respect
thereto); and
(iv) Any action by a third party, including without
limitation, any governmental entity, which could result in the
closing of the Business on a temporary or permanent basis.
In addition, Buyer shall give Seller prompt notice of its intention to
terminate the Business on a temporary or permanent basis, but in no event shall
such notice be given less than sixty (60) days prior to the relevant termination
date of the Business.
(d) Insurance. Insure and keep insured all of the Assets acquired
from the Seller of an insurable value under all-risk policies issued by
insurance companies authorized to do business in the relevant states in an
amount and with such deductibles as are consistent with past practices.
(e) Maintain Property. Maintain and keep the Assets, property and
equipment in good repair, working order and condition and from time to
time make or cause to be made all needed renewals, replacements and
repairs.
7
(f) Prompt Performance. Promptly perform in all material respects
each and every term and condition of this Agreement and of each document
delivered in connection herewith, time being of the essence.
8.2 Negative Covenants. As long as there remains any amount outstanding
under the Note, the Buyer shall not, unless waived in writing by the Seller:
(a) Consolidation, Merger, Sale of Assets. Consolidate with or merge
into or with any other entity other than an Affiliate of the Buyer, or
sell (other than sales of inventory in the ordinary course of business),
transfer, lease or otherwise dispose of all or a substantial part of the
Assets to any entity other than an Affiliate of the Buyer.
(b) Liens. Create, incur, assume or suffer to exist any lien on any
of the property, real or personal, acquired from the Seller.
(c) Payment of Other Indebtedness. Default upon or fail to pay any
of its other debts or obligations as the same mature.
(d) Dissolution or Liquidation. Dissolve or liquidate any member of
the Buyer;
(e) Transactions Outside the Ordinary Course. Effect any material
change in the general business in which the Buyer is engaged on the date
hereof;
(f) Contracts. Execute or amend of any license, subcontracting or
lease agreement or other contract outside the ordinary course of the
Buyer's business.
SECTION 9. Remedies upon Default. (a) In the event that the (i) Buyer
shall be in breach of any provision contained in this Agreement for five (5)
days following written notice thereof from the Seller or (ii) the obligations of
the Buyer under this Secured Promissory Note shall remain
8
unpaid after the Maturity Date or after the principal amount of this Secured
Promissory Note shall have been declared due and payable prior to the stated
maturity thereof in accordance with the terms hereof:
(i) The Seller may, without demand of performance or other
demand, advertisement or notice of any kind to or upon the Buyer or
any other person (all of which are hereby expressly waived by the
Buyer), forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and may forthwith sell, assign,
give options to purchase, contract to sell or otherwise dispose of
and deliver the Collateral, or any part thereof, in one or more
parcels at public or private sales, at any exchange or broker's
board or at any of the Seller's offices or elsewhere, upon such
terms and conditions as it may deem advisable and at such prices as
it may deem best, for cash or on credit or for future delivery,
without assumption of any credit risk, with the right upon any such
sale, public or private, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in the
Buyer, which right or equity is hereby expressly waived and released
by the Buyer; provided, however, that the Buyer shall not be
credited with the net proceeds of any sale on credit or for future
delivery until the cash proceeds thereof are actually received by
the Seller;
(ii) The Seller may, instead of exercising the power of sale
herein conferred upon it, proceed by a suit at law or in equity to
foreclose the pledge and security interest under this Secured
Promissory Note and sell the Collateral, or any
9
part thereof, under a judgment or decree of a court of competent
jurisdiction or as otherwise authorized by applicable law;
(iii) The Seller may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein, all
the rights and remedies of a secured party on default under the
Uniform Commercial Code (whether or not the Uniform Commercial Code
applies to the affected Collateral) and all rights and remedies
otherwise available to it under applicable law.
(b) The Buyer agrees that, to the extent notice of sale or
other disposition of any of the Collateral shall be required by
applicable law, the Seller need not give more than twenty (20) days
notice of the time and place of any public sale or of the time after
which a private sale or other intended disposition is to take place
and that such notice is reasonable notification of such matters. No
notification need be given to the Buyer if, in the event that the
obligations of the Buyer under this Secured Promissory Note shall
remain unpaid after the Maturity Date or after the principal amount
of this Secured Promissory Note shall have been declared due and
payable prior to the stated maturity thereof in accordance with the
terms hereof, the Buyer shall have signed a statement renouncing or
modifying any right to notification of any sale or other intended
disposition. The Seller shall not be obligated to make any sale
pursuant to any such notice. The Seller may, without notice or
publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place
to which the same may be so
10
adjourned. In case of any sale of all or any part of the Collateral
on credit or for future delivery, the Collateral so sold may be
retained by the Seller until the selling price is paid by the
purchaser thereof, but the Seller shall incur no liability in the
case of the failure of such purchaser to take up and pay for the
Collateral so sold, and in case of any such failure such Collateral
may again be sold on like notice. To the extent permitted by law,
the Buyer waives all claims, damages and demands against the Seller
arising out of the retention, sale or other disposition of the
Collateral or any part thereof, except any such claims, damages and
demands arising out of the gross negligence or willful misconduct of
the Seller.
(c) The Buyer recognizes that the Seller may be unable to
effect a public sale of any or all of the Collateral by reason of
certain prohibitions contained in applicable statutes and
regulations, but may be compelled to resort to one or more private
sales thereof to a restricted group of purchasers who will be
obliged to agree, among other things, to acquire such Collateral for
their own account for investment and not with a view to the
distribution or resale thereof. The Buyer acknowledges and agrees
that any such private sale may result in prices and other terms less
favorable to the seller than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private
sale made in good faith to a bona fide third party shall not be
deemed to have been made in a commercially unreasonable manner by
virtue of its private nature.
SECTION 10. Amendments. No amendment or waiver of any provision of this
Secured Promissory Note nor consent to any departure by the Buyer here from
shall in any event be effective
11
unless the same shall be in writing and signed by the Seller, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
SECTION 11. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing and shall be given by mail, if to the
Buyer, addressed to it at the address indicated on the signature page hereof, if
to the Seller, addressed to it at 377 Hoes Lane, Piscataway Centre, Piscataway,
New Jersey, 08854, or, as to either party, at such other address as shall be
designated by such party in a written notice to the other party complying as to
delivery with the terms of this Section 11. All such notices and other
communications shall be effective three (3) business days after being deposited
in the mails, postage prepaid, addressed as aforesaid.
SECTION 12. Continuing Security Interest; Transfer of Note. This Secured
Promissory Note shall create a continuing security interest in the Collateral
and shall remain in full force and effect until payment in full of the
obligations hereunder. The rights and obligations of the Buyer hereunder may not
be assigned without the prior written consent of the other party and any
purported assignment shall be null and void.
SECTION 13. Consent to Jurisdiction and Service; Waiver of Jury Trial. The
Buyer hereby absolutely and irrevocably consents and submits to the jurisdiction
of the Courts of the State of New Jersey and of any Federal Court located in
said State in connection with any actions or proceedings brought against the
Buyer by the Seller arising hereunder. In any such action or proceeding, the
Buyer hereby absolutely and irrevocably waives personal service of any summons,
complaint, declaration or other process and hereby absolutely and irrevocably
agrees that the service thereof may be made, in addition to other methods
permitted by law, by certified, registered or recorded first-class mail directed
to the Buyer at the address set forth in Section 11. The Buyer
12
hereby waives and agrees not to assert in any such action or proceeding, in
case, to the fullest extent permitted by applicable law, any claim that (a) the
Buyer is not personally subject to the jurisdiction of any such court, (b) the
Buyer is immune from any legal process (whether through service or notice,
attachment prior to judgment, attachment in aid of execution, execution or
otherwise) with respect to it or its property, (c) any such suit, action or
proceeding is brought in an inconvenient forum, (d) the venue of such suit,
action or proceeding is improper, (e) that this Secured Promissory Note may not
be enforced in or by any such court and (f) any right to a trial by jury in any
action, proceeding or counterclaim concerning any rights under this Secured
Promissory Note. Anything hereinbefore to the contrary notwithstanding, the
Seller may sue the Buyer in the courts of any country, State of the United
States or place where the Buyer or any of the property or assets of the Buyer
may be found or in any other appropriate jurisdiction.
SECTION 14. Expenses. Should all or any part of the indebtedness
represented by this Secured Promissory Note be collected by action at law, or in
bankruptcy, insolvency, receivership or other court proceedings, or should this
Secured Promissory Note be placed in the hands of attorneys for collection after
default, the Buyer hereby promises to pay to the Seller, upon demand by the
Seller at any time, in addition to principal of, interest on and any other
amount owing in respect of this Secured Promissory Note or the indebtedness
evidenced hereby, all court costs and reasonable attorneys, fees and all other
reasonable collection charges and expenses incurred or sustained by the Seller.
SECTION 15. Governing Law; Terms. This Secured Promissory Note shall be
governed by and construed in accordance with the laws of the State of New
Jersey, without regard to
13
principles of conflicts of law. Unless otherwise defined herein, terms defined
in Article 9 of the Uniform Commercial Code in the State of New Jersey are used
herein as therein defined.
IN WITNESS WHEREOF, the Buyer has executed this instrument on the date
first above written.
NORTHERN BERGEN KARATE, INC.
By: _____________________________
Name:
Title:
RAMSEY KARATE CENTER, INC.
By:______________________________
Name:
Title:
14
EXHIBIT D
ESCROW AGREEMENT
ESCROW AGREEMENT
This Escrow Agreement (the "Agreement") is made and entered into as of the
17th day of December, 1996, by and among Northern Bergen Karate, Inc., (the
"Buyer"), and Ramsey Karate Center, Inc., (the "Seller"), and Bernstein &
Wasserman, LLP, as escrow agent (the "Escrow Agent").
W I T N E S S E T H:
WHEREAS, the Buyer and the Seller have entered into a certain Asset
Purchase Agreement for the purchase of a martial arts center (the
"Agreement")dated as of the date hereof; (terms used herein and not otherwise
defined are used herein with the meanings as defined in the Agreement); and
WHEREAS, pursuant to the Agreement, the Buyer understands that the Seller
has agreed, pursuant to the Agreements, to sell the martial arts center and
other ancillary equipment (the "Business") to the Buyer so long as the Buyer
places $5,000 (the "Escrowed Amount") for the purchase of such Business; and
WHEREAS, the Buyer and the Seller have agreed that upon execution of this
Escrow Agreement, the Buyer will deliver to the Escrow Agent the Escrow Amount
to be held by the Escrow Agent pursuant to the terms of this Agreement; and
WHEREAS, the Escrow Agent is willing to serve as escrow agent and hold the
Escrowed Amount(as defined below) in accordance with the terms and conditions
hereof.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
Section 1. Escrow of Escrowed Property.
(a) Simultaneously with the execution of this Agreement, the Buyer
shall deposit the Escrowed Amount with the Escrow Agent.
(b) Escrow Agent shall deposit the Escrowed Amount in an escrow
account at Escrow Agent's bank (the "Escrow Account").
Section 2. Disposition of the Escrowed Amount. On the Closing Date (as
defined in the Asset Purchase Agreement). The Escrow Agent shall pay, by federal
wire transfer or attorney escrow account check, from the Escrowed Account to the
Seller, the full Escrow Amount. The Escrow Agent shall only be required to
follow the payment instructions contained in the joint written instructions
delivered to the Escrow Agent by the Buyer and the Seller. However, should the
Closing not occur by May 31, 1997, the Escrow Agent shall upon the delivery of
the karate school located
at 91 Interstate Rte 17, Ramsey, NJ, to the Seller, in broom clean and workable
condition, shall deliver to the Buyer $5,000 by federal wire transfer or
attorney escrow account check, from the Escrowed Account.
Section 3. Responsibility of Escrow Agent.
(a) The Escrow Agent shall be entitled to rely upon, and shall be
fully protected from all liability, loss, cost, damage or expense in acting or
omitting to act pursuant to, any instruction, order, judgment, certification,
affidavit, demand, notice, opinion, instrument or other writing delivered to it
hereunder without being required to determine the authenticity of such document,
the correctness of any fact stated therein, the propriety of the service thereof
or the capacity, identity or authority of any party purporting to sign or
deliver such document.
(b) The duties of the Escrow Agent are only as herein specifically
provided, and are purely ministerial in nature. The Escrow Agent shall neither
be responsible for, or under, nor chargeable with knowledge of, the terms and
conditions of any other agreement, instrument or document in connection
herewith, and shall be required to act in respect of the Escrowed Amount only as
provided in this Agreement. This Agreement sets forth all the obligations of the
Escrow Agent with respect to any and all matters pertinent to the escrow
contemplated hereunder and no additional obligations of the Escrow Agent shall
be implied from the terms of this Agreement or any other agreement. The Escrow
Agent shall incur no liability in connection with the discharge of its
obligations under this Agreement or otherwise in connection therewith, except
such liability as may arise form the bad faith, gross negligence or willful
misconduct of the Escrow Agent.
(c) The Escrow Agent may consult with counsel of its choice, and
shall not be liable for any action taken or omitted to be taken by the Escrow
Agent in accordance with the advice of such counsel.
(d) The Escrow Agent is acting as a stakeholder only with respect to
the Escrowed Amount. Except as provided in this agreement, if any dispute arises
as to whether the Escrow Agent is obligated to deliver the Escrowed Amount or as
to whom the Escrowed Amount are to be delivered, the Escrow Agent shall not be
required to make any delivery, but in such event the Escrow Agent may hold the
Escrowed Amount until receipt by the Escrow Agent of instructions in writing,
signed by all parties which have, or claim to have, an interest in the Escrowed
Amount, directing the disposition of the Escrowed Amount, or in the absence of
such authorization, the Escrow Agent may hold the Escrowed Amount until receipt
of a certified copy of a final judgement of a court of competent jurisdiction
providing for the disposition of the Escrowed Amount. The Escrow Agent may
require, as a condition to the disposition of the Escrowed Amount pursuant to
written instructions, indemnification and/or opinions of counsel, in form and
substance satisfactory to the Escrow Agent, from each party providing such
instructions. If such written instructions, indemnification and opinions are not
received, or proceedings for such determination are not commenced, within thirty
(30) days after receipt by the Escrow Agent of notice of any such dispute and
diligently continued, or if the Escrow Agent is uncertain as to which party or
parties are entitled to the Escrowed Amount, the Escrow Agent may either (i)
hold the Escrowed Amount until receipt
of (a) such written instructions and indemnification or (b) a certified copy of
a final judgment of a court of competent jurisdiction providing for the
disposition of the Escrowed Amount, or (ii) deposit of the Escrowed Amount in
the clerk of a court of competent jurisdiction located in New York County;
provided, however, that notwithstanding the foregoing, the Escrow Agent may, but
shall not be required to, institute legal proceedings of any kind.
(e) Both the Seller and the Buyer agree to jointly and severally
reimburse the Escrow Agent on demand for, and to jointly and severally indemnify
and hold the Escrow Agent harmless against and with respect to, any and all
loss, liability, damage, or expense (including, without limitation, reasonable
attorney's fees and costs) that the Escrow Agent may suffer or incur in
connection with the entering into of this Agreement and the performance of its
obligations under this Agreement or otherwise in connection therewith, except to
the extent such loss, liability, damage or expense arises from the bad faith,
gross negligence or willful misconduct of the Escrow Agent. Without in any way
limiting the foregoing, the Escrow Agent shall be reimbursed for the cost of all
reasonable legal fees and costs incurred by it in acting as the Escrow Agent
hereunder, based on the reasonable rates in effect at the time services are
rendered.
(f) The Escrow Agent and any successor escrow agent may at any time
resign as such by delivering the Escrowed Amount to either (i) any successor
escrow agent designated by all the parties hereto (other than the Escrow Agent)
in writing, or (ii) any court having competent jurisdiction located in New York
County. Upon its resignation and delivery of the Escrowed Amount as set forth in
this paragraph, the Escrow Agent shall be discharged of, and from, any and all
further obligations arising in connection with the escrow contemplated by this
Agreement.
(g) The rights of the Escrow Agent contained in this Agreement,
including without limitation the right to indemnification, shall survive the
resignation of the Escrow Agent and the termination of the escrow contemplated
hereunder.
Section 4. Notices. Any notice authorized or required to be given to a
party hereto pursuant to this Agreement shall be deemed to have been given when
hand-delivered, or when mailed by United States certified or registered mail,
postage prepaid, return receipt requested, addressed as follows:
(i) if to the Seller:
377 Hoes Lane
Piscsataway Centre
Piscataway, New Jersey
Attn: Mark Glazier
with a copy to:
Bernstein & Wasserman, LLP
950 Third Avenue
New York, NY 10022
(ii) if to Buyer:
40 Eisenhower Drive
Paramus, New Jersey
Attn: Danny Schulmann
(iii) if to the Escrow Agent:
Bernstein & Wasserman, LLP
950 Third Avenue
New York, NY 10022
Attn: Alan N. Forman, Esq.
Section 5. Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of New York. All actions against the
Escrow Agent arising under or relating to this Agreement shall be brought
against the Escrow Agent exclusively in the appropriate court in the County of
New York, State of New York. Each of the parties hereto agree to submit to
personal jurisdiction and to waive any objection as to venue in the County of
New York, State of New York. Service of process on any party hereto in any
action arising out of or relating to this Agreement shall be effective if mailed
to such party as set forth in the immediately preceding paragraph.
Section 6. Waiver of Trial by Jury. TO THE FULL EXTENT PERMITTED BY LAW,
EACH OF THE PARTIES HERETO HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVES THE RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION
BASED HEREON, OR ARISING OUT OF , UNDER OR IN CONNECTION WITH THIS AGREEMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF ANY PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
ESCROW AGENT ENTERING INTO THIS AGREEMENT.
Section 7. Modification. The Escrow Agent shall not be bound by any
modification, cancellation or rescission of this Agreement unless in writing and
signed by the Escrow Agent.
Section 8. Termination. This Agreement shall be terminated at such time as
the Escrowed Amount shall have been delivered pursuant to Section 2 hereof or at
any earlier time by written mutual consent of the parties hereto including the
Escrow Agent.
Section 9. Assignment. This Agreement shall inure to the benefit of, and
be binding upon, the parties hereto and their respective successors and assigns
as permitted hereunder. Nothing in this Agreement, express or implied, shall
give to anyone, other than the parties hereto and their respective permitted
successors and assigns, any benefit, or any legal or equitable right, remedy or
claim, under or respect of this Agreement or any rights hereunder without the
prior written consent of the other parties hereto.
Section 10. Headings. The headings in the sections of this Agreement are
inserted for convenience only and shall not constitute a part hereof.
Section 11. Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall, collectively and separately,
constitute one agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date and year first above written.
RAMSEY KARATE CENTER, INC. NORTHERN BERGEN KARATE, INC.
By: /s/ Mark Glazier By: /s/ Danny Schulmann
---------------------------- ---------------------------
Name: Mark Glazier Name: Danny Schulmann
Title: President Title: President
BERNSTEIN & WASSERMAN, LLP,
AS ESCROW AGENT
By: /s/ Alan Forman
-----------------------------
Name: Alan N. Forman
Title: Partner
EXHIBIT E
GUARANTY
GUARANTY
THIS GUARANTY made as of this _____ day of _________, 1997 by Danny
Schulmann, (the "Guarantor"), to Ramsey Karate Center, Inc. (the "Seller").
W I T N E S S E T H :
WHEREAS, pursuant to that certain Asset Purchase Agreement dated as of
December 17, 1996 by and among Northern Bergen Karate, Inc., a New Jersey
corporation (the "Buyer"), the Seller (the "Asset Purchase Agreement"), the
Buyer has certain obligations to the Seller; and
WHEREAS, the Seller required as a condition to its execution of the Asset
Purchase Agreement that the Guarantor guarantee the obligations of the Buyer
under that certain Secured Promissory Note, dated as of the date hereof, made by
the Buyer and delivered to the Seller pursuant to the Asset Purchase Agreement
(the "Note").
NOW, THEREFORE, for good and valuable consideration, the Guarantor hereby
agrees with the Seller as follows:
Section 1. The Guaranty. The Guarantor hereby unconditionally and
irrevocably guarantees to the Seller or its assigns, or any subsequent holder of
the Note, the prompt and full discharge by the Buyer, of all of the Buyer's
obligations under the Note (collectively, the "Obligations"), in accordance with
the terms hereof and thereof. Guarantor hereby guarantees to the Seller full and
complete performance by the Buyer of each and all of the Obligations, including,
without limitation, the due and punctual payment of all amounts which may become
due and payable to the Seller. Guarantor acknowledges and agrees that, with
respect to all obligations to pay money, such guaranty shall be a guaranty of
payment and not of collection. If Seller shall default in the due and punctual
performance of any of the Obligations or in the full and timely payment of any
amounts owed pursuant to the Obligations, Guarantor will forthwith perform or
cause to be performed such Obligations and will forthwith make full payment of
any amount due with respect thereto at its sole cost and expense, and shall
reimburse Seller, or its assigns, or any subsequent holder of the Note, for all
reasonable expenses, collection charges, court costs, and attorneys' fees
incurred in attempts to collect under or enforce the provisions of this
Guaranty.
Section 2. Guaranty Unconditional. The liabilities and obligations of
Guarantor to the Seller pursuant to this Guaranty shall be unconditional and
irrevocable and shall not be conditioned or contingent upon the pursuit of any
remedies against Seller or any other person.
Section 3. Waivers of the Guarantors. (a) Guarantor hereby waives any
right, whether legal or equitable, statutory or non-statutory, to require Seller
to proceed against or take any action against or pursue any remedy with respect
to the Buyer or any other person or to resort to any security, liens or
collateral thereto appertaining, or make presentment or demand for performance;
provided that Seller shall give notice within a reasonable time after such
default to Guarantor of
the Buyer's nonperformance of any of the Obligations and Guarantor shall have
the right to cure, or procure the cure of, such nonperformance within fifteen
(15) days from and after receipt of such notice before Seller may enforce rights
against Guarantor hereunder. The unconditional obligation of Guarantor hereunder
will not be affected, impaired or released by any extension, waiver, amendment
or thing whatsoever which would release a guarantor (other than performance).
(b) The Guarantor hereby waives irrevocably any defense based upon or
arising by reason of any disability or incapacity of the Buyer or lack of
authority of any officer or director of the Buyer, and any immunity (whether on
the basis of sovereignty or otherwise) from the jurisdiction, attachment or
execution to which it or its property might otherwise be entitled in any action
arising out of or based upon this Guaranty which may be instituted in the courts
of the State of New Jersey, the United States of America, or any other domestic
or foreign jurisdiction where personal jurisdiction may attach under law.
Section 4. Definitions. Terms used herein that are defined in the Asset
Purchase Agreement are, unless otherwise defined, used herein as therein
defined.
Section 5. Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be given personally, telegraphed, telefaxed, sent by facsimile
transmission or sent by prepaid air courier or certified, registered or express
mail, postage prepaid. Any such notice shall be deemed to have been given (a)
the succeeding business day after receipt, if delivered in person, telegraphed,
telexed, sent by facsimile transmission and confirmed in writing within three
(3) Business Days thereafter or sent by prepaid air courier or (b) ten (10)
Business Days following the mailing thereof, if mailed by certified first class
mail, postage prepaid, return receipt requested, in any such case as follows (or
to such other address or addresses as a party may have advised the other in the
manner provided in this Section 5):
If to the Seller, to:
Master Glazier's Karate International, Inc.
377 Hoes Lane
Piscataway Centre
Piscataway, New Jersey 08854
Attention: Mark Glazier
President
Telephone Number: (908) 354-2349
Telecopier Number: (908) 981-8982
with a copy to:
Bernstein & Wasserman, LLP
2
950 Third Avenue
New York, NY 10022
Attention: Alan N. Forman, Esq.
Telephone Number (212) 826-0730
Telecopier Number (212) 371-4730
If to Guarantor, to:
Tiger Schulmann's Karate
40 Eisenhower Drive
Paramus, New Jersey 07652
Attention: Danny Schulmann
Section 6. Waivers and Amendments. This Guaranty may be amended,
superseded, canceled, 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.
Section 7. Governing Law. This Guaranty shall be governed by and construed
in accordance with the laws of the State of New Jersey, without regard to
principles of conflicts of law.
Section 8. Binding Effect; No Assignment. This Guaranty shall be binding
upon and inure to the benefit of the parties and their respective successors and
legal representatives. This Guaranty is not assignable except by operation of
law and any other purported assignment shall be null and void.
Section 9. Variations in Pronouns. All pronouns and any variations thereof
refer to the masculine, feminine or neuter, singular or plural, as the context
may require.
Section 10. Counterparts. This Guaranty may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.
Section 11. Headings. The headings in this Guaranty are for reference
only, and shall not affect the interpretation of this Guaranty.
3
Section 12. Severability of Provisions. If any provision or any portion of
any provision of this Guaranty or the application of such provision or any
portion thereof to any Person or circumstance, shall be held invalid or
unenforceable, the remaining portion of such provision and the remaining
provisions of this Guaranty, or the application of such provision or portion of
such provision as is held invalid or unenforceable to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affect thereby.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed as of this _____ day of ____________, 1997.
__________________________________
Danny Schulmann
Accepted and Accepted:
RAMSEY KARATE CENTER, INC.
By: ________________________________
Name: Mark Glazier
Title: President
4
EXHIBIT F
OPERATING AGREEMENT
OPERATING AGREEMENT
THIS OPERATING AGREEMENT (the "Agreement") is entered into as of this 17th
day of December 1996, by and among Ramsey Karate Center, Inc., (the "Seller")
and Northern Bergen Karate, Inc., (the "Buyer").
NOW, THEREFORE, in consideration of the mutual promises of the parties
hereinafter set forth, the Seller and Buyer agree as follows:
1. Retention as Operator. Subject to each of the terms, conditions and
provisions of this Agreement, the Seller hereby retains Buyer and Buyer hereby
agrees to be retained by the Seller to perform those operating functions set
forth in Section 4 of this Agreement.
2. Term. Subject to the provisions for termination set forth herein, the
term of this Agreement shall be from the date of this Agreement through the
earlier of the Closing Date or the Termination Date (as such terms are defined
in those certain Asset Purchase Agreements dated as of the date hereof by and
among Ramsey Karate Center, Inc., and Northern Bergen Karate, Inc., (the
"Purchase Agreement"). In the event this Agreement is terminated as a result of
the Seller's failure to close the transactions contemplated by the Purchase
Agreement, the Seller shall (i) continue to operate the Business and teach the
Buyer students, (ii) refund all funds required to be repaid to students and
(iii) be entitled to collect all accounts receivable generated by the Business.
If certain students transfer to a Tiger Schulmann's Karate martial arts center
(or one managed by an affiliate of Tiger Schulmann's Karate), then Buyer shall
refund all funds to be repaid to such students and retain all accounts
receivable relating to such students.
3. Compensation. In consideration for Buyer's operation of Ramsey Karate
Center, Inc. located at 91 Interstate Rte. 17, Ramsey, NJ, as a martial arts
instruction center (the "Business"), Buyer shall receive all gross proceeds from
such operations during the Term of this Agreement, without deduction from or
payment to the Seller.
4. Duties of Buyer. Buyer shall operate the Business in the usual course
of business in accordance with past practice, under the name of Tiger
Schulmann's Karate, including but not limited to the hiring of qualified
personnel and providing accounting, maintenance, operational and administrative
services for the Business (the "Services"). Buyer shall devote as much time as
reasonably necessary to complete its obligations hereunder. Buyer represents and
warrants that it is currently licensed to operate martial arts instruction
centers in the State of New Jersey and that its operation of the Business shall
comply with all requirements of applicable law.
5. Expenses. Buyer shall be responsible for all direct and indirect
expenses incurred by it during the Term of this Agreement relating to the
operation of the Business.
6. Insurance. Seller shall list the Buyer as an additional insured in an
amout equal to $115,000 in comprehensive insurance coverage, in exchange for
which, Buyer shall pay $100 per month on the first day of each month during the
term of this agreement. Buyer shall remain liable to the Seller for any losses
or damages to the Assets of the Business as a result of Buyer's negligence or
intentional misconduct to the extent such losses or damages are either not fully
covered or are excluded from coverage by such insurance policies.
7. Decisions. Buyer shall have the right to make all decisions for the
Business, unless such decisions would constitute willful misconduct or gross
negligence on the part of Buyer, or are outside the ordinary course of business
in accordance with past practice. Under no circumstances shall any liability
enure to the Seller for any decisions relating to the Business, or otherwise,
made by Buyer during the term of this Agreement.
8. Authority of Buyer. Buyer shall have no authority to enter into any
agreement or to make any representation, commitment or warranty binding upon the
Business or to obtain or incur any right, obligation or liability on behalf of
the Business without the prior written consent of the Seller, except for student
contracts assumed by Buyer under Section 2 (i).
9. Books and Records. The Business' books and records with respect to the
Services and any costs ("Books and Records") shall be kept at Buyer's offices
located at 40 Eisenhower Drive, Paramus, New Jersey. The Books and Records shall
be kept in accordance with recognized accounting principles and practices,
consistently applied, and shall be made available for the Seller or the Seller's
representatives, with inspection and copying at all times being made available
during regular office hours.
10. Confidential Information.
10.1 The parties acknowledge that during the course of provision of the
Services, the Seller may disclose information to Buyer or its affiliated
companies. Buyer shall treat such information as the Seller's confidential
property and safeguard and keep secret all such information about the Seller,
including reports and records, customer lists, trade lists, trade practices, and
prices pertaining to the Seller's business.
10.2 Buyer shall exercise its best efforts and shall cause any of its
affiliated companies to exercise their best efforts to prevent any confidential
information from being disclosed to third parties, except as necessarily
required in the performance of the Services and except under terms of
confidentiality satisfactory to the Seller. This obligation shall remain in
effect until the Seller shall release Buyer or its affiliated companies from
their obligations under this paragraph 10, but in no event later than the
completion of the Services on the Closing Date. Buyer shall not use any of the
Seller's confidential information in any way that is or may be detrimental to
the interests of the Seller, directly or indirectly, either during the term of
this Agreement or at any time thereafter.
10.3 The parties also acknowledge that during the term of this Agreement,
the Buyer may disclose information to Seller or its affiliated companies through
Seller's right to enter and inspect the premises of the Business, as well as it
right to inspect the Books and Records of the Business. Seller shall treat such
information as the Buyer's confidential property and safeguard and keep secret
all such information about the Buyer, including reports and records, customer
lists, trade lists, trade practices, and prices pertaining to the Buyer's
business.
10.4 Seller shall exercise its best efforts and shall cause any of its
affiliated companies to exercise their best efforts to prevent any confidential
information from being disclosed to third parties, except as necessarily
required in the inspection of the premises and Books and Records of the Business
and except under terms of confidentiality satisfactory to the Buyer. This
obligation shall remain in effect until the Buyer shall release Seller or its
affiliated companies from their obligations under this paragraph 10, but in no
event later than the completion of the Services on the Closing Date. Seller
shall not use any of the Buyer's confidential information in any way that is or
may be detrimental to the interests of the Buyer, directly or indirectly, either
during the term of this Agreement or at any time thereafter.
11. Indemnification. Buyer agrees to indemnify and hold the Seller and its
officers, directors and agents harmless from damages, losses or expenses,
including, without limitation, reasonable attorneys' fees and expenses, incurred
or paid directly or indirectly, by Buyer as a result of or arising out of any
actions taken by Buyer in connection with the performance of the Services under
this Agreement, or for any claims made against Seller by a student for a refund
arising from the transfer of that student to another Tiger Schulmann Karate
martial arts center. Additionally, Seller agrees to indemnify and hold Buyer and
its officers, directors and agents harmless from damages, losses or expenses,
including, without limitation, reasonable attorneys' fees and expenses, incurred
or paid directly or indirectly, by Buyer as a result of or arising out of any
actions taken by Buyer in connection with the provisions of Section 2 (ii) of
this Agreement.
12. Notices and Communications.
12.1 All communications relating to the day-to-day activities necessary to
render the Services shall be exchanged between the respective representatives of
the Seller and Buyer, who will be designated by the parties promptly upon
commencement of the Services.
12.2 All other notices, demands, and communications required or permitted
hereunder shall be in writing and shall be delivered personally to the
respective representatives of the Seller and Buyer set forth below or shall be
sent by a nationally recognized overnight courier or mailed by registered mail,
postage prepaid, return receipt requested. Notices, demands and communications
hereunder shall be effective: (i) if delivered personally, on delivery; or (ii)
if mailed, forty-eight (48) hours after deposit thereof in the United States
mail addressed to the party to whom such notice, demand, or communication is
given. Until changed by written notice, all such notices, demands and
communications shall be addressed as follows:
If to the Seller:
Master Glazier's Karate International, Inc.
377 Hoes Lane
Piscataway Centre
Piscataway, New Jersey 08854
Attn: Mark Glazier
President
If to Buyer:
40 Eisenhower Drive
Paramus, New Jersey
Attn:
President
13. Assignments. Buyer shall not assign this Agreement in whole or in part
without the prior written consent of the Seller.
14. Applicable Law and Severability. This document shall, in all respects,
be governed by the laws of the State of New Jersey applicable to agreements
executed and to be wholly performed within the State of New Jersey. Nothing
contained herein shall be construed so as to require the commission of any act
contrary to law, and wherever there is any conflict between any provisions
contained herein and any contrary present or future statute, law, ordinance or
regulation, the latter shall prevail, but the provision of this document which
is affected shall be curtailed and limited only to the extent necessary to bring
it within the requirements of the law.
15. Further Assurances. Each of the parties hereto shall execute and
deliver any and all additional papers, documents and other assurances, and shall
do any and all acts and things reasonably necessary in connection with the
performance of their obligations hereunder and to carry out the intent of the
parties hereto.
16. Attorneys' Fees. In the event any action is instituted by a party to
enforce any of the terms and provisions contained herein, the prevailing party
in such action shall be entitled to such reasonable attorneys' fees, costs and
expenses as may be fixed by the court.
17. Successors and Assigns. Subject to the foregoing, all the terms and
conditions contained herein shall inure to the benefit of and shall be binding
upon the parties hereto and their respective heirs, personal representatives,
successors and assigns.
18. Captions. The captions appearing at the commencement of the paragraphs
hereof are descriptive only and for convenience and reference. Should there be
any conflicts between any such caption and the paragraph at the head of which it
appears, the paragraph and not such caption shall control and govern in the
construction of this document.
19. Modifications or Amendments. No amendment, change or modification of
this document shall be valid unless it is in writing and signed by all the
parties hereto and expressly states that it is an amendment, change or
modification of this Agreement is intended.
20. Separate Counterparts. This document may be executed in one or more
separate counterparts, each of which, when so executed, shall be deemed to be an
original. Such counterparts shall, together, constitute and be one and the same.
21. Entire Agreement. This Agreement shall constitute the entire
understanding and agreement between the parties hereto and shall supersede any
and all letters of intent, whether written or oral, pertaining to the subject
matter of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
RAMSEY KARATE CENTER, INC.
By: /s/ Mark Glazier
-----------------------------
Name: Mark Glazier
Title: President
NORTHERN BERGEN KARATE, INC.
By: /s/ Danny Schulmann
-----------------------------
Name: Danny Schulmann
Title: President