Merger Agreement - Noah's New York Bagels Inc. and Einstein Bros. Bagels Inc.
MERGER AGREEMENT
AMONG
NOAH'S NEW YORK BAGELS, INC.,
SHAREHOLDERS AND CERTAIN OPTIONHOLDERS
OF NOAH'S NEW YORK BAGELS, INC.,
EINSTEIN BROS. BAGELS, INC.
and
NNYB ACQUISITION CORPORATION
DATED JANUARY 22, 1996
TABLE OF CONTENTS
Page
Article 1. The Merger; the Stock Purchase 1.
1.1 The Merger 1.
1.2 Effective Time of the Merger 1.
1.3 Articles of Incorporation of the Company 2.
1.4 Bylaws of the Company 2.
1.5 Treatment of Shares of the Company 2.
1.6 Treatment of Optionees 2.
1.7 Treatment of Shares of Common Stock of Merger Sub 2.
1.8 Time and Place of the Closing 2.
1.9 The Merger 2.
1.10 The Stock Purchase 3.
Article 2. Representations and Warranties of the
Shareholders Concerning the Transaction 3.
2.1 Organization of Certain Shareholders; Due Authorization 3.
2.2 Binding Obligation 3.
2.3 Ownership of Shares of the
Company By the Shareholders 4.
2.4 Investment Bankers' and Brokers' Fees 4.
2.5 Acquisition of Purchased Shares 4.
2.6 Status of Shareholders for Tax Purposes 4.
Article 3. Representations and Warranties
of Einstein Bros. and Merger Sub 4.
3.1 Organization, Power and Authority of
Einstein Bros. and Merger Sub 4.
3.2 Binding Obligation; Noncontravention 5.
3.3 Capital Stock of Einstein Bros. 5.
3.4 Capital Stock of Merger Sub 5.
3.5 Certificates of Incorporation and
Bylaws of Einstein Bros. and Merger Sub 5.
3.6 Purchased Shares 6.
3.7 Financial Statements of Einstein Bros. 6.
3.8 Liabilities of Einstein Bros. 6.
3.9 Assets of Einstein Bros. 6.
3.10 Licenses and Permits of Einstein Bros. 6.
3.11 Proprietary Rights of Einstein Bros. 6.
3.12 Adequacy of Einstein Bros.' Assets 7.
3.13 Litigation Concerning Einstein Bros. 7.
3.14 No Material Adverse Change 7.
3.15 Compliance With Laws 7.
3.16 Investment Bankers' and Brokers' Fees 7.
3.17 Products Liability 7.
3.18 Records of Einstein Bros. 7.
3.19 Material Transactions 7.
3.20 Accuracy Of Information Furnished
By Einstein Bros. 7.
3.21 Hart-Scott-Rodino Act Reporting Matters 8.
Article 4. Representations and Warranties
Concerning the Company 8.
4.1 Organization, Power and Authority
of the Company; Binding Obligation 8.
4.2 Capital Stock of the Company 9.
4.3 Subsidiaries of the Company 9.
4.4 Financial Statements of the Company 9.
4.5 Liabilities of the Company 10.
4.6 Tax Matters 10.
4.7 Real Estate of the Company 11.
4.8 Good Title to and Condition of the Company's Assets 12.
4.9 Products Liability 12.
4.10 Licenses and Permits of the Company 12.
4.11 Proprietary Rights of the Company 12.
4.12 Adequacy of the Company's Assets; the Company's
Relationships with its Customers and Suppliers 13.
4.13 Documents of and Information with
Respect to the Company 13.
4.14 Insurance Covering the Company and its Assets 14.
4.15 Litigation Involving the Company 14.
4.16 Records of the Company 14.
4.17 No Material Adverse Change 14.
4.18 Absence of Certain Acts or Events 15.
4.19 Compliance with Laws by the Company 15.
4.20 Environmental Matters 15.
4.21 Labor Relations of the Company 16.
4.22 Employee Benefits 17.
4.23 Accuracy of Information Furnished by the Company 18.
4.24 HSR Act Reporting Matters 18.
Article 5. Additional Covenants of the
Shareholders and the Company 19.
5.1 Reasonable Best Efforts 19.
5.2 Conduct of Business Pending the Closing 19.
5.3 Access to the Company's Stores,
Properties and Records 19.
5.4 Notice of Material Developments 20.
5.5 No Other Discussions 20.
Article 6. Additional Covenants of Einstein
Bros. and Merger Sub 20.
6.1 Reasonable Best Efforts 20.
6.2 Guarantee of Performance by Merger Sub 20.
6.3 Conduct Of Business Pending The Closing 20.
6.4 Notice Of Material Developments 21.
Article 7. Conditions To The Obligation
Of Einstein Bros. And Merger Sub 21.
7.1 Accuracy of Representations and
Warranties and Compliance with Obligations 21.
7.2 Opinion of Counsel 21.
7.3 Receipt of Bank Consent 21.
7.4 No Adverse Litigation 21.
7.5 Resignations 21.
7.6 Employment and Consulting Agreements; Options 21.
7.7 Landlord Consents 22.
7.8 Qualifications, Legal Investment 22.
7.9 Termination Of Certain Agreements 22.
Article 8. Conditions to Obligation of
the Shareholders and the Company 22.
8.1 Accuracy of Representations
and Warranties and Compliance with Obligations 22.
8.2 Opinion of Counsel 23.
8.3 Einstein Bros. Registration Rights Agreement 23.
8.4 Election of Noah Alper 23.
8.5 Agreements with Certain Members of Noah's Management 23.
8.6 Receipt Of Bank Consent 23.
8.7 No Adverse Litigation 23.
8.8 Landlord Consents 23.
Article 9. Certain Actions After the Closing 23.
9.1 Execution of Further Documents 23.
9.2 Restrictions on Transfer of Purchased Shares 24.
9.3 Certain Post-Closing Cooperation 25.
9.4 Certain Voting Agreements 25.
9.5 Confidential Information 26.
9.6 Restrictive Covenants 27.
9.7 Additional Agreements Of
Starbucks, the Company And Einstein Bros. 27.
9.8 Additional Agreement Of Noah Alper 28.
9.9 Remedies; Waiver 28.
9.10 Employee Benefit Plans 29.
Article 10. Indemnification 29.
10.1 Agreement by the Shareholders to Indemnify 29.
Article 11. Miscellaneous 32.
11.1 Amendment and Modification 32.
11.2 Payment of Expenses 32.
11.3 Termination 33.
11.4 Binding Effect 33.
11.5 Entire Agreement 33.
11.6 Headings 33.
11.7 Certain Defined Terms 33.
11.8 Execution in Counterpart 34.
11.9 Notices 34.
11.10 Governing Law 35.
11.11 Amendment and Restatement 35.
MERGER AGREEMENT
This Merger Agreement (the "Agreement") is made and entered into
as of the 22nd day of January, 1996 by and among Noah's New York
Bagels, Inc., a California corporation (the "Company"), the
shareholders of the Company who have executed this Agreement
(collectively, the "Shareholders"), the holders of Options (as
defined in Section 1.6) who are Purchasers (as defined in Section
1.1), Einstein Bros. Bagels, Inc., a Delaware corporation
("Einstein Bros."), and NNYB Acquisition Corporation, a Delaware
corporation ("Merger Sub").
Recitals
The Shareholders own a majority of the issued and outstanding
shares of capital stock of the Company. The parties desire that
Merger Sub be merged with and into the Company, with the Company
being the surviving corporation in the merger and the outstanding
shares of capital stock of the Company being converted into cash,
on the terms and subject to the conditions set forth herein. The
board of directors of each of the Company, Einstein Bros. and
Merger Sub has approved and adopted such merger on the terms and
subject to the conditions set forth herein. Immediately after
such merger, certain of the Shareholders and holders of Options
desire to purchase shares of Einstein Bros. Common Stock on the
terms and subject to the conditions set forth herein.
COVENANTS
In consideration of the mutual representations, warranties and
covenants and subject to the conditions herein contained, the
parties hereto agree as follows:
ARTICLE 1. THE MERGER; THE STOCK PURCHASE
1.1 THE MERGER. At the Closing (as defined in Section 1.8), on
the terms and subject to the conditions set forth in this
Agreement, and in accordance with the General Corporation Law of
the State of Delaware (the "Delaware Act") and the General
Corporation Law of the State of California (the "California
Act"), Merger Sub shall be merged with and into the Company (the
"Merger"). Following the Merger, the Company shall continue as
the surviving corporation (the "Surviving Company") and the
separate existence of Merger Sub shall cease.
1.2 Effective Time of the Merger. The Merger shall become
effective at the time (the "Effective Time") the Company and
Merger Sub file an agreement of merger in the form attached as
Exhibit A hereto (the "Merger Agreement") with the Secretary of
State of Delaware and the Secretary of State of California. The
Surviving Company may, at any time after the Effective Time, take
any action (including executing and delivering any document) in
the name and on behalf of either the Company or Merger Sub in
order to carry out and effectuate the transactions contemplated
by this Agreement.
1.3 Articles of Incorporation of the Company. The Articles of
Incorporation of the Surviving Company shall be the Articles of
Incorporation of the Company as they exist immediately prior to
the Effective Time.
1.4 Bylaws of the Company. The bylaws of the Surviving Company
shall be the bylaws of the Company as they exist immediately
prior to the Effective Time.
1.5 Treatment of Shares of the Company. At and as of the
Effective Time, each outstanding share of capital stock of the
Company shall be converted into the right to receive an amount in
cash (the "Per Share Merger Consideration") equal to (a)
$100,900,000, less the amounts paid to persons identified in the
first sentence of Section 11.2, plus the aggregate exercise price
of all Options (as defined in Section 1.6), divided by (b) the
total number of shares of capital stock of the Company
outstanding immediately prior to the Effective Time, plus the
total number of shares of capital stock subject to the Options.
1.6 Treatment of Optionees. Subject to obtaining the consent of
the shareholders of the Company required under Section 280G of
the Internal Revenue Code of 1986, as amended (the "Code"),
immediately prior to the Effective Time, the Company shall
accelerate the vesting of the options held by the optionees
identified in the Disclosure Schedule (other than options to
purchase 240,000 shares of Common Stock held by Glenn Bacheller)
that have not been exercised (the "Options"). At the Effective
Time, Einstein Bros. shall pay to each of such optionees in
cancellation and satisfaction of his or her Options an amount
equal to (a) the total number of shares subject to such
optionee's Options, multiplied by the Per Share Merger
Consideration, less (b) the aggregate exercise price of such
optionee's Options.
1.7 Treatment of Shares of Common Stock of Merger Sub. At and
as of the Effective Time, each share of Common Stock of Merger
Sub shall be converted into the right to receive one share of
Common Stock of the Company.
1.8 Time and Place of the Closing. The Merger shall take place
at the offices of Cooley Godward Castro Huddleson & Tatum, One
Maritime Plaza, 20th Floor, San Francisco, California at 10:00
a.m., local time, on January 31, 1996; provided, however, that if
any of the conditions which are set forth in Articles 7 and 8
have not been satisfied or waived by said date, then, subject to
the provisions of Section 11.3 hereof, such transactions shall
take place on a subsequent date, which shall be determined by the
mutual agreement of Einstein Bros. and the Company. Throughout
this Agreement, the consummation of the Merger is referred to as
the "Closing" and such date and time are referred to as the
"Closing Date."
1.9 The Merger. At the Closing:
1.9.1 Merger Sub and the Company shall file the Merger
Agreement with the Secretary of State of California and the
Secretary of State of Delaware.
1.9.2 Einstein Bros. (a) shall cause the consideration to
be paid to the shareholders and optionholders of the Company
in the manner provided in Section 1.5 and Section 1.6,
respectively, and (b) shall pay to Alex. Brown & Sons
Incorporated and the other persons identified in the first
sentence of Section 11.2 hereof the amounts it is instructed
in writing by the Company to pay. The parties may cause
such payments to be made by a paying agent of the Company,
if Einstein Bros. so elects, with the fees of the paying
agent to be paid by Einstein Bros.
1.10 The Stock Purchase. Immediately following the Closing, and
on the terms and subject to the conditions set forth in this
Agreement, the Shareholders and holders of Options identified on
Schedule 1.10 (the "Purchasers") will purchase the number of
shares of Common Stock of Einstein Bros. set forth opposite their
respective names on Schedule 1.1 under the heading "Purchased
Shares," in exchange for the cash payment set forth opposite
their respective names on Schedule 1.10 under the heading
"Purchase Price," for an aggregate of 3,801 shares of Einstein
Bros. Common Stock. (Such transaction is herein sometimes
referred to as the "Purchase" and the shares of Einstein Bros.
Common Stock so purchased are herein sometimes collectively
referred to as the "Purchased Shares.") Each Purchaser hereby
authorizes Einstein Bros. to withhold such Purchaser's Purchase
Price from the consideration to be received by such Purchaser
pursuant to Sections 1.5 and 1.6.
Article 2. Representations and Warranties of the Shareholders
Concerning the Transaction
In order to induce Einstein Bros. and Merger Sub to enter into
this Agreement and to consummate the transactions contemplated
hereunder, except as set forth in the Disclosure Schedule
attached hereto, each Shareholder makes the following
representations and warranties:
2.1 ORGANIZATION OF CERTAIN SHAREHOLDERS; DUE AUTHORIZATION. If
such Shareholder is a corporation or a partnership, such
Shareholder is duly organized and legally existing in good
standing under the laws of the jurisdiction of its organization,
with full 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 action of such Shareholder.
2.2 Binding Obligation. This Agreement has been duly executed
and delivered by such Shareholder and is a valid and binding
obligation of such Shareholder, enforceable in accordance with
its terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally or general principles of
equity. Neither the execution and delivery of this Agreement by
such Shareholder nor the consummation of the transactions
contemplated hereby will: (i) conflict with or violate any
decree or order of any court or administrative or other
governmental body which is either applicable to, binding upon or
enforceable against such Shareholder; or (ii) assuming, in the
case of Starbucks Corporation ("Starbucks"), the satisfaction of
the condition set forth in Section 8.6, 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, will, trust or other instrument which is
either binding upon or enforceable against such Shareholder. 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 such Shareholder and the consummation by such
Shareholder of the transactions contemplated hereby.
2.3 Ownership of Shares of the Company By the Shareholders.
Such Shareholder is the lawful record and beneficial owner of all
of the shares of capital stock of the Company shown as owned by
such Shareholder in the Disclosure Schedule and has valid title
thereto, free and clear of all liens, pledges, encumbrances,
security interests, restrictions on transfer (other than
restrictions under federal and state securities laws), claims and
equities of every kind, except those arising under the agreements
listed in the Disclosure Schedule. Except for this Agreement and
the agreements listed in the Disclosure Schedule, there are no
outstanding warrants, options or rights of any kind to acquire
from such Shareholder any of such Shares.
2.4 Investment Bankers' and Brokers' Fees. Such Shareholder 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, except its obligation under
Section 11.2 hereof to pay the fees of Alex. Brown & Sons
Incorporated.
2.5 Acquisition of Purchased Shares. If such Shareholder is a
Purchaser, such Purchaser is acquiring Purchased Shares for such
Shareholder's own account and not with a view to, or for sale in
connection with, any distribution thereof. Such Purchaser
understands that the Purchased Shares will not have been
registered under the Securities Act of 1933, as amended, or under
any state securities laws, and that, except as provided in the
Amended and Restated Registration Rights Agreement (as
hereinafter defined), Einstein Bros. does not contemplate nor is
Einstein Bros. legally required to file a registration statement
for the purpose of registering the Purchased Shares under any of
such laws. Such Purchaser is an "accredited investor" as that
term is defined in Rule 501 of Regulation D under the Securities
Act of 1933 and confirms that all documents, records and books
pertaining to Einstein Bros. and its business have been made
available to such Purchaser and that such Purchaser has been
given an opportunity to make any further inquiries of Einstein
Bros. and its representatives that such Purchaser desires to make
and that each such inquiry has been answered, or requested
information provided, to such Purchaser's satisfaction.
2.6 Status of Shareholders for Tax Purposes. Such Shareholder
is a U.S. person (as defined in Section 7701(a)(30) of the Code).
Article 3. Representations and Warranties of Einstein Bros. and
Merger Sub.
In order to induce the Company and the Shareholders to enter into
this Agreement and to consummate the transactions contemplated
hereunder, except as set forth in the Einstein Bros. Disclosure
Schedule, Einstein Bros. and Merger Sub make the following
representations and warranties:
3.1 Organization, Power and Authority of Einstein Bros. and
Merger Sub. Each of Einstein Bros. and Merger Sub is a
corporation duly organized and validly existing in good standing
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 each of
Einstein Bros. and the Merger Sub.
3.2 Binding Obligation; Noncontravention. This Agreement and
the Merger Agreement have been duly executed and delivered by
each of Einstein Bros. and Merger Sub that is a party thereto and
each such agreement is a valid and binding obligation of each of
Einstein Bros. and Merger Sub that is a party thereto,
enforceable in accordance with its terms, except to the extent
that such enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally,
or general principles of equity. Neither the execution and
delivery of this Agreement and the Merger Agreement by each of
Einstein Bros. and Merger Sub that is a party thereto nor the
consummation of the transactions contemplated hereby will: (i)
conflict with or violate any provision of the certificate of
incorporation or bylaws of Einstein Bros. or Merger Sub 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 Einstein Bros. or Merger Sub; or (ii)
assuming satisfaction of the conditions set forth in Article 7.3,
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 Einstein
Bros. or Merger Sub. Assuming the accuracy of the
representations of the Company in Section 4.24, 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 and the Merger Agreement by each of Einstein Bros. and
Merger Sub that is a party thereto and the consummation of the
transactions contemplated hereby, except for the filing of the
Merger Agreement and filings under federal and state securities
laws.
3.3 Capital Stock of Einstein Bros. The authorized capital
stock of Einstein Bros. consists solely of 1,000,000 shares of
Common Stock, $.01 par value per share, 24,754.92 shares of which
are issued and outstanding and none of which are issued and held
in its treasury, and 200,000 shares of Preferred Stock, $.01 par
value, 6,250 shares of which are issued and designated as
Series A Preferred Stock. Except as set forth in Section 1.10 or
the Einstein Bros. Disclosure Schedule: (i) there are no
outstanding warrants, options or rights of any kind to acquire
from Einstein Bros. any shares of its Common Stock or securities
of any kind, (ii) there are no pre-emptive rights with respect to
the issuance or sale of shares of capital stock of Einstein Bros.
and (iii) there are no voting trusts, proxies or other agreements
or understandings with respect to the voting of the capital stock
of Einstein Bros.
3.4 Capital Stock of Merger Sub. The authorized capital stock
of Merger Sub consists solely of 100 shares of Common Stock, $.01
par value per share, 100 shares of which are issued and
outstanding and none of which are issued and held in its
treasury.
3.5 Certificates of Incorporation and Bylaws of Einstein Bros.
and Merger Sub. Einstein Bros. has previously delivered to the
Company copies of the certificate of incorporation and all
amendments thereto to date (certified by the Secretary of State
of Delaware) and of the bylaws of each of Einstein Bros. and
Merger Sub.
3.6 PURCHASED SHARES. The Purchased Shares, when issued at the
Closing, will be duly authorized, validly issued, fully paid and
nonassessable shares of Common Stock, $.01 par value per share,
of Einstein Bros.
3.7 FINANCIAL STATEMENTS OF EINSTEIN BROS. Set forth in the
Einstein Bros. Disclosure Schedule, are the following financial
statements of Einstein Bros: (i) audited consolidated balance
sheet at March 24, 1995, (ii) unaudited consolidated balance
sheet at December 31, 1995, and (iii) unaudited consolidated
statement of operations for the period from March 24, 1995 to
December 31, 1995. Such financial statements present fairly the
consolidated financial position of Einstein Bros. at each of such
balance sheet dates and the results of its operations for each of
the periods covered, and they have been prepared in conformity
with generally accepted accounting principles except that the
unaudited financial statements are subject to normal recurring
year end audit adjustments, none of which will be material, and
do not contain either the statement of cash flows or the
footnotes required under generally accepted accounting
principles. The December 31, 1995 balance sheet is herein
sometimes referred to as the "Einstein Bros. Balance Sheet."
3.8 LIABILITIES OF EINSTEIN BROS. As of the date of the
Einstein Bros. Balance Sheet, Einstein Bros. had no material
liabilities of a type required to be set forth on a balance sheet
prepared in accordance with generally accepted accounting
principles, except as set forth on the Einstein Bros. Balance
Sheet.
3.9 ASSETS OF EINSTEIN BROS. Einstein Bros. 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, except for
mortgages, pledges and security interests granted under or
pursuant to the secured loan agreement between Boston Chicken,
Inc. ("BCI") and Einstein Bros. dated March 24, 1995, as amended,
and such liens, mortgages, pledges, encumbrances or charges as do
not have a Material Adverse Effect (as defined in Section 11.7).
3.10 LICENSES AND PERMITS OF EINSTEIN BROS. Einstein Bros.
possesses all licenses and other required governmental or
official approvals, permits or authorizations, the failure to
possess which would have a Material Adverse Effect. All such
licenses, approvals, permits and authorizations that are material
to Einstein Bros.' business are in full force and effect,
Einstein Bros. is in substantial compliance with their
requirements, and no proceeding is pending or, to the Best of the
Knowledge of Einstein Bros. (as defined in Section 11.7),
threatened to revoke or amend any of them.
3.11 PROPRIETARY RIGHTS OF EINSTEIN BROS. To the Best of the
Knowledge of Einstein Bros., except as set forth in the Einstein
Bros. Disclosure Schedule, Einstein Bros. possesses all
proprietary rights to carry on its business as now being
conducted without conflict with valid proprietary rights of
others.
3.12 ADEQUACY OF EINSTEIN BROS.' ASSETS. The assets and
properties of Einstein Bros. constitute, in the aggregate, all of
the property necessary for the conduct of Einstein Bros.'
business in the manner in which and to the extent to which it is
currently being conducted. Except as set forth in this
Agreement, Einstein Bros. is not restricted by agreement from
carrying on its current business anywhere in the world.
3.13 LITIGATION CONCERNING EINSTEIN BROS. There are on the date
hereof no actions, suits, claims, governmental investigations or
arbitration proceedings pending or to the Best of the Knowledge
of Einstein Bros. threatened against or affecting Einstein Bros.
or any of its assets or properties which, if determined adversely
to Einstein Bros., would have a Material Adverse Effect.
3.14 NO MATERIAL ADVERSE CHANGE. From the date of the Einstein
Bros. Balance Sheet to the date of this Agreement, there have not
been any changes in the business or properties of Einstein Bros.,
or in its consolidated financial condition, other than changes
occurring in the ordinary course of business which in the
aggregate have not had a Material Adverse Effect.
3.15 COMPLIANCE WITH LAWS. Einstein Bros. is in substantial
compliance with all laws, regulations and orders applicable to
it, its assets, properties and business, except where the failure
so to comply would not have a Material Adverse Effect.
3.16 INVESTMENT BANKERS' AND BROKERS' FEES. Einstein Bros. does
not 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.
3.17 PRODUCTS LIABILITY. Einstein Bros. has no liability (and
to the Best of the Knowledge of Einstein Bros. there is no basis
for any liability) arising out of any injury to individuals or
property as a result of the ownership, possession, use or
consumption of any product manufactured, sold or delivered by
Einstein Bros.
3.18 RECORDS OF EINSTEIN BROS. A record of all action taken by
the stockholders and board of directors of Einstein Bros. and all
minutes of their meetings are contained in the minute books of
Einstein Bros. and are accurate and complete, except that such
minute books do not contain minutes of meetings of directors held
in November, December and January. The stock records and stock
ledgers of Einstein Bros. contain an accurate and complete record
of all issuances, transfers and cancellations of shares of
capital stock of Einstein Bros.
3.19 MATERIAL TRANSACTIONS. Except as set forth in the Einstein
Bros. Disclosure Schedule, since the date of the Einstein Bros.
Balance Sheet, Einstein Bros. has not incurred any material
obligations (including any indebtedness) or entered into any
material transaction, except in the ordinary course of business
and except for this Agreement and the transactions contemplated
hereby.
3.20 ACCURACY OF INFORMATION FURNISHED BY EINSTEIN BROS. No
representation, statement or information made or furnished in
writing by Einstein Bros. to the Company or the Purchasers,
including, without limitation, those contained in this Agreement
and the Einstein Bros. Disclosure Schedule, taken as a whole,
contains any untrue statement of a material fact or omits any
material fact necessary to make the representations, statements
and information made or furnished therein, in light of the
circumstances in which they were made, not misleading.
3.21 HART-SCOTT-RODINO ACT REPORTING MATTERS. Einstein Bros. is
the "ultimate parent entity" of Einstein Bros. within the meaning
of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"). Einstein Bros. does not have total
assets, and did not record annual net sales for its most recent
fiscal year, in excess of $100,000,000, for purposes of the HSR
Act.
Article 4. Representations and Warranties Concerning the Company
In order to induce Einstein Bros. and Merger Sub to enter into
this Agreement and to consummate the transactions contemplated
hereunder, except as set forth in the Disclosure Schedule, the
Company makes the following representations and warranties:
4.1 ORGANIZATION, POWER AND AUTHORITY OF THE COMPANY; BINDING
OBLIGATION. The Company is a corporation duly organized and
legally existing in good standing under the laws of California,
and has full corporate power and authority (i) to enter into this
Agreement and to carry out the transactions and agreements
contemplated hereby, and (ii) to carry on its business as it is
now being conducted. The Company is legally qualified to
transact business as a foreign corporation, and is in good
standing, in the jurisdictions identified in the Disclosure
Schedule, those being the only jurisdictions in which its
business or property is such as to require that it be thus
qualified. This Agreement and the Merger Agreement have been duly
authorized by all necessary corporate action of the Company,
including its board of directors and shareholders, and each such
agreement has been duly executed and delivered by the Company and
is a valid and binding obligation of the Company, enforceable in
accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally
or general principles of equity. Neither the execution and
delivery of this Agreement and the Merger Agreement by the
Company nor the consummation of the transactions contemplated
hereby will: (i) conflict with or violate any provision of the
articles of incorporation or bylaws of the Company, or any decree
or order of any court or administrative or other governmental
body which is either applicable to, binding upon or enforceable
against the Company; or (ii) except as set forth in the
Disclosure Schedule, 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, will,
trust or other instrument which is either binding upon or
enforceable against the Company or the assets and properties of
the Company. Assuming the accuracy of the representations of
Einstein Bros. in Section 3.21 hereof, 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 and
the Merger Agreement by the Company and the consummation by it of
the transactions contemplated hereby, except for the filing of
the Merger Agreement and filings under federal and state
securities laws.
4.2 CAPITAL STOCK OF THE COMPANY. The authorized capital stock
of the Company consists solely of: 38,000,000 shares of Common
Stock without par value, of which 5,365,197 shares are issued and
outstanding and none of which are issued and held in its
treasury; 38,000,000 shares of Preferred Stock without par value,
of which 3,375,000 shares are designated "Series A Preferred
Stock" (of which 3,286,406 are issued and outstanding) and
4,904,425 shares are designed "Series B Preferred Stock" (of
which 4,744,838 are issued and outstanding). No shares of
Preferred Stock are issued and held in the Company's treasury and
no other shares of capital stock are outstanding. All voting
rights in the Company are vested exclusively in its shares of
Common and Preferred Stock, and, except for the agreements listed
in the Disclosure Schedule, there are no voting trusts, proxies
or other agreements or understandings with respect to the voting
of the capital stock of the Company. All of the issued and
outstanding shares of Common Stock of the Company are validly
authorized and issued, fully paid and non-assessable. The
Disclosure Schedule sets forth the name of, and the number of
shares of Common Stock of the Company owned by, each shareholder
of record as of the date hereof. Except as set forth in the
Disclosure Schedule, which lists each outstanding option granted
by the Company, the name of the optionee, the number of shares
subject to the option and the plan pursuant to which such option
was granted, there are no outstanding warrants, options or rights
of any kind to acquire from the Company any shares of its Common
Stock or securities of any kind, and there are no preemptive
rights with respect to the issuance or sale of shares of capital
stock of the Company. The Company has delivered to Einstein
Bros. true and correct copies of all option plans and option
agreements entered into by the Company. The Company has no
obligation to acquire any of its issued and outstanding shares of
Common Stock or any other security issued by it from any holder
thereof.
4.3 SUBSIDIARIES OF THE COMPANY. The Company has no equity
interest or the right or obligation to acquire an equity
interest, in any other person or entity.
4.4 FINANCIAL STATEMENTS OF THE COMPANY. Set forth in the
Disclosure Schedule are the following financial statements of the
Company:
4.4.1 audited balance sheets at December 31 of each of the
years 1993 and 1994;
4.4.2 an unaudited balance sheet of the Company at November
25, 1995;
4.4.3 audited statements of operations and retained
earnings and statements of cash flow for each year in the
two-year period ended December 31, 1994; and
4.4.4 an unaudited statement of operations of the Company
for the forty-seven week period ended November 25, 1995.
Such financial statements present fairly the financial position
of the Company at each of the said balance sheet dates and the
results of its operations for each of the said periods covered,
and they have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis except as may
be disclosed in the notes thereto; provided, however, that the
unaudited financial statements are subject to normal recurring
year end audit adjustments, none of which will be material, and
do not contain either the statement of cash flows or the
footnotes required under generally accepted accounting
principles. The unaudited balance sheet of the Company at
November 25, 1995 is referred to herein as the "1995 Balance
Sheet."
4.5 Liabilities of the Company. The Company has no liabilities
or obligations, either accrued, absolute, contingent or
otherwise, except: (i) to the extent reflected or taken into
account in determining net worth in the 1995 Balance Sheet and
not heretofore paid or discharged; (ii) to the extent clearly
disclosed and specifically set forth in or incorporated by
express reference in any of the schedules attached hereto; (iii)
obligations incurred in the ordinary course of business that can
be terminated by the Company on not more than 30 days' notice
without liability to the Company in excess of $25,000; and
(iv) liabilities incurred in the ordinary course of business,
consistent with prior practice, since the date of the 1995
Balance Sheet. The Company 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,
except for the fees of Alex. Brown & Sons Incorporated.
4.6 Tax Matters.
4.6.1 The Company has accurately prepared and timely filed
all tax returns and reports required to be filed by it,
including without limitation all federal, state, local and
foreign tax returns, and has paid in full all taxes and
other charges which have become due in connection therewith.
The amounts provided in the 1995 Balance Sheet for taxes are
adequate to cover all unpaid liabilities for all federal,
state, local and foreign taxes and other charges in
connection therewith which were accrued through, or
applicable to the period ended, November 25, 1995 and for
which the Company may be liable in its own right or as a
transferee of the assets of, or successor to, any other
person or entity. There is no tax deficiency proposed or,
to the Best of the Knowledge of the Company, threatened
against the Company. There are no tax liens upon any
property or assets of the Company except liens for current
taxes not yet due and payable. The Company has made all
payments of estimated taxes when due in amounts sufficient
to avoid the imposition of any penalty.
4.6.2 All taxes and other assessments and levies which the
Company was required by law to withhold or to collect have
been duly withheld and collected, and have been paid over to
the proper governmental entity or are being held by the
Company, and all such withholdings and collections and all
other payments due in connection therewith as of the date of
the 1995 Balance Sheet are duly reflected on the 1995
Balance Sheet.
4.6.3 The Company has not been advised that any of the tax
returns of the Company is under audit or examination by any
tax authority, and there are no outstanding agreements or
waivers extending the statute of limitations applicable to
any federal or state income tax returns of the Company for
any period. The Company has previously delivered to
Einstein Bros. accurate and complete copies of all federal
and state income tax returns, examination reports and
statements of deficiencies assessed against or agreed to by
the Company.
4.6.4 The Company has not consented to have the provisions
of Section 341(f)(2) of the Code apply, nor has the Company
made any "qualified stock purchases," as defined in Section
338 of the Code.
4.6.5 The Company is not, and has not been during the
applicable period specified in Section 897(c)(1)(A)(ii) of
the Code, a United States real property holding corporation,
within the meaning of Section 897(c)(2) of the Code.
4.6.6 To the extent the Company is obligated to make a
payment to any individual that would not be deductible to
the Company because of the provisions of Section 280G of the
Code, or otherwise makes such a payment under this
Agreement, the Company shall obtain prior to Closing
consents of its shareholders sufficient so that Section 280G
shall not apply.
4.7 Real Estate of the Company.
4.7.1 The Company owns no fee interests in real estate.
4.7.2 The Disclosure Schedule accurately and completely
sets forth, with respect to every parcel of real estate
leased by the Company (the "Leasehold Premises"), the
lessor and lessee thereof and the date and term of the lease
governing such property. The Company has previously
delivered to Einstein Bros. accurate and complete copies of
each of the leases covering the Leasehold Premises, and none
of such leases has been amended or modified except to the
extent that such amendments or modifications are disclosed
in such copies or in the Disclosure Schedule. All of the
leases covering the Leasehold Premises are in full force and
effect, and the Company is not in material default or breach
under any such lease. 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 by the Company under any
such lease. To the Best of the Knowledge of the Company,
there is no breach or anticipated breach by the other
parties to such lease.
4.7.3 The Leasehold Premises are each in good operating
condition, normal wear and tear excepted. The Company's
commissary is sufficient to satisfy the Company's current
normal production levels. The Company has received no
notice of: (i) any condemnation proceeding with respect to
any portion of the Leasehold Premises, and to the Best of
the Knowledge of the Company no proceeding is contemplated
by any governmental authority; or (ii) any special
assessment which may affect the Leasehold Premises, and to
the Best of the Knowledge of the Company no such special
assessment is contemplated by any governmental authority.
4.8 GOOD TITLE TO AND CONDITION OF THE COMPANY'S ASSETS. The
Company 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, except: (i) those set forth in the Disclosure
Schedule, (ii) liens for current taxes not yet due and payable,
(iii) purchase money security interests in equipment in or for
use by the Company's stores, commissaries, or corporate offices,
and (iv) minor liens or encumbrances that have no material effect
on the value of the Company's assets and do not impair the
present use or marketability of such assets. The Company's fixed
assets are in good operating condition, normal wear and tear
excepted. The inventory and supplies of the Company consist of
items of a quality and quantity saleable or usable, respectively,
in the normal course of the Company's business at values in the
aggregate at least equal to the values at which such items are
carried on its books, net of reserves therefor on the 1995
Balance Sheet.
4.9 PRODUCTS LIABILITY. The Company has no liability (and to
the Best of the Knowledge of the Company there is no basis for
any liability) arising out of any injury to individuals or
property as a result of the ownership, possession, use or
consumption of any product manufactured, sold or delivered by the
Company.
4.10 LICENSES AND PERMITS OF THE COMPANY. The Company possesses
all licenses and other required governmental or official
approvals, permits or authorizations, the failure to possess
which would have a Material Adverse Effect. All such licenses,
approvals, permits and authorizations are in full force and
effect, the Company is in compliance with their requirements, and
no proceeding is pending or, to the Best of the Knowledge of the
Company, threatened to revoke or amend any of them. 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 Agreement or the consummation of the transactions
contemplated hereby.
4.11 PROPRIETARY RIGHTS OF THE COMPANY. To the Best of the
Knowledge of the Company, except as set forth in the Disclosure
Schedule, the Company possesses all proprietary rights, to carry
on its business as now being conducted without conflict with
valid proprietary rights of others. The Disclosure Schedule
contains an accurate and complete list of all trade secrets,
technology, know-how, copyrights, common law trademarks and
service marks, trademark and service mark registrations and
applications, trade names, and rights to any of the foregoing,
owned by the Company, or in which it has any interest
(collectively, "Proprietary Rights"), and each jurisdiction in
which each such Proprietary Right is registered and the number
and expiration date, if applicable, for such registration and
each jurisdiction in which an application to register such item
is pending and the date such application was made. Except as set
forth on the Disclosure Schedule, (i) the Company owns full,
exclusive and unencumbered title in the United States in and to
and the exclusive right to use all of the Proprietary Rights,
(except that the Company makes no representation that its
formulas and processes are protectable trade secrets), (ii) as to
the registrations set forth in the Disclosure Schedule, all such
registrations are presently in full force and effect, (iii) as to
the applications for marks set forth in the Disclosure Schedule,
all such applications are presently pending with no known grounds
for refusal or outstanding officer actions; (iv) there are no
legal or administrative actions, challenges or other adverse
claims or challenges pending or, to the Best of the Knowledge of
the Company, threatened against any of the Proprietary Rights and
there are no grounds for the same, (v) the Company has not
entered into any licenses regarding the Proprietary Rights or any
open agreement with any third party acknowledging any prior
rights or consenting to any concurrent right of any other party
or granting any right to any other party to use any proprietary
right that is confusingly similar to any of the trademarks,
service marks or trade dress included in the Proprietary Rights
and (vi) to the Best of the Knowledge of the Company no other
person or entity is using any of the Proprietary Rights or any
trademark or service mark that is confusingly similar to any of
the Proprietary Rights.
4.12 ADEQUACY OF THE COMPANY'S ASSETS; THE COMPANY'S
RELATIONSHIPS WITH ITS CUSTOMERS AND SUPPLIERS. The assets and
properties of the Company constitute, in the aggregate, all of
the property necessary for the conduct of the Company's business
in the manner in which and to the extent to which it is currently
being conducted. Except for the joint venture between Starbucks
and Bagel Oasis no officer or director of the Company has any
direct or indirect interest in any customer, supplier or
competitor of the Company or in any person from whom or to whom
the Company leases real or personal property, or in any other
person with whom the Company is doing business, except for the
ownership of less than 5% of a public company. The Company is
not restricted by agreement from carrying on its business
anywhere in the world. All agreements, contracts, commitments or
arrangements to which the Company is a party or by which it is
bound and to which any of the Shareholders or any Affiliate (as
hereinafter defined) of any of the Shareholder (other than the
Company) or any officer or director of the Company, or any
Affiliate of such person ("Affiliated Person") is a party or by
which such person is bound, have been negotiated, and, if
applicable, entered into, at arms' length, and do not contain
terms or provisions or obligate the Company on terms that are
materially less favorable to the Company than those which could
be obtained if such agreement, contract, commitment or
arrangement was with a person other than an Affiliated Person.
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 persons
specified.
4.13 Documents of and Information with Respect to the
Company. The Disclosure Schedule accurately and completely lists
the following: (i) each loan, credit agreement, guarantee,
security agreement or similar document or instrument to which the
Company is a party or by which it is bound, other than agreements
creating purchase money security interests in equipment in or for
use by the Company's stores, or commissaries or corporate
offices; (ii) each lease of personal property to which the
Company is a party or by which it is bound, other than leases
under which the annual rent payable is less than $50,000;
(iii) any other agreement, contract or commitment to which the
Company is a party or by which it is bound which involves a
future commitment by the Company in excess of $50,000 and which
cannot be terminated without liability on 90 days or less notice;
(iv) each power of attorney executed by or on behalf of the
Company; (v) the name and current annual salary of each salaried
employee of the Company whose current annual salary is in excess
of $50,000 and the profit sharing, bonus or any other form of
compensation (other than salary) paid or payable by the Company
to or for the benefit of each such person for the year ended
December 31, 1995, and any employment or other compensation
agreement of the Company with any of its officers or employees;
(vi) the name of each of the Company's officers and directors;
and (vii) the name of each bank in which the Company has an
account or safe-deposit box, the name in which the account or box
is held and the names of all persons authorized to draw thereon
or to have access thereto. The Company has previously furnished
Einstein Bros. with an accurate and complete copy of each such
agreement, contract or commitment listed in the Disclosure
Schedule. There is no continuing default under any such
agreement, contract or instrument.
4.14 INSURANCE COVERING THE COMPANY AND ITS ASSETS. The
Disclosure Schedule accurately and completely lists each policy
of insurance in force with respect to the Company, its assets and
properties, and each of the performance or other surety bonds
maintained by the Company in the conduct of its business. All
premiums and other payments which have become due under the
policies of insurance listed in the Disclosure Schedule have been
paid in full, all of such policies are now in full force and
effect and the Company has received no notice from any insurer,
agent or broker of the cancellation of, or any increase in
premium (other than normal increases) with respect to, any of
such policies or bonds. The Company has received no notification
from any insurer, agent or broker denying or disputing any claim
made by the Company or denying or disputing any coverage for any
such claim or the amount of any claim. The Company has no claim
against any of its insurers under any of such policies pending or
anticipated and, to the Best of the Knowledge of the Company,
there has been no occurrence of any kind which would give rise to
any such claim.
4.15 LITIGATION INVOLVING THE COMPANY. Except as set forth in
the Disclosure Schedule there are on the date hereof no actions,
suits, claims, governmental investigations or arbitration
proceedings pending or to the Best of the Knowledge of the
Company threatened against or affecting the Company or any of its
assets or properties and, to the Best of the Knowledge of the
Company, 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 the Company is or was a
party.
4.16 RECORDS OF THE COMPANY. The Company has previously
furnished Einstein Bros. with copies of the Company's amended and
restated articles of incorporation and all amendments thereto to
date (certified by the Secretary of State of California) and of
the Company's by-laws (certified by the Company's secretary), and
such copies are correct and complete in all respects. All of the
Company's operating data and records, including without
limitation customer lists and financial, accounting and credit
records (the "Company Records"), are accurate and complete in all
material respects and there are no material matters required to
be recorded in the Company records as to which appropriate
entries have not been made in the Company Records. A record of
all action taken by the shareholders and the board of directors
of the Company and all minutes of their meetings (except the
minutes of the January, 1996 meetings) are contained in the
minute books of the Company and are accurate and complete. The
stock records and stock ledgers of the Company contain an
accurate and complete record of all issuances, transfers and
cancellations of shares of capital stock of the Company.
4.17 NO MATERIAL ADVERSE CHANGE. From the date of the 1995
Balance Sheet to the date of this Agreement, there have not been
any changes in the business or properties of the Company, or in
its consolidated financial condition, other than changes
occurring in the ordinary course of business which in the
aggregate have not had a Material Adverse Effect. There is not,
to the Best of the Knowledge of the Company, except for general
competitive conditions or risks common to businesses generally,
any threatened event or condition of any character whatsoever
which could have a Material Adverse Effect.
4.18 ABSENCE OF CERTAIN ACTS OR EVENTS. Except as disclosed in
the Disclosure Schedule, or as contemplated by this Agreement,
since the date of the 1995 Balance Sheet, the Company has not:
(i) authorized or issued any of its shares of capital stock
(including any held in its treasury) or any other securities;
(ii) declared or paid any dividend or made any other distribution
of or with respect to its shares of capital stock or other
securities or purchased or redeemed any shares of its capital
stock or other securities; (iii) paid any bonus or, except in the
ordinary course of business, increased the rate of compensation
of any of its employees; (iv) sold, leased, transferred or
assigned any of its assets other than in the ordinary course of
business; (v) made or obligated itself to make capital
expenditures aggregating more than $50,000; (vi) incurred any
material obligations or liabilities (including any indebtedness)
or entered into any material transaction, except in the ordinary
course of business and except for this Agreement and the
transactions contemplated hereby; or (viii) suffered any theft,
damage, destruction or casualty loss not covered by insurance in
excess of $50,000.
4.19 COMPLIANCE WITH LAWS BY THE COMPANY. Except as set forth
in the Disclosure Schedule, the Company is in compliance in all
material respects with all laws, regulations and orders
applicable to the Company, its assets, properties and business.
The Company has received no notification of any asserted past or
present failure to comply with any laws, and to the Best of the
Knowledge of the Company, no proceeding with respect to any such
violation is contemplated. Neither the Company nor, to the Best of
the Knowledge of the Company, any employee of the Company, has
made any payment of funds in connection with the business of the
Company prohibited by law, and no funds have been set aside to be
used in connection with the business of the Company for any
payment prohibited by law.
4.20 ENVIRONMENTAL MATTERS.
4.20.1 The Company has not transported, stored, treated or
disposed, nor has it 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 it performed,
arranged for or allowed by any method or procedure such
transportation, storage, treatment or disposal in
contravention of any laws or regulations. The Company has
not disposed, or allowed or arranged for any third parties
to dispose, of Hazardous Substances or other waste upon
property owned or leased by them, except as permitted by
law. For purposes of this Section 4.20, 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.
4.20.2 There has not occurred during the Company's
occupancy of any of the Leasehold Premises, and to the Best
of the Knowledge of the Company, there has not occurred
prior thereto, any Release of any Hazardous Substance on,
into or beneath the surface of such Leasehold Premises. For
purposes of this Section 4.20, the term "Release" shall mean
releasing, spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching,
disposing or dumping.
4.20.3 The Company has not 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,
(i) has been placed on the National Priorities List or its
state equivalent, or (ii) 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. The Company has received no notice, and
it has no knowledge of any facts which could give rise to
any notice, that the Company 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. The Company has not submitted nor was it
required to submit any notice pursuant to Section 103(c) of
CERCLA with respect to the Leasehold Premises. The Company
has received no written or oral request for information in
connection with any federal or state environmental cleanup
site. The Company has not undertaken (or been requested to
undertake) any response or remedial actions or clean-up
actions of any kind at the request of any federal, state or
local governmental entity, or at the request of any other
person or entity.
4.20.4 The Company does not use, and has not used, any
Underground Storage Tanks, and the Company is not aware of
any Underground Storage Tanks on the Leasehold Premises.
For purposes of this Section 4.20, 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.).
4.20.5 There is no asbestos in or on any of the Leasehold
Premises presently requiring remediation or abatement or
which may be reasonably expected hereafter to require such
remediation or abatement.
4.20.6 There are no laws, regulations, ordinances,
licenses, permits or orders relating to environmental or
worker safety matters presently requiring any work, repairs,
construction or capital expenditures with respect to the
assets or properties of the Company, or which may be
reasonably expected hereafter to require any such work.
4.21 Labor Relations of the Company. The Company is not a party
to or bound by any collective bargaining agreement or any other
agreement with a labor union, and, except as set forth in the
Disclosure Schedule, there has been no effort by any labor union
to organize any employees of the Company into one or more
collective bargaining units. There is not pending or, to the
best of the knowledge of the Sellers or the Company, threatened
any labor dispute, strike or work stoppage which affects or which
may affect the business of the Company or which may interfere
with its continued operation. Except as set forth in the
Disclosure Schedule, neither the Company nor, to the Best of the
Knowledge of the Company, any agent, representative or employee
of the Company has committed any unfair labor practice as defined
in the National Labor Relations Act, as amended, and there is not
now pending or, to the Best of the Knowledge of the Company,
threatened any charge or complaint against the Company by or with
the National Labor Relations Board or any representative thereof.
There has been no strike, walkout or work stoppage affecting the
Company involving any of the employees of the Company during the
five-year period prior to the date hereof. To the Best of the
Knowledge of the Company, no executive or key employee or group
of employees has any plans to terminate his, her or their
employment with the Company.
4.22 Employee Benefits.
4.22.1 Neither the Company, nor any corporation or business
which is now or at the relevant time was a member of a
controlled group of corporations or trades or businesses
including the Company, within the meaning of Section 414 of
the Code, maintains or contributes to, or at any time has
maintained or contributed to: (i) any non-qualified
deferred compensation or retirement plans or arrangements;
(ii) any qualified defined contribution retirement plans or
arrangements; (iii) any qualified defined benefit pension
plan; (iv) any other plan, program, agreement or arrangement
under which former employees of the Company or their
beneficiaries are entitled, or current employees of the
Company will be entitled following termination of
employment, to medical, health, life insurance or other
benefits other than pursuant to benefit continuation rights
granted by state or federal law; or (v) any other employee
benefit, health, welfare, medical, disability, life
insurance, stock, stock purchase or stock option plan,
program, agreement, arrangement or policy, except in each
case as described in the Disclosure Schedule attached
hereto. The plans described in the Disclosure Schedule are
referred to herein as the "Plans."
4.22.2 The administration of the Plans complies in all
respects with the requirements of the Employee Retirement
Income Security Act of 1974 ("ERISA"), and the Plans meet
any applicable requirements for favorable tax treatment
under the Code in both form and operation. All of the Plans
which constitute employee pension benefit plans or employee
welfare plans subject to ERISA and the trusts or other
funding vehicles related to the Plans have been maintained
in compliance in both form and operation with the
requirements of ERISA including, but not limited to, the
preparation and filing of all required reports with respect
to the Plans, the submission of such reports to the
appropriate governmental authorities, the timely preparation
and distribution of all required employee communications
(including without limitation any notice of plan amendment
which is required prior to the effectiveness of such
amendments), the proper and timely purchase and maintenance
of required surety bonds and the proper and timely
disposition of all benefit claims. The costs of
administering the Plans through the date of the 1995 Balance
Sheet, including fees for the trustee and other service
providers which are customarily paid by the Company, have
been paid or will be paid prior to the Closing or are
reflected in the 1995 Balance Sheet. There have been no
prohibited transactions involving the Company as defined in
Section 406 of ERISA or Section 4975 of the Code with respect
to any of the Plans or any parties in interest or
disqualified persons with respect to the Plans or any
reduction or curtailment of accrued benefits with respect to
any of the Plans. There are no pending or threatened
claims, lawsuits, or arbitrations which have been asserted
or instituted against the Plans, any fiduciaries thereof
with respect to their duties to the Plans or the assets of
any of the trusts under any of the Plans.
4.22.3 All required contributions for all Plan years ending
prior to the Closing Date have been made and adequate
accruals for contributions with respect to all current Plan
years are reflected in the 1995 Balance Sheet. The Company
has no plans, programs, agreements or arrangements and has
made no other commitments to its employees, former employees
or their beneficiaries under which it has any obligation to
provide any retiree or other employee benefit payments which
are not adequately funded through a trust or other funding
arrangement.
4.22.4 The Company has furnished Einstein Bros. with true
and complete copies of: (i) the Plans and any amendments
thereto and any related or contracts and the related summary
plan descriptions with respect to each Plan, if any;
(ii) the most recent determination letters received from the
Internal Revenue Service regarding the Plans, if any, and
copies of any pending applications, filings or notices with
respect to any of the Plans with the Internal Revenue
Service, the Pension Benefit Guaranty Corporation, the
Department of Labor or any other governmental agency, if
any; (iii) the policies or contracts, if any, for each of
the Plans as of the end of the most recent plan year; and
(iv) copies of any communications or notices provided to
employees or plan participants with respect to the Plans
along with information concerning the date and extent of
distribution of such communications, including without
limitation notices intended to comply with Section 606 of
ERISA and Section 4980B of the Code.
4.23 Accuracy of Information Furnished by the Company. No
representation, statement or information made or furnished in
writing by the Company to Einstein Bros., in this Agreement and
the Disclosure Schedule, taken as whole, contains any untrue
statement of a material fact or omits any material fact necessary
to make the representations, statements and information made or
furnished therein, in light of the circumstances in which they
were made, not misleading.
4.24 HSR Act Reporting Matters. The Company is the "ultimate
parent entity" of the Company within the meaning of the HSR Act.
The Company does not have total assets, and did not record annual
net sales for its most recent fiscal year, in excess of
$100,000,000.
ARTICLE 5. ADDITIONAL COVENANTS OF THE SHAREHOLDERS AND THE
COMPANY
5.1 REASONABLE BEST EFFORTS. The Indemnifying Shareholders and
the Company will use their 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 Article 7 to the obligations
of Einstein Bros. and Merger Sub to consummate the Merger. The
Indemnifying Shareholders will use their reasonable best efforts
to cause each of the shareholders of the Company who has not
signed this Agreement on the date hereof to sign this Agreement
and become a party hereto prior to Closing.
5.2 CONDUCT OF BUSINESS PENDING THE CLOSING. From and after the
execution and delivery of this Agreement and until the Closing
Date, except as otherwise provided with the prior written consent
of Einstein Bros. or as contemplated by this Agreement:
5.2.1 the Company will conduct its business and operations
in the manner in which the same have heretofore been
conducted and use reasonable best efforts to (i) preserve
its business organization intact, (ii) keep available the
services of its officers, employees, agents and
distributors, and (iii) preserve its relationships with
customers, suppliers and others having dealings with the
Company;
5.2.2 the Company will maintain all of its properties in
customary repair, order and condition, reasonable wear and
use and damage by unavoidable casualty excepted, and
maintain insurance of such types and in such amounts upon
all of its properties and with respect to the conduct of its
business as are in effect on the date of this Agreement;
5.2.3 the Company will not (i) authorize or issue any
shares of its capital stock (including any held in its
treasury) or any other securities, except pursuant to the
exercise of outstanding stock options, (ii) declare or pay
any dividend or make any other distribution of or with
respect to its shares of capital stock or other securities
or purchase or redeem any shares of its capital stock or
other securities; (iii) pay any bonus or increase the rate
of compensation of any of its employees (except pursuant to
normal policies of the Company) or enter into any new
employment agreement or amend any existing employment
agreement; (iv) sell, lease, transfer or assign any of its
assets other than in the ordinary course of business; (v)
make or obligate itself to make capital expenditures
aggregating more than $50,000; (vi) incur any material
obligations or liabilities or enter into any material
transaction; or (vii) amend its amended and restated
articles of incorporation or by-laws.
5.3 ACCESS TO THE COMPANY'S STORES, PROPERTIES AND RECORDS.
From and after the execution and delivery of this Agreement, the
Company will afford to the representatives of Einstein Bros.
access, during normal business hours and upon reasonable notice,
to the Company's premises sufficient to enable Einstein Bros. to
inspect the assets and properties of the Company, and the Company
shall furnish to such representatives during such period all such
information relating to the foregoing investigation as Einstein
Bros. may reasonably request; provided, however, that any
furnishing of such information to Einstein Bros. and any
investigation by Einstein Bros. shall not affect the right of
Einstein Bros. to rely on the representations and warranties made
by the Company in or pursuant to this Agreement, and, provided
further that Einstein Bros. and Merger Sub will hold in
confidence all documents and information concerning the Company
so furnished, and, if the Merger shall not be consummated, such
confidence shall be maintained in accordance with the
confidentiality agreement between Einstein Bros. and the Company
dated September 13, 1995.
5.4 NOTICE OF MATERIAL DEVELOPMENTS. The Company will give
prompt written notice to Einstein Bros. of any material
development affecting the assets, properties, business, business
prospects, financial condition or results of operation of the
Company, including without limitation any development which
results in the inaccuracy of any of the representations and
warranties of the Company made herein. However, no disclosure
pursuant to this Section 5.4 shall be deemed to amend or
supplement any of such representations and warranties, or any of
the schedules hereto.
5.5 NO OTHER DISCUSSIONS. Neither the Shareholders nor the
Company will, prior to the Closing 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 or shares of the Company to, other than
sales in the ordinary course of business, or the merger or
consolidation or other business combination of the Company with,
any person other than Einstein Bros.
ARTICLE 6. ADDITIONAL COVENANTS OF EINSTEIN BROS. AND MERGER
SUB.
6.1 REASONABLE BEST EFFORTS. Einstein Bros. and Merger Sub will
use their 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 Article 8 to the obligation of the
Shareholders and the Company to consummate the Purchase and the
Merger. Einstein Bros. will use its reasonable best efforts to
cause each of its stockholders to enter into the Amended and
Restated Registration Rights Agreement (as hereinafter defined) and
will indemnify and hold the Shareholders of the Company harmless
from and against any expenses, losses, costs, deficiencies,
liabilities and damages (including reasonable related counsel
fees and expenses) incurred or suffered by any of the
shareholders (or any of their successors in interest) arising
from any claim or action of any stockholders of Einstein Bros.
related to the execution and delivery of the Amended and Restated
Registration Rights Agreement or the consummation of any of the
transactions contemplated thereby without the consent of such
stockholders.
6.2 GUARANTEE OF PERFORMANCE BY MERGER SUB. Einstein Bros.
agrees to cause Merger Sub to perform all of its obligations
hereunder.
6.3 CONDUCT OF BUSINESS PENDING THE CLOSING. From and after the
execution and delivery of this Agreement and until the Closing
Date, except as otherwise provided by the prior written consent
of the Company, Einstein Bros. will conduct its business and
operations in the manner in which the same have heretofore been
conducted and use reasonable best efforts to (i) preserve its
business organization intact, (ii) keep available the services of
its officers, employees, agents and distributors, and
(iii) preserve its relationships with customers, suppliers and
others having dealings with it.
6.4 NOTICE OF MATERIAL DEVELOPMENTS. Einstein Bros. will give
prompt written notice to the Company of any material development
affecting the assets, properties, business, business prospects,
financial condition or results of operation of Einstein Bros.
including without limitation any development which results in the
inaccuracy of any of the representations and warranties of
Einstein Bros. made herein. However, no disclosure pursuant to
this Section 6.4 shall be deemed to amend or supplement any of
such representations and warranties, or any of the schedules
hereto.
ARTICLE 7. CONDITIONS TO THE OBLIGATION OF EINSTEIN BROS. AND
MERGER SUB
The obligation of Einstein Bros. and Merger Sub to consummate the
Merger shall be subject to the satisfaction or waiver of the
following conditions:
7.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE
WITH OBLIGATIONS. The representations and warranties of the
Company contained in Section 4.1 (except as they relate to
foreign qualification) and 4.2 of this Agreement and the
representations and warranties of the Shareholders 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. The Company shall have performed and complied in all
material respects with all of its obligations required by this
Agreement to be performed or complied with at or prior to the
Closing Date. The Company shall have delivered to Einstein Bros.
and Merger Sub a certificate, dated as of the Closing Date and
signed by the Company, certifying that such representations and
warranties are thus true and correct and that all such
obligations have been thus performed and complied with.
7.2 OPINION OF COUNSEL. Einstein Bros. shall have received an
opinion dated the Closing Date from Cooley Godward Castro
Huddleson & Tatum, counsel for the Company and the Sellers, in
form and substance as set forth in Exhibit B attached hereto.
7.3 RECEIPT OF BANK CONSENT. BCI shall have obtained the
consent of Bank of America, N.A. to the transactions contemplated
hereby.
7.4 NO ADVERSE LITIGATION. 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 the Merger or any other transaction contemplated
hereby which, in the reasonable judgment of Einstein Bros., makes
it inadvisable to proceed with the Merger.
7.5 RESIGNATIONS. The Company shall have delivered to Einstein
Bros. the written resignations of the directors of the Company.
7.6 EMPLOYMENT AND CONSULTING AGREEMENTS; OPTIONS. Each of the
employment agreements and consulting agreements to which the
Company is a party (other than the agreement between William
Hughson and the Company) shall have been terminated without
liability to the Company.
7.7 LANDLORD CONSENTS. All required consents of the Company's
landlords to the transactions contemplated by this Agreement
shall have been obtained; provided, however, that Einstein Bros.
and Merger Sub shall agree to waive this condition at Closing if
requested to do so by the Company, in which event the
Shareholders will indemnify Einstein Bros. for all damages it may
incur as a result of its failure to obtain such consents, unless
Einstein Bros. has requested a similar waiver from the Company
and the Shareholders pursuant to Section 8.8 hereof, in which
event the Shareholders will indemnify Einstein Bros. for one-half
of such damages.
7.8 QUALIFICATIONS, LEGAL INVESTMENT. All authorizations,
approvals, filings, or permits, if any, of any governmental
authority or regulatory body of the United States, the State of
California or of any other state that are required in connection
with the lawful sale or issuance of the Purchased Shares shall
have been duly obtained and shall be effective on and as of the
Closing. At the time of the Closing, the sale or issuance of the
Purchased Shares shall be legally permitted by all laws and
regulations to which Einstein Bros. and the Purchasers are
subject.
7.9 TERMINATION OF CERTAIN AGREEMENTS. Each of the following
agreements shall have been terminated without liability to the
Company, pursuant to termination agreements satisfactory in form
and substance to Einstein Bros.: (i) the Series A Preferred
Stock Purchase Agreement dated May 3, 1994 among the Company,
certain of its shareholders and certain purchasers, (ii) the
Series B Preferred Stock Purchase Agreement dated March 31, 1995
among the Company, certain of its shareholders and certain
purchasers; (iii) Amended and Restated Investor Rights Agreement
dated March 31, 1995 among Starbucks, the Company and certain
shareholders of the Company; (iv) the Amended and Restated Voting
Rights Agreement dated March 31, 1995 among Starbucks, the
Company and certain shareholders of the Company; (v) the Founders
and Rosewood Voting Rights Agreement dated March 31, 1995 among
the Company and certain shareholders of the Company; and (vi) the
Protective Covenants Agreement dated March 31, 1995 among
Starbucks, the Company and certain shareholders of the Company.
ARTICLE 8. CONDITIONS TO OBLIGATION OF THE SHAREHOLDERS AND THE
COMPANY.
The obligation of the Shareholders and the Company to consummate
the Merger shall be subject to the satisfaction or waiver of each
of the following conditions:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES AND COMPLIANCE
WITH OBLIGATIONS. The representations and warranties of Einstein
Bros. and Merger Sub contained in Sections 3.1, 3.2, 3.3, 3.4,
3.5 and 3.6 of 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. Einstein Bros. and Merger Sub shall have
performed and complied in all material respects with all of its
obligations required by this Agreement to be performed or
complied with at or prior to the Closing Date. Einstein Bros.
and Merger Sub shall have delivered to the Shareholders a
certificate, dated as of the Closing Date and signed by an
officer of Einstein Bros. and Merger Sub. certifying that such
representations and warranties are thus true and correct and that
all such obligations have been thus performed and complied with.
8.2 OPINION OF COUNSEL. The Sellers shall have received an
opinion, dated the Closing Date, from Bell, Boyd & Lloyd, counsel
for Einstein Bros. and Merger Sub, in form and substance as set
forth in Exhibit C attached hereto.
8.3 EINSTEIN BROS. REGISTRATION RIGHTS AGREEMENT. Einstein Bros.
shall have executed and delivered to each of the Purchasers an
amended and restated registration rights agreement in the form
set forth in Exhibit D hereof (the "Amended and Restated
Registration Rights Agreement").
8.4 ELECTION OF NOAH ALPER. Noah Alper shall have been elected
as a director and vice chairman of Einstein Bros.
8.5 AGREEMENTS WITH CERTAIN MEMBERS OF NOAH'S MANAGEMENT.
Einstein Bros. shall have executed and delivered to each of Jim
Mizes, Bob Purcell, Nancy Hauge, Bill Schrader, Paul Soulier,
Doug Troy and Barbara Musante agreements in the form set forth in
Exhibit E.
8.6 RECEIPT OF BANK CONSENT. Starbucks shall have obtained the
consent of Bank of America, N.A. to the transactions contemplated
hereby.
8.7 NO ADVERSE LITIGATION. 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 the Merger or the Purchase or any other transaction
contemplated hereby which, in the reasonable judgment of the
Company, makes it inadvisable to proceed with the Merger or the
Purchase.
8.8 LANDLORD CONSENTS. All required consents of the Company's
landlords to the transactions contemplated by this Agreement
shall have been obtained; provided, however, that the
Shareholders and the Company shall agree to waive this condition
at Closing if requested to do so by Einstein Bros., in which
event the Shareholders will have no liability for the failure to
obtain any such consent, unless the Company has requested a
similar waiver from Einstein Bros. and Merger Sub pursuant to
Section 7.7 hereof, in which event the Shareholders will
indemnify Einstein Bros. for one-half of all damages it may incur
as a result of the Company's failure to obtain any such consents.
ARTICLE 9. CERTAIN ACTIONS AFTER THE CLOSING
9.1 Execution of Further Documents. From and after the Closing,
upon the reasonable request of Einstein Bros., the Shareholders
shall execute, acknowledge and deliver all such further acts,
deeds, assignments, transfers, conveyances, powers of attorney
and assurances as may be required to carry out the transactions
contemplated by this Agreement.
9.2 RESTRICTIONS ON TRANSFER OF PURCHASED SHARES. The
restrictions of this Section 9.2 apply to any holder of the
Purchased Shares. Each Purchaser acknowledges and agrees that:
9.2.1 The Purchased Shares to be issued pursuant to the
Purchase may be owned, as of the Closing, only in the names
of and by such Purchasers.
9.2.2 No federal, state or other agency has made any
finding or determination as to the fairness of the offering
of the Purchased Shares for investment, nor any
recommendation or endorsement of the Purchased Shares.
9.2.3 Because the Purchased Shares will not have not been
registered under the Securities Act of 1933, as amended
("the Securities Act"), or applicable state or other
securities laws, the economic risk of the investment must be
borne indefinitely by such Purchasers, and the Purchased
Shares cannot be sold unless subsequently registered under
the Securities Act and such state or other laws, or unless
an exemption from such registration is available; Einstein
Bros. is not obligated to file a notification under
Regulation A of the Securities Act or a registration
statement under the Securities Act, except pursuant to the
Amended and Restated Registration Rights Agreement; and Rule
144, adopted under the Securities Act and governing the
possible disposition of the Purchased Shares, is not
currently available.
9.2.4 No Purchased Shares may be transferred unless
(i) such transfer is effected pursuant to a registration
statement which has been filed under the Securities Act and
declared effective by the Securities and Exchange
Commission, or (ii) in the written opinion of counsel, which
opinion and counsel shall be satisfactory to Einstein Bros.
(the fees and expenses of which counsel shall be borne by
the transferring Purchaser), an exemption from the
registration requirements of the Securities Act and
applicable state or other securities laws is available.
9.2.5 The Purchasers agree that they shall enter into an
agreement restricting the public resale of the Purchased
Shares for a period of up to 120 days, to the extent
required by the underwriters in any initial public offering
of shares of Common Stock of Einstein Bros. and that they
will not sell, transfer or otherwise dispose of any of the
Purchased Shares unless they have first obtained the written
agreement of the transferee of such shares (which agreement
shall be satisfactory to Einstein Bros.) to be bound by the
provisions of this Section 9.2.5.
9.2.6 Each certificate evidencing the Purchased Shares
shall bear the following legends:
"The shares represented by this certificate were issued
without registration under the Securities Act of 1933, as
amended (the "Securities Act") or applicable state
securities laws, in reliance upon the exemptions contained
therein. No transfer of these shares or any interest
therein may be made unless (i) such transfer is effected
pursuant to a registration statement which has been filed
under the Securities Act and declared effective by the
Securities and Exchange Commission, or (ii) in the written
opinion of counsel, which opinion and counsel shall be
satisfactory to the issuer of these shares, an exemption
from the registration requirements of the Securities Act and
applicable state or other securities laws is available."
"The shares represented by this certificate are also subject
to certain covenants and agreements (including restrictions
on transfer) contained in a Merger Agreement dated as of
January 22, 1996 by and among Einstein Bros. Bagels, Inc.,
Noah's New York Bagels, Inc. ("Noah's"), NNYB Acquisition
Corporation and shareholders of Noah's."
9.3 CERTAIN POST-CLOSING COOPERATION. Each of the Shareholders
acknowledges and agrees that Einstein Bros. may have need of
information concerning the Company and the Shareholders in order
to comply with applicable securities laws and regulations in
connection with future public and private debt and equity
offerings by Einstein Bros. ("Offerings"). Each Purchaser agrees
that such Purchaser will cooperate with Einstein Bros. in
connection with any Offerings and that such Purchaser will
furnish Einstein Bros. with such information concerning the
Company prior to the Closing Date and such Purchaser as Einstein
Bros. may reasonably require to comply with applicable securities
laws and regulations. Each Shareholder who is not a Purchaser
agrees that such Shareholder will furnish Einstein Bros. with
such information concerning such Shareholder as Einstein Bros.
may reasonably require in connection with any Offerings to comply
with applicable securities laws and regulations.
9.4 CERTAIN VOTING AGREEMENTS.
(a) Each of the Purchasers agrees that from and after the
Closing and until the earlier of February 28, 1998 or the
completion of any Qualified Public Offering, that such
Purchaser shall vote (at any meeting and in any action by
written consent) such Purchaser's Purchased Shares (and any
equity or other voting securities issued or issuable
directly or indirectly with respect to such shares by way of
stock dividend or stock split or in connection with a
combination of stores, recapitalization, merger,
consolidation or other reorganization) over which such
Purchaser has voting control and shall take all other
actions within the control of such Purchaser (whether in
such Purchaser's capacity as a stockholder or director of
the Company or otherwise) to cause the election to the Board
of Directors of Einstein Bros. of (a) Daniel V. Colangelo,
(b) Gail Lozoff, (c) the designee of OBG Holdings, Inc.
("OBG") pursuant to Section 5.M of the agreement to
contribute assets dated March 23, 1995 by and among Einstein
Bros., OBG (formerly known as Offerdahl's Bagel Gourmet,
Inc.) and the shareholders of OBG, (d) three directors
designated by BCI, and (e) three directors designated from
time to time by the holders of an aggregate of 15,104.95
shares of Common Stock of Einstein Bros. pursuant to
subscription agreements entered into by the purchasers of
such shares dated as of March 24, 1995. For purposes of
this Section 9.4(a), a "Qualified Public Offering" means a
sale in an underwritten public offering registered under the
Securities Act of 1933, as amended, of shares of Einstein
Bros.' Common Stock in which the aggregate gross proceeds
are equal to at least $15,000,000.
(b) Until the provisions of Section 9.4(a) cease to be
effective, the Shareholders shall not sell, transfer,
assign, pledge or otherwise dispose of any interest in any
Purchased Shares, unless in each case the proposed
transferee has executed and delivered to Einstein Bros. a
written agreement in form satisfactory to Einstein Bros.
pursuant to which such transferee agrees to be bound by the
provisions hereof with respect to the Purchased Shares so
transferred.
(c) Until the provisions of Section 9.4 of this Agreement
cease to be effective, each certificate evidencing Purchased
Shares shall bear the following legend:
"The shares of stock represented by this certificate are
subject to certain voting agreements and certain
restrictions on transfer set forth in a Merger Agreement
dated as of January 22, 1996, a copy of which is available
for inspection at the offices of the Secretary of the
Company."
9.5 CONFIDENTIAL INFORMATION.
9.5.1 The Restricted Shareholders (as defined in Section
9.6) possess certain confidential and proprietary
information and trade secrets of the Company, including, but
not limited to, information, methods, techniques, procedures
and knowledge developed by or for the Company respecting the
business of the Company (the "Confidential Information").
Each of the Restricted Shareholders acknowledges and agrees
that neither such Restricted Shareholder nor any other
person or entity has acquired by or through such Restricted
Shareholder any interest in or right to use the Confidential
Information other than the right to utilize it in the
operation of the business of Einstein Bros. and its
subsidiaries, and that the use or duplication of the
Confidential Information in any other business would
constitute an unfair method of competition with Einstein
Bros. and its subsidiaries. Each of the Restricted
Shareholders hereby agrees that such Restricted Shareholder:
(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.
9.5.2 Notwithstanding the foregoing, the obligations of the
Restricted Shareholders 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 Restricted
Shareholders, their agents or any person or entity which has
received such Confidential Information from or through any
of the Restricted Shareholders, (ii) is approved for release
by written authorization of an officer of Einstein Bros.,
(iii) is required to be disclosed by proper order of a court
of applicable jurisdiction after adequate notice to Einstein
Bros. to seek a protective order therefor, the imposition of
which protective order the Restricted Shareholders agree to
approve and support, or (iv) in the written opinion of the
disclosing Restricted Shareholder's counsel, is necessary to
be made by such Restricted Shareholder in order that the
Restricted Shareholder not violate any law, rule or
regulation applicable to him or her.
9.6 RESTRICTIVE COVENANTS. Each of the Restricted Shareholders
acknowledges and agrees that Einstein Bros. would be unable to
protect the Confidential Information against unauthorized use or
disclosure and Einstein Bros. would be unable to realize the
benefits of this Agreement if such Restricted Shareholder were
permitted, directly or indirectly, to engage in, hold interests
in or perform services for any entity which derives more than 15%
of its revenues from the business of selling, producing,
marketing or distributing bagels, other than Einstein Bros. and
its subsidiaries and franchisees (a "Competitive Business").
Each of the Restricted Shareholders further acknowledges and
understands that Einstein Bros. intends, and expects, to expand
its business throughout the United States. Each of the
Restricted Shareholders therefore agrees that for a period of
three (3) years from the Closing Date, such Restricted
Shareholder shall not, and shall not permit such Restricted
Shareholder's Affiliates, to directly or indirectly, anywhere in
the United States (including without limitation every county in
the State of California): (i) have any interest as a record or
beneficial owner in any Competitive Business; provided, however,
the Restricted Shareholders may have an interest in any
Competitive Business as passive investors in such Competitive
Business conducted by a company which has a class of securities
which is registered under Section 12 of the Securities Exchange
Act of 1934, as amended, or traded on a national securities
exchange provided that the interest consists solely of such
securities and the interest held by any Restricted Shareholder,
or any group of which any Restricted Shareholder is a member that
would be treated as a person under Section 13(d)(3) of the
Securities Exchange Act of 1934, shall in no event exceed five
percent (5%) of the total equity securities of such issuer;
(ii) perform services as a director, officer, manager, employee,
consultant, representative, agent, or otherwise for any
Competitive Business; or (iii) divert or attempt to divert any
business or any customers of Einstein Bros.' business to any
Competitive Business. For purposes of this Section 9.5, the term
"Restricted Shareholders" means Noah Alper, Dan Alper and Bill
Hughson.
9.7 ADDITIONAL AGREEMENTS OF STARBUCKS, THE COMPANY AND EINSTEIN
BROS.
9.7.1 Until March 31, 1998, Starbucks will continue, with
respect to both the Company and Einstein Bros., to comply
(and to cause its subsidiaries to comply) with the covenants
made by it in Section 3.3 of the Amended and Restated
Investor Rights Agreement dated as of March 31, 1995 by and
among the Company and certain investors in the Company,
whether or not such agreement continues in effect.
9.7.2 Until March 31, 1998, the Company and Einstein Bros.
will comply (and will cause their respective subsidiaries to
comply) with the covenants made by the Company, as if made
by both Einstein Bros. and the Company, in Section 3.4 of
the Amended and Restated Investor Rights Agreement dated as
of March 31, 1995 by and among the Company and certain
investors in the Company, whether or not such agreement
continues in effect.
9.7.3 At any time, Einstein Bros. may terminate its
obligations and those of the Company under Section 9.7.2
upon written notice to Starbucks and shall terminate such
obligations if a Covered Entity (as hereinafter defined)
takes any action which, if taken by Einstein Bros., would
violate Section 9.7.2. If Einstein Bros. terminates its
obligations, then the obligations of Starbucks under Section
9.7.1 shall terminate at the same time. "Covered Entity"
shall mean (i) an entity in which BCI holds (or has the
right to acquire) a majority equity interest or (ii) an
entity in which BCI holds (or has the right to acquire) an
equity interest which would result in BCI "controlling" such
entity within the meaning of such term as it is used in Rule
405 of the Securities Act.
9.8 ADDITIONAL AGREEMENT OF NOAH ALPER. Noah Alper hereby
grants to the Company the exclusive right to use his name,
likeness and persona in the business conducted by the Company,
consistent with the manner in which it is currently used (but
without any restriction whatsoever on the use of any trademark or
service mark of the Company) and agrees that he will not at any
time, without Einstein Bros.' written consent, use his name,
likeness or persona in a Competitive Business.
9.9 REMEDIES; WAIVER.
9.9.1 Einstein Bros., the Restricted Shareholders and
Starbucks (collectively, the "Restricted Persons") agree
that the provisions and restrictions set forth above in
Section 9.5, 9.6, 9.7 and 9.8 applicable to such Restricted
Person are necessary to protect Einstein Bros. and
Starbucks, as applicable, and their respective successors
and assigns in the protection of the business to be acquired
by Einstein Bros. pursuant to this Agreement. Each of the
Restricted Persons agrees that damages cannot compensate
Einstein Bros. or Starbucks, as applicable in the event of a
violation of the covenants contained in Section 9.5, 9.6,
9.7 or 9.8 hereof applicable to such Restricted Person, and
that injunctive relief shall be essential for the protection
of Einstein Bros. and Starbucks, as applicable, and their
respective successors and assigns. Accordingly, each of the
Restricted Persons agrees and consents that, in the event
such Restricted Person shall violate or breach any of said
covenants, Einstein Bros. or Starbucks, as applicable, shall
be entitled to obtain (and such Restricted Person hereby
consents to) such injunctive relief against such Restricted
Person, without bond, in addition to such further or other
relief as may appertain at equity or law. The exercise or
enforcement by Einstein Bros. or Starbucks, as applicable,
of any other right or remedy hereunder shall not preclude
the exercise or enforcement by Einstein Bros. or Starbucks,
as applicable, of any other right or remedy hereunder or
which Einstein Bros. or Starbucks, as applicable, has the
right to enforce under applicable law.
9.9.2 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.
9.10 EMPLOYEE BENEFIT PLANS. Einstein Bros. intends that the
Plans described in Schedule 4.22 (the "Company Benefit Plans")
that are in effect at the date of this Agreement shall remain in
effect until such time as the Company's employees are allowed to
participate in employee plans and benefit arrangements of
Einstein Bros. (the "Einstein Bros. Plans") or of an area
developer of Einstein Bros. who hires such employees, if such
area developer is formed.
Article 10. INDEMNIFICATION
10.1 AGREEMENT BY THE SHAREHOLDERS TO INDEMNIFY. The
Shareholders agree that they will indemnify and hold Einstein
Bros. and the Company harmless in respect of the aggregate of all
Indemnifiable Damages (as hereinafter defined). With respect to
Indemnifiable Damages arising from any inaccurate representation
or warranty made by the Company in Article 4 of this Agreement,
the obligation of the Shareholders to indemnify will be limited
to the following persons: Starbucks, Rosewood Capital, L.P.,
Noah Alper, Dan Alper, Robert Polsky and Bill Hughson
(collectively, the "Indemnifying Shareholders"), who shall be
obligated severally to indemnify Einstein Bros. and Merger Sub,
with each such person being obligated to indemnify for up to the
following percentage of the aggregate amount of Indemnifiable
Damages: Starbucks: 28.74%; Rosewood Capital, L.P.: 29.14%;
Noah Alper: 15.76%; Dan Alper: 6.32%; Robert Polsky: 10.94%;
and Bill Hughson: 9.10%. With respect to any other
Indemnifiable Damages, the obligation of the Shareholders to
indemnify shall be several. For purposes of this Agreement,
Indemnifiable Damages shall mean the aggregate of all expenses,
losses, costs, deficiencies, liabilities and damages (including
reasonable related counsel fees and expenses) incurred or
suffered by Einstein Bros., Merger Sub or the Company (or any
successor to all or any part of the assets or business of the
Company) (i) resulting from any inaccurate representation or
warranty made by the Shareholders or the Company in or pursuant
to this Agreement (disregarding for this purpose the limitations
on materiality set forth in the third sentence of Section 4.7.2
and the first sentence of Section 4.19), (ii) resulting from any
default in the performance of any of the covenants or agreements
made by the Shareholders in this Agreement, (iii) resulting from
any claim or action of any shareholder of the Company who has not
entered into this Agreement prior to the Closing related to the
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, including without
limitation any action based on the dissenters' rights of any such
shareholder under California law, or (iv) resulting from any
representation or statement made by the Company to its
shareholders in connection with the solicitation of consents to
approve the Merger that, taken as a whole, contains any untrue
statement of a material fact or omits any material fact necessary
to make the representations and statements made, in light of the
circumstances in which they were made, not misleading. Without
limiting the generality of the foregoing, with respect to the
measurement of Indemnifiable Damages, Einstein Bros. and the
Company shall 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 the Shareholders and the
Company been true and correct, had each of the covenants of the
Shareholders been performed in full, had there been no such claim
or action described in clause (iii) of the preceding sentence and
had no misleading statement or omission been made as described in
clause (iv) of the preceding sentence. The foregoing obligation
to indemnify Einstein Bros., and the Company shall be subject to
each of the following principles or qualifications:
10.1.1 Each of the representations and warranties made by
the Shareholders and the Company in this Agreement or
pursuant hereto, shall survive for a period of one year
after the Closing Date, notwithstanding any investigation at
any time made by or on behalf of Einstein Bros. or Merger
Sub, and thereafter all such representations and warranties
shall be extinguished, provided, however, that the
representations and warranties made by the Shareholders in
Sections 2.1, 2.2, 2.3, 2.4, 2.5, 4.1 (except to the extent
it relates to foreign qualification and except for clause
(ii) of the fourth sentence thereof) and 4.2 hereof shall in
each case survive forever (or, to the extent a claim
hereunder relates to third-party claims, a period of six
months after the expiration of the statute of limitations
applicable to such claim), those made in clause (ii) of the
fourth sentence thereof shall survive for six months after
the expiration of the applicable statute of limitations and
those made in Section 4.6 hereof shall in each case survive
until the first anniversary of the later of (i) the date on
which the applicable period of limitation on assessment or
refund of tax has expired, or (ii) the date on which the
applicable taxable year (or portion thereof) has been
closed. No claim for the recovery of Indemnifiable Damages
based upon the inaccuracy of such representations and
warranties may be asserted by Einstein Bros. or the Company
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.
10.1.2 The Shareholders shall not be liable for any claim
for Indemnifiable Damages arising out of any inaccuracy of
any representation or warranty if the aggregate amount of
all Indemnifiable Damages does not exceed $250,000. For
this purpose, amounts which would constitute Indemnifiable
Damages but for the limitations on materiality set forth in
the third sentence of Section 4.7.2 and the first sentence
of Section 4.19 shall be taken into account in determining
whether such threshold has been met.
10.1.3 The Shareholders' liability for claims for
Indemnifiable Damages arising out of any inaccuracy of
representations and warranties shall not exceed $10,000,000
in the aggregate.
10.1.4 The limitations set forth in Sections 10.1.2 and
10.1.3 shall not apply to Indemnifiable Damages arising out
of any inaccuracy of any representation or warranty in
Sections 2.1, 2.2, 2.3, 2.4, 2.5, 4.1 (except to the extent
it relates to foreign qualification) or 4.2.
10.1.5 Einstein Bros. and the Company shall not be entitled
to recover Indemnifiable Damages with respect to any matter
to the extent such matter is covered by insurance, but in
such event the effect of such matter on the insurance costs
of Einstein Bros. and the Company shall also be taken into
account in determining the amount of Indemnifiable Damages.
10.1.6 Absent fraud, the provisions of this Article 10
shall provide the exclusive remedy of Einstein Bros. and the
Company for damages arising from the inaccuracy of
representations and warranties of the Shareholders and the
Company in this Agreement.
10.1.7 In the event Einstein Bros. or the Company becomes
involved in any legal, governmental or administrative
proceeding which may result in indemnification claims
hereunder and such proceeding, if adversely determined, can
reasonably be expected to result in the payment of
Indemnifiable Damages hereunder in an amount (a) in excess
of the amount of damages of the Company that would not be
recovered because of the threshold set forth in Section
10.1.2 hereof, but (b) less than the cap set forth in
Section 10.1.3 hereof, then the Indemnifying Shareholders
may, at their option and expense, defend such proceeding.
If the Indemnifying Shareholders elect to defend any such
proceeding, they shall have full control over the conduct of
such proceeding, although Einstein Bros. shall have the
right to retain legal counsel and to participate in the
defense of such proceeding 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; provided that, in the event the Indemnifying
Shareholders shall fail to initiate a defense of a claim
within twenty days of the notice to the Indemnifying
Shareholders of a claim, Einstein Bros. shall have the
option to conduct the defense of such claim as it may in its
discretion and in good faith deem proper, and the
Indemnifying Shareholders shall have the right to retain
legal counsel and to participate in the defense of such
proceeding at their own expense. If any proceeding, if
adversely determined, can reasonably be expected to result
in an amount of damages of the Company (x) that would not be
recovered because such amount would be less than the
threshold set forth in Section 10.1.2 hereof, or (y) that
would exceed the cap set forth in Section 10.1.3 hereof,
then Einstein Bros. may, at its option, defend such
proceeding. If Einstein Bros. elects to defend any such
proceeding, it shall have full control over the conduct of
such proceeding, although the Indemnifying Shareholders
shall have the right to retain legal counsel and to
participate in the defense of such proceeding at their 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; provided that, in the event
Einstein Bros. shall fail to initiate a timely defense of a
claim, the Indemnifying Shareholders shall have the option
to conduct the defense of such claim, and Einstein Bros.
shall have the right to retain legal counsel and to
participate in the defense of such proceeding at its own
expense.
10.1.8 Nothing in this Section 10.1 shall prevent Einstein
Bros. from obtaining equitable relief in any appropriate
case.
10.1.9 Einstein Bros. and the Company agree to use
reasonable best efforts to give prompt written notice to the
Indemnifying Shareholders of each claim for Indemnifiable
Damages which they believe they have suffered; provided,
however, that no delay in the giving of such notice shall
affect the rights of Einstein Bros., and the Company to
recover Indemnifiable Damages hereunder except to the extent
the recipient of such notice is prejudiced by such delay.
ARTICLE 11. MISCELLANEOUS
11.1 AMENDMENT AND MODIFICATION. Subject to any restrictions
set forth in the California Act and the Delaware Act, the parties
hereto may amend, modify and supplement this Agreement in such
manner as may be agreed upon in writing by Einstein Bros., the
Company and Shareholders owning on the date hereof 75% of the
aggregate number of shares of capital stock of the Company owned
by all of the Shareholders, provided, however, that (i) any
amendment to Section 8.4 or 9.8 shall require only the consent of
Einstein Bros. and Noah Alper, (ii) any amendment to Section 9.5
or 9.6 shall require only the consent of Einstein Bros. and of
all Restricted Shareholders affected thereby, (iii) any amendment
to Section 9.7 shall require only the consent of Einstein Bros.
and Starbucks, (iv) any amendment to Section 9.9 shall require
only the consent of Einstein Bros. and all of the Restricted
Persons affected thereby, (v) any amendment to Article 10 shall
require only the consent of Einstein Bros. and all of the
Indemnifying Shareholders, (vi) any amendment to any of clauses
(i) through (v) of this Section 11.1 shall require only the
consent of all of the persons identified in such clause, and
(vii) any amendment of Section 11.3.4 shall require only the
consent of Starbucks, Rosewood Capital, L.P., Noah Alper and
Einstein Bros.
11.2 PAYMENT OF EXPENSES. The Shareholders shall pay all fees
and expenses incurred in connection with this Agreement and the
transactions contemplated hereby payable to Alex. Brown & Sons
Incorporated; Cooley Godward Castro Huddleson & Tatum, counsel
for the Company; Preston Gates & Ellis, representing Starbucks;
and certain other professional advisors approved by the Company.
Einstein Bros. shall pay all of the expenses incurred by it or
Merger Sub in connection with this Agreement, including without
limitation their legal and accounting fees and expenses, and the
commissions, fees and expenses of any person employed or retained
by them to bring about, or to represent them in, the transactions
contemplated hereby.
11.3 TERMINATION. Anything to the contrary herein
notwithstanding, this Agreement may be terminated and the
transaction contemplated hereby may be abandoned:
11.3.1 by the mutual written consent of all of the parties
hereto at any time prior to the Closing Date;
11.3.2 by Einstein Bros. in the event of the material
breach by the Shareholders of any provision of this
Agreement, which breach is not remedied by the breaching
party within 10 days after receipt of notice thereof from
Einstein Bros.;
11.3.3 by the Shareholders in the event of the material
breach by Einstein Bros. of any provision of this Agreement,
which breach is not remedied by Einstein Bros. within 10
days after receipt of notice thereof from Shareholders; or
11.3.4 by any party hereto if the Closing has not taken
place by the close of business on February 2, 1996.
If this Agreement is terminated pursuant to Sections 11.3.1, no
party shall have any liability for any costs, expenses, loss of
anticipated profit or any further obligation for breach of
warranty or otherwise to any other party to this Agreement. Any
termination of this Agreement pursuant to Sections 11.3.2,
11.3.3, or 11.3.4 shall be without prejudice to any other rights
or remedies of the respective parties.
11.4 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.
11.5 ENTIRE AGREEMENT. This Agreement and the exhibits and
schedules attached hereto and the confidentiality agreement
between Einstein Bros. and the Company dated September 13, 1995,
contain the entire agreement of the parties hereto with respect
to the Purchase and the Merger 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 schedules and exhibits attached hereto.
11.6 HEADINGS. The descriptive headings in this Agreement are
inserted for convenience only and do not constitute a part of
this Agreement.
11.7 CERTAIN DEFINED TERMS. As used herein, the following terms
shall have the meanings given them below:
"Best of the Knowledge of the Company" means the knowledge
of any of Noah Alper, Dan Alper, Bob Polsky, Bill Hughson or
Glenn Bacheller and the knowledge which any of them could
reasonably be expected to have upon the exercise of
reasonable diligence in the performance of his duties or in
the preparation of the Disclosure Schedules (to the extent
such person was involved in the preparation of such
Disclosure Schedules).
"Best of the Knowledge of Einstein Bros." means the
knowledge of any of Einstein Bros.' executive officers and
the knowledge which any of them could reasonably be expected
to have in the performance of his duties or in the
preparation of the Einstein Bros. Disclosure Schedules (to
the extent such person was involved in the preparation of
such Einstein Bros. Disclosure Schedules).
"Material Adverse Effect" means, when used with reference to
Einstein Bros., a material adverse effect on the business,
financial condition or results of operations of Einstein
Bros. and its subsidiaries, taken as a whole, and when used
with reference to the Company, a material adverse effect on
its business, financial condition or results of operations.
11.8 EXECUTION IN COUNTERPART. This Agreement may be executed
in any number of counterparts, each of which shall be deemed an
original.
11.9 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
when delivered personally or by courier, when sent by facsimile
transmission with confirmed receipt, or four business days after
it is sent by registered or certified mail, postage prepaid, to
the intended recipient, addressed as follows:
If to any one or more of the Shareholders, addressed to such
Shareholder at its address set forth on Schedule 11.9
hereto.
If to the Company, prior to the Closing, addressed to:
Noah's New York Bagels, Inc.
14054 Catalina Street
P.O. Box 2158
San Leandro, CA 94577-0331
Attention: Glenn Bacheller
with a copy to:
Cooley Godward Castro Huddleson & Tatum
One Maritime Plaza, 20th Floor
San Francisco, CA 94111
Attention: Christopher Westover
If to the Company after the Closing, or if to Einstein Bros.
or Merger Sub, addressed to:
Einstein Bros. Bagels, Inc.
1526 Cole Boulevard, Suite 200
Golden, CO 80401
Attention: General Counsel
with a copy to:
Bell, Boyd & Lloyd
70 W. Madison, Suite 3200
Chicago, Illinois 60602
Attention: Paul T. Metzger
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 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.
11.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware
applicable to contracts made and to be performed therein, except
that the Merger shall be governed by and become effective in
accordance with the California Act to the extent provided
therein.
11.11 AMENDMENT AND RESTATEMENT. This Agreement amends and
restates in its entirety that certain Merger Agreement, dated as
of January 22, 1996, among the Company, Einstein Bros., Merger
Sub and certain Shareholders.
[THIS SPACE INTENTIONALLY LEFT BLANK]
In Witness Whereof, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
Noah's New York Bagels, Inc.
By: /s/ William B. Hughson
------------------------
Title: President
Einstein Bros. Bagels, Inc.
By: /s/ Paul A. Strasen
------------------------
Title: Vice President
NNYB Acquisition Corporation
By: /s/ Joel Alam
------------------------
Title: Vice President
SHAREHOLDER SIGNATURE PAGE TO
MERGER AGREEMENT
STARBUCKS CORPORATION
-------------------------
Print Shareholder Name
/s/ Martin M. Casey
-------------------------
Signature of Shareholder
(or authorized signatory,
if Shareholder is not an
individual)
Senior Vice President
-------------------------
Name and Title of
authorized signatory, if
Shareholder is not an
individual