EXHIBIT 2.1
_________________________________________________________________
_________________________________________________________________
________________________
ASSET PURCHASE AGREEMENT
________________________
by and among
HEINER'S BAKERY, INC.
and
EEE REALTY, INC.
as Sellers
and
WEST VIRGINIA BAKERY ACQUISITION COMPANY, INC.
as Buyer
DATED AS OF OCTOBER 6, 1996
_________________________________________________________________
_________________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . 1
"Assets". . . . . . . . . . . . . . . . . . . . . . . . . 1
"Assigned Contracts". . . . . . . . . . . . . . . . . . . 2
"Assumed Liabilities. . . . . . . . . . . . . . . . . . . 2
"Authorizations . . . . . . . . . . . . . . . . . . . . . 2
"Buyer Group" . . . . . . . . . . . . . . . . . . . . . . 3
"Buyer's Accountants" . . . . . . . . . . . . . . . . . . 3
"Buyer's Documents" . . . . . . . . . . . . . . . . . . . 3
"Closing. . . . . . . . . . . . . . . . . . . . . . . . . 3
"Closing Accounts Receivable" . . . . . . . . . . . . . . 3
"Closing Balance Sheet" . . . . . . . . . . . . . . . . . 3
"Closing Consideration" . . . . . . . . . . . . . . . . . 3
"Closing Date . . . . . . . . . . . . . . . . . . . . . . 3
"Code . . . . . . . . . . . . . . . . . . . . . . . . . . 3
"EBITDA". . . . . . . . . . . . . . . . . . . . . . . . . 3
"Environmental Condition" . . . . . . . . . . . . . . . . 4
"Environmental Laws and Regulations . . . . . . . . . . . 4
"ERISA" . . . . . . . . . . . . . . . . . . . . . . . . . 4
"Escrow Account". . . . . . . . . . . . . . . . . . . . . 4
"Escrow Agent". . . . . . . . . . . . . . . . . . . . . . 4
"Escrow Agreement". . . . . . . . . . . . . . . . . . . . 5
"Excluded Assets. . . . . . . . . . . . . . . . . . . . . 5
"Excluded Liabilities". . . . . . . . . . . . . . . . . . 5
"Financial Statements". . . . . . . . . . . . . . . . . . 5
"GAAP". . . . . . . . . . . . . . . . . . . . . . . . . . 5
"H-S-R Act. . . . . . . . . . . . . . . . . . . . . . . . 5
"Hazardous Materials. . . . . . . . . . . . . . . . . . . 5
"Increased Taxes" . . . . . . . . . . . . . . . . . . . . 5
"Indemnifiable Claim. . . . . . . . . . . . . . . . . . . 5
"Indemnifiable Loss . . . . . . . . . . . . . . . . . . . 5
"Intellectual Property. . . . . . . . . . . . . . . . . . 6
"Interim Statements . . . . . . . . . . . . . . . . . . . 6
"Inventory. . . . . . . . . . . . . . . . . . . . . . . . 6
"Liens" . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Litigation". . . . . . . . . . . . . . . . . . . . . . . 6
"1995 Statements. . . . . . . . . . . . . . . . . . . . . 6
"Natural Gas Well . . . . . . . . . . . . . . . . . . . . 6
"Net Working Capital" . . . . . . . . . . . . . . . . . . 6
"Neutral Auditors". . . . . . . . . . . . . . . . . . . . 6
"Other Incremental Costs" . . . . . . . . . . . . . . . . 6
"PBGC". . . . . . . . . . . . . . . . . . . . . . . . . . 6
"Permitted Encumbrances". . . . . . . . . . . . . . . . . 6
"Person". . . . . . . . . . . . . . . . . . . . . . . . . 6
"Purchase Price". . . . . . . . . . . . . . . . . . . . . 6
"Real Property. . . . . . . . . . . . . . . . . . . . . . 6
"Sellers' Accountants". . . . . . . . . . . . . . . . . . 7
"Sellers' Documents . . . . . . . . . . . . . . . . . . . 7
"Sellers' Tax Group". . . . . . . . . . . . . . . . . . . 7
"Taxes" . . . . . . . . . . . . . . . . . . . . . . . . . 7
"Tax Returns" . . . . . . . . . . . . . . . . . . . . . . 7
(i)
ARTICLE II - PURCHASE AND SALE . . . . . . . . . . . . . . . . 7
2.1 Agreement to Sell . . . . . . . . . . . . . . . . 7
2.2 Agreement to Purchase . . . . . . . . . . . . . . 7
2.3 Purchase Price. . . . . . . . . . . . . . . . . . 7
2.4 Payment of Purchase Price . . . . . . . . . . . . 8
2.5 Closing Balance Sheet Purchase Price Adjustment . 9
2.6 Escrow Account. . . . . . . . . . . . . . . . . . 11
2.7 Assumption of Liabilities . . . . . . . . . . . . 11
2.8 Employees . . . . . . . . . . . . . . . . . . . . 12
2.9 Employee Compensation and Benefits. . . . . . . . 13
ARTICLE III - CLOSING, ITEMS TO BE DELIVERED,
AND FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . 13
3.1 Closing . . . . . . . . . . . . . . . . . . . . . 13
3.2 Conveyances at Closing. . . . . . . . . . . . . . 14
3.3 Payment of Purchase Price . . . . . . . . . . . . 14
3.4 Further Assurances. . . . . . . . . . . . . . . . 14
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLERS . . . . 15
4.1 Corporate Existence . . . . . . . . . . . . . . . 15
4.2 Corporate Power; Authorization; Enforceable
Obligations . . . . . . . . . . . . . . . . . . 15
4.3 Title and Condition of Assets; Property Used
But Not Owned . . . . . . . . . . . . . . . . . 15
4.4 No Interest in Other Entities . . . . . . . . . . 15
4.5 No Conflicting Agreements or Orders; Required
Consents or Filings. . . . . . . . . . . . . . 15
4.6 No Third Party Options. . . . . . . . . . . . . . 16
4.7 Financial Statements. . . . . . . . . . . . . . . 16
4.8 Accounts Receivable . . . . . . . . . . . . . . . 17
4.9 Inventory . . . . . . . . . . . . . . . . . . . . 17
4.10 Absence of Undisclosed Liabilities. . . . . . . . 17
4.11 Employees; Employment Agreements; Compensation. . 17
4.12 Leases. . . . . . . . . . . . . . . . . . . . . . 18
4.13 Material Contracts. . . . . . . . . . . . . . . . 18
4.14 Restrictive Documents . . . . . . . . . . . . . . 19
4.15 Litigation. . . . . . . . . . . . . . . . . . . . 19
4.16 Labor Relations . . . . . . . . . . . . . . . . . 19
4.17 Tax Matters . . . . . . . . . . . . . . . . . . . 20
4.18 Insurance . . . . . . . . . . . . . . . . . . . . 21
4.19 Compliance. . . . . . . . . . . . . . . . . . . . 21
4.20 Documents . . . . . . . . . . . . . . . . . . . . 21
4.21 Employee Benefit Plans. . . . . . . . . . . . . . 22
4.22 Intellectual Property . . . . . . . . . . . . . . 26
4.23 Environmental . . . . . . . . . . . . . . . . . . 26
4.24 Interests in Clients, Suppliers, etc. . . . . . . 28
4.25 Fixed Assets. . . . . . . . . . . . . . . . . . . 28
4.26 No Changes. . . . . . . . . . . . . . . . . . . . 28
4.27 Absence of Certain Business Practices . . . . . . 29
4.28 No Misrepresentation. . . . . . . . . . . . . . . 29
4.29 Receipt of Notices. . . . . . . . . . . . . . . . 30
4.30 Assets. . . . . . . . . . . . . . . . . . . . . . 30
4.31 Conditions Affecting Sellers. . . . . . . . . . . 30
(ii)
4.32 Customers . . . . . . . . . . . . . . . . . . . . 30
4.33 Real Property . . . . . . . . . . . . . . . . . . 30
4.34 Warranties. . . . . . . . . . . . . . . . . . . . 32
4.35 Prepaid Expenses and Deposits . . . . . . . . . . 32
4.36 Natural Gas Well. . . . . . . . . . . . . . . . . 32
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER. . . . . . 32
5.1 Existence . . . . . . . . . . . . . . . . . . . . 32
5.2 Corporate Power and Authorization . . . . . . . . 32
5.3 Validity of Contemplated Transactions . . . . . . 33
ARTICLE VI - SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS
AND INDEMNIFICATIONS. . . . . . . . . . . . . . 33
ARTICLE VII - COVENANTS OF THE PARTIES . . . . . . . . . . . . 34
7.1 Reasonable Access . . . . . . . . . . . . . . . . 34
7.2 Conduct of Business . . . . . . . . . . . . . . . 35
7.3 Litigation. . . . . . . . . . . . . . . . . . . . 37
7.4 Publicity . . . . . . . . . . . . . . . . . . . . 37
7.5 Access to Records After Closing . . . . . . . . . 38
7.6 Litigation Cooperation. . . . . . . . . . . . . . 38
7.7 Transfer Taxes. . . . . . . . . . . . . . . . . . 38
7.8 Expenses of Sale. . . . . . . . . . . . . . . . . 38
7.9 H-S-R Act Notification. . . . . . . . . . . . . . 38
7.10 Insurance Claims. . . . . . . . . . . . . . . . . 39
7.11 Insurance . . . . . . . . . . . . . . . . . . . . 39
7.12 Acquisition Structure . . . . . . . . . . . . . . 40
7.13 Amend and Update Schedules. . . . . . . . . . . . 41
7.14 Consents and Conditions Precedent . . . . . . . . 41
7.15 Tax Returns and Audits. . . . . . . . . . . . . . 42
7.16 Post-Closing Prorations and Adjustments . . . . . 43
7.17 Return of Sellers' Information from Other Bidders 43
7.18 Real Property Not Owned by EEE. . . . . . . . . . 44
7.19 Real Property Documents . . . . . . . . . . . . . 44
7.20 Sellers' Environmental Actions. . . . . . . . . . 44
7.21 Certain Employees of Sellers. . . . . . . . . . . 44
7.22 Sellers' Designee . . . . . . . . . . . . . . . . 44
7.23 Tax Clearance Certificates. . . . . . . . . . . . 44
7.24 Maintenance of Assets . . . . . . . . . . . . . . 44
ARTICLE VIII - CONDITIONS PRECEDENT TO THE CLOSING . . . . . . 45
8.1 Conditions Precedent to Buyer's Obligations . . . 45
8.2 Conditions Precedent to Sellers' Obligations. . . 49
ARTICLE IX - INDEMNIFICATION OF BUYER. . . . . . . . . . . . . 50
9.1 Breach of Representation, Warranty, Covenant or
Agreement . . . . . . . . . . . . . . . . . . . 50
9.2 Failure to Comply with Bulk Sales Law . . . . . . 50
9.3 Failure to Discharge Liabilities. . . . . . . . . 51
9.4 Failure to Satisfy Deferred Compensation
Arrangements . . . . . . . . . . . . . . . . . .51
(iii)
9.5 Indemnification Remedies; Right of Set-Off. . . . 51
ARTICLE X - INDEMNIFICATION OF SELLERS . . . . . . . . . . . . 53
10.1 Breach of Representation, Warranty, Covenant or
Agreement . . . . . . . . . . . . . . . . . . . 53
10.2 Failure to Discharge Liabilities. . . . . . . . . 53
10.3 Remedies Not Exclusive. . . . . . . . . . . . . . 53
ARTICLE XI - INDEMNIFICATION RIGHTS. . . . . . . . . . . . . . 53
ARTICLE XII - ALLOCATION OF PURCHASE PRICE AND TAX CONVENTION. 54
12.1 Allocation of Purchase Price . . . . . . . . . . 54
12.2 Tax Convention . . . . . . . . . . . . . . . . . 54
ARTICLE XIII - MISCELLANEOUS . . . . . . . . . . . . . . . . . 55
13.1 Termination. . . . . . . . . . . . . . . . . . . 55
13.2 Brokers' and Finders' Fees . . . . . . . . . . . 56
13.3 Arbitration. . . . . . . . . . . . . . . . . . . 56
13.4 Expenses . . . . . . . . . . . . . . . . . . . . 57
13.5 Entire Agreement; Amendment. . . . . . . . . . . 57
13.6 Assignment and Binding Effect. . . . . . . . . . 57
13.7 Waiver . . . . . . . . . . . . . . . . . . . . . 57
13.8 Notices. . . . . . . . . . . . . . . . . . . . . 57
13.9 Governing Law. . . . . . . . . . . . . . . . . . 58
13.10 No Benefit to Others . . . . . . . . . . . . . . 58
13.11 Incorporation of Schedules . . . . . . . . . . . 58
13.12 Headings and Gender. . . . . . . . . . . . . . . 58
13.13 Severability . . . . . . . . . . . . . . . . . . 58
13.14 Counterparts . . . . . . . . . . . . . . . . . . 59
13.15 Effective Date . . . . . . . . . . . . . . . . . 59
(iv)
Schedules
Schedule No. Description of Schedule
1-A Assigned Contracts
1-B Assumed Liabilities
1-C Excluded Assets
1-D Permitted Encumbrances
3.2(a) Bill of Sale and Assignment
3.2(b) Warranty Deeds
3.2(c) Assignment of Intellectual Property
3.2(d) Agreement for Assignment and
Assumption of Assumed Liabilities
4.1 Foreign Jurisdictions Where Qualified
4.3(a) Exceptions to Title
4.3(b) Property used by Sellers but not owned by
Sellers
4.4 Interest in Other Entities
4.5 Exceptions to No Conflicting Agreements;
Required Consents
4.7 1995 Statements; Interim Statements;
Exceptions to Financial Statements
Representations
4.10 Exceptions to Absence of Undisclosed
Liabilities
4.11(a) Current Employees Roster
4.11(b) Employee Plans and Agreements; Employee
Liabilities
4.12 Real Property and Personal Property Leases
and Subleases
4.13 Material Contracts; Violations
4.14 Restrictive Documents
4.15 Litigation Matters
4.16 Exceptions to Labor Relations Representations
4.17 Tax Returns Subject to Audit
4.18 Insurance Policies; Bonds
4.19(a) Exceptions to Compliance Representations; List
of Authorizations
4.21(a) All Employee Benefit Plans
4.21(b) All Qualified Plans
4.21(c) All Title IV Plans
4.22(a) Description of Intellectual Property
4.22(b) Exceptions to Intellectual Property
Representations
4.22(c) Exceptions to No Confidentiality and Non-
Disclosure Agreements
4.23(a) Environmental Disclosures
4.23(b)(1) Exceptions to Environmental Permits
Representation
4.23(b)(2) List of Environmental Permits
4.23(b)(3) Exceptions to Post-Closing Environmental
Permits Representation
4.23(c) Exceptions to No Environmental Litigation
(iv)
Schedule No. Description of Schedule
4.23(d) Exceptions to Section 4.23(d) Representations
4.23(e) Exceptions to No Asbestos, Etc.
Representations
4.23(f) Exceptions to No Exposure to Hazardous
Material
4.23(g) Exceptions to No Environmental Clean-Up Costs
4.23(h) Exceptions to Underground Storage Tanks
Representations
4.23(i) List of Environmental Assessments
4.24 Exceptions to No Interests in Clients, Etc.
4.25 Fixed Assets List
4.26 Exceptions to No Changes Since December 31,
1995
4.27 Certain Business Practices
4.30 Exceptions to All Necessary Assets
Representations
4.31 Conditions Affecting Sellers
4.32 List of Customers
4.33 List of Real Property and Real Property
Service, Maintenance, Utility and Management
Contracts; Exceptions to Real Property
Representations
4.35 Description of Prepaid Expenses and Deposits
4.36 Exceptions to Natural Gas Property
Representations
7.2 Employees Receiving 5% Increases
7.20 Environmental Remedial Actions to be Completed
Before Closing Date
8.1(D) Sellers' Opinion of Counsel
8.1(S) Form of Escrow Agreement
8.2(D) Buyer's Opinion of Counsel
8.2(J) Form of Earthgrains Guarantee
12.1 Form of Allocation Agreement
(vi)
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("this Agreement") is made as
of October 6, 1996 by and among HEINER'S BAKERY, INC., a West
Virginia corporation ("Heiner's") and EEE REALTY, INC., a West
Virginia corporation ("EEE") and WEST VIRGINIA BAKERY ACQUISITION
COMPANY, INC., a Delaware corporation ("Buyer"). Heiner's and
EEE are sometimes individually referred to herein as the "Seller"
and sometimes collectively referred to herein as the "Sellers."
RECITALS
A. Heiner's is a baker of bread, roll and bun products
for sale at wholesale and retail. EEE owns the real property
upon which such business is conducted and leases such property to
Heiner's. The respective businesses of Heiner's and EEE are
hereinafter sometimes referred to collectively as the "Business."
B. Sellers desire to sell and Buyer desires to purchase
the Assets, as hereinafter defined, and in connection therewith,
Buyer will assume certain liabilities, all upon the terms and
conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and of the
agreements and provisions set forth herein, and subject to the
conditions herein contained, it is mutually agreed as follows:
ARTICLE I - DEFINITIONS
Wherever used in this Agreement, the following terms shall
have the following meanings:
"Accountants' Resolution Period" is defined in Section
2.4(B).
"Accounts Receivable" is defined in Section 4.8.
"Accounts Receivable Schedule" is defined in Section 4.8.
"Additional Consideration" is defined in Section 2.3(B).
"Assets" shall mean all assets, properties and rights owned
by Sellers and used directly or indirectly in the conduct of, or
generated by, the Business, except the Excluded Assets, and
include, without limitation, the following:
(A) all machinery, equipment, motor vehicles,
tools, furniture, furnishings, leasehold improvements, office
supplies, packaging materials, incidentals and like items used or
consumed in the Business and any other tangible personal
property;
(B) all Inventory;
1
(C) all Real Property;
(D) all prepaid expenses, deposits, finance
charges, unbilled costs and fees, and rebates and credits,
relating to other Assets described in this Article I;
(E) all Closing Accounts Receivable;
(F) the Natural Gas Well;
(G) all rights in the Assigned Contracts;
(H) the Intellectual Property and the goodwill
symbolized by all tradenames, trademarks, servicemarks and
copyrights included in the Intellectual Property;
(I) all information, files, books, records, data,
plans, contracts and recorded knowledge, including customer and
supplier lists, regardless of format, relating to the Business,
including those relating to the Assets, that will be necessary
for the conduct of the Business after the Closing Date;
(J) the "Heiner's" trademark, company name and any
applications therefor, whether appearing alone or with any other
name, mark, design, or designation and any related name, mark,
design or designation, and the goodwill symbolized by such
trademarks and servicemarks associated therewith;
(K) all claims and rights of Sellers (except for
the Excluded Assets) arising out of the Business, including those
arising under any policy of insurance with respect to the Assets
or the Business, liquidated or unliquidated;
(L) to the extent not otherwise described above,
and except for Excluded Assets, all of Sellers' interest in all
tangible or intangible assets owned and used by Sellers in
connection with the Business, including without limitation any
which have been fully depreciated or written off.
"Assigned Contracts" shall mean all of Sellers' contracts,
leases and other agreements directly relating to the Business and
necessary for the conduct of the Business after the Closing Date,
all of such contracts, leases and other agreements being listed
on Schedule 1-A.
"Assumed Liabilities" shall mean those liabilities and
obligations of Sellers described on Schedule 1-B.
"Authorizations" shall mean all franchises, licenses,
permits, easements, rights, applications, filings, registrations,
certificates, bonds, approvals and other authorizations which are
in any manner necessary for the conduct of the Business, as now
or previously conducted, or for the ownership or use of the
Assets.
2
"Buyer Group" is defined in ARTICLE IX.
"Buyer's Accountants" shall mean Buyer's independent
certified public accountants, Price Waterhouse LLP.
"Buyer's Documents" shall refer to all agreements,
documents, instruments and certificates required to be delivered
by Buyer in accordance with the terms of this Agreement.
"Closing" shall have the meaning set forth in Section 3.1.
"Closing Accounts Receivable" is defined in Section 4.8.
"Closing Balance Sheet" is defined in Section 2.5.
"Closing Consideration" is defined in Section 2.3(A).
"Closing Date" is defined in Section 3.1.
"Code" shall mean the Internal Revenue Code of 1986, as
amended.
"EBITDA" shall mean the net book income of the Buyer before
interest expense and income and federal and state income taxes
determined in accordance with GAAP, as used in the calculation of
EBITDA in the 1995 Statements, excluding the effect of the
following items:
1. the gain or loss of any sale, exchange or other
disposition of assets other than in the ordinary course of
business consistent with the past practice of the Business;
2. the gain or loss from the exchange of securities, or
any increase or reduction in the carrying value of such
securities;
3. any extraordinary gain or loss;
4. customary depreciation and amortization, and any
additional depreciation, amortization or other expense resulting
from the write-up of any asset and any amortization of goodwill
or other intangibles relating to the acquisition of the Assets by
the Buyer;
5. any expenses directly or indirectly incurred in
connection with the financing of the acquisition of the Assets or
any refinancing of such indebtedness;
6. the effect of valuing inventories on a last-in-first-
out basis;
7. any gain, loss, income or expense resulting from a
change in the accounting methods, principles or practices of the
3
Business or a change in GAAP or any GAAP election or treatment,
or any new announcements implemented after December 31, 1995 by
any applicable governing body;
8. intercompany charges between the Buyer and any of its
affiliates which have not been approved by Sellers in their
reasonable discretion;
9. any expenses directly or indirectly incurred in
connection with the acquisition of the Assets by the Buyer; and
10. any reserves or adjustments to reserves which are
not consistent with the past practices of the Business which
conform to GAAP.
"Environmental Condition" shall mean the presence of any
Hazardous Materials on, in, under or emanating from, any property
now or in the past owned, leased or utilized by either Seller
(except for any property sold by either Seller more than five (5)
years prior to the date hereof, or which has not been leased or
used by either Seller for more than five (5) years prior to the
date hereof) or the violation of any Environmental Laws and
Regulations.
"Environmental Laws and Regulations" shall mean all
limitations, restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables contained in
any federal, state, foreign and local laws or regulations
relating to pollution, nuisance, or the environment including,
without limitation, (A) the Federal Clean Air Act, 42 U.S.C.
Sections 7401 et seq.; (B) the Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Sections
9601 et seq.; (C) the Federal Emergency Planning and Community
Right-to-Know Act, 42 U.S.C. Sections 1101 et seq.; (D) the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
Sections 136 et seq.; (E) the Federal Water Pollution Control
Act, 33 U.S.C. Sections 1251 et seq.; (F) the Solid Waste
Disposal Act, 42 8.S.C. Sections 6901 et seq.; (G) the Toxic
Substances Control Act, 15 U.S.C. Sections 2601 et seq.; (H) laws
relating in whole or in part to emissions, discharges, releases,
or threatened releases of any Hazardous Material; and (I) laws
relating in whole or in part to the manufacture, processing,
distribution, use, coverage, disposal, transportation, storage or
handling of any Hazardous Material.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"Escrow Account" is defined in Section 2.4(A)(ii).
"Escrow Agent" shall mean Wachovia Bank, N.A., Charlotte,
North Carolina.
4
"Escrow Agreement" shall mean the Escrow Agreement entered
into by and among Sellers, Buyer and the Escrow Agent, with
respect to the Escrow Account, in the form of Schedule 8.1(S)
with only such changes as shall be in form and substance
satisfactory to the parties, acting reasonably.
"Excluded Assets" shall mean (A) the rights which accrue or
will accrue to Sellers under this Agreement; and (B) those assets
described on Schedule 1-C.
"Excluded Liabilities" is defined in Section 2.7.
"Financial Statements" is defined in Section 4.7.
"GAAP" shall mean generally accepted accounting principles,
applied on a basis consistent with the past practices of the
Business, including the Business' principles, policies,
practices, procedures, classifications, estimates, methodologies
and judgments.
"H-S-R Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder.
"Hazardous Materials" shall mean any hazardous, infectious
or toxic substance, chemical, pollutant, contaminant, emission or
waste which is regulated by any local, state, federal or foreign
authority. Hazardous Materials include, without limitation,
anything which is (A) defined as a "pollutant" pursuant to 33
U.S.C. Sec. 1362(6); (B) defined as a "hazardous waste" pursuant
to 42 U.S.C. Sec. 6921; (C) defined as a "regulated substance"
pursuant to 42 U.S.C. Sec. 6991; (D) defined as a "hazardous
substance" pursuant to 42 U.S.C. Sec. 9601(14); (E) defined as a
"pollutant or contaminant" pursuant to 42 U.S.C. Sec. 9601(33);
(F) petroleum; (G) asbestos; or (H) polychlorinated biphenyl.
"Increased Taxes" is defined in Section 7.12.
"Indemnifiable Claim" shall mean (i) any claim against a
party hereto which, if paid by such party, will constitute an
Indemnifiable Loss or (ii) any action, suit or proceeding against
a party hereto which, if decided against such party, will
constitute an Indemnifiable Loss.
"Indemnifiable Loss" for Buyer shall mean any loss,
liability, damage, cost or expense of any nature whatsoever as a
result of a breach of a representation, warranty, covenant or
agreement referred to in Section 9.1 or the failure to comply
with the bulk transfers provisions of the Uniform Commercial Code
as enacted and in force in the State of West Virginia and any
other applicable bulk sale or transfer law (collectively, the
"Bulk Sales Law") referred to in Section 9.2 or a failure to
discharge liabilities referred to in Section 9.3 or a failure to
pay the liabilities referred to in Section 9.4. "Indemnifiable
Loss" for Seller shall
5
mean any loss, liability, damage, cost or expense of any nature
whatsoever as a result of a breach of a representation, warranty,
covenant or agreement referred to in Section 10.1 or the failure
to discharge liabilities referred to in Section 10.2.
"Intellectual Property" is defined in Section 4.22.
"Interim Statements" shall mean the unaudited consolidated
balance sheet and income statement of Heiner's and EEE, as of and
for the period ending August 10, 1996, and the notes thereto,
attached hereto as Schedule 4.7.
"Inventory" shall mean all items of inventory, goods held
for sale, merchandise, finished products, component and raw
materials, garage and spare parts and garage supplies, except for
scrap food products.
"Liens" shall mean restrictions on or conditions to transfer
or assignment, debts, claims, security interests, liens,
encumbrances and other title retention agreements, pledges,
assessments, covenants, restrictions, charges, mortgages,
conditional sales agreements, options and other title defects of
every nature.
"Litigation" is defined in Section 4.15.
"1995 Statements" shall mean the unaudited consolidated
balance sheet and income statement of Heiner's and EEE, as of and
for the fiscal year ending December 31, 1995 and the notes
thereto, attached hereto as Schedule 4.7.
"Natural Gas Well" is defined in Section 4.36.
"Net Working Capital" is defined in Section 2.5.
"Neutral Auditors" is defined in Sections 2.4(B) and 2.5.
"Other Incremental Costs" is defined in Section 7.12.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" shall mean those Liens described on
Schedule 1-D.
"Person" shall mean an individual, firm, corporation,
partnership, limited liability company, trust, governmental
authority or body, association, unincorporated organization, or
any other entity.
"Purchase Price" is defined in Section 2.3.
"Real Property" shall mean all real property (including,
without limitation, all interests in and any rights to real
6
property) and improvements located thereon which are owned,
leased or used in the Business by Sellers.
"Sellers' Accountants" shall mean Sellers' independent
certified public accountants, Deloitte & Touche LLP.
"Sellers' Documents" shall refer to all Schedules hereto and
all agreements, documents, instruments and certificates required
to be delivered by Sellers in accordance with the terms of this
Agreement.
"Sellers' Tax Group" shall mean any "affiliated group" (as
defined in Section 1504(a) of the Code) that includes the Sellers
or any predecessor of either Seller, excluding, however, the
shareholders of Sellers.
"Taxes" shall mean any and all federal, state, foreign or
local income, gross receipts, property, sales, use, ad valorem,
license, excise, franchise, employment, withholding or similar
taxes, together with any interest, additions or penalties with
respect thereto, and any interest in respect of such additions or
penalties.
"Tax Returns" shall mean all federal, state, foreign or
local tax returns, declarations of estimated tax and tax reports
(including, without limitation, consolidated federal income tax
returns of the Sellers' Tax Group).
ARTICLE II - PURCHASE AND SALE
2.1 Agreement to Sell. At the Closing, Sellers shall
grant, sell, convey, assign, transfer and deliver to Buyer, upon
and subject to the terms and conditions of this Agreement, all
right, title and interest of Sellers in and to the Assets, free
and clear of all Liens, except with respect to the Assumed
Liabilities which Buyer shall assume and pay in accordance with
their terms.
2.2 Agreement to Purchase. At the Closing, Buyer shall
purchase the Assets from Sellers, upon and subject to the terms
and conditions of this Agreement and in reliance on the
representations, warranties, covenants and indemnifications of
Sellers contained herein, in exchange for the Purchase Price. In
addition, Buyer shall assume at the Closing and agree to pay,
discharge or perform, as appropriate and in the ordinary course,
the Assumed Liabilities. Except as and to the extent
specifically provided in this Section 2.2, Buyer shall not assume
or otherwise be in any respect responsible for any liabilities or
obligations whatsoever of the Business or of Sellers.
2.3 Purchase Price. Subject to adjustment pursuant to
Sections 2.5 and 7.16, the Purchase Price for the Assets shall be
the sum of the following components:
7
(A) consideration to be paid at the Closing in the
amount of Thirty Eight Million Five Hundred Thousand Dollars
($38,500,000.00) (the "Closing Consideration"); and
(B) additional consideration in an amount equal to
(i) one-hundred percent (100%) of EBITDA of the Buyer which
exceeds $7,100,000, up to a maximum of $750,000, and fifty
percent (50%) of EBITDA which exceeds $7,850,000, for the twelve-
month period immediately following the Closing Date and (ii) one-
hundred percent (100%) of EBITDA of the Buyer which exceeds
$7,300,000, up to a maximum of $750,000, and fifty percent (50%)
of EBITDA which exceeds $8,050,000, for the second twelve-month
period immediately following the Closing Date (the "Additional
Consideration").
2.4 Payment of Purchase Price.
(A) The Closing Consideration shall be paid as
follows:
(i) Thirty-Four Million Seventy Five Thousand
Dollars ($34,075,000.00) of the Closing Consideration shall be
paid to the Sellers at Closing in cash (in U.S. dollars) by bank
wire transfer of immediately available funds to one (1) bank
account designated by the Sellers in accordance with instructions
given to Buyer at least five (5) business days prior to the
Closing; and
(ii) Four Million Four Hundred Twenty Five
Thousand Dollars ($4,425,000.00) (the "Escrowed Funds") of the
Closing Consideration shall be deposited at Closing in cash (in
U.S. dollars) by bank wire transfer of immediately available
funds in an interest-bearing escrow account (the "Escrow
Account") with the Escrow Agent, and held therein for a period of
up to thirty six (36) months commencing upon the Closing Date, in
accordance with Section 2.6 hereof and the Escrow Agreement.
(B) Within sixty (60) days of the end of each twelve
month period specified in Section 2.3(B), Buyer shall deliver to
Sellers the computation of the Additional Consideration due for
such period, as well as all workpapers generated by Buyer or
Buyer's Accountants in computing the Additional Consideration.
Such computation will be conclusive and binding on Sellers unless
Sellers, within thirty (30) days of their receipt of such
computation, deliver a written objection thereto to Buyer. Buyer
and Sellers will use their best efforts in good faith to amicably
resolve the dispute within ten (10) days of Buyer's receipt of
Sellers' objection. If the parties cannot resolve the dispute
within such ten (10) day period, Buyer's Accountants and Sellers'
Accountants will then, within thirty (30) days of the end of such
ten (10) day period (the "Accountants' Resolution Period"), use
their best efforts in good faith to amicably resolve the dispute.
Any resolution by Buyer's Accountants and Sellers' Accountants as
8
to the dispute shall be conclusive and binding on the parties.
The Additional Consideration shall be paid to the Sellers or to
the Sellers' designee on behalf of the Sellers within forty-five
(45) days of the completion of the computation for each twelve
month period, unless the Sellers have delivered a written
objection to Buyer in which event the Additional Consideration
shall be paid to Sellers within fifteen (15) days of the final
resolution of the dispute. Such payment will be in cash (in U.S.
dollars) by bank wire transfer of immediately available funds to
one (1) bank account designated by the Sellers or by the Sellers'
designee. The parties agree to supply each other with access to
any applicable information relating to any such dispute that is
reasonably requested by a requesting party, including, without
limitation, access to records and accountants' workpapers. If,
at the conclusion of the Accountants' Resolution Period, there
remain items in dispute, then all disputed items shall be
submitted to a firm of nationally recognized independent public
accountants (the "Neutral Auditors") selected by Buyer and
Sellers within ten (10) days after the expiration of the
Accountants' Resolution Period. If Sellers and Buyer are unable
to agree on the Neutral Auditors, a "big six" accounting firm
will be selected by lot after eliminating one such firm selected
by Sellers and one such firm selected by Buyer. If one party
hereto fails to make the necessary selection within said ten (10)
day period, the other party shall select the Neutral Auditors.
The Neutral Auditors shall not represent Buyer, Sellers, or any
of their respective affiliates. All fees and expenses relating
to the work, if any, to be performed by the Neutral Auditors
shall be borne equally by Buyer and Sellers. The Neutral
Auditors shall act as an arbitrator to determine, based solely on
presentations by Buyer and Sellers, and not by independent
review, only those issues in dispute. The Neutral Auditors'
determination shall be made within thirty (30) days after their
selection; shall be set forth in a written statement delivered to
Buyer and Sellers; and shall be final, binding and conclusive.
2.5 Closing Balance Sheet Purchase Price Adjustment.
(A) The Sellers agree that the Purchase Price may be
adjusted in accordance with this Section 2.5. Within forty-five
(45) days following the Closing Date, Sellers will provide Buyer
with their consolidated balance sheet as of the Closing Date,
prepared and adjusted on a basis consistent with the Financial
Statements (the "Closing Balance Sheet"). Buyer will cause
Buyer's Accountants to perform an examination of the Closing
Balance Sheet. Sellers will provide Buyer and Buyer's
Accountants with access to their books and records and accounting
and financial personnel and Seller's Accountants and their
workpapers in the course of such examination. Subject to the
terms of Section 2.5(B), the Purchase Price will be adjusted on a
dollar for dollar basis in recognition of any difference between
the Net Working Capital as reflected on the Closing Balance Sheet
and the Net Working Capital as reflected
9
on the balance sheet contained in the 1995 Statements. Any
adjustment to the Purchase Price pursuant to this Section 2.5
shall bear simple interest beginning on the Closing Date up to
but not including the date on which such adjustment is paid at
six percent (6%) per annum, based on a 365 day year. If the
adjustment results in the Purchase Price being increased, Buyer
will pay, within five (5) business days after such adjustment has
been finally determined, such additional Purchase Price plus
interest to Sellers in cash (in U.S. dollars) by bank wire
transfer of immediately available funds to one (1) bank account
designated by the Sellers in accordance with instructions given
to Buyer. If the adjustment results in the Purchase Price being
reduced, Sellers will pay, within five (5) business days after
such adjustment has been finally determined, the amount of such
reduction plus interest to Buyer in cash (in U.S. dollars), by
bank wire transfer of immediately available funds to a bank
account designated by Buyer in accordance with instructions given
to Sellers. For purposes of this Section 2.5, "Net Working
Capital" shall mean the excess of net trade receivables, other
receivables, total inventories (net of appropriate, if any,
write-downs and write-offs, and slow moving and obsolete items)
and total prepaid expenses and deposits over total assumed
current liabilities, as those terms are used in the 1995
Statements and the Closing Balance Sheet, excluding Excluded
Assets and Excluded Liabilities, or any liabilities for which
Buyer may be indemnified or reimbursed under any provision of
this Agreement. Buyer agrees that a reduction in the Purchase
Price pursuant to this Section 2.5 will not constitute a breach
of any representation or warranty contained in this Agreement or
the Schedules attached hereto.
(B) Buyer shall have thirty (30) days after receipt of
the Closing Balance Sheet to assert any objection to the Closing
Balance Sheet. Buyer and Seller will use their best efforts in
good faith to amicably resolve the dispute within fifteen (15)
days of Sellers' receipt of Buyer's objections. If the parties
cannot resolve the dispute within such fifteen (15) day period,
then all disputed items shall be submitted to a firm of
nationally recognized independent public accountants (the
"Neutral Auditors") selected by Buyer and Sellers within ten (10)
days after the expiration of said fifteen (15) day period. If
Sellers and Buyer are unable to agree on the Neutral Auditors, a
"big six" accounting firm will be selected by lot after
eliminating one such firm selected by Sellers and one such firm
selected by Buyer. If one party fails to make the necessary
selection within said ten (10) day period, the other party shall
select the Neutral Auditors. The Neutral Auditors shall not
represent Buyer, Sellers, or any of their respective affiliates.
All fees and expenses relating to the work, if any, to be
performed by the Neutral Auditors shall be borne equally by Buyer
and Sellers. The Neutral Auditors
10
shall act as an arbitrator to determine, based solely on
presentations by Buyer and Sellers, and not by independent
review, only those issues in dispute. The Neutral Auditors'
determination shall be made within thirty (30) days after their
selection; shall be set forth in a written statement delivered to
Buyer and Sellers; and shall be final, binding and conclusive.
(C) Notwithstanding any other provision of this
Section 2.5, at any time prior to a final, binding and conclusive
determination of an adjustment to the Purchase Price subject to
this Section 2.5, the Sellers will have one (1) opportunity to
amend the Closing Balance Sheet to reflect any error or omission
discovered by Sellers or Sellers' Accountants. Sellers shall
promptly notify the Buyer of such error or omission and provide
an amended Closing Balance Sheet to the Buyer (but in no event
later than such final determination). The provisions of Section
2.5(B) shall apply to the amended Closing Balance Sheet.
2.6 Escrow Account. The Escrowed Funds will be held
pursuant to the Escrow Agreement and will be paid to Sellers
and/or Buyer in accordance with the terms of the Escrow
Agreement.
2.7 Assumption of Liabilities.
(A) At the Closing, Buyer shall assume and agree to
pay, discharge or perform, as appropriate, the Assumed
Liabilities, in the ordinary course of business and in accordance
with the terms of the Assumed Liabilities.
(B) Except for the Assumed Liabilities, Buyer is not
assuming and shall not be obligated to pay any of Sellers'
obligations or liabilities (such unassumed obligations and
liabilities being referred to herein as the "Excluded
Liabilities") including by way of example and not by way of
limitation any of the following:
(i) any promissory notes issued by either Seller,
including any notes to any lender or shareholder of a Seller;
(ii) any liability or obligation under or in
connection with the Excluded Assets;
(iii) any liability or obligation arising out of
the conduct of the Business prior to the Closing, whether now
known or hereafter asserted;
(iv) any liability or obligation relating to any
Environmental Laws and Regulations or any Environmental Condition
arising or accruing prior to the Closing;
11
(v) any product liability or similar claim for
injury to person or property, regardless of when made or
asserted, which arises out of or is based upon any express or
implied representation, warranty, agreement or guarantee made by
either Seller, or alleged to have been made by such Seller, or
which is imposed or asserted to be imposed by operation of law,
in connection with any service performed or product sold or
leased by or on behalf of such Seller on or prior to the Closing,
including without limitation any claim relating to any product
delivered in connection with the performance of such service and
any claim seeking recovery for consequential damage, lost revenue
or income;
(vi) any Taxes (a) payable with respect to the
Business, the Assets, or the properties or operations of
Sellers' Tax Group; or (b) incident to, or arising as a
consequence of, the negotiation or consummation by Sellers of
this Agreement and the transactions contemplated hereby;
(vii) any liability or obligation arising prior
to or as a result of the Closing to any employees, agents or
independent contractors of either Seller, whether or not employed
by Buyer after the Closing, or under any Employee Benefit Plan or
other benefit or compensation arrangement with respect thereto,
including any such Plan or arrangement referred to in Section
4.11 or Section 4.21; and
(viii) any liability or obligation of either
Seller arising or incurred in connection with the negotiation,
preparation and execution of this Agreement and the transactions
contemplated hereby, including the fees and expenses of counsel,
accountants and other experts.
2.8 Employees.
(A) As of the Closing Date, Buyer shall offer
employment, on an at-will basis (except as noted in this
Agreement), to all those persons then presently employed by
Sellers in the Business (other than those persons then presently
on disability leave and not then actively working for Sellers),
at the compensation rates, benefit levels and with the duties
then in effect (the "Employees"). Each such Employee, whether
represented by a labor union or not, who becomes an employee of
Buyer shall receive full credit for his or her past service to
the Sellers for the following purposes only: (i) vacation
benefits; (ii) union seniority, if applicable; (iii) vesting
under any defined benefit plan created, sponsored or assumed by
Buyer; and (iv) as required by the union contract and union
pension plan which are being assumed by Buyer. Past service
credit will not be received for any other purposes, including but
not limited to,
12
determining benefits under any such defined benefit plan (except
for the union pension plan) or severance pay.
(B) Except with respect to the Assumed Liabilities and
the deferred compensation and supplemental retirement income
agreements set forth in Schedule 4.11, Sellers shall pay in full
to and/or settle with, on or before the Closing Date, each of the
Employees who accepts an offer of employment by Buyer in
accordance with Section 2.8(A), all salaries, bonuses and other
amounts payable to or receivable by the Employees or payable to
or receivable by any government agency with respect to workers'
compensation or any other similar taxes or benefits, up to and
including the Closing Date.
(C) Until the third anniversary of the Closing Date,
neither Seller nor its shareholders will directly or indirectly
solicit or offer employment to any of the Employees (i) who is an
employee of Buyer at the time of such solicitation or offer, or
(ii) who became an employee of Buyer but terminated such
employment without the consent of Buyer within 180 days of such
solicitation or offer.
2.9 Employee Compensation and Benefits. Except with
respect to liabilities and obligations to or regarding the
Employees who become employees of Buyer during the period from
and after the Closing Date, including amounts payable with
respect to the termination of their employment by Buyer after the
Closing Date (the "Employee Liabilities"), and except for Assumed
Liabilities, Buyer shall assume no liability for compensation or
benefits accrued and payable to any of Sellers' employees,
including the Employees, as of the Closing Date and Sellers shall
remain solely responsible for and shall pay (or make provision to
pay in a manner satisfactory to Buyer) such compensation and
benefits, as well as any related taxes, on or before the Closing
Date. Except for Assumed Liabilities, no portion of the assets
of any plan, fund, program or arrangement, written or unwritten,
heretofore sponsored or maintained by either Seller (and no
amount attributable to any such plan, fund, program or
arrangement) shall be required hereunder or otherwise to be
transferred to Buyer, and Buyer shall not be required to continue
any such plan, fund, program or arrangement after the Closing
Date. Buyer shall not be liable for any claim for insurance,
reimbursement or other benefits payable by reason of any event
which occurs prior to the Closing Date.
ARTICLE III - CLOSING, ITEMS TO BE DELIVERED,
AND FURTHER ASSURANCES
3.1 Closing. The closing (the "Closing") of the sale
and purchase of the Assets shall take place at 10:00 A.M.,
Eastern time on November 15, 1996 at the offices of Jenkins,
Fenstermaker, Krieger, Kayes & Agee, 1100 Coal Exchange Building,
Fourth Avenue and Eleventh Street, Huntington, West Virginia
25701, or on such other date and/or place as may be mutually
agreed upon in writing by Buyer and Sellers (the "Closing Date"),
but shall be effective
13
as of the Closing Date, provided all of the conditions precedent
set forth in Article VIII have been satisfied or waived. For all
purposes, and to the extent permitted by law, the Closing shall
be deemed to have been effective as of 6:00 p.m. Eastern time, on
the Closing Date.
3.2 Conveyances at Closing. At the Closing, Sellers
will deliver to Buyer full possession of the Assets and such
bill(s) of sale, deeds, endorsements, assignments and other good
and sufficient instruments of sale, conveyance, transfer and
assignment, all containing covenants of general warranty, in form
and substance satisfactory to Buyer acting reasonably (including,
without limitation, a Bill of Sale and Assignment substantially
in the form of Schedule 3.2(a), Warranty Deeds substantially in
the form of Schedule 3.2(b) and an Assignment of Intellectual
Property substantially in the form of Schedule 3.2(c)), as will
be required or as may be desirable in the opinion of Buyer's
counsel in order to effectively vest in Buyer full, indefeasible,
legal, equitable and beneficial title to the Assets with full
substitution and subrogation to all rights and actions of
warranty, free and clear of all Liens, except for Permitted
Encumbrances and the Assumed Liabilities. On the Closing Date,
Buyer shall assume and agree to discharge the Assumed Liabilities
by delivering to Sellers at the Closing an Agreement for
Assignment and Assumption of Assumed Liabilities substantially in
the form of Schedule 3.2(d). The parties have agreed to waive
any compliance by the Sellers with respect to the Bulk Sales Law,
and the Sellers have agreed to indemnify Buyer for the failure to
so comply in accordance with Section 9.2.
3.3 Payment of Purchase Price. In consideration of the
sale, transfer, assignment and conveyance of the Assets by
Sellers to Buyer, and also in consideration of the
representations, warranties, covenants, agreements and
indemnities of Sellers contained in this Agreement and in the
other agreements and documents contemplated hereby, Buyer will
pay, and Sellers will accept, the Purchase Price, subject to
adjustment, as provided herein.
3.4 Further Assurances. From time to time after the
Closing, at Buyer's request, Sellers will, without additional
consideration, execute, acknowledge and deliver to Buyer such
other instruments of conveyance and transfer and will take such
other actions and execute and deliver such other documents,
certifications and further assurances as Buyer may reasonably
require in order to vest more effectively in Buyer, or to put
Buyer more fully in possession of, any of the Assets, or to
better enable Buyer to complete, perform or discharge any of the
Assumed Liabilities. Each of the parties hereto will cooperate
with the other and execute and deliver to the other parties
hereto such other instruments and documents and take such other
actions as may be reasonably requested from time to time by any
other party hereto as necessary to carry out, evidence and
confirm the intended purposes of this Agreement.
14
ARTICLE IV - REPRESENTATIONS AND WARRANTIES
OF SELLERS
The Sellers, jointly and severally, hereby represent and
warrant to, and covenant and agree with, Buyer as follows:
4.1 Corporate Existence. Each Seller is a corporation
duly organized, validly existing and in good standing under the
laws of the State of West Virginia and has all necessary power
and authority to own its own assets as now owned and to carry on
its business as now being conducted. Each Seller is duly
qualified to do business, and is in good standing as a foreign
corporation, in those jurisdictions listed on Schedule 4.1. The
aforementioned jurisdictions are the only jurisdictions in which
the conduct of the Business or the ownership of the Assets
requires either Seller to be so qualified.
4.2 Corporate Power; Authorization; Enforceable
Obligations. Each Seller has the corporate power, authority and
legal right to execute, deliver and perform this Agreement and
all covenants and agreements referred to in this Agreement. The
execution, delivery and performance of this Agreement and all
agreements referred to herein by each Seller have been duly
authorized by all necessary corporate and shareholder action.
This Agreement has been duly executed and delivered on behalf of
Sellers by duly authorized officers or agents of Sellers, and
this Agreement constitutes, and the Sellers' Documents when
executed and delivered will constitute, the legal, valid and
binding obligations of each of the Sellers, enforceable against
such party in accordance with their respective terms.
4.3 Title and Condition of Assets; Property Used But Not
Owned. Except as set forth in Schedule 4.3(a), Sellers have good
and marketable title to and interest in the Assets which are free
and clear of all Liens, except with respect to the Assumed
Liabilities and Permitted Encumbrances. All of the items of
tangible personal/movable property constituting a part of the
Assets are in good and workable condition. Schedule 4.3(b) is a
true and complete list of all property used by the Sellers in the
Business but not owned by them, and a description of the terms of
and compensation for such use. Sellers will take all actions
necessary to enable Buyer to use such property in the same manner
and under the same arrangements as Sellers.
4.4 No Interest in Other Entities. Except as otherwise
set forth in Schedule 4.4, neither Seller owns or holds, directly
or indirectly, either of record, beneficially or equitably, any
shares of capital stock of any corporation or any ownership or
other investment interest, in any association, partnership,
limited liability company, joint venture or other legal entity,
other than the Excluded Assets.
4.5 No Conflicting Agreements or Orders; Required
Consents or Filings. Except as set forth on Schedule 4.5, the
execution,
15
delivery and performance of this Agreement by Sellers does not
and will not violate, conflict with or result in the breach of
any term, condition or provision of, or require the consent of
any other person under (A) any existing law, ordinance, or
governmental rule or regulation to which either Seller is
subject; (B) any judgment, order, writ, injunction, decree or
award of any court, arbitrator or governmental or regulatory
official, body or authority which is applicable to either Seller;
(C) the articles of incorporation and bylaws of either Seller, or
any securities issued by either Seller; or (D) any mortgage,
indenture, agreement, contract, commitment, lease, plan,
Authorization or other instrument, document or understanding,
oral or written, to which either Seller is a party, by which
either Seller may have rights or by which any of the Assets may
be bound or affected, or which give any party with rights
thereunder the right to terminate, modify, accelerate or
otherwise change the existing rights or obligations of either
Seller thereunder. Except as set forth on Schedule 4.5 and
except for compliance with the H-S-R Act, no Authorization,
approval or consent of, and no registration or filing with, any
governmental or regulatory official, body or authority is
required in connection with the execution, delivery or
performance of this Agreement by Sellers.
4.6 No Third Party Options. There are no existing
agreements, options, commitments, or rights with, of or to any
person to acquire any of either Seller's assets, properties or
rights which are a part of the Assets or any interest therein,
except for those contracts entered into in the normal course of
business consistent with past practice for the sale of Inventory.
4.7 Financial Statements. The 1995 Statements and the
Interim Statements (collectively, the "Financial Statements") are
attached hereto as Schedule 4.7. The Financial Statements have
been prepared and adjusted on a basis consistent with one
another. Except as expressly stated on Schedule 4.7, the
Financial Statements are, and will continue to be, accurate and
complete, and fairly represent and will continue to fairly
represent the financial condition of the Sellers and the income,
expenses and results of operations of the Sellers, for the time
period(s) covered thereby, and do not, and will not, omit to
state or reflect any fact concerning the Sellers or the Business
required by GAAP to be stated or reflected therein or necessary
to make the statements therein not misleading. Except as set
forth on Schedule 4.7, the Financial Statements were prepared in
accordance with GAAP. Neither Seller has any outstanding or
potential unasserted claims, contingent obligations (whether as a
guarantor, indemnitor, surety, accommodation party or otherwise),
liability for taxes or forward or long-term commitments or
obligations relating to the Business or the Assets, except as set
forth in the Financial Statements or as set forth in the
Schedules to this Agreement. There are no additional, duplicate
or other sets of books, financial statements or other documents
which more accurately reflect the financial condition or results
of operations of the Sellers for the same periods of time covered
by the Financial Statements.
16
4.8 Accounts Receivable. Sellers have delivered to
Buyer a current aged list of unpaid accounts and notes receivable
(the "Accounts Receivable") owing to Sellers (the "Accounts
Receivable Schedule"), and will deliver to Buyer at Closing, an
aged list of accounts receivable (the "Closing Accounts
Receivable") owing to Sellers as of the close of business on the
preceding business day (the "Closing Accounts Receivable
Schedule"), and other information pertaining to the Accounts
Receivable as Buyer shall reasonably request. The Accounts
Receivable Schedule, the Closing Accounts Receivable Schedule and
any such updates thereto or other related information provided to
Buyer set forth or will set forth a true and correct list of all
Accounts Receivable as of the respective dates thereof. The
Accounts Receivable are, and the Closing Accounts Receivable will
be, legal, valid and binding claims, arose in the ordinary course
of business and are not subject to any defense, counterclaim or
right of set off.
4.9 Inventory. All Inventory used in the conduct of the
Business: (A) was acquired and has been maintained in the
ordinary course of the Business; (B) is of good and merchantable
quality; and (C) consists substantially of a quality, quantity
and condition usable, leasable or saleable in the ordinary course
of the Business.
4.10 Absence of Undisclosed Liabilities. Except as
specifically disclosed in Schedule 4.10, neither Seller has any
liabilities or obligations with respect to the Business or the
Assets, either direct or indirect, matured or unmatured or
absolute, contingent or otherwise, which have resulted in or will
result in a Lien on any of the Assets or which will interfere
with Buyer's use of the Assets following the Closing.
4.11 Employees; Employment Agreements; Compensation.
Schedule 4.11(a) sets forth a true and complete roster of all
current employees, including their titles, date of hire and
current base salary or wages. Except as disclosed on Schedule
4.11(b) hereof, neither Seller has entered into, nor has any
obligation or liability with respect to, any employment or
consulting agreement, executive compensation plan, collective
bargaining agreement, deferred compensation agreement,
supplemental retirement income agreement, split dollar insurance
plan, bonus plan, employee pension plan or retirement plan,
employee profit sharing plan, employee stock purchase or stock
option plan, severance agreement or any other agreement or
arrangement providing for remuneration or benefits to its current
employees or their dependents. Except as set forth on Schedule
4.11(b), neither Seller has any liability to any person presently
or formerly employed in connection with the operations of its
business for any arrears in wages, salaries, deferred
compensation, supplemental retirement income, overtime pay,
vacation, time off, or pay in lieu of vacation or time off (other
than for normal wage accruals with respect to the Sellers'
current pay period) or for any other payments or penalties for
failure to comply with any statute, law, rule, regulation or
agreement relating to or affecting the Business, nor is there any
17
basis known to the Sellers for any such liability. It is
understood and agreed that the previous sentence does not apply
to any Seller liability which has been finally and fully resolved
with no continuing or contingent obligation on the part of such
Seller.
4.12 Leases. Schedule 4.12 attached hereto contains an
accurate and complete list and description of the terms of all
leases or subleases of real property and personal property to
which either Seller is a party (as lessee, sublessee, lessor, or
sublessor), excluding (i) any lease or sublease terminable
without penalty by such Seller upon no more than thirty (30) days
notice and (ii) any lease or sublease wherein the annual payments
by either Seller under such lease or sublease is less than
$10,000.00, provided that the aggregate annual payments under
such excluded leases and subleases are less than $50,000.00.
Each lease or sublease set forth in Schedule 4.12 (or required to
be set forth in Schedule 4.12) is in full force and effect; all
rents due to date on each such lease or sublease have been paid;
in each case, the lessee or sublessee has been in peaceable
possession since the commencement of the original term of such
lease or sublease and is not in default thereunder and no waiver,
indulgence or postponement of the lessee's or sublessee's
obligations thereunder has been granted by the lessor or
sublessor; and there exists no event of default or event,
occurrence, condition or act (including the purchase of the
Assets hereunder) which, with the giving of notice, the lapse of
time or the happening of any further event or condition, would
become a default under such lease or sublease. Neither Seller
has violated any of the terms or conditions under any such lease
or sublease, and all of the terms, conditions and covenants to be
performed by any other party under any such lease or sublease
have been fully performed. The property leased or subleased by
the Sellers is in adequate operating condition and in a state of
maintenance and repair which is adequate and suitable for the
purposes for which it is presently being used.
4.13 Material Contracts. Except as set forth in
Schedule 4.13 attached hereto, neither Seller has entered into or
is bound by (a) any agreement, contract or commitment which
involves $50,000.00 or more and is not cancelable without penalty
within thirty (30) days, (b) any loan or advance to, or
investment in, any Person or any agreement, contract or
commitment relating to the making of any such loan, advance or
investment, (c) any guarantee or other contingent liability in
respect of any indebtedness or obligation of any Person other
than a Seller (other than the endorsement of negotiable
instruments for collection in the ordinary course of business),
(d) any management service, consulting or any other similar type
contract, (e) any agreement, contract or commitment limiting the
freedom of either Seller to engage in any line of business or to
compete with any Person, or (f) any other agreement, contract or
commitment which might reasonably be expected to have an adverse
impact on the business or operations of either Seller. Each
contract or agreement set forth in Schedule 4.13 (or required to
be set forth in Schedule 4.13) and each Assigned Contract is in
full force and effect and there exists no default or event of
18
default or event, occurrence, condition or act (including the
purchase of the Assets hereunder) which, with the giving of
notice, the lapse of time or the happening of any other event or
condition, would become a default or event of default thereunder.
Neither Seller has violated any of the terms or conditions of any
contract or agreement set forth in Schedule 4.13 or of any
Assigned Contract (or required to be set forth in Schedule 4.13)
in any respect, and all of the terms, conditions and covenants to
be performed by any other party thereto have been fully
performed.
4.14 Restrictive Documents. Except as set forth in
Schedule 4.14 attached hereto, neither Seller is subject to, or
is a party to, any charter, by-law, mortgage, Lien (except the
Permitted Encumbrances), lease, license, permit, agreement,
contract, instrument, law, rule, ordinance, regulation, order,
judgment or decree, or any other restriction of any kind or
character, oral or written, which adversely affects the business
practices, operations or condition of such Seller or any of its
assets or property, or which would prevent consummation of the
transactions contemplated by this Agreement, compliance by such
Seller with the terms, conditions and provisions hereof or the
continued operation of the Business or its Assets after the date
hereof or the Closing Date on substantially the same basis as
heretofore operated or which would restrict the ability of such
Seller to acquire any property or conduct business in any area.
4.15 Litigation. Except as set forth in Schedule 4.15,
no suit, action, decree, arbitration or legal, administrative or
other proceeding, controversy or investigation ("Litigation") is
pending or threatened against either Seller or any of its
property, assets or rights which might adversely affect the
Business or financial or other condition of such Seller or any of
the Assets or which would prevent the execution and delivery of
this Agreement by the Sellers or prevent consummation of the
transactions contemplated by this Agreement. There is no basis
known to Sellers for any other such litigation, proceeding,
controversy or investigation. Except as set forth in Schedule
4.15, neither Seller is subject to or in default with respect to
any order, writ, injunction, judgment or decree of any federal,
provincial, state, local or foreign court, department, agency or
instrumentality, nor has the time period of such Seller's
compliance with respect to any of the same been extended or
stayed. Except as set forth in Schedule 4.15, neither Seller is
presently a party to any legal action to recover moneys due to,
or damages sustained by, such Seller in respect of the business
or the assets of such Seller.
4.16 Labor Relations. Except as set forth in Schedule
4.16, each Seller has complied with all applicable laws, rules
and regulations relating to the employment of labor in connection
with its business, including those relating to wages (including
overtime), benefits (including vacation), hours, employee safety
or other conditions of employment and the withholding and payment
of taxes. Except as set forth in Schedule 4.16, there are no
labor disputes, controversies, grievances, strikes, work
slowdowns or
19
stoppages, nor are there any proceedings before any court,
governmental agency or arbitrator relating to such matters,
including unfair labor practice claims, existing, pending or
threatened against either Seller or between either Seller and any
of its employees or any union representing or claiming to
represent any such employees, nor have any discharges occurred
which form the basis for any claim of discrimination against
either Seller. Except as set forth in Schedule 4.16, neither
Seller is a party to any collective bargaining agreement nor have
the Sellers received any notice that any union claims to
represent any employees of either Seller.
4.17 Tax Matters.
(A) All Tax Returns of the Sellers' Tax Group
required to be filed on or before the Closing Date with respect
to either Seller or any of its income, properties or operations
have been duly filed. All such Tax Returns were correct and
complete in all material respects. All Taxes, whether or not
shown to be due on such Tax Returns and any assessment received
on or before the Closing Date with respect to either Seller have
been duly paid or have been provided for in a reserve to be
maintained by Sellers which is adequate for the payment of such
Taxes. Sellers have withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing
to any employee, independent contractor, creditor, stockholder or
other third party. Except as set forth on Schedule 4.17, no
deficiency for any Taxes with respect to either Seller has ever
been proposed, asserted, or assessed. No waivers or extensions
of statutes of limitations for any Taxes or Tax Returns have been
given or requested.
(B) There are no Liens on any of the assets of
either Seller that have arisen in connection with any failure (or
alleged failure) to pay any Taxes (other than for current Taxes
not yet due and payable).
(C) Schedule 4.17 lists those Tax Returns that have
been, or currently are, the subject of any audit. Sellers have
delivered to Buyer correct and complete copies of all Federal
income tax returns of Sellers since 1990.
(D) No property owned by either Seller (i) is
property required to be treated as being owned by another Person
pursuant to the provisions of Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended, and in effect immediately prior
to the enactment of the Tax Reform Act in 1986, (ii) constitutes
"tax-exempt use property" within the meaning of Section 168(h) of
the Code, or (iii) is tax-exempt bond financed property within
the meaning of Section 168(g) of the Code. Neither Seller is a
party to any other joint venture, partnership, limited liability
company or other contract or arrangement relating to the Business
or the Assets
20
that is treated as a partnership for federal income tax purposes.
4.18 Insurance. Set forth on Schedule 4.18 is a
complete list of insurance policies which the Sellers maintain
with respect to their business, properties or employees and all
outstanding claims thereunder. Sellers have delivered to Buyer a
true and complete copy of each such policy, or, if such policy is
not available, a summary of the material terms of such policy.
Such policies are in full force and effect and there is no event
(including the purchase of the Assets hereunder) which, with the
giving of notice or the passage of time or both, would constitute
a default thereunder. The Sellers are fully and adequately
insured with respect to risks normally insured against by
companies similarly situated. Since December 31, 1995, there has
not been any adverse change in either Seller's relationship with
its insurers, or in the premiums payable pursuant to such
policies. Set forth on Schedule 4.18 is a true and complete list
and description of all outstanding bonds and other surety
arrangements issued or entered into in connection with the
Business, the Assets, the liabilities and the employees of the
Sellers.
4.19 Compliance. Except as set forth in Schedule
4.19(a), each Seller has conducted its business and maintained
its properties, and the real and personal property covered by
present and past leases and subleases, in compliance with, and is
not in violation of, applicable laws, ordinances, rules,
regulations and orders of federal, state, local and foreign
jurisdictions, governments, regulatory bodies and courts
(including, without limitation, any and all applicable building,
zoning and licensing laws, ordinances, regulations or orders
affecting the location, size and function of the Sellers' assets,
all Environmental Laws and Regulations and any and all applicable
laws, regulations, orders, decrees or requirements relating to
securities, properties, business, products, advertising, sales or
employment practices, terms and conditions of employment,
occupational safety, health and welfare, conditions of occupied
premises, product safety, liability for civil rights and rights
of disabled persons). Neither Seller has received any claim or
notice that either Seller has not complied in all respects in the
operation of its business and related properties with such laws,
rules, regulations and orders. Except as set forth on Schedule
4.19(a), each Seller has all Authorizations, licenses, permits
and consents required to be obtained from federal, state, local
or foreign authorities with respect to the ownership or use of
its assets or the operation of its business, a complete list of
which is set forth on Schedule 4.19(b).
4.20 Documents. Within fifteen (15) days of the
execution of this Agreement, Sellers have furnished to Buyer and
its advisors for their examination copies of all agreements,
policies, leases, and other instruments and documents listed on
the Schedules attached hereto or subsequently provided pursuant
to Section 7.13. Such copies are true and complete and include
all amendments,
21
supplements, and modifications thereto or waivers currently in
effect thereunder.
4.21 Employee Benefit Plans.
(A) Employee Benefit Plans and Similar
Arrangements.
(1) Schedule 4.21(a) lists all employee
benefit plans or arrangements to which either Seller is a party
or by which either of them is bound, legally or otherwise,
including, without limitation: (i) any profit-sharing,
compensation, deferred compensation, bonus, stock option, stock
purchase, pension, retainer, consulting, retirement, supplemental
retirement, severance, welfare or incentive plan, agreement or
arrangement; (ii) any plan, agreement, arrangement or policy
providing for "fringe benefits" or perquisites to employees,
officers, directors or agents, including but not limited to
benefits relating to company automobiles, clubs, vacation, child
care, parenting, sabbatical, sick leave, medical, dental,
hospitalization, life insurance and other types of insurance; and
(iii) any other "employee benefit plan" within the meaning of
Section 3(3) of ERISA. (All such plans, agreements,
arrangements, perquisites and policies being hereinafter
collectively referred to as the "Employee Benefit Plans" and
singly an "Employee Benefit Plan".)
(2) The Sellers have delivered to the Buyer:
(i) true and complete copies of all documents and summary plan
descriptions with respect to the Employee Benefit Plans or
summary descriptions of any such plans not otherwise in writing;
and (ii) for each such Employee Benefit Plan, if applicable,
copies of the Form 5500, if any, filed in the three most recently
completed plan years, including, but not limited to, all
schedules thereto and financial statements with attached opinions
of independent accountants.
(3) There are no negotiations, demands or
proposals that are pending or have been made which concern
matters now covered, or that would be covered, by any Employee
Benefit Plan.
(4) The Sellers have complied in all material
respects with the applicable provisions of ERISA (as amended
through the date of this Agreement), the regulations and
published authorities thereunder, and all other laws applicable
to each Employee Benefit Plan. The Sellers have performed in all
material respects all of their obligations under each Employee
Benefit Plan including, but not limited to, the full payment when
due of all amounts required to be made as contributions thereto
or otherwise. To the best knowledge of
22
the Sellers, there are no actions, suits or claims (other than
routine claims for benefits) pending or threatened against any
Employee Benefit Plan or its assets, or arising out of any
Employee Benefit Plan, and, to the best knowledge of the Sellers,
no facts exist that could give rise to any liability in the event
of such actions, suits or claims. Each Employee Benefit Plan has
been duly authorized by the Board of Directors of the appropriate
company.
(5) Except as specified in Schedule 4.21(a),
each of the Employee Benefit Plans can be terminated by the
Sellers within a period of 30 days, without payment of any
additional compensation or amount or the additional vesting or
acceleration of any such benefits.
(6) With respect to each Employee Benefit Plan
that is an "employee benefit plan" within the meaning of Section
3(3) of ERISA or a "Plan" within the meaning of Section
4975(e)(1) of the Code, there has occurred no transaction
prohibited by Section 406 of ERISA and no "prohibited
transaction" within the meaning of Section 4975(c) of the Code.
(B) Qualified Plans.
(1) Schedule 4.21(b) lists each Employee
Benefit Plan that is also a stock bonus, pension or profit-
sharing plan within the meaning of Section 401(a) of the Code
(hereinafter referred to as a "Qualified Plan").
(2) Each such Qualified Plan is qualified in
form and operation under Section 401(a) of the Code and each
trust under each such plan is exempt from tax under Section
501(a) of the Code. No event has occurred that will or could
give rise to disqualification or loss of tax-exempt status of any
such Qualified Plan or trust under such Code Sections. No event
has occurred that will or could subject any such plans to tax
under Section 511 of the Code.
(3) The Sellers have delivered to the Buyer
for each such Qualified Plan copies of the following documents:
(i) the most recent determination letter from the Internal
Revenue Service; (ii) the consolidated statement of assets and
liabilities of such Qualified Plan as of its most recent
valuation date; and (iii) the statement of changes in fund
balance and in financial position or the statement of changes in
net assets available for benefits under such Qualified Plan for
the most recently ended plan year. The financial statements so
delivered fairly present the financial condition and the results
of operations of each of such Qualified Plan
23
as of such dates, in accordance with generally accepted
accounting principles consistently applied.
(4) With respect to each Qualified Plan
subject to Section 412 of the Code maintained for employees of
either Seller or any of their ERISA Affiliates, there has
occurred no failure to meet the minimum funding standard of
Section 412 of the Code (whether or not waived in accordance with
Section 412(d) of the Code) or failure to make by its due date a
required installment under Section 412(m) of the Code. "ERISA
Affiliate", as applied to any Person, means: (i) any corporation
that is a member of a controlled group of corporations within the
meaning of Section 414(b) of the Code of which that person is a
member; (ii) any trade or business (whether or not incorporated)
that is a member of a group of trades or businesses under common
control within the meaning of Section 414(c) of the Code of which
that person is a member; and (iii) any member of an affiliated
service group within the meaning of Section 414(m) and (o) of the
Code of which that person, any corporation described in clause
(i) above or any trade or business described in clause (ii) above
is a member.
(C) Title IV Plans.
(1) Schedule 4.21(c) lists all plans in
Schedules 4.21(a) and 4.21(b) that are also subject to Title IV
of ERISA ("Title IV Plan").
(2) With respect to each "employee pension
benefit plan" (within the meaning of Section 3(2) of ERISA) in
which either Seller or any ERISA Affiliate participates or has
participated: (i) neither Seller, nor any ERISA Affiliate has
withdrawn from such plan during a plan year in which it was a
"substantial employer" (as defined in Section 4001(a)(2) of
ERISA) where such withdrawal could result in liability of such
substantial employer pursuant to Section 4062(e) or 4063 of
ERISA; (ii) neither Seller, nor any ERISA Affiliate has filed a
notice of intent to terminate any such plan or adopted any
amendment to treat any such plan as terminated; (iii) the PBGC
has not instituted proceedings to terminate any such plan;
(iv) no other event or condition has occurred which might
constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer,
any such plan; (v) no accumulated funding deficiency, whether or
not waived, exists with respect to any such plan, and no
condition has occurred or exists which by the passage of time
would be expected to result in an accumulated funding deficiency
as of the last day of the current plan year of any such plan;
(vi) all required premium payments to the PBGC have been paid
when due; (vii) no reportable event, as described in Section
24
4043 of ERISA, has occurred with respect to any such plan;
(viii) no excise taxes are payable under the Code; and (ix) no
amendment with respect to which security is required under
Section 307 of ERISA has been made or is reasonably expected to
be made.
(3) All costs of each Title IV Plan have been
provided for on the basis of consistent methods in accordance
with sound actuarial assumptions and practices. Schedule 4.21(c)
includes for each Title IV Plan, as of its last valuation date,
the amount by which its assets exceeded (or were less than) its
"benefit liabilities" (within the meaning of Section 4001 of
ERISA). Since the last valuation date for each Title IV Plan,
there has been no amendment or change to such plan, that would
increase the amount of benefits thereunder and, to the best
knowledge of the Sellers, there has been no event or occurrence
that would cause the excess of assets over benefit liabilities as
listed in Schedule 4.21(c) to be reduced or the amount by which
benefit liabilities exceed assets as listed in Schedule 4.21(c)
to be increased.
(4) In addition to the documents listed in
subsections (A)(2) and (B)(3) above, the Sellers have delivered
to the Buyer for each Title IV Plan copies of the following
documents: (i) the Form PBGC-1 filed in each of the most recent
three plan years; and (ii) the actuarial reports as of the last
two valuation dates. Each such actuarial report fairly presents
the financial condition and the results of operations of each
such plan as of such date, in accordance with generally accepted
accounting principles consistently applied.
(D) Multiemployer Plans.
Neither Seller nor any ERISA Affiliate of either Seller is a
party to, has ever been a party to, has contributed to or had an
obligation to contribute to any multiemployer plan within the
meaning of Section 3(37) of ERISA.
(E) Welfare Benefit Plans.
All group health plans of Sellers and any ERISA
Affiliate have been operated in all material respects in
compliance with the group health plan continuation coverage
requirements of Part 6 Subtitle B of Title I of ERISA and 4980B
of the Code to the extent such requirements are applicable.
Except to the extent required under Section 4980B of the Code or
as set forth in Schedule 4.21(e), neither Seller provides health
or welfare benefits (through the purchase of insurance or
otherwise) for any retired or former employees.
25
(F) Fines and Penalties.
There has been no act or omission by either Seller or
any ERISA Affiliate that has given rise to or any give rise to
fines, penalties, taxes, or related changes under Section 502(c),
(i) or (1) Section 4071 of ERISA or Chapter 43 of the Code.
4.22 Intellectual Property. Schedule 4.22(a) sets forth
a description of all patents, patent applications, trademarks,
registered trademarks, trademark applications, service marks,
registered service marks, service mark applications, trade names,
copyrights, registered copyrights, copyright applications,
computer software including the source code, object code and
executable code relating thereto(other than miscellaneous off-
the-shelf software, such as, by way of example, word processing,
network and spread sheet programs), trade secrets, confidential
information and proprietary know-how owned and/or used by either
Seller. Such items listed in Schedule 4.22(a) are referred to in
this Agreement as the "Intellectual Property". All of the
Intellectual Property is and, on the Closing Date will be, owned
and/or used by Sellers free and clear of any Liens, except as set
forth in Schedule 4.22(b). Buyer's ownership and use of the
Intellectual Property will not infringe upon any other Person's
rights or create any Lien on the Intellectual Property. To
Sellers' best knowledge and belief, neither Seller infringes upon
or unlawfully or wrongfully uses any intellectual property owned
or claimed by another. Neither Seller is in default under any
obligation relating to, nor has it received any notice of any
claim of infringement or any other claim or proceeding relating
to, any intellectual property, including the Intellectual
Property, except as set forth in Schedule 4.22(b). Except as set
forth in Schedule 4.22(b), no present or former employee of
either Seller and no other Person owns or has any proprietary,
financial or other interest, direct or indirect, in whole or in
part, in any Intellectual Property. Except as set forth on
Schedule 4.22(c), there are no confidentiality or non-disclosure
agreements to which either the Seller or any of its employees is
a party which relates to the Business or the Assets. Sellers
hereby covenant and agree, following the Closing, that they will
not use any name, mark, commercial symbol or logo that is the
same as or confusingly similar to any of the Intellectual
Property.
4.23 Environmental.
(a) Except as set forth in Schedule 4.23(a), the
operations and activities of the Sellers comply, and have in the
past complied, in all respects, with all Environmental Laws and
Regulations.
(b) Except as set forth in Schedule 4.23(b)(1),
each Seller has obtained all permits, licenses and other
Authorizations which are required with respect to such Seller's
operations, as well as the transactions contemplated hereby,
under all Environmental Laws and Regulations and is in
26
full compliance with all requirements thereunder. Schedule
4.23(b)(2) lists each such permit, license or other
Authorization. Except as set forth in Schedule 4.23(b)(3), there
are no other such permits, licenses or other Authorizations which
are required by any Environmental Laws and Regulations to be
obtained after the Closing.
(c) There is no civil, criminal, administrative or
other action, suit, demand, claim, hearing, notice of violation,
proceeding, investigation, notice or demand pending, received or
threatened against either Seller relating in any way to any
Environmental Laws and Regulations except as shown in Schedule
4.23(c).
(d) Except as shown in Schedule 4.23(d), neither
Seller has caused or experienced any past or present events,
conditions, circumstances, plans or other matters which: (i) are
not in compliance with all Environmental Laws and Regulations;
(ii) may give rise to any statutory, common law, or other legal
liability, or otherwise form the basis of any claim, action,
demand, suit, proceeding, hearing, notice of violation or
investigation based on or relating to Hazardous Materials
including, without limitation, such matters relating to any
property now or previously owned, leased or utilized by either
Seller (other than any property sold by either Seller more than
five (5) years prior to the date hereof or which has not been
leased or used by either Seller for more than five (5) years
prior to the date hereof); (iii) arise from inventory of or waste
from Hazardous Materials; or (iv) arise from any off-site
disposal, release or threatened release of Hazardous Materials.
(e) No asbestos, polychlorinated biphenyls, or
lead-based paints, are on any real property or in any building
owned, operated, leased or utilized by the Sellers except as
shown in Schedule 4.23(e).
(f) No past or present employee of the Sellers has
been exposed to any Hazardous Material owned, produced or
utilized by the Sellers, except as shown in Schedule 4.23(f).
(g) Except as shown in Schedule 4.23(g), neither
Seller has received any notice or indication from any
governmental agency or private or public entity advising it that
it is or may be responsible for any investigation or response
costs with respect to a release, threatened release or cleanup of
chemicals or materials produced, used, stored, treated, disposed
of or resulting by or from any business, commercial or industrial
activities, operations or processes, including, without
limitation, any Hazardous Materials. Neither Seller is aware of
any facts which might give rise to such notice.
(h) Except as shown in Schedule 4.23(h), no
underground tanks, including but not limited to underground
storage tanks,
27
piping or subsurface structures of any type exist or have existed
on any real property now or previously owned, operated, leased or
utilized by either Seller. With respect to those tanks disclosed
on Schedule 4.23(h), the tanks still in operation are in
compliance with all Environmental Laws and Regulations, and the
tanks which are not in operation have been closed or removed in
compliance with all Environmental Laws and Regulations.
(i) Within fifteen (15) days after the date of this
Agreement, Sellers (i) will provide to Buyer, as Schedule
4.23(i), a complete list of all environmental investigations,
assessments, audits, studies, tests and related materials
conducted or performed since January 1, 1986, and in the
possession of the Sellers, or known to the Sellers to exist,
which relate to the current or prior operations of the Sellers or
any real property now or previously owned, operated, leased or
utilized by the Sellers; (ii) will provide Buyer with access to
such investigations, assessments, audits, studies, tests and
related materials; and (iii) will provide Buyer with the location
of all such environmental investigations, assessments, audits,
studies, tests and related materials conducted or performed prior
to January 1, 1986, and will take all necessary steps to allow
Buyer to inspect such investigations, assessments, audits,
studies, tests and related materials prior to the Closing.
4.24 Interests in Clients, Suppliers, etc. Except as
set forth in Schedule 4.24, neither Seller nor any officer or
director of such Seller possesses, directly or indirectly, any
material financial interest in, or is a director, officer or
employee of, any corporation, firm, association, partnership,
limited liability company, or other legal entity which is a
client, supplier, customer, lessor, lessee, or competitor or
potential competitor of either Seller. Ownership of securities
of a company whose securities are registered under the Securities
Exchange Act of 1934 not in excess of 1% of any class of such
securities shall not be deemed to be a financial interest for
purposes of this Section 4.24.
4.25 Fixed Assets. Schedule 4.25 is a true and
complete list of all Fixed Assets (as such term is used in the
Financial Statements) presently owned by each Seller. Each of
such Fixed Assets will conform to the representations set forth
in Section 4.3 and will be owned by such Seller as of the Closing
Date and will be conveyed to Buyer as part of the Assets.
4.26 No Changes. Since December 31, 1995, except as set
forth on Schedule 4.26, neither Seller has (a) incurred any
liability or obligation of any nature (whether accrued, absolute,
contingent or otherwise), except in the ordinary course of
business, (b) permitted any of its assets to be subjected to any
Lien, (c) sold, transferred or otherwise disposed of any assets
except in the ordinary course of business, (d) made any capital
expenditure
28
or commitment therefor, except in the ordinary course of
business, (e) made any bonus or profit sharing distribution or
payment of any kind, except in the ordinary course of business,
(f) incurred any indebtedness for borrowed money or made any loan
to any Person, (g) written off as uncollectible any notes or
accounts receivable, except writeoffs in the ordinary course of
business charged against applicable reserves, none of which
individually or in the aggregate is material to such Seller,
(h) granted any increase in the rate of wages, salaries, bonuses
or other remuneration of any executive employee or other
employee, except in the ordinary course of business, (i) canceled
or waived any claims or rights of substantial value, (j) made any
change in any method of accounting or auditing practice,
(k) engaged in any material transaction except in the ordinary
course of business as theretofore conducted, (l) suffered any
material adverse change in its financial or other condition or
prospects, (m) had any customer which generated revenues of over
$1,000,000 per year for either of such Seller's last two fiscal
years cease doing business with it or advise such Seller that it
intended to cease doing business with such Seller or
substantially reduce the amount of business it does or proposes
to do with such Seller, (n) otherwise conducted its business or
entered into any material transaction, other than this Agreement,
except in the usual and ordinary manner and in the ordinary
course of business, or (o) agreed, whether or not in writing, to
do any of the foregoing.
4.17 Absence of Certain Business Practices. Except as
set forth in Schedule 4.27, neither Seller nor any affiliate,
officer, employee or agent of either Seller has: (a) received,
directly or indirectly, any rebates, payments, commissions,
promotional allowances or any other economic benefit (excluding
frequent flyer miles or similar programs), regardless of its
nature or type, from any customer, supplier, trading company,
shipping company, governmental employee or other entity or
individual with whom such Seller has done business directly or
indirectly; or (b) directly or indirectly, given or agreed to
give any gift or similar benefit to any customer, supplier,
trading company, shipping company, governmental employee or other
person or entity who is or may be in a position to help or hinder
the business of such Seller (or assist such Seller in connection
with any actual or proposed transaction), which: (i) would
subject such Seller to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) if not
given in the past would have had an adverse effect on the assets,
business or operations of such Seller, as reflected in the
Financial Statements, or (iii) if not continued in the future,
would materially adversely affect the assets, business,
operations or prospects of such Seller or which would subject
such Seller to suit or penalty in any private or governmental
litigation or proceeding.
4.28 No Misrepresentation. No representation or
warranty made by Sellers in this Agreement or any Schedule hereto
contains or will contain any untrue statement of a material fact
or omits or
29
will omit to state a material fact necessary to make the
statements contained herein and therein not misleading.
4.29 Receipt of Notices. Neither Seller has received
any notice, oral or written, which indicates or suggests that any
of the representations and warranties contained in this Article
IV are not true and complete in all respects.
4.30 Assets. Except as set forth in Schedule 4.30, the
Assets include all rights and property necessary to the conduct
of the Business by Buyer in the manner it is presently conducted
by Sellers, and no Excluded Assets constitute property or rights
material to the Business.
4.31 Conditions Affecting Sellers. Except as set forth
in Schedule 4.31, there is no fact, development or threatened
development with respect to the markets, products, services,
clients, customers, facilities, computer software, data bases,
personnel, vendors, suppliers, operations, assets or prospects of
the Business which are known to Sellers which would materially
adversely affect the Business, operations or prospects of Sellers
considered as a whole, other than such conditions as may affect
as a whole the economy generally. Sellers have used and will use
their best efforts to keep available for Buyer the services of
the employees, agents, customers and suppliers of Sellers active
in the conduct of the Business. Sellers do not have any reason
to believe that any loss of any employee, agent, customer or
supplier or other advantageous arrangement will result because of
the consummation of the transactions contemplated hereby.
4.32 Customers. Schedule 4.32 is a true and complete
list of Heiner's twenty (20) largest customers (by sales volume)
for the twelve-month period ended December 31, 1995, and the
amount of sales to each such customer during such period.
4.33 Real Property.
(i) Schedule 4.33 correctly sets forth a list of
all Real Property owned by either Seller and all leases and
subleases under which either Seller is lessee of any Real
Property.
(ii) The use and operation of all Real Property
does not violate any instrument of record or agreement relating
to the Real Property, or any building, zoning, subdivision or
other land use or similar law, regulation or ordinance affecting
the Real Property. There is no violation of any covenant,
condition, restriction, easement or order of any governmental
body or any other Person affecting the Real Property, or the use
or occupancy thereof.
(iii) Except as set forth in Schedule 4.33, the
Real Property is currently zoned in the zoning categories which
permit operation of the Real Property in the manner now and
30
historically used, operated or maintained. Sellers have not
requested, applied for, or given consent to, and there are no
pending zoning variances or changes with respect, to the Real
Property. Except as set forth in Schedule 4.33, the consummation
of the transactions contemplated hereby will not result in a
violation of any applicable zoning ordinance or the termination
of any applicable variance now existing, and if the improvements
on the Real Property are damaged or destroyed prior to or after
the Closing, the repair or replacement of same by Buyer will not
violate any applicable zoning ordinance.
(iv) Sellers do not know of any pending, proposed
or threatened action to condemn or take by way of eminent domain,
or to impose any special assessments on, or otherwise to take or
restrict in any way the right to use, alter or occupy any part of
the Real Property. All streets providing ingress and egress to
the Real Property are public streets.
(v) The activities carried on in all buildings,
structures and improvements included as part of, or located on
the Real Property, and the buildings, structures and improvements
themselves, comply in all material respects with applicable law,
including any health, safety or sanitation regulation. All
buildings, structures and improvements located on the Real
Property are in good operating condition and repair and are
usable in the ordinary course of business.
(vi) Sellers have not received notice of any
disputes with contiguous property owners as to the boundary lines
of the Real Property or as to any improvements, structures or
buildings thereon.
(vii) Sellers have not received notice of any
claims or rights of other Persons as to any rights over, across,
under or through any of the Real Property, other than those which
are a matter of public record.
(viii) All material permits, licenses and approvals
necessary for the use of the Real Property in the manner in which
same is now being used have been obtained and are in full force
and effect.
(ix) Except as set forth in Schedule 4.33, none of
the Real Property or leases is subject to any lease, assignment,
easement, option, right of way or license.
(x) Schedule 4.33 sets forth a complete description
of all service, maintenance, utility and management contracts
affecting the Real Property. All such contracts are currently in
full force and effect and there is no default or action or
omission of any third party or of either Seller which with the
giving of notice or passage of time would constitute a default
thereunder.
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(xi) Sellers have delivered to Buyer copies of the
most recent real estate tax assessments for the Real Property.
(xii) The Real Property has such access to all gas,
water, electricity, storm and sanitary sewer, telephone and other
utility services necessary or beneficial to the operation of the
Business.
(xiii) Except as set forth on Schedule 4.33, there
are no construction, improvement or expansion programs currently
on-going or contracted for with respect to any of the Real
Property.
4.34 Warranties. All products manufactured or sold by
Sellers have been in substantial conformity with applicable
contractual commitments and all express or implied warranties
made in connection therewith.
4.35 Prepaid Expenses and Deposits. Schedule 4.35 sets
forth a description of all liabilities, obligations, accounts and
expenses which have been prepaid by Sellers and all deposits
which have been made by Sellers, which are individually in excess
of $2,500.00. All such amounts arose in the ordinary course of
business.
4.36 Natural Gas Well. Except as set forth in Schedule
4.36, (i) Sellers have good and marketable title to a one hundred
percent (100%) net revenue interest in Heiner's Bakery Well No.
1, API No. 47-011-0711 (the "Natural Gas Well"); (ii) neither the
Natural Gas Well, nor production therefrom, is subject to any
lease, contract, sales agreement or other agreement; and (iii)
Sellers have complied with the provisions and requirements of all
orders, regulations and rules issued or promulgated by all
governmental authorities having jurisdiction with respect to the
Natural Gas Well and have filed for and obtained issuance of all
necessary governmental certificates, consents, permits or other
authorizations, and have obtained all property and contract
rights required for any operations that have been conducted with
respect to the Natural Gas Well. No claim, demand, cause of
action, administrative proceeding, lawsuit or other ligation has
been commenced or threatened, nor are such proceedings pending or
threatened, which now or would hereafter adversely affect the
ownership and operation of the Natural Gas Well.
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
5.1 Existence. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State
of Delaware.
5.2 Corporate Power and Authorization. Buyer has the
corporate power, authority and legal right to execute, deliver
and
32
perform this Agreement. The execution, delivery and performance
of this Agreement by Buyer have been duly authorized by all
necessary corporate action. This Agreement has been duly
executed and delivered by Buyer and constitutes the legal, valid
and binding obligation of Buyer enforceable against Buyer in
accordance with its terms.
5.3 Validity of Contemplated Transactions. The
execution, delivery and performance of this Agreement by Buyer
does not and will not violate, conflict with or result in the
breach of any term, condition or provision of, or require the
consent of any other party to:
(A) any existing law, ordinance, or governmental
rule or regulation to which Buyer is subject;
(B) any judgment, order, writ, injunction, decree
or award of any court, arbitrator or governmental or regulatory
official, body or authority which is applicable to Buyer;
(C) the certificate of incorporation or Bylaws of, or
any securities issued by, Buyer; or
(D) any mortgage, indenture, loan or security
agreement, contract, commitment, lease, plan or other instrument,
document or understanding, oral or written, to which Buyer is a
party or by which Buyer is otherwise bound.
Except for compliance with the H-S-R Act, no Authorization,
approval or consent of, and no registration or filing with, any
governmental or regulatory official, body or authority is
required in connection with the execution, delivery and
performance of this Agreement by Buyer.
ARTICLE VI - SURVIVAL OF REPRESENTATIONS,
WARRANTIES, COVENANTS AND INDEMNIFICATIONS
All representations, warranties, covenants and
indemnifications made by the parties in this Agreement or in any
certificate, schedule, statement, document or instrument
furnished hereunder or in connection with the negotiation,
execution and performance of this Agreement shall survive the
Closing for three (3) years following the Closing Date, except
for matters identified in Section 9.4 which shall survive the
Closing for the period of the statute of limitations applicable
thereto, including the period of any waiver or extension thereof.
Notwithstanding any investigation or audit conducted before or
after the Closing Date or the decision of any party to complete
the Closing, each party shall be entitled to rely upon the
representations, warranties, covenants and indemnifications set
forth herein and therein.
33
ARTICLE VII - COVENANTS OF THE PARTIES
7.1 Reasonable Access. Prior to the Closing, and after
the execution of this Agreement by the parties hereto, Sellers
shall give the Buyer and its representatives (including its
independent auditors) reasonable access, during normal business
hours and upon reasonable prior notice to the Sellers, to the
assets, personnel, properties, books, records, agreements and
commitments of Sellers and the work papers of Sellers'
Accountants and shall furnish the Buyer during such period with
all such information relating to Sellers as the Buyer may
reasonably request. Prior to the Closing, Sellers will use their
best efforts to prepare and provide to Buyer and Buyer's
Accountants combined consolidated balance sheets, income
statements and statements of cash flow of Sellers relating to the
Business as of and for the years ended December 31, 1995, 1994
and 1993, and such other periods as may be requested by Buyer, in
such form as to enable Buyer's Accountants to audit such
financial statements as of and for the years ended December 31,
1995, 1994 and 1993, and such other periods, in order to allow
Buyer to comply with the applicable requirements under the
Securities Exchange Act of 1934, as amended and the rules and
regulations promulgated thereunder. In the event such financial
statements have not been prepared and provided to Buyer and
Buyer's Accountants prior to the Closing, Sellers will use their
best efforts, following the Closing, to prepare and provide such
financial statements to Buyer and Buyer's Accountants as
expeditiously as possible. In connection with such audit,
Sellers shall provide or cause Sellers' Accountants to provide to
Buyer and Buyer's Accountants all documents and records and
copies thereof, and all other information with respect to the
affairs of the Business and copies of any working papers relating
thereto as Buyer or Buyer's Accountants from time to time shall
reasonably request. Prior to the Closing, and after the
execution of this Agreement by the parties hereto, Buyer shall
also be entitled to conduct such environmental testing and
inspection of the Real Property as Buyer deems reasonably
necessary provided such inspections and testing shall not
unreasonably interfere with the operation of the business at such
locations. Sellers will cooperate fully with Buyer in regard to
Buyer's environmental inquiries. The Buyer shall hold in strict
confidence and not use for its own benefit (except in connection
with this Agreement and the transactions contemplated hereby) the
documents and information furnished concerning Sellers; and, if
the transactions contemplated in this Agreement shall not be
consummated, such confidence shall be maintained and all such
documents and all copies thereof, together with all analyses,
reports and other materials derived therefrom, shall immediately
thereafter be returned to the Sellers or, with respect to such
analyses, reports and other materials, destroyed (with
certification of destruction executed by an officer of the Buyer
and delivered to the Sellers). Within the later of five (5) days
of the receipt by Buyer, or any affiliate of Buyer, of any
written reports, audits or searches produced or generated by
third parties engaged by Buyer, or any affiliate of Buyer, as a
part of Buyer's due diligence investigation of Sellers and the
Business, or five
34
(5) days following the date of this Agreement if such reports,
audits or searches were received prior to the date hereof, Buyer
will provide to Seller a copy of such reports, audits or
searches. Such obligation will extend only through the Closing
Date. In the event such report, audit or search is received
within five (5) days of the Closing, Buyer will provide such
report, audit or search within two (2) days of its receipt, but
in any event no later than the Closing. In the event Buyer fails
to provide Sellers with any such report, audit or search, Buyer
will be estopped from any claim of indemnification against
Sellers with respect to a breach of any representation or
warranty of Sellers disclosed in such report, audit or search
unless Seller knew of such breach.
7.2 Conduct of Business. Subject to the provisions of
this Section 7.2, until the Closing, Sellers shall conduct the
Business in the ordinary and usual course and, without limiting
the generality of the foregoing, without the prior approval of
the Buyer, the Sellers covenant and agree as follows:
(i) Sellers will maintain Inventories at levels
adequate, but not excessive, in relation to the circumstances of
the Business and in accordance with past inventory practices, and
not dispose of any property, right or other assets employed in
the Business, except in the ordinary course;
(ii) Sellers will maintain their assets in good
repair, order and condition, reasonable wear and tear excepted,
and not acquire or dispose of any material fixed assets;
(iii) Sellers will maintain and keep in full force and
effect all insurance on their assets and property and all
insurance provided for their employees under welfare benefit
plans, all liability and other casualty insurance, and all
presently carried bonds and other surety arrangements in
connection with the Business, the Assets, the liabilities and the
Employees of the Sellers;
(iv) Sellers will not enter into or amend any
employment, bonus, severance, retirement contract or arrangement
nor any Employee Benefit Plan, except as set forth in Schedule
7.2;
(v) Sellers will not increase any salary or other
form of compensation payable or to become payable to any of the
Employees, nor pay any bonuses to any Employees, except for such
payments to be made pursuant to the bonus or profit sharing
provisions of the employment agreements listed on Schedule
4.11(b) and except for customary annual compensation increases to
take effect in September, 1996. The names of those employees
receiving increases of five percent (5%) or more as a result of
such annual compensation increases and the amount of such
increases are set forth on Schedule 7.2;
35
(vi) Sellers will not enter into or agree to enter into
any lease or supply, purchase, distribution or other contract,
nor make or agree upon any lease, contract, purchase or sale
order, or other commitment requiring an expenditure in excess of
$50,000 with a term expiring more than three (3) months beyond
the Closing Date, nor will Sellers make or permit to be made any
material amendment or termination of any contract or agreement to
which either Seller is a party, or surrender or forfeit any
Authorization, without the prior written consent of Buyer which
will not be unreasonably withheld;
(vii) Sellers will continue to deal with their
respective present executives, employees, agents, suppliers,
customers, and others having business relations with them
consistent with the Sellers' current practices;
(viii) Sellers will maintain their respective books,
accounts and records in the usual and ordinary manner on a basis
consistent with the Financial Statements and prior years;
(ix) Sellers will not allow a Lien, except for
Permitted Encumbrances, to be created or imposed on any of their
assets;
(x) Sellers will not incur any debt or obligation for
borrowed funds;
(xi) Sellers will not extend credit in the sale of
products, collection of receivables or otherwise, except in the
ordinary course of business;
(xii) Except with respect to a transaction contemplated
under Section 7.18, Sellers will not sell, option, mortgage,
lease, buy or otherwise acquire or dispose of any Real Property
or any interest therein nor modify, cancel or amend any leases
with respect to the Real Property nor buy or otherwise acquire or
lease any other real property;
(xiii) Neither Sellers nor any of its shareholders will
take any action to seek, encourage, solicit, or support any
inquiry, proposal, expression of interest or offer from any other
Person with respect to any acquisition, combination or similar
transaction involving the purchase and sale of the Assets or the
purchase and sale of all or substantially all of the issued and
outstanding shares of capital stock of the Sellers. The Sellers
will promptly inform the Buyer of the existence of any such
inquiry, proposal, expression of interest or offer and shall not,
without the written consent of the Buyer, furnish any information
to or participate in any discussions or negotiations with any
other Person regarding the same;
(xiv) Sellers will maintain, preserve and protect the
Intellectual Property, cause to be made all needed and proper
36
renewals thereto so that the Business may be properly conducted
at all times, and maintain, keep in full force and effect and
make all necessary payments on all contracts, licenses, patents
and agreements related to the Intellectual Property;
(xv) Sellers will pay and discharge all indebtedness
and obligations promptly in accordance with the normal terms and
practices before the same shall become in default, as well as all
lawful claims for labor, materials and supplies;
(xvi) Sellers will pay when due all Taxes, assessments
and other governmental charges or levies which become due and
payable to any political entity, subdivision or department
thereof under any law now or hereafter in force and effect,
unless such Taxes, assessments, charges or levies are contested
in good faith in appropriate proceedings;
(xvii) Sellers will not (a) wind up, liquidate or
dissolve or enter into any transaction of merger or
consolidation, or (b) convey, sell, lease or otherwise dispose of
any properties, other than Inventory sold in the ordinary course
of business;
(xviii) Sellers will keep confidential all of its
trade secrets, proprietary information and know-how; and
(xix) Heiner's will continue its marketing plan
(including the expenditure of money) in the ordinary course of
business.
In the event Sellers desire to take an action, or operate or
conduct the Business in a manner, which would violate one or more
of the provisions of Section 7.2(i) through (xix), Sellers will
send written notice (by telecopy in accordance with Section 13.8)
of such proposed action or conduct to Buyer's designated
representative (who, until Buyer notifies Sellers to the
contrary, will be Bryan A. Torcivia, Vice President Planning and
Purchasing). If Buyer does not respond to Sellers with respect
to such proposed action or conduct within two (2) business days
of receipt of the notice, Buyer will be deemed to have consented
to such proposed action or conduct.
7.3 Litigation. Until the Closing, the Sellers shall
promptly notify the Buyer of any Litigation or claims that are
commenced or made or, to the knowledge of the Sellers, threatened
against either Seller.
7.4 Publicity. No publicity release or announcement
concerning the transactions contemplated hereby shall be issued
by the Sellers (or their shareholders) or Buyer without the
advance consent of the other party hereto, except as such release
37
or announcement may be required by applicable law or the rules of
the New York Stock Exchange, in which case the party making the
release or announcement shall provide such release or
announcement in advance to the other party.
7.5 Access to Records After Closing. For a period of
five (5) years after the Closing, with respect to materials
related to or required with respect to Tax Returns or tax audits,
or for a period of three (3) years after the Closing for any
other materials, the Buyer shall retain and make available to the
Sellers any of the books and records of Sellers (or copies
thereof, at the expense of the Sellers) delivered to the Buyer at
the Closing, at any reasonable time during normal business hours
for any reasonable purpose (including, without limitation,
settling or defending any claim or responding to any tax audit).
The Buyer shall have the right after the applicable periods to
dispose of any such books or records that are not material in
nature. Buyer will provide Sellers with suitable office
facilities at the principal location of the Business for the
purpose of such access.
7.6 Litigation Cooperation. If the Sellers or the Buyer
shall become engaged or participate in any Litigation or claim
with any third party in respect of the Business as conducted on,
prior to, or following the Closing Date, the Buyer or the
Sellers, as the case may be, shall cooperate with one another in
all reasonable respects, in connection therewith, including
without limitation, making available, relevant records and
employees who may be helpful with respect to such Litigation or
claim.
7.7 Transfer Taxes. Buyer and Sellers will each pay
when due one-half of all stamp, transfer, documentary, sales,
use, registration and other such taxes and fees related to the
transfer to Buyer of the Real Property (including any penalties
and interest) incurred in connection with this Agreement and the
transactions contemplated hereby. Buyer will pay when due all
taxes and fees related to the transfer to Buyer of the motor
vehicles included in the Assets.
7.8 Expenses of Sale. The Sellers, on the one hand, and
the Buyer, on the other hand, shall bear their own direct and
indirect expenses incurred in connection with the negotiation and
preparation of this Agreement and the consummation and
performance of the transactions contemplated hereby, including,
without limitation, all legal fees, accounting fees and financial
advisory fees. Buyer will pay the fees and expenses of Buyer's
Accountants to perform the audits referred to in Section 7.1.
7.9 H-S-R Act Notification.
(A) Within five (5) business days after the date
hereof, the Sellers and the Buyer each shall file a premerger
notification under the H-S-R Act with the Department of Justice
and the Federal Trade Commission. Such premerger notification
filings shall be accompanied by a request for early termination
of the applicable waiting period, and the Sellers and the Buyer
shall use their respective best efforts
38
to have such waiting periods terminated on the earliest
practicable date. If the Sellers or the Buyer receive(s) any
request, inquiry or other notification from either such agency,
the party receiving such request, inquiry or other notification
shall promptly notify the other party. If such request, inquiry
or notification reasonably requires a response, the Sellers or
the Buyer, as the case may be, shall respond as soon as
practicable.
(B) Notwithstanding any of the foregoing, the
Sellers and the Buyer shall have no obligation (a) to undertake,
or to cause their Affiliates to undertake, any additional
financial obligation, to dispose of any assets or business, or to
surrender any material right, (b) to otherwise consent to any
arrangement or undertake any obligation that would have a
material adverse effect on the Buyer or the Sellers, or (c)
consent to the extension of the Closing Date beyond that provided
for herein.
(C) All governmental fees to be paid in connection
with the H-S-R Act filings will be split equally between the
parties.
7.10 Insurance Claims. Following the Closing and with
respect to occurrences prior to Closing: (a) the Sellers shall
provide the Buyer with the benefit of such existing workers
compensation or general liability (excluding director and officer
liability), automobile liability or other insurance policies as
currently cover the operations of either Seller, but only to the
extent the Sellers are able, using their reasonable efforts
(which shall not require the expenditure of funds in excess of
accruals and reimbursements referred to in clause (b) immediately
following, or the filing of any lawsuit), to obtain such
benefits, and (b) the Buyer shall promptly reimburse the Sellers
with respect to any amounts required to be paid with respect to
insurance premiums and claims covered by such policies, to the
extent any such payments are in excess of the amounts accrued as
of the Closing Date.
7.11 Insurance.
(A) The Sellers will maintain all direct damage, legal
liability, workers' compensation and other pertinent policies of
insurance until the Closing Date.
(B) In the event that, on or prior to the Closing
Date, any property owned, leased or used by either Seller suffers
any material damage, destruction or loss, Sellers do not repair
or replace said property prior to the Closing Date and the Buyer
determines that it will proceed with the consummation of the
transactions contemplated by this Agreement, Sellers shall
surrender to the Buyer (i) insurance proceeds received by them
with respect to such damage or loss equal to the cost of the
repair or replacement of such property, and (ii) all rights of
Sellers with respect to any
39
causes of action, whether or not litigation has commenced on the
Closing Date, in connection with such damage or loss, up to the
cost of the repair or replacement of such property. In the event
Sellers repair or replace said property prior to the Closing
Date, Sellers shall retain all insurance proceeds and all rights
with respect to any causes of action in connection with such
damage or loss.
7.12 Acquisition Structure.
(A) The Buyer and Sellers have contemplated that the
transaction described herein would consist of a purchase of the
Assets for cash. The Buyer and the Sellers acknowledge, however,
that the Buyer has reserved the right to select one or more
reasonable alternative structures (individually the "Alternative
Structure" or the "Structure" and collectively the "Alternative
Structures") for effecting the acquisition of the Business.
(B) The Buyer shall be entitled to select an
Alternative Structure to make such acquisition, provided that the
Buyer shall be solely responsible for effecting such Alternative
Structure, and provided further that the implementation of such
Structure shall not delay the Closing. Sellers and the
shareholders of the Sellers make no representations or warranties
concerning any such Alternative Structure and shall have no
liability to the Buyer in regard to such Structure under any law.
(C) If the Buyer decides to implement an
Alternative Structure, the Sellers shall report and shall cause
their shareholders to report such Structure in its tax returns
and in other relevant records and documents in a manner
consistent with the Alternative Structure selected by Buyer
provided that the Sellers and the shareholders of the Sellers
shall have the right, at their option, to request that Buyer
furnish, at Buyer's expense, an opinion of tax counsel that
substantial authority exists for the use of such Alternative
Structure. The Sellers and the shareholders of the Sellers agree
to make any tax elections that might be required to implement an
Alternative Structure.
(D) The Buyer shall hold harmless and indemnify each of
the Sellers and the Sellers' shareholders from any additional
taxes or transaction or other costs, losses and expenses that the
Sellers and the Sellers' shareholders incur by reason of such
Alternative Structure. For this purpose, the Sellers' and the
Sellers' shareholders' additional taxes shall mean the excess
(the "Increased Taxes") of any estimated or other tax or
governmental charge of any description, whether based on income,
transfer, or otherwise, for any taxable year or period and
whether imposed by the federal or any state, local or other
taxing authority, including interest, penalties and additions to
tax, over such taxes that Sellers and the
40
Sellers' shareholders would have borne had Buyer not elected an
Alternative Structure. The Sellers' and the Sellers'
shareholders' additional transaction or other costs, losses and
expenses relating to such Alternative Structure (the "Other
Incremental Costs") shall include the substantiated reasonable
additional costs of their counsel and other advisers, as well as
any other reasonable internal or external expenses that Sellers
and the Sellers' shareholders incur in planning for, implementing
and recording the Alternative Structure, including reasonable
attorneys fees and costs for enforcing this indemnity. The Buyer
shall reimburse the Sellers and the Sellers' shareholders for
such Increased Taxes or Other Incremental Costs within ten (10)
calendar days after receipt of request therefor, together with
reasonable substantiation thereof.
7.13 Amend and Update Schedules. Sellers shall have
fifteen (15) days following the date of this Agreement (i) to
amend and revise any Schedule attached hereto as to matters or
disclosures which should have been listed on such Schedule in
order to make such Schedule complete and accurate and to comply
with the production of agreements, policies, leases and other
instruments and documents under Section 4.20 and (ii) to deliver
such amended or revised Schedule and such documents to Buyer.
Buyer shall have fifteen (15) days after its receipt of any such
amended and revised Schedule and such documents to determine, in
its sole discretion, if such Schedule and such documents are
acceptable to it. Notwithstanding anything in this Agreement to
the contrary, Buyer shall not be deemed to have accepted any
Schedule initially attached hereto. In the event Buyer
determines any such Schedule or document is unacceptable to it,
Buyer may terminate this Agreement pursuant to Section 13.1.
Sellers shall promptly disclose to Buyer, and Buyer shall
promptly disclose to Sellers, as the case may be, any information
contained in their or its respective representations and
warranties or in the Schedules which, because of any event
occurring after the date hereof, is incomplete or is no longer
completely correct as of all times after the date hereof until
the Closing Date, such disclosure to be made within five (5) days
of such event, or if such event occurs within five (5) days of
the Closing, as soon as reasonably practicable but prior to
Closing. Such disclosures shall be deemed to modify, amend or
supplement the representations and warranties of Sellers, or
Buyer, as the case may be, or the Schedules hereto, subject to
Section 8.1(U).
7.14 Consents and Conditions Precedent. As soon as
reasonably practicable after the execution and delivery of this
Agreement, and in any event on or before the Closing Date, each
party will use its best efforts to obtain the written consent of
all Persons whose consent to such party's execution of, and
consummation of the transactions contemplated by, this Agreement
is required, in form and substance acceptable to the other
parties acting reasonably, including the written consent of any
Person whose consent to the transfer of any Asset, including the
Assigned Contracts, is
41
required. Each party will furnish the other parties with
original executed copies of such consents as they are obtained.
Sellers will use their best efforts to satisfy those conditions
precedent set forth in Section 8.1 which are within Sellers'
control. Buyer will use its best efforts to satisfy those
conditions precedent set forth in Section 8.2 which are within
Buyer's control.
7.15 Tax Returns and Audits.
(A) Filing of Tax Returns and Payment of Taxes.
Sellers shall file or cause to be filed when due all Tax Returns
in respect of Taxes for taxable years or periods ending on or
prior to the Closing Date and shall pay or cause to be paid the
Taxes shown to be due on any such Return. Buyer shall file or
cause to be filed when due all Tax Returns for Taxes in respect
of the Assets for all periods beginning after the Closing Date
and for all periods that include the Closing Date and shall pay
or cause to be paid the Taxes shown to be due on any such
returns. Sellers, upon notification and receipt of satisfactory
documentation from Buyer, at least fifteen (15) days prior to the
due date for payment, shall pay Buyer, prior to the due date for
payment, the Taxes to be paid with any such Return with respect
to all taxable periods or portions of periods ending on or before
the Closing Date (to the extent not previously paid by Sellers).
Buyer shall be responsible for any audits of such Returns;
provided, however, that Sellers shall be given notice of the
commencement of any audit within ten (10) days thereafter and
Sellers, at their own expense, may participate in such audit. If
there is an audit in which there is a possibility Sellers may
become liable under this Section 7.15(A) or otherwise, Buyer
shall not settle or compromise the Tax claim without the prior
written consent of Sellers, which consent shall not be
unreasonably withheld. If there is a settlement or other
disposition of the audit, Buyer shall be entitled to receive, at
least ten (10) days in advance of any payment that it makes in
connection with the settlement or other disposition of such
proceedings, the part of any such payment for which Sellers are
liable under this Section 7.15(A).
(B) Cooperation and Assistance. Buyer and Sellers
agree to furnish or cause to be furnished to each other, upon
written request and as promptly as practicable, such information
(including without limitation, access to books and records) and
reasonable assistance relating to the Business the Assets as is
necessary for the filing of a return, preparation for any audit,
and prosecution or defense of any claim, suit or proceeding
relating to any proposed adjustment. Buyer and Sellers shall
cooperate with each other in the conduct of any audit or other
proceeding involving the Business or the Assets and each shall
execute and deliver such documents as are necessary to carry out
the intent of this Section 7.15(B). Except as provided in
Section 7.15(A) above, Buyer shall have the right to control the
resolution of the
42
audit or settlement proceedings for which Buyer is to bear the
cost of any resulting Tax.
(C) Nonforeign Affidavit. Sellers shall furnish
Buyer affidavits, stating, under penalties of perjury, the
transferors' United States taxpayer identification numbers and
that the transferors are not foreign persons, pursuant to Section
1445(b)(2) of the Code.
(D) Preparation of W-2's, etc. Sellers agree that
Buyer has purchased substantially all the property used in the
Business, and, in connection therewith, Buyer shall employ
individuals who immediately before the Closing Date were employed
in the Business by Sellers. Accordingly, pursuant to Revenue
Procedure 84-77 (1984-2 C.B. 753), provided that Sellers provide
Buyer with all necessary payroll records for the calendar year
which includes the Closing Date, Buyer shall furnish a Form W-2
to each employee employed by Buyer who had been employed by
either Seller disclosing all wages and other compensation paid
for such calendar year, and Taxes withheld therefrom, and Sellers
shall be relieved of the responsibility to do so.
7.16 Post-Closing Prorations and Adjustments. Within
sixty (60) days following the Closing, Buyer and Sellers agree to
adjust the Purchase Price to reflect all reasonably appropriate
prorations between Buyer and Sellers as of the Closing Date for
any of the following items not reflected on the Closing Balance
Sheet: personal property, real property and occupancy Taxes (in
accordance with Section 12.2), water, telephone, electric and
other utilities, employee salaries, accrued and unused vacation,
sick pay and associated payroll taxes and benefit expenses and
all other items which are normally prorated between buyers and
sellers in connection with similar transactions. Any adjustments
to the Purchase Price pursuant to this Section 7.16 shall bear
simple interest beginning on the Closing Date up to but not
including the date on which such adjustment is paid at six
percent (6%) per annum, based on a 365 day year. Any such
adjustments and interest shall, within five (5) business days
after such adjustments are agreed to by the parties or any
remaining disputed items are ultimately determined by arbitration
in accordance with Section 13.3, be paid by the responsible party
by wire transfer of immediately available funds to the account
specified by the party to whom such payment is owed.
7.17 Return of Sellers' Information from Other Bidders.
Sellers covenant and agree that, within thirty (30) days of the
Closing Date, they will have requested from each Person (other
than Buyer) who was a potential bidder for the Business, the
Assets and/or the shares of capital stock of Sellers any
Confidential Information Memoranda and any other information and
materials regarding the Sellers, the Business and the Assets
received from Sellers or their representatives. Sellers covenant
and agree to take steps to recover such documents and
information. All such information and documentation shall be
destroyed by Sellers and
43
such destruction shall be certified to Buyer by the chief
executive officer of each Seller within thirty (30) days of the
Closing Date.
7.18 Real Property Not Owned by EEE. Sellers covenant
and agree that prior to Closing, all parcels of Real Property
used by Heiner's and not owned by EEE on the date of this
Agreement shall be conveyed to EEE in such manner that EEE will
be able to convey title to such parcels to Buyer in conformity
with Section 3.2.
7.19 Real Property Documents. No later than fifteen
(15) days prior to the Closing, at Sellers' expense, Sellers
shall cause to be prepared and delivered to Buyer, for each of
the lots, tracts or parcels of Real Property to be conveyed by
Sellers to Buyer, the following documents: (a) a title insurance
commitment for owner's title insurance policy (ALTA 1992); (b) an
ALTA/ACSM form of survey and surveyor's certificate; and (c) a
certification by the surveyor to the title insurance company,
Buyer and such other persons or entities as Buyer may reasonably
request. Buyer agrees to pay any title search fees incurred in
connection with the title insurance commitments referred to in
the preceding sentence.
7.20 Sellers' Environmental Actions. Sellers agree to
complete or cause to be completed, at their expense, the remedial
actions set forth in Schedule 7.20. Sellers will use their best
efforts to complete and pay for such remedial actions on or
before the Closing Date. If such actions have not been completed
and paid for by the Closing Date, Sellers will retain the
obligation to complete and pay for such actions and will
undertake to do so with reasonable diligence.
7.21 Certain Employees of Sellers. Sellers shall use
all reasonable efforts to persuade those employees of either
Seller designated by Buyer, including Barney A. Molnar, James
Basler and Curtis Ritter, to become employees of Buyer following
the Closing, on terms, and pursuant to written employment
agreements, acceptable to Buyer.
7.22 Sellers' Designee. Prior to Closing, Sellers shall
have appointed, and notified Buyer of the identity of, Sellers'
designee, for purposes of Section 2.4(B).
7.23 Tax Clearance Certificates. Sellers will use their
best efforts to obtain, prior to Closing or following Closing if
necessary, a clearance certificate or similar document as to the
tax status of each Seller from the West Virginia Department of
Tax and Revenue, and from the applicable taxing authority of each
state in which each Seller is qualified to do business, each such
certificate in form and substance satisfactory to Buyer.
7.24 Maintenance of Assets. At all times prior to
and following the Closing, Sellers will maintain assets
sufficient to satisfy their obligations under Section 9.4 and
their covenants under Sections 2.5, 7.7, 7.8, 7.16, 7.20 and
7.23.
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ARTICLE VIII - CONDITIONS PRECEDENT TO THE CLOSING
8.1 Conditions Precedent to Buyer's Obligations. All
obligations of Buyer under this Agreement are subject to the
fulfillment (or waiver by Buyer in its sole discretion), prior to
or at the Closing, of each of the following conditions precedent:
(A) Representations, Warranties, Covenants and
Agreements of Sellers. The representations, warranties,
covenants and agreements of Sellers contained in this Agreement
or in any of Sellers' Documents shall have been true and correct
on the date hereof without regard to any Schedule updates
furnished by Sellers after the date hereof and shall be true and
correct at the Closing with the same effect as though such
representations, warranties, covenants and agreements were made
as of such date.
(B) Compliance with this Agreement. Sellers shall
have performed and complied with all covenants, agreements and
conditions required by this Agreement to be performed or complied
with by them prior to or at the Closing.
(C) Closing Certificates. Buyer shall have
received a certificate from each Seller, dated as of the Closing,
certifying in such detail as Buyer may reasonably request, that
the conditions specified in Section 8.1 hereof have been
fulfilled and certifying that such Seller has obtained all
consents and approvals required under this Agreement.
(D) Opinion of Counsel for Sellers. Jenkins,
Fenstermaker, Krieger, Kayes & Agee, counsel for Sellers, shall
have delivered to Buyer a written opinion, dated as of the
Closing, in the form of Schedule 8.1(D) with only such changes as
shall be in form and substance reasonably satisfactory to the
Buyer and its counsel.
(E) No Threatened or Pending Litigation. As of the
Closing, no suit, action or other proceeding or injunction or
final judgment relating thereto shall be threatened or be pending
before any court or governmental or regulatory official, body or
authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement
or the consummation of the transactions contemplated hereby, and
no investigation that might result in any such suit, action or
proceeding shall be pending or threatened.
(F) Third Party Consents and Releases. All consents
and waivers by third parties that are required for the transfer
of the Assets to the Buyer or that are required for the
consummation of the transactions contemplated hereby, or that are
required in order to prevent a breach of or a default under or a
termination or modification of any lease, license or other
agreement relating to the Business or the Assets to which either
Seller is a party or to which any portion of the
45
property of either Seller relating to the Business is subject
will have been obtained, and, releases of any and all security
interests held by third parties on the Assets will have been
obtained, all on terms satisfactory to the Buyer.
(G) H-S-R Act. The Sellers shall have complied in
all material respects with the requirements of the H-S-R Act, and
the waiting period (including any extension thereof by reason of
a request for additional information) relating to the
notification and report form filed by the Sellers shall have
expired or been terminated.
(H) Other Governmental Consents. All other
governmental consents, filings, authorizations and approvals that
are required for the consummation of the transactions
contemplated hereby will have been duly made and obtained on
terms satisfactory to the Buyer.
(I) Payment of Excluded Liabilities. All known
Excluded Liabilities, including those referred to in Section 2.7,
which have accrued as of the Closing Date and which, if not paid,
would create a Lien against any of the Assets or interfere with
Buyer's use of the Assets following the Closing shall have been
paid in full and satisfactory evidence thereof shall have been
delivered to Buyer.
(J) Material Adverse Changes. The Business, the
Assets or the operations or prospects of the Business shall not
have been, and shall not be threatened to be, materially and
adversely affected in any way as a result of any event or
occurrence.
(K) Good Standing and Other Certificates. Each
Seller shall have delivered to the Buyer:
(i) copies of the Seller's articles of
incorporation, including all amendments thereto, in each case
certified by the Secretary of State of West Virginia;
(ii) a certificate from the Secretary of State of
West Virginia to the effect that the Seller is in good standing
and listing all charter documents of the Seller on file;
(iii) a certificate from the Secretary of State
or other appropriate official in each State in which the Seller
is qualified to do business to the effect that the Seller is in
good standing in such State;
(iv) a copy of the bylaws of the Seller,
certified by the Secretary of the Seller as being true and
correct and in effect at the Closing; and
46
(v) evidence reasonably satisfactory to Buyer
that Heiner's has taken all actions necessary to enable Buyer to
use the name "Heiner's", including amending its articles of
incorporation to change its corporate name.
(L) Approval of Documents; Corporate Matters.
(i) All actions, proceedings, resolutions,
instruments and documents required to carry out this Agreement or
incidental hereto and all other related legal matters shall be
legally sufficient and reasonably satisfactory to Buyer and its
counsel. Each Seller shall also have delivered to Buyer such
other documents, instruments, certifications and further
assurances as such counsel may reasonably require.
(ii) The execution and delivery of this
Agreement by Sellers and the performance of Sellers' covenants
and obligations hereunder, shall have been duly authorized by all
necessary corporate and other actions of each Seller, including,
without limitation, the approval of such Seller's board of
directors and shareholders, and Buyer shall have received copies
of all resolutions pertaining to such authorization, certified by
the corporate secretary of such Seller.
(M) Casualty Loss. The Business shall not have
been curtailed or interrupted by, and the Assets shall not have
been affected by, any loss, destruction or damage due to fire or
other casualty or, if any such loss, destruction or damage shall
have occurred, the provisions of Section 7.11(B) shall have been
satisfied.
(N) Satisfactory Review of the Business, Assets and
Inspections, Etc. Buyer shall have been given access to and been
permitted to review the Assets, the Business and such other
information as shall have been requested by Buyer and to visit
with or otherwise contact customers listed on the Customer List,
suppliers and vendors of Sellers (provided any such visit or
contact shall be conducted in a manner reasonably agreeable to
Sellers and approved in advance by Sellers) and Buyer shall be
satisfied, in its sole discretion, with the physical,
environmental and operating condition of the Assets, the
financial condition of the Business, the future of relationships
with Heiner's customers and all findings related to Environmental
Laws and Regulations.
(O) Buyer's Accountants' Report. Buyer shall have
received a report from Buyer's Accountants that the Financial
Statements accurately and fairly portray the financial condition
of Sellers, are in accordance with GAAP, and do not omit or fail
to include any item that would have an adverse effect on the
financial condition of the Business.
47
(P) Employment and Consulting Agreements with
Management Personnel. Each of Earl W. Heiner, Jr., Earl W.
Heiner, III and Charles E. Heiner shall have entered into an
employment agreement with Buyer or an affiliate of Buyer, and
Robert W. Agee and Ernest H. Wittpenn shall have entered into a
consulting agreement with Buyer or an affiliate of Buyer, all of
which agreements shall be in form and substance satisfactory to
Buyer acting reasonably.
(Q) Non-Competition Agreements. Each of the
individual shareholders of each Seller shall have entered into a
non-competition/confidentiality agreement with Buyer or an
affiliate of Buyer, in form and substance satisfactory to Buyer
acting reasonably, which agreement will provide that each such
shareholder shall be prohibited, for a period of five (5) years
from the Closing Date, from being employed by any corporation,
other entity, or person, or engaging in any other capacity, in
the business of the manufacture, distribution and/or sale of
fresh packaged bakery goods anywhere in the United States.
(R) Termination of Real Property Leases. Each
lease of Real Property between EEE and Heiner's shall have been
terminated prior to or as of the Closing Date and Buyer shall
have been provided with written confirmation of such
terminations, in form and substance satisfactory to Buyer, acting
reasonably.
(S) Escrow Agreement. The parties shall have
entered into the Escrow Agreement, in the form of Schedule 8.1(S)
with only such changes as shall be in form and substance
satisfactory to Buyer, acting reasonably.
(T) Sellers' Financial Statements. Buyer shall
have determined, in its sole discretion, that either (i) Sellers
have prepared and provided to Buyer and Buyer's Accountants the
financial statements referred to in Section 7.1 in such form as
to enable Buyer's Accountants to audit such financial statements
in order to allow Buyer to comply with the applicable
requirements under the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder, or
(ii) such financial statements will be prepared and provided to
Buyer and Buyer's Accountants by Sellers within such time period
as will enable Buyer's Accountants to audit such financial
statements in order to allow Buyer to comply with the applicable
requirements under the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
(U) Delivery of Schedules. Sellers shall have
delivered to Buyer all updated Schedules pursuant to the fourth
sentence of Section 7.13, and Buyer shall have determined that
such updated Schedules are acceptable to Buyer acting reasonably.
48
8.2 Conditions Precedent to Sellers' Obligations. All
obligations of the Sellers under this Agreement are subject to
the fulfillment (or waiver by Sellers in their sole discretion),
prior to or at the Closing, of each of the following conditions
precedent:
(A) Representations and Warranties of Buyer. The
representations and warranties of Buyer contained in this
Agreement or in any certificate or document delivered by Buyer to
Sellers pursuant to the provisions hereof shall be true and
correct at the Closing with the same effect as though such
representations and warranties were made as of such date.
(B) Compliance with this Agreement. Buyer shall
have performed and complied with all covenants, agreements and
conditions required by this Agreement to be performed or complied
with by it prior to or at the Closing.
(C) Closing Certificate. Sellers shall have
received a certificate from Buyer dated as of the Closing
certifying in such detail as Sellers may reasonably request that
the conditions specified in Section 8.2 hereof have been
fulfilled.
(D) Opinion of Counsel for Buyer. Gallop, Johnson
& Neuman, L.C., counsel to Buyer, shall have delivered to Sellers
a written opinion, dated as of the Closing, in the form of
Schedule 8.2(D) with only such changes as shall be in form and
substance reasonably satisfactory to Sellers and their counsel.
(E) No Threatened or Pending Litigation. As of the
Closing, no suit, action or other proceeding or injunction or
final judgment relating thereto, shall be threatened or be
pending before any court or governmental or regulatory official,
body or authority in which it is sought to restrain or prohibit
or to obtain damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated
hereby, and no investigation that might result in any such suit,
action or proceeding shall be pending or threatened.
(F) Approval of Documents; Corporate Matters. All
actions, proceedings, resolutions, instruments and documents
required to carry out this Agreement or incidental hereto and all
other related legal matters shall be legally sufficient and
reasonably satisfactory to Sellers and their counsel. Buyer
shall also have delivered to Sellers such other documents,
instruments, certifications and further assurances as such
counsel may reasonably require.
(G) Escrow Agreement. The parties shall have
entered into the Escrow Agreement, in the form of Schedule 8.1(S)
with only such changes as shall be in form and substance
satisfactory to Sellers, acting reasonably.
49
(H) H-S-R Act. The Buyer shall have complied in
all material respects with the requirements of the H-S-R Act, and
the waiting period (including any extension thereof by reason of
a request for additional information) relating to the
notification and report form filed by the Buyer shall have
expired or been terminated.
(I) Employment and Consulting Agreements with
Management Personnel. Each of Earl W. Heiner, Jr., Earl W.
Heiner, III and Charles E. Heiner shall have entered into an
employment agreement with Buyer or an affiliate of Buyer and each
of Robert W. Agee and Ernest H. Wittpenn shall have entered into
a consulting agreement with Buyer or an affiliate of Buyer, all
of which shall be in form and substance satisfactory to the
employee or consultant acting reasonably.
(J) Guarantee of Buyer's Obligations. Buyer shall
have delivered to Sellers the irrevocable guarantee of The
Earthgrains Company, in the form set forth in Schedule 8.2(J), by
which the full and timely performance of all the obligations and
agreements of Buyer set forth in this Agreement and in the other
agreements and documents contemplated herein shall be guaranteed
to the Sellers.
(K) Assignment and Assumption Agreement. Buyer
shall have delivered to Sellers an Agreement for Assignment and
Assumption of Assumed Liabilities, in the form set forth in
Schedule 3.2(d).
ARTICLE IX - INDEMNIFICATION OF BUYER
This Article sets forth the respects in which Buyer, its
officers, directors, shareholders, employees, agents,
representatives and affiliates (collectively, the "Buyer Group")
shall be indemnified by Sellers in the event the Buyer Group
shall become obligated or liable for, or shall discharge,
obligations or liabilities of Sellers, other than the Assumed
Liabilities, and/or in the event of any breach of a
representation, warranty, covenant or agreement on the part of
either Seller hereunder.
9.1 Breach of Representation, Warranty, Covenant or
Agreement. Sellers agree, jointly and severally, to indemnify
the Buyer Group and hold the Buyer Group harmless against any and
all loss, liability, damage, claim, cost and expense of any
nature whatsoever, including, without limitation, costs of
cleanup, containment or other remediation and reasonable
attorneys', consultants' and contractors' fees and costs, arising
from or in connection with any breach of a representation,
warranty, covenant or agreement on the part of either Seller
under this Agreement or under any other instrument or document
executed and delivered by such Seller in connection with the
transactions contemplated hereby, as any of the same may be
amended from time to time.
9.2 Failure to Comply with Bulk Sales Law. Sellers
agree, jointly and severally, to indemnify the Buyer Group and
hold the
50
Buyer Group harmless against any and all loss, liability, damage,
claim, cost and expense of any nature whatsoever, including,
without limitation, reasonable attorneys' fees, arising out of
the failure of the parties hereto to comply with the Bulk Sales
Law or any other law in respect of the bulk sale and transfer
contemplated by this Agreement.
9.3 Failure to Discharge Liabilities. Except with
respect to the Assumed Liabilities, Sellers agree, jointly and
severally, to indemnify the Buyer Group and hold the Buyer Group
harmless against any and all loss, liability, damage, claim, cost
and expense of any nature whatsoever, including, without
limitation, costs of cleanup, containment or other remediation
and reasonable attorneys', consultants' and contractors' fees,
arising from or in connection with any liability of either Seller
arising or accruing prior to, at or following the Closing,
including, without limitation: (i) the failure of Sellers to pay
any of the Excluded Liabilities; (ii) any payment or performance
made by Buyer to any third party in order to perform or discharge
fully or partially any unpaid or unperformed liability or
obligation of either Seller (other than the Assumed Liabilities),
including any Excluded Liability, which Buyer shall have the
option, but shall not be required, to do; (iii) any judgment or
other circumstances pursuant to which Buyer may be held liable or
accountable for, or for which the Assets may be charged in
respect of, any liability or obligation of either Seller; (iv)
the noncompliance by Sellers with any applicable laws, rules,
regulations and orders of federal, state and local governments
and regulatory bodies (including, without limitation, all
Environmental Laws and Regulations); and (v) all Taxes,
attributable to operations of Sellers for any taxable year,
period or portion thereof, ending on or before the Closing Date,
whether such liabilities relate to the Business or the Assets or
otherwise, Sellers being entitled to any and all refunds of such
Taxes.
9.4 Failure to Satisfy Deferred Compensation
Arrangements. Sellers agree, jointly and severally, to indemnify
the Buyer Group and hold the Buyer Group harmless against any and
all loss, liability, damage, claim, cost and expense of any
nature whatsoever including, without limitation, reasonable
attorneys' fee, arising from or in connection with the failure of
Sellers to pay all obligations under (i) the deferred
compensation and supplemental retirement income agreements and
similar agreements set forth in Schedule 4.11 and (ii) any other
similar arrangements entered into by either Seller and not
disclosed in Schedule 4.11.
9.5 Indemnification Remedies; Right of Set-Off.
(A) Buyer is hereby granted a right of set-off and
reduction, in the event of an Indemnifiable Loss or an
Indemnifiable Claim, against any payments of Additional
Consideration which are to be made, or any amounts due and
payable, by Buyer to Sellers under Section 2.4(B) ("Additional
Consideration Payments"). Except as provided in Section 9.5(C),
beginning on the Closing Date, the sole and exclusive recourse of
Buyer with respect to claims referred to in
51
Sections 9.1, 9.2 and 9.3 shall be against the Additional
Consideration and the Escrowed Funds in accordance with the
Escrow Agreement. Any remedies to which Buyer may avail itself
with respect to such recourse shall be limited to those related
to the enforcement of Buyer's rights against the Additional
Consideration and the Escrowed Funds. Buyer agrees that, if an
Additional Consideration Payment is due and payable to Sellers at
a time when Buyer has incurred an Indemnifiable Loss or an
Indemnifiable Claim has occurred, it will exercise its right of
set-off and reduction against such Payment and will exercise its
rights against the Escrowed Funds only to the extent that such
Loss or Claim exceeds such Additional Consideration Payment. An
Additional Consideration Payment will be deemed to be due and
payable at such time as the amount of such Payment has been
computed and Sellers have failed to make a timely objection to
the computation or there has been a final resolution of the
dispute.
(B) Beginning on the Closing Date, with respect to
claims referred to in Sections 9.1, 9.2 or 9.3 (other than those
related to the agreements and covenants of Sellers to be
performed following the Closing), Sellers will not be liable to
Buyer for any Indemnifiable Loss or Indemnifiable Claim unless
the aggregate amount of all such Losses or Claims exceeds Three
Hundred Twenty-Five Thousand Dollars ($325,000.00) and then only
to the extent such Losses or Claims exceed Three Hundred Twenty-
Five Thousand Dollars ($325,000.00). Furthermore, any
Indemnifiable Loss or Indemnifiable Claim will be net of (i) any
and all insurance recoveries received by Buyer as a result of, or
in connection with, the basis of such Loss or Claim; and (ii) the
fair market value of any and all assets related to an
Indemnifiable Loss or Indemnifiable Claim which are or become the
property of Buyer and which were not recorded on the books and
records of the Sellers as of the Closing Date or disclosed on a
Schedule to this Agreement.
(C) With respect to claims arising under Section
9.4 or related to the agreements and covenants of Sellers to be
performed following the Closing under Sections 2.5, 7.7, 7.8,
7.16, 7.20, 7.23 and 7.24, in addition to having recourse against
the Additional Consideration and the Escrowed Funds, Buyer may
avail itself of any and all remedies under this Agreement, at law
or in equity or otherwise. Such rights and remedies shall be
cumulative and may be exercised at any time, or from time to
time, and any failure or delay of Buyer in exercising any right
or remedy at any time shall not constitute a waiver thereof or
restrict its subsequent enforcement or the enforcement of any
other right or remedy of Buyer.
(D) Buyer hereby expressly understands and agrees
that the shareholders of the Sellers, in such capacity, have no
liability to Buyer, or any affiliate of Buyer, for any breach by
Sellers of Sellers' representations, warranties, covenants
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and agreements contained in this Agreement or any agreement
contemplated hereby, other than Section 7.24.
ARTICLE X - INDEMNIFICATION OF SELLERS
This Article sets forth the respects in which Sellers shall
be indemnified by Buyer in the event Sellers shall become
obligated for, or shall discharge, any liabilities of Buyer or in
the event of any breach of a representation, warranty, covenant
or agreement on the part of Buyer hereunder.
10.1 Breach of Representation, Warranty, Covenant or
Agreement. Buyer agrees to indemnify Sellers and hold Sellers
harmless against any and all loss, liability, damage, claim, cost
and expense of any nature whatsoever, including, without
limitation, reasonable attorneys' fees and costs, arising from or
in connection with any breach of a representation, warranty,
covenant or agreement on the part of Buyer under this Agreement
or under any other instrument or document executed and delivered
by Buyer in connection with the transactions contemplated hereby,
as any of the same may be amended from time to time.
10.2 Failure to Discharge Liabilities. Buyer agrees to
indemnify Sellers and hold Sellers harmless against any and all
loss, liability, damage, claim, cost and expense of any nature
whatsoever, including, without limitation, reasonable attorneys
fees arising from or in connection with the Assumed Liabilities.
10.3 Remedies Not Exclusive. The rights and remedies of
Sellers provided for in this Article or otherwise in this
Agreement shall be cumulative and in addition to and not in
limitation or exclusion of all other rights and remedies, whether
by the terms of other provisions of this Agreement or at law or
in equity or otherwise, which may exist on the part of Sellers by
reason of any breach of a representation, warranty, covenant or
agreement on the part of Buyer hereunder. Such rights or
remedies shall be cumulative and may be exercised at any time or
from time to time, and any failure or delay of Sellers in
exercising any right or remedy at any time shall not constitute a
waiver thereof or restrict its subsequent enforcement or the
enforcement of any other right or remedy of Sellers.
ARTICLE XI - INDEMNIFICATION RIGHTS
In the event a party incurs an Indemnifiable Loss, such
party may seek indemnification pursuant to the terms of this
Agreement. The indemnified party may avail itself of any and all
rights and remedies provided for in this Agreement or (to the
extent consistent with the other provisions of this Agreement) at
law or in equity or otherwise. In the event of an Indemnifiable
Claim against a party which intends to seek indemnification under
this Agreement, the indemnified party shall notify the
indemnifying party or parties within thirty (30) days after the
receipt of notice of such Claim; provided, however, that the
omission by any indemnified party to give notice as provided
herein shall not
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relieve the indemnifying party or parties of its or their
indemnification obligation under this Agreement except to the
extent that such omission results in a failure of actual notice
to the indemnifying party and such indemnifying party is
materially damaged as a result of such failure to give notice.
If the Indemnifiable Claim relates to an action threatened or
brought against the indemnified party, the indemnifying party or
parties will be entitled to participate in or assume the defense
thereof with counsel reasonably satisfactory to such indemnified
party and, after notice of its election to assume the defense
thereof, the indemnifying party or parties will no longer be
liable for any legal or other expense subsequently incurred by
the indemnified party in connection with the defense thereof;
provided, however, that the indemnified party shall be entitled
at all times to participate in the defense of any such action at
its own cost. Except with the prior written consent of each
party hereto, no party, in the defense of any such Claim, shall
consent to the entry of any judgment or enter into any settlement
that provides for any relief, including injunctive or other
nonmonetary relief, affecting any party hereto or that does not
include as an unconditional term thereof the giving by each
claimant or plaintiff to such affected party hereto of a release
from all liability with respect to such Claim.
ARTICLE XII - ALLOCATION OF PURCHASE PRICE AND TAX CONVENTION
12.1 Allocation of Purchase Price. Prior to the
Closing, the Purchase Price shall be allocated among the Assets
as mutually agreed to by Buyer and Sellers in the manner required
by Section 1060 of the Code in the form of an Allocation
Agreement to be attached hereto as Schedule 12.1.
12.2 Tax Convention. Whenever it is necessary for
purposes of the Closing, Section 7.15(A) or any indemnification
required under ARTICLE IX or ARTICLE X to determine any liability
for Taxes attributable to a period ending with the Closing Date
or beginning on any day following the Closing Date and the return
in respect of such Tax liability relates to a taxable year or
period beginning on or before and ending after the Closing Date,
the determination shall be made by apportioning the total Taxes
involved by treating the Closing Date as the end of a short
taxable year. In making this computation, exemptions,
allowances, or deductions calculated on an annual basis, such as
the deduction for depreciation, shall be apportioned as provided
in the Code. All real property and personal property Taxes which
are past due or have been due upon any owned Real Property
conveyed hereby or upon any owned personal property conveyed
hereby prior to the Closing Date shall be paid by Sellers (or if
Sellers have objected to such Taxes, Sellers shall assume
responsibility for such Taxes), together with any penalty or
interest thereon. Current real property and personal property
Taxes and special assessments shall be prorated and adjusted
between Sellers and Buyer as of the Closing Date on a per diem
basis. If current tax bills are unavailable at the Closing Date,
the prior year's tax bills shall be used for proration purposes
and when the current year's tax bills are received, the proration
shall
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be recalculated and the appropriate payment shall be made
forthwith.
ARTICLE XIII - MISCELLANEOUS
13.1 Termination.
(A) Anything herein or elsewhere to the contrary
notwithstanding, this Agreement may be terminated by written
notice of termination at any time prior to the Closing Date only
as follows:
(i) by mutual consent of Sellers and Buyer;
(ii) by Buyer, (a) at any time if the
representations and warranties of Sellers contained in Article IV
hereof were incorrect in any material respect when made or at any
time thereafter; (b) at any time if the covenants of Sellers
pending the Closing contained in Article VII hereof have not been
satisfied; (c) if the conditions precedent to the obligations of
Buyer contained in Section 8.1 have not been fulfilled, or waived
by Buyer, by the Closing; or (d) pursuant to Section 7.13.
(iii) by Sellers, (a) at any time if the
representations and warranties of Buyer contained in Article V
hereof were incorrect in any material respect when made or at any
time thereafter; or (b) the conditions precedent to the
obligations of Sellers contained in Section 8.2 have not been
fulfilled, or waived by Sellers, by the Closing; or
(iv) by either Buyer or Sellers if the Closing
has not occurred (other than through the failure of any party
seeking to terminate this Agreement to comply fully with its
obligations under this Agreement) on or before sixty (60) days
from the date of this Agreement, or such later date as the
parties may agree upon.
(B) In the event of the termination and abandonment
hereof pursuant to the provisions of this Section 13.1, this
Agreement shall become void and have no effect, without any
liability on the part of any of the parties or their directors or
officers or shareholders in respect of this Agreement, unless the
termination was the result of the representations and warranties
of a party being materially incorrect when made or the material
breach by such party of a covenant hereunder in which event the
party whose representations and warranties were materially
incorrect or who materially breached such covenant shall be
liable to the other party for all reasonable costs and expenses
of the other party incurred in connection with the preparation,
negotiation, execution and performance of this Agreement.
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13.2 Brokers' and Finders' Fees.
(A) Sellers represent and warrant to Buyer that all
negotiations relative to this Agreement have been carried on by
it directly without the intervention of any person, who may be
entitled to any brokerage or finder's fee or other commission in
respect of this Agreement or the consummation of the transactions
contemplated hereby, and Sellers agree to indemnify and hold
harmless Buyer against any and all claims, losses, liabilities
and expenses which may be asserted against or incurred by it as a
result of Sellers' dealings, arrangements or agreements with any
such person.
(B) Buyer represents and warrants that all
negotiations relative to this Agreement have been carried on by
it directly without the intervention of any person who may be
entitled to any brokerage or finder's fee or other commission in
respect of this Agreement or the consummation of the transactions
contemplated hereby, and Buyer agrees to indemnify and hold
harmless Seller against any and all claims, losses, liabilities
and expenses which may be asserted against or incurred by it as a
result of Buyer's dealings, arrangements or agreements with any
such person.
13.3 Arbitration. Except as otherwise expressly
provided in this Agreement, any controversy or claim arising out
of or relating to this Agreement or any other agreement
contemplated hereunder, or the interpretation or breach hereof or
thereof, shall be submitted to binding arbitration conducted in
the City of Atlanta, Georgia, in accordance with the then current
Commercial Arbitration Rules of the American Arbitration
Association. If the parties are unable to agree on the selection
of an arbitrator to resolve the dispute within fifteen (15) days
of either party giving the other party notice of its intent to
invoke this Section, then either party may make a request of the
American Arbitration Association for a list of qualified
potential arbitrators from which the parties shall select an
arbitrator in accordance with the Commercial Arbitration Rules of
the American Arbitration Association. If no arbitrator is thus
selected within fifteen (15) days after such list is submitted to
the parties, either party may request the American Arbitration
Association to select such arbitrator. All expenses and fees of
the arbitrator and any other expenses of the arbitration will be
borne equally by Buyer and Sellers unless the arbitrator in the
award assesses such expenses against one of the parties or
allocates such expenses other than equally between the parties.
Each party will bear its own attorneys' fees and expenses, unless
the arbitrator finds that the claim or defense of any party was
frivolous or lacked a reasonable basis in fact or law, in which
case the arbitrator may assess against such party all or any part
of the attorneys' fees and expenses of the other party. The
determination of such arbitrator shall be final and binding upon
the parties and judgment may be entered thereupon in any court
having jurisdiction thereof.
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13.4 Expenses. Except as otherwise provided in this
Agreement, each party hereto shall pay its own expenses
incidental to the preparation of this Agreement, the carrying out
of the provisions of this Agreement and the consummation of the
transactions contemplated hereby.
13.5 Entire Agreement; Amendment. This Agreement sets
forth the entire agreement and understanding of the parties
hereto with respect to the transactions contemplated hereby. Any
and all previous agreements and understandings between or among
the parties regarding the subject matter hereof, whether written
or oral, are superseded by this Agreement. This Agreement shall
not be amended or modified except by written instrument duly
executed by each of the parties hereto.
13.6 Assignment and Binding Effect. Neither Buyer nor
either Seller may assign its or their interest in this Agreement,
without the prior written consent of the other party; provided,
however, the rights and obligations of Buyer hereunder may be
assigned to an entity affiliated with Buyer without the prior
written consent of Sellers. Subject to the foregoing, all of the
terms and provisions of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the successors and
assigns of the Sellers and Buyer.
13.7 Waiver. Any term or provision of this Agreement
may be waived at any time by the party entitled to the benefit
thereof by a written instrument duly executed by such party.
13.8 Notices. Any notice, request, demand, waiver,
consent, approval or other communication which is required or
permitted hereunder shall be in writing and shall be deemed
given:
If to Buyer, to:
West Virginia Bakery Acquisition Company, Inc.
8400 Maryland Avenue
St. Louis, Missouri 63105-3668
Attention: General Counsel
Telecopy: (314) 259-7029
With a copy to:
Gallop, Johnson & Neuman, L.C.
101 South Hanley Road
Suite 1600
St. Louis, Missouri 63105
Attention: Thomas G. Lewin, Esq.
Telecopy: (314) 862-1219
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If to Sellers, to:
Heiner's Bakery, Inc.
EEE Realty, Inc.
P.O. Box 9247
Huntington, West Virginia 25701
Attn: Earl W. Heiner, Jr., President
With a copy to:
Jenkins, Fenstermaker, Krieger, Kayes & Agee
1100 Coal Exchange Building
Fourth Avenue and Eleventh Street
Huntington, West Virginia 25701
Attention: Henry M. Kayes, Esq. and
Wesley F. Agee, Esq.
Telecopy: (304) 523-9279
or such other address or telecopy number as such parties may
hereafter specify by notice to the other party. Each such
notice, request or other communication shall be effective: (i)
if given by telecopy and the appropriate acknowledgment of
receipt of such telecopy is received; or (ii) if given by any
other means, when delivered at the address specified in this
Section 13.8.
13.9 Governing Law. This Agreement shall be governed by
and interpreted and enforced in accordance with the internal laws
of the State of West Virginia, without regard to its conflicts of
law provisions or interpretations.
13.10 No Benefit to Others. Except as set forth in
Section 4.34 hereof, the representations, warranties, covenants
and agreements contained in this Agreement are for the sole
benefit of the parties hereto and their heirs, executors,
administrators, legal representatives, successors and assigns,
and they shall not be construed as conferring any rights on any
other persons.
13.11 Incorporation of Schedules. The Schedules
attached hereto shall be deemed to be incorporated in and form a
part of this Agreement.
13.12 Headings and Gender. All section headings
contained in this Agreement are for convenience of reference
only, do not form a part of this Agreement and shall not affect
in any way the meaning or interpretation of this Agreement.
Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any
other number, singular or plural, and any other gender,
masculine, feminine, or neuter, as the context requires.
13.13 Severability. Any provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity or unenforceability
without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in
any
58
jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
13.14 Counterparts. This Agreement may be executed in
any number of counterparts and any party hereto may execute any
such counterpart, each of which when executed and delivered shall
be deemed to be an original and all of which counterparts taken
together shall constitute but one and the same instrument. This
Agreement shall become binding when one or more counterparts
taken together shall have been executed and delivered by the
parties.
13.15 Effective Date. The submission of this Agreement
by a party to another party for the purposes of examination and
negotiation shall not be deemed an offer to sell or to purchase
the Assets. This Agreement shall not be effective and binding
upon the parties until this Agreement is executed by all of the
parties and a fully executed counterpart of this Agreement is
delivered to each party.
THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION
WHICH MAY BE ENFORCED BY THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first written above.
"Sellers"
HEINER'S BAKERY, INC.
By:
Title:
EEE REALTY, INC.
By:
Title:
"Buyer"
WEST VIRGINIA BAKERY ACQUISITION
COMPANY, INC.
By:
Title:
59