Exhibit 10.3
AMENDED AND RESTATED
PROJECT AND
APPROVED SUPPLIER AGREEMENT
August 15, 1997
among
EINSTEIN/NOAH BAGEL CORP.,
▇▇▇▇▇▇ BAGEL SUPPLY COMPANY, LLC,
▇▇▇▇▇▇ BAKERIES, INC.,
▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇▇
and
▇▇▇▇ ▇. ▇▇▇▇▇▇
AMENDED AND RESTATED
PROJECT AND
APPROVED SUPPLIER AGREEMENT
This amended and restated agreement (the "Agreement") is made and entered
into as of this 15th day of August, 1997 by and among Einstein/Noah Bagel Corp.,
a Delaware corporation ("ENBC"), ▇▇▇▇▇▇ Bagel Supply Company, LLC, an Indiana
limited liability company (the "Supplier"), ▇▇▇▇▇▇ Bakeries, Inc., an Indiana
corporation ("▇▇▇▇▇▇"), ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇. The
Supplier and ▇▇▇▇▇▇ are herein sometimes collectively referred to as the "▇▇▇▇▇▇
Companies", and ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ are herein
sometimes collectively referred to as the "Harlans."
Recitals
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ENBC, directly and through its wholly-owned subsidiaries, owns and operates
retail bagel stores, and ENBC has also granted franchise rights to own and
operate retail bagel stores under trademarks owned by ENBC and its subsidiaries
and using ENBC's system. The Supplier previously entered into a Project and
Approved Supplier Agreement with ENBC dated as of May 24, 1996 (the "Prior
Project Agreement") pursuant to which ENBC designated Supplier as an approved
supplier of ENBC to supply frozen bagel dough products to ENBC and its
subsidiaries and franchisees. Concurrent with the closing of the transactions
contemplated by the Prior Project Agreement, (i) the Supplier entered into a
lease agreement with ▇▇▇▇▇▇, pursuant to which the Supplier agreed to lease from
▇▇▇▇▇▇ a production facility constructed by ▇▇▇▇▇▇ adjacent to ▇▇▇▇▇▇'▇ existing
production facility in Avon, Indiana, (ii) ENBC purchased from ▇▇▇▇▇▇ and the
Supplier certain production equipment, and contract rights to acquire certain
production equipment, owned by them, which production equipment comprises the
bagel line currently operated by the Supplier; and (iii) ENBC and the Supplier
entered into a lease agreement pursuant to which ENBC leased the production
equipment comprising the bagel line to the Supplier. The Supplier and ENBC
desire: (x) ENBC to purchase from the Supplier and ▇▇▇▇▇▇ certain additional
production equipment used by the Supplier in the operation of the bagel line and
lease same to the Supplier, (y) the Supplier to install in the Production
Facility an additional bagel line for the production of raw, frozen bagel dough
products for the dedicated use by ENBC, ENBC Subsidiaries and ENBC Franchisees,
and (z) ENBC to lease to the Supplier the production equipment for the
additional bagel line. In order to facilitate the installation and leasing of
the additional bagel line and to amend, restate, replace and substitute in full
the obligations under the Prior Project Agreement, the parties desire to enter
into this Agreement.
Covenants
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In consideration of the premises and the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
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Article 1.0 Definitions
1.1 As used herein the following terms shall have the meanings given them
below:
"Accounting Period" shall mean one of twelve (12) periods of four or five
consecutive weeks in each fiscal year of the Supplier during the Term that is
designated by the Supplier as an accounting period.
"Additional Original Bagel Line Equipment" shall have the same meaning
ascribed to it in Section 2.1.1.
"Additional Original Bagel Line Equipment Financing" shall mean the
purchase by ENBC of the Additional Original Bagel Line Equipment for the
Additional Original Bagel Line Equipment Purchase Price.
"Additional Original Bagel Line Equipment Purchase Price" shall mean
$1,000,000.
"Authorized Recipients" shall have the meaning ascribed to it in Section
6.3.
"Bagel Equipment" shall mean all of the equipment included in the Bagel
Lines and all other equipment required for the operation of the Bagel Lines.
"Bagel Lines" shall mean the Original Bagel Line and the Second Bagel Line.
"Closing" shall have the meaning ascribed to it in Section 2.1.
"ENBC Allocated Charges" shall mean those costs of ENBC charged to the
Supplier as described in Section 7.7.
"ENBC Franchisee" shall mean a franchisee of ENBC.
"ENBC Subsidiary" shall mean a subsidiary of ENBC.
"Encumbrances" shall mean liens, mortgages, pledges, charges, encumbrances,
assessments, restrictions, covenants, easements or title defects of any nature
whatsoever.
"Equipment Financing" shall mean the lease of up to $13,446,000 of Bagel
Equipment comprising the Bagel Lines by ENBC to the Supplier pursuant to the
Equipment Lease (which Equipment Lease shall result in all of the costs and
expenses, including all financing costs, incurred by ENBC in connection with the
lease of the Bagel Equipment being passed through to the Supplier).
"Equipment Financing Cost" shall mean operating lease rentals and/or
interest and principal amortization from all equipment financing.
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"Equipment Lease" shall mean that certain Lease Agreement dated August 27,
1996 between the Supplier and ENBC.
"Equipment Financing Documents" shall mean the Equipment Lease, together
with all other agreements, instruments and documents contemplated by such
agreement.
"Financing Documents" shall mean the Equipment Financing Documents and the
Working Capital Financing Documents.
"Formulations" shall have the meaning ascribed to it in Section 6.5.
"Lease" shall mean that certain Lease Agreement dated August 27, 1996
between ▇▇▇▇▇▇ and the Supplier.
"Leasehold Premises" shall have the meaning ascribed to it in Section 3.6.
"Materials Cost" shall mean the Supplier's cost of ingredients and
packaging used in manufacturing the Products during each Quarterly Period,
determined in the manner set forth in Exhibit A hereto. For this purpose,
ingredients shall include corn meal used in manufacturing the Products.
"Mortgage" shall mean the existing mortgage loan on the land and buildings
owned by ▇▇▇▇▇▇, consisting of the Production Facility and the facility adjacent
thereto, made by the Mortgage Holders.
"Mortgage Holders" shall mean LaSalle National Bank and KeyBank National
Association.
"Occupancy Cost" shall mean building rental expense, real estate taxes,
utilities, maintenance and repair and property casualty insurance.
"Option Agreement" shall mean that certain Option Agreement dated August
27, 1996 among ENBC, the Supplier and the Harlans.
"Original Bagel Line" shall mean the operating ▇▇▇▇▇▇▇ bagel line owned by
ENBC and leased to and operated by the Supplier, together with the other
components of the bagel production line installed in the Production Facility,
including without limitation mixers, bagel cooking unit, proofer, retarder,
blast freezer and packaging equipment.
"Original Bagel Line Equipment" shall mean the production and other
equipment comprising the Original Bagel Line, including the Additional Original
Bagel Line Equipment.
"Procedures" shall have the meaning ascribed to it in Section 6.5.
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"Production Facility" shall mean ▇▇▇▇▇▇'▇ 75,000 square foot production
facility in Avon, Indiana as described in the Lease.
"Products" shall mean frozen bagel dough products.
"Proprietary Information" shall have the meaning ascribed to it in Article
12.0.
"Quarterly Period" shall mean the first three Accounting Periods of the
Supplier during each fiscal year of the Supplier during the Term and each
subsequent period of three Accounting Periods thereafter during said fiscal
year.
"Second Bagel Line" shall mean the ▇▇▇▇▇▇▇ bagel line that is being
purchased by the Supplier (or by ENBC pursuant to Section 8.1 hereof), together
with the other components of the bagel production line that is to be installed
by the Supplier in the Production Facility, including without limitation mixers,
bagel cooking unit, components for the proofer, components for the retarder,
modifications to the blast freezer and packaging equipment.
"Second Bagel Line Capital Budget" shall mean the capital budget attached
hereto as Exhibit F.
"Specifications" shall have the meaning ascribed to it in Section 6.5.
"Term" shall mean the period commencing on the date hereof and continuing
until the date this Agreement expires or is terminated pursuant to Article 13.0
hereof.
"Title Policy" shall mean that certain Leasehold Loan Policy dated August
30, 1996 issued by Chicago Title Insurance Company (Policy No. 15-0140-109-
0000001).
"Working Capital Financing" shall mean the loan by the Working Capital
Lenders to the Supplier.
"Working Capital Financing Documents" shall mean the revolving credit
agreement between the Working Capital Lenders and the Supplier, together with
all other agreements, instruments and documents contemplated by such agreement.
"Working Capital Lenders" shall mean LaSalle National Bank and KeyBank
National Association.
Article 2.0 The Closing; Conditions to Closing; Covenants Pending Closing;
Termination Prior to Closing
2.1 On the terms and subject to the conditions set forth in this
Agreement, the parties agree to close the transactions contemplated by this
Agreement, including the Additional Original Bagel Line Equipment Financing, at
the offices of ENBC, within three business days
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after the satisfaction of the conditions set forth in Sections 2.2 and 2.3
hereof (the "Closing"). At the Closing:
2.1.1 The Supplier and ▇▇▇▇▇▇ shall execute and deliver to ENBC an
Assignment and ▇▇▇▇ of Sale, in the form of Exhibit B hereto, pursuant to which
ENBC shall acquire from the Supplier and ▇▇▇▇▇▇ all production and other
equipment that has been purchased by the Supplier or ▇▇▇▇▇▇ for use in the
Original Bagel Line that has not previously been purchased by ENBC and leased to
the Supplier pursuant to the Equipment Lease (the "Additional Original Bagel
Line Equipment").
2.1.2 ENBC and the Supplier shall execute and deliver a closing
statement evidencing the payment of certain amounts owed by the Supplier to ENBC
and certain amounts owed by ENBC to the Supplier, including the Additional
Original Bagel Line Equipment Purchase Price, certain receivables owed between
the parties, and the Equipment Lease payment due to ENBC on or about July 14,
1997. ENBC or the Supplier, as applicable, shall remit to the other the net
amount owed, all as evidenced by the closing statement.
2.1.3 ENBC shall execute and deliver to the Supplier, and the
Supplier shall execute and deliver to ENBC, (a) amended and restated Schedule
No. 1 to the Equipment Lease in the form set forth as Exhibit C hereto, pursuant
to which ENBC shall lease to the Supplier the Original Bagel Line Equipment for
a term expiring on April 16, 2005, and (b) the amendment to lease agreement in
the form set forth as Exhibit G hereto.
2.1.4 ENBC shall execute and deliver to the Supplier, and the
Supplier shall execute and deliver to ENBC, the Amended and Restated Option
Agreement in the form set forth as Exhibit D hereto.
2.1.5 The Working Capital Lenders and the Mortgage Holders shall
deliver a consent to the transactions contemplated by this Agreement, which
consent shall reaffirm all of the rights and obligations of the parties under
each of the agreements and other documents previously executed and/or delivered
in connection with the closing of the transactions contemplated by the Prior
Project Agreement in August 1996.
2.1.6 The ▇▇▇▇▇▇ Companies shall deliver a copy of the Lease to ENBC,
together with a written certification of an authorized officer or member of each
of the ▇▇▇▇▇▇ Companies certifying that (a) said copy is true, correct and
complete, and (b) no default has occurred thereunder.
2.1.7 The Supplier shall deliver to ENBC (a) a certificate of
existence of the Supplier from the State of Indiana, certified as of a date no
earlier than 10 days prior to the Closing by the Secretary of State of Indiana,
and (b) resolutions of the board of managers of the Supplier approving the
execution and delivery by the Supplier of this Agreement, and the other
agreements contemplated hereby, and the performance of the other transactions
contemplated hereby, certified by the secretary of the Supplier.
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2.1.8 ▇▇▇▇▇▇ shall deliver to ENBC (a) a certificate of existence
from the State of Indiana, certified as of a date no earlier than 10 days prior
to the Closing by the Secretary of State of Indiana, and (b) resolutions of the
board of directors of ▇▇▇▇▇▇ approving the execution and delivery by ▇▇▇▇▇▇ of
this Agreement and the other agreements contemplated hereby, and the performance
of the other transactions contemplated hereby, certified as of the date of the
Closing by the secretary of ▇▇▇▇▇▇.
2.1.9 ▇▇▇▇▇▇▇▇▇, Daily, ▇▇▇▇▇▇▇ and ▇▇▇▇▇ shall deliver to ENBC its
legal opinion in a form substantially similar to the opinion delivered in
connection with the closing of the Prior Project Agreement in August, 1996.
2.1.10 The ▇▇▇▇▇▇ Companies shall deliver to ENBC certificates of
insurance that satisfy the requirements of Section 11.5 hereof.
2.1.11 ENBC shall deliver to the ▇▇▇▇▇▇ Companies (a) a good standing
certificate from the State of Delaware, certified as of the date of the Closing
by the Secretary of State of Delaware, and (b) a resolution of the board of
directors of ENBC approving the execution and delivery by ENBC of this Agreement
and the performance of the other transactions contemplated hereby, certified as
of the date of the Closing by the secretary or assistant secretary of ENBC.
2.2 The obligation of ENBC to consummate the transactions contemplated
hereby shall be subject to the fulfillment or waiver at or prior to the Closing
of each of the following conditions:
2.2.1 The representations and warranties of the ▇▇▇▇▇▇ Companies
contained in this Agreement shall have been true and correct in all material
respects at and as of the date hereof, and they shall be true and correct in all
material respects at and as of the Closing with the same force and effect as
though made at and as of that time. The ▇▇▇▇▇▇ Companies and the Harlans shall
have performed and complied with all of their obligations required by this
Agreement to be performed or complied with at or prior to the Closing. The
▇▇▇▇▇▇ Companies and the Harlans shall have delivered to ENBC a certificate,
dated as of the date of the Closing and signed by each of them, certifying that
such representations and warranties are thus true and correct and that all such
obligations have been thus performed and complied with.
2.2.2 Each of the agreements and other instruments and documents
required by Section 2.1 hereof to be executed and delivered by persons other
than ENBC shall have been executed and delivered.
2.2.3 There shall not be pending or threatened any action or
proceeding by or before any court or other governmental body which shall seek to
restrain, prohibit or invalidate this Agreement or any transaction contemplated
hereby.
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2.3 The obligations of the Harlans and the ▇▇▇▇▇▇ Companies to consummate
the transactions contemplated hereby shall be subject to the fulfillment or
waiver at or prior to the Closing of each of the following conditions:
2.3.1 The representations and warranties of ENBC contained in this
Agreement shall have been true and correct in all material respects at and as of
the date hereof, and they shall be true and correct in all material respects at
and as of the Closing with the same force and effect as though made at and as of
that time. ENBC shall have performed and complied with all of its obligations
required by this Agreement to be performed or complied with at or prior to the
Closing. ENBC shall have delivered to the Harlans and the ▇▇▇▇▇▇ Companies a
certificate, dated as of the date of the Closing and signed by an officer of
ENBC, certifying that such representations and warranties are thus true and
correct and that all such obligations have been thus performed and complied
with.
2.3.2 Each of the agreements and other instruments and documents
required by Section 2.1 hereof to be executed and delivered by persons other
than the Harlans and the ▇▇▇▇▇▇ Companies shall have been executed and
delivered.
2.3.3 There shall not be pending or threatened any action or
proceeding by or before any court or other governmental body which shall seek to
restrain, prohibit or invalidate this Agreement or any transaction contemplated
hereby.
2.4 Each of the parties hereto agrees to use reasonable best efforts to
cause to be satisfied as soon as practicable all of the conditions to the
Closing set forth in Sections 2.2 and 2.3 hereof that are in the control of such
party.
Article 3.0 Representations and Warranties of the ▇▇▇▇▇▇ Companies
In order to induce ENBC to enter into this Agreement and to perform its
obligations hereunder, the ▇▇▇▇▇▇ Companies jointly and severally represent and
warrant to ENBC that:
3.1 Each of the ▇▇▇▇▇▇ Companies is duly organized and validly existing
under the laws of the jurisdiction of its incorporation, with full corporate
power and authority to enter into this Agreement and to carry out the
transactions and agreements contemplated hereby. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
of each of the ▇▇▇▇▇▇ Companies.
3.2 This Agreement has been duly executed and delivered by each of the
▇▇▇▇▇▇ Companies and is a valid and binding obligation of each of them,
enforceable in accordance with its terms. Neither the execution and delivery of
this Agreement by the ▇▇▇▇▇▇ Companies nor the consummation of the transactions
contemplated hereby will: (a) conflict with or violate any provision of its
organizational documents, or of any law, ordinance or regulation or any decree
or order of any court or administrative or other governmental body which is
either applicable to, binding upon or enforceable against either of the ▇▇▇▇▇▇
Companies or (b) result in a breach of,
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constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify or cancel, or require any notice
under, any mortgage, contract, agreement, indenture, will, trust or other
instrument which is either binding upon or enforceable against either of the
▇▇▇▇▇▇ Companies or the assets and properties of either of them, except pursuant
to the Working Capital Financing Documents and the Mortgage. No permit, consent,
approval or authorization of, or declaration to or filing with, any regulatory
or other governmental authority is required in connection with the execution and
delivery of this Agreement by the ▇▇▇▇▇▇ Companies and the consummation by them
of the transactions contemplated hereby, except for such of the foregoing as are
identified in Schedule 3.8 hereto, all of which have been obtained, and except
for documents the ▇▇▇▇▇▇ Companies have executed and which are to be recorded
pursuant to the Financing Documents.
3.3 Schedule 3.3 hereto accurately and completely sets forth, with respect
to each of the ▇▇▇▇▇▇ Companies: (a) the number of shares of each class of its
capital stock or other units of equity interest which are issued and outstanding
and (b) the name and address of, and the number of shares of each class of
capital stock or other units of equity interest owned by, each of its
shareholders or other equity owners. All voting rights in each of the ▇▇▇▇▇▇
Companies are vested exclusively in its shares of capital stock, in the case of
▇▇▇▇▇▇, and in units of equity interest, in the case of the Supplier, and other
than shareholder agreements or operating agreements which have been provided to
ENBC (the "Shareholder Agreements"), there are no voting trusts, proxies or
other agreements or understandings with respect to the voting of the capital
stock or other units of equity interest of either of the ▇▇▇▇▇▇ Companies.
Except pursuant to the Shareholder Agreements and the right of first refusal
granted to ENBC pursuant to that certain Right of First Refusal Agreement dated
as of August 27, 1996 among ENBC and the Harlans, there are no outstanding
warrants, options or rights of any kind to acquire from either of the ▇▇▇▇▇▇
Companies, or from the shareholders or other equity owners of either of the
▇▇▇▇▇▇ Companies, any shares of capital stock or other units of equity interest
of either of the ▇▇▇▇▇▇ Companies, and neither of the ▇▇▇▇▇▇ Companies has any
obligation to acquire any of its issued and outstanding shares of capital stock
or other units of equity interest from any holder thereof.
3.4 Set forth in Schedule 3.4 are the following financial statements of
the ▇▇▇▇▇▇ Companies:
3.4.1 balance sheets of (a) ▇▇▇▇▇▇ at December 31, 1995 and December
31, 1996; and (b) the Supplier at December 31, 1996; and
3.4.2 statements of operations and cash flow of (a) ▇▇▇▇▇▇ for the
years ended December 31, 1995 and December 31, 1996; and (b) the Supplier
for the partial year ended December 31, 1996.
Such financial statements present fairly in all material respects the financial
position of each of the ▇▇▇▇▇▇ Companies covered thereby at said balance sheet
dates and the results of operations and cash flows of each of the ▇▇▇▇▇▇
Companies for each of the said periods covered, and they have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis. The balance sheet of ▇▇▇▇▇▇ at December 31, 1996 is herein sometimes
referred
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to as the "▇▇▇▇▇▇ Balance Sheet," and the balance sheet of the Supplier at
December 31, 1996 is herein sometimes referred to as the "Supplier Balance
Sheet."
3.5 Neither of the ▇▇▇▇▇▇ Companies has any liabilities or obligations,
accrued, absolute, contingent or otherwise, except: (a) to the extent reflected
or taken into account in determining net worth in the ▇▇▇▇▇▇ Balance Sheet or
the Supplier Balance Sheet and not heretofore paid or discharged; (b)
contractual obligations of the ▇▇▇▇▇▇ Companies incurred in the ordinary course
of business; (c) liabilities of the ▇▇▇▇▇▇ Companies incurred in the ordinary
course of business since the date of the ▇▇▇▇▇▇ Balance Sheet and the Supplier
Balance Sheet; (d) obligations of the ▇▇▇▇▇▇ Companies under this Agreement and
the other documents now or hereafter executed in connection therewith, and (e)
obligations of the ▇▇▇▇▇▇ Companies under contracts identified in Schedule 3.9.
3.6 The premises covered by the Lease (the "Leasehold Premises"): (a)
have direct access to public roads or access to public roads by means of a
perpetual access easement, such access being sufficient to satisfy the
reasonably anticipated transportation requirements of the Supplier's business to
be conducted at the Leasehold Premises; and (b) are served by all utilities,
including but not limited to water, electricity, natural gas, sewer and
telephone, in such quantity and quality as are sufficient to satisfy the
reasonably anticipated production levels and business activities of the
Supplier's business to be conducted at the Leasehold Premises. Neither of the
▇▇▇▇▇▇ Companies has received notice of: (a) any condemnation proceeding with
respect to any portion of the Leasehold Premises, and, to the best of their
knowledge, no proceeding is contemplated by any governmental authority; or (b)
any special assessment which may affect the Leasehold Premises and to the best
of their knowledge, no such special assessment is contemplated by any
governmental authority.
3.7 The Supplier has good and marketable title to all of its assets and
properties, free and clear of all Encumbrances, except as set forth in the
Financing Documents or the Title Policy or on Schedule 3.7 hereto. The
Additional Original Bagel Line Equipment constitutes all of the equipment owned
by the ▇▇▇▇▇▇ Companies and used by the Supplier in operating the Original Bagel
Line which is not presently owned by ENBC, and that, upon full execution of the
Assignment and ▇▇▇▇ of Sale by the ▇▇▇▇▇▇ Companies with respect to the
Additional Original Bagel Line Equipment, ENBC shall own all of the equipment
comprising or otherwise used in the operation of the Original Bagel Line.
3.8 The ▇▇▇▇▇▇ Companies possess all licenses and other required
governmental or official approvals, permits or authorizations, the failure to
possess which would have a material adverse effect on the business, financial
condition or results of operations of either of the ▇▇▇▇▇▇ Companies. All such
licenses, approvals, permits and authorizations are in full force and effect,
the ▇▇▇▇▇▇ Companies are in material compliance with their requirements, and no
proceeding is pending or to the best of the knowledge of the ▇▇▇▇▇▇ Companies,
threatened to revoke or amend any of them. Schedule 3.8 hereto contains an
accurate and complete list of all such licenses, approvals, permits and
authorizations. None of such licenses, approvals, permits and authorizations
are or will be impaired or in any way affected by the execution and delivery of
this
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Agreement or the Schedule to the Equipment Lease or the consummation of the
transactions contemplated hereby.
3.9 Schedule 3.9 hereto accurately and completely lists each contract to
which either of the ▇▇▇▇▇▇ Companies is a party related to the construction of
the Production Facility, and each contract to which either of the ▇▇▇▇▇▇
Companies is a party related to the acquisition of equipment for use in the
Production Facility. None of such contracts has been further amended or
modified and each of them is in full force and effect. Neither of the ▇▇▇▇▇▇
Companies is in breach of or default under any of such contracts, and no event
has occurred which with the passage of time or the giving of notice or both
would cause a material breach of or default under any such contract. Neither of
the ▇▇▇▇▇▇ Companies is aware of any breach of or default under any such
contract by the other party thereto.
3.10 Except as set forth on Schedule 3.10 hereto, there are no actions,
suits, claims, governmental investigations or arbitration proceedings
("Actions") pending or, to the best of the knowledge of the ▇▇▇▇▇▇ Companies,
threatened against or affecting either of the ▇▇▇▇▇▇ Companies or any of their
assets or properties and, to the best of the knowledge of the ▇▇▇▇▇▇ Companies,
there is no basis for any of the foregoing. Except for ▇▇▇▇▇▇'▇ settlement
agreement with the West Central Conservancy District, there are no outstanding
orders, decrees or stipulations issued by any federal, state, local or foreign
judicial or administrative authority in any proceeding to which either of the
▇▇▇▇▇▇ Companies is or was a party.
3.11 Each of the ▇▇▇▇▇▇ Companies is in material compliance with all laws,
regulations and orders applicable to it, its assets, properties and business.
Neither of the ▇▇▇▇▇▇ Companies has received notification of any asserted past
or present failure to comply with any laws, and to the best of their knowledge,
no proceeding with respect to any such violation is contemplated.
3.12
3.12.1 Neither of the ▇▇▇▇▇▇ Companies has transported, stored,
treated or disposed, nor has either of them allowed or arranged for any
third parties to transport, store, treat or dispose of Hazardous Substances
or other waste to or at any location other than a site lawfully permitted
to receive such Hazardous Substances or other waste for such purposes, nor
has either of them performed, arranged for or allowed by any method or
procedure such transportation, storage, treatment or disposal in
contravention of any laws or regulations. Neither of the ▇▇▇▇▇▇ Companies
has disposed, or allowed or arranged for any third parties to dispose, of
Hazardous Substances or other waste upon the Leasehold Premises, except as
permitted by law. For purposes of this Section 3.12.1, the term "Hazardous
Substances" shall have the meaning given it in the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Sections
9601, et seq.), as amended, and the regulations promulgated pursuant
thereto ("CERCLA"), or any similar state law.
3.12.2 Since the acquisition of the Leasehold Premises, ▇▇▇▇▇▇ has
not permitted to occur, nor is there presently occurring, a Release of any
Hazardous Substance on, into
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or beneath the surface of the Leasehold Premises, except that the parties
acknowledge that ▇▇▇▇▇▇ discharges wastewater into the sewage treatment
plant of the West Central Conservancy District. For purposes of this
Section 3.12.2, the term "Release" shall mean releasing, spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing or dumping.
3.12.3 Neither of the ▇▇▇▇▇▇ Companies has transported or disposed,
nor has it allowed or arranged for any third parties to transport or
dispose, any Hazardous Substance or other waste to or at a site which,
pursuant to CERCLA or any similar state law: (a) has been placed on the
National Priorities List or its state equivalent, or (b) the Environmental
Protection Agency or the relevant state agency has proposed or is proposing
to place on the National Priorities List or its state equivalent. Neither
of the ▇▇▇▇▇▇ Companies has received notice, or has any knowledge of any
facts which could give rise to any notice, that either of the ▇▇▇▇▇▇
Companies is a potentially responsible party for a federal or state
environmental cleanup site or for corrective action under CERCLA or any
other applicable law or regulation. Neither of the ▇▇▇▇▇▇ Companies has
submitted nor was either of them required to submit any notice pursuant to
Section 103(c) of CERCLA with respect to the real estate that is covered by
the Lease. Neither of the ▇▇▇▇▇▇ Companies has received any written or oral
request for information in connection with any federal or state
environmental cleanup site. Neither of the ▇▇▇▇▇▇ Companies has undertaken
(or been requested to undertake) any response or remedial actions or clean-
up action of any kind at the request of any federal, state or local
governmental entity, or at the request of any other person or entity.
3.12.4 Neither of the ▇▇▇▇▇▇ Companies uses, or has used, any
Underground Storage Tanks, and, except as set forth in Schedule 3.12
hereto, the ▇▇▇▇▇▇ Companies are not aware of any Underground Storage Tanks
previously or currently on or under the Leasehold Premises. For purposes of
this Section 3.12.4, the term "Underground Storage Tanks" shall have the
meaning given it in the Resource Conservation and Recovery Act (42 U.S.C.
Sections 6901 et seq.).
3.12.5 Schedule 3.12 hereto identifies (a) all environmental audits,
assessments or occupational health studies relating to the assets,
properties or business of either of the ▇▇▇▇▇▇ Companies undertaken by
governmental agencies or either of the ▇▇▇▇▇▇ Companies or their agents;
(b) the results of any ground, water, soil, air or asbestos monitoring
undertaken with respect to the Leasehold Premises, except for tests of
sewage discharge, which are summarized in Schedule 3.12; (c) all written
communications between either of the ▇▇▇▇▇▇ Companies and any environmental
agencies within the past three years; and (d) all citations issued to
either of the ▇▇▇▇▇▇ Companies within the past three years under the
Occupational Safety and Health Act (29 U.S.C. Sections 651 et seq.).
12
Article 4.0 Representations and Warranties of ENBC
In order to induce the ▇▇▇▇▇▇ Companies to enter into this Agreement and to
perform their obligations hereunder, ENBC represents and warrants to the ▇▇▇▇▇▇
Companies that:
4.1 ENBC is duly organized and legally existing under the laws of the
State of Delaware, with full corporate power and authority to enter into this
Agreement and to carry out the transactions and agreements contemplated hereby.
The execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
necessary corporate action of ENBC.
4.2 This Agreement has been duly executed and delivered by ENBC and is a
valid and binding obligation of ENBC, enforceable in accordance with its terms.
Neither the execution and delivery of this Agreement by ENBC nor the
consummation of the transactions contemplated hereby will: (a) conflict with or
violate any provision of the certificate of incorporation of bylaws of ENBC or
of any decree or order of any court or administrative or other governmental body
which is either applicable to, binding upon or enforceable against ENBC; or (b)
result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify or cancel, or
require any notice under, any mortgage, contract, agreement, indenture or other
instrument which is either binding upon or enforceable against ENBC. No permit,
consent, approval or authorization of, or declaration to or filing with, any
regulatory or other government authority is required in connection with the
execution and delivery of this Agreement by ENBC and the consummation of the
transactions contemplated hereby.
4.3 There are no Actions pending or, to the best of the knowledge of ENBC,
threatened against or affecting ENBC or any of its assets or properties which
Actions are related to this Agreement or ENBC's obligations hereunder and, to
the best of the knowledge of ENBC, there is no basis for any of the foregoing.
There are no outstanding orders, decrees or stipulations issued by any federal,
state, local or foreign judicial or administrative authority in any proceeding
to which ENBC is or was a party related to this Agreement or ENBC's obligations
under this Agreement.
4.4 ENBC is in material compliance with all laws, regulations and orders
applicable to its performance under this Agreement. ENBC has received no
notification of any asserted past or present failure to comply with any such
laws, and to the best of its knowledge, no proceeding with respect to any such
violation is contemplated.
Article 5.0 Certain Covenants of the ▇▇▇▇▇▇ Companies
5.1 The Supplier will complete the acquisition of the Bagel Equipment and
the installation of the Second Bagel Line, as further provided in this Article
5.0 and Article 8.0 hereof, and subject to the approval of ENBC, with such
changes therein as may be reasonably requested by ENBC. The Supplier agrees to
consult with such representatives and consultants as
13
ENBC may engage, to the extent requested by ENBC during the installation of the
Second Bagel Line.
5.2 The Supplier will cause the Second Bagel Line to be installed and
ready for testing on or about January 7, 1998 and operational by January 24,
1998, subject to events beyond the reasonable control of the Supplier.
5.3 The ▇▇▇▇▇▇ Companies agree that the use of any portion of the
Production Facility or the Bagel Lines for production of any products for
persons other than ENBC, ENBC Subsidiaries, ENBC Franchisees and Authorized
Recipients shall be subject to ENBC's prior written approval, which shall not be
unreasonably withheld; provided that ENBC hereby consents to the ▇▇▇▇▇▇
Companies' use of the Production Facility in the manner identified on Schedule
5.3 hereto. The parties agree that it shall not be unreasonable for ENBC's
approval to be subject to (i) ENBC being satisfied that Proprietary Information
of ENBC will not be subject to a risk of unauthorized use or disclosure by
reason of such use of the Production Facility, (ii) ENBC being satisfied that
such use of the Production Facility will not interfere with or otherwise
adversely effect the use of the Production Facility to produce Products under
this Agreement, (iii) adjustment of the Toll Charge on terms mutually acceptable
to ENBC and ▇▇▇▇▇▇, to permit sharing of the benefits of leveraging Occupancy
Cost, and (iv) adjustment of the manner in which the Shortfall Amount and the
Excess Amount are calculated pursuant to Section 7.5 hereof, on mutually
acceptable terms.
5.4 Commencing on the date hereof, and continuing until the later of any
exercise of the option by ENBC pursuant to the Option Agreement or the
termination or expiration of this Agreement, the ▇▇▇▇▇▇ Companies agree to
deliver to ENBC the financial statements required to be provided to the Mortgage
Holders and Working Capital Lenders under their respective credit agreements
with said Mortgage Holders and Working Capital Lenders as in effect on the date
hereof (whether or not such credit agreements hereafter remain in effect or are
amended or modified), together with any copies of any amendments or
modifications to such credit agreements promptly upon their becoming effective.
Article 6.0 Designation of the Supplier as an Approved Supplier; Purchase and
Sale of the Products
6.1 ENBC hereby designates the Supplier as an approved supplier of
Products to ENBC, ENBC Subsidiaries, ENBC Franchisees and Authorized Recipients
(as hereinafter defined). On the terms and subject to the conditions set forth
herein, and during the Term hereof, the Supplier agrees to sell to ENBC, ENBC
Subsidiaries, ENBC Franchisees and Authorized Recipients Products produced by
the Supplier at the Production Facility.
6.2 The ▇▇▇▇▇▇ Companies jointly and severally agree that during the Term,
and for a period of one year thereafter, none of the ▇▇▇▇▇▇ Companies or any
Affiliate of the ▇▇▇▇▇▇ Companies shall, without the prior written consent of
ENBC, produce any bagels or bagel dough for sale or distribution to any
specialty bagel retail establishment (which shall be defined for this purpose as
any retail establishment (including any retail delicatessen and any doughnut
shop or
14
other specialty bakery store but excluding delicatessens located in
supermarkets, convenience stores or grocery stores that do not use a brand name
of a specialty bagel retailer) that derives a significant amount of its revenue
from the sale of bagels and bagel-related products). In addition, the ▇▇▇▇▇▇
Companies jointly and severally agree that during the Term, none of the ▇▇▇▇▇▇
Companies or any Affiliate of the ▇▇▇▇▇▇ Companies shall enter into any
agreement to produce pre-proofed raw frozen bagels for Maplehurst Bakeries, Inc.
("Maplehurst") or any Affiliate of Maplehurst unless Maplehurst has agreed in
writing that the restrictions set forth in Section 3.1 of the supply agreement
dated as of August 2, 1994 between ▇▇▇▇▇▇ and Maplehurst do not apply to the
supply of Products by the ▇▇▇▇▇▇ Companies under this Agreement or the Short-
Term Supply Agreement. For purposes of this Section 6.2, an "Affiliate" shall
mean any person or entity that controls or is controlled by, or is under common
control with, such person, and the term "control" (including the terms
"controlling," "controlled by" and "under common control with") shall mean the
possession, direct or indirect, of the power to direct or cause the direction of
the management and policies of a person, whether through the ownership of voting
shares, by contract, or otherwise.
6.3 Notwithstanding any other provision of this Agreement to the contrary,
ENBC may at any time arrange upon reasonable notice to the Supplier for the
Products to be sold to ENBC, ENBC Subsidiaries and ENBC Franchisees through one
or more subsidiaries, affiliates, joint ventures, area developers, franchisees,
vendors, processors or other persons ("Authorized Recipients") or for the
Products otherwise to be sold directly to such other Authorized Recipients,
subject to the Supplier's right to be reasonably satisfied as to the
creditworthiness of any Authorized Recipients. In such event (a) orders may be
placed with the Supplier by such Authorized Recipients, rather than by ENBC,
ENBC Subsidiaries or ENBC Franchisees, and the obligation to pay for the
Products delivered to any Authorized Recipient shall be solely that of the
Authorized Recipient and not the obligation of ENBC or any ENBC Subsidiary or
ENBC Franchisee, (b) the provisions of this Article governing the purchase and
sale of the Products shall continue to govern the purchase and sale of such
Products, (c) the provisions of Article 7.0 shall govern the pricing of the
Products to Authorized Recipient, and (d) the product warranties in Article 9.0,
the covenants in Sections 10.1 and 10.2, and the indemnification and insurance
provisions in Article 11.0 shall be made for the benefit of ENBC or the ENBC
Subsidiary or ENBC Franchisee that ultimately purchases the Products, as well as
for the benefit of the Authorized Recipient. The Supplier may cease the supply
of Products to ENBC or any ENBC Subsidiary, ENBC Franchisee or Authorized
Recipient, as the case may be, if any balance owed to the Supplier by such
entity is not paid within 30 days after it has become due. ENBC will cooperate
with Supplier to resolve any disputes with ENBC Subsidiaries, ENBC Franchisees
or Authorized Recipients.
6.4 ENBC, ENBC Subsidiaries, ENBC Franchisees and Authorized Recipients
shall notify the Supplier from time to time of the quantity of Products they
wish to purchase from the Supplier by placing purchase orders with the Supplier.
Each order shall be filled by the Supplier within seven days after the
Supplier's receipt of the order. During the term hereof, the Supplier shall
sell to ENBC, ENBC Subsidiaries, ENBC Franchisees and Authorized Recipients the
Products ordered by them, up to a maximum aggregate of (a) 2,630,880 dozen
bagels per Accounting Period which consists of four weeks, and (b) 3,288,600
dozen bagels per Accounting
15
Period which consists of five weeks. ENBC agrees to use reasonable best efforts
to provide the Supplier, at the beginning of each Accounting Period, with
rolling good faith estimates of the volume of Products it expects to be ordered
from the Supplier under this Section 6.4 in such Accounting Period and the two
succeeding Accounting Periods, but such estimates shall be used for planning
purposes only and shall not be deemed orders or otherwise create any commitment
whatsoever on the part of ENBC.
6.5 The Products shall be produced (a) using such formulations as ENBC
shall specify from time to time in writing (the "Formulations"), (b) in
accordance with such size, weight and other specifications as ENBC shall
establish from time to time in writing (the "Specifications"), and (c) in
accordance with such manufacturing procedures as ENBC shall specify from time to
time in writing (the "Procedures"), including the Formulations, Specifications
and Procedures set forth in the Schedule of Formulations, Specifications and
Procedures delivered concurrently with the execution and delivery of this
Agreement. The Formulations, Specifications and Procedures that are not
specified in writing as of the date hereof shall be committed to writing by ENBC
as soon as reasonably practicable and shall be in such form as ENBC deems
appropriate to minimize disclosure of Proprietary Information (as defined in
Section 12.1), and the Supplier agrees that it shall not analyze or reverse
engineer any such Formulations, Specifications and Procedures or any ingredients
supplied for use therein. All Formulations, Specifications and Procedures are
subject to change upon reasonable written notice from ENBC to the Supplier at
any time, except that (x) the Supplier shall have such time as may be reasonably
necessary for the Supplier to implement such changed Formulations,
Specifications and Procedures in its production of the Products, and (y) certain
changes in Formulations, Specifications and Procedures may result in an
adjustment to the Toll Charge, as provided in Section 7.4. All Formulations,
Specifications and Procedures shall be owned exclusively by ENBC but the
Supplier shall have a royalty-free nonexclusive license, without the right to
grant sublicenses, to use such Formulations, Specifications and Procedures
solely to produce Products for sale to ENBC, ENBC Subsidiaries, ENBC Franchisees
and Authorized Recipients under this Agreement.
6.6 ENBC shall have the right to have one or more of its employees or
representatives who are engaged in ENBC's product development present at the
Production Facility at any time that the Supplier is producing the Products and
all such individuals will comply with the Supplier's established policies and
procedures applicable to similarly situated employees and will be bound by the
confidentiality provisions of Article 12.0 hereof.
6.7 The Products shall be packaged using such packaging materials and
labeling as shall be determined by ENBC. The Supplier agrees to maintain an
inventory of such packaging materials and labels which shall be consistent with
the quantity of Products estimated in the rolling good faith estimates made by
ENBC pursuant to Section 6.4 above or as otherwise reasonably directed by ENBC.
All trademarks, trade names and trade dress appearing on or in packaging and
labeling shall be the exclusive property of ENBC but the Supplier shall have a
royalty-free nonexclusive license, without the right to grant sublicenses, to
use such trademarks and trade dress solely to package and label the Products
manufactured in accordance with the
16
provisions of this Agreement for sale to ENBC, ENBC Subsidiaries, ENBC
Franchisees and Authorized Recipients under this Agreement.
6.8 ENBC shall be responsible for arranging for the procurement of
ingredients and raw materials used to produce the Products on standard vendor
terms and, at ENBC's option, ENBC may supply any ingredients or raw materials
directly to the Supplier (with ENBC, at its option, owning such ingredients or
raw materials).
6.9 Products supplied hereunder shall be shipped F.O.B. the Production
Facility, and ownership and risk of loss with respect to the Products supplied
hereunder shall pass to ENBC or the ENBC Subsidiary, ENBC Franchisee or
Authorized Recipient when delivered to a carrier at the F.O.B. point.
6.10 Payment terms shall be (a) net 15 days, together with interest at a
rate of 12% per annum from the date any amounts are past due or (b) such other
terms as are mutually agreed by the Supplier, on the one hand, and any of the
ENBC Subsidiaries or ENBC Franchisees or Authorized Recipients that purchase
Products from the Supplier, on the other hand. In no event shall ENBC be
construed as a guarantor of payment (or any other obligation) of any ENBC
Franchisee or Authorized Recipient, but ENBC will be responsible for any
obligation of any ENBC Subsidiaries.
Article 7.0 Pricing
7.1 The Products shall be sold to ENBC, ENBC Subsidiaries, ENBC
Franchisees and Authorized Recipients at the Materials Cost plus the Loss
Factor, plus a toll charge per bagel (the "Toll Charge"). The Toll Charge will
be [ ]* per bagel from the date hereof through June 30, 1998 and [ ]* per
bagel from July 1, 1998 through the balance of the Term hereof. The Toll Charge
shall be subject to adjustment as provided in Sections 7.3, 7.4, 7.5 and 7.7
hereof. The Loss Factor will be equal to [ ]* multiplied by the Materials
Cost.
7.2 The Materials Cost shall be determined based upon a Statement of
Materials Cost for each Accounting Period which shall be prepared by the
Supplier in accordance with the provisions of Exhibit A. The Materials Cost
shall be redetermined as of the end of each Accounting Period during the Term as
set forth in Section 7.2 hereof and the prices based upon such redetermination
shall take effect beginning with products shipped on or after the first business
day of the Accounting Period following the redetermination. Each Statement of
Materials Cost shall be delivered to ENBC within ten business days after the end
of the Accounting Period to which it relates and shall include the information
required by Exhibit A. Within 90 days after the end of each calendar year during
the Term, the Supplier shall cause to be delivered the Statement of Materials
Cost for the last Accounting Period in each of the Quarterly Periods during
which this Agreement was in effect during such calendar year, accompanied by a
report of Ernst & Young, or such other independent accountants as the Supplier
may select from time to time to do the regular annual review of its financial
statements and who may be approved by ENBC (such approval not to be unreasonably
withheld), in the form set forth in Exhibit E. The fees and expenses of such
independent accountants shall be borne by the Supplier. The
*Confidential Treatment Requested.
17
Supplier acknowledges that a copy of each Statement of Materials Cost (and each
report of independent accountants thereon) may be provided by ENBC to any ENBC
Franchisee.
7.3 The Toll Charge shall be adjusted, effective as of the first day of
the third Quarterly Period of each fiscal year during the Term hereof, beginning
in fiscal year 1999. The amount of the adjustment shall equal the Toll Charge
in effect immediately before such adjustment minus the Fixed Costs, and then
multiplying such result by the percentage increase in the Consumer Price Index
for the urban area including Indianapolis, Indiana, published by the Department
of Labor for the 12 month period ending on March 31 of the year in which the
Toll Charge adjustment is to take place. For this purpose, "Fixed Costs" shall
mean the sum of the building rental expense and Equipment Financing Cost for the
12 previous Accounting Periods ending on the last day of the third Accounting
Period of the fiscal year divided by 342,720,000. In the event the Consumer
Price Index ceases to be published for any reason, the parties shall select
another index designed to approximate as closely as practicable the Consumer
Price Index.
7.4 In the event that changes in Formulations, Specifications or
Procedures result in additional costs or savings to ▇▇▇▇▇▇ or the Supplier that
are not reflected in Materials Cost, the parties shall make appropriate
adjustments in the Toll Charge and/or the Loss Factor to reflect such costs or
savings. In addition, the parties agree that ENBC shall bear as part of its
research and development, the cost of Product losses and production related
costs that arise from the development of Products or test runs of the Products.
The Supplier shall invoice ENBC for each such cost in a timely manner, and in
any event no later than sixty (60) days from the date on which such cost first
arose. Costs associated with such research and development shall be reimbursed
within 30 days of invoice.
7.5 In the event that orders are shipped under Section 6.4 for more or
less than the following minimum amounts during the periods provided below, then
the Toll Charge shall be adjusted as provided in this Section 7.5:
(a) 3,295,385 dozen bagels, during any consecutive twelve-week period
commencing after the date hereof and ending on December 31, 1997;
(b) 4,559,450 dozen bagels, during the first Quarterly Period of 1998;
(c) 6,391,725 dozen bagels during the second Quarterly Period of 1998; or
(d) 7,140,000 dozen bagels during each subsequent Quarterly Period during
the remainder of the Term hereof.
In the event orders are shipped under Section 6.4 for fewer than the minimum
amounts stated herein in any applicable Quarterly Period commencing with the
first Quarterly Period of 1998 or twelve week period prior thereto (the
"Shortfall Measuring Period"), then the Toll Charge applicable during the last
two Accounting Periods of the ensuing Quarterly Period and the first Accounting
Period of the Quarterly Period thereafter or such shorter period remaining
during the Term hereof (the "Recovery Period") shall be increased by an amount
sufficient to result in the
18
recovery over the Recovery Period, in equal amounts during each Accounting
Period in the Recovery Period, and assuming the minimum number of bagels set
forth above are shipped during said Recovery Period, of the difference between
the minimum amounts stated herein and the amounts actually shipped during the
Shortfall Measuring Period multiplied by [ ]* per bagel (such amount being
herein sometimes referred to as the "Shortfall Amount").
In the event orders are shipped under Section 6.4 for greater than the minimum
amounts stated in subsection (d) above in any Quarterly Period during the Term
hereof and commencing on or after July 1, 1998 (the "Excess Measuring Period"),
then the Toll Charge applicable during the last two Accounting Periods of the
ensuing Quarterly Period and the first Accounting Period of the Quarterly Period
thereafter or such shorter period remaining during the Term hereof (the "Excess
Recovery Period") shall be decreased by an amount sufficient to result in the
recovery over the Excess Recovery Period, in equal amounts during each
Accounting Period in the Excess Recovery Period, and assuming the minimum number
of bagels set forth above are shipped during said Excess Recovery Period, of the
difference between the minimum amount stated therein and the amount actually
shipped during the Excess Measuring Period multiplied by [ ]* per bagel (such
amount being herein sometimes referred to as the "Excess Amount").
The parties acknowledge that in recovering the Shortfall Amount and the Excess
Amount, more or less than said amount may be recovered as a result of the actual
shipments of bagels during the Recovery Period. The parties agree to
appropriately adjust the Toll Charge in subsequent Recovery Periods to account
for this event.
In the event the Second Bagel Line is not fully operational by February 1, 1998,
the parties agree to negotiate, in good faith, modifications to subsections (b),
(c) and (d) above.
7.6 The Supplier shall provide to ENBC and the accountants referred to in
Section 7.2 all information requested by them in order to permit (a) the
preparation of each report referred to in Section 7.2 and the determination of
the Materials Cost therefrom, and (b) each adjustment to the Toll Charge
provided for herein. The Supplier shall also permit ENBC (and its
representatives) and such accountants to have access to its books and records,
and to meet with members of the Supplier's management, at any time upon
reasonable notice during normal business hours. The Supplier shall also permit
accountants selected by ENBC to have access to its books and records, and to
meet with members of the Supplier's management, at any time upon reasonable
notice during normal business hours, provided, however, that (a) the fees and
expenses of such accountants shall be borne by ENBC, and (b) it shall be a
condition to the covenant of the Supplier in this Section 7.6 to give such
accountants access to the Supplier's books and records that such accountants
shall agree in writing to be bound by the confidentiality provisions of Article
12.0 hereof.
7.7 ENBC may charge the Supplier for various costs incurred by ENBC in
connection with research and development, product development, procurement or
other costs related to the development, production, distribution and sale of the
Products, and such costs shall result in an addition to the purchase price for
the Products over a period comparable to the length of a Recovery Period.
*Confidential Treatment Requested.
19
Article 8.0 Acquisition, Installation and Leasing of Second Bagel Line
8.1 The Supplier and ENBC acknowledge and agree that the Supplier will
arrange for the acquisition and installation of each component piece of
equipment comprising the Second Bagel Line. The Supplier represents and
warrants that the total cost for the Second Bagel Line will not exceed
$4,950,000 (the "Budgeted Amount"), as set forth on the Second Bagel Line
Equipment Capital Budget. The parties anticipate that ENBC will purchase
directly most of the Second Bagel Line Equipment upon notice from the Supplier.
Notwithstanding the foregoing, the parties also anticipate that the Supplier
will purchase directly certain components of the Second Bagel Line Equipment and
that ENBC will reimburse the Supplier for its actual cost of any part of the
Second Bagel Line Equipment so purchased by the Supplier. In the event the
Supplier seeks reimbursement for any such component of the Second Bagel Line
Equipment, the Supplier will deliver to ENBC such receipts, invoices, and other
documentation as ENBC reasonably requests with respect thereto. ENBC will
reimburse the Supplier for such costs within a reasonable time and in accordance
with the parties' prior practices. In the event the total cost of the Second
Bagel Line is greater than the Budgeted Amount, the Supplier will be
responsible, and shall reimburse ENBC, if necessary, for any amount in excess of
the Budgeted Amount. The Supplier further agrees that it will, from time to
time, execute an Assignment and ▇▇▇▇ of Sale in the form of Exhibit B hereto
with respect to each component of the Second Bagel Line Equipment purchased by
the Supplier, but not including any component of the Second Bagel Line Equipment
for which ENBC does not reimburse the Supplier as a result of the cost of the
Second Bagel Line Equipment exceeding the Budgeted Amount (such event is
referred to as a "Budget Overrun"). In the event of a Budget Overrun, ENBC
shall, in its sole discretion, determine which components of the Second Bagel
Line Equipment it shall purchase and own and the parties will transfer title to
such components upon notice from ENBC.
8.2 The Supplier and ENBC agree that they will execute an additional
Schedule to the Equipment Lease on or before February 1, 1998, pursuant to which
the Supplier will lease from ENBC the Second Bagel Line. The Schedule with
respect to the Second Bagel Line Equipment will provide for a term expiring on
April 16, 2005, and will be on the same economic terms as Schedule No. 1 to the
Equipment Lease.
Article 9.0 Product Warranties
9.1 The Supplier warrants to ENBC and all ENBC Subsidiaries and ENBC
Franchisees that purchase Products from the Supplier that:
9.1.1 each shipment of Products supplied hereunder shall be
manufactured in accordance with the provisions of Section 6.5 hereof, shall be
of good and merchantable quality and shall be fit for the purposes for which
they are intended to be used, except to the extent any lack of merchantability
or lack of fitness for the intended purposes is attributable to the use by the
Supplier of the Formulations, Procedures and Specifications;
20
9.1.2 none of the Products supplied hereunder shall be adulterated or
misbranded within the meaning of the Federal Food Drug and Cosmetics Act, as
amended, except to the extent misbranding is attributable to the use of the
Formulations, Procedures or Specifications, and none of the Products will be an
article which may not be introduced into interstate commerce under the
provisions of Section 404, 409 or 706 of that Act; and
9.1.3 none of the Products supplied hereunder shall be adulterated or
misbranded within the meaning of any applicable provision of any state or
municipal law, which provision is similar to any provision of the Federal Food,
Drug and Cosmetics Act, as amended, except to the extent misbranding is
attributable to the use of the Formulations, Procedures or Specifications.
The foregoing warranties shall survive inspection and acceptance of any of the
Products, and payment therefor, by ENBC, ENBC Subsidiaries and ENBC Franchisees.
Article 10.0 Other Covenants of the Parties
10.1 Each party agrees to comply with all governmental laws, regulations
and orders applicable to its operations under this Agreement, and to bear any
and all taxes, fees or other governmental charges applicable to its operations.
▇▇▇▇▇▇ and the Supplier agree to comply with the Lease.
10.2 The Supplier agrees to permit representatives of ENBC to inspect the
Leasehold Premises at any time to assure compliance with the terms of this
Agreement and all such individuals will comply with the Supplier's established
policies and procedures applicable to similarly situated employees and will be
bound by the confidentiality provisions of Article 12.0 hereof.
10.3 ▇▇▇▇▇▇ and the Supplier agree that they shall not, without the prior
written consent of ENBC, amend or modify the Lease or the assignment and
assumption agreement between ▇▇▇▇▇▇ and the Supplier. The Supplier also agrees
that it shall not, without the prior written consent of ENBC, agree to amend or
modify the Subordination and Nondisturbance Agreement.
10.4 Except as may be contemplated by the Option Agreement, each of ENBC,
on the one hand, and the Supplier and ▇▇▇▇▇▇, on the other hand, agrees that
they will not, directly or indirectly, at any time prior to the first
anniversary of the expiration of the Lease, solicit or hire any employee of any
other party, unless such employee has been terminated by the other party, or
unless such employee terminated his or her employment with the other party at
least one year prior to the date of the first such solicitation or hiring.
10.5 ▇▇▇▇▇▇ agrees to devote to Supplier such of its resources as may be
necessary to assist Supplier in timely and completely performing all of the
Supplier's obligations under this Agreement.
21
Article 11.0 Indemnification and Insurance
11.1 The Supplier agrees to indemnify ENBC and all ENBC Subsidiaries and
ENBC Franchisees for, and hold ENBC and all ENBC Subsidiaries and ENBC
Franchisees that purchase Products harmless from and against, all expenses,
losses, costs, deficiencies, liabilities and damages (including related counsel
fees) incurred or suffered by them resulting from: (a) any breach of any
representation or warranty made by the Supplier in or pursuant to this
Agreement; (b) any default in the performance of any of the covenants or
agreements made by the Supplier in this Agreement; (c) any claim or action by
any consumer or any other third party arising out of the production or sale of
the Products by the Supplier (including any claims or actions for personal
injury and any products liability claims or action), provided, however, that the
Supplier shall have no obligation to indemnify ENBC or any ENBC Subsidiary or
ENBC Franchisee with respect to any claim or action to the extent such claim or
action is attributable to the alteration, handling or misbranding of Products
after they have been delivered to ENBC or any ENBC Subsidiary or ENBC Franchisee
or is attributable to the use by the Supplier of the Formulations, Procedures
and Specifications; or (d) any claim or action brought by any federal, state,
local or foreign governmental agency in connection with the production or sale
of the Products by the Supplier (including without limitation any claim or
action under any law or regulation relating to public health, the sale of food
and drugs, and the safe conduct of business), provided, however, that the
Supplier shall have no obligation to indemnify ENBC or any ENBC Subsidiary or
ENBC Franchisee with respect to any claim or action to the extent such claim or
action is attributable to the alteration, handling or misbranding of Products
after they have been delivered to ENBC or any ENBC Subsidiary or ENBC Franchisee
or is attributable to the use by the Supplier of the Formulations, Procedures
and Specifications.
11.2 ENBC agrees to indemnify the Supplier for, and to hold the Supplier
harmless from and against, all expenses, losses, costs, deficiencies,
liabilities and damages (including related counsel fees) incurred or suffered by
the Supplier resulting from: (a) any breach of any representation or warranty
made by ENBC in or pursuant to this Agreement; (b) any default in the
performance of any of the covenants or agreements made by ENBC in this
Agreement; (c) any claim or action by any consumer, governmental agency or any
other third party, including any claim of infringement or violation of, or
conflict with, any patent or trade secret of any third party, to the extent such
claim or action is attributable to the use by the Supplier of the Formulations,
Procedures and Specifications or is attributable to the alteration, handling or
misbranding of Products after they have been delivered to ENBC, or any ENBC
Subsidiary, ENBC Franchisee or Authorized Recipient; or (d) any claim or action
by any third party alleging infringement or violation of, or conflict with, any
trademarks, trade names or trade dress, to the extent such claim or action is
attributable to the use of trademarks, trade names or trade dress used in
accordance with ENBC's instructions pursuant to Section 6.7.
11.3 The parties agree that each party shall have the exclusive right to
control the defense (and the right to establish the terms of any settlement) of
any claim or action by any third party that could result in such party having an
indemnification obligation under Section 11.1 or Section 11.2 with counsel of
such party's selection, that each party will promptly give the other party
written notice of any claim or action of which it becomes aware that could
result in such
22
other party having an indemnification obligation under Section 11.1 or Section
11.2, and that each party will fully cooperate with the other party in the
defense of any claim or action by the other party hereunder.
11.4 ENBC and the Supplier acknowledge and agree that ENBC, ENBC
Subsidiaries and ENBC Franchisees, on the one hand, and the Supplier, on the
other hand, may be required to enter into indemnity agreements with Authorized
Recipients. ENBC and the Supplier agree that (a) in the event ENBC or any ENBC
Subsidiary or ENBC Franchisee is obligated to make indemnity payments under any
such agreement resulting from any of the matters described in clauses (a)
through (d), inclusive, of Section 11.1 hereof, the Supplier shall indemnify
ENBC or such ENBC Subsidiary or ENBC Franchisee for, and hold ENBC and such ENBC
Subsidiary or ENBC Franchisee harmless from and against, such payment in
accordance with Section 11.1 hereof, and (b) in the event the Supplier is
obligated to make indemnity payments under any such agreement resulting from any
of the matters described in clauses (a) through (d), inclusive, of Section 11.2
hereof, ENBC shall indemnify the Supplier, and hold the Supplier harmless from
and against, such payment in accordance with Section 11.2 hereof.
11.5 The Supplier represents and warrants that it carries: (a) policies of
worker's compensation and employer's liability insurance that comply with all
state and federal laws, and (b) policies of comprehensive general liability
insurance covering the Supplier's premises and operations, including premises
and operations coverage, owner's and contractor's protective coverage, products
and completed operations coverage, full blanket contractual coverage and broad
form property damage coverage, with a combined single limit of $9,000,000 naming
ENBC as an additional insured and containing endorsements (i) providing that the
Supplier's comprehensive general liability coverage (including products
liability) (the "Supplier CGL Coverage") is primary relative to ENBC or any ENBC
Subsidiary or ENBC Franchisee, and that any other insurance maintained by ENBC
or any ENBC Subsidiary or ENBC Franchisee with respect to the risks covered by
the Supplier CGL Coverage is excess and non-contributing, and (ii) waiving any
and all rights of subrogation against ENBC, ENBC Subsidiaries and ENBC
Franchisees with respect to the Supplier CGL Coverage, and (iii) providing for a
continuation of the Supplier CGL Coverage beyond the expiration or termination
of this Agreement for claims made following such expiration or termination that
are attributable to the manufacture of Products by the Supplier during the Term.
The Supplier also represents and warrants that all premiums which have become
due on such policies have been paid, that such policies are in full force and
effect, and that such policies may not be canceled, changed or allowed to lapse
through non-renewal, failure to pay premiums or otherwise except upon not less
than 60 days' prior written notice to the Supplier and ENBC, except that such
notice period need not exceed 10 days in the case of failure to pay premiums.
The Supplier has previously delivered to ENBC evidence of the foregoing
insurance coverages by providing to ENBC a satisfactory Accord Certificate of
Coverage of ENBC as an additional insured, and will hereafter provide ENBC with
a satisfactory Accord Certificate of Coverage upon the issuance of any renewal
or replacement policies. The Supplier agrees to maintain such policies in full
force and effect, in the amount set forth above, throughout the term of this
Agreement, and to maintain ENBC as an additional insured under such policies.
23
Article 12.0 Confidentiality
12.1 As used in this Agreement, the term "Proprietary Information" shall
mean any knowledge or information, written or oral, which relates in any manner
to the respective businesses of the Supplier and ENBC which is confidential and
proprietary information of the disclosing party, whether or not disclosed prior
to, on or after the date hereof, including, without limitation, the business
concepts, recipes, food preparation methods, equipment, operating techniques,
marketing methods, financial information, demographic and trade area
information, prospective site locations, market penetration techniques, plans,
or schedules, customer profiles, preferences, or statistics, menu breakdowns,
itemized costs, franchisee composition, territories, and development plans,
products, production techniques and all related trade secrets or confidential or
proprietary information treated as such by the disclosing party, whether by
course of conduct, by letter or report, or by the use of any appropriate
proprietary stamp or legend designating such information or item to be
confidential or proprietary. As used in this Article 12.0, the term "disclosing
party" shall mean the party to this Agreement which discloses or makes available
Proprietary Information to the receiving party, and the term "receiving party"
shall mean the party to this Agreement to whom Proprietary Information is
disclosed or made available by the disclosing party.
12.2 Without limiting the generality of Section 12.1 hereof, the parties
acknowledge and agree that the Formulations, Specifications and Procedures are
the Proprietary Information of ENBC and will be treated as Proprietary
Information that does not become stale with the passage of time for purposes of
the last sentence of Section 12.3 hereof.
12.3 The receiving party shall hold all Proprietary Information in strict
confidence, shall use such Proprietary Information only for the benefit of the
disclosing party and shall disclose such Proprietary Information only to the
receiving party's employees and agents who have a need to know such Proprietary
Information in order to assist the receiving party in performing its obligations
under this Agreement provided such employees and agents each have individually
entered into a confidentiality agreement in form satisfactory to the disclosing
party or are otherwise obligated by a written agreement with the receiving party
to maintain the confidence of the Proprietary Information, which agreement the
parties hereby agree may be directly enforced by the disclosing party. The
receiving party shall not disclose Proprietary Information to any other person
or entity. The obligations hereunder to maintain the confidentiality of
Proprietary Information shall continue: (a) for five years from the date of
disclosure of the Proprietary Information, in the case of Proprietary
Information that by its nature becomes stale with the passage of time (e.g.,
financial information, development plans) and (b) indefinitely, in the case of
the Proprietary Information that by its nature does not become stale with the
passage of time (e.g. trade secrets, production techniques, recipes).
12.4 The obligations of the parties specified in Section 12.3 shall not
apply to any Proprietary Information which (a) is disclosed in a printed
publication available to the public prior to the date of this Agreement, or
becomes known to the public through no act of the receiving party or its
employees, agents or other person or entity which has received such Proprietary
Information from or through the receiving party, provided, however, that a
24
combination of ingredients or processes that has not been disclosed to, or
become known by, the public shall remain subject to Section 12.3 notwithstanding
the fact that the identity of such ingredients or processes may be known, (b) is
approved for release by written authorization of an officer of the disclosing
party, (c) can be established by the receiving party by documentary evidence to
have been in the legitimate and lawful possession of the receiving party at the
time revealed by the disclosing party to the receiving party, (d) is lawfully
received by the receiving party without restriction from a third party
subsequent to this Agreement, which third party did not obtain the Proprietary
Information through improper means or disclose the Proprietary Information
without authorization, or (e) is required to be disclosed by law or regulation
or by proper order of a court of applicable jurisdiction after adequate notice
to the disclosing party, sufficient to permit the disclosing party to seek a
protective order therefor, the imposition of which protective order the
receiving party agrees to approve and support. In addition, after consultation
with the disclosing party, the receiving party may disclose only that
Proprietary Information that the receiving party believes in good faith it is
required to disclose (x) in connection with any filing that is made or
disclosure document that is prepared for the purpose of complying with federal
or state securities or franchise laws, rules or regulations or (y) to comply
with the rules of any stock exchange or quotation system or any other regulatory
requirements; provided, however, that in any event trade secrets, production
techniques, recipes and similar Proprietary Information of a disclosing party
will not be disclosed by the receiving party without the written consent of the
disclosing party.
12.5 The receiving party (and each employee, agent, or other person or
entity which has received such Proprietary Information from or through the
receiving party) shall, upon the request of the disclosing party, return all
documents and other tangible manifestations of Proprietary Information received
from the disclosing party, including all copies and reproductions thereof. The
receiving party will thereafter certify in writing to the disclosing party that
all Proprietary Information has either been returned to the disclosing party or
destroyed.
Article 13.0 Term
13.1 The initial term of this Agreement shall commence on the date hereof
and continue until April 16, 2005, except that this Agreement shall terminate
upon the exercise by ENBC of its option under the Option Agreement.
13.2 The provisions of Articles 9.0, 10.0, 11.0 and 12.0 and any other
provisions hereof requiring performance by a party following termination shall
survive the expiration or any termination of this Agreement.
13.3 Upon expiration or termination of this Agreement for any reason, ENBC
shall purchase from the Supplier all finished Products in inventory, all
packaging materials and labeling in inventory purchased by the Supplier pursuant
to Section 6.7 hereof, and the ingredients and raw materials in the Supplier's
inventory, at the Supplier's cost, F.O.B. the Production Facility, and (a) ENBC
shall pay to the Supplier any Shortfall Amount that has not previously been
recovered under Section 7.5 and any amounts charged to, but not previously
25
recovered by, the Supplier under Section 7.7, and (b) the Supplier shall pay to
ENBC any Excess Amount that has not previously been recovered under Section 7.5.
Article 14.0 Miscellaneous
14.1 ENBC and the Supplier may amend, modify and supplement this Agreement
in such manner as may be agreed upon by them in writing.
14.2 Each party to this Agreement shall pay all of the expenses incurred
by it in connection with this Agreement, including without limitation its legal
and accounting fees and expenses, and the commission, fees and expenses of any
person employed or retained by it to bring about, or to represent it in, the
transactions contemplated hereby.
14.3 This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns, except that the
Supplier may not assign its rights or delegate its duties hereunder without the
prior written consent of ENBC.
14.4 This instrument and the exhibits attached hereto contain the entire
agreement of the parties hereto with respect to the purchase and sale of the
Products from the Supplier and the other transactions contemplated herein, and
supersede all prior understandings and agreements of the parties with respect to
the subject matter hereof. Any reference herein to this Agreement shall be
deemed to include the exhibits attached hereto. In the event of any
inconsistency between this Agreement and any purchase order, confirmation or
similar document or instrument of ENBC, any ENBC Subsidiary or ENBC Franchisee
or the Supplier, this Agreement shall govern.
14.5 Except as expressly set forth in this Agreement or hereafter agreed
in writing by the Supplier and ENBC, (a) ENBC is not promising, committing to or
guaranteeing that any business relationship with the Supplier or the Supplier's
status as an approved supplier will continue for any specified time period, and
(b) ENBC is not agreeing to reimburse the Supplier for any costs, expenses,
investments or other amounts incurred or expended by the Supplier (and no such
amounts have been or will be incurred or expended in reliance on continued
business from ENBC or ENBC Subsidiaries or ENBC Franchisees).
14.6 The descriptive headings in this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.
14.7 This Agreement may be executed in any number of counterparts, each of
which shall be deemed an original.
14.8 Any notice, request, information or other document to be given
hereunder shall be in writing. Any notice, request, information or the document
shall be deemed duly given three business days after it is sent by registered or
certified mail, postage prepaid, to the intended recipient, addressed as
follows:
26
If to the Supplier or ▇▇▇▇▇▇, addressed to such party at the following
address:
▇▇▇▇▇▇ Bakeries, Inc.
▇▇▇▇ ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to such party at the following address:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Dawley, Inc.
P. O. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇
and a copy to:
▇▇▇▇▇▇▇▇▇, Daily, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to ENBC, addressed as follows:
Einstein/Noah Bagel Corp.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President - Supply Chain
with a copy to:
Einstein/Noah Bagel Corp.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Any party may send any notice, request, information or other document to be
given hereunder using any other means (including personal delivery, courier,
messenger service, fax or ordinary mail), but no such notice , request,
information or other document shall be deemed duly given unless and until it is
actually received by the party for whom it is intended. Any party may change
the address to which notices hereunder are to be sent to it by giving written
notice of such change of address in the manner herein provided for giving
notice.
14.9 This Agreement shall be governed by and construed in accordance with
the laws of the State of Colorado applicable to contracts made and to be
performed wholly therein.
27
14.10 In the event of a breach or threatened breach of any of the
provisions of Section 6.2 or Article 12.0 of this Agreement, the parties
acknowledge and agree that the non-breaching party will not have an adequate
remedy at law and therefore will be entitled to enforce any such provision by
temporary or permanent injunctive or mandatory relief as a remedy for any such
breach, and that such remedy shall not be deemed to be the exclusive remedy for
any such breach but shall be in addition to all other remedies, subject,
however, to the provisions of Section 14.11 hereof.
14.11 In no event shall either party hereto seek, or be liable to the
other party hereto for, speculative, exemplary or punitive damages.
14.12 No press release or other public or trade announcement or statement
related to this Agreement or the transactions contemplated hereby (or the
existence of any discussions or negotiations between the parties regarding any
other possible transactions) will be issued, and no disclosure of this Agreement
or the terms hereof will made, by either of the ▇▇▇▇▇▇ Companies without the
prior approval of ENBC. ENBC agrees to use reasonable best efforts to consult
with the ▇▇▇▇▇▇ Companies prior to issuing any press release or public or trade
announcement or statement relating to this Agreement or the transactions
contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
EINSTEIN/NOAH BAGEL CORP.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇, Senior Vice President
----------------------------------------
▇▇▇▇▇▇ BAGEL SUPPLY COMPANY, LLC
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, Vice President
----------------------------------------
▇▇▇▇▇▇ BAKERIES, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
----------------------------------------
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
28
Exhibits
--------
Exhibit A Determination of Materials Cost
Exhibit B Form of Assignment and ▇▇▇▇ of Sale
Exhibit C Amended and Restated Schedule No.1 to Equipment Lease
Exhibit D Amended and Restated Option Agreement
Exhibit E Form of Statement of Independent Accountants
Exhibit F Second Bagel Line Capital Budget
Exhibit G Amendment to Lease Agreement
Schedules
---------
Schedule 3.3 Ownership of the ▇▇▇▇▇▇ Companies
Schedule 3.4 Financial Statements of the ▇▇▇▇▇▇ Companies
Schedule 3.7 Exceptions to Title
Schedule 3.8 Licenses and Permits of the ▇▇▇▇▇▇ Companies
Schedule 3.9 Production Facility and Equipment Contracts
Schedule 3.10 Actions
Schedule 3.12 Environmental Matters
Schedule 5.3 Permitted Production Facility Uses
Exhibit A
---------
Determination of
Materials Cost
--------------
EXHIBIT A
---------
Exhibit A-1
▇▇▇▇▇▇ Bagel Supply Company, LLC
Einstein Bros. Bagels, Inc.
Summary of Material Costs
(Ingredient and Packaging)
By Bagel Flavor (4.0 oz)
-----------------------------------------------------------
Total costs
------------------------------------------------------------------------------------------------------------------------------------
Ingredient Packaging
Costs per Costs per Per Case
Bagel Flavor Bagel Bagel Per Bagel Per Dozen (90 Bagels)
------------------------------------------------------------------------------------------------------------------------------------
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
------------------------------------------------------------------------------------------------------------------------------------
Average Cost
------------------------------------------------------------------------------------------------------------------------------------
Exhibit A-2
▇▇▇▇▇▇ Bagel Supply Company, LLC
Summary of Ingredient costs
By Bagel Flavor
Einstein Bros. Bagels, Inc. - 4.0 Ounce
------------------------------------------------------------------------------------------------------------------------------------
Current Costs Total Costs of
Ingredient % of Ingredient Ingredient
Flavor Ingredients Quantity of Total Flour per Unit (lbs) Used
------------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------
Total Mix Weight Total Cost -
----------------------------------------------------------------------------------------------------------------
Ingredient Cost per Dozen (______ Dozen Yield) -
Ingredient Loss Factor/Dozen* -
Total cost per Dozen
Total cost per Bagel (4.0 Ounce)
Total cost per Case (90-4.0 Ounce)
------------------------------------------------------------------------------------------------------------------------------------
* As determined pursuant to Section 7.1 of the Agreement
Exhibit A-3
▇▇▇▇▇▇ Bagel Supply Company, LLC
Einstein Bros. Bagels, Inc.
Summary of Packaging Costs
(Based on 90 bagels per case)
------------------------------------------------------------------------------------------------------------------------------------
# Reg. Per Cost Per Cost Per Cost Per Cost Per
Item Case Item Case Dozen Bagel
------------------------------------------------------------------------------------------------------------------------------------
Box 1 - - -
Tape 50" - -
Bag Liner 3 - - -
Label 1 - - -
Shrink Wrap 1 - - -
Tie 3 - - -
------------------------------------------------------------------------------------------------------------------------------------
Total Cost - - - -
====================================================================================================================================
Exhibit A-4
▇▇▇▇▇▇ Bagel Supply Company, LLC
Einstein Bros. Bagels, Inc.
Current Ingredient Costs
------------------------------------------------------------------------------------------------------------------------------------
Total Date of Last Invoice Amount
lbs. on Last ---------------------------------- Cost per
Ingredient Current Vendor Order Invoice Ingredient Freight Total Pound
------------------------------------------------------------------------------------------------------------------------------------
High Gluten Flour - #DIV/01
Bagel Eze-5 - #DIV/01
Sugar - #DIV/01
Yeast - #DIV/01
Calcium Proplonate - #DIV/01
Water - #DIV/01
Cinnamon - #DIV/01
Nudget Raisin - #DIV/01
White Pepper - #DIV/01
Poppy Seeds - #DIV/01
Dry Onions - Toasted - #DIV/01
Onion Powder - #DIV/01
Liquid Whole Eggs - #DIV/01
Double Spice - #DIV/01
Blueberry Gumbits - #DIV/01
Frozen Blueberries - #DIV/01
Blueberry Flavoring - #DIV/01
▇▇▇▇▇▇▇ Seeds - #DIV/01
Heart of Rye - #DIV/01
Caramel Color - #DIV/01
Sesame White Hulled Seeds - #DIV/01
Dehydrated Apple Bits - #DIV/01
Ground Nutmeg - #DIV/01
Spice Apple (Liquid) - #DIV/01
Apple Gumbits - #DIV/01
Sweet n' Neat - #DIV/01
Cornmeal - #DIV/01
- - #DIV/01
- - #DIV/01
-----------------------------------------------------------------------------------------------------------------------------------
Exhibit B
---------
Form of Assignment and ▇▇▇▇ of Sale
-----------------------------------
ASSIGNMENT AND ▇▇▇▇ OF SALE
This assignment and ▇▇▇▇ of sale, (the "Assignment") is delivered by ▇▇▇▇▇▇
Bagel Supply Company, LLC (the "Seller") to Einstein/Noah Bagel Corp. ("ENBC"),
a Delaware corporation, as of the ____ day of August, 1997.
KNOW ALL BY THESE PRESENTS, that for good and valuable consideration the
Seller does hereby sell, convey, transfer, assign, and deliver to ENBC the
Equipment specified in Exhibit A hereto (the "Purchased Equipment").
The Seller represents, warrants, and covenants to ENBC, its successors, and
assigns, that the Seller is the lawful owner of the Purchased Equipment and has
the right and authority to make the herein described transfer free and clear of
all liens, mortgages, pledges, encumbrances, claims, and charges of every kind.
The Seller further agrees to execute such additional documents from time to
time at the request of ENBC as may be reasonably necessary to accomplish the
transfer made herein.
IN WITNESS WHEREOF, the Seller has executed this assignment and ▇▇▇▇ of
sale as of the day and year first written above.
▇▇▇▇▇▇ BAGEL SUPPLY COMPANY, LLC
By
-----------------------------
ASSIGNMENT AND ▇▇▇▇ OF SALE
This assignment and ▇▇▇▇ of sale, (the "Assignment") is delivered by ▇▇▇▇▇▇
Bakeries, Inc. (the "Seller") to Einstein/Noah Bagel Corp. ("ENBC"), a Delaware
corporation, as of the ____ day of August, 1997.
KNOW ALL BY THESE PRESENTS, that for good and valuable consideration the
Seller does hereby sell, convey, transfer, assign, and deliver to ENBC the
Equipment specified in Exhibit A hereto (the "Purchased Equipment").
The Seller represents, warrants, and covenants to ENBC, its successors, and
assigns, that the Seller is the lawful owner of the Purchased Equipment and has
the right and authority to make the herein described transfer free and clear of
all liens, mortgages, pledges, encumbrances, claims, and charges of every kind.
The Seller further agrees to execute such additional documents from time to
time at the request of ENBC as may be reasonably necessary to accomplish the
transfer made herein.
IN WITNESS WHEREOF, the Seller has executed this assignment and ▇▇▇▇ of
sale as of the day and year first written above.
▇▇▇▇▇▇ BAKERIES, INC.
By
-----------------------------
Exhibit C
---------
Amended and Restated Schedule No. I to Equipment Lease
------------------------------------------------------
EXHIBIT C
EQUIPMENT SCHEDULE
AMENDED AND RESTATED SCHEDULE NO. SERIES I
DATED THIS ____ DAY OF AUGUST, 1997
TO LEASE AGREEMENT DATED AS OF AUGUST 27, 1996
Lessor & Mailing Address: Lessee & Mailing Address:
EINSTEIN/NOAH BAGEL CORP. ▇▇▇▇▇▇ BAGEL SUPPLY COMPANY
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇.▇. ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Avon, Indiana 46168-7971
This Amended and Restated Equipment Schedule is executed pursuant to, and
incorporates by reference the terms and conditions of, and capitalized terms not
defined herein shall have the meanings assigned to them in, the Lease Agreement
identified above ("Agreement;" said Agreement and this Schedule being
collectively referred to as "Lease"). This Amended and Restated Equipment
Schedule, incorporating by reference the Agreement, constitutes a separate
instrument of lease. This Amended and Restated Equipment Schedule is designated
as a Series A Schedule. This Amended and Restated Equipment Schedule amends,
restates, replaces, and substitutes in full the obligations under that certain
Equipment Schedule previously entered into by Lessor and Lessee and dated as of
the 27th day of August, 1996.
A. Equipment.
Pursuant to the terms of the Lease, Lessor agrees to Lease to Lessee the
Equipment listed on Annex A attached hereto and made a part hereof.
B. Financial Terms.
(1) Capitalized Lessor's Cost as of July 11, 1997: $8,007,681.
(2) Term: Effective as of July 14, 1997 through April 16, 2005.
(3) Lease Commencement Date: July 14, 1997
(4) Equipment Location: ▇▇▇▇ ▇. ▇.▇. ▇▇▇▇▇▇▇ ▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇
(5) Lessee Federal Tax ID No.: Applied for.
(6) Suppliers: Various.
(7) Last Delivery Date: N/A
(8) Stipulated Loss Values: See Annex B.
The parties agree to adjust Capitalized Lessor's Cost and the principal
amortization and stipulated loss value schedules attached hereto to reflect
adjustments in the final purchase price of the Equipment.
C. Term and Rent.
Commencing on October 3, 1997 and on the last Business Day of each fiscal
quarter of Lessor thereafter through the first fiscal quarter of 2005 (each, a
"Rent Payment Date"), Lessee shall pay as rent quarterly installments of
principal and interest, in arrears, each installment in the principal amount
specified on the attached Amortization Schedule together with interest on the
Unamortized Principal Balance as of the immediately preceding Rent Payment Date
(after application of the Rent paid on such date) at the Interest Rate for the
Interest Period following such immediately preceding Rent Payment Date, except
that interest payable on the first Rent Payment date shall be determined based
on Capitalized Lessor's Cost. Interest shall be calculated on the basis of a 360
day year for the actual number of days elapsed. Said Rent consists of principal
and interest components, such principal components being as provided in the
Amortization Schedule attached hereto.
As used herein, the following terms shall have the following meanings:
"Interest Period" shall mean the period beginning on the Lease Commencement
Date and ending on the next Rent Payment Date, and each subsequent quarterly
period.
"Interest Rate" shall mean that percentage per annum calculated as the sum
of (a) the LIBOR Rate redetermined quarterly, plus (b) four hundred twenty five
(425) basis points (or five hundred ninety five (595) basis points during the
continuance of any Material Indebtedness Default).
"LIBOR Rate" shall mean, with respect to any Interest Period occurring
during the term of the Lease, an interest rate per annum equal at all times
during such Interest Period to the quotient of (1) the rate per annum as
determined by Lessor at which deposits of U.S. Dollars in immediately available
and freely transferable funds are offered at 11:00 a.m. (London, England time)
two (2) Business Days before the commencement of such Interest Period to major
banks in the London interbank market for a period of three (3) months and in an
amount equal or comparable to the Unamortized Principal Balance, divided by (2)
a number equal to 1.00 minus the aggregate (without duplication) of the rates
(expressed as a decimal fraction) of the LIBOR Reserve Requirements current on
the date three (3) Business Days prior to the first day of the Interest Period.
"LIBOR Reserve Requirements" shall mean the daily average for the
applicable Interest Period of the maximum rate applicable to Lessor at which
reserves (including, without limitation, any supplemental, marginal and
emergency reserves) are imposed during such Interest Period by the Board of
Governors of the Federal Reserve System (or any successor) on "Eurocurrency
liabilities", as defined in such Board's Regulation D (or in respect of any
other category of liabilities that include deposits by reference to which the
interest rates on Eurodollar loans is determined or any category of extensions
of credit or other assets that include loans by non-United States offices of any
lender to United States residents), having a term equal to such Interest Period,
subject to any amendments of such reserve requirement by such Board or its
successor, taking into account any transitional adjustments thereto.
2
If at any time Lessor determines that either adequate and reasonable means
do not exist for ascertaining the LIBOR Rate, or Lessor reasonably determines
that, as a result of changes to applicable law after the date of execution of
the Agreement, or the adoption or making after such date of any interpretations,
directives or regulations (whether or not having the force of law) by any court,
governmental authority or reserve bank charged with the interpretation or
administration thereof, it shall be or become unlawful or impossible to make,
maintain, or fund the transaction hereunder at the LIBOR Rate, then Lessor
promptly shall give notice to Lessee of such determination, and Lessor and
Lessee shall negotiate in good faith a mutually acceptable alternative method of
calculating the Interest Rate and shall execute and deliver such documents as
reasonably may be required to incorporate such alternative method of calculating
the Interest Rate in this Schedule, within thirty (30) days after the date of
Lessor's notice to Lessee.
(3) If any Rent Payment Date is not a Business Day, the Rent otherwise due
on such date shall be payable on the immediately preceding Business Day. As used
herein, "Business Day" shall mean any day other than Saturday, Sunday, and any
day on which banking institutions located in the State of Colorado are
authorized by law or other governmental action to close.
D. Insurance.
(1) Public Liability: Combined single limit of $9,000,000.
(2) Casualty and Property Damage: An amount equal to the higher of the
Stipulated Loss Value or the full replacement cost of the Equipment.
This Amended and Restated Equipment Schedule is not binding or effective
with respect to the Agreement or Equipment until executed on behalf of Lessor
and Lessee by authorized representatives of Lessor and Lessee, respectively.
3
IN WITNESS WHEREOF, Lessee and Lessor have caused this Amended and Restated
Equipment Schedule to be executed by their duly authorized representatives as of
the date first above written.
Lessor: Lessee:
EINSTEIN/NOAH BAGEL CORP. ▇▇▇▇▇▇ BAGEL SUPPLY COMPANY, LLC
By: By:
------------------------- ----------------------------
Name: Name:
----------------------- --------------------------
Title: Title:
---------------------- -------------------------
4
ANNEX A
TO
AMENDED AND RESTATED SCHEDULE NO. SERIES I
DATED THIS ____ DAY OF AUGUST, 1997
TO LEASE AGREEMENT DATED AS OF AUGUST 27, 1996
DESCRIPTION OF EQUIPMENT
[See attached Fixed Asset Register]
Initials:
------------ ------------ ------------
Lessor Lessee
ANNEX B
TO
AMENDED AND RESTATED SCHEDULE NO. SERIES I
DATED THIS ____ DAY OF AUGUST, 1997
TO LEASE AGREEMENT DATED AS OF AUGUST __, 1997
STIPULATED LOSS VALUE TABLE*
RENT PAYMENT DATE STIPULATED LOSS VALUE
----------------- ---------------------
[See attached table of Stipulated Loss Values]
Initials:
------------ ------------ ------------
Lessor Lessee
---------------
. The Stipulated Loss Value for any unit of Equipment shall be equal to the
Capitalized Lessor's Cost of such unit multiplied by the appropriate
percentage derived from the above table. In the event that the Lease is for
any reason extended, then the last percentage figure shown above shall control
throughout any such extended term.
ANNEX C
TO
AMENDED AND RESTATED SCHEDULE NO. SERIES I
DATED THIS ____ DAY OF AUGUST, 1997
TO LEASE AGREEMENT DATED AS OF AUGUST 27, 1997
PRINCIPAL AMORTIZATION SCHEDULE
RENT PAYMENT DATE PRINCIPAL UNAMORTIZED PRINCIPAL BALANCE
----------------- --------- -----------------------------
[See attached principal
amortization schedule]
Initials:
------------ ------------ ------------
Lessor Lessee
ANNEX D
TO
AMENDED AND RESTATED SCHEDULE NO. SERIES I
DATED THIS ____ DAY OF AUGUST, 1997
TO LEASE AGREEMENT DATED AS OF AUGUST 27, 1996
RETURN PROVISIONS: In addition to the provisions provided for in Section X of
this Lease, and provided that Lessee has elected not to exercise its purchase
option pursuant to Section XVIII(a) of the Lease, Lessee shall, at its expense:
(A) At least one hundred twenty (120) days and not more than two hundred
forty (240) days prior to expiration or earlier termination of the Lease,
provide to Lessor a detailed inventory of all components of the Equipment. The
inventory should include, but not be limited to, a listing of model, serial
numbers and size description (length, width, height, diameter) for all
components comprising the Equipment.
(B) At least one hundred twenty (120) days prior to expiration or earlier
termination of the Lease, upon receiving reasonable notice from Lessor, provide
or cause the vendor(s) or manufacturer(s) to provide to Lessor the following
documents: (1) one set of service manuals, blue prints, process flow diagrams
and operating manuals including replacements and/or additions thereto, such that
all documentation is completely up-to-date; and (2) one set of documents,
detailing equipment configuration, operating requirements, maintenance records,
and other technical data concerning the set-up and operation of the Equipment,
including replacements and/or additions thereto, such that all documentation is
completely up-to-date.
(C) At least one hundred twenty (120) days prior to expiration or earlier
termination of the Lease, upon receiving reasonable notice from Lessor, make the
Equipment available for on-site operational inspections by potential purchasers,
under power, and provide personnel, power and other requirements necessary to
demonstrate electrical, mechanical and functionality of each item of the
Equipment,
(D) At least forty-five (45) days prior to expiration or earlier
termination of the Lease, cause the manufacturer's representative(s) or
qualified equipment maintenance provider(s), acceptable to Lessor, to perform a
comprehensive physical inspection, including testing all material and
workmanship of the Equipment. The authorized inspector should ensure the
Equipment is clean and cosmetically acceptable, and in such condition so that it
may be immediately installed and placed into use in a similar environment. There
shall be no missing screws, bolts, fasteners, etc. There shall be no evidence of
extreme use or overloading. If during such inspection, examination and test, the
authorized inspector finds any of the material or workmanship to be defective or
the Equipment not operating within manufacturer's specifications, then Lessee
shall repair or replace such defective material and, after corrective
measures are completed, Lessee will provide for a follow-up inspection of the
Equipment by the authorized inspector as outlined in the preceding clause.
(E) Have each item of Equipment returned with an in-depth field service
report detailing said inspection as outlined in Section D of this Annex D. The
report shall certify that the Equipment has been properly inspected, examined
and tested and is operating within the manufacturer's specifications.
(F) Properly remove all Lessee installed markings which are not necessary
for the operation, maintenance or repair of the Equipment.
(G) Ensure all Equipment and equipment operations conform to all applicable
local, state, and federal laws, health and safety guidelines.
(H) The Equipment shall be redelivered with all component parts in good
operating condition, ordinary wear and tear excepted. All components must meet
or exceed the manufacturer's minimum recommended specifications unless otherwise
specified.
(I) Provide for the deinstallation, packing, transporting, and certifying
of the Equipment to include, but not be limited to, the following: (1) the
manufacturer's representative or a mutually acceptable third party shall de-
install all Equipment (including all wire, cable and mounting hardware) in
accordance with the specifications of the manufacturer; (2) each item of the
Equipment will be returned with a certificate supplied by the manufacturer's
representative or a mutually acceptable third party certifying the Equipment to
be in good condition and (where applicable) to be eligible for the
manufacturer's maintenance plan; the certificate of eligibility shall be
transferable to another operator of the Equipment; (3) the Equipment shall be
packed properly and in accordance with the manufacturer's recommendations; and
(4) Lessee shall transport the Equipment in a manner consistent with the
manufacturer's recommendations and practices.
(J) Upon sale of the Equipment to a third party, provide transportation to
any locations anywhere in the continental United States selected by Lessor.
(K) Obtain and pay for a policy of transit insurance for the redelivery
period in an amount equal to the replacement value of the Equipment and Lessor
shall be named as the loss payee on all such policies of insurance.
Initials:
------------ ------------ ------------
Lessor Lessee
Exhibit D
---------
Amended and Restated Option Agreement
-------------------------------------
Exhibit 10.4
AMENDED AND RESTATED
OPTION AGREEMENT
dated August 15, 1997
among
EINSTEIN/NOAH BAGEL CORP.
▇▇▇▇▇▇ BAGEL SUPPLY COMPANY, LLC
▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇ ▇. ▇▇▇▇▇▇
and
▇▇▇▇ ▇. ▇▇▇▇▇▇
TABLE OF CONTENTS
Article 1.0 The Option............................................................... 1
1.1 The Option.................................................................. 1
1.2 Exercise of the Option...................................................... 2
1.3 Regulatory Compliance....................................................... 3
1.4 Purchase Price upon Exercise of the Option.................................. 3
1.5 Allocation of Purchase Price Among Option Assets............................ 3
1.6 Valuation of ENBC Stock or BCI Stock........................................ 4
1.7 Closing of Option Exercise.................................................. 4
1.8 Procedure at each Closing................................................... 4
Article 2.0 Representations and Warranties of Supplier and the Members............... 5
2.1 Organization, Power and Authority of Supplier............................... 5
2.2 Due Authorization; Binding Agreement of Supplier............................ 5
2.3 Ownership Interests in Supplier............................................. 5
2.4 Ownership of Interests by the Members....................................... 6
2.5 Title to Supplier's Assets.................................................. 6
2.6 Accuracy of Information Furnished by Supplier and the Members............... 6
2.7 Investment Banker's and Broker's Fees....................................... 7
Article 3.0 Representations and Warranties of ENBC................................... 7
3.1 Organization, Power and Authority of ENBC................................... 7
3.2 Due Authorization; Binding Agreement of ENBC................................ 7
3.3 Investment Bankers' and Brokers' Fees....................................... 7
Article 4.0 Additional Covenants of Supplier and the Prior to the Termination........ 8
4.1 Reasonable Best Efforts..................................................... 8
4.2 Conduct of Business......................................................... 8
4.3 Access to Supplier's Properties and Records................................. 9
4.4 Notice of Material Developments............................................. 9
4.5 No Disclosure............................................................... 9
4.6 No Other Discussions; Retention of Shares................................... 9
Article 5.0 Conditions to the Closing of the Option Exercise by ENBC................. 10
5.1 Accuracy of Representations and Warranties and Compliance with Obligations.. 10
5.2 HSR Act Waiting Period...................................................... 10
5.3 Receipt of Necessary Consents............................................... 10
5.4 No Adverse Litigation....................................................... 10
5.5 No Material Adverse Change.................................................. 10
5.6 Delivery of Information..................................................... 10
Article 6.0 Certain Additional Covenants............................................. 11
6.1 Accuracy of Representations and Warranties and Compliance with Obligations.. 10
6.2 HSR Act Waiting Period...................................................... 10
6.3 Receipt of Necessary Consents............................ 10
6.4 No Adverse Litigation.................................... 10
Article 7.0 Indemnification....................................... 10
7.1 Execution of Further Documents.......................... 10
7.2 Cooperation of Supplier and the Members................. 10
7.3 Subsequent Audited Financial Statements................. 11
7.4 Confidential Information................................ 11
7.5 Remedies; Waiver........................................ 12
7.6 Employment by ENBC of Supplier's Employees.............. 12
7.7 No Obligation of ENBC to Employ......................... 13
Article 8.0 Indemnification....................................... 13
8.1 Agreement by Supplier and the Members to Indemnify....... 13
8.2 Agreement by ENBC to Indemnify........................... 14
8.3 Tax Effect of Damages and Indemnity Payments............. 14
8.4 Legal Proceedings........................................ 14
Article 9.0 Miscellaneous
9.1 Amendment and Modification............................... 15
9.2 Payment of Expenses...................................... 15
9.3 Binding Effect........................................... 15
9.4 Entire Agreement......................................... 15
9.5 Headings................................................. 15
9.6 Execution in Counterpart................................. 15
9.7 Notices.................................................. 15
9.8 Governing Law............................................ 16
9.9 Publicity................................................ 16
ii
AMENDED AND RESTATED OPTION AGREEMENT
This amended and restated option agreement (the "Agreement") is made and
entered into this ________ day of August, 1997 by and among Einstein/Noah Bagel
Corp. a Delaware corporation ("ENBC"), ▇▇▇▇▇▇ Bagel Supply Company, LLC, an
Indiana limited liability company ("Supplier"), and ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ (collectively, the "Members").
Recitals
--------
ENBC, the Supplier, and ▇▇▇▇▇▇ Bakeries, Inc. and the Members previously
entered into a project and approved supplier agreement dated as of May 24, 1996
(the "Prior Approved Supplier Agreement"). As contemplated by the Prior
Approved Supplier Agreement, ENBC obtained an option to acquire all of the
assets of Supplier, pursuant to that certain Option Agreement among ENBC,
Supplier, and the Members dated August 27, 1996, (the "Prior Option Agreement").
The Supplier and ENBC have entered into an Amended and Restated Projected
Approved Supplier Agreement (the "Approved Supplier Agreement") to amend and
restate certain of the terms and conditions of the Prior Approved Supplier
Agreement and desire to amend and restate certain of the terms and conditions of
the Prior Option Agreement. In order to reflect the parties' understanding with
respect to the option, and to amend, restate, replace and substitute in full the
obligations under the Prior Option Agreement, the parties desire to enter into
this Agreement.
Covenants
---------
In consideration of the mutual representations, warranties and covenants
and subject to the conditions herein contained herein and in the Approved
Supplier Agreement, the parties hereto agree as follows:
Article 1.0 The Option
1.1 The Option. Upon the terms and subject to the conditions hereof,
Supplier hereby grants to ENBC an irrevocable option (the "Option") to purchase,
at the purchase price provided for in Section 1.4 hereof, all of the assets of
Supplier (the assets subject to the option being herein sometimes referred to as
the "Option Assets"). Without limiting the generality of the foregoing, the
Option Assets shall include:
1.1.1 all of Supplier's machinery, equipment, tools, supplies,
leasehold improvements, construction in progress, furniture and fixtures,
and other fixed assets ("Fixed Assets");
1.1.2 all inventories and raw materials of Supplier;
1.1.3 all receivables of Supplier including without limitation any
receivables under Sections 7.5 and 7.7 of the Approved Supplier Agreement;
1.1.4 all real estate owned by Supplier, if any, and all of the
interest of, and the rights and benefits accruing to, Supplier as lessee
under all leases of real property and all improvements thereto and
buildings thereon, and all leases or rental agreements covering machinery,
equipment, tools, supplies, vehicles, furniture and fixtures and other
fixed assets or personal property;
1.1.5 all of the rights and benefits accruing to Supplier under the
Approved Supplier Agreement and under all sales orders, sales contracts,
supply contracts, purchase orders and purchase commitments made by Supplier
in the ordinary course of business, all other agreements to which Supplier
is a party or by which it is bound and all other choices in action, causes
of action and other rights of every kind, but excluding contracts relating
solely to the production or the sale of products other than the Products
(as defined in the Approved Supplier Agreement) ("Excluded Contracts");
1.1.6 all operating data and records of Supplier, including, without
limitation, customer lists, financial, accounting and credit records,
correspondence, budgets and other similar documents and records (although
Supplier may retain copies thereof at its own expense for its tax or other
legitimate business purposes);
1.1.7 all of the proprietary rights of Supplier, including, without
limitation, all trademarks, trade names (but expressly excluding the name
"▇▇▇▇▇▇" or any name including the name "▇▇▇▇▇▇"), patents, patent
applications, licenses, trade secrets, technology, know-how, formula,
designs and drawings, computer software, slogans, copyrights, processes,
operating rights, other licenses and permits, and other similar intangible
property and rights, if any; and
1.1.8 all cash and investments, and all prepaid and deferred items of
the Supplier, including, without limitation, prepaid rentals, insurance,
taxes and unbilled charges and deposits.
The Option shall be exercisable at any time from and after the date hereof and
on or before the later of (a) the expiration or termination date of that
certain Lease Agreement dated August 27, 1996 between ENBC and Supplier
("Equipment Lease"), or (b) the expiration or termination date of the Approved
Supplier Agreement ("Termination Date"), but only in the event Supplier: (x)
fails to make any payment required to be made to ENBC under the Equipment Lease
and does not correct such failure within thirty (30) days of the payment due
date; or (y) is in default under any of the Working Capital Financing Documents
(as defined in the Approved Supplier Agreement) or any other third party
indebtedness and such default is not cured within (i) thirty (30) days after
notice of default or (ii) the applicable grace period specified in a notice of
default. The Option will be exercisable for ninety (90) days from the date on
which it first arises. The Option will be exercisable with respect to any and
every default meeting the requirements of this paragraph. For purposes hereof,
the term "other third party indebtedness" shall not include indebtedness owed to
▇▇▇ ▇. ▇▇▇▇▇▇ or trade payables of the Supplier incurred in the ordinary course
of business.
2
1.2 Exercise of the Option. In the event that ENBC elects to exercise
the Option it shall give written notice of such exercise to Supplier in the
manner provided herein for the giving of notice, which notice shall specify the
consideration which ENBC elects to deliver upon the Closing (as hereinafter
defined), which may consist of the Promissory Note (hereinafter defined), shares
of common stock of ENBC ("ENBC Stock"), shares of common stock ("BCI Stock") of
Boston Chicken, Inc. ("BCI"), cash, or any combination of the foregoing, having
an aggregate value equal to the Supplier Value (as defined in Section 1.4),
provided, however, that such consideration may consist of ENBC Stock or BCI
Stock (the issuer of such stock being referred to herein as the "Issuer") only
if (a) the average closing sales price per share of such stock of the Issuer as
quoted on the NASDAQ National Market, as quoted on such other market or exchange
on which such shares are traded, for the ten consecutive trading days ending on
the second business day prior to the Closing Date (as hereinafter defined) (the
"Share Price") is at least $10, and (b) the value of the Issuer (defined as the
product of the Share Price and the total number of outstanding shares of such
stock of the Issuer) is at least $300 million. In the event ENBC elects to
deliver upon the Closing shares of ENBC Stock or shares of BCI Stock, such
shares shall be registered under the Securities Act of 1933, as amended, and
shall be accompanied by a written undertaking of ENBC to pay to the Supplier in
cash the excess, if any, of the value of the shares so delivered , determined in
the manner provided in Section 1.6 hereof, over the proceeds (net of
commissions) from the sale of the shares, assuming all shares are sold in
accordance with such reasonable conditions on the timing, daily volume and
manner of sale as may be set forth in such undertaking. Such undertaking shall
be assignable by the Supplier to its members to the extent any such shares are
assigned to such members.
1.3 Regulatory Compliance. Upon the exercise of the Option each of the
parties shall promptly prepare and file with the Federal Trade Commission
("FTC") and the United States Department of Justice ("Justice Department") any
notification required to be filed with respect to the transactions contemplated
hereby under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976 as
amended, or any rules or regulations thereunder (the "HSR Act"). Each party
represents and warrants to the other parties hereto that any such filing made by
it shall be true and accurate in all material respects and shall conform to the
requirements of the HSR Act. Each party shall promptly complete and file any
required responses to requests by the FTC or the Justice Department for
additional data and information. Each party shall also make available to the
other parties hereto such information relative to its business, assets and
property as may be required for the preparation of such notifications and
reports.
1.4 Purchase Price upon Exercise of the Option. The purchase price
payable by ENBC upon the exercise of the Option shall consist of: (i) (a) ENBC
Stock, BCI Stock, cash or any combination of the foregoing (determined in
accordance with Section 1.2) having an aggregate value equal to the Supplier
Value as of the Closing Date (as hereinafter defined) or (b) the Promissory Note
and (ii) the assumption by ENBC of Supplier's accounts payable, accrued
expenses, outstanding indebtedness for money borrowed and contractual
obligations, except that ENBC shall not be obligated to assume any liability or
obligation under the Excluded Contracts or any liability or obligation the
existence of which constitutes a breach of any representation and warranty made
by Supplier or the Members in this Agreement or incurred in violation of any
covenants or agreements of Supplier made in this Agreement (such liabilities to
be assumed by ENBC being herein referred
3
to as the "Assumed Liabilities"). For this purpose, the "Supplier Value" as of
the Closing Date shall be determined in the manner set forth in Exhibit A.
1.5 Allocation of Purchase Price Among Option Assets. The purchase price
for the Option Assets shall be allocated among each item or class of the Option
Assets as determined by the parties. Supplier and ENBC agree that they will
prepare and file their federal and any state or local income tax returns based
on such allocation of the purchase price. Supplier and ENBC agree that they
will prepare and file any notices or other filings required pursuant to Section
1060 of the Internal Revenue Code of 1986, as amended, and that any such notices
of filings will be prepared based on such agreed allocation of the purchase
price.
1.6 Valuation of ENBC Stock or BCI Stock. ENBC Stock or BCI Stock
delivered upon the Closing (as hereinafter defined) shall be deemed to have a
value equal to the average closing sales price per share of such stock as quoted
on the NASDAQ National Market, as reported in the Wall Street Journal (Western
Edition), or as quoted on such other market or exchange on which such shares are
traded, for the ten consecutive trading days ending on the second business day
prior to the Closing Date (as hereinafter defined).
1.7 Closing of Option Exercise. The closing of the exercise of the
Option shall take place at the offices of ENBC at 9:00 A.M., local time, on the
fifth business day after the date of the notice of such exercise referred to in
Section 1.2, or, if later, the second business day after the satisfaction or
waiver of all other conditions to the exercise of the Option provided for in
Articles 5.0 and 6.0 hereof. Throughout this Agreement, such event is referred
to as "Closing" and such date and time are referred to as "Closing Date".
1.8 Procedure at the Closing. At the Closing: (i) Supplier shall
execute and deliver to ENBC instruments of assignment in form and substance
satisfactory to ENBC sufficient to convey to ENBC all right, title and interest
of Supplier in and to the Option Assets, all necessary consents or approvals of
third parties (including any governmental entities) to the transactions
contemplated hereby, subscription agreements of Supplier and the Members
satisfactory in form and substance to ENBC, in the event ENBC has elected to
deliver ENBC Stock or BCI Stock at the Closing, and an opinion of ▇▇▇▇▇▇▇▇▇,
Daily, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, or other counsel reasonably acceptable to ENBC, dated
as of the Closing Date and in a form reasonably acceptable to ENBC, to the
effect that: (A) Supplier is a limited liability company duly organized and
validly existing under the laws of the State of Indiana with full power and
authority to own or lease its properties, to carry on its business as it is
being conducted and to convey the Option Assets to ENBC pursuant to this
Agreement, (B) the sale of the Option Assets has been duly authorized by all
necessary action of Supplier under Indiana law, its articles of incorporation
and bylaws, (C) the sale of the Option Assets will not conflict with or violate
any provision of the articles of organization or operating agreement of
Supplier, conflict with or violate any order, judgment or decree known to such
counsel applicable to Supplier or the Members or by which any of Supplier's
properties are affected, or result in a breach of, or constitute a default (or
any event which with notice or lapse of time would become a default) under, or
give to others any rights of first refusal, termination, amendment, acceleration
or cancellation of, or result in the creation of any lien or encumbrance on any
of the Option Assets pursuant to, any notice, bond, mortgage, indenture
contract, agreement, lease or other instrument or
4
obligation known to such counsel by which Supplier or any of the Members is
bound or by which any of the Supplier's properties are affected, (D) the sale of
the Option Assets will not, require any consent, approval, exemption,
authorization or permit of, filing with or notification, or other action by, any
court, administrative agency or governmental or regulatory authority, under any
provision of Indiana or Federal law, except for such consents and approvals as
shall have been obtained and filings which shall have been made, and (E) to such
counsel's knowledge, there are no actions, suits, proceedings or governmental
inquiries pending or threatened against Supplier or any of the Members seeking
to prevent the consummation of the transactions contemplated by this Agreement
or which could reasonably be expected to have a material adverse effect on the
Option Assets or the ability of Supplier and the Members to perform their
obligations under this Agreement, and (ii) in the event ENBC has not elected to
pay the purchase price by delivering cash, ENBC Stock or BCI Stock, ENBC shall
deliver to Supplier a promissory note, in the form of Exhibit B attached hereto,
in the principal amount of the purchase price (the "Promissory Note"), and (iii)
ENBC shall deliver to Supplier an instrument of assumption in form and substance
satisfactory to Supplier, assuming the Assumed Liabilities, and releases of any
guarantees made by the Members in connection with the Assumed Liabilities, to
the extent such releases may be obtained through ENBC's reasonable efforts
(which the parties agree shall not require ENBC to expend money or provide
security to the holder of any of the Assumed Liabilities). ENBC acknowledges
that the legal opinion referred to above will be subject to review by ▇▇▇▇▇▇▇▇▇,
Daily's opinion committee prior to the time of issuance of such opinion so that
such opinion is consistent with prevailing opinion letter practice at such time.
The Promissory Note shall provide that the purchase price shall be payable to
the Supplier on the six (6) month anniversary of the Closing Date unless the
purchase price exceeds $1,000,000, in which event $1,000,000 will be payable to
the Supplier on the six (6) month anniversary of the Closing Date with the
balance of the purchase price payable in equal installments of principal, with
interest, on each of the twelve (12), eighteen (18), and twenty-four (24) month
anniversaries of the Closing Date. Interest shall be payable on the purchase
price from and after the Closing Date.
Article 2.0 Representations and Warranties of Supplier and the Members
In order to induce ENBC to enter into this Agreement and to consummate the
transactions contemplated hereunder, Supplier and the Members jointly and
severally make the following representations and warranties:
2.1 Organization, Power and Authority of Supplier. Supplier is a
limited liability company duly organized and validly existing under the laws of
Indiana, and has full corporate power and authority to own or lease its
properties and to carry on its business as it is now being conducted and to
enter into this Agreement and to carry out the transactions and agreements
contemplated hereby. Supplier is legally qualified to transact business, and is
in good standing, in any jurisdictions in which its business or property is such
as to require that it be thus qualified, except where the failure to be so
qualified would not have a material adverse effect on its business, properties
or financial condition.
2.2 Due Authorization; Binding Agreement of Supplier and Members. The
execution, delivery and performance of this Agreement and the consummation of
the transactions
5
contemplated hereby have been duly authorized by all necessary action of
Supplier, including the approval of the Members of Supplier. This Agreement has
been duly executed and delivered by Supplier and the Members and is a valid and
binding obligation of Supplier and the Members, enforceable in accordance with
its terms. Neither the execution and delivery of this Agreement by Supplier or
the Members nor the consummation of the transactions contemplated hereby will:
(i) conflict with or violate any provision of the articles of organization or
operating agreement of Supplier or of any decree or order of any court or
administrative or other governmental body which is either applicable to, binding
upon or enforceable against Supplier or the Members or the assets and properties
of Supplier or the Members; or (ii) result in a breach of, constitute a default
under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice under, any
mortgage, contract, agreement, indenture or other instrument which is either
binding upon or enforceable against Supplier or the Members or the assets and
properties of Supplier or the Members. No permit, consent, approval or
authorization of, or declaration to or filing with, any regulatory or other
government authority is required in connection with the execution and delivery
of this Agreement by Supplier or the Members and the consummation by it of the
transactions contemplated hereby, except pursuant to the HSR Act.
2.3 Ownership Interests in Supplier. All voting rights in Supplier are
vested exclusively in its membership interests (the "Interests"), and there are
no voting trusts, proxies or other agreements or understandings with respect to
the voting of the Interests of Supplier, except for the operating agreement
among the Supplier and the Members (the "Operating Agreement"). Supplier has
previously furnished to ENBC copies of Supplier's articles of organization and
the Operating Agreement, and such copies are correct and complete in all
respects. There are no outstanding warrants, options or rights of any kind to
acquire from Supplier any interests or securities of any kind, and there are no
pre-emptive rights with respect to the issuance or sale of interests of
Supplier. Supplier has no obligation to acquire any of its issued and
outstanding interests or any other security issued by it from any holder
thereof, except pursuant to the Operating Agreement.
2.4 Ownership of Interests by the Members. The Members are the lawful
owners of all of the outstanding Interests of Supplier and have valid marketable
title thereto, free and clear of all liens, pledges, encumbrances, security
interests, restrictions on transfer, claims and equities of every kind, other
than restrictions under federal and state securities laws. There are no
outstanding warrants, options or rights of any kind to acquire from the Members
any of the Interests.
2.5 Title to Supplier's Assets. Supplier has good and marketable title
to all of its assets and properties, free and clear of all liens, mortgages,
pledges, encumbrances or charges of every kind, nature, and description
whatsoever, and upon the Closing ENBC will acquire good and marketable title to
the Option Assets, free and clear of all liens, mortgages, pledges, encumbrances
or charges of every kind, nature and description whatsoever, except for (i)
security interests securing any indebtedness for money borrowed or other
contractual obligations but only if such indebtedness or obligations are assumed
by ENBC or (ii) such liens, mortgages, pledges, encumbrances or charges as shall
have been approved by ENBC in writing.
6
2.6 Accuracy of Information Furnished by Supplier and the Members. No
representation, statement or information made or furnished by Supplier or the
Members to ENBC, including without limitation those contained in this Agreement
and the various schedules attached hereto, when taken as a whole, contains or
shall contain any untrue statement of a material fact or omits or shall omit any
material fact necessary to make the information contained therein not
misleading.
2.7 Investment Bankers' and Brokers' Fees. Neither the Members nor
Supplier have any obligation to pay any fees or commissions to any investment
banker, broker, finder or agent with respect to the transactions contemplated by
this Agreement.
Article 3.0 Representations and Warranties of ENBC
In order to induce Supplier and the Members to enter into this Agreement
and to consummate the transactions contemplated hereunder, ENBC makes the
following representations and warranties:
3.1 Organization, Power and Authority of ENBC. ENBC is a corporation
duly organized and validly existing under the laws of the State of Delaware, and
has full corporate power and authority to own or lease its properties and to
carry on its business as it is now being conducted and to enter into this
Agreement and to carry out the transactions and agreements contemplated hereby.
3.2 Due Authorization; Binding Agreement of ENBC. The execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action of ENBC This Agreement has been duly executed and delivered by
ENBC and is a valid and binding obligation of ENBC, enforceable in accordance
with its terms. Neither the execution and delivery of this Agreement by ENBC
nor the consummation of the transactions contemplated hereby will: (i) conflict
with or violate any provision of the certificate of incorporation or bylaws of
ENBC or of any decree or order of any court or administrative or other
governmental body which is either applicable to, binding upon or enforceable
against ENBC, or its assets and properties; or (ii) result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify or cancel, or require any notice
under, any mortgage, contract, agreement, indenture or other instrument which is
either binding upon or enforceable against ENBC, or its assets and properties.
No permit, consent, approval of authorization of, or declaration to or filing
with, any regulatory or other government authority is required in connection
with the execution and delivery of this Agreement by ENBC and the consummation
by it of the transactions contemplated hereby.
3.3 Investment Bankers' and Brokers' Fees. ENBC has no obligation to
pay any fees or commissions to any investment banker, broker, finder or agent
with respect to the transactions contemplated by this Agreement.
7
Article 4.0 Additional Covenants of Supplier and the Members Prior to the
Termination Date
4.1 Reasonable Best Efforts. Supplier and the Members will use
reasonable best efforts to cause to be satisfied as soon as practicable and
prior to the Closing Date all of the conditions set forth in Articles 5.0 and
6.0. Without limiting the generality of the foregoing Supplier and the Members
will not, without ENBC's written consent, take any action that would result in a
requirement that any third party consent or approval be obtained in connection
with exercise of the Option.
4.2 Conduct of Business. From and after the execution and delivery of
this Agreement and until the earlier of the Closing Date or the Termination
Date, except as otherwise provided by the prior written consent of ENBC:
4.2.1 Supplier will use reasonable best efforts to (i) preserve its
business organization intact, (ii) keep available the services of its
officers, employees, and agents, and (iii) preserve its relationships with
suppliers and others having dealings with Supplier;
4.2.2 Supplier will maintain all of its properties in customary
repair, order and condition, reasonable wear and use and damage by
unavoidable casualty excepted; and
4.2.3 Supplier will not (a) sell, lease, transfer or otherwise
dispose of assets other than in the ordinary course of business, (b)
redeem, purchase or otherwise acquire from any of its Members all or any
part of their equity interest in the Supplier or pay any dividends or make
any other distributions or payments to such Members, or persons or entities
related to them, except for (i) distributions to the members to permit
payment by them of income taxes on income of Supplier allocated to them,
which shall be based on a tax rate equal to the highest effective combined
statutory rate of federal and state income tax (giving effect to the
deductibility of state income taxes for federal income tax purposes)
imposed on taxable income of an individual residing in the State of
Indiana, and (ii) other cash distributions and compensation payments that
are permitted to be made by the Financing Documents (as defined in the
Approved Supplier Agreement), (c) incur indebtedness other than the
indebtedness provided for in the Financing Documents (as defined in the
Approved Supplier Agreement), (d) incur any material obligations or
liabilities (other than its obligations under this Agreement and the
Approved Supplier Agreement), or enter into any material transaction (other
than transactions contemplated by this Agreement or the Approved Supplier
Agreement) other than in the ordinary course of business, (e) merge or
consolidate with any other entity, effect any change in its capital
structure, make any investment in any other entity, liquidate or dissolve,
(f) amend its articles of organization or the Operating Agreement, (g)
enter into any transaction with any affiliate except on terms at least as
favorable as those that could be obtained from an unrelated third party or
(h) agree to do any of the foregoing.
8
4.3 Access to Supplier's Properties and Records. From and after the
execution and delivery of this Agreement and until the earlier of the Closing
Date or the Termination Date, Supplier will afford to the representatives of
ENBC access, during normal business hours and upon reasonable notice, to
Supplier's premises and books and records sufficient to enable ENBC to inspect
the assets and properties of Supplier and to determine the Supplier Value (as
defined in Exhibit A hereof), and Supplier will furnish to such representatives
during such period all such information relating to the foregoing investigation
as ENBC may reasonably request; provided, however, that any furnishing of such
information to ENBC and any investigation by ENBC shall not affect the right of
ENBC to rely on the representations and warranties made by Supplier and the
Members in or pursuant to this Agreement, and provided further, that ENBC shall
maintain the confidentiality of any information so furnished to it in accordance
with the provisions of Article 12.0 of the Approved Supplier Agreement. Without
limiting the generality of the foregoing, Supplier shall furnish to ENBC within
five (5) business days after the Option is first exercisable, a statement
setting forth the Supplier Value (as defined in Exhibit A hereof) determined as
of the applicable date under Exhibit A, which statement shall be prepared in
accordance with Exhibit A and shall set forth with specificity the calculation
of Supplier Value.
4.4 Notice of Material Developments. From and after the execution and
delivery of this Agreement and until the earlier of the Closing Date or the
Termination Date, Supplier will give prompt written notice to ENBC of any
material development affecting the assets, properties, business, business
prospects, financial condition or results of operations of Supplier, including
without limitation any development which results in the inaccuracy of any of the
representations and warranties of Supplier and the Members made herein.
4.5 No Disclosure. Without the prior written consent of ENBC, neither
Supplier nor any of the Members will, prior to the earlier of the Closing Date
or the Termination Date, disclose the existence of or any term or condition of
this Agreement to any person or entity except that such disclosure may be made
(i) to any lender or financing source of Supplier or any person in a business
relationship with Supplier to whom such disclosure is necessary in order to
satisfy any of the conditions or obligations which are set forth in this
Agreement, and (ii) to the extent Supplier believes in good faith that such
disclosure is required by law (in which case Supplier will consult with ENBC
prior to making such disclosure).
4.6 No Other Discussions; Retention of Interests. Neither the Members
nor Supplier will, prior to the earlier of the Closing Date or the Termination
Date, enter into discussions or negotiate with or entertain or accept the
unsolicited offer of any other party concerning the potential sale or exchange
of all or any part of the assets of or interests in Supplier to, or the merger
or consolidation of Supplier with, any person other than ENBC The Members will
not, prior to the earlier of the Closing Date or the Termination Date, sell,
assign, transfer, pledge, encumber or otherwise dispose of any of the Interests
owned by them, except for Exempt Transactions permitted by the Operating
Agreement.
9
Article 5.0 Conditions to ENBC' Obligation to Close the Option Exercise.
The obligation of ENBC to purchase the assets of Supplier upon the exercise
of the Option shall be subject to the fulfillment or waiver by ENBC at or prior
to the Closing Date of each of the following conditions:
5.1 Accuracy of Representations and Warranties and Compliance with
Obligations. The representations and warranties of Supplier and the Members
contained in this Agreement shall have been true and correct in all material
respects at and as of the date hereof, and they shall be true and correct in all
material respects at and as of the Closing Date with the same force and effect
as though made at and as of that time. Supplier and the Members shall have
performed and complied with all of their obligations required by this Agreement
to be performed or complied with at or prior to the Closing Date. The Members
shall have delivered to ENBC a certificate, dated as of the Closing Date and
signed by each of the Members, certifying that such representations and
warranties are thus true and correct in all material respects and that all such
obligations have been thus performed and complied with.
5.2 HSR Act Waiting Period. Any waiting period imposed by the HSR Act
with respect to the exercise of the Option shall have expired or been
terminated.
5.3 Receipt of Necessary Consents. All necessary consents or approvals
of third parties to any of the transactions contemplated hereby, shall have been
obtained and shown by written evidence satisfactory to ENBC.
5.4 No Adverse Litigation. There shall not be any pending or threatened
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit or invalidate the purchase of the assets of
Supplier or any other transaction contemplated hereby, and no injunction or
other order prohibiting the purchase of the Option Assets or any other
transaction contemplated hereby shall have been entered by any court or other
governmental body.
5.5 No Material Adverse Change. Since the date of the exercise of the
Option, there shall have been no changes in the business or properties of
Supplier, or in its financial condition, other than changes which in the
aggregate shall not have had a material adverse effect.
5.6 Delivery of Information. Supplier shall have delivered to ENBC any
information required to have been delivered to ENBC pursuant to Section 4.3
hereof.
Article 6.0 Conditions to the Supplier's Obligation to Close the Option
Exercise
The obligation of Supplier to sell the assets of Supplier upon the exercise
of the Option shall be subject to the fulfillment or waiver by Supplier at or
prior to the Closing Date of each of the following conditions:
6.1 Accuracy of Representations and Warranties and Compliance with
Obligations. The representations and warranties of ENBC contained in this
Agreement shall have been true and correct in all material respects at and as of
the date hereof, and they shall be true and correct in all
10
material respects at and as of the Closing Date with the same force and effect
as though made at and as of that time. ENBC shall have performed and complied
with all of its obligations required by this Agreement to be performed or
complied with at or prior to the Closing Date. ENBC shall have delivered to
Supplier a certificate, dated as of the Closing Date and signed by ENBC,
certifying that such representations and warranties are thus true and correct in
all material respects and that all such obligations have been thus performed and
complied with.
6.2 HSR Act Waiting Period. Any waiting period imposed by the HSR Act
with respect to the exercise of the Option shall have expired or been
terminated.
6.3 Receipt of Necessary Consents. All necessary consents or approvals of
third parties to any of the transactions contemplated hereby, shall have been
obtained and shown by written evidence satisfactory to Supplier.
6.4 No Adverse Litigation. There shall not be any pending or threatened
action or proceeding by or before any court or other governmental body which
shall seek to restrain, prohibit or invalidate the sale of the assets of
Supplier or any other transaction contemplated hereby, and no injunction or
other order prohibiting the purchase of the Option Assets or any other
transaction contemplated hereby shall have been entered by any court or other
governmental body.
Article 7.0 Certain Additional Covenants
7.1 Execution of Further Documents. From and after the Closing, upon
the reasonable request of ENBC, Supplier and the Members shall execute,
acknowledge and deliver all such further acts, deeds, assignments, transfers,
conveyances, powers of attorney and assurances as may be required to convey and
transfer to and vest in ENBC the Option Assets and as may be appropriate
otherwise to carry out the transactions contemplated by this Agreement.
7.2 Cooperation of Supplier and the Members. Each of the Members
acknowledges and agrees that ENBC may have need of information concerning
Supplier and the Members in order to comply with applicable securities laws and
regulations in connection with future public and private debt and equity
offerings by ENBC ("Offerings"). The Members jointly and severally agree that
they will cooperate with ENBC in connection with any Offerings and that they
will, at ENBC's expense: (i) furnish ENBC with such information concerning
Supplier and the Members as ENBC may reasonably require to comply with
applicable securities laws and regulations (the "Company Information"); (ii) use
diligent efforts to review, comment on, and otherwise assist ENBC as reasonably
necessary for the preparation of, descriptions concerning Supplier and the
Members to be used in connection with Offerings; and (iii) represent and warrant
to ENBC in connection with any Offerings that Company Information will not
contain any untrue statement of a material fact or omit any material fact
necessary to make the information contained therein not misleading.
7.3 Subsequent Audited Financial Statements. Each of the Members
covenants and agrees with ENBC that if ENBC shall determine that audited
financial statements of ENBC or Supplier for the periods prior to the Closing
are necessary or advisable in connection with an initial public offering,
another transaction or offering, or otherwise, each shall cooperate fully with
ENBC's accountants in the preparation of such audited financial statements, at
ENBC's expense,
11
and each shall make such reasonable representations and warranties to the
applicable certified public accountants as are customary in connection with the
preparation of audited financial statements.
7.4 Confidential Information.
7.4.1 The Members may possess certain confidential and proprietary
information and trade secrets including, but not limited to, information,
methods, techniques, procedures and knowledge developed by or for Supplier
respecting the business of Supplier (the "Confidential Information"). Each
of the Members acknowledges and agrees that neither such Shareholder nor
any other person or entity has acquired by or through such Members any
interest in or right to use the Confidential Information other than the
right to utilize it in the operation of the businesses of Supplier and
ENBC, and that the use or duplication of the Confidential Information in
any other business would constitute an unfair method of competition with
Supplier and ENBC. Notwithstanding the foregoing, however, ENBC
acknowledges that the Members are actively involved as Members, officers
and directors of ▇▇▇▇▇▇ Bakeries, Inc. and that certain Confidential
Information may be shared with ▇▇▇▇▇▇ Bakeries, Inc. The foregoing is not
intended to prevent ▇▇▇▇▇▇ Bakeries from using such Confidential
Information in its business generally, but Confidential Information
relating specifically to ENBC or its Formulations, Specifications and
Procedures (as defined in the Approved Supplier Agreement) may not be used
by ▇▇▇▇▇▇ Bakeries except to the extent such use is solely for the benefit
of ENBC.
7.4.2 Subject to Section 7.4.1 hereof, each of the Members
acknowledges and agrees that the Confidential Information is confidential
to and a valuable asset of Supplier, is proprietary, and includes trade
secrets of Supplier and that such Member: (i) will not use the
Confidential Information in any other business or capacity; (ii) will
maintain the absolute secrecy and confidentiality of the Confidential
Information; and (iii) will not make unauthorized copies of any portion of
the Confidential Information disclosed in written or other tangible form.
7.4.3 Notwithstanding the foregoing, the obligations of the Members
specified above shall not apply to any Confidential Information which (i)
is disclosed in a printed publication available to the public, or is
otherwise in the public domain through no act of any of the Members, their
agents or any person or entity which has received such Confidential
Information from or through any of the Members, (ii) is approved for
release by written authorization of an officer of ENBC, (iii) is required
to be disclosed by proper order of a court of applicable jurisdiction after
adequate notice to ENBC to seek a protective order therefor, the imposition
of which protective order the Members agree to approve and support, or (iv)
in the written opinion of the disclosing Member's counsel, is necessary to
be made by such Member in order that the Member not violate any law, rule
or regulation applicable to him.
12
7.5 Remedies; Waiver.
7.5.1 Each of the Members agrees that the provisions and restrictions
set forth above in Section 7.4 are necessary to protect ENBC and its
successors and assigns in the protection of the Option Assets ENBC is
entitled to acquire pursuant to this Agreement. Each of the Members agrees
that damages cannot compensate ENBC in the event of a violation of the
covenants contained in Section 7.4 hereof, and that injunctive relief
shall be essential for the protection of ENBC and its successors and
assigns. Accordingly, each of the Members agrees and consents that, in the
event he shall violate or breach any of said covenants ENBC shall be
entitled to obtain (and he hereby consents to) such injunctive relief
against such Shareholder, without bond, in addition to such further or
other relief as may appertain at equity or law. The exercise or
enforcement by ENBC of any right or remedy hereunder shall not preclude the
exercise or enforcement by ENBC of any other right or remedy hereunder or
which ENBC has the right to enforce under applicable law.
7.5.2 Failure by any party to insist upon strict compliance with any
of the terms, covenants or conditions hereof shall not be deemed a waiver
of such term, covenant or condition, nor shall any waiver or relinquishment
of any right or remedy hereunder at any one or more times be deemed a
waiver or relinquishment of such right or remedy at any other time or
times.
7.6 Employment by ENBC of Supplier's Employees. Supplier shall use its
reasonable best efforts to aid ENBC in engaging such of its employees as are
employed on the Closing Date, if any, whom ENBC desires to engage after the
Closing Date, and except with the written consent of ENBC, neither Supplier nor
any Affiliate (as hereinafter defined) of Supplier shall employ, for a period of
one year after the Closing Date, any person employed by Supplier at or at any
time within six months prior to the Closing Date unless such person was either
not offered employment by ENBC or was terminated by ENBC. As used in this
Agreement, the term "Affiliate" means, with respect to a specified person, any
other person which directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the person
specified, and the term "control" (including the terms "controlling,"
"controlled by" and "under common control with") shall mean the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of voting
shares, by contract, or otherwise.
7.7 No Obligation of ENBC to Employ. ENBC shall have no obligation to
employ any of the persons employed by Supplier at the time of the Closing, if
any, or to continue, or institute any replacement or substitution for, any
vacation, severance, incentive, bonus, profit sharing, pension or other employee
benefit plan or program of Supplier.
Article 8.0 Indemnification
8.1 Agreement by Supplier and the Members to Indemnify. Subject to the
qualifications and limitations set forth in this Section 8.1, Supplier and the
Members jointly and severally agree that from and after the Closing, if any,
they will indemnify and hold ENBC harmless in respect of the
13
aggregate of all ENBC Indemnifiable Damages (as hereinafter defined). For this
purpose, ENBC Indemnifiable Damages shall mean the aggregate of all expenses,
losses, costs, deficiencies, liabilities and damages (including related counsel
fees and expenses) incurred or suffered by ENBC (or any successor to all or any
part of the assets or business of Supplier) (i) resulting from any inaccurate
representation or warranty made by Supplier and the Members in or pursuant to
this Agreement, (ii) resulting from any default in the performance of any of the
covenants or agreements made by Supplier or the Members in this Agreement, or
(iii) resulting from the failure of Supplier to pay, discharge or perform any
liability or obligation that is not required to be assumed by ENBC hereunder
("Excluded Liabilities"). Without limiting the generality of the foregoing,
with respect to the measurement of ENBC Indemnifiable Damages, ENBC shall have
the right to be put in the same financial position as it would have been in had
each of the representations and warranties of Supplier and the Members been true
and correct, had each of the covenants and agreements of Supplier and the
Members been performed in full and had each of the Excluded Liabilities been
paid or performed in full. The foregoing obligation to indemnify ENBC shall be
subject to each of the following principles or qualifications:
8.1.1 Each of the representations and warranties made by the Supplier
and the Members in this Agreement or pursuant hereto, shall survive for a
period of eighteen (18) months after the exercise of the Option and
thereafter all such representations and warranties shall be extinguished,
provided, however, that the representations and warranties made in Sections
2.1, 2.2, 2.3, 2.4 and 2.7 hereof shall in each case survive forever. No
claim for the recovery of ENBC Indemnifiable Damages based upon the
inaccuracy of such representations and warranties may be asserted by ENBC
after such representations and warranties shall be thus extinguished;
provided, however, that claims first asserted in writing within the
applicable period (whether or not the amount of any such claim has become
ascertainable within such period) shall not thereafter be barred.
8.1.2 The Supplier and the Members shall be liable for any claim for
ENBC Indemnifiable Damages arising out of any inaccuracy of any
representation or warranty only to the extent the aggregate amount of all
such ENBC Indemnifiable Damages do exceed $25,000.
8.1.3 The liability of the Supplier and the Members for claims for
all ENBC Indemnifiable Damages arising out of inaccuracies of
representations and warranties of the Supplier and the Members shall in no
event exceed the amount of the purchase price payable under Section 1.4.
8.2 Agreement by ENBC to Indemnify. ENBC agrees that from and after the
Closing, if any, it will indemnify and hold Supplier and the Members harmless in
respect of the aggregate of all Supplier Indemnifiable Damages (as hereinafter
defined). For this purpose, Supplier Indemnifiable Damages shall mean the
aggregate of all expenses, losses, costs, deficiencies, liabilities and damages
(including related counsel fees and expenses) incurred or suffered by Supplier
or the Members (i) resulting from any inaccurate representation or warranty made
by ENBC in or pursuant to this Agreement, (ii) resulting from any default in the
performance of any of the covenants or agreements made by ENBC in this
Agreement, (iii) resulting from the failure of
14
ENBC to discharge any Assumed Liabilities (including any Assumed Liabilities
that may have been guaranteed by one or more of the Members) after Closing or
(iv) resulting from the operation of the business utilizing the Option Assets by
ENBC after Closing (except to the extent arising from any inaccurate
representation or warranty made by the Supplier and the Members herein). Without
limiting the generality of the foregoing, with respect to the measurement of
Supplier Indemnifiable Damages, Supplier and the Members shall each have the
right to be put in the same financial position as they would have been in had
each of the representations and warranties of ENBC been true and correct, had
each of the covenants and agreements of ENBC been performed in full and had each
of the Assumed Liabilities been paid or performed in full.
8.3 Tax Effect of Damages and Indemnity Payments. In determining the
amount of ENBC Indemnifiable Damages payable under Section 8.1 and Supplier
Indemnifiable Damages payable under Section 8.2, there shall be taken into
account both tax benefits, if any, arising from the incurrence of damages and
tax detriments, if any, arising from the receipt of payments hereunder.
8.4 Legal Proceedings. In the event Supplier, the Members or ENBC become
involved in any legal, governmental or administrative proceeding which may
result in indemnification claims hereunder, such party shall promptly notify the
other parties in writing of such proceeding. The other parties may, at their
option and expense, defend any such proceeding if the proceeding could give rise
to an indemnification obligation hereunder. If any party elects to defend any
proceeding, such party shall have full control over the conduct of such
proceeding, although the party being indemnified shall have the right to retain
legal counsel at its own expense and shall have the right to approve any
settlement of any dispute giving rise to such proceeding, such approval not to
be withheld unreasonably by the party being indemnified; provided, that, in the
event the indemnifying party shall fail to initiate a defense of a claim within
twenty days of the notice to the indemnified party of a claim, the indemnified
party shall have the option to conduct the defense of such claim as it may in
its discretion deem proper. The party being indemnified shall reasonably
cooperate with the indemnifying party in such proceeding.
Article 9.0 Miscellaneous
9.1 Amendment and Modification. The parties hereto may amend, modify
and supplement this Agreement in such manner as may be agreed upon by them in
writing.
9.2 Payment of Expenses. Each party to this Agreement shall pay all of
the expenses incurred by it in connection with this Agreement, including without
limitation its legal and accounting fees and expenses.
9.3 Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, assigns,
heirs and legal representatives.
9.4 Entire Agreement. This instrument and the exhibits attached hereto
contain the entire agreement of the parties hereto with respect to the option to
purchase the Option Assets and the other transactions contemplated herein, and
supersede all prior understandings and agreements of the parties with respect to
the subject matter hereof. Any reference herein to this Agreement shall be
deemed to include the exhibits attached hereto.
15
9.5 Headings. The descriptive headings in this Agreement are inserted
for convenience only and do not constitute a part of this Agreement.
9.6 Execution in Counterpart. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original.
9.7 Notices. Any notice, request, information or other document to be
given hereunder shall be in writing. Any notice, request, information or other
document shall be deemed duly given three business days after it is sent by
registered or certified mail, postage prepaid, to the intended recipient,
addressed as follows:
If to Supplier addressed as follows:
▇▇▇▇▇▇ Bakeries, Inc.
▇▇▇▇ ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to such party at the following address:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Inc.
▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇, Daily, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to ENBC, addressed as follows:
Einstein/Noah Bagel Corp.
14123 Denver ▇▇▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President-Supply Chain
16
with a copy to:
Einstein/Noah Bagel Corp.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
P. O. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Any party may send any notice, request, information or other document to be
given hereunder using any other means (including personal delivery, courier,
messenger service, facsimile transmission, telex or ordinary mail), but no such
notice, request, information or other document shall be deemed duly given unless
and until it is actually received by the party for whom it is intended. Any
party may change the address to which notices hereunder are to be sent to it by
giving written notice of such change of address in the manner herein provided
for giving notice.
9.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado applicable to contracts made
and to be performed wholly therein.
9.9 Publicity. No press release or other public announcement related to
this Agreement or the transactions contemplated hereby (or the existence of any
discussions or negotiations among the parties regarding any other possible
transactions) will be issued, and no disclosure of this Agreement or the terms
hereof will be made, by Supplier or any of the Members without the prior
approval of ENBC. ENBC agrees to use reasonable best efforts to consult with
Supplier prior to issuing any press release or public or trade announcement or
statement relating to this Agreement or the transactions contemplated hereby.
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
EINSTEIN/NOAH BAGEL CORP.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------
Senior Vice President
▇▇▇▇▇▇ BAGEL SUPPLY COMPANY, LLC
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, President
-----------------------------
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
18
Exhibits
--------
Exhibit A Determination of Supplier Value
Exhibit B Promissory Note
EXHIBIT A
---------
SUPPLIER VALUE
--------------
"Supplier Value" as of the Closing Date shall be the net asset value of the
Supplier determined in accordance with generally accepted accounting principles.
"Net asset value" shall mean the net book value of the Supplier's assets.
EXHIBIT B TO THE OPTION AGREEMENT
THIS PROMISSORY NOTE IS NON-NEGOTIABLE, NON-ASSIGNABLE
AND NON-TRANSFERABLE
PROMISSORY NOTE
$______________ __________, _______
FOR VALUE RECEIVED, Einstein/Noah Bagel Corp., a Delaware corporation (the
"Company"), promises to pay to ▇▇▇▇▇▇ Bagel Supply Company, LLC ("HBSC"), at
such place as HBSC may from time to time designate in writing,
________________________________ DOLLARS ($______________); and to pay interest
on the unpaid principal balance hereof from time to time outstanding, at the per
annum rate equal to the Interest Rate until the indebtedness evidenced hereby is
paid in full, and at the Interest Rate plus two percent (2%) in respect of any
principal amount not paid when due, for the period from the date such principal
is due until such unpaid amount has been paid in full (whether before or after
judgment). The term "Interest Rate" shall mean the rate designated and announced
by Bank of America Illinois or its successor in interest (the "Bank") from time-
to-time as its "reference rate" in effect at its principal office in Chicago,
Illinois. The Interest Rate shall be adjusted from time-to-time on the same day
on which the Bank adjusts its reference rate.
Principal and interest on this Note shall be payable as follows: Principal
of $___________ shall be payable on _________________ (being the Six Month
Anniversary Date). One-third (1/3) of the remaining outstanding principal amount
of this Note together with all accrued but unpaid interest thereon shall be due
and payable on each of _______________ (being the twelve month anniversary of
the date hereof), ____________________ (being the eighteen month anniversary of
the date hereof), and __________ (being the twenty-four month anniversary of the
date hereof).
Interest shall be computed on the basis of a 360-day year and the actual
number of days elapsed.
All or any part of the principal amount of this Note and any accrued
interest due on any of the respective payment dates or otherwise may be paid at
the Company's option in lawful money of the United States of America in
immediately available funds, shares of common stock of the Company (the "ENBC
Stock"), shares of common stock of Boston Chicken, Inc. ("BCI Stock") (the
issuer of ENBC Stock or BCI Stock being referred to herein as the "Issuer") or
any combination of the foregoing, provided that with respect to ENBC Stock and
BCI Stock, same shall be valued at the average of the closing sales prices per
share of the Common Stock quoted on the Nasdaq National Market, as reported in
the Wall Street Journal (Western Edition), for the five (5) trading days
immediately prior to the second business day before the respective date of
payment (the "Average Price"). The Company may make a payment hereunder with
ENBC Stock or BCI Stock only if (a) the Average Price per share of such stock of
the Issuer as quoted on the NASDAQ National Market, as quoted on such other
market or exchange on which such shares are traded is at least $10, and (b) the
value of the Issuer (defined as the product of the Share Price and the total
number of outstanding shares of such stock of the Issuer) is at least $300
million. In the event ENBC elects to deliver shares of ENBC Stock or shares of
BCI Stock, such shares shall be registered under the Securities Act of 1933, as
amended, and shall be
accompanied by a written undertaking of ENBC to pay to HBSC in cash the excess,
if any, of the value of the shares so delivered over the proceeds (net of
commissions) from the sale of the shares, assuming all shares are sold in
accordance with such reasonable conditions on the timing, daily volume and
manner of sale as may be set forth in such undertaking. Such undertaking shall
be assignable by HBSC to its members to the extent any such shares are assigned
to such members.
This Note may be prepaid at any time without premium or penalty. All
payments made hereunder shall be applied first to interest and then to
outstanding principal.
If payment hereunder becomes due and payable on a Saturday, Sunday, or
legal holiday, under the laws of the State of Colorado, the due date thereof
shall be extended to the next succeeding business day.
Demand, presentment, protest, diligence, notice of dishonor, and any other
formality are hereby expressly waived by the Company and any endorser or
guarantor.
If the Company fails to make any payment hereunder when due and such
failure continues for a period of ten (10) days, then this Note shall become
immediately due and payable, without notice, at HBSC's option. If this Note is
not paid at maturity, whether by acceleration or otherwise, HBSC shall have all
of the rights and remedies provided by law or in equity.
If this Note is placed in the hands of an attorney for collection, or is
collected through any court, including any bankruptcy court, the Company
promises to pay to HBSC, HBSC's reasonable attorneys' fees and court costs
incurred in collecting or attempting to collect this Note.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF, THE STATE OF COLORADO APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
THEREIN WITHOUT REGARD TO THE CONFLICTS OF LAW PROVISIONS THEREOF.
Any provision herein or any other document executed or delivered in
connection herewith or therewith, or in any other agreement or commitment,
whether written or oral, expressed or implied, to the contrary notwithstanding,
HBSC shall in no event be entitled to receive or collect, nor shall any amounts
received hereunder be credited, so that HBSC shall be paid, as interest, a sum
greater than the maximum amount permitted by applicable law to be charged to the
person primarily obligated to pay this Note at the time in question. If any
construction of this Note or any and all other papers, agreements, or
commitments, indicate a different right given to HBSC to ask for, demand, or
receive any larger sum as interest, such is a mistake in calculation or wording
which this clause shall override and control, it being the intention of the
parties that this Note and all other documents executed or delivered in
connection herewith shall in all ways comply with applicable law and proper
adjustments shall automatically be made accordingly. In the event that HBSC ever
receives, collects, or applies as interest, any sum in excess of the maximum
amount permitted by applicable law, if any, such excess amount shall be applied
to the reduction of the unpaid principal balance of this Note, and if this Note
is paid in full, any remaining excess shall be paid to the Company. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the maximum amount permitted by applicable law, if any, the
Company and HBSC shall, to the maximum extent permitted under
applicable law: (a) characterize any non-principal payment as an expense or fee
rather than as interest, and (b) "spread" the total amount of interest
throughout the entire term of this Note.
IN WITNESS WHEREOF, the Company has caused this Note to be executed in its
corporate name by the undersigned officer, thereunto duly authorized.
EINSTEIN/NOAH BAGEL CORP., a
Delaware corporation
By:___________________________
Its:__________________________
Exhibit E
---------
Form of Statement
of
Independent Accountants
-----------------------
Board of Directors
Einstein/Noah Bagel Corp.
Ladies and Gentlemen:
At your request, we have performed certain agreed upon procedures, as
enumerated below, with respect to the Statements of Materials Cost of ▇▇▇▇▇▇
Bagel Supply Company, LLC, for each of the Quarterly Periods in the year ended
December 31, 19__. These procedures, which were specified by the Board of
Directors of Einstein/Noah Bagel Corp., and the Board of Managers of ▇▇▇▇▇▇
Bagel Supply Company, LLC were performed solely to meet the requirements of the
Project and Approved Supplier Agreement among Einstein/Noah Bagel Corp., ▇▇▇▇▇▇
Bagel Supply Company, LLC, and ▇▇▇▇▇▇ Bakeries, Inc., ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Approved Supplier Agreement"). It is
understood that this report is solely for your information and should not be
used by those who did not participate in determining the procedures.
a. We have compared the costs as reported in the Statements of Materials
Cost to the costs and expenses as reflected in the general ledger of
▇▇▇▇▇▇ Bagel Supply Company, LLC, and reconciled any material
differences.
b. We have compared the Statements of Materials Cost to the listing of
costs as per Exhibit A of the referenced Approved Supplier Agreement
and noted any material addition of cost categories.
c. We have compared the total reported number of bagels produced with the
Production Log and reconciled any material differences.
d. We have tested the Statements of Materials Cost for mathematical
accuracy.
Because the procedures described above do not constitute an examination of
financial statements in accordance with the Statements on Standards for
Accounting and Review Services issued by the American Institute of Certified
Public Accountants, we do not express an opinion on whether the financial
statement is presented in conformity with AICPA guidelines.
In connection with the procedures referred to above, no matters came to our
attention that caused us to believe that the Statements of Materials Cost were
not reflective of the general ledger, that cost categories were included that
were not reflected in Exhibit A of the Approved Supplier Agreement, that the
number of bagels reported was materially different than those
shown on the Production Log or that any of the Statements of Materials Cost is
mathematically inaccurate. Had we performed additional procedures or had we
made an examination in accordance with Statements on Standards for Accounting
and Review Services issued by the American Institute of Certified Public
Accountants, matters might have come to our attention that would have been
reported to you. We have no responsibility to update this report for events and
circumstances occurring after the date of this report.
36
Exhibit F
---------
Second Bagel Line Capital Budget
--------------------------------
SCHEDULE A
EQUIPMENT NEEDED FOR 2ND LINE
July 9, 1997
DEL OF
EQUIPMENT INSTALLATION $$$ AMOUNT EQUIP.
SUPPLIER LEAD TIME TIME EQUIPMENT QTY.
A) DRY INGREDIENT WAREHOUSE
A1) Metal room to seal Trash Compactor to building ▇▇▇▇▇▇▇▇▇ 3 WEEKS 2 DAYS $2,225.00 1
A2) Pour curbs in compactor room SQUEEKE 2 WEEKS 2 DAYS $ 450.00 1
SUB TOTAL 2
B) LAB
B1) Storage Cabinet - To retain flour samples. ASSOCIATED 6 WEEKS 1 DAY $ 474.85 1
B2) Upright Freezer ZOLL BROTHERS 4 WEEKS 1 DAY $1,450.00 1
SUB TOTAL 2
C) PRE-MIX ROOM
C1) Ingredient containers (6) ZOLL/ZESCO 4 WEEKS N/A $ 144.00 6
C2) Scoops for Ingredient Containers (7) ZOLL/ZESCO 4 WEEKS N/A $ 6.25 7
C3) Racks for dry pre-mix containers (3)
(66" w x 24"x d 78" h) ▇▇▇▇/▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇/▇ $ 378.00 3
C4) Pre-Mix Containers with Lids (100) ▇▇▇▇/▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇/▇ $ 25.00 100
C5) Scale INDPLS SCALE CO. 4 WEEKS N/A $1,595.00 1
C6) 24 volt battery (for lift to load mixer platform) ASSOCIATED 6 WEEKS N/A $1,670.00 1
C7) Rollers to change 24 volt battery CONCEPT 6 WEEKS N/A $ 460.00 1
C8) Multi-Purpose Respirators (2) GRAINGER 1 WEEK N/A $ 25.00 2
SUB TOTAL 121
D) FLOUR SYSTEM
D1) Scale Hoppers, indicator panel, PLC modifications CAMCO 12 WEEKS 3 WEEKS $36,810.00 1
D2) Aeration on flour bin (1) (Test one silo) CAMCO 12 WEEKS 3 WEEKS $10,930.00 1
D3) Aeration on 4 flour bins CAMCO 12 WEEKS 3 WEEKS $ 5,000.00 4
D4) Flour Sock for mixer vent and hoppers FABRICRAFT 1 WEEK 1 DAY $ 12.00 10
D5) Mechanical installation TERENST 2 WEEKS 8 DAYS $ 0.00 1
D6) Air Exhaust/Supply Fans CALL ▇▇▇▇▇▇▇ 2 WEEKS 8 DAYS $ 8,000.00 1
SUB TOTAL 18
$$$ AMOUNT TOTAL
INSTALLATION FREIGHT $$$ PROVISIONS TOTAL $$$
A) DRY INGREDIENT WAREHOUSE
A1) Metal room to seal Trash Compactor to building $ 838.00 $ 0.00 $ 2,863.00
A2) Pour curbs in compactor room $ 00 $ 0.00 $ 450.00
SUB TOTAL $ 838.00 $ 0.00 $ 0.00 $ 3,313.00
B) LAB
B1) Storage Cabinet - To retain flour samples. $ 0.00 $ 0.00 $ 474.85
B2) Upright Freezer $ 0.00 $ 0.00 $ 1,450.00
SUB TOTAL $ 0.00 $ 0.00 $ 0.00 $ 1,924.85
C) PRE-MIX ROOM
C1) Ingredient containers (6) $ 0.00 $ 15.00 $ 879.00
C2) Scoops for Ingredient Containers (7) $ 0.00 $ 5.00 $ 48.75
C3) Racks for dry pre-mix containers (3)
(66" w x 24" d x 78" h) $ 0.00 $ 40.00 $ 1,174.00
C4) Pre-Mix Containers with Lids (100) $ 0.00 $ 15.00 $ 2,515.00
C5) Scale $ 0.00 $ 15.00 $ 1,610.00
C6) 24 volt battery (for lift to load mixer platform) $ 0.00 $ 225.00 $ 1,895.00
C7) Rollers to change 24 volt battery $ 0.00 $ 50.00 $ 510.00
C8) Multi-Purpose Respirators (2) $ 0.00 $ 8.00 $ 58.00
SUB TOTAL $ 0.00 $ 373.00 $ 0.00 $ 8,689.75
D) FLOUR SYSTEM
D1) Scale Hoppers, indicator panel, PLC modifications $ 0.00 $ 750.00 $ 37,560.00
D2) Aeration on flour bin (1) (Test one silo) $ 0.00 $ 0.00 $ 10,930.00
D3) Aeration on 4 flour bins $ 0.00 $ 0.00 $15,000.00 $ 35,000.00
D4) Flour Sock for mixer vent and hoppers $ 0.00 $ 0.00 $ 120.00
D5) Mechanical installation $15,000.00 $ 0.00 $ 15,000.00
D6) Air Exhaust/Supply Fans $ 0.00 $ 0.00 $ 8,000.00
SUB TOTAL $15,000.00 $ 750.00 $15,000.00 $106,610.00
Equipment needed for 2nd line -- Page 1 of 5
SCHEDULE A
EQUIPMENT NEEDED FOR 2ND LINE DEL. OF EQUIPMENT INSTALLATION $$$ AMOUNT EQUIP.
July 9, 1997 SUPPLIER LEAD TIME TIME EQUIPMENT QTY.
E) DOUGH ROOM
E1) Temporary wall to divide Dough Room ▇▇▇▇▇▇ 2 DAYS 2 DAYS $1,864.00 1
E2) Mixer Platform ▇▇▇▇▇▇▇▇▇ 3 WEEKS 1 DAY $15,114.00 1
E3) Infeed chute on back of mixer ▇▇▇▇▇▇▇▇▇ 3 WEEKS 1 DAY $2,514.00 1
E4) Water Meter ▇▇ ▇▇▇▇ 6 WEEKS 3 DAYS $2,250.00 1
E5) Brackets for water/sugar/flour meters ▇▇▇▇▇▇▇▇▇ 6 WEEKS 2 DAYS $550.00 1
E6) Ports on mixer for liquid sugar infeed
(existing mixers) (2) ETMW/▇▇▇▇▇▇▇▇▇ 1 DAY 1 DAY $825.00 2
E7) ETMW Mixers (2) ETMW IN STORAGE 2 DAYS $161,000.00 2
E8) Riggers to set equipment (Mixers, Trough
lifts) ▇▇▇▇▇▇▇▇▇ 2 WEEKS 3 DAYS $1,630.00 1
E9) ETMW - Sugar ports ETMW 2 WEEKS 1 DAY $325.00 2
E10) Epoxy coating on floor in front of mixers
over to Trough lifters ENG. FLOORING, INC. 3 WEEKS 3 DAYS $4,320.00 1
E11) Glycol lines for mixer jackets (6)
(Flex pipe only) ▇▇▇▇▇▇ RUBBER 3 WEEKS 1 DAY $333.33 6
E12) ETMW Dough Troughs (2) ETMW 16-20 WEEKS N/A $3,150.00 2
E13) Oil system for Dough Troughs (Additional
piping and sprayer nozzles) ▇▇▇▇▇▇ 3 WEEKS 2 DAYS $207.00 1
E14) ETMW Dough Trough Lifts (2) ETMW 16-20 WEEKS 2 DAYS $31,500.00 2
E15) ▇▇▇▇▇▇▇ System ▇▇▇▇▇▇▇ 14 WEEKS 2 WEEKS $1,243,064.00 1
E16) Pour concrete pad for ▇▇▇▇▇▇▇ control
panel SQUEEKE 2 WEEKS 2 DAYS $550.00 1
E17) ▇▇▇▇▇▇▇▇ Bagel Former (8) ▇▇▇▇▇▇▇▇ IN STORAGE 2 DAYS $239,000.00 1
E18) ▇▇▇▇▇▇▇▇ Bagel Formers (Spare Parts) ▇▇▇▇▇▇▇▇ 2 WEEKS N/A $7,754.00 1
E19) Walk over to cross conveyor going into
spiral proofer ▇▇▇▇▇▇▇▇▇ 4 WEEKS 1 DAY $3,119.00 1
E20) Pipe ▇▇▇▇▇▇▇ to protect yeast cooler wall CAP. DRILLING/SQUEEK 2 WEEKS 2 DAYS $350.00 1
E21) Hand sink by mixers ▇▇▇▇▇▇▇ 4 WEEKS 2 DAYS $520.00 1
E22) Rubbermaid Containers
1) 32 Gallon (white) (24) ▇▇▇▇/▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇/▇ $48.00 24
2) 32 Gallon (red) (12) ZOLL/ZESCO 4 WEEKS N/A $48.00 12
3) 32 Gallon (yellow) (4) ZOLL/ZESCO 4 WEEKS N/A $48.00 4
E23) Temperature probes for Dough temperature ▇▇▇▇▇▇ ▇▇▇▇▇ 3 WEEKS 1 DAY $850.00 1
E24) Scale divider to check weights (Weigh
Tronix) - tie into computer INDPLS. SCALE CO. 4 WEEKS N/A $1,095.00 1
E25) Stainless steel table for scale
(30" x 60") ZOLL/ZESCO 6 WEEKS N/A $107.00 1
E26) Tables/Carts to clean divider parts (4)
(Rubbermaid) ZOLL/ZESCO 6 WEEKS N/A $562.00 4
E27) Electrical Installation ETS 2 WEEKS 3 WEEKS $0.00 1
E28) Mechanical Installation ▇▇▇▇▇▇▇ 2 WEEKS 3 WEEKS $0.00 1
E29) Laptop Computer / ▇▇▇▇▇-▇▇▇▇▇▇▇
Controller & S/W COMP USA / ▇▇▇▇▇-▇▇▇▇ 2 WEEKS 1 DAY $2,500.00 1
E30) Locking device to secure Trough to
Mixers (4) ETMW 6 WEEKS 2 DAYS $500.00 4
SUB TOTAL 85
F) SPIRAL FINAL PROOFER
F1) Platform between proofer/cooler ▇▇▇▇▇▇▇▇▇ 5 WEEKS 3 DAYS $8,737.00 1
F2) Add ladder to access back side ▇▇▇▇▇▇▇▇▇ 4 WEEKS 2 HOURS $1,250.00 1
F3) Belt ▇▇▇▇▇▇▇▇/NORTHFIELD 10 WEEKS 2 DAYS $69,650.00 1
F4) Install belt washer and dryer NORTHFIELD 2 DAYS 1 DAY $0.00 1
F5) Install steam unit ▇▇▇▇▇▇▇ 2 DAYS 3 DAYS $0.00 1
F6) Take up motor for slack loop NORTHFIELD 2 WEEKS 1 DAY $500.00 1
F7) Transfer belt from proofer to cooler NORTHFIELD 4 WEEKS 1 WEEK $42,000.00 1
F8) Automatic belt oil system NORTHFIELD 4 WEEKS 2 HOURS $500.00 1
F9) Electrical Installation ETS 2 WEEKS 2 WEEKS $0.00 1
F10) Proofer Exhaust Fan Guard ▇▇▇▇▇▇▇▇▇ 2 WEEKS 1 DAY $348.00 1
SUB TOTAL 10
$$$ AMOUNT TOTAL TOTAL
SUPPLIER INSTALLATION FREIGHT $$$ PROVISIONS $$$
E) DOUGH ROOM
E1) Temporary wall to divide Dough Room ▇▇▇▇▇▇ $0.00 $0.00 $1,864.00
E2) Mixer Platform ▇▇▇▇▇▇▇▇▇ $986.00 $0.00 $16,100.00
E3) Infeed chute on back of mixer ▇▇▇▇▇▇▇▇▇ $344.00 $0.00 $2,858.00
E4) Water Meter ▇▇ ▇▇▇▇ $0.00 $25.00 $2,275.00
E5) Brackets for water/sugar/flour meters ▇▇▇▇▇▇▇▇▇ $0.00 $0.00 $550.00
E6) Ports on mixer for liquid sugar infeed
(existing mixers) (2) ETMW/▇▇▇▇▇▇▇▇▇ $0.00 $0.00 $1,650.00
E7) ETMW Mixers (2) ETMW $0.00 $4,000.00 $326,000.00
E8) Riggers to set equipment (Mixers, Trough
lifts) ▇▇▇▇▇▇▇▇▇ $0.00 $0.00 $1,630.00
E9) ETMW - Sugar ports ETMW $0.00 $0.00 $650.00
E10) Epoxy coating on floor in front of mixers
over to Trough lifters ENG. FLOORING, INC. $0.00 $0.00 $4,320.00
E11) Glycol lines for mixer jackets (6)
(Flex pipe only) ▇▇▇▇▇▇ RUBBER $0.00 $10.00 $2,010.00
E12) ETMW Dough Troughs (2) ETMW $0.00 $0.00 $6,300.00
E13) Oil system for Dough Troughs (Additional
piping and sprayer nozzles) ▇▇▇▇▇▇ $400.00 $18.00 $625.00
E14) ETMW Dough Trough Lifts (2) ETMW $6,000.00 $1,150.00 $70,150.00
E15) ▇▇▇▇▇▇▇ System ▇▇▇▇▇▇▇ $91,600.00 $7,000.00 $1,341,664.00
E16) Pour concrete pad for ▇▇▇▇▇▇▇ control
panel SQUEEKE $0.00 $0.00 $550.00
E17) ▇▇▇▇▇▇▇▇ Bagel Former (8) ▇▇▇▇▇▇▇▇ $2,800.00 $3,200.00 $245,000.00
E18) ▇▇▇▇▇▇▇▇ Bagel Formers (Spare Parts) ▇▇▇▇▇▇▇▇ $0.00 $375.00 $8,129.00
E19) Walk over to cross conveyor going into
spiral proofer ▇▇▇▇▇▇▇▇▇ $626.00 $0.00 $3,745.00
E20) Pipe ▇▇▇▇▇▇▇ to protect yeast cooler wall CAP. DRILLING/SQUEEK $0.00 $0.00 $350.00
E21) Hand sink by mixers ▇▇▇▇▇▇▇ $0.00 $0.00 $520.00
E22) Rubbermaid Containers
1) 32 Gallon (white) (24) ZOLL/ZESCO $0.00 $5.00 $1,157.00
2) 32 Gallon (red) (12) ZOLL/ZESCO $0.00 $5.00 $581.00
3) 32 Gallon (yellow) (4) ZOLL/ZESCO $0.00 $5.00 $197.00
E23) Temperature probes for Dough temperature ▇▇▇▇▇▇ ▇▇▇▇▇ $0.00 $10.00 $860.00
E24) Scale divider to check weights (Weigh
Tronix) - tie into computer INDPLS. SCALE CO. $0.00 $20.00 $1,115.00
E25) Stainless steel table for scale
(30" x 60") ZOLL/ZESCO $0.00 $15.00 $122.00
E26) Tables/Carts to clean divider parts (4)
(Rubbermaid) ZOLL/ZESCO $0.00 $15.00 $2,263.00
E27) Electrical Installation ETS $130,000.00 $0.00 NOT TO $130,000.00
E28) Mechanical Installation ▇▇▇▇▇▇▇ $3,895.00 $0.00 EXCEED $$ $5,895.00
E29) Laptop Computer / ▇▇▇▇▇-▇▇▇▇▇▇▇ AMOUNT
Controller & S/W COMP USA / ▇▇▇▇▇-▇▇▇▇ $0.00 $0.00 $2,000.00 $2,500.00
E30) Locking device to secure Trough to
Mixers (4) ETMW $0.00 $0.00 $2,000.00
SUB TOTAL $236,651.00 $15,853.00 $2,000.00 $2,183,630.00
F) SPIRAL FINAL PROOFER
F1) Platform between proofer/cooler ▇▇▇▇▇▇▇▇▇ $2,530.00 $0.00 $11,267.00
F2) Add ladder to access back side ▇▇▇▇▇▇▇▇▇ $325.00 $0.00 $1,575.00
F3) Belt ▇▇▇▇▇▇▇▇/NORTHFIELD $1,100.00 $750.00 $71,500.00
F4) Install belt washer and dryer NORTHFIELD $660.00 $0.00 $660.00
F5) Install steam unit ▇▇▇▇▇▇▇ $3,600.00 $0.00 $3,600.00
F6) Take up motor for slack loop NORTHFIELD $0.00 $0.00 $500.00
F7) Transfer belt from proofer to cooler NORTHFIELD $0.00 $450.00 NOT TO $42,450.00
F8) Automatic belt oil system NORTHFIELD $0.00 $0.00 EXCEED $$ $500.00
F9) Electrical Installation ETS $800.00 $0.00 AMOUNT $800.00
F10) Proofer Exhaust Fan Guard ▇▇▇▇▇▇▇▇▇ $132.00 $0.00 $480.00
SUB TOTAL $9,147.00 $1,200.00 $0.00 $133,332.00
EQUIPMENT NEEDED FOR 2ND LINE Page 2 of 5
SCHEDULE A
EQUIPMENT NEEDED FOR 2ND LINE DEL. OF EQUIPMENT INSTALLATION
July 9, 1997 SUPPLIER LEAD TIME TIME
G) SPIRAL COOLER
G1) Belt ▇▇▇▇▇▇▇▇/NORTHFIELD 10 WEEKS 2 DAYS
G2) Install belt washer NORTHFIELD 2 DAYS 1 DAY
G3) Add ladder to access back side ▇▇▇▇▇▇▇▇▇ 4 WEEKS 2 HOURS
G4) Take up motor for slack loop NORTHFIELD 2 WEEKS 1 DAY
G5) Automatic belt oil system NORTHFIELD 4 WEEKS 2 HOURS
G6) Eletrical installation ETS 2 WEEKS 2 WEEKS
G7) High Pressure pump belt washer NORTHFIELD 8 WEEKS N/A
SUB TOTAL
H) BAGEL COOKER (▇▇▇▇▇)
H1) Epoxy floors to prevent excess wear on concrete ENG. FLOORING, INC. 2 WEEKS 3 DAYS
H2) Bagel Cooker with take away conveyor and filter HEAT & CONTROL 16-20 WEEKS 3 WEEKS
H3) Infeed/Discharge Conveyors HEAT & CONTROL 16-20 WEEKS 1 WEEK
H4) Filter for Bagel Cooker HEAT & CONTROL 16-20 WEEKS 1 WEEK
H5) Exhaust Fans, Duct work and piping filter to Cooker HEAT & CONTROL 2 WEEKS 2 DAYS
H6) S.S. Stack for Exhaust Fan to Roof ▇▇▇▇▇▇▇▇▇ 4 WEEKS 2 DAYS
H7) Flash roof penetrations ▇▇▇▇▇▇▇▇ ROOFING 2 WEEKS 2 DAYS
H8) Walk over to cross both conveyors ▇▇▇▇▇▇▇▇▇ 5 WEEKS 1 DAY
H9) Rubbermaid Containers 1) 32 Gallon (White) ZOLL/ZESCO 4 WEEKS N/A
2) 32 Gallon (Red) ZOLL/ZESCO 4 WEEKS N/A
H10) Vinegar System to control pH (pump, meter, probe) HVC 6 WEEKS 2 DAYS
H11) Drum spill skid GRAINGER 1 WEEK N/A
H12) Temporary ▇▇▇▇ ▇▇▇▇▇▇ 1 WEEK 2 DAYS
H13) Electrical installation ETS 2 WEEKS 3 WEEKS
H14) Mechanical installation ▇▇▇▇▇▇▇ 2 WEEKS 3 WEEKS
H15) Riggers to set equipment (cooker) ▇▇▇▇▇▇▇▇▇ 2 WEEKS 2 DAYS
SUB TOTAL
I) BLAST FREEZER
I1) Northfield Modifications/Coils NORTHFIELD 12 WEEKS 4 WEEKS
I2) Temporary ▇▇▇▇ ▇▇▇▇▇▇ 2 WEEKS 2 DAYS
I3) Concrete/floor work SQUEEK 2 WEEKS 2 WEEKS
I4) Blower and PVC pipes for floor B & J PLASTIC PIPE 1 WEEK 1 DAY
I5) Pro-Tech epoxy floor PRO-TECH. 3 WEEKS 3 DAYS
I6) Freezer Panels ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 6 WEEKS 4 DAYS
I7) Install Belt Washer ▇▇▇▇▇▇▇ 1 DAY 1 DAY
I8) Drive Cap Bar NORTHFIELD 2 WEEKS 2 DAYS
I9) Electrical Installation ETS 2 WEEKS 4 WEEKS
I10) Mechanical Installation AIR 3 WEEKS 8 WEEKS
SUB TOTAL
SCHEDULE A
EQUIPMENT NEEDED FOR 2ND LINE $$$ AMOUNT EQUIP. $$$ AMOUNT
July 9, 1997 EQUIPMENT QTY. INSTALLATION
G) SPIRAL COOLER
G1) Belt $69,650.00 1 $1,100.00
G2) Install belt washer $0.00 1 $460.00
G3) Add ladder to access back side $1,250.00 1 $325.00
G4) Take up motor for slack loop $500.00 1 $0.00
G5) Automatic belt oil system $500.00 1 $0.00
G6) Eletrical installation $0.00 1 $2,800.00
G7) High Pressure pump belt washer $10,200.00 1 $0.00
SUB TOTAL 7 $4,685.00
H) BAGEL COOKER (▇▇▇▇▇)
H1) Epoxy floors to prevent excess wear on concrete $6,880.00 1 $0.00
H2) Bagel Cooker with take away conveyor and filter $217,927.00 1 $4,000.00
H3) Infeed/Discharge Conveyors $17,050.00 1 $0.00
H4) Filter for Bagel Cooker $43,560.00 1 $0.00
H5) Exhaust Fans, Duct work and piping filter to Cooker $6,320.00 1 $0.00
H6) S.S. Stack for Exhaust Fan to Roof $5,171.00 1 $2,308.00
H7) Flash roof penetrations $0.00 1 $1,166.00
H8) Walk over to cross both conveyors $7,777.00 1 $864.00
H9) Rubbermaid Containers 1) 32 Gallon (White) $48.00 4 $0.00
2) 32 Gallon (Red) $48.00 2 $0.00
H10) Vinegar System to control pH (pump, meter, probe) $3,500.00 1 $0.00
H11) Drum spill skid $262.00 1 $0.00
H12) Temporary wall $1,398.00 1 $0.00
H13) Electrical installation 1 $24,000.00
H14) Mechanical installation $0.00 1 $12,200.00
H15) Riggers to set equipment (cooker) $0.00 1 $1,160.00
SUB TOTAL 20 $45,698.00
I) BLAST FREEZER
I1) Northfield Modifications/Coils $389,400.00 1 $0.00
I2) Temporary Wall $1,165.00 1 $0.00
I3) Concrete/floor work $21,000.00 1 $0.00
I4) Blower and PVC pipes for floor $2,200.00 1 $0.00
I5) Pro-Tech epoxy floor $11,000.00 1 $0.00
I6) Freezer Panels $29,982.00 1 $0.00
I7) Install Belt Washer IN STORAGE 1 $400.00
I8) Drive Cap Bar $9,150.00 1 $800.00
I9) Electrical Installation $38,000.00 1 $0.00
I10) Mechanical Installation $0.00 1 $220,000.00
SUB TOTAL 10 $221,200.00
SCHEDULE A
EQUIPMENT NEEDED FOR 2ND LINE TOTAL TOTAL
July 9, 1997 FREIGHT $$$ PROVISIONS $$$
G) SPIRAL COOLER
G1) Belt $750.00 $71,500.00
G2) Install belt washer $0.00 $460.00
G3) Add ladder to access back side $0.00 $1,575.00
G4) Take up motor for slack loop $0.00 $500.00
G5) Automatic belt oil system $0.00 $500.00
G6) Eletrical installation $0.00 $2,800.00
G7) High Pressure pump belt washer $0.00 $10,200.00
SUB TOTAL $750.00 $0.00 $87,535.00
H) BAGEL COOKER (▇▇▇▇▇)
H1) Epoxy floors to prevent excess wear on concrete $0.00 $6,880.00
H2) Bagel Cooker with take away conveyor and filter $3,200.00 $225,127.00
H3) Infeed/Discharge Conveyors $0.00 $17,050.00
H4) Filter for Bagel Cooker $0.00 $43,560.00
H5) Exhaust Fans, Duct work and piping filter to Cooker $0.00 $6,320.00
H6) S.S. Stack for Exhaust Fan to Roof $0.00 $7,479.00
H7) Flash roof penetrations $0.00 $1,166.00
H8) Walk over to cross both conveyors $0.00 $8,641.00
H9) Rubbermaid Containers 1) 32 Gallon (White) $5.00 $197.00
2) 32 Gallon (Red) $5.00 $101.00
H10) Vinegar System to control pH (pump, meter, probe) $0.00 $3,500.00
H11) Drum spill skid $15.00 $277.00
H12) Temporary wall $0.00 $1,398.00
H13) Electrical installation $0.00 NOT TO EXCEED $$ AMOUNT $24,000.00
H14) Mechanical installation $0.00 $12,200.00
H15) Riggers to set equipment (cooker) $0.00 $1,160.00
SUB TOTAL $3,225.00 $0.00 $359,056.00
I) BLAST FREEZER
I1) Northfield Modifications/Coils $0.00 NOT TO EXCEED $$ AMOUNT $389,400.00
I2) Temporary Wall $0.00 $1,165.00
I3) Concrete/floor work $0.00 WILL EXCEED $$ AMOUNT $21,000.00
I4) Blower and PVC pipes for floor $0.00 $2,200.00
I5) Pro-Tech epoxy floor $0.00 $11,000.00
I6) Freezer Panels $0.00 $5,000.00 $34,982.00
I7) Install Belt Washer $0.00 $400.00
I8) Drive Cap Bar $100.00 $10,050.00
I9) Electrical Installation $0.00 NOT TO EXCEED $$ AMOUNT $38,000.00
I10) Mechanical Installation $0.00 $16,000.00 $236,000.00
SUB TOTAL $100.00 $21,000.00 $744,197.00
Equipment needed for 2nd line--Page 3 of 5
SCHEDULE A
EQUIPMENT NEEDED FOR 2ND LINE DEL. OF EQUIPMENT INSTALLATION
July 9, 1997 SUPPLIER LEAD TIME TIME
J) PACKAGING AREA
J1) Controls for Packaging Area SYSTEM TECHNOLOGY 16-18 WEEKS 5 WEEKS
J2) Check Weighers (2) SYSTEM TECHNOLOGY 12 WEEKS 5 WEEKS
J3) Conveyors SYSTEM TECHNOLOGY 16-18 WEEKS 5 WEEKS
J4) Conveyors (7 feet to replace Metal Detector) SYSTEM TECHNOLOGY 16-18 WEEKS 5 WEEKS
J5) Counters (2) WEIGH-RITE 16-18 WEEKS 5 WEEKS
J6) Platforms for Counters ▇▇▇▇▇▇▇▇▇ 6 WEEKS 1 DAY
J7) Baggers (2) SYSTEM TECHNOLOGY 16-18 WEEKS 5 WEEKS
J8) Hytrol Conveyor for cases SYSTEM TECHNOLOGY 16-18 WEEKS 5 WEEKS
J9) Metal Detector to detect product in bags (1) SYSTEM TECHNOLOGY 16-18 WEEKS 5 WEEKS
J10) Install walk through door from packaging into palletizing room ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 6 WEEKS 2 DAYS
J11) Ink Jet Machine MARCRAFT 2 WEEKS 5 WEEKS
J12) Label Machine with spare print engine MARCRAFT 10 WEEKS 5 WEEKS
J13) Case Taper SYSTEM TECHNOLOGY 8-10 WEEKS 5 WEEKS
J14) Walk over to cross hytroll conveyors ▇▇▇▇▇▇▇▇▇ 6 WEEKS 1 DAY
J15) Program changes to Robot FANUC 3 WEEKS 2 DAYS
J16) Air Dryer for Fanuc Robot ▇▇▇▇▇▇ 3 WEEKS 1 DAY
J17) Temperature probes to check core temperatures ▇▇▇▇▇▇ ▇▇▇▇▇ 3 WEEKS 2 HOURS
J18) Stainless steel table ZOLL/ZESCO 4 WEEKS N/A
J19) Storage Cabinet for labels, tape, etc. ASSOCIATED 8-10 WEEKS 1 DAY
J20) Pallet ▇▇▇▇ ▇▇▇ 1 WEEK N/A
J21) Rubbermaid Containers 1) 32 Gallon (White) (8) ZOLL/ZESCO 4 WEEKS N/A
2) 32 Gallon (Red) (8) ZOLL/ZESCO 4 WEEKS N/A
J22) Temporary ▇▇▇▇ ▇▇▇▇▇▇ 2 WEEKS 2 DAYS
J23) Electrical Installation ETS 3 WEEKS 4 WEEKS
J24) Mechanical Installation - Air lines ▇▇▇▇▇▇▇ 2 WEEKS 2 WEEKS
SUB TOTAL
K) FREEZER WAREHOUSE
K1) System to change out batteries on forklifts ASSOCIATED 2 WEEKS 1 DAY
K2) Crown sit down forklift (1) OKI 8 WEEKS N/A
K3) Batteries (2) OKI 8 WEEKS N/A
K4) Watering kit for batteries OKI 2 WEEKS 1 DAY
K5) Charger (1) OKI 8 WEEKS 2 DAYS
K6) Pallet racking - 2 deep x 3 high x 9 sections = 54 positions ASSOCIATED 8-10 WEEKS 1 WEEK
K7) One dock plate with door seals and dock light RDC 6 WEEKS 2 DAYS
SUB TOTAL
SCHEDULE A
EQUIPMENT NEEDED FOR 2ND LINE $$$ AMOUNT EQUIP. $$$ AMOUNT TOTAL
July 9, 1997 EQUIPMENT QTY. INSTALLATION FREIGHT $$$
J) PACKAGING AREA
J1) Controls for Packaging Area $38,000.00 1 $14,000.00 $325.00
J2) Check Weighers (2) $18,000.00 2 $0.00 $250.00
J3) Conveyors $180,000.00 1 $24,000.00 $600.00
J4) Conveyors (7 feet to replace Metal Detector) $300.00 7 $0.00 $0.00
J5) Counters (2) $90,000.00 2 $0.00 $425.00
J6) Platforms for Counters $14,000.00 1 $0.00 $0.00
J7) Baggers (2) $100,000.00 2 $0.00 $1,250.00
J8) Hytrol Conveyor for cases $38,500.00 1 $0.00 $425.00
J9) Metal Detector to detect product in bags (1) $35,000.00 1 $0.00 $350.00
J10) Install walk through door from packaging into palletizing room $400.00 1 $0.00 $0.00
J11) Ink Jet Machine $1,200.00 2 $0.00 $0.00
J12) Label Machine with spare print engine $20,754.00 1 $0.00 $0.00
J13) Case Taper $12,000.00 1 $0.00 $225.00
J14) Walk over to cross hytroll conveyors $2,568.00 1 $532.00 $0.00
J15) Program changes to Robot $3,800.00 1 $0.00 $0.00
J16) Air Dryer for Fanuc Robot $2,000.00 1 $0.00 $0.00
J17) Temperature probes to check core temperatures $860.00 1 $0.00 $10.00
J18) Stainless steel table $615.00 1 $0.00 $15.00
J19) Storage Cabinet for labels, tape, etc. $474.85 1 $0.00 $0.00
J20) Pallet ▇▇▇▇ $430.00 1 $0.00 $0.00
J21) Rubbermaid Containers 1) 32 Gallon (White) (8) $48.00 8 $0.00 $5.00
2) 32 Gallon (Red) (8) $48.00 6 $0.00 $5.00
J22) Temporary Wall $2,796.00 1 $0.00 $0.00
J23) Electrical Installation $0.00 1 $100,000.00 $0.00
J24) Mechanical Installation - Air lines $0.00 1 $1,140.00 $0.00
SUB TOTAL 47 $139,672.00 $3,885.00
K) FREEZER WAREHOUSE
K1) System to change out batteries on forklifts $5,955.00 1 $0.00 $200.00
K2) Crown sit down forklift (1) $19,344.00 1 $0.00 $162.50
K3) Batteries (2) $3,068.00 2 $0.00 $0.00
K4) Watering kit for batteries $347.36 1 $65.52 $0.00
K5) Charger (1) $2,808.00 1 $0.00 $0.00
K6) Pallet racking - 2 deep x 3 high x 9 sections= 54 positions $4,800.00 1 $4,000.00 $1,000.00
K7) One dock plate with door seals and dock light $1,570.00 1 $550.00 $0.00
SUB TOTAL 8 $4,615.52 $1,362.50
SCHEDULE A
EQUIPMENT NEEDED FOR 2ND LINE PROVISIONS TOTAL
July 9, 1997 $$$
J) PACKAGING AREA
J1) Controls for Packaging Area $52,325.00
J2) Check Weighers (2) $36,250.00
J3) Conveyors $204,600.00
J4) Conveyors (7 feet to replace Metal Detector) $1,500.00 $3,600.00
J5) Counters (2) $180,425.00
J6) Platforms for Counters $14,000.00
J7) Baggers (2) $201,250.00
J8) Hytrol Conveyor for cases $38,925.00
J9) Metal Detector to detect product in bags (1) $35,350.00
J10) Install walk through door from packaging into palletizing room $400.00
J11) Ink Jet Machine $2,400.00
J12) Label Machine with spare print engine $20,754.00
J13) Case Taper $12,225.00
J14) Walk over to cross hytroll conveyors $3,100.00
J15) Program changes to Robot $3,800.00
J16) Air Dryer for Fanuc Robot $2,000.00
J17) Temperature probes to check core temperatures $870.00
J18) Stainless steel table $630.00
J19) Storage Cabinet for labels, tape, etc. $474.85
J20) Pallet ▇▇▇▇ $430.00
J21) Rubbermaid Containers 1) 32 Gallon (White) (8) $389.00
2) 32 Gallon (Red) (8) $293.00
J22) Temporary Wall $2,796.00
J23) Electrical Installation NOT TO EXCEED $$ AMOUNT $100,000.00
J24) Mechanical Installation - Air lines $3,000.00 $4,140.00
SUB TOTAL $4,500.00 $921,426.85
K) FREEZER WAREHOUSE
K1) System to change out batteries on forklifts $6,155.00
K2) Crown sit down forklift (1) $19,506.50
K3) Batteries (2) $6,136.00
K4) Watering kit for batteries $412.88
K5) Charger (1) $2,808.00
K6) Pallet racking - 2 deep x 3 high x 9 sections= 54 positions $9,800.00
K7) One dock plate with door seals and dock light $2,120.00
SUB TOTAL $0.00 $46,938.38
Equipment needed for 2nd Line -- page 4 of 5
DEL OF
SCHEDULE A EQUIPMENT INSTALLATION $$$ AMOUNT EQUIP
EQUIPMENT NEEDED FOR 2ND LINE SUPPLIER LEAD TIME TIME EQUIPMENT QTY.
July 9, 1997
L) SANITATION ROOM
L1) Pressure Washers (1) ACTION EQUIPMENT 4 WEEKS N/A $5,350.00 1
L2) Foamer (1) (16 gallon) ACTION EQUIPMENT 4 WEEKS N/A $1,625.00 1
L3) Washer & Dryer to clean intermediate proofer cups ▇.▇. ▇▇▇▇▇ 1 WEEK 1 DAY $ 929.00 1
L4) 50 feet air hoses with reels (8) 3/4" GRAINGER 2 WEEKS 4 DAYS $ 280.00 8
L5) High temp water hoses (2 at 100 ft. 2 at 50 ft.) ▇▇▇▇▇▇ RUBBER 2 WEEKS N/A $ 380.00 2
L6) Crimper for Water Hoses ▇▇▇▇▇▇ RUBBER 1 WEEK 1 DAY $ 50.00 1
L7) Door Bump Rolls for Sanitation Doors ▇▇▇▇▇▇▇▇▇ 2 WEEKS 1 DAY $ 478.00 1
L8) Ladders (4) A-Frame 12 ft. HOME DEPOT 1 WEEK N/A $ 150.00 4
SUB TOTAL 19
$$$ AMOUNT TOTAL PROVISIONS TOTAL
INSTALLATION FREIGHT $$$
L) SANITATION ROOM
L1) Pressure Washers (1) $ 0.00 $100.00 $ 5,450.00
L2) Foamer (1) (16 gallon) $ 0.00 $ 40.00 $ 1,665.00
L3) Washer & Dryer to clean intermediate proofer cups $ 0.00 $ 34.95 $ 963.95
L4) 50 feet air hoses with reels (8) 3/4" $ 0.00 $ 18.00 $ 2,258.00
L5) High temp water hoses (2 at 100 ft. 2 at 50 ft.) $ 0.00 $ 10.00 $ 770.00
L6) Crimper for Water Hoses $ 0.00 $ 6.00 $ 56.00
L7) Door Bump Rails for Sanitation Doors $ 324.00 $ 0.00 $ 802.00
L8) Ladders (4) A-Frame 12 ft. $ 0.00 $ 0.00 $ 600.00
SUB TOTAL $ 324.00 $208.95 $0.00 $12,564.95
M) GENERAL PLANT EQ./SUPPLIES/SERVICES ETC.
M1) 2nd Water Heater for/to pre-piped system ▇▇▇▇▇▇▇ 2 WEEKS 2 DAYS $ 9,670.00 1
M2) Platform man lift ASSOCIATED 6 WEEKS N/A $24,000.00 1
M3) ▇▇▇▇▇▇ Construction Laborers N/A 1 WEEK 12 WEEKS $ 0.00 1
M4) ▇▇▇▇▇▇ Group ▇▇▇▇▇▇
M5) Rental of 1 forklift during equipment installation period OKI 2 DAYS N/A $ 4,500.00 1
M6) Additional lockers KING EQUIPMENT 4 WEEKS 2 DAYS $ 88.00 48
M7) 40 yard dumpster for waste and trash removal RAYS TRASH SERVICE 1 DAY N/A $ 560.00 15
M8) Rubbermaid 55 gallon ▇▇▇▇ garbage cans with lids and dollies ▇▇▇▇/▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇/▇ $ 78.00 8
M9) Indiana Oxygen (Welding gas) INDIANA OXYGEN 1 DAY N/A $ 68.00 6
M10) Painting - ▇▇▇▇ ▇▇▇▇▇▇▇ (paint, materials, labor) ▇▇▇▇ ▇▇▇▇▇▇▇ 2 WEEKS 6 WEEKS $ 3,000.00 1
M11) Misc. Tool Rental for Installation DEANS 1 DAY 3 DAYS $ 2,800.00 1
M12) Special Dispatch - courier service SPECIAL DISPATCH 1 DAY 1 DAY $ 30.00 30
M13) Belt Washer (for conveyors other than spirals) ▇▇▇▇▇▇▇▇▇ 4 WEEKS 1 DAY $ 2,000.00 1
M14) SCBA(Self Contained Breathing Apparatus) (2) GRAINGER 1 WEEK N/A $ 3,088.00 2
M15) Level A SCBA suits (2) NEW PIG 4 WEEKS N/A $ 569.00 2
M16) Safety cabinet for SCBA's with breakaway locks ASSOCIATED 4 WEEKS N/A $ 960.00 1
M17) ▇▇▇▇▇▇▇ Denver Air Compressor ▇▇▇▇▇▇ 8 WEEKS 2 DAYS $25,200.00 1
M18) Air Dryer ▇▇▇▇▇▇ 6 WEEKS 2 DAYS $ 8,600.00 1
M19) Provisions N/A $ 0.00 0
SUB TOTAL 121
GRAND TOTAL EQUIPMENT NEEDED FOR 2ND LINE 470
GRAND TOTAL (INCLUDING WISH LIST AND COMPUTER SYSTEM) 525
SCHEDULE A $$$ AMOUNT TOTAL PROVISIONS TOTAL
EQUIPMENT NEEDED FOR 2ND LINE INSTALLATION FREIGHT $$$ $$$
July 9, 1997
M) GENERAL PLANT EQ./SUPPLIES/SERVICES ETC.
M1) 2nd Water Heater for/to pre-piped system $ 0.00 $ 0.00 $ 9,670.00
M2) Platform man lift $ 0.00 $ 0.00 $ 24,000.00
M3) ▇▇▇▇▇▇ Construction Laborers $ 36,000.00 $ 0.00 $ 36,000.00
M4) ▇▇▇▇▇▇ Group $ 115,000.00
M5) Rental of 1 forklift during equipment installation period $ 0.00 $ 0.00 $ 4,500.00
M6) Additional lockers $ 0.00 $ 0.00 $ 4,224.00
M7) 40 yard dumpster for waste and trash removal $ 0.00 $ 0.00 $ 8,400.00
M8) Rubbermaid 55 gallon ▇▇▇▇ garbage cans with lids and dollies $ 0.00 $ 40.00 $ 664.00
M9) Indiana Oxygen (Welding gas) $ 0.00 $ 0.00 $ 408.00
M10) Painting - ▇▇▇▇ ▇▇▇▇▇▇▇ (paint, materials, labor $ 0.00 $ 0.00 $ 3,000.00
M11) Misc. Tool Rental for Installation $ 0.00 $ 0.00 $ 2,800.00
M12) Special Dispatch - courier service $ 0.00 $ 0.00 $ 900.00
M13) Belt Washer (for conveyors other than spirals) $ 0.00 $ 0.00 $ 2,000.00
M14) SCBA(Self Contained Breathing Apparatus) (2) $ 0.00 $ 0.00 $ 6,176.00
M15) Level A SCBA suits (2) $ 0.00 $ 12.00 $ 1,150.00
M16) Safety cabinet for SCBA's with breakaway locks $ 0.00 $ 0.00 $ 960.00
M17) ▇▇▇▇▇▇▇ Denver Air Compressor $ 3,500.00 $ 250.00 $ 28,950.00
M18) Air Dryer $ 800.00 $ 0.00 $ 9,400.00
M19) Provisions $ 68,193.05 $ 0.00 $14,387.17 $ 82,580.22
SUB TOTAL $108,493.05 $ 302.00 $14,387.17 $ 340,782.22
$786,123.57 $28,009.45 $56,887.17 $4,950,000.00
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$802,981.09 $30,451.95 $5,272,604.15
EQUIPMENT NEEDED FOR 2ND LINE--PAGE 5 OF 5
Exhibit G
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Amendment to Lease Agreement
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AMENDMENT TO LEASE AGREEMENT EXHIBIT G
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This Amendment (the "Amendment") is dated as of August __, 1997 and is
entered into by and between Einstein/Noah Bagel Corp. ("ENBC" or "Lessor") and
▇▇▇▇▇▇ Bagel Supply Company, LLC (the "Company" or "Lessee") and amends that
certain Lease Agreement dated as of August 27, 1996 between the parties (the
"Lease" or "Agreement"). Capitalized terms not defined herein shall have the
same meaning ascribed to such terms in the Lease.
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which is hereby acknowledged, the parties hereto agree as follows:
1. Article XVIII of the Lease is hereby amended and restated in its
entirety as follows:
XVIII. END OF LEASE PURCHASE OPTION:
(a) So long as Lessee is not then in Default under this Lease, Lessee
shall have the option commencing on August 27, 2003 and continuing until the
expiration of the term of each Schedule, to purchase all (but not less than all)
of the Equipment described on all Schedules of a particular series executed
hereunder upon the following terms and conditions: If Lessee desires to exercise
this option with respect to the Equipment, Lessee shall pay to Lessor on the
closing date of the purchase of the Equipment, in addition to the scheduled Rent
(if any) then due on such date and all other sums then due hereunder, in cash
the purchase price for the Equipment so purchased, determined as hereinafter
provided. If the closing date falls on a date on which scheduled Rent is not
due, Lessee will pay the appropriate pro rata share of the next scheduled Rent
payment. The purchase price of the Equipment shall be an amount equal to the
Fair Market Value of such Equipment, plus all taxes and charges upon sale. Upon
satisfaction of the conditions specified in this Paragraph 9(a), and upon
receipt from Lessee of documentation acceptable to Lessor, Lessor will transfer,
on an AS IS BASIS, all of Lessor's interest in and to such Equipment. Lessor
shall not be required to make and may specifically disclaim any representation
or warranty as to the condition of such Equipment and other matters (except that
Lessor shall warrant that it has conveyed whatever interest it received in such
Equipment free and clear of any lien or encumbrance created by, through or under
Lessor). Lessor shall execute and deliver to Lessee such Uniform Commercial
Code Statements of Termination, bills of sale and other documents as reasonably
may be required in order to terminate any interest of Lessor in and to such
Equipment.
(b) For purposes of this Section XVIII, the Fair Market Value of any
Equipment shall be agreed to be the fair market value of the Equipment as agreed
by Lessor and Lessee or as otherwise determined hereunder. If Lessor and Lessee
are unable to agree within thirty (30) days after Lessee gives written notice to
Lessor of its exercise of the foregoing option, then each of Lessor and Lessee
shall within ten (10) days after the expiration of such thirty (30) day period
appoint an independent appraiser, knowledgeable in the appraisal of assets such
as the Equipment, to determine the fair market value of the Equipment. If the
two appraisers so selected are unable to agree on the fair market value of the
Equipment within forty-five (45) days after appointment, then they shall appoint
a third independent appraiser, knowledgeable in the appraisal of assets such as
the Equipment, who shall determine the fair market value of the Equipment within
thirty (30)
days after appointment. Closing shall take place promptly after Fair Market
Value is finally determined; provided, however, that closing shall not take
place earlier than one hundred twenty (120) days after Lessee has given Lessor
notice of its election to purchase as provided in Paragraph (c) of this Section,
unless the parties otherwise agree. Lessor and Lessee agree that they shall be
bound by the determination of fair market value pursuant to this Section XVIII,
and that such determination shall be enforceable by a court of competent
jurisdiction. Lessor shall bear the fees and expenses of its appraiser, Lessee
shall bear the fees and expenses of its appraiser, and Lessor and Lessee shall
bear equally the fees and expenses of the third appraiser, if any.
(c) Lessee shall give Lessor written notice of its election of the
purchase options specified in paragraph (a) of this Section at any time after
April 30, 2003 and in any event not less than one hundred twenty (120) days
before the expiration of the Term of the first Schedule of a series to be
executed under this Lease. Such election shall be effective with respect to all
Equipment described on all Schedules of that particular series executed
hereunder. If Lessee fails timely to provide such notice, without further action
Lessee automatically shall be deemed to have not elected to purchase the
Equipment pursuant to Paragraph (a) of this Section.
2. The parties agree that the Lease will terminate upon the exercise by
ENBC of its option to purchase the assets of the Company pursuant to that
certain Amended and Restated Option Agreement dated of even date herewith and
entered into by and among ENBC, the Company, ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇ ▇. ▇▇▇▇▇▇.
3. Except as amended hereby, the Lease remains in full force and effect.
IN WITNESS WHEREOF, Lessee and Lessor have caused this Amendment to be
executed by their duly authorized representatives as of the date first above
written.
LESSOR: LESSEE:
EINSTEIN/NOAH BAGEL CORP. ▇▇▇▇▇▇ BAGEL SUPPLY COMPANY,
LLC
By: By:
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Printed: Printed:
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Title: Title:
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