EX-10.1



 






Exhibit 10.1




EXECUTION
COPY




 





ASSET PURCHASE AGREEMENT




Between




TOM’S FOODS INC., as Seller,




AND




COLUMBUS CAPITAL ACQUISITIONS, INC., as Buyer




Dated as of October 17, 2005




 
















 








TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE 1. PURCHASE AND SALE OF THE ACQUIRED ASSETS
	 	 	2	 
	SECTION 1.1 Transfer of Acquired Assets
	 	 	2	 
	SECTION 1.2 Excluded Assets
	 	 	4	 
	SECTION 1.3 Assumption of Liabilities
	 	 	5	 
	SECTION 1.4 Excluded Liabilities
	 	 	6	 
	SECTION 1.5 [RESERVED]
	 	 	8	 
	SECTION 1.6 Identification of Additional and Excluded Contracts
	 	 	8	 
	SECTION 1.7 Administrative Creditor Obligations
	 	 	9	 
	SECTION 1.8 [RESERVED]
	 	 	10	 
	ARTICLE 2. CONSIDERATION
	 	 	10	 
	SECTION 2.1 Total Consideration
	 	 	10	 
	ARTICLE 3. CLOSING AND DELIVERIES
	 	 	10	 
	SECTION 3.1 Closing
	 	 	10	 
	SECTION 3.2 Seller’s Deliveries
	 	 	11	 
	SECTION 3.3 Buyer’s Deliveries
	 	 	11	 
	ARTICLE 4. REPRESENTATIONS AND WARRANTIES
	 	 	12	 
	SECTION 4.1 Representations and Warranties of Seller
	 	 	12	 
	SECTION 4.2 Representations and Warranties of Buyer
	 	 	17	 
	SECTION 4.3 Warranties Are Exclusive
	 	 	18	 
	ARTICLE 5. COVENANTS AND OTHER AGREEMENTS
	 	 	18	 
	SECTION 5.1 Pre-Closing Covenants of Seller
	 	 	18	 
	SECTION 5.2 Pre-Closing Covenants of Buyer
	 	 	21	 
	SECTION 5.3 Other Covenants of Seller and Buyer
	 	 	22	 






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	 	 	Page	 
	SECTION 5.4 Employment Covenants and Other Undertakings
	 	 	25	 
	SECTION 5.5 Ownership and Use of Tom’s Foods Name
	 	 	27	 
	SECTION 5.6 Non-Assignment of Contracts
	 	 	28	 
	SECTION 5.7 Guaranty of Parent
	 	 	28	 
	ARTICLE 6. TAXES
	 	 	28	 
	SECTION 6.1 Taxes Related to Purchase of Acquired Assets
	 	 	28	 
	SECTION 6.2 Cooperation on Tax Matters
	 	 	29	 
	SECTION 6.3 Allocation of Total Consideration
	 	 	29	 
	ARTICLE 7. CONDITIONS PRECEDENT TO PERFORMANCE BY PARTIES
	 	 	29	 
	SECTION 7.1 Conditions Precedent to Performance by Sellers
	 	 	30	 
	SECTION 7.2 Conditions Precedent to the Performance by Buyer
	 	 	30	 
	ARTICLE 8. TERMINATION
	 	 	32	 
	SECTION 8.1 Conditions of Termination
	 	 	32	 
	SECTION 8.2 Effect of Termination
	 	 	33	 
	ARTICLE 9. SURVIVAL
	 	 	33	 
	SECTION 9.1 Survival
	 	 	33	 
	SECTION 9.2 Specific Performance
	 	 	33	 
	SECTION 9.3 Covenant Not to Sue
	 	 	34	 
	ARTICLE 10. MISCELLANEOUS
	 	 	34	 
	SECTION 10.1 Joint Drafting
	 	 	34	 
	SECTION 10.2 Further Assurances
	 	 	35	 
	SECTION 10.3 Successors and Assigns
	 	 	35	 
	SECTION 10.4 Governing Law; Jurisdiction
	 	 	35	 
	SECTION 10.5 Expenses
	 	 	36	 
	SECTION 10.6 Broker’s and Finder’s Fees
	 	 	36	 






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	 	 	Page	 
	SECTION 10.7 Severability
	 	 	36	 
	SECTION 10.8 Notices
	 	 	36	 
	SECTION 10.9 Amendments; Waivers
	 	 	37	 
	SECTION 10.10 Public Announcements
	 	 	37	 
	SECTION 10.11 Entire Agreement
	 	 	38	 
	SECTION 10.12 No Third Party Beneficiaries
	 	 	38	 
	SECTION 10.13 Headings
	 	 	38	 
	SECTION 10.14 Counterparts
	 	 	38	 
	SECTION 10.15 Construction
	 	 	38	 
	ARTICLE 11. DEFINITIONS
	 	 	38	 
	SECTION 11.1 Certain Terms Defined
	 	 	38	 






SCHEDULES




	 	 	 	 	 
	Schedule 1.1(a)

	 	-
	 	Real Property
	Schedule 1.1(b)

	 	-
	 	Owned Machinery and Equipment
	Schedule 1.1(c)

	 	-
	 	Acquired Contracts
	Schedule 1.1(e)

	 	-
	 	Inventory and Inventory Locations
	Schedule 1.1(f)

	 	-
	 	Supply Locations
	Schedule 1.1(g)

	 	-
	 	Acquired Intellectual Property
	Schedule 1.1(h)

	 	-
	 	Motor Vehicles
	Schedule 1.1(i)

	 	-
	 	Information Technology Owned, Leased or Licensed
	Schedule 1.1(j)

	 	-
	 	Permits
	Schedule 1.1(r)

	 	-
	 	Chattel Paper
	Schedule 1.1(v)

	 	-
	 	Letters of Credit
	Schedule 1.1(w)

	 	-
	 	Accounts
	Schedule 1.2(b)

	 	-
	 	Excluded Contracts
	Schedule 1.2(d)

	 	-
	 	Miscellaneous Excluded Assets
	Schedule 1.3

	 	-
	 	Assumed Liabilities
	Schedule 1.6(b)

	 	-
	 	Estimated Pre-Petition Cure Costs
	Schedule 3.2(d)

	 	-
	 	Significant Leased Property
	Schedule 4.1(d)(i)

	 	-
	 	Reports not Filed
	Schedule 4.1(g)

	 	-
	 	Sellers Consents and Approvals
	Schedule 4.1(h)

	 	-
	 	Compliance with Laws
	Schedule 4.1(i)

	 	-
	 	Litigation
	Schedule 4.1(k)(i)

	 	-
	 	Overdue Intellectual Property Fees
	Schedule 4.1(k)(ii)

	 	-
	 	Violations of Intellectual Property






iii









 






	 	 	 	 	 
	Schedule 4.1(k)(iii)

	 	-
	 	Claims and Investigations of Intellectual Property
	Schedule 4.1(l)

	 	-
	 	Information Technology
	Schedule 4.1(m)

	 	-
	 	Permit Violations
	Schedule 4.1(n)

	 	-
	 	Contract Actions; Invalid Contracts
	Schedule 4.1(o)

	 	-
	 	Environmental Matters
	Schedule 4.1(p)

	 	-
	 	Insurance
	Schedule 4.1(q)

	 	-
	 	Real Property Matters
	Schedule 4.1(r)

	 	-
	 	Accounts Receivable
	Schedule 4.1(s)

	 	-
	 	Inventories
	Schedule 4.1(t)

	 	-
	 	Absence of Certain Changes
	Schedule 4.1(v)

	 	-
	 	Non-Executive Employees
	Schedule 5.1(a)

	 	-
	 	Exceptions to Seller’s Conduct of Business
	Schedule 5.4(b)

	 	-
	 	Executive Employees






iv









 






ASSET PURCHASE AGREEMENT




     THIS ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of October 17, 2005 (the “Execution
Date”), is made by and between Tom’s Foods Inc., a Delaware corporation (“Seller”), and Columbus
Capital Acquisitions, a North Carolina corporation, (“Buyer”), and for purposes of Section
5.7 hereof, Lance, Inc., a North Carolina corporation and the sole owner of Buyer (“Parent”).
Capitalized terms used in this Agreement are defined or cross-referenced in Article 11.



BACKGROUND INFORMATION




     A. On April 6, 2005 (the “Petition Date”), Seller commenced a voluntary case for
reorganization (the “Bankruptcy Case”) under chapter 11 of the Bankruptcy Code, 11 U.S.C. §
101-1330 (the “Bankruptcy Code”), in the United States Bankruptcy Court for the Middle District of
Georgia (the “Bankruptcy Court”), and Seller has retained possession of its assets and is
authorized under the Bankruptcy Code to continue the operation of its business as a debtor in
possession.



     B. Buyer desires to purchase the Acquired Assets and assume the Assumed Liabilities from
Seller, and Seller desires to sell, convey, assign and transfer to Buyer the Acquired Assets
together with the Assumed Liabilities, all in the manner and subject to the terms and conditions
set forth in this Agreement and in accordance with sections 105, 363, 365 and 1146 and other
applicable provisions of the Bankruptcy Code.



     C. The Acquired Assets and Assumed Liabilities shall be purchased and assumed by Buyer
pursuant to an order (the “Bankruptcy Sale Order”) approving such sale, free and clear of all
liens, Claims, encumbrances and interests, pursuant to sections 105, 363, 365 and 1146 of the
Bankruptcy Code, which order will include the authorization for the assumption by Seller and
assignment to Buyer of the Acquired Contracts and the liabilities thereunder in accordance with
section 365 of the Bankruptcy Code, all in the manner and subject to the terms and conditions set
forth in this Agreement and the Bankruptcy Sale Order and in accordance with other applicable
provisions of the Bankruptcy Code and the Federal Rules of Bankruptcy Procedure (the “Bankruptcy
Rules”).



     D. On September 23, 2005, the Bankruptcy Court entered the Order pursuant to 11 U.S.C. §§ 105,
363, and 365 and Fed. R. Bankr. P. 2002 and 6004: (A) Authorizing and Scheduling an Auction for the
Sale of Substantially all of the Debtor’s Assets Free and Clear of all Liens, Claims, Interests,
and Encumbrances; (b) Approving Bidding Procedures Governing Auction Sale; (c) Approving the Form
and Manner of Notice of the Sale Pursuant to Fed. R. Bankr. P. 2002 and 6004; and (d) Fixing
Procedures for Determination of Cure Amounts with Respect to Executory Contracts and Unexpired
Leases (the “Bidding Procedures Order”).



STATEMENT OF AGREEMENT




     NOW, THEREFORE, in consideration of the foregoing and their respective representations,
warranties, covenants and agreements herein contained, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer hereby agree as
follows:













 





ARTICLE 1. PURCHASE AND SALE OF THE ACQUIRED ASSETS




     SECTION 1.1 Transfer of Acquired Assets.



     At the Closing, and upon the terms and conditions herein set forth, Seller shall sell to
Buyer, and Buyer shall acquire from Seller, all right, title and interest of Seller in, to and
under the Acquired Assets, free and clear of all Liens (other than Permitted Liens) and all Claims.
As used herein, the term “Acquired Assets” shall mean all of the properties, assets and rights of
Seller and all of the proceeds thereof, wherever located, whether real or personal, tangible or
intangible, existing or hereafter acquired and whether or not reflected on the books or financial
statements of Seller, excluding only the Excluded Assets, and including, without limitation:




	 	(a)	 	all owned real property (the “Owned Real Property”) and leased real property
(the “Leased Real Property,” and together with the Owned Real Property, the “Real
Property”), together with all appurtenant, subsurface and mineral rights, licenses,
rights-of-way, privileges and easements belonging to, appertaining to or benefiting the
Real Property in any way and all Improvements erected thereon, including, without
limitation, the Real Property listed on Schedule 1.1(a);
	 
	 	(b)	 	all (i) owned equipment, machinery, furniture, fixtures and improvements,
tooling and spare parts of Seller (the “Owned Machinery and Equipment”), including,
without limitation, all Owned Machinery and Equipment that is being stored, repaired,
refurbished, modified or updated at a location other than the Real Property, including
without limitation the Owned Machinery and Equipment listed on Schedule 1.1(b),
and (ii) rights of Seller to the warranties and licenses received from manufacturers
and sellers of the Owned Machinery and Equipment;
	 
	 	(c)	 	those Contracts listed on Schedule 1.1(c) (collectively, the “Acquired
Contracts”) and all deposits made under any Acquired Contract;
	 
	 	(d)	 	all accounts receivable and notes receivable of Seller (the “Accounts
Receivable”);
	 
	 	(e)	 	all (i) Inventory of Seller, including, without limitation, all (A) Inventory
at the locations listed on Schedule 1.1(e), (B) Inventory held by third parties
on a consignment basis, (C) Inventory held by third-party processors, and (D) Inventory
located on any Real Property, and (ii) rights of Seller to the warranties received from
suppliers with respect to such Inventory;
	 
	 	(f)	 	all Supplies of Seller, including, without limitation, the Supplies located on
any Real Property or at the locations listed on Schedule 1.1(f);
	 
	 	(g)	 	all Intellectual Property and technology owned by Seller or licensed to Seller
pursuant to an Acquired Contract (collectively, the “Acquired Intellectual Property”),
including, without limitation, all rights to the name “Tom’s Foods” (and all rights to
any other tradenames, trademarks and servicemarks owned by
Seller or licensed to Seller) and the Intellectual Property and technology listed on
Schedule 1.1(g);




2









 






	 	(h)	 	all cars, trucks, forklifts, railcars, other industrial vehicles and other
motor vehicles owned by Seller, and all of Seller’s right, title and interest in any
cars, trucks, forklifts, railcars, other industrial vehicles and other motor vehicles
leased to Seller (“Motor Vehicles”), including, without limitation, the vehicles listed
on Schedule 1.1(h);
	 
	 	(i)	 	all computer hardware and, to the extent assignable, software (including,
without limitation, process control software) owned by Seller or licensed to Seller
pursuant to an Acquired Contract, including, without limitation, the hardware and
software listed on Schedule 1.1(i);
	 
	 	(j)	 	to the extent assignable, all permits, authorizations and licenses
(collectively, the “Permits”) issued to Seller by any Government and all pending
applications therefor, including, without limitation, those Permits set forth on
Schedule 1.1(j);
	 
	 	(k)	 	copies or originals of all books, files, documents and records owned by or in
the control of Seller (in whatever format they exist, whether in hard copy or
electronic format), including, without limitation, customer lists, historical customer
files, accounting records, test results, product specifications, plans, data, studies,
drawings, diagrams, training manuals, engineering data, safety and environmental
reports and documents, maintenance schedules and operating and production records,
inventory records, business plans, credit records of customers, and marketing
materials;
	 
	 	(l)	 	all air emissions credits, allowances, allotment trading units and other
creditable emission reductions that Seller has, is entitled to or has applied for,
including, without limitation, any air emissions where Seller has credit for or has
banked, applied to bank or agreed to sell or trade;
	 
	 	(m)	 	all rights to Claims for refunds, overpayment or rebates of Taxes;
	 
	 	(n)	 	to the extent assignable under applicable law, all of Seller’s rights under any
insurance policy or contract of insurance or indemnity (or similar agreement) under
which Seller is an insured, named as an additional insured or is otherwise a
beneficiary, and all proceeds realized in connection therewith;
	 
	 	(o)	 	all prepaid expenses and deposits made by or on behalf of Seller;
	 
	 	(p)	 	all goodwill, payment intangibles and general intangible assets and rights of
Seller;
	 
	 	(q)	 	all of Seller’s equity interests in Carriage Hill Brands, Inc.;
	 
	 	(r)	 	any chattel paper owned or held by Seller, including, without limitation, the
chattel paper described on Schedule 1.1(r);
	 
	 	(s)	 	all amounts due to Seller from any Affiliate of Seller;




3









 






	 	(t)	 	all books, files and records owned by Sellers that relate to current or former
employees and other personnel, including, without limitation, books, files and records
that are related to medical history, medical insurance or other medical matters and to
workers’ compensation and to the evaluation, appraisal or performance of current or
former employees and other personnel of Seller;
	 
	 	(u)	 	all (i) shares of capital stock or equity or other ownership interest of Seller
in any other Person and any related or associated investment property and (ii)
corporate seals, minute books, charter documents, stock transfer records, record books,
original Tax and financial records and such other files, books and records relating to
each such Person (excluding those files, books and records relating to any of the
Excluded Assets) or to the organization, existence or capitalization of Seller or of
any other Person;
	 
	 	(v)	 	all of Seller’s interest in any Letters of Credit issued by any Person at the
request or for the benefit of Seller, including, without limitation, the Letters of
Credit described on Schedule 1.1(v);
	 
	 	(w)	 	all of Seller’s right, title and interest in and to all deposit or similar
accounts in which Seller deposits cash or any other assets, including without
limitation, the accounts described in Schedule 1.1(w); and
	 
	 	(x)	 	all of Seller’s Causes of Action and any and all proceeds thereof; and
	 
	 	(y)	 	all of Seller’s Cash and cash equivalents and all of Seller’s non-cash
proceeds, rents, products and profits based upon, arising from or related to any of the
Acquired Assets.





     SECTION 1.2 Excluded Assets.



     Notwithstanding anything to the contrary in this Agreement, Seller shall retain only the
properties and assets of Seller set forth below (all such properties and assets not being acquired
by Buyer being herein referred to as the “Excluded Assets”):




	 	(a)	 	any asset of Sellers that otherwise would constitute an Acquired Asset but for
the fact that it is conveyed, leased or otherwise disposed of, in the ordinary course
of Seller’s business, consistent with the terms of this Agreement, the DIP Order and
the Post-Petition Credit Agreement, during the time from the Execution Date until the
Closing Date;
	 
	 	(b)	 	all Contracts that are not Acquired Contracts, including, without limitation,
those listed on Schedule 1.2(b);
	 
	 	(c)	 	all Employee Benefit Plans currently or previously sponsored or maintained by
Seller or any of Seller’s ERISA Affiliates (collectively, the “Seller Controlled
Group”) or their respective predecessors or with respect to which the Sellers
Controlled Group or their respective predecessors has made or is required to make
payments, transfers or contributions in respect of any present or former




4









 






	 	 	 	employees,
directors, officers, shareholders, consultants or independent contractors of Seller
or any of the Seller’s ERISA Affiliates or their respective predecessors
(collectively, the “Seller Benefit Plans”), and all insurance policies, fiduciary
liability policies, benefit administration contracts, actuarial contracts, trusts,
escrows, surety bonds, letters of credit and other contracts primarily relating to
any Seller Benefit Plan;
	 
	 	(d)	 	all of the assets set forth on Schedule 1.2(d); provided that
Buyer may amend Schedule 1.2(d) at any time prior to the Closing in order to exclude
from the definition of Acquired Assets any other asset not otherwise excluded;
provided further that such exclusion shall not reduce or otherwise
affect the amount of the Cash Purchase Price or Total Consideration.
	 
	 	(e)	 	all corporate books and records, board minutes, organizational documents of
Seller; provided, however, that copies of all such corporate books and
records, board minutes and organizational documents shall be provided.





     SECTION 1.3 Assumption of Liabilities.



     At the Closing, Buyer shall assume, and thereafter pay, perform and discharge when due, only
the following liabilities (the “Assumed Liabilities”), which Assumed Liabilities are listed by
category, including estimated amounts of such Assumed Liabilities, on Schedule 1.3:




	 	(a)	 	all trade accounts payable and operating expenses of the Seller, as indicated
on Schedule 1.3 and as updated by Buyer and Seller, as applicable in accordance
with subsections (i) and (ii) below (provided, however, that, notwithstanding any other
provision of this Agreement, the information to be contained on such Schedule
1.3 shall be provided at least three (3) days prior to the Auction), (i) accrued in
the ordinary course of business between the Petition Date and prior to September 15,
2005 which are integral to the operation of the business of the Seller as a going
concern, as determined by the Buyer, in its reasonable discretion, and that remain
unpaid as of the Closing Date and (ii) accrued in the ordinary course of business after
September 14, 2005 and prior to the Closing Date, which are integral to the operation
of the business of the Seller as a going concern, as determined by the CRO in
consultation with the Buyer, and that remain unpaid as of the Closing Date
(collectively, “Operating Expenses”);
	 
	 	(b)	 	all obligations arising under all Acquired Contracts;
	 
	 	(c)	 	all ordinary course returns and other customer allowances consistent with
Seller’s past practices;
	 
	 	(d)	 	all unpaid employee payroll expenses that are accrued in the ordinary course of
business since the Petition Date that remain unpaid as of the Closing Date;
	 
	 	(e)	 	all employee benefits accrued in the ordinary course of business since the
Petition Date that remain unpaid as of the Closing Date of the Non-Executive Employees
of Seller who are employed by the Buyer in accordance with Section 5.4(b);






5









 







	 	(f)	 	all liabilities for continuation coverage under any Employee Benefit Plan
pursuant to the requirements of section 4980B of the Code and Part 6 of Subtitle B of
Title I of ERISA and the regulations promulgated thereunder (“COBRA”) including for all
individuals who currently have COBRA coverage and all individuals who are entitled to
COBRA coverage as a result of the termination of any employees in connection with this
transaction;
	 
	 	(g)	 	all liabilities to the Non-Executive Employees in connection with and with
respect to the Worker Adjustment and Retraining Notification Act of 1988 (“WARN Act”)
or similar state law from and after the Closing;
	 
	 	(h)	 	all taxes on real and personal property (including, without limitation, ad
valorem and franchise taxes) owed by the Company that constitute a lien against the
Acquired Assets;
	 
	 	(i)	 	the Administrative Creditor Obligations, subject to the Administrative Creditor
Obligations Limit; and
	 
	 	(j)	 	the Seller Professional Carve-Out Guaranty;





     provided, however, that, unless Buyer chooses, in its sole discretion, to pay
excess amounts, obligations of the Buyer described in clauses (c), (d), (e) and (f) of this
Section 1.3 shall not exceed $3,478,000 in the aggregate, but provided further,
however, that any amounts paid by individuals receiving COBRA continuation coverage
pursuant to clause (f) of this Section 1.3 for the cost of such coverage shall not be
included in such $3,478,000 aggregate amount.



     For the avoidance of doubt, subject to Section 1.6(c), Buyer shall be obligated to pay no more
than $2,800,000 with respect to all Pre-Petition Cure Costs arising under the Acquired Contracts.



     SECTION 1.4 Excluded Liabilities.



     Buyer is assuming only the Assumed Liabilities and is not assuming any other liability or
obligation of Seller of whatever nature, whether presently in existence or arising hereafter. All
such other liabilities and obligations shall be retained by, and remain liabilities and obligations
of, Seller (all such liabilities are, collectively, the “Excluded Liabilities”). The Excluded
Liabilities include, without limitation, the following liabilities and obligations:




	 	(a)	 	all liabilities and obligations of Seller relating to Excluded Assets;
	 
	 	(b)	 	except as provided in Section 1.3(c), all liabilities and obligations
for damages to Persons or property (including, without limitation, liabilities and
obligations to
repair or replace, or to refund the sales price (or any other related expenses))
relating to alleged defects in products sold by Seller;
	 
	 	(c)	 	except as provided in Section 1.3(d), Section 1.3(e),
Section 1.3(f) or Section 1.3(g), all liabilities and obligations of
Seller under any applicable labor or




6









 












employment laws, any collective bargaining
Contract or other Contract with any labor union (including but not limited to any
pending grievances), or any employment Contract, severance Contract or any key employee
retention plan or similar plan;




	 	(d)	 	except as provided in Section 1.3(d), Section 1.3(e),
Section 1.3(f) or Section 1.3(g), all liabilities and obligations of
Seller or the Seller Controlled Group to all present and former employees of Seller
(and their respective spouses and dependents) or any other applicable law;
	 
	 	(e)	 	except as provided in Section 1.3(d), Section 1.3(e),
Section 1.3(f) or Section 1.3(g), all liabilities and obligations of
Seller or the Seller Controlled Group to all present and former employees of Seller
(and their respective spouses and dependents), including, without limitation, (i) all
liabilities under any Seller Benefit Plan; (ii) all liabilities in connection with and
with respect to the WARN Act or any other applicable law; and (iii) all liabilities and
obligations of Seller relating to employees, former employees, persons on laid-off or
inactive status, or their respective dependents, heirs or assigns, who have received,
who are receiving as of the Closing Date, or who are or could become eligible to
receive any short-term or long-term disability benefits or any other benefits of any
kind arising out of or related in any way to the employment of persons by the Seller,
including, without limitation, benefits or claims under applicable unemployment
compensation laws or any other similar state law, Title VII of the Civil Rights Act of
1964, as amended, the Age Discrimination in Employment Act, as amended, the Americans
with Disabilities Act of 1990, or any other similar law;
	 
	 	(f)	 	except to the extent covered by insurance polices being acquired by Buyer, all
liabilities and obligations of Seller arising in connection with any actions for
employment discrimination, actions for wrongful opposition to a claim, or any other
claim or benefits of any kind, whether now known or unknown, whenever incurred or
filed, which have occurred or arise from work-related injuries, diseases, death,
exposures, intentional torts, acts of discrimination or other incidents, acts, or
injuries prior to the Closing Date, or otherwise arising out of or related to the
employment of persons by the Seller, and all premiums, assessments or other obligations
related in any way to workers’ compensation or work-related liabilities arising prior
to the Closing Date or otherwise arising out of or related to the activities of Seller;
	 
	 	(g)	 	except to the extent covered by insurance polices being acquired by Buyer, all
liabilities and obligations of Seller (i) for any environmental health or safety matter
(including any liability or obligation arising under any Environmental Law) relating to
any property or assets other than the Acquired Assets,
(ii) resulting from the transport, disposal or treatment of any Hazardous Materials
by Seller on or prior to the Closing Date to or at any location other than the Real
Property, (iii) relating to any personal injury of any Person resulting from
exposure to Hazardous Materials or otherwise, where such exposure or other event or
occurrence occurred on or prior to the Closing Date or as a consequence




7









 












of any event
or occurrence prior to the Closing Date, and (iv) for any fine or other monetary
penalty arising under any Environmental Law for acts or omissions of Seller or
otherwise relating to acts or omissions or conditions with respect to the Acquired
Assets as of the Closing Date);




	 	(h)	 	all liabilities and obligations of Seller for: (i) payments made to or fees and
expenses accrued with respect to professionals retained or employed by the Seller’s
chapter 11 estate or any official committee of creditors appointed in the Seller’s
Bankruptcy Case, (ii) Claims by the Pension Benefit Guaranty Corporation, (iii) Claims
of third parties based upon the Perishable Agricultural Commodities Act (PACA); (iv)
reclamation Claims and (v) any prepetition, priority or other tax Claims;
	 
	 	(i)	 	any Indebtedness of Seller, including, but not limited to, any liabilities or
obligations of Seller for borrowed money of any kind or nature;
	 
	 	(j)	 	any counterclaim or claim or offset or recoupment or similar affirmation claim
or right in abatement other than a defense to primary liability, capable of being
asserted in response to any Cause of Action assigned to Buyer pursuant to Section
1.1(x) of this Agreement; and
	 
	 	(k)	 	except to the extent covered by insurance polices being acquired by Buyer, all
liabilities and obligations of Seller or any predecessor or Affiliate of Seller of
whatever nature whether presently in existence or hereafter arising, other than the
Assumed Liabilities.





     SECTION 1.5 [RESERVED]



     SECTION 1.6 Identification of Additional and Excluded Contracts.




	 	(a)	 	From time to time, at any time prior to the Closing, Buyer may update
Schedule 1.1(c) and/or Schedule 1.2(b) to add or remove any Contract to
or from such schedule. Any Contract added to Schedule 1.1(c) shall become an
Acquired Contract, shall be deemed an Acquired Asset for all purposes of this
Agreement, and all liabilities and obligations under such Contract shall be Assumed
Liabilities for all purposes of this Agreement subject to the provisions of Section
1.3. Any Contract removed from Schedule 1.1(c) and/or added to Schedule
1.2(b) shall become an Excluded Asset and shall not be an Acquired Contract, except
as provided in Section 5.3(f), for all purposes of this Agreement and all
liabilities and obligations under such Contract shall be Excluded Liabilities for all
purposes of this Agreement.
	 
	 	(b)	 	Schedule 1.6(b) sets forth Seller’s estimate of the Pre-Petition Cure
Cost for each Acquired Contract listed on Schedule 1.1(c). Seller shall, within
two days after Buyer amends Schedule 1.1(c) in accordance with Section
1.6(a), supplement Schedule 1.6(b) to update the Cure Costs and update
Schedule 4.1(n) to make any required disclosure with regard to any Contract
added to Schedule 1.1(c).




8









 






	 	(c)	 	If and to the extent that Buyer amends Schedule 1.1(c) and/or
Schedule 1.2(b) to add or remove any Contract with respect to which there are
Pre-Petition Cure Costs, the maximum amount of Pre-Petition Cure Costs set forth in the
last sentence of Section 1.3 and set forth in Section 1.7(b) shall be increased or
decreased, as applicable, by the applicable amount of Pre-Petition Cure Costs added to
or removed from Schedule 1.6(b); provided, however, that in no event shall such
maximum amount be decreased below $2,200,000.





     SECTION 1.7 Administrative Creditor Obligations.




	 	(a)	 	For purposes of this Agreement, “Administrative Creditor Obligations” consist
of obligations other than obligations identified in Section 1.3(a) through (h),
inclusive, and which are allowed administrative expense claims within the meaning of
Section 503(b) of the Bankruptcy Code, and include, among other things, certain
reasonable amounts for professional fees, fees to be paid to the Office of the United
States Trustee, operating expenses other than the Operating Expenses and other expenses
necessary to administer and close the Seller’s estate.
	 
	 	(b)	 	For purposes of this Agreement “Administrative Creditor Obligations Limit”
means $2,500,000 less the sum of (i) the amount by which
Buyer’s obligations identified in Section 1.3(a) exceed $1,800,000; plus (ii)
the amount by which Cure Costs, to the extent not included in the obligations
identified in Section 1.3(a), exceed $2,800,000, subject to adjustment as provided in
Section 1.6(c); plus (iii) the amount by which payments made by Buyer in
respect of obligations identified in clauses (c), (d), (e) and (f) of Section 1.3
exceed $3,478,000; plus (iv) the amount by which Buyer’s obligations identified
in Section 1.3(h) exceed $850,000; plus (v) the amount of all payments made on
or after September 9, 2005 by the Seller or the Seller’s estate that are not Operating
Expenses; plus (vi) the amount by which the Seller has less than $21,250,000 in
Cash (excluding the $750,000 DIP escrow reserve and net of the aggregate amount of all
checks drawn on the Seller’s accounts that have not cleared), Accounts Receivable and
Inventory, in the aggregate, at the time of Closing; plus (vii) if Seller does
not obtain an order from the Bankruptcy Court exempting the transactions contemplated
by this Agreement from Taxes pursuant to section 1146 of the Bankruptcy Code, the
amount of any Transaction Taxes required to be paid by Buyer pursuant to Section 6.1 of
this Agreement; provided, however, that in no event shall the
Administrative Creditor Obligations Limit be less than $1,500,000.
	 
	 	(c)	 	Notwithstanding any other provision of this Agreement to the contrary other
than Section 1.7(d), Buyer shall have no obligation to pay any Administrative
Creditor
Obligations until such time as the Administrative Creditor Obligations Limit has
been resolved by agreement of the parties hereto or otherwise to the reasonable
satisfaction of Buyer. In the event the Administrative Creditor Obligations Limit
is less than the aggregate amount of Administrative Creditor Obligations, Buyer’s
obligations under Section 1.3(i) shall be limited to a pro rata payment to holders
of Administrative Creditor Obligations, subject to an aggregate limit equal to the
Administrative Creditor Obligations Limit.




9









 






	 	(d)	 	To the extent that accrued and unpaid expenses of Greenberg Traurig, LLP that
are allowed administrative expense claims against the Seller’s bankruptcy estate are
not otherwise subject to payment by Buyer as an Administrative Creditor Obligation,
Buyer shall be obligated to pay such expenses, subject to an aggregate limit of
[$800,000] (the “Seller Professional Carve-Out Guaranty”). Notwithstanding Section
1.7(c), Buyer shall pay such accrued and unpaid expenses of Greenberg Traurig, LLP
in the ordinary course as and when such expenses are incurred up to the amount of the
Seller Professional Carve-Out Guaranty; provided, however, that any such payments shall
be deemed first to be payments of Administrative Creditor Obligations to the extent
that such expenses are subject to payment by Buyer as an Administrative Creditor
Obligation.





     SECTION 1.8 [RESERVED].



ARTICLE 2. CONSIDERATION




     SECTION 2.1 Total Consideration.



     The aggregate consideration (the “Total Consideration”) for the sale, transfer, assignment and
conveyance of the Acquired Assets shall be (i) cash equal to $23,250,000 (the “Cash Purchase
Price”) plus (ii) assumption of the Assumed Liabilities.



     The Buyer has deposited $1,930,000 (the “Deposit”) with Greenberg Traurig, LLP, counsel to the
Seller (the “Escrow Agent”), in accordance with the Bidding Procedures Order. Upon consummation of
the Closing hereunder, the Deposit, together with any interest accrued thereon, shall be applied
against the Cash Purchase Price as set forth in Section 3.3(a) below. If this Agreement is
terminated for any reason, or if the Closing is not consummated for any reason, the Escrow Agent
shall return the Deposit, together with any interest accrued thereon, to the Buyer, and the Buyer
shall not have any further obligation to the Seller or the Escrow Agent.



ARTICLE 3. CLOSING AND DELIVERIES




     SECTION 3.1 Closing.



     The consummation of the transactions contemplated hereby (the “Closing”) shall take place at
the offices of Greenberg Traurig, LLP, The Forum, Suite 400, 3290 Northside Parkway, Atlanta GA
30327 at 10:00 a.m., eastern time, on the first Business Day following the
satisfaction or waiver by the appropriate party of all the conditions contained in Article
7 or on such other date or at such other place and time as may be mutually agreed to by the
parties (the “Closing Date”). All proceedings to be taken and all documents to be executed and
delivered by all parties at the Closing shall be deemed to have been taken and executed
simultaneously and no proceedings shall be deemed to have been taken nor documents executed or
delivered until all have been taken, executed and delivered.



10









 





     SECTION 3.2 Seller’s Deliveries.




	 	(a)	 	At the Closing, the sale, transfer, assignment, conveyance and delivery by
Seller of the Acquired Assets to Buyer shall be effected on the Closing Date by special
or limited warranty deeds, bills of sale, endorsements, assignments and other
instruments of transfer and conveyance (including an assignment of insurance policies
and proceeds therefrom by Seller as contemplated by Section 1.1(n)) reasonably
satisfactory in form and substance to counsel for Buyer;
	 
	 	(b)	 	At the Closing, Seller shall deliver a certificate, in a form reasonably
acceptable to the Buyer, dated the Closing Date and signed by its President and Chief
Executive Officer and attested by the Secretary of Seller, certifying to the accuracy
of the matters set forth in Section 7.2(a) and Section 7.2(b), and
certifying that no Material Adverse Effect shall have occurred;
	 
	 	(c)	 	At the Closing, Seller shall deliver three executed counterparts of the Estate
Action Proceeds Agreement; and
	 
	 	(d)	 	At the Closing, Seller shall deliver estoppel certificates and non-disturbance
agreements, in a form reasonably acceptable to the Buyer, for Leased Real Property
deemed significant by Buyer, in its reasonable discretion, as indicated on Schedule
3.2(d).





     SECTION 3.3 Buyer’s Deliveries.




	 	(a)	 	At the Closing, Buyer shall pay, in immediately available funds, by wire
transfer to an account designated by Sellers, an amount in Cash equal to the Cash
Purchase Price less the amount of the Deposit (together with any interest accrued
thereon);
	 
	 	(b)	 	At the Closing, Buyer shall execute and deliver to Seller an instrument of
assignment and assumption of liabilities with respect to the Assumed Liabilities
reasonably satisfactory in form and substance to counsel for Seller;
	 
	 	(c)	 	At the Closing, Buyer shall deliver three executed counterparts of the Estate
Action Proceeds Agreement; and
	 
	 	(d)	 	At the Closing, Buyer shall deliver a certificate, in a form reasonably
acceptable to Seller, dated the Closing Date, signed by its President and its
Secretary,
certifying the accuracy of the matters set forth in Section 7.1(a) and
Section 7.1(b).




11









 











ARTICLE 4. REPRESENTATIONS AND WARRANTIES




     SECTION 4.1 Representations and Warranties of Seller.



     Seller hereby represents and warrants to Buyer as follows:




	 	(a)	 	Corporate Organization. Seller is duly organized, validly existing and
in good standing under the laws of the State of Delaware. Seller has all requisite
corporate power and authority to own its properties and assets and to conduct its
businesses as now conducted.
	 
	 	(b)	 	Qualification to Conduct Business. Seller is duly qualified to do
business and is in good standing in every jurisdiction in which the character of the
properties owned or leased by it or the nature of the businesses conducted by it makes
such qualification necessary except where the failure to be so qualified would not
result in a Material Adverse Effect.
	 
	 	(c)	 	Authorization and Validity. Seller has, or on the Closing Date will
have, as applicable, all requisite corporate power and authority to enter into this
Agreement and any Ancillary Agreements to which Seller is or will become a party and,
subject to the (i) Bankruptcy Court’s entry of the Orders, and (ii) receipt of all
Consents to perform its obligations hereunder and thereunder, the execution and
delivery of this Agreement and each Ancillary Agreement to which Seller is or will
become a party and the performance of Seller’s obligations hereunder and thereunder,
have been, or on the Closing Date will be, duly authorized by all necessary corporate
action of Seller, and no other corporate proceedings on the part of Seller are
necessary to authorize such execution, delivery and performance. This Agreement and
each Ancillary Agreement to which Seller is or will become a party have been, or on the
Closing Date will be, duly executed by Seller, and, subject to the Bankruptcy Court’s
entry of the Orders, constitute, or will when executed and delivered constitute,
Seller’s valid and binding obligation, enforceable against Seller in accordance with
their respective terms. The board of directors of Seller has resolved to request that
the Bankruptcy Court approve this Agreement and the transactions contemplated hereby
and each Ancillary Agreement to which Seller is or will become a party.
	 
	 	(d)	 	Reports: Financial Statements.






	 	(i)	 	Other than as set forth on Schedule 4.1(d)(i), Seller
has filed all reports, registration statements, proxy statements and other
materials, together with any amendments required to be made with respect
thereto, that were required to be filed with the SEC under the Securities Act
or the Exchange Act (all such reports and statements are, collectively, the
“Seller
Reports”). As of their respective dates, the Seller Reports complied in all
material respects with all of the statutes and published rules and
regulations enforced or promulgated by the SEC and did not as of the date of
filing thereof (or, if amended or superseded by a filing prior to the date




12









 












of this Agreement, then on the date of such filing) with the SEC contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading; and




	 	(ii)	 	Each of the financial statements (including the related notes)
included in the Seller Reports presents fairly, in all material respects, the
financial position and results of operations and cash flows of Seller as of the
respective dates or for the respective periods set forth therein, all in
conformity with GAAP consistently applied during the periods involved except as
otherwise noted therein, and subject, in the case of the unaudited interim
financial statements, to the absence of notes and normal year-end adjustments
that have not been and are not expected to be material in amount.






	 	(e)	 	No Conflict or Violation. Subject to the (i) receipt of all Consents
and (ii) the Bankruptcy Court’s entry of the Orders, the execution, delivery and
performance by each Seller of this Agreement and each Ancillary Agreement to which any
of them is or will become a party does not and will not (A) violate or conflict with
any provision of the Certificate of Incorporation or By-laws of Seller, (B) violate any
provision of law, or any order, judgment or decree of any Government applicable to
Seller except where any such violation would not result in a Material Adverse Effect,
(C) result in or require the creation or imposition of any Liens (other than Permitted
Liens) on any of the Acquired Assets or (D) violate or result in a breach of or
constitute (with due notice or lapse of time or both) a default under any Acquired
Contract entered into by Seller or by which the Seller is bound or to which the assets
of Seller are subject.
	 
	 	(f)	 	Subsidiaries. Seller holds of record and owns beneficially all of the
capital stock of Carriage Hill Brands, Inc., a Delaware corporation (“Carriage Hill”).
With the exception of Carriage Hill, Seller does not own any shares of capital stock or
other equity interest in any Person. No Person has the right to acquire any shares of
capital stock or other equity interest in Carriage Hill. Carriage Hill has no
liabilities, obligations or commitments (whether based on contract or tort, accrued,
absolute, contingent or otherwise) of any kind or character to any Person.
	 
	 	(g)	 	Consents and Approvals. Schedule 4.1(g) sets forth a true and
complete list of each consent, waiver, authorization or approval of any Person and each
material declaration to or filing or registration with any Government that is required
to be obtained by Seller in connection with the execution and delivery by it of this
Agreement and each Ancillary Agreement to which it is or will become a party or the
performance by it of its obligations hereunder or thereunder, including,
without limitation, any and all material consents and approvals that are required to
be obtained, or rights of first refusal, first offer or other similar preferential
rights to purchase that are required to be complied with, in connection with the




13









 












assignment or transfer of any Acquired Assets to Buyer in accordance with the terms
of this Agreement (collectively, the “Consents”).




	 	(h)	 	Compliance with Laws. Except as set forth on Schedule 4.1(h),
Seller is in compliance with all applicable laws, regulations, orders or other legal
requirements to which Seller is subject except where the failure so to comply would not
result in a Material Adverse Effect. Except as set forth on Schedule 4.1(h),
Seller has not received written notice of any violation of any law, regulation, order
or other legal requirement and Seller is not in default with respect to any order,
writ, judgment, award, injunction or decree of any Government except where such default
would not result in a Material Adverse Effect. Except as set forth on Schedule
4.1(h), Seller is not required to maintain any bond, letter of credit or other
similar financial assurance instrument or to satisfy any financial assurance
obligation.
	 
	 	(i)	 	Litigation. Except as set forth on Schedule 4.1(i), there are
no Claims, actions, suits, proceedings, orders or investigations pending or, to the
knowledge of Seller, threatened, before any Government that could reasonably be
expected to affect the ability of Seller to consummate the transactions contemplated by
this Agreement and each Ancillary Agreement.
	 
	 	(j)	 	Title to Acquired Assets. Subject to the entry of the Bankruptcy Sale
Order, at the Closing, Seller will obtain good and marketable title to or a valid and
enforceable right by Contract to use, the Acquired Assets which shall be transferred to
Buyer free and clear of all Liens other than Permitted Liens. Except for the Excluded
Assets, the Acquired Assets constitute all of the assets of Seller and are adequate to
conduct the business of Seller as currently conducted.
	 
	 	(k)	 	Intellectual Property.






	 	(i)	 	Schedule 1.1(g) is a list of all material items of
Acquired Intellectual Property, and such list contains a complete and correct
description of the owner, title (in the case of patents and copyrights) or
trademark (in the case of trademarks), registration or application number, if
in existence, and country of registration or application of each such listed
item of Acquired Intellectual Property. Except as set forth on Schedule
1.1(g), all of the Acquired Intellectual Property is owned by Seller and
none is subject to a license agreement. Except as set forth on Schedule
4.1(k)(i), no renewal and maintenance fees, annuities or other similar fees
due and payable in respect of the Acquired Intellectual Property required to
have been listed on Schedule 1.1(g) are overdue.
	 
	 	(ii)	 	To the knowledge of Seller, the use of any Acquired
Intellectual Property (in the businesses conducted by Seller) does not
infringe, constitute an
unauthorized use of or otherwise violate any Intellectual Property of any
other Person. Except as set forth on Schedule 4.1(k)(ii), to the
knowledge




14









 












of Seller, no other Person is infringing, misappropriating or
violating any of the Acquired Intellectual Property owned by Seller.




	 	(iii)	 	Except as set forth on Schedule 4.1(k)(iii), there are
no Claims or investigations pending or, to the knowledge of Seller, threatened
that (A) challenge the rights of Seller in respect of any Acquired Intellectual
Property owned by Seller, or otherwise challenge the registration, validity,
enforceability, scope or sole and exclusive ownership of the Acquired
Intellectual Property owned by Seller or (B) assert that the operation of the
businesses conducted by Seller or the use of Acquired Intellectual Property
therein is or will be infringing or otherwise in violation of any Intellectual
Property of any other Person.






	 	(l)	 	Information Technology. Schedule 4.1 (1) sets forth a true and
complete list of all material items of hardware, software, databases, computer
equipment and other information technology, owned, leased or licensed by Seller
(collectively, the “Information Technology”). Schedule 4.1(1) includes a true
and complete list of all material Contracts to which Seller is a party relating to the
current use of the Information Technology.
	 
	 	(m)	 	Permits. Schedule 1.1(j) sets forth a true and complete list
of all Permits, and all pending applications therefor held by Seller. Except as set
forth on Schedule 4.1(m), each such Permit has been duly obtained, is valid and
in full force and effect, and is not subject to any pending or, to the knowledge of
Seller, threatened administrative or judicial proceeding to revoke, cancel, suspend or
declare such Permit invalid in any respect. None of the operations of the businesses
conducted by Seller are being conducted in a manner that violates any of the terms or
conditions under which any Permit was granted except any such violation which would not
result in a Material Adverse Effect. Subject to the receipt of the Consents, except to
the extent any such Permits are not assignable, the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements will not result in the
termination or suspension of any such Permit.
	 
	 	(n)	 	Contracts. Except as set forth on Schedule 4.1(n), Seller has
not, and to the knowledge of Seller no other party to any Acquired Contract has,
commenced any action against any of the parties to such Acquired Contract or given or
received any written notice of any default or violation under any Acquired Contract
that has not been withdrawn or dismissed. Except as set forth on Schedule
4.1(n), each Acquired Contract is, or will be upon the Closing, valid, binding and
in full force and effect in accordance with its terms.
	 
	 	(o)	 	Environmental Matters. To the knowledge of Seller, except as set forth
on Schedule 4.1(o):






	 	(i)	 	there has been no release, threatened release, spill, leak,
discharge or emission of any Hazardous Materials to the air, surface water,






15










 







	 	 	 	groundwater or soil of the Real Property requiring corrective, response or
remedial action under, or that is a violation of, any applicable Environmental
Laws, except for any such event of violation which would not result in a
Material Adverse Effect;
	 
	 	(ii)	 	there are no pending or threatened Claims or investigations
that affect or apply to the Real Property or the Acquired Assets and that
relate in any way to any Environmental Laws; and
	 
	 	(iii)	 	Seller has provided or made available to Buyer copies of all
information in possession of Seller relating to the presence or migration of
Hazardous Materials on, in or under the Real Property and the compliance with
applicable Environmental Laws associated with activities conducted with respect
to the Acquired Assets.






	 	(p)	 	Insurance. Schedule 4.1(p) sets forth a correct and complete
list of all current insurance policies covering Seller and a summary of each such
policy, including any limits of coverage, deductibles and premiums applicable to such
policy. Except as set forth on Schedule 4.1(p), all premiums required to be
paid under each insurance policy required to be set forth on Schedule 4.1(p)
have been paid when due, and all such policies are in full force and effect.
	 
	 	(q)	 	Real Property. Except as set forth on Schedule 4.1(q), Seller
has not received any notice of (i) default from a landlord of any Leased Real Property
that would reasonably be expected to adversely affect the use of any Leased Real
Property as currently used by Seller; or (ii) threatened or contemplated condemnation
or eminent domain proceedings that would reasonably be expected to adversely affect the
use of any Real Property as currently used by Seller. Seller is not a “foreign person”
within the meaning of section 1445(f)(3) of the Code.
	 
	 	(r)	 	Accounts Receivable. Except as set forth on Schedule 4.1(r),
all Accounts Receivable of Seller have been properly recorded on the books and records
of Seller in accordance with GAAP consistently applied by Seller in the ordinary
course.
	 
	 	(s)	 	Inventories. Except as set forth on Schedule 4.1(s), the
Inventories of Seller have been properly recorded on the books and records of Seller in
accordance with GAAP consistently applied by Seller in the ordinary course.
	 
	 	(t)	 	Absence of Certain Changes. Except as set forth on Schedule
4.1(t), and subject to the ongoing matters and restrictions of the Bankruptcy Case
and the Post-Petition Credit Agreement, since April 12, 2004, the business of Seller
has been conducted in all material respects in the ordinary course, and there has not
been:






	 	(i)	 	any material damage, destruction or other casualty or loss
(whether or not covered by insurance) affecting any of the Acquired Assets or
any portion thereof that has not been repaired; or




16









 












	 	(ii)	 	any sale or other disposition of any assets (including, without
limitation, discounting of accounts receivable) used or useful in the
businesses of Seller, other than sales of inventory in the ordinary course of
business consistent with Seller’s past practice.






	 	(u)	 	Public Utility Matters. Seller is not subject to regulation by any
Government as a “public utility,” an “electric utility,” a “gas utility,” a “public
utility holding company,” a “holding company,” an “electrical corporation” or as a
subsidiary or affiliate of any of the foregoing, under (A) the Public Utility Holding
Company Act of 1935, as amended, the Federal Power Act, as amended and the Public
Utility Regulatory Policies Act of 1978, as amended or (B) any similar Government
requirement.
	 
	 	(v)	 	Non-Executive Employees. Schedule 4.1(v) sets forth the names,
addresses and job descriptions of, and the salary or wages and other compensation and
benefits payable to, each of the Non-Executive Employees. Seller believes all such
Non-Executive Employees are necessary for the continuation of the business of Seller as
a going concern and does not anticipate terminating any such Non-Executive Employee.
	 
	 	(w)	 	Disclosure. All written information and other materials concerning the
Seller, the Acquired Assets, the Assumed Liabilities and the business of Seller that
has been, or is hereafter, prepared by, or on behalf of, Seller and delivered to Buyer
or the DIP Lenders, other than any information or materials prepared or delivered by
Corporate Revitalization Partners, LLP (the “Information”), were, or when delivered
will be, when considered as a whole, complete and correct in all material respects and
did not, or will not when delivered, contain any untrue statement of material fact or
omit to state a material fact necessary in order to make the statements contained
therein not misleading in light of the circumstances under which such statement has
been made and, to the extent that any such Information contains projections, such
projections were prepared in good faith on the basis of (i) assumptions, methods and
tests which were believed by Seller to be reasonable and (ii) information believed by
Seller to have been accurate based upon the information available to the Seller, in
each case, at the time such projections were furnished to Buyer.
	 
	 	(x)	 	DIP Loan Claims. On the Closing Date, the DIP Loan Claims will be no
more than [$23,250,000], in the aggregate.





     SECTION 4.2 Representations and Warranties of Buyer.



     Buyer hereby represents and warrants to Seller as follows:




	 	(a)	 	Corporate Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of North Carolina and has all
requisite corporate power and authority to own its properties and assets and to conduct
its businesses as now conducted.




17









 












	 	(b)	 	Authorization and Validity. Buyer has, or on the Closing Date will
have, all requisite corporate power and authority to enter into this Agreement and any
Ancillary Agreement to which Buyer is or will become a party and to perform its
obligations hereunder and thereunder. The execution and delivery of this Agreement and
any Ancillary Agreement to which Buyer is or will become a party and the performance of
Buyer’s obligations hereunder and thereunder have been, or on the Closing Date will be,
duly authorized by all necessary corporate action by the Board of Directors of Buyer,
and no other corporate proceedings on the part of Buyer are necessary to authorize such
execution, delivery and performance. This Agreement and each Ancillary Agreement to
which Buyer is or will become a party have been, or on the Closing Date will be, duly
executed by Buyer and constitute, or will constitute, when executed and delivered,
Buyer’s valid and binding obligations, enforceable against it in accordance with their
respective terms except as may be limited by bankruptcy or other laws affecting
creditors’ rights and by equitable principles.
	 
	 	(c)	 	No Conflict or Violation. The execution, delivery and performance by
Buyer of this Agreement and any Ancillary Agreement to which Buyer is or will become a
party do not and will not (i) violate or conflict with any provision of the Articles of
Incorporation or Bylaws of Buyer, (ii) violate any provision of law, or any order,
judgment or decree of any court or Government applicable to Buyer or (iii) violate or
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any Contract to which Buyer is party or by which Buyer is bound or to
which any of Buyer’s properties or assets is subject.
	 
	 	(d)	 	Consents and Approvals. No consent, waiver, authorization or approval
of any Person and no declaration to or filing or registration with any Government is
required in connection with the execution and delivery by Buyer of this Agreement and
each Ancillary Agreement to which Buyer is or will become a party or the performance by
Buyer of its obligations hereunder or thereunder.
	 
	 	(e)	 	Adequate Assurances Regarding Acquired Contracts. Buyer is (or, after
the Closing, will be) capable of satisfying the conditions contained in sections
365(b)(1)(C) and 365(f)(2)(B) of the Bankruptcy Code with respect to the Acquired
Contracts.





     SECTION 4.3 Warranties Are Exclusive.



     The parties acknowledge that the representations and warranties contained in this Article
4 are the only representations or warranties given by the parties and that all other express or
implied warranties are disclaimed.



ARTICLE 5. COVENANTS AND OTHER AGREEMENTS




     SECTION 5.1 Pre-Closing Covenants of Seller.



     Seller covenants to Buyer that, during the period from the Execution Date through and
including the Closing Date or the earlier termination of this Agreement:



18









 






	 	(a)	 	Conduct of Business Before the Closing Date. Unless otherwise agreed
by Seller and Buyer, Seller shall use its commercially reasonable efforts to preserve
intact its business or organization and relationships with third parties. Moreover,
except as set forth on Schedule 5.1(a) or as required pursuant to the terms of
this Agreement, without obtaining the prior written consent of Buyer to take any
actions not permitted or required by the following clauses (i) — (xiii), Seller:






	 	(i)	 	shall not take or agree to commit to take any action that would
make any representation or warranty of Seller under this Agreement inaccurate
in any material respect at, or as of any time prior to, the Closing Date;
	 
	 	(ii)	 	shall not offer credit terms or trade promotions to any
customers except in a manner consistent in all material respects with past
practices with respect to the applicable product lines of Seller or except to
the extent reasonably necessary to be competitive with competitors’ product
offerings;
	 
	 	(iii)	 	shall not borrow funds from any Person or declare or pay
dividends, to any Person, except for (A) cash management practices in the
ordinary course of business consistent in all material respects with past
practices and applicable Bankruptcy Court orders and (B) granting or obtaining
trade credit terms in the ordinary course of business;
	 
	 	(iv)	 	shall keep in full force and effect, and pay all premiums and
other amounts due under, the insurance policies required to be set forth on
Schedule 4.1(p);
	 
	 	(v)	 	shall continue to take all actions consistent with past
practice and existing plans to comply, in all material respects, with
Environmental Laws, including, without limitation, disposal of all Hazardous
Materials;
	 
	 	(vi)	 	shall not make any change in its general pricing practices or
policies or any material change in its credit or allowance practices or
policies, except to the extent reasonably necessary to be competitive;
	 
	 	(vii)	 	shall not enter into any material Contract or any material
amendment, modification or termination (partial or complete) of, grant any
material waiver under or give any material consent with respect to, any
Acquired Contract set forth on Schedule 1.1(c) or that is otherwise
required to be disclosed in the Schedules to Section 1.1;
	 
	 	(viii)	 	shall not place or impose any Lien other than Permitted Liens on any material
portion of the Acquired Assets;
	 
	 	(ix)	 	shall not sell or dispose of any Acquired Assets other than
sales of products, inventory and obsolete equipment in the ordinary course of
business;





19









 





	 	(x)	 	shall not enter into, amend, modify or terminate, in any
material respect, any Acquired Contract with respect to the Intellectual
Property rights of any Person;
	 
	 	(xi)	 	shall not employ or appoint any person as an officer of the
Seller other than officers serving as of the date hereof;
	 
	 	(xii)	 	shall not incur any Indebtedness or incur any costs or
expenses outside of the ordinary course of business (other than costs or
expenses allowed by the Bankruptcy Court); and
	 
	 	(xiii)	 	shall not take any other action or enter into any other transaction
(including any transactions with Affiliates) other than the transactions
contemplated by this Agreement or any Ancillary Agreement to which Sellers are
party (including actions permitted by this Section 5.1(a)), or as
required in connection with the Bankruptcy Code.






	 	(b)	 	Cooperation. Seller shall use commercially reasonable efforts to (i)
obtain the Consents, (ii) take, or cause to be taken, all action and to do, or cause to
be done, all things necessary or proper, consistent with applicable law, to consummate
and make effective as soon as possible the transactions contemplated hereby, and (iii)
assist Buyer in the transfer of or obtaining any Permits required to own the Acquired
Assets. Seller acknowledges that Buyer has the right, in cooperation with Seller, to
take any and all commercially reasonable actions in order to obtain the Consents
without the incurrence of cost or obligation to Seller. In addition, Seller shall use
commercially reasonable efforts to obtain, and assist Buyer in obtaining, such
Consents; provided, however, that (A) Buyer has no obligation to obtain
the Consents (other than to sign an assumption agreement, pay Cure Costs and provide
adequate assurances as specifically provided by this Agreement), and (B) Buyer will not
incur any liability under this Agreement or otherwise for Buyer’s failure to take any
further actions to obtain such Consents.
	 
	 	(c)	 	Access to Records and Properties. Buyer shall be entitled, and Seller
shall permit Buyer, to conduct such investigation of the condition (financial or
otherwise), businesses, assets, properties or operations of Seller as Buyer shall
reasonably deem appropriate. Seller shall (i) provide Buyer and its Related Persons
full and complete access at any reasonable time to all the facilities, offices and
personnel of Seller and to all of the books and records of Seller, including, without
limitation, to perform field examinations and inspections of Seller’s inventories,
facilities, equipment and other assets and properties; (ii) cause Seller’s Related
Persons to furnish Buyer with such financial and operating data and other information
with respect to the condition (financial or otherwise), businesses, assets, properties
or operations as Buyer shall reasonably request; (iii) provide Buyer and the Title
Company with all customary documents, certificates and instruments required by the
Title Company to issue the title insurance contemplated by Section 7.2(g); and
(iv) permit Buyer to make such inspections and copies thereof as Buyer may require,
including, without limitation, to conduct






20










 







	 	 	 	such environmental assessments and
investigations of the Real Property and surrounding real property as Buyer or its
advisors and consultants may deem reasonably necessary or appropriate and to conduct
sampling and analysis of environmental media to detect the presence or confirm the
absence of contamination, including any contamination which may be present in
groundwater and the sources of any such contamination; provided,
however, that Buyer shall use commercially reasonable efforts to prevent any
such investigation from unreasonably interfering with the operation of the business of
Seller. In addition, at Buyer’s expense, Seller shall (i) provide Buyer and its Related
Persons with full and complete access to its customers and suppliers and the
opportunity to make cooperative and investigative sales calls on its customers; (ii)
provide Buyer and its Related Persons office space at its facilities and access to such
office space at all times; and (iii) permit Buyer and its Related Persons to talk to
the employees of Seller as Buyer deems appropriate for the purpose of determining the
suitability of such employees for employment by Buyer after the Closing Date;
provided, however, that Buyer shall use reasonable efforts to prevent
any such conversations from unreasonably interfering with the operations of Seller’s
business and such employee’s duties with Seller.
	 
	 	(d)	 	Notice of Certain Events. Seller shall promptly notify Buyer of, and
furnish Buyer any information it may reasonably request with respect to, the occurrence
of any event or condition or the existence of any fact that would reasonably be
expected to cause any of the conditions to Buyer’s obligations to consummate the
transaction(s) contemplated by this Agreement or by any Ancillary Agreement not to be
fulfilled.
	 
	 	(e)	 	Buyer’s Right to Advise. Buyer shall have the right to consult with,
and make specific recommendations to, Seller regarding all aspects of management and
operations of Seller and potential cost-cutting measures that may be implemented prior
to the Closing Date. Seller agrees to consider in good faith, and in its reasoned
business judgment, any such recommendations and to discuss such recommendations with
Buyer. Notwithstanding the foregoing, nothing in this Agreement shall give, and shall not be deemed to have given, Buyer or its
Affiliates, directly or indirectly, the right to control or direct the management
and operations of Seller prior to the Closing Date. Prior to the Closing Date,
Seller shall exercise, consistent with the terms and conditions of this Agreement,
complete control, supervision and decision-making authority over the management and
operations of Seller.
	 
	 	(f)	 	Bankruptcy Case. Prior to the Closing, Seller shall not seek or
consent to the dismissal of the Bankruptcy Case and/or seek or consent to the
conversion of the Bankruptcy Case to a case under chapter 7 of the Bankruptcy Code.





     SECTION 5.2 Pre-Closing Covenants of Buyer.



     Buyer covenants to Seller that, during the period from the date of this Agreement through and
including the Closing Date or the earlier termination of this Agreement:



21









 






	 	(a)	 	Cooperation. Buyer shall use commercially reasonable efforts to take,
or cause to be taken, all actions and to do, or cause to be done, all things necessary
or proper, consistent with applicable law, to consummate and make effective as soon as
possible the transactions contemplated hereby.
	 
	 	(b)	 	Adequate Assurances Regarding Acquired Contracts and Required Orders.
With respect to each Acquired Contract, Buyer shall provide adequate assurance of the
future performance of such Acquired Contract by Buyer. Buyer shall take such actions as
may be reasonably requested by Seller to assist Seller in obtaining the Bankruptcy
Court’s entry of the Bankruptcy Sale Order and any other order of the Bankruptcy Court
reasonably necessary to consummate the transactions contemplated by this Agreement.
	 
	 	(c)	 	Permits. Buyer shall use commercially reasonable efforts to promptly
obtain or consummate the transfer to Buyer of any Permit required to own or operate the
Acquired Assets under applicable laws.
	 
	 	(d)	 	Notice of Certain Events. Buyer shall promptly notify Seller of, and
furnish Seller any information it may reasonably request with respect to, the
occurrence of any event or condition or the existence of any fact that would reasonably
be expected to cause any of the conditions to Seller’s obligations to consummate the
transactions contemplated by this Agreement or by any Ancillary Agreement not to be
fulfilled.





     SECTION 5.3 Other Covenants of Seller and Buyer.




	 	(a)	 	Improper Receipt of Payment. From and after the Closing Date, (i)
Seller shall promptly forward to Buyer any and all payments received by Seller from
customers or any other Persons that constitute part of the Acquired Assets and (ii)
Buyer shall promptly forward to Seller any and all payments received by
Buyer from customers or any other Persons that constitute part of the Excluded
Assets.
	 
	 	(b)	 	Management of Expenses. Seller shall use commercially reasonable
efforts to minimize the actual amount of the Assumed Liabilities, provided that nothing
contained herein shall obligate Seller to take actions outside the ordinary course of
business including with respect to paying, in advance of other liabilities, liabilities
that would become Assumed Liabilities or otherwise.
	 
	 	(c)	 	Post-Sale Order Covenant. Following entry of the Sale Order by the
Bankruptcy Court, Seller shall not seek, solicit, encourage or negotiate any offer to
purchase or acquire all or any portion of the Acquired Assets, whether pursuant to a
potential sale, plan or otherwise.
	 
	 	(d)	 	Disclosure Schedules and Supplements.






	 	(i)	 	The parties acknowledge and agree that (i) Seller has not yet
delivered definitive Schedules to this Agreement in final form to Buyer, and
(ii)




22









 






	 	 	 	Buyer has not yet delivered definitive Schedules to this Agreement in
final form to Seller. Seller hereby agrees that it shall deliver to Buyer all
of the Schedules due from it in final form within two (2) days of the date
hereof. Except as provided in Section 1.6 and Section 1.2(d), Buyer hereby
agrees that it shall deliver to Seller all of the Schedules due from it in
final form within two (2) days of the date hereof. Each of Seller and Buyer,
as applicable, hereby agrees that the other party shall have until the Closing
to review such materials and to terminate this Agreement if such party
reasonably determines that such Schedules reflect material information relating
to Seller or Buyer, as applicable, which was not disclosed prior to the date
hereof or which is otherwise inconsistent with the materials reviewed by Buyer
or Seller, as applicable, prior to the date hereof and which, in each case,
reflects materially and adversely on Seller or Buyer, as applicable.
Notwithstanding the foregoing, all Schedules shall be delivered in accordance
with the timing required under the Orders or otherwise by the Bankruptcy Court.
	 
	 	(ii)	 	Seller, on the one hand, shall notify Buyer of, and Buyer on
the other hand, shall notify Seller of, and shall supplement or amend the
Schedules to this Agreement with respect to, any matter that (i) may arise
after the delivery of the Schedules hereunder and that, if existing or
occurring at or prior to such delivery of the Schedules, would have been
required to be set forth or described in the Schedules to this Agreement or
(ii) makes it necessary to correct any information in the Schedules to this
Agreement or in any representation and warranty of Seller or Buyer, as
applicable, that has been rendered inaccurate thereby. Each such notification
and supplementation shall be made no later than two days before the date set
for the Closing by the parties. No supplement or amendment to the Schedules to
this Agreement, unless expressly acknowledged by Buyer or
Seller, as applicable, as a cure or modification, shall be deemed to cure
any inaccuracy of any representation or warranty made in this Agreement or
modify, affect or diminish Buyer’s right to exclude Contracts as provided in
Section 1.6(a) or Buyer’s or Seller’s right to terminate this
Agreement pursuant to Section 8.1.






	 	(e)	 	Filings Under Securities Laws. Seller shall provide Buyer with such
access to and copies of books, records and personnel of Seller and its subsidiaries as
may be required in order for Buyer to prepare any financial statements, including
historical or pro forma financial statements, required for inclusion or incorporation
by reference by Buyer in its filings with the SEC (the “Required Seller Financial
Statements”), including, without limitation, any registration, proxy or information
statement or any periodic or current report under the Securities Act, the Exchange Act
and the rules and regulations of the SEC. Seller shall use its best efforts to provide
Buyer with such assistance as Buyer shall reasonably request (i) in order to permit
Buyer to obtain or prepare any Required Seller Financial Statements and to comply with
any requirement pursuant to the Sarbanes-Oxley Act of 2002 and the rules and
regulations of the SEC thereunder




23









 






	 	 	 	with respect to Seller and (ii) to enable the
preparation and review or audit, as applicable, by an independent registered public
accounting firm of any Required Seller Financial Statements as may be required under
the Securities Act, the Exchange Act and the rules and regulations of the SEC. Seller
shall use its best efforts to cause and permit the independent registered public
accounting firm or firms that have audited its financial statements, or that will audit
its financial statements, to provide Buyer with such assistance as Buyer shall
reasonably request in order to permit Buyer to prepare and file any Required Seller
Financial Statements, including, without limitation, by issuing or providing an
original executed copy of any required audit report or consent to the inclusion of such
report and the identification of such audit firm or firms as experts.
	 
	 	(f)	 	Post-Closing Assumption of Contracts. From Closing and through and
including the twentieth (20th) Business Day after the Closing Date, Buyer
shall have the right to direct Seller to request the entry of an order of the
Bankruptcy Court (a “Post-Closing Order”), in form and substance satisfactory to Buyer
and Seller, (i) authorizing the assumption of any Contract by the Buyer that is an
Excluded Asset and not an Acquired Contract as of the Closing, including, without
limitation, any of those Contracts listed on Schedule 1.2(b) as of the Closing,
pursuant to section 365(b) of the Bankruptcy Code and (ii) authorizing the sale and
assignment of such Contract(s) to the Buyer pursuant to sections 363 and 365 of the
Bankruptcy Code. Seller agrees to transfer and assign any such assets to the Buyer
within two (2) Business Days of the issuance of a Post-Closing Order, as permitted by
such Post-Closing Order, for no further consideration whatsoever. Buyer shall bear all
of the costs of preparing and filing a Post-Closing Order and all Cure Costs for any
Contract(s) assumed by Buyer in connection with such Post-Closing Order.
	 
	 	(g)	 	Seller shall incorporate the terms and provisions of this Agreement and the
Bankruptcy Sale Order in any plan Seller seeks to confirm in the Bankruptcy case, in a
manner form and substance reasonably satisfactory to Buyer, to the extent necessary to
confirm that Buyer is entitled to the protections of Section 1141(c) with respect to
the transactions that are the subject of this Agreement.
	 
	 	(h)	 	Subject to Section 5.3(f) and from and after the twenty-first (21st)
Business Day after the Closing, Seller shall take all action reasonably necessary under
the Bankruptcy Code and Orders, including full compliance with any applicable notice
requirements, to reject, as soon as reasonably practicable, any Contract that is an
Excluded Asset and not an Acquired Contract, including, without limitation and subject
to Section 5.3(f), any Contract listed on Schedule 1.2(b); provided, however,
that Buyer shall bear all costs of such action required to be taken by Seller.
	 
	 	(i)	 	Title Insurance. At the request and the sole expense of Buyer, from
and after Closing, Seller shall execute and deliver, or cause to be executed and
delivered, such documents as Buyer or its counsel may reasonably request in connection
with the issuance of an ALTA (or local equivalent) owner’s policy of title




24









 






	 	 	 	insurance
for each of the Real Properties identified on Schedule 1.1(a) as requiring
title insurance, insuring in Buyer or its designee fee simple absolute ownership of
each such owned Real Property or leasehold interest in each such leased Real Property,
subject only to Permitted Liens (specifically deleting the standard exceptions, other
than (i) the standard survey exception and (ii) the parties-in-possession exception,
except for properties where Buyer has obtained a survey or where the Title Company will
otherwise provide such coverage; provided, however, that Seller shall
nonetheless agree to make a reasonable knowledge-based representation for the Title
Company as to parties-in-possession as part of the customary title affidavit requested
by the Title Company) and including such endorsements as are available in the
particular states in which the properties are located and as Buyer may reasonably
require, and in each case in an amount not less than the portion of the Total
Consideration allocated to the property being insured thereunder.





     SECTION 5.4 Employment Covenants and Other Undertakings.




	 	(a)	 	Seller Benefit Plans. Subject to Section 1.3(d), Section
1.3(e), Section 1.3(f), and Section 1.3(g). Seller shall retain all
liabilities and obligations in respect of its past, present and future employees under
applicable laws and the Seller Benefit Plans, and Buyer shall have no liability or
obligation whatsoever under the Seller Benefit Plans nor shall Buyer assume the
sponsorship of the Seller Benefit Plans. Unless and until such Seller Benefit Plans are
terminated, Seller shall retain sponsorship and all of its rights and obligations under
all of the Seller Benefit Plans. Prior to or upon commencement of employment with Buyer
of any employees of Seller hired by Buyer as of or after the Closing, Buyer shall offer
such employees and their dependents employee benefits on such terms and conditions
as Buyer may, in its sole discretion, determine.
	 
	 	(b)	 	Future Employment. From and after the Closing, Buyer shall offer
continued employment to all of the Seller’s current non-executive level employees (the
“Non-Executive Employees”) as are necessary for the continuation of the Seller’s
business as a going concern, which include all of the Seller’s employees other than the
employees listed on Schedule 5.4(b), on similar terms as they are currently
employed. Buyer will be solely responsible for obligations (including notice) under
the WARN Act that arise based in any part on events that occur from or after the
Closing with respect to any Non-Executive Employee or arising as a result of any breach
of Buyer’s obligations under this Section 5.4(b).
	 
	 	(c)	 	No Right to Employment. Notwithstanding Section 5.4(b), nothing
herein expressed or implied shall confer upon any of the employees of Seller any right
to employment or continued employment for any specified period, of any nature or kind
whatsoever under or by reason of this Agreement.
	 
	 	(d)	 	Labor Matters. During the period between the date of this Agreement and
the Closing Date, Buyer and Seller shall reasonably cooperate on labor matters to
effect the transactions contemplated by this Agreement and the orderly transition




25









 












	 	 	 	of the operations of the Acquired Assets from Seller to Buyer. Seller shall comply with
any obligations to bargain with any labor organizations representing their employees
with respect to the transactions contemplated by this Agreement and/or the effects of
such transactions on their represented employees, in accordance with applicable law.
	 
	 	(e)	 	Other Obligations. Except as otherwise required by law, specified in
this Agreement, or otherwise agreed in writing by Buyer and/or its Affiliates, neither
Buyer nor its Affiliates shall be obligated to provide any severance, separation pay,
or other payments or benefits, including any key employee retention payments, to any
employee of Seller on account of any termination of such employee’s employment on or
before the Closing Date, and such benefits (if any) shall remain obligations of the
Seller.
	 
	 	(f)	 	Health Insurance Coverage.






	 	(i)	 	Seller shall, either directly or through a third party at
Buyer’s expense, provide all notices that Seller’s former employees and
retirees are entitled to receive under COBRA in connection with a group health
plan provided by Seller, subject to the timely review and comment of Buyer.
Notices required as a result of a qualifying event under Code section
4980B(f)(3) shall be provided promptly after the qualifying event and shall
include information with regard to an individual’s ability to receive the tax
credit provided under Code section 35. Seller shall, at Buyer’s reasonable
request, include with any notice described in this Section 5.4(f) any
materials requested by Buyer in a timely manner, which materials shall be
subject to Seller’s review and comment.
	 
	 	(ii)	 	Seller shall take reasonable actions necessary to ensure that
the initial COBRA continuation coverage elections of its former employees,
retirees and their dependents are reported to Seller. Seller shall maintain
records (“COBRA Records”) of each of Seller’s former employees, retirees and
their dependents who elect COBRA continuation coverage as a result of receiving
the notice described in this Section 5.4(f) or who were receiving COBRA
continuation coverage from Seller on the Closing Date. Such COBRA Records shall
include (i) the name and address of the former employee or retiree, (ii) the
specific qualifying event (listed under Code section 4980B(f)(3)) that entitled
the former employee or retiree and his or her dependents to elect COBRA
continuation coverage, (iii) the date on which COBRA continuation coverage was
elected, (iv) the type of health plan coverage elected, and (v) the name of the
former employee or retiree’s dependents who elected COBRA continuation
coverage.
	 
	 	(iii)	 	Seller shall provide Buyer with the COBRA Records after the
expiration of the time period during which Seller’s former employees and
retirees are entitled to elect the COBRA continuation coverage. Seller shall
provide the continuation coverage pursuant to COBRA to any of Seller’s former




26









 






	 	 	 	employees, retirees and their dependents until such time as Seller is not
required to provide such continuation coverage under applicable law.






	 	(g)	 	Non-Executive Employee Information. To the extent necessary to enable
Buyer to meet any obligation Buyer may have to any Non-Executive Employee after the
Closing Date, Seller shall provide to Buyer, in a format reasonably acceptable to
Buyer, the name, social security number, dates of service, most recent job position,
seniority, and most recent annual salary or wage rate of such Non-Executive Employee,
and the name or names of each such Non-Executive Employee’s spouse and dependents;
provided, however, that Seller shall be obligated to provide only such
information as may be reflected on Seller’s records. Seller shall also provide to
Buyer, at Buyer’s request, such additional available information with regard to the
Non-Executive Employees as Buyer may reasonably request in connection with any
obligation Buyer may have to such Non-Executive Employees of Seller after the Closing
Date.





     SECTION 5.5 Ownership and Use of Tom’s Foods Name.




	 	(a)	 	Seller covenants and agrees that Seller shall, and Seller shall cause all of
its Affiliates which use the Tom’s Foods Name, to pass all required resolutions and to
amend their respective articles or certificate of incorporation or other organizational
documents to change their corporate or company name to a name that does not include the
words “Tom’s Foods” or any name intended or likely to be confused or associated with
any Tom’s Foods Name or product no later than
the Closing Date. Promptly following receipt of confirmation that each such name
change has been effected, Seller shall provide to Buyer written proof that each such
name change has been effected.
	 
	 	(b)	 	Seller acknowledges that the Tom’s Foods Name shall be and remain, subsequent
to the Closing, the sole and exclusive property of Buyer or its Affiliates.
	 
	 	(c)	 	Subsequent to the Closing, subject to Section 5.5(d), neither Seller
nor any of its Affiliates shall have any right, title or interest in or to, and Buyer
is not granting Seller or any of its Affiliates, a license to use, the Tom’s Foods
Name.
	 
	 	(d)	 	Seller agrees that, as soon as reasonably practicable, but, in any event,
within twenty (20) days following the Closing, no stationery, purchase order, invoice,
receipt or other similar document containing any reference to the Tom’s Foods Name
shall be printed, ordered or produced for use by Seller or any of its Affiliates and
that Seller shall, and Seller shall cause each of its Affiliates to, following the
Closing, cease to use any stationery, purchase order, invoice, receipt or other similar
document containing any reference to the Tom’s Foods Name or shall only use such
stationery, purchase order, invoice, receipt or other similar document after having
deleted, pasted over or placed a sticker over such references. The obligations in this
paragraph (d) shall not apply (y) to the extent use of the Tom’s Foods Name is required
by law or otherwise reasonably required pending the registration of the change of
corporate names (as set out in this




27









 






	 	 	 	Section 5.5) or (z) to the extent use of
the Tom’s Foods Name is reasonably required in order to enable collection or payment of
invoices issued by Seller or any of its Affiliates.





     SECTION 5.6 Non-Assignment of Contracts



     Anything contained herein to the contrary notwithstanding, this Agreement shall not constitute
an agreement to assign any Acquired Contract or any Permit, if, notwithstanding the provisions of
sections 363 and 365 of the Bankruptcy Code, an attempted assignment thereof, without the consent
of any other Person party thereto, would constitute a breach thereof or in any way negatively
affect the rights of either of the Seller or Buyer (unless the restrictions on assignment would be
rendered ineffective pursuant to sections 9-406 through 9-409, inclusive, of the Uniform Commercial
Code, as amended (the “UCC”)), as the assignee of such Acquired Contract or Permit, as the case may
be, thereunder. If, notwithstanding the provisions of sections 363 and 365 of the Bankruptcy Code,
such consent or approval is required but not obtained, Seller shall cooperate with Buyer without
further consideration, in any reasonable arrangement designed to provide Buyer with the benefits of
or under any such Acquired Contract or Permit, including, without limitation, enforcement for the
benefit of Buyer of any and all rights of Seller against any Person party to the Acquired Contract
or Permit arising out of the breach or cancellation thereof by such Person; provided,
however, that after Closing, Buyer shall be responsible for all payment and other
obligations under, and for all costs of enforcing rights under, such Acquired Contract or Permit.
Any assignment to Buyer of any Acquired Contract or Permit that shall, notwithstanding the
provisions of sections 363 and 365 of the Bankruptcy
Code, require the consent or approval of any Person for such assignment as aforesaid shall be
made subject to such consent or approval being obtained.



     SECTION 5.7 Guaranty of Parent



     Buyer and the Parent hereby acknowledge and agree that Buyer is the designee of the Parent for
purposes of purchasing the Acquired Assets, including delivering the Total Consideration. The
Parent hereby guarantees the payment and performance of the liabilities and obligations required by
Buyer under this Agreement.



ARTICLE 6. TAXES




     SECTION 6.1 Taxes Related to Purchase of Acquired Assets.



     All sales, use, purchase, transfer, fixed asset, stamp or documentary stamp taxes that may be
imposed by reason of the transfer of the Acquired Assets (collectively, “Transaction Taxes”), and
all recording and filing fees, that may be imposed by reason of the sale, transfer, assignment and
delivery of the Acquired Assets and that are not exempt under section 1146(c) of the Bankruptcy
Code, shall be borne by Buyer. Notwithstanding the foregoing, Seller shall use its reasonable best
efforts to obtain an order of the Bankruptcy Court exempting the transactions contemplated by this
Agreement from such Transaction Taxes pursuant to section 1146 of the Bankruptcy Code. Buyer and
Seller shall cooperate to (a) determine the amount of Transaction Taxes payable in connection with
the transactions contemplated under this Agreement, (b) provide all requisite exemption
certificates and (c) prepare and file any and all required Tax



28









 







Returns for or with respect to such
Transaction Taxes with any and all appropriate Government taxing authorities.



     SECTION 6.2 Cooperation on Tax Matters.




	 	(a)	 	Buyer and Seller shall furnish or cause to be furnished to each other, as
promptly as practicable, such information and assistance relating to the Acquired
Assets and the Assumed Liabilities as is reasonably necessary for the preparation and
filing of any Tax Return, claim for refund or other required or optional filings
relating to Tax matters, for the preparation for and proof of facts during any Tax
audit, for the preparation for any Tax protest, for the prosecution or defense of any
suit or other proceeding relating to Tax matters and for the answer to any Government
relating to Tax matters.
	 
	 	(b)	 	Buyer shall retain possession of all accounting, business, financial and Tax
records and information (i) relating to the Acquired Assets or the Assumed Liabilities
that are in existence on the Closing Date and transferred to Buyer hereunder and (ii)
coming into existence after the Closing Date that relate to the Acquired Assets or the
Assumed Liabilities before the Closing Date, for a period of at least three years from
the Closing Date. Buyer shall give Seller notice and an opportunity to retain any such
records in the event that Buyer determines to destroy or dispose of them after such
period. In addition, from and after the
Closing Date, Buyer shall provide access to Seller and its Related Persons (after
reasonable notice and during normal business hours and without charge), to the
books, records, documents and other information relating to the Acquired Assets or
the Assumed Liabilities as Seller may reasonably deem necessary to (i) properly
prepare for, file, prove, answer, prosecute and/or defend any such Tax Return,
claim, filing, tax audit, tax protest, suit, proceeding or answer or (ii) administer
or complete any cases under chapter 11 of the Bankruptcy Code of Seller. Such access
shall include, without limitation, access to any computerized information retrieval
systems relating to the Acquired Assets or the Assumed Liabilities.





     SECTION 6.3 Allocation of Total Consideration.



     Buyer will allocate the Total Consideration among the Acquired Assets (the “Allocation”). The
Allocation will be binding upon Buyer and Seller and their respective successors and assigns, and
none of the parties to this Agreement will take any position (whether in returns, audits or
otherwise) that is inconsistent with the Allocation. Buyer and Seller will report the purchase and
sale of the Acquired Assets on all tax returns, including, without limitation, Form 8594 as
provided for in section 1060 of the Code, in accordance with the Allocation and will cooperate in
timely filing with the Internal Revenue Service their respective Forms 8594.



29









 





ARTICLE 7. CONDITIONS PRECEDENT TO PERFORMANCE BY PARTIES




     SECTION 7.1 Conditions Precedent to Performance by Seller.



     The obligation of Seller to consummate the transactions contemplated by this Agreement is
subject to the fulfillment, at or before the Closing, of the following conditions, any one or more
of which (other than the conditions contained in Section 7.1(c)) may be waived by Seller,
in its sole discretion:




	 	(a)	 	Representations and Warranties of Buyer. The representations and
warranties of Buyer made in Section 4.2 of this Agreement, in each case, shall
be true and correct as of the date of this Agreement and in all material respects as of
the Closing Date as though made by Buyer as of the Closing Date, except to the extent
representations and warranties expressly relate to an earlier date, in which case such
representations and warranties shall be true and correct on and as of such earlier
date.
	 
	 	(b)	 	Performance of the Obligations of Buyer. Buyer shall have performed in
all material respects all obligations required under this Agreement or any Ancillary
Agreement to which it is party which are to be performed by it on or before the Closing
Date (except with respect to the obligation to pay the Total Consideration
in accordance with the terms of this Agreement any obligations qualified by
materiality, which obligations shall be performed in all respects as required under
this Agreement).
	 
	 	(c)	 	Governmental Consents and Approvals. The Orders shall have been entered
and shall not have been stayed.
	 
	 	(d)	 	No Violation of Orders. No preliminary or permanent injunction or other
order of any court or Government that declares this Agreement invalid or unenforceable
in any material respect or which prevents the consummation of the transactions
contemplated hereby shall be in effect.
	 
	 	(e)	 	Closing Deliveries. Buyer shall have made the deliveries contemplated
under Section 3.3.
	 
	 	(f)	 	No Litigation. There shall not be pending or threatened in writing by
any Government any suit, action or proceeding, (i) challenging or seeking to restrain,
prohibit, alter or materially delay the consummation of any of the transactions
contemplated by this Agreement, or (ii) seeking to obtain from Seller or any of its
Affiliates any damages in connection with the transactions contemplated hereby.





     SECTION 7.2 Conditions Precedent to the Performance by Buyer.



     The obligations of Buyer to consummate the transactions contemplated by this Agreement are
subject to the fulfillment, at or before the Closing, of the following conditions, any one or more
of which (other than the conditions contained in Section 7.2(c)) may be waived by Buyer, in
its sole discretion:




30









 







	 	(a)	 	Representations and Warranties of Seller. The representations and
warranties of Seller made in Section 4.1 of this Agreement shall be true and
correct as of the Execution Date and in all material respects as of the Closing Date as
though made by Seller as of the Closing Date, except to the extent such representations
and warranties expressly relate to an earlier date, in which case such representations
and warranties shall be true and correct on and as of such earlier date.
	 
	 	(b)	 	Performance of the Obligations of Seller. Seller shall have performed
in all material respects all obligations required under this Agreement or any Ancillary
Agreement to which Seller is party which are to be performed by Seller on or before the
Closing Date (except with respect to any obligations qualified by materiality, which
obligations shall be performed in all respects as required under this Agreement).
	 
	 	(c)	 	Governmental Consents and Approvals. The Orders shall have been entered
and shall not be subject to stay.
	 
	 	(d)	 	No Violation of Orders. No preliminary or permanent injunction or other
order of any court or Government that declares this Agreement invalid in any material
respect or prevents the consummation of the transactions contemplated hereby shall
be in effect.
	 
	 	(e)	 	No Litigation. There shall not be pending or threatened in writing by
any Government any suit, action or proceeding, (i) challenging or seeking to restrain,
prohibit, alter or materially delay the consummation of any of the transactions
contemplated by this Agreement, (ii) seeking to obtain from Buyer or any of its
Affiliates any damages in connection with the transactions contemplated hereby or (iii)
seeking to prohibit Buyer or any of its Affiliates from effectively controlling or
operating any portion of the Acquired Assets.
	 
	 	(f)	 	Closing Deliveries. Seller shall have made the deliveries contemplated
under Section 3.2.
	 
	 	(g)	 	Name Change. Seller shall have provided Buyer written confirmation
acceptable to Buyer evidencing Seller’s compliance with Section 5.5(a).
	 
	 	(h)	 	Schedules. All schedules to this Agreement that are completed and
annexed to this Agreement after the Execution Date shall be in form and substance
acceptable to Buyer in accordance with Section 5.3(c).
	 
	 	(i)	 	Bankruptcy Sale Order. The Bankruptcy Sale Order shall (i) have been
duly entered in all respects in form, substance and procedure satisfactory to Buyer and
Seller and shall include, in addition to other terms and provisions typical for such
orders, express findings and conclusions to the effect that the sale and all other
terms and provisions of this Agreement and the Bankruptcy Sale Order are fully
authorized under Section 363(f) of the Bankruptcy Code; and that upon Closing the Buyer
shall acquire full title to the assets free and clear of all liens, claims and
encumbrances (except as expressly provided in Section 1.3(h) of this Agreement),





31









 











and
further that the Buyer shall be entitled to the full protection of Section 363(m) of
the Bankruptcy Code and (ii) shall not be subject to any stay.



ARTICLE 8. TERMINATION




     SECTION 8.1 Conditions of Termination.



     This Agreement may be terminated only in accordance with this Section 8.1. This
Agreement may be terminated at any time before the Closing as follows:




	 	(a)	 	By mutual written consent of Seller and Buyer;
	 
	 	(b)	 	By Buyer, by written notice to Seller, on or after October 21, 2005 (the
“Termination Date”), subject, however, to extension by the mutual written consent of
Seller and Buyer, if the Closing shall not have occurred on or prior to the Termination
Date; provided, however, that Buyer shall not have the right to
terminate this Agreement under this Section 8.1(b) if Buyer is then in material
breach of this Agreement;
	 
	 	(c)	 	By Seller, by written notice to Buyer, on or after the Termination Date,
subject, however, to extension by the mutual written consent of Buyer and Seller, if
the Closing shall not have occurred on or prior to the Termination Date;
provided, however, that Seller shall not have the right to terminate
this Agreement under this Section 8.1(c) if Seller is then in material breach
of this Agreement;
	 
	 	(d)	 	By Buyer, by written notice to Seller, if Buyer has previously provided Seller
with notice of any inaccuracy of any representation or warranty of Seller contained in
Section 4.1, which inaccuracy would reasonably be expected to result in,
individually or in the aggregate with the results of other inaccuracies, a Material
Adverse Effect, or notice of a material failure to perform any covenant of Seller
contained in this Agreement or any Ancillary Agreement to which Seller is party, and
Seller has failed, within 10 Business Days after such notice, to remedy such inaccuracy
or perform such covenant or provide reasonably adequate assurance to Buyer of Seller’s
ability to remedy such inaccuracy or perform such covenant; provided,
however, that Buyer shall not have the right to terminate this Agreement under
this Section 8.1(d) if Buyer is then in material breach of this Agreement;
	 
	 	(e)	 	By Seller, by written notice to Buyer, if Seller has previously provided Buyer
with notice of any inaccuracy of any representation or warranty of Buyer contained in
Section 4.2, which inaccuracy would reasonably be expected to result in,
individually or in the aggregate with the results of other inaccuracies, the conditions
set forth in Section 7.1 not being satisfied, or notice of a material failure
to perform any covenant of Buyer contained in this Agreement or any Ancillary Agreement
to which Buyer is party, and Buyer has failed, within 10 Business Days after such
notice, to remedy such inaccuracy or perform such covenant or provide reasonably
adequate assurance to Seller of Buyer’s ability to remedy such inaccuracy or perform
such covenant; provided, however, that Seller




32









 












shall not have the right
to terminate this Agreement under this Section 8.1(e) if Seller is then in
material breach of this Agreement;




	 	(f)	 	By Buyer, by written notice to Seller, if any event, fact or circumstance
identified in Section 7.2(h) shall have occurred; provided,
however, that Buyer shall not have the right to terminate this Agreement under
this Section 8.1(f) if Buyer is then in material breach of this Agreement;
	 
	 	(g)	 	By Buyer, by written notice to Seller, if the Bankruptcy Sale Order, in the
form, substance and procedure satisfactory to Buyer, is not entered by the Bankruptcy
Court on or before October 19, 2005;
	 
	 	(h)	 	By Buyer, by written notice to Seller, if (i) Seller ceases substantially all
of its business operations, or any such cessation is authorized by Seller’s board of
directors, (ii) the Bankruptcy Court enters an order authorizing (A) a cessation of
substantially all of Seller’s business operations or (B) the liquidation of Seller’s
estate or (iii) Seller’s chapter 11 case is converted to a chapter 7 case; or
	 
	 	(i)	 	By either party, if the Bankruptcy Court shall enter an order approving the
sale of the Acquired Assets (or any material portion of the Acquired Assets) to any
Person other than the Buyer.





     SECTION 8.2 Effect of Termination.



     In the event of termination pursuant to Section 8.1, this Agreement shall become null
and void and have no effect (other than Section 5.6 and those provisions of Article 8,
Article 10 and Article 11 that expressly survive termination), with no liability on
the part of Seller or Buyer, or their respective Affiliates or respective Related Persons, with
respect to this Agreement or any Ancillary Agreement; provided, however, that such
termination shall not relieve any party hereto of any liability for willful breach of this
Agreement.



ARTICLE 9. SURVIVAL




     SECTION 9.1 Survival.



     Each of the representations and warranties, covenants and agreements of Seller and Buyer made
in this Agreement shall not survive the Closing Date except where, and only to the extent that, the
terms of any such covenant or agreement expressly provide for obligations extending after the
Closing.



     SECTION 9.2 Specific Performance.



     Each party acknowledges that in case of any breach of their covenants or other obligations,
the other party would suffer immediate and irreparable harm, which money damages would be
inadequate to remedy, and accordingly, in case of any such breach each non-breaching party shall be
entitled to obtain specific performance and other equitable remedies, in addition to other remedies
provided in this Article 9.



33









 





     SECTION 9.3 Covenant Not to Sue.




	 	(a)	 	On the Closing Date, and except as otherwise provided herein or in the Orders,
Seller shall absolutely, unconditionally, and irrevocably release and discharge Buyer
and Parent and each of their respective current and former directors, officers,
employees, agents, managers, financial advisors, attorneys, partners, members, equity
holders, Affiliates and representatives (in their capacity as such and in no other
capacity) from any and all Claims based in whole or in part upon any act, omission,
transaction, event or other occurrence taking place at any time on or before the
Closing Date, with the exception of acts, omissions, transactions, events or
occurrences resulting from or involving the gross negligence, breach of fiduciary
duties, ultra vires acts or fraud of any such Persons, as determined by a final order
of the Bankruptcy Court or other court of competent jurisdiction.
	 
	 	(b)	 	On the Closing Date, and except as otherwise provided herein, Buyer covenants
and agrees not to sue or otherwise bring any action against Seller and each of the
current and former directors, officers, employees, agents, managers, advisors,
attorneys and representatives (in their capacity as such and in no other capacity) of
Seller with respect to any and all Claims based in whole or in part upon any act,
omission, transaction, event or other occurrence taking place at any time on or before
the Closing Date, with the exception of acts, omissions, transactions, events or
occurrences resulting from or involving the gross negligence, breach of fiduciary
duties, ultra vires acts or fraud of any such Persons, as determined by a final order
of the Bankruptcy Court or other court of competent jurisdiction.
	 
	 	(c)	 	On or after the Closing Date, and except as otherwise provided herein, Seller,
at the direction of the Buyer, shall absolutely, unconditionally, and irrevocably
release and discharge those entities who provide goods or services necessary to the
business and operation of the Tom’s Foods business enterprise and with respect to the
Acquired Assets and who agree to provide credit terms to the Buyer on and after the
Closing Date, in each case as determined by the Buyer in its sole discretion, from any
and all Claims, under sections 547, 548 and 550 of the Bankruptcy Code or otherwise,
based in whole or in part upon any act, omission, transaction, event or other
occurrence taking place at any time on or before the Closing Date.
	 
	 	(d)	 	Notwithstanding any other term in this Agreement to the contrary, the waivers,
covenants and agreements contained in this Section 9.3 shall survive the
Closing and shall bind and inure to the benefit of, as the case may be, the Buyer and
its successors and assigns and the Seller and its estate, creditors, successors and
assigns, including, without limitation, any trustee in any case under chapter 7 of the
Bankruptcy Code.





ARTICLE 10. MISCELLANEOUS




     SECTION 10.1 Joint Drafting. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or question of intent or
interpretation



34









 




arises, this Agreement shall be construed as if drafted jointly by the parties and
no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of this Agreement.




     SECTION 10.2 Further Assurances.



     At the request and the sole expense of the requesting party, Buyer or Seller, as applicable,
shall execute and deliver, or cause to be executed and delivered, such documents as Buyer or
Seller, as applicable, or their respective counsel may reasonably request to effectuate the
purposes of this Agreement and the Ancillary Agreements.



     SECTION 10.3 Successors and Assigns.




	 	(a)	 	Buyer shall have the right to assign to an Affiliate (each, an “Assignee”) any
of its rights or obligations (including the right to acquire any of the Acquired
Assets) and may require any such Assignee to pay all or a portion of the Total
Consideration that is described in Section 2.1 and/or to assume all or a
portion of those Assumed Liabilities that are described in Section 1.3 and
relate to the Acquired Assets acquired by the Assignee (“Assignable Liabilities”). In
the event of any assignment pursuant to this Section 10.3(a), Buyer shall not
be relieved of any liability or obligation hereunder; provided that, Buyer
shall, with Seller’s approval, which shall not be unreasonably withheld, be fully
released from such Assignable Liabilities upon their assumption by an Assignee.
	 
	 	(b)	 	Buyer shall have the right to assign this Agreement or any of its rights or
obligations hereunder collaterally to any lender of Buyer; provided,
however, that no such assignment shall relieve Buyer of its obligations to
Seller hereunder.
	 
	 	(c)	 	Seller shall not assign this Agreement or any of its rights or obligations
hereunder. This Agreement shall inure to the benefit of and shall be binding upon the
successors and permitted assigns of the parties hereto, including, without limitation,
any trustee appointed in the Bankruptcy Case or subsequent chapter 7 case and Seller,
if the Bankruptcy Case is dismissed.





     SECTION 10.4 Governing Law; Jurisdiction.



     This Agreement shall be construed, performed and enforced in accordance with, and governed by,
the laws of the State of New York (without giving effect to the principles of conflicts of laws
thereof), except to the extent that the laws of such State are superseded by the Bankruptcy Code or
other applicable federal law. For so long as Seller is subject to the jurisdiction of the
Bankruptcy Court, the parties irrevocably elect, as the sole judicial forum for the adjudication of
any matters arising under or in connection with the Agreement, and consent to the exclusive
jurisdiction of, the Bankruptcy Court. After Seller is no longer subject to the jurisdiction of the
Bankruptcy Court, the parties irrevocably elect, as the sole judicial forum for the adjudication of
any matters arising under or in connection with this Agreement, and consent to the jurisdiction of,
any state or federal court having competent jurisdiction over the Borough of Manhattan, New York,
New York.



35









 





     SECTION 10.5 Expenses.



     Except as otherwise provided in this Agreement, each of the parties shall pay its own expenses
in connection with this Agreement and the transactions contemplated hereby, including, without
limitation, any legal and accounting fees, whether or not the transactions contemplated hereby are
consummated. Buyer shall pay the cost of all surveys, title insurance policies and title reports
ordered by Buyer.



     SECTION 10.6 Broker’s and Finder’s Fees.



     Each of the parties represents and warrants that it has not engaged any broker or finder in
connection with any of the transactions contemplated by this Agreement and, insofar as such party
knows, no broker or other Person is entitled to any commission or finder’s fee in connection with
any of such transactions, except for Buyer’s obligations to Giuliani Capital Advisors.



     SECTION 10.7 Severability.



     In the event that any part of this Agreement is declared by any court or other judicial or
administrative body to be null, void or unenforceable, said provision shall survive to the extent
it is not so declared, and all of the other provisions of this Agreement shall remain in full force
and effect only if, after excluding the portion deemed to be unenforceable, the remaining terms
shall provide for the consummation of the transactions contemplated hereby in substantially the
same manner as originally set forth at the later of (a) the date of this Agreement and (b) the date
this Agreement was last amended.



     SECTION 10.8 Notices.




	 	(a)	 	All notices, requests, demands, consents and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given: (i) on the
date of service, if served personally on the party to whom notice is to be given; (ii)
on the day of transmission, if sent via facsimile transmission to the facsimile number
given below; (iii) on the day after delivery to Federal Express or similar overnight
courier or the Express Mail service maintained by the United States Postal Service
addressed to the party to whom notice is to be given; or (iv) on the fifth day after
mailing, if mailed to the party to whom notice is to be given, by first class mail,
registered or certified, postage prepaid and properly addressed, to the party as
follows:




If to Seller:



Tom’s Foods Inc.

c/o PIRINATE Consulting Group, LLC

5 Canoe Brook Drive

Livingston, New Jersey 07039

Attention: Eugene Davis

Facsimile: (973) 535-1843



36









 







With a copy (which shall not constitute notice) to:



Greenberg Traurig, LLP

The Forum, Suite 400

3290 Northside Parkway

Atlanta, Georgia 30327

Attention: David B. Kurzweil, Esq.

Facsimile: (678) 553-2212


If to Buyer:



Columbus Capital Acquisitions, Inc.

Post Office Box 32368

Charlotte, NC 28232

Attention: David V. Singer

Facsimile: (704) 554-5562


With a copy (which shall not constitute notice) to:



Kennedy Covington Lobdell & Hickman, L.L.P.

Hearst Tower, 47th Floor

214 North Tryon Street

Charlotte, NC 28202

Attention: A. Zachary Smith, III

Facsimile: (704) 353-3174




	 	(b)	 	Any party may change its address or facsimile number for the purpose of this
Section 10.8 by giving the other parties written notice of its new address in
the manner set forth above.





     SECTION 10.9 Amendments; Waivers.



     This Agreement may be amended or modified, and any of the terms, covenants, representations,
warranties or conditions hereof may be waived, only by a written instrument executed by Buyer and
Seller, or in the case of a waiver, by the party waiving compliance. Any waiver by any party of any
condition, or of the breach of any provision, term, covenant, representation or warranty contained
in this Agreement, in any one or more instances, shall not be deemed to be or construed as a
furthering or continuing waiver of any such condition, or of the breach of any other provision,
term, covenant, representation or warranty of this Agreement.



     SECTION 10.10 Public Announcements.



     Neither party shall make any press release or public announcement concerning the transactions
contemplated by this Agreement without first coordinating their communications strategy with the
other party, unless a press release or public announcement is required by law, the rules of any
stock exchange or order of the Bankruptcy Court. If any such announcement or



37









 




other disclosure is
required by law, the rules of any stock exchange or order of the Bankruptcy Court, the form and
content of any such announcing or other disclosure shall be subject to the prior written consent of
the other party, which consent shall not be unreasonably withheld.




     SECTION 10.11 Entire Agreement.



     This Agreement and the Ancillary Agreements contain the entire understanding between the
parties with respect to the transactions contemplated hereby and supersede and replace all prior
and contemporaneous agreements and understandings, oral or written, with regard to such
transactions. All Schedules hereto and any documents and instruments delivered pursuant to any
provision hereof are expressly made a part of this Agreement as fully as though completely set
forth herein.



     SECTION 10.12 No Third Party Beneficiaries.



     Except as set forth in Section 9.3, nothing in this Agreement is intended to or shall
confer any rights or remedies under or by reason of this Agreement on any Persons other than Seller
and Buyer and their respective successors and permitted assigns. Nothing in this Agreement is
intended to or shall relieve or discharge the obligation or liability of any third Persons to
Seller or to Buyer. Except as set forth in Section 9.3, this Agreement is not intended and
shall not give any third Persons any right of subrogation or action over or against Sellers or
against Buyer.



     SECTION 10.13 Headings.



     The article and section headings in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this Agreement.



     SECTION 10.14 Counterparts.



     This Agreement may be executed in counterparts, each of which shall be deemed an original, but
all of which shall constitute the same agreement.



     SECTION 10.15 Construction.



     Any reference to any law shall be deemed also to refer to all rules and regulations
promulgated thereunder, unless the context requires otherwise. The word “including” shall mean
including without limitation. Any reference to the singular in this Agreement shall also include
the plural and vice versa.



ARTICLE 11. DEFINITIONS




     SECTION 11.1 Certain Terms Defined.



     As used in this Agreement, the following terms have the following meanings:



     “Accounts Receivable” has the meaning set forth in Section 1.1(d).



     “Acquired Assets” has the meaning set forth in Section 1.1.



38









 





     “Acquired Contracts” has the meaning set forth in Section 1.1(c).



     “Acquired Intellectual Property” has the meaning set forth in Section 1.1(g).



     “Administrative Creditor Obligations” has the meaning set forth in Section 1.7(a).



     “Administrative Creditor Obligations Limit” has the meaning set forth in Section
1.7(b).



     “Affiliate” means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under direct or indirect common control with such Person.



     “Agent” has the meaning given that term in the Post-Petition Credit Agreement.



     “Agreement” has the meaning set forth in the Preamble.



     “Allocation” has the meaning set forth in Section 6.3.



     “Ancillary Agreement” means any other agreement that the Seller or Buyer, as applicable, may
enter into in connection with the consummation of the transactions contemplated hereby.



     “Assignable Liabilities” has the meaning set forth in Section 10.3(a).



     “Assignee” has the meaning set forth in Section 10.3(a).



     “Assumed Liabilities” has the meaning set forth in Section 1.3.



     “Auction” means the auction described in the Bidding Procedures Order.



     “Avoidance Actions” means all Claims of a Debtor assertable or arising under chapter 5 of the
Bankruptcy Code, including, without limitation, all preference, fraudulent transfer, and other
Claims to avoid a transfer, or under any other applicable law.



     “Bankruptcy Case” has the meaning set forth in Recital A.



     “Bankruptcy Code” has the meaning set forth in Recital A.



     “Bankruptcy Court” has the meaning set forth in Recital A.



     “Bankruptcy Rules” has the meaning set forth in Recital C.



     “Bankruptcy Sale Order” has the meaning set forth in Recital C.



     “Bidding Procedures Order” has the meaning set forth in Recital D.



     “Business Day” means any day other than Saturday, Sunday and any day that is a legal holiday
or a day on which banking institutions in New York City, New York are authorized by law or other
governmental action to close.



39









 





     “Buyer” has the meaning set forth in the Preamble.



     “Carriage Hill” has the meaning set forth in Section 4.1(f).



     “Cash” means all cash and cash equivalents.



     “Cash Purchase Price” has the meaning set forth in Section 2.1.



     “Causes of Action” means all Claims, causes of action, including, without limitation, the
Avoidance Actions, that the Seller or any of its Affiliates may have against any other Person.



     “Claim” means all rights, claims, causes of action, defenses, debts, demands, damages, offset
rights, setoff rights, recoupment rights, obligations, and liabilities of any kind or nature under
contract, at law or in equity, known or unknown, contingent or matured, liquidated or unliquidated,
and all rights and remedies with respect thereto.



     “Closing” has the meaning set forth in Section 3.1.



     “Closing Date” has the meaning set forth in Section 3.1.



     “COBRA” has the meaning set forth in Section 1.3(f).



     “COBRA Records” has the meaning set forth in Section 5.4(f).



     “Code” means the Internal Revenue Code of 1986, as amended.



     “Consents” has the meaning set forth in Section 4.1(g).



     “Contract” means any written contract, agreement, lease or sublease, license or sublicense,
instrument, indenture, commitment or undertaking.



     “CRO” means Eugene Davis or any Person who may succeed Eugene Davis as the Chief Restructuring
Officer of Seller, in accordance with and subject to the terms of the DIP Order and the
Post-Petition Credit Agreement.



     “Cure Costs” means all Pre-Petition Cure Costs and all Post-Petition Cure Costs.



     “Deposit” has the meaning set forth in Section 2.1.



     “DIP Loan Lenders” means the lenders under the Post-Petition Credit Agrement, dated as of May
6, 2005, entered into by Seller and approved by the Bankruptcy Court.



     “DIP Loan Claims” means the secured Claims of the DIP Loan Lenders granted pursuant to the
terms of, and the transactions described in, the DIP Order and Post-Petition Credit Agreement that
remain payable on the Closing Date.



     “DIP Order” means the “Final Order Pursuant to sections 361, 363 and 364 of the Bankruptcy
Code and Rule 4001 of the Federal Rules of Bankruptcy Procedure (I) Authorizing Debtor to Obtain
Post-Petition Financing, Granting Senior Liens and Superpriority





40










 





Administrative Expense Status, Modifying the Automatic Stay, Authorizing Debtor to Enter into
Agreements with Fleet Capital Corporation, as Agent for Certain Lenders, (II) Authorizing Debtor to
Pay in Full Certain Secured Claims of Fleet Capital Corporation, (III) Authorizing Use of Cash
Collateral and (IV) Authorizing Grant of Adequate Protection” entered by the Bankruptcy Court on
May 4, 2005.




     “Employee Benefit Plans” means all employee benefit plans as defined in section 3(3) of ERISA,
all compensation, pay, severance pay, salary continuation, bonus, incentive, stock option,
retirement, pension, profit sharing or deferred compensation plans, Contracts, programs, funds or
arrangements of any kind and all other employee benefit plans, programs, funds or arrangements
(whether written or oral, qualified or nonqualified, funded or unfunded, foreign or domestic,
currently effective or terminated, and whether or not subject to ERISA) and any trust, escrow or
similar agreement related thereto, whether or not funded.



     “Environmental Laws” means all applicable federal, state and local statutes, ordinances,
rules, orders, judgments, junctions, decrees, regulations and other provisions having the force of
law, all judicial and administrative orders and determinations, and all common law concerning
pollution or protection of human health and the environment, including, without limitation, all
those relating to the presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge, release, threatened
release, control or cleanup of any Hazardous Materials.



     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended.



     “ERISA Affiliate” means, with respect to any Person, any trade or business (whether or not
incorporated) (i) under common control within the meaning of section 4001(b)(1) of ERISA with such
Person or (ii) which together with such Person is treated as a single employer under sections
414(b), (c), (m), (n) or (o) of the Code.



     “Estate Action Proceeds Agreement” means the agreement to be entered into by Buyer and Seller
on or prior to the Closing Date pursuant to which the Seller agrees to pursue and bring available
Causes of Action upon the request of Buyer, subject to the terms of this Agreement, and the Buyer
agrees to fund such actions, with the proceeds from any such actions to be delivered to Buyer.



     “Escrow Agent” has the meaning set forth in Section 2.1.



     “Exchange Act” means the Securities Exchange Act of 1934, as amended.



     “Excluded Assets” has the meaning set forth in Section 1.2.



     “Excluded Liabilities” has the meaning set forth in Section 1.4.



     “Execution Date” has the meaning set forth in the Preamble.



     “GAAP” means United States generally acceptable accounting principles as in effect as of the
Execution Date.



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     “Government” means any agency, division, subdivision or governmental or regulatory authority
or any adjudicatory body thereof, of the United States, or any state thereof.



     “Hazardous Materials” means any hazardous or toxic substance or waste or any contaminant or
pollutant regulated or otherwise creating liability under Environmental Laws, including, without
limitation, “hazardous substances” as defined by the Comprehensive Environmental Response
Compensation and Liability Act, as amended, “toxic substance” as defined by the Toxic Substance
Control Act, as amended, “hazardous wastes” as defined by the Resource Conservation and Recovery
Act, as amended, “hazardous materials” as defined by the Hazardous Materials Transportation Act, as
amended, thermal discharges, radioactive substances, PCBs, natural gas, petroleum products or
byproducts and crude oil.



     “Indebtedness” has the meaning given that term in the Post-Petition Credit Agreement.



     “Improvements” means the buildings, improvements and structures of Sellers now existing on the
Real Property or demised under any lease of, or other Contract for the use of, real property, and
any and all fixtures appurtenant thereto.



     “Information Technology” has the meaning set forth in Section 4.1(l).



     “Intellectual Property” means any and all patents and patent applications; trademarks, service
marks, trade names and trade dress rights, together with all goodwill of the business symbolized by
and associated with such marks, names and rights; internet domain names, trade secrets and
copyrights; foreign equivalent or counterpart rights having similar effect in any jurisdictions
throughout the world; extensions, renewals, registrations and applications for registration of any
of the foregoing; and all proceeds of any of the foregoing, including, without limitation, any and
all causes of action which may exist by reason of infringement thereof and any and all damages
arising from past, present and future violations thereof.



     “Inventory” means all the finished goods, raw materials, work in process and inventoriable
supplies owned by Seller on the Closing Date.



     “Leased Real Property” has the meaning set forth in Section 1.1(a).



     “Letters of Credit” has the meaning given that term in the Post-Petition Credit Agreement.



     “Lien” has the meaning given to that term in the Bankruptcy Code.



     “Material Adverse Effect” means a state of facts, event, change or effect with respect to the
Acquired Assets, the Assumed Liabilities or the enforceability of any Acquired Contract(s), that
results in a material adverse effect on the value of the Acquired Assets, taken as a whole, or a
material increase in the amount of the Assumed Liabilities, taken as a whole, but excludes any
state of facts, event, change or effect caused by events, changes or developments relating to (A)
changes or conditions affecting the snack food manufacturing and distributing industry generally;
(B) changes in economic, regulatory or political conditions generally; or (C) any action of Seller
pursuant to any order of the Bankruptcy Court entered prior to the date hereof, including, without
limitation, the transactions contemplated by this Agreement or any of the



42









 







Ancillary Agreements or the announcement thereof. For the avoidance of doubt, the following
facts, events, changes and effects shall constitute a Material Adverse Effect:



     (1) in the event any customer of Seller that purchased more than $1,000,000 in products from
the Seller in 2004 shall seek to terminate its purchase contract or purchasing arrangements with
Seller or shall seek to reduce its product purchases for any month by 10% or more, as compared to
the same month in 2004, or shall advise the Seller that it intends to take any of the actions
described in this clause; and



     (2) in the event that the Seller has less than $19,000,000 in Cash (excluding the $750,000 DIP
escrow reserve and net of the aggregate amount of all checks drawn on the Seller’s accounts that
shall not have cleared), Accounts Receivable and Inventory at the time of the Closing.



     “Motor Vehicles” has the meaning set forth in Section 1.1(h).



     “Non-Executive Employees” has the meaning set forth in Section 5.4(b).



     “Operating Expenses” has the meaning set forth in Section 1.3(a).



     “Orders” means the Bankruptcy Sale Order and the Bidding Procedures Order.



     “Owned Machinery and Equipment” has the meaning set forth in Section 1.1(b).



     “Owned Real Property” has the meaning set forth in Section 1.1(a).



     “Parent” has the meaning set forth in the Preamble.



     “Permits” has the meaning set forth in Section 1.1(j).



     “Permitted Liens” mean: (a) Liens for Taxes, assessments and Government or other similar
charges that are not yet due and payable, (b) easements, licenses, unrecorded real estate
agreements, restrictions and other matters of record which either (i) the title company has agreed
to affirmatively insure against loss caused thereby in the applicable title policy, by way of ALTA
coverage or other affirmative cover, reasonably acceptable to Buyer, or (ii) do not materially and
adversely affect the operation of the Real Property in question as currently and previously used in
the operation of the Seller’s business, (c) any state of facts a survey or other visual inspection
would show that do not materially and adversely affect the operation of the Real Property in
question as currently and previously used in the operation of Seller’s business, and (d) Liens
arising from the Assumed Liabilities.



     “Person” means any individual, corporation, partnership, limited liability company, joint
venture, association, joint-stock company, trust, unincorporated organization or Government.



     “Petition Date” has the meaning set forth in Recital A.



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     “Post-Petition Credit Agreement” means the Post-Petition Credit Agreement, dated as of May 6,
2005, entered into by Seller and the DIP Loan Lenders and approved by the Bankruptcy Court.



     “Post-Petition Cure Costs” means all post-petition costs and expenses required by the
Bankruptcy Court to cure all monetary defaults under the Acquired Contracts so that they may be
assigned to Buyer pursuant to section 365 of the Bankruptcy Code.



     “Pre-Petition Cure Costs” means all pre-petition costs and expenses required by the Bankruptcy
Court to cure all monetary defaults under the Acquired Contracts so that they may be assigned to
Buyer pursuant to section 365 of the Bankruptcy Code.



     “Real Property” has the meaning set forth in Section 1.1(a).



     “Related Person” means, with respect to any Person, all past, present and future directors,
officers, members, managers, stockholders, employees, controlling persons, agents, professionals,
attorneys, accountants, lenders, investment bankers or representatives of any such Person.



     “Required Seller Financial Statements” has the meaning set forth in Section 5.3(e).



     “Securities Act” means the Securities Act of 1933, as amended.



     “SEC” means the Securities and Exchange Commission.



     “Seller” has the meaning set forth in the Preamble.



     “Seller Benefit Plans” has the meaning set forth in Section 1.2(c).



     “Seller Controlled Group” has the meaning set forth in Section 1.2(c).



     “Seller Professional Carve-Out Guaranty” has the meaning set forth in Section 1.7(d).



     “Supplies” means all supplies, items and materials (including spare parts) owned by Seller on
the Closing Date.



     “Tax Return” means any report, return, information return, filing or other information,
including any schedules, exhibits or attachments thereto, and any amendments to any of the
foregoing required to be filed or maintained in connection with the calculation, determination,
assessment or collection of any Taxes (including estimated Taxes).



     “Taxes” means all taxes, however denominated, including any interest, penalties or additions
to tax that may become payable in respect thereof, imposed by any Government, whether payable by
reason of contract, assumption, transferee liability, operation of law or Treasury Regulation
section 1.1502-6(a) (or any predecessor or successor thereof or any analogous or similar provision
under state, local or foreign law), which taxes shall include all income taxes, payroll and
employee withholding, unemployment insurance, social security (or similar), sales and use, excise,
franchise, gross receipts, occupation, real and personal property,



44









 







stamp, transfer, workmen’s compensation, customs duties, registration, documentary, value
added, alternative or add-on minimum, estimated, environmental (including taxes under section 59A
of the Code) and other assessments or obligations of the same or a similar nature, whether arising
before, on or after the Closing Date.



     “Technology” means any and all inventions, discoveries, ideas, processes, formulae, designs,
models, industrial designs, know-how, confidential information and proprietary information, whether
or not patented or patentable, writings and other copyrightable works and works in progress,
databases and software.



     “Termination Date” has the meaning set forth in Section 8.1(b).



     “Title Company” means First American Title Insurance Company or such other title insurance
company reasonably acceptable to Buyer.



     “Tom’s Foods Name” means any name including the words “Toms Foods” and any other tradenames,
trademarks or servicemarks owned by Seller or licensed to Seller.



     “Total Consideration” has the meaning set forth in Section 2.1.



     “Transaction Taxes” has the meaning set forth in Section 6.1.



     “UCC” has the meaning set forth in Section 5.6.



     “WARN Act” has the meaning set forth in Section 1.3(g).



[Signatures on following page.]




45









 








     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their
respective officers thereunto duly authorized as of the date first above written.



	 	 	 	 	 
	 	BUYER:



COLUMBUS CAPITAL ACQUISTIONS, INC.

 	 
	 	By:  	/s/ David V. Singer
 	 
	 	 	David V. Singer 	 
	 	 	President 	 
	 
	 	SELLER:



TOM’S FOODS INC.

 	 
	 	By:  	/s/ Eugene I. Davis
 	 
	 	 	Name:  	Eugene I. Davis 	 
	 	 	Title:  	CRO 	 
	 
	 	FOR PURPOSES OF SECTION 5.7:



PARENT:



LANCE, INC..

 	 
	 	By:  	/s/ David V. Singer
 	 
	 	 	David V. Singer 	 
	 	 	President and Chief Executive Officer