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Exhibit 10.7
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made this ___ day of May 1997 among RED ONE, INC., a New
Jersey corporation ("Seller") as debtor and debtor-in-possession, XXXX X.
XXXXXXXXX, as debtor and debtor-in-possession ("Xxxxxxxxx") (Red One and
Xxxxxxxxx being hereinafter referred to from time to time as "Sellers") and
MAGIC RESTAURANTS, INC., a Delaware corporation ("Buyer").
WITNESSETH:
WHEREAS, the Red One is a debtor and debtor-in-possession under chapter 11 of
title 11 U.S.C., ss. 101 et seq. (the "Bankruptcy Code") in a case pending in
the United States Bankruptcy Court for the District of New Jersey, Trenton
Division (the "Bankruptcy Court"), case number 96-32119; and
WHEREAS, Xxxxxxxxx is a debtor and debtor-in-possession under chapter 11 of the
Bankruptcy Code in a case pending before the Bankruptcy Court, case number
96-32120; and
WHEREAS, Red One operates a restaurant owns and operates a restaurant (the
"Restaurant") doing business under the name "Redheads" at premises commonly
known as 000 Xxxxxxx 00, Xxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx 00000; and
WHEREAS, Sellers own all right, title and interest to the Concept (as
hereinafter defined); and
WHEREAS, Buyer wishes to purchase certain of the assets owned and used by Red
One in the operation of the Restaurant on the terms and subject to the
conditions set forth in this Agreement; and
WHEREAS, Sellers intend to sell the assets that are the subject of the this
Agreement to Buyer pursuant to a sale of asset of assets under Section 363 of
the Bankruptcy Code;
WHEREAS, Buyer and Red One have entered into an escrow agreement (the "Escrow
Agreement") pursuant to which Buyer has deposited with the Escrow Agent the sum
of $75,000;
NOW, THEREFORE, in consideration of the premises and the mutual covenants,
agreements, representations and warranties herein contained, and subject to the
conditions hereinafter set forth, the parties hereto agree as follows:
1. PURCHASE AND SALE OF ASSETS
1.1 Sellers hereby agree to sell, assign, convey, transfer and
deliver to Buyer on the Closing Date (as hereafter defined), and
Buyer hereby agrees to purchase and acquire on the Closing Date,
the following:
1.1.1 Seller's interest in the lease used in the operation of
the Restaurant (the "Lease");
1.1.2 Sellers' right, title and interest in and to the name
"Redheads", and all derivatives thereof, and all other
trademarks, trademark rights, trade names, trade name
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rights, trade styles, brand names, service marks,
patents, logos, copyrights, characterizations, and all
other intangible rights and properties (and all
applications with respect to all of the foregoing),
which are owned or used by Seller in connection with the
Business, as set forth on Schedule 1.1.2 hereto
(collectively, the "Concept"); provided, however, that
in connection with the sale of the Purchased Assets, Red
Three, Inc. shall be granted a royalty-free perpetual
and non-transferable license to use the name "Redheads"
and the Concept in connection with the operation of a
restaurant in Eatontown, New Jersey;
1.1.3 a11 menus, interior design schemes, specifications,
renderings, prototypes, drawings, plans, system manuals,
training guides, methods and processes relating to the
products and services offered by the Restaurant and
other similar or related items used in connection with
the operation of the Restaurant or the Concept, as set
forth on Schedule 1.1.3 hereto;
1.1.4 a11 machinery, equipment, tools, handling equipment,
vehicles, furniture, and other assets, as set forth on
Schedule 1.1.4 hereto (the "Fixed Assets"); provided,
however, that in no event shall the Seller sell to the
Buyer the Excluded Assets (as hereinafter defined);
1.1.5 a11 designs, plans, specifications, renderings,
prototypes, methods and processes relating to the
products and services offered by the Restaurant, as
described on Schedule 1.1.6 hereto;
1.1.6 a11 customers, customer lists, and all written
information, files, correspondence and documents
relating to the Restaurant, as set forth on Schedule
1.1.6 hereto;
1.1.7 a11 right, title, interest, obligation and liability of
Seller as lessee or licensee, with respect to the
personal property leases and licenses set forth on
Schedule 1.1.7 hereto;
1.1.8 a11 stationery, office supplies, catalogues, product
descriptions, advertising materials, forms and other
similar supplies and materials used by the Restaurant;
1.1.9 liquor license number 1331-33-025-005 (the "Liquor
License") issued by the State of New Jersey used in the
operation of the Restaurant; and
1.1.10 any and all goodwill associated with the Restaurant;
wherever the same shall be located (collectively, the
"Purchased Assets").
1.2 It is the intent of this Agreement that the Purchased Assets
shall constitute all of the assets, properties and business of
Seller which are necessary or appropriate to enable Buyer to
continue to operate the Restaurant as heretofore conducted by
Seller; provided, however, that the Purchased Assets shall not
include (i)
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cash on hand of Red One on or prior to the Closing date, (ii)
claims or causes of action of either Seller, whether arising
under chapter 5 of the Bankruptcy Code or otherwise, and (iii)
any furniture, equipment or fixtures listed on Schedule 1.2
hereto, and/or on which a creditor of Red One has a valid and
perfected Lien (as hereinafter defined), which items are
hereinafter collectively referred to as the "Excluded Assets."
1.3 It is understood and agreed that the Purchased Assets shall be
acquired by (i) Buyer free and clear of all Liens (as
hereinafter defined) pursuant to a Final Order (as hereinafter
defined) of the Bankruptcy Court, and (ii) except as expressly
set forth in this Agreement, "as is" and "where is." As used in
this Agreement:
1.3.1 "Final Order" means an order or judgment of the
Bankruptcy Court that has not been reversed, stayed or
vacated and as to which the time to appeal, petition for
certiorari or seek reargument or rehearing has expired
and as to which no appeal, reargument, petition for
certiorari or rehearing is pending or as to which any
right to appeal, reargue, petition for certiorari or
seek rehearing has been waived in writing, or, if an
appeal, reargument, writ or certiorari or rehearing
thereof has been sought, the order or judgment of the
Bankruptcy Court has been affirmed by the highest court
to which the order was appealed or from which the
reargument or rehearing was sought, or by which the
petition for writ of certiorari has been denied, and the
time to take any further appeal or to seek certiorari or
further reargument or rehearing has expired.
1.3.2 "Lien" shall mean any mortgage or deed of trust, pledge,
hypothecation, assignment, deposit arrangement, lien,
charge, claim, security interest, easement or
encumbrance, or preference, priority or other security
agreement or preferential arrangement of any kind or
nature whatsoever (including, without limitation, any
lease or title retention agreement, any financing lease
having substantially the same economic effect as any of
the foregoing, and the filing of, or agreement to give,
any financing statement perfecting a security interest
under the New Jersey Uniform Commercial Code or
comparable law of any jurisdiction).
2. LIABILITIES
2.1 Buyer does not assume or agree to pay, perform or discharge any
other liability or obligation of either Seller of any nature
whatsoever, whether known or unknown, direct or indirect,
contingent or accrued, matured or unmatured, including, without
limitation, any of the following liabilities or obligations of
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Sellers whether or not relating to the Purchased Assets or the
Restaurant, which shall remain the sole liabilities and
obligations of Sellers:
2.1.1 Any obligations or liabilities of either Seller in
respect of any Federal, state, local or foreign income,
sales, franchise, excise, withholding, payroll or any
other taxes for the current or any other fiscal period;
2.1.2 Any obligations or liabilities which are incurred in
violation of this Agreement or which are inconsistent
with any representation, warranty or covenant contained
in this Agreement;
2.1.3 Any obligations of either Seller to perform under this
Agreement;
2.1.4 Any cost, expense or tax liability of either Seller
incident to the preparation of this Agreement or the
consummation of the transactions contemplated hereby;
2.1.5 Any obligations or liabilities of either Seller arising
by reason of any default, breach, penalty or delinquency
under any agreement, commitment or obligation of either
Seller or to which either Seller is a party;
2.1.6 Any obligations or liabilities of either Seller, or
asserted against Buyer or the Purchased Assets, arising
from any claim, demand or Lien based upon noncompliance
with any applicable bulk sales or bulk transfer law;
2.1.7 Any obligations or liabilities of either Seller or with
respect to the Restaurant which are incurred on or after
the Closing Date;
2.1.8 Any cost, expense or other obligations or liabilities of
either Seller relating to or arising from current or
future pension, retirement, profit sharing, bonus, group
health insurance, group life insurance, or other similar
plans for the benefit of either Seller's employees;
2.1.9 Any obligations or liabilities relating to (i) any
employee wages, salaries or benefits incurred prior to
the Closing Date; (ii) any collective bargaining
agreement or other labor or union agreement or
commitment, or any employee benefit arising thereunder,
or (iii) compliance with the WARN Act or similar
Federal, state or local laws and regulations, or (iv)
any other applicable statute, rule, decision, regulation
or ordinance;
2.1.10 Any obligations or liabilities of either Seller under
any contracts, agreements, commitments, or purchase
orders for finished goods, raw materials or services,
except as set forth on Schedule 2.2.10 hereto.
2.1.11 Any obligations or liabilities of either Seller for
amounts owing in respect of the Excluded Assets.
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2.1.12 After the Closing Date, Buyer shall have no obligation
to continue the employment of any employee of Red One or
the Restaurant for any length of time, and shall have
the right to terminate the employment of any employees.
Red One represents that it is not a party to any
employment agreements.
3. CONSIDERATION
3.1 The consideration (the "Purchase Price") to be paid to Seller
for the Purchased Assets is Two Hundred Seventy-Five Thousand
Dollars ($275,000):
3.2 The Purchase Price shall be payable as follows:
3.2.1 Up to One Hundred Fifty Thousand Dollars ($150,000) by
delivery by Buyer on the Closing Date by wire transfer
of immediately available funds to Red One; provided,
however, that the amount payable under this Section
3.2.1 shall be reduced dollar for dollar by any amount
deposited into the Tax Escrow (as hereinafter defined);
3.2.2 Seventy-Five Thousand Dollars ($75,000) by delivery by
the Escrow Agent on the Closing Date, by wire transfer
of immediately available funds to Red One, in accordance
with the Indemnity Agreement among Red One, Buyer and
Xxxxxxx, Xxxxx & Marvel dated May 9, 1997; and
3.2.3 Fifty Thousand Dollars ($50,000) by delivery by Buyer on
the Closing Date by wire transfer of immediately
available funds to Xxxxxxxxx, for distribution (i) as
Sellers shall agree, or (ii) pursuant to a Final Order.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF SELLER
Sellers, jointly and severally, hereby represent and warrant to, and
agree with, Buyer that as of the Closing Date:
4.1 Red One is a corporation duly organized, validly existing and in
good standing under the laws of the State of New Jersey. Red One
has the corporate power and authority to own and/or lease its
properties and to conduct the Business in the manner and in the
places where such properties are now owned, leased or operated
or the Business is now conducted.
4.2 Sellers have has not granted any option or other right, nor has
either Seller entered into any agreement, to sell or otherwise
dispose of any of the Purchased Assets, or to convey any
interest therein.
4.3 Except for the Concept, which is owned by Red One and Xxxxxxxxx,
Red One is the owner of and has valid and marketable title to
each item constituting the Purchased Assets, free and clear of
all claims, charges, Liens, security interests, pledges and
encumbrances whatsoever.
4.4 Each item of Equipment that is not an Excluded Asset is owned by
Red One.
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4.5 (i) Each Seller has timely filed, or will timely file, all tax
reports and returns (the "Tax Returns") in accordance with the
Internal Revenue Code of 1986, as amended (the "Code")) which
have become due for all post-petition taxable periods ending on
or before the Closing Date, and each Seller has paid or withheld
all taxes due to Federal, state or local taxing authorities
required to be paid or withheld in respect of the periods
covered by such Tax Returns. Except as set forth on Schedule
4.5, neither Seller is delinquent in the payment of any
post-petition tax, penalty or interest required to be paid by
such Seller and no unpaid deficiencies for any tax have been
assessed against either Seller. All Federal, state and local Tax
Returns filed by or on behalf of each Seller were true and
correct when filed and no event has occurred subsequent to such
filing which would require the filing of an amended or corrected
Tax Return; (ii) neither Seller is undergoing any tax audits, is
not contesting any tax claimed to be due, and has not granted an
extension of any statute of limitations, or similar law, to any
taxing authority for the assessment of any post-petition taxes.
On or before the Closing Date, either (A) each Seller will
furnish Buyer with reasonably satisfactory evidence of payment
of all post-petition taxes (including, but not limited to, real
estate and personal property taxes) due for all periods prior to
the Closing Date, or (B) Buyer and the Sellers shall agree on an
amount to be deposited in escrow pursuant to a mutually
satisfactory escrow agreement (the "Tax Escrow") on the Closing
Date, which fund shall be disbursed solely to pay post-petition
taxes of Red One.
4.6 Except as set forth on Schedule 4.6 hereto, Red One is not a
party to any collective bargaining or other agreement with labor
unions, labor representatives or any other employee groups.
4.7 Except as set forth on Schedule 4.7 hereto, Red One is not a
party to any written or oral:
4.7.1 lease, license or other agreement with respect to
personal property, and Schedule 4.7 lists all of the
material terms of each such lease, license or other
agreement;
4.7.2 contract of employment or other outstanding contract
with any officer, employee, agent, consultant, salesman,
advisor, sales representative, supplier, distributor or
dealer;
4.7.3 contract or commitment with respect to advertising
services;
4.7.4 contract or commitment amounting to or involving more
than $10,000;
4.7.5 contract or commitment with any customer, or
4.7.6 any other contract, commitment or instrument which is
material to the Restaurant or the Purchased Assets.
To Sellers' knowledge, all contracts, commitments, agreements
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or leases listed on Schedule 4.7 hereto are in full force and
effect without any default or breach thereof by Red One which
cannot be cured under such contract or the Bankruptcy Code (and
all of which shall be cured on and as of the Closing Date), or,
to the best knowledge of Sellers, by any other party thereto,
and the benefit, enforcement or validity of all such contracts,
commitments, agreements or leases are not affected by the
transactions contemplated by this Agreement. Accurate and
complete copies of all such contracts have been delivered to
Buyer.
4.8 Schedule 1.1.2 hereto is a complete and correct list of all
trademarks, trade names (registered or unregistered), service
marks, brand names, copyrights, patents (and applications for
any of the foregoing) logos, designs or other intangible rights
or properties of a similar nature (the "Intangible Properties")
used by, useful to, owned by, or licensed by or to, Sellers.
Except as set forth on Schedule 1.1.2, Sellers are the lawful
owners or licensees of all of the aforesaid and have the right
to use the same in the conduct of the Restaurant. No proceedings
have been instituted or are pending for royalties in respect
thereof or which challenge the exclusive or perpetual rights in
respect thereto or the validity thereof and none of the
aforesaid is subject to any outstanding order, decree, judgment,
stipulation or charge; the enforceability and validity of, and
the obligations of the parties provided in, any agreement
granting or relating to the Intangible Properties are not
affected by the transactions contemplated by this Agreement and
no consent of any party thereto is necessary or required by the
transactions contemplated by this Agreement.
4.9 Schedule 4.9 hereto is a list of all employees of Red One and
the compensation, benefits and all perquisites paid and afforded
to such employees as of April 30, 1997, including all changes
made to compensation and benefits from April 30, 1997 to the
Closing Date. Except as set forth on Schedule 4.9, there are no
bonuses in respect of work done prior to the date hereof, due to
or expected by present or former employees of Red One.
4.10 Annexed hereto as Schedule 4.10 is a list and brief description
of all policies of insurance maintained by Red One. All premiums
due to the date hereof on such insurance policies have been paid
in full, and, except as set forth on Schedule 4.10, all of such
policies are currently in effect. No insurance company has ever
denied, or attempted to deny, coverage based upon any allegation
that Red One has violated or breached the terms of coverage, or
violated any law or regulation, or failed to meet any standards,
governing or relating to the sale of products or the rendering
of services by Red One. All claims made against Red One which
are covered by insurance are being defended by such insurance
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companies.
4.11 Except as set forth on Schedule 4.11 hereto, Red One does not
have any group health insurance, group life insurance, current
or future pension, retirement, profit sharing, bonus, or any
other "employee benefit" plan as defined in Section 3(3) of the
Employee Retirement Security Act of 1974, as amended, whether or
not such plans or obligations are of a legally binding nature or
are in the nature of informal understandings. All obligations
due to, or for the benefit of, all employees of Red One pursuant
thereto are the sole liability of Red One and have been, or
shall be promptly, satisfied by Seller for all periods ending on
the Closing Date.
4.12 Except as set forth on Schedule 4.12 hereto, Red One has no
obligation to file with the Pension Benefit Guaranty Corporation
any notice of a reportable event arising out of the transactions
contemplated herein with respect to any employee benefit plan of
Red One now in effect or to comply with other requirements of
the Internal Revenue Service, Department of Labor and Pension
Benefit Guaranty Corporation arising out of the transactions
contemplated herein with respect to any such employee benefit
plan. With respect to all pension plans maintained by Red One,
Red One has satisfied the minimum funding standard of Section
412 of the Code, and the regulations promulgated thereunder, and
the filing requirements of Section 6058 of the Code through the
last plan year of each such plan, and there is no funding
deficiency under Section 412 of the Code for any such plan.
4.13 Except as set forth on Schedule 4.13 hereto, neither the
execution of this Agreement nor the consummation of the
transactions contemplated hereby will result in any violation
of, or be in conflict with, the terms of, or require the consent
of any party to, any contract, agreement, lease, license
agreement, instrument, commitment or understanding applicable to
either Seller or will result in the creation of any Lien on, or
claim to, any of the Purchased Assets.
4.14 To the best knowledge of Sellers, Red One is in compliance with
all terms of any instrument and any law, order, rule or
regulation of the United States, or any state or political
subdivision, or any agency thereof (including, but not limited
to, the Federal Occupational Safety and Health Agency,
Environmental Protection Agency and Department of
Transportation, and their equivalent state and local agencies)
which is applicable to Red One, and no complaint or order has
been filed against Red One by or with, and no notice has been
issued to Red One by, any such agency in respect of its business
or operations; Red One is not liable for any arrears, damages,
taxes or penalties for failure to comply with any of the
foregoing.
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4.15 Except as set forth on Schedule 4.15 hereto, the real estate
leased by Red One and, to the best knowledge of Red One, the
land and the buildings in proximity hereto, are not, and have
not been in the past, the site of any activity or condition
(currently or in the past) which is in violation of Federal,
state or local statutes, rules, regulations, ordinances,
administrative orders or rulings relating to the protection of
the environment or governing or prohibiting the storage, use,
disposal or transport of pollutants, hazardous substances or
toxic materials (as such terms are described in such statutes,
rules, regulations, ordinances, orders or rulings), including,
but not limited to, in respect of underground storage tanks.
4.16 Red One holds all governmental licenses, permits and other
authorizations necessary for the conduct of the Restaurant,
including good and valid title to the Liquor License, and all
such licenses, permits and other authorizations to the extent
that they can be assigned will be duly assigned and transferred
to Buyer in connection with the transactions contemplated
herein. Schedule 4.16 hereto is a true and complete list of all
such licenses, permits and authorizations setting forth the
issuing entity and the subject matter thereof. All such
governmental licenses, permits and other authorizations are
valid and sufficient in all material respects for the Restaurant
as it is presently conducted by Red One, and Red One does not
know of any threatened suspension, cancellation or invalidation
of any such license, permit or other authorization or any threat
of any proceeding for the suspension, cancellation or
invalidation of any such license, permit or authorization.
4.17 Except for the approval of the Bankruptcy Court, no consent,
approval or authorization of any governmental agency is required
in connection with the execution and delivery of this Agreement
by Sellers or the consummation of the transactions contemplated
herein. Buyer acknowledges and agrees that the sale of the
Purchased Assets will be subject to higher and better offers,
and that Sellers shall have no liability to Buyer (i) if the
Purchased Assets are sold pursuant to a higher and better offer,
or (ii) the Bankruptcy Court does not approve the sale of the
Purchased Assets to Buyer.
4.18 The execution and delivery of this Agreement, and the
consummation of the transactions contemplated herein, have been
duly authorized by the Board of Directors and shareholders of
Red One and no other proceedings on the part of Red One is
necessary to authorize this Agreement, nor the carrying out of
the transactions contemplated herein.
4.19 The execution, delivery, and performance of this Agreement, and
the consummation of the transactions contemplated herein, will
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not violate, or result in a breach of, with, or constitute (with
or without due notice or lapse of time or both) a default or
give rise to any right of termination, cancellation or
acceleration under any charter or by law, or agreement,
instrument, judgment, or decree to which either Seller is a
party or to which either Seller is subject or bound. This
Agreement, upon the approval of the Bankruptcy Court, shall be
the valid and binding obligation of each Seller, enforceable
against each Seller in accordance with its terms.
4.20 All persons who have executed this Agreement on behalf of Red
One are the duly elected, qualified and acting incumbents of the
corporate offices under authority of which they have purported
to act, and each of them has been authorized by all necessary
corporate action of Red One to execute and deliver this
Agreement and bind Red One to the engagements undertaken by it
in this Agreement, and the other transactions contemplated
herein.
4.21 Except as set forth on Schedule 4.21 hereto, all agreements
between Sellers and any officer, director or employee of Sellers
or any of its affiliates relating to the Restaurant shall
terminate on the Closing Date without liability or obligation of
Buyer to any of such persons.
4.22 No representation or warranty made by Sellers in this Agreement,
or in any document, Schedule, certificate, or other instrument
delivered or deliverable pursuant to the terms hereof, contains
or will contain, any untrue statement of a material fact or
omits, or will omit, to state a material fact necessary in order
to make the statements made, in light of the circumstances under
which they were made, not misleading.
4.23 Sellers may attach, amend or supplement any schedule hereto at
any time prior to the Closing Date; provided, however, that (1)
all schedules shall have been completed and delivered at least
seven days prior to the Closing Date, and (2) Buyer may
temrinate this Agreement without liability if any schedule
delivered after the date hereof demonstrates a material adverse
change in the condition of the Purchased Assets, taken as a
whole.
5. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF BUYER
Buyer hereby represents and warrants to, and agrees with Seller that on
the date hereof and the Closing Date:
5.1 Buyer is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has
full corporate power and authority to own, operate and lease its
properties and conduct its business as now owned, operated,
leased and conducted.
5.2 The execution and delivery of this Agreement, and the
consummation
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of the transactions contemplated herein, have been duly
authorized by Buyer, and no other proceedings on the part of
Buyer are necessary to authorize this Agreement and, nor the
carrying out of the transactions contemplated herein. Buyer is
not required to obtain bankruptcy court approval in connection
with the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.
5.3 The execution delivery and performance of this Agreement, and
the consummation of the transactions contemplated herein, will
not violate, or result in a breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give
rise to any right of termination, cancellation or acceleration)
under any charter or by-law, or agreement, instrument, judgment,
or decree to which Buyer is a party, or to which it is subject
or bound.
5.4 This Agreement will be, upon execution and delivery thereof by
Buyer, the valid and binding obligations of Buyer, and will be
enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency or other laws affecting the
enforcement of creditors rights generally.
5.5 Buyer has performed its own due diligence of the Purchased
Assets, and by execution of this Agreement, has accepted the
condition of the Purchased Assets as of the date hereof. Buyer
has reviewed the terms of the Lease, and the terms of the Lease
is acceptable to Buyer.
5.6 Buyer has the financial capacity to consummate the acquisition
of the Purchased Assets.
5.7 Buyer is current in the payment of all licensing fees owed to
Red One as of the date of this Agreement; if there are any
outstanding licensing fees due on the Closing Date to Red One,
Buyer shall make payment of all amounts due on the Closing Date.
Nothing contained in this Agreement shall affect Buyer's
obligation to continue to pay licensing fees to Red One through
and until the Closing Date pursuant to that certain License
Agreement dated _________, 1996 between Red One and Buyer. Upon
Buyer's performance in full of its obligations under this
Section 5.7, on the Closing Date the licensing fees payable by
Buyer to Red One shall terminate.
6. SURVIVAL OF REPRESENTATIONS
Notwithstanding any investigation or opportunity to investigate by or on
behalf of Buyer or Seller, all representations and warranties made in
this Agreement or in any Schedule, Exhibit, certificate, statement or
other document delivered or deliverable in connection with this
Agreement, shall remain in full force and effect and shall survive the
consummation of the transactions contemplated herein.
7. CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer hereunder are, at the option of Buyer, subject
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to and conditioned upon the satisfaction, at or prior to the Closing
Date, of each of the following conditions:
7.1 All of the representations and warranties of Sellers contained
herein or otherwise made in writing in connection with the
transactions contemplated hereby shall be true and correct as of
the Closing Date, and Sellers shall have complied with and
performed all of the agreements and conditions on Sellers' part
to be complied with or performed pursuant to this Agreement on
or before the Closing Date. Without limitation of the foregoing,
Sellers shall have paid all post-petition taxes on or prior to
the Closing Date and shall have provided Buyer with satisfactory
evidence of such payment.
7.2 Buyer shall receive all of the documents required pursuant to
Section 9 hereof.
7.3 The Bankruptcy Court shall have issued a Final Order approving
the sale of the Purchased Assets to Buyer on terms acceptable to
Buyer. The Final Order shall contain a finding that Red Three
has no interest in the Concept.
7.4 Prior to the Closing Date, there shall not have occurred any
event or condition that would make the premises subject to the
Lease unfit, in whole or in substantial part, for operation as a
restaurant. Without limitation of the foregoing, prior to the
Closing Date, the Restaurant shall not have suffered or
experienced any fire, flood, tornado or other similar and
substantial catastrophe or act of God.
7.5 No litigation shall be pending or, to the knowledge of Seller,
threatened, involving or affecting the Purchased Assets.
8. DELIVERIES OF SELLER
The closing of the transactions contemplated herein (the "Closing")
shall take place on or about June 2, 1997 (the "Closing Date"). In the
event the Closing does not occur on said date, the Closing shall occur
on such other date within three days following satisfaction of all of
the conditions to Closing as Buyer and Seller shall mutually agree;
provided, however, that in no event shall the Closing Date occur after
June 16, 1997. In such event, the terms "Closing" or "Closing Date"
shall mean such other date on which the closing occurs. If the closing
occurs on the date of execution of this Agreement, the term "Closing
Date" shall mean the date hereof. On the Closing Date, Seller shall
deliver, or cause to be delivered, to Buyer:
8.1 All conveyances, deeds, assignments, bills of sale,
confirmations, powers of attorney, approvals, consents,
agreements and any and all further instruments as may be
necessary, expedient or proper in order to complete any and all
conveyances, transfers and assignments herein provided for and
to convey to Buyer such title to the Purchased Assets as Sellers
are obligated hereunder to convey,
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8.2 Certified copies of the resolutions adopted by the Board of
Directors of Red One authorizing this Agreement and the
transactions contemplated hereby,
8.3A certificate of an executive officer of Red One, certifying that
the representations and warranties made hereunder are true and
correct on and as of the Closing Date,
8.4 Possession of the Purchased Assets.
9. BROKERS
9.1 Except for Equity Enterprises Inc. whose fee shall be paid by
Sellers, the parties represent and warrant to each other that no
broker or finder was retained or used by any of them in
connection with the transactions contemplated herein.
9.2 Except as set forth in Section 10.1, the parties each agree to
indemnify and hold the other harmless from and against any and
all loss, cost, damage, claim and expense (including reasonable
attorneys' fees) which the other may sustain or which may be
asserted against the other by reason of any claim for
compensation by any person, firm or corporation hired, retained
or introduced by the indemnifying party in connection with the
transactions contemplated hereby.
10. INDEMNIFICATION
10.1 Sellers agree to and do hereby indemnify and hold harmless
Buyer, and its respective officers, directors, stockholders,
affiliates, agents and employees, and their successors and
assigns, from and against any claim against Buyer and against
any other loss, cost, liability, judgment, damage or expense
(including, without limitation, all expenses, reasonable
attorneys' fees and court costs) incurred by Buyer as a result
of, or which involves, (i) the inaccuracy of any representation
or the breach of any warranty made by Sellers or the failure of
Sellers to perform any covenants contained in this Agreement or
in any other document or agreement delivered or deliverable
pursuant hereto, or (ii) any failure of Sellers at any time
after the petition date and prior to the Closing Date to comply
with any applicable law, order and regulation of any Federal,
state, municipal or other governmental department, commission,
board, agency or instrumentality, domestic or foreign, having
jurisdiction over it or its operations including, but not
limited to, any law, order or regulation relating to wages,
hours, prices, collective bargaining, the payment of
withholding, payroll and social security taxes, the environment,
or (iii) any liability of any form or nature asserted against
Buyer relating to Red One's operation of the Restaurant on or
prior to the Closing.
10.2 Buyer agrees to and does hereby indemnify and hold harmless
Xxxxxxxxx and Red One, and Red One's officers, directors,
parent, affiliate, agents and employees, and their successors
and
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assigns, from and against any claim against Sellers and against
any other loss, cost, liability, judgment, damage or expense
(including without limitation, all expenses, reasonable
attorneys' fees and court costs) incurred by Seller as a result
of, or which involves, (i) the inaccuracy of any representation
or the breach of any warranty made by Buyer in this Agreement,
or (ii) the failure of Buyer to perform any covenants or
agreements in this Agreement, or in any other document or
agreement delivered or deliverable pursuant hereto, or (iii) the
use of the Purchased Assets or the operation of the Restaurant
on and after the Closing Date.
10.3 Promptly after receipt by an indemnified party pursuant to the
provisions of this Section 11 of notice of the commencement of
any action or the assertion of any claim, such indemnified party
will notify the indemnifying party if a claim thereto is to be
made against the indemnifying party. In the event that any
action is commenced against an indemnified party by a third
party and the indemnified party promptly notifies the
indemnifying party of the commencement thereof, the indemnifying
party will have the option, exercisable by sending written
notice to the indemnified party, within ten (10) days of receipt
of the indemnified party's notice, of either (i) approving the
claim and authorizing payment of the amount set forth in such
notice; or (ii) assuming the defense of such action with counsel
satisfactory to the indemnified party; and after notice from the
indemnifying party to the indemnified party of its election to
assume the defense of such action, the indemnifying party will
not be liable to the indemnified party for any legal or other
expenses subsequently incurred by the indemnified party in
connection with the defense of such action, other than
reasonable costs of investigation.
11. ADDITIONAL PROVISIONS
11.1 Buyer and Sellers shall execute and deliver or cause to be
executed and delivered to the other such further instruments,
documents and conveyances and shall take such other action as
may be reasonably required to more effectively carry out the
terms and provisions of this Agreement.
11.2 This Agreement shall be binding upon and inure to the benefit of
Buyer and Sellers and their successors and assigns. This
Agreement shall not be assignable by Sellers or Buyer without
the prior written consent of the other. Buyer may assign its
rights pursuant to this Agreement to an entity which is under
common control with Buyer, or which Buyer controls ("Assignee");
provided, however, that any such assignment shall not affect,
the obligations of Buyer to Sellers as set forth herein.
11.3 This Agreement and the documents referred to herein constitute
the
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whole agreement among the parties, and there are no terms other
than as are contained herein or therein. No variation hereof or
thereof shall be deemed valid unless by full performance by the
parties hereto or by a writing signed by the parties hereto.
11.4 This Agreement shall be governed by the laws of the State of New
Jersey, without giving effect to the principles of conflicts of
laws.
11.5 All notices and other communications hereunder shall be in
writing and shall be given (and shall be deemed to have been
duly given upon receipt) by delivery in person by recognized
courier, telegram, telex, facsimile or other standard form of
telecommunication, or by registered or certified post-paid mail,
return receipt requested, and addressed as follows, or to such
other address as any party may notify the other in accordance
with the provisions hereof:
To Buyer: Magic Restaurants, Inc.
Xxx Xxxxxxxxx Xxxxxxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxx, Jr.
-copy to-
Berlack, Israels & Xxxxxxxx LLP
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
To Red One: Red One, Inc.
c/o Karasic, Stone & Marvel
000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxx Castelluccia. Esq.
To Xxxxxxxxx: Xxxx X. Xxxxxxxxx
c/o Ravin, Xxxxxxxxx & Marks, P.A.
000 Xxxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
1.1 This Agreement may be executed in counterparts, each of which
shall be an original, but all of which shall be deemed to be one
and the same instrument.
1.2 The headings in this Agreement are for the convenience of
reference only, and shall not affect in any manner any of the
terms or provisions hereof. For purposes of this Agreement,
where applicable, the masculine gender shall also include the
feminine gender.
1.3 Whether or not the transactions contemplated herein are
consummated, each of parties hereto shall be solely liable for
the fees and expenses incurred by such party's attorneys,
accountants and other representatives in connection with the
preparation of
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this Agreement, the documents deliverable hereunder and any
investigation or examination authorized herein.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
MAGIC RESTAURANTS, INC.
By:__________________________________
Title: Chief Financial Officer
RED ONE, INC., as debtor and
debtor-in-possession
By:__________________________________
Title: ______________________________
_____________________________________
Xxxx Xxxxxxx Xxxxxxxxx, as debtor and
debtor-in-possession