Exhibit 10.1
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STOCK PURCHASE AGREEMENT
by and among
XXXXX XXXXXXXX CORPORATION,
XXXXX XXXXXXXX (EASTERN HEMISPHERE) LIMITED
and
TH EUROPE HOLDINGS LIMITED
dated as of June 29, 2001
ARTICLE I
Certain Definitions...........................................................1
ARTICLE II
Purchase and Sale Stock; Closing..............................................5
Section 2.1 Purchase and Sale......................................5
Section 2.2. Time and Place of Closing..............................6
ARTICLE III
Representations and Warranties of Seller......................................6
Section 3.1 Incorporation; Authorization; etc.........................6
Section 3.2. Capitalization; Structure.................................8
Section 3.3. Financial Statements......................................8
Section 3.4. Properties; Leases........................................8
Section 3.5. Absence of Certain Changes................................9
Section 3.6. Litigation; Orders........................................9
Section 3.7. Licenses, Approvals, Other Authorizations,
Consents, Reports, etc....................................9
Section 3.8. Labor Matters............................................10
Section 3.9. Compliance with Laws.....................................10
Section 3.10. Insurance................................................10
Section 3.11. Material Contracts.......................................10
Section 3.12. Brokers, Finders, etc....................................11
Section 3.13. Affiliate Transactions...................................11
Section 3.14. Environmental Compliance.................................12
Section 3.15. Netherlands Antilles and Netherlands
Tax Matters..............................................13
Section 3.16. No Undisclosed Liabilities...............................13
ARTICLE IV
Representations and Warranties of THEH.......................................14
Section 4.1. Incorporation; Authorization; etc........................14
Section 4.2. Other Authorizations, Consents, Reports, etc.............15
Section 4.3. Brokers, Finders, etc.............. .....................15
Section 4.4. Acquisition of Shares for Investment.....................15
ARTICLE V
Covenants of Seller, Parent and THEH.........................................16
Section 5.1. Investigation of Business; Access to Properties
and Records..............................................16
Section 5.2. Efforts; Obtaining Consents..............................16
Section 5.3 Further Assurances.......................................17
Section 5.4. Conduct of Business by Seller............................17
Section 5.5. Preservation of Business.................................19
Section 5.6. Non-Solicitation.........................................19
Section 5.7. Notice of Developments...................................19
Section 5.8. Guarantees and Other Commitments.........................19
Section 5.9. Financial Statements.....................................20
Section 5.10. Financing................................................20
Section 5.11. Resignation of Directors.................................20
Section 5.12. Intercompany Accounts; Indebtedness......................20
ARTICLE VI
Employee Benefits............................................................20
Section 6.1 Employee Benefit Plans....................................20
Section 6.2. Company Employee Benefit Plans............................21
Section 6.3. Administration............................................22
ARTICLE VII
Tax Matters..................................................................22
Section 7.1. Tax Returns of the Company and
the Subsidiaries.........................................22
Section 7.2. Allocation of Certain Taxes..............................23
Section 7.3. Filing Responsibility....................................24
Section 7.4. Refunds and Carrybacks...................................25
Section 7.5. Cooperation and Exchange of Information..................25
Section 7.6. Tax Indemnification by Seller............................26
Section 7.7. Transfer Taxes...........................................26
Section 7.8. Definitions..............................................26
ARTICLE VIII
Conditions to THEH's Obligation to Close.....................................27
Section 8.1. Representations, Warranties and Covenants
of Seller................................................27
Section 8.2. No Orders or Injunctions.................................27
Section 8.3. Opinions of Seller's Counsel.............................27
Section 8.4. Non-Competition Agreement; Consents......................27
Section 8.5. Tax Matters..............................................27
ARTICLE IX
Conditions to Seller's Obligation to Close...................................28
Section 9.1. Representations, Warranties and
Covenants of Parent......................................28
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Section 9.2. No Orders or Injunctions.................................28
ARTICLE X
Survival; Indemnification....................................................28
Section 10.1. Survival.................................................28
Section 10.2 Indemnification by Seller................................29
Section 10.3. Indemnification Procedures...............................29
Section 10.4. Limits on Indemnification................................30
Section 10.5. Losses Net of Insurance..................................31
Section 10.6. Adjustment to Purchase...................................31
ARTICLE XI
Termination..................................................................31
Section 11.1 Termination..............................................31
Section 11.2. Procedure and Effect of Termination......................31
ARTICLE XII
Miscellaneous................................................................32
Section 12.1 Counterparts.............................................32
Section 12.2 Governing Law............................................32
Section 12.3. Jurisdiction; Waiver of Trial by Jury....................32
Section 12.4. Entire Agreement.........................................32
Section 12.5. Expenses.................................................32
Section 12.6. Notices..................................................32
Section 12.7. Successors and Assigns...................................33
Section 12.8 Headings; Definitions....................................34
Section 12.9 Amendments and Waivers...................................34
Section 12.10.Severability.............................................34
Section 12.11 Interpretation...........................................34
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Schedule 1 Individuals With Knowledge
Schedule 3.1(a) Jurisdictions in Which the Company and the
Subsidiaries are Qualified to Do Business
Schedule 3.1(d) Violations and Accelerations
Schedule 3.2(a) Stock Information
Schedule 3.3 Applicable Accounting Principles
Schedule 3.4 Real Property and Leases
Schedule 3.5 Absence of Certain Changes
Schedule 3.6 Litigation
Schedule 3.7(b) Required Licenses
Schedule 3.8 Labor Agreements, Disputes
Schedule 3.9 Compliance With Law
Schedule 3.10 Insurance Policies
Schedule 3.11 Material Contracts
Schedule 3.13 Affiliate Transactions
Schedule 3.14 Environmental Compliance
Schedule 3.16 Undisclosed Liabilities
Schedule 4.2 Authorizations and Consents
Schedule 5.4 Conduct of Business by Seller
Schedule 6.1(a) Company Employee Benefit Plans
Schedule 6.1(c) Payments Caused by this Agreement
Schedule 7.1(a) Income Tax Returns
Schedule 7.1(b) Contested Taxes; Reserves
Schedule 7.1(c) Tax Extensions and Powers of Attorneys
Schedule 7.1(d) Company Affiliated Group
Schedule 7.1(e) Audits
Exhibit A Form of AIHL-TH Guarantee
Exhibit B-1 Form of Waiver by Xxxxxx X. Xxxxxxxx
Exhibit B-2 Form of Waiver by Xxxx X. Xxxxxxxx
Exhibit C-1 Form of Non-Competition Agreement with Silas
X.X. Xxxx and Xxxxxxxx X. Stroll
Exhibit C-2 Form of Non-Competition Agreement with Xxxx
Xxxxxxx
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "AGREEMENT"), dated as of June 29,
2001, is by and among Xxxxx Xxxxxxxx Corporation, a British Virgin Islands
corporation ("PARENT"), Xxxxx Xxxxxxxx (Eastern Hemisphere) Limited, a British
Virgin Islands corporation and a wholly owned subsidiary of Parent ("THEH"), and
TH Europe Holdings Limited, a British Virgin Islands corporation ("SELLER").
WHEREAS, Seller owns 100% of the issued and outstanding shares of
capital stock of T.H. International N.V., a corporation organized under the laws
of the Netherlands Antilles (the "COMPANY"); and
WHEREAS, THEH desires to purchase from Seller, and Seller desires to
sell to THEH, 100% of the issued and outstanding shares of capital stock of the
Company, upon the terms and subject to the conditions set forth herein (the
"STOCK PURCHASE"); and
WHEREAS, AIHL-TH Limited, a British Virgin Islands corporation
("AIHL"), has entered into a Guarantee in the form attached as EXHIBIT A hereto,
dated of even date herewith, pursuant to which AIHL has guaranteed all of the
obligations of Seller under this Agreement; and
WHEREAS, in connection with the execution and delivery of this
Agreement, TH Europe (as defined below) has at the request of Parent entered
into an employment agreement with each of Xxxx Xxxxxxx and Ludo Onnink, such
agreements to be effective as of the closing of the Stock Purchase hereunder
(the "EMPLOYMENT AGREEMENTS"); and
WHEREAS, in connection with the execution and delivery of this
Agreement, Xxxxx Xxxxxxxx U.S.A., Inc., a wholly owned subsidiary of Parent, has
received a waiver from Xxxxxx X. Xxxxxxxx in the form attached as EXHIBIT B-1
hereto and a waiver from Xxxx X. Xxxxxxxx in the form attached as EXHIBIT B-2
hereto with respect to certain compensation matters under their respective
employment agreements, such waivers to be effective as of the closing of the
Stock Purchase hereunder; and
WHEREAS, in connection with the execution and delivery of this
Agreement, (a) Silas X.X. Xxxx and Xxxxxxxx X. Stroll have entered into a
Non-Competition Agreement with Parent in the form attached as EXHIBIT C-1 hereto
and (b) Xxxx Xxxxxxx has entered into a Non-Competition Agreement with Parent in
the form attached as EXHIBIT C-2 hereto.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement the following terms shall have the following
respective meanings:
"ACTION" shall mean any complaint, claim, prosecution, indictment,
action, suit, arbitration, investigation, inquiry or proceeding by or before any
Governmental Authority.
"AFFILIATE" shall mean any Person that directly, or indirectly through
one or more intermediaries, controls or is controlled by or is under common
control with the party specified.
"AGREEMENT" shall have the meaning set forth in the preamble hereof.
"AIHL" shall have the meaning set forth in the recitals hereof.
"APPLICABLE RETURN" shall have the meaning set forth in Section
10.1(a) hereof.
"CLOSING" shall mean the consummation of the transactions contemplated
by Section 2.1 of this Agreement.
"CLOSING DATE" shall have the meaning set forth in Section 2.2 hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
any successor thereto.
"COMPANY" shall have the meaning set forth in the recitals hereof.
"COMPANY BALANCE SHEET" shall mean the audited consolidated balance
sheet of the Company and its consolidated subsidiaries as of March 31, 2001,
included in the Financial Statements.
"COMPANY EMPLOYEE BENEFIT PLANS" shall have the meaning set forth in
Section 6.1(a) hereof.
"COMPANY MATERIAL ADVERSE EFFECT" shall have the meaning set forth in
Section 3.5 hereof.
"CONTINUING AFFILIATE" shall mean Seller, AIHL or any of their
respective corporate Affiliates (other than (i) the Company and the Subsidiaries
and (ii) Parent and its subsidiaries).
"COVERED LOSSES" shall mean any and all debts, losses, liabilities,
claims, fines, royalties, deficiencies, damages, obligations, payments
(including, without limitation, those arising out of any demand, assessment,
settlement, judgment or compromise relating to any Action), costs and expenses
(including, without limitation, interest and penalties due and payable with
respect thereto and reasonable attorneys' and accountants' fees and any other
out-of-pocket expenses incurred in investigating, preparing, defending, avoiding
or settling any Action or in enforcing another party's obligations hereunder),
including, without limitation, any of the foregoing arising under, out of or in
connection with any Action, order or consent decree of any Governmental
Authority or award of any arbitrator of any kind, or any law, rule, regulation,
contract, commitment or undertaking.
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"DETERMINATION" shall have the meaning set forth in Section 7.8(a)
hereof.
"EMPLOYMENT AGREEMENTS" shall have the meaning set forth in the
recitals hereof.
"ENCUMBRANCE" shall mean any mortgage, pledge, lien, easement,
restrictive covenant, right of way, lease, purchase agreement, option, security
interest or other encumbrance.
"ENVIRONMENTAL LAW" shall have the meaning set forth in Section
3.14(a)(ii) hereof.
"EUROPEAN LICENSE" shall have the meaning set forth in Section 5.8
hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXPIRATION DATE" shall have the meaning set forth in Section 10.1(a)
hereof.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section 3.3
hereof.
"FORTIS COMFORT LETTER" shall have the meaning set forth in Section
5.8 hereof.
"GAAP" shall mean United States generally accepted accounting
principles.
"GOVERNMENTAL AUTHORITY" shall have the meaning set forth in Section
3.1(d) hereof.
"HAZARDOUS SUBSTANCE" shall have the meaning set forth in Section
3.14(a)(i) hereof.
"INCOME TAX RETURNS" shall have the meaning set forth in Section
7.8(b) hereof.
"INCOME TAXES" shall have the meaning set forth in Section 7.8(c)
hereof.
"INDEMNIFICATION THRESHOLD" shall have the meaning set forth in
Section 10.4 hereof.
"INDEMNIFIED PARTIES" shall have the meaning set forth in Section
10.2(a) hereof.
"INDIVIDUAL AFFILIATE" shall mean any of Silas X.X. Xxxx, Xxxxxxxx X.
Stroll, Xxxxxx X. Xxxxxxxx, Xxxx X. Xxxxxxxx and Xxxx Xxxxxxx.
"INTELLECTUAL PROPERTY" means all United States and foreign (a)
patents, patent applications, patent disclosures and improvements thereto, (b)
trademarks, service marks, logos, trade names and corporate names and
registrations and applications for registration thereof, including, but not
limited to, all marks registered in the United States Patent and Trademark
Office, (c) copyrights and registrations and applications for registration
thereof, (d) computer software, data and documentation, (e) trade secrets and
confidential business information (including ideas, formulas, compositions,
inventions (whether patentable or unpatentable and
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whether or not reduced to practice), know-how, manufacturing and production
processes and techniques, research and development information, drawings,
specifications, designs, plans, proposals, technical data, copyrightable works,
financial, marketing and business data, pricing and cost information, business
and marketing plans and customer and supplier lists and information) and (f)
copies and tangible embodiments thereof (in whatever form or medium) in which
the Company or any Subsidiary has any rights.
"IRS" shall have the meaning set forth in Section 7.8(d) hereof.
"LICENSES" shall have the meaning set forth in Section 3.7(a) hereof.
"NET AFTER-TAX BASIS" shall mean, with respect to the calculation of
any indemnification payment owed to any party pursuant to this Agreement,
calculation thereof in a manner taking into account any Taxes owing by the
indemnified party or its Affiliates as a result of receipt or accrual of the
indemnity payment and any Tax benefit received or accrued by the indemnified
party or its Affiliates as a result of the indemnified liability.
"NOTICE OF CLAIM" shall have the meaning set forth in Section 10.3(a)
hereof.
"PARENT" shall have the meaning set forth in the preamble hereof.
"PERMITTED EXCEPTIONS" shall mean (a) mechanics', materialmen's,
carriers', workmen's, warehousemen's, repairmen's, landlords' or similar liens
imposed by law arising and incurred in the ordinary course of business and
securing obligations that are not delinquent, (b) liens for taxes and other
governmental charges, assessments or fees which (i) are not yet due and payable
or which may be paid without penalty or (ii) are being contested in good faith
through appropriate procedures and in respect of which the Company or a
Subsidiary has created adequate reserves or (c) Encumbrances which individually
or in the aggregate do not detract from the value of any of the property or
assets subject thereto or interfere with the present use thereof.
"PERSON" shall mean any individual, firm, corporation, partnership or
other entity (including Governmental Authorities), and shall include any
successor (by merger or otherwise) of such entity.
"PRICEWATERHOUSECOOPERS" shall mean PricewaterhouseCoopers LLP or one
of its international affiliates.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.1
hereof.
"RCRA HAZARDOUS WASTE" shall have the meaning set forth in Section
3.14(a)(iii) hereof.
"REAL PROPERTY" shall have the meaning set forth in Section 3.4
hereof.
"RETAINED LIABILITIES" shall have the meaning set forth in Section
10.2(a) hereof.
"RETURNS" shall have the meaning set forth in Section 7.8(e) hereof.
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"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLER" shall have the meaning set forth in the preamble hereof.
"SELLER AFFILIATE" shall mean any of the Company, a Subsidiary or a
Continuing Affiliate.
"SELLER'S KNOWLEDGE" or "KNOWLEDGE OF SELLER" shall mean the knowledge
of those individuals set forth on SCHEDULE 1, after due inquiry by such
individuals of the respective officers and directors of the Company and TH
Europe.
"SHARES" shall mean the shares of one United States dollar (US$1) each
of the Company.
"STOCK PURCHASE" shall have the meaning set forth in the recitals
hereof.
"SUBSIDIARIES" shall mean TH Europe, TH UK Ltd, a corporation
organized under the laws of the United Kingdom, TH Deutschland GmbH, a German
corporation, TH Italia SRL, an Italian corporation, Hilfiger Stores BV, a
Netherlands corporation, Hilfiger Stores Ltd. (to be renamed Tommy Stores Ltd.),
a corporation organized under the laws of the United Kingdom, Pepe Jeans Retail
Ltd. (to be renamed Hilfiger Stores Ltd.), a corporation organized under the
laws of the United Kingdom, Pepe Jeans France SAS (to be renamed Hilfiger Stores
SAS), a French corporation, TH Belgium NV, a Belgian corporation, TH France SAS,
a French corporation, and any direct or indirect subsidiary of the Company
formed after the date of this Agreement.
"TAX AUDIT" shall have the meaning set forth in Section 7.5(d) hereof.
"TAX LAWS" shall have the meaning set forth in Section 7.8(f) hereof.
"TAXES" shall have the meaning set forth in Section 7.8(g) hereof.
"TAXING AUTHORITY" shall have the meaning set forth in Section 7.8(h)
hereof.
"TH EUROPE" shall mean Xxxxx Xxxxxxxx Europe B.V., a company
incorporated under the laws of the Netherlands.
"THEH" shall have the meaning set forth in the preamble hereof.
"$" shall mean United States Dollars.
ARTICLE II
PURCHASE AND SALE OF STOCK; CLOSING
Section 2.1. PURCHASE AND SALE. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or waiver
(to the extent permitted) of the conditions set forth in Articles VIII and IX,
at the Closing Seller will sell and THEH will
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purchase six thousand (6,000) Shares, which constitute, and will constitute as
of the Closing, 100% of the issued and outstanding shares of capital stock or
other equity interests of the Company. In payment for such Shares,
simultaneously with the delivery by Seller of certificates for such Shares, with
all appropriate stock powers and requisite tax stamps attached, properly signed,
in form suitable for the transfer of such Shares to THEH, and subject to the
satisfaction or waiver (to the extent permitted) of the applicable conditions
set forth herein, THEH will deliver to Seller $200,000,000 (the "PURCHASE
PRICE") by wire transfer of immediately available funds to the account or
accounts specified by Seller.
Section 2.2. TIME AND PLACE OF CLOSING. Subject to satisfaction or
waiver of the conditions to Closing set forth herein, the Closing shall take
place at the offices of Wachtell, Lipton, Xxxxx & Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, at 9:00 a.m., New York City time, on July 6, 2001 or at such
other time and date as THEH and Seller may agree (the "CLOSING DATE").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to THEH and Parent as follows:
Section 3.1. INCORPORATION; AUTHORIZATION; ETC. (a) Each of the
Company and the Subsidiaries has been duly organized and is validly existing and
in good standing (to the extent such term is applicable) under the laws of the
jurisdiction of its incorporation. Each of the Company and the Subsidiaries has
full corporate power and authority to own its properties and assets and to
conduct its business as it is now being conducted and is in good standing (to
the extent such term is applicable) and is duly qualified to transact business
in each jurisdiction in which the nature of property owned or leased by it or
the conduct of its business requires it to be so qualified, except where the
failure to be in good standing or so qualified would not have a material adverse
effect on the Company and the Subsidiaries, taken as a whole. Each jurisdiction
in which the Company or any Subsidiary is qualified to do business is set forth
on Schedule 3.1(a).
(b) Seller has been duly organized, is validly existing and is in good
standing under the laws of the British Virgin Islands.
(c) Seller has full corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby. The execution and delivery of this
Agreement by Seller, the performance of Seller's obligations hereunder and the
consummation by Seller of the transactions contemplated hereby have been duly
and validly authorized by all necessary corporate proceedings on the part of
Seller, and no other corporate proceeding or action on the part of Seller or its
Board of Directors and stockholders is necessary therefor.
(d) The execution, delivery and performance of this Agreement by
Seller will not (i) violate or conflict with any provision of the memorandum of
association or articles of association (or similar instruments) of any of
Seller, the Company or any Subsidiary, (ii) except
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as set forth on Schedule 3.1(d), conflict with, violate or constitute a default
under any provision of, or be an event that is (or with the giving of notice or
passage of time or both will result in) a violation of or default under, or
result in the acceleration of or entitle any party to accelerate (whether after
the giving of notice or lapse of time or both) any obligation or right under, or
result in the imposition of any lien upon or the creation of a security interest
in any of the Shares or any of the assets or properties of the Company or any of
the Subsidiaries pursuant to, or require a consent or create a penalty or
increase the Company's or any Subsidiary's payment or performance obligations
under, any material mortgage, lien, lease, instrument, order, arbitration award,
judgment or decree, or any material contract, agreement, license or permit, to
which Seller, the Company or any Subsidiary is a party or by which any of them
or any of their property is bound, or (iii) assuming that all consents,
approvals, authorizations and other actions described in Section 3.7(b) have
been obtained and all filings and obligations set forth in Section 3.7(b) have
been made, violate or conflict with in any material respect, or result in the
imposition of any material lien (other than liens arising from any actions taken
or arrangements made by Parent or any of its subsidiaries) upon any of the
Shares, or any of the assets or properties of the Company or any Subsidiary
pursuant to, any provision of law, regulation, rule, writ, injunction, decree,
statute, order, judgment or ruling of any federal, state, local, foreign,
supernational or supranational court or tribunal (including any court or
tribunal dealing with labor matters), governmental, regulatory or administrative
agency, department, bureau, authority or commission or arbitral panel
("GOVERNMENTAL AUTHORITY") or any other material restriction of any kind or
character to which Seller, the Company or any Subsidiary is or may be subject or
by which any of them or any of their property is or may be bound. This Agreement
has been duly executed and delivered by Seller and, assuming the due execution
hereof by Parent and THEH, this Agreement constitutes the legal, valid and
binding obligations of Seller enforceable against Seller in accordance with its
terms except as such enforceability may be limited by any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally, and except as the availability of equitable
remedies may be limited by the application of general principles of equity
(regardless of whether such equitable principles are applied in a proceeding at
law or in equity).
(e) Upon consummation of the Stock Purchase at the Closing, as
contemplated by this Agreement, Seller will deliver to THEH good and valid title
to all of the outstanding Shares free and clear of any liens, claims, charges,
security interests, options or other legal or equitable encumbrances or other
rights of third parties (except those imposed by the United States federal
securities laws or any action taken or arrangement made by Parent or any of its
subsidiaries).
(f) Seller has made available to THEH complete and correct copies of
the memorandum of association and articles of association (or similar
instruments), as amended to date, of Seller, the Company and each of the
Subsidiaries, and has made available to THEH the corporate minute books
containing the records of meetings of the stockholders and boards of directors,
the stock certificate books and the stock record books of the Company and the
Subsidiaries. The stock record books of the Company and the Subsidiaries which
Seller has made available to THEH are complete and correct in all respects and
accurately reflect the ownership of all of the outstanding shares of the
Company's and the Subsidiaries' respective capital stock and all other
securities issued by the Company or any of the Subsidiaries. All material
corporate actions taken by the Company and the Subsidiaries since their
respective
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organization and incorporation have been duly authorized and subsequently
ratified as necessary. Neither the Company nor any of the Subsidiaries is in
default under or in violation of any provision of its articles of incorporation,
bylaws or similar instruments.
Section 3.2. CAPITALIZATION; STRUCTURE. (a) The authorized capital
stock of the Company consists of 30,000 Shares, of which 6,000 Shares are issued
and outstanding. All of the outstanding shares of capital stock of the Company
are validly issued, fully paid and nonassessable and are owned beneficially and
of record by Seller. All of the outstanding shares of capital stock or other
equity interests of the Subsidiaries, as listed on Schedule 3.2(a), are validly
issued, fully paid and nonassessable. Except as set forth on Schedule 3.2(a),
all of the outstanding shares of capital stock or other equity interests of the
Subsidiaries are owned by the Company or another Subsidiary in the amounts set
forth on Schedule 3.2(a). None of the outstanding Shares nor any of the shares
of outstanding capital stock or other equity interests of any Subsidiary have
been issued in violation of, or are subject to, any preemptive rights. Except as
provided in the European License, the shares of capital stock or other equity
interests of the Subsidiaries and the outstanding Shares are owned in each case
free and clear of any liens, claims, charges, security interests, options or
other legal or equitable encumbrances or restrictions. Except as provided in the
European License, there are no outstanding options, warrants, subscriptions or
other rights of any kind to acquire, or obligations to issue, shares of capital
stock of any class of, or other equity interests in, the Company or any
Subsidiary, or any securities convertible into or exchangeable or exercisable
for any shares of capital stock of any class of, or other equity interests in,
the Company or any Subsidiary.
(b) Neither the Company nor any of the Subsidiaries directly or
indirectly owns or has the right to acquire any capital stock of or other equity
interests, investment, partnership, joint venture or similar interest in any
corporation, partnership or other entity or other Person except for the
ownership of the outstanding shares or other equity interests of the
Subsidiaries, as set forth on Schedule 3.2(a).
Section 3.3. FINANCIAL STATEMENTS. Seller has previously furnished to
THEH true and complete copies of the consolidated financial statements of the
Company and its consolidated subsidiaries for the fiscal years ended March 31
for each of 2001, 2000 and 1999 (such financial statements for the Company for
2001 and for TH Europe for 2001, 2000 and 1999 being audited and accompanied by
the unqualified opinion of PricewaterhouseCoopers) (the "FINANCIAL STATEMENTS").
Except as set forth on Schedule 3.3, the Financial Statements (including the
notes thereto) present fairly in all material respects the consolidated
financial position and results of operations and cash flows of the Company and
its consolidated subsidiaries for the respective periods or as of the respective
dates set forth therein, in each case in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as otherwise indicated
therein). The Financial Statements have been prepared from and in accordance
with the books and records of the Company and its subsidiaries.
Section 3.4. PROPERTIES; LEASES. Except for Permitted Exceptions or as
set forth on Schedule 3.4 hereto, at the Closing the Company or a Subsidiary
will have good and marketable title to, or valid leasehold interests in, as the
case may be, and hold free and clear of all Encumbrances, all of the properties
and assets reflected in the Company Balance Sheet or acquired in the ordinary
course of business since the date of the Company Balance Sheet other
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than assets sold or fixtures transferred in the ordinary course of business
consistent with past practice since such date. Schedule 3.4 sets forth a list of
all real property used in conducting the businesses of the Company and the
Subsidiaries (collectively, the "REAL PROPERTY"). Seller has delivered to THEH
or otherwise made available, correct and complete copies of all leases,
subleases and other material agreements or other material instruments relating
to the Real Property to which the Company or any of the Subsidiaries is a party,
all of which are identified on Schedule 3.4 hereto. There are no pending or, to
Seller's knowledge, threatened condemnation proceedings relating to any of the
Real Property. Except as set forth on Schedule 3.13.B.1., none of the real
property improvements (including leasehold improvements), equipment and other
assets owned or used by the Company or the Subsidiaries is subject to any
commitment or other arrangement for their sale or use by any Affiliate of the
Company or any of the Subsidiaries or by third parties.
Section 3.5. ABSENCE OF CERTAIN CHANGES. Except as set forth on
Schedule 3.5 hereto and except as contemplated by this Agreement, since March
31, 2001, there has been no (a) change or development in, or effect on, the
Company and the Subsidiaries that is, or could reasonably be expected to be,
materially adverse to the business, assets, liabilities, condition (financial or
otherwise), results of operations or prospects of the Company and the
Subsidiaries, taken as a whole (a "COMPANY MATERIAL ADVERSE EFFECT"), or (b)
action taken by the Company or any Subsidiary which, if taken from the date
hereof through the Closing, would violate Section 5.4(a) through (l) (assuming
that references to "the date of this Agreement" in clause (ii) of Section 5.4(c)
were deemed to be changed to "March 31, 2001").
Section 3.6. LITIGATION; ORDERS. Except as set forth on Schedule 3.6
hereto, there are no Actions pending or, to the knowledge of Seller, threatened
or claims asserted against the Company or any Subsidiary other than routine
Actions in the ordinary course of business as to which the claims against the
Company and the Subsidiaries are less than $25,000 individually and $75,000 in
the aggregate. Except as set forth on Schedule 3.6 hereto, there are no material
judgments or material outstanding orders, injunctions, decrees, stipulations,
settlement agreements, citations, investigations, fines or awards against or
binding upon the Company or any Subsidiary or any of their respective properties
or businesses.
Section 3.7. LICENSES, APPROVALS, OTHER AUTHORIZATIONS, CONSENTS,
REPORTS, ETC. (a) The Company and the Subsidiaries possess or have been granted
all material registrations, filings, applications, certifications, notices,
consents, licenses, permits, approvals, certificates, franchises, orders,
qualifications, authorizations and waivers ("LICENSES") of any Governmental
Authority necessary to entitle them to conduct their businesses in the manner in
which they are presently being conducted.
(b) Except (i) as set forth on Schedule 3.7(b) hereto, (ii) required
notices to the Committee for Merger Affairs in the Netherlands pursuant to
Article 21.1 of the Merger Code and (iii) those the failure to make, file, give
or obtain which would not have a Company Material Adverse Effect or prevent the
consummation of the Stock Purchase and the other transactions contemplated
hereby, there are no Licenses required to be made, filed, given or obtained by
Seller, the Company or any of the Subsidiaries with, to or from any Governmental
Authority in connection with the consummation of the Stock Purchase and the
other transactions contemplated under this Agreement.
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Section 3.8. LABOR MATTERS. Schedule 3.8 hereto sets forth all
collective bargaining or other agreements with labor unions, trade unions,
employee representatives, work committees, guilds or associations representing
employees of the Company or any of the Subsidiaries. As of the date hereof, the
Company does not have any "trade unions" as such term is defined in the SER
FUSIEGEDRAGSREGELS. As of the date hereof, neither the Company nor any
Subsidiary is involved in or, to Seller's knowledge, threatened with any labor
dispute, arbitration, lawsuit, grievance or administrative proceeding (other
than immaterial grievances), relating to labor matters involving any current or
former employee of the Company or any Subsidiary. Except as set forth on
Schedule 3.8, as of the date hereof, no union or association organizing or
election activities involving any nonunion employees of the Company or any
Subsidiary are in progress or, to the knowledge of Seller, have been threatened
since April 1, 1998.
Section 3.9. COMPLIANCE WITH LAWS. Except as may be disclosed in
Schedule 3.9, the conduct of the businesses of the Company and the Subsidiaries
is in and has been in compliance in all material respects with all material
statutes, laws, regulations, ordinances, rules, judgments, orders or decrees
applicable thereto. Except as set forth on Schedule 3.9, neither Seller nor the
Company or any Subsidiary has received written notice of any alleged violation
of any statute, law, regulation, ordinance, rule, judgment, order or decree from
any Governmental Authority applicable to the Company or any of the Subsidiaries
or to their properties which has not been satisfactorily addressed and which
gives or may give rise to material fines or other civil penalties or to any
criminal liabilities. In furtherance and not in limitation of the foregoing,
neither Seller nor the Company or any Subsidiary has, directly or indirectly,
paid or delivered any fee, commission or other sum of money or item of property,
however characterized, to any government official or other governmental party,
in the United States or any other country, which is in any manner related to the
businesses or operations of the Company or the Subsidiaries and which was
illegal under any statutes, laws, regulations, ordinances, rules, judgments,
orders or decrees of any Governmental Authority (including, without limitation,
the U.S. Foreign Corrupt Practices Act). The lack of a Works Council, within the
meaning of the WET OP DE ONDERNEMINGSRADEN, in the Company shall not result in
any economic penalties to the Company nor shall it preclude or prohibit, nor
result in any grounds to preclude, prohibit or challenge in any court of law or
otherwise, the Stock Purchase as contemplated herein.
Section 3.10. INSURANCE. Each of the Company and the Subsidiaries is
covered by valid and currently effective insurance policies issued in its favor
that are customary in scope and amount of coverage for privately-owned companies
of similar size and financial condition in the industry and locale in which it
operates. Schedule 3.10 lists all insurance policies which are in effect
covering the Company, any of the Subsidiaries or their employees, or the Real
Property and such Schedule lists each of the parties to such policies. Except as
set forth on Schedule 3.10, all such policies are in full force and effect, all
premiums due thereon have been paid and the Company and the Subsidiaries have
complied with the provisions of such policies in all material respects.
Section 3.11. MATERIAL CONTRACTS. Except as set forth on Schedule 3.11
hereto, neither the Company nor any Subsidiary is a party to or bound by any
written or oral (a) employment, consulting or non-competition agreement or
contract requiring payments of compensation to any one Person in excess of
$75,000 per year or aggregate payments of
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compensation to any one Person in excess of $150,000, other than (i) employment
agreements entered into with employees in the ordinary course of business
containing terms not differing in any material respect from the forms of
contract previously provided by Seller to THEH and (ii) the Employment
Agreements, true and correct copies of which Seller has previously provided to
THEH; (b) joint venture or partnership contract or agreement; (c) contract or
agreement restricting the right of the Company or any of the Subsidiaries to
compete in any way with any other Person; (d) other than trade payables in the
ordinary course of business, agreement or contract creating, evidencing or
securing, as of the date hereof, obligations of the Company or any of the
Subsidiaries for (i) borrowed money, (ii) purchase money indebtedness, (iii) any
guarantee or assumption of an obligation for borrowed money or purchase money
indebtedness or other obligations of reimbursement of any maker of a letter of
credit or any guaranty of minimum equity or capital or any make-whole or similar
agreement, (iv) any loan or extension of credit by the Company or any Subsidiary
or (v) bankers acceptance; (e) agreement or contract relating to any outstanding
commitment for capital expenditures in excess of the amount set forth in the
capital budget provided to THEH prior to the date hereof; (f) licenses, whether
as licensor or licensee, of any Intellectual Property (other than the European
License); (g) any material lease as lessee or lessor of real or personal
property; (h) capitalized lease or sale-leaseback or material conditional sale
agreement; (i) distributorship, agency or franchise agreement; (j) material raw
material or other supply agreements or any exclusive dealing, requirements or
take-or-pay contracts; (k) other than as identified in Section 3.12, any
brokerage or finders fee agreements; or (l) other contract or agreement, entered
into other than in the ordinary course of business, involving an estimated total
future payment or payments in excess of $100,000. Each contract or agreement set
forth on Schedule 3.11 hereto is in full force and effect, and, to Seller's
knowledge, is legal, valid and binding and enforceable against each other Person
party thereto. Neither the Company or any of the Subsidiaries, nor, to Seller's
knowledge, any other party to any such contract or agreement, is in material
breach thereof or default thereunder and there does not exist under any
provision thereof, any event that, with the giving of notice or the lapse of
time or both, would constitute such a breach or default by the Company or any
Subsidiary or, to Seller's knowledge, by any other party to any such contract or
agreement, except for such breaches, defaults and events as to which requisite
waivers or consents have been or prior to the Closing will have been obtained.
Seller has made available to THEH true and correct copies of each of such
written agreements and contracts or provided written summaries of any such oral
agreements and contracts.
Section 3.12. BROKERS, FINDERS, ETC. No Seller Affiliate has employed,
or is subject to any valid claim of, any broker, finder, or other similar
intermediary in connection with the transactions contemplated by this Agreement
who might be entitled to a fee or commission in connection with such
transactions, other than pursuant to an engagement letter with Xxxxxxxx Xxxxxxx
Xxxxx Xxxxxx, a true and correct copy of which Seller has previously provided to
THEH, the fees and expenses of which will be payable by the Company.
Section 3.13. AFFILIATE TRANSACTIONS. (a) Except as disclosed in the
notes to the Financial Statements or as set forth on Schedule 3.13 hereto, (i)
no Individual Affiliate or Continuing Affiliate or officer, director or employee
of any Continuing Affiliate directly or indirectly provides or causes to be
provided to the Company or any of the Subsidiaries any assets, loans, advances,
services or facilities (other than in their capacity as an officer, director or
employee of the Company or the Subsidiaries), (ii) neither the Company nor any
of the
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Subsidiaries provides or causes to be provided to any such officer, director or
employee, Continuing Affiliate or Individual Affiliate any assets, loans,
advances, services or facilities, and (iii) neither the Company nor any of the
Subsidiaries has paid any dividends or made any other distributions or payments
to any Affiliates of either the Company or any of the Subsidiaries (other than
the Company and the Subsidiaries) since March 31, 2001, except as contemplated
by Section 5.12. Except as set forth on Schedule 3.13 hereto, neither the
Company nor any of the Subsidiaries, jointly with any Continuing Affiliate,
purchases or sells goods or services.
(b) Each of Xxxx Xxxxxxx and Ludo Onnink has tendered his written
resignation as an officer or director of each Continuing Affiliate for which
such individual served as an officer or director, and no such resignation has
subsequently been withdrawn.
Section 3.14. ENVIRONMENTAL COMPLIANCE. (a) For purposes of this
Section 3.14, (i) "HAZARDOUS SUBSTANCE" means any pollutant, contaminant,
hazardous or toxic substance or waste, solid waste, petroleum, petroleum
product, by-product or breakdown product, or any other chemical, substance or
material listed or identified in or regulated by or under any Environmental Law;
(ii) "ENVIRONMENTAL LAW" means any applicable statute, rule, regulation, law,
by-law, ordinance or directive of any Governmental Authority dealing with the
pollution or protection of natural resources or the indoor or ambient
environment or with the protection of human health or safety; and (iii) "RCRA
HAZARDOUS WASTE" means a solid waste that is listed or classified as a hazardous
waste, as that term is defined in or pursuant to the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. ss. 6901 et seq.
(b) Except as set forth on Schedule 3.14, there are no claims pending
or, to the knowledge of Seller, threatened, and none of Seller, the Company or
the Subsidiaries has received any written notice, alleging, warning or notifying
Seller, the Company or any Subsidiary that the Company or any Subsidiary is, has
been or may be in violation of, or non-compliance with, in any material respect,
any Environmental Law.
(c) Except as set forth on Schedule 3.14, to the knowledge of Seller,
no Hazardous Substances have ever been buried, spilled, leaked, discharged,
emitted, generated, stored, used or released, and no Hazardous Substances are
now present in amounts, concentrations or conditions requiring investigation,
study, removal, remediation or any other responsive action or corrective action
under, or forms the basis of a claim pursuant to, any Environmental Law, in, on,
from or under the Real Property or any other property with respect to which the
Company or any Subsidiary may be identified as a potentially responsible party
or otherwise bear liability, except for immaterial quantities stored or used by
the Company or any Subsidiary in the ordinary course of its business and in
accordance, in all material respects, with all applicable Environmental Laws.
(d) Except as set forth on Schedule 3.14, the Real Property is not
being used and, to the knowledge of Seller, never has been used in connection
with the business of manufacturing, storing or transporting Hazardous
Substances, and, to the knowledge of Seller, no RCRA Hazardous Wastes have been
treated, stored or disposed of there.
(e) Except as set forth on Schedule 3.14, to Seller's knowledge, there
are not now and never have been any underground or above ground storage tanks or
other containment
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facilities of any kind on the Real Property which contain or contained any
Hazardous Substances.
(f) Except as set forth on Schedule 3.14, none of the Real Property is
or has been listed on any list, schedule, log, inventory or database maintained
or issued by any Governmental Authority of sites or facilities with potential,
threatened, suspected or actual releases of Hazardous Substances.
(g) Schedule 3.14 identifies, and Seller has provided to THEH true and
correct copies of, all environmental audits or assessments relating in whole or
in part to the Company or any of the Subsidiaries undertaken by or on behalf of
any of the Seller Affiliates, or, to Seller's knowledge, by Governmental
Authorities or other third parties, and any written communications by the
Company or the Subsidiaries or, to Seller's knowledge, relating in whole or in
part to the Company or any of the Subsidiaries with environmental agencies,
within the past six years which describe the status of any Real Property or the
compliance of the owners or lessees thereof with respect to any Environmental
Law.
(h) Except as set forth on Schedule 3.14, no Seller Affiliate has
received any written notice from any Governmental Authority or other third party
that the Company or any of the Subsidiaries or any of their predecessors is or
may be a potentially responsible party or may otherwise bear liability for any
actual or threatened release of Hazardous Substances at or from any site or
facility other than the Real Property.
Section 3.15. NETHERLANDS ANTILLES AND NETHERLANDS TAX MATTERS. (a)
Netherlands Antilles. The tax ruling granted by the relevant Netherlands
Antilles Tax Authority, dated December 15, 1999, which provides that, in
accordance with articles 14 and 14A of the Profit Tax Ordinance 1940, the
Company is subject to Netherlands Antilles tax at rates of 2.4-3% is in full
force and effect as of the date hereof and the Company is in compliance with all
provisions thereof. TH Europe has received oral confirmation from such
Netherlands Antilles Tax Authority that the ruling will remain in effect
following the execution and delivery of this Agreement and the consummation of
the Stock Purchase and the other transactions contemplated hereunder.
(b) Netherlands. The special tax ruling granted by the relevant
Netherlands Tax Authority, dated March 4, 1997, which provides that, subject to
certain restrictions, pre-tax profits of TH Europe otherwise subject to taxation
in the Netherlands in excess of 7% of TH Europe's net sales are tax-exempt, is
in full force and effect as of the date hereof and TH Europe is in compliance
with all provisions thereof. TH Europe has received written confirmation from
such Netherlands Tax Authority on June 26, 2001, a true and complete copy of
which Seller has previously provided to THEH, that the ruling will remain in
effect following the execution and delivery of this Agreement and the
consummation of the Stock Purchase and the other transactions contemplated
hereunder.
Section 3.16. NO UNDISCLOSED LIABILITIES. Except (a) as disclosed in
Schedule 3.16 hereto, (b) as and to the extent disclosed or reserved against on
the Company Balance Sheet or identified in the notes thereto, (c) as incurred
after the date of the Company Balance Sheet in the ordinary course of business
consistent with prior practice and not prohibited by this
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Agreement or (d) liabilities or obligations relating to Actions, contracts,
agreements or environmental matters disclosed on or not required to be disclosed
on Schedules 3.6, 3.11 or 3.14, respectively, the Company and the Subsidiaries
do not have any liabilities or obligations of any nature, whether known or
unknown, absolute, accrued, contingent or otherwise and whether due or to become
due.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THEH
THEH hereby represents and warrants to Seller as follows:
Section 4.1. INCORPORATION; AUTHORIZATION; ETC. (a) Each of Parent and
THEH has been duly incorporated and is validly existing as a company limited by
shares in good standing under the laws of the British Virgin Islands. THEH has
full corporate power and authority to own its property and to conduct its
business as it is now being conducted and is duly qualified as a foreign
corporation to transact business and is in good standing (to the extent such
term is applicable) in each jurisdiction in which the conduct of its business or
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or in good standing would not have a
material adverse effect on Parent and its subsidiaries, taken as a whole. Each
of Parent and THEH has full corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and THEH and the performance by Parent and THEH of their respective
obligations hereunder and the consummation of the transactions contemplated
hereby by Parent and THEH have been duly authorized by the Board of Directors of
Parent and THEH, as applicable, and no other corporate proceedings on the part
of Parent or THEH or their respective Boards of Directors or stockholders are
necessary therefor.
(b) The execution, delivery and performance by Parent and THEH of this
Agreement will not (i) violate or conflict with any provision of the memorandum
of association or articles of association (or similar instruments) of Parent or
THEH, (ii) conflict with, violate or constitute a default under any provision
of, or be an event that is (or with the giving of notice or passage of time or
both will result in) a violation of or default under, or result in the
acceleration of or entitle any party to accelerate (whether after the giving of
notice or lapse of time or both) any obligation or right under, or result in the
imposition of any lien upon or the creation of a security interest in any of the
assets or properties of Parent or its subsidiaries pursuant to, or require a
consent or create a penalty or increase Parent's or any of its subsidiary's
payment or performance obligations under, any mortgage, lien, lease, instrument,
order, arbitration award, judgment or decree, or any contract, agreement,
license or permit, to which Parent or any of its subsidiaries is a party or by
which any of them or any of their property is bound, or (iii) assuming that all
consents, approvals, authorizations and other actions described in Section 4.2
have been obtained and all filings and obligations set forth in Section 4.2 have
been made, violate or conflict with, or result in the imposition of any lien
(other than liens arising from any actions taken or arrangements made by any
Seller Affiliate) upon any of the assets or properties of Parent or any of its
subsidiaries pursuant to, any provision of law, regulation, rule, writ,
injunction, decree, statute, order, judgment or ruling of any Governmental
Authority or any other
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restriction of any kind or character to which Parent or any of its subsidiaries
is or may be subject or by which any of them or any of their property is or may
be bound except, in the case of clauses (ii) or (iii) for such conflicts,
violations, defaults, accelerations or liens which would not, individually or in
the aggregate, have a material adverse effect on Parent and its subsidiaries
taken as a whole or on the ability of Parent and THEH to consummate the Stock
Purchase and the other transactions contemplated hereby. This Agreement has been
duly executed and delivered by Parent and THEH and, assuming the due execution
hereof by Seller, this Agreement constitutes the legal, valid and binding
obligations of Parent and THEH enforceable against such parties in accordance
with its terms except as such enforceability may be limited by any applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and except as the availability of
equitable remedies may be limited by the application of general principles of
equity (regardless of whether such equitable principles are applied in a
proceeding at law or in equity).
Section 4.2. OTHER AUTHORIZATIONS, CONSENTS, REPORTS, ETC. Except (a)
as set forth on Schedule 4.2 hereto, (b) for applicable requirements, if any, of
the Exchange Act, (c) for notices to the Committee for Merger Affairs in the
Netherlands pursuant to Article 21.1 of the Merger Code and (d) those the
failure to make, file, give or obtain which would not have a material adverse
effect on Parent and its subsidiaries taken as a whole or prevent the
consummation of the Stock Purchase and the other transactions contemplated
hereby, there are no Licenses required to be made, filed, given or obtained by
Parent or THEH with, to or from any Governmental Authority in connection with
the consummation of the Stock Purchase and the transactions contemplated under
this Agreement.
Section 4.3. BROKERS, FINDERS, ETC. Except for the services of Xxxxxx
Xxxxxxx & Co. Incorporated and Gleacher & Co. LLC, neither Parent nor THEH has
employed, nor is Parent or THEH subject to any valid claim of, any broker,
finder, or other similar intermediary in connection with the transactions
contemplated by this Agreement who might be entitled to a fee or commission in
connection with such transactions. No Continuing Affiliate has or will have any
obligations to Xxxxxx Xxxxxxx & Co. Incorporated or Gleacher & Co. LLC with
respect to the transactions contemplated by this Agreement.
Section 4.4. ACQUISITION OF SHARES FOR INVESTMENT. THEH has such
knowledge and experience in financial and business matters that it is capable of
evaluating the merits and risks of its purchase of the Shares and has been
provided access to personnel and books of the Company and the Subsidiaries for
purposes of making its evaluation. THEH is acquiring the Shares for investment
and not with a view toward or for sale in connection with any distribution
thereof, or with any present intention of distributing or selling the Shares.
THEH agrees that the Shares may not be sold, transferred, offered for sale,
pledged, hypothecated or otherwise disposed of without registration under the
Securities Act, except pursuant to an exemption from such registration available
under the Securities Act.
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ARTICLE V
COVENANTS OF SELLER, PARENT AND THEH
Section 5.1. INVESTIGATION OF BUSINESS; ACCESS TO PROPERTIES AND
RECORDS. (a) Prior to the Closing Date, Seller shall and shall cause the Company
and the Subsidiaries to afford to representatives of THEH full access to the
personnel, offices, plants, properties, books and records of the Company and the
Subsidiaries during normal business hours, in order that THEH may have full
opportunity to make such investigations as it desires of the affairs and assets
of the Company and the Subsidiaries; PROVIDED, HOWEVER, that such investigation
by THEH shall not unreasonably disrupt the personnel and operations of the
Company and the Subsidiaries.
(b) At the Closing or as soon thereafter as practicable, Seller will
deliver or cause to be delivered to THEH all corporate records of the Company
and the Subsidiaries, and all other original (or copies thereof, if originals
are not immediately available) agreements, documents, books and records relating
to the businesses of the Company and the Subsidiaries.
(c) Except as required by law and except to the extent such
information becomes publicly available other than as a result of any action
taken by any Continuing Affiliate or its directors, officers, employees or
agents, from and after the Closing Date, Seller shall, and shall use its best
efforts to cause the other Continuing Affiliates to, and shall use its
reasonable best efforts to cause the respective directors, officers, employees
and agents of the Continuing Affiliates to, maintain the confidentiality of
non-public information with respect to the Company and the Subsidiaries. In the
event that any of the Continuing Affiliates after the Closing Date is requested,
or becomes required by law, to disclose any confidential information relating to
the Company and the Subsidiaries, Seller will provide THEH with prompt notice
thereof (before such information is disclosed if practicable) so that THEH may
seek a protective order or other appropriate remedy and/or waive compliance with
the terms of this Section 5.1(c).
Section 5.2. EFFORTS; OBTAINING CONSENTS. (a) Subject to the terms and
conditions herein provided, each of Seller, Parent and THEH agrees to use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by this
Agreement and to cooperate with the others in connection with the foregoing,
including using its reasonable efforts (i) to obtain all waivers, consents and
approvals from other parties to loan agreements, leases, mortgages and other
contracts necessary for the consummation of the transactions contemplated
hereby, (ii) to make all filings with, and to obtain all consents, approvals and
authorizations that are required to be obtained from, Governmental Authorities,
(iii) to lift or rescind any injunction, restraining order, decree or other
order adversely affecting the ability of the parties hereto to consummate the
transactions contemplated hereby, (iv) to effect all necessary registrations and
filings and submissions of information requested by Governmental Authorities,
and (v) to fulfill all conditions to this Agreement. Each of Seller, Parent and
THEH shall use all reasonable efforts to prevent the entry, enactment or
promulgation of any threatened or pending preliminary or permanent injunction or
other order, decree or ruling or statute, rule, regulation or executive order
that would adversely affect the ability of the parties hereto to consummate the
transactions contemplated hereby.
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(b) Each party hereto shall promptly inform the other of any material
communication from any Governmental Authority regarding any of the transactions
contemplated hereby. If any of Parent, THEH or Seller or any Affiliate thereof
receives a request for additional information or documentary material from any
such Governmental Authority with respect to the transactions contemplated
hereby, then such party shall endeavor in good faith to make, or cause to be
made, as soon as reasonably practicable and after consultation with the other
party, an appropriate response in compliance with such request. Each of Parent,
THEH and Seller will advise the others promptly in respect of any
understandings, undertakings or agreements (oral or written) which it proposes
to make or enter into with any Governmental Authority in connection with the
transactions contemplated hereby.
Section 5.3. FURTHER ASSURANCES. Seller, Parent and THEH agree that,
from time to time, whether before, at or after the Closing Date, each of them
will take such other action (including, on the part of Seller, using its best
efforts to cause the other Continuing Affiliates to, and using its reasonable
best efforts to cause the respective directors, officers, employees and agents
of the Continuing Affiliates to, take such action and, on the part of Parent,
using its best efforts to cause its subsidiaries to take such action) as may be
necessary to carry out the purposes and intents of this Agreement. Seller shall
use its best efforts as promptly as practicable following the date hereof to
cause the resignations described in Section 3.13(b) to be accepted by the
applicable Continuing Affiliate and, if applicable, such Continuing Affiliate's
shareholder(s) (to the extent not heretofore accepted), and to make or cause to
be made any and all filings with Governmental Authorities required to record
such resignations under applicable laws and regulations.
Section 5.4. CONDUCT OF BUSINESS BY SELLER. From the date hereof
through the Closing, except as disclosed on Schedule 5.4 hereto or otherwise
contemplated by this Agreement, and, except as consented to or approved by THEH
in writing, Seller covenants and agrees that:
(a) each of the Company and the Subsidiaries shall operate its
business in the ordinary and usual course in accordance with past practices;
(b) neither the Company nor any Subsidiary shall issue or sell (i) any
shares of its capital stock or (ii) any securities convertible into, or options
with respect to, or warrants to purchase or rights to subscribe for, any shares
of its capital stock or make any change in its issued and outstanding capital
stock or redeem, purchase or otherwise acquire any of its capital stock;
(c) neither the Company nor any Subsidiary shall (i) increase in any
manner the compensation of, or enter into any new bonus or incentive agreement
or arrangement with, any of its directors, officers or other employees other
than increases in compensation in the ordinary course of business and consistent
with past practice and which are not material in the aggregate; (ii) pay or
agree to pay any pension, retirement allowance or other employee benefit to any
director, officer or employee, whether past or present, other than as required
by applicable law, contracts or plan documents in effect on the date of this
Agreement; (iii) enter into any new employment, severance, consulting, or other
compensation agreement with any director, officer or employee or other person
other than in connection with any new hires or promotions in the
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ordinary course and consistent with past practice; or (iv) commit itself to any
additional pension, profit-sharing, deferred compensation, group insurance,
severance pay, retirement or other employee benefit plan, fund or similar
arrangement or adopt or amend or commit itself to adopt or amend any of such
plans, funds or similar arrangements in existence on the date hereof;
(d) neither the Company nor any Subsidiary shall (i) amend its
articles of incorporation, bylaws or similar instruments, (ii) declare any
dividend or make any distribution with respect to its capital stock, (iii)
assume, incur or guarantee any obligation for borrowed money other than trade
payables in the ordinary course of business consistent with past practice, (iv)
cancel or compromise, except for compromises of current or former short-term
trade receivables or other current assets in the ordinary course of business
consistent with past practice, any debts owed to it, or (v) waive or release any
rights of material value;
(e) neither the Company nor any Subsidiary shall (i) sell, transfer,
lease or otherwise dispose of any of its assets other than inventory, accounts
receivable or fixtures in the ordinary course of business consistent with prior
practice, (ii) create or permit to exist any new security interest, lien or
encumbrance on any of its properties or assets, other than Permitted Exceptions,
(iii) enter into any joint venture, partnership or other similar arrangement,
(iv) make any investment in or purchase any securities of any Person other than
in connection with (A) the cash management activities of the Company and the
Subsidiaries in the ordinary course of business consistent with past practice or
(B) the formation of a wholly owned subsidiary or (v) purchase any assets of any
Person other than in the ordinary course of business consistent with past
practice;
(f) neither the Company nor any Subsidiary shall permit a change in
its methods of maintaining its books, accounts or business records or, except as
required by GAAP (in which event prior notice shall be given to THEH), change
any of its accounting principles or the methods by which such principles are
applied for tax or financial reporting purposes;
(g) the Company and the Subsidiaries together shall incur capital
expenditures only in the ordinary course of business consistent with prior
practice and not in excess of the capital budget provided to THEH prior to the
date hereof;
(h) neither the Company nor any of the Subsidiaries shall (i) enter
into or terminate any material lease, contract or agreement, or make any change
in any of their material leases, contracts and agreements (including but not
limited to any contracts listed on Schedule 3.11), (ii) enter into any
transaction with any Continuing Affiliate or any director, officer or
shareholder of any Continuing Affiliate (other than in their capacity as an
officer, director or employee of the Company or the Subsidiaries), (iii)
reclassify any assets or liabilities, or (iv) do any other act that (A) would
cause any representation or warranty of Seller in this Agreement to be or become
untrue in any material respect or (B) could reasonably be expected to have a
Company Material Adverse Effect;
(i) the Company and Subsidiaries will comply in all material respects
with all material laws and regulations applicable to them;
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(j) neither the Company nor any of the Subsidiaries will make any
payment of interest on or principal of any intercompany indebtedness to any
Continuing Affiliate;
(k) neither the Company nor any of the Subsidiaries shall make any
election with respect to Taxes, consent to any waiver or extension of time to
assess or collect any Taxes without the consent of THEH (which consent shall not
be unreasonably withheld) or file any Return other than a Return filed in the
ordinary course of business and prepared in a manner consistent with past
practice; and
(l) neither the Company nor any of the Subsidiaries shall agree to
take any action prohibited by this Section 5.4.
Section 5.5. PRESERVATION OF BUSINESS. From the date hereof until the
Closing, subject to the terms and conditions of this Agreement, Seller shall,
and shall cause each of the Subsidiaries to, use all reasonable efforts to
preserve the business of the Company and the Subsidiaries intact, to preserve
the good will of customers, suppliers, employees and others having business
relations with the Company and the Subsidiaries, to retain its key employees,
and to maintain insurance in full force and effect.
Section 5.6. NON-SOLICITATION. Except as otherwise contemplated in
this Agreement, the Continuing Affiliates shall not, and shall not permit the
Company or the Subsidiaries to, directly or indirectly, (a) solicit any
inquiries or proposals for, or enter into or continue or resume any discussions
with respect to or enter into any negotiations or agreements relating to the
sale or exchange of any Shares, any shares of capital stock of any Subsidiary or
all, or a substantial part, of the assets of the Company or any of the
Subsidiaries or (b) furnish or cause to be furnished any non-public information
concerning the business and operations of the Company or the Subsidiaries to any
Person (other than to or at the request of THEH and its representatives) other
than in the ordinary course of business consistent with past practice.
Section 5.7. NOTICE OF DEVELOPMENTS. Each party shall promptly notify
the other party in writing of any events, facts and occurrences which would
result in any breach of any representation or warranty or breach of any covenant
by such party contained in this Agreement.
Section 5.8. GUARANTEES AND OTHER COMMITMENTS. Parent shall cause
Xxxxx Xxxxxxxx Licensing, Inc. to release the existing guarantees and other
obligations of Seller and any other Continuing Affiliate under the License
Agreement, dated as of February 1, 1997, by and between Xxxxx Xxxxxxxx
Licensing, Inc. and Pepe Jeans London Corporation, as amended and assigned to TH
Europe (the "EUROPEAN LICENSE"), concurrently with the Closing. Parent and THEH
shall use their commercially reasonable efforts to cause Seller to be absolutely
and unconditionally released from (on or effective as of the Closing), and shall
(from and after the Closing) indemnify and hold Seller harmless from and against
any losses suffered by it arising from, its obligations under the Letter of
Comfort, dated March 21, 2001, from Seller to Fortis Bank (Nederland) N.V. and
Fortis Commercial Finance N.V. and any additional such comfort letter approved
in advance by Parent (collectively, the "FORTIS COMFORT LETTER"). Seller
covenants and agrees that it shall timely provide any notices required by it
under the Fortis Comfort Letter.
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Section 5.9. FINANCIAL STATEMENTS. Prior to the Closing, Seller shall
deliver to THEH promptly after they are prepared such monthly or other financial
statements or financial reports of the Company and the Subsidiaries as are
prepared by or relating to the Company and the Subsidiaries in the ordinary
course of business and such other financial information as THEH may reasonably
request, promptly after such request. Seller shall use its reasonable efforts to
have PricewaterhouseCoopers' consent to Parent's use of and reliance on the
Financial Statements and such other financial statements of the Company and the
Subsidiaries as may be required in connection with filings under the United
States federal securities laws.
Section 5.10. FINANCING. At Closing, Parent shall cause THEH to have
available all of the funds necessary to consummate the Stock Purchase.
Section 5.11. RESIGNATION OF DIRECTORS. At the Closing, Seller shall
cause to be delivered to THEH duly signed resignations, effective as of the
Closing, of all directors of the Company and all of the Subsidiaries designated
in writing by THEH to Seller reasonably prior to the Closing Date, or shall take
such other action as is necessary to ensure that such persons are not directors
of the Company or the Subsidiaries after the Closing.
Section 5.12. INTERCOMPANY ACCOUNTS; INDEBTEDNESS. All intercompany
and intracompany payables and receivables (other than payables and receivables
for goods and services, including buying office and/or sales agency commissions,
in the ordinary course and payables and receivables pursuant to franchise,
agency or distribution agreements in the ordinary course) and/or loans between
the Company and the Subsidiaries, on the one hand, and the Continuing
Affiliates, on the other hand, if any, shall be eliminated, released or
forgiven, without the transfer of any cash and without the need for any further
documentation, by way of dividends in kind (with respect to receivables of the
Company or the Subsidiaries owed by any Continuing Affiliate) or by way of
capital contributions (with respect to intercompany payables or loans due to any
Continuing Affiliate) immediately prior to the Closing.
ARTICLE VI
EMPLOYEE BENEFITS
Section 6.1. EMPLOYEE BENEFIT PLANS. Seller hereby represents and
warrants to THEH as follows:
(a) Schedule 6.1(a) includes a complete list of all employee benefit
plans, programs, policies, retirement schemes, practices, and other arrangements
for any employee or former employee (including arrangements for the payment to
employees on their retirement or death or on the occurrence of any permanent or
temporary disability) or any beneficiary or dependent thereof, whether covering
one person or more than one person, sponsored or maintained by the Company or
any of the Subsidiaries or to which the Company or any of the Subsidiaries
contribute or are obligated to contribute (collectively, "COMPANY EMPLOYEE
BENEFIT PLANS"). No Company Employee Benefit Plan is subject to the Employee
Retirement Income Security Act of 1974, as amended, nor does any Company
Employee Benefit Plan
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provide benefits to any employee employed in the United States or to any former
employee with respect to services rendered in the United States.
(b) With respect to each Company Employee Benefit Plan, Seller has
delivered or made available to THEH a true, correct and complete copy of (i)
each writing constituting a part of such Company Employee Benefit Plan,
including without limitation all plan documents, benefit schedules, participant
agreements, trust agreements, and insurance contracts and other funding
vehicles; (ii) the most recent annual financial report, if any; and (iii) the
most recent letter regarding its tax status from the relevant Taxing Authority,
if any. Except as specifically provided in the foregoing documents delivered or
made available to THEH, there are no amendments to any Company Employee Benefit
Plan that have been adopted or approved nor has Seller or the Company or any
Subsidiary taken any formal steps to make any such amendments.
(c) Except as otherwise set forth in Schedule 6.1(c) hereto, none of
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby will (either alone or in conjunction with any
related event, including without limitation, termination of employment) (i)
result in any payment or benefit becoming due from the Company or the
Subsidiaries under any Company Employee Benefit Plan or any collective
bargaining agreement, (ii) increase or vest any compensation or benefits under
any such Company Employee Benefit Plan or collective bargaining agreement or
(iii) accelerate any liability under any Company Employee Benefit Plan because
of an acceleration of the time of payment or vesting of any rights or benefits
to which employees may be entitled thereunder.
Section 6.2. COMPANY EMPLOYEE BENEFIT PLANS. Seller hereby represents
and warrants to THEH as follows: (a) All Company Employee Benefit Plans are in
compliance with and have been administered and managed in all material respects
in compliance with their terms and with all applicable requirements of
applicable law, regulations and requirements, and all contributions required to
be made to each such plan under the terms of such plan or under applicable law
for all periods of time prior to the Closing Date will by the Closing Date be
timely made or paid in full or, to the extent not required to be made or paid to
each such Plan on or before the Closing Date, have been fully reflected on the
Company Balance Sheet to the extent required by GAAP.
(b) There are no pending or, to Seller's knowledge, threatened claims
(other than claims for benefits in the ordinary course), lawsuits, audits,
investigations or arbitrations which have been threatened, asserted or
instituted against the Company Employee Benefit Plans, any fiduciaries thereof
with respect to their duties to the Company Employee Benefit Plans or the assets
of any of the trusts under any of the Company Employee Benefit Plans which could
reasonably be expected to result in any material liability of the Company or the
Subsidiaries to any Company Employee Benefit Plan, any participant or
beneficiary thereunder, or any Governmental Authority.
(c) There is no material dispute about the entitlements or benefits
payable under any of the Company Employee Benefit Plans, no material claim by or
against the managers or administrators of the Company Employee Benefit Plans or
the Company or any of
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the Subsidiaries has been made or threatened, and there are no circumstances
which would reasonably be expected to give rise to any such claim.
(d) Where Company Employee Benefit Plans are funded or insured, all
contributions and other amounts due to or in respect of them or any state
pension arrangements by the Company and the Subsidiaries have been fully paid at
Closing. Where such Company Employee Benefit Plans are unfunded or underfunded,
appropriate reserves are established therefor in the Financial Statements. The
Company and the Subsidiaries have not by any act or omission, direct or
indirect, materially increased their liabilities or obligations to the Company
Employee Benefit Plans since the date of the last actuary's report described in
Section 6.2(e) below.
(e) Seller has given or made available to THEH the actuary's report on
the latest actuarial valuation of each of the Company Employee Benefit Plans or
such other information which accurately describes the financial position of each
of the Company Employee Benefit Plans. Nothing has happened since the date of
that information which would adversely affect the funding position of the
Company Employee Benefit Plans in a material way.
Section 6.3 ADMINISTRATION. Seller, Parent and THEH shall each make
their appropriate employees available to the other at such reasonable times as
may be necessary for the proper administration by the other of any and all
matters relating to employee benefits affecting employees of the Company and the
Subsidiaries, including benefits to which such employees may become entitled
after the Closing Date under any tax-qualified retirement plan maintained by the
Continuing Affiliates.
ARTICLE VII
TAX MATTERS
Section 7.1. TAX RETURNS OF THE COMPANY AND THE SUBSIDIARIES. Seller
represents and warrants to THEH that:
(a) Except as set forth in Schedule 7.1(a) (i) all Income Tax
Returns required to be filed for taxable periods ending on or prior to the
Closing Date by the Company or the Subsidiaries have been or will be timely
filed and (ii) all other material Returns required to be filed before the
Closing Date by the Company or the Subsidiaries have been or will be timely
filed.
(b) Except as set forth on Schedule 7.1(b), (i) neither Company nor
any Subsidiary is doing business or maintains a taxable presence in a
jurisdiction in which (A) it does not file Income Tax Returns or (B) it files
Returns that are intended to preserve the right to receive the benefit of
deductions and credits within the meaning of Treasury Regulation
SS.1.882-4(a)(3)(iv) or any comparable or similar provision of applicable law;
(ii) to the knowledge of Seller, no claim has been made in writing by any Taxing
Authority in a jurisdiction where the Company or the Subsidiaries (A) do not
file Income Tax Returns or (B) file Returns that are intended to preserve the
right to receive the benefit of deductions and credits within the meaning
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of Treasury Regulation SS.1.882-4(a)(3)(iv) or any comparable or similar
provision of applicable law that the Company or any of the Subsidiaries are or
may be subject to taxation by that jurisdiction; (iii) except for Taxes being
contested in good faith and by appropriate proceedings and for which appropriate
reserves are established on the Company Balance Sheet, all Taxes owed by the
Company and any of the Subsidiaries with respect to any taxable period (or
portion thereof) ending on or prior to March 31, 2001 (whether or not shown on
any Return) have (or by the Closing Date will have) been duly and timely paid;
and (iv) all material Taxes required to be withheld from employee salaries,
wages and other compensation and from dividend, interest or royalty payments by
or on behalf of the Company or any of the Subsidiaries with respect to periods
for which the statute of limitations has not expired have been withheld, and
such withheld Taxes have been duly and timely paid to the proper Taxing
Authorities.
(c) Except as set forth on Schedule 7.1(c), no agreement or other
document extending, or having the effect of extending, the period of assessment,
payment or collection of any material Taxes for which the Company or any of the
Subsidiaries or any of their predecessors may be held liable and no power of
attorney with respect to any such material Taxes have been executed or filed
with the IRS or any other Taxing Authority.
(d) Except as set forth on Schedule 7.1(d), neither the Company nor
any of the Subsidiaries has been a member of a group that files Returns on an
affiliated, combined, consolidated or unitary basis, other than a group of which
one of the Subsidiaries is the common parent or all of whose members are one or
more Subsidiaries. Neither the Company nor any of the Subsidiaries has any
liability for material amounts of Taxes of any other person under Treasury
Regulation SS.1.1502-6 (or comparable provision under applicable law), as a
transferee, successor, indemnitor or otherwise.
(e) Seller has made available to THEH true and correct copies of all
applicable Income Tax Returns showing a material amount of tax that have been
filed for all taxable periods for which the statute of limitations has not
expired, tax rulings, advance pricing agreements, examination reports, and
statements of deficiencies assessed against or agreed to by the Company or any
of the Subsidiaries. Except as set forth on Schedule 7.1(e), (i) no lien exists
with respect to any asset of any of the Company or the Subsidiaries that arose
in connection with any failure to pay Taxes (other than for Taxes not yet due
and payable); (ii) there are no material Taxes for which the Company or any of
the Subsidiaries could be held liable which have been asserted in writing by any
Taxing Authority to be due; and (iii) there are no pending audits, examinations,
or investigations with respect to any material Taxes of the Company or any of
the Subsidiaries and no Taxing Authority has given notice that it will commence
any such audit or examination.
(f) Neither the Company nor any of the Subsidiaries is party to or
bound by any closing agreement, gain recognition agreement, tax sharing, tax
indemnity, tax allocation or similar agreement or arrangement.
Section 7.2. ALLOCATION OF CERTAIN TAXES. Each of Parent and Seller
agrees that if any of the Companies are permitted but not required under
applicable Income Tax laws to treat March 31, 2001 as the last day of a taxable
period, Parent and Seller shall treat such day as the last day of a taxable
period. For purposes of this Agreement, in the case of any Tax that is
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imposed on a periodic basis and is payable for a taxable period that begins
before March 31, 2001 and ends after March 31, 2001 (including without
limitation any Taxes resulting from a Tax audit or administrative court
proceeding), the portion of such Taxes which is payable for the portion of such
taxable period ending on March 31, 2001, shall be (i) in the case of any Tax
other than a Tax based upon or measured by income or receipts, the amount of
such Tax for the entire taxable period (or, in the case of such Taxes determined
on an arrears basis, the amount of such Tax for the immediately preceding
period) multiplied by a fraction, the numerator of which is the number of days
in the portion of such taxable period ending on March 31, 2001 and the
denominator of which is the number of days in the entire taxable period, and
(ii) in the case of a Tax based upon or measured by income or receipts, the
amount which would be payable if the relevant taxable period ended on March 31,
2001. Any credit or refund resulting from an overpayment of Taxes shall be
prorated based upon the method employed in the preceding sentence.
Section 7.3. FILING RESPONSIBILITY. (a) Seller shall prepare and file
or shall cause the Company and each of the Subsidiaries to prepare and file all
Returns with respect to the Company and each of the Subsidiaries required to be
filed (taking into account any extension of time within which to file) on or
before the Closing Date. With respect to any Return for taxable periods
beginning before and ending after March 31, 2001 that is required to be filed on
or before the Closing Date, Seller shall consult with Parent concerning such
Return. Seller shall provide to Parent a copy of its proposed Return to review
and comment upon at least 30 days prior to the filing of such Return, and Parent
may provide comments to Seller, which comments shall be delivered to Seller
within 10 days of receiving such copies from Seller. Seller shall consider in
good faith any such revisions to such Tax Returns as are reasonably requested by
Parent.
(b) Parent, the Company and the Subsidiaries shall file all other
Returns with respect to the Company and the Subsidiaries. With respect to any
Return for taxable periods beginning before and ending after March 31, 2001 that
is required to be filed after the Closing Date, Parent shall cause the Company
and each of the Subsidiaries to consult with Seller concerning such Return. The
Company and each of the Subsidiaries shall provide Seller a copy of its proposed
Return to review and comment upon at least 30 days prior to the filing of such
Return, and Seller may provide comments to the Company and each of the
Subsidiaries, which comments shall be delivered to the Company and each of the
Subsidiaries within 10 days of receiving such copies from the Company and each
of the Subsidiaries. The Company and the Subsidiaries shall consider in good
faith any such revisions to such Tax Returns as are reasonably requested by
Seller.
(c) In the case of any Return for taxable periods beginning before and
ending after March 31, 2001 which is filed after the Closing Date, Seller shall
pay to Parent, at least five days prior to the date on which the Company or any
of the Subsidiaries is required to make a payment to the relevant Taxing
Authority, any amounts for which Seller is liable pursuant to Section 7.6, to
the extent such Taxes are not reflected in the reserve for Tax liabilities
(other than any reserve for deferred Taxes established to reflect timing
differences between book and Tax income) shown on the Company Balance Sheet.
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Section 7.4. REFUNDS AND CARRYBACKS. (a) Seller shall be entitled to
any refunds of or amounts credited against Taxes relating to any taxable period
ending on or before March 31, 2001, or with respect to any taxable period
beginning before and ending after March 31, 2001, to the portion of such period
beginning before and ending on March 31, 2001 (in each case except for refunds
or credits accrued on the Company Balance Sheet).
(b) Parent, the Company or the Subsidiaries, as the case may be, shall
be entitled to all other refunds or credits of Taxes.
(c) Parent shall cause the Company and each of the Subsidiaries
promptly to forward to Seller or to reimburse Seller for any refunds or credits
due Seller (pursuant to the terms of this Article VII) after receipt thereof,
and Seller shall promptly forward to Parent or reimburse Parent for any refunds
or credits due Parent (pursuant to the terms of this Article VII) after receipt
thereof.
(d) Except (i) as required by a Determination, (ii) as otherwise
required by applicable law, or (iii) in connection with a matter described in
the second sentence of Section 7.5(d), none of Parent, the Company nor the
Subsidiaries will, after the Closing Date, amend any tax return relating to a
period ending on or before March 31, 2001 without the prior written consent of
Seller, which consent will not unreasonably be withheld.
Section 7.5. COOPERATION AND EXCHANGE OF INFORMATION. (a) Seller shall
prepare and submit to Parent no later than three months after the Closing Date,
blank tax return workpaper packages for Tax Returns for which Seller has
responsibility to prepare pursuant to Section 7.3. Parent shall and shall cause
the Company and each of the Subsidiaries to prepare and to submit to Seller
within three months of receipt all information as Seller shall reasonably
request in such tax return workpaper packages.
(b) As soon as practicable, but in any event within 30 days after
Seller's request, from and after the Closing Date, Parent shall provide Seller
with such cooperation and shall deliver to Seller such information and data
concerning the pre-Closing operations of the Company and each of the
Subsidiaries and make available such knowledgeable employees of the Company and
the Subsidiaries as Seller may reasonably request in order to enable Seller to
complete and file all Returns which it may be required to file with respect to
the operations and business of the Company and each of the Subsidiaries through
the Closing Date or to respond to audits by any Taxing Authorities with respect
to such operations.
(c) Parent and Seller and their respective Affiliates shall cooperate
in the preparation of all Returns described in Section 7.3 hereof. Such
cooperation shall include, but not be limited to, furnishing prior years'
Returns or return preparation packages illustrating previous reporting practices
or containing historical information relevant to the preparation of such
Returns, and furnishing such other information within such party's possession
requested by the party filing such Returns as is relevant to their preparation.
(d) Seller shall have the right, at its own expense, to control any
audit or examination by any Taxing Authority ("TAX AUDIT"), initiate any claim
for refund, contest, resolve and defend against any assessment, notice of
deficiency, or other adjustment or proposed
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adjustment which in any such case relates to Taxes for which Seller is liable
pursuant to Section 7.6, with respect to the Company and each of the
Subsidiaries; PROVIDED, HOWEVER, that no claim, contest or settlement shall be
resolved by Seller if such claim, contest, or settlement could reasonably be
expected to have a material adverse effect on the Company or any of the
Subsidiaries after the Closing. Parent shall have the right, at its own expense,
to control any other Tax Audit, initiate any other claim for refund, and
contest, resolve and defend against any other assessment, notice of deficiency,
or other adjustment or proposed adjustment; PROVIDED, HOWEVER, any such
resolution shall not have a material adverse effect on the Seller. Seller shall
furnish Parent and the Company and each of the Subsidiaries with its cooperation
in a manner comparable to that described in Section 7.5(b) hereof to effect the
purposes of this Section 7.5(d).
Section 7.6. TAX INDEMNIFICATION BY SELLER. Seller shall be liable
for, and shall hold Parent and the Company and each of the Subsidiaries and any
successor corporations thereto or Affiliates thereof harmless from and against,
on a Net After-Tax Basis, any and all Taxes imposed upon, or with respect to the
income or operations of, the Company or any of the Subsidiaries (i) with respect
to any taxable period ending on or before March 31, 2001 and (ii) in the case of
any taxable period beginning before and ending after March 31, 2001, allocable
to the portion of such period beginning before and ending on March 31, 2001, in
each case to the extent such Taxes are not reflected in the reserve for Tax
liabilities (other than any reserve for deferred Taxes established to reflect
timing differences between book and Tax income) shown on the Company Balance
Sheet.
Section 7.7. TRANSFER TAXES. All stock transfer, real estate transfer,
documentary, stamp, recording and other similar Taxes (including interest,
penalties, and additions to such Taxes) incurred in connection with the
acquisition of the Company or any of the Subsidiaries contemplated by this
Agreement shall be borne fifty percent by the Seller and fifty percent by THEH.
Section 7.8. DEFINITIONS. For purposes of this Article VII, the
following terms shall have the meanings ascribed to them below:
(a) "DETERMINATION" means a determination as defined by Section
1313(a) of the Code or any comparable or similar provision of applicable
law.
(b) "INCOME TAX RETURNS" means U.S. federal, state, local or non-U.S.
Returns relating to Income Taxes required to be filed with any Taxing
Authority that include the Company or any of the Subsidiaries.
(c) "INCOME TAXES" means U.S. federal, state, local or non-U.S.
income, profits, capital gains, franchise taxes or other taxes measured by
reference to net income, profits or capital gains, together with any
interest, penalties, charges or fees imposed with respect thereto.
(d) "IRS" means the United States Internal Revenue Service.
(e) "RETURNS" means returns, reports and forms required to be filed
with any Taxing Authority.
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(f) "TAX LAWS" means the Code, U.S. federal, state, county, local, or
non-U.S. laws relating to Taxes and any regulations or official
administrative pronouncements released thereunder.
(g) "TAXES" means all taxes (whether U.S. federal, state, local or
non-U.S.) based upon or measured by income and any other tax whatsoever,
including, without limitation, gross receipts, profits, sales, levies,
imposts, deductions, charges, rates, duties, use, occupation, value added,
ad valorem, transfer, franchise, withholding, payroll and social security,
employment, excise, stamp duty or property taxes, together with any
interest, penalties, charges or fees imposed with respect thereto.
(h) "TAXING AUTHORITY" means any Governmental Authority including
social security administration, U.S. or non-U.S., having responsibility for
or jurisdiction over the assessment, determination, collection, or other
imposition of Tax.
ARTICLE VIII
CONDITIONS TO THEH'S OBLIGATION TO CLOSE
The obligation of THEH to consummate the Stock Purchase shall be
subject to the satisfaction on or prior to the Closing Date of all of the
following conditions:
Section 8.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLER. The
representations and warranties of Seller contained in this Agreement shall be
true and correct when made and, except for representations and warranties that
speak as of a specific date or time (which need only be true and correct as of
such date or time), on and as of the Closing Date with the same effect as though
such representations and warranties had been made on and as of such date, except
for such inaccuracies or breaches as would not, individually or in the
aggregate, have a Company Material Adverse Effect, and the covenants and
agreements of Seller contained in this Agreement to be performed on or before
the Closing Date in accordance with this Agreement shall have been duly
performed in all material respects, and THEH shall have received at the Closing
a certificate to the effect of the foregoing dated the Closing Date and validly
executed by a Co-Chairman, the Chief Executive Officer or any Director of
Seller.
Section 8.2. NO ORDERS OR INJUNCTIONS. No order or injunction shall
have been issued by any Governmental Authority which prevents or prohibits the
consummation of the Stock Purchase or any other transaction contemplated by this
Agreement.
Section 8.3. OPINIONS OF SELLER'S COUNSEL. Parent shall have received
at Closing opinions addressed to Parent and dated the Closing Date from counsel
to Seller in form and substance reasonably satisfactory to Parent with respect
to certain corporate matters in Sections 3.1 and 3.2.
Section 8.4. CONSENTS. All consents or waivers of the parties
to the agreements or consents listed on Schedule 3.1(d) reasonably requested by
Parent shall have been obtained.
Section 8.5. Tax Matters. The oral confirmation from the Netherlands
Antilles Tax Authorities referenced in Section 3.15(a) shall not have been
rescinded or modified in any
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material respect. The written confirmation from the Netherlands Tax Authorities
referenced in Section 3.15(b) shall not have been rescinded or modified in any
material respect.
ARTICLE IX
CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to consummate the Stock Purchase shall be subject
to the satisfaction on or prior to the Closing Date of all of the following
conditions:
Section 9.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PARENT AND
THEH. The representations and warranties of THEH contained in this Agreement
shall be true and correct when made and, except for representations and
warranties that speak as of a specific date or time (which need only be true and
correct as of such date or time), on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date, except for such inaccuracies or breaches as would not, individually
or in the aggregate, have a material adverse effect on the ability of THEH to
consummate the Stock Purchase, and the covenants and agreements of THEH and
Parent contained in this Agreement to be performed on or before the Closing Date
in accordance with this Agreement shall have been duly performed in all material
respects, and Seller shall have received at the Closing a certificate to the
effect of the foregoing dated the Closing Date and validly executed by the
President, a Vice President or other senior officer of Parent and THEH.
Section 9.2. NO ORDERS OR INJUNCTIONS. No order or injunction shall
have been issued by any Governmental Authority which prevents or prohibits the
consummation of the Stock Purchase or any other transaction contemplated by this
Agreement.
ARTICLE X
SURVIVAL; INDEMNIFICATION
Section 10.1. SURVIVAL. (a) The representations and warranties of
Seller contained in this Agreement shall survive the Closing until December 31,
2002, except the representations and warranties set forth (i) in Sections 3.1(e)
and 3.2(a) which shall survive the Closing indefinitely, (ii) in Section 3.14
which shall survive the Closing until the third anniversary of the Closing Date,
and (iii) in Section 3.15 and Article VII which shall survive the Closing until
90 days after the expiration of the relevant statutes of limitations (including
any extensions thereof) for all applicable Taxes or, if later, until resolution
of any disputes arising during such period applicable to the income tax return
(the "APPLICABLE RETURN") of each of the Company and the Subsidiaries for the
period ending on March 31, 2001 (such later date being the "EXPIRATION DATE").
(b) The covenants and agreements contained in this Agreement which by
their terms do not contemplate performance after the Closing Date shall survive
the Closing until December 31, 2002. The covenants and agreements contained in
this Agreement which by their terms contemplate performance after the Closing
Date (including but not limited to the indemnities) shall survive the completion
of the transactions contemplated herein.
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Section 10.2. INDEMNIFICATION BY SELLER. (a) Subject to Section
10.4 hereof, from and after the Closing Date, Seller shall indemnify and hold
harmless Parent and its subsidiaries and their respective officers and directors
(collectively, the "INDEMNIFIED PARTIES"), on a Net After-Tax Basis, from and
against any and all Covered Losses suffered by such Indemnified Parties
resulting from or arising out of (i) any inaccuracy in or breach of any of the
representations or warranties of Seller when made, and, except for
representations and warranties that speak as of a specific date or time (which
need only be true and correct as of such date and time), on and as of the
Closing Date, (ii) any breach or nonfulfillment of any covenants or agreements
made by Seller herein, and (iii) any liability or obligation of the Company or
any of the Subsidiaries arising from or relating to any business other than (x)
the business of the Company and the Subsidiaries conducted under the European
License or (y) the business assumed by the Company or the Subsidiaries pursuant
to the transactions contemplated by the Agreement, dated November 23, 2000,
between USC Group Plc and TH Europe (collectively, "RETAINED LIABILITIES"). The
indemnity by Seller under this Section 10.2 shall not affect or limit the
indemnification provided by Seller under Section 7.6; it being understood and
agreed that the Indemnified Parties shall not be entitled to indemnification
under this Article X for any Covered Losses for which indemnification is
provided under Section 7.6 if such indemnification would be available under both
Section 7.6 and this Article X.
(b) The Indemnified Parties shall not be entitled to assert any
indemnification pursuant to clause (i) or (ii) (in the case of covenants and
agreements which by their terms do not contemplate performance after the Closing
Date) of Section 10.2(a): (i) after the Expiration Date, with respect to
inaccuracies in or breaches of the representations and warranties by Seller
contained in Section 3.15 and Article VII, (ii) after the third anniversary of
the Closing Date, with respect to inaccuracies in or breaches of the
representations and warranties by Seller contained in Section 3.14 or (iii)
after December 31, 2002, with respect to all other inaccuracies in or breaches
of the representations and warranties by Seller contained in any other Section
hereof (other than Sections 3.1(e) and 3.2(a), which shall have no such
limitation) or any breach or nonfulfillment of any covenants or agreements made
by Seller herein which by their terms were required to be performed prior to the
Closing Date; provided that if on or prior to such Expiration Date, third
anniversary of the Closing Date or December 31, 2002, as the case may be, a
Notice of Claim shall have been given to Seller pursuant to Section 10.3 hereof
for such indemnification, the Indemnified Parties shall continue to have the
right to be indemnified on a Net After-Tax Basis with respect to such
indemnification claim until such claim for indemnification has been satisfied or
otherwise resolved as provided in this Article X.
Section 10.3. INDEMNIFICATION PROCEDURES. (a) Upon obtaining knowledge
of any claim or demand which has given rise to, or is expected to give rise to,
a claim for indemnification hereunder, Parent shall give written notice ("NOTICE
OF CLAIM") of such claim or demand to Seller. Parent shall furnish to Seller in
reasonable detail such information as the Indemnified Parties may have with
respect to such indemnification claim (including copies of any summons,
complaint or other pleading which may have been served on it and any written
claim, demand, invoice, billing or other document evidencing or asserting the
same). Subject to the limitations set forth in Section 10.2(b) hereof, no
failure or delay by Parent in the performance of the foregoing shall reduce or
otherwise affect the obligation of Seller to indemnify and hold the Indemnified
Parties harmless on a Net After-Tax Basis, except to the extent that such
failure or delay shall have actually adversely affected Seller's ability to
defend
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against, settle or satisfy any Covered Losses for which the Indemnified
Parties are entitled to indemnification hereunder.
(b) If the claim or demand set forth in the Notice of Claim given by
Parent pursuant to Section 10.3(a) hereof is a claim or demand asserted by a
third party, Seller shall have 15 days after the date on which Notice of Claim
is given to notify Parent in writing of its election to defend such third party
claim or demand on behalf of the Indemnified Party. If Seller elects to defend
such third party claim or demand, Parent shall make available to Seller and its
agents and representatives all records and other materials which are reasonably
required in the defense of such third party claim or demand and shall otherwise
cooperate with, and assist Seller in the defense of, such third party claim or
demand, and so long as Seller is defending such third party claim in good faith,
the Indemnified Parties shall not pay, settle or compromise such third party
claim or demand. If Seller elects to defend such third party claim or demand,
the Indemnified Party shall have the right to participate in the defense of such
third party claim or demand, at such Indemnified Party's own expense. In the
event, however, that such Indemnified Party reasonably determines that
representation by counsel to Seller of both Seller and such Indemnified Party
could reasonably be expected to present such counsel with a conflict of
interest, then the Indemnified Party may employ separate counsel to represent or
defend it in any such action or proceeding and Seller will pay the fees and
expenses of such counsel; PROVIDED, that Seller shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the fees and expenses of more than one separate firm of attorneys (in addition
to local counsel) at any time for all Indemnified Parties. If Seller does not
elect to defend such third party claim or demand or does not defend such third
party claim or demand in good faith, the Indemnified Party shall have the right,
in addition to any other right or remedy it may have hereunder, at Seller's
expense, to defend such third party claim or demand; PROVIDED, HOWEVER, that (i)
such Indemnified Party shall not have any obligation to participate in the
defense of, or defend, any such third party claim or demand; (ii) such
Indemnified Party's defense of or its participation in the defense of any such
third party claim or demand shall not in any way diminish or lessen the
obligations of Seller under the agreements of indemnification set forth in this
Article X; and (iii) such Indemnified Party may not settle any claim without the
consent of Seller (which consent shall not be unreasonably withheld or delayed).
(c) Seller and Parent shall cooperate in the defense of any claim or
litigation subject to this Article X and the records of each shall be available
to the other with respect to such defense.
(d) Except for third party claims being defended in good faith, Seller
shall satisfy its obligations under this Article X in respect of a valid claim
for indemnification hereunder which is not contested by Seller in good faith in
cash within 30 days after the date on which Notice of Claim is given.
Section 10.4. LIMITS ON INDEMNIFICATION. Seller shall have no
liability for indemnification pursuant to this Article X with respect to Covered
Losses unless such Covered Losses exceed in the aggregate $100,000 (the
"INDEMNIFICATION THRESHOLD"); PROVIDED, HOWEVER, that in the event that Covered
Losses shall exceed in the aggregate the Indemnification Threshold, Seller shall
be liable hereunder for all such Covered Losses; and PROVIDED, FURTHER, that
Covered Losses with respect to Retained Liabilities shall not be subject to the
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Indemnification Threshold. Notwithstanding anything herein to the contrary, in
no event shall Seller be required to indemnify the Indemnified Parties pursuant
to this Article X for Covered Losses in excess of $200,000,000.
Section 10.5. LOSSES NET OF INSURANCE. The amount of any Covered Loss
for which indemnification is provided under this Article X shall be net of any
amounts recovered by the Indemnified Parties under insurance policies with
respect to such Covered Loss. In the event that the Indemnified Parties shall
later collect any such amounts recovered under insurance policies with respect
to any Covered Loss for which any of them has previously received payments under
this Article X from Seller, such Indemnified Party shall promptly repay to
Seller such amount recovered.
Section 10.6. ADJUSTMENT TO PURCHASE PRICE. All indemnity payments
made pursuant to this Article X or pursuant to Article VII shall constitute
adjustments to the Purchase Price for all tax purposes, and no party shall take
any position inconsistent with such characterization, unless such position is
impermissible as a result of a change of law.
ARTICLE XI
TERMINATION
Section 11.1. TERMINATION. This Agreement may be terminated at any
time prior to the Closing:
(a) by mutual consent of Seller and THEH;
(b) by either Seller or THEH, if any Governmental Authority of
competent jurisdiction shall have issued an injunction, restraining order
or decree that restrains or prohibits the consummation of the Stock
Purchase or the performance by the parties hereto of the other obligations
hereunder, and such injunction, restraining order or decree shall have
become final and nonappealable; or
(c) by either Seller or THEH, if the Closing has not occurred by the
close of business on September 30, 2001, unless the failure of the Closing
to occur by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe in all material respects the
covenants and agreements of such party set forth herein.
Section 11.2. PROCEDURE AND EFFECT OF TERMINATION. In the event of
termination of this Agreement by either or both of Seller and THEH pursuant to
Section 11.1, written notice thereof shall forthwith be given by the terminating
party or parties to the other party or parties hereto, and this Agreement shall
thereupon terminate and become void and have no effect, and the transactions
contemplated hereby shall be abandoned without further action by the parties
hereto, except that the provisions of Section 12.5 shall survive the termination
of this Agreement; PROVIDED, HOWEVER, that such termination shall not relieve
any party hereto of any liability for any willful breach of this Agreement
(other than a breach of a representation, as to which no party shall be liable
hereunder). If this Agreement is terminated as provided herein, all filings,
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applications and other submissions contemplated by Sections 3.7 and 4.2 and
Article V shall, to the extent practicable, be withdrawn from the agency or
other Persons to which they were made.
ARTICLE XII
MISCELLANEOUS
Section 12.1. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party.
Section 12.2. GOVERNING LAW. This Agreement and all disputes,
controversies or claims arising out of or related to this Agreement or a breach
hereof shall be governed by and construed in accordance with the laws of the
State of New York as applied to contracts to be performed in New York.
Section 12.3. JURISDICTION; WAIVER OF TRIAL BY JURY. The parties
hereby consent to the jurisdiction of the United States District Court for the
Southern District of New York and any of the courts of the state of New York in
any dispute arising under this Agreement and agree further that service of
process or notice in any such action, suit or proceeding shall be effective if
in writing and delivered in person or sent as provided in Section 12.6 hereof.
ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO ANY CLAIM OR ACTION ARISING OUT OF
THIS AGREEMENT OR IN CONNECTION HEREWITH IS HEREBY WAIVED.
Section 12.4. ENTIRE AGREEMENT. This Agreement and the Schedules and
Exhibits hereto contain the entire agreement between the parties with respect to
the subject matter hereof and there are no agreements, understandings,
representations or warranties between the parties other than those set forth or
referred to herein. Except for the provisions of Article X, which are intended
to benefit, and to be enforceable by, any of the Indemnified Parties, this
Agreement is not intended to confer and shall not confer upon any Person not a
party hereto any rights or remedies hereunder.
Section 12.5. EXPENSES. Except as otherwise set forth in this
Agreement, if the transactions contemplated hereby are not consummated, all
legal and other costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses. Except as otherwise set forth in this Agreement, if the
transactions contemplated hereby are consummated, the legal and other expenses
incurred in connection with this Agreement shall be paid by the Company and
THEH.
Section 12.6. NOTICES. All notices hereunder shall be sufficiently
given for all purposes hereunder if in writing and delivered personally, sent by
documented overnight delivery service or, to the extent receipt is confirmed,
telecopy, telefax or other electronic transmission service to the appropriate
address or number as set forth below. Notices to Seller shall be addressed to:
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TH Europe Holdings Limited
c/o Novel Enterprises Limited
12/F, Novel Industrial Xxxxxxxx
000-000 Xxx Xxx Xxx Xxxx
Xxxxxx Sha Wan, Kowloon
Hong Kong
Attn: Xxxxxxxx Xxx
Telecopier No.: 000-0000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
Citypoint
0 Xxxxxxxxx Xxxxxx
Xxxxxx XX0X 0XX
Xxxxxxx
Attn: Xxxxxxx X. Xxxxxxxxx, Esq.
Telecopier No.: 44-20-7275 6502
or at such other address and to the attention of such other person as Seller may
designate by written notice to Parent. Notices to Parent or THEH shall be made
to Parent and shall be addressed to:
Xxxxx Xxxxxxxx Corporation
c/o Xxxxx Xxxxxxxx U.S.A., Inc.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxx
Telecopier No.: (000) 000-0000
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx X. Xxxxxxxx, Esq.
Telecopier No: (000) 000-0000
or at such other address and to the attention of such other person as Parent may
designate by written notice to Seller.
Section 12.7. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that no party hereto will assign its
rights or delegate its obligations under this Agreement without the express
prior written consent of each other party hereto. Notwithstanding the foregoing,
THEH may assign its rights under this Agreement to Parent or any wholly-owned
subsidiary of Parent; PROVIDED that no such assignment by THEH of its rights
hereunder to Parent
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or any wholly-owned subsidiary of Parent shall in any way affect THEH's
obligations or liabilities under this Agreement.
Section 12.8. HEADINGS; DEFINITIONS. The Section and Article headings
contained in this Agreement are inserted for convenience of reference only and
will not affect the meaning or interpretation of this Agreement. All references
to Sections or Articles contained herein mean Sections or Articles of this
Agreement unless otherwise stated. All capitalized terms defined herein are
equally applicable to both the singular and plural forms of such terms.
Section 12.9. AMENDMENTS AND WAIVERS. This Agreement may not be
modified or amended except by an instrument or instruments in writing signed by
the party against whom enforcement of any such modification or amendment is
sought. Any party hereto may, only by an instrument in writing waive compliance
by the other parties hereto with any term or provision of this Agreement on the
part of such other parties hereto to be performed or complied with. The waiver
by any party hereto of a breach of any term or provision of this Agreement shall
not be construed as a waiver of any subsequent breach.
Section 12.10. SEVERABILITY. In the event that this Agreement, or any
of its provisions, or the performance of any provision, is found to be illegal
or unenforceable under applicable law now or hereafter in effect, the parties
shall be excused from performance of such portions of this Agreement as shall be
found to be illegal or unenforceable under the applicable laws or regulations
without affecting the validity of the remaining provisions of the Agreement;
provided that (i) the remaining provisions of the Agreement shall in their
totality constitute a commercially reasonable agreement, and (ii) should any
method of termination of this Agreement or a portion thereof be found to be
illegal or unenforceable, such method shall be reformed to comply with the
requirements of applicable law so as, to the greatest extent possible, to allow
termination by that method. Nothing herein shall be construed as a waiver of any
party's right to challenge the validity of such law.
Section 12.11. INTERPRETATION. For the purposes of this Agreement, (i)
a "subsidiary" of an entity means any entity more than 50% of the voting power
of whose outstanding voting securities or equity interests are directly or
indirectly owned by such other entity, and (ii) "including" shall mean
"including without limitation."
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IN WITNESS WHEREOF, this Agreement has been signed by
or on behalf of each of the parties as of the day first above
written.
XXXXX XXXXXXXX CORPORATION
By: /s/ Silas X.X. Xxxx
-------------------------------
Name: Silas X.X. Xxxx
Title: Co-Chairman of the Board
XXXXX XXXXXXXX (EASTERN HEMISPHERE)
LIMITED
By: /s/ Xxxxxxxx X. Stroll
-------------------------------
Name: Xxxxxxxx X. Stroll
Title: Director
TH EUROPE HOLDINGS LIMITED
By: /s/ Silas X.X. Xxxx
-------------------------------
Name: Silas X.X. Xxxx
Title: Co-Chairman of the Board
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