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ILLINOIS
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0-17363
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36-3442829
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(State
or other jurisdiction of
incorporation)
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(Commission
File Number)
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(I.R.S.
Employer Identification No.)
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6431
West Oakton St. Morton Grove, IL
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60053
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(Address
of principal executive offices)
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(Zip
code)
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Item
1.01
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Entry
into a Material Definitive
Agreement.
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Item
2.01
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Completion
of Acquisition or Disposition of
Assets.
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Item
2.03
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Creation
of a Direct Financial Obligation or an Obligation Under an Off-Balance
Sheet Arrangement of a Registrant.
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Item
3.02
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Unregistered
Sales of Equity Securities.
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Item
9.01
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Financial
Statements and Exhibits.
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Exhibit
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Description
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2.1
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Stock
Purchase Agreement dated February 6, 2009.
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2.2
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Real
Property Agreement dated February 6, 2009.
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10.1
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Loan
and Security Agreement dated February 6, 2009.
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10.2
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Revolving
Note dated February 6, 2009.
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10.3
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Term
Note dated February 6, 2009.
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99.1
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Press
Release dated February 9, 2009.
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LIFEWAY
FOODS, INC.
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By:
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/s/
Edward Smolyansky
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Edward
Smolyansky
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Chief
Financial and Accounting Officer and Treasurer
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Exhibit
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Description
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2.1
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Stock
Purchase Agreement dated February 6, 2009.
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2.2
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Real
Property Agreement dated February 6, 2009.
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10.1
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Loan
and Security Agreement dated February 6, 2009.
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10.2
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Revolving
Note dated February 6, 2009.
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10.3
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Term
Note dated February 6, 2009.
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99.1
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Press
Release dated February 9,
2009.
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ARTICLE
1 DEFINITIONS
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1
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1.1
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DEFINITIONS.
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1
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1.2
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ACCOUNTING
TERMS.
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1
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ARTICLE
2 PURCHASE AND SALE OF SHARES
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1
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2.1
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PURCHASE
AND SALE.
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1
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2.2
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PURCHASE
PRICE.
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1
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2.3
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EXCLUDED
ASSETS.
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2
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2.4
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EMPLOYEE
PAYMENTS.
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2
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2.5
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CLOSING
PAYMENTS.
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2
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ARTICLE
3 REPRESENTATIONS AND WARRANTIES OF SELLERS CONCERNING THE
TRANSACTION
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3
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3.1
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AUTHORITY
AND CAPACITY.
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3
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3.2
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OWNERSHIP
OF SHARES.
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3
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3.3
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EXECUTION
AND DELIVERY; ENFORCEABILITY.
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3
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3.4
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NONCONTRAVENTION.
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4
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3.5
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LITIGATION.
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4
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3.6
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FINANCIAL
IMPAIRMENT.
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4
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3.7
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RESTRICTED
SHARES.
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4
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ARTICLE
4 REPRESENTATIONS AND WARRANTIES OF SELLERS CONCERNING THE
COMPANY
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4
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4.1
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INCORPORATION,
GOOD STANDING, GOVERNING DOCUMENTS.
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4
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4.2
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CAPITALIZATION.
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5
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4.3
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OTHER
VENTURES; SUBSIDIARIES.
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5
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4.4
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NONCONTRAVENTION.
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5
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4.5
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FINANCIAL
INFORMATION.
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6
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4.6
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ABSENCE
OF UNDISCLOSED LIABILITIES.
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6
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4.7
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ABSENCE
OF CERTAIN CHANGES OR EVENTS.
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6
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4.8
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TAXES.
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8
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4.9
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EMPLOYEES.
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9
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4.10
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EMPLOYEE
BENEFIT PLANS.
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11
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4.11
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COMPLIANCE
WITH THE FEDERAL FOOD AND DRUG ADMINISTRATION
REQUIREMENTS.
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13
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4.12
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ENVIRONMENTAL
MATTERS.
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14
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4.13
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COMPLIANCE
WITH LAWS; PERMITS.
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16
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4.14
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REAL
PROPERTY.
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16
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4.15
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TITLE,
CONDITION AND SUFFICIENCY OF ASSETS.
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17
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4.16
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INTELLECTUAL
PROPERTY.
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17
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4.17
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CONTRACTS.
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18
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4.18
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LITIGATION.
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18
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4.19
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INSURANCE.
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18
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4.20
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ACCOUNTS
RECEIVABLE.
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18
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4.21
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CUSTOMERS
AND SUPPLIERS.
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19
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4.22
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INDEBTEDNESS.
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19
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4.23
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BROKERAGE.
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19
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4.24
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RELATED
PARTY TRANSACTIONS.
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19
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4.25
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CONFLICTS
OF INTEREST.
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19
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4.26
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ABSENCE
OF CERTAIN PAYMENTS.
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20
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4.27
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FINANCIAL
IMPAIRMENT.
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20
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4.28
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DISCLOSURE.
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20
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ARTICLE
5 REPRESENTATIONS AND WARRANTIES OF BUYER
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20
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5.1
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ORGANIZATION;
AUTHORIZATION.
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20
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5.2
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EXECUTION
AND DELIVERY; ENFORCEABILITY.
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20
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5.3
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NONCONTRAVENTION.
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20
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5.4
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BROKERAGE.
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21
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5.5
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FINANCIAL
IMPAIRMENT.
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21
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ARTICLE
6 THE CLOSING
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21
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ARTICLE
7 CLOSING CONDITIONS AND DELIVERIES
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21
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7.1
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BUYER’S
CLOSING CONDITIONS AND SELLERS’ DELIVERIES.
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21
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7.2
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SELLERS’
CLOSING CONDITIONS AND BUYER’S DELIVERIES.
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23
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ARTICLE
8 ADDITIONAL COVENANTS AND AGREEMENTS
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24
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8.1
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CONDUCT
OF BUSINESS.
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24
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8.2
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NO
MATERIAL CHANGE.
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25
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8.3
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ACCESS.
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25
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8.4
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COOPERATION
TO SATISFY CLOSING CONDITIONS.
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25
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8.5
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PUBLICITY.
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25
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8.6
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EXPENSES.
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25
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8.7
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NO
ASSIGNMENTS.
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26
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8.8
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TAX
MATTERS.
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26
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8.9
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GENERAL
RELEASE OF CLAIMS.
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31
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8.10
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CONFIDENTIALITY.
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32
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8.11
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NON-COMPETITION,
NON-SOLICITATION AGREEMENT.
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32
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8.12
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EXCLUSIVITY.
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33
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8.13
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FURTHER
ASSURANCES.
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33
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8.14
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CORRECTION
OF LEGAL COMPLIANCE ISSUES.
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34
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8.15
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PAYMENT
OF SELLING EXPENSES. ON OR BEFORE THE CLOSING
DATE,
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34
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8.16
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REMOVAL
OF RESTRICTIVE LEGEND.
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34
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8.17
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TAX
PROTECTION.
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34
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ARTICLE
9 INDEMNIFICATION
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35
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9.1
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SURVIVAL.
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35
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9.2
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INDEMNIFICATION
OF BUYER.
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35
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9.3
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INDEMNIFICATION
OF SELLERS.
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37
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9.4
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LIMITATIONS
ON INDEMNIFICATION OF BUYER INDEMNIFIED PARTIES.
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37
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9.5
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LIMITATIONS
ON INDEMNIFICATION OF SELLERS’ INDEMNIFIED PARTIES.
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40
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9.6
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PROCEDURES
RELATING TO INDEMNIFICATION; THIRD-PARTY CLAIMS.
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40
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9.7
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OTHER
CLAIMS.
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42
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9.8
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REMEDIES
OF BUYER.
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42
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9.9
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NO
CIRCULAR RECOVERY.
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42
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ARTICLE
10 TERMINATION
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43
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10.1
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TERMINATION.
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43
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10.2
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EFFECT
OF TERMINATION.
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43
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ARTICLE
11 CERTAIN DEFINITIONS
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44
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ARTICLE
12 MISCELLANEOUS PROVISIONS
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54
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12.1
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NOTICES.
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54
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12.2
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ENTIRE
AGREEMENT.
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55
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12.3
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MODIFICATION.
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55
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12.4
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BINDING
EFFECT.
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55
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12.5
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INTERPRETATION.
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55
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12.6
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COUNTERPARTS.
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56
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12.7
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THIRD
PARTIES.
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56
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12.8
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TIME
PERIODS.
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56
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12.9
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GOVERNING
LAW.
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56
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12.10
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LEGAL
FEES AND COSTS.
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56
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Schedule
4.1
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Incorporation,
Good Standing, Governing Documents
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Schedule
4.2
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Capitalization
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Schedule
4.4
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Consents
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Schedule
4.5
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Financial
Statements
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Schedule
4.6
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Undisclosed
Liabilities
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Schedule
4.7
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Absence
of Certain Changes or Events
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Schedule
4.8(a)
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Tax
Filings
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Schedule
4.8(b)
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Tax
Claims, Audits or Proceedings
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Schedule
4.8(c)
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Tax
Withholding
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Schedule
4.8(j)
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Tax
Elections
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Schedule
4.9(a)
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Employees
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Schedule
4.9(c)
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Labor
Law Compliance; Severance Payments
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Schedule
4.10(a)(i)
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Employee
Benefit Plans
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Schedule
4.10(a)(ii)
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ERISA
Affiliate Plans
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Schedule
4.10(c)
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Employee
Compensation/Benefits Changes
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Schedule
4.10(h)
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Outstanding
Options
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Schedule
4.11
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FDA
Requirements
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Schedule
4.12(a)
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Environmental
Matters
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Schedule
4.13
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Permits
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Schedule
4.14
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Real
Property
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Schedule
4.15
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Right(s)
of Any Person(s) to Use Company Personal Property
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Schedule
4.16
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Intellectual
Property
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Schedule
4.17
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Contracts
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Schedule
4.18
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Litigation
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Schedule
4.19
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Insurance
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Schedule
4.21
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Customers,
Suppliers and Distributors
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Schedule
4.22
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Indebtedness
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Schedule
4.24
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Related
Party Transactions
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Schedule
4.25
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Conflicts
of Interest
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Schedule
7.1(f)
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Directors
and Officer Resignations
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Schedule
7.1(p)
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Related
Party Releases
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Schedule
7.1(q)
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Lender
Releases
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Exhibit
A
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Form
of Seller Note
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Exhibit
B
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Form
of Consulting Agreement
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Exhibit
C
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Form
of Real Property Purchase Agreement
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Exhibit
D
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Form
of Security Agreement
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Exhibit
E
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Form
of Mortgage and Security Agreement
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Exhibit
F
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Form
of Stock Pledge
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Exhibit
G
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Form
of Lender Releases
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Exhibit
H
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Form
of Related Party Releases
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(a)
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$8,050,000.00;
less
an
amount equal to any Selling Expenses that are in excess of the amount
permitted to be paid by the Company pursuant to
Section 8.15
hereof and are not paid by Sellers at Closing (“
Unpaid Selling
Expenses
”);
less
the
$100,000.00 Forbearance Payment made pursuant to the Forbearance
Agreement; and
less
an amount
equal to any Funded Debt that is outstanding immediately prior to the
Closing (the “
Outstanding Funded
Debt
”) (collectively, the “
Base Purchase
Price
”);
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(b)
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plus
the Seller
Note, in the principal amount of $2,735,000.00, due on February 6,
2011;
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(c)
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plus
$980,000.00 worth of the shares of Buyer (i.e., 128,948 shares), valued at
$7.60 per share (the “
Lifeway
Shares
”);
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(d)
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plus
the
cancellation by the Company of the Shareholder Loan, in the principal
amount of $265,000.00, and execution by the Company and the Sellers of
mutual releases with regard thereto, and for the related note(s),
mortgage(s), lease agreement(s) and/or other document(s) evidencing same,
providing security therefor and/or related thereto (together, the “
Sellers’ Lease(s),
Note(s) and Mortgage
”); and
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(e)
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plus
not more
than $98,000, representing an amount equal to the amount of the funds,
held in two accounts of the Company (the “
Vist Accounts
”)
on deposit with Vist Financial Corp., and used as collateral for milk
purchases, which amounts/accounts shall remain with the Company from and
after the Closing.
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(a)
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The
Shareholder Autos, which will be transferred to Sellers at or prior to the
Closing Date; and
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(b)
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Intentionally
omitted.
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(a)
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an
aggregate amount in cash equal to the Base Purchase Price less the amount
of the Outstanding Funded Debt (if any) and the Unpaid Selling Expenses
(if any) (the “
Closing
Payment
”) to an account or accounts as designated in writing by
Sellers (the “
Sellers’
Account
”);
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(b)
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all
of the Unpaid Selling Expenses to the Persons entitled thereto in
accordance with the certificate contemplated by
Section
7.1(j
);
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(c)
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all
of the Outstanding Funded Debt to be repaid in full to the Persons
entitled thereto pursuant to the payoff letters to be obtained by Sellers
prior to the Closing in form and substance reasonably acceptable to Buyer
and its lenders (the “
Payoff
Letters
”), which Payoff Letters will state, among other things,
that upon satisfaction of the terms and conditions contained in such
Payoff Letters the Outstanding Funded Debt shall be paid in full and all
Liens and guarantees relating to the Funded Debt shall be released without
any further action on the part of such lender;
and
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(d)
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an
aggregate amount in cash equal to the amount of the funds held in the Vist
Accounts, which amount shall not be more than $98,000, to the Sellers’
Account.
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(a)
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Schedule 4.5
sets forth complete and up-to-date copies of the federal, Pennsylvania and
City of Philadelphia Tax Returns (including balance sheets, income
statements and related schedules attached thereto) of the Company as at
and for the fiscal years ended December 31, 2005,
December 31, 2006, and December 31, 2007 (the “
Annual Tax
Returns
”).
Schedule 4.5
also sets forth copies of interim financial statements (balance sheets,
income statements and statements of cash flows) of the Company as at and
for the 11-month period ended November 30, 2008 (the “
Interim Financial
Statements
,” and together with the Tax Returns, the “
Financial
Statements
”). The Financial Statements were prepared from the books
of account of the Company on a tax accounting basis, present fairly the
financial position of the Company on a tax accounting basis as of the
dates indicated and the results of operations (and, with respect solely to
the Interim Financial Statements, cash flows) on a tax accounting basis
for the periods then ended, and were prepared in accordance with GATAP,
consistently applied, subject to, in the case of the Interim Financial
Statements, normal year end
adjustments.
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(b)
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The
Company’s internal controls and procedures are sufficient to ensure that
the Financial Statements are accurate in all material
respects. All accounts, books and ledgers related to the
business of the Company are properly kept, are accurate and complete in
all material respects, and there are no material inaccuracies or
discrepancies of any kind contained or reflected therein. The
Company maintains internal accounting controls sufficient to provide
reasonable assurances that (a) transactions are executed in accordance
with management’s general or specific authorizations, (b) transactions are
recorded as necessary to permit preparation of the Financial Statements in
conformity with GATAP and to maintain accountability for assets,
(c) access to assets is permitted only in accordance with
management’s general or specific authorization and (d) the recorded
accounting records for the Company’s assets are compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
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(a)
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there
has not occurred any event or circumstance regarding the Company that
constitutes, or that, to the knowledge of Sellers, is reasonably likely to
result in, a Material Adverse Change in the business, assets, Liabilities,
financial condition, operating results, employees, customer, supplier or
distributor relationships or prospects of the
Company;
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(b)
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there
has not been any change in the tax reporting or accounting policies,
practices, methodologies or underlying assumptions of the Company; the
Company has not settled or compromised any Tax liability or made any Tax
election; and the Company has not changed its practices or policies of
accruing any workers’ compensation
claim;
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(c)
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the
Company has not incurred any Indebtedness or assumed, guaranteed, or
endorsed the Indebtedness of any other Person, nor canceled any debt or
compromised or released any right or claim other than in connection with
the performance of this Transaction, nor prepaid any Indebtedness for
borrowed money;
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(d)
|
the
Company has not suffered any extraordinary loss, theft, damage,
destruction or loss of or to any tangible asset, nor waived any rights of
material value;
|
(e)
|
the
Company has not made, granted, or committed to make or grant any bonus or
any wage, salary or compensation increase to any director, officer,
employee or consultant, other than salary increases and bonuses in the
Ordinary Course of Business, or any increase of any benefit provided under
any employee benefit plan or arrangement, and the Company has not amended
or terminated any existing employee benefit plan or arrangement or adopted
any new employee benefit plan or
arrangement;
|
(f)
|
the
Company has not made any distribution to its shareholders on or in respect
of, and has not repurchased, redeemed, retired or otherwise acquired any
equity interests of its shareholders or any options, warrants or other
rights to purchase such equity interests or adjusted or reclassified its
equity interests;
|
(g)
|
the
Company has not sold, assigned, licensed, transferred or subjected to any
Lien, except for Permitted Liens, or committed to sell, assign, license,
transfer or subject to any Lien, except for Permitted Liens, any tangible
or intangible assets other than in the Ordinary Course of
Business;
|
(h)
|
the
Company has not discharged or satisfied any material Lien or paid any
material obligation or Liability, other than current Liabilities paid in
the Ordinary Course of Business;
|
(i)
|
the
Company has not purchased or leased, or committed to purchase or lease,
any asset;
|
(j)
|
the
Company has not made or authorized any capital expenditure or commitment
for any capital expenditure in excess of $5,000 for any individual item or
$25,000 in the aggregate;
|
(k)
|
there
has been no material change in existing credit terms with any customer,
supplier or distributor of the
Company;
|
(l)
|
the
Company has not changed how it conducts its cash management practices
(including the collection of receivables, payment of payables, maintenance
of inventory controls and pricing
practices);
|
(m)
|
the
Company has not committed or agreed, whether in writing or otherwise, to
do any of the foregoing; and
|
(n)
|
there
has been no change to the Vist Accounts containing, in the
aggregate, $92,571.21 (as of January 15, 2009), all of the
funds in the Vist Accounts belong to the Company, there has been no
default by the Company that would cause any portions of the Vist Accounts
to be taken by another party, and the entire amount in the Vist Accounts
will be recoverable by the Company if it terminates its relationship with
Vist Financial Corp., or by any milk suppliers for which amounts in the
Vist Accounts were posted by the Company as security for
purchases.
|
(a)
|
Except
as set forth in
Schedule
4.8(a
), all Tax Returns required to be filed by the Company have
been duly and timely filed and are true, accurate and
complete. The Company has paid all Taxes due (whether or not
shown as due and owing on such Tax Returns) as of the
Closing. The Company is not currently the beneficiary of any
extension of time within which to file any Tax
Return.
|
(b)
|
Except
as set forth in
Schedule
4.8(b)
, there are no Tax claims, audits or proceedings pending or,
to the knowledge of Sellers, threatened against the
Company. There are not currently in force any waivers or
agreements binding upon the Company for the extension of time for the
assessment or payment of any Tax.
|
(c)
|
Except
as set forth on
Schedule 4.8(c
),
the Company has properly withheld and/or paid all Taxes required to have
been withheld and/or paid in connection with amounts paid or owing to any
shareholder, employee, creditor, independent contractor, or other third
party.
|
(d)
|
The
Company is not a party to or bound by any Tax allocation or Tax sharing
agreement with any other Person and has no contractual obligation to
indemnify any other Person with respect to Taxes. The Company
has not incurred any liability for the Taxes of any Person under Treas.
Reg. § 1.1502-6 (or any similar provision of state, local, or foreign
law), as a transferee or successor, by contract, or
otherwise.
|
(e)
|
The
Company has never been a member of an affiliated group of corporations,
within the meaning of Section 1504 of the
Code.
|
(f)
|
The
Company is not a party to any joint venture, partnership or other
arrangement or contract which could be treated as a partnership for
federal income tax purposes.
|
(g)
|
No
claim has ever been made to the Company or either or both of Sellers by an
authority in a jurisdiction where the Company does not file Tax Returns
that it is or may be subject to taxation by that
jurisdiction.
|
(h)
|
There
are no Liens for Taxes upon any of the assets of the
Company.
|
(i)
|
The
Company will not be required to include any item of income in, or exclude
any item of deduction from, taxable income for any taxable period (or
portion thereof) ending after December 31, 2008 as a result of any
(i) change in method of accounting made by the Company prior to the
Closing for a taxable period ending on or prior to the Closing Date, or
(ii) “closing agreement” as described in Section 7121 of the
Code (or any corresponding or similar provision of state, local or foreign
Law) executed by the Company or either or both of Sellers prior to the
Closing Date. There are no outstanding rulings of, or requests
for rulings from, any Tax authority, addressed to the Company that are, or
if issued would be, binding on the
Company.
|
(j)
|
All
material elections in effect as of the date hereof with respect to Taxes
affecting the Company are set forth on
Schedule
4.8(j)
. The Company is not or will not be required to
recognize positive adjustments to income because of a change in method of
accounting made by the Company prior to the Closing pursuant to Section
481 of the Code.
|
(k)
|
There
are no outstanding rulings of, or requests for rulings from, any tax
authority addressed to the Company that are, or if issued, would be
binding on the Company.
|
(l)
|
The
Company has not filed a consent under Section 341(f) of the Code
concerning collapsible corporations. The Company has not made any
payments, is not obligated to make any payments and is not a party to any
agreement that under any circumstances could obligate it to make any
payments that will not be fully deductible under Section 280G of the Code.
The Company has not been a United States real property holding corporation
with the meaning of Section 897(c)(2) of the Code during the applicable
period specified in Section 897(c)(1)(A)(ii) of the Code. The Company has
disclosed on its federal income Tax Returns all positions taken therein
that could give rise to a substantial understatement of federal income Tax
within the meaning of Section 6662 of the
Code.
|
(a)
|
Schedule
4.9(a)
contains a true,
correct and complete list of (i) all employees presently employed or
engaged by the Company (the “
Employees
”),
(ii) a true and correct and complete list of all independent contractors
and leased employees providing services to the Company (“
Leased
Employees
”), and (iii) any bonus accrued by on behalf of or
received by any Employees or Leased Employees on or after January 1, 2008,
and their current remuneration. Except as disclosed on
Schedule
4.9(a)
, the Company has not received any notice of and has no
knowledge of the intent to terminate employment from any person listed on
Schedule 4.9(a)
,
nor has the Company made any offer of employment to any Person or agreed
to engage any Person as a Leased Employee, except in the Ordinary Course
of Business.
|
(b)
|
The
Company, within the last three years, has not experienced any organized
slowdown, work interruption, strike, or work stoppage by the
Employees. Neither the Company nor an ERISA Affiliate is a
party to or has any obligation pursuant to any oral and legally binding or
written agreement, collective bargaining or otherwise, with any party
regarding the rates of pay, employee benefits, or working conditions of
any of the Employees or its former employees, nor is the Company or an
ERISA Affiliate obligated under any contract, order or law to recognize or
bargain with any labor organization or union on behalf of such
Employees. No labor union organizing activity has been
conducted by the Employees in the past three years. Neither the
Company nor Sellers know of any pending or threatened union organizing
efforts that might impose collective bargaining obligations on the
Company.
|
(c)
|
Neither
the Company nor any of its officers, directors, or employees has been
charged or, to the knowledge of Sellers, threatened with the charge of any
unfair labor practice within the last two years. Except as
described on
Schedule 4.9(c)
or
Schedule 4.8(c)
,
the Company has complied in all material respects with all applicable
federal, state, local and foreign Laws concerning the employment
relationship and with all agreements relating to the employment of the
Employees, including applicable Laws relating to wage and hour, fair
employment practices, occupational health and safety, worker compensation,
unemployment, hiring and other employment practices, immigration,
violation of public policies, equal employment entitlement, prohibited
discrimination, or termination of employment and social security and other
similar employment acts (collectively, the “
Labor Laws
”).
There are no pending or, to the knowledge of Sellers, threatened labor
claims against the Company. The Company is not liable for any
unpaid wages, bonuses, or commissions (other than those not yet due) or
any Tax, penalty, assessment, or forfeiture for failure to comply in all
material respects with any of the matters set forth in this
Section
4.9(c
). There is no outstanding policy, practice, plan,
handbook, management guideline, agreement or arrangement with respect to
severance payments with respect to any employee, officer, director,
independent contractor or consultant of the
Company.
|
(d)
|
The
Company has never, during the Inquiry Period, been the subject of any
inspection or investigation relating to its compliance with or violation
of any of the Labor Laws, nor, during the Inquiry Period, has it received
notice, been warned, fined or otherwise penalized by reason, of any
failure to comply in all material respects with any of the Labor Laws, nor
is any such proceeding pending or, to the knowledge of Sellers,
threatened.
|
(e)
|
The
Company has not effectuated (i) a “plant closing” (as defined in the
Worker Adjustment and Retraining Notification (WARN) Act Pub. L. 100-379,
102 stat. 890 (1988) (the “
WARN Act
”))
affecting any site of employment or one or more facilities or operating
units within any site of employment or facility of the Company; or (ii) a
“mass layoff” (as defined in the WARN Act) affecting any site of
employment or facility of the Company; and the Company has not been
affected by any transaction or engaged in layoffs or employment
terminations sufficient in number to trigger application of any similar
state or local Law. None of the employees of the Company has
suffered an “employment loss” (as defined in the WARN Act) since six
months prior to the Closing Date.
|
(f)
|
There
are no employment contracts (whether or not in writing) with any
Employees, and no provision of any employee handbook or policy manual can
be construed as creating an employment contract. All Employees
can be terminated by the Company “at will.” There are no
contracts (whether or not in writing) or other obligations or commitments
with respect to any Leased
Employees.
|
(g)
|
Neither
the Company nor Sellers know of any oral or written notice, report or
information regarding any liabilities (whether accrued, absolute,
contingent, unliquidated or otherwise) or any corrective, investigatory or
remedial obligations arising under environmental or safety
requirements.
|
(a)
|
Schedule
4.10(a)(i)
contains a true and complete list of all Plans.
Schedule
4.10(a)(ii)
contains a true and complete list of all ERISA
Affiliate Plans.
|
(b)
|
With
respect to each Plan, and where applicable, with respect to each ERISA
Affiliate Plan:
|
(i)
|
The
Plan has been provided to Buyer for review, including correct and complete
copies of: (A) all trust agreements or other funding arrangements for such
Plan (including insurance contracts), and all amendments thereto, (B) with
respect to any such Plan or any amendments thereto, all current
determination letters and, if any, rulings, opinion letters, notes,
correspondence to or from, or other information letters, or advisory
opinions issued by the IRS, the United States Department of Labor, or the
PBGC, (C) annual reports or returns, audited or unaudited financial
statements, actuarial valuations and reports, and summary annual reports
prepared for the Plan with respect to the most recent three plan years,
(D) the most recent summary plan descriptions and any modifications
thereto, and (E) any documents relating to voluntary or involuntary
correction under the IRS Employee Plan Compliance Resolution
System.
|
(ii)
|
The
Plan or the ERISA Affiliate Plan and the related trusts subject to ERISA
comply in all material respects with and have been administered in
compliance with the terms of such Plan or ERISA Affiliate Plan and, (A)
the applicable provisions of ERISA, (B) all applicable provisions of the
Code relating to qualification and Tax exemption under Code Sections
401(a) and 501(a) or otherwise applicable to secure intended Tax
consequences, (C) all applicable state or federal securities Laws, and (D)
all other applicable Laws and collective bargaining agreements, and none
of the Company or any ERISA Affiliate has received any notice from any
governmental authority questioning or challenging such
compliance. No event has occurred which will give rise to
disqualification of any such plan or Loss of intended Tax consequences
under the Code or to any Tax under Section 511 of the
Code.
|
(iii)
|
No
oral or written representation or communication with respect to any aspect
of the Plan or the ERISA Affiliate Plan has been made to Employees prior
to the date hereof that is not in accordance with the written or otherwise
preexisting terms and provisions of such plans. None of the
Company, or, to the knowledge of the Company or any administrator or
fiduciary of the Employee Benefit Plan (or any agent of any of the
foregoing) has engaged in any transaction, or acted or failed to act in
any manner that, to the knowledge of Sellers, will subject Buyer, the
Company to any Liability (by indemnity or otherwise) for breach of any
fiduciary, co-fiduciary or other duty under ERISA or the
Code.
|
(iv)
|
No
“party in interest” (as defined in Section 3(14) of ERISA) or
“disqualified Person” (as defined in Code Section 4975) of any Plan has
engaged in any nonexempt “prohibited transaction” (described in Code
Section 4975 or ERISA Section 406).
|
(v)
|
There
are (A) no pending investigations by any governmental authority involving
the Plan or the ERISA Affiliate Plan, (B) no termination proceedings
involving the Plan or the ERISA Affiliate Plan, (C) no threatened (to the
knowledge of Sellers) or pending claims (except for claims for benefits
payable in the normal operation of the Plan or the ERISA Affiliate Plan),
suits or proceedings against the Plan or the ERISA Affiliate Plan or
asserting any rights or claims to benefits under the Plan or the ERISA
Affiliate Plan which, to the knowledge of Sellers, will give rise to any
material Liability, and (D) no facts which, to the knowledge of Sellers,
will give rise to any material liability in the event of such
investigation, claim, suit or
proceeding.
|
(vi)
|
All
contributions to, and payments from, the Plan or the ERISA Affiliate Plan
which may have been required to be made in accordance with the Plan or the
ERISA Affiliate Plan or any collective bargaining agreement and, when
applicable, Section 302 of ERISA or Section 412 of the Code, have been
timely made.
|
(c)
|
Except
as set forth on
Schedule
4.10(c)
, neither the execution and delivery of this Agreement or
the Related Agreements, nor the consummation of the Transaction will (i)
entitle any Employee, Leased Employee or former Employee or director of
the Company to severance pay, unemployment compensation or any payment
contingent upon a change in control or ownership of the Company or the
Shares, (ii) increase or enhance any benefits payable under any Plan or
(iii) accelerate the time of payment or vesting, or increase the amount,
of any compensation due to any such Employee, Leased Employee or former
Employee or director.
|
(d)
|
Each
ERISA Affiliate and the Company have complied with the continuation
coverage requirements of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended, and ERISA Sections 601 through 608 (“
COBRA
”) and the
requirements of the Health Insurance Portability and Accountability Act,
as amended (“
HIPAA
”). Neither
the Plan or the ERISA Affiliate Plan is subject to Title IV of ERISA,
Section 302 of ERISA or Section 412 of the Code. None of the
Company or any ERISA Affiliate sponsors contributes to or has any
obligations or any Liability with respect to, including, but not limited
to, an “obligation to contribute” (as defined in ERISA Section 4212) to a
“multiemployer plan” (as defined in ERISA Sections 4001(a)(3) and
3(37)(A)) or an Employee Benefit Plan subject to Title IV of ERISA or
Section 302 of ERISA or Section 412 of the
Code.
|
(e)
|
No
Plan promises or provides medical, health, dental, vision, life insurance,
disability or other welfare benefits or insured benefits to any person
that is not an Employee, or the qualified dependent of such person,
following the termination of the employment of such Employee with the
Company, except where the cost of such benefit is borne entirely by the
former Employee (or his or her dependents) and is specifically required
under COBRA.
|
(f)
|
With
respect to any Plan that is an employee welfare benefit Plan, whether or
not subject to ERISA, no such Plan is unfunded, funded through a “welfare
benefit fund” (as defined in Code Section 419(e)) or self-insured, and all
such Plans may be amended, modified, or terminated at any time by the
Company without liability.
|
(g)
|
No
Employee will incur an excise tax or other penalty or tax under Code
Sections 4999 or 409A as a result of, or related to, the
Transaction.
|
(h)
|
Except
as otherwise listed on
Schedule
4.10(h)
, there are no outstanding, whether vested or not vested,
(i) options to purchase equity of the Company, or (ii) other forms of
equity or equity-type participation relating to the
Company.
|
|
(a)
|
The
Company is and at all times during the Inquiry Period has been in
compliance, in all material respects, with all applicable Laws relating to
the manufacture, storage, transportation, sale, handling, distribution and
labeling of the Company’s products.
|
|
(b)
|
Without
limiting the generality of the immediately preceding statement, (i) the
Company has not, at any time during the Inquiry Period, sold or
distributed any products which are or were contaminated, adulterated or
misbranded or which are or have been subject to any recall (whether
ordered by the FDA or otherwise); (ii) all labels for all products
manufactured, sold or distributed by the Company are and at all times
during the Inquiry Period have been correct in all material respects and
comply in all material respects with all requirements of all applicable
Laws; (iii) all of the Company’s operations are in compliance, in all
material respects, with all applicable Laws (including those issued by the
FDA and/or any applicable state or local governmental agencies (including
all aspects of the Company’s production, storage, transportation and
record-keeping operations); (iv) the Company has in place
appropriate policies and procedures to ensure compliance, in all material
respects, with all applicable Laws (including those of the FDA and/or any
applicable state and local governmental agencies; (v) the Company does not
currently and has at no time during the Inquiry Period produced any
products which contain any ingredients or additives which were not at the
time of manufacture and sale approved as food ingredients or additives by
the FDA; and (vi) all promotional and advertising materials used or
produced by the Company currently or during the Inquiry Period comply, in
all material respects, with all requirements or all applicable Laws
(including those of the FDA and all applicable state and local
governmental agencies).
|
|
(c)
|
The
Company has established compliance programs and procedures reasonably
designed to assure compliance, in all material respects, with all
applicable Laws.
|
|
(d)
|
As
of December 1, 2008, the Company has ceased and desisted from the practice
of disposing items of universal waste (namely, waste fluorescent light
bulbs) in the general trash and the Company’s current practice is to
dispose of such materials in accordance with applicable
Law.
|
(a)
|
There
has been no generation, use, handling, treatment, storage or disposal by
the Company or, to the knowledge of Sellers, any other party, of any
hazardous material at, on, under or from or transported to or from any of
the Leased Real Property or any other real property now or formerly owned
or operated by the Company, or in connection with the operations of the
Company. To the knowledge of Sellers, there has been no
release, or threatened release, of any hazardous material at, on, under,
from, or affecting, any of the Leased Real Property. To the
knowledge of the Sellers, there has been no release, or threatened
release, of any hazardous material at, on, under, from, or affecting any
other real property now or formerly owned or operated by the
Company. There has been no disposal of any hazardous materials
by the Company or, to the knowledge of Sellers, any other party, at, on or
under any of the Leased Real Property in violation of Environmental Laws
or which
|
|
requires
investigation, remediation or other response action by the Company under
Environmental Laws. There has been no disposal by the Company
of any hazardous materials in connection with the operations of the
Company in violation of Environmental Laws or which requires
investigation, remediation or other response action by the Company under
Environmental Laws. The Company has not been named in any
Action, nor, to the knowledge of Sellers, has any Action been threatened
concerning, nor any demand or request for information from any third party
been received by Sellers with respect to, the presence, a release or
threatened release of any hazardous material. To the knowledge
of Sellers and except as set forth in
Schedule
4.12(a)
, there are no underground storage tanks or related piping
located on, under or at any of the Leased Real Property. To the
knowledge of the Sellers, there are no underground storage tanks or
related piping located on, under or at any other real property formerly
owned or operated by the Company. The Company has not removed
any such tank or piping from the Leased Real Property, any other real
property now or formerly owned or operated by the
Company. Except as set forth in
Schedule
4.12(a)
, the Company is and has been in compliance with all
applicable Environmental Laws and possesses all environmental Permits
which are required with respect to the operation of its business, and
there are no Actions pending or, to the knowledge of Sellers, threatened
that seek the revocation, cancellation, suspension or any modification of
any such environmental Permits. No hazardous materials managed
by the Company have come to be located in any site which is listed or
proposed for listing under CERCLA, on the Comprehensive Environmental
Response, Compensation and Liability Information System list, as
established under CERCLA, or in any similar state list, or which, to the
knowledge of Sellers, is the subject of foreign, federal, state or local
enforcement actions or other investigations which may lead to claims
against the Company for response actions, damages to natural resources or
for personal injury claims, including, but not limited to, claims under
CERCLA. To the knowledge of the Sellers, there have neither
been any non-routine environmental inspections, investigations, studies,
audits, tests, reviews or other analyses documented in relation to any
Leased Real Property, or any property formerly owned, operated or leased
by the Company or, with respect to the business of the Company, nor are
there any in the possession or control of the Company. The
Company has neither been named in any Action, nor, to the knowledge of
Sellers, has any Action been threatened concerning, nor has any demand
been received by the Company from any third party, notifying the Company
of any obligation, contractual or otherwise, (i) to perform any
environmental investigation or remediation for any third party, or (ii) to
defend indemnify, or hold harmless any third party from or against any
claims or losses arising from either a release of any hazardous materials
or a violation of any Environmental
Law.
|
(b)
|
The
Company has provided to Buyer all environmental site assessment reports,
compliance or other soil, air and/or groundwater analyses (including
asbestos surveys and operation and maintenance plans) documented in
relation to any Leased Real Property or any other real property owned,
operated or leased by the Company or, with respect to the business of the
Company, which are in possession or control of the
Company.
|
(c)
|
Anything
contained in this
Section 4.12
to
the contrary notwithstanding, the indemnification of the Buyer Indemnified
Parties with respect to the representations and warranties set forth in
this
Section
4.12
shall be subject to the limitations and conditions set forth
in
Section
9.4(f
) below.
|
|
(a)
|
Except
as set forth in
Schedule 4.13
,
the Company has been and is in compliance in all material respects with
all Laws applicable to it and its business, assets, properties and
operations. The Company owns or possesses all right, title and
interest in and to all Permits that are necessary to own and operate its
business, properties and assets, as intended by Buyer.
Schedule 4.13
sets forth an accurate list of each of the Company’s
Permits. Except as set forth in
Schedule 4.13
,
the Company has not received notice from any Person alleging any
noncompliance with any Law or Permit. None of the Permits of
the Company will, to the knowledge of Sellers, lapse, terminate or expire
as a result of the consummation of the Transaction. All such
Permits have been legally obtained, renewed and maintained by the Company
and are valid and in full force and
effect.
|
|
(b)
|
No
proceeding is pending or, to the knowledge of Sellers, threatened to
revoke or limit any of the Permits or otherwise impose any conditions or
obligations on the possession or transfer of any of them; and there is no
state of facts or event which, to the knowledge of Sellers, could
reasonably be expected to form the basis for any revocation or limitation
of the Permits or other imposition of conditions or obligations on the
possession or transfer of any of
them.
|
(a)
|
Schedule 4.16
sets forth a complete and correct list of all Company Intellectual
Property.
|
(b)
|
The
Company owns and possesses all, right, title and interest in and to, or
has valid and enforceable rights or licenses to use the Company
Intellectual Property owned or used by it as currently being
used.
|
(c)
|
The
Company Intellectual Property is not subject to any Liens and is not
subject to any restrictions or limitations regarding use or disclosure
other than pursuant to written license agreements applicable
thereto.
|
(d)
|
The
Company Intellectual Property owned or used by the Company is valid,
subsisting, in full force and effect, and has not been cancelled, expired
or abandoned.
|
(e)
|
The
Company has not infringed, misappropriated or otherwise conflicted with,
any Intellectual Property of any third person. The Company has
not received any written notice regarding any of the foregoing (including
any demands or offers to license any Intellectual Property from any third
person).
|
(f)
|
The
Company does not have notice that a third person has infringed,
misappropriated or otherwise conflicted with any of the Company
Intellectual Property. The Company has not brought or
threatened any such claims against any third
person.
|
(g)
|
(i)
all licenses listed on the
Schedule 4.16
are in full force and effect and enforceable by the Company in accordance
with their respective terms, (ii) the Company has performed all material
obligations required to be performed by it pursuant to the licenses and
agreements listed on
Schedule 4.16
and (iii) there is no existing or, to the knowledge of Sellers, threatened
default under or violation of any of the licenses or agreements listed on
Schedule
4.16
by any other party
thereto.
|
(a)
|
made
any bribe, payoff, influence payment, kickback, unlawful material gift or
other unlawful payment to (i) obtain favorable treatment in securing
business or (ii) to any Person in violation of any applicable
Laws;
|
(b)
|
used
any corporate or other funds for unlawful contributions, payments, gifts
or entertainment, or made any unlawful expenditures relating to political
activity to, or on behalf of, governmental officials or other Persons;
or
|
(c)
|
accepted
or received any unlawful contributions, payments, gifts or
expenditures.
|
(a)
|
No
Material Adverse Change has occurred since the date of this
Agreement;
|
(b)
|
No
Action is pending or has, in writing, been threatened before any court,
agency or other Governmental Authority by which it is sought to restrain,
delay, prohibit, invalidate, set aside or impose any conditions upon the
Closing, in whole or in part, and no injunction, judgment, order, decree
or ruling with respect thereto is in
effect;
|
(c)
|
(i)
The representations and warranties of Sellers contained in
Article 3
and
Article 4
, are in all
material respects, true and correct at and as of the Closing as though
then made, (ii) each Seller has performed or caused to have been performed
all of the covenants and agreements required by this Agreement to be
performed by each Seller prior to or as of the Closing, and (iii) Sellers
have provided a certificate to Buyer certifying that the conditions set
forth in clauses (i) and (ii) have been
satisfied;
|
(d)
|
A
Secretary Certificate, certifying the Articles of Incorporation (also
certified by the Secretary of the Commonwealth of Pennsylvania), the
Bylaws, the resolutions duly adopted by the Board of Directors of the
Company and the shareholders of the Company authorizing and approving the
Transaction;
|
(e)
|
An
assignment of the Shares in form and substance reasonably satisfactory to
Buyer, sufficient to transfer good and marketable title to the Shares,
free and clear of all Liens, executed by each Seller along with
certificates for all of the Shares;
|
(f)
|
The
written resignation, effective as of the Closing, of each director and
officer of the Company listed on
Schedule 7.1(f)
;
|
(g)
|
The
Payoff Letters and/or the UCC-3 Termination
Statements;
|
(h)
|
The
consents listed on
Schedule 4.4;
|
(i)
|
A
certificate of good standing with respect to the Company as of the most
recent practicable date from the Secretary of State of the State of
Pennsylvania and the Secretary of State of each jurisdiction in which the
Company is licensed to do business;
|
(j)
|
A
certificate of an officer of the Company setting forth in sufficient
detail any Unpaid Selling Expenses;
|
(k)
|
A
Consulting Agreement executed by each of Ilya Mandel and Michael
Edelson;
|
(l)
|
The
Real Property Purchase Agreement shall have been executed and delivered by
Sellers and all actions necessary to consummate the transactions
contemplated thereby shall have occurred and the closing of the
transactions contemplated thereby shall occur simultaneously with the
Closing;
|
(m)
|
The
completion, to Buyer’s satisfaction (or waiver to the extent permitted by
applicable Law), of the Due Diligence Investigation solely (in accordance
with Section 8 of the Forbearance Agreement) with respect to those
additional disclosure documents referenced in the last sentence of Section
7 of the Forbearance Agreement;
|
(n)
|
Any
and all other consents and approvals of any Person or Governmental
Authority, lender, lessor, third-party, or other party required in
connection with the consummation of the
Transaction;
|
(o)
|
Opinion
of counsel for Sellers in form and substance reasonably satisfactory to
Buyer and such counsel;
|
(p)
|
Related
Party Releases executed by the Related Parties set forth on
Schedule
7.1(p)
;
|
(q)
|
Lender
Releases executed by the Persons set forth on
Schedule
7.1(q)
;
|
(r)
|
Appropriate
documents, reasonably satisfactory in form and substance to Buyer and
Sellers, effecting cancellation by the Company of the Shareholder
Loan;
|
(s)
|
The
original corporate record books for the
Company;
|
(t)
|
The
titles to the automobiles listed on
Schedule 4.15
,
which have been retitled in the name of the Company (it being understood,
pursuant to the Forbearance Agreement, that the Company, and not Sellers,
is solely obligated for the payment of any Pennsylvania Sales and Use
Taxes, filing fees and other related costs and expenses to be paid in
connection therewith); and
|
(u)
|
Each
other document required to be delivered to Buyer pursuant to this
Agreement.
|
(a)
|
No
Action is pending or has, in writing, been threatened before any court,
agency or other Governmental Authority by which it is sought to restrain,
delay, prohibit, invalidate, set aside or impose any conditions upon the
Closing, in whole or in part, and no injunction, judgment, order, decree
or ruling with respect thereto is in
effect;
|
(b)
|
(i)
The representations and warranties of Buyer contained in
Article 5
, are in all
material respects, true and correct at and as of the Closing as though
then made, (ii) Buyer has performed or caused to have been performed all
of the material covenants and agreements required by this Agreement to be
performed by Buyer prior to or as of the Closing, and (iii) Buyer has
provided a certificate to Seller certifying that the conditions set forth
in clauses (i) and (ii) have been
satisfied;
|
(c)
|
The
Closing Payment in accordance with
Section 2.5;
|
(d)
|
Proof
that Buyer has requested the transfer agent to issue the certificates
representing the Lifeway Shares, which shares shall be provided to Sellers
within two (2) weeks from the date of this
Agreement;
|
(e)
|
The
Seller Note executed by Buyer and the
Company;
|
(f)
|
The
Security Agreement executed by
Buyer;
|
(g)
|
The
Mortgage executed by the Company;
|
(h)
|
The
Stock Pledge executed by Buyer;
|
(i)
|
A
form of the Letter of Credit;
|
(j)
|
A
Consulting Agreement for each of Michael Edelson and Ilya Mandel has been
executed by Buyer;
|
(k)
|
The
Real Property Purchase Agreement shall have been executed and delivered by
Buyer and all actions necessary to consummate the transactions
contemplated thereby shall have occurred and the closing of the
transactions contemplated thereby shall occur simultaneously with the
Closing;
|
(l)
|
Title
to the Shareholder Autos; and
|
(m)
|
Each
other document required to be delivered to Sellers pursuant to this
Agreement.
|
(a)
|
Buyer
shall pay all fees and expenses incident to the Transaction and incurred
by Buyer or its representatives;
and
|
(b)
|
Sellers
shall pay all fees and expenses incident to the Transaction and incurred
by the Company, any Seller and/or their respective representatives in
connection therewith (including any Taxes imposed upon Sellers by reason
of the Transaction).
|
(a)
|
Following
the Closing, the Company shall prepare or cause to be prepared for filing
by the Company all Tax Returns for the Company for all Tax periods ending
on or before December 31, 2008 (the “
Pre-Closing
Periods
”) that are due to be filed after the Closing Date (it being
understood and agreed that the Company (and/or the Buyer), and not the
Sellers, shall be responsible for the filing of all Tax Returns; and for,
and for the payment of, any and all Taxes, for all Tax periods commencing
after December 31, 2008). Such Tax Returns for Pre-Closing
Periods shall be prepared in a manner consistent with the terms of this
Agreement and the Company’s past practices, except to the extent required
by applicable law. Such Tax Returns for Pre-Closing Periods
(including any related workpapers or other information reasonably
requested by Buyer), shall be provided to Sellers for review not later
than 45 take days before the due date for filing such Tax Returns
(including extensions). If Sellers do not provide Buyer with a
written description of the items in the Tax Returns that Sellers intend to
dispute within 15 days following the delivery to Sellers of such
documents, Sellers shall be deemed to have accepted and agreed to such
documents in the form provided. Buyer and Sellers agree to
consult with each other and to negotiate in good faith any timely-raised
issue arising as a result of the review of such Tax Returns to permit the
filing of such Tax Returns as promptly as possible, which good faith
negotiations shall include each side exchanging in writing their positions
concerning the matter or matters in dispute and a meeting to discuss their
respective positions. In the event the parties are unable to
resolve any dispute within 10 days following the delivery of written
notice by Sellers of such dispute, Sellers and Buyer shall jointly request
the Independent Accountants to resolve any issue in dispute at least 5
business days before the due date of such Tax Return, in order that such
Tax Return may be timely filed. If the Independent Accountants
are unable to make a determination with respect to any disputed issue
within 5 business days before the due date (including extensions) for the
filing of the Tax Return in question, then Buyer may require that the
Company file such Tax Return on the due date (including extensions)
therefor without such determination having been made and without the
consent of
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|
Sellers;
provided,
however
, that such Tax Return shall incorporate such changes as
have at the time of such filing been agreed to by the parties pursuant to
this
Section 8.8
. Notwithstanding
the filing of such Tax Return for Pre-Closing Periods, the Independent
Accountants shall make a determination with respect to any disputed issue
submitted to the Independent Accountants hereunder, and the amount of
Taxes, if any, for any Pre-Closing Periods, that are to be allocated to
Sellers pursuant to this
Section 8.8
,
shall be determined utilizing the determination of the Independent
Accountants. The determination of the Independent Accountants
shall be binding on all parties;
provided,
however
, that any such determination shall be limited to the
resolution of issues in dispute. The Company shall pay the fees
and expenses of the Independent
Accountants.
|
(b)
|
Buyer
and the Company shall prepare or cause to be prepared, and file or cause
to be filed, all Tax Returns for the Company for all Tax periods that
begin before and end after December 31, 2008, and for all Tax periods that
begin after December 31, 2008 and for all Tax periods that end after the
Closing Date, and that were not required, under applicable law, to be
filed prior to the Closing Date (including for the 2008 calendar year
end). Such Tax Returns shall be prepared by, and at the expense
of, the Company, and, to the extent they relate to any Pre-Closing
Periods, in a manner consistent with the Company’s past practices, except
to the extent required by applicable law. Such Tax Returns for
Pre-Closing Periods (including any related workpapers or other information
reasonably requested by Sellers), together with a Tax Statement with
respect to any such Tax Return, shall be provided to Sellers for their
review not later than 45 days before the due date for filing such Tax
Returns for Pre-Closing Periods (including extensions). If
Sellers do not provide Buyer with a written description of the items in
the Tax Returns for Pre-Closing Periods or the Tax Statement that Sellers
intend to dispute within 15 days following the delivery to Sellers of such
documents, Sellers shall be deemed to have accepted and agreed to such
documents in the form provided. Buyer and Sellers agree to
consult with each other and to negotiate in good faith any timely-raised
issue arising as a result of the review of such Tax Returns for
Pre-Closing Periods or the Tax Statement to permit the filing of such Tax
Returns for Pre-Closing Periods as promptly as possible, which good faith
negotiations shall include each side exchanging in writing their positions
concerning the matter or matters in dispute and a meeting to discuss their
respective positions. In the event the parties are unable to
resolve any dispute within 10 days following the delivery of written
notice by Sellers of such dispute, Sellers and Buyer shall jointly request
the Independent Accountants to resolve any issue in dispute at least 5
business days before the due date of such Tax Return for Pre-Closing
Periods, in order that such Tax Return for Pre-Closing Periods may be
timely filed. If the Independent Accountants are unable to make
a determination with respect to any disputed issue within 5 business days
before the due date (including extensions) for the filing of the Tax
Return for Pre-Closing Periods in question, then Buyer and the Company may
file such Tax Return on the due date (including extensions) therefor
without such determination having been made and without the consent of
Sellers;
provided
,
however
, that
any such Tax Return for Pre-
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|
Closing
Periods shall incorporate such changes as have at the time of such filing
been agreed to by the parties pursuant to this
Section 8.8
. Notwithstanding
the filing of such Tax Return for Pre-Closing Periods, the Independent
Accountants shall make a determination with respect to any disputed issue
submitted to the Independent Accountants hereunder, and the amount of
Taxes that are allocated to Sellers pursuant to this
Section 8.8
shall be determined utilizing the determination of the Independent
Accountants. The determination of the Independent Accountants
shall be binding on all parties;
provided,
however
, that any such determination shall be limited to the
resolution of issues in dispute. The Company shall pay the fees
and expenses of the Independent
Accountants.
|
(c)
|
Sellers
shall have no obligation to reimburse Buyer and/or the Company under this
Section 8.8
(subject, in any event, to
Section 8.15
below) for any Taxes of the Company with respect to any Pre-Closing Period
(“
Pre-Closing
Taxes
”) to the extent that the Financial Statements referred to in
Section
4.5
above include a provision for the amount of the Company’s
Pre-Closing Taxes (determined in accordance with GATAP and in accordance
with
Section
4.8
above, by the accountant for the Company to be due and
payable), and that such Pre-Closing Taxes have been paid (subject, in any
event, to
Section 8.15
below), on or before the Closing Date. In the case of an audit
or Action for Taxes that includes Pre-Closing Taxes, Sellers shall
(pursuant to
Section 9.8
below) reimburse Buyer and/or the Company under this
Section 8.8
and
under
Section
8.8.4
for any unpaid Pre-Closing Taxes within 15 days after Sellers
have received written confirmation of the settlement or other final
resolution of such audit or Action (subject to the provisions of
Sections 8.8.1(d) and
8.8.2
below, regarding the furnishing to Sellers of an opportunity
to have participated in any such audit or
Action).
|
(d)
|
Sellers,
Buyer and the Company shall (and shall be given the opportunity to
participate in matters related to and otherwise) cooperate fully in
connection with the filing of Tax Returns pursuant to this
Section 8.8.1
and any audit, litigation or other proceeding with respect to Taxes of the
Company. Such cooperation shall include the reasonable
furnishing or making available during normal business hours of personnel,
powers of attorney, and the retention and (upon a party’s request) the
review of and the provision of records and information that are reasonably
relevant to the preparation of any such Tax Return or to any such audit,
litigation or other proceeding. Each of Sellers, Buyer and the
Company shall (i) retain all books and records that are in his or its
possession with respect to Tax matters pertinent to the Company relating
to any Pre-Closing Period until the expiration of the applicable statute
of limitations (and, to the extent notified by Buyer or Sellers, any
extension thereof) of the applicable taxable periods, and abide by all
record retention agreements entered into with any taxing authority, and
(ii) give the other parties hereto reasonable written notice before
transferring, destroying or discarding any such books and records and, if
the other party so requests, Sellers or Buyer, as the case may be, shall
allow the other party to take possession of such books and
records.
|
(e)
|
Buyer
and Sellers shall, upon request, use their commercially reasonable efforts
to obtain any certificate or other document from any Person as may be
necessary to mitigate, reduce or eliminate any Tax that could be imposed
(including with respect to the
Transaction).
|
(a)
|
After
the Company receives actual notice of such claim or alleged deficiency,
Buyer shall, or Buyer shall cause the Company to, promptly notify Sellers
in writing of such claim or alleged deficiency and shall not make payment
of any Tax claimed for at least 30 days after the giving of such notice;
provided that the failure to give such notice shall not affect Sellers’
indemnity obligations hereof, except to the extent Sellers are materially
prejudiced by such failure;
|
(b)
|
Buyer
shall have the right to represent the interests of the Company before the
relevant Governmental Authority with respect to any Tax matter and shall
have the right to control the defense, compromise or other resolution of
any such Tax matter, including responding to inquiries, filing Tax Returns
and contesting, defending against and resolving any assessment for
additional Taxes or notice of Tax deficiency or other adjustment of Taxes
of, or relating to, such Tax matter. Sellers shall have the
right (but not the duty) to participate in the defense of such Tax matter
and to employ counsel, at Sellers’ own expense, separate from counsel
employed by Buyer, and Buyer shall keep Sellers informed with respect to
the commencement, status and nature of any such Tax matter and will, in
good faith, allow Sellers to consult with it regarding the conduct of or
positions taken in any such Action;
|
(c)
|
If
Sellers desire that the Company contest such claim or alleged deficiency,
Sellers shall, within 30 days after receipt of notice by Sellers from
Buyer or the Company of such claim or alleged deficiency: (i) request by
written notice to Buyer and the Company that such claim or alleged
deficiency be contested; (ii) if requested by Buyer or the Company,
furnish Buyer and the Company with an opinion of independent tax counsel
selected by Sellers and approved by Buyer (the “
Approved
Counsel
”), at Sellers’ expense, to the effect that a meritorious
defense exists with respect to such claim or alleged deficiency; and (iii)
indemnify Buyer and the Company in a manner reasonably satisfactory to
Buyer and the Company and pay to Buyer or the Company on demand all
liabilities and expenses which may reasonably be entailed in such defense;
and
|
(d)
|
Following
Sellers furnishing Buyer and the Company with such items as are set forth
in
Section 8.8.2(c)
,
Buyer shall cause the Company to take all such legal or other action
reasonably requested by the Approved Counsel in contesting such claim or
alleged deficiency (provided that in no event shall it be deemed
reasonable for the Company to take any action that would cause it
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|
to
incur any liability for which it is not indemnified pursuant hereto),
which may include, at the discretion of the Approved Counsel, the
agreement to a reasonable settlement or the Company forgoing any and all
administrative appeals, proceedings, hearings and conferences with the IRS
or other appropriate taxing authority in respect of such claim or alleged
deficiency, in which event Buyer shall cause the Company to either pay the
Tax claimed (in which event Sellers shall promptly pay, on written request
from Buyer or the Company, the amount of any such deficiency to Buyer or
the Company) and sue for a refund in the appropriate United States
District Court and/or the United States Court of Claims and/or other
appropriate courts or forums, as determined in the discretion of the
Approved Counsel, or contest such claim or alleged deficiency in the
United States Tax Court and/or other appropriate courts or
forums.
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(a)
|
Sellers
shall jointly and severally indemnify and hold harmless each of the
Company and the Buyer Indemnified Parties from and against, and shall pay
to the Company or the Buyer Indemnified Parties the amount of, any and all
Losses for: (i) all Taxes (or the nonpayment thereof) of the Company for
any Pre-Closing Tax Period (subject, in any event, to
Section 8.15
below); (ii) any and all Taxes of any Person (other than the Company)
imposed on the Company as a transferee or successor, by contract or
pursuant to any Law, which Taxes relate to an event or transaction
occurring on or before December 31, 2008 (subject, in any event, to
Section 8.15
below); and (iii) any Tax incurred or suffered by the Company, Buyer or
any of their respective Affiliates arising out of any inaccuracy in or
misrepresentation by Sellers of any representation or warranty contained
in
Section 4.7
or any covenant contained in
Section
8.8
.
|
(b)
|
Any
amount paid to the Company or Buyer pursuant to this
Section 8.8
shall be paid by wire transfer of immediately available funds to an
account designated in writing by Buyer to Sellers no later than 10
business days after Buyer makes written demand upon Sellers
therefor.
|
(c)
|
The
indemnification obligations of Sellers under this
Section 8.8
shall survive until the expiration of the applicable statute of
limitations.
|
(d)
|
The
indemnification obligations of Sellers for which they may be liable to
Buyer pursuant to this
Section 8.8
shall be subject to adjustment to take into account, as a reduction of the
aggregate indemnification obligations of Sellers otherwise arising out of
the matter in question, the value of any quantifiable net Tax benefit
resulting either from the matter giving rise to such indemnification
obligations of Sellers or from the payment of indemnification amounts
pursuant to this
Section 8.8
in
respect of the matter in question (“
Buyer Tax
Benefit
”), which Buyer
Tax Benefit
is
actually realized by
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|
Buyer. The
fact that Buyer or the Company will or may receive insurance proceeds in
the future or will or may realize a Buyer Tax Benefit in the future shall
not delay the payment of the indemnification obligations of Sellers
pursuant to this
Section
8.8
. Such indemnification obligations of Sellers shall
be payable by the Sellers without regard to any future insurance proceeds
or Buyer Tax Benefit that will or may be received or realized in the
future. When, as and if any such insurance proceeds are
actually received or a Buyer Tax Benefit is actually realized by Buyer,
then Buyer shall pay to the Sellers the amount of such insurance proceeds
or Buyer Tax Benefit, as applicable, to the extent the same do not exceed
the aggregate indemnification payments made to Buyer pursuant to this
Agreement by the Sellers in respect of the indemnification obligations of
Sellers that gave rise to such insurance proceeds or Buyer Tax Benefit, as
applicable;
|
(e)
|
The
Sellers shall be entitled to receive and shall be paid (as provided in
this
Section
8.8
) all Refunds of such Taxes for all taxable periods ending on or
before December 31, 2008, but only to the extent such Refunds are paid
with respect to Taxes of the Company pursuant to the terms of (i) the
settlement of an audit of any Tax Return of the Company, which audit
commenced after the date of this Agreement, or (ii) a final judicial
determination, which determination resolves issues raised in an audit of
any Tax Return of the Company which audit commenced after the date of this
Agreement. Notwithstanding the immediately preceding sentence or any other
provision hereof, Buyer (and the Company), and not the Sellers, shall be
entitled to receive (i) all Refunds for all taxable periods ending on or
before December 31, 2008 resulting from a carryback of losses and/or
credits from a taxable period ending subsequent to December 31, 2008, and
(ii) all other Refunds not specified under the express terms of the
immediately preceding sentence as Refunds to which the Sellers are
entitled.
|
|
(a)
|
If
applicable, the failure by the Company to obtain a general storm water
permit or an exemption therefrom from the Pennsylvania Department of
Environmental Protection;
|
|
(b)
|
The
failure by the Company to obtain a comprehensive survey of asbestos
containing materials located on the Leased Real Property from a qualified
environmental consulting firm reasonably satisfactory to Buyer, and/or to
perform any remediation with respect to asbestos;
and
|
|
(c)
|
The
failure by the Company prior to the Closing to take any action and/or
perform any investigation, remediation, correction and/or removal work,
with respect to any matters set forth in the Phase I Report(s) and/or
Phase II Report(s) and/or the FDA
Report(s).
|
(a)
|
any
Losses based upon, arising out of or caused by any material breach of any
representation or warranty contained in
Article
3
;
|
(b)
|
any
Losses based upon, arising out of or caused by any material breach of any
representation or warranty contained in
Article 4
, in general
(and, for emphasis, as specifically listed in
Section 9.2(h
)
below, in particular) ;
|
(c)
|
any
Losses based upon, arising out of or caused by any material breach or
nonperformance of any covenant or agreement to be performed by a Seller
herein;
|
(d)
|
any
Losses based upon, arising out of or caused by any Outstanding Funded Debt
and/or Unpaid Selling Expenses;
|
(e)
|
any
Losses based upon, arising out of or caused by any fraud of any
Seller;
|
(f)
|
any
Losses based upon, arising out of or caused by any pre-Closing agreement
or transaction with or between Related
Parties;
|
(g)
|
any
Losses based upon, arising out of or caused by an ERISA Affiliate Plan;
and
|
(h)
|
any
Losses based upon, arising out of or caused by any violations of Laws and
Environmental Laws, except those matters disclosed in the Phase I
Report(s) and/or the Phase II Report(s), except as set forth in
Section 9.4(f
)
below.
|
(a)
|
any
Losses based upon, arising out of or caused by any breach of any
representation or warranty made by Buyer in
Article
5
;
|
(b)
|
any
Losses based upon, arising out of or caused by any breach or
nonperformance of any covenant of Buyer, under any of the Contracts to be
performed by the Company from and after the Closing Date (as contemplated
by
Section
4.17
) and/or any agreement to be performed by Buyer
herein;
|
(c)
|
except
as described in the examples set forth in
Section 9.2
above, and except for any matter constituting a breach of a representation
or warranty made by Sellers in
Articles 3
and/or 4
above, any Losses of the Company, and/or any
agreement to be performed by the Company, based upon, incurred in
connection with, incurred by reason of, relating to and/or arising out of,
as applicable, the Assumed Liabilities, and/or the operations and/or
conduct of the business of the Company, after the Closing Date;
and
|
(d)
|
any
amounts for which Sellers are to be indemnified and/or held harmless as
described in the examples set forth in
Section 9.2
above.
|
(a)
|
Any
claim by a Buyer Indemnified Party for indemnification pursuant to
Section 9.2
shall be required to be made by delivering notice to Sellers no later than
the expiration of the applicable Survival Period set forth in
Section
9.1
.
|
(b)
|
Buyer
Indemnified Parties shall not be entitled to indemnification with respect
to
Section 9.2(a) or
9.2(b
) until the aggregate amount of all of the Buyer Indemnified
Parties’ claims for indemnification exceed $50,000.00 (the “
Indemnification
Threshold Amount
”), whereupon the full amount of such Losses shall
be recoverable by Buyer Indemnified Parties in accordance with the terms
of this Agreement.
|
(c)
|
The
maximum amounts to which Buyer Indemnified Parties may be entitled to
indemnification with respect to
Section 9.2(a) or
9.2(b
) shall be (i) an amount equal to $4,200,000 in the aggregate
for breaches of the Significant Representations and for fraud or for
intentional breaches of any representation or warranty; and (ii) an amount
equal to $500,000 in the aggregate for any breaches of Seller’s other
representations and warranties.
|
(d)
|
Sellers
shall have no obligations to Buyer for, and Buyer hereby waives and
relinquishes any claims and/or rights under, any covenant, condition,
representation, or warranty of Sellers in this Agreement and/or the Real
Property Purchase Agreement with respect to, (i) any environmental
conditions or matters that are disclosed in the Phase I Report(s) and/or
the Phase II Report(s), except as set forth in
Section 9.4(f
)
below and (ii) any conditions or matters that are disclosed in the FDA
Report(s), except as set forth in
Section 9.2
above regarding matters arising under
Section 4.11
hereof.
|
(e)
|
The
provisions of
Sections 8.8.4 (d) and
(e
) shall be applicable in all
cases.
|
(f)
|
Sellers
shall have no indemnification obligation whatsoever (other than for fraud
or for intentional breaches of any representation or warranty) with
respect to any matters set forth and/or described in the Phase I Report(s)
and/or the Phase II Report(s), except as set forth in this
Section 9.4(f
). To
the extent that any claim by a Buyer Indemnified Party for indemnification
specifically (x) arises under the representations and warranties for
Environmental Matters set forth in
Section 4.12
above, (y) relates to
groundwater contamination of the
Leased Real Property arising from
conditions as described in the Phase I & II Documentation, and (z) was
discussed in, a subject matter of and/or the subject of any analyses,
work, testing, reporting and/or correspondence as set forth in,
recommended by and/or performed in furtherance of anything described in
the Phase I & II Documentation, Sellers shall only have the limited
indemnification obligation set forth in this
Section 9.4(f
),
but subject, nevertheless, to the following additional limitations and
conditions:
|
|
(1)
|
the Buyer Indemnified Parties
shall be entitled to indemnification solely for, and to the extent of,
what would have been Sellers’ responsibility, on and as of the date
of this Agreement, under applicable Environmental Laws, had Sellers had
knowledge of the existence of groundwater contamination of the
Leased Real
Property;
|
|
(2)
|
the
Buyer Indemnified
Parties shall not be entitled to indemnification with respect to any
groundwater contamination of the
Leased Real
|
|
|
Property,
as aforesaid,
until the aggregate
amount of all of the Buyer Indemnified Parties’ claims for indemnification
with respect thereto exceeds $25,000.00, whereupon the full amount of such
Losses shall be recoverable by the Buyer Indemnified Parties in accordance
with the terms of this Agreement;
provided,
however
, that, in any event, the maximum aggregate amount for which
the Buyer Indemnified Parties may be entitled to indemnification with
respect thereto is
$75,000.00;
|
|
(3)
|
The indemnification
obligation of Sellers to the Buyer Indemnified Parties, arising under the
representations and warranties for Environmental Matters as set forth in
Section
4.12
above, in general, and, in particular, with
respect
to any
groundwater
contamination of the
Leased Real Property, as aforesaid,
shall only survive
for a period of twenty-four (24) months from the Closing Date (the “
24 Month
Period
”); and
|
|
(4)
|
the
indemnification obligation
of Sellers with respect to any
groundwater contamination of the
Leased Real Property, as
aforesaid,
shall be
rendered null and void, in the event that any claim of the Buyer
Indemnified Parties (including the Company and/or any of their respective
agents, contractors or subcontractors) arises from any of the following
work or other activities restricted hereby taking place, at
any
time during the 24 Month Period
, at, upon, beneath and/or with
respect to, the Leased Real Property: (i) digging into, digging
up or in any manner otherwise d
isturbing, the soil; (ii) doing any
drilling, boring and/or excavation work; (iii) doing any environmental
testing of and/or upon the soil; and/or (iv) doing any environmental
testing of the groundwater upon and/or beneath the surface of the Leased
Real Property (other than for a reason set forth in
Sections 9.4(f) (5) or
(6
) below).
|
|
(5)
|
The
provisions of
Section
9.4(f) (4
) above
shall not apply to any work or other activities described in
Section
9.4(f) (4
) above,
that is
actually and in fact (i) mandated or otherwise required, by
action of any governmental agency or body, set forth in a writing
specifically regarding the Leased Real Property, neither of which action
or writing is solicited (directly or indirectly) by
any action, inquiry, application
or other writing of or by any of the Buyer Indemnified Parties (including
the Company and/or any of their respective agents, contractors or
subcontractors), and/or (ii)
in the nature of geophysical testing,
or any other work or activities as may otherwise be, required or mandated
by any architect or engineer engaged by and/or on behalf of any of the
Buyer Indemnified Parties
(including the Company and/or any of their respective agents, contractors
or subcontractors),
in the case of (ii) only, in connection with
actual and commercially reasonable material structural improvements
contemplated to be made to the Leased Real Property and completed during
the 24 Month Period
.
|
|
(6)
|
Buyer
and Sellers acknowledge and agree that Sellers’ willingness to incur the
limited
indemnification
obligation with respect to any
groundwater contamination of the
Leased Real Property, as
aforesaid,
is based upon and has been induced by Buyer’s and
representation and warranty to Sellers that, on and as of the date of this
Agreement, none of the
Buyer Indemnified Parties
has (i) received and/or has any knowledge
of any writing as described in
Section
9.4(f) (5)(i
) above;
(ii)
any plans and/or intention to do and/or cause to be done, any
of the work and/or activities as described in
Section
9.4(f) (4) and/or (5
) above; (iii) any plans and/or
intentions to sell, lease,
dispose of or otherwise, in any other
manner, transfer all or any portion of the Leased Real Property to any
party other then one of the Buyer Indemnified Parties; and/or (iv) any
plans or intentions to enter into any financing and/or refinancing
transaction(s) which in any way or manner would involve the Leased Real
Property, for which the Leased Real Property is or shall be regarded as
material, and/or for which a mortgage or other security interest in, upon
and/or with regard to, the Leased Real Property, or any portion thereof,
may reasonably be anticipated to be required. Accordingly, the
indemnification obligation of
Sellers with respect to any
groundwater contamination of the
Leased Real Property, as
aforesaid,
shall be
rendered null and void in the event of any breach of any of the
representations and warranties as referred to in this
Section
9.4(f) (6)
by
any of the
Buyer
Indemnified Parties (including any of their respective agents, contractors
or subcontractors).
|
(a)
|
In
order for a party (the “
indemnitee
”) to
be entitled to any indemnification provided for under this Agreement in
respect of a claim or demand made by any Person against the indemnitee (a
“
Third-Party
Claim
”), such indemnitee must give written notice of the
Third-Party Claim (i) to Buyer, if indemnity is sought from it, or (ii) to
any Seller, if indemnity is sought from Sellers, pursuant to
Sections 9.2
(the party to whom notice hereunder is given, in any
|
|
case,
the “
indemnitor’s
representative
,” and the party against whom the indemnification
claim is asserted, the “
indemnitor
”). Such
notice shall be given no later than 30 days after such Third-Party Claim
is first asserted, but in any event not later than the expiration, if any,
of the applicable Survival Period set forth in
Section 9.1
for
making a claim for indemnification. Such notice shall state the
amount or estimated amount, to the extent feasible, of such claim and
shall identify, with particularity, the specific basis for such claim in
reasonable detail. Thereafter, the indemnitee shall promptly
deliver to the indemnitor’s representative copies of all notices and
documents (including court papers received by the indemnitee) relating to
the Third-Party Claim so long as any such disclosure is not reasonably be
expected to have an adverse effect on the attorney-client or any other
privilege that may be available to the indemnitee. No delay in
or failure by the indemnitee to give the copies and notices referenced in
this
Section
9.6(a
) to the indemnitor’s representative will adversely affect any
rights or remedies that the indemnitee has under this Agreement or alter
or relieve the indemnitor of its obligation to indemnify the indemnitee to
the extent that such delay or failure has not materially prejudiced the
indemnitor.
|
(b)
|
If
a Third-Party Claim is made against an indemnitee, the indemnitor’s
representative shall be entitled to participate, at its expense, in the
defense thereof. If the Litigation Conditions are met and
continue to be met at all times thereafter, the indemnitor’s
representative has the right, exercisable by written notice to the
indemnitee within 30 days of receipt of notice of the Third-Party Claim,
to assume and conduct the defense of such Third-Party Claim with counsel
selected by the indemnitor’s representative (which counsel must be
reasonably acceptable to the indemnitee). If the indemnitor’s
representative assumes such defense, the indemnitee shall have the right
to participate in the defense thereof and to employ counsel (at its own
expense) separate from the counsel employed by the indemnitor’s
representative, it being understood that the indemnitor’s representative
shall control such defense. If the indemnitor’s representative
assumes the defense and the indemnitee elects to participate with separate
counsel, then the costs and expenses of such separate counsel shall be at
the expense of the indemnitee unless any of the Separate Counsel
Conditions are met, in which case the fees and expenses of such separate
counsel shall be at the expense of the
indemnitor.
|
(c)
|
If
the indemnitor’s representative assumes the defense of any Third-Party
Claim, all of the indemnified parties shall reasonably cooperate with the
indemnitor’s representative in such defense. Such cooperation
shall include, at the expense of the indemnitor’s representative, the
retention and (upon the indemnitor’s representative’s request) the
provision to the indemnitor’s representative of records and information
which are reasonably relevant to such Third-Party Claim, and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided
hereunder. If the indemnitor’s representative has assumed the
defense of a Third-Party Claim and the Litigation Conditions continue to
be met, (i) the indemnitee shall not admit any liability with respect to,
or
|
|
settle,
compromise or discharge, such Third-Party Claim without the indemnitor’s
representative’s prior written consent (which consent shall not be
unreasonably withheld), (ii) the indemnitee shall agree to any settlement,
compromise or discharge of a Third-Party Claim which the indemnitor’s
representative may recommend and which by its terms releases all
indemnitees from any liability in connection with such Third-Party Claim
and which requires only the payment of monetary damages, and (iii) the
indemnitor’s representative shall not, without the written consent of the
indemnitee, enter into any settlement, compromise or discharge or consent
to the entry of any judgment which imposes any obligation or restriction
upon the indemnitee.
|
(a)
|
by
mutual written consent of Buyer and Sellers at any time prior to the
Closing;
|
(b)
|
by
Buyer or Sellers if a material breach of any provision of this Agreement
has been committed by the other party and such breach has not been waived
or cured within ten (10) days after receipt of written notice of such
breach;
|
(c)
|
by
(i) Sellers if any of the conditions in
Section 7.2
has
not been satisfied as of February 9, 2009 or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
Sellers to comply in all material respects with their obligations under
this Agreement) and Sellers have not waived such condition; or (ii) Buyer
if any of the conditions in
Section 7.1
has
not been satisfied as of February 9, 2009 or if satisfaction of such a
condition is or becomes impossible (other than through the failure of
Buyer to comply in all material respects with its obligations under this
Agreement) and Buyer has not waived such
condition;
|
(d)
|
by
Buyer if Buyer is not reasonably satisfied, in its sole discretion, with
the results of its Due Diligence Investigation as of February 9, 2009;
or
|
(e)
|
by
Buyer or Sellers, if the Closing has not occurred (other than through the
failure of any party seeking to terminate this Agreement to comply in all
material respects with its obligations under this Agreement) on or before
February 9, 2009.
|
(a)
|
adjudicated
bankruptcy or insolvency or death or discontinuation of the business of
the Person;
|
(b)
|
the
Person becomes insolvent;
|
(c)
|
the
Person is not capable of paying its obligations when due (including
payment of the Purchase Price, as
applicable);
|
(d)
|
assignment
by the Person for the benefit of
creditors;
|
(e)
|
voluntary
institution by the Person or consent granted by the Person to the
involuntary institution whether by petition, complaint, application,
default, answer (including, without limitation, an answer or any other
permissible or required responsive pleading admitting (i) the jurisdiction
of the forum or (ii) any material allegations of the petition, complaint,
application, or other writing to which such answer serves as a responsive
pleading thereto), or otherwise of any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution,
liquidation, receivership, trusteeship, or similar proceeding pursuant to
or purporting to be pursuant to any bankruptcy, insolvency,
reorganization, arrangement, readjustment of debt, dissolution,
liquidation, receivership, trusteeship, or similar law of any
jurisdiction;
|
(f)
|
voluntary
application by the Person for or consent granted by the Person to the
involuntary appointment of any receiver, trustee, or similar officer (i)
for the Person or (ii) of or for all or any substantial part of the
Person’s property; and
|
(g)
|
entry,
without the Person’s application, approval, or consent, of any order that
is not dismissed, stayed, or discharged within sixty (60) days from its
entry, which is pursuant to or purporting to be pursuant to any
bankruptcy, insolvency, reorganization, arrangement, readjustment of debt,
dissolution, liquidation, receivership, trusteeship or similar law of any
jurisdiction (i) approving an involuntary petition seeking an arrangement
of the Person’s creditors, (ii) approving an involuntary petition seeking
reorganization of the Person, or (iii) appointing any receiver, trustee,
or similar officer (A) for the Person, or (B) of or for all or any
substantial part of the Person’s
property.
|
(a)
|
If
to Buyer, to:
|
(b)
|
If
to Sellers:
|
CHICAGO
TITLE
INSURANCE COMPANY
By:
/s/
Printed
Name: ______________________
Title: _____________________________
Date: _____________________________
Escrow
Number:
____________________
|
1. DEFINITIONS
|
1
|
1.1 Defined
Terms
|
1
|
1.2 Accounting
Terms
|
19
|
1.3 Other
Terms Defined in UCC
|
20
|
1.4 Other
Interpretive Provisions
|
20
|
1.5 Multiple
Borrowers
|
21
|
|
|
2 COMMITMENT
OF THE BANK
|
21
|
2.1 Revolving
Loans
|
21
|
2.2 Term
Loan
|
22
|
2.3 Additional
LIBOR Loan Provisions
|
23
|
2.4 Interest
and Fee Computation; Collection of Funds
|
25
|
2.5 Late
Charge
|
25
|
2.6 Letters
of Credit
|
26
|
2.7 Taxes
|
26
|
2.8 All
Loans to Constitute Single Obligation
|
27
|
|
|
3 CONDITIONS
OF BORROWING
|
27
|
3.1 Loan
Documents
|
27
|
3.2 Event
of Default
|
31
|
3.3 Material
Adverse Effect
|
31
|
3.4 Litigation
|
31
|
3.5 Representations
and Warranties
|
31
|
|
|
4 NOTES
EVIDENCING LOANS
|
32
|
4.1 Revolving
Note
|
32
|
4.2 Term
Note
|
32
|
|
|
5 MANNER
OF BORROWING
|
32
|
5.1 Borrowing
Procedures
|
32
|
5.2 LIBOR
Conversion and Continuation Procedures
|
33
|
5.3 Letters
of Credit
|
33
|
5.4 Automatic
Debit
|
33
|
5.5 Discretionary
Disbursements
|
34
|
|
|
6 SECURITY
FOR THE OBLIGATIONS
|
34
|
6.1 Security
for Obligations
|
34
|
6.2 Other
Collateral
|
35
|
6.3 Possession
and Transfer of Collateral
|
35
|
6.4 Financing
Statements
|
35
|
6.5 Additional
Collateral
|
36
|
6.6 Preservation
of the Collateral
|
36
|
6.7 Other
Actions as to any and all Collateral
|
37
|
6.8 Collateral
in the Possession of a Warehouseman or Bailee
|
37
|
6.9 Letter-of-Credit
Rights
|
37
|
6.10 Commercial
Tort Claims
|
37
|
6.11 Electronic
Chattel Paper and Transferable Records
|
38
|
|
|
7 REPRESENTATIONS
AND WARRANTIES
|
38
|
7.1 Borrowers
Organization and Name
|
38
|
7.2 Authorization
|
38
|
7.3 Validity
and Binding Nature
|
39
|
7.4 Consent;
Absence of Breach
|
39
|
7.5 Ownership
of Properties; Liens
|
39
|
7.6 Equity
Ownership
|
39
|
7.7 Intellectual
Property
|
39
|
7.8 Financial
Statements
|
40
|
7.9 Litigation
and Contingent Liabilities
|
40
|
7.10 Event
of Default
|
40
|
7.12 Environmental
Laws and Hazardous Substances
|
40
|
7.13 Solvency,
etc
|
41
|
7.14 ERISA
Obligations
|
41
|
7.15 Labor
Relations
|
41
|
7.16 Security
Interest
|
42
|
7.17 Lending
Relationship
|
42
|
7.18 Business
Loan
|
42
|
7.19 Taxes
|
42
|
7.20 Compliance
with Regulation U
|
42
|
7.21 Governmental
Regulation
|
42
|
7.22 Bank
Accounts
|
43
|
7.23 Place
of Business
|
43
|
7.24 Complete
Information
|
43
|
7.25 Subordinated
Debt
|
43
|
7.26 Internal
Controls
|
43
|
7.27 Real
Property
|
44
|
7.28 Hedging
Agreements
|
44
|
7.28 Lifeway’s
Disclosure Documents
|
44
|
8 AFFIRMATIVE
COVENANTS
|
44
|
8.1 Compliance
with Bank Regulatory Requirements; Increased Costs
|
44
|
8.2 Borrowers
Existence
|
45
|
8.3 Compliance
With Laws
|
45
|
8.4 Payment
of Taxes and Liabilities
|
45
|
8.5 Maintain
Property
|
46
|
8.6 Maintain
Insurance
|
46
|
8.7 ERISA
Liabilities; Employee Plans
|
47
|
8.8 Financial
Statements
|
47
|
8.9 Supplemental
Financial Statements
|
48
|
8.10 Borrowing
Base Certificate
|
48
|
8.11 Aged
Accounts Schedule
|
48
|
8.12 Inventory
Reports
|
48
|
8.13 Compliance
Certificate
|
48
|
8.14 Field
Audits
|
49
|
8.15 Securities
and Exchange Commission Filings
|
49
|
8.16 Other
Reports
|
49
|
8.17 Collateral
Records
|
49
|
8.18 Intellectual
Property
|
49
|
8.19 Notice
of Proceedings
|
49
|
8.20 Notice
of Event of Default or Material Adverse Effect
|
50
|
8.21 Environmental
Matters
|
50
|
8.22 Further
Assurances
|
50
|
8.23
Banking Relationship
|
50
|
|
|
9 NEGATIVE
COVENANTS
|
50
|
9.1 Debt
|
50
|
9.2 Encumbrances
|
51
|
9.3 Investments
|
51
|
9.4 Transfer;
Merger; Sales
|
52
|
9.5 Issuance
of Capital Securities
|
52
|
9.6 Distributions
|
52
|
9.7 Transactions
with Affiliates
|
53
|
9.8 Unconditional
Purchase Obligations
|
53
|
9.9 Cancellation
of Debt
|
53
|
9.10 Inconsistent
Agreements
|
53
|
9.11 Use
of Proceeds
|
53
|
9.12 Bank
Accounts
|
54
|
9.13 Business
Activities; Change of Legal Status and Organizational
Documents
|
54
|
9.15 Prepayment
of Seller Note
|
54
|
|
|
10 FINANCIAL
COVENANTS
|
54
|
10.1 Tangible
Net Worth
|
54
|
10.2 Fixed
Charge Coverage
|
54
|
10.3 Capital
Expenditures
|
54
|
|
|
11 EVENTS
OF DEFAULT
|
54
|
11.1 Nonpayment
of Obligations
|
55
|
11.2 Misrepresentation
|
55
|
11.3 Nonperformance
|
55
|
11.4 Default
under Loan Documents
|
55
|
11.5 Default
under Other Debt
|
55
|
11.6 Other
Material Obligations
|
55
|
11.7 Bankruptcy,
Insolvency, etc.
|
55
|
11.8 Judgments
|
56
|
11.9 Change
in Control
|
56
|
11.10 Collateral
Impairment
|
56
|
11.11 Material
Adverse Effect
|
56
|
11.12 Subordinated
Debt
|
56
|
12 REMEDIES
|
56
|
12.1 Possession
and Assembly of Collateral
|
57
|
12.2 Sale
of Collateral
|
57
|
12.3 Standards
for Exercising Remedies
|
58
|
12.4 UCC
and Offset Rights
|
58
|
12.5 Additional
Remedies
|
59
|
12.6 Attorney-in-Fact
|
60
|
12.7 No
Marshaling
|
60
|
12.8 Application
of Proceeds
|
61
|
12.9 No
Waiver
|
61
|
12.10 Letters
of Credit
|
61
|
13
CROSS-GUARANTY
|
61
|
13.1 Cross
Guaranty
|
61
|
13.2 Waivers
By Borrowers
|
62
|
13.3 Waivers
By Borrowers
|
62
|
13.4
Subordination of Subrogation, Etc
|
62
|
13.5
Election of Remedies
|
62
|
13.6
Limitation
|
63
|
13.7
Contribution with Respect to Guaranty Obligations
|
63
|
13.8
Liability Cumulative
|
64
|
|
|
14 MISCELLANEOUS
|
64
|
14.1 Obligations
Absolute
|
64
|
14.2 Entire
Agreement
|
64
|
14.3 Amendments;
Waivers
|
65
|
14.4 WAIVER
OF DEFENSES
|
65
|
14.5 FORUM
SELECTION AND CONSENT TO JURISDICTION
|
65
|
14.6 WAIVER
OF JURY TRIAL
|
65
|
14.7 Assignability
|
66
|
14.8 Confirmations
|
66
|
EXHIBIT
A
|
Form
of Revolving Note
|
EXHIBIT
B
|
Form
of Term Note
|
EXHIBIT
C
|
Form
of Borrowing Base Certificate
|
EXHIBIT
D
|
Form
of Compliance Certificate
|
EXHIBIT
E
|
Form
of Notice of Borrowing
|
EXHIBIT
F
|
Form
of Notice of
Conversion/Continuation
|
(i)
|
All
Accounts and all Goods whose sale, lease or other disposition by the
Borrowers have given rise to Accounts and have been returned to, or
repossessed or stopped in transit by, the Borrowers, or rejected or
refused by an Account Debtor;
|
(ii)
|
All
Inventory, including raw materials, work-in-process and finished
goods;
|
(iii)
|
All
Goods (other than Inventory), including embedded software, Equipment,
vehicles, furniture and Fixtures;
|
(iv)
|
All
Software and computer programs;
|
(v)
|
All
Securities, Investment Property, Financial Assets and Deposit
Accounts;
|
(vi)
|
All
Chattel Paper, Electronic Chattel Paper, Instruments, Documents, Letter of
Credit Rights, all proceeds of letters of credit, Health-Care-Insurance
Receivables, Supporting Obligations, notes secured by real estate,
Commercial Tort Claims and General Intangibles, including Payment
Intangibles; and
|
(vii)
|
All
Proceeds (whether Cash Proceeds or Noncash Proceeds) of the foregoing
property, including all insurance policies and proceeds of insurance
payable by reason of loss or damage to the foregoing property, including
unearned premiums, and of eminent domain or condemnation
awards.
|
LIFEWAY
FOODS, INC.
By:
/s/ Julie
Smolyansky
Title:
President and CEO
FRESH
MADE, INC.
By:
/s/ Edward
Smolyansky
Title:
President
LFI
ENTERPRISES, INC.
By:
/s/ Julie
Smolyansky
Title:
President and CEO
HELIOS
NUTRITION LIMITED
By:
/s/ Julie
Smolyansky
Title:
President and CEO
PRIDE
OF MAIN STREET DAIRY, LLC
By:
/s/ Julie
Smolyansky
Title:
President and CEO
STARFRUIT,
LLC
By:
/s/ Julie
Smolyansky
Title:
President and CEO
|
Agreed
and accepted:
THE
PRIVATEBANK AND TRUST COMPANY,
By:
/s/
Name:_______________________________
Title: _______________________________
|
$5,000,000.00
|
Chicago,
Illinois
February
_, 2009
|
|
LIFEWAY
FOODS, INC.
|
$7,600,000 |
Chicago,
Illinois
February
_, 2009
|
(a)
|
Billed
Accounts Receivable
|
$__________
|
|
Over
60 days
|
$__________
|
|
25%Rule,
+60 days
|
$__________
|
|
Contra
accounts
|
$__________
|
|
Government
Contracts
|
$__________
|
|
Foreign
Accounts
|
$__________
|
|
Subject
to other Liens
|
$__________
|
|
Affiliate
Accounts
|
$__________
|
|
Other
exclusions
|
$__________
|
|
|
$__________
|
(b)
|
Total
of Eligible Receivables
|
$__________
|
(c)
|
80%
of (b)
|
$__________
|
(a)
|
Inventory
|
$__________
|
|
Damaged
or Defective
|
$__________
|
|
Consigned,
in transit, bill
of
lading
|
$__________
|
|
Inventory
not located at
Eligible
collateral location
|
$__________
|
|
Other
exclusions
|
$__________
|
|
|
$__________
|
(b)
|
Total
of Eligible Inventory
|
$__________
|
(c)
|
Lesser
of 50% of (b) or $2,000,000
|
$__________
|
III.
|
“AVAILABILITY”,
lesser of I (c) + II (c)
minus
$100,000
environmental
reserve for the Niles Property
and
Revolving Loan Commitment
|
$__________
|
IV.
|
OUTSTANDING
REVOLVING LOANS
&
LETTER OF CREDIT OBLIGATIONS
|
$__________
|
V.
|
AVAILABILITY
REMAINING
(III
minus IV)
|
$__________
|
II.
|
FIXED CHARGE COVERAGE RATIO
(S
ection
10.2
)
:
1
|
·
|
disburse
as a LIBOR Loan, $____________ of the Term Loan being requested pursuant
to the notice of borrowing of even date herewith with an Interest Period
of _____________ months and $____________ of the Revolving Loan being
requested pursuant to the notice of borrowing of even date herewith with
an Interest Period of _____________
months;
|
·
|
on
[ date ] convert
$[________]of the aggregate outstanding principal amount of the [_______]
Loan, bearing interest at the [________] Rate, into a(n) [________] Loan
[and, in the case of a LIBOR Loan, having an Interest Period of [_____]
month(s)];
|
·
|
on
[ date ] continue
$[________]of the aggregate outstanding principal amount of the [_______]
Loan, bearing interest at the LIBOR Rate, as a LIBOR Loan having an
Interest Period of [_____]
month(s)].
|
Borrower
|
Jurisdiction
|
Organization Identification
Number
|
Lifeway
Foods, Inc.
|
Illinois
|
5425-124-6
|
Fresh
Made, Inc.
|
Pennsylvania
|
822425
|
LFI
Enterprises, Inc.
|
Illinois
|
5700-566-1
|
Helios
Nutrition Limited
|
Minnesota
|
9P-79
|
Pride
of Main Street Dairy, LLC
|
Minnesota
|
18391-LLC
|
Starfruit,
LLC
|
Illinois
|
02155133
|
Borrower
|
#
of Authorized Shares
|
#
of Issued Shares
|
Lifeway
Foods, Inc.
|
22,500,000
|
16,867,890
*
|
Fresh
Made, Inc.
|
10,000
|
10,000
|
LFI
Enterprises, Inc.
|
1,000,000
|
1,000
|
Helios
Nutrition Limited
|
15,000,000
|
809,888
|
Borrower
|
#
of
Membership
Interests
|
Pride
of Main Street Dairy, LLC
|
3,433,400
|
Starfruit,
LLC
|
100
|
Lifeway
Foods, Inc.
|
MB
Financial, Chicago, IL
2
The
Private Bank, 70 West Madison, Chicago, IL
|
xxxxxxxxxx
xxxxxxx
|
Business
checking
Business
Checking
|
Fresh
Made, Inc.
|
PNC
Bank, Pittsburgh, PA
Wachovia,
Philadelphia, PA
VIST
Bank, Leesport, PA 19533
VIST
Same
|
xx-xxxx-xxxx
xxxxxxxxxxxxx
xxxxxxxxxx
xx-x;
xx-x
|
Business
Checking
Business
Checking
Checking
CD’s
|
LFI
Enterprises
|
Citizens
Bank, Philadelphia, PA
|
xxxxxx-xxx-x
|
Business
Checking
|
Pride
of Main Street Dairy
|
Minnesota
National Bank, 235 Main St, Sauk Centre MN, 56378
|
xxxxxxx
|
Business
Checking
|
Helios
Nutrition
|
None
|
||
Starfruit
LLC
|
MB
Financial, Chicago IL
|
xxxxxxxxxx
|
Business
Checking
|
Lifeway
Foods, Inc.
|
6431
W. Oakton St. Morton Grove IL, 60053 Cook
6101
W. Gross Point Rd, Niles IL
7625
N. Austin Ave, Skokie IL, 60077 Cook
214
Main Street S. Sauk Centre MN, 56378
5201
N. Harbison Ave, Philadelphia, PA 19012
|
Fresh
Made, Inc.
|
810
Bleigh St. Philadelphia PA, 19111
|
Pride
of Main Street Dairy
|
214
Main Street S. Sauk Centre MN, 56378
|
Helios
Nutrition
|
214
Main Street S. Sauk Centre MN, 56378
|
Starfruit
LLC
|
1745
W. Division St, Chicago IL 60612
|
LFI
Enterprises
|
5201
N. Harbison Ave, Philadelphia, PA
19012
|
Lifeway
Foods, Inc.
|
6431
W. Oakton St. Morton Grove IL, 60053 Cook
6101
W. Gross Point Rd, Niles IL
7625
N. Austin Ave, Skokie IL,
|
Owned
|
Lifeway
Foods Inc
|
Fresh
Made, Inc.
|
810
Bleigh St. Philadelphia PA, 19111
|
Owned
|
Freshmade
Inc
|
LFI
Enterprises
|
LFI
Enterprises, 5201 N. Harbison Ave, Philadelphia, PA
|
Leased
|
Michael
Kofman
|
Pride
of Main Street Dairy
|
214
Main Street S, Sauk Centre MN, 56378
|
Owned
|
Pride
of Main Street Dairy
|
Helios
Nutrition
|
None
|
||
Starfruit
LLC
|
1745
W. Division St. Chicago, IL 60612
|
Leased
|
John
Leydon- Ruby Room
|
Starfruit
LLC
|
2142
North Halsted, Chicago, IL 60614
|
Leased
|
Lifeway
Foods, Inc.
|
MB
Financial, Chicago, IL
|
xxxxxxxxxx
|
Business
checking
|
Fresh
Made, Inc.
|
PNC
Bank, Pittsburgh, PA
Wachovia,
Philadelphia, PA
VIST
Bank, Leesport, PA 19533
VIST
Same
|
xx-xxxx-xxxx
xxxxxxxxxxxxx
xxxxxxxxxx
xx-x;
xx-x
|
Business
Checking
Business
Checking
Checking
CD’s
|
LFI
Enterprises
|
Citizens
Bank, Philadelphia, PA
|
xxxxxx-xxx-x
|
Business
Checking
|
Pride
of Main Street Dairy
|
Minnesota
National Bank, 235 Main St, Sauk Centre MN, 56378
|
xxxxxxx
|
Business
Checking
|
Starfruit
LLC
|
MB
Financial, Chicago IL
|
xxxxxxxxxx
|
Business
Checking
|
$5,000,000.00
|
Chicago,
Illinois
February
6, 2009
|
LIFEWAY
FOODS, INC.
By:
/s/ Julie
Smolyansky
Title:
President and CEO
FRESH
MADE, INC.
By:
/s/ Edward
Smolyansky
Title:
President
LFI
ENTERPRISES, INC.
By:
/s/ Julie
Smolyansky
Title:
President and CEO
HELIOS
NUTRITION LIMITED
By:
/s/ Julie
Smolyansky
Title:
President and CEO
PRIDE
OF MAIN STREET DAIRY, LLC
By:
/s/ Julie
Smolyansky
Title:
President and CEO
STARFRUIT,
LLC
By:
/s/ Julie
Smolyansky
Title:
President and CEO
|
$7,600,000 |
Chicago,
Illinois
February
6, 2009
|
LIFEWAY
FOODS, INC.
By:
/s/ Julie
Smolyansky
Title:
President and CEO
FRESH
MADE, INC.
By:
/s/ Edward
Smolyansky
Title:
President
LFI
ENTERPRISES, INC.
By:
/s/ Julie
Smolyansky
Title:
President and CEO
HELIOS
NUTRITION LIMITED
By:
/s/ Julie
Smolyansky
Title:
President and CEO
PRIDE
OF MAIN STREET DAIRY, LLC
By:
/s/ Julie
Smolyansky
Title:
President and CEO
STARFRUIT,
LLC
By:
/s/ Julie
Smolyansky
Title:
President and CEO
|
LWAY:US
Lifeway
Foods Inc.
|
Lifeway
Foods Acquires Philadelphia Based Fresh Made Dairy, the Lifeway Foods
Acquires Philadelphia Based Fresh Made Dairy, the Nation
’
s Second
Largest Kefir Manufacturer
PR
Newswire
MORTON
GROVE, Ill., Feb. 9
MORTON
GROVE, Ill., Feb. 9 /PRNewswire-FirstCall/ -- Lifeway Foods,
Inc., Nasdaq: LWAY), makers of a nutritious, probiotic dairy beverage
called Kefir, today announced the acquisition of Fresh Made Dairy,
its top competitor in the Kefir market with a #2 overall market
share. The acquisition strengthens Lifeway’s presence in the rapidly
growing market for probiotic dairy products. Fresh Made had 2008
total sales of approximately $10 million and 2007 total sales of
approximately $8,500,000.
“
The major
catalyst behind this acquisition is the growing demand for probiotic and
functional dairy products,
”
said
Lifeway Foods’ CEO Julie Smolyansky. “For over 20 years, both companies
have spent a large amount of time, energy, and money fiercely competing
against one another in the same market space. Today, with the completion
of the acquisition, we couldn’t be more excited about being able to shift
our focus, and combine our resources to growing and expanding the whole
probiotic category,” Smolyansky added.
Edward
Smolyansky, Lifeway Foods’ CFO said, “This acquisition couldn’t have come
at a better time for Lifeway. Most of our input costs are at multi-year
lows, including many of our production supply
costs, transportation costs, and most of our raw materials
including milk. Milk prices are at multi year lows, with February, 2009
prices coming in at their lowest levels in 6 years. Additionally, with
interest rates where they currently sit, the costs to finance a portion of
the acquisition purchase price are also at all time lows. These factors
should bolster Lifeway’s already strong cash flows going forward, and at a
time when so few companies are growing and expanding. Moreover,
the last two weeks of January 2009 were back to back record weeks for
shipments and sales, so we are extremely optimistic about our company’s
future at this time.”
The
synergies between the Lifeway and Fresh Made provide natural
benefit to Lifeway’s shareholders,” Mr. Smolyansky added. “We serve
the same customers, we share the same shelf space, we purchase the same
raw materials, and we exhibit at the same trade shows. This transaction
will enhance Lifeway’s purchasing power, increase our ability to target
our market category, and alleviate some of the competitive pressures in
our business” said Mr. Smolyansky.
“This
acquisition also provides Lifeway with enhanced distribution access to the
northeast USA, an important geographic market that was previously very
difficult for Lifeway to target because local retailers were fiercely
loyal to the Fresh Made brand, just as we have always had a very strong
advantage in our hometown of Chicago,” added Ms. Smolyansky. “This
transaction is a major step and another milestone for Lifeway, as we
continue to expand the Kefir phenomenon with our line of great-tasting,
healthy products. This elevates our competitive positioning in the
marketplace and creates a tremendous footprint in the growing probiotic
and functional dairy market,” she added.
Lifeway
Foods had 2008 total sales of approximately $44,500,000, a
15% increase over 2007.
Fresh
Made brand Kefir and other products will continue to be manufactured by
Fresh Made, Inc. as a wholly-owned subsidiary of Lifeway, from Fresh
Made’s existing 25,000-square-foot facility in Philadelphia, Pennsylvania,
bringing the top two kefir brands under Lifeway’s control. Excluding
several top executives, all Fresh Made employees will continue to be
retained. Edward Smolyansky will assume the role of President and CEO of
Fresh Made.
The
total purchase price of this transaction is $14,050,000 million for all of
the stock of Fresh Made. Specifically, the terms include $10,050,000 in
cash to be paid at the closing, $2,735,000 in a note, with quarterly
installment payments over two years, and $1 million of Lifeway’s treasury
shares, (i.e. approximately 131,500 shares). Included in the total
purchase price is approximately $2,000,000 in real estate.
The
agreement was signed February 6,
2009.
|