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Exhibit 10.1
ASSET PURCHASE AGREEMENT
This ASSET PURCHASE AGREEMENT (this "Agreement") is made and
entered into as of this 11th day of June, 1996, by and among JERRY'S FAMOUS
DELI, INC., a California corporation ("Buyer"), SOLLEY'S INC., a California
corporation ("Solley's"), and Sol Zide, an individual and sole shareholder of
Solley's ("Zide"). Solley's and Zide are sometimes collectively referred to
herein as "Sellers," and individually as a "Seller."
RECITALS:
A. Sellers are engaged in the business of owning and operating
two delicatessen restaurants under the name "Solley's."
B. Sellers and Buyer have entered into a letter of intent,
dated as of April 9, 1996, pursuant to which Buyer has agreed in principal to
acquire the Restaurants (as defined in this Agreement).
C. Sellers desire to sell to Buyer the assets of the
Restaurants and the assets related to the operation thereof, and Buyer desires
to acquire such assets on the terms and conditions hereinafter set forth.
AGREEMENTS:
NOW, THEREFORE, in consideration of the premises and the
mutual promises contained herein, the parties hereto covenant and agree as
follows:
Definitions. For purposes of this Agreement, the following
terms shall have the following meanings:
"ABC" means the California Department of Alcoholic
Beverage Control.
"Additional Security Deposits" shall have the meaning
ascribed in Section 2 a. v. of this Agreement.
"Assets" means the Restaurants and all assets
utilized in connection with the operation of the Restaurants, including, without
limitation, the Leasehold Estate (including the Security Deposits), the FF&E,
the Personal Property, the Intangible Property, the Books and Records (only to
the extent that copies of such Books and Records are requested by Buyer in
accordance with Section 7(k) of this Agreement), and the Liquor Licenses; but
does not include the Excluded Assets.
"Assignment of Intangible Property" means the
Assignment of Intangible Property, to be duly executed and delivered by Sellers
in accordance with this Agreement,
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assigning to Buyer all of Sellers' right, title and interest in and to the
Intangible Property. The Assignment of Intangible Property shall be in the form
of, and upon the terms contained in, Exhibit "A."
"Bill of Sale" means the Bill of Sale, to be duly
executed and delivered by Sellers in accordance with this Agreement, conveying
to Buyer all of the FF&E and the Personal Property. The Bill of Sale shall be in
the form of, and upon the terms contained in, Exhibit "B."
"Books and Records" means copies of all menus,
recipes, books, records and accounts, correspondence, customer or supplier
lists, marketing information and any confidential information relating to the
Assets or the Restaurants; provided, however, that such term shall not include
copies of any employment records unless Buyer has obtained the written consent
of the employee(s) with respect to which such employment information is to be
provided.
"Buyer Indemnitees" shall have the meaning ascribed
in Section 9 a. of this Agreement.
"Closing" means the closing of the transactions
contemplated herein which closing shall occur on the Closing Date.
"Closing Date," unless otherwise agreed to in writing
by the parties hereto, means the date which is three (3) business days after all
of the following have occurred: (i) the date that all applicable periods have
run under applicable Bulk Sales Notice laws, and (iii) the date that all
applicable periods have run and all actions necessary for the Liquor Licenses to
be transferred to Buyer have been taken; provided, however, that subject to the
satisfaction of all conditions to Closing set forth in Section 10 of this
Agreement, the Closing Date shall occur no later than June 30, 1996.
"Deposit" means the One Hundred Thousand and 00/100
Dollars ($100,000) deposited by Buyer into the Escrow pursuant to the terms of
the Letter of Intent.
"Escrow Holder " means Nettie Becker Escrow, Inc.,
301 North Canon Drive, Beverly Hills, California 90210.
"Escrow" means that certain escrow established with
Escrow Holder for the purpose of completing the purchase and sale of the Liquor
Licenses in accordance with Division 6 of the California Commercial Code and
Sections 24071-24074 of the Business and Professions Code of California and in
accordance with the terms and conditions of this Agreement.
"Excluded Assets" means those assets of Sellers
listed in Exhibit "C" of this Agreement.
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"FF&E" means all furniture, fixtures and equipment
owned or leased by Sellers and used in connection with the operation of either
Restaurant, including, without limitation, the items listed in Exhibit "D"
hereto.
"Holdback Claim" shall have the meaning ascribed in
Section 3 of this Agreement.
"Holdback Period" shall have the meaning ascribed in
Section 3 of this Agreement.
"Insurance Policies" shall have the meaning ascribed
in Section 5 o. of this Agreement.
"Intangible Property" means all of Sellers' right,
title and interest in and to any and all intangible property now and through the
Closing Date owned by either Seller and/or used in connection with the
ownership, development, use and/or operation of the Restaurant, including,
without limitation, Licenses and Permits, goodwill, and each and every
tradename, trademark, service mark and other similar assets of Sellers existing
on the Closing Date, including, without limitation, all of Sellers' right, title
and interest in and to the name "Solley's" and the goodwill associated
therewith.
"Landlord Consents" means the Woodland Hills Consents
and the Sherman Oaks Consent.
"Leasehold Estate" means the leasehold estate created
under the Restaurant Leases, including any and all right, title and interest of
either Seller in and to the Security Deposits.
"Letter of Intent" means that certain Letter of
Intent, dated as of April 9, 1996, among Solley's, Zide and Buyer.
"Licenses and Permits" means all of Sellers' right,
title, interests, privileges, benefits and remedies in, to and under all
authorizations, approvals, permits, licenses agreements, variances, plans and
specifications and land use entitlement held by Sellers and/or relating to the
construction, reconstruction, occupancy, operation or use of any part of the
Restaurant (including, without limitation, all building permits, certificates of
occupancy, business licenses and the Liquor License).
"Liquor Licenses" means that (i) certain Liquor
License Type 41-20662 used in connection with the operation of the Woodland
Hills Restaurant, and (ii) that certain Liquor License Type 41-163916 used in
connection with operation of the Sherman Oaks Restaurant.
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"Personal Property" means all personal property of
Sellers located on or in or used in connection with the Restaurant, including,
but not limited to, food and beverage inventory, all consumables, motor
vehicles, cash registers, telephone systems, computer and related equipment and
software, all furniture, fixtures, furnishings and equipment, ovens, stoves,
refrigerators, chinaware, glassware, silverware, kitchen utensils, bars, bar
fixtures and equipment, lamps, mirrors, heating and lighting fixtures and
equipment, linens and other similar items of Sellers which exist on the date of
this Agreement, subject to ordinary wear and tear and consumption between the
date of this Agreement and the Closing Date, but excluding therefrom the
Excluded Assets listed in Exhibit C of this Agreement.
"Purchase Price" means Two Million Three Hundred
Twenty Five Thousand and 00/100 Dollars ($2,325,000.00).
"Restaurant Leases" means the Woodland Hills Lease
and the Sherman Oaks Lease, as amended by the Woodland Hills Consents and the
Sherman Oaks Consent, respectively.
"Seller Indemnitees" shall have the meaning ascribed
in Section 9 b. of this Agreement.
"Service Contracts" means the maintenance contracts,
equipment, leases and any other similar obligations, commitments or arrangements
of either Seller, together with all supplements, amendments and modifications
thereto, relating to the development, marketing, operation, maintenance or
enjoyment of the Restaurant.
"Security Deposits" shall mean the security deposits
of Sellers identified in Exhibit "E" to this Agreement.
"Sherman Oaks Consent" means that certain Landlord
Consent and Amendment to Lease, dated as of May 6, 1996 among Solley's, Buyer
and WRAM Development Company.
"Sherman Oaks Lease" means that certain Shopping
Center Lease, dated as of April 2, 1984, as amended by that certain First
Amendment to Shopping Center Lease, dated March 6, 1992, by and between WRAM
Development Company and Solley's with respect to the commercial space located at
4578 and 4580 Van Nuys Boulevard, Sherman Oaks, California, including any
amendments thereto effected or to be effected by the Sherman Oaks Consent.
"Sherman Oaks Restaurant" means the restaurant and
related bakery owned and operated by Sellers at 4578 and 4580 Van Nuys
Boulevard, Sherman Oaks, California.
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"Tax Clearance Certificates" means tax clearance
certificates issued by the State Board of Equalization and the Employment
Development Department certifying that all sales and use taxes and employment
taxes, respectively, relating to the operation of the Restaurants through a date
no earlier than five (5) business days prior to the Closing Date have been
properly withheld and paid over to such governmental agencies in accordance with
applicable laws.
"Tradenames" shall have the meaning ascribed in
Section 5 p. of this Agreement.
"Woodland Hills Consents" means (i) that certain
Landlord Consent and Amendment to Lease, dated as of April 4, 1996, between
Buyer and Plaza International, and (ii) that certain Amendment to Lease, dated
April 4, 1996, between Zide and Plaza International, together with any
amendments to either such document through the Closing Date.
"Woodland Hills Lease" means that certain Lease --
Shopping Center Form, dated as of August 31, 1993, by and between Plaza
International and Zide with respect to the commercial space known as 21857 and
21845 Ventura Boulevard, Woodland Hills, California, including any amendments
thereto effected or to be effected by the Woodland Hills Consents.
"Woodland Hills Restaurant" means the restaurant
owned and operated by Sellers at 21857 and 21845 Ventura Boulevard, Woodland
Hills, California.
1. Purchase and Sale.
a. Conveyance of Assets. On the terms and subject to the
conditions set forth in this Agreement, on the Closing Date Sellers shall
convey, transfer, assign, sell and deliver to Buyer, and Buyer shall acquire,
accept and purchase, the Assets.
b. Closing. The Closing shall, unless another date, time or
place is agreed to in writing by the parties hereto, take place at the offices
of Jeffer, Mangels, Butler & Marmaro LLP, at 10:00 a.m., Pacific time on the
Closing Date.
c. No Assumption of Liabilities. Except for post-Closing
obligations of Sellers under the Restaurant Leases, Buyer shall not assume any
of the liabilities of either Seller whatsoever, whether known or unknown, fixed
or contingent, whether or not related to the Assets acquired, or arising or
relating to events prior to the Closing Date, and Sellers shall jointly and
severally indemnify Buyer in accordance with Section 9 of this Agreement.
d. Allocation of Purchase Price. The parties hereto agree
that, for purposes of calculating any tax obligation arising out of the sale of
Assets, the Purchase Price shall be allocated as set forth in Exhibit "F"
attached hereto.
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2. Deposit and Payment of Purchase Price and Other Closing Payments.
a. Deposits. Funds shall be deposited into Escrow by Buyer as
follows, at least three days prior to Closing unless otherwise specified:
i. Prior to or simultaneously with the mutual
execution of this Agreement by Buyer and Sellers, One Hundred Thousand and
00/100 Dollars ($100,000.00) will be delivered to the Escrow Holder by Buyer for
deposit in the Escrow;
ii. Two Million Two Hundred Twenty-Five Thousand and
00/100 Dollars ($2,225,000.00) shall be deposited by Buyer into Escrow at least
two (2) days prior to the expiration of the thirty (30) day posting period
required by the ABC, or the date this Agreement is executed if execution occurs
after that date;
iii. Fifty Thousand and 00/100 Dollars ($50,000.00),
representing the portion of the brokerage fee payable by Buyer to Jerry Ackrich
in connection with the sale of the Restaurants, shall be deposited into Escrow
by Buyer at least one (1) business day prior to Closing;
iv. Seventy-Five Thousand and 00/100 Dollars
($75,000.00), representing the dollar amount of the Security Deposits made by
Sellers under the Restaurant Leases, shall be deposited into Escrow by Buyer at
least one (1) business day prior to Closing;
v. Thirty-Five Thousand and 00/100 Dollars
($35,000.00), representing the dollar amount of additional security deposits
payable at Closing to the landlord pursuant to the terms of the Woodland Hills
Lease (the "Additional Security Deposits"), shall be deposited into Escrow by
Buyer at least one (1) business day prior to Closing; and
vi. The amount of estimated sales tax liability
("Sales Tax Liability") arising from the amount allocated from the Purchase
Price to items requiring the payment of sales tax ("Sales Tax Escrow Amount")
shall be deposited into Escrow by Buyer at least one (1) business day prior to
Closing.
b. Payments at Closing. Subject to satisfaction of the
conditions to closing set forth in Section 10 of this Agreement and the
requirements of Section 24074 of the California Business and Professions Code,
the following payments shall be made at Closing:
i. Two Million Two Hundred Thousand and 00/100
Dollars ($2,200,000.00) shall be paid to Sellers out of Escrow by check or wire
transfer; absent receipt by the Escrow Holder and Buyer of written instructions
of the Sellers to the contrary the entire amount of such payment shall be made
to Solley's to be allocated among Zide and Solley's as such parties may agree;
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ii. Seventy-Five Thousand and 00/100 ($75,000.00),
representing the dollar amount of the Security Deposits made by Sellers under
the Restaurant Leases, shall be paid to Sellers out of Escrow by check or wire
transfer; absent receipt by the Escrow Holder and Buyer of written instructions
of the Sellers to the contrary the entire amount of such payment shall be made
to Solley's to be allocated among Zide and Solley's as such parties may agree;
iii. One Hundred Thousand and 00/100 Dollars
($100,000.00), representing Buyer's and Sellers' combined portions of the broker
fee payable to Jerry Ackrich in connection with the transactions contemplated by
this Agreement, shall be paid to Jerry Ackrich out of Escrow by check or wire
transfer;
iv. Thirty-Five Thousand and 00/100 Dollars
($35,000.00), representing the Additional Security Deposits, shall be paid to
Plaza International, the landlord under the Woodland Hills Lease, out of Escrow
by check or wire transfer; and
v. At or prior to the Closing, each party shall pay
to the Escrow Holder one-half of all Escrow costs and expenses of Escrow Holder
relating to establishment of Escrow which costs and expenses are expected to
total $4,650.00.
c. Payments after Closing. The Sales Tax Escrow Amount shall
be released to either of Sellers upon proof of payment of the Sales Tax
Liability or sooner, but if sooner only in the form of a check payable only to
the State Board of Equalization.
3. Holdback. Notwithstanding anything to the contrary contained in Section 2 of
this Agreement, Seventy-Five Thousand and 00/100 Dollars ($75,000.00) of the
Purchase Price shall remain in Escrow for a period of sixty (60) days following
the Closing Date (the "Holdback Period"), in order to provide funds for any
prorations or adjustments pursuant to Section 11 of this Agreement as well as
the payment of any accrued but unpaid taxes or any other liabilities incurred or
charged to Buyer but arising out of events or actions taken prior to the Closing
Date. In the event that any proration or adjustment is required or Buyer incurs
any such liability prior to the expiration of the Holdback Period, Buyer shall
deliver written notice (the "Holdback Claim") to the Escrow Holder and Sellers
of the amount and nature of such adjustment or liability and supporting
documentation, if any. Ten (10) days after receipt of the Holdback Claim, if no
objection has been received by Escrow Holder from Sellers, Escrow Holder shall
release funds to Buyer from Escrow equal to the lesser of (i) the amount of the
Holdback Claim, or (ii) the amount of funds remaining in Escrow; provided,
however, that Escrow Holder may make the release of such funds contingent upon
receipt by Escrow Holder of an agreement by Buyer to indemnify Escrow Holder
from and against any liabilities, costs or expenses (including reasonable
attorneys fees and costs) resulting from the release of such funds to Buyer. If
Sellers shall deliver notice that they dispute the claim, Escrow Holder shall
hold said sums until Escrow Holder receives a final written notice of
determination of arbitrator(s), a final judgement of a court or directions
executed by both Buyer and Sellers as to the disbursement of such funds. Any
dispute among Buyer and Sellers regarding the
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amount of the Holdback Claim shall be resolved by binding arbitration in
accordance with Section 22 d. of this Agreement. Upon expiration of the Holdback
Period, any remaining portion of the Purchase Price held in Escrow will be
released to Sellers.
4. Deliveries At Closing.
a. Deliveries by Sellers. At the Closing, Sellers shall
deliver into Escrow the following original documents, duly executed by each
Seller that is a party to such document:
i. The Bill of Sale;
ii. The Landlord Consents, duly executed by each
landlord and, if applicable, Sellers;
iii. The Assignment of Intangible Property;
iv. Certificates of title, registration papers, bills
of sales and any other documents that may be required by the Department of Motor
Vehicles in order to effect the transfer of title to Buyer of any motor vehicles
included in the Assets;
v. Such resolutions, authorizations, certificates of
good standing and/or other corporate or partnership documents relating to Zide
and Solley's and its shareholders, officers and/or directors as are reasonably
required by Buyer in connection with the transactions contemplated under this
Agreement; and
vi. Such further instruments of sale, transfer,
conveyance, assignment or delivery covering the Assets or any part thereof as
Buyer may reasonably require to assure the full and effective sale, transfer,
conveyance, assignment or delivery to it of the Assets to be transferred to
Buyer under this Agreement.
b. Deliveries by Buyer. At the Closing, Buyer shall deliver
into Escrow the following original documents, duly executed by Buyer:
i. The Landlord Consents, duly executed by Buyer, to
the extent that Buyer is a party thereto; and
ii. Such resolutions, authorizations, certificates of
good standing and/or other corporate documents relating to Buyer as are
reasonably required by Sellers in connection with the transactions contemplated
under this Agreement.
c. By Buyer and Sellers. Buyer and Sellers will each deposit
such other instruments consistent with this Agreement as are reasonably required
to effectuate the transactions contemplated under this Agreement.
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5. Representations and Warranties of Sellers. Sellers jointly
and severally represent and warrant to Buyer that:
a. Organized and Good Standing. Solley's is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California with full power to consummate the transactions contemplated herein.
b. Authorization of Agreement. Each Seller has full legal
right, power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. This Agreement and all other agreements and
instruments to be executed by either Seller in connection herewith have been (or
upon execution will have been) duly executed and delivered by such Seller, have
been effectively authorized by all necessary action, corporate or otherwise, and
constitute (or upon execution will constitute) legal, valid and binding
obligations of such Seller.
c. Ownership of Assets. Sellers, or either of them, is the
lawful owner of and has the right to use and transfer to Buyer each of the
Assets. Each of the Assets is owned by Sellers, or either one of them, free and
clear of any and all liens, encumbrances, pledges, security interests, or claims
of any kind or nature whatsoever other than those specifically disclosed in
Schedule 5(c) of this Agreement. The delivery to Buyer of the instruments of
transfer of ownership specifically contemplated by this Agreement will vest good
and marketable title to the Assets in Buyer, free and clear of all liens,
mortgages, pledges, security interests, restrictions, prior assignments,
encumbrances and claims of any kind or nature whatsoever, except for any of the
foregoing as may be specifically assumed by Buyer in accordance with the terms
of this Agreement.
d. Absence of Certain Changes. There is no event or condition
of any character which would adversely affect the ability or right of Buyer to
own and operate a restaurant on the sites where the Restaurants are currently
operating.
e. Restaurant Lease. Sellers, or either of them, are the
holders of all leasehold estates purported to be granted by the Restaurant
Leases. Each of the Restaurant Leases is in full force and effect and
constitutes a legal, valid and binding obligation of each of the parties
thereto, enforceable in accordance with its terms and grant the leasehold
estates they purport to grant free and clear of all mortgages, liens or other
encumbrances whatsoever. There are no existing or claimed defaults under the
Restaurant Leases and there are no events which with notice or lapse of time or
both would constitute such an event of default thereunder or would cause the
acceleration of any obligation of any party thereto or the creation of a lien or
encumbrance on any of the Assets. All structures, improvements and fixtures on
the premises leased pursuant to the Restaurant Leases are in good operating
condition and repair and conform to any and all applicable state and local laws,
zoning, building, health and safety laws and/or ordinances. No notice from any
governmental body has been served upon Sellers, or either of them, claiming any
violation of any law or ordinance, or requiring any substantial
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or material work, repairs, construction, alterations or installation on or in
connection with the premises that are the subject of the Restaurant Leases
(including any notices regarding earthquake retrofitting).
f. No Conflicts. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will (i)
conflict with or result in a violation of any provision of the Articles of
Incorporation or Bylaws of Solley's, (ii) constitute or result in a breach of,
or a default (or give rise to any rights to acquire any Assets of Sellers)
under, any term or provision of any contract, agreement, indebtedness, lease,
commitment, license, sublicense, franchise, permit, authorization or concession
to which either Seller is a party or by which any of the Assets of such Seller
are bound, (iii) constitute or result in a violation by either Seller of any
statute, rule, regulation, ordinance, code, order, judgment, writ, injunction,
decree or award, or (iv) result in an imposition of any encumbrance, restriction
or charge on any of the Assets.
g. Operating Condition. The tangible Assets are, to the best
knowledge of Sellers, in good operating condition and repair except for
reasonable wear and tear which is not such as to adversely affect the operation
of either Restaurant. Exhibit "D" of this Agreement constitutes and, as of the
Closing Date, will constitute, a complete and accurate list of all equipment
(other than the Excluded Assets) owned or used by Sellers in the operation of
the Restaurants as of the date of this Agreement and as of the Closing Date.
h. Compliance with Laws. Sellers hold valid and effective
certificates of occupancy, zoning, building, safety, fire and health approvals
and all other permits and licenses required by applicable law relating to the
operation of the Restaurants. Neither Seller has violated, and on the Closing
Date will not be in violation of, in any material respect, any federal, state,
local or foreign laws, regulations or orders (including, but not limited to, any
of the foregoing relating to employment discrimination, occupational safety,
environmental protection, conservation, or corrupt practices), relating to the
operation of Restaurants or the ownership or operation of the Assets and neither
Seller has received any notice of any such violation.
i. Labor and Employment Matters. Sellers will terminate all
employees of the Restaurants prior to or as of the Closing Date and comply in
all respects with all applicable laws, rules and regulations with respect
thereto including, but not limited to, filing any notices and paying all accrued
but unpaid periodic compensation, vacation pay, sick pay and other employee
benefits due and owing to such employees as of the Closing Date. There is no
collective bargaining agreement or other labor agreement to which either Seller
is a party or by which it is bound.
j. Litigation. Except as specifically set forth in Schedule
5(j) attached hereto, there are no claims, disputes, actions, proceedings or
investigations of any nature pending or, to the best knowledge of Sellers,
threatened against or involving either Seller, or the Restaurants or any of the
officers, directors, partners or employees of either Seller in
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connection with or arising out of the business conducted by the Sellers or the
transactions contemplated by this Agreement. None of the items listed in
Schedule 5(j) will (i) result in any claim against or liability of Buyer, or
(ii) have a material adverse effect on the business, results of operations or
financial condition of either Restaurant.
k. Taxes. Sellers have complied in all respects with all
applicable laws, rules and regulations relating to the payment and withholding
of taxes and other sums as required by appropriate governmental authorities and
has withheld and paid to the appropriate governmental authorities or is holding
for payment not yet due to such authorities, all amounts required to be withheld
from such employees of the Sellers for all periods through the Closing Date and
is not liable for any arrears of wages, taxes, penalties or other sums for
failure to comply with any of the foregoing. Sellers have filed with the
appropriate governmental agencies all required all income, sales and use,
employment and payroll, meal, franchise and other tax returns and tax reports
with respect to the Assets and the operation of the Restaurants. Sellers have
not executed any waiver(s) which would have the effect of extending any
applicable statute of limitations in respect of its tax liabilities. Sellers
have paid all sales taxes, assessments, fees, and other government charges
levied upon its assets and income or otherwise relating or attributable to the
Assets for all periods prior to the Closing Date. Neither Seller has knowledge
of any unassessed tax deficiency that has been proposed or threatened against
either of them by any taxing authority. No audits of any tax return are in
progress, and there are not in force any agreements by either Seller for the
extension of time for the assessment or payment of any tax.
l. Regulatory Approvals. The Licenses and Permits constitute
all approvals, authorizations, consents, licenses, orders and permits of all
governmental agencies, whether federal, state or local, related to the operation
of Restaurants, the absence of which would materially and adversely affect the
Assets or Buyer's use or operation thereof in the manner in which such assets
are being used or operated as of the date of this Agreement, and no
circumstances exist which could prevent or interfere with the transfer of the
Licenses and Permits to Buyer in connection with the transactions contemplated
hereunder. Sellers have, at all times during which they have operated the
Restaurants, or either of them, possessed all approvals, authorizations,
consents, licenses, orders and permits necessary to operate the Restaurants in
compliance with applicable state, federal or other laws or regulations.
m. Insolvency. There are no attachments, execution
proceedings, assignments for the benefit of creditors, insolvency, bankruptcy,
reorganization or other proceedings pending or threatened against either Seller,
nor are any such proceedings contemplated by either Seller, nor will either
Seller voluntarily file or permit a third party to file against either Seller
any petition seeking protection under applicable bankruptcy laws.
n. No Undisclosed Liabilities. Other than obligations arising
after Closing under the Restaurant Leases, Sellers have no liabilities or
obligations of any nature, whether absolute, accrued, contingent or otherwise,
and whether due or to become due (including, without limitation, any liability
for taxes and interest, penalties and other charges payable with
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respect to any such liability or obligation) which would affect Buyer or the
Assets or become the obligation of Buyer after the Closing.
o. Insurance. Sellers maintain insurance policies, including,
without limitation, general liability, property and personal liability
insurance, which insure the Sellers, their employees and such other persons to
whom such entities may become liable against such losses and risks generally
insured against by comparable businesses (collectively, the "Insurance
Policies").
p. Intangible Property. To the best of Sellers' knowledge,
Sellers own all trademarks, trade names, service marks, service names and
copyrights which, individually or in the aggregate, used in connection with the
operation of the Restaurant (the collectively, the "Tradenames"). No such
Tradenames are in dispute or are in conflict with any right of any other person
or entity.
q. Other Information. All information provided and to be
provided by Sellers to Buyer in this Agreement or pursuant to the terms thereof
or in any other writing pursuant hereto does not and will not contain any untrue
statement of a material fact or omits or will omit to state a material fact
required to be stated herein or therein or necessary to make the statements and
facts contained herein or therein, in light of the circumstances in which they
are made, not false or misleading. Copies of all documents heretofore or
hereafter delivered or made available to Buyer pursuant hereto were or will be
complete and accurate records of such documents.
Each Seller's representations and warranties set forth in this
Section 7 shall be true and correct as of the date hereof and the Closing Date
and shall survive the Closing.
6. Representations and Warranties of Buyer. Buyer represents
and warrants to Sellers that:
a. Organization and Authority. Buyer is duly organized,
validly existing and in good standing under the laws of the State of California
and has all requisite power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. This Agreement and all other
agreements herein contemplated to be executed in connection herewith have been
(or upon execution will have been) duly executed and delivered by Buyer, have
been effectively authorized by all necessary action, and constitute (or upon
execution will constitute) legal, valid and binding obligations of Buyer.
b. Agreement Not in Breach of Other Instruments. The execution
and delivery of this Agreement, the consummation of the transactions
contemplated hereby and the fulfillment of the terms hereof will not result in a
breach of any of the terms or provisions of, or constitute a default under, or
conflict with, any material agreement, indenture or other instrument to which
Buyer is a party or by which it is bound, any judgment, decree, order or award
of any court, governmental body or arbitrator, or any law, rule or regulation
applicable
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to Buyer, except where such default or conflict would not have a material
adverse effect on Seller or Buyer's ability to effect the transactions
contemplated hereby.
Each of Buyer's representation and warranties set forth above
shall be true and correct as of the date hereof and the Closing Date and shall
survive the Closing.
7. Sellers' Covenants.
a. Operation Of Restaurant. Sellers shall operate the
Restaurants substantially in accordance with prior practice and in the ordinary
course of business, and, without limiting the generality of the foregoing,
Sellers shall not (except with the prior written consent of Buyer): (i) enter
into any transaction which would affect Buyer or the Assets after the Closing
Date; (ii) sell or transfer any of the Assets, (iii) mortgage, pledge, or
encumber any of the Assets; (iv) amend, modify, or terminate any material
contract affecting the Restaurants; or (v) amend, modify or terminate in any
respect any Restaurant Lease or any Landlord Consent. Buyer acknowledges that
prior practice does not include wholesale baking for third parties which has
already been terminated.
b. Bulk Sales Notice and Tax Clearance Certificates. Sellers
have (or will, immediately upon the execution of this Agreement) prepared, filed
and published all documents and paid all fees and other amounts necessary to (i)
comply with and to afford Buyer with all protection available under all laws
applicable to the filing of bulk sale notices, and (ii) transfer the Liquor
Licenses to Buyer. Escrow Holder is hereby authorized and instructed, at the
Sellers' expense, to record and publish the bulk sale notices contemplated
herein. If and when Sellers receive the Tax Clearance Certificates, Sellers
shall deliver copies to Buyer as soon as possible. Sellers shall also deliver
copies of the most recent pre-Closing and post-Closing sales tax return filings
to Buyer as soon as they are available.
c. Termination of Employees. Sellers will terminate all
employees of the Restaurants prior to or as of the Closing Date and comply in
all respects with all applicable laws, rules and regulations with respect
thereto including, but not limited to, filing any notices and paying all accrued
but unpaid periodic compensation, vacation pay, sick pay and other employee
benefits due and owing to such employees. Sellers shall pay and shall indemnify
Buyer against any and all costs or expenses arising out of the termination of
such employees by Sellers. Buyer shall have no obligation to hire or otherwise
employ any current employees of either Seller.
d. Termination of all Service Contracts. Sellers will
terminate all Service Contracts prior to or as of the Closing Date and comply in
all respects with all applicable contractual provisions with respect thereto
including, but not limited to, paying all unpaid amounts thereunder.
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e. Sellers' Execution, Delivery and Performance. Sellers will,
both before and after the Closing Date, execute all documents and take all steps
deemed necessary or desirable by Buyer to give effect to the terms and
conditions of this Agreement.
f. Cooperation With Representatives. Sellers shall cooperate
with Buyer and its accountants, counsel and/or other representatives in
providing information and materials pertaining to the operation of the Assets,
including access to the Assets. Without limiting the generality of the
foregoing, from and after the execution and delivery of this Agreement, Sellers
shall allow a representative or representatives of Buyer access to the Assets
for the purpose of (i) inspecting the Assets, (ii) meeting with and interviewing
employees of the Restaurants, which employees shall be made available for such
interviewing process, and (iii) performing such other due diligence as Buyer may
reasonably require. In addition, Sellers shall permit a representative or
employee of Buyer to (i) remain on-site at each of the Restaurants in order to
observe the operations and business of each Restaurant, and (ii) to have access
to the Restaurants at reasonable times after normal business hours in order to
conduct inspections and to facilitate the preparation of architectural or other
plans, applications or specifications by Buyer or its representatives.
g. Cooperation in Audit and Permitting. Both prior to and
after the Closing Date, Sellers shall fully cooperate with Buyer and its
representatives, agents, attorneys and accountants in connection with (i) the
performance and completion of any audits, in form and substance to be determined
by Buyer, in its sole discretion, of the financial statements for the
Restaurants, and (ii) the application and prosecution of any permit
applications, including any construction, zoning or other permits deemed by
Buyer to be necessary or appropriate for its operation of the Restaurants as
"Solley's" or "Jerry's Famous Deli" restaurants, and all remodeling and/or
redesign of the Restaurants as deemed by Buyer to be necessary or appropriate.
Nothing herein shall be deemed to be a guaranty by either Sellers that Buyer
will be successful in obtaining any such permits subsequent to the date of this
Agreement. Requirements pursuant to this subparagraph post closing requiring
cooperation of third party professionals shall be at the expense of Buyer.
h. Insurance. Sellers shall maintain in full force and effect
all Insurance Policies through and including the Closing Date.
i. Maintenance of Assets. Sellers shall maintain the Assets in
sub- stantially their current state of repair, excepting normal wear and tear.
j. Payment of Rent Under Restaurant Leases. Subject to the
terms and conditions of this Agreement, Sellers shall pay all rental and other
payments required to be paid under the Restaurant Leases through the Closing
Date.
k. Access to Books and Records. Both prior and subsequent to
the Closing Date, Sellers, upon the reasonable request of Buyer, shall grant
Buyer access to all Books and Records in Sellers' possession. Sellers agree that
for a period of one year following the
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Closing Date, Sellers will provide Buyer copies of all Books and Records
reasonably requested by Buyer at cost based on copy center prices.
8. Buyer's Covenants. Notwithstanding anything to the contrary
contained in the Woodland Hills Lease or any Landlord Consent, Buyer shall not
transfer or assign the Woodland Hills Lease subsequent to the Closing Date
without the prior consent of Zide, which consent shall not be unreasonably
withheld; provided, however, no consent of Zide shall be required in connection
with the transfer or assignment of the Woodland Hills Lease to any person or
entity having a net worth in excess of $12,000,000 as verified by audit by an
independent accounting firm (with no cost of audit borne by Sellers).
9. Indemnification.
a. Indemnification by Sellers. Each Seller will jointly and
severally defend, indemnify and hold the Buyer, its officers, directors, agents,
shareholders, representatives, employees, attorneys, accountants, affiliates,
beneficiaries, subsidiaries, successors and assigns (collectively, the "Buyer
Indemnitees") harmless from and against:
i. Any and all claims, demands, liabilities, liens,
costs, expenses, penalties, damages and losses (including, but not limited to,
attorneys' fees and costs) of every kind and nature incurred or accrued prior to
the Closing Date with respect to the Assets, whether arising from acts or
omissions of such Seller, its agents or employees or otherwise including, but
not limited to, all liabilities and obligations for which either Seller would
have been, or will be, liable had Seller not transferred the Assets to Buyer
pursuant to this Agreement (which shall include, but not be limited to, all
liabilities, obligations, claims (including, without limitation, statutory and
contractual claims), damages and expenses resulting from or in any way related
to the Seller's acts or omissions with respect to the operation of the Assets,
as well as any infringement action arising before or after the Closing Date
which relates to Sellers' or Buyer's use of the Tradenames);
ii. Any and all liabilities and obligations arising
from any breach of the warranties, representations, covenants and agreements of
either Seller or their respective agents contained in this Agreement or in any
agreements between either Seller and any third parties relating to the Assets or
the Restaurant Leases;
iii. Any and all liabilities and obligations arising
before or after the Closing Date as a result of either Seller's failure to pay
all taxes, assessments, fees and other government charges levied upon either
Seller's assets and income or otherwise relating or attributable to the Assets
or the operations conducted thereon; and
iv. The failure of Buyer to obtain the protections
afforded by compliance with the notification requirements of the Bulk Sales Laws
in force in the jurisdictions in which such laws may be applicable to either
Seller or the transactions contemplated by this Agreement.
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b. Indemnification by Buyer. Buyer will defend, indemnify and
hold the Sellers, their respective officers, directors, agents, shareholders,
representatives, employees, attorneys, accountants, affiliates, beneficiaries,
subsidiaries, successors and assigns (collectively, the "Seller Indemnitees")
harmless from and against:
i. Any and all claims, demands, liabilities, liens,
costs, expenses, penalties, damages and losses (including, but not limited to,
attorneys' fees and costs) of every kind and nature incurred or accrued
subsequent to the Closing Date with respect to Buyer's ownership or operation of
the Assets, whether arising from acts or omissions of Buyer, its agents or
employees or otherwise, including from any additional sales tax arising from a
re-allocation of the Purchase Price subsequent to closing of this transaction,
other than infringement actions arising after the Closing Date which relates to
Sellers' or Buyer's use of the Tradenames); and
ii. Any and all liabilities and obligations arising
from any breach of the warranties, representations, covenants and agreements of
Buyer or its agents contained in this Agreement or in any agreements between
Buyer and any third parties relating to the Assets.
c. Survival of Provisions. The indemnifications by Sellers and
Buyer set forth in this Section 9 shall survive the Closing.
10. Conditions to Closing.
a. Conditions to Obligations of Buyer. The obligations of
Buyer to consummate the transactions contemplated hereby shall be, at the option
of Buyer, subject to the fulfillment, at or prior to the Closing Date (or such
earlier date if so specified below), of the following additional conditions:
i. Representations and Warranties True. The
representations and warranties of Sellers contained in this Agreement or in any
other document of Sellers delivered pursuant hereto shall be true and correct in
all material respects on the Closing Date. Sellers shall deliver at Closing a
certificate of each of them certifying that such representations and warranties
are true and correct in all material respects as of the Closing Date.
ii. Sellers' Performance. Each of the obligations of
Sellers to be performed by either of them on or before the Closing Date pursuant
to the terms of this Agreement shall have been duly performed in all respects on
or before the Closing Date and Sellers shall deliver at Closing a certificate of
each of them certifying that such obligations have been duly performed in all
respects.
iii. Personal Property Liens. Buyer has received a
certificate from the Secretary of the State of California indicating that, as of
the Closing Date, there are no
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filings against either Seller in the office of the Secretary of the State of
California under the Commercial Code which would be a lien on any of the FF&E or
Personal Property.
iv. Authority. All actions required to be taken by,
or on the part of, Sellers to authorize the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby
shall have been duly and validly taken by each Sellers and/or the shareholders,
officers and directors of any Seller.
v. Additional Closing Documents of Sellers. Sellers
shall have delivered all of the items to be delivered by Sellers pursuant to
this Agreement.
vi. Transfer of Liquor Licenses. The ABC shall have
approved the transfer of the Liquor Licenses to Buyer.
vii. No Adverse Changes. Between the date of this
Agreement and the Closing Date there shall not have occurred any material
change, disappearance, damage, destruction, or loss of any of the Assets,
whether or not covered by insurance, nor shall there have occurred any other
event or condition which has had or which reasonably may be expected to have a
material and adverse effect on the Assets or the financial condition of the
Restaurants.
viii. Receipt of Consents. Sellers and Buyer shall
have obtained all material landlord, ground lessor, governmental or other
third-party consents reasonably necessary to effectuate the transactions
contemplated by this Agreement, including, without limitation, the receipt and
continuing effectiveness of the Landlord Consents.
ix. Approval of Construction and Signage Plans. Each
landlord (and, to the extent required, ground lessor) under the Restaurant
Leases shall have approved construction and signage plans submitted for approval
by Buyer at a reasonable time prior to the Closing Date, only to the extent that
such approvals are required pursuant to the terms of the Restaurant Leases
and/or the Landlord Consents.
x. Completion of Audit. Buyer's independent public
accountants shall have completed an audit of the financial statements for the
Restaurants for the year 1995, in a form and substance satisfactory to Buyer.
xi. Non-Disturbance Agreements. Delivery to Buyer of
non- disturbance agreements, to the extent reasonable requested by Buyer, by
each ground lessor or lender or other person who has a security interest in the
premises on which the Restaurants are located or operate or the property on
which all or any portion of such premises are located.
xii. Licenses and Permits. All Licenses and Permits
reasonably required by Buyer to operate the Restaurants consistent with prior
use, including the Liquor Licenses, shall be in place and transferable to Buyer
by Sellers on the Closing Date.
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xiii. Board of Directors Approval. The Board of
Directors of Buyer shall have approved the transactions contemplated by this
Agreement.
xiv. Parking at Woodland Hills Restaurant. Buyer
shall have received evidence satisfactory to Buyer that the parking for the
shopping center of which the Woodland Hills Restaurant is a part is adequate to
accommodate the additional restaurant square footage resulting from the use of
the Additional Premises and the Spaces (as defined in the Woodland Hills
Consent, dated April 4, 1996, between Zide and Plaza International) as a
restaurant and that the operation of a restaurant on the Additional Premises
will comply with all governmental and regulatory laws, rules, regulations,
covenants and other restrictions pertaining to parking.
xv. Extension of Option. The Woodland Hills Consent,
dated April 4, 1996, between Plaza International and Zide, shall be amended by
Plaza International and Zide to extend the option to lease the Additional
Premises until June 30, 1996.
b. Conditions to Obligations of Sellers. The obligation of
Sellers to consummate the transactions contemplated hereby shall be, at the
option of Sellers, subject to the fulfillment, at or prior to the Closing Date,
of the following additional conditions:
i. Representations and Warranties True. The
representations and warranties of Buyer contained in this Agreement or in any
document delivered pursuant hereto shall be true and correct in all material
respects on the Closing Date with the same effect as if made on the Closing
Date.
ii. Performance of Covenants. Each of the obligations
of Buyer to be performed on or before the Closing Date pursuant to the terms of
this Agreement shall have been duly performed on or before the Closing Date and
Buyer shall deliver at Closing a certificate certifying that such obligations
have been duly performed in all respects.
iii. Authority. All actions required to be taken by,
or on the part of, Buyer to authorize the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
shall have been duly and validly taken by the shareholders, officers and/or
directors of Buyer, as applicable.
iv. Deliveries. Buyer shall have delivered the items,
required to be delivered by Buyer pursuant to this Agreement.
c. Failure of Conditions. In the event any of the foregoing
conditions to either party's obligation to close the transactions contemplated
hereunder are not satisfied by the dates set forth herein with respect thereto,
the party in whose favor such condition was set forth shall have, in addition to
any other right set forth in this Agreement, the right to waive such condition
in which case the parties shall proceed to the Closing or terminate this
Agreement by written notice to the other party and Escrow Holder in which case
this
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Agreement shall be deemed terminated as of the effective date of such notice and
Escrow Holder shall return all amounts and documents in its possession to the
party who had deposited such items with Escrow Holder.
11. Prorations and Adjustments. Buyer is acquiring all of Sellers' right, title
and interest in and to the Assets as of the Closing Date free and clear of all
obligations, liabilities, claims, debts liens or encumbrances and, accordingly,
there shall be no prorations between the parties except as follows:
a. Utilities. Utility meters will be read, to the extent that
the utility company will do so, during the daylight hours on the Closing Date,
with charges to that time paid by Sellers and charges thereafter paid by Buyer.
All utility deposits made by Sellers shall be returned to Sellers.
b. Taxes. Real estate and personal property taxes with respect
to the Assets to be conveyed to Buyer pursuant hereto shall be prorated through
the Closing Date; however, such taxes shall be adjusted between the parties
hereto from time to time after the Closing Date when such amounts become fixed,
if the amounts calculated on the Closing Date with respect thereto differ from
such fixed amounts.
c. Lease Obligations. Sellers' share of rental payments,
maintenance, real property taxes, and insurance relating to the common areas of
the property on which the Restaurant is located (if any) payable by Seller
pursuant to the terms of the Restaurant Leases, shall be prorated through the
Closing Date.
d. Method and Payment of Proration. All prorations will be
made as of the Closing Date based on a 360-day year and 30 day month and, unless
paid from escrow, shall be paid at Closing or as soon thereafter as calculable.
e. Inventory. Buyer and Seller have prepared an inventory of
the FF&E and Personal Property included in the Assets which is attached hereto
as Exhibit "D." On the Closing Date, Buyer and Seller shall perform a new
inventory thereof. To the extent any of the items of the FF&E and/or Personal
Property specified in the original inventory are not set forth in the new
inventory (and such disappearance is not due to any act of omission of Buyer or
any of its affiliates or agents), the Purchase Price shall be adjusted to
reflect the reduction of FF&E and Personal Property set forth in the new
inventory. For purposes of calculating such adjustments, the parties shall
assign values to the FF&E and Personal Property equal to the actual cost (less
depreciation) of such items, or if such actual cost/depreciation data is not
available, then the value shall be based on the parties good faith estimate of
the current fair market value of the particular item(s) of the FF&E and/or
Personal Property.
Notwithstanding anything to the contrary contained herein or otherwise, Buyer
shall have no liability for and shall not be deemed to have assumed any of
Sellers' unpaid expenses or
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accounts payable or other obligations or liabilities under any Service Contracts
or otherwise with respect to the operation of the Restaurant at any time prior
to the Closing Date.
f. Security Deposits. All of each Seller's right, title and
interest in and to the Security Deposits shall be transferred and assigned to
Buyer simultaneously with the Closing. Each Seller agrees that he or it will not
request any refund of all or any portion of such Security Deposits and that any
Sellers shall immediately transfer and deliver to Buyer any Security Deposit (or
portion thereof) returned to either Seller by the landlords under the Restaurant
Leases.
12. Costs and Expenses. The closing costs shall be allocated as
follows:
a. Sales and Transfer Taxes. Buyer shall pay any state and
county sales or transfer taxes resulting from the sale of the Assets to Buyer
pursuant to the terms of this Agreement.
b. Lease Transfer Fees. Except as specifically provided in the
Landlord Consents, any transfer fees imposed under the Restaurant Leases in
connection with the assignment of the Restaurant Leases to Buyer shall be paid
by Sellers out of Escrow on or prior to the Closing Date.
c. Other Closing Costs. Buyer and Sellers will each pay their
own legal and professional fees and fees of other consultants incurred by Buyer
and Sellers, respectively. All other Closing costs and expenses, including any
Escrow fees or costs, will be allocated one-half to Buyer and one-half to
Sellers.
13. Risk of Loss. Until and including the Closing Date, all risk
of loss or damage to the Assets shall be borne by Sellers, and thereafter shall
be borne by Buyer. If any portion of the Assets whatsoever is destroyed or
damaged by fire, flood, earthquake, vandalism or any other cause prior to the
Closing Date, Sellers shall promptly give notice to Buyer of such damage or
destruction and the amount of insurance, if any, covering said Assets. Prior to
the Closing Date, Buyer shall have the option, which shall be exercised by
written notice to Sellers within ten (10) days after receipt of Sellers' notice
or if there is not ten (10) days prior to the Closing Date, as soon as possible
but not less than 24 hours prior to the Closing Date, of (a) accepting the
Assets in their destroyed or damaged condition, in which event any insurance
proceeds payable to Sellers with respect to the damaged property shall be
assigned to Buyer, and the Purchase Price payable by Buyer for the Assets shall
be paid in accordance with Section 2 of this Agreement, or (b) terminating this
Agreement.
14. Closing and Possession. Simultaneously with the Closing,
Sellers shall deliver possession and enjoyment of the Assets to Buyer and Buyer
shall thereupon have the immediate right to possess, develop, use, sell,
encumber and/or transfer the Assets, or any part thereof for its own account to
the total exclusion of Sellers.
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15. Cooperation in Litigation. Each party hereto will fully cooperate with the
other in the defense or prosecution of any litigation or proceeding already
instituted or which may be instituted hereafter against or by such party
relating to or arising out of the Assets or the operation of the Restaurants
prior to or after the Closing Date (other than litigation between the parties
arising out of the transactions contemplated by this Agreement).
16. Covenant Not to Compete; Non Solicitation.
a. Definitions. For the purposes of this Section 16, the
following terms shall have the meanings ascribed to them below:
i. "Covenant Term" shall mean a period beginning on
the date hereof and ending five (5) years from the date hereof.
ii. "Covenant Territory" shall mean the territories
located within three (3) miles of any current "Jerry's Famous Deli" or
"Solley's" restaurant location (including the "Jerry's Famous Deli" locations
proposed or scheduled to be opened in Westwood (Los Angeles), California and,
Las Vegas, Nevada).
b. Non-Compete. During the Covenant Term, Zide covenants and
agrees that he (i) shall not own, operate, manage or consult to any delicatessen
or delicatessen-style restaurant or delicatessen-style restaurant chain having
one or more locations in California or Las Vegas, Nevada, and (ii) shall not
own, operate, manage or consult to any bagel restaurant or bagel restaurant
chain located in the Covenant Territory.
c. Non-Solicitation. Zide agrees that during the Covenant Term
he will not, directly or indirectly, induce or encourage any employee to
terminate his or her relationship with Buyer or the Restaurants. In addition,
Zide agrees that, during the Covenant Term he will not, directly or indirectly,
employ or attempt to employ any employees of the Restaurants as of the date of
this Agreement or Buyer's employees.
d. Limitations on Scope. If any provision of this Section 16,
as applied to any party or to any circumstances, shall be adjudged by a court to
be invalid or unenforceable, the same shall in no way affect any other provision
of this Agreement, the application of such provision in any other circumstances,
or the validity or enforceability of this Agreement. If any provision of this
Section 16, or any part thereof, is held to be unenforceable, the provisions of
this Section 16 shall be modified so that the restrictions imposed hereby are no
greater than would otherwise be permissible under applicable law.
e. Separate Covenants. Zide and Buyer intend that the
covenants contained in this Section 16 be construed as a series of separate
covenants (with identical terms except geographic coverage) for each city,
county, state or province, as the case may be, specified herein. The parties
hereby confer jurisdiction to enforce such covenants upon the courts of any
state of the United States and any other governmental jurisdiction within the
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geographical scope of such covenants. If the courts of any one or more of such
states or jurisdictions shall hold such covenants unenforceable such
determination shall not bar or in any way affect Buyer's right to the relief
provided hereunder in the courts of any other state or jurisdiction within the
geographical scope of such covenants, as to breaches of such covenants in such
other respective states or jurisdictions.
17. Consulting Services of Zide. At the request of Buyer, Zide agrees to provide
consulting services to Buyer at Buyer's corporate offices, free of charge, for a
period of sixty (60) days following the Closing Date in order to assist Buyer in
the transition of ownership of the Restaurants. In addition, Zide agrees that
for a period of one (1) year following the Closing Date and upon the reasonable
request of Buyer, he will provide consulting services to Buyer at Buyer's
corporate offices in connection with the operation and management of Buyer's
restaurants (including the Restaurants) in exchange for compensation of $100 per
hour. The parties hereto agree that any consulting services rendered by Zide
will be rendered as an independent contractor and not as an employee, agent or
servant of Buyer, nor shall Zide be deemed, by reason of this Agreement or any
services to be performed by Zide, to be an employee of Buyer for purposes of
withholding, employee payroll taxes, contributions, pensions, benefits or
otherwise. It is further agreed and understood that Buyer will request such
services on reasonable notice and subject to Zide's other activities and
reasonable convenience, and shall accommodate any request by Zide to perform
such services by telephone or other mutually agreed upon manner unless personal
appearance by Zide is clearly and reasonably necessary.
18. Termination; Remedies.
a. Drop Dead Date. Notwithstanding anything to the contrary
contained in Section 18 b. or c. below, in the event that the Closing Date has
not occurred by June 30, 1996 and the failure to close by such date is not due
to any fault of the party seeking termination, any party hereto may terminate
this Agreement by delivery of written notice to the other parties and all funds
and documents held in Escrow shall be immediately returned by the Escrow Holder
to the parties who deposited such funds and/or documents in Escrow.
b. Buyer's Remedies Generally. IN THE EVENT THE CLOSING FAILS
TO OCCUR BECAUSE OF EITHER A FAILURE OF SATISFACTION OF ANY OF THE CONDITIONS IN
FAVOR OF BUYER SET FORTH IN THIS AGREEMENT, OR SELLERS' FAILURE TO PERFORM ANY
OF SELLERS' OBLIGATIONS UNDER THIS AGREEMENT, THEN BUYER SHALL HAVE THE RIGHT TO
TERMINATE THIS AGREEMENT UPON WRITTEN NOTICE TO SELLERS. UPON SUCH TERMINATION,
SELLERS SHALL IMMEDIATELY RETURN, OR CAUSE THE ESCROW HOLDER TO RETURN, TO BUYER
ANY AND ALL DOCUMENTS AND FUNDS THERETOFORE DEPOSITED OR PAID BY BUYER.
ALTERNATIVELY, NOTWITHSTANDING SUCH FAILURE OF CONDITION AND/OR SELLERS' BREACH,
BUYER MAY ELECT TO PROCEED WITH THE PURCHASE OF THE ASSETS, RESERVING THE RIGHT
TO COLLECT DAMAGES FROM SELLERS FOR ANY SUCH BREACH. WHETHER OR
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NOT BUYER ELECTS TO TERMINATE THIS AGREEMENT OR TO PROCEED WITH THE PURCHASE OF
THE ASSETS AS HEREINABOVE PROVIDED FOR, BUYER SHALL RETAIN THE RIGHT TO EXERCISE
ANY AND ALL REMEDIES WHICH BUYER MAY HAVE AGAINST SELLERS, WHETHER AT LAW, IN
EQUITY OR PURSUANT TO THIS AGREEMENT, INCLUDING, BUT NOT LIMITED TO, THE RIGHT
TO COMPEL SPECIFIC PERFORMANCE BY SELLERS.
c. Sellers' Remedies. IF BUYER SHOULD TERMINATE THIS AGREEMENT
FOR REASONS OTHER THAN AS A RESULT OF EITHER (i) SELLERS' MATERIAL BREACH OR
DEFAULT UNDER THE TERMS OF THIS AGREEMENT, OR (ii) THE FAILURE OF SELLERS TO
SATISFY ANY OF THE CONDITIONS TO CLOSING CONTEMPLATED BY THIS AGREEMENT (EITHER
EVENT CONSTITUTING "CAUSE" FOR BUYER'S TERMINATION), THEN SELLERS, AS THEIR SOLE
AND EXCLUSIVE REMEDY, MAY TERMINATE THIS AGREEMENT BY NOTIFYING BUYER THEREOF
AND RECEIVE OR RETAIN ONE HALF OF THE DEPOSIT ($50,000) AS LIQUIDATED DAMAGES.
THE PARTIES AGREE THAT SELLERS WILL SUFFER DAMAGES IN THE EVENT OF BUYER'S
BREACH OF ITS OBLIGATIONS. ALTHOUGH THE AMOUNT OF SUCH DAMAGES IS DIFFICULT OR
IMPOSSIBLE TO DETERMINE, THE PARTIES AGREE THAT THE AMOUNT OF THE DEPOSIT IS A
REASONABLE ESTIMATE OF SELLERS' LOSSES IN THE EVENT OF BUYER'S TERMINATION OF
THIS AGREEMENT WITHOUT CAUSE. THUS, SELLERS SHALL ACCEPT AND RETAIN ONE HALF OF
THE DEPOSIT ($50,000) AS LIQUIDATED DAMAGES BUT NOT AS A PENALTY, WITH THE
REMAINING PORTION OF THE DEPOSIT BEING RETURNED TO BUYER. SUCH LIQUIDATED
DAMAGES SHALL CONSTITUTE SELLERS' SOLE AND EXCLUSIVE REMEDY.
SELLERS AND BUYER ACKNOWLEDGE THAT THEY HAVE READ AND
UNDERSTAND THE PROVISIONS OF THE FOREGOING PROVISION AND BY THEIR SIGNATURES
IMMEDIATELY BELOW AGREE TO BE BOUND BY ITS TERMS.
"SELLERS" "BUYER"
SOLLEY'S INC. JERRY'S FAMOUS DELI, INC.
By:_______________________________ By:_______________________________
Sol Zide Ike Starkman
__________________________________
SOL ZIDE
19. Confidentiality. The terms and provisions of this Agreement shall be kept in
complete confidence by Zide and Solley's, their affiliates, and each of their
respective directors, officers, employees and agents, and dissemination of the
terms and conditions of this Agreement and related
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information shall only be made to those persons as absolutely necessary.
Solley's and Zide each acknowledges that it(he) is aware that Buyer is a public
company with listed securities and improper disclosure of the contents of this
Agreement or related information could have an adverse effect on Buyer and its
securities holders. In the event of a breach of this confidence, the Agreement
may be immediately terminated in the sole discretion of Buyer. Notwithstanding
anything to the contrary contained in this Agreement, Buyer shall have the
right, subject to the reasonable review of the content and method of disclosure
by Zide and Solley's, to make appropriate disclosure as a public corporation of
the existence and terms of this Agreement and the terms and conditions hereof;
provided, however, that any right of review by Zide or Solley's shall be subject
to the requirements of applicable federal or state securities laws and shall
terminate on the Closing Date.
20. Standstill. Neither Zide nor Solley's, nor any of their respective officers,
directors, affiliates, representatives or agents, will directly or indirectly
negotiate, cooperate in any manner with any other party, or agree to a sale of
any or all of the Assets or stock of Solley's or any other transaction which
would result in a change in control of Solley's or the Restaurants, or act in a
manner which could have the effect, directly or indirectly, of frustrating the
completion of the transactions contemplated by this Agreement, so long as Buyer
is proceeding in good faith toward the consummation of the transactions
contemplated herein (provided, however, that transfers among the existing
shareholders of Solley's or by existing shareholders of Solley's to trusts
established by them and for the benefit of them or their family for reasons of
estate or financial planning shall not be prohibited by this Section).
21. Escrow Instructions. The parties hereto do hereby enter into the Escrow with
Escrow Holder for the purpose of completing the transfer of the Assets and the
Liquor License in accordance with Division 6 of the California Commercial Code
and Sections 24071-24074 of the Business and Professions Code of California.
Concurrently herewith, a fully executed copy of this Agreement is being
deposited with, and countersigned by, Escrow Holder. This Agreement, together
with the Escrow Instructions attached hereto as Exhibit "G", shall constitute
escrow instructions to Escrow Holder and Escrow Holder is hereby appointed and
designated to act as an escrow holder and is authorized and instructed to follow
the escrow instructions set forth herein.
22. Miscellaneous.
a. Notices. Unless applicable law requires a different method of giving
notice, any and all notices, demands or other communications required or desired
to be given hereunder by any party shall be in writing. Assuming that the
contents of a notice meet the requirements of the specific Section of this
Agreement which mandates the giving of that notice, a notice shall be validly
given or made to another party if served either personally or if postage
prepaid, or if transmitted by telegraph, telecopy or other electronic written
transmission device or if sent by overnight courier service, and if addressed to
the applicable party as set forth below. If such notice, demand or other
communication is served personally, service shall be conclusively deemed made at
the time of such personal service. If such notice, demand or other communication
is given by mail, service shall be conclusively deemed given upon the earlier of
receipt or seventy-two (72) hours after the deposit thereof in the United States
mail, postage prepaid. If such notice, demand or other communication is given by
overnight
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courier, or electronic transmission, service shall be conclusively made at the
time of confirmation of delivery. The addresses for Sellers and Buyer are as
follows:
If to Buyer: Jerry's Famous Deli, Inc.
12711 Ventura Boulevard, Suite 400
Studio City, California 91604
Attention: Ike Starkman
Telecopier: (818) 766-8315
With a copy to: Jeffer, Mangels, Butler & Marmaro LLP
2121 Avenue of the Stars, 10th Floor
Los Angeles, California 90067
Attention: Steven J. Insel, Esq.
Telecopier: (310) 203-0567
If to Sellers: Sol Zide
C/O Barry Gordon
16027 Ventura Boulevard, Suite 204
Encino, CA 91436-2728
Telecopier: (818) 990-3609
With a copy to: Parker Mills & Patel
20631 Ventura Boulevard, Suite 300
Woodland Hills, California 91364-2392
Attention: William Mills, Esq.
Telecopier: (818) 883-9345
Any party hereto may change his or its address for the purpose of receiving
notices, demands and other communications as herein provided, by a written
notice given in the aforesaid manner to the other parties hereto.
b. Assignability and Parties in Interest. This Agreement shall not be
assignable by either Seller without the express written consent of Buyer which
shall be given in Buyer's sole and absolute discretion. This Agreement shall not
be assignable by Buyer without the express written consent of each Seller;
provided, however, that Buyer may assign this Agreement to any entity managed,
wholly or partially owned, directly or indirectly, by Buyer. Subject to the
foregoing, this Agreement shall inure to the benefit of and be binding upon
Buyer and Sellers and their respective permitted successors and assigns.
c. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of California.
d. Venue; Arbitration. Any claims or disputes arising out of or
relating to this Agreement shall be settled by binding arbitration conducted in
Los Angeles County, California in accordance
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with the Commercial Arbitration Rules of the American Arbitration Association
then in effect, and judgment upon the award entered by the arbitrator(s) may be
entered in any court having jurisdiction thereof. Neither party's right to file
a lawsuit seeking an injunction or such party's right to injunctive relief is
subject to arbitration or to the provisions of this Section 22 d.
e. Counterparts. This Agreement may be executed simultaneously in one
or more counterparts, each of which shall be deemed an original, but all of
which shall constitute but one and the same instrument.
f. Indemnification for Brokerage. Buyer and Sellers each represent and
warrant to the other that no broker or finder has acted on its behalf in
connection with this Agreement or the transactions contemplated hereby other
than Jerry Ackrich, who shall be paid a commission of One Hundred Thousand
Dollars ($100,000) at Closing out of Escrow. Each party hereto agrees to
indemnify and hold and save harmless the others from any other claim or demand
for commissions or other compensation by any broker, finder or similar agent
claiming to have been employed by or on behalf of such party.
g. Further Assurances. From time to time after the Closing, Sellers
will execute and deliver to Buyer such instruments of sale, transfer,
conveyance, assignment and delivery, consents, assurances, powers of attorney
and other instruments as may be reasonably requested by counsel for Buyer in
order to vest in Buyer all right, title and interest of Sellers in and to the
Assets and otherwise in order to carry out the purpose and intent of this
Agreement.
h. Complete Agreement. This Agreement, the Exhibits hereto, and the
documents delivered or to be delivered pursuant to this Agreement contain or
will contain the entire agreement between the parties hereto with respect to the
transactions contemplated herein and shall supersede all previous oral and
written and all contemporaneous oral negotiations, commitments, and
understandings.
i. Modification; Waiver. No supplement, modification or amendment of
this Agreement, or of any covenant, condition or limitation herein contained,
shall be valid unless made in writing and executed by the parties hereto. No
waiver of any covenant, condition, or limitation herein contained shall be valid
unless made in writing and executed by the party making the waiver. No waiver of
any of the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provision hereof (whether or not similar), nor shall such
waiver constitute a continuing waiver unless otherwise expressly provided.
j. Severability. Any provision of this Agreement which is invalid,
illegal, or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective only to the extent of such invalidity, illegality, or
unenforceability, without affecting in any way the remaining provisions hereof
in such jurisdiction or rendering that or any other provision of this Agreement
invalid, illegal, or unenforceable in any other jurisdiction.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the date first above written.
"SELLERS" "BUYER"
SOLLEY'S, INC. JERRY'S FAMOUS DELI, INC.
By:_________________________________ By:__________________________________
Sol Zide Ike Starkman
____________________________________
SOL ZIDE
The undersigned, as agent for the Escrow Holder, hereby accepts the duties of
Escrow Holder as more particularly described in this Agreement, subject to and
in accordance with all the terms and conditions thereof.
NETTIE BECKER ESCROW, INC.
By:________________________________
Authorized Agent
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