EXECUTION COPY
STOCK PURCHASE AGREEMENT
between
XXXXXXX OVERSEAS HOLDINGS S.A.,
and
RH FINANCIAL CORPORATION
Dated as of June 16, 2000
STOCK PURCHASE AGREEMENT
--------------------------
STOCK PURCHASE AGREEMENT, dated as of June 16, 2000 (this
"Agreement"), between Xxxxxxx Overseas Holdings S.A., a company organized under
the laws of Luxembourg (the "Seller"), and RH Financial Corporation, a Nevada
corporation (the "Buyer").
WHEREAS, the Seller owns all of the outstanding shares of capital
stock of RHM Holdings (USA) Inc., a Delaware corporation (the "Company"); and
WHEREAS, the Seller desires to sell to the Buyer, and the Buyer
desires to purchase from the Seller, 1,103 shares (the "Shares") of common
stock, par value $1.00 per share, representing all of the issued and outstanding
shares of the Company, upon the terms and subject to the conditions set forth
herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
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SALE OF STOCK
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Section 1.1 Purchase and Sale. Upon the terms and subject
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to the conditions of this Agreement, at the Closing (as hereinafter defined),
the Seller will sell, convey, assign, transfer and deliver to the Buyer, and the
Buyer will purchase, acquire and accept from the Seller the Shares, in
consideration for which, at the Closing, the Buyer will pay to the Seller an
amount equal to $132.5 million dollars in cash less Indebtedness (as hereinafter
defined) on the Closing Date (as hereinafter defined) (the "Initial Purchase
pursuant to Section 1.2 (as so adjusted, the "Pre-Closing Purchase Price"), by
Price"), subject to adjustment wire transfer of immediately available funds
to an account or accounts designated by the Seller prior to the Closing. The
Pre-Closing Purchase Price shall be subject to adjustment as set forth in
Section 1.3 (as so adjusted, the "Purchase Price"). The transactions
contemplated by this Section 1.1 are sometimes herein referred to as the
"Stock Purchase."
Section 1.2 Pre-Closing Purchase Price Adjustment
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(a) On or before the fifth business day prior to the Closing Date, the
Seller shall cause to be prepared and delivered to the Buyer a certificate (the
"Estimated Net Working Capital Certificate") signed by a senior officer of the
Seller setting forth a calculation of the estimated Net Working Capital (as
defined below) of the Company as of the Closing Date (the "Estimated Closing Net
Working Capital") which shall be prepared in accordance with generally accepted
accounting principles in the United Kingdom as consistently applied by the
Company in the preparation of its statutory accounting package for Xxxxxxx PLC
("U.K. GAAP") and the Company Accounting Policies (as defined herein). The
Buyer shall have forty-eight hours to review the Estimated Net Working Capital
Certificate, after which, unless objected to by the Buyer on the basis of fraud
or manifest error, for purposes of this Section 1.2, the Estimated Net Working
Capital Certificate delivered by the Seller shall be binding on the Buyer and
the Seller. In the event that the Buyer objects to the Estimated Net Working
Capital Certificate (as provided above), the Buyer and the Seller and their
respective representatives shall resolve such objection in a mutually agreeable
manner. In order to determine the Pre-Closing Purchase Price, the Initial
Purchase Price shall be (i) increased dollar-for-dollar by the amount by which
the Estimated Closing Net Working Capital exceeds $36.9 million (the "Base Net
Working Capital") or (ii) decreased dollar-for-dollar by the amount by which the
Estimated Closing Net Working Capital is less than the Base Net Working Capital.
(b) For purposes of this Agreement, "Net Working Capital"
means "Total Current Assets" minus "Total Current Liabilities" where: (i)
"Total Current Assets" means inventory, trade receivables and cash (for the sake
of clarity, book cash inclusive of deposit and other bank credits in transit, if
any, and net of outstanding checks and other bank debits not yet cleared) on the
Company's consolidated balance sheet (prepared in accordance with U.K. GAAP and
the Company Accounting Policies), and (ii) "Total Current Liabilities" means
current payables (less than one year) and provisions for liabilities and charges
but excluding stay bonus amounts. The parties agree that income taxes, deferred
taxes and intercompany accounts payable and receivables will not be included in
the foregoing calculation, but third-party long-term Indebtedness other than
Indebtedness deducted from the Pre-Closing Purchase Price will be included. For
avoidance of doubt, the parties agree that Net Working Capital shall be
calculated in the form and based upon (x) the accounts set forth on Exhibit A
hereto and (y) the Company Accounting Policies. The parties also agree that
there will be no reserves reflected on the certificate setting forth the Closing
Net Working Capital in respect of the Aurora Obligation (as defined herein) and
in respect of the environmental matters set for in Schedule 4.13 and it being
understood that the gross amount of the Aurora Obligation will be reflected on
the certificate setting forth the Closing Net Working Capital.
Section 1.3 Post-Closing Purchase Price Adjustment
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(a) As promptly as practicable, but no later than 45 days after the
Closing Date, the Seller will cause to be prepared and delivered to the Buyer a
certificate of a senior officer of the Seller, setting forth the Net Working
Capital of the Company as of the Closing Date (the "Closing Net Working
Capital") and the amount of any adjustment to the Pre-Closing Purchase Price
pursuant to this Section 1.3, together with supporting calculations (the
"Adjustment Certificate"). The Adjustment Certificate shall (x) be accompanied
by a draft auditor's report thereon from the Seller's accountants and (y)
present fairly in all material respects the Net Working Capital of the Company
as of the close of business on the Closing Date (without giving effect to the
sale and purchase of the Shares or any subsequent transaction contemplated
hereby). Following the Closing, the Buyer shall afford the Seller and its
accountants full and complete access to the Company's employees and the work
papers of the Company's accountants (subject to the execution of customary
confidentiality and other undertakings) on reasonable prior notice throughout
the 45 day period following the Closing in order to prepare the Adjustment
Certificate. The Buyer shall have 45 days from the date on which the Adjustment
Certificate is delivered to it to review such documents (the "Review Period").
The Buyer and its accountants shall be provided with customary access to the
work papers of the Seller's accountants in connection with such review, subject
to the execution of customary confidentiality and other undertakings. If the
Buyer disagrees in any respect with any item or amount shown or reflected in the
Adjustment Certificate or with the calculation of the Closing Net Working
Capital (other than the definition of such term as set forth in this Agreement),
the Buyer may, on or prior to the last day of the Review Period, deliver a
notice to the Seller setting forth, in reasonable detail, each disputed item or
amount and the basis for the Buyer's disagreement therewith (the "Dispute
Notice"). The Dispute Notice shall set forth the Buyer's position as to the
proper Closing Net Working Capital. If no Dispute Notice is received by the
Seller on or prior to the last day of the Review Period, the Adjustment
Certificate shall be deemed accepted by the Buyer. In the event that the Buyer
delivers a Dispute Notice to the Seller, the Buyer will concurrently pay to the
Seller or the Seller will concurrently pay to the Buyer, as the case may be, any
undisputed portion of the amount which would be payable pursuant to the first
sentence of Section 1.3(d) if the Adjustment Certificate (and the amount of the
Closing Net Working Capital derived therefrom) were deemed accepted by the
Buyer, with interest on such amount as provided in Section 1.3(e). All payments
made by the Seller or the Buyer pursuant to the preceding sentence shall be made
by wire transfer of immediately available funds to an account or accounts
designated by the respective party for such purpose.
(b) For 30 days after the Seller's receipt of a Dispute
Notice, the parties shall endeavor in good faith to resolve by mutual agreement
all matters in the Dispute Notice. In the event the parties are unable to
resolve by mutual agreement any matter in the Dispute Notice within such 30-day
period, the Buyer and the Seller hereby agree that they shall engage KPMG LLP as
the "Accountant" (if KPMG LLP is unable or unwilling to serve as the Accountant,
the parties shall, within 15 days of the end of such 15-day period, agree on an
alternate independent accounting firm or have such selection made pursuant to
the rules of the American Arbitration Association (the "AAA") in the event they
are unable to agree within such allotted time period) in respect of this Section
1.3. The Seller and the Buyer shall submit the disputed matters, as described
in the Dispute Notice, together with a statement of facts agreed to by the
Seller and the Buyer and such arguments as either of them choose to make in
connection therewith in writing to the Accountant within 20 days after the
Accountant's engagement.
(c) The Seller and the Buyer shall use reasonable best
efforts to cause the Accountant to resolve the disputed matters based upon the
materials submitted to it pursuant to the last sentence of Section 1.3(b) within
30 days following the submission of such materials and the Accountant shall not
make any other determination. In connection with its resolution of the dispute,
the Accountant shall deliver to the Seller and the Buyer a report (the
"Adjustment Report") in which the Accountant shall, after considering all
matters set forth in the Dispute Notice, determine what adjustments, if any,
should be made to the Adjustment Certificate in order for it to comply with this
Section 1.3 and shall determine the appropriate Closing Net Working Capital on
that basis. The Adjustment Report shall set forth, in reasonable detail, the
Accountant's determination with respect to each of the disputed items or amounts
specified in the Dispute Notice, and the revisions, if any, to be made to the
Adjustment Certificate and the Closing Net Working Capital, together with
supporting calculations. All fees and expenses relating to this work of the
Accountant shall be borne by the Seller and the Buyer in inverse proportion as
they may prevail on the matters resolved by the Accountant, which proportionate
allocation will also be determined by the Accountant and be included in the
Adjustment Report. The Adjustment Report shall be final and binding upon the
Buyer and the Seller, shall be deemed a final arbitration award that is binding
on each of the Buyer and the Seller, and no party shall seek further recourse to
courts, other tribunals or otherwise, other than to enforce the Adjustment
Report. Judgment may be entered to enforce the Adjustment Report in any court
having jurisdiction over the party against which such determination is to be
enforced.
(d) Effective upon the end of the Review Period (if a timely
Dispute Notice is not delivered), or upon the resolution of all matters set
forth in the Dispute Notice by mutual agreement of the parties or by the
issuance of the Adjustment Report (if a timely Dispute Notice is delivered), the
Pre-Closing Purchase Price shall be (i) increased dollar-for-dollar by the
amount by which the Closing Net Working Capital exceeds the Estimated Closing
Net Working Capital or (ii) decreased dollar-for-dollar by the amount by which
the Closing Net Working Capital is less than the Estimated Closing Net Working
Capital. Any adjustment to the Purchase Price pursuant to this Section 1.3
shall be paid by the Buyer or the Seller, as the case may be, together with
interest as provided in Section 1.3(e), (i) on the fifth business day following
the end of the Review Period (if a timely Dispute Notice is not delivered), or
(ii) (A) with respect to undisputed amounts paid pursuant to the last sentence
of Section 1.3(a), concurrently with the delivery of a Dispute Notice to the
Seller and (B) giving effect to any payment made by the Buyer or the Seller as
described in the foregoing clause (A), five business days after resolution of
all matters set forth in the Dispute Notice by mutual agreement of the parties
or five business days after the date on which the Adjustment Report has been
received by the Seller and the Buyer (if a timely Dispute Notice is delivered).
Any such payment shall be made by wire transfer of immediately available funds
to an account or accounts designated by the Buyer or the Seller, as the case may
be, prior to the applicable payment date.
(e) Any interest payable pursuant to Section 1.3(a) or 1.3(d)
shall be paid at an annual rate equal to the "Prime Rate" as reported in the
Wall Street Journal on the Closing Date and shall be calculated on the basis of
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the actual days elapsed between the Closing Date and the payment date over 360
days.
Section 1.4 Time and Place of Closing
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Upon the terms and subject to the conditions of this Agreement, the closing of
the transactions contemplated by this Agreement (the "Closing") will take place
at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, Xxxx Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, at 9:00 a.m. (New York City time) on the third
business day following the date on which all the conditions that are susceptible
to being satisfied prior to the Closing to each party's obligations hereunder
have been satisfied or waived, or at such other date, place or time as the
parties may agree. The Closing will be effective at 11:59 P.M., New York City
time, on the Closing Date. The date on which the Closing occurs and the
transactions contemplated hereby become effective is referred to herein as the
"Closing Date."
Section 1.5 Deliveries by the Seller
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Subject to the terms and conditions hereof, at the Closing, the Seller will
deliver the following to the Buyer:
(a) A certificate or certificates representing the Shares,
accompanied by stock powers duly endorsed in blank or accompanied by duly
executed instruments of transfer;
(b) The resignations of all members of the board of directors
of the Company and its Subsidiaries (as hereinafter defined) and all officers of
the Company and its Subsidiaries who are employees of the Seller;
(c) A "FIRPTA" certificate substantially in the form set
forth as Exhibit B hereto;
(d) The officer's certificate provided for in Section 5.3(c);
(e) The opinions of counsel to the Seller, substantially in
the form of Exhibits C-1 and C-2 hereto;
(f) The Seller shall have delivered or to the Buyer a
certificate from an appropriate officer setting forth the authorization of the
execution of the Agreement and all agreements, documents and instruments to be
executed in connection herewith and the taking of any and all actions deemed
necessary or advisable to consummate the transactions contemplated herein; and
(g) All other documents, instruments and writings required to
be delivered by the Seller at or prior to the Closing Date pursuant to this
Agreement.
Section 1.6 Deliveries by the Buyer
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Subject to the terms and conditions hereof, at the Closing, the Buyer will
deliver the following to the Seller:
(a) The Pre-Closing Purchase Price, in immediately available
funds, in the manner set forth in Section 1.1 hereof;
(b) The officer's certificate provided for in Section 5.2(c);
and
(c) All other documents, instruments and writings required to
be delivered by the Buyer at or prior to the Closing Date pursuant to this
Agreement.
Section 1.7 Books and Records of the Company
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The Seller agrees to deliver to the Buyer or the Company at the Closing, as
requested by the Buyer, all books and records of the Company and its
Subsidiaries, including, but not limited to, correspondence, memoranda, minute
books, shareholder lists, books of account, personnel and payroll records and
the like, in electronic or paper formats, provided, however, that neither the
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Buyer nor any of its affiliates shall have the right to receive or obtain any
information relating to Taxes (as hereinafter defined) or Tax Returns (as
hereinafter defined) of the Seller, any of its affiliates, or any of their
respective predecessors other than information relating solely to the Company or
its Subsidiaries; however, data or work papers of the Company and any Subsidiary
of the Company contained in consolidated, combined or unitary Tax Returns shall
be made available to Buyer. As used in this Agreement, a "Subsidiary" of any
person means another person, (a) an amount of the voting securities, other
voting ownership or voting partnership or membership interests of which is
sufficient to elect at least a majority of its board of directors or other
governing body is owned or controlled directly or indirectly by such person or
(b) 50% or more of the equity interests of which is owned or controlled directly
or indirectly by such person.
Section 1.8 Transition Services
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Except as agreed to in writing by the Seller and the Buyer, at the
Closing all data processing, accounting, insurance (except for insurance
policies of the Seller which provide coverage with respect to pre-Closing
occurrences to the Company), banking, personnel, legal, communications and other
products and services provided to the Company and its Subsidiaries by the Seller
or any affiliate of the Seller (other than the Company or any of its
Subsidiaries) (including those identified in Section 2.18 of the disclosure
schedule of the Seller (the "Company Disclosure Schedule") including any
agreements or understandings (written or oral) with respect thereto, will
terminate without any further action or liability on the part of the parties
thereto. Notwithstanding the foregoing, in the absence of a written agreement,
the provision of any services (similar to those contemplated by the preceding
sentence) by the Seller to the Company or any of its Subsidiaries from and after
the Closing shall be for the convenience, and at the expense, of the Buyer only
and shall be furnished without any liability on the part of the Seller with
respect thereto.
Section 1.9 Intercompany Accounts
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Prior to the Closing Date, all intercompany accounts (including, without
limitation, intercompany loans) between the Company or one of its Subsidiaries,
on the one hand, and the Seller and its affiliates (excluding the Company and
its Subsidiaries), on the other hand, shall be settled through a cash payment of
the full amount of the respective obligation by the obligor to the creditor
party.
Section 1.10 Treatment of Seller Guaranties
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Following the Closing, the Buyer shall cause the Company to use its
reasonable best efforts to release and cancel the agreements set forth on
Section 1.10 of the Company Disclosure Schedule (the "Seller Guaranties");
provided, however, that to the extent that any of the Seller Guaranties cannot
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be so released and cancelled, the Buyer shall use its reasonable best efforts to
cause itself to be substituted for the Seller or any of its affiliates in
respect of such Seller Guaranties (or if not possible, added as the primary
obligor with respect thereto). In any event, the Buyer shall indemnify, defend
and hold harmless the Seller or its affiliates with respect to all liabilities
or expenses that might arise or be incurred by the Seller or its affiliates with
respect to the Seller Guaranties. For purposes of this Section 1.10,
"reasonable best efforts" shall not be deemed to require the payment of money to
any lenders, bond holders, trustees or their legal counsel or the payment of any
increased interest or other charges to said entities in an amount exceeding in
the aggregate $100,000. The Buyer agrees to make payments, up to an aggregate
of $100,000 to any lenders, bond holders, trustees or their legal counsel in
order to have the Seller Guarantees released and cancelled and the Seller agrees
to make any payments in excess of $100,000 in connection therewith.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
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The Seller hereby represents and warrants to the Buyer as follows:
Section 2.1 Organization; Etc.
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(a) Each of the Company and its Subsidiaries: (i) is a corporation validly
existing and in good standing under the laws of its jurisdiction of
organization; (ii) has all requisite corporate power and authority to own, lease
and operate its properties and assets and to carry on its business substantially
as it is now being conducted; and (iii) is duly qualified and in good standing
to do business in each jurisdiction in which the nature of its business or the
ownership, operation or leasing of its properties makes such qualification
necessary (each of such jurisdictions being listed in Section 2.1 of the Company
Disclosure Schedule), except where the failure to be existing and in good
standing, to have such power and authority or to be so qualified would not,
individually or in the aggregate, have a Company Material Adverse Effect (as
hereinafter defined). Section 2.1 of the Company Disclosure Schedule sets forth
a complete list, as of the date of this Agreement and the Closing Date, of all
of the Subsidiaries of the Company and their respective jurisdictions of
organization and capitalization. Except as set forth in Section 2.1 of the
Company Disclosure Schedule, the Company does not own any equity interest in any
corporation or other entity. The Seller has previously delivered to the Buyer
true and correct copies of the certificate of incorporation and by-laws or
comparable organizational documents of the Company and its Subsidiaries
(collectively, the "Organizational Documents") as in effect on the date hereof.
Neither the Company nor any of its Subsidiaries is in default of, or in
violation of, any provision of its respective Organizational Documents or
resolutions of its Board of Directors.
(b) As used in this Agreement, the term "Company Material
Adverse Effect" shall mean a material adverse change in, or effect on, the
business, results of operations or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole; provided, however, that in
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determining whether a Company Material Adverse Effect has occurred, the effects
of changes that exist on the date hereof and have been reflected in this
Agreement or disclosed in the Company Disclosure Schedule or that are generally
applicable to the industries in which the Company and its Subsidiaries operate
or to the United States economy generally shall be excluded from such
determination.
Section 2.2 Authority Relative to this Agreement
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The Seller has the corporate power and authority to execute, perform and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
requisite corporate action on the part of the Seller. This Agreement has been
duly and validly executed and delivered by the Seller and (assuming this
Agreement has been duly authorized, executed and delivered by the Buyer)
constitutes a valid and binding agreement of the Seller, enforceable against the
Seller in accordance with its terms, except that (a) such enforcement may be
subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other laws, now or hereafter in effect, relating to or limiting
creditors' rights generally and (b) enforcement of this Agreement, including,
among other things, the remedy of specific performance and injunctive and other
forms of equitable relief, may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Section 2.3 Capitalization; Ownership of Shares
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(a) The Shares represent all of the outstanding capital stock in the Company.
All Shares are validly issued, fully paid and nonassessable. Except for the
Shares, there are not, and at the Closing there will not be, any capital stock
or other equity interests in the Company issued or outstanding or any
subscriptions, voting trusts or other voting agreements, options, purchase
agreements, warrants, calls, rights, convertible securities or other agreements
or commitments of any character obligating the Company to issue, transfer or
sell any of its capital stock or other equity interests, or any agreements,
arrangements, or understandings granting any person any rights in the Company
similar to capital stock or other equity interests.
(b) All of the Shares are owned of record and beneficially by
the Seller free and clear of all liens, easements, pledges, charges, claims,
options, security interests, conditional sale or other encumbrances, except for
liens relating to Taxes not yet due and payable (collectively, "Liens"). The
consummation of the Stock Purchase will convey to the Buyer good title to the
Shares, free and clear of all Liens, except for those created by the Buyer or
arising out of ownership of the Shares by the Buyer.
(c) Except as set forth in Section 2.3(c) of the Company
Disclosure Schedule, all of the outstanding shares of capital stock of each of
the Company's Subsidiaries are beneficially owned by the Company, directly or
indirectly, and all such shares are validly issued, fully paid and nonassessable
and are owned by either the Company or one of its Subsidiaries free and clear of
all Liens. Except for the shares of capital stock referred to in the preceding
sentence, there are not, and at the Closing there will not be, any capital stock
or other equity interests in any Subsidiary of the Company issued or outstanding
or any subscriptions, voting trusts or other voting agreements, options,
purchase agreements, warrants, calls, rights, convertible securities or other
agreements or commitments of any character obligating such Subsidiary or any of
its affiliates to issue, transfer or sell any capital stock or other equity
interests, or any agreements, arrangements or understandings granting any person
any rights in such Subsidiary similar to capital stock or other equity
interests.
Section 2.4 Consents and Approvals; No Violations
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Except for applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "H-S-R Act"), or as set forth in
Section 2.4 of the Company Disclosure Schedule, neither the execution and
delivery of this Agreement by the Seller, nor the consummation by the Seller or
the Company of the transactions contemplated hereby will (a) conflict with or
result in any breach of any provision of the certificate of incorporation or
by-laws or comparable organizational documents of the Seller, the Company or any
Subsidiary of the Company, (b) result in a material violation or breach of, or
constitute (with or without due notice or lapse of time or both) a material
default (or give rise to any right of termination, renegotiation, cancellation
or acceleration) under, or require any material consent or notice under, any
material indenture, license, contract, agreement or other instrument or
obligation to which the Seller, the Company or any Subsidiary of the Company is
a party or by which any of them or any of their respective properties or assets
are bound, (c) materially violate any order, writ, injunction, judgment, decree
or award rendered by any Governmental Entity (as hereinafter defined) or any
statute, rule, code, treaty or regulation (collectively, "Laws" and,
individually, a "Law") applicable to the Seller, the Company or any Subsidiary
of the Company or any of their respective properties or assets, or (d) require
any material filing with, or the obtaining of any material notice, registration,
report, permit, authorization, consent or approval of, any governmental or
regulatory authority or court, domestic or foreign (a "Governmental Entity"),
except in the case of clauses (b), (c) and (d) of this Section 2.4 for any such
violations, breaches, defaults, rights of termination, cancellation or
acceleration or requirements that, individually or in the aggregate, (x) would
not adversely affect the ability of the Seller to consummate the transactions
contemplated by this Agreement or (y) become applicable as a result of the
business or activities in which the Buyer is or proposes to be engaged (in each
case, other than activities of the Company and its Subsidiaries) or as a result
of any acts or omissions by, or the status of or any facts pertaining to, the
Buyer.
Section 2.5 Financial Statements
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(a) Section 2.5(a) of the Company Disclosure Schedule contains the audited
consolidated balance sheets of the Company as of April 29, 2000, May 1, 1999,
May 2, 1998, and May 3, 1997 and the related audited profit and loss account of
the Company for the periods then ended (collectively, the "Annual Financial
Statements"). The Annual Financial Statements present fairly in all material
respects the consolidated financial condition of the Company and its
Subsidiaries as of such date and the results of its operations for the fiscal
periods then ended.
(b) The Annual Financial Statements, including the related schedules thereto,
have all been prepared in accordance with (i) the Company's accounting policies
consistently applied to the periods included therein as set forth in Section
2.5(b) of the Company Disclosure Schedule (the "Company Accounting Policies")
and (ii) U.K. GAAP consistently applied throughout the periods included therein
except as may be indicated in the notes thereto.
(c) Section 2.5(c) of the Company Disclosure Schedule contains the Company's
statement of cash flows for periods covered by the Financial Statements (the
"Cash Flow Statements"). The Cash Flow Statements (i) have been prepared from
the books and records of the Company; (ii) were prepared in accordance with the
Company Accounting Policies; and (iii) present fairly in all material respects
the cash flows of the Company for the periods presented.
Section 2.6 Absence of Undisclosed Liabilities
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Except for (a) current liabilities or current obligations incurred in the
ordinary course of business and consistent with past practice since January 29,
2000, (b) liabilities or obligations to the extent accrued or reserved against
in the Financial Statements or (c) liabilities or obligations disclosed herein
or in the Company Disclosure Schedule, the Company and its Subsidiaries have no
liabilities or obligations (whether direct, indirect, accrued, contingent or
otherwise) that individually or in the aggregate would have a Company Material
Adverse Effect.
Section 2.7 Absence of Certain Changes
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Except as set forth in Section 2.7 of the Company Disclosure Schedule or as
otherwise contemplated by this Agreement, since January 29, 2000 through the
date of this Agreement and the Closing Date, (i) the business of the Company and
its Subsidiaries has been conducted only in the ordinary course, (ii) there has
not been any development or event that has had or would reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse Effect,
and (iii) to the knowledge of the Seller, there has not been any transaction,
act, circumstance or event that if it occurred after January 29, 2000 without
the prior consent of the Buyer would constitute a breach of Section 4.1 assuming
that Section 4.1 is applicable only for the specific purposes of this
representation.
Section 2.8 Litigation
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Section 2.8 of the Company Disclosure Schedule sets forth, as of the date
hereof, all actions, hearings, suits, complaints, appeals, arbitrations,
written employee grievances, claims, proceedings (collectively, "Legal
Proceedings") or, to the knowledge of the Seller, governmental investigations
pending or, to the knowledge of the Seller, threatened against the Seller, the
Company or any of the Company's Subsidiaries or that challenge or that may have
the effect of preventing, delaying, making illegal or otherwise interfering with
consummation of the transactions contemplated by this Agreement, by or before
any court or Governmental Entity. Since the date hereof to the Closing, except
as set forth in Section 2.8 of the Company Disclosure Schedule, no Legal
Proceedings shall have been filed or, to the knowledge of the Seller,
governmental investigations instituted, or to the knowledge of the Seller,
threatened against the Seller, the Company or any of the Company's Subsidiaries
or that challenge or that may have the effect of preventing, delaying, making
illegal or otherwise interfering with consummation of the transactions
contemplated by this Agreement, by or before any court or Governmental Entity.
Section 2.9 Compliance with Law
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(a) The business of the Company and its Subsidiaries is not being and has not
been conducted in material violation of any applicable Law (other than Environ-
mental Laws (as defined in Section 2.19(b)) which are the subject of the
representations and warranties set forth in Section 2.19) or (with or without
the lapse of time or giving of notice) any order, decision, finding, citation,
subpoena, verdict, writ, injunction or decree of any court, arbitrator or
Governmental Entity. The Company and its Subsidiaries have (i) all permits,
licenses, waivers and other governmental authorizations, consents, and approvals
necessary to conduct their business as currently conducted (collectively, the
"Permits"), or (ii) are capable of obtaining all Permits without incurring,
individually or in the aggregate, any material fine, penalty or liability.
Neither the Company nor any of its Subsidiaries is in violation of the terms of
any Permit, except for violations that, alone or in the aggregate, would not
have a Company Material Adverse Effect. The Company is not subject to any
unpaid fine for any continuing sanction or noncompliance with any Law.
(b) To the knowledge of the Seller, there is no investigation
or review pending or threatened by any Governmental Entity with respect to the
Company or its Subsidiaries or any of their business facilities, operations,
agreements, products or labels.
(c) All of the packaging and labels therein (including, but
not limited to, nutritional, net weight, ingredient declaration and claims) used
by the Company and its Subsidiaries comply in all material respects with
applicable Law.
(d) The Company and its Subsidiaries have not received any
written notice or written communication alleging material noncompliance by the
Company or any of its Subsidiaries with any Law or Permit that has not been
cured.
Section 2.10 Employee Benefit Plans
------------------------
(a) Section 2.10(a) of the Company Disclosure Schedule contains a true and
complete list, as of the date of this Agreement and as of the Closing Date, of
each deferred compensation and each bonus or other incentive compensation, stock
purchase, stock option and other equity compensation or ownership plan, program,
agreement or arrangement, each severance or termination pay, medical, surgical,
hospitalization, life insurance and other "welfare" plan, fund or program
(within the meaning of Section 3(1) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA")); each profit-sharing, stock bonus or other
"pension" plan, fund or program (within the meaning of Section 3(2) of ERISA);
each employment, retention, consulting, termination or severance agreement; and
each other employee benefit plan, fund, program, agreement or arrangement, in
each case, that is sponsored, maintained or contributed to or required to be
contributed to by the Company or any of its Subsidiaries, or to which the
Company or any of its Subsidiaries is a party or is financially responsible, for
the benefit of any employee or director or former employee or director (or any
of their respective beneficiaries), of the Company or its Subsidiaries (the
"Company Plans").
(b) With respect to each Company Plan, the Seller has
heretofore delivered or made available to the Buyer true and complete copies of
all of the following documents:
(i) a copy of the Company Plan and any amendments thereto;
(ii) a copy of the most recent annual report on Internal
Revenue Service Form 5500 and actuarial report, if required under ERISA, and the
most recent report prepared with respect thereto in accordance with Statement of
Financial Accounting Standards No. 87;
(iii) a copy of the most recent Summary Plan Description
required under ERISA with respect thereto;
(iv) if the Company Plan is funded through a trust or any
third-party funding vehicle, a copy of the trust or other funding agreement and
the latest financial statements thereof and all related agreements; and
(v) the most recent determination letter or pending
determination letter received from the Internal Revenue Service with respect to
each Company Plan intended to qualify under Section 401 or 501(c) of the
Internal Revenue Code of 1986, as amended (the "Code").
(c) No liability under Title IV or Section 302 of ERISA has
been incurred by the Company or any of its Subsidiaries that has not been
satisfied in full, and no condition exists that presents a material risk to the
Company or any of its Subsidiaries of incurring any such liability, other than
liability for premiums due the Pension Benefit Guaranty Corporation (the "PBGC")
(which premiums have been paid when due). No Company Plan has, to the knowledge
of the Seller, engaged in a "prohibited transaction" (as defined in Section 4975
of the Code or Section 406 of ERISA), no Company Plan subject to Title IV of
ERISA (a "Title IV Company Plan") has been terminated by the PBGC or has been
the subject of a "reportable event" (as defined in Section 4043 of ERISA and the
regulations thereunder) for which the 30-day notice requirement has not been
waived and the Company has not received any notice of intent by the PBGC to
terminate any such Company Plan.
(d) With respect to each Title IV Company Plan, the present
value of accrued benefits under such Title IV Company Plan, based upon the
actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such Title IV Company Plan's actuary with respect to such
Title IV Company Plan did not exceed, as of its latest valuation date, the then
current value of the assets of such Title IV Company Plan allocable to such
accrued benefits.
(e) No Title IV Company Plan or any trust established
thereunder has incurred any "accumulated funding deficiency" (as defined in
Section 302 of ERISA and Section 412 of the Code), whether or not waived, as of
the last day of the most recent fiscal year of each Title IV Company Plan ended
prior to the Closing Date.
(f) Neither the Company nor any ERISA Affiliate (as defined
below) has withdrawn (including a partial withdrawal) from any multi-employer
plan within the meaning set forth in Section 3(37) of ERISA ("Multi-Employer
Plan") with respect to which there is or could reasonably expected to be any
outstanding liability. No event has occurred or circumstance exists (including
the consummation of the transaction contemplated in this Agreement) that could
reasonably be expected to result in liability to the Buyer, the Company or any
of its Subsidiaries with respect to a Multi-Employer Plan. "ERISA Affiliate"
means the Company and any other entity that, together with the Company, would be
treated as a single employer under Section 414 of the Code.
(g) Each Company Plan has been operated and administered in
all material respects in accordance with its terms and applicable Law, including
but not limited to ERISA and the Code, and each Company Plan intended to be
"qualified" under Section 401(a) of the Code either has received a favorable
determination letter from the Internal Revenue Service to such effect or a
request for such letter is pending. To the knowledge of the Seller, there is no
fact, condition or set of circumstances existing that would adversely affect
such favorable determination. To the knowledge of the Seller, there are no
investigations pending or threatened in respect of any Company Plan by any
governmental entity.
(h) Except as set forth on Schedule 2.10(h), no Company Plan
provides medical, surgical, hospitalization, death or similar benefits (whether
or not insured) for employees or former employees (or their beneficiaries) of
the Company or any of its Subsidiaries for periods extending beyond their
respective dates of retirement or other termination of service, other than (i)
coverage mandated by applicable law, (ii) death benefits under any "pension
plan" or (iii) benefits the full cost of which is borne by the current or former
employee (or his beneficiary).
(i) Section 2.10(i) of the Company Disclosure Schedule sets
forth in reasonable detail the calculation, on an individual by individual
basis, of any amounts payable or that could become payable under the Company
Plans that may fail to be deductible for Federal income tax purposes by virtue
of Section 280G of the Code.
(j) The consummation of the transactions contemplated by this
Agreement will not, either alone or in combination with another event, (i)
entitle any current or former employee, director or officer of the Company or
any of its Subsidiaries to severance pay, unemployment compensation or any other
payment, (ii) accelerate the time of payment or vesting, or increase the amount
of compensation due any such employee, director or officer or (iii) require the
immediate funding or financing of any compensation or benefits.
(k) Except as set forth in Section 2.10(k) of the Company
Disclosure Schedule, there are no pending, or to the knowledge of the Seller,
threatened or anticipated claims by or on behalf of any Company Plan, by any
employee or beneficiary covered under any such Company Plan, or otherwise
involving any such Company Plan (other than routine claims for benefits).
(l) No statement, either written or oral, has been made by
the Company or its Subsidiaries or the Seller or its affiliates to any person
with regard to any Company Plan that was not in accordance with the applicable
Company Plan and that would be reasonably likely to have an adverse economic
consequence to the Buyer, or the Company or its Subsidiaries.
Section 2.11 Labor Relations
----------------
Except as set forth in Section 2.11 of the Company Disclosure Schedule, (a) the
Company and its Subsidiaries are and have been, in compliance in all material
respects with all applicable Laws respecting employment and employment
practices, terms and conditions of employment, wages, hours of work and
occupational safety and health, and are not engaged in any unfair labor
practices as defined in the National Labor Relations Act or other applicable
Law; (b) there is no labor strike, labor arbitration or grievance, slowdown,
stoppage, lockout or other labor dispute actually pending, or, to the knowledge
of the Seller, threatened against or affecting the Company or any of its
Subsidiaries; (c) neither the Company nor any of its Subsidiaries is a party to
or bound by any collective bargaining or similar agreement with any labor
organization; (d) no unfair labor practice charge has been properly served on
the Company or any of its Subsidiaries by any employee of the Company or union
with the National Labor Relations Board in accordance with applicable Law or
other legal requirements; (e) to the knowledge of the Seller, there are no
activities or proceedings of any labor union or labor organization to organize
any of the employees of the Company or any of its Subsidiaries; and (f) to the
knowledge of the Seller, there are no other arrangements (whether written or
oral) between the Company or its Subsidiaries and any union other than those
collective bargaining agreement or Company Plans set forth on Section 2.10 of
the Company Disclosure Schedule.
Section 2.12 Taxes
-----
Except as would not have a Company Material Adverse Effect or as set forth on
Section 2.12 of the Company Disclosure Schedule:
(a) The Company and each of its Subsidiaries (i) has filed
(or there has been filed on its behalf) with the appropriate taxing authorities
all Tax Returns (as defined in Section 4.7) required to be filed by it, and all
such Tax Returns are true, correct and complete in all material respects, and
(ii) has paid or made adequate provision in the Closing Balance Sheet for the
payment of all Taxes (as defined in Section 4.7) shown to be due and payable on
such Tax Returns;
(b) There are no outstanding waivers in writing regarding the
application of any statute of limitations in respect of Taxes of the Company or
any of its Subsidiaries;
(c) To the knowledge of the Seller, there is no suit, audit,
claim or assessment pending or proposed in writing with respect to Taxes of the
Company or any of its Subsidiaries;
(d) There are no Liens for Taxes upon the assets of the Company
or any of its Subsidiaries, except for Liens for Taxes being contested in good
faith; and
(e) There are no written assessments of Taxes from any taxing
authority against the Company or its Subsidiaries except for those reflected on
the Interim Balance Sheet or the Closing Balance Sheet.
Section 2.13 Contracts
---------
(a) Section 2.13(a) of the Company Disclosure Schedule lists, as of the date of
this Agreement, all written or oral contracts and agreements to which the
Company or any of its Subsidiaries is a party or by which any of its properties
or assets are bound that are material to the business, properties or assets of
the Company and its Subsidiaries, taken as a whole, including, without
limitation: (i) employment, personal services, consulting, non-competition,
severance, golden parachute or director or officer indemnification agreements or
any employee indemnification agreement; (ii) contracts granting a right of first
refusal or first negotiation with respect to any assets or line of business of
the Company or any of its Subsidiaries or which restrict the Company and its
Subsidiaries from engaging in any business or from competing with other persons
in any territories or businesses; (iii) partnership, profit sharing or joint
venture agreements; (iv) agreements for the acquisition, sale or lease of
properties, ingredients or fixed assets of the Company or any of its
Subsidiaries (by merger, purchase or sale of assets or stock or otherwise)
entered into since June 30, 1999 for aggregate consideration per agreement of
$50,000 or more; (v) contracts or agreements with any Governmental Entity; (vi)
leases for the Leased Real Property (as hereinafter defined); (vii) commodity
forward purchase contracts for the aggregate consideration per agreement of
$50,000 or more; (viii) any broker, distributor, agency or consulting agreement
that cannot be cancelled by the Company without penalty, payment or premium on
notice of 30 days or less; (ix) any contract or arrangement under which the
Company has made a loan to any director, officer, employee, customer or
supplier; (x) any contract providing for the payment in excess of $50,000 to or
by any person based on sales, purchases or profits in the nature of a commission
but not direct payments for the sale of goods; (xi) any contract regarding any
Indebtedness; (xii) all collective bargaining agreements; (xiii) each contract
for capital expenditures with a remaining balance of $50,000; (xiv) any contract
in the nature of a rebate, discount, bonus, slotting allowance or other payment
with respect to the sale of any finished goods under which the Company or any of
its Subsidiaries is obligated to pay more than $50,000; (xv) any agreement
restricting how or where the Company or any of its Subsidiaries can conduct
their business; and (xvi) all amendments or supplements of, or commitments and
agreements to enter into, any of the foregoing (collectively, together with any
such contracts entered into in accordance with Section 4.1 hereof, the
"Contracts"). The parties acknowledge and agree that the Buyer shall not be
entitled to assert a breach of this Section 2.13(a) in the nature of recovering
amounts paid by the Company after the Closing under any Contract omitted from
disclosure under Section 2.13(a) of the Company Disclosure Schedule if the
liability associated with such omitted Contract has been accrued as a liability
in accordance with GAAP on the April 29, 2000 financial statements of the
Company as such accruals may be adjusted in the calculation of the Closing Net
Working Capital.
As used in this Agreement, "Indebtedness" means, for any person, any
liability contingent or otherwise and relating to: (i) indebtedness, including
interest and any prepayment penalties, expenses, or fees thereon created, issued
or incurred by such person for borrowed money (whether by loan or the issuance
and sale of debt securities or the sale of property to another person subject to
an understanding or agreement, contingent or otherwise, to repurchase such
property from such person); (ii) obligations of such person to pay the deferred
purchase or acquisition price of property or services, other than trade accounts
payable arising, and accrued expenses incurred, in the ordinary course of
business and consistent with such person's customary trade practices; (iii)
indebtedness of another person secured by a Lien on the property of such person;
whether or not the respective Indebtedness so secured has been assumed by such
person; (iv) payment obligations of such person in respect of letters of credit,
bankers' acceptances or similar instruments issued or accepted by banks and
other financial institutions for account of such person; (v) capital lease
obligations of such person; and (vi) indebtedness of others guaranteed by such
person.
(b) Except as set forth in Section 2.13(b) of the Company
Disclosure Schedule: (i) there is no material default under any Contract by the
Company or any of its Subsidiaries or, to the knowledge of the Seller, by any
other party thereto, and no event has occurred that with the lapse of time or
the giving of notice or both would constitute a material default thereunder by
the Company or any of its Subsidiaries, or to the knowledge of the Seller, any
other party; (ii) no party to any such Contract has given notice to the Company
or any of its Subsidiaries of or made a claim against the Company or any of its
Subsidiaries with respect to any material breach or default thereunder; (iii) as
of the date hereof, the Company is not currently in active renegotiation
discussions pursuant to any Contract except for Contracts with customers who
have purchase orders at a fixed price that may be cancelled by such customers at
their convenience; (iv) no Contract contains a provision that expressly permits
a party to the Contract to renegotiate the terms of such Contract which would be
triggered as a result of the consummation of the transactions contemplated
herein; and (v) assuming such Contracts have been duly authorized, executed and
delivered by the respective other parties thereto, all the Contracts are valid,
binding and enforceable (except as such enforceability may be subject to any
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other
laws, now or hereafter in effect, relating to or limiting creditors' rights
generally) obligations of the Company or one of its Subsidiaries.
Section 2.14 Real Property
--------------
(a) Section 2.14 of the Company Disclosure Schedule sets forth a list of all
real property and interests in real property owned in fee by the Company and its
Subsidiaries (the "Owned Real Property") and contracts to purchase real property
in fee. Section 2.14 of the Company Disclosure Schedule also sets forth a list
of all real property leased or subleased by the Company and its Subsidiaries and
the leases with respect thereto (the "Leased Real Property"). With respect to
each parcel of Leased Real Property, the Company has not entered into any
written sublease, license, option, right, concession or other agreement or
arrangement granting to any person the right to use such parcel of Leased Real
Property or any portion thereof or interest therein, except as disclosed in
Section 2.14 of the Company Disclosure Schedule.
The Company or one of its Subsidiaries holds good and marketable title
to the Owned Real Property and has valid leasehold interests in the Leased Real
Property, free and clear of any Liens, except for the Permitted Liens (as
hereinafter defined). As used herein, the term "Permitted Liens" means (i)
Liens which are being contested in good faith and by appropriate proceedings;
(ii) carriers', warehouseman's, mechanic's, materialmen's, repairmen's or other
like Liens arising in the ordinary course of business which are less than
$100,000 in amount in the aggregate and which are being contested in good faith
and by appropriate proceedings; (iii) recorded easements, rights-of-way,
encroachments, restrictions, conditions and other similar encumbrances incurred
or suffered in the ordinary course of business that do not materially restrict
the current use of the Owned Real Property or Leased Real Property; and (iv)
other nonmaterial title defect or Liens that are capable of being cured without
expenditures in excess of $25,000.
To the knowledge of the Seller, the use and operation of the Owned
Real Property and the Leased Real Property, and, to the knowledge of the persons
set forth in Section 2.14 of the Company Disclosure Schedule, the planned use of
the Owned Real Property and the Leased Real Property as of the date of this
Agreement do not violate any order of any Governmental Entity affecting or
relating to the Owned Real Property or the Leased Real Property, or any
building, zoning, subdivision or other land use or similar Law. There are no
pending, or to the knowledge of the Seller, threatened condemnation proceedings
relating to the Owned Real Property or the Leased Real Property that would,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
(b) The Company's facilities located in the City of Dunkirk, New York
and referred to as 000 Xxxxxxxxx Xxxxxx and 00-00 Xxxxxxx Xxxxxx are located on
the properties described in Section 7.2 to the Company Disclosure Schedule. To
the extent the surveys received by the Buyer as contemplated in Section 4.22
confirm the accuracy of this Section 2.14(b), then the parties agree that such
representation shall terminate immediately upon the Closing. To the extent the
surveys received by the Buyer as contemplated in Section 4.22 do not confirm the
accuracy of this Section 2.14(b), then the parties agree that such
representation shall survive the Closing and shall terminate on the second
anniversary of the Closing and the terms of Section 7.2(b)(i) shall not apply to
a breach of this Section 2.14(b).
Section 2.15 Intellectual Property
----------------------
(a) Except as set forth in Section 2.15(a) of the Company Disclosure Schedule,
the Company or one of its Subsidiaries has, or will as of the Closing have, such
ownership of or such rights by license or other valid and enforceable agreement
to use all inventions, patents and patent applications, trademarks and service
marks, trademark and service xxxx registrations and applications, trade names,
trade dress, logos, company names, Internet domain names, copyrights, copyright
registrations and applications, trade secrets, know-how, production processes
(including all technology and equipment used therein), proprietary recipes and
formulae and computer software programs (including all data and related
documentation) and all common law rights to the foregoing that are used or held
for use by the Company and are necessary to permit the Company and its
Subsidiaries to conduct their business in substantially the same manner as
currently conducted (collectively, the "Intellectual Property"). Section
2.15(a) of the Company Disclosure Schedule lists all (i) trademark and service
xxxx registrations and applications, patent and patent applications and
copyright registrations and applications owned by the Company and its
Subsidiaries and (ii) material third party patents, copyrights, trademarks and
service marks used by the Company and its Subsidiaries, as of the date of this
Agreement.
(b) The conduct of the business of the Company and its Subsidiaries
as currently conducted does not infringe in any material respect upon the
proprietary Intellectual Property rights of any third party. To the knowledge
of the Seller, there are no present or threatened material infringements
of the Intellectual Property by any third party. Except as set forth in
Section 2.15(b) of the Company Disclosure Schedule, there are no pending or,
to the knowledge of Seller, threatened proceedings or litigation or other
adverse claims by any person against the use by the Company or one of its
Subsidiaries of any Intellectual Property that is owned by the Company or one of
its Subsidiaries or licensed to the Company or one of its Subsidiaries.
(c) All computer software programs included in the Intellectual
Property (i) were developed by employees of the Company or one of its Subsidi-
aries within the scope of their employment, (ii) were developed as "works-made-
for-hire" as that term is defined under Section 101 of the United States
copyright laws, pursuant to a valid and enforceable written agreement,
(iii) were assigned to the Company or one of its Subsidiaries pursuant to a
valid and enforceable written agreement or (iv) are duly licensed to the Company
or one of its Subsidiaries for use in its business as currently conducted.
(d) Section 2.15(d) of the Company Disclosure Schedule sets forth a
list of all material Intellectual Property licensed by the Company or any of its
Subsidiaries to an unaffiliated party.
Section 2.16 Year 2000 Compliance
----------------------
As of the date of this Agreement, the Seller is not aware of any Year 2000
compliance problem in any of its mission critical internal systems and software.
In addition, the Seller has not received any notification from any supplier of
products and services to the Company of any Year 2000-related disruption in such
suppliers' businesses.
Section 2.17 Assets
------
Except as set forth in Section 2.17(a) of the Company Disclosure Schedule, the
Company and its Subsidiaries have good and marketable title to, or a valid
leasehold interest in or right to use by license or otherwise, the properties
and assets used or held for use by it on or immediately prior to the date
hereof, or reflected in the Financial Statements or acquired after the date
thereof (collectively, the "Assets"), free and clear of all Liens, except for
(i) properties and assets disposed of in the ordinary course of business
consistent with past practice and not in violation of Section 4.1, (ii) Liens
for Taxes that are being contested in good faith and (iii) Liens that are not
material to the value of the properties or assets encumbered and that do not
impair in any material respect the current use or operation of such properties
and assets.
(b) Except as set forth in Section 2.17(b) of the Company
Disclosure Schedule, the Assets include or will include as of the Closing Date,
without limitation, all personal property, both tangible and intangible,
necessary to conduct the business of the Company and its Subsidiaries
substantially in the same manner as conducted by the Company and its
Subsidiaries on or immediately prior to the date hereof.
Section 2.18 Affiliate Transactions
-----------------------
Section 2.18 of the Company Disclosure Schedule sets forth a complete and
correct list as of the date hereof of all contracts and agreements (including
the products and services provided to the Company by the Seller as referred to
in Section 1.8) to which the Company or any of its Subsidiaries, on the one
hand, and the Seller or any of its affiliates (other than the Company and its
Subsidiaries), on the other hand, are a party that are in effect as of the date
hereof.
Section 2.19 Environmental Matters
----------------------
(a) Except as set forth in Section 2.19 of the Company Disclosure
Schedule:
(i) each of the Company and its Subsidiaries is, and have been, in
compliance in all material respects with all applicable Environmental Laws and
neither the Company nor its Subsidiaries are subject to any order, decree,
consent or rule relating to Environmental Laws;
(ii) there is no Environmental Claim pending or, to the knowledge
of the Seller, threatened, against (A) the Company or any of its Subsidiaries,
or (B) any real or personal property or operations which the Seller owns, leases
or operates or, to the knowledge of the Seller, formerly owned, operated or
leased, in whole or in part;
(iii) There have been no storage, treatment or Releases of any
Hazardous Materials by the Company or any of its Subsidiaries, or, to the
knowledge of the Seller, by any other person that would be reasonably likely to
form the basis of any Environmental Claim against the Company or any of its
Subsidiaries;
(iv) No Hazardous Materials are stored or have been stored by the
Company or any of its Subsidiaries, or, to the knowledge of the Seller, by any
other person at the Company's Owned Real Estate or Leased Real Estate other than
those Hazardous Materials that are (A) necessary to conduct the Company's
operations, (B) in quantities reasonably related to the Company's size of
operations and (C) not in violation of Environmental Law;
(v) the Company and its Subsidiaries possess all Permits required
under any Environmental Laws and are in compliance with such Permits in all
material respects; and
(vi) the Seller has provided the Buyer with accurate copies of all
reasonably relevant documents relating to environmental matters.
(b) For purposes of this Agreement:
(i) "Environmental ClaimEnvironmental Claim" means any and all
administrative or judicial actions, demands, information requests, directives,
claims, liens, investigations, proceedings or notices of noncompliance,
violation or status as a potentially responsible person or otherwise liable
party by any person (including, without limitation, any Governmental Entity)
relating to or alleging potential liability (including, without limitation, for
investigatory or cleanup costs, natural resources damages, property damages,
personal injuries or penalties) arising out of or resulting from (A) the
presence, or Release or threatened Release into the environment, of any
Hazardous Materials at any location; or (B) any violation or alleged violation
of any Environmental Law.
(ii) "Environmental LawsEnvironmental Laws" means all applicable
foreign, federal, state and local Laws and judicial opinions or decisions by
administrative law judges in effect on the date hereof and relating to
pollution, the environment (including, without limitation, ambient air, surface
water, groundwater, land surface or subsurface strata) or protection of human
health including, without limitation, laws and regulations relating to Hazardous
Materials.
(iii) "Hazardous MaterialsHazardous Materials" means any
chemicals, materials or substances, which are defined as "hazardous
substanceshazardous substances," "hazardous wasteshazardous wastes," "Hazardous
Materialshazardous materials," "asbestos," "extremely hazardous
substancesextremely hazardous substances," "toxic," "radioactive materials,"
"toxic substancestoxic substances,"
"pollutantspollutants,contaminantspollutants," "contaminants," "petroleum" or
"oils" or regulated as such under any Environmental Law;
(iv) "ReleaseRelease" means any release, spill, emission, leaking,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the environment (including, without limitation, ambient air, soil, surface
water, or groundwater) or into or out of any property, including the movement of
Hazardous Materials through or in the air, soil, surface water, groundwater or
property; and
(v) "Remediation Standard" means a numerical standard that defines
the concentrations of Hazardous Materials that may be permitted to remain in any
environmental media after an investigation, removal, remediation or containment
of a Release or threatened Release of Hazardous Materials.
Section 2.20 Brokers; Finders and Fees
---------------------------
Except for Warburg Dillon Read, whose fees will be paid by the Seller, neither
the Seller nor the Company or any of its Subsidiaries has employed any
investment banker, broker or finder or incurred any liability for any investment
banking fees, brokerage fees, commissions or finders' fees in connection with
this Agreement or the transactions contemplated hereby.
Section 2.21 Inventory
---------
All inventory, finished goods, raw materials, packaged goods or work-in-progress
reflected in the Financial Statements as currently owned by the Company and all
of its Subsidiaries in the aggregate (a) have been valued at cost or at market,
whichever is lower, in accordance with U.K. GAAP, and (b) are of a quality and
quantity usable and salable in the ordinary course of business.
Section 2.22 Insurance
---------
All of the insurance maintained by the Seller on behalf of the Company provides
coverage on an occurrence basis except for director and officer liability
insurance which is provided on a claims made basis. As of the date hereof, no
loss limits of the Seller's insurance policies have been exhausted or materially
impaired and except as set forth on Schedule 2.22 of the Company Disclosure
Schedule, the Seller has no knowledge of any facts or circumstances that could
reasonably be expected to exhaust such limits. All of the Seller's insurance
policies which provide the Company with coverage with respect to pre-Closing
occurrences will remain in full force and effect after the Closing. At no time
since the acquisition of the Company by Xxxxxxx has the Company been without
substantially the same insurance coverage as presently in place so as to cause
the Company or its insured persons to have a material gap in insurance coverage.
Section 2.23 Customers
---------
Section 2.23 of the Company Disclosure Schedule lists the top 15 customers of
the Company and its Subsidiaries with respect to revenues generated from such
customers as of January 31, 2000 (the "Top 15 Customers"). Except as set forth
in Section 2.23 of the Company Disclosure Schedule, to the knowledge of the
Seller, none of the Top 15 Customers are currently undertaking an account review
with the Company or any of its Subsidiaries and the Seller does not reasonably
believe that any of the Top 15 Customers are actively considering terminating
their business relationship with the Company or any of its Subsidiaries.
Section 2.24 Records
-------
The corporate record books of the Company and each of its Subsidiaries contain
accurate and complete records of all material meetings and accurately reflect
all other actions taken by the stockholders and boards of directors of the
Company and its Subsidiaries and have been maintained in accordance with good
business practices and all applicable Law.
Section 2.25 Receivables
-----------
Except as set forth in Section 2.25 of the Company Disclosure Schedule, all
existing accounts receivable of the Company (including those accounts receivable
reflected on the Closing Balance Sheet that have not yet been collected)
represent valid obligations of customers of the Company arising from bona fide
transactions entered into in the ordinary course of business.
Section 2.26 Bank Accounts
--------------
Section 2.26 of the Company Disclosure Schedule sets forth the name of each
bank, safe deposit company or other financial institution in which the Company
or any of its Subsidiaries has an account, lock box or safe deposit box and the
names of all persons authorized to draw thereon or have access thereto.
Section 2.27 Powers of Attorney
--------------------
Except as set forth on Section 2.27 of the Company Disclosure Schedule, there
are no outstanding powers of attorney executed by or on behalf of the Company or
any of its Subsidiaries in favor of the Seller or its affiliates or any of their
respective employees, officers or directors.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
------------------------------------------------
The Buyer hereby represents and warrants to the Seller as follows:
Section 3.1 Organization; Etc.
-------------------
The Buyer is a Nevada corporation validly existing and in good standing under
the laws of the jurisdiction of its organization.
Section 3.2 Authority Relative to this Agreement
----------------------------------------
The Buyer has the corporate power and authority to execute, perform and deliver
this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized by all
requisite corporate action on the part of the Buyer. This Agreement has been
duly and validly executed and delivered by the Buyer and (assuming this
Agreement has been duly authorized, executed and delivered by the Seller)
constitutes a valid and binding agreement of the Buyer, enforceable against the
Buyer in accordance with its terms, except that (a) such enforcement may be
subject to any bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other laws, now or hereafter in effect, relating to or limiting
creditors' rights generally and (b) enforcement of this Agreement, including,
among other things, the remedy of specific performance and injunctive and other
forms of equitable relief, may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.
Section 3.3 Consents and Approvals; No Violations
-----------------------------------------
Except for applicable requirements of the H-S-R Act or as set forth in Section
3.3 of the disclosure schedule being delivered by the Buyer to the Seller
concurrently herewith (the "Buyer Disclosure Schedule"), neither the execution
and delivery of this Agreement by the Buyer nor the consummation by the Buyer of
the transactions contemplated hereby will (a) conflict with or result in any
breach of any provision of the certificate of incorporation or by-laws of the
Buyer, (b) result in a material violation or breach of, or constitute (with or
without due notice or lapse of time or both) a material default (or give rise to
any right of termination, renegotiation, cancellation or acceleration) under, or
require any material consent or notice under, any indenture, license, contract,
agreement or other instrument or obligation to which the Buyer or any of its
subsidiaries is a party or by which any of them or any of their respective
properties or assets may be bound, (c) materially violate any order, writ,
injunction, judgment, decree or Laws applicable to the Buyer, any of its
subsidiaries or any of their respective properties or assets, or (d) require any
material filing with, or the obtaining of any material notice, registration,
report, permit, authorization, consent or approval of, any Governmental Entity,
except in the case of clauses (b), (c) and (d) of this Section 3.3 for any such
violations, breaches, defaults, rights of termination, cancellation or
acceleration or requirements that, individually or in the aggregate, would not
have a Buyer Material Adverse Effect (as hereinafter defined). As used in this
Agreement, the term "Buyer Material Adverse Effect" shall mean an event, change
or circumstance that would adversely affect the ability of the Buyer to
consummate the transactions contemplated hereby or to perform its obligations
hereunder.
Section 3.4 Acquisition of Shares for Investment; Ability to
------------------------------------------------
Evaluate and Bear Risk
-------------------------
(a) The Buyer is acquiring the Shares for investment and not with a view toward,
or for sale in connection with, any distribution thereof, nor with any present
intention of distributing or selling such Shares. The Buyer agrees that the
Shares may not be sold, transferred, offered for sale, pledged, hypothecated or
otherwise disposed of without registration under the Securities Act of 1933, as
amended, (the "Act") and any applicable state securities Laws, except pursuant
to an exemption from such registration under the Act and such Laws.
(b) The Buyer (i) is able to bear the economic risk of holding the Shares for an
indefinite period, (ii) can afford to suffer the complete loss of its investment
in the Shares, and (iii) has knowledge and experience in financial and business
matters such that it is capable of evaluating the risks of the investment in the
Shares.
Section 3.5 Availability of Funds
-----------------------
The Buyer has delivered, prior to the date of this Agreement, true and complete
copies of the following "highly confident" letter to the Seller received in
connection with the financing of the transactions (the "Financing") contemplated
by this Agreement: Highly Confident Letter (the "Highly Confident Letter"),
dated as of June 14, 2000, from Bank One Corporation in favor the Ralcorp
Holdings, Inc. ("Buyer Parent") as in effect on the date hereof. To the
knowledge of the Buyer, the Highly Confident Letter is in full force and effect.
The financing pursuant to the Highly Confident Letter will provide the Buyer
with sufficient funds in cash or cash equivalents to pay the Purchase Price and
otherwise to consummate the transactions contemplated by this Agreement.
Section 3.6 Litigation
----------
There is no claim, action, suit, proceeding or, to the knowledge of the Buyer,
governmental investigation pending or, to the knowledge of the Buyer, threatened
against the Buyer or any of its subsidiaries by or before any court or
Governmental Entity that, individually or in the aggregate, would have or would
reasonably be expected to have a Buyer Material Adverse Effect.
Section 3.7 Buyer Acknowledgment
---------------------
In entering into this Agreement, the Buyer acknowledges that it has relied, and
shall be entitled to rely, solely upon the representations and warranties made
in Article II of this Agreement as modified by the Company Disclosure Schedule
(and subject to the limitations contained in this Agreement).
Section 3.8 Brokers; Finders and Fees
----------------------------
Except for Schroders & Co., whose fees will be paid by the Buyer, neither the
Buyer nor any of its affiliates has employed any investment banker, broker or
finder or incurred any liability for any investment banking, financial advisory
or brokerage fees, commissions or finders' fees in connection with this
Agreement or the transactions contemplated hereby.
ARTICLE IV
COVENANTS OF THE PARTIES
---------------------------
Section 4.1 Conduct of Business of the Company
---------------------------------------
During the period from the date of this Agreement to the Closing Date, except
(x) as otherwise contemplated by this Agreement or the transactions contemplated
hereby, (y) for those matters set forth in Section 4.1 of the Company Disclosure
Schedule, or (z) consented to by the Buyer in writing, the Seller shall cause
the Company and each of its Subsidiaries:
(a) to conduct its business and operations in the ordinary
course consistent with past practice and, to the extent consistent therewith,
use reasonable best efforts to preserve intact its current business
organization, use reasonable efforts to keep available the services of its
current officers and other key employees and preserve its relationships with
those persons having business dealings with it to the end that its goodwill and
ongoing businesses shall be unimpaired at the time of the Closing; and
(b) not to (i) sell, license or dispose of any of its
properties or assets, except finished goods and obsolete assets in the ordinary
course of business; (ii) make any loans, advances (other than advances in the
ordinary course of business or advances to the Seller) or capital contributions
to, or investments in, any other person; (iii) terminate or amend any of its
Contracts or licenses, provided that the Company may take such action if the
Buyer has not responded to the Company's request for consent (which consent
shall not be unreasonably withheld) within two days of such request; (iv) enter
into any new Contracts other than renewals of existing agreements or otherwise
in the ordinary course of business; (v) enter into or amend any employment,
severance or retirement agreement with any employee or increase the compensation
of any of the officers or other employees of the Company or any of its
Subsidiaries, except for such increases as are granted in the ordinary course of
business in accordance with its customary practices (which shall include normal
periodic performance reviews and related compensation and benefit increases);
(vi) enter into or amend any collective bargaining agreement; provided, however,
that if the Buyer shall fail to consent to the Company's entering into any
collective bargaining agreement then any events or circumstances that arise from
or relate to the Company not entering into such agreement shall not be deemed to
(A) be a Company Material Adverse Effect, (B) result in a failure of the
conditions set forth in Section 5.3, and the Seller shall have no obligation to
indemnify the Buyer Indemnitees for any Buyer Damages (as such terms are
hereinafter defined) related thereto; (vii) hire any senior manager (other than
any regional sales personnel) without first consulting with the Buyer; (viii)
adopt, grant, extend or increase the rate or terms of any bonus, insurance,
pension or other Company Plan, payment or arrangement made to, for or with any
such officers or employees of the Company or any of its Subsidiaries, except (A)
increases required by any applicable Law, and (B) any other benefits payable in
any form by the Seller; (ix) make any change in any of its present accounting
methods and practices, except as required by changes in U.K. GAAP; (x) license,
terminate or allow to lapse any Intellectual Property rights to or from any
third party pursuant to an arrangement other than in the ordinary course of
business consistent with past practice; (xi) make or authorize any capital
expenditures other than in accordance with its annual plan or other than capital
expenditures not exceeding $25,000 individually or $100,000 in the aggregate;
(xii) settle or compromise any material Tax liability or make any material Tax
election, except in the ordinary course of business or consistent with past
practice; (xiii) incur any Indebtedness other than from the Seller, issue any
debt securities or assume, guarantee or endorse the obligations of any other
persons, or mortgage or encumber any of their respective properties or assets;
(xiv) amend its certificate of incorporation or by-laws; (xv) issue, sell,
pledge or transfer, or propose to issue, sell, pledge or transfer, any shares of
its capital stock, or securities convertible into or exchangeable or exercisable
for, or options with respect to, or warrants to purchase or rights to subscribe
for, any shares of its capital stock or otherwise change its capital stock;
(xvi) engage in any transaction with the Seller or any affiliate of the Seller
(other than the Company and its Subsidiaries) other than transactions on an
arms-length basis or transactions on a basis consistent with past practice;
(xvii) cancel or waive any litigation, claims or rights with a value to the
Company or any Subsidiary of $25,000; or (xviii) take, or agree to take, any of
the foregoing actions.
Section 4.2 Access to Information for the Buyer
----------------------------------------
(a) From the date of this Agreement to the Closing, the Seller will cause the
Company and its Subsidiaries to (i) give the Buyer and its authorized
representatives reasonable access to all books, records, personnel, offices and
other facilities and properties of the Company and its Subsidiaries and the
Company's accountants, (ii) permit the Buyer to make such copies and inspections
thereof as the Buyer may reasonably request and (iii) cause the officers of the
Company and its Subsidiaries to furnish the Buyer with such financial and
operating data and other information with respect to the business and properties
of the Company and its Subsidiaries as the Buyer may from time to time
reasonably request; provided, however, that any such access shall be conducted
-------- -------
at the Buyer's expense, at a reasonable time, under the supervision of the
Seller's or the Company's or its Subsidiaries' personnel and in such a manner as
to maintain the confidentiality of this Agreement and the transactions
contemplated hereby and not to interfere unreasonably with the normal operation
of the business of the Seller, the Company or any Subsidiary of the Company.
(b) All such information and access shall be subject to the
terms and conditions of the letter agreement (the "Confidentiality Agreement"),
between the Buyer and the Seller, dated September 22, 1999. Notwithstanding
anything to the contrary contained in this Agreement, none of the Company, any
Subsidiary of the Company, the Seller or any affiliate of the Seller shall have
any obligation to make available or provide to the Buyer or its representatives
a copy of any consolidated, combined or unitary Tax Return filed by the Seller,
or any of its affiliates or predecessors, or any related materials. However,
data or work papers of the Company and any Subsidiary of the Company contained
in such consolidated, combined or unitary Tax Return shall be made available to
Buyer.
Section 4.3 Consents; Cooperation
----------------------
Each of the Seller and the Buyer shall cooperate, and use its best efforts, to
make all filings and obtain all licenses, permits, consents, approvals,
authorizations, qualifications and orders of Governmental Entities and other
third parties necessary to consummate the transactions contemplated by this
Agreement, including, without limitation, under the H-S-R Act. Each of the
Seller and the Buyer shall use its best efforts to make all necessary filings
with Governmental Entities contemplated by the preceding sentence no later than
five business days after the date hereof and shall furnish each other as
promptly as possible such information as is necessary or appropriate in
connection with the preparation of such filings or requests from any
Governmental Entity for additional information. In addition to the foregoing,
the Buyer agrees to provide such assurances as to financial capability,
resources and creditworthiness as may be reasonably requested by any third party
whose consent or approval is sought hereunder.
Section 4.4 No Solicitation
----------------
Neither the Seller nor any of its affiliates (including the Company and its
Subsidiaries), or any officers, directors, employees, stockholders, affiliates,
agents or representatives of the Seller or any of its affiliates will, directly
or indirectly, solicit, initiate or encourage the submission of any proposal or
offer from any person other than the Buyer or its directors, officers,
employees, or other affiliates or representatives, enter into or continue any
discussions or negotiations with, or provide any information to, any person
other than the Buyer or its directors, officers, employees or other affiliates
or representatives, relating to any (i) merger, consolidation or other business
combination involving the Company or any of its Subsidiaries, (ii)
restructuring, recapitalization or liquidation of the Company or any of its
Subsidiaries, or (iii) acquisition or disposition of any material assets of the
Company and its Subsidiaries (taken as a whole) or any of their securities (any
such proposal or offer being hereinafter referred to as an "Acquisition
Proposal"). The Seller will immediately cease and cause to be terminated any
activities, discussions or negotiations conducted prior to the date of this
Agreement with any parties other than the Buyer with respect to any of the
foregoing.
Section 4.5 Best Efforts
-------------
Each of the Seller and the Buyer shall cooperate and use its best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws and regulations to
consummate and make effective the Stock Purchase and the other transactions
contemplated by this Agreement.
Section 4.6 Public Announcements
---------------------
Prior to the Closing, except as otherwise agreed to by the parties, the parties
shall not issue any report, statement or press release or otherwise make any
public statements with respect to this Agreement and the transactions
contemplated hereby, except as in the reasonable judgment of the party may be
required by law or in connection with its obligations as a publicly-held,
exchange-listed company, in which case the parties will use their reasonable
best efforts to reach mutual agreement as to the language of any such report,
statement or press release. Upon execution hereof and upon the Closing, the
Seller and the Buyer will consult with each other with respect to the issuance
of a joint report, statement or press release with respect to this Agreement and
the transactions contemplated hereby.
Section 4.7 Tax Matters
-----------
(a) The Seller and the Buyer hereby agree that an election under Section 338 of
the Code (or any similar provision of the law of any state or other taxing
jurisdiction) will not be made with respect to the Company or any of its
Subsidiaries in connection with the transactions contemplated by this Agreement
and that for purposes of all Tax Returns and other applicable filings, the Buyer
and the Seller will report the Stock Purchase as a purchase and sale,
respectively, of the Shares of the Company.
(b) Tax Returns. Subject to Section 4.7(f):
------------
(i) The Seller shall file or cause to be filed when due all
Tax Returns that are required to be filed by or with respect to the Company and
each Subsidiary for taxable years or periods ending on or before the Closing
Date other than Tax Returns for taxable years or periods ending on or before the
Closing Date for which the Due Date (as hereinafter defined) is after the
Closing Date (such latter Tax Returns, "Post-Closing Due Tax Returns" and Tax
Returns for such taxable years or periods other than Post-Closing Due Tax
Returns, "Pre-Closing Due Tax Returns"). The Seller shall remit (or cause to be
remitted) any Taxes due in respect of Pre-Closing Due Tax Returns.
(ii) The Seller shall prepare or cause to be prepared all
Post-Closing Due Tax Returns and shall submit such Post-Closing Due Tax Returns
(with copies of any relevant schedules, work papers and other documentation then
available) and a computation of the amount of Taxes shown as payable on such
Post-Closing Due Tax Returns that constitute Excluded Taxes (as hereinafter
defined) to the Buyer no later than 45 days prior to the Due Date for such
Post-Closing Due Tax Returns. The Seller shall pay (or cause to be paid) to the
Buyer no later than two days prior to the Due Date for such Post-Closing Due Tax
Returns all Taxes shown as due and payable on such Post-Closing Due Tax Returns
less Excluded Taxes as shown on Seller's submission to Buyer. The Buyer shall
file or cause to be filed when due such Post-Closing Due Tax Returns as prepared
by Seller (unless, and then only to the extent, in the opinion of nationally
recognized tax counsel to the Buyer, filing such Post-Closing Due Tax Returns as
prepared by Seller would subject the Buyer to any criminal penalty or to civil
penalties under Sections 6662 through 6664 of the Code or similar provisions of
applicable state, local or foreign Laws) and remit (or cause to be remitted) any
Taxes due in respect of such Post-Closing Tax Returns. The Seller shall pay to
the Buyer interest at the Applicable Interest Rate (as hereinafter defined),
compounded daily, on any amount not paid when due under this Section 4.7(b)(ii).
(iii) The Buyer shall file or cause to be filed when due all
Tax Returns that are required to be filed by or with respect to the Company and
each Subsidiary for taxable years or periods ending after the Closing Date and
the Buyer shall remit (or cause to be remitted) any Taxes due in respect of such
Tax Returns.
(iv) Any Tax Return required to be filed by the Buyer
relating to any taxable year or period beginning on or before and ending after
the Closing Date (the "Straddle Period") shall be submitted (with copies of any
relevant schedules, work papers and other documentation then available) to the
Seller for the Seller's approval not less than 60 days prior to the Due Date of
such Tax Return, which approval shall not be unreasonably withheld. The Buyer
shall, in preparing such return, cause the items (or a portion thereof) for
which the Seller is liable hereunder to be reflected in accordance with the
Seller's instructions, provided to Buyer at least 15 days prior to the Due Date
(unless, and then only to the extent that, in the opinion of nationally
recognized tax counsel to the Buyer, complying with the Seller's instructions
would subject the Buyer to any criminal penalty or to civil penalties under
Sections 6662 through 6664 of the Code or similar provisions of applicable
state, local or foreign Laws) and, in the absence of having received such
instructions, in accordance with past practice, if any, to the extent
permissible under applicable Law. The Seller shall pay (or cause to be paid) to
the Buyer no later than two days prior to the Due Date of such Tax Returns all
Taxes with respect to any Straddle Period which, as prepared consistently with
Seller's instructions, are shown as due and payable on such Tax Returns and for
which Seller is liable.
(v) Within 70 days after the Closing Date, the Buyer shall
cause the Company and each of its Subsidiaries to prepare and provide to the
Seller a package of Tax information materials, including, without limitation,
schedules and work papers (the "Tax Package") required by the Seller to enable
the Seller to prepare (or prepare and file) all Tax Returns required to be
prepared (or prepared and filed) by it pursuant to Sections 4.7(b)(i) and (ii).
The Tax Package shall be prepared in good faith in a manner consistent with past
practice.
(vi) The Seller may, in its sole and absolute discretion,
amend any Tax Return of the Company or any of its Subsidiaries filed or required
to be filed for any taxable years or periods ending on or before the Closing
Date; provided, however, that any such amendment which may reasonably be
-------- -------
expected to result in increased Tax liability for the Company, its Subsidiaries
or the Buyer for any Straddle Period or for any taxable year or period beginning
after the Closing Date shall require the consent of the Buyer, which consent may
be withheld in the sole discretion of the Buyer; provided, further, however,
-------- ------- -------
that to the extent the Seller agrees to indemnify the Buyer for the amount of
such increased Tax liability (as mutually agreed by the parties or as otherwise
determined pursuant to Section 4.7(i)), the Seller may amend any such Tax
Return.
(c) Indemnification.
---------------
(i) The Seller shall indemnify and hold the Buyer harmless
from and against the following (net of the amount of any Tax Benefit (as
hereinafter defined) realizable by the Buyer, the Company or its Subsidiaries as
a result of the payment or accrual of any of the following):
(A) any liability for Taxes for any period that ends on
or before the Closing Date imposed on the Company or its Subsidiaries as members
of the "affiliated group" (within the meaning of Section 1504(a) of the Code)
that arises under Treasury Regulations Section 1.1502-6(a) or comparable
provisions of foreign, state or local Law; and
(B) any liability for Taxes imposed on the Company or
its Subsidiaries for any taxable year or period that ends on or before the
Closing Date and, with respect to any Straddle Period, the portion of such
Straddle Period deemed to end at the close of the Closing Date (as set forth in
Section 4.7(d));
provided, however, that the Seller shall not be liable for and shall not
-------- -------
indemnify the Buyer for (I) any Taxes resulting from transactions or actions
taken by the Company or its Subsidiaries on the Closing Date that are properly
allocable to the portion of the Closing Date after the Closing except for
transactions or actions undertaken in the ordinary course of business; (II) any
Taxes that result from an actual or deemed election under Section 338 of the
Code or any similar provisions of state law or the law of any other taxing
jurisdiction with respect to the Company or any of its Subsidiaries in
connection with any of the transactions contemplated by this Agreement; (III)
any Transfer Taxes for which the Buyer is liable pursuant to Section 4.7(f);
(IV) Taxes the liability for which is included in the calculation of Closing Net
Working Capital; and (V) any Taxes that result from the Buyer not filing a
Post-Closing Due Tax Return or a Straddle Period Tax Return in the manner
required by Section 4.7(b)(ii) and Section 4.7(b)(iii), respectively (Taxes
described in this proviso referred to herein as "Excluded Taxes").
(ii) The Buyer shall indemnify and hold the Seller and the
Seller's subsidiaries and affiliates harmless from and against (net of the
amount of any Tax Benefit realizable by the Seller as a result of the payment or
accrual of any of the following):
(A) Taxes imposed on the Company or any of its
Subsidiaries for any taxable year or period that begins after the Closing Date
and, with respect to any Straddle Period, the portion of such Straddle Period
beginning immediately after the Closing Date; and
(B) Excluded Taxes.
(d) Computation of Tax Liabilities. To the extent permitted
-------------------------------
or required by Law or administrative practice, (i) the taxable year of the
Company or any of its Subsidiaries which includes the Closing Date shall be
treated as closing on (and including) the Closing Date and, notwithstanding the
foregoing, (ii) all transactions not in the ordinary course of business
occurring after the effective time of the Closing shall be reported on Buyer's
consolidated United States federal income Tax Return to the extent permitted by
Treasury Regulations Section 1.1502-76(b)(1)(ii)(B) and shall be similarly
reported on other Tax Returns of the Buyer or its affiliates to the extent
permitted by law. For purposes of Section 4.7(c)(i) and (c)(ii), where it is
necessary to apportion between the Seller and the Buyer the Tax liability of an
entity for a Straddle Period (which is not treated under the immediately
preceding sentence as closing on the Closing Date), such liability shall be
apportioned between the period deemed to end at the close of the Closing Date,
subject to Section 4.7(d)(ii), and the period deemed to begin immediately
following the Closing Date on the basis of an interim closing of the books;
provided that exemptions, allowances or deductions that are calculated on an
annual basis (including depreciation and amortization deductions) shall be
allocated between the portion of the Straddle Period up to and including the
Closing Date and the portion of the Straddle Period following the Closing Date
in proportion to the number of days in each such period; and provided further
-------- -------
that Taxes imposed on a periodic basis (such as real property Taxes) shall be
allocated between the portion of the Straddle Period up to and including the
Closing Date and the portion of the Straddle Period following the Closing Date
in proportion to the number of days in each such period.
(e) Contest Provisions.
-------------------
(i) Each of the Buyer, on the one hand, and the Seller, on
the other hand (the "Recipient"), shall notify the chief tax officer of the
other party in writing within 15 days of receipt by the Recipient of written
notice of any pending or threatened audit, notice of deficiency, proposed
adjustment, assessment, examination or other administrative or court proceeding,
suit, dispute or other claim which could affect the liability for Taxes of such
other party (a "Tax Claim"). If the Recipient fails to give such prompt notice
to the other party it shall not be entitled to indemnification for any Taxes
arising in connection with such Tax Claim if and to the extent that such failure
to give notice materially and adversely affects the other party's right to
participate in the Tax Claim; provided, however, that one party will be
-------- -------
obligated to indemnify the other party pursuant to Section 4.7(c) or otherwise
only if the indemnifying party receives written notice thereof prior to the end
of the applicable statute of limitations for the relevant taxable year or
period.
(ii) The Seller shall have the sole right to represent the
Company and each of its Subsidiaries' interests in any Tax Claim relating to
taxable periods ending on or before the Closing Date and to employ counsel of
its choice at its expense. In the case of a Straddle Period, the Seller shall
be entitled to participate at its expense in any Tax Claim relating in any part
to Taxes attributable to the portion of such Straddle Period deemed to end on or
before the Closing Date and, with the written consent of the Buyer (which shall
not be unreasonably withheld), at the Seller's sole expense, may assume the
control of such entire Tax Claim. None of the Buyer, any of its affiliates, the
Company or any of the Company's Subsidiaries may settle or otherwise dispose of
any Tax Claim for which the Seller may have a liability under this Agreement, or
which may result in an increase in Seller's liability under this Agreement,
without the prior written consent of the Seller, which consent may be withheld
in the sole discretion of the Seller, unless the Buyer fully indemnifies the
Seller in writing with respect to such liability in a manner satisfactory to the
Seller.
(f) Transfer Taxes. All excise, sales, use, transfer
---------------
(including real property transfer or gains), stamp, documentary, filing,
recordation and other similar taxes, together with any interest, additions or
penalties with respect thereto and any interest in respect of such additions or
penalties, resulting directly from the transactions contemplated by this
Agreement (the "Transfer Taxes"), shall be borne by the Buyer. Notwithstanding
Section 4.7(b), which shall not apply to Tax Returns relating to Transfer Taxes,
any Tax Returns that must be filed in connection with Transfer Taxes shall be
prepared and filed by the Buyer.
(g) Refunds.
-------
(i) Any Tax refund (including any interest in respect
thereof) received by the Buyer or the Company or any of its Subsidiaries, and
any amounts credited against Tax to which the Buyer or the Company or any of its
Subsidiaries become entitled (including by way of any amended Tax Returns), that
relate to any taxable period, or portion thereof, ending on or before the
Closing Date shall be for the account of the Seller, and the Buyer shall pay
over to the Seller any such refund or the amount of any such credit within
fifteen days after receipt or entitlement thereto. The Buyer shall pay the
Seller interest at the Applicable Interest Rate, compounded daily, on any amount
not paid when due under this Section 4.7(g). For purposes of this Section
4.7(g), where it is necessary to apportion a refund or credit between the Buyer
and the Seller for a Straddle Period, such refund or credit shall be apportioned
between the period deemed to end at the close of the Closing Date, and the
period deemed to begin immediately following the Closing Date on the basis of an
interim closing of the books, except that refunds or credits of Taxes imposed on
a periodic basis (such as real property Taxes) shall be allocated between the
portion of the Straddle Period up to and including the Closing Date and the
portion of the Straddle Period following the Closing Date in proportion to the
number of days in each such period.
(ii) The Buyer shall cooperate, and cause the Company and its
Subsidiaries to cooperate, in obtaining any refund that the Seller reasonably
believes should be available, including without limitation, through filing
appropriate forms with the applicable taxing authorities.
(h) Certain Post-Closing Settlement Payments.
-------------------------------------------
(i) Upon the exercise of an option to purchase the capital
stock of Xxxxxxx PLC (a "Seller Option") by an employee or former employee of
the Company or any of its Subsidiaries and the payment of cash or other property
by the Seller (or its designated agent) to the holder of the Seller Option, the
Buyer shall pay or cause the Company to pay to the Seller the amount of any Tax
Benefit attributable to any payment described in this Section 4.7(h)(i) within
30 days of the filing of the Tax Return upon which such Tax Benefit is reported.
(ii) For purposes of this Agreement, "Tax Benefits" shall
mean the sum of (A) the product of (1) the sum of any increased deductions or
losses or decreases in income or gains then allowable (including by way of
amended Tax Returns), and (2) 42%; (B) the sum of increased tax credits or
decreases in recapture of tax credits then allowable; (C) the product of (1) the
sum of the present values of any increased deductions or losses or decreases in
income or gains allowable in future years determined by applying a discount rate
of 8% from the earliest year in which such amounts would possibly be available,
and (2) 42%; and (D) the sum of the present values of increased tax credits or
decreases in recapture of tax credits allowable in future years determined by
applying a discount rate of 8% from the earliest year in which such amounts
would possibly be available.
(iii) Any Tax Benefit required to be paid under this Section
4.7(h) that is not paid within the time prescribed by this Section 4.7(h) shall
accrue interest at the Applicable Interest Rate, compounded daily.
(iv) For purposes of Sections 4.7(b)(ii), (g)(i), and
(h)(iii), "Applicable Interest Rate" shall mean the rate provided in Section
6621(a)(2), provided, however, that for any period during which the amount upon
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which interest is accruing pursuant to each of Sections 4.7(b)(ii), (g)(i), and
(h)(iii) exceeds $100,000, for such amount "Applicable Interest Rate" shall mean
the rate provided in Section 6621(c)(1).
(i) Resolution of All Tax-Related Disputes. In the event
------------------------------------------
that the Seller and the Buyer cannot agree on the calculation of any amount
relating to Taxes or the interpretation or application of any provision of this
Agreement relating to Taxes, such dispute shall be resolved by a nationally
recognized independent accounting firm or tax attorney at an independent
nationally recognized law firm selected by the parties (the "Tax Arbitrator");
provided, however, that if the Buyer and the Seller cannot agree upon the choice
------- -------
of the Tax Arbitrator within 5 business days of one party providing written
notice to the other party that it seeks arbitration pursuant to this Section
4.7(i), the Tax Arbitrator shall be selected pursuant to the rules of the AAA.
The Tax Arbitrator's fees and expenses shall be borne by the Seller and the
Buyer in inverse proportion as they may prevail on the matters resolved by the
Tax Arbitrator, which proportionate allocation will also be determined by the
Tax Arbitrator at the time it renders its determination on the merits of the
matters submitted to it. The determination of the Tax Arbitrator shall be final
and binding upon the Buyer and the Seller, shall be deemed a final arbitration
award that is binding on each of the Buyer and the Seller, and no party shall
seek further recourse to courts, other tribunals or otherwise, other than to
enforce such determination. Judgment may be entered to enforce the Tax
Arbitrator's determination in any court having jurisdiction over the party
against which such determination is to be enforced.
(j) Post-Closing Actions Which Affect Seller's Liability for Taxes.
---------------------------------------------------------------
(i) The Buyer shall not permit the Company or any of its
Subsidiaries to take any action on the Closing Date which could increase the
Seller's liability for Taxes (including any liability of the Seller to indemnify
the Buyer for Taxes pursuant to this Agreement).
(ii) None of the Buyer or any affiliate of the Buyer shall
(or shall cause or permit the Company or any of its Subsidiaries to) amend,
refile or otherwise modify any Tax Return relating in whole or in part to the
Company or any of its Subsidiaries with respect to any taxable year or period
ending on or before the Closing Date (or with respect to any Straddle Period)
without the prior written consent of the Seller, which consent may be withheld
in the sole discretion of the Seller.
(k) Termination of Existing Tax Sharing Agreements. Any and
-----------------------------------------------
all existing Tax sharing agreements or arrangements, written or unwritten,
between the Seller and the Company or Subsidiaries of the Company, shall be
terminated as of the Closing.
(l) Assistance and Cooperation. After the Closing Date, each
--------------------------
of the Seller and the Buyer shall (and shall cause their respective affiliates
to):
(i) timely sign and deliver such certificates or forms as may
be necessary or appropriate to establish an exemption from (or otherwise
reduce), or file Tax Returns or other reports with respect to Transfer Taxes;
(ii) assist the other party in preparing any Tax Returns
which such other party is responsible for preparing and filing in accordance
with Section 4.7(b);
(iii) cooperate fully in preparing for any audits of, or
disputes with taxing authorities regarding, any Tax Returns of the Company and
its Subsidiaries;
(iv) make available to the other and to any taxing authority
as reasonably requested in connection with any Tax Return described in Section
4.7(b) or any proceeding described in Section 4.7(e), all information relating
to any Taxes or Tax Returns of the Company and its Subsidiaries; and
(v) furnish the other with copies of all correspondence
received from any taxing authority in connection with any Tax audit or
information request with respect to any such taxable period.
Notwithstanding the foregoing or any other provision in this Agreement, neither
the Buyer nor any of its affiliates shall have the right to receive or obtain
any information relating to Taxes of the Seller, any of its affiliates, or any
of its predecessors other than information relating solely to the Company and
its Subsidiaries.
(m) Adjustment to Purchase Price. For all Tax purposes, any
-----------------------------
payment by the Buyer or the Seller under this Agreement shall be treated as an
adjustment to the Purchase Price.
(n) Certain Definitions. For purposes of this Agreement,
--------------------
"Due Date" shall mean, with respect to any Tax Return, the date such return is
due to be filed (taking into account any valid extensions); "Tax" or "Taxes"
shall mean taxes of any kind, levies or other like assessments, customs, duties,
imposts, charges or fees, including, income, gross receipts, ad valorem, value
added, excise, real property or property, asset, sales, use, license, payroll,
transaction, capital, net worth, withholding, estimated, social security,
utility, workers' compensation, severance, production, unemployment
compensation, occupation, premium, windfall profits, transfer and gains taxes or
other governmental taxes imposed or payable to the United States, or any state,
county, local or foreign government or subdivision or agency thereof, together
with any interest, penalties or additions with respect thereto and any interest
in respect of such additions or penalties; and "Tax Returns" shall mean all
returns, reports, statements, declarations, estimates and forms or other
documents (including any related or supporting information), required to be
filed with respect to any Taxes.
Section 4.8 Knowledge of Breach; Prior Knowledge
----------------------------------------
No breach by the Seller of any representation, warranty, covenant, agreement or
condition of this Agreement shall be deemed to be a breach of this Agreement for
any purpose hereunder, and neither the Buyer nor any affiliate of the Buyer
shall have any claim or recourse against the Seller or its directors, officers,
employees, affiliates, controlling persons, agents, advisors or representatives
with respect to such breach, under Article VII or otherwise, if any of the
representatives of the Buyer set forth in Section 4.8 of the Company Disclosure
Schedule had actual knowledge prior to the Closing of such breach or of the
threat of such breach or the circumstances giving rise to such breach.
Section 4.9 Employees; Employee Benefits
----------------------------
(a) If any employee of the Company or any of its Subsidiaries becomes a
participant in any employee benefit plan, practice or policy of the Buyer or any
of its affiliates, such employee shall be given credit under such plan for all
service prior to the Closing Date with the Company and its Subsidiaries or any
predecessor employer (to the extent such credit was given by the Seller, the
Company or any predecessor employer), and all service with the Company and its
Subsidiaries or the Buyer following the Closing Date but prior to the time such
employee becomes such a participant, for purposes of determining eligibility and
vesting and for all other purposes for which such service is either taken into
account or recognized; provided, however, such service need not be credited to
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the extent it would result in a duplication of benefits, including, without
limitation, benefit accrual under defined benefit plans. Such service also
shall apply for purposes of satisfying any waiting periods, evidence of
insurability requirements, or the application of any preexisting condition
limitations. Employees shall be given credit for amounts paid under a
corresponding benefit plan during the same period for purposes of applying
deductibles, copayments and out-of-pocket maximums as though such amounts had
been paid in accordance with the terms and conditions of the of the comparable
Buyer employee benefit plan. This Section 4.9(a) shall not apply to employees
governed by collective bargaining agreements.
(b) In the event that any person who is an employee of the
Company or any of its Subsidiaries immediately prior to the Closing (an
"Affected Employee") is discharged by the Company or such Subsidiary as of or
after the Closing, then the Buyer shall be responsible for any and all severance
costs for such Affected Employee. Notwithstanding the foregoing, the Seller
shall be responsible for the initial $1.5 million (in the aggregate) in enhanced
severance costs actually paid by the Company or the Buyer under The Red Wing
Company, Inc. Special Retention Plan for Key Senior Management Employees and The
Red Wing Company, Inc. Special Retention Plan for Key Employees) (collectively
the "Special Retention Plans"); provided that the Seller shall have no liability
for enhanced severance amounts in excess of $1.5 million in the aggregate under
the Special Retention Plans. Except as expressly provided in this Section
4.9(b), the Buyer shall be responsible for all severance costs in respect of all
Affected Employees, including in connection with the Special Retention Plans.
The Buyer shall be responsible and assume all liability for all notices or
payments due to any Affected Employees, and all notices, payments, fines or
assessments due to any government authority, pursuant to any applicable foreign,
federal, state or local law, common law, statute, rule or regulation with
respect to the employment, discharge or layoff of employees by the Company and
its Subsidiaries after the Closing, including but not limited to the Worker
Adjustment and Retraining Notification Act and C.O.B.R.A. and any rules or
regulations as have been issued in connection with the foregoing.
(c) From and after the Closing, the Buyer shall be
responsible for, and shall defend, indemnify and hold harmless the Seller and
its affiliates and their officers, directors, employees, affiliates and agents
and the fiduciaries (including plan administrators) of the Company Plans, from
and against any and all claims, losses, damages, costs and expenses (including,
without limitation, attorneys' fees and expenses) and other liabilities and
obligations relating to or arising out of (i) all salaries, wages, commissions,
employee incentive or other compensation, severance, holiday, vacation, health,
dental or retirement benefits accrued but unpaid as of the Closing, post-Closing
bonuses due to any Affected Employee under the Company Plans and all payments
required to be made under The Red Wing Company Inc. Bonus Plan, (ii) the
liabilities assumed by the Buyer under this Section 4.9 or any failure by the
Buyer to comply with the provisions of this Section 4.9 and (iii) any claims of,
or damages or penalties sought by, any Affected Employee, or any Governmental
Entity on behalf of or concerning any Affected Employee, with respect to any act
or failure to act by Buyer to the extent arising from the employment, discharge,
constructive discharge, layoff or termination of any Affected Employee who
becomes an employee of the Buyer or becomes or remains an employee of the
Company or any of the Company's Subsidiaries on or after the Closing.
(d) From and after the Closing, the Buyer shall cause the
Company to continue in full force and effect all collective bargaining
agreements listed in Section 2.11 of the Company Disclosure Schedule and all
successor agreements thereto entered into prior to the Closing to which the
Buyer has consented.
Section 4.10 Indemnification
---------------
Following the Closing, the Buyer shall cause the Company and its Subsidiaries
not to make any changes to their certificate of incorporation or by-laws or
comparable organizational documents that would adversely affect the rights of
persons who are currently or were officers and directors of the Company or any
of its Subsidiaries to claim indemnification from such entity under the terms of
such certificate of incorporation or by-laws as in effect on the date hereof for
acts taken prior to the Closing. The Buyer shall pay (to the extent not paid by
the Company or any of its Subsidiaries) any payments required under such
indemnification provisions relating to facts or circumstances occurring prior to
the Closing, unless such facts and circumstances relate to matters constituting
a breach of this Agreement by Seller, in which case the Seller shall pay such
indemnification payments.
Section 4.11 Maintenance of Books and Records
------------------------------------
Each of the parties hereto shall preserve, until at least the third anniversary
of the Closing Date, all pre-Closing Date records possessed or to be possessed
by such party relating to the Company, except with respect to Tax records (which
the parties shall preserve until at least the seventh anniversary of the Closing
Date). After the Closing Date and up until at least the third anniversary of
the Closing Date (or the seventh anniversary of the Closing Date, with respect
to Taxes only), upon any reasonable request from a party hereto or its
representatives, the party holding such records shall, subject to the
confidentiality provisions of Section 4.2(b), (x) provide to the requesting
party or its representatives reasonable access to such records during normal
business hours and (y) permit the requesting party or its representatives to
make copies of such records, in each case at no cost to the requesting party or
its representatives (other than for reasonable out-of-pocket expenses). Such
records may be sought under this Section 4.11 for any reasonable purpose,
including, without limitation, to the extent reasonably required in connection
with the audit, accounting, Tax, litigation, federal securities disclosure or
other similar needs of the party seeking such records. Notwithstanding the
foregoing, any and all such records may be destroyed by a party if such
destroying party sends to the other parties hereto written notice of its intent
to destroy such records, specifying in reasonable detail the contents of the
records to be destroyed; such records may then be destroyed after the 30th day
following such notice unless another party hereto notifies the destroying party
that such other party desires to obtain possession of such records (subject to
the confidentiality provisions of Section 4.2(b) above), in which event the
destroying party shall transfer the records to such requesting party and such
requesting party shall pay all reasonable expenses of the destroying party in
connection therewith.
Section 4.12 Seller's Trademarks and Logos
-----------------------------
Notwithstanding anything to the contrary contained in this Agreement, it is
expressly agreed that (i) the Buyer is not purchasing, acquiring or otherwise
obtaining, and the Company and its Subsidiaries will not be entitled to retain
following the Closing Date, any right, title or interest in any trade names,
trademarks, identifying logos or service marks employing the word "Xxxxxxx" or
any part or variation of such word or anything confusingly similar thereto
(collectively, the "Seller's Trademarks and Logos") and (ii) neither the Company
and its Subsidiaries nor the Buyer or its affiliates shall make any use of the
Seller's Trademarks and Logos from and after the Closing.
Section 4.13 Environmental Indemnity
------------------------
(a) To the extent such matters have not been addressed by the Seller or the
Company to the Buyer's reasonable satisfaction prior to the Closing and subject
to the limitations set forth in Sections 4.13(c) and 4.13(d), the Seller agrees
to reimburse the Buyer for (i) all out-of-pocket expenses incurred by the Buyer
to clean up and/or remediate ("Cleanup Costs") each of the environmental matters
set forth on Schedule 4.13(a) of the Company Disclosure Schedule and (ii) all
fines, charges, penalties or other regulatory assessments incurred whether prior
to or after the Closing for the failure of the Company and the Subsidiaries
prior to the Closing Date to be in compliance with any Environmental Laws in
effect as of and enforceable as of the Closing Date with respect to the
environmental matters set forth on Schedule 4.13(a) of the Company Disclosure
Schedule. Notwithstanding the foregoing, the Seller shall not be required to
reimburse the Buyer under clause (i) above of this Section 4.13(a) for (A)
amounts in excess of $162,000 in the aggregate, less amount expended prior to
the Closing, to clean up and remedy any of the environmental matters
contemplated in this Section 4.13(a) and (B) all other out-of-pocket expenses
that the Buyer incurs for environmental matters set forth in Section 4.13(a).
(b) Notwithstanding anything to the contrary contained in
Article VII and subject to the limitations set forth in Section 7.2(b), the
Seller's obligation to indemnify and hold harmless the Buyer Indemnitees (as
defined in Section 7.2) pursuant to Article VII from and against all Buyer
Damages (as defined in Section 7.2) asserted against or incurred by any Buyer
Indemnitee as a result of or arising out of a breach of any representation or
warranty of the Seller contained in Section 2.19 shall be limited to (i) all
Cleanup Costs incurred by the Buyer to remediate or arising from or related to a
breach of Section 2.19 and (ii) fines, charges, penalties or other regulatory
assessments incurred for the failure of the Company and the Subsidiaries prior
to the Closing Date to be in compliance with any Environmental Laws in effect as
of and enforceable as of the Closing Date, and further shall be subject to the
limitations set forth in Sections 4.13(c), 4.13(d) and 4.13(e).
(c) With respect to Cleanup Costs, the Seller shall only be
required to indemnify and hold harmless the Buyer Indemnitees to the extent
that: (i) cleanup of the Hazardous Materials is required by a Governmental
Entity under an applicable Environmental Law that is in effect as of and is
enforceable as of the Closing Date; (ii) the Remediation Standards that must be
met in order to satisfy the requirements of the applicable Environmental Law or
Governmental Entity (A) are no more stringent than the Remediation Standards
that were in effect as of and were enforceable as of the Closing Date under the
applicable Environmental Law that is the source of the obligation to conduct a
cleanup, or, where no such Remediation Standards had been promulgated and were
enforceable as of the Closing Date, Remediation Standards that were applied,
within one year prior to the Closing Date, on a case-by-case basis, to
properties that are most similar to the property that is subject to a cleanup
and (B) are also those Remediation Standards that would be the least stringent
Remediation Standards that would be applicable given the use of the property as
of the day before the Closing Date; (iii) such cleanup is for substances that
were designated as Hazardous Materials and would have been subject to cleanup
under an applicable Environmental Law had such cleanup been initiated on or
before the Closing Date; and (iv) such cleanup is conducted using the most cost
effective methods for investigation, removal, remediation and/or containment
consistent with applicable Environmental Law or the requirements of a
Governmental Entity. To the extent that the Cleanup Costs incurred in
connection with a cleanup covered by Sections 4.13(a) or 4.13(b) are in excess
of the Cleanup Costs that would be incurred for a cleanup meeting the conditions
set forth in this Section 4.13(c), the Seller shall have no obligation to
indemnify Buyer Indemnitees for such excess Cleanup Costs.
(d) Notwithstanding anything to the contrary herein, the
Seller and the Buyer agree that the Seller's indemnity obligations shall be
subject to the following limitations: (i) if the cost of cleanup or correcting a
non-compliance with the Environmental Law subject to indemnity by the Seller are
increased after the Closing Date due to an act or omission in violation of any
Environmental Law by a person or entity other than the Seller or its affiliates
or any of their respective employees or representatives, the Seller shall not be
responsible for any such increase in costs; and (ii) the Seller shall not be
responsible for any costs for indemnification obligations under Sections 4.13(a)
or 4.13(b) due to (A) any change related to the property or the Company and the
Subsidiaries resulting or arising from the closure or sale of a facility or
business, (B) a change in use of the facilities from manufacturing to any other
use or (C) any construction of new structures or equipment, modifications to
existing structures or equipment, or the excavation or movement of soil if such
activities are related to the circumstances set forth in clauses (A) and (B) of
this Section 4.13(d)(ii).
(e) Indemnification shall be available under Section 4.13(b)
only with respect to those specific claims for which Buyer has provided written
notice to the Seller by the third anniversary of the Closing Date. Such notice
must include, based on reasonably available evidence, the following: (i)
location; (ii) the extent of contamination and the impacted media, if known;
(iii) a copy of any notices filed with or received from any Governmental Entity
or other person, or, if no such notice has been filed or received, the basis
upon which the claimant seeks indemnification; and (iv) whether the cleanup was
or will be consistent with the conditions set forth in Section 4.13(b). Claims
relating to fines, charges, penalties or other regulatory assessments within the
scope of Section 4.13(b) shall be subject to the procedures for indemnification
set forth in Section 7.4 for Third-Party Claims (as defined in Section 7.4).
For claims relating to Cleanup Costs within the scope of Section 4.13(b), the
Seller shall have the right to assume responsibility for managing the cleanup
and related matters thereto, by providing notice to the Buyer within 45 days of
receipt of the written notice required under this subsection (e). If the Seller
assumes responsibility for management of a cleanup under this subsection (e),
the Seller shall be obligated to comply with all applicable legal requirements
with respect to such cleanup, provided, that Seller reserves the right to seek
--------
reimbursement of the Cleanup Costs that are incurred for work that is in excess
of work that would be required in accordance with the conditions set forth in
Sections 4.13(c) or 4.13(d) but only to the extent the Buyer consented to the
work in excess of that set forth in Sections 4.13(c) or 4.13(d). Where the
Seller has assumed responsibility for management of a cleanup under this Section
4.13(e), the Buyer may participate, at its own cost and expense, in activities
related to the cleanup, including, but not limited to, participation in meetings
with respect to the determination of applicable Remediation Standards or methods
for conducting the cleanup. The Seller will manage such cleanup in a manner and
using appropriate third parties as consented to by the Buyer whose consent shall
not be unreasonably withheld.
(f) Notwithstanding anything to the contrary in this
Agreement, the Buyer hereby agrees that its sole and exclusive remedy against
the Seller, with respect to any and all matters arising under or related to
Environmental Law, Hazardous Materials or the environment shall be as provided
in this Section 4.13 (excluding fraud or willful misconduct by the Seller as
determined by a court or Governmental Entity). Except as provided in
subsections (a), (b), (c), (d) and (e) of this Section 4.13, the Buyer hereby
waives, to the fullest extent permitted under applicable Law, and forever
releases the Seller, in connection with the business of the Company and its
Subsidiaries, from, and indemnifies and holds harmless the Seller Indemnitees
(as defined in Section 7.3) against, any and all Seller Damages (as defined in
Section 7.3) that (i) relate to the environmental matters set forth in Section
2.19 of the Company Disclosure Schedule that are not also set forth in Section
4.13 of the Company Disclosure Schedule, or (ii) arise under Environmental Laws
or common law or relating to Hazardous Materials or the environment.
(g) Notwithstanding anything to the contrary in this
Agreement, and except for the Seller's representation that the Seller has
provided to the Buyer copies of all reasonably relevant material documents
relating to environmental matters at the properties, described below, the
parties agree that the Seller is making no representations or warranties
regarding the properties identified in Section 4.13(g) of the Company Disclosure
Schedule and the Seller shall have no indemnification obligations to the Buyer
Indemnities with respect to such properties.
Section 4.14 Other Matters
--------------
Subject to the terms of the Highly Confident Letter, the Buyer shall take all
actions necessary to consummate the Financing on the terms set forth in the
Highly Confident Letter and shall use its best efforts to consummate such
Financing on or prior to July 19, 2000. The Buyer agrees not to undertake or
enter into any transaction that would prevent the consummation of the
transactions contemplated hereby or prevent the Buyer from obtaining the
Financing set forth in the Highly Confident Letter.
Section 4.15 Confidentiality
---------------
Beginning on the Closing Date and continuing for three years thereafter, the
Seller agrees to hold all Company Confidential Information (as hereinafter
defined) with at least the same degree of skill and care that they would
exercise in similar circumstances in carrying out their own business to prevent
the disclosure or accessability to others (including to any entity that controls
the Seller) of the Company Confidential Information and agrees not to reveal,
report, publish, disclose or transfer any Company Confidential Information to
any person or entity (other than the Buyer). The Seller represents that during
the past three years none of the Company's material Confidential Information
relating to Intellectual Property has been revealed, disclosed or transferred to
the Seller of any of its affiliates. For the purposes of this Agreement,
"Company Confidential Information" means any non-public information relating to
the Company; provided, however, that Company Confidential Information shall not
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be deemed to include (i) information that was already publicly known and in the
public domain prior to the time of its initial disclosure to the Seller or any
of its Subsidiaries or (ii) information that is or becomes available to the
Seller or any of its Subsidiaries on a non-confidential basis from a
non-confidential source; provided, further, the Seller and its Subsidiaries may
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reveal, report, publish, disclose or transfer any Company Confidential
Information pursuant to a subpoena or order issued by a court of competent
jurisdiction or by a judicial or administrative or legislative body or
committee.
Section 4.16 Non-Competition
---------------
For a period of two years from the Closing (the "Non-Competition Period"), each
Subsidiary of the Seller that is incorporated under the laws of a state in the
United States as of the date of this Agreement (the "U.S. Subsidiaries") shall
not, directly or indirectly, operate or own any interest in (other than a
passive interest of less than 5%), or engage in, a Competitive Business (as
hereinafter defined) in the United States; provided, however, that nothing set
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forth in this Section 4.16 shall:
(a) prohibit or otherwise restrict the Seller or any of its
Subsidiaries (including the U.S. Subsidiaries) from acquiring an interest, by
joint venture, merger or other business combination, in a business (the
"Acquired Business") that includes a Competitive Business so long as the
aggregate revenues derived by the Competitive Business included in the Acquired
Business during the four most recently completed fiscal quarters for such
Acquired Business prior to the date on which the definitive agreement for the
acquisition of the Acquired Business is entered into do not exceed thirty-three
percent of the aggregate revenues derived by the Acquired Business during such
four fiscal quarters;
(b) be deemed to apply to any person or entity, or the
affiliates of such person or entity, that directly or indirectly (i) acquires
all or any portion of the capital stock or other equity securities of the
Seller, or any of its Subsidiaries (including the U.S. Subsidiaries) or Xxxxxxx
plc, (ii) acquires all or substantially all of the assets of the Seller, or any
of its Subsidiaries (including the U.S. Subsidiaries) or Xxxxxxx plc, or (iii)
consummates any merger, consolidation, business combination, share exchange,
reorganization or similar transaction involving the Seller, or any of its
Subsidiaries (including the U.S. Subsidiaries) or Xxxxxxx (each of clauses
(i)-(iii) being an "Acquisition Transaction"); or
(c) be deemed to apply to Xxxxxxx plc, the Seller or the U.S.
Subsidiaries following an Acquisition Transaction.
A "Competitive Business" shall mean engaging in the production of
private label packaged food products operating in the shelf stable, wet fill
category.
Section 4.17 Stock Certificates
------------------
The Seller agrees that, for as long as it is obligated to indemnify the Buyer
Indemnitees pursuant to Article VII, it shall, and shall cause its affiliates
to, hold in Xxxxxxx Corporation's United States headquarters located in Dayton,
Ohio and Denver, Colorado, the stock certificates of the subsidiaries of Xxxxxxx
Corporation that are incorporated under the laws of a state in the United States
as of the date of this Agreement in the United States to the extent such
subsidiaries are indirectly wholly-owned subsidiaries of Xxxxxxx plc; provided,
however, that nothing in this Section 4.17 shall not prevent or otherwise limit
Xxxxxxx Corporation, the Seller or any of their affiliates from directly or
indirectly transferring any such stock certificates in connection with a sale,
merger, consolidation, reorganization or similar transaction.
Section 4.18 Insurance
---------
Following the Closing, the Buyer shall, and shall cause the Company to, comply
with all of the Company's obligations under insurance policies in effect prior
to the Closing that the Company participates in, including payment of the self
insured portion of any loses payable by the Company thereunder.
Section 4.19 Estoppel Certificates
----------------------
Subject to and in accordance with Section 4.5, the parties shall use their best
efforts to obtain estoppel certificates from the landlords of leasehold
interests set forth on Section 2.14 of the Company Disclosure Schedule.
Section 4.20 Preclosing Transaction
-----------------------
Prior to the Closing, the Seller shall take or cause to be taken such actions as
are necessary to cause the transfer all of the capital stock of Carriage House
Fruit Company ("Carriage House") to an entity other than the Company or one of
its Subsidiaries. Notwithstanding the foregoing, the Buyer shall cause the
Company to continue to pay, and to administer the payment of, all outstanding
obligations of Carriage House in respect worker's compensation and pension
liabilities in respect of former Carriage House employees. To the extent the
Buyer is required to make any payments pursuant to this Section 4.20 which, in
the aggregate, exceed the amount reserved therefore on the Annual Financial
Statements, the Seller agrees to indemnify the Buyer for such excess amounts
without regard to the provisions of Section 7.2(b).
Section 4.21 Aurora Account Receivable
--------------------------
For a period of six months after the Closing (the "Collection Period"), the
Buyer agrees to use it best efforts to pursue payment in full of the Aurora
Foods ("Aurora") account receivables that exist as of the Closing as set forth
on the Closing Net Working Capital (the "Aurora Obligation"). If the Buyer is
unable to collect the full amount of the Aurora Obligation within the Collection
Period, the Seller shall indemnify the Buyer of any portion of the Aurora
Obligation that has not been collected by the Buyer; provided, however, that the
-------- -------
Seller shall not be responsible for any uncollected amounts resulting from the
impairment of the Aurora Obligation as a result of any action or inaction by, or
on behalf of, the Buyer. To the extent that the Aurora Obligation has not been
paid in full during the Collection Period, the Buyer agrees to assign to the
Seller the amount of the Aurora Obligation which remains unpaid at the
termination of the Collection Period. During the Collection Period, the Buyer
also agrees to not institute any involuntary bankruptcy or insolvency proceeding
or action against Aurora or otherwise take or fail to take action which could
reasonably be expected to result in impairment of the Aurora Obligation.
Section 4.22 Real Property Survey
----------------------
Promptly following the date hereof, the Buyer agrees to obtain a complete real
estate survey of the properties set forth on Section 7.2(b) of the Company
Disclosure Schedule.
ARTICLE V
CONDITIONS TO CONSUMMATION OF THE STOCK PURCHASE
------------------------------------------------------
The respective obligations of each party to consummate the transactions
contemplated hereby is subject to the satisfaction at or prior to the Closing
Date of the following conditions:
(a) No statute, rule, regulation, executive order, decree, or
injunction shall have been enacted, entered, promulgated or enforced by any
court or Governmental Entity that remains in force and prohibits the
consummation of the Stock Purchase;
(b) There shall not be any suit, action, or other proceeding
pending by any Governmental Entity or administrative agency or commission that
seeks to enjoin or otherwise prevent consummation of the transactions
contemplated hereby, other than suits, actions or proceedings that, in the
reasonable opinion of counsel to the parties hereto, are unlikely to result in
an adverse judgment; provided, however, that the provisions of this Section
-------- -------
5.1(b) shall not apply to any party that has directly or indirectly encouraged
such suit, action or proceeding; and
(c) Any waiting periods applicable to the transactions
contemplated by this Agreement under the H-S-R Act shall have expired or been
terminated.
Section 5.2 Further Conditions to the Seller's Obligations
----------------------------------------------
The obligation of the Seller to consummate the transactions contemplated hereby
are further subject to satisfaction or waiver of the following conditions:
(a) The representations and warranties of the Buyer contained
in this Agreement (without giving effect to any "materiality" or Buyer Material
Adverse Effect qualification or exception contained therein) shall be true and
correct at and as of the Closing Date as though such representations and
warranties were made at and as of such date (except to the extent expressly made
as of an earlier date, in which case, as of such date), except where the failure
of such representations and warranties to be so true and correct (i) does not
have, individually or in the aggregate, a Buyer Material Adverse Effect or (ii)
results from changes specifically permitted by this Agreement or from any
transaction expressly consented to in writing by the Buyer and the Seller;
(b) The Buyer shall have performed and complied in all
material respects with all agreements and obligations required by this Agreement
to be performed or complied with by it on or prior to the Closing;
(c) The Buyer shall have delivered or tendered to the Seller
an officer's certificate to the effect that each of the conditions specified
above in Sections 5.2(a) and (b) is satisfied; and
(d) Each of the documents referred to in Section 1.6 shall
have been executed by the Buyer and delivered to the Seller.
Section 5/3 Further Conditions to the Buyer's Obligations
----------------------------------------------
The obligation of the Buyer to consummate the transactions contemplated hereby
are further subject to the satisfaction or waiver at or prior to the Closing
Date of the following conditions:
(a) The representations and warranties of the Seller
contained in this Agreement (without giving effect to any "materiality" or
Company Material Adverse Effect qualification or exception contained therein)
shall be true and correct at and as of the Closing Date as though such
representations and warranties were made at and as of such date (except to the
extent expressly made as of an earlier date, in which case, as of such date),
except where the failure of such representations and warranties to be so true
and correct (i) does not have, individually or in the aggregate, a Company
Material Adverse Effect or (ii) results from changes specifically permitted by
this Agreement or from any transaction expressly consented to in writing by the
Buyer and the Seller;
(b) The Seller shall have performed and complied in all
material respects with all agreements and obligations required by this Agreement
to be performed or complied with by it on or prior to the Closing;
(c) The Seller shall have delivered or tendered to the Buyer
an officer's certificate to the effect that each of the conditions specified
above in Sections 5.3(a) and (b) is satisfied;
(d) The Buyer will have obtained Title Insurance that will
insure over or will delete as exceptions to coverage to its reasonable
satisfaction, the matters set forth in Section 5.3 of the Company Disclosure
Schedule; and
(e) Each of the documents referred to in Section 1.5 shall
have been executed by the Seller and delivered to the Buyer.
ARTICLE VI
TERMINATION AND ABANDONMENT
-----------------------------
Section 6.1 Termination
-----------
This Agreement may be terminated and the transactions contemplated hereby may be
abandoned at any time prior to the Closing Date:
(a) by mutual written consent of the Seller and the Buyer;
(b) by the Seller or the Buyer at any time after 60 days from
the date of this Agreement if the Closing shall not have occurred by such date;
provided, however, that the right to terminate this Agreement under this Section
-------- -------
6.1(b) shall not be available to (i) the Seller, if the Seller has breached any
of its representations, warranties or covenants hereunder in any material
respect and such breach has been the cause of or resulted in the failure of the
Closing to occur on or before such date or (ii) the Buyer, if the Buyer has
breached any of its representations, warranties or covenants hereunder in any
material respect and such breach has been the cause of or resulted in the
failure of the Closing to occur on or before such date; provided, further,
-------- -------
however, that this Agreement may be extended not more than 15 days by either the
Seller or the Buyer by written notice to the other party if (i) the Stock
Purchase shall not have been consummated as a direct result of the Seller or the
Buyer having failed to receive all regulatory approvals required to be obtained
under Section 5.1(c), (ii) the parties are endeavoring in good faith to obtain
all outstanding regulatory approvals required under Section 5.1(c), and (iii)
the reason that such outstanding regulatory approvals have not been obtained
within 60 days from the date of this Agreement is not due to a breach by the
party seeking to extend this Agreement under this proviso of its obligations
under this Agreement; and
(c) by the Seller or the Buyer if the other shall have
breached or failed to perform in any material respect any of its respective
representations, warranties, covenants or other agreements contained in this
Agreement, which breach or failure to perform (i) would give rise to the failure
of a condition set forth in Section 5.2 or 5.3(a) or (b), as applicable, and
(ii) cannot be or has not been cured within 30 days after the giving of written
notice to the Seller or the Buyer, as applicable.
Section 6.2 Procedure for and Effect of Termination
--------------------------------------------
In the event of termination of this Agreement and abandonment of the
transactions contemplated hereby by the parties hereto pursuant to Section 6.1
hereof, written notice thereof shall be given by a party so terminating to the
other party and this Agreement shall forthwith terminate and shall become null
and void and of no further effect, and the transactions contemplated hereby
shall be abandoned without further action by the Seller or the Buyer. If this
Agreement is terminated pursuant to Section 6.1 hereof:
(a) each party shall redeliver all documents, work papers and
other materials of the other parties relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same, and all confidential information received by any party
hereto with respect to the other party shall be treated in accordance with the
Confidentiality Agreement and Section 4.2(b) hereof;
(b) all filings, applications and other submissions made
pursuant hereto shall, to the extent practicable, be withdrawn from the agency
or other person to which made; and
(c) there shall be no liability or obligation hereunder on
the part of the Seller or the Buyer or any of their respective directors,
officers, employees, affiliates, controlling persons, agents or representatives,
except with respect to a breach of Section 3.5 hereof and except that the Seller
or the Buyer, as the case may be, may have liability to the other party if the
basis of termination is a willful, material breach by the Seller or the Buyer,
as the case may be, of one or more of the provisions of this Agreement, and
except that the obligations provided for in Sections 4.2(b), 6.2 and 8.8 hereof
shall survive any such termination.
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
------------------------------
Section 7.1 Survival Periods
-----------------
Each of the representations and warranties made by the parties in this Agreement
shall terminate on the second anniversary of the Closing; provided, however,
-------- -------
that (i) the representations and warranties contained in Sections 2.1, 2.2, 2.3,
2.20, 3.2, 3.4 and 3.7 shall survive the Closing without limitation (subject to
any applicable statutes of limitations), other than the termination of this
Agreement, (ii) the representations and warranties contained in Section 2.12
shall terminate upon the Closing, (ii) the representations and warranties
contained in Section 2.19 shall survive until the third anniversary of the
Closing Date and be subject to indemnification as set forth in Section 4.13
exclusively. Except as provided in clause (i), (ii) or (iii) above, the parties
intend to shorten the statute of limitations and agree that no claims or causes
of action may be brought against the Seller or the Buyer based upon, directly or
indirectly, any of the representations, warranties or agreements contained in
Articles II and III hereof after the applicable survival period or, except as
provided in Section 6.2(c) hereof, any termination of this Agreement. This
Section 7.1 shall not limit any covenant or agreement of the parties that
contemplates performance after the Closing, including, without limitation, the
covenants and agreements set forth in Sections 4.7, 4.9, 4.10 and 4.13 hereof.
Section 7.2 Seller's Agreement to Indemnify
-------------------------------
(a) Subject to the terms and conditions set forth herein, from
and after the Closing, the Seller shall indemnify and hold harmless the Buyer
and its directors, officers, employees, affiliates, controlling persons and
representatives (collectively, the "Buyer Indemnitees") from and against all
liability, demands, claims, actions or causes of action, assessments, losses,
damages, costs and expenses (including, without limitation, reasonable
attorneys' fees and expenses) (collectively, the "Buyer Damages") asserted
against or incurred by any Buyer Indemnitee as a result of or arising out of (i)
a breach of any representation or warranty of the Seller contained in this
Agreement that survives the Closing pursuant to (and subject to the terms of)
Section 7.1 or that is contained in any certificate delivered to the Buyer by
the Seller pursuant to this Agreement; (ii) a breach of any covenant or
agreement on the part of the Seller under this Agreement; or (iii) any real
property, entity (including any corporation, partnership, limited liability
company or joint venture) or business owned (or leased in the case of real
property) by the Company or any Subsidiary of the Company prior to Closing
(including, except as provided in Section 4.20, Carriage House Fruit Company and
the assets and real properties located in Geneva and Portland Indiana but sold
to Red Gold, Inc. or one or more of its affiliates) but not owned by the Company
or any Subsidiary of the Company on the Closing Date.
(b) The Seller's obligation to indemnify the Buyer
Indemnitees pursuant to Section 7.2(a) hereof is subject to the following
limitations:
(i) No indemnification pursuant to clause (i) of Section
7.2(a) shall be made by the Seller unless the aggregate amount of Buyer Damages
incurred exceeds $1,200,000 and, in such event, indemnification shall be made by
the Seller only to the extent Buyer Damages incurred exceed $1,200,000 (except
that matters arising from a breach of Section 2.14 in respect of the Owned Real
Property set forth in Section 7.2 of the Company Disclosure Schedule shall not
be subject to the limitation in this section 7.2(b)(i));
(ii) In no event shall the Seller's aggregate obligation to
indemnify the Buyer Indemnitees exceed $70,000,000;
(iii) The amount of any Buyer Damages shall be reduced by (A)
any amount received by a Buyer Indemnitee with respect thereto under any
insurance coverage (net of any retroactive premium adjustments) or from any
other party alleged to be responsible therefor and (B) the amount of any Tax
Benefit available to the Buyer Indemnitee relating thereto. The Buyer
Indemnitees shall use reasonable efforts to collect any amounts available under
such insurance coverage or from such other party alleged to have responsibility.
If a Buyer Indemnitee receives an amount under insurance coverage or from such
other party with respect to Buyer Damages at any time subsequent to any
indemnification provided by the Seller pursuant to this Section 7.2, then such
Buyer Indemnitee shall promptly reimburse the Seller for any payment made or
expense incurred by the Seller in connection with providing such indemnification
up to such amount received by the Buyer Indemnitee, provided, however, that the
Buyer Indemnitees may retain an amount from proceeds received under insurance
coverage or from such other party with respect to Buyer Damages to the extent
that the Seller has not indemnified the Buyer for the full value of its claim;
(iv) The Seller shall be obligated to indemnify the Buyer
Indemnitees pursuant to clause (i) of Section 7.2(a) only for those claims
giving rise to Buyer Damages as to which the Buyer Indemnitees have given the
Seller written notice thereof prior to the end of the applicable survival period
(as provided for in Section 7.1). Any written notice delivered by a Buyer
Indemnitee to the Seller with respect to Buyer Damages shall set forth with as
much specificity as is reasonably practicable the basis of the claim for Buyer
Damages and, to the extent reasonably practicable, a reasonable estimate of the
amount thereof; and
(v) Notwithstanding anything to the contrary in this
Agreement, the Seller shall have no obligation to indemnify any Buyer Indemnitee
for incidental, consequential, exemplary, special or punitive damages; provided
that Buyer Indemnitees shall be entitled to recover consequential damages
payable in respect of a Third-Party Claim (as hereinafter defined) to the extent
they are awarded by Governmental Entity.
Section 7.3 The Buyer's Agreement to Indemnify
--------------------------------------
(a) Subject to the terms and conditions set forth herein, from and
after the Closing, the Buyer shall indemnify and hold harmless the Seller and
its directors, officers, employees, affiliates, controlling persons and
representatives and their successors and assigns (collectively, the "Seller
Indemnitees") from and against all liability, demands, claims, actions or causes
of action, assessments, losses, damages, costs and expenses (including, without
limitation, reasonable attorneys' fees and expenses) (collectively, "Seller
Damages") asserted against or incurred by any Seller Indemnitee as a result of
or arising out of (i) a breach of any representation or warranty of the Buyer
contained in this Agreement or that is contained in any certificate delivered to
the Seller by the Buyer pursuant to this Agreement; and (ii) a breach of any
covenant or agreement on the part of the Buyer under this Agreement.
(b) The Buyer's obligation to indemnify the Seller
Indemnitees pursuant to Section 7.3(a) hereof is subject to the following
limitations:
(i) No indemnification pursuant to clause (i) of Section
7.3(a) shall be made by the Buyer unless the aggregate amount of Seller Damages
incurred exceeds $1,200,000 and, in such event, indemnification shall be made by
the Buyer only to the extent that the aggregate amount of Seller Damages
incurred exceed $1,200,000;
(ii) In no event shall the Buyer's aggregate obligation to
indemnify the Seller Indemnitees under clauses (i) and (ii) of Section 7.3(a)
exceed $70,000,000;
(iii) The amount of any Seller Damages shall be reduced by
(A) any amount received by a Seller Indemnitee with respect thereto under any
insurance coverage (net of any retroactive premium adjustments) or from any
other party alleged to be responsible therefor and (B) the amount of any Tax
Benefit available to the Seller Indemnitee relating hereto. The Seller
Indemnitees shall use reasonable efforts to collect any amounts available under
such insurance coverage or from such other party alleged to have responsibility.
If a Seller Indemnitee receives any amount under insurance coverage or from such
other party with respect to Seller Damages at any time subsequent to any
indemnification provided by the Buyer pursuant to this Section 7.3, then such
Seller Indemnitee shall promptly reimburse the Buyer for any payment made or
expense incurred by the Buyer in connection with providing such indemnification
up to such amount received by the Seller Indemnitee, provided, however that the
Seller Indemnitees may retain an amount from proceeds received under insurance
coverage or from such other party with respect to Seller Damages only to the
extent that the Buyer has not indemnified the Seller for the full value of its
claim;
(iv) The Buyer shall be obligated to indemnify the Seller
Indemnitees pursuant to clause (i) of Section 7.3(a) only for those claims
giving rise to Seller Damages as to which the Seller Indemnitees have given the
Buyer written notice thereof prior to the end of the applicable survival period
(as provided for in Section 7.1). Any written notice delivered by a Seller
Indemnitee to the Indemnifying Party with respect to Seller Damages shall set
forth with as much specificity as is reasonably practicable the basis of the
claim for Seller Damages and, to the extent reasonably practicable, a reasonable
estimate of the amount thereof; and
(v) Notwithstanding anything to the contrary in this Agreement,
the Buyer shall have no obligation to indemnify any Seller Indemnitee for
incidental, consequential, exemplary, special or punitive damages; provided that
Seller Indemnitees shall be entitled to recover consequential damages payable in
respect of a Third-Party Claim to the extent they are awarded by a Governmental
Entity.
Section 7.4 Third-Party Indemnification
---------------------------
Except with respect to Tax matters governed by Section 4.7, the obligations of
the Seller to indemnify the Buyer Indemnitees under Section 7.2 hereof with
respect to Buyer Damages and the obligations of the Buyer to indemnify the
Seller Indemnitees under Section 7.3 with respect to Seller Damages, in either
case resulting from the assertion of liability by third parties (each, as the
case may be, a "Third-Party Claim"), will be subject to the following terms and
conditions:
(a) Any party against whom any Third-Party Claim is asserted
will give the indemnifying party written notice of any such Third-Party Claim
promptly after learning of such Third-Party Claim, and the indemnifying party
may at its option undertake the defense thereof by representatives of its own
choosing. Failure to give prompt notice of a Third-Party Claim hereunder shall
not affect the indemnifying party's obligations under this Article VII, except
to the extent the indemnifying party is materially prejudiced by such failure to
give prompt notice. If the indemnifying party, within 30 days after notice of
any such Third-Party Claim, or such shorter period as is reasonably required,
fails to assume the defense of such Third-Party Claim, the Buyer Indemnitee or
the Seller Indemnitee, as the case may be, against whom such claim has been made
will (upon further notice to the indemnifying party) have the right to undertake
the defense, compromise or settlement (subject to the terms of Section 7.4(c))
of such claim on behalf of and for the account and risk, and at the expense, of
the indemnifying party, subject to the right of the indemnifying party to assume
the defense of such Third-Party Claim at any time prior to settlement,
compromise or final determination thereof.
(b) So long as the indemnifying party has assumed the defense
of any Third-Party Claim in the manner set forth above and in a good faith and
diligent manner, the indemnifying party shall have the exclusive right to
contest, defend and litigate such Third-Party Claim and, except as expressly
provided in Section 7.4(c), shall have the exclusive right, in its sole
discretion, to settle any such claim, either before or after the initiation of
litigation at such time and on such terms as the indemnifying party deems
appropriate. If the indemnifying party elects not to assume the defense of any
such Third-Party Claim (which shall be without prejudice to its right at any
time to assume subsequently such defense), the indemnifying party will
nonetheless be entitled, at its own expense, to participate in such defense.
The indemnified party shall have the right to participate, with separate counsel
(which counsel shall act in an advisory capacity only), in any such contest,
defense, litigation or settlement conducted by the indemnifying party. After
notice from the indemnifying party to such indemnified party of the indemnifying
party's election to assume the defense of such Third-Party Claim, the
indemnifying party will not be liable to such indemnified party for any expenses
of the indemnified party's counsel that are subsequently incurred in connection
with the defense thereof; provided, however, that the expense of such
-------- -------
indemnified party's counsel shall be paid by the indemnifying party if (i) the
indemnifying party requested such separate counsel to participate or (ii) in the
reasonable opinion of counsel to the indemnified party, a significant conflict
of interest exists between the indemnifying party, on the one hand, and the
indemnified party, on the other hand, that would make such separate
representation clearly advisable.
(c) Without the prior written consent of the indemnified
party (which consent shall not be unreasonably withheld or delayed), the
indemnifying party shall not admit any liability with respect to, or settle,
compromise or discharge, any Third-Party Claim or consent to the entry of any
judgment with respect thereto, except in the case of any settlement that
includes as an unconditional term thereof the delivery by the claimant or
plaintiff to the indemnified party of a written release from all liability in
respect of such Third-Party Claim. In addition, whether or not the indemnifying
party shall have assumed the defense of the Third-Party Claim, the indemnified
party shall not admit any liability with respect to, or settle, compromise or
discharge, any Third-Party Claim or consent to the entry of any judgment with
respect thereto, without the prior written consent of the indemnifying party
(which consent shall not be unreasonably withheld or delayed), and the
indemnifying party will not be subject to any liability for any such admission,
settlement, compromise, discharge or consent to judgment made by an indemnified
party without such prior written consent of the indemnifying party.
(d) Upon execution of this Agreement and delivery of the
Company Disclosure Schedule, the Seller shall be deemed to have satisfied the
notice requirement of Section 7.4(a) with respect to all matters set forth in
Section 2.8 of the Company Disclosure Schedule.
(e) The indemnifying party and the indemnified party shall
cooperate fully in all aspects of any investigation, defense, pre-trial
activities, trial, compromise, settlement or discharge of any claim in respect
of which indemnity is sought pursuant to this Article VII, including, but not
limited to, by providing the other party with reasonable access to employees and
officers (including as witnesses) and other information.
Section 7.5 Insurance
---------
The indemnifying party shall be subrogated to the rights of the indemnified
party in respect of any insurance relating to Buyer Damages or Seller Damages,
as the case may be, to the extent of any indemnification payments made
hereunder.
Section 7.6 No Duplication; Sole Remedy
----------------------------
(a) Any liability for indemnification hereunder shall be
determined without duplication of recovery by reason of the state of facts
giving rise to such liability constituting a breach of more than one
representation, warranty, covenant or agreement.
(b) The Buyer's and the Seller's respective rights to
indemnification as provided for in Sections 7.2 and 7.3, as applicable, for a
breach of the other's representations or warranties contained in this Agreement,
shall constitute such party's sole remedy for such a breach and the breaching
party shall have no other liability or damages to the other party resulting from
the breach; provided, however, that nothing contained herein shall prevent an
-------- -------
indemnified party from pursuing remedies as may be available to such party under
applicable law in the event of an indemnifying party's failure to comply with
its indemnification obligations hereunder or in the event of a claim of fraud by
the indemnified party against the indemnifying party.
Section 7.7 Indemnification Matters Governed by this Article VII
----------------------------------------------------
Except as otherwise provided in this Section 7.7, Section 4.7 shall govern and
control the indemnification of all matters relating to Taxes. The
indemnification and other provisions of this Article VII shall govern the
procedure for all indemnification matters under this Agreement, except to the
extent otherwise expressly provided in the preceding sentence or in Sections
4.9(d), 4.13, 4.20 and 8.8. The limitations on indemnification set forth in
Sections 7.2(b) and 7.3(b) shall not apply to the indemnification matters set
forth in Sections 4.7, 4.9(d), 4.20 and 8.8 but shall apply to the
indemnification matters set forth in Section 4.13 (other than Section 4.13(a)).
ARTICLE VIII
MISCELLANEOUS PROVISIONS
-------------------------
Section 8.1 Entire Agreement
----------------
This Agreement (including the Company Disclosure Schedule and the Buyer
Disclosure Schedule) and the Confidentiality Agreement constitute the entire
agreement of the parties relating to the subject matter hereof and supersede
other prior agreements and understandings between the parties both oral and
written regarding such subject matter.
Section 8.2 Severability
------------
Any provision of this Agreement that is held by a court of competent
jurisdiction to violate applicable law shall be limited or nullified only to the
extent necessary to bring the Agreement within the requirements of such law.
Section 8.3 Notices
-------
Any notice required or permitted by this Agreement must be in writing and must
be sent by facsimile, by nationally recognized commercial overnight courier, or
mailed by United States registered or certified mail, addressed to the other
party at the address below or to such other address for notice (or facsimile
number, in the case of a notice by facsimile) as a party gives the other party
written notice of in accordance with this Section 8.3. Any such notice will be
effective as of the date of receipt:
(a) if to the Seller, to
Xxxxxxx Overseas Holdings S.A.
00-00 xxx Xxxxx Xxxx
X-0000 Xxxxxxxxx
Telecopy: 011-352-228-020
Attention: General Counsel
with a copy to:
Xxxxxxx Industries, Inc.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxx 00000
Telecopy: (000) 000-0000
Attention: General Counsel
and
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
Xxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx, Esq.
(b) if to the Buyer, to
Ralcorp Holdings, Inc.
X.X. Xxx 000
Xx. Xxxxx, Xxxxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx Xxxxxxxx
Section 8.4 Governing Law; Jurisdiction
---------------------------
This Agreement shall be governed by, enforced under and construed in accordance
with the laws of the State of New York, without giving effect to any choice or
conflict of law provision or rule thereof. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of New York and of the United States of America in
each case located in the County of New York for any litigation arising out of or
relating to this Agreement and the transactions contemplated hereby (and agrees
not to commence any litigation relating thereto except in such courts) and
further agrees that service of any process, summons, notice or document by U.S.
registered mail to its respective address set forth in Section 8.3 (or to such
other address for notice that such party has given the other party written
notice of in accordance with Section 8.3) shall be effective service of process
for any litigation brought against it in any such court. Each of the parties
hereto hereby irrevocably and unconditionally waives any objection to the laying
of venue of any litigation arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of New York or of the United
States of America in each case located in the County of New York and hereby
further irrevocably and unconditionally waives and agrees not to plead or claim
in any such court that any such litigation brought in any such court has been
brought in an inconvenient forum.
Section 8.5 Descriptive Headings
---------------------
The descriptive headings herein are inserted for convenience of reference only
and shall in no way be construed to define, limit, describe, explain, modify,
amplify, or add to the interpretation, construction or meaning of any provision
of, or scope or intent of, this Agreement nor in any way affect this Agreement.
Section 8.6 Counterparts
------------
This Agreement may be signed in counterparts and all signed copies of this
Agreement will together constitute one original of this Agreement. This
Agreement shall become effective when each party hereto shall have received
counterparts thereof signed by all the other parties hereto.
Section 8.7 Assignment
----------
Neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto (whether by operation of law or
otherwise) without the prior written consent of the other parties.
Notwithstanding the preceding sentence, the Seller may delegate all or any part
of its obligations under this Agreement to any of its agents, affiliates or
other designees. No such delegation shall relieve the Seller of any of its
obligations hereunder. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of and be enforceable by the parties and
their respective successors and assigns.
Section 8.8 Fees and Expenses
------------------
Whether or not this Agreement and the transactions contemplated hereby are
consummated, and except as otherwise expressly set forth herein, each of the
parties hereto shall bear its own costs and expenses (including legal and
financial advisory fees and expenses) incurred in connection with, or in
anticipation of, this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses; provided, however, that if (a)
-------- -------
this Agreement is terminated pursuant to Section 6.1(b) hereof and (b) the Buyer
shall have breached the representation and warranty set forth in Section 3.5
hereof, the Buyer shall pay the Seller an amount equal to all fees, costs, and
expenses incurred by the Seller in connection with the transactions contemplated
by this Agreement. Such payment shall not constitute liquidated damages and
shall be in addition to any other legal or equitable remedies available to the
Seller. Each of the Seller, on the one hand, and the Buyer, on the other hand,
shall indemnify and hold harmless the other party from and against any and all
claims or liabilities for financial advisory and finders' fees incurred by
reason of any action taken by such party or otherwise arising out of the
transactions contemplated by this Agreement by any person claiming to have been
engaged by such party.
Section 8.9 Interpretation
--------------
Throughout this Agreement, nouns, pronouns and verbs shall be construed as
masculine, feminine, neuter, singular or plural, whichever shall be applicable.
Unless otherwise specified, all references herein to "Section" shall refer to
corresponding provisions of this Agreement. Whenever the words "include,"
"includes" or including" are used in this Agreement, they are deemed to be
followed by the words "without limitation." The phrase "to the knowledge of the
Seller" or any similar phrase shall mean such facts and other information that
as of the date hereof are actually known to, or which could reasonably be
expected to be known after a reasonably diligent inquiry of the relevant facts
and circumstances by, any executive officer or director of the Seller or the
Company and those persons set forth in Section 8.9 of the Company Disclosure
Schedule. In the event an ambiguity or question of intent or interpretation
arises, this Agreement shall be construed as if drafted jointly by the parties
and no presumption or burden of proof shall arise favoring or disfavoring any
party by virtue of the authorship of any provisions of this Agreement.
Section 8.10 No Third-Party Beneficiaries
----------------------------
Except as expressly provided in this Agreement, this Agreement shall not benefit
or create any right or cause of action in or on behalf of any person other than
the parties hereto; provided, however, that this Agreement will be binding upon,
-------- -------
inure to the benefit of, and be enforceable by, the parties and their respective
successors and permitted assigns.
Section 8.11 No Waivers; Modification
--------------------------
No Waivers; Modification. Any waiver of any right or default hereunder will be
--------------------------
effective only in the instance given and will not operate as or imply a waiver
of any other or similar right or default on any subsequent occasion. No waiver,
modification or amendment of this Agreement or of any provision hereof will be
effective unless in writing and signed by the party against whom such waiver,
modification or amendment is sought to be enforced.
Section 8.12 Specific Performance
---------------------
The parties hereto agree that if any of the provisions of this Agreement were
not performed in accordance with their specific terms or were otherwise
breached, irreparable damage would occur, no adequate remedy at law would exist
and damages would be difficult to determine, and that the parties shall be
entitled to specific performance of the terms hereof and immediate injunctive
relief, without the necessity of proving the inadequacy of money damages as a
remedy, in addition to any other remedy at law or equity.
IN WITNESS
WHEREOF, each of the undersigned has caused this Agreement to be duly signed as
of the date first above written.
XXXXXXX OVERSEAS HOLDINGS S.A.
By: /s/ C. Xxxx X. Xxxxxxxx
-----------------------
Name: C. Xxxx X. Xxxxxxxx
Title: Authorized Xxxxxx
XX FINANCIAL CORPORATION
By: /s/ J. R. Xxxxxxxxxx
--------------------
Name: J. R. Xxxxxxxxxx
Title: Chief Executive Officer
GUARANTY
In order to induce Xxxxxxx Overseas Holdings S.A. (the "Seller") to
enter into the Stock Purchase Agreement (the "Agreement"), dated as of June 16,
2000, between the Seller and RH Financial Corporation (the "Buyer"), Ralcorp
Holdings, Inc., a Delaware corporation, irrevocably and unconditionally
guarantees the prompt, complete and punctual performance, compliance and payment
of all the obligations of the Buyer under the Agreement.
Ralcorp further agrees that its obligations under the Agreement shall
not be affected by any event, condition or circumstance whatsoever (with or
without notice to, or knowledge of, the Buyer or Ralcorp) including without
limitation any which constitutes, or might be construed to constitute, a legal
or equitable discharge of the Buyer for its obligations under the Agreement or
of Ralcorp of its guaranty hereunder. In furtherance of the foregoing and
without limiting the generality thereof, Ralcorp agrees that (a) this Guaranty
is a guaranty of payment and performance when due and not collectability; (b)
this Guaranty is a primary obligation of Ralcorp and not merely a contract of
surety; and (c) payment or performance by Ralcorp of a portion, but not all, of
the obligations under the Agreement shall in no way limit, affect, modify or
abridge any liability of Ralcorp for any portion of the obligations which have
not been paid or performed.
Ralcorp waives all diligence, presentment, protest and demand, and
also notice of dishonor, demand, protest and nonpayment. No failure by the
Seller to assert any right or pursue any remedy with respect to the Buyer or
under this Guaranty shall relieve Ralcorp from its obligations hereunder.
Ralcorp agrees that this Guaranty shall not be diminished or affected,
in any way, by any bankruptcy, reorganization, arrangement, liquidation or
similar proceeding with respect to the Buyer or by dissolution of the Buyer.
This Guaranty shall continue in full force and effect, notwithstanding any
merger, consolidation, sale of assets or any other similar transaction by the
Buyer or Ralcorp.
Ralcorp further agrees to pay all reasonable costs and expenses,
including without limitation, reasonable attorneys' fees, at any time paid or
incurred by or on behalf of the Seller in enforcing this Guaranty.
June 16, 2000 RALCORP HOLDINGS, INC.
By: /s/ J. R. Xxxxxxxxxx
--------------------
Name: J. R. Xxxxxxxxxx
Title: Chief Executive Officer
EXHIBIT B
FIRPTA CERTIFICATE
-------------------
Section 1445 of the Internal Revenue Code of 1986, as amended (the
"Code"), provides that a transferee of a United States real property interest
must withhold tax if the transferor is a foreign person. To inform the
transferee that withholding of tax is not required upon the acquisition of an
interest in RHM Holdings (USA) Inc., a Delaware corporation (the "Company"), the
undersigned hereby certifies that he is an officer of the Company and that, as
such, he is authorized to execute and deliver this certificate on behalf of the
Company, and further certifies as follows:
1. The Company is not and has not been a "United States real
property holding corporation" within the meaning of section 897(c)(2) of the
Code during the applicable period specified in section 897(c)(1)(A)(ii) of the
Code;
2. Interests in the Company are not "United States real property
interests" by reason of section 897(c)(1)(A)(ii) of the Code;
3. The Company's United States employer identification number is
#; and
4. The Company's address is #.
The undersigned understands that this certification may be disclosed
to the Internal Revenue Service by the transferee and that any false statement
contained herein could be punished by fine, imprisonment or both.
Under penalties of perjury, the undersigned declares that he has
examined this certification and, to his knowledge and belief, it is true,
correct and complete, and he further declares that he has authority to sign this
document on behalf of the Company.
Dated this # day of #, ____.
RHM HOLDINGS (USA) INC.
By:
Name:
Title:
TABLE OF CONTENTS
PAGE
ARTICLE I
SALE OF STOCK
Section 1.1. Purchase and Sale 1
Section 1.2. Pre-Closing Purchase Price Adjustment 1
Section 1.3. Post-Closing Purchase Price Adjustment 2
Section 1.4. Time and Place of Closing 5
Section 1.5. Deliveries by the Seller 5
Section 1.6. Deliveries by the Buyer 6
Section 1.7. Books and Records of the Company 6
Section 1.8. Transition Services 7
Section 1.9. Intercompany Accounts 7
Section 1.10. Treatment of Seller Guaranties 7
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE SELLER
Section 2.1. Organization; Etc. 8
Section 2.2. Authority Relative to this Agreement 8
Section 2.3. Capitalization; Ownership of Shares 9
Section 2.4. Consents and Approvals; No Violations 10
Section 2.5. Financial Statements 10
Section 2.6. Absence of Undisclosed Liabilities 11
Section 2.7. Absence of Certain Changes 11
Section 2.8. Litigation 11
Section 2.9. Compliance with Law 12
Section 2.10. Employee Benefit Plans 13
Section 2.11. Labor Relations 16
Section 2.12. Taxes 16
Section 2.13. Contracts 17
Section 2.14. Real Property 19
Section 2.15. Intellectual Property 20
Section 2.16. Year 2000 Compliance 21
Section 2.17. Assets 21
Section 2.18. Affiliate Transactions 21
Section 2.19. Environmental Matters. 21
Section 2.20. Brokers; Finders and Fees 23
Section 2.21. Inventory 23
Section 2.22. Insurance 24
Section 2.23. Customers 24
Section 2.24. Records 24
Section 2.25. Receivables 24
Section 2.26. Bank Accounts 24
Section 2.27. Powers of Attorney 25
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BUYER
Section 3.1. Organization; Etc. 25
Section 3.2. Authority Relative to this Agreement 25
Section 3.3. Consents and Approvals; No Violations 25
Section 3.4. Acquisition of Shares for Investment; Ability
to Evaluate and Bear Risk 26
Section 3.5. Availability of Funds 26
Section 3.6. Litigation 27
Section 3.7. Buyer Acknowledgment 27
Section 3.8. Brokers; Finders and Fees 27
ARTICLE IV
COVENANTS OF THE PARTIES
Section 4.1. Conduct of Business of the Company 27
Section 4.2. Access to Information for the Buyer 29
Section 4.3. Consents; Cooperation 29
Section 4.4. No Solicitation 30
Section 4.5. Best Efforts 30
Section 4.6. Public Announcements 30
Section 4.7. Tax Matters 30
Section 4.8. Knowledge of Breach; Prior Knowledge 39
Section 4.9. Employees; Employee Benefits 39
Section 4.10. Indemnification. 41
Section 4.11. Maintenance of Books and Records 41
Section 4.12. Seller's Trademarks and Logos 42
Section 4.13. Environmental Indemnity 42
Section 4.14. Other Matters 45
Section 4.15. Confidentiality 46
Section 4.16. Non-Competition 46
Section 4.17. Stock Certificates 47
Section 4.19. Estoppel Certificates. 47
Section 4.20. Preclosing Transaction. 47
Section 4.21. Aurora Account Receivable. 48
ARTICLE V
CONDITIONS TO CONSUMMATION OF THE STOCK PURCHASE
Section 5.1. Conditions to Each Party's Obligations to
Consummate the Stock Purchase 48
Section 5.2. Further Conditions to the Seller's Obligations 49
Section 5.3. Further Conditions to the Buyer's Obligations 49
ARTICLE VI
TERMINATION AND ABANDONMENT
Section 6.1. Termination 50
Section 6.2. Procedure for and Effect of Termination 51
ARTICLE VII
SURVIVAL AND INDEMNIFICATION
Section 7.1. Survival Periods 52
Section 7.2. Seller's Agreement to Indemnify 52
Section 7.3. The Buyer's Agreement to Indemnify 54
Section 7.4. Third-Party Indemnification 56
Section 7.5. Insurance 57
Section 7.6. No Duplication; Sole Remedy 58
Section 7.7. Indemnification Matters Governed by this
ARTICLE VIII
MISCELLANEOUS PROVISIONS
Section 8.1. Entire Agreement 58
Section 8.2. Severability 58
Section 8.3. Notices 59
Section 8.4. Governing Law; Jurisdiction 60
Section 8.5. Descriptive Headings 60
Section 8.6. Counterparts 60
Section 8.7. Assignment 60
Section 8.8. Fees and Expenses 61
Section 8.9. Interpretation 61
Section 8.10. No Third-Party Beneficiaries 61
Section 8.11. No Waivers; Modification 62
Section 8.12. Specific Performance 62
Exhibit A A-1
Exhibit B B-1
Exhibit C-1 C-1
Exhibit C-2 C-2
