ASSET PURCHASE AGREEMENT
Dated as of February 10, 2001
by and among
EINSTEIN/NOAH BAGEL CORP.
and
EINSTEIN/NOAH BAGEL PARTNERS, L.P.,
as Sellers,
and
ENB ACQUISITION LLC
as Buyer
ASSET PURCHASE AGREEMENT
------------------------
This Asset Purchase Agreement (this "Agreement") is made and entered
into as of February 10, 2001, by and among Einstein/Noah Bagel Corp. ("E/N
---
Corp."), Einstein/Noah Bagel Partners, L.P. ("E/N Partners" and together with
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E/N Corp., the "Sellers"), and ENB Acquisition LLC (the "Buyer"). Capitalized
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terms not otherwise defined in the body of this Agreement are defined in Section
12.
PRELIMINARY STATEMENTS
----------------------
A. Sellers are debtors in certain chapter 11 cases (Case Nos. 00-04447-CGC
and 00-04448-CGC) (together, the "Cases") pending before the United States
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Bankruptcy Court for the District of Arizona (the "Bankruptcy Court");
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X. Xxxxxxx own and operate a chain of specialty retail stores doing
business under the names "Einstein Bros. Bagels" and "Noah's New York Bagels,"
selling fresh-baked bagels, proprietary cream cheeses, specialty coffees and
teas, among other items, and engage in certain related licensing and other
business activities (collectively, the "Business"); and
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C. Upon the terms and subject to the conditions set forth in this Agreement
and in accordance with, among other provisions, Sections 363 and 365 of title 11
of the United States Code (the "Bankruptcy Code"), Sellers desire to sell,
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transfer and assign to Buyer (or its Affiliates) substantially all of the assets
and rights of Sellers used in or related to such Business (excluding in all
cases the Excluded Assets) in return for cash and the assumption by Buyer of
certain liabilities of Sellers related to the Business, and Buyer desires to
purchase, acquire and accept the assignment of such assets and rights and to
assume such liabilities, all upon the terms and subject to the conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual promises
herein contained, and in consideration of the representations, warranties and
covenants herein contained, the parties hereby agree as follows.
1. Purchase and Sale of Assets.
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1.1 Purchased Assets. Pursuant to Sections 363 (b) and (f) and 365 of
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the Bankruptcy Code, Sellers agree to sell, transfer, assign and deliver to
Buyer (or its Affiliates) at the Closing, and Buyer agrees to purchase and
accept from Sellers at the Closing, each Seller's right, title and interest to
all of its respective assets, properties and rights, real and personal, tangible
and intangible, whether owned or leased that are used, usable or necessary in
connection with the Business (all of the foregoing, but in all cases excluding
the Excluded Assets, the "Purchased Assets"), free and clear of all mortgages,
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pledges, liens, charges, equities, encumbrances, security interests and the like
(collectively, "Liens"), upon the terms and subject to the conditions and
-----
exceptions set forth in this Agreement. Unless indicated otherwise in the
respective subsections, all schedules referred to in this Section 1 or elsewhere
in this Agreement have been mutually
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agreed to by Buyer and Sellers. Without limiting the generality of the
foregoing, the Purchased Assets shall include the following:
1.1.1 Cash. All Operating Cash as of the Closing Time including
----
without limitation any cash in any "concentration account" or similar account;
1.1.2 Receivables. All trade receivables, note receivables, insurance
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receivables and other receivables of either Seller as of the Closing Time,
including receivables under any franchise or licensing agreements (collectively,
"Receivables") and any security or collateral for Receivables. Specifically
-----------
excluded from the Receivables are the Excluded Receivables;
1.1.3 Inventory. All items of inventory, components, assembled or
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finished goods, work in process, parts, raw materials and supplies as of the
Closing Date (collectively, "Inventory");
---------
1.1.4 Assumed Contracts. To the extent such Contracts are assignable
-----------------
under the Bankruptcy Code, all of either Seller's right, title and interest in
and to or under all Contracts other than Excluded Contracts listed on Schedule
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1.2.3 (the "Assumed Contracts");
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1.1.5 Personal Property. All owned furniture, fixtures, fixed assets,
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equipment (including office equipment), supplies, manuals, vehicles, and other
personal property owned by either Seller (collectively, the "Personal
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Property");
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1.1.6 Claims and Causes of Action. (i) Any and all intellectual
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property claims (to the extent related to the Intellectual Property) and (ii)
any and all other claims and causes of action that may be asserted by Sellers
against (x) any vendor to the extent that the relevant contract with such vendor
is an "Assumed Contract" hereunder or the obligations to such vendor are Assumed
Total Liabilities hereunder or (y) employees of the Business who become
employees of Buyer as of the Closing Date; excluding from all of the foregoing,
(A) claims or causes of action against parties listed on Schedule 1.2.4 hereto
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that are unrelated to the Business, (B) claims or causes of action under the
avoidance provisions of the Bankruptcy Code or state fraudulent conveyance laws,
and (C) claims against vendors (including claims for indemnity, contribution and
reimbursement) that arose prior to the Closing Date (whether or not asserted
prior to the Closing Date) with respect to services or supplies provided by such
vendors to Sellers prior to the Closing Date and that do not relate to Assumed
Contracts or Assumed Real Property Leases;
1.1.7 Intentionally Omitted
1.1.8 Assumed Real Property Leases. To the extent such Real Property
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Leases are assignable under the Bankruptcy Code, all of Sellers' right, title
and interest in and to all Real Property Leases other than the Excluded Real
Property Leases listed on Schedule 1.2.5 (the "Assumed Real Property Leases");
----------------------------
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1.1.9 Books and Records. All books and records of Sellers relating to
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the Business or Purchased Assets, including, without limitation, (i) all
computer data files stored, used, held or kept in connection with the Business
or Purchased Assets, and (ii) to the extent in possession of Sellers, copies of
the Organizational Books and Records of Einstein/Noah Bagel Partners, Inc.
("ENBPI") (all of the foregoing, the "Books and Records");
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1.1.10 Intellectual Property. All of Sellers' right, title and
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interest with respect to:
(i) patents, patent applications, inventor's certificates,
invention disclosures, reissues, divisions, continuations-in-part and
extensions thereof;
(ii) trademarks (whether registered or unregistered),
trademark applications, trade names, brand names, assumed names, trade
dress, service marks (whether registered or unregistered), service xxxx
applications, internet domain name registrations and other indications of
origin and all renewals, modifications and extensions thereof;
(iii) copyrights (whether registered or unregistered),
copyright applications and all renewals and extensions thereof;
(iv) the Management Information Systems;
(v) to the extent transferable under the Bankruptcy Code,
all of Sellers' other intellectual property, trade secrets, inventions,
confidential or proprietary business information, know-how, ideas,
formulas, compositions, technical data, operating manuals and guides,
writings and other works of authorship, whether copyrightable or not,
including software programs or applications (including source code and
object code and all documentation therefor) developed by or on behalf of
Sellers, algorithms, databases, financial, marketing and business data,
pricing and cost information, recipes, processes, techniques, vendor lists
and records, customer lists and records, licensing records, plans, designs,
drawings, sketches, specifications, proposals, rights to limit the use or
disclosure of confidential information by any person, advertising and
promotional materials, business and marketing plans and similar assets;
(vi) the goodwill associated with each of the foregoing;
(vii) the right to use or exploit any of the foregoing;
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(viii) any similar tangible or intangible intellectual
property or proprietary rights, information and technology;
(ix) any of the foregoing used pursuant to an express or
implied license, to the extent transferable under the Bankruptcy Code; and
(x) any claims or causes of action arising out of or
related to any infringement or misappropriation of any of the foregoing; in
each case in any jurisdiction
(all of the foregoing being referred to collectively as the "Intellectual
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Property");
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1.1.11 Governmental Permits. All of Sellers' licenses, consents,
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qualifications, approvals or other regulatory authorizations issued by any
governmental entity pursuant to any law, rule, regulation, decree or
administrative or industry practice ("Governmental Permits") that are
--------------------
transferable and that are necessary or useful for the operation of the Business
and held by Sellers in connection with the operation of the Business or the
ownership of the Purchased Assets (and "Purchased Assets" shall expressly
exclude any other Governmental Permits);
1.1.12 Prepaid Expenses, Deposits, and Certain Rights. All of Sellers'
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prepaid expenses, media barter credits, utility, lease and other deposits
(including the Prepaid Rent and Prepaid Advertising), rights under indemnities
(including, without limitation, from manufacturers, vendors and others), rights
arising out of or under any express or implied warranties from any suppliers, or
rights otherwise arising in connection with the operation of the Business, but
in all cases only to the extent related directly to the Purchased Assets (and
"Purchased Assets" shall expressly exclude any of the foregoing types of rights
and interests not related directly to the Purchased Assets);
1.1.13 Vendor Allowances. All vendor allowances, including volume and
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promotional incentive allowances, spoilage credits, and any other credits of
Sellers received by or accruing to Sellers, related to (i) the vendor contracts
that are Assumed Contracts hereunder or (ii) vendors with respect to which all
of Sellers' obligations are Assumed Total Liabilities hereunder;
1.1.14 Bank Account Agreements. Each bank account agreement with
-----------------------
respect to which Buyer (to the extent Buyer has determined that it wants such
agreement transferred to it) and the relevant bank or financial institution have
agreed to a transfer of such agreement to Buyer effective on or immediately
after the Closing Date; provided, that Sellers shall have no obligation with
respect to the foregoing other than to execute an Assumption and Assignment
Agreement and to pay all fees current through Closing (other than account
transfer fees);
1.1.15 Insurance Policies and Insurance Claims. To the extent
---------------------------------------
assignable under the Bankruptcy Code, all of Sellers' contracts of insurance
with respect to the Business and the Purchased Assets, any unearned premiums
thereunder, and any
5
outstanding claims against insurance policies; provided, that Sellers shall
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remain listed as additional insureds under any such policies, at Sellers'
expense;
1.1.16 Equity Interest in ENBPI. All of E/N Corp.'s right, title and
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interest in the capital stock of ENBPI;
1.1.17 Other Assets. All other assets of Sellers that are not Excluded
------------
Assets and that are used, usable, or necessary for the operation of the
Business.
1.2 Excluded Assets. The Purchased Assets shall not include, and
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Sellers shall retain, the following assets, without duplication (the "Excluded
--------
Assets"):
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1.2.1 Interseller Claims. All claims or obligations between or among
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any Sellers or either of the Sellers and ENBPI;
1.2.2 Excluded Receivables. All receivables due from one Seller to the
--------------------
other Seller, from either Seller to ENBPI, or from ENBPI to either Seller (the
"Excluded Receivables");
1.2.3 Excluded Contracts. All Contracts of Sellers (i) listed in
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Schedule 1.2.3 and (ii) all Contracts between Sellers (but not any third
--------------
parties) (all of the foregoing, the "Excluded Contracts");
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1.2.4 Excluded Claims and Causes of Action. All claims and causes of
------------------------------------
action against parties set forth on Schedule 1.2.4 and causes of action that are
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not specifically described as being "Purchased Assets" pursuant to Section
1.1.6;
1.2.5 Excluded Real Property Leases. (i) All Real Property Leases
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between Sellers (collectively, the "Interseller Leases"), and (ii) all Real
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Property Leases listed in Schedule 1.2.5 (all of the foregoing, the "Excluded
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Real Property Leases");
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1.2.6 Organizational Books and Records. The corporate charters,
--------------------------------
bylaws, partnership agreements, regulations, minute books, taxpayer and other
identification numbers, seals, securities transfer books, registries, blank
stock certificates, and other organizational documents and records of each
Seller and each subsidiary or affiliate of any Seller or other entity in which
any Seller may have an equity interest other than ENBPI (the "Organizational
--------------
Books and Records");
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1.2.7 Sellers' Rights Under this Agreement. Either Seller's rights
------------------------------------
under this Agreement or any ancillary agreements executed by Buyer and either of
the Sellers pursuant hereto (the "Related Agreements"), including without
------------------
limitation, the right to receive the Purchase Price;
1.2.8 Tax Refunds. Tax refunds payable to either Seller in respect of
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(i) Excluded Assets or (ii) any Tax paid prior to the Closing Date; and
6
1.2.9 Other Excluded Assets. All items of property or other assets
---------------------
expressly excluded from the Purchased Assets pursuant to Section 1.1 or
otherwise in this Agreement.
2. Purchase Price; Assumption of Liabilities; Deposit.
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2.1 Amount and Payment of Purchase Price.
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(a) Amount. The aggregate consideration (the "Purchase Price") to
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be paid by Buyer pursuant to this Agreement shall be: $167.7 million,
consisting of cash in the amount of $145 million, as adjusted pursuant to
this Section 2.1(a), and the assumption of Assumed Current Liabilities. The
cash portion of the Purchase Price shall be:
(i) decreased by the amount by which the Assumed Current
Liabilities at the Closing Date exceed $22.7 million; and
(ii) increased by the amount by which the Assumed Current
Liabilities on the Closing Date are less than $22.7 million.
(b) Cash at Closing. On the Closing Date, Buyer shall pay to
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Sellers by wire transfer of immediately available funds to the Designated
Seller Account an amount equal to:
(i) $145 million, less
----
(ii) the Escrowed Purchase Price Portion, which shall be
delivered to an escrow agent acceptable to Buyer and Sellers (the
"Escrow Agent"), to be held in an interest-bearing account by the
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Escrow Agent (and to be invested as Buyer may reasonably direct),
which amount shall be released in accordance with Section 9.1, less
(iii) the Deposit Amount to be delivered by the Escrow Agent
in accordance with Section 2.5.
(c) Final Determination of Assumed Current Liabilities. Promptly
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after the determination of Assumed Current Liabilities as provided for in
Section 9.1, the parties shall make the payments provided for in Section
9.1.3 and any portion of the Escrowed Purchase Price Portion due to Sellers
or Buyer, as the case may be, shall be released to Sellers or Buyer in
accordance with Section 9.1.
(d) Allocation of Purchase Price. The Purchase Price shall be
----------------------------
allocated for tax purposes among the Purchased Assets in a manner to be
determined by Buyer based on the advice or recommendation of a nationally
recognized appraisal firm. Sellers and Buyer agree to use the allocations
determined pursuant to this Section 2.1(d) for all tax purposes, including
without
7
limitation, those matters subject to Section 1060 of the Internal Revenue
Code of 1986, as amended.
(e) IRS Form 8594. Buyer and Sellers each agree to file Internal
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Revenue Service Form 8594. Buyer and Sellers each agree to provide the
other promptly with any other information required to complete Form 8594.
2.2 Assumed Liabilities. Subject to the terms and conditions of this
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Agreement, Buyer shall assume:
(a) all current liabilities of Sellers (including, without
duplication, the outstanding float consisting of checks or other payment
items (including Outstanding ACHs) issued and outstanding against Sellers'
operating accounts) as of the Closing Date;
(b) (i) with respect to Employees in Good Standing, Sellers'
obligation to make payments under and in accordance with the terms of the
Retention Bonus Program, in each case only to the extent that the Closing
occurs before the relevant payment is required to be made; provided , that
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payments under the Retention Bonus Program otherwise due upon confirmation
of Sellers' plan of reorganization shall instead be payable at Closing, and
(ii) all COBRA liabilities of Sellers; and
(c) liabilities and obligations under all Assumed Contracts
(including, without limitation, the Xxxxxxxx Employment Agreement and the
Severance Agreements) and the Assumed Real Property Leases.
The liabilities described in Sections 2.2(a) and 2.2(b) shall hereinafter be
referred to as the "Assumed Current Liabilities". The Assumed Current
---------------------------
Liabilities and the liabilities described in Section 2.2(c), shall hereinafter
be referred to collectively as the "Assumed Total Liabilities"; provided,
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however that, the current liability portion of the Assumed Contracts and Assumed
Real Property Leases shall be included in the Assumed Current Liabilities. Other
than the Assumed Total Liabilities, no indebtedness, obligation or liability of
Sellers is assumed by Buyer, including without limitation any liability for the
payment of (i) any professional person retained in the Cases, (ii) any Taxes of
the Sellers for any period through the day before the Closing Date, or (iii) any
liability for inter-Seller payables.
2.3 No Expansion of Third Party Rights. The assumption by Buyer of the
----------------------------------
Assumed Total Liabilities shall in no way expand the rights or remedies of any
third party against Buyer or Sellers as compared to the rights and remedies
which such third party would have had against Sellers (absent their chapter 11
filings) had Buyer not assumed such liabilities. Without limiting the generality
of the preceding sentence, the assumption by Buyer of the Assumed Total
Liabilities shall not create any third-party beneficiary rights other than with
respect to the person whose debt is assumed.
8
2.4 Taxes.
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2.4.1 With respect to Taxes (whether assessed or unassessed) that are
not included in the Assumed Total Liabilities and that relate to the Business or
the Purchased Assets, and except as otherwise provided in Section 2.4.2, (i)
Sellers shall be liable for and shall to the extent required or permitted by
Bankruptcy-Related Requirements pay all such Taxes to the extent attributable to
periods (or portions thereof) ending on or prior to the Closing Date, and (ii)
Buyer shall be liable for and shall pay all such Taxes to the extent
attributable to periods (or portions thereof) beginning after the Closing Date;
provided, that, Buyer shall not be liable for any Taxes arising or incurred with
respect to the operations of the Business prior to Closing other than those that
are included in the Assumed Total Liabilities.
2.4.2 Sellers shall be liable for and shall pay any and all Taxes to
the extent required or permitted by Bankruptcy-Related Requirements (including,
without limitation, any Taxes payable in respect of any Internal Revenue Code
Section 338(h)(10) election, sales tax, use tax, transfer tax or documentary or
stamp tax) arising out of or in connection with the sale of the Purchased
Assets. Buyer shall not be liable for any Taxes arising out of or in connection
with the sale of the Purchased Assets.
2.4.3 In connection with Sellers' preparation of tax and related forms
and documents relating to any tax periods through and including the tax period
in which the Closing Date occurs, including, without limitation, any and all
income tax returns, Form W-2s, Form K-1s, Form 5500s and Form 1099s, required to
be filed by Sellers, Buyer shall provide Sellers or their representatives with
such access to the necessary information as Sellers reasonably request in
advance of the relevant filing deadline for such forms and documents. Buyer
shall have no obligation to prepare all or any part of Sellers' tax returns for
any period.
2.5 Deposit. Within two business days following the execution hereof,
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Buyer shall have delivered to the Escrow Agent $3,000,000 (such amount, together
with the interest or income thereon, the "Deposit Amount"), to be held in an
--------------
interest-bearing account reasonably acceptable to Sellers by the Escrow Agent to
serve as a down payment on the Purchase Price, and to be released in accordance
with the following procedure:
(a) On the Closing Date, the Escrow Agent shall cause the Deposit
Amount to be transferred, by wire transfer, to the Designated Seller
Account (and such amount shall be applied towards the payment of the
Purchase Price);
(b) Upon termination of this Agreement by Sellers due to a breach
of this Agreement by Buyer, the Escrow Agent shall cause the Deposit Amount
to be transferred, by wire transfer, to the Designated Seller Account to be
retained by Sellers; and
9
(c) Upon termination of this Agreement other than as set forth in
Section 2.5(b), the Escrow Agent shall cause the Deposit Amount to be
transferred, by wire transfer, to the Buyer to be retained by Buyer
(without limiting Buyer's right to payment of the Termination Payment in
the circumstances specified in Section 10.2).
3. Employees.
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(a) Buyer (or its Affiliates) shall offer Employment on
substantially similar terms, with substantially similar compensation and
benefits in the aggregate, as of the Closing Date (with such employees
receiving credit for prior service in connection with vacation leave, sick
leave, and the like), to each of Sellers' employees who, on the Closing
Date, is an Employee in Good Standing.
(b) The names and the material terms of the employment of all
employees shall be provided by Sellers to Buyer upon request. Sellers shall
use their best efforts to assist Buyer in communicating any offers of
employment to such employees and in no case will Sellers interfere with the
hiring of any such employees. In addition, Sellers shall have provided
Buyer with all information reasonably necessary for, and requested by,
Buyer to administer COBRA with respect to any remaining COBRA liabilities,
such information to be updated monthly until Closing.
(c) In no event shall this Section 3 constitute or be deemed to
be an employment contract for any purposes whatsoever, and no employee of
Sellers shall be entitled to any rights or interests under this Agreement
nor in any event shall any employees constitute or be deemed to be third
party beneficiaries under this Agreement or otherwise be entitled to
enforce or make any claim under this Agreement.
4. Representations and Warranties of Sellers. Sellers each jointly and
-----------------------------------------
severally hereby represent and warrant to Buyer as follows:
4.1 Organization. Each Seller is duly organized, validly existing and
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in good standing under the laws of the jurisdiction of its organization. Each
Seller is duly qualified and licensed to do business as a foreign entity in good
standing in all jurisdictions in which the character or the location of the
assets owned or leased by it or the nature of the Business conducted by it
requires licensing or qualification and where the failure to be so qualified
could have a Material Adverse Effect on the Business.
4.2 Authorization. Giving pro forma effect to the Preliminary Order
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and Sale Order, as the case may be, the execution, delivery and performance of
this Agreement by Sellers have been duly and validly authorized by all necessary
action on the part of Sellers. Giving pro forma effect to the Preliminary Order
and Sale Order, as the case may be, this Agreement and the Related Agreements
constitutes the legal, valid and binding obligation of Sellers, enforceable
against Sellers in accordance with their
10
respective terms. No vote of, or consent by, the holders of any class or series
of capital stock issued by the Sellers is necessary to authorize the execution
and delivery of this agreement and any Related Agreements.
4.3 No Conflicts. Giving pro forma effect to the Preliminary Order and
------------
Sale Order, as the case may be, the execution, delivery and performance of this
Agreement by Sellers will not violate the provisions of, or constitute a breach
or default whether upon lapse of time and/or the occurrence of any act or event
or otherwise under (a) the organizational documents of Sellers, (b) any law to
which Sellers are subject, or (c) any agreement, contract, instrument, mortgage,
lien or other document to which Sellers are a party, except to the extent that
any such violation, breach or default is excused by, or unenforceable as a
result of, the filing of the Cases or to the extent that it would not have a
Material Adverse Effect on the Business. Other than the filings under the HSR
Act, and the approval of the Bankruptcy Court, no other consent, approval, order
or authorization of, or representation, declaration or filing with any
governmental entity is required to be obtained or made by or with respect to
Sellers in connection with the execution or delivery of this Agreement and any
Related Agreements by Sellers or the transactions contemplated by this Agreement
or any Related Agreement by Sellers.
4.4 Leased Real Property. Schedule 4.4 lists all of Sellers' real
-------------------- ------------
property leases other than any Interseller Leases (collectively, the "Real
----
Property Leases"). Giving pro forma effect to the terms of the Sale Order, with
---------------
respect to each Assumed Real Property Lease with respect to which a Seller is
the lessee or sublessee, such Seller will transfer each such Assumed Real
Property Lease free and clear of any Liens other than landlord liens. To the
knowledge of Sellers, each Assumed Real Property Lease is legal, valid, binding,
enforceable and in full force and effect. Each Assumed Real Property Lease was
either assumed by Sellers pursuant to Section 365 of the Bankruptcy Code or will
be assumed as part of the Sale Order.
4.5 Personal Property. Giving pro forma effect to the terms of the
-----------------
Sale Order, Sellers have good and marketable title (in the case of owned
Personal Property) and a valid leasehold interest (in the case of Personal
Property leased under equipment leases) to all items of tangible Personal
Property, free and clear of any Liens (other than any landlord liens). EXCEPT
FOR THE FOREGOING WARRANTY OF TITLE, ALL ITEMS OF EQUIPMENT AND OTHER TANGIBLE
PERSONAL PROPERTY, ALL IMPROVEMENTS, ALL ITEMS LEASED PURSUANT TO OPERATING OR
OTHER LEASES AND ALL LEASEHOLD IMPROVEMENTS ARE CONVEYED PURSUANT HERETO ON AN
"AS IS, WHERE IS" BASIS, WITH NO WARRANTY OR REPRESENTATION OF SELLERS, EXPRESS
OR IMPLIED, AS TO THE CONDITION OF SUCH ASSETS OTHER THAN AS SET FORTH IN THIS
AGREEMENT.
4.6 Intellectual Property. Schedule 4.6 lists the copyrights, patents,
--------------------- ------------
service marks, trademarks, trade names, internet domain names, and registrations
or applications for registration of any of the foregoing, used in the Business
or in which Sellers have an interest and the nature of such interest (but
excluding any of the foregoing that is an Excluded Asset), including the
material licenses or other rights in effect with
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respect to any of the foregoing. Giving pro forma effect to the terms of the
Sale Order, the Intellectual Property is assignable free and clear of any Liens,
and no consent from or payment to any third party is required for the purchase
or use of such Intellectual Property by Buyer. Except as set forth in Schedule
--------
4.6, neither the Sellers nor ENBPI has received any notice to the effect (or
---
otherwise has actual knowledge) that the Intellectual Property or any use by
Sellers of any of the Intellectual Property conflicts with or allegedly
conflicts with or infringes the rights of any person or entity, and none of the
Intellectual Property is currently involved in any proceedings challenging its
availability or enforceability.
4.7 Employees and Employment-Related Matters. There is no labor
----------------------------------------
strike, material dispute, request for representation, slowdown or stoppage
actually pending or, to the actual knowledge of Sellers, threatened against or
affecting Sellers. All workers' compensation and unemployment compensation
insurance premiums which have become due and payable have been fully paid.
4.8 Employee Benefit Plans. Schedule 4.8 lists each employee benefit
---------------------- ------------
plan that any Seller maintains or to which either Seller contributes, and to the
knowledge of Sellers:
(a) Each such employee benefit plan (and each related trust,
insurance contract, or fund) complies in form and in operation in all
material respects with the applicable requirements of ERISA and the Code;
and
(b) All contributions (including all employer contributions and
employee salary reduction contributions) which are due have been paid to
each such employee benefit plan which is an employee pension benefit plan,
as defined in Section 3 of ERISA. Sellers have not maintained any defined
contribution plan other than E/N Corp.'s 401(k) plan (the "Seller 401(k)
-------------
Plan") and have not maintained any defined benefit pension plan at any
----
time. The Seller 401(k) Plan is qualified under Section 401(a) of the Code
and its related trust is exempt under Section 501(a) of the Code.
4.9 Contracts. Schedule 4.9 lists or describes all of Sellers'
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material written Contracts other than any bank account agreements. Each of the
Assumed Contracts as of the date hereof was either assumed by Sellers pursuant
to Section 365 of the Bankruptcy Code, will be assumed as part of the Sale Order
or was entered into after the Petition Date and prior to the date hereof. Giving
pro forma effect to the terms of the Sale Order, to the knowledge of Sellers,
each of the Assumed Contracts is legal, valid, binding, enforceable and in full
force and effect.
4.10 Litigation. Except as set forth on Schedule 4.10 and garnishment
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actions, a schedule of which has been provided to Buyer, no action, suit,
proceeding or investigation is pending or, to Sellers' best knowledge,
threatened by or before any federal, state or local court, governmental agency,
tribunal or any other forum, in which Sellers are named or likely to be named as
a party or otherwise relating to or affecting the
12
Business or any of the Purchased Assets and that would have a Material Adverse
Effect on the Business.
4.11 Xxxxxxxx Employment Agreement and Severance Agreements. Sellers
------------------------------------------------------
have provided Buyer with true and correct copies of the Xxxxxxxx Employment
Agreement and Severance Agreements as amended to the date hereof.
4.12 SEC Documents; Financial Statements. E/N Corp. has filed in a
-----------------------------------
timely manner all documents that E/N Corp. was required to file with the
Securities and Exchange Commission (the "Commission") under Sections 13, 14(a)
and 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), during the 12 months preceding the date of this Agreement. As of their
respective filing dates, all documents filed by E/N Corp. with the Commission
(the "SEC Documents") complied as to form in all material respects with the
requirements of the Exchange Act or the Securities Act of 1933, as amended, as
applicable. The SEC Documents did not contain any untrue statement of material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements made therein, in light of the circumstances under which
they were made, not misleading. The financial statements contained in E/N
Corp.'s 10-Q for the quarter ended October 2000 and the Sellers' unaudited
year-end financial statements for the fiscal year ended January 2, 2001
previously delivered to Buyer have been prepared in accordance with United
States generally accepted accounting principles ("GAAP") consistently applied
----
and fairly present the consolidated financial position of E/N Corp. at the dates
thereof and the results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited financial statements, to normal,
recurring adjustments and the absence of footnotes).
4.13 ENBPI. ENBPI is duly organized, validly existing and in good
-----
standing under the laws of the jurisdiction of its organization. The stock
transferred to the Buyer pursuant to Section 1.1.16 represents all of the
outstanding securities of ENBPI and, giving pro forma effect to the Sale Order,
such stock is free and clear of any and all Liens.
4.14 Amount of Assumed Current Liabilities. The amount of Assumed
-------------------------------------
Current Liabilities of the Sellers is reasonably constant and is normally in the
range of approximately $22.7 million.
5. Representations and Warranties of Buyer. Buyer represents and warrants
---------------------------------------
to Sellers as follows:
5.1 Organization. It is duly organized, validly existing and in good
------------
standing under the laws of the jurisdiction of its organization, and has the
necessary power and authority to execute, deliver and perform this Agreement.
5.2 Authorization. Its execution, delivery and performance of this
-------------
Agreement have been duly and validly authorized by all necessary action on its
part. This Agreement and the Related Agreements to which it is a party
constitute its legal,
13
valid and binding obligations, enforceable against it in accordance with their
respective terms.
5.3 No Conflicts. Its execution delivery and performance of this
------------
Agreement will not violate the provisions of, or constitute a breach or default
whether upon lapse of time and/or the occurrence of any act or event or
otherwise under, (a) its organizational documents, (b) any law to which it is
subject, or (c) any agreement, contract, instrument, mortgage, lien or other
document to which it is a party. Other than the filings under the HSR Act, no
other consent, approval, order or authorization of, or representation,
declaration or filing with any governmental entity is required to be obtained or
made by or with respect to Buyer in connection with the execution or delivery of
this Agreement by such party or the transactions contemplated by this Agreement
to which it is a party.
5.4 Financial Capacity. As of the date hereof, Buyer has cash and
------------------
assets having a value of at least $35 million. As of the Closing Date, the Buyer
shall have available sufficient funds to consummate the transactions
contemplated by this Agreement.
6. Covenants.
---------
6.1 Access; Confidentiality. Sellers shall, to the extent practicable
-----------------------
without material disruption of the Sellers' business, during normal business
hours, provide Buyer and its employees and representatives with full and
complete access to the books, records, facilities, contracts, assets,
properties, employees, vendors, suppliers, landlords, franchisees, licensees,
and creditors of Sellers, the Purchased Assets and the Business, relating to the
transactions contemplated by this Agreement and the Related Agreements;
provided, that Buyer shall give Sellers advance notice before meeting or
--------
otherwise communicating with any third party or employee, and Sellers or their
authorized representatives shall be given a reasonable opportunity to
participate in any such meeting or communication. Buyer and its representatives
shall have the right to review and make copies of all documents and other
information relating to Sellers, the Business and the Purchased Assets, in all
cases at Buyer's expense.
6.2 Operation of Business. Except as otherwise contemplated by the
---------------------
Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, the operation and
information requirements of the Office of United States Trustee, and any orders
entered or approvals or authorizations granted by the Bankruptcy Court in the
Cases (collectively, "Bankruptcy-Related Requirements") or by this Agreement,
-------------------------------
during the period between the date hereof and the Closing, the Business shall be
conducted by Sellers in the ordinary course and in compliance with all other
applicable laws and regulations, and, to the extent consistent therewith,
Sellers shall, unless agreed to in writing by Buyer, use all commercially
reasonable efforts to:
(i) preserve intact their respective business organizations
and operate in the normal course, consistent with past practice;
14
(ii) keep their respective physical assets in good working
condition, ordinary wear and tear excepted, and maintain such assets
in accordance with industry standard;
(iii) pay all Taxes as they become due and payable;
(iv) maintain insurance on their respective Business and
assets (in amounts and types consistent with past practice);
(v) maintain staffing levels that are adequate to
properly operate the Business in the ordinary course;
(vi) preserve their relationships with customers,
suppliers, landlords (including the payment of all rents and other
charges due on leased real property) and others having business
dealings with Sellers (to the extent relating to the Purchased
Assets), to the end that their goodwill and ongoing business shall not
be impaired in any material respect;
(vii) not enter into, renew, terminate or amend any
Contract (a) outside the ordinary course of business or (b) which
obligates any Seller to pay an aggregate amount in excess of $100,000
or the term of which is longer than one year (unless prior approval of
the Bankruptcy Court is obtained therefor);
(viii) retain at each open Store an adequate supply of good
and useable operating inventories consistent with each Store's
reasonably anticipated usage requirements;
(ix) not terminate or amend any Real Property Leases, or
exercise or not exercise any options on Real Property Leases, except
to the extent that such action would not cause a Material Adverse
Effect on the Business;
(x) maintain in good standing and keep in full force and
effect all Governmental Permits applicable to the Business and comply
in all material respects with all laws applicable thereto;
(xi) not change the accounting principles or methods
employed in the calculation of Assumed Total Liabilities;
(xii) perform and comply in all material respects with the
terms of all Assumed Contracts;
(xiii) maintain their books and records in the usual,
regular and ordinary manner;
15
(xiv) except as otherwise provided in this Agreement, not
increase above normal and usual merit or cost-of-living increases the
compensation payable or to become payable by Sellers to any of their
officers or employees or increase the coverage or benefits available
under (or create any new or otherwise amend) any severance pay,
termination pay, vacation pay, company awards, salary continuation for
disability, sick leave, deferred compensation, bonus or other
incentive compensation, insurance, pension or other employee benefit
plan, payment or arrangement made to, for, or with any of the officers
or employees of Sellers (unless prior Bankruptcy Court approval
therefor is obtained);
(xv) provide prompt notice to Buyer of (a) any losses or
damages in excess of an aggregate of $100,000 suffered by Sellers with
respect to the Purchased Assets whether or not such losses or damages
are covered by insurance, (c) any material legal proceeding commenced
by or against Sellers or any motion or pleading filed in such cases
(other than proceedings in the Cases), and (d) any material legal
proceeding commenced or, to the best knowledge of Sellers, threatened
against Sellers relating to the transactions contemplated by this
Agreement or relating to any of the Purchased Assets;
(xvi) regularly confer with Buyer concerning operational
matters relating to the Business;
(xvii) make contractual payments only in accordance with
the terms of the applicable Contract; and
(xviii) not agree to do anything that would violate this
Section 6.2.
6.3 Reasonable Efforts. Sellers, on the one hand, and Buyer, on the
------------------
other hand, agree that from the date hereof, they shall use their reasonable
efforts to satisfy the conditions precedent to the Closing (to the extent that
such conditions are to be satisfied by Sellers and Buyer, as the case may be) on
or prior to the first possible date upon which the Closing can occur.
6.4 Publicity. Except as may be required by law or regulation, until
---------
the earlier of the termination of this Agreement and the Closing Date, no party
hereto (nor any of their respective affiliates) shall make any public
announcement or other public disclosure regarding the terms of, or transactions
contemplated by, this Agreement without the consent of the other party, which
consent shall not be unreasonably withheld or delayed.
6.5 Notice of Developments. Each party will give prompt written notice
----------------------
to the other party of any material adverse development causing a breach of any
of its own representations and warranties. No disclosure by any party pursuant
to this
16
Section 6.5, however, shall be deemed to amend or supplement the schedules
attached hereto or to prevent or cure any misrepresentation or breach of
warranty.
6.6 HSR Filings. If required by law, each party shall promptly, but
-----------
in no event later than 20 business days after the date hereof, make their
respective filing under the HSR Act, and thereafter make any other required
submissions under the HSR Act and use reasonable commercial efforts and
diligence to satisfy any other conditions necessary to comply with the HSR Act
and to obtain an early termination of any waiting period pursuant thereto.
6.7 Preliminary Order. As promptly as practicable after the date
-----------------
hereof, Sellers will file with the Bankruptcy Court a motion and supporting
papers in form and substance reasonably acceptable to Buyer's counsel seeking
the Bankruptcy Court's approval of the terms of Sections 6.8, 6.10, 10.1 and
10.2 of this Agreement and Sellers' observance and performance of such terms
(the "Preliminary Order").
-----------------
6.8 Acquisition Proposals.
---------------------
(a) Neither Sellers nor any of their affiliates nor any of
their affiliates' respective directors, officers, employees, agents or
representatives shall solicit, or initiate, directly or indirectly,
any inquiries, discussions or proposals for an Acquisition Proposal or
engage in or continue any discussions with any party that has made or
who may make any Acquisition Proposal until after the Preliminary
Order shall have been entered by the Bankruptcy Court; provided, that,
--------
subject to compliance with the provisions of Section 6.8(b), Sellers
may respond to any unsolicited proposal received from a third party
relating to an Acquisition Proposal, and after entry of the
Preliminary Order, Seller may solicit Acquisition Proposals from third
parties, provide information to such third parties and negotiate and
discuss any such Acquisition Proposal with such third party in
accordance with the terms of the Preliminary Order.
(b) Upon receipt of an Acquisition Proposal, Sellers will
promptly notify Buyer and indicate in such notice the identity of the
offeror and a complete and accurate description of the material terms
thereof and provide Buyer with a copy of any writing evidencing such
Acquisition Proposal, and thereafter keep Buyer informed on a current
basis, of the status and terms of such Acquisition Proposal.
6.9 Cooperation and Access. From and after the date hereof, Sellers
----------------------
shall use their commercially reasonable efforts to provide reasonable access and
information to Buyer concerning the Business.
6.10 Preliminary Order. The Company shall use its reasonable best
-----------------
efforts to obtain entry of the Preliminary Order by the Bankruptcy Court on or
before February 22, 2001, which shall be reasonably satisfactory in all respects
to Buyer. Among other provisions, the Preliminary Order shall include:
17
(a) The Buyer's claim to the Termination Payment (as defined
and described in Section 10.2) and stating specifically that such
Termination Payment shall be entitled to super-priority administrative
expense claim treatment, senior to all super-priority claims other
than those of lenders under the Sellers' post-petition credit
facility, if any;
(b) A provision that the Sellers may consider alternative
bids to the bid of the Buyer contemplated by this Agreement, provided
such bids provide for all-cash consideration;
(c) A provision that the minimum initial overbid must be for
at least $1 million greater than $167.7 million plus the Termination
Payment (the "Initial Overbid"). If the Sellers receive an Initial
---------------
Overbid which meets the requirements to be set forth in the
Preliminary Order, the Sellers may conduct an auction on such terms
and conditions as set forth on Schedule 6.10(c) hereto or as may be
----------------
reasonably acceptable to the Buyer (the "Auction"). The opening bid at
-------
the Auction shall not be less than $1 million greater than the highest
qualified bid submitted prior to the Auction. On conclusion of the
Auction, the Sellers shall determine the highest or otherwise best bid
and shall submit such bid for approval by the Bankruptcy Court. If the
Sellers do not receive any qualified bids other than that of the
Buyer, the Sellers will report the same to the Bankruptcy Court and
will proceed with the sale of the Purchased Assets to the Buyer.
6.11 Sale Order. The Company shall use its reasonable best efforts to
----------
obtain entry by the Bankruptcy Court on or before April 15, 2001 of an order
(the "Sale Order") which:
----------
(a) approves a sale of the Purchased Assets to Buyer
pursuant to Sections 363 and 365 of the Bankruptcy Code, free and
clear of Liens, claims and interests (except to the extent securing an
Assumed Total Liability);
(b) contains findings of fact and provides that Buyer is a
good faith purchaser entitled to the protections of Section 363(m) of
the Bankruptcy Code;
(c) contains provisions allowing for all purposes claims
against the Sellers held by Buyer or its Affiliates, in the aggregate
amount of not less than $46,254,165.01 (provided Buyer or its
Affiliates shall not have sold the securities representing such
claims);
(d) contains full and final releases by the Sellers in favor
of Buyer or its Affiliates, and their respective officers, directors
and affiliates except with respect to obligations arising hereunder or
under any Related Agreement;
18
(e) authorizes the assumption by Sellers and assignment to
Buyer of all Assumed Real Property Leases and Assumed Contracts; and
(f) is otherwise reasonably acceptable to Buyer.
6.12 ENBPI. Prior to the Closing Date, ENBPI will enter into an
-----
agreement reasonably acceptable to ENBPI, E/N Corp. and Buyer which provides for
(i) the transfer of the general partnership interest in E/N Partners held by
ENBPI, (ii) the transfer of the intercompany receivables representing the
amounts owed by E/N Corp. and /or E/N Partners to ENBPI to a subsidiary of E/N
Corp. ("Sub"), and (iii) the satisfaction by ENBPI or Sellers at or before
---
Closing of (A) all currently outstanding lease obligations of ENBPI under leases
for open Stores; and (B) all outstanding lease obligations under any other
leases. Such agreement shall, among other things, provide that ENBPI will be
indemnified by Sub for claims arising out of its ownership of the E/N Partners
general partnership interest, and Sub and the Sellers will be indemnified by
ENBPI for claims arising out of ENBPI's operations following the Closing Date.
6.13 401(k) Plan. Effective as of the Closing Date, Buyer shall assume
-----------
sponsorship of the Seller 401(k) Plan and shall assume the assets and
liabilities thereunder. Buyer and Seller shall take all steps reasonably
necessary to give effect to the intent of the preceding sentence.
6.14 Transitional Services Agreement. Prior to the Closing Date, Buyer
-------------------------------
and Sellers shall enter into a transitional services agreement, in form and
substance mutually satisfactory to the parties, which will provide Sellers with
the services of employees of Buyer to the extent reasonably necessary to wind up
the affairs of the Sellers (the "Transitional Services Agreement").
-------------------------------
7. Conditions Precedent to Parties' Obligation.
-------------------------------------------
7.1 Conditions to Obligations of All Parties. The respective
----------------------------------------
obligation of each party to consummate the transactions to be performed by it in
connection with the Closing is subject to the satisfaction or waiver by that
party of the following conditions:
7.1.1 HSR Act. Any waiting period (and any extensions thereof)
-------
applicable to the consummation of the transactions contemplated hereby under the
HSR Act shall have expired or been terminated.
7.1.2 Orders. The Sale Order shall have been entered by the
------
Bankruptcy Court in accordance with Section 6.11 and shall have become a Final
Order.
7.2 Conditions to Buyer's Obligations. Unless waived by Buyer, the
---------------------------------
obligations of Buyer under this Agreement are subject to satisfaction by Sellers
of the following conditions on or before the Closing Date:
7.2.1 Covenants, Representations and Warranties. All of the
-----------------------------------------
covenants, terms and conditions of this Agreement to be complied with and
performed by
19
Sellers at or before the Closing Date shall have been complied with and
performed in all material respects, and the representations and warranties made
by Sellers in this Agreement shall be correct in all material respects, at and
as of the Closing Date, with the same force and effect as though such
representations and warranties had been made at and as of the Closing Date. Any
representation or warranty which by its terms is made with reference to a
specific date shall have been correct in all material respects as of such date.
For purposes of determining compliance with this provision and for all other
purposes, representations and warranties shall be deemed not to be correct in
all material respects only if:
(a) to the extent made as of the date hereof, the difference
between the facts, circumstances and conditions as represented and the
facts, circumstances and conditions as subsequently determined to
exist as of the date hereof constitutes a Material Adverse Change.
(b) to the extent deemed made as of the Closing Date, the
difference between the facts, circumstances and conditions as
represented and the facts, circumstances and conditions as determined
to exist as of the Closing Date constitutes a Material Adverse Change.
7.2.2 Closing Documents. With respect to the Purchased Assets
-----------------
existing as of the Closing Date, Sellers shall have executed the following
documents, which shall have been approved by Buyer, subject to the reasonable
comments of Sellers. Sellers shall use their respective best efforts to deliver
such reasonable comments, if any, within five business days of receipt of such
documents. Each of such documents shall be without representation or warranty
and shall otherwise be in form acceptable to Buyer and Sellers. The documents
are as follows:
(a) A Xxxx of Sale with respect to the Purchased Assets
constituting Personal Property to transfer all of Sellers' right, title and
interest thereto, in a customary form (the "Xxxx of Sale"), duly executed
------------
by Sellers;
(b) An Assignment of Equipment Leases to transfer all of
Sellers' right, title and interest in the equipment leases that are
"Assumed Contracts" hereunder, in a customary form ("Equipment Lease
---------------
Assignment"), duly executed by Sellers;
----------
(c) An Assignment of Real Property Leases to transfer all of
Sellers' right, title and interest in all Assumed Real Property Leases
hereunder, in a customary form ("Real Property Lease Assignment"),
------------------------------
duly executed by Sellers;
(d) An Assignment of Intellectual Property Rights to
transfer all of Sellers' right, title and interest in and to all
Intellectual Property, in a customary form ("Assignment of
-------------
Intellectual Property Rights"), duly executed by Sellers;
----------------------------
20
(e) One or more Assumption and Assignment Agreements
evidencing the transfer of Sellers' right, title and interest in the
Assumed Contracts and all other Assumed Liabilities and Buyer's
assumption of Sellers' obligations thereunder to the extent
contemplated hereby, in a customary form (the "Assumption and
--------------
Assignment Agreements"), duly executed by Sellers;
---------------------
(f) A certificate issued by each Seller certifying that as
of the Closing Date, such Seller is not a foreign person (as described
in Treasury Regulation Section 1.1445-2(b)(i)), such certificate to be
in form similar to that described in Treasury Regulation Section
1.1445-2(b)(2)(iii)(B) or otherwise meeting the requirements of
Treasury Regulation Section 1.1445-2(b)(2);
(g) An assignment, in form and substance satisfactory to
Buyer, duly executed and acknowledged by the applicable Sellers,
transferring and assigning to Buyer the Sellers' interest in all title
insurance policies relating to the Assumed Real Property Leases;
(h) Stock certificates representing all of the issued and
outstanding stock of ENBPI duly endorsed for transfer by the Sellers;
and
(i) Such other agreements and documents as are necessary and
appropriate for Sellers to carry out the terms and provisions of this
Agreement.
7.2.3 Material Adverse Change. Since January 2, 2001, there shall
-----------------------
have been no Material Adverse Change in the Business.
7.2.4 Continuity of Senior Management. Xxxxxx Xxxxxxxx shall have
-------------------------------
continued to be the chief executive officer of E/N Corp. to the Closing Date
(other than as a result of death or disability).
7.3 Conditions to Sellers' Obligations. Unless waived by Sellers, the
----------------------------------
obligations of Sellers under this Agreement are subject to satisfaction of the
following conditions on or before the Closing Date:
7.3.1 Covenants, Representations and Warranties. All of the
-----------------------------------------
covenants, terms and conditions of this Agreement to be complied with and
performed by Buyer at or before the Closing Date shall have been complied with
and performed in all material respects, and the representations and warranties
made by Buyer in this Agreement shall be correct in all material respects, at
and as of the Closing Date, with the same force and effect as though such
representations and warranties had been made at and as of the Closing Date. Any
representation or warranty which by its terms is made with reference to a
specific date shall have been correct in all material respects as of such date.
7.3.2 Closing Documents. With respect to the Purchased Assets
-----------------
existing as of the Closing Date, the Buyer shall have delivered the following
documents in the form referred to in Section 7.2.2 or as otherwise set forth
below:
21
(i) The Real Property Lease Assignment, duly executed by
Buyer;
(ii) The Assumption and Assignment Agreements, duly
executed by Buyer;
(iii) The Assignment of Intellectual Property Rights, duly
executed by Buyer; and
(iv) Such other agreements and documents as are necessary
and appropriate for Buyer or Seller to carry out the provisions of
this Agreement.
8. Closing and Closing Deliveries; Calculations and Payments at Closing.
--------------------------------------------------------------------
8.1 Closing. Subject to the terms and conditions of this Agreement,
-------
the closing of the transactions provided for in this Agreement (the "Closing")
-------
shall take place at 12:01 p.m. (Eastern Time) on April 30, 2001 or at such date
and time as may be mutually agreed by the parties (the "Closing Date"), subject
------------
to Section 10 hereof.
8.2 Sellers' Obligations at Closing.
-------------------------------
8.2.1 At the Closing, Sellers shall deliver or cause to be
delivered to Buyer the certificates, consents, agreements and other documents
specified in Section 7.2 hereof.
8.2.2 At the Closing, Sellers shall transfer the Purchased Assets
to Buyer.
8.3 Buyer's Obligations at Closing. At the Closing, in addition to its
------------------------------
obligations under Section 2.1, Buyer shall deliver or cause to be delivered the
certificates, consents, agreements and other documents specified in Section
7.3.2.
9. Certain Post Closing Matters.
----------------------------
9.1 Post Closing Determination of Assumed Current Liabilities
---------------------------------------------------------
9.1.1 Preparation of Closing Statement. Within 45 calendar days
--------------------------------
after the Closing Date, Buyer shall prepare and deliver to Sellers a statement
setting forth a detailed calculation, in accordance with GAAP, of the Assumed
Current Liabilities as of the Closing Date (the "Closing Statement"). If neither
-----------------
Seller disputes the Closing Statement within 45 calendar days after receipt
thereof, the amounts set forth thereon shall be deemed to have been "finally
determined" as set forth thereon. If either of the Sellers wishes to dispute the
Closing Statement, it shall deliver to the other Seller and to Buyer a notice
specifying in reasonable detail those items or amounts as to which it disagrees,
the reason for such disagreement, and its resulting proposed adjustments
("Dispute Notice"). Only those items or amounts specifically identified in a
--------------
Dispute
22
Notice (the "Disputed Items") shall be deemed to be disputed by the relevant
--------------
disputing party.
9.1.2 Expert Determination re: Disputes. If a Dispute Notice is
---------------------------------
delivered, Sellers and Buyer shall use their commercially reasonable efforts to
reach agreement on the Disputed Items. If such parties cannot reach agreement
within 30 days from the date of delivery of the Dispute Notice, the Disputed
Items shall be submitted to the Independent Accountants for determination in
accordance with this Section 9.1.2 (which determination shall incorporate the
undisputed items or amounts from the Closing Statement as applicable). The
Independent Accountants shall deliver to Sellers and Buyer as promptly as
practicable, a written report setting forth their determination of the Disputed
Items (which shall incorporate the undisputed items from the Closing Statement),
which determination shall be final, conclusive and binding upon the parties, and
shall not be subject to appeal to any court or tribunal. Upon delivery of such
report, Assumed Current Liabilities shall be deemed to have been "finally
determined" as set forth in such report. Each party will bear its own expenses
in connection with any disputes regarding the Closing Statement except that the
Independent Accountant's fees and expenses will be allocated fifty percent to
Buyer and fifty percent to Sellers.
9.1.3 Calculations and Payments Upon "Final Determination".
----------------------------------------------------
(a) If the Assumed Current Liabilities are finally
determined to exceed $22.7 million, the excess amount (the "Excess
------
Portion") shall be paid by wire transfer of immediately available
-------
funds to the account designated by Buyer (the "Designated Buyer
----------------
Account") by the Escrow Agent, in the case of the Escrowed Purchase
-------
Price Portion, and Sellers, in the case of any amount in excess of the
Escrowed Purchase Price Portion;
(b) If the Escrowed Purchase Price Portion exceeds the
Excess Portion, such excess amount shall be paid out of the Escrowed
Purchase Price Portion to Sellers by wire transfer of immediately
available funds to the Designated Seller Account by the Escrow Agent,
and the balance of the Escrowed Purchase Price Portion shall be paid
by wire transfer of immediately available funds to the Designated
Buyer Account by the Escrow Agent;
(c) If the Assumed Current Liabilities are finally
determined to be equal to or less than $22.7 million, the Escrowed
Purchase Price Portion shall be paid by wire transfer of immediately
available funds to the Designated Seller Account and to the extent the
Assumed Current Liabilities are less than $22.7 million, Buyer shall
pay, by wire transfer of immediately available funds, the difference
between $22.7 million and the amount of the Assumed Current
Liabilities, as determined; and
(d) Interest accrued on the Escrowed Purchase Price Portion
shall be paid pro rata with the distribution of the Escrowed Purchase
Price Portion.
23
9.1.4 Access. Sellers, the Independent Accountants and their
------
respective representatives will have reasonable access to the books, records and
accounts of Buyer for any purposes related to their preparation or review, as
the case may be, of the Closing Statement and the determination of Assumed
Current Liabilities.
9.1.5 GAAP Rules. Each item to be listed on the Closing Statement
----------
in connection with the determination of the Assumed Current Liabilities shall be
determined in accordance with GAAP, consistently applied.
9.2 Use of Intellectual Property and Other Information. Except in
--------------------------------------------------
connection with Sellers' completion of such administrative, ministerial or other
matters as may be required to effectuate an orderly conclusion and winding up of
the business and affairs of Sellers (including, without limitation, the
prosecution of claims and causes of action that are Excluded Assets), after the
Closing Date, Sellers shall not communicate, disclose, divulge, or use for their
own benefit or for the benefit of any other person or entity, or misuse in any
way, any of the Intellectual Property or other proprietary or confidential
information of Buyer relating to the Business or the Purchased Assets, except as
consented to by Buyer in writing.
9.3 Further Assurances.
------------------
(a) In addition to Sellers' obligations under this Agreement and
the Related Agreements, Sellers, at any time on or after the Closing Date,
will, subject to Buyer's payment of Sellers' reasonable costs, execute,
acknowledge and deliver any further assignments, conveyances and other
assurances, documents and instruments of transfer, reasonably requested by
Buyer, and will take any other reasonable action consistent with the terms
of this Agreement that may reasonably be requested by Buyer, for the
purpose of assigning, transferring, granting, conveying and confirming to
Buyer, or reducing to Buyer's possession, any or all of the Purchased
Assets, including any Purchased Assets which come into the possession or
control of Sellers after the Closing Date.
(b) In addition to all of Buyer's obligations under this
Agreement and the Related Agreements, Buyer, at any time on or after the
Closing Date, will execute, acknowledge and deliver any further assurance,
documents or instruments reasonably requested by Sellers, and will take any
other reasonable action consistent with the terms of this Agreement that
may reasonably be requested by Sellers, for the purpose of the assumption
by Buyer of the Assumed Total Liabilities, and for purposes of reducing to
Sellers' possession any or all of the Excluded Assets which may come into
the possession or control of Buyer after the Closing Date.
(c) To the extent deemed reasonable by Buyer, Buyer shall make
available, at Sellers' cost, its management, staff and resources for
purposes of permitting Sellers to complete such administrative, ministerial
or
24
other matters as may be required to effectuate an orderly and timely
conclusion and winding up of the business and affairs of Sellers.
9.4 Survival of Representations and Warranties. The representations
------------------------------------------
and warranties in this Agreement or in any instrument delivered pursuant to the
Agreement shall survive the Closing for six (6) months. This Section 9.4 shall
not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Closing.
9.5 Post Closing Access to Books and Records. For a period of five
----------------------------------------
years after the Closing Date, Buyer shall (subject to the last sentence of this
Section 9.5) maintain all of the pre-Closing Books and Records. At all times
during which Buyer maintains the Books and Records, Buyer shall provide Sellers
and their representatives, during normal business hours and upon reasonable
notice from Sellers, with reasonable access to such Books and Records. If,
during the five years after the Closing Date, Buyer proposes to dispose of any
Books and Records, Buyer shall provide Sellers with written notice and, if
requested, shall deliver the same to Sellers at Sellers' expense.
9.6 Change of Corporate Name. Each Seller entity whose corporate or
------------------------
entity name contains the trade names "Einstein Bros. Bagels" or "Noah's New York
Bagels, " or any part thereof, shall take, as promptly as practicable after the
Closing Date, such action as may be legally required to effectuate a change in
the name of such entity to a new name not including any such trade names or any
other trade names that are included in the Intellectual Property.
10. Termination.
-----------
10.1 Termination Rights. This Agreement and the transactions
------------------
contemplated hereby may be terminated at any time prior to the Closing Date with
written notice thereof (a "Termination Notice") by any of the following:
------------------
(a) By mutual written consent of Sellers and Buyer at any
time;
(b) By Buyer or Sellers if any of the conditions set forth
in Section 7.1 have not been, or are not capable of being, satisfied at
Closing;
(c) By Buyer if (i) any of the conditions set forth in
Section 7.2 have not been, or are not capable of being, satisfied at
Closing or (ii) in the event of the occurrence of a Material Adverse Change
at any time after the date hereof;
(d) By Sellers if any of the conditions set forth in
Section 7.3 have not been, or are not capable of being, satisfied at
Closing;
(e) If this Agreement has not otherwise been terminated,
by Buyer if (i) the Preliminary Order is not entered by the Bankruptcy
Court on or prior to February 27, 2001; or (ii) by Buyer or Sellers if the
Closing
25
Date has not occurred on or prior to June 30, 2001; provided, that Sellers
may not exercise their right to terminate the Agreement under this Section
10.1(e)(ii) if the reasons for the failure to consummate the transaction by
June 30, 2001 are attributable to the Sellers;
(f) By Buyer, if at any time after the date hereof,
Sellers materially violate: (i) Section 6.2 (and have not cured any such
violation within 10 days of written notice to Sellers, of such violation);
or (ii) Sections 6.8(a); and
(g) By either Sellers or Buyer if there shall be in effect
a final, nonappealable order of the Bankruptcy Court restraining,
enjoining, or otherwise prohibiting the consummation of the transactions
contemplated hereby.
10.2 Termination Payment. In the event that (i) this Agreement is
-------------------
terminated other than as a result of a breach by Buyer or other than pursuant
the requirements of Sections 10.1(a), (d) and (e)(i) and (ii), and (ii) the
Sellers accept an Acquisition Proposal from a third party other than the Buyer
whether by a plan or reorganization or otherwise, then on the earlier of (x)
June 30, 2001 and (y) the date of consummation of such acquisition or
reorganization, Sellers shall pay to Buyer a $5.0 million fee in cash (the
"Termination Payment") promptly upon demand therefor. The obligations of Sellers
-------------------
to pay the Termination Payment shall be entitled to superpriority administrative
expense claim status in each of the Cases, senior to all other superpriority
administrative expense claims in such cases, except for those of the Sellers,
post-petition lenders. If the Sale Order is not entered, other than the return
of the Deposit Amount to Buyer, the payment of the Termination Payment to the
Buyer (if any is required) shall be the sole and exclusive remedy of Buyer,
whether at law or in equity, for any breach by Sellers or any of their
affiliates of the terms and conditions of this Agreement.
11. General.
-------
11.1 Third Party Beneficiaries. Other than the assumption by the Buyer
-------------------------
of the Assumed Total Liabilities, nothing in this Agreement, including, without
limitation, Section 3, is intended to confer any right or remedy under or by
reason of this Agreement on any person or entity, other than the parties and
their respective successors and permitted assigns, nor is anything in this
Agreement intended to relieve or discharge the obligation or liability of any
other person or entity to any party, nor shall any provision of this Agreement
give any other person or entity any right of subrogation or action over or
against any party.
11.2 Amendments, Waivers. This Agreement and any Schedule or exhibit
-------------------
attached hereto may be amended only by agreement in writing of all parties;
provided, that Schedules may be amended as expressly provided herein. No waiver
--------
of any provision nor consent to any exception to the terms of this Agreement or
any agreement contemplated hereby shall be effective unless in writing and
signed by the party to be bound and then only to the specific purpose, extent
and instance so provided.
26
11.3 Schedules; Integration. Each Schedule delivered pursuant to the
----------------------
terms of this Agreement shall be in writing and shall constitute a part of this
Agreement. This Agreement, together with such Schedules, constitute the entire
agreement among the parties pertaining to the subject matter hereof and thereof
and supersede all prior agreements and understandings of the parties in
connection therewith, excepting the Confidentiality Agreement to the extent
inconsistent with this Agreement. Any Schedule which, pursuant to the express
terms of this Agreement, is required to be amended at any time (either by adding
or deleting an item thereon) shall be deemed to have been so amended as of such
time.
11.4 Governing Law. This Agreement and the Related Agreements and the
-------------
legal relations between the parties shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and performed in such State and without regard to conflicts of law doctrines
except to the extent that certain matters are preempted by federal law.
11.5 No Assignment. Neither this Agreement nor any rights or
-------------
obligations under it are assignable except that Buyer may assign substantially
all of its rights hereunder to any subsidiary or Affiliate of Buyer on the
condition that Buyer shall remain primarily liable to Sellers for Buyer's
obligations.
11.6 Headings. The descriptive headings of the Sections and
--------
subsections of this Agreement are for convenience only and do not constitute a
part of this Agreement.
11.7 Counterparts. This Agreement and any amendment hereto or any
------------
other agreement (or document) delivered pursuant hereto may be executed in one
or more counterparts and by different parties in separate counterparts. All of
such counterparts shall constitute one and the same agreement (or other
document) and shall become effective (unless otherwise provided therein) when
one or more counterparts have been signed by each party and delivered to the
other party.
11.8 Parties in Interest. Other than the assumption by the Buyer of
-------------------
the Assumed Total Liabilities, this Agreement shall be binding upon and inure to
the benefit of each party hereto and their respective successors and assigns,
and, nothing in this Agreement, express or implied, is intended to confer upon
any other person any rights or remedies of any nature whatsoever under or by
reason of this Agreement. Nothing in this Agreement is intended to relieve or
discharge the obligation of any third person to (or to confer any right of
subrogation or action over or against) any party to this Agreement.
11.9 Notices. Any notice or other communication hereunder must be
-------
given in writing and either (a) delivered in person, (b) transmitted by
facsimile, or (c) mailed by first class mail, postage prepaid, as follows:
To Buyer: To Sellers:
Prior to and post Closing: Prior to and post Closing:
27
ENB Acquisition LLC Einstein/Noah Bagel Corp. and
Einstein/Noah Bagel Partners L.P.
000 Xxxxxxx Xxxxxx 0000 Xxxx Xxxxxxxxx
Xxx Xxxx, XX 00000 Xxxxxx, XX 00000
Attention: Mr. J. Xxxxxxx Xxxxx Attention: Xx. Xxxx Xxxxxxx, Esq.
With a copy to: With a copy to:
Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx Xxxxxxx, Xxxx, Slate, Meagher, & Xxxx
1285 Avenue of the Americas (Illinois)
Xxx Xxxx, XX 00000 000 Xxxx Xxxxxx Xxxxx
Attention: Xxxx X. Xxxxxxxx, Esq. Xxxxxxx, XX 00000-0000
Xxxxxxx X. Xxxxxxxx, Esq. Attention: Xxxx Xxxxxxx, Esq.
Fax: (000) 000-0000 Fax: 000-000-0000
or to such other address or to such other person as either party shall have last
designated by such notice to the other party. Each such notice or other
communication shall be effective and deemed to have been received (i) if given
by facsimile, when transmitted to the applicable number so specified in (or
pursuant to) this Section and an appropriate confirmation is received, (ii) if
given by mail, three (3) days after such communication is deposited in the mails
with first class postage prepaid, addressed as aforesaid or (iii) if given by
personal delivery, when actually delivered at such address.
11.10 Expenses. Sellers and Buyer shall each pay their own expenses
--------
incident to the negotiation, preparation, approval and performance of this
Agreement and the transactions contemplated hereby, including but not limited to
the fees, expenses and disbursements of their respective counsel and financial
advisors; provided that transfer taxes paid on the transfer of Sellers' interest
--------
in Leased Real Property shall be borne by Sellers or Buyer in accordance with
the standard practice of the jurisdiction in which such Sellers' interest in
Leased Real Property is located.
11.11 Waiver. No failure on the part of any party to exercise or delay
------
in exercising any right hereunder shall be deemed a waiver thereof, nor shall
any single or partial exercise preclude any further or other exercise of such or
any other right. The waiver of any breach of any term or condition of this
Agreement shall not be deemed to constitute the waiver of any other breach of
the same or any other term or condition.
11.12 Representation By Counsel; Interpretation. Sellers and Buyer
-----------------------------------------
each acknowledge that each party to this Agreement has been represented by
counsel in connection with this Agreement and the transactions contemplated by
this Agreement. Accordingly, any rule of law or any legal decision that would
require interpretation of any claimed ambiguities in this Agreement against the
party that drafted it has no application and is expressly waived. The provisions
of this Agreement shall be interpreted in a reasonable manner to effect the
intent of the parties.
11.13 Severability. If any provision of this Agreement is determined
------------
to be invalid, illegal or unenforceable, the remaining provisions of this
Agreement shall
28
remain in full force and effect provided that the essential terms and conditions
--------
of this Agreement for all of the parties remain valid, binding and enforceable.
11.14 Jurisdiction. SELLERS AND BUYER HEREBY IRREVOCABLY SUBMIT TO THE
------------
EXCLUSIVE JURISDICTION OF THE UNITED STATES BANKRUPTCY COURT FOR THE DISTRICT OF
ARIZONA FOR THE PURPOSE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING
TO THIS AGREEMENT AND SELLERS AND BUYER HEREBY IRREVOCABLY AGREE THAT ALL CLAIMS
IN RESPECT TO SUCH ACTION OR PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH
COURT. SELLERS AND BUYER AGREE THAT A FINAL JUDGMENT IN ANY ACTION OR PROCEEDING
SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE
JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW.
11.15 Indemnification.
---------------
(a) Sellers shall indemnify and hold Buyer (and its
officers, directors, employees, consultants, attorneys, and affiliates)
harmless from and with respect to any and all claims, liabilities, losses,
damages, costs and expenses (including without limitation the reasonable
fees and disbursements of counsel), net of insurance proceeds, related to
or arising, directly or indirectly, out of (i) any liabilities arising from
the operation of the Business accruing and relating to events occurring on
and before the Closing Time (excluding in all cases any Assumed Total
Liabilities), (ii) any failure by Sellers to discharge any obligation or
undertaking made by them in this Agreement or (iii) any breach by either
Seller of any of its representation and warranties herein.
(b) Buyer shall indemnify and hold Sellers (and each of
their respective officers, directors, employees, consultants, attorneys,
and affiliates) harmless from and with respect to any and all claims,
liabilities, losses, damages, costs and expenses (including without
limitation the reasonable fees and disbursements of counsel), net of
insurance proceeds, related to or arising, directly or indirectly, out of
(i) any liabilities arising from the operation of the Business accruing and
relating to events occurring on and after the Closing Time, (ii) any
failure by Buyer to discharge any Assumed Total Liabilities or any
obligation or undertaking made by it in this Agreement or (iii) any breach
by Buyer of any of its representations and warranties herein.
(c) An indemnifying party shall, after receipt of written
notice from an indemnified party of any claims, liabilities, losses,
damages, costs and expenses recognized by the indemnifying party as
indemnification obligations pursuant to this Section 11.15, appoint counsel
reasonably satisfactory to the indemnified party for the purpose of
defending or contesting such claims, liabilities, losses, damages, costs
and expenses.
29
11.16 Evaluation of Alternative Structure. Buyer shall discuss with
-----------------------------------
Sellers the restructuring of the transactions contemplated by this Agreement as
a stock transaction; provided, that in no event shall Sellers, Agents or Buyer
be required to enter into or obligated to pursue any such alternative structure.
12. Definitions. Capitalized terms used in this Agreement and any Related
-----------
Documents or any Schedules shall have (unless otherwise provided) the following
respective meanings:
"Acquisition Proposal" means a proposal involving a third party and
--------------------
any Seller or any of their affiliates relating to any merger, consolidation,
business combination, sale of significant assets, sale of shares of capital
stock or any restructuring, recapitalization or similar transaction involving
any of the assets to be purchased by Buyer pursuant to this Agreement, including
through a plan of reorganization.
"Affiliates" means, with respect to any person, any other person
----------
controlling, controlled by or under common control with, or the parents, spouse,
lineal descendants or beneficiaries of, such person.
"Agreement" see the preamble.
---------
"Assumption and Assignment Agreements" see Section 7.2.2(e).
------------------------------------
"Assignment of Intellectual Property Rights" see Section 7.2.2(d).
------------------------------------------
"Assumed Contracts" see Section 1.1.4.
-----------------
"Assumed Current Liabilities" see Section 2.2.
---------------------------
"Assumed Total Liabilities" see Section 2.2.
-------------------------
"Assumed Real Property Leases" see Section 1.1.8.
----------------------------
"Bankruptcy Code" see Recital C.
---------------
"Bankruptcy Court" see Recital A.
----------------
"Bankruptcy-Related Requirements" see Section 6.2.
-------------------------------
"Xxxx of Sale" see Section 7.2.2(a).
------------
"Books and Records" see Section 1.1.9.
-----------------
"Business" see Recital B.
--------
"Buyer" see the preamble.
-----
"Cases" see Recital A.
-----
30
"Closing" see Section 8.1.
-------
"Closing Date" see Section 8.1.
------------
"Closing Statement" see Section 9.1.1.
-----------------
"Closing Time" means 12:01 p.m. (Eastern Time) on the Closing Date.
------------
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Comparable Position" means, with respect to each employee, a job: (i)
-------------------
with the opportunity to earn Equivalent Compensation; (ii) with the same or
substantially similar job title; (iii) with the same or substantially similar
benefits as those received by such employee, as the case may be, as of the
Closing Date; (iv) within a 25-mile radius (unless otherwise agreed by such
employee) of such employee's place of employment as of the Closing Date; and (v)
with Buyer or any of its direct or indirect subsidiaries, affiliates or
franchisees.
"Commission" see Section 4.12
----------
"Confidentiality Agreement" means that certain letter agreement
-------------------------
regarding confidentiality dated as of the date of this Agreement between Sellers
and Three Cities Fund III L.P..
"Contracts" means all of Sellers' contracts and agreements, including
---------
franchise agreements, license agreements, loan agreements with financed area
developers and others, service agreements, vendor contracts, employment, bonus
and retention bonus agreements, consulting agreements, equipment leases and
confidentiality and similar agreements.
"Deposit Amount" see Section 2.5.
--------------
"Designated Buyer Account" see Section 9.1.3(a).
------------------------
"Designated Seller Account" means an account to be designated by E/N
-------------------------
Corp. as the account into which any payments to Sellers on account of the
Purchase Price are to be deposited.
"Dispute Notice" see Section 9.1.1.
--------------
"Disputed Items" see Section 9.1.1.
--------------
"Employee in Good Standing" means any employee of Sellers as of the
-------------------------
Closing Date, including those on short term disability leave, workers'
compensation leave or other authorized leave of absence on the Closing Date,
other than any such employee: (i) who has been absent from work without
authorization for one or more weeks on the Closing Date or (ii) who is on long
term disability on the Closing Date; provided, that any employee of Sellers on
short term disability leave, workers'
31
compensation leave or other authorized leave of absence on the Closing Date will
cease to be an Employee in Good Standing as of the Closing Date unless such
employee returns to his or her Employment within 90 days of the date on which
such employee's disability leave began.
"Employment" means, with respect to each employee, either (i) such
----------
employee's position as of the Closing Date or (ii) in the event that, in Buyer's
sole discretion, such position is no longer available, a Comparable Position.
"E/N Corp." see the preamble.
---------
"E/N Partners" see the preamble.
------------
"ENBPI" see Section 1.1.9
-----
"Equipment Lease Assignment" see Section 7.2.2(b).
--------------------------
"Equivalent Compensation" means salary or wages, bonus and incentives
-----------------------
of the Buyer (or its affiliates), which, in the aggregate, are substantially
equivalent to the Sellers' salary or wages, as the case may be, and applicable
Incentives in the aggregate of such employee as of the Closing Date.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended, and the related regulations and published interpretations.
"Escrow Agent" see Section 2.1(b)(ii).
------------
"Escrowed Purchase Price Portion" means $3.0 million.
-------------------------------
"Exchange Act" see Section 4.12
------------
"Excluded Assets" see Section 1.2.
---------------
"Excluded Contracts" see Section 1.2.3.
------------------
"Excluded Real Property Leases" see Section 1.2.5.
-----------------------------
"Excluded Receivables" see Section 1.2.2.
--------------------
"Final Order" means an order of the Bankruptcy Court with respect to
-----------
which (a) no appeal has been filed within the time period specified by Rule
8002(a), Federal Rules of Bankruptcy Procedure, (b) in the event a timely appeal
has been filed, the effectiveness of such order has not been stayed in
accordance with Rule 8005, Federal Rules of Bankruptcy Procedure, or (c) in the
event such order was stayed pending appeal, such stay has been terminated by
subsequent court order.
"GAAP" see Section 4.12.
----
32
"Government Permits" see Section 1.1.11.
------------------
"Xxxxxxxx Employment Agreement" means the amended and restated
-----------------------------
executive employment agreement between Xxxxxx X. Xxxxxxxx and E/N Corp.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
-------
1976, as amended.
"Independent Accountants" means an independent public accounting firm
-----------------------
to be mutually agreed by Sellers and Buyer
"Intellectual Property" see Section 1.1.10.
---------------------
"Interseller Leases" see Section 1.2.5.
------------------
"Inventory" see Section 1.1.3.
---------
"Liens" see Section 1.1.
-----
"Management Information Systems" means the computer systems of the
------------------------------
Sellers that provide information about their business operations.
"Material Adverse Change" means any event or circumstance or series of
-----------------------
related events or circumstances that have caused a material adverse change in
the operations, properties or assets of the Business.
"Material Adverse Effect" means any event or circumstance or series of
-----------------------
related events or circumstances that have caused a material adverse effect in
the operations, properties or assets of the Business..
"Organizational Books and Records" see Section 1.2.6.
--------------------------------
"Outstanding ACHs" means all Automated Clearing House liabilities that
----------------
have been initiated by Sellers but not settled on or before the Closing Time.
"Personal Property" see Section 1.1.5.
-----------------
"Preliminary Order" see Section 6.7.
-----------------
"Prepaid Advertising" means network, spot, and print advertising paid
-------------------
for by Sellers prior to the Closing Date prorated (with respect to any such
payments that are for a payment period that include both pre- and post Closing
Date) based on the number of days from the Closing Date to the end of the
payment period.
"Prepaid Rent" means all rent payments and other landlord related
------------
payments (for such items as, without limitation, taxes, insurance, C.A.M., and
utilities payable to any Seller's landlords or any assignee thereof) made by any
Seller to the extent such payments (i) were made as of the Closing Date, (ii)
related to Real Property
33
Leases (other than Excluded Real Property Leases), (iii) are (in whole or in
part) for a payment period after the Closing Date, prorated (with respect to any
such payments that are for a payment period that include both the pre- and
post-Closing Date) from the Closing Date to the end of such payment period.
"Petition Date" means April 27, 2000.
-------------
"Purchase Price" see Section 2.1.
--------------
"Purchased Assets" see Section 1.1.
----------------
"Real Property Leases" see Section 4.4.
--------------------
"Real Property Lease Assignment" see Section 7.2.2(c).
------------------------------
"Receivables" see Section 1.1.2.
-----------
"Related Agreements" see Section 1.2.7.
------------------
"Retention Bonus Program" means the amended and Restated Einstein/Noah
-----------------------
Bagel Corp. Employee Retention Program as in effect on the date hereof under
which $265,000 is payable in February 2001 and $530,000 is payable upon
confirmation of Sellers' plan or reorganization.
"Sale Order" see Section 6.11.
----------
"Severance Agreements" means the 10 individual change of control
--------------------
severance agreements for senior management previously approved by the Bankruptcy
Court.
"Seller, Sellers" see the preamble.
---------------
"Store" means any location currently owned by or leased to any Seller
-----
at which Sellers currently operates or formerly operated a retail food service
outlet under the tradename of "Einstein Bros. Bagels" or "Noah's New York
Bagels."
"Taxes" means federal, state, local and foreign taxes, assessments,
-----
deficiencies, duties, fees and other governmental charges or impositions
(including without limitation on all income tax, gross receipts, unemployment
compensation, social security, payroll, sales and use, excise, privilege, real
and personal property, ad valorem, transfer, franchise, capital stock, license,
production, business and occupation, disability, employment, severance,
withholding and any other tax or similar governmental charge or imposition
whatsoever (including interest, penalties, or additions with respect thereto)
under laws of the United States or any state or municipal or political
subdivision thereof or any foreign country or political subdivision thereof).
"Termination Notice" see Section 10.1.
------------------
34
"Termination Payment" see Section 10.2.
-------------------
35
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized officers as of the day and year
first above written.
SELLERS, each as a debtor and debtor-in possession
EINSTEIN/NOAH BAGEL CORP.
By:______________________________
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President
EINSTEIN/NOAH BAGEL PARTNERS, L.P.
By:______________________________
Name: Xxxx X. Xxxxxxx
Title: Vice President, Einstein/Noah Bagel
Partners, Inc., general partner of
Einstein/Noah Bagel Partners, L.P.
BUYER
ENB ACQUISITION LLC
By:______________________________
Name: J. Xxxxxxx Xxxxx
Title:
TABLE OF CONTENTS
-----------------
Page
----
1. Purchase and Sale of Assets..............................................1
1.1 Purchased Assets................................................1
1.2 Excluded Assets.................................................5
2. Purchase Price; Assumption of Liabilities; Deposit.......................6
2.1 Amount and Payment of Purchase Price............................6
2.2 Assumed Liabilities.............................................7
2.3 No Expansion of Third Party Rights..............................7
2.4 Taxes...........................................................8
2.5 Deposit.........................................................8
3. Employees................................................................9
4. Representations and Warranties of Sellers................................9
4.1 Organization....................................................9
4.2 Authorization...................................................9
4.3 No Conflicts...................................................10
4.4 Leased Real Property. ........................................10
4.5 Personal Property..............................................10
4.6 Intellectual Property..........................................10
4.7 Employees and Employment-Related Matters.......................11
4.8 Employee Benefit Plans.........................................11
4.9 Contracts......................................................11
4.10 Litigation.....................................................11
4.11 Xxxxxxxx Employment Agreement and Severance Agreements.........12
4.12 SEC Documents; Financial Statements. .........................12
4.13 ENBPI ........................................................12
4.14 Amount of Liabilities. .......................................12
5. Representations and Warranties of Buyer.................................12
5.1 Organization...................................................12
5.2 Authorization..................................................12
5.3 No Conflicts. ...............................................13
5.4 Financial Capacity. ..........................................13
6. Covenants...............................................................13
6.1 Access; Confidentiality........................................13
6.2 Operation of Business..........................................13
6.3 Reasonable Efforts.............................................15
6.4 Publicity......................................................15
i
Page
----
6.5 Notice of Developments.........................................15
6.6 HSR Filings....................................................16
6.7 Preliminary Order..............................................16
6.8 Acquisition Proposals..........................................16
6.9 Cooperation and Access . ......................................16
6.10 Preliminary Order..............................................16
6.11 Sale Order.....................................................17
6.12 ENBPI. .......................................................18
6.13 Transitional Services Agreement. .............................18
7. Conditions Precedent to Parties' Obligation.............................18
7.1 Conditions to Obligations of All Parties.......................18
7.2 Conditions to Buyer's Obligations..............................18
7.3 Conditions to Sellers' Obligations.............................20
8. Closing and Closing Deliveries; Calculations and Payments at Closing....21
8.1 Closing........................................................21
8.2 Sellers' Obligations at Closing................................21
8.3 Buyer's Obligations at Closing.................................21
9. Certain Post Closing Matters............................................21
9.1 Post Closing Determination of Assumed Current Liabilities......21
9.2 Use of Intellectual Property and Other Information.............23
9.3 Further Assurances.............................................23
9.4 Survival of Representations and Warranties.....................24
9.5 Post Closing Access to Books and Records.......................24
9.6 Change of Corporate Name.......................................24
10. Termination.............................................................24
10.1 Termination Rights.............................................24
10.2 Termination Paymenton the earlier of (x) June 30, 2001
and (y) the date of consummation of such acquisition
or reorganization, ............................................25
11. General ................................................................25
11.1 Third Party Beneficiaries......................................25
11.2 Amendments, Waivers............................................25
11.3 Schedules; Integration.........................................26
11.4 Governing Law..................................................26
11.5 No Assignment..................................................26
11.6 Headings.......................................................26
11.7 Counterparts...................................................26
11.8 Parties in Interest............................................26
11.9 Notices........................................................26
11.10 Expenses.......................................................27
ii
Page
----
11.11 Waiver.........................................................27
11.12 Representation By Counsel; Interpretation......................27
11.13 Severability...................................................27
11.14 Jurisdiction...................................................28
11.15 Indemnification................................................28
11.16 Evaluation of Alternative Structure. .........................29
12. Definitions.............................................................29
iii
