Exhibit 10.25
PURCHASE AGREEMENT
BY AND AMONG
INTERNATIONAL MULTIFOODS CORPORATION,
MULTIFOODS BRANDS, INC.,
FANTASIA CONFECTIONS, INC.,
XXXXX XXXX MULTIFOODS CORPORATION,
THE X.X. XXXXXXX COMPANY,
VALUE CREATION PARTNERS INC.,
BEST BRANDS CORP.,
AND
IMCB CORP.
DATED AS OF JANUARY 13, 2005
TABLE OF CONTENTS
ARTICLE I SALE AND PURCHASE OF SHARES AND ASSETS; ASSUMPTION OF LIABILITIES........... 2
1.01 Sale and Purchase of Shares....................................... 2
1.02 Sale and Purchase of Assets....................................... 2
1.03 Excluded Assets................................................... 4
1.04 Assumption of Liabilities......................................... 4
1.05 Excluded Liabilities.............................................. 6
1.06 Assignment and Assumption of Assigned Contracts................... 7
1.07 Dividable Contracts............................................... 8
ARTICLE II PURCHASE PRICE AND PAYMENT................................................. 9
2.01 Purchase Price.................................................... 9
2.02 Payment........................................................... 9
2.03 Prorations........................................................ 9
2.04 Determination of Closing Net Working Capital...................... 10
2.05 Inventory Adjustment.............................................. 12
2.06 Allocation of Purchase Price Among the Assets..................... 14
ARTICLE III CLOSING, CLOSING DELIVERIES AND CERTAIN TAXES............................. 14
3.01 Closing and Closing Date.......................................... 14
3.02 Closing Deliveries................................................ 15
3.03 Transfer Taxes and Recording Fees................................. 17
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS OF SELLERS AND XXXXXXX........... 17
4.01 Representations and Warranties of Sellers and Xxxxxxx............. 17
4.02 Covenants of Sellers.............................................. 35
ARTICLE V REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYER ENTITIES............. 40
5.01 Representations and Warranties of the Buyer Entities.............. 40
5.02 Covenants of the Buyer Entities................................... 42
ARTICLE VI MUTUAL COVENANTS........................................................... 43
6.01 Consents.......................................................... 43
6.02 Cooperation....................................................... 43
6.03 Trademark Matters and Corporate Names............................. 44
6.04 Publicity......................................................... 45
6.05 Closing Conditions................................................ 45
6.06 Antitrust Notification and Governmental Filings................... 46
6.07 Cancellation of FCI Lease......................................... 47
6.08 Supply Agreement.................................................. 47
6.09 Transition Services Agreement..................................... 47
6.10 Co-Pack Agreement................................................. 47
6.11 Disclosure Supplements............................................ 47
6.12 Bulk Sales Compliance............................................. 47
6.13 Further Assurances................................................ 47
6.14 Insurance......................................................... 48
6.15 International Sales............................................... 48
6.16 Intercompany Accounts; Distributions.............................. 48
6.17 Patent License Agreement.......................................... 48
6.18 Lockport Plant Matters............................................ 49
ARTICLE VII CONDITIONS TO CLOSING..................................................... 50
7.01 Conditions to Buyer Entities' Obligation.......................... 50
7.02 Conditions to Sellers' Obligation................................. 51
ARTICLE VIII EMPLOYEES AND EMPLOYEE BENEFITS.......................................... 53
8.01 Offers of Employment.............................................. 53
8.02 Union Employees................................................... 53
8.03 Provision of Buyer's and Companies' Plans......................... 54
8.04 Credit Under Buyer's Plans........................................ 54
8.05 Incentive Payments................................................ 54
8.06 Medical, Dental, Disability and Life Insurance Plan Liabilities... 55
8.07 Accrued Vacation.................................................. 55
8.08 COBRA............................................................. 55
ARTICLE IX TAX MATTERS................................................................ 56
9.01 Cooperation....................................................... 56
9.02 Filing Responsibility............................................. 56
9.03 Refunds........................................................... 56
ARTICLE X INDEMNIFICATION............................................................. 57
10.01 Tax Indemnification............................................... 57
10.02 Indemnification by Sellers........................................ 58
10.03 Indemnification by the Buyer Entities............................. 59
10.04 Adjustments....................................................... 60
10.05 Termination of Indemnification.................................... 61
10.06 Procedures Relating to Indemnification of Third Party Claims...... 62
10.07 Procedures Relating to Indemnification of Tax Claims.............. 63
10.08 Procedures for Indemnification--Other Claims...................... 64
10.09 No Effect on Other Agreements..................................... 64
ARTICLE XI TERMINATION............................................................... 65
11.01 Grounds for Termination........................................... 65
11.02 Procedure for Termination......................................... 65
11.03 Consequences of Termination....................................... 65
11.04 Survival of Certain Indemnification Obligations................... 66
ARTICLE XII MISCELLANEOUS............................................................ 67
12.01 Assignment........................................................ 67
12.02 No Third-Party Beneficiaries...................................... 67
12.03 Survival of Representations....................................... 67
12.04 Expenses.......................................................... 67
12.05 Amendments and Waiver............................................. 67
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12.06 Notices................................................................... 68
12.07 Counterparts.............................................................. 69
12.08 Entire Agreement.......................................................... 69
12.09 Severability.............................................................. 69
12.10 Governing Law............................................................. 69
12.11 Equitable Remedies........................................................ 69
12.12 Interpretation............................................................ 69
12.13 Disclosure Schedule....................................................... 70
Exhibits
Exhibit 1.02(a) U.S. Owned Real Property
Exhibit 1.02(b) U.S. Leased Real Property
Exhibit 1.02(c) Equipment
Exhibit 1.02(k) Assigned Contracts
Exhibit 1.03(i) Certain Excluded Contracts
Exhibit 1.03(j) Certain Excluded Assets
Exhibit 1.07 Dividable Contracts
Exhibit 2.01 Allocation of Purchase Price between the Shares
and the Assets
Exhibit 2.02(ii) Form of Note Purchase Agreement
Exhibit 2.04(g)(i) Certain Net Working Capital Principles
Exhibit 2.04(g)(ii) Detailed Accounting of Net Working Capital
Exhibit 2.06 Allocation of Purchase Price among the Assets
Exhibit 3.02(a)(iii) Form of Xxxx of Sale
Exhibit 3.02(a)(iv) Form of Lease Assignment
Exhibit 3.02(a)(v) Forms of Limited Warranty Deeds
Exhibit 3.02(a)(vi) Forms of Intellectual Property Assignment
Exhibit 3.02(a)(viii) Requested Subordination, Nondisturbance Agreements
Exhibit 3.02(a)(ix) Requested Estoppel Certificates
Exhibit 3.02(a)(x) Form of Seller's Affidavit
Exhibit 3.02(a)(xi) Lemelson Instrument of Transfer
Exhibit 5.01(f) Form of Accredited Investor Certificate
Exhibit 6.03(a) Form of Trademark License Agreement
Exhibit 6.03(d) Form of Grant-Back Technology License Agreement
Exhibit 6.08(a) Form of Supply Agreement
Exhibit 6.08(b) Form of Baking Mix Agreement
Exhibit 6.09 Form of Transition Services Agreement
Exhibit 6.10 Form of Co-Pack Agreement
Exhibit 6.17 Form of Patent License Agreement
Exhibit 7.01(i) Certain Consents
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PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") is made as of January 13, 2005,
by and among INTERNATIONAL MULTIFOODS CORPORATION, a corporation organized under
the laws of Delaware ("IMC"), MULTIFOODS BRANDS, INC., a corporation organized
under the laws of Delaware ("MBI"), FANTASIA CONFECTIONS, INC., a corporation
organized under the laws of California ("FCI"; IMC, MBI and FCI are sometimes
hereinafter referred to individually as a "U.S. Seller" and collectively as the
"U.S. Sellers"), XXXXX XXXX MULTIFOODS CORPORATION, an unlimited company
amalgamated under the laws of Nova Scotia ("Xxxxx Xxxx"; the U.S. Sellers and
Xxxxx Xxxx are sometimes hereinafter referred to individually as a "Seller" and
collectively as the "Sellers"), THE X. X. XXXXXXX COMPANY, a corporation
organized under the laws of Ohio ("Xxxxxxx"), VALUE CREATION PARTNERS INC., a
corporation organized under the laws of Delaware ("VCP"), BEST BRANDS CORP., a
corporation organized under the laws of Delaware ("BBC"), and IMCB CORP., a
corporation organized under the laws of Delaware (hereinafter referred to as
"Buyer"; VCP, BBC and Buyer are sometimes hereinafter referred to individually
as a "Buyer Entity" and collectively as the "Buyer Entities") and a wholly-owned
subsidiary of VCP.
WHEREAS, the U.S. Sellers are engaged in, among other businesses, the
business of manufacturing, marketing, selling and distributing (1) baking mix
and baking ingredient foodservice products primarily under the brand names
Multifoods and Pillsbury and distributor and customer labels in the in-store
bakery, foodservice and wholesale/retail bakery channels in the continental
United States and Puerto Rico and (2) frozen bakery products primarily under the
brand names Fantasia, Gourmet Xxxxx and Multifoods and distributor and customer
labels in the in-store bakery, retail bakery and foodservice channels in the
continental United States and Puerto Rico (the "U.S. Business"); and
WHEREAS, Xxxxx Xxxx owns (1) all of the issued and outstanding shares of
capital stock (the "Gourmet Xxxxx Shares") of Gourmet Xxxxx Inc., a corporation
organized under the laws of Ontario ("Gourmet Xxxxx"), and (2) all of the issued
and outstanding shares of capital stock (the "980964 Shares" and together with
the Gourmet Xxxxx Shares, the "Shares") of 980964 Ontario Limited, a corporation
organized under the laws of Ontario ("980964") (Gourmet Xxxxx together with
980964 are sometimes hereinafter collectively referred to as the "Companies" and
individually as a "Company"); and
WHEREAS, the Companies are engaged in the business of manufacturing,
marketing, selling and distributing frozen bakery products primarily under the
brand name Gourmet Xxxxx and distributor and customer labels in the in-store
bakery and foodservice channels in Canada and the continental United States (the
"Canadian Business" and together with the U.S. Business, the "Business"); and
WHEREAS, the U.S. Sellers desire to sell, transfer and assign to Buyer,
and Buyer desires to purchase and assume from the U.S. Sellers, on the terms and
subject to the conditions set forth in this Agreement, certain assets and
liabilities relating to the U.S. Business; and
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WHEREAS, Xxxxx Xxxx desires to sell, transfer and assign to Buyer, and
Buyer desires to purchase from Xxxxx Xxxx, on the terms and subject to the
conditions set forth in this Agreement, the Shares.
NOW, THEREFORE, in consideration of the premises and the covenants and
agreements herein contained and for other good and valuable consideration, the
parties, intending to be legally bound, hereby agree as follows:
ARTICLE I
SALE AND PURCHASE OF SHARES AND ASSETS; ASSUMPTION OF LIABILITIES
1.01 SALE AND PURCHASE OF SHARES. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing (as hereinafter defined)
Xxxxx Xxxx shall sell, transfer, assign and convey to Buyer, and Buyer shall
purchase from Xxxxx Xxxx, the entire right, title and interest of Xxxxx Xxxx in
and to the Shares.
1.02 SALE AND PURCHASE OF ASSETS. Upon the terms and subject to the
conditions set forth in this Agreement, at the Closing, the U.S. Sellers shall
sell, transfer, assign and convey to Buyer, and Buyer shall purchase and acquire
from the U.S. Sellers, all of the U.S. Sellers' right, title and interest, as of
the Closing, in and to all of the following assets and properties described in
this Section 1.02 (the "Assets"):
(a) the real property described in Exhibit 1.02(a) hereto, together with
all improvements (including improvements in progress), fixtures and easements,
rights-of-way, spur tracks, docks, piers and other appurtenances thereto (such
as appurtenant rights in and to public streets, alleys and thoroughfares) (the
"U.S. Owned Real Property");
(b) the leasehold and subleasehold interests of each U.S. Seller in and to
the real property leases listed on Exhibit 1.02(b) hereto (the "Leases") with
respect to the real property listed on Exhibit 1.02(b) hereto (collectively, the
"U.S. Leased Real Property" and, together with the U.S. Owned Real Property,
referred to herein as the "U.S. Real Property"), together with all interests of
the U.S. Sellers in all improvements (including improvements in progress),
fixtures and easements, rights-of-way, spur tracks, docks, piers and other
appurtenances thereto (such as appurtenant rights in and to public streets,
alleys, and thoroughfares) (collectively with the U.S. Leased Real Property, the
"Leasehold Interests");
(c) all machinery, equipment, spare parts, furniture, automobiles, trucks,
tractors, trailers, computer hardware, tools and other tangible personal
property listed in Exhibit 1.02(c) hereto (the "Equipment");
(d) all inventories of ingredients and raw materials, work in process,
finished goods, bagging, packaging and other containers, and other goods
(whether located at the U.S. Sellers' premises or third parties' (including
co-packers') facilities) held for sale to customers in the ordinary course of
business, in each case exclusively related to the U.S. Business, and the
"TreatToppers" inventory at the Sedalia, Missouri plant (the "Inventory");
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(e) all accounts receivable for goods sold or services rendered by each
U.S. Seller in the ordinary course of business, in each case exclusively related
to the U.S. Business, other than those payable by an affiliate of the U.S.
Sellers (collectively, the "Receivables");
(f) all purchase orders made by customers for the purchase of products of
the U.S. Business or by any of the U.S. Sellers for the purchase of goods or
services, in each case exclusively related to the U.S. Business (the "Purchase
Orders");
(g) the Owned Business Intellectual Property (as defined in Section
4.01(n)) owned by a U.S. Seller that is exclusively related to the U.S. Business
(the "Intellectual Property");
(h) all books, records and other documents and information exclusively
related to the U.S. Business, including all customer, prospect, broker and
distributor lists, sales literature, price lists, quotes and bids, promotional
programs, product catalogs and brochures, inventory records, product data,
purchase orders and invoices, sales orders and sales order log books, commission
records, customer information, personnel records (to the extent permitted by
law) and correspondence, in each case exclusively related to the U.S. Business
(the "Books and Records");
(i) all pre-paid expenses and deposits made by the U.S. Sellers, in each
case exclusively related to the Assets and the U.S. Business (the "Prepaid
Expenses");
(j) all governmental licenses, permits, approvals and other authorizations
held by the U.S. Sellers exclusively related to the Assets and the U.S.
Business, to the extent their transfer is permitted by law (the "Licenses");
(k) the licenses, contracts and agreements listed on Exhibit 1.02(k)
hereto, together with each other contract or agreement exclusively related to
the U.S. Business not required to be listed on Section 4.01(o) of the Disclosure
Schedule (as defined in Section 4.01) (other than Excluded Contracts (as defined
in Section 1.03(i)) (together with the Leases, the "Assigned Contracts");
(l) each warranty or guarantee by any manufacturer, supplier or other
predecessor or transferor of any of the Assets, to the extent such assignment is
not prohibited by the terms of such warranty or guarantee (the "Warranties");
(m) all Tax (as defined in Section 4.01(i)) refunds and credits related to
Taxes that are not Excluded Taxes;
(n) the portions of the Dividable Contracts (as defined in Section
1.07(a)) that are assigned to Buyer pursuant to this Agreement;
(o) (i) the $4,805,000 Industrial Revenue Bonds, Series 1999, (ii) the
$1,532,000 Industrial Revenue Bonds, Series 2000, and (iii) the $3,624,000
Industrial Revenue Bonds, Series 2001, in each case issued by the City of Xxxxxx
Springs, Kansas (the "Industrial Revenue Bonds"); and
(p) all goodwill to the extent exclusively related to the U.S. Business.
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1.03 EXCLUDED ASSETS. The U.S. Sellers are not selling, and Buyer is not
purchasing from the U.S. Sellers, any property or assets not expressly described
in Section 1.02 hereof (the "Excluded Assets"). Without limiting the generality
of the foregoing, the following properties and assets of the U.S. Sellers
constitute Excluded Assets, notwithstanding anything to the contrary provided in
Section 1.02:
(a) all cash, cash equivalents, securities (whether or not marketable),
investments and bank accounts;
(b) the corporate charter, minute books, stock records, qualifications to
do business as a foreign corporation, taxpayer and other identification numbers,
Tax Returns (as defined in Section 4.01(i)) (although copies of Tax Returns for
Taxes that are not Excluded Taxes shall be provided to Buyer for periods
beginning on or after January 1, 2001) and similar records and documents of each
U.S. Seller;
(c) all Tax (as defined in Section 4.01(i)) refunds or credits related to
Excluded Taxes;
(d) all insurance policies of the U.S. Sellers and all rights of the U.S.
Sellers (including rights to receive dividends, refunds or proceeds) under or
arising out of such insurance policies;
(e) all of the U.S. Sellers' interests or rights in real property, except
for the U.S. Real Property;
(f) all intellectual property of each U.S. Seller, except for the
Intellectual Property and any intellectual property rights licensed to any U.S.
Seller pursuant to an Assigned Contract or the applicable portions of any
Dividable Contracts assigned to Buyer pursuant to this Agreement;
(g) Licenses that are not transferable or are transferable but only with
the consent of the government or a governmental agency and with respect to which
the requisite consent is not received at or prior to the Closing;
(h) assets held in the U.S. Sellers' Plans (as defined in Section
4.01(r));
(i) the contracts and agreements listed on Exhibit 1.03(i) hereto, all
collective bargaining agreements or other agreements with a labor or trade
union, and all contracts to which any U.S. Seller is a party pursuant to which
an employee of such U.S. Seller is entitled to a "success bonus" (the "Success
Bonus Agreements") if the transactions contemplated by this Agreement are
consummated and the employee remains employed through the date of such
consummation (collectively, the "Excluded Contracts"); and
(j) the assets and properties listed in Exhibit 1.03(j).
1.04 ASSUMPTION OF LIABILITIES. At the Closing, upon the terms and subject
to the conditions set forth in this Agreement, Buyer shall assume and hereby
agrees to pay, perform,
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observe and discharge fully and timely, effective as of the Closing, all
liabilities, obligations and commitments, known or unknown, asserted or
unasserted, absolute or contingent, of each U.S. Seller to the extent
exclusively related to or arising out of the U.S. Business or the Assets,
whether arising before, at or after the Closing, other than liabilities,
obligations or commitments constituting Excluded Liabilities (as defined in
Section 1.05) (collectively, the liabilities, obligations and commitments so
assumed being referred to as the "Assumed Liabilities"). To the extent that any
U.S. Seller or any affiliate of any U.S. Seller pays any Assumed Liability
following the Closing, Buyer shall reimburse IMC for any amount so paid
immediately upon demand. Without limiting the generality of the foregoing,
except to the extent such liabilities, obligations, and/or commitments
constitute Excluded Liabilities, the following liabilities, obligations and
commitments constitute Assumed Liabilities:
(a) all liabilities, obligations and commitments of each U.S. Seller under
or in respect of the U.S. Real Property, Leasehold Interests, Equipment,
Inventory, Assigned Contracts, Purchase Orders, Licenses, Intellectual Property,
the Industrial Revenue Bonds and Warranties and the applicable portions of each
Dividable Contract;
(b) all unpaid accounts payable of each U.S. Seller to the extent
exclusively related to the U.S. Business and all accrued expenses of each U.S.
Seller to the extent exclusively related to the U.S. Business;
(c) without limiting Article VIII hereof, (i) all liabilities, obligations
and commitments of each U.S. Seller to Employees (as defined in Section 8.01)
and (to the extent accrued on the Final Closing Statement (as defined in Section
2.04(d)) persons formerly on the payroll of the U.S. Business (or any
predecessor payroll) relating to compensation, commissions, incentive payments,
and bonuses (except to the extent arising from the Success Bonus Agreements),
(ii) all liabilities, obligations and commitments of the U.S. Sellers to
Employees for severance pay resulting from the termination of employment with a
U.S. Seller in connection with the transactions contemplated by this Agreement
(including severance obligations arising out of the collective bargaining
agreements relating to the Lockport, New York or Elyria, Ohio plants to which a
U.S. Seller is a party), and (iii) all liabilities, obligations and commitments
of each U.S. Seller for severance pay to persons formerly on the payroll of the
U.S. Business (or any predecessor payroll) to the extent accrued on the Final
Closing Statement.
(d) all liabilities, obligations and commitments arising from litigation,
arbitration, administrative and other proceedings (other than workers'
compensation and health insurance/benefit claims) pending or threatened against
the U.S. Business or the Assets and all performance obligations under any
product recall or any non-financial settlement obligation exclusively related to
the U.S. Business;
(e) all liabilities, obligations and commitments arising from any workers'
compensation and health insurance/benefit claims related to the U.S. Business
asserted on or after the Closing Date (as defined in Section 3.01) (regardless,
in the case of workers' compensation claims, of when the alleged injuries were
incurred) other than (i) workers' compensation claims asserted by persons
employed at the Lockport, New York plant (the "Lockport Plant") that relate to
injuries incurred prior to the Closing Date, (ii) workers'
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compensation claims resulting from accidents occurring prior to the Closing Date
that cause death or loss of limbs or other severe physical injuries (e.g.,
broken backs or other physical injuries requiring hospitalization other than on
an outpatient basis), and (iii) health insurance/benefit claims asserted by
persons employed by the U.S. Sellers at the Lockport Plant (except to the extent
any such persons are employed by Buyer, in which case Buyer shall be liable for
such health insurance/benefit claims in accordance with the terms of Section
8.06), each of which shall be the sole responsibility of the U.S. Sellers;
(f) any claims (including product liability and infringement claims,
liabilities for customer deductions and refund and replacement obligations with
respect to products) relating to goods sold or services provided by the U.S.
Business before, on or after the Closing Date;
(g) any claims (other than claims retained by the U.S. Sellers pursuant to
Section 1.05(e) and Section 1.05(j)) asserted by Employees, by persons formerly
on the payroll of the U.S. Business (or any predecessor payroll), or by
dependents of such Employees or former employees, for acts or omissions
occurring on or before the Closing Date;
(h) all liabilities, obligations and commitments relating to the
ownership, operation or condition of the tangible Assets (including
environmental conditions) before, on or after the Closing Date or arising from
the transfer of the Assets to Buyer;
(i) vacation, personal time off and sick time accrued by the U.S. Sellers
as of the Closing Date for all Employees hired by Buyer ("Accrued Vacation");
(j) all liabilities for Taxes attributable to the U.S. Business or the
Assets, other than Excluded Taxes (as defined in Section 4.01(i)), the U.S.
Sellers' share of prorated Taxes under Section 2.03 and the U.S. Sellers' share
of Transfer Taxes pursuant to Section 3.03;
(k) any liability, obligation or commitment of any U.S. Seller to pay or
perform any liability, obligation or commitment (i) pursuant to any guaranty or
obligation or Lien (as defined in Section 4.01(k)) on, or in respect of, any
collateral of any U.S. Seller (other than the Assets) to ensure performance
given or made by any such U.S. Seller to the extent exclusively in connection
with the U.S. Business (including pursuant to a letter of credit or surety
bond), or (ii) that otherwise arises as a matter of law or contract to the
extent exclusively in connection with the U.S. Business, but in no event shall
the provisions of this subsection include any obligation to repay any borrowed
money; and
(l) all liabilities, obligations and commitments of the U.S. Sellers
reflected on the Final Closing Statement.
1.05 EXCLUDED LIABILITIES. Notwithstanding anything to the contrary
provided in Section 1.04 hereof, the Assumed Liabilities shall not include the
following liabilities, obligations and commitments of the U.S. Sellers (or any
of them) (the "Excluded Liabilities"):
(a) any liability, obligation or commitment for borrowed money;
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(b) any liability for Excluded Taxes, the U.S. Sellers' share of
prorated Taxes under Section 2.03 or the U.S. Sellers' share of Transfer Taxes
pursuant to Section 3.03;
(c) any liability, obligation or commitment for costs and expenses
(other than Transfer Taxes, as defined in Section 3.03) in connection with the
negotiation and execution of this Agreement or the consummation of the
transactions contemplated hereby (other than severance costs and liabilities
referred to in Exhibit 2.04(g)(i));
(d) any liability, obligation or commitment of the U.S. Sellers under
this Agreement or under any other agreement between one or more of the U.S.
Sellers and Buyer entered into on or after the date of this Agreement in
accordance with the terms hereof;
(e) any liability, obligation or commitment relating to any of the U.S.
Sellers' Plans, except to the extent Buyer is assuming such liabilities,
obligations and commitments pursuant to Section 1.04(c);
(f) any intercompany accounts between the U.S. Sellers and their
affiliates;
(g) claims relating to COBRA (as defined in Section 8.08) coverage, to
the extent provided in Section 8.08;
(h) any liability, obligation or commitment primarily related to the
Excluded Assets (except to the extent provided in Section 1.04(c), Section 1.06
and Section 1.07 hereof) and any other assets of the U.S. Sellers not
transferred to and not purchased by Buyer;
(i) any liability, obligation or commitment of each U.S. Seller for
severance pay to persons formerly on the payroll of the U.S. Business (or any
predecessor payroll) to the extent not accrued on the Final Closing Statement;
(j) (i) any liability, obligation or commitment arising from workers'
compensation claims or health insurance/benefit claims (to the extent provided
in Section 8.06) related to the U.S. Business that are asserted prior to the
Closing Date, (ii) workers' compensation claims resulting from accidents
occurring prior to the Closing Date that cause death or loss of limbs or other
severe physical injuries (e.g., broken backs or other physical injuries
requiring hospitalization other than on an outpatient basis), and (iii) in the
case of claims asserted by persons employed at the Lockport Plant, (A) workers'
compensation claims asserted by such persons at any time that relate to injuries
incurred prior to the Closing Date and (B) health insurance/benefit claims
asserted by persons employed by the U.S. Sellers at the Lockport Plant (except
to the extent any such persons are employed by Buyer, in which case Buyer shall
be liable for such health insurance/benefit claims in accordance with the terms
of Section 8.06); and
(k) any liability, obligation, or commitment set forth in Section
1.05(k) of the Disclosure Schedule.
1.06 ASSIGNMENT AND ASSUMPTION OF ASSIGNED CONTRACTS. Notwithstanding any
other provision of this Agreement, if (i) any Assigned Contract is not permitted
to be sold, assigned, transferred or conveyed without the approval, consent or
waiver of another party
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thereto, and (ii) all necessary approvals, consents and waivers of all parties
to such Assigned Contract have not been obtained at or prior to the Closing,
then Buyer shall not be obligated to assume such Assigned Contract and such
Assigned Contract shall not be included in the Assets transferred to Buyer on
the Closing Date, provided that Buyer will assume the obligations and
liabilities of the U.S. Sellers under such Assigned Contract (but not such
Assigned Contract itself), in which event the claims, rights and benefits of the
U.S. Sellers arising under such Assigned Contract or resulting therefrom (but
not such Assigned Contract itself) shall be included in the Assets and
transferred to Buyer hereunder, and the U.S. Sellers shall, following the
Closing, use reasonable efforts to assist Buyer in attempting to obtain the
necessary approvals, consents and waivers with respect to such Assigned Contract
(but in no event shall the U.S. Sellers be required to pay money or grant any
accommodations to obtain any such approval, consent or waiver). Each U.S. Seller
that is a party thereto shall promptly transfer such Assigned Contract to Buyer
if such approvals, consents and waivers are obtained (provided, that no U.S.
Seller shall be obligated to make any representations or warranties with respect
thereto beyond those expressly required by this Agreement) and upon such
transfer Buyer shall assume all liabilities, obligations and commitments of the
applicable U.S. Seller(s) arising under such Assigned Contract. Nothing stated
in this Section 1.06 shall modify in any respect the conditions set forth in
Article VII.
1.07 DIVIDABLE CONTRACTS.
(a) The U.S. Sellers shall use their reasonable efforts to assist in the
transfer to Buyer of such portion of each Dividable Contract or the benefits
thereof that relates to the U.S. Business on terms that, taken as a whole, for
all such transfers are not materially less advantageous to Buyer than would
exist if such transferred portions were stand alone contracts. Upon such
transfer, Buyer shall assume any liabilities and obligations of the applicable
U.S. Seller related to the transferred portion of such Dividable Contract.
"Dividable Contracts" means the contracts and agreements referred to in Exhibit
1.07 hereto.
(b) Notwithstanding anything to the contrary contained in this Agreement,
to the extent that the transfer to Buyer of the portion of any Dividable
Contract that relates to the U.S. Business or any claim or right or any benefit
arising thereunder or resulting therefrom would require any approvals, consents
or waivers by another person, and such approvals, consents or waivers shall not
have been obtained prior to the Closing, the Closing shall (subject to the
satisfaction or waiver of the conditions set forth in Article VII) proceed
without the transfer of any such portion of any such Dividable Contract and this
Agreement shall not constitute a transfer of such portion of any such Dividable
Contract or an attempt thereof. In the event that the Closing proceeds without
the transfer of any such portion of any such Dividable Contract, then following
the Closing, the U.S. Sellers shall use their reasonable efforts to assist Buyer
in attempting to obtain promptly such approvals, consents or waivers; provided,
however, that neither Sellers nor Buyer shall be required to pay any
consideration for any such approval, consent or waiver or grant any
accommodations. Pending such approval, consent or waiver, the parties shall
cooperate with each other in any mutually agreeable, reasonable and lawful
arrangements (to the extent any such arrangements are feasible) designed to
provide to Buyer the benefits of such portion of any such Dividable Contract and
to the U.S. Sellers the benefits that they would have obtained had such portion
of such Dividable Contract been transferred to Buyer
8
at the Closing. To the extent that Buyer is provided the benefits pursuant to
this Section 1.07 of any portion of any such Dividable Contract, Buyer shall
perform the obligations of the U.S. Sellers thereunder. Once approval, consent
or waiver for the transfer of any such portion of any such Dividable Contract
not transferred at the Closing is obtained, the U.S. Sellers shall transfer such
portion of any such Dividable Contract to Buyer (provided, that no U.S. Seller
shall be obligated to make any representations or warranties with respect
thereto beyond those expressly required by this Agreement) and Buyer shall
assume the corresponding obligations of each U.S. Seller thereunder. Nothing
stated in this Section 1.07 shall modify in any respect the conditions set forth
in Article VII.
ARTICLE II
PURCHASE PRICE AND PAYMENT
2.01 PURCHASE PRICE. The aggregate purchase price to be paid by Buyer to
Sellers for the Shares and the Assets shall be an amount equal to the sum of (i)
$43,000,000 (the "Base Purchase Price"), plus or minus (as applicable) (ii) the
amount by which Final Closing Net Working Capital, as determined in the manner
set forth below in Section 2.04, exceeds or is less than $15,552,000 (the Base
Purchase Price, as so adjusted, being referred to as the "Purchase Price", as
such amount may be further adjusted after Closing as otherwise provided in this
Agreement (including pursuant to Section 2.05)). The Purchase Price shall be
allocated between the Shares, on the one hand, and the Assets, on the other
hand, as set forth on Exhibit 2.01.
2.02 PAYMENT. Upon the terms and subject to the conditions of this
Agreement, at the Closing, the Base Purchase Price shall be payable as follows:
Buyer shall (i) pay to Sellers, by wire transfer to the bank accounts designated
in writing by Sellers prior to the Closing, immediately available United States
funds in the aggregate amount of $33,000,000 (the "Closing Cash Payment"), with
Buyer to pay such portion of the Closing Cash Payment to each such account as
may be directed by Sellers, and (ii) a promissory note of Buyer (the "Buyer
Note") in the form attached as Exhibit 1 to the Note Purchase Agreement (the
"Note Purchase Agreement") attached as Exhibit 2.02(ii) hereto, dated the
Closing Date, in the principal amount of $10,000,000, bearing interest at the
rate of 8% per annum, payable on the dates and containing the other terms set
forth in Exhibit 1 to the Note Purchase Agreement.
2.03 PRORATIONS. The following prorations relating to the Assets will be
made as of the Closing Date, with the U.S. Sellers liable to the extent such
items relate to any time period up to the day immediately preceding the Closing
Date and Buyer liable to the extent that such items relate to periods on or
after the Closing Date. The net amount of all such prorations will be settled
and paid by the U.S. Sellers to Buyer or Buyer to the U.S. Sellers, as the case
may be, on the Closing Date by wire transfer of immediately available funds to
an account designated in writing by Buyer or the U.S. Sellers, as applicable,
provided, however, that if any item cannot be prorated with specificity as of
the Closing Date (including real estate taxes and assessments resulting from,
among other things, any proposed or actual change in valuation prior to the
Closing Date to the extent such changes affect Taxes in the period up to and
including the Closing Date) due to final bills not being issued as of the
Closing Date, the parties will calculate the prorations with respect to such
items as soon as practicable after the actual bills are issued,
9
and the net amount shall be paid by the responsible party to the other(s) by
wire transfer of immediately available funds promptly thereafter:
(a) rents, additional rents, taxes and other items payable by the U.S.
Sellers under any lease to be assigned to or assumed by Buyer pursuant to the
terms of this Agreement;
(b) the amount of rents and charges for sewer, water, fuel, telephone,
electricity and other utilities, including Taxes thereon; provided, however,
that no deposits or prepaid amounts will be prorated, but will be included in
the Assets; and
(c) real estate and personal property Taxes and installments of
assessments, if any, on or with respect to the Assets.
Notwithstanding the foregoing, Buyer shall be liable for and pay such items set
forth in clauses (a), (b) and (c) above to the extent such items are included as
liabilities on the Final Closing Statement.
(d) The U.S. Sellers will use commercially reasonable efforts to cause all
utility bills of the U.S. Sellers to be closed and billed by their respective
utility companies as of the day immediately preceding the Closing Date in order
that utility charges may be separately billed for the period prior to the
Closing Date and the period on and after the Closing Date. If any such utility
charges are not separately billed, they will be prorated presuming that such
charges were uniformly incurred during the period in question.
2.04 DETERMINATION OF CLOSING NET WORKING CAPITAL.
(a) Within 60 days after the Closing Date, Sellers shall prepare a
statement (the "Closing Statement") setting forth Net Working Capital (as
defined in clause (g) below) as of the close of business on the day immediately
preceding the Closing Date ("Closing Net Working Capital"). The value of the
inventory shown on the Closing Statement shall be equal to the value of
inventory as of the close of business on the day immediately preceding the
Closing Date reflected on the perpetual inventory records maintained by the U.S.
Sellers and the Companies in the ordinary course of business (the "Closing
Perpetual Inventory Value"), and such value shall be final and binding for
purposes of this Section 2.04, but shall be subject to adjustment after Closing
pursuant to Section 2.05 hereof. Buyer shall, and shall cause the Companies to,
reasonably assist Sellers and their representatives in the preparation of the
Closing Statement and shall provide Sellers and their representatives access at
all reasonable times to the personnel, properties and books and records of the
Business and the Companies for such purpose.
(b) Buyer shall, within 45 days after the delivery by Sellers of the
Closing Statement, complete its review thereof. After delivery of the Closing
Statement, Sellers shall provide Buyer and its representatives access at all
reasonable times to their personnel, properties and books and records, in each
case used or involved in the preparation of the Closing Statement. The Closing
Statement shall be binding and conclusive upon, and deemed accepted by, Buyer
unless Buyer shall have notified Sellers in writing within 45 days after
delivery of the Closing Statement of any objection thereto (the "Buyer's
Objection"). The Buyer's Objection shall set forth a
10
description of the basis of the Buyer's Objection and the adjustments to Closing
Net Working Capital reflected on the Closing Statement that Buyer believes
should be made. Any items not disputed during the foregoing 45-day period shall
be deemed to have been accepted by Buyer. If the Closing Net Working Capital set
forth in the Closing Statement exceeds the Closing Net Working Capital set forth
in Buyer's Objection (if any) by $100,000 or less, then Final Closing Net
Working Capital (as defined below) shall be equal to one-half the sum of (x) the
Closing Net Working Capital set forth in Buyer's Objection, plus (y) the Closing
Net Working Capital set forth in the Closing Statement, which amount shall be
final and binding and not subject to any post-Closing adjustment except as may
be necessary to correct manifest computational errors. If the Closing Net
Working Capital set forth in the Closing Statement exceeds the Closing Net
Working Capital set forth in Buyer's Objection (if any) by more than $100,000,
then Sellers and Buyer shall attempt to resolve their disputes.
(c) If Sellers and Buyer are unable to resolve all of their disputes with
respect to the Closing Statement within 45 days following Sellers' receipt of
the Buyer's Objection to such Closing Statement pursuant to Section 2.04(b),
they shall refer their remaining differences for decision to a nationally
recognized independent accounting firm (other than Ernst & Young or KPMG) agreed
upon by Buyer and Sellers (such agreed upon firm being hereinafter referred to
as the "Arbitrator"). The Arbitrator's decision shall be made consistent with
this Section 2.04 and the methods and principles used in the preparation of the
Closing Statement, shall be made within 45 days and shall be final and binding
on the parties; provided, that the Arbitrator's determination as to any item set
forth in Buyer's Objection shall not be more beneficial to Sellers than the
determination of that item by Sellers in the Closing Statement or more
beneficial to Buyer than the determination of that item in Buyer's Objection.
(d) The Closing Statement shall become final and binding on the parties
upon the earliest of (i) if no Buyer's Objection has been given, the expiration
of the period within which Buyer must make its objection pursuant to Section
2.04(b) hereof, (ii) agreement in writing by Sellers and Buyer that the Closing
Statement, together with any modifications thereto agreed to by Sellers and
Buyer, shall be final and binding, or (iii) the date on which the Arbitrator
shall issue its written determination with respect to any dispute relating to
such Closing Statement. The Closing Statement, when final and binding on all
parties, is herein referred to as the "Final Closing Statement" and the amount
of Net Working Capital reflected thereon shall be referred to as the "Final
Closing Net Working Capital"; provided, that Final Closing Net Working Capital
shall be the amount determined pursuant to the second to last sentence of
Section 2.04(b) if such sentence is applicable, with the Closing Statement
related thereto being the Final Closing Statement.
(e) Within 10 business days following issuance of the Final Closing
Statement, the net adjustment payment payable pursuant to this Section 2.04(e)
(the "Adjustment Payment") and interest thereon shall be paid by wire transfer
of immediately available United States funds to a bank account or bank accounts
designated in writing by Sellers or Buyer, as the case may be. The Adjustment
Payment shall be the difference, if any, between (x) the Final Closing Net
Working Capital, minus (y) $15,552,000. The Adjustment Payment shall be payable
by Buyer to Sellers, if positive, and by Sellers to Buyer, if negative. If the
Adjustment Payment is payable to Sellers, it shall be allocated and paid to such
of the Sellers to whose business the adjustment
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relates. The Adjustment Payment shall bear interest from the Closing Date to the
date of payment at the rate per annum equal to the prime commercial lending rate
quoted as of the Closing Date by Xxxxx Fargo Bank, N.A. (the "Closing Date
Interest Rate"), which interest shall be calculated on the basis of a 365-day
year and the actual number of days elapsed and such interest shall be paid on
the same date and in the same manner as such Adjustment Payment.
(f) If the Final Closing Net Working Capital is determined by the
Arbitrator pursuant to Section 2.04(c), the Non-Prevailing Party (as defined
below) shall pay its own expenses incurred with respect to the submission to
such Arbitrator and shall pay a percentage of (i) the fees and expenses of such
Arbitrator plus (ii) the reasonable out-of-pocket expenses (including reasonable
attorneys' fees) of the other party incurred with respect to the submission,
which percentage shall be calculated by dividing (1) an amount equal to the
difference between the Non-Prevailing Party's determination of Closing Net
Working Capital, as submitted to such Arbitrator, and such Arbitrator's
determination of Closing Net Working Capital by (2) an amount equal to the
difference between the parties' respective determinations of Closing Net Working
Capital, as submitted to such Arbitrator. The other party shall pay the
remainder of the fees and expenses of such Arbitrator and its own expenses not
required to be paid by the Non-Prevailing Party hereunder. A party is the
"Non-Prevailing Party" if such Arbitrator's determination of Closing Net Working
Capital is closer to the other party's determination of Closing Net Working
Capital, as submitted to such Arbitrator, than it is to that party's
determination of Closing Net Working Capital, as submitted to such Arbitrator.
For purposes of this Section 2.04, Sellers collectively shall be treated as one
party.
(g) As used in this Section 2.04, "Net Working Capital" means the current
assets (net of appropriate reserves and excluding cash and cash equivalents),
less the current liabilities, of the Business as determined in a manner
consistent with the methods, standards and principles used in the preparation of
the Unaudited Consolidated Statement of Net Investment Assets of the Business as
of September 25, 2004 referred to in Section 4.01(h), as modified and/or
elaborated on by the principles set forth on Exhibit 2.04(g)(i) hereto. Net
Working Capital as reflected on the Unaudited Consolidated Statement of Net
Investment Assets of the Business as of September 25, 2004 was $16,352,000 as
shown in the detailed accounting of Net Working Capital set forth on Exhibit
2.04(g)(ii). All amounts denominated in Canadian dollars that are part of the
calculation of Closing Net Working Capital shall be converted into U.S. dollars
using the currency exchange rate therefor as of the Closing Date published in
The Wall Street Journal (the "Closing Date Exchange Rate"). For the avoidance of
doubt, "Net Working Capital" shall not include any Excluded Liabilities or
Excluded Assets.
2.05 INVENTORY ADJUSTMENT.
(a) Within 30 days after the Closing Date, Sellers shall prepare and
deliver to Buyer a statement (the "Closing Inventory Statement") setting forth
the type and value, as of the close of business on the day immediately preceding
the Closing Date, of the inventory of the Business, which statement shall be
derived from a physical taking of such inventory as of such date and shall value
inventory on the basis of the lower of cost or market value utilizing a
first-in, first-out method in a manner consistent with Sellers' and the
Companies' past practices and the standards and principles used in the
preparation of the Unaudited Consolidated Statement of Net
12
Investment Assets of the Business as of September 25, 2004 and shall otherwise
be prepared in a manner consistent with Sellers' and the Companies' past
practices with respect to perpetual inventory records; provided, that all
amounts denominated in Canadian dollars that are part of the calculation of the
value of inventory pursuant to this Section 2.05 shall be converted into U.S.
dollars using the Closing Date Exchange Rate. Buyer and its representatives
shall have such opportunity as Buyer reasonably deems appropriate to observe the
taking and reconciliation of such inventory (which may begin prior to the
Closing Date) in connection with the preparation of the Closing Inventory
Statement. Buyer shall provide Sellers and their accountants, upon reasonable
notice, such access to the books and records, to any other information,
including working papers of Buyer's accountants, and to any employees of Buyer
and its affiliates, in each case as may be reasonably necessary for Sellers to
take such physical inventory, prepare the Closing Inventory Statement, respond
to the Buyer's Inventory Objection (as defined in Section 2.05(b)) and prepare
materials for presentation to the Arbitrator in connection with the matters
contemplated by Section 2.05(c). If necessary, Buyer shall, after Closing, also
provide or cause to be provided to Sellers and their designees such access as
such persons may reasonably request to all facilities at which inventory of the
Business is located in order to conduct such physical inventory. For the
avoidance of doubt, the inventory of the Business to be valued pursuant to this
Section 2.05 consists of the Inventory and all inventory of the Companies.
(b) Buyer shall, within 20 days after the delivery by Sellers of the
Closing Inventory Statement, complete its review thereof. After delivery of the
Closing Inventory Statement, Sellers shall provide Buyer and its accountants,
upon reasonable notice, such access to the books and records, to any other
information, including working papers of Sellers' accountants, and to any
employees of Sellers and their affiliates, in each case used in the preparation
of the Closing Inventory Statement or as may otherwise be reasonably necessary
for Buyer to prepare the Buyer's Inventory Objection and to prepare materials
for presentation to the Arbitrator in connection with the matters contemplated
by Section 2.05(c). The Closing Inventory Statement shall be binding and
conclusive upon, and deemed accepted by, Buyer unless Buyer shall have notified
Sellers in writing within 20 days after delivery to Buyer of the Closing
Inventory Statement of any objection thereto (the "Buyer's Inventory
Objection"). The Buyer's Inventory Objection shall set forth a description of
the basis of the Buyer's Inventory Objection and the adjustments to the value of
inventory reflected on the Closing Inventory Statement that Buyer believes
should be made. Any items not disputed during the foregoing 20-day period shall
be deemed to have been accepted by Buyer.
(c) If Sellers and Buyer are unable to resolve all of their disputes with
respect to the Closing Inventory Statement within 30 days following Sellers'
receipt of the Buyer's Inventory Objection, they shall refer their remaining
differences to the Arbitrator for decision, which decision shall be made
consistent with the principles set forth in this Section 2.05 within 30 days and
shall be final and binding on the parties, provided that the Arbitrator's
determination as to any item set forth in the Buyer's Inventory Objection shall
not be more beneficial to Sellers than the determination of that item by Sellers
in the Closing Inventory Statement or more beneficial to Buyer than the
determination of that item in the Buyer's Inventory Objection. Any expenses
relating to the engagement of the Arbitrator shall be shared equally by Sellers,
on the one hand, and Buyer, on the other hand.
13
(d) The Closing Inventory Statement shall become final and binding on the
parties upon the earliest of (i) if no Buyer's Inventory Objection has been
given, the expiration of the period within which Buyer must make its objection
pursuant to Section 2.05(b) hereof, (ii) agreement in writing by Sellers and
Buyer that the Closing Inventory Statement, together with any modifications
thereto agreed to by Sellers and Buyer, shall be final and binding, or (iii) the
date on which the Arbitrator shall issue its written determination with respect
to any dispute relating to such Closing Inventory Statement. The Closing
Inventory Statement, as submitted by Sellers if no timely Buyer's Inventory
Objection has been given or as adjusted pursuant to any agreement between the
parties or as determined pursuant to the decision of the Arbitrator, in each
case pursuant to this Section 2.05, is herein referred to as the "Final Closing
Inventory Statement."
(e) Within five business days following issuance of the Final Closing
Inventory Statement, Sellers or Buyer, as applicable, shall pay, as an
adjustment to the Purchase Price, the net adjustment payment payable pursuant to
this Section 2.05(e) (the "Inventory Adjustment Payment") (if any) and interest
thereon by wire transfer of immediately available funds to a bank account or
bank accounts designated in writing by Sellers or Buyer, as applicable. If the
aggregate value of inventory reflected on the Final Closing Inventory Statement
exceeds the Closing Perpetual Inventory Value, the Inventory Adjustment Payment
shall be made by Buyer and shall equal the amount of such excess. If the
aggregate value of inventory reflected on the Final Closing Inventory Statement
is less than the Closing Perpetual Inventory Value, the Inventory Adjustment
Payment shall be made by Sellers and shall equal the amount of such shortfall.
The Inventory Adjustment Payment (if any) shall bear interest from the Closing
Date to the date of payment at the Closing Date Interest Rate, which interest
shall be calculated on the basis of a 365-day year and the actual number of days
elapsed and such interest shall be paid on the same date and in the same manner
as such Inventory Adjustment Payment.
2.06 ALLOCATION OF PURCHASE PRICE AMONG THE ASSETS. The portion of the
Purchase Price attributable to the Assets shall be allocated among the Assets
for all Tax purposes as set forth on Exhibit 2.06. Buyer and Sellers shall
follow the allocation set out in Exhibit 2.06 in determining and reporting their
liabilities for any Taxes and shall prepare their respective applicable Tax
Returns in accordance with such allocation. Further, neither Buyer nor Sellers,
nor any of their respective affiliates, shall take any position on any Tax
Return inconsistent with such allocation unless required to do so by any Taxing
authority.
ARTICLE III
CLOSING, CLOSING DELIVERIES AND CERTAIN TAXES
3.01 CLOSING AND CLOSING DATE. The closing of the sale and purchase of the
Shares and the Assets pursuant to this Agreement (the "Closing") shall take
place at the offices of Faegre & Xxxxxx LLP, 2200 Xxxxx Fargo Center, 00 Xxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxxxx, Xxxxxxxxx, on February 16, 2005, at 9:00 a.m.,
Minneapolis time, or such other place, date and time as is mutually agreed by
the parties. Notwithstanding the immediately preceding sentence, if on February
16, 2005, one or more of the conditions set forth in Article VII to the
obligations of the parties to consummate the transactions contemplated by this
Agreement shall not have
14
been satisfied or waived by the party or parties entitled to waive the
condition, the Closing shall be delayed until the second business day following
the satisfaction or waiver of all such conditions (subject to the parties'
respective rights to terminate this Agreement pursuant to Article XI hereof).
The date on which the Closing shall occur is hereinafter referred to as the
"Closing Date" and the Closing shall for all purposes be considered effective as
of 12:01 a.m., Minneapolis time, on the Closing Date.
3.02 CLOSING DELIVERIES.
(a) At the Closing, subject to the terms and conditions contained in
this Agreement, Xxxxx Xxxx and the U.S. Sellers (as applicable) agree to deliver
to Buyer the following:
(i) certificates representing the Shares, duly endorsed by Xxxxx
Xxxx for transfer to Buyer or accompanied by stock powers duly executed by
Xxxxx Xxxx in proper form for transfer to Buyer;
(ii) the resignations required pursuant to Section 4.02(g) of this
Agreement;
(iii) a xxxx of sale, assignment and assumption agreement in
substantially the form attached hereto as Exhibit 3.02(a)(iii) (the "Xxxx
of Sale"), dated the Closing Date and duly executed by each U.S. Seller;
(iv) a lease assignment and assumption agreement for each Lease in
substantially the form attached hereto as Exhibit 3.02(a)(iv) (each, a
"Lease Assignment"), dated the Closing Date and duly executed by the
applicable U.S. Seller;
(v) limited warranty deeds for all U.S. Owned Real Property in
substantially the forms attached hereto as Exhibit 3.02(a)(v), dated the
Closing Date and duly executed by the applicable U.S. Seller, with the
limited warranties expiring at such times as are consistent with the
survival periods for the corresponding representations and warranties in
this Agreement;
(vi) an instrument of assignment with respect to each registered
trademark, patent and copyright constituting Intellectual Property and
each trademark application constituting Intellectual Property in
substantially the forms attached hereto as Exhibit 3.02(a)(vi), dated the
Closing Date and duly executed by the applicable U.S. Seller;
(vii) a certificate, in form and substance reasonably satisfactory
to counsel for Buyer, duly executed by the applicable U.S. Sellers and
certifying facts that would exempt the transactions contemplated hereby
from the provisions of the Foreign Investors Real Property Tax Act, as
amended;
(viii) such subordination, non-disturbance and attornment
agreements, in the form prepared by the Buyer Entities, with the holders
of fee mortgages or deeds of trust on each Leased Real Property listed on
Exhibit 3.02(a)(viii) as Xxxxx Xxxx and the U.S. Sellers shall have
received, if any, after submission of a request for same made promptly
after the date hereof;
15
(ix) such estoppel certificates, in the form prepared by the Buyer
Entities, from the landlords on each Leased Real Property listed on
Exhibit 3.02(a)(ix) as Xxxxx Xxxx and the U.S. Sellers shall have
received, if any, after submission of a request for same made promptly
after the date hereof;
(x) a seller's affidavit for the Canadian Owned Real Property in
favor of the issuer of the title commitment relating thereto in
substantially the form of Exhibit 3.02(a)(x);
(xi) an instrument of transfer with respect to that certain
Agreement, effective as of April 1, 2002, by and between Lemelson Medical,
Education and Research Foundation, Limited Partnership and IMC in
substantially the form attached hereto as Exhibit 3.02(a)(xi), dated the
Closing Date and duly executed by IMC; and
(xii) each other item required by this Agreement to be delivered by
Sellers or any of them at Closing, it being understood that no instrument
required to be delivered by Sellers or any of them under this Agreement
shall require any Seller, any of their respective affiliates or any other
person to make any additional representations, warranties or covenants,
express or implied, not contained in this Agreement.
(b) At the Closing, subject to the terms and conditions contained in
this Agreement, the Buyer Entities agree to deliver to Sellers the following:
(i) the Closing Cash Payment, payable as provided in Section 2.02;
(ii) the Buyer Note, duly authorized, executed and issued by Buyer;
(iii) the Note Purchase Agreement, duly executed by the Buyer
Entities and completed as contemplated therein;
(iv) guaranties in the forms attached to the Note Purchase Agreement
as Exhibit 2 (the "Guaranties" and each a "Guaranty"), duly authorized,
executed and issued by each of BBC and VCP, guaranteeing the obligations
of Buyer under the Buyer Note;
(v) the Xxxx of Sale, duly executed by Buyer;
(vi) each Lease Assignment, duly executed by Buyer;
(vii) resale and occasional-sale exemption certificates with respect
to the Assets, in form and substance reasonably satisfactory to the U.S.
Sellers, dated the Closing Date and duly executed by Buyer; and
(viii) each other item required by this Agreement to be delivered by
the Buyer Entities at Closing.
16
3.03 TRANSFER TAXES AND RECORDING FEES. Buyer, on the one hand, and
Sellers, on the other hand, shall each be responsible for one-half of any sales,
use, value-added, business transfer, goods and services, transfer, documentary,
conveyancing or similar Taxes or expenses and all recording fees that may be
imposed as a result of the sale and transfer of the Shares and the Assets to
Buyer under this Agreement (including any stamp, duty or other Tax chargeable in
respect of any instrument transferring property), together with any and all
fines, penalties, interest and additions to Tax with respect thereto ("Transfer
Taxes"), and Sellers and Buyer shall cooperate in timely making all filings,
returns, reports and forms as may be required to comply with the provisions of
laws related to Transfer Taxes.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS OF
SELLERS AND XXXXXXX
4.01 REPRESENTATIONS AND WARRANTIES OF SELLERS AND XXXXXXX. "Material
Adverse Effect" means any change or effect (other than those set forth in the
Disclosure Schedule) that, individually or when taken together with all such
changes or effects, has a material adverse effect on the business, operations,
results of operations, properties or financial condition of the Business, taken
as a whole (other than (i) incidents, occurrences, events, or conditions
generally applicable to the industry in which the Business operates or changes
in general economic conditions, (ii) changes or effects resulting from the
public announcement of this Agreement, or (iii) changes or effects resulting
from compliance with the terms of this Agreement) or materially impairs the
ability of Sellers, taken as a whole, to consummate the transactions
contemplated by this Agreement. Xxxxxxx and Sellers, jointly and severally,
hereby represent and warrant to Buyer, except as set forth in the Disclosure
Schedule accompanying this Agreement (the "Disclosure Schedule"), as follows:
(a) Organization and Authority of Sellers.
(i) Xxxxx Xxxx is an unlimited company amalgamated, organized and
subsisting under the laws of Nova Scotia. IMC and MBI are corporations
organized, validly existing and in good standing under the laws of the
State of Delaware. FCI is a corporation organized, validly existing and in
good standing under the laws of the State of California. Each Seller has
all requisite corporate power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. All corporate acts
and proceedings required to be taken to authorize the execution, delivery,
and performance by each Seller of this Agreement and the consummation by
such Seller of the transactions contemplated hereby have been properly
taken. This Agreement has been duly executed and delivered by each Seller
and, assuming due authorization, execution, and delivery of this Agreement
by the Buyer Entities, constitutes a valid and binding obligation of such
Seller, enforceable against such Seller in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
moratorium, and other similar laws affecting creditors' rights generally
and by general principles of equity.
17
(ii) Each U.S. Seller has all requisite corporate power and
authority to enable it to own, lease, or otherwise hold its properties and
assets and to operate the U.S. Business (to the extent it operates the
U.S. Business) as presently conducted, except where the failure to have
such power and authority does not have a Material Adverse Effect. Xxxxx
Xxxx has all requisite corporate power and authority to enable it to own,
lease or otherwise hold its properties and assets and to operate its
business as presently conducted, except where the failure to have such
power and authority does not have a Material Adverse Effect. Each U.S.
Seller is duly qualified and in good standing to do business as a foreign
corporation in each jurisdiction in which Assets owned by it or the U.S.
Business otherwise conducted by it requires such qualification and good
standing, except where the failure to be so qualified or in good standing
has no Material Adverse Effect
(b) Organization and Authority of the Companies. Each of the Companies
is a corporation incorporated, organized and subsisting under the laws of
Ontario. Each of the Companies has all requisite corporate power and authority
to enable it to own, lease or otherwise hold its properties and assets and to
operate its business as presently conducted, except where the failure to have
such power and authority does not have a Material Adverse Effect. Each of the
Companies is licensed or qualified to do business in the jurisdictions set forth
in Section 4.01(b) to the Disclosure Schedule, which is each jurisdiction in
which the nature of its business or the ownership, leasing or holding of its
properties makes such qualifications necessary, except such jurisdictions where
the failure to be so licensed or qualified does not have a Material Adverse
Effect. IMC has made available to Buyer true and complete copies of the
articles, as amended to date, and the by-laws, as in effect on the date hereof,
of each of the Companies. The minutes of the meetings of the shareholders and
directors of each of the Companies made available by IMC to Buyer are correct
and complete in all material respects.
(c) The Shares. Xxxxx Xxxx is, and immediately prior to the Closing will
be, the registered and beneficial owner of all of the Shares, free and clear of
any claims, liens, encumbrances, security interests, options, charges and rights
of third parties except for rights of Buyer under this Agreement. The Shares
consist of two common shares of Gourmet Xxxxx and one common share of 980964.
The Shares are not subject to any voting trust agreement or other contract,
agreement, arrangement, commitment or understanding, including any such
contract, agreement, arrangement, commitment or understanding restricting or
otherwise relating to the voting, dividend rights or disposition of the Shares,
other than this Agreement.
(d) Capital Stock of the Companies. The authorized capital stock of
Gourmet Xxxxx consists of an unlimited number of common shares of which two
shares are duly authorized, validly issued and outstanding and fully paid and
nonassessable. The authorized capital stock of 980964 consists of an unlimited
number of preference shares and an unlimited number of common shares, of which
one common share is duly authorized, validly issued and outstanding and fully
paid and nonassessable. Such outstanding shares of capital stock of the
Companies have not been issued in violation of any preemptive or similar rights.
Except as set forth above in this Section 4.01(d), there are no shares of
capital stock of the Companies outstanding. There are no outstanding warrants,
options, agreements, convertible or exchangeable securities or other commitments
pursuant to which any of Xxxxx Xxxx, Gourmet Xxxxx or 980964 is or may
18
become obligated to issue, sell or otherwise dispose of, or purchase, return,
redeem or otherwise acquire, any shares of capital stock of the Companies other
than this Agreement, and no capital stock of the Companies is reserved for
issuance for any purpose.
(e) Equity Interests. Neither Gourmet Xxxxx nor 980964 directly or
indirectly owns, or is a party to any contract or agreement to acquire, any
capital stock of or other equity interests in any corporation, partnership or
other entity.
(f) Canadian Resident. Xxxxx Xxxx is not a non-resident of Canada for
purposes of Section 116 of the Income Tax Act (Canada).
(g) No Conflicts. Subject to other applicable provisions of this
Agreement, the execution, delivery, and performance by each Seller of this
Agreement do not, and the consummation by such Seller of the transactions
contemplated hereby will not (i) conflict with, or result in any violation of,
any provision of the charter or bylaws of such Seller or either Company, or (ii)
conflict with, result in any violation of, or constitute a default under, any
instrument, contract, commitment, agreement, or arrangement to which such Seller
or either Company is a party or by which it or any of its properties or assets
is bound, or any judgment, order, writ, injunction, or decree to which such
Seller or either Company has been specifically identified as subject, or any
statute, law, ordinance, rule, or regulation applicable to it or any of its
properties or assets (except in the case of this clause (ii) where such
conflict, violation, or default has no Material Adverse Effect). No material
consent, approval, license, permit, order, or authorization of, or registration,
declaration, or filing with, any court, administrative agency or commission, or
other governmental authority or instrumentality, domestic or foreign, is
required to be obtained or made by any Seller in connection with the execution,
delivery, and performance by such Seller of this Agreement or the consummation
by such Seller of the transactions contemplated hereby other than compliance
with and filings under (w) the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), (x) the Competition Act (Canada), as amended
(the "Competition Act"), (y) the Investment Canada Act (Canada), as amended (the
"Investment Canada Act"), and (z) Canadian federal or provincial securities
laws, if applicable. Notwithstanding any other provision of this Agreement, no
representation is made as to whether any new licenses, permits or other
approvals from any government or governmental agency (or any consents, approvals
or waivers from any government or governmental agency with respect to the
Licenses or the governmental licenses, permits, approvals or other
authorizations held by the Companies) will be required as a result of the sale
of Assets or the Shares to Buyer in order for Buyer to continue to conduct the
U.S. Business and operate the Assets following the Closing in the manner in
which the U.S. Business was conducted and the Assets were operated prior to
Closing or for the Companies to continue to conduct their businesses and operate
their assets following the Closing in the manner in which such businesses were
conducted and such assets were operated prior to Closing.
(h) Financial Information. Section 4.01(h) of the Disclosure Schedule sets
forth (i) the Unaudited Consolidated Income Statements of the Business for
fiscal year 2003, fiscal year 2004 and fiscal year 2005 year-to-date through
September 25, 2004, and (ii) the Unaudited Consolidated Statements of Net
Investment Assets of the Business as of the end of fiscal year 2003, the end of
fiscal year 2004 and fiscal year 2005 year-to-date through September 25, 2004
19
(collectively, the "Financial Statements"). Except as expressly disclosed
therein and for exclusions of the nature described therein, the Financial
Statements fairly present, in all material respects, the assets and liabilities
of the Business as of their dates and the results of operations of the Business
for the periods set forth therein (subject, in the case of interim statements,
to normal year-end and quarter-end adjustments) and have been prepared on a
basis consistent with the principles historically applied in the preparation of
the financial information of the Multifoods Foodservice and Bakery Products
segment of Xxxxxxx that is included in Xxxxxxx'x filings with the Securities and
Exchange Commission (except for such adjustments thereto as are set forth in
Section 4.01(h) of the Disclosure Schedule). Except as expressly provided in
this Section 4.01(h), no representation is made by any Seller as to any
financial information provided to the Buyer Entities, including any financial
information set forth in the Confidential Information Memorandum provided to the
Buyer Entities by Sellers' Banker (as defined in Section 4.01(ee)). Without
limiting the generality of the foregoing, no representation is made as to the
accuracy, fairness or reasonableness of any projections provided to the Buyer
Entities or the assumptions used in preparing the same, or as to the likelihood
that such projections will be achieved.
(i) Taxes of the U.S. Sellers.
(i) For purposes of this Agreement, (A) "Tax" or "Taxes" means all
federal (U.S. and Canadian), state, provincial, local, municipal and
foreign taxes and assessments and withholding obligations of any nature
whatsoever and however denominated (including all duties, levies,
assessments, reassessments, premiums, imposts or other governmental
charges and all sales, profits, capital, use, occupancy, real or personal
property, import, excise, payroll, health, franchise and goods and
services taxes) including all interest, penalties, and additions imposed
with respect to such amounts whether computed on a separate, combined,
unitary, consolidated or any other basis; (B) "Code" means the Internal
Revenue Code of 1986, as amended, and the regulations thereunder; (C) "Tax
Return" or "Tax Returns" means returns, reports, information statements,
elections and other documentation (including any additional or supporting
material) filed or maintained, or required to be filed or maintained, in
connection with the calculation, determination, assessment, or collection
of any Tax; (D) "Pre-Closing Tax Period" means any tax period ending on or
before the Closing Date, and with respect to a Straddle Period, any
portion thereof ending on the Closing Date; (E) "Straddle Period" means
any complete tax period of the parties that includes but does not end on
the Closing Date; (F) "Income Taxes" means all Taxes based upon or
measured by gross or net receipts or gross, net or taxable income or
franchise Taxes imposed in lieu of such Taxes, including Taxes in the
nature of minimum taxes, tax preference items, and alternative minimum
taxes, and Taxes on capital or net worth or capital stock (other than any
Taxes that are in the nature of sales, use, property, Transfer, recording
and similar Taxes); and (G) "Excluded Taxes" means (i) any Income Taxes,
sales and use Taxes, employment and payroll Taxes (including withholding)
and value added Taxes of Sellers, (ii) any Income Taxes of the Companies
for the Pre-Closing Tax Period and sales and use Taxes, employment and
payroll Taxes (including withholding) and value added Taxes of the
Companies for the Pre-Closing Tax Period, other than any such Tax incurred
on the Closing Date in the ordinary course of business or as a result of
transactions occurring after the transfer of the Shares on the Closing
Date, (iii) any other Taxes of the U.S.
20
Sellers to the extent not attributable to the U.S. Business or the Assets, (iv)
any liability of Sellers for Taxes arising in connection with the consummation
of the transactions contemplated by this Agreement, (v) any and all Taxes of any
person imposed on any Seller or either Company as a transferee or successor, by
contract or pursuant to any law which relate to an event or transaction
occurring before the Closing Date; and (vi) any liability of Sellers for the
Taxes of any other person under Treasury Regulation 1.1502-6 (or any similar
provision of state, local or foreign law).
(ii) Each U.S. Seller, and any affiliated group (within the meaning of
Section 1504 of the Code) of which any U.S. Seller is or has been a member, has
filed or caused to be filed in a timely manner (within any applicable extension
periods) all Income, sales, use, value-added and other Tax Returns that it has
been required to file in accordance with applicable law. All Taxes that are
required to be paid by the U.S. Sellers (whether or not reflected on such Tax
Returns) have been paid in full or will be paid in full before the Closing Date.
(iii) No U.S. Seller is currently a beneficiary of any extension of time
to file a Tax Return with respect to the Assets. No Tax Returns filed by any
U.S. Seller are the subject of pending audits, actions or proceedings as of the
date of this Agreement nor, to the knowledge of any U.S. Seller, have any
audits, actions or proceedings been proposed or threatened. No U.S. Seller has
received, prior to the date of this Agreement, a notice of deficiency or
assessment of additional Taxes, which notice or assessment remains unresolved.
No U.S. Seller has extended the period for assessment or payment of any Tax,
which has not since expired, nor has any U.S. Seller agreed to extend the
statutory period of limitations on any Tax Return.
(iv) No U.S. Seller has been a real property holding company 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.
(v) None of the U.S. Sellers is a "foreign person" within the meaning of
Section 1445 of the Code.
(vi) There are no Liens for Taxes on the Assets. There are no Tax
deficiencies of any kind assessed against or relating to the Assets with respect
to any taxable period ending on or before the Closing Date.
(vii) From January 1, 2000 to the date of this Agreement, no claim has
been made by a Tax authority in any jurisdiction where a U.S. Seller does not
file a Tax Return that it is, or may be, subject to taxation in that
jurisdiction with respect to the Assets.
(viii) Each U.S. Seller has complied in all material respects with all
applicable laws, regulations and rules relating to the payment and withholding
of Taxes and each U.S. Seller has, within the time required by law, withheld and
paid over to the proper authorities, all amounts required to be so withheld and
paid over under applicable laws.
21
(ix) There are no Tax sharing agreements or similar arrangements (whether
oral or written) that include a U.S. Seller with respect to the Assets and no
U.S. Seller has any liability to any Person with respect to any previously
terminated Tax sharing agreement or similar arrangement involving the Assets.
(j) Taxes of the Companies.
(i) For purposes of this Agreement, "Canadian Tax Act" shall mean the
Income Tax Act (Canada), as amended, and the regulations thereunder.
(ii) The Companies have filed or will file when due all Income, sales,
use, value-added, and other Tax Returns required to be filed by them on or
before the date immediately preceding the Closing Date for Pre-Closing Tax
Periods in accordance with applicable law. All Taxes that are required to be
paid by the Companies before the Closing Date have been paid in full or will be
paid in full before the Closing Date (whether or not reflected on such Tax
Returns). All such Tax Returns are true, accurate and complete in all material
respects.
(iii) The Companies have withheld from each payment made to any of their
present or former employees, officers and directors, and to all persons who are
non-residents of Canada for the purposes of the Canadian Tax Act all amounts
required by law to be withheld, and furthermore, have remitted such withheld
amounts within the prescribed periods to the appropriate governmental body or
have included any unremitted amounts withheld in the determination of Closing
Net Working Capital. The Companies have remitted all Canada Pension Plan
contributions, provincial pension plan contributions, employment insurance
premiums, employer health taxes and other Taxes payable by the Companies in
respect of their employees to the proper governmental body within the time
required under the applicable legislation or have included any unremitted
amounts in the determination of Closing Net Working Capital. The Companies have
charged, collected and remitted on a timely basis all Taxes as required under
applicable legislation on any sale, supply or delivery whatsoever, made by the
Companies.
(iv) No Tax Returns filed by the Companies are the subject of pending
audits, proceedings or actions as of the date of this Agreement and, to the
knowledge of the Companies, no audits, proceedings or actions have been proposed
or threatened as of the date of this Agreement. The Companies have not received,
prior to the date of this Agreement, a material notice of assessment or
reassessment, which notice of assessment or reassessment remains unresolved. The
Companies have not extended the period for assessment or payment of any Tax,
which has not since expired.
(v) From January 1, 2000 to the date of this Agreement, no claim has been
made by a Tax authority in any jurisdiction that a Company does not file a Tax
Return that it is, or may be, subject to taxation in that jurisdiction.
22
(vi) Section 4.01(j)(vi) of the Disclosure Schedule sets forth all
jurisdictions in which the Companies have filed, or will file, Tax Returns
for each taxable period, or portion thereof, ending on or before the
Closing Date.
(k) Title to Tangible Personal Property. A U.S. Seller has good and
valid title, and will have good and valid title as of the Closing Date (except
to the extent of dispositions of Assets not prohibited under Section 4.02(b)
prior to Closing), to all Assets that are tangible personal property, and each
Company has good and valid title, and will have good and valid title as of the
Closing Date (except to the extent of dispositions of assets not prohibited
under Section 4.02(b) prior to Closing), to all of its tangible personal
property, in each case free and clear of all liens, security interests,
restrictions and other encumbrances ("Liens"), except (i) mechanics',
materialmen's, carriers', workmen's, warehousemen's, repairmen's, landlord's or
other like Liens securing obligations that are not delinquent, (ii) Liens for
Taxes and other governmental charges which are not due and payable or which may
be paid without penalty, (iii) Liens evidenced by any mortgage, deed of trust,
security agreement, financing statement, purchase money agreement, conditional
sales contract, capital lease, operating lease or license which is described in
the Disclosure Schedule or the non-disclosure of which therein does not
constitute a misrepresentation under Section 4.01(o) of this Agreement, and (iv)
imperfections of title and encumbrances which do not, individually or in the
aggregate, materially impair the value or the continued use and operation in the
current manner of the Assets or either Company's assets to which they relate or
the Business as currently conducted (the Liens and other encumbrances described
in clauses (i) through (iv) above (whether the same relate to real or personal
property) being referred to collectively as "Permitted Liens").
(l) Real Property. Exhibit 1.02(a) sets forth a true and complete list
of the U.S. Owned Real Property. Exhibit 1.02(b) sets forth a true and complete
list of the Leases and the U.S. Leased Real Property. Section 4.01(l) of the
Disclosure Schedule sets forth a complete list of all real property owned by the
Companies (the "Canadian Owned Real Property"), and all real property leased by
the Companies (the "Canadian Leased Real Property"; the U.S. Owned Real Property
and the Canadian Owned Real Property are referred to collectively as the "Owned
Real Property", and the U.S. Leased Real Property and the Canadian Leased Real
Property are referred to collectively as the "Leased Real Property"; the Owned
Real Property and the Leased Real Property are collectively referred to as the
"Real Property"). None of the U.S. Sellers or either Company has done anything
to encumber or imperil title to any of the Owned Real Property purported to be
owned by it or to encumber or imperil its leasehold estate in any of the Leased
Real Property purported to be leased by it, in each case from the date of
acquisition of such title or estate by such person, respectively, except (x)
Permitted Liens and (y) (A) mortgages, deeds of trust, security interests,
easements, restrictive covenants, rights-of-way, encroachments and other Liens
on any Real Property as disclosed by the Title Commitments (as defined in
Section 7.01(f)) or any endorsement thereto or as disclosed by the documents and
information made available by Sellers to Buyer in the electronic data room
hosted by IntraLinks, in each case as of the date of this Agreement, (B) any
conditions that may be shown by a current, accurate survey or physical
inspection of the Real Property, (C) platting, subdivision, zoning, building and
other similar restrictions, (D) unrecorded easements, restrictive covenants,
rights-of-way, encroachments and other similar Liens on any Owned Real Property
as disclosed by the Title Commitments or any endorsement thereto or as disclosed
by the documents and information made available by Sellers
23
to Buyer in the electronic data room hosted by IntraLinks, in each case as of
the date of this Agreement, and (E) reservations of coal, oil, gas, minerals and
mineral interests, none of which items set forth in this clause (y) individually
or in the aggregate materially interferes with the continued use and operation
of the Real Property to which it relates substantially in the manner in which
such Real Property is currently used and operated. There are no eminent domain
or expropriation proceedings pending (with respect to which any Seller has been
served or otherwise notified in writing) or, to the knowledge of any Seller,
threatened in writing against any Real Property or any portions thereof.
(i) Each U.S. Seller and Company has obtained all occupancy permits
that are required by applicable laws with respect to the Real Property;
(ii) the fixed or minimum rent set forth in each Lease (as amended
and/or supplemented) is the actual fixed or minimum rent being paid by the
applicable U.S. Seller or Company, and there are no separate agreements or
understandings with respect to the same; and
(iii) from January 1, 2002 to the date of this Agreement, no written
notice of a material violation of any applicable laws affecting the Real
Property or relating to the use or occupancy thereof by the Business has
been given to Sellers or the Companies, nor does any Seller have knowledge
of any such violation which has not been corrected.
(m) Condition of the Assets and Canadian Assets. The facilities
constituting a part of the Real Property, the other tangible Assets, and the
tangible assets of the Companies are physically in operating condition
(reasonable wear and tear and depreciation excepted), except where the failure
to be in operating condition has no Material Adverse Effect or where the
responsibility for correction, or for payment of the costs of correction, of the
condition is the responsibility of the landlord or a tenant of any U.S. Seller
or either Company. Except as expressly provided in this Section 4.01(m) and in
Section 4.01(u), no further representation is made concerning the physical
condition of any of the Real Property, any other Assets or any assets of either
Company, all of which are being accepted "AS IS AND WHERE IS" as of the Closing
(including all environmental aspects thereof, except as otherwise provided in
Section 4.01(u)). All material tangible Assets and the material tangible assets
of the Companies are in the possession of the U.S. Sellers or the Companies (as
applicable) or under their control; provided, that at any given time, inventory
is held by third parties, including co-packers and warehouses.
(n) Intellectual Property.
(i) The term "Business Intellectual Property" means all of the
following that is owned by or licensed to a Company or a U.S. Seller which
is used in the Business as currently conducted: (A) all currently
subsisting material patents, patent applications, common law trademarks,
trademark applications, trademark registrations, trade names, trade dress,
common law service marks, service xxxx applications, service xxxx
registrations, logos, together with all goodwill associated therewith, and
copyright registrations and Internet domain names; (B) all material trade
secrets and confidential
24
information (including customer lists, know-how, formulae, formulae in process
or under research and development, recipes, recipes in process or under research
and development, manufacturing and production processes, research, financial
business information and marketing plans); and (C) information technologies
(including software programs, data and related documentation); provided,
however, that the term "Business Intellectual Property" shall not include any
(x) information technologies licensed to a Company or a U.S. Seller under
non-negotiated, non-exclusive licenses granted to end-user customers by third
parties in the ordinary course of such third parties' businesses; and (y)
intellectual property which is embedded in equipment or fixtures and which is
licensed to a Company or a U.S. Seller under non-negotiated, non-exclusive
licenses granted to customers by third parties in the ordinary course of such
third parties' businesses. The term "Owned Business Intellectual Property" means
all Business Intellectual Property owned by a Company or a U.S. Seller, and the
term "Licensed Business Intellectual Property" means all Business Intellectual
Property licensed to a Company or a U.S. Seller from a third party. Section
4.01(n)(i) of the Disclosure Schedule sets forth a complete and accurate list of
all Owned Business Intellectual Property set forth in clause (A) of this Section
4.01(n)(i).
(ii) (A) A Company or a U.S. Seller owns all of the Owned Business
Intellectual Property; (B) a Company or a U.S. Seller has a valid and
enforceable license to all of the material Licensed Business Intellectual
Property pursuant to a contract a copy of which has been made available to
Buyer; (C) from January 1, 2002 to the date of this Agreement, to the knowledge
of Sellers, no written claim by any third party contesting the validity,
enforceability or use by a Company or a U.S. Seller or ownership by (or, if
applicable, license to) a Company or a U.S. Seller of any of the Business
Intellectual Property has been made, is currently outstanding or is threatened
(other than challenges by governmental intellectual property office examiners as
part of the application process); (D) as of the date of this Agreement, to the
knowledge of Sellers, no third party is infringing or misappropriating any of
the Owned Business Intellectual Property or any of the Licensed Business
Intellectual Property that is licensed to a Company or a U.S. Seller on an
exclusive basis; (E) as of the date of this Agreement, to the knowledge of each
Seller, neither any Company nor any U.S. Seller nor the conduct of the Business
as currently conducted infringes, misappropriates or otherwise conflicts with
any intellectual property rights or other rights of any third parties; and (F)
as of the date of this Agreement, to the knowledge of each Seller, the continued
operation by Buyer and the Companies immediately following the Closing of the
Business as currently conducted (but subject to Section 6.03(c)) will not
infringe, misappropriate or otherwise conflict with any intellectual property
rights or other rights of any third parties except to the extent resulting from
any failure to obtain all consents referred to in Section 6.01 or from the
failure otherwise to satisfy all conditions to the transfer of all Assigned
Contracts (or the applicable portions of the Dividable Contracts) to Buyer; in
each of cases (A) through (F) except to the extent that exceptions to any of the
foregoing, individually or in the aggregate, do not have a Material Adverse
Effect.
(iii) (A) A Company or a U.S. Seller, as the case may be, has taken all
reasonably prudent actions necessary to maintain and protect the Owned Business
25
Intellectual Property so as to not materially adversely diminish or
compromise the validity or enforceability of the Owned Business
Intellectual Property; and (B) with respect to the Licensed Business
Intellectual Property licensed from General Xxxxx, Inc. and The Pillsbury
Company to a U.S. Seller, the applicable U.S. Seller has taken all
reasonably prudent actions, within the constraints of the applicable
license agreement from General Xxxxx, Inc. and The Pillsbury Company,
necessary to maintain and protect such Licensed Business Intellectual
Property so as to not materially adversely diminish or compromise the
validity or enforceability of such Licensed Business Intellectual
Property.
(o) Contracts. Section 4.01(o) of the Disclosure Schedule describes all
of the following agreements or contracts in effect as of the date of this
Agreement to which either Company is a party or that are exclusively related to
the U.S. Business and to which any U.S. Seller is a party (other than the
Excluded Contacts):
(i) an employment agreement, employment contract or severance
agreement that is not terminable at will or upon not more than 30 days'
notice by such U.S. Seller or such Company without penalty;
(ii) a covenant not to compete or non-solicitation agreement that
restricts such U.S. Seller or such Company in the operation of the
Business as presently conducted;
(iii) an agreement or contract with any affiliate of such U.S.
Seller or such Company or any current or former officer or director of
such U.S. Seller or such Company or of any affiliate of such U.S. Seller
or such Company, other than (A) employment agreements, employment
contracts or severance agreements covered by Section 4.01(o)(i) above, (B)
U.S. Sellers' Plans, and (C) agreements relating to intercompany loans or
advances;
(iv) an operating lease (as lessor or lessee) of any Leased Real
Property or any other real or tangible personal property calling for
annual payments in excess of $25,000 per lease;
(v) a license (as licensor or licensee) of any material patents,
trademarks, trade names, service marks, internet domain names, copyrights
or other intellectual property (other than (A) licenses of commercially
available computer software available for less than $25,000 per license,
(B) licenses associated with purchased or leased equipment or fixtures, or
(C) licenses calling for annual payments not in excess of $25,000 per
license);
(vi) a management, service, consulting or other similar type of
contract under which there exists an aggregate future liability in excess
of $25,000 per contract that is not terminable at will or upon not more
than 30 days' notice by such U.S. Seller or such Company without penalty;
(vii) an advertising agreement or contract under which there exists
an aggregate future liability in excess of $25,000 per contract;
26
(viii) a written agreement for the purchase or sale of raw
materials, commodities, supplies or products which calls for payments in
excess of $50,000;
(ix) other than with respect to intercompany loans or advances, an
agreement or contract under which any money has been borrowed or loaned or
any note, bond, indenture or other evidence of indebtedness has been
issued, guaranteed or assumed (other than endorsements for the purpose of
collection in the ordinary course of business);
(x) mortgage, deed of trust, security agreement, purchase money
agreement, conditional sales contract or capital lease (other than (A)
purchase money agreements, conditional sales contracts or capital leases
evidencing Liens on tangible personal property under which there exists an
aggregate future liability not in excess of $25,000 per contract or lease,
and (B) protective filings of financing statements);
(xi) partnership, joint venture, shareholders' or other similar
agreement;
(xii) commodities future or similar "hedging" contract or agreement;
and
(xiii) other agreement or contract (A) entered into outside of the
ordinary course of business which involves an aggregate future liability
in excess of $50,000 per contract or (B) entered into in the ordinary
course of business which involves aggregate future liability in excess of
$150,000 per contract.
Each agreement and contract required to be listed in Section 4.01(o) of
the Disclosure Schedule (collectively, the "Material Contracts") is valid,
binding and in full force and effect and is enforceable by the applicable U.S.
Seller or Company in all material respects in accordance with its terms, except
(A) as such enforceability may be limited by bankruptcy, insolvency, moratorium
and other similar laws affecting creditors' rights generally and by general
principles of equity or (B) for such invalidity, lack of binding effect or lack
of enforceability that has no Material Adverse Effect. No U.S. Seller or Company
(as applicable) is (with or without the lapse of time or the giving of notice,
or both) in material breach of, or material default under, any of the Material
Contracts, and, to the knowledge of each Seller, no other party to any of the
Material Contracts is (with or without the lapse of time or the giving of
notice, or both) in material breach of, or material default under, any of the
Material Contracts. A true and correct copy of each of the written Material
Contracts and an accurate summary of each of the oral Material Contracts has
been made available to Buyer.
(p) Litigation; Decrees. Section 4.01(p) of the Disclosure Schedule
identifies each and every material action, lawsuit, proceeding, or investigation
pending (with respect to which any Seller or either Company has been served or
otherwise notified in writing) or, to the knowledge of each Seller, threatened
in writing against one or more U.S. Sellers relating to the U.S. Business or the
Assets or against either Company as of the date of this Agreement. As of the
date of this Agreement, no U.S. Seller is specifically identified as a party
subject to any material restrictions or limitations relating to the Business or
the Assets and neither Company is specifically identified as a party subject to
any material restrictions or limitations, in each case
27
under any judgment or order of any court, administrative agency or commission,
other governmental authority or instrumentality, domestic or foreign.
(q) Insurance. The insurance policies currently maintained with respect
to (i) the U.S. Business and the Assets (other than U.S. Sellers' Plans and
title insurance) and (ii) the Companies and their respective assets, properties
and businesses (other than the Companies' Plans and title insurance) are listed
in Section 4.01(q) of the Disclosure Schedule. As of the date of this Agreement,
no Seller has received any written notice of cancellation with respect to such
policies.
(r) Employee Benefits and Related Matters.
(i) Section 4.01(r)(i) of the Disclosure Schedule lists the
following programs, plans and arrangements which are provided to or for
the benefit of the current or former employees of the U.S. Business: (i)
any collective bargaining agreement and any written employment agreement,
not terminable upon sixty (60) days notice without penalty, (ii) each
defined benefit plan and defined contribution plan, stock option or
ownership plan, executive compensation, bonus, incentive compensation or
deferred compensation or profit-sharing plan, (iii) each medical, dental,
vision, disability or death benefit plan, and (iv) any other employee
benefit plan, including each "employee benefit plan" within the meaning of
Section 3(3) of ERISA, and any vacation, holiday, sick leave, fringe
benefit, or group life insurance plan in each case which is maintained or
contributed to or by any U.S. Seller and which covers current or former
employees of the U.S. Business (such programs, plans and arrangements
described in clauses (ii), (iii) and (iv) above being referred to herein
as the "U.S. Sellers' Plans"). True and complete copies of the U.S.
Sellers' Plans listed in Section 4.01(r)(i) of the Disclosure Schedule
have been made available to Buyer.
(ii) Except as set forth on Section 4.01(r)(ii) of the Disclosure
Schedule:
(A) there have been no non-exempt "prohibited transactions"
within the meaning of Section 4975 of the Code or Section 406 of
ERISA with respect to any U.S. Sellers' Plans that could result in
liability of Buyer under Section 502(i) of ERISA or Section 4975 of
the Code.
(B) each of the U.S. Sellers' Plans and its administration is
in compliance in all material respects with its terms and the
requirements of ERISA and the Code.
(C) no U.S. Sellers' Plan is a "multiemployer plan" (as
defined in Section 4001 of ERISA), and no U.S. Seller nor any member
of the controlled group of corporations, or trades or businesses
under common control, within the meaning of Sections 414(b) and (c)
of the Code, of which any U.S. Seller is a member contributes or is
obligated to contribute to any multiemployer plan on behalf of the
U.S. Business' current or former employees or has completely or
partially withdrawn (as defined in ERISA Section 4203 or 4205) from
any such
28
multiemployer plan under any circumstances which would impose any
Liability on Buyer.
(D) each U.S. Sellers' Plan which is a group health plan within the
meaning of Section 5000 of the Code complies in all material respects with
the applicable requirements of Sections 601 through 608 of ERISA, Section
162(k) of the Code (through December 31, 1988) and Section 4980B of the
Code (commencing January 1, 1989).
(E) Buyer will incur no liability or obligation with respect to any
pension plan subject to Title IV of ERISA by virtue of the U.S. Business
being a part of a "controlled group" within the meaning of Section 414 of
the Code.
(iii) Section 4.01(r)(iii) of the Disclosure Schedule identifies each
employee pension, retirement, profit sharing, stock bonus, stock option, stock
purchase, bonus, incentive, deferred compensation, hospitalization, medical,
dental, vision, vacation, insurance, sick pay, disability, severance, or other
plan, fund, program, policy, contract or arrangement, providing employee
benefits maintained or contributed to by Xxxxx Xxxx or the Companies, other than
those sponsored or mandated by the federal or provincial government of Canada
(the "Government Sponsored or Mandated Plans"), in which any employees of the
Companies are participating or under which any current or former employees of
the Companies have accrued any benefits to which they remain entitled (the
"Companies' Plans"). Xxxxx Xxxx has made available to Buyer true and complete
copies or accurate summaries of all Companies' Plans. All contributions and
premiums with respect to any of the Companies' Plans or to any of the Government
Sponsored or Mandated Plans for all periods ending on or prior to the Closing
Date (including periods from the first day of the current plan year to the
Closing Date) either have been or will be paid by the Companies prior to Closing
or will be included as an accrual in the Closing Net Working Capital. The
Companies' Plans have been duly registered where required by all applicable
legislation, including the Canadian Tax Act.
(iv) Except as set forth in Section 4.01(r)(iv) of the Disclosure
Schedule:
(A) The Companies' Plans have been established and administered and, if
applicable, invested and funded, in each case in all material
respects, in accordance with (i) all applicable laws, regulations
and orders and all applicable legislative, administrative and
judicial promulgations and regulatory policies; (ii) the terms of
the Companies' Plans and all employee plan summaries and booklets;
and (iii) all understandings, written or oral, between the Companies
and plan participants.
(B) There are no pending or, to the knowledge of Sellers, threatened
claims or investigations by any government agency, suits or
proceedings against, or otherwise involving any of the Companies'
Plans, other than routine claims for benefits.
29
(C) The employee data respecting each of the Companies' Plans is
correct and complete in all material respects.
(D) No event has occurred which would reasonably be expected to
adversely affect the tax status of the Companies' Plans.
(s) Absence of Changes or Events. From September 25, 2004 to the date of
this Agreement, the Business has been conducted in the ordinary course
substantially consistent with past practice. Without limiting the generality of
the immediately preceding sentence, from September 25, 2004 to the date of this
Agreement, none of the U.S. Sellers or the Companies has:
(i) suffered any damage or destruction (whether or not fully
covered by insurance) that has resulted in the discontinuance of
operations or otherwise materially and adversely affected operations at
any facility constituting a part of the Real Property;
(ii) other than in the ordinary course of business, granted any
increase in the salaries or other compensation payable or to become
payable to, or granted any advance (excluding advances for ordinary
business expenses) or any increase in, or any addition to, other benefits
(including any bonus, profit-sharing, pension or other plan) to which any
of the Companies' officers, directors or employees or any of the U.S.
Sellers' employees who perform services primarily for the U.S. Business
may be entitled, or made any payments to any pension, retirement,
profit-sharing, bonus or similar plan except payments in the ordinary
course of business made pursuant to the U.S. Sellers' Plans (to the extent
affecting employees in the U.S. Business) or the Companies' Plans or
amended or terminated any existing employee benefit plan or arrangement,
or adopted any new employee benefit plan or arrangement affecting
employees of the Companies or those of the U.S. Sellers who perform
services primarily for the U.S. Business, other than amendments to
existing plans or the adoption of new plans required or made appropriate
by law;
(iii) granted any Lien on, or agreed to the imposition of any Lien
with respect to, any of the Assets or any assets of such Company, in each
case that are material to the Business;
(iv) canceled any material indebtedness for borrowed money owing to
such U.S. Seller exclusively related to the U.S. Business or to such
Company, or waived any claims or rights of such U.S. Seller exclusively
related to the U.S. Business or claims or rights of such Company, in each
case that are of material value (other than settlements of trade accounts
in the ordinary course of business);
(v) sold or otherwise disposed of any assets of such U.S. Seller
or such Company material to the Business (other than sales of inventory in
the ordinary course of business consistent with past practices and
dispositions of non-material intellectual property and obsolete equipment
and inventory);
30
(vi) modified, amended or terminated any of the Material Contracts
in any respect materially adverse to the Business or such Company (as
applicable), except terminations upon expiration of a Material Contract's
term; or
(vii) made any change in accounting methods or principles applicable
to the Business, including changes in estimates or valuation methods;
(viii) elected, revoked or amended any material Tax election,
settled or compromised any claim or assessment with respect to Taxes,
executed any closing agreement or any other agreement with respect to
Taxes, executed or consented to any waivers extending the statutory period
of limitations with respect to the collection or assessment of any Taxes,
or amended any Tax Returns (in the case of the U.S. Sellers, only to the
extent related to the U.S. Business and not relating to any Income Taxes
of the U.S. Sellers);
(ix) suffered any strike, walkout, or material labor dispute related
to the Business;
(x) made any acquisition of any other business or entity (or any
significant portion or division thereof), whether by merger,
consolidation, or reorganization, or by the purchase of its assets or
stock, in connection with the Business;
(xi) settled any claim or lawsuit against either Company or against
any of the U.S. Sellers to the extent relating exclusively to the U.S.
Business, in each case for payment by or on behalf of either Company or
any U.S. Sellers of more than $25,000;
(xii) made any capital expenditure or commitment for additions to
property, plant, or equipment that relates to the Business or any Asset,
other than capital expenditures set forth in the Business's capital plan
for the 2005 fiscal year and other expenditures not exceeding $100,000 in
the aggregate;
(xiii) declared, set aside, or paid any dividends on, or made any
other distributions in respect of, any of the Companies' capital stock,
other than dividends and distributions to Xxxxx Xxxx consistent with past
practices; or
(xiv) agreed to do any of the foregoing.
(t) Compliance with Applicable Laws. To the knowledge of each Seller,
each U.S. Seller is conducting the U.S. Business (to the extent it conducts the
U.S. Business), and each Company is conducting its business, in compliance with
all applicable statutes, laws, ordinances, rules, orders and regulations of any
governmental authority or instrumentality, domestic or foreign, including all
applicable labor, civil rights, food and occupational safety and health laws and
regulations, except for noncompliance that does not have a Material Adverse
Effect. No written notice (the reason for which has not been corrected) has been
served upon any U.S. Seller or either Company from January 1, 2002 to the date
of this Agreement by any governmental body that such person is not in compliance
in any material respect with any federal, state, local or foreign law,
ordinance, rule or regulation as the same relates to the U.S. Business (in the
case of
31
any U.S. Seller) or whether or not the same relates to the Business (in the case
of either Company). Each U.S. Seller has and is in compliance with all
governmental licenses, permits, approvals, consents, registrations, and other
authorizations necessary in order to enable it to own, operate and use the
applicable Assets and conduct the portion of the Business conducted by it as
such portion is currently being conducted, except where the failure to obtain
and maintain the same or be in such compliance has no Material Adverse Effect.
The Companies have and are in compliance with all governmental licenses,
permits, approvals, consents, registrations, and other authorizations necessary
in order to enable them to own, operate, and use their assets and conduct their
business as it is currently being conducted, except where the failure to obtain
and maintain the same or be in such compliance has no Material Adverse Effect.
This Section 4.01(t) does not relate to Taxes or compliance with Environmental
Laws, all representations with respect to which are the subject of Sections
4.01(i), 4.01(j) and 4.01(u), respectively.
(u) Environmental Matters. Sellers have made available to Buyer true and
complete copies of the environmental reports and other documents described in
Section 4.01(u) of the Disclosure Schedule (collectively, the "Environmental
Reports"), but Sellers make no representation or warranty as to the accuracy,
adequacy or any other aspect of any Environmental Report. The Environmental
Reports constitute all reasonably available material reports, audits,
assessments, analyses, regarding the environmental condition of the Real
Property that are in the possession or control of Sellers. Except as disclosed
in the Environmental Reports, to the knowledge of each Seller, there has been no
material Release (as defined below) of any Hazardous Substance (as defined
below) by any U.S. Seller or either Company (i) on any Real Property, (ii) to
the environment surrounding any Real Property, or (iii) from any Real Property
to any site away from the Real Property. Except as described in the
Environmental Reports or otherwise in Section 4.01(u) of the Disclosure
Schedule, to the knowledge of Sellers, neither Company nor any of the U.S.
Sellers has, from January 1, 2002 to the date of this Agreement, received
written notice of any material claim, demand, notice, cost recovery suit,
request for information or notice of violation with respect to the disposal of
Hazardous Substances by any U.S. Seller with respect to the U.S. Business or
either Company at a location other than the Real Property. For purposes of this
Agreement, the term "Release" shall have the meaning assigned to it in the
federal Superfund Act, 42 U.S.C. Section 9601, et seq., and the term "Hazardous
Substance" shall mean, with respect to any Real Property, any substance defined
as hazardous or toxic by any federal, state, local, or foreign regulatory agency
having jurisdiction over the operations of the Business at such Real Property or
otherwise regulated under applicable federal, state, local, or foreign
environmental laws that relate to pollution or the protection of the environment
("Environmental Laws"). The Business is being conducted in compliance with all
Environmental Laws relating to the Real Property or otherwise applicable to the
Business, except as disclosed in the Environmental Reports and except for
noncompliance which does not have a Material Adverse Effect.
(v) Employee and Labor Relations. Section 4.01(v) of the Disclosure
Schedule lists all collective bargaining agreements and other contracts with any
labor or trade union (i) representing employees of any U.S. Seller who perform
services primarily for the U.S. Business to which any U.S. Seller is a party or
by which any U.S. Seller is bound (collectively, the "U.S. Collective Bargaining
Agreements"), and all such agreements or contracts currently being negotiated
and (ii) to which either Company is a party or by which either Company is bound
(the "Canadian Collective Bargaining Agreements" and together with the U.S.
Collective Bargaining
32
Agreements, the "Collective Bargaining Agreements"), and all such agreements or
contracts currently being negotiated. Sellers have made available to Buyer true
and correct copies of each Collective Bargaining Agreement. No labor strikes,
lockouts or material labor disputes or work stoppages involving employees of any
U.S. Seller who perform services primarily for the U.S. Business or involving
employees of either Company are pending or, to the knowledge of Sellers, have
been threatened from January 1, 2002 to the date of this Agreement against such
person. To each Seller's knowledge, no union organizational campaign has
occurred from January 1, 2002 to the date of this Agreement with respect to
employees of any U.S. Seller who perform services primarily for the U.S.
Business or with respect to employees of either Company.
(w) Accounts Receivable. All of the accounts receivable which are
reflected in the Financial Statements represented as of the respective dates of
such Financial Statements, and all accounts receivable which will have arisen as
of the day immediately prior to the Closing Date since the date of the Most
Recent Financial Statements will represent as of such date, valid obligations
arising from sales actually made or services actually performed by the U.S.
Sellers or the Companies in the ordinary course of business; provided, that
nothing stated herein shall constitute a guaranty of the collectibility of any
accounts receivable. No person has any Lien (other than Permitted Liens) on such
receivables or any part thereof.
(x) Inventory. As of the date of this Agreement and as of the Closing
Date, the quantities of Inventory included in the Assets and inventory of the
Companies are or will be sufficient for the operation of the Business as
conducted at such date. All inventory reflected in the Financial Statements has
been valued at the lower of cost or market value utilizing a first-in, first-out
method; provided, that Xxxxxxx xxxx futures contracts to market each month in
accordance with generally accepted accounting principles and such practice had a
commensurate effect on the value of inventory reflected in the Financial
Statements.
(y) Banks/Powers of Attorney. Section 4.01(y) of the Disclosure Schedule
sets forth the name of each bank or other financial institution in which either
of the Companies has an account, lock box, safe deposit box or other similar
safekeeping arrangement, the number or other identification of all such accounts
or arrangements and the names of all persons authorized to draw thereon or
having access thereto. Neither of the Companies has given any person (other than
officers of the Companies who have been authorized to act on behalf of the
Companies) a power of attorney to act on its behalf in regard to the accounts,
lock boxes, safe deposit boxes or other safekeeping arrangements disclosed in
Section 4.01(y) of the Disclosure Schedule.
(z) Directors and Officers of the Companies. Section 4.01(z) of the
Disclosure Schedule sets forth a complete and accurate list of the names and
titles of all directors and officers of the Companies.
(aa) Warranty Obligations, Product Liability Obligations and Recall
Obligations. Except where such claims do not have a Material Adverse Effect,
from January 1, 2002 to the date of this Agreement, no product or service
warranty, recall or similar claims have been made against any U.S. Seller or the
Companies in connection with the Business. From January 1, 2002 to the date of
this Agreement, no Seller has received written notice as to any claim or
allegation of personal injury, death, or property or economic damages, product
recall, any claim for punitive
33
or exemplary damages, any claim for contribution or indemnification, or any
claim for injunctive relief in connection with any product manufactured, sold or
distributed by, or in connection with any service provided by, or based on any
error, omission or negligent act in the performance of professional services by
the U.S. Sellers or the Companies in connection with the Business, except where
any such matter does not have a Material Adverse Effect. From January 1, 2002 to
the date of this Agreement, there has not been any material product recall,
voluntary, involuntary or otherwise, with respect to the Business. To Seller's
knowledge, from January 1, 2002 to the date of this Agreement, all products
manufactured, sold or delivered by the Business (when so manufactured, sold or
delivered) were in conformity with all express and implied warranties.
(bb) Books and Records. The books and records of the U.S. Sellers relating
to the U.S. Business and of the Companies have been maintained in accordance
with reasonable business practices.
(cc) Customers and Suppliers. Section 4.01(cc) of the Disclosure Schedule
sets forth a true and complete list of (i) the top ten (10) customers of the
Business and the amount of net sales of the Business to each such customer
during the fiscal year ended February 28, 2004 and the nine (9) month period
ended November 27, 2004, and (ii) the top ten (10) suppliers of the Business and
the dollar amounts of purchases by the Business from such suppliers during the
fiscal year ended February 28, 2004 and the nine (9) month period ended November
27, 2004. Except as set forth in Section 4.01(cc) of the Disclosure Schedule,
from January 1, 2004 to the date of this Agreement, no material customer or
supplier of the Business has terminated, substantially reduced or (in a manner
adverse to the Business) substantially modified, or, to the knowledge of
Sellers, threatened to terminate, substantially reduce or (in a manner adverse
to the Business) substantially modify, its relationship with the Business. For
the avoidance of doubt, material customers and suppliers of the Business shall
be deemed to include, without limitation, those customers and suppliers listed
in Section 4.01(cc) of the Disclosure Schedule.
(dd) Illegal Payments. From January 1, 2002 to the date of this Agreement,
to the knowledge of Sellers, none of the U.S. Sellers (to the extent related to
the U.S. Business) or the Companies or any of their respective directors or
officers (acting in their capacities as such officers or directors) have (a)
used any corporate funds for unlawful contributions, gifts, entertainment, or
other unlawful expenses relating to political activity, (b) made any unlawful
payments on behalf of the U.S. Sellers or the Companies to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns from corporate funds, or (c) violated in any material respect the
Foreign Corrupt Practices Act of 1977.
(ee) Brokers. There is no broker or other person who would have any valid
claim against Buyer or any of its affiliates for a finder's fee or broker's fee
or commission in connection with this Agreement or the transactions contemplated
hereby as a result of any agreement, understanding or action by or on behalf of
any Seller or any of its affiliates. Sellers shall be solely responsible for all
fees and expenses of Xxxxx Xxxxxxx & Co. ("Sellers' Banker") and any other
broker, finder or other person engaged by or on behalf of them or otherwise
claiming through them in connection with the transactions contemplated by this
Agreement.
34
(ff) Sufficiency of Assets. To the knowledge of each Seller, the Assets
and the assets, properties and rights held by the Companies, together with the
assets, properties and rights specifically provided or made available to Buyer
under the Transition Services Agreement, the Trademark License Agreement, the
Patent License Agreement (each as hereinafter defined) and the other agreements
entered into in connection with this Agreement, include all of the material
assets, properties and rights of every type and description, whether real,
personal, tangible or intangible and wherever located, that Xxxxxxx or any of
its affiliates owns or which any of them has the right to use that are
reasonably necessary or adequate for Buyer and the Companies immediately after
the Closing to conduct in all material respects the Business conducted as of the
date hereof except for the following: (i) assets, properties and rights that
have been specifically assigned to or retained by Sellers under another
provision of this Agreement (including cash and cash equivalents, assets in the
U.S. Sellers' Plans and insurance), (ii) rights under contracts to the extent
any consents have not been obtained prior to Closing, and (iii) governmental
consents, approvals, licenses, permits, orders, authorizations, registrations,
declarations, or filings that may be required as a result of the sale of the
Shares and Assets to Buyer in order for Buyer and the Companies to continue to
conduct the Business following the Closing Date in the manner in which the
Business was conducted before the Closing Date. Nothing in this Section 4.01(ff)
constitutes an additional representation or warranty with respect to title to or
the condition of any assets or properties (whether real or personal, tangible or
intangible, owned, leased or held under license), any and all representations or
warranties with respect to which are set forth in other sections of this Section
4.01.
(gg) Undisclosed Liabilities. There are no outstanding claims, liabilities
or indebtedness, absolute or contingent, or obligations of any nature, whether
accrued, absolute, contingent, threatened or otherwise, whether due or to become
due, with respect to the Business and the Assets other than liabilities (i)
reflected on the Most Recent Financial Statements, (ii) incurred in the ordinary
course of the conduct of the Business since September 25, 2004, (iii) not
required to be reflected on a balance sheet prepared in accordance with
generally accepted accounting principles, or (iv) of the nature set forth in
Section 4.01(gg) of the Disclosure Schedule.
(hh) Disclaimer. None of Sellers or Xxxxxxx shall be deemed to have made
to the Buyer Entities any representation or warranty other than as expressly
made by such person in this Section 4.01. Without limiting the generality of the
foregoing, except as expressly provided in this Section 4.01, none of Sellers or
Xxxxxxx makes any representation or warranty to the Buyer Entities regarding the
present condition of the Business, the Assets or the assets of the Companies,
and notwithstanding any projections that may have been supplied to the Buyer
Entities by Sellers, Xxxxxxx or any of them, it is understood that no
representation or warranty is made by any Seller or Xxxxxxx as to the prospects
of the Business.
4.02 COVENANTS OF SELLERS. Sellers covenant and agree as follows:
(a) Access. Prior to the Closing, each Seller will give Buyer and its
officers, employees, agents and representatives reasonable access, during normal
business hours and upon reasonable notice, to the personnel, material customers
(to the extent such material customers cooperate with and consent to such
access, which access Sellers shall use their reasonable efforts
35
to arrange), properties, books and records of the Business and the Companies and
to the Assets; provided, however, that (i) such access shall not unreasonably
disrupt the normal operations of such Seller or either Company, (ii) neither
Buyer nor any of its officers, employees, agents or representatives shall have
access to any personnel of such Seller or either Company other than any vice
president or president without IMC's consent, which shall not be unreasonably
withheld, (iii) such Seller may excise from any books and records to which Buyer
and its officers, employees, agents and representatives have access all
information that does not relate primarily to the Business or the Companies, and
(iv) neither Buyer nor any of its officers, employees, agents or representatives
shall have access to any material customers of the Business without (i) IMC's
consent, which shall not be unreasonably withheld, and (ii) a representative
designated by IMC present, and all such access shall occur on terms that comply
with applicable antitrust laws.
(b) Ordinary Conduct. Except as expressly contemplated by this Agreement
(including Section 6.18 hereof), from the date hereof to the Closing, each U.S.
Seller will cause the portion of the U.S. Business conducted by it to be
conducted in the ordinary course in substantially the same manner as presently
conducted, including maintaining its corporate existence in good standing,
maintaining proper business and accounting records, and making all reasonable
efforts consistent with past practices to preserve its business organization and
relationships with the U.S. Business's material customers and suppliers, key
employees who perform services primarily for the U.S. Business, and others with
whom it has a material business relationship relating to the U.S. Business.
Further, except as expressly contemplated by this Agreement, from the date
hereof to the Closing, Xxxxx Xxxx will cause the Companies to conduct their
business in the ordinary course in substantially the same manner as presently
conducted, including maintaining their corporate existence in good standing,
maintaining proper business and accounting records, and making all reasonable
efforts consistent with past practices to preserve their business organization
and relationships with material customers and suppliers, key employees and
others with whom they have a material business relationship. In addition, except
as expressly contemplated by this Agreement, no U.S. Seller will do, and Xxxxx
Xxxx will cause each Company not to do, any of the following without the prior
written consent of Buyer:
(i) other than as required by law, enter into any new collective
bargaining agreement or amend in any material respect any Collective
Bargaining Agreement; provided, that Buyer acknowledges and agrees that
the Collective Bargaining Agreement related to Gourmet Baker's Winnipeg,
Manitoba plant expires in January 2005, that Sellers are currently in
negotiations regarding a new collective bargaining agreement with the
union representing the applicable employees and that Gourmet Xxxxx may
enter into a new collective bargaining agreement with such union, subject
to obtaining Buyer's prior written consent, which consent shall not be
unreasonably withheld or delayed;
(ii) grant to any employee who performs services primarily for the
U.S. Business or to any employee of such Company any increase in
compensation or other material benefits, except (A) as may be required
under existing agreements or plans or under applicable law, (B) in the
ordinary course of business consistent with past practices or increases
for which Sellers or any affiliate of Sellers (other than the Companies)
is solely obligated, or (C) pursuant to a new collective bargaining
agreement entered into
36
pursuant to the proviso in clause (i) above; provided, that the Buyer
Entities acknowledge that Sellers intend to permanently layoff 13 hourly
employees and four salaried employees at the Elyria, Ohio plant and that
such employees shall be entitled to severance pay as a result of such
layoffs pursuant to plans in effect as of the date of this Agreement (it
being understood that liability for such severance pay shall be subject to
Section 1.04(c)(iii) and Section 1.05(i) (as applicable) to the extent
such layoffs occur prior to Closing);
(iii) grant any Lien on, or agree to the imposition of any
restriction or charge of any kind with respect to, any of the Assets or
any assets of such Company, in each case that are material to the
Business, other than Permitted Liens and Liens under purchase money
agreements, conditional sales contracts, capital leases, operating leases,
or licenses the non-disclosure of which in the Disclosure Schedule would
not constitute a misrepresentation under Section 4.01(o);
(iv) cancel any material indebtedness for borrowed money owing to
such U.S. Seller exclusively related to the U.S. Business or to such
Company, or waive any claims or rights of such U.S. Seller exclusively
related to the U.S. Business or of such Company, in each case that are of
material value (other than settlements of trade accounts in the ordinary
course of business);
(v) sell or otherwise dispose of any assets of such U.S. Seller used
in the U.S. Business that, but for any disposition, would constitute
Assets or sell or dispose of any material assets of such Company (in each
case, other than sales of inventory in the ordinary course of business and
dispositions of non-material intellectual property and obsolete equipment
and inventory consistent with past practices);
(vi) modify, amend or terminate any of the Material Contracts in any
respect materially adverse to the Business, such U.S. Seller or such
Company, except terminations upon expiration of a Material Contract's
term;
(vii) make any change in accounting methods or principles applicable
to the Business or such Company;
(viii) elect, revoke or amend any material Tax election, settle or
compromise any claim or assessment with respect to Taxes, execute any
closing agreement or any other agreement with respect to Taxes, execute or
consent to any waivers extending the statutory period of limitations with
respect to the collection or assessment of any Taxes, or amend any Tax
Returns (in the case of the U.S. Sellers, only to the extent related to
the U.S. Business); or
(ix) agree to do any of the foregoing.
(c) Confidentiality. In addition to Sellers' confidentiality obligations
under that certain Confidentiality Agreement, dated December 17, 2004, between
Xxxxxxx and VCP, each Seller will keep confidential and cause its affiliates to
keep confidential all non-public
37
information relating to the Business and the Companies which does not also
relate to any of the other businesses of such Seller or any of its affiliates,
except disclosures required by law, the rules of any securities exchange to
which any of them or their affiliates is subject, or administrative process
(including disclosures required in Tax Returns and in other governmental
filings) and disclosures in the defense of any Third Party Claim (as defined in
Section 10.06), provided, that such Seller shall provide Buyer with reasonable
notice of any required disclosure, to the extent practicable, and except for
information (i) which becomes public other than as a result of a breach of this
Section 4.02(c) or (ii) which is disclosed by such Seller in the defense of any
claim by Buyer or any of its affiliates against such Seller. Buyer acknowledges
that Sellers have advised Buyer that Sellers intend to provide such notice
relating to the transactions contemplated by this Agreement as is required by
law to labor or trade unions representing Employees or employees of the
Companies promptly after the date hereof.
(d) Insurance. Sellers shall keep, or cause to be kept, all insurance
policies set forth in Section 4.01(q) of the Disclosure Schedule that are in
effect on the date hereof, or equivalent replacements therefor, in full force
and effect through the Closing, except for insurance covering risks of terrorism
or similar occurrences the cost of which is deemed excessive in Sellers' sole
judgment.
(e) Covenant Not to Compete.
(i) Each Seller and Xxxxxxx hereby agrees that, except as
hereinafter provided, for the period commencing on the Closing Date and
terminating on the second anniversary of the Closing Date, it will not,
and it will cause its affiliates not to, except in the case of a Permitted
Investment (as hereinafter defined), without Buyer's prior written
consent, directly or indirectly engage in (or become a partner or
shareholder in or otherwise participate in the management or operation of
any venture or enterprise of any kind that engages in) the business of
manufacturing, selling, marketing or distributing (A) in the in-store
bakery, foodservice or wholesale/retail bakery channels in the continental
United States or Puerto Rico, baking mix or baking ingredient products of
the types sold by the Business as of the Closing Date (other than consumer
branded syrup products in serving sizes of 64 ounces or less) or (B) in
the in-store bakery, wholesale/retail bakery or foodservice channels in
the continental United States, Puerto Rico or Canada (the "Non-Competition
Area"), frozen bakery products of the types sold by the Business as of the
Closing Date (the "Restricted Business"); provided, that Sellers, Xxxxxxx
and their affiliates may directly or indirectly own in the aggregate up to
five percent (5%) of any outstanding class of equity securities of any
entity engaged in the Restricted Business or any portion thereof in the
Non-Competition Area, the equity securities of which are actively traded
on a domestic or foreign stock exchange or in a domestic or foreign
over-the-counter market. Notwithstanding any other provision of this
Agreement, nothing in this Agreement shall limit or restrict in any way
Xxxxx Xxxx and certain of its affiliates (other than the U.S. Sellers)
from manufacturing, selling, marketing and distributing baking mix and
baking ingredient products (x) in the in-store bakery, foodservice and
wholesale/retail bakery channels in Canada, (y) for and to The TDL Group
Corp. and its affiliates in the continental United States and Puerto Rico
and (z) to existing pizza mix customers of Xxxxx Xxxx or its affiliates
(other than the U.S. Sellers) in the continental United States and
38
Puerto Rico (but, in the case of this clause (z), only with respect to pizza mix
crust products). For purposes of this Agreement, "wholesale/retail bakery"
refers to bakeries (in the case of wholesale bakeries) that make and sell to
retailers finished bakery goods for resale to consumers or (in the case of
retail bakeries) which are stand-alone bakeries not part of a grocery store or
other general food or other retailer and the primary business of which is making
and selling to consumers finished bakery goods. For the avoidance of doubt,
"wholesale/retail bakery" shall not include retail grocers, mass merchandisers,
club stores or other retailers that are part of the trade channel commonly known
as the retail channel. For further avoidance of doubt, nothing in this Agreement
shall be deemed to restrict Sellers, Xxxxxxx or any of their affiliates from
manufacturing, selling, marketing or distributing any products in the retail
channel, including sales to grocers, mass merchandisers, club stores or any
other retailers (other than to the in-store bakery divisions of any of the
foregoing to the extent set forth above in clauses (A) and (B)). Nothing in this
Agreement shall be deemed to restrict or prohibit Xxxxxxx or any of its
affiliates from entering into an agreement (or consummating the transactions
contemplated by any such agreement) after Closing with a person engaged in any
portion of the Restricted Business relating to the acquisition of Xxxxxxx or any
of its affiliates or all or any portion of the equity interests or businesses of
such persons or affect such acquiring person's right to continue to conduct
Restricted Business after such acquisition.
(ii) For purposes of this Section 4.02(e), a Permitted Investment means:
(A) an acquisition after the Closing of an entity, or all or any
portion of its assets or businesses (the entity, assets or businesses so
acquired being herein called the "Acquired Business") if that portion of
the Acquired Business that is engaged in the Restricted Business or any
portion thereof (the "Competing Business") generated less than $20,000,000
in revenues, and accounted for less than 10% of the total revenues of the
Acquired Business, during the most recently completed fiscal year of the
Acquired Business preceding the date of the acquisition; or
(B) an acquisition after the Closing of an Acquired Business, if (1)
that portion of the Acquired Business constituting the Competing Business
generated less than $20,000,000 in revenues, and accounted for 15% or
more, but less than 25%, of the total revenues of the Acquired Business,
during the most recently completed fiscal year of the Acquired Business
preceding the date of the acquisition, (2) the acquiring persons give
written notice to Buyer of the proposed acquisition, the identity of the
Acquired Business and a description of the businesses conducted by it,
including the Competing Business, as promptly as practicable after the
acquisition, and (3) the acquiring persons use their good faith efforts to
dispose of, or cause the Acquired Business to dispose of, the Competing
Business on commercially reasonable terms within twelve (12) months after
the acquisition.
(iii) Each Seller hereby agrees that for a period of two years after the
Closing Date, it will not, and will cause its affiliates not to, without Buyer's
prior written consent,
39
(A) solicit for hire any person employed by Buyer at the time of such
solicitation (provided, that general solicitations such as "help-wanted"
advertising or postings on internet job search sites shall not be
prohibited by this clause (A)), or (B) specifically and directly encourage
any person who is then an employee, officer, agent, supplier or customer
of Buyer to terminate such relationship.
(f) Delivery of Records. At the Closing or as soon thereafter as
reasonably practicable, Sellers will deliver, or cause to be delivered, to Buyer
the Books and Records and the books and records of the Companies to the extent
not already in the possession or control of the Companies at Closing; provided,
however, that Sellers shall have the right to keep and use a copy of all books
and records where necessary to comply with applicable laws or desirable for use
in connection with the preparation of Tax Returns, the administration of
employee benefit plans, the preparation of Sellers' financial statements, the
fulfillment of obligations under the Transition Services Agreement (as defined
in Section 6.09) or in connection with investigations or litigation. Sellers
may, before delivering any books and records to Buyer, redact all information
and data therefrom that relate to businesses of Sellers other than the Business
or the Companies.
(g) Resignations. On the Closing Date, Xxxxx Xxxx shall cause to be
delivered to Buyer duly signed resignations, effective immediately after the
Closing, of all directors and officers of the Companies (other than those
directors and officers designated in writing by Buyer to Xxxxx Xxxx at least
five business days prior to the Closing Date), or shall take such other action
as is necessary to assure that such persons are not directors or officers of the
Companies after the Closing.
ARTICLE V
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE BUYER ENTITIES
5.01 REPRESENTATIONS AND WARRANTIES OF THE BUYER ENTITIES. The Buyer
Entities, jointly and severally, hereby represent and warrant to Sellers as
follows:
(a) Organization and Authority of the Buyer Entities. Each of the Buyer
Entities is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware. Each of the Buyer Entities has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby. All corporate acts and
proceedings required to be taken to authorize the execution, delivery, and
performance by each of the Buyer Entities of this Agreement and the consummation
by each of the Buyer Entities of the transactions contemplated hereby have been
duly and properly taken. This Agreement has been duly executed and delivered by
each of the Buyer Entities and, assuming due authorization, execution, and
delivery of this Agreement by Sellers, constitutes a valid and binding
obligation of each of the Buyer Entities, enforceable against each of them in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, and other similar laws affecting creditors'
rights generally and by general principles of equity. VCP has made available to
Sellers true and complete copies of the certificate of incorporation, as amended
to date, and the by-laws, as in effect on the date hereof, of each of the Buyer
Entities.
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(b) No Conflicts. The execution, delivery, and performance by the Buyer
Entities of this Agreement do not, and the consummation by the Buyer Entities of
the transactions contemplated hereby will not, (i) conflict with, or result in
any violation of, any provision of the certificate of incorporation or bylaws of
any of the Buyer Entities, or (ii) conflict with, result in any violation of, or
constitute a default under, any instrument, contract, commitment, agreement, or
arrangement to which any of the Buyer Entities is a party or by which any of the
Buyer Entities or their respective properties or assets is bound, or any
judgment, order, writ, injunction, or decree to which any of the Buyer Entities
has been specifically identified as subject, or any statute, law, ordinance,
rule, or regulation applicable to any of the Buyer Entities or their respective
properties or assets (except, in the case of clause (ii), where such conflict,
violation, or default would not materially impair the ability of any of the
Buyer Entities to consummate the transactions contemplated by this Agreement).
No material consent, approval, license, permit, order, or authorization of, or
registration, declaration, or filing with, any court, administrative agency or
commission, or other governmental authority or instrumentality, domestic or
foreign, is required to be obtained or made by any of the Buyer Entities in
connection with the execution, delivery, and performance by the Buyer Entities
of this Agreement or the consummation by the Buyer Entities of the transactions
contemplated hereby other than compliance with and filings under the HSR Act,
the Competition Act, the Investment Canada Act and Canadian federal or
provincial securities laws, if applicable.
(c) Litigation; Decrees. There are no judgments, orders, or decrees of any
court, administrative agency or commission, or other governmental authority or
instrumentality, domestic or foreign, to which any of the Buyer Entities is
subject that would prohibit or enjoin, or otherwise adversely affect the ability
of any of the Buyer Entities to consummate, the transactions contemplated
hereby. As of the date of this Agreement, no action, lawsuit, proceeding, or
investigation is pending (with respect to which any of the Buyer Entities has
been served or otherwise notified) or, to any of the Buyer Entities' knowledge,
threatened in writing against any of the Buyer Entities that, if decided
adversely to such Buyer Entity, individually or in the aggregate, is reasonably
likely to materially impair the ability of any of the Buyer Entities to
consummate the transactions contemplated hereby.
(d) Availability of Funds. At Closing, Buyer will have available cash or
existing borrowing facilities that, together with its available cash, are
sufficient to enable it to consummate the transactions contemplated by this
Agreement (including the payment of the Closing Cash Payment). Buyer has
provided Sellers with true and correct copies of equity and debt commitment
letters (the "Commitment Letters") from Buyer's financing sources in an
aggregate amount that exceeds the sum of the Closing Cash Payment, the estimated
transaction expenses arising from the transactions contemplated hereby and the
on-going working capital requirements of the Business. As of the date of this
Agreement, the Commitment Letters are in full force and effect and have not been
amended or modified. None of the Buyer Entities has any reason to expect as of
the date of this Agreement that any of the conditions set forth in the
Commitment Letters will not be satisfied.
(e) Brokers. There is no broker or other person who would have any valid
claim against any Seller or any of such Seller's affiliates for a finder's fee
or broker's fee or commission in connection with this Agreement or the
transactions contemplated hereby as a
41
result of any agreement, understanding or action by or on behalf any of the
Buyer Entities or any of their affiliates. Buyer shall be solely responsible for
all fees and expenses of Xxxxx Xxxxxxx Xxxx & Company and any other broker,
finder or other person engaged by or on behalf of it or otherwise claiming
through it in connection with the transactions contemplated by this Agreement.
(f) Accredited Investor. Buyer (i) is a company that had assets of at
least CDN$5,000,000 as reflected in its most recently prepared financial
statements and, consequently, is an "accredited investor" as defined in Ontario
Securities Commission Rule 00-000, Xxxxxx Distributions, promulgated under the
Securities Act (Ontario), (ii) has concurrently herewith executed and delivered
a certificate addressed to Seller in the form of Exhibit 5.01(f) hereto, and
(iii) is purchasing the Shares as principal. Further, Buyer is an "accredited
investor" as defined in Rule 501(a) of Regulation D promulgated by the U.S.
Securities and Exchange Commission. Buyer is acquiring the Industrial Revenue
Bonds for its own account for investment purposes only and not with a view to,
or for resale in connection with, any "distribution" thereof for purposes of the
Securities Act of 1933, as amended.
(g) Investment Canada. Buyer is a "WTO investor" for purposes of the
Investment Canada Act.
(h) Representations and Warranties in Note Purchase Agreement. All of the
representations and warranties of the Buyer Entities contained in the form of
Note Purchase Agreement attached as Exhibit 2.02(ii) hereto are true and correct
and are incorporated herein as if made in their entirety herein.
5.02 COVENANTS OF THE BUYER ENTITIES. Each of the Buyer Entities covenants
and agrees as follows:
(a) Confidentiality. Each Buyer Entity acknowledges that the information
being provided to it by Sellers is subject to the terms of the Confidentiality
Agreement, dated as of September 15, 2004, executed by Xxxxxxxx Partners and
Sellers' Banker on behalf of Sellers (the "Confidentiality Agreement"), the
terms of which are incorporated herein by reference. The Confidentiality
Agreement shall remain in effect after the Closing as to all confidential
information that does not relate primarily to the Companies, the Business or the
Assets. Each of the Buyer Entities agrees that it will not, and will cause its
affiliates not to, use confidential information provided to it in connection
herewith to trade in the capital stock of Xxxxxxx.
(b) No Representations or Warranties. Each of the Buyer Entities
acknowledges that none of the Sellers or Xxxxxxx or any other person has made
any representation or warranty, express or implied, as to the accuracy or
completeness of any information regarding any Seller, the Companies, the Shares,
the Assets or the Business not expressly included in this Agreement or in any
certificate signed by any Seller or Xxxxxxx and delivered pursuant hereto, and
none of the Sellers, Xxxxxxx or any other person will have or be subject to any
liability to any of the Buyer Entities or any other person resulting from any
Buyer Entity's use of or reliance on any such information, except as expressly
provided in this Agreement.
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(c) Retention of Records. Without limiting the provisions of Article X,
unless otherwise consented to in writing by Sellers (which shall not be
unreasonably withheld), none of the Buyer Entities shall at any time after the
Closing destroy or otherwise dispose of (or permit the destruction or
disposition of) any of the Books and Records or any of the Companies' books and
records, in each case which books and records are less than seven years old at
the time of such proposed destruction, without first offering, by notice to
Sellers, to surrender to Sellers such books and records or any portion thereof,
at least 30 days before the proposed destruction or other disposition.
Notwithstanding the above, to the extent that the books and records are in an
electronic or machine-sensible format, Buyer will maintain, and will cause the
Companies to maintain, such electronic or machine-sensible books and records in
accordance with the requirements of Rev. Proc. 98-25, 1998-1 C.B. 689.
ARTICLE VI
MUTUAL COVENANTS
Each of Sellers and the Buyer Entities (as applicable) covenants and
agrees as follows:
6.01 CONSENTS. Buyer acknowledges that (i) certain consents to the
transactions contemplated by this Agreement may be required from governmental
authorities with respect to governmental licenses, permits, approvals or
authorizations held by or on behalf of the U.S. Sellers or the Companies (or any
of them) or from parties to instruments, contracts, commitments, agreements, or
arrangements relating to the Business or otherwise, which consents have not been
obtained as of the date hereof and may not have been obtained as of the Closing,
and (ii) certain new governmental licenses, permits, approvals and
authorizations may be required to be obtained by Buyer with respect to the
Assets and the Business or by the Companies as a result of the transactions
contemplated hereby in order for Buyer and the Companies to conduct the Business
following the Closing in substantially the same manner as it was conducted
before the Closing. Except as otherwise expressly provided in this Section 6.01,
Sellers shall not have any liability to any of the Buyer Entities arising out of
the failure to obtain any such consents or any such new governmental licenses,
permits, approvals or authorizations that may be required. The parties will
cooperate in a reasonable manner in connection with efforts to obtain any such
consents and any such new governmental licenses, permits, approvals or
authorizations; provided, however, that such cooperation shall not include any
requirement of any Seller or any of Seller's affiliates to expend money or offer
or grant any accommodation (financial or otherwise) to any third party. Buyer
further acknowledges and agrees that the assignment of certain Assigned
Contracts and the applicable portions of certain Dividable Contracts to Buyer
requires Buyer to agree in writing to be bound by the obligations of the
applicable U.S. Sellers under such Assigned Contracts and such portions of such
Dividable Contracts and that Buyer shall be solely responsible for the
consequences of any failure by Buyer to so agree to be bound. Nothing stated in
this Section 6.01 shall affect the conditions to Closing set forth in Section
7.01(i).
6.02 COOPERATION. Buyer and Sellers shall reasonably cooperate with each
other, and shall cause their respective affiliates, officers, employees, agents,
and representatives to cooperate with each other, during the term of the
Transition Services Agreement, to ensure the
43
orderly transition of the Business from Sellers to Buyers and to minimize any
disruption to the respective businesses of Sellers and Buyer that might result
from the transactions contemplated hereby. Each party shall reimburse the
other(s) for reasonable out-of-pocket expenses (but not compensation payments to
or with respect to its employees) incurred in assisting such party under this
Section 6.02. No party shall be required by this Section 6.02 to take any action
that would unreasonably interfere with the conduct of its or its affiliates'
businesses. Without limiting the provisions of Article X, after the Closing,
upon reasonable written notice, Buyer and Sellers shall furnish to each other
and each other's officers, employees, agents, and representatives access, during
normal business hours, to such information relating to the Business and such
other assistance as is reasonably necessary for financial reporting, accounting,
and other reasonably appropriate purposes; provided, however, that such access
or assistance shall not unreasonably disrupt the normal operations of any of
Sellers, the Companies or Buyer and shall be subject to the confidentiality
obligations of Section 5.02(a) and the Confidentiality Agreement.
6.03 TRADEMARK MATTERS AND CORPORATE NAMES.
(a) Subject to the terms and conditions of this Agreement, at the Closing,
Buyer and MBI shall execute and deliver a trademark license agreement with
respect to the Xxx Xxxxx and Pet trademarks in substantially the form attached
hereto as Exhibit 6.03(a) (the "Trademark License Agreement").
(b) With respect to all packaging materials and other inventory that are
included in the Assets or the assets of the Companies (or that are on order at
the time of the Closing, and will be used by Buyer or the Companies after
Closing), in each case that bear the corporate name of any Seller or any
affiliate thereof or any trade name, trademark (including Xxxxxx Xxxxx), service
xxxx or internet domain name owned by any Seller or any affiliate thereof that
is not included in the Assets or owned by either Company (other than the Xxx
Xxxxx and Pet trademarks, which are the subject of the Trademark License
Agreement) (such corporate names, trade names, trademarks, service marks and
internet domain names other than the Xxx Xxxxx and Pet trademarks being
collectively called the "Licensed Marks"), each Seller hereby grants, or shall
cause its applicable affiliate to grant, to Buyer and the Companies, effective
at Closing, the nontransferable, nonexclusive, nonsublicensable right and
license to use for a reasonable time (not to exceed six months) after the
Closing the Licensed Marks owned by it on such existing packaging materials and
other inventory in the ordinary course of business, but not to apply the
Licensed Marks on any additional items. Buyer agrees that, for so long as the
right and license granted under this Section 6.03(b) remain in effect, the
nature and quality of all products and services offered by Buyer and the
Companies under or in connection with any of the Licensed Marks shall
substantially conform to Sellers' and the Companies' practices, standards, and
specifications as in effect on the date of this Agreement, and Sellers (and
their applicable affiliates) shall have access at all reasonable times, upon
reasonable notice, to the facilities of Buyer and the Companies and, to the
extent Buyer and the Companies may reasonably provide using their reasonable
best efforts, of customers and suppliers thereof to assure compliance with the
foregoing standards for the quality of such products and services and the other
requirements of this provision. If any Seller (or its applicable affiliate)
determines that the requirements of the foregoing provision have not been
complied with in all material respects and such noncompliance is continuing,
Sellers (or their
44
applicable affiliates) may immediately terminate the right and license granted
under this Section 6.03(b) by giving written notice of such termination to Buyer
and the Companies. Upon any such termination or the close of business on the
six-month anniversary of the Closing Date, whichever occurs first, Buyer agrees
to, and to cause the Companies to, immediately cease all use of the Licensed
Marks, including by relabeling such packaging materials and other inventory.
Other than as permitted under this Section 6.03(b), Buyer shall not, and shall
cause its affiliates not to, use in any manner any of the Licensed Marks without
the prior written consent of Sellers. Buyer acknowledges that Sellers (or their
applicable affiliates) are the owners of the Licensed Marks and that Buyer
obtains no rights in the Licensed Marks other than pursuant to the license
granted in this Section 6.03(b). Buyer shall not, and shall cause its affiliates
not to, ever challenge or assist any other person in challenging the validity or
enforceability of the Licensed Marks, or Sellers' (or Sellers' affiliate's)
ownership of the Licensed Marks.
(c) Buyer acknowledges that Sellers' representations and warranties in
Section 4.01 of this Agreement are subject to the provisions of this Section
6.03 and that the rights of Buyer following the Closing with respect to the
Licensed Marks and the Xxx Xxxxx and Pet trademarks shall be limited to those
set forth in this Section 6.03 and in the Trademark License Agreement (as
applicable).
(d) Subject to the terms and conditions of this Agreement, at the Closing,
Buyer, the Companies and IMC shall execute and deliver a technology license
agreement for the perpetual, royalty-free license of certain product formulas
and other related intellectual property by Buyer and the Companies to IMC and
its affiliates for use in retail channels, in substantially the form of Exhibit
6.03(d) attached hereto (the "Grant-Back Technology License Agreement").
(e) As soon as practicable after the Closing, but in any event within ten
(10) days after the Closing with respect to entities organized in the United
States, IMC, MBI and Xxxxx Xxxx shall change their respective corporate names,
and shall cause each other affiliate with the word "Multifoods" in its corporate
name to change its corporate name, to names that do not contain the words
"Multifoods" or anything confusingly similar thereto.
6.04 PUBLICITY. No public release or announcement concerning the
transactions contemplated hereby shall be issued by any party on or before the
Closing Date without the prior written consent of each other party, except as
such release or announcement may be required by law or the rules or regulations
of any applicable United States or foreign securities exchange, in which case
the party required to make the release or announcement shall, if practicable
under the circumstances, allow the other party or parties (as applicable)
reasonable time to comment on such release or announcement in advance of
issuance.
6.05 CLOSING CONDITIONS. Subject to the terms and conditions of this
Agreement (including the limitations set forth in Section 6.01), each party will
use its reasonable best efforts to satisfy all conditions to Closing set forth
in this Agreement that are within such party's control.
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6.06 ANTITRUST NOTIFICATION AND GOVERNMENTAL FILINGS.
(a) Sellers and Buyer shall file or cause to be filed as soon as
practicable after the date of this Agreement (but in any event no later than 10
days after the date hereof) with the United States Federal Trade Commission (the
"FTC") and the United States Department of Justice (the "DOJ") the notification
and report form required for the transactions contemplated hereby and will
promptly file or cause to be filed any supplemental information requested under
the HSR Act. The notification and report form and all such supplemental
information filed by Buyer or Sellers will be in substantial compliance with the
requirements of the HSR Act. All filing fees required to be paid by Buyer under
the HSR Act will be paid one-half each by Buyer, on the one hand, and Sellers,
on the other hand. Each of Buyer, on the one hand, and Sellers, on the other
hand, shall furnish to the other such necessary information and reasonable
assistance as the other may reasonably request in connection with its
preparation of any filing or submission necessary under the HSR Act. Sellers and
Buyer shall keep each other apprised of the status of any communications with,
and inquiries or requests for additional information from, the FTC or the DOJ,
and shall use their reasonable best efforts to comply promptly with any such
inquiry or request. Each of Sellers and Buyer will use its reasonable best
efforts to cause the expiration or early termination of the waiting period
required under the HSR Act as a condition to the purchase and sale of the
Assets.
(b) Each of Xxxxx Xxxx and Buyer shall as promptly as practicable, but in
no event later than 10 days following the execution and delivery of this
Agreement, file with the Commissioner of Competition under the Competition Act
(the "Commissioner") any prenotification filing required for the transactions
contemplated hereby and any supplemental information requested in connection
therewith pursuant to the Competition Act. Such prenotification filing and all
such supplemental information filed by Buyer and Xxxxx Xxxx shall be in
substantial compliance with the requirements of the Competition Act or, if
determined between them to be appropriate, an Advance Ruling Certificate
request. The filing fees under the Competition Act shall be paid by Buyer. Each
of Buyer and Xxxxx Xxxx shall use their reasonable best efforts to make or cause
to be made all such other filings or submissions, if any, as may be required
under applicable laws and regulations for the consummation of the transactions
contemplated by this Agreement. Each of Buyer and Xxxxx Xxxx shall furnish to
the other such necessary information and reasonable assistance as the other may
request in connection with its preparation of any of the foregoing filings or
submissions. Xxxxx Xxxx and Buyer shall keep each other apprised of the status
of any communications with, and inquiries or requests for additional information
from, the Commissioner and shall use their best efforts to comply promptly with
any such inquiry or request. Each of Xxxxx Xxxx and Buyer shall use its
reasonable best efforts to ensure that any required compliance under the
Competition Act is achieved in respect of the purchase and sale of the Shares.
(c) Buyer shall file not later than the close of business on the 30th day
after the Closing Date any required notice under the Investment Canada Act in
connection with the transactions contemplated by this Agreement and shall
promptly deliver to Xxxxx Xxxx a copy of such notice as so filed.
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6.07 CANCELLATION OF FCI LEASE. Buyer and Sellers agree that at the
Closing, the Lease Agreement dated January 1, 1998, between FCI, as landlord,
and IMC, as tenant, for the manufacturing facility of the U.S. Business located
at 0000 Xxxxxxx Xxxx, Xxxxxxx, Xxxxxxxx shall be canceled and terminated by IMC
and FCI effective as of the Closing.
6.08 SUPPLY AGREEMENT. Subject to the terms and conditions of this
Agreement, at the Closing, Gourmet Xxxxx and Xxxxx Xxxx shall execute and
deliver a supply agreement for the supply of flour to Gourmet Xxxxx and the
Companies in substantially the form attached hereto as Exhibit 6.08(a) (the
"Supply Agreement"). Subject to the terms and conditions of this Agreement, at
the Closing, Gourmet Xxxxx and Xxxxx Xxxx shall execute and deliver a supply
agreement for the supply of baking mix product to Gourmet Xxxxx in substantially
the form attached hereto as Exhibit 6.08(b) (the "Baking Mix Agreement").
6.09 TRANSITION SERVICES AGREEMENT. Subject to the terms and conditions of
this Agreement, at the Closing, Buyer and IMC shall execute and deliver a
transition services agreement in substantially the form attached hereto as
Exhibit 6.09 (the "Transition Services Agreement") for the provision of certain
services by IMC and its affiliates to Buyer and by Buyer to certain Sellers.
6.10 CO-PACK AGREEMENT. Subject to the terms and conditions of this
Agreement, at the Closing Buyer and IMC shall execute and deliver a co-pack
agreement in substantially the form of Exhibit 6.10 attached hereto for the
co-packing of frosting products by IMC for Buyer (the "Co-Pack Agreement").
6.11 DISCLOSURE SUPPLEMENTS. From time to time prior to the Closing, each
Seller and Xxxxxxx may promptly supplement or amend the Disclosure Schedule with
respect to any matter hereafter arising which would make any representation or
warranty made by such Seller or Xxxxxxx set forth in Section 4.01 inaccurate if
updated to the Closing Date or as is necessary to correct any information in the
Disclosure Schedule or in any representation or warranty of such Seller or
Xxxxxxx made in Section 4.01. For purposes of determining the fulfillment of the
conditions set forth in Section 7.01(a) as of the Closing, the Disclosure
Schedule shall be deemed to include only that information contained therein on
the date of this Agreement and shall be deemed to exclude any information
contained in any subsequent supplement or amendment thereto. However, for
purposes of determining the liability of Xxxxxxx and each Seller under Section
10.01(a)(ii) or 10.02(a)(i) with respect to the accuracy of its representations
and warranties contained in Section 4.01 or in any certificate or instrument
delivered pursuant hereto should the Closing occur, the Disclosure Schedule
shall be deemed to include all information contained in any subsequent
supplement or amendment thereto.
6.12 BULK SALES COMPLIANCE. The Buyer Entities and the U.S. Sellers hereby
waive compliance with the terms of any applicable bulk sales law or similar laws
that may be applicable to the sale and transfer of the Assets.
6.13 FURTHER ASSURANCES. From time to time after the Closing, as and when
requested by any party hereto, the other party or parties shall execute and
deliver, or cause to be executed and delivered, all such documents and
instruments and shall take, or cause to be taken, all such
47
further or other actions (subject to the limitations set forth in Section 6.01),
as such party may reasonably deem necessary or desirable to give full effect to
this Agreement.
6.14 INSURANCE.
(a) With respect to the master insurance policies set forth in Section
4.01(q) of the Disclosure Schedule that insure both the Companies, on the one
hand, and Xxxxx Xxxx or its other affiliates, on the other hand, Xxxxx Xxxx
shall have no obligation to continue such policies in effect following the
Closing and may terminate such policies as of the Closing or at any time
thereafter. Xxxxx Xxxx may, in its sole discretion, take any action it desires
to discontinue as of the Closing or at any time thereafter the coverage of the
Companies under the master insurance policies of Xxxxx Xxxx or its affiliates
that are presently in effect.
(b) To the extent that, and as long as, coverage at any time remains after
Closing under the master insurance policies referred to in Section 6.14(a) with
respect to occurrences prior to the Closing Date relating to the Companies,
Buyer shall, and shall cause the Companies to, as long as the insurance is in
place, use commercially reasonable efforts to assist Xxxxx Xxxx in seeking
payment or reimbursement by or from the insurer to the Companies or claimants
against the Companies under such insurance policies.
(c) If any legal action, arbitration, negotiation or other proceeding is
required after Closing for coverage to be asserted against any insurer for the
benefit of the Companies related to losses for which any Seller is required
under Article X to indemnify Buyer, Buyer shall make, or cause the Companies to
make, such assertions at the expense of Xxxxx Xxxx.
(d) Buyer acknowledges that no insurance policies are included in the
Assets and that as of the Closing, no insurance policies maintained by Sellers
or their affiliates will cover the Assets or the U.S. Business.
6.15 INTERNATIONAL SALES. The Buyer Entities acknowledge that as of the
date of this Agreement, the U.S. Sellers sell baking mix and baking ingredient
products to Xxxxx Xxxx for resale by Xxxxx Xxxx to customers in Mexico and other
locations outside of the Non-Competition Area. Buyer and Xxxxx Xxxx may continue
such relationship after Closing if they mutually agree to do so, in each such
person's sole discretion.
6.16 INTERCOMPANY ACCOUNTS; DISTRIBUTIONS. The parties agree that all
intercompany accounts between either of the Companies, on the one hand, and
Sellers or any of their other affiliates, on the other hand, shall be settled
and canceled by Sellers and their affiliates effective immediately prior to
Closing, and Final Closing Net Working Capital shall be determined after giving
effect to such settlement and cancellation. The Buyer Entities acknowledge and
agree that Sellers shall cause all cash, cash equivalents, securities and
investments held by the Companies to be distributed or otherwise transferred to
Xxxxx Xxxx prior to Closing.
6.17 PATENT LICENSE AGREEMENT. Subject to the terms and conditions of this
Agreement, at the Closing, Xxxxx Xxxx and Buyer shall execute and deliver a
patent license agreement in substantially the form of Exhibit 6.17 attached
hereto (the "Patent License
48
Agreement") for the license of U.S. Patent 4,931,297 and the corresponding
Canadian patent to Buyer.
6.18 LOCKPORT PLANT MATTERS.
(a) The Buyer Entities shall have the option, in their sole
discretion, to direct Sellers to close the Lockport Plant effective prior to the
Closing Date at a date determined by Sellers (the "Lockport Option"). To elect
the Lockport Option, the Buyer Entities must provide written notice to Sellers
of such election no earlier than January 20, 2005 and no later than January 24,
2005 (the "Lockport Notice"). The Lockport Option shall be deemed to be
irrevocably waived by the Buyer Entities if such Lockport Notice is not provided
in strict accordance with the immediately preceding sentence.
(b) If the Buyer Entities elect the Lockport Option in accordance
with Section 6.18(a), Sellers shall, promptly after receipt of the Lockport
Notice, take such actions as Sellers deem appropriate in order to close the
Lockport Plant prior to the Closing Date, including announcing to persons
employed at the Lockport Plant that the Buyer Entities have directed Sellers to
close the Lockport Plant prior to the Closing Date. Promptly after the Buyer
Entities' election of the Lockport Option (if so elected), Sellers shall engage
in "effects bargaining" with the union that represents the Lockport Plant's
Union Employees (as defined in Section 8.02 below) in accordance with and as may
be required by applicable law and shall keep the Buyer Entities reasonably
informed of the status of such effects bargaining. Sellers shall take all such
actions in good faith and attempt, in a manner consistent with their current
practices and standards with respect to the Business and to the extent
reasonably practicable, to minimize any adverse economic impact arising out of
the plant closure and the related effects bargaining.
(c) Notwithstanding any other provision of this Agreement, if the
Buyer Entities elect the Lockport Option, (i) in no event shall any change,
event, incident, circumstance or state of facts resulting or arising from or
related to the anticipated or actual closing of the Lockport Plant or any other
matter related thereto (including the Buyer Entities' election of the Lockport
Option, Sellers' announcement of the closing of the Lockport Plant to employees,
and actions or omissions by Sellers or their affiliates, agents or employees in
connection with or in anticipation of the closing of the Lockport Plant or in
response to the announcement of such closing) be deemed to constitute a Material
Adverse Effect or be considered in determining whether a Material Adverse Effect
has occurred, and (ii) each such change, event, incident, circumstance or state
of facts shall be disregarded for all purposes of this Agreement in determining
the accuracy of the representations and warranties of Sellers and Xxxxxxx
contained in this Agreement or in any certificate delivered in connection with
this Agreement; provided, in all events, that any such change, event, incident,
circumstance or state described in this Section 6.18(c) shall not have been the
direct result of any negligent action or omission or willful misconduct on the
part of any Seller.
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ARTICLE VII
CONDITIONS TO CLOSING
7.01 CONDITIONS TO BUYER ENTITIES' OBLIGATION. The obligation of the Buyer
Entities to consummate the transactions contemplated by this Agreement,
including the purchase of and payment for the Shares and the Assets, is subject
to the satisfaction at or prior to the Closing of the following conditions, any
one or more of which may be waived by the Buyer Entities:
(a) Each of the representations and warranties of each Seller contained in
this Agreement shall be true and correct as of the date hereof and (except as
they may be affected by transactions contemplated by this Agreement) immediately
before the Closing, as though made immediately before the Closing (unless and to
the extent any such representation or warranty speaks specifically as of an
earlier date, in which case as of such earlier date), except where the failure
to be so true and correct, individually or in the aggregate, has no Material
Adverse Effect; each Seller shall have performed or complied with in all
material respects all obligations and covenants required by this Agreement to be
performed or complied with by such Seller by the Closing; and Sellers shall have
delivered to Buyer a certificate executed by an authorized officer of each
Seller dated the Closing Date confirming the foregoing.
(b) No injunction or order of any court or administrative agency of
competent jurisdiction shall be in effect as of the Closing that restrains or
prohibits the consummation of the transactions contemplated hereby.
(c) All filings required under the HSR Act shall have been made, and any
approvals required thereunder shall have been obtained, or the waiting period
required thereby shall have expired or terminated.
(d) If a prenotification filing is required under the Competition Act,
Buyer shall have either obtained an Advance Ruling Certificate pursuant to
Section 102 of the Competition Act to the effect that the Commissioner is
satisfied that there would not be sufficient grounds upon which to apply to the
Competition Tribunal under Section 92 of the Competition Act with respect to the
transactions contemplated by this Agreement, or (i) the waiting period provided
under Section 123 of the Competition Act shall have expired and (ii) Buyer shall
have obtained written notification that the Commissioner does not at that time
intend to make application to the Competition Tribunal under Section 92 of the
Competition Act in respect of the transactions contemplated by this Agreement.
(e) Since the date of this Agreement, no incident or event (other than
those expressly contemplated by this Agreement, including Article VI) shall have
occurred that, individually or in the aggregate, has a Material Adverse Effect.
(f) Title to the U.S. Owned Real Property and the Canadian Owned Real
Property as reflected by (i) the title insurance commitments heretofore issued
by Chicago Title Insurance Company or Ticor Title Company (as applicable), as
the same may be subsequently endorsed and with such affirmative coverage as may
be available (collectively, the "Title Commitments"), and
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(ii) the surveys (the "Surveys") for the U.S. Owned Real Property heretofore
made available to Buyer, as the same may be updated by Buyer, shall as of the
Closing be of such condition as to not have a Material Adverse Effect.
(g) Sellers shall have delivered to Buyer the following:
(i) certified copies of resolutions duly adopted by Sellers'
respective boards of directors approving the execution, delivery, and
performance of this Agreement and the consummation of the transactions
contemplated hereby, and by the Companies' respective boards of directors
approving the transfer of the Shares to Buyer, which resolutions shall be
in full force and effect as of the Closing; and
(ii) all documents and other items required to be delivered to Buyer
at or before Closing pursuant to Section 3.02(a) hereof.
(h) The applicable Sellers shall have executed and delivered to Buyer
and the Companies (as applicable) the Trademark License Agreement, the Supply
Agreement, the Co-Pack Agreement, the Patent License Agreement, the Baking Mix
Agreement and the Transition Services Agreement.
(i) The consents of the third parties listed on Exhibit 7.01(i) hereto
to the transactions contemplated by this Agreement shall have been received and
shall be in form reasonably satisfactory to Buyer.
(j) All proceedings to be taken by Sellers in connection with the
consummation of the Closing and the other transactions contemplated hereby and
all documents required to be delivered by Sellers in connection with the
transactions contemplated hereby, including the transfer of Sellers' (as
applicable) right, title, and interest in the Shares and the Assets to Buyer,
will be reasonably satisfactory to Buyer.
(k) IMC shall have executed and delivered to the Buyer Entities' senior
lender a subordination and interecreditor agreement in substantially the form
attached as Exhibit 3 to the Note Purchase Agreement.
7.02 CONDITIONS TO SELLERS' OBLIGATION. The obligation of Sellers to
consummate the transactions contemplated by this Agreement, including the
transfer of Sellers' (as applicable) right, title and interest in the Shares and
the Assets to Buyer, is subject to the satisfaction of each of the following
conditions, any one or more of which may be waived by Sellers:
(a) Each of the representations and warranties of each of the Buyer
Entities contained in this Agreement shall be true and correct in all material
respects as of the date hereof and immediately before the Closing, as though
made immediately before the Closing (unless and to the extent any such
representation or warranty speaks specifically as of an earlier date, in which
case as of such earlier date); each of the Buyer Entities shall have performed
or complied in all material respects with all obligations and covenants required
by this Agreement to be performed or complied with by it by the Closing; and
each of the Buyer Entities shall have delivered to
51
Sellers a certificate executed by an authorized officer of such Buyer Entity
dated the Closing Date confirming the foregoing.
(b) No injunction or order of any court or administrative agency of
competent jurisdiction shall be in effect as of the Closing that restrains or
prohibits the consummation of the transactions contemplated hereby.
(c) All filings required under the HSR Act shall have been made, and any
approvals required thereunder shall have been obtained, or the waiting period
required thereby shall have expired or terminated.
(d) If a prenotification filing is required under the Competition Act,
Buyer shall have either obtained an Advance Ruling Certificate pursuant to
Section 102 of the Competition Act to the effect that the Commissioner is
satisfied that there would not be sufficient grounds upon which to apply to the
Competition Tribunal under Section 92 of the Competition Act with respect to the
transactions contemplated by this Agreement, or (i) the waiting period provided
under Section 123 of the Competition Act shall have expired and (ii) Buyer shall
have obtained written notification that the Commissioner does not at that time
intend to make application to the Competition Tribunal under Section 92 of the
Competition Act in respect of the transactions contemplated by this Agreement.
(e) Each Buyer Entity shall have delivered to Sellers certified copies of
resolutions duly adopted by such Buyer Entity's board of directors authorizing
the execution, delivery, and performance of this Agreement and the consummation
of the transactions contemplated hereby (including the execution, delivery,
performance and issuance (as applicable) of the Note Purchase Agreement, the
Buyer Note and the Guaranties), which resolutions shall be in full force and
effect as of the Closing.
(f) Buyer shall have delivered to Sellers the documents and other items
(including payment of the Closing Cash Payment and issuance and delivery of the
Buyer Note and the Guaranties) required to be delivered to Sellers at or before
Closing pursuant to Section 3.02(b) hereof.
(g) The Buyer Entities' senior lender(s) shall have executed and delivered
to Sellers a subordination and intercreditor agreement in substantially the form
attached as Exhibit 3 to the Note Purchase Agreement.
(h) Buyer and the Companies (as applicable) shall have executed and
delivered to Sellers the Trademark License Agreement, the Grant-Back Technology
License Agreement, the Supply Agreement, the Co-Pack Agreement, the Baking Mix
Agreement and the Transition Services Agreement.
(i) The applicable U.S. Sellers shall be satisfied, in their reasonable
judgment, that they have had sufficient opportunity to fulfill their obligation
to bargain with the labor unions representing the Union Employees (as defined in
Section 8.02) over the effects of the transactions contemplated by this
Agreement on such Union Employees.
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(j) All proceedings to be taken by the Buyer Entities in connection with
the consummation of the Closing and the other transactions contemplated hereby
and all documents required to be delivered by the Buyer Entities in connection
with the transactions contemplated hereby will be reasonably satisfactory to
Sellers, and Buyer shall simultaneously pay to Sellers the Base Purchase Price
in the manner provided in Section 2.02.
ARTICLE VIII
EMPLOYEES AND EMPLOYEE BENEFITS
8.01 OFFERS OF EMPLOYMENT. Buyer shall offer employment effective at the
Closing to substantially all Employees (as defined below) (both hourly and
salaried and full- and part-time), including each Employee on medical, military,
disability, workers' compensation, family or other leave of absence as of the
Closing; provided, that in the event that the Buyer Entities elect the Lockport
Option in accordance with Section 6.18(a), Buyer shall have no obligation to
offer employment to any Employees who work at the Lockport Plant. The offered
employment shall in each case be on terms and conditions (including wages and
benefits) that are substantially similar to the terms and conditions of
employment provided by BBC to its employees in the aggregate. Buyer shall hire
each Employee who accepts such offer and do so on such terms and conditions as
provided above. Nothing in this Section 8.01 shall obligate Buyer to continue
the employment of any such Employee for any specific period following the
Closing Date. Buyer shall hire a sufficient number of Employees for the U.S.
Sellers not to have any obligation under the WARN Act, provided that the
foregoing covenant shall not apply with respect to Employees at the Lockport
Plant in the event of an obligation arising out of the Buyer's decision to
exercise the Lockport Option. Buyer shall be responsible for delivering any
notices that may be required under the WARN Act as a result of any action or
actions that it takes on or after the Closing Date, and Sellers shall be
responsible for any WARN Act notice to Employees at the Lockport Plant that may
be required as a result of Buyer's decision to exercise the Lockport Option.
"Employees" means all employees of each U.S. Seller on the payroll of the U.S.
Business as of the applicable date and time or on leave of absence as of the
applicable date and time who otherwise would be on such payroll.
8.02 UNION EMPLOYEES. As required by applicable law, Buyer agrees to
negotiate in good faith to provide Union Employees (as defined below) (who are
employed by Buyer) with a collective bargaining or other labor agreement,
effective as of the Closing Date, or as soon as reasonably practicable
thereafter. If a collective bargaining agreement or other labor agreement
described in the immediately preceding sentence is not effective on the Closing
Date, the initial terms and conditions of employment established by Buyer shall
be substantially similar in the aggregate to those applicable to the Union
Employees immediately prior to their employment by Buyer pursuant to the
applicable U.S. Collective Bargaining Agreements. "Union Employees" means those
Employees of each U.S. Seller the terms and conditions of employment of whom are
subject to one or more of the U.S. Collective Bargaining Agreements.
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8.03 PROVISION OF BUYER'S AND COMPANIES' PLANS.
(a) Without limiting Section 8.01 or 8.02, effective at the Closing, Buyer
shall provide to each Employee (who is employed by Buyer) employee benefit plans
(collectively, "Buyer's Plans") under which such person will be entitled to
pension and other benefits substantially similar to the pension and other
benefits provided by BBC to its employees; provided, that Buyer shall provide to
each Employee (who is employed by Buyer) a severance plan that is substantially
similar to the severance plans provided by the U.S. Sellers immediately prior to
Closing to non-union hourly employees or salaried employees (as applicable) and
shall keep each such plan in full force and effect, without any diminution in
benefits or other changes adverse to employees, for one year after the Closing
Date. Buyer represents and warrants to Sellers that true and correct copies of
BBC's existing employee benefit plans have been previously provided to Sellers.
(b) As promptly as reasonably practicable after Closing, Sellers shall
cause the account balances of all Employees (who are employed by Buyer) under
the Employees' Voluntary Investment and Savings Plan of International Multifoods
Corporation to be spun-off and transferred to a defined contribution plan
established or maintained by Buyer, with that portion of each participant's
balance that reflects an outstanding loan to the participant to be transferred
in-kind to the transferee plan. Buyer agrees to cause the transferee plan to
accept such transfer.
(c) Buyer agrees that for a period of one year after the Closing or, if
longer, as long as required by law, it will cause the Companies to maintain in
full force and effect and unamended for the benefit of employees of the
Companies severance plans substantially similar to the severance plans in effect
immediately prior to Closing.
8.04 CREDIT UNDER BUYER'S PLANS. For purposes of eligibility and vesting,
and also for purposes of entitlement to vacation, paid time off and severance
benefits, each non-union Employee who is employed by Buyer shall be given credit
under Buyer's Plans (including the vacation and paid time off policies and
severance plans included within Buyer's Plans) for such Employee's service with
any U.S. Seller or any affiliate or predecessor thereof prior to the Closing
Date as reflected in the "current service dates" or other applicable dates
assigned to such Employees as of the Closing Date by the U.S. Sellers set forth
in Section 8.04 of the Disclosure Schedule or as required by law; and each
Employee (who is employed by Buyer) and covered dependent thereof shall be
allowed to participate in each of Buyer's Plans without regard to preexisting
conditions, waiting periods or other exclusions or limitations not imposed on
such individual by, or which were otherwise satisfied under, the U.S. Sellers'
Plans immediately prior to the Closing.
8.05 INCENTIVE PAYMENTS. Notwithstanding any other provision of this
Agreement, Buyer shall assume the Fiscal Year 2005 Multifoods U.S. Foodservice
Products Division Sales Incentive Plan, and all liabilities, obligations and
commitments of the U.S. Sellers thereunder, and pay to the Employees (whether or
not hired by Buyer) all amounts earned by such Employees through the end of the
Business's 2005 fiscal year under such incentive plan in accordance with the
terms thereof.
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8.06 MEDICAL, DENTAL, DISABILITY AND LIFE INSURANCE PLAN LIABILITIES. The
U.S. Sellers shall pay or shall cause the applicable U.S. Sellers' Plan to pay
any benefits or expenses covered by the group medical, dental, long-term
disability and life insurance plans included within the U.S. Sellers' Plans
which (i) in the case of any such medical or dental plans, are incurred by
Employees (who are employed by Buyer) or their dependents prior to the Closing
Date, (ii) in the case of any such long-term disability plans, are payable with
respect to a disability suffered by an Employee (who is employed by Buyer) prior
to the Closing Date (but not with respect to the recurrence on or after the
Closing Date of any such disability, even if such recurrence is considered to be
a continuation of a prior disability), if such Employee, at the effective time
of the Closing, has qualified for long-term disability benefits (or subsequently
qualifies for such benefits after meeting any applicable waiting or elimination
period) under such plans with respect to such disability, and (iii) in the case
of any such life insurance plans, are payable to the beneficiaries of any
Employee (who is employed by Buyer) who dies prior to the Closing Date. To the
extent Employees who are employed by Buyer have enrolled in the applicable
Buyer's Plan, Buyer shall pay or cause the applicable Buyer's Plan to pay any
such benefits or expenses which (A) in the case of any such medical or dental
plans, are incurred by the Employees or their dependents on or after the Closing
Date, (B) in the case of any such disability plans, are payable with respect to
either (x) a disability suffered by an Employee prior to the Closing Date, if
such Employee, at the effective time of the Closing, has not yet qualified for
long-term disability benefits (and subsequently does not qualify for such
benefits after meeting any applicable waiting or elimination period) under the
group disability plans included in the U.S. Sellers' Plans with respect to such
disability, or (y) a disability suffered by an Employee at any time on or after
the Closing Date (including a recurrence on or after the Closing Date of a
disability of an Employee suffered prior to the Closing Date), and (C) in the
case of any such life insurance plans, are payable to the beneficiaries of any
Employee who dies on or after the Closing Date. A medical or dental expense is
"incurred" for purposes of this Section 8.06 as of the date when the services
that give rise to the expense are rendered, and not when the expense is billed.
8.07 ACCRUED VACATION. Each Employee who is employed by Buyer shall be
credited under Buyer's Plans with all Accrued Vacation, if any, accrued by such
Employee prior to the Closing Date under the policies included within the U.S.
Sellers' Plans and not used by such Employee prior to the Closing Date to the
extent reflected on the Closing Statement.
8.08 COBRA. The U.S. Sellers shall be solely responsible for claims
relating to coverage under COBRA attributable to "qualifying events" with
respect to any Employee and his or her beneficiaries and dependents that occur
before the date such Employee becomes employed by Buyer or as a result of the
sale and purchase of the Assets as contemplated by this Agreement. Buyer shall
be solely responsible for claims relating to coverage under COBRA attributable
to "qualifying events" with respect to Employees who become employees of Buyer,
and their beneficiaries and dependents, that occur after such Employees become
employees of Buyer. "COBRA" means Section 601 et seq. of ERISA and Section 4980B
of the Code and any similar applicable state laws.
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ARTICLE IX
TAX MATTERS
9.01 COOPERATION. Buyer and Sellers shall, and shall cause their
respective subsidiaries and other affiliates (including in the case of Buyer and
after the Closing, the Companies) to reasonably cooperate with respect to Tax
matters, including with respect to preparing and filing all Tax Returns or
amended Tax Returns or refund claims relating to the Assets or the U.S. Business
and Taxes of the Companies. Buyer and Sellers shall provide one another with
such information as is reasonably requested in order to enable the requesting
party to complete and file all Tax Returns that they or their affiliates may be
required to file with respect to the Companies, the Business or the Assets or to
respond to audits, inquiries or other proceedings by any Taxing authority and
otherwise to satisfy Tax requirements. Such cooperation shall further include
(i) provision of reasonably necessary powers of attorney relating to Tax matters
to satisfy obligations under this Article IX, (ii) promptly forwarding copies of
appropriate notices, forms or other communications received from or sent to any
Taxing authority, and (iii) promptly providing reasonably requested copies of
all relevant Tax Returns together with accompanying schedules and related
workpapers, documents relating to rulings, audits or other determinations by any
Taxing authority and relevant records concerning the ownership and tax basis of
property, in each case only to the extent such materials relate to the
Companies, the Business or the Assets.
9.02 FILING RESPONSIBILITY.
The U.S. Sellers shall prepare and file all Tax Returns (i) with respect
to Taxes attributable to the Assets or the U.S. Business that are required to be
filed (taking into account extensions therefor) on or prior to the date
immediately preceding the Closing Date and (ii) with respect to Excluded Taxes.
Buyer shall file or cause to be filed all Tax Returns attributable to the Assets
or the U.S. Business for which the U.S. Sellers do not have filing
responsibility pursuant to this Section 9.02. Xxxxx Xxxx shall cause the
Companies to file all Tax Returns for the Companies that are required to be
filed on or prior to the date immediately preceding the Closing Date. Buyer
shall prepare and file, or cause the Company to prepare and file, all Tax
Returns of the Companies filed on or after the Closing Date. Buyer shall
prepare, or cause the Companies to prepare, such Tax Returns in a manner
consistent with the past practices and customs of the Companies to the extent
such past practices and customs are in accordance with applicable law. Buyer and
Sellers shall discharge all Tax liabilities shown on Tax Returns based on the
assumption and allocation of Tax liabilities provided in Section 10.01 of this
Agreement without regard to the party that has prepared the Tax Return, and the
party responsible for payment of any amount of Taxes shown due on a Tax Return
shall pay such unpaid amount to the party filing the Tax Return no later than
five business days prior to the filing of such Tax Return.
9.03 REFUNDS.
(a) The U.S. Sellers shall be entitled to any refunds or credits of or
against any Excluded Taxes (plus any interest received with respect thereto).
Buyer shall be entitled to any refunds or credits of (i) Taxes other than
Excluded Taxes, (ii) Taxes not indemnified by Sellers
56
pursuant to Section 10.01, and (iii) any other Taxes attributable to the U.S.
Business or the Assets (plus any interest received with respect thereto). Buyer
shall promptly forward to the U.S. Sellers or reimburse the U.S. Sellers for any
refund or credits due the U.S. Sellers (pursuant to the terms of this Article
IX) after receipt thereof, and the U.S. Sellers shall promptly forward to Buyer
or reimburse Buyer for any refunds or credits due Buyer (pursuant to the terms
of this Article IX) after receipt thereof.
(b) Any refunds or credits of Taxes of the Companies shall be for the
account of Buyer, provided that any refunds or credits of Income Taxes of any of
the Companies for the Pre-Closing Tax Period (except for refunds or credits of
Income Taxes of the Companies that are included as receivables in the Closing
Net Working Capital) shall be for the account of Xxxxx Xxxx. Buyer shall pay to
Xxxxx Xxxx an amount equal to any refund or credit in respect of which Xxxxx
Xxxx is entitled to an amount under this Section 9.03(b) within 10 days after
such refund is received by the Companies (or such credit is allowed or applied
against other Tax liabilities of the Companies). Xxxxx Xxxx and Buyer shall
treat any payments under the immediately preceding sentence that Xxxxx Xxxx
shall receive pursuant to this Section 9.03(b) as an adjustment to the Purchase
Price.
ARTICLE X
INDEMNIFICATION
10.01 TAX INDEMNIFICATION.
(a) After the Closing, Sellers and Xxxxxxx, jointly and severally, shall
indemnify Buyer and its affiliates and hold them harmless from and against (i)
all liability for Excluded Taxes; (ii) any liability, claim or damage suffered
or incurred by any such indemnified party to the extent caused proximately by
any breach of any representation or warranty contained in Section 4.01(i) or
Section 4.01(j) or any certificate delivered pursuant to this Agreement to the
extent related to such Section 4.01(i) or Section 4.01(j); (iii) all liability
for Taxes other than Excluded Taxes of the U.S. Sellers and the Companies for
the Pre-Closing Tax Period, (iv) Sellers' share of prorated Taxes pursuant to
Section 2.03 and Transfer Taxes pursuant to Section 3.03; and (v) all liability
for expenses (including reasonable legal fees and expenses, except as otherwise
provided in Section 10.07) incurred by Buyer attributable to clauses (i) through
(iv) of this subsection (a); provided, however, that any liability under clause
(ii) (but only to the extent that the breached representation or warranty does
not relate to an Income Tax, sales or use Tax, employment or payroll Tax
(including withholding) or value added Tax) or (iii) above shall be subject to
the limitations set forth in Section 10.02(b), except that such liability shall
not be subject to the limits of Section 10.02(b)(ii).
(b) In the case of any Straddle Period, the portion of the Excluded Taxes
attributable to any Pre-Closing Tax Period (which are subject to indemnification
by Sellers as Excluded Taxes to the extent set forth in Section 10.01(a)) shall
be computed by using a closing-of-the-books method as if such taxable period
ended on the date immediately preceding the Closing Date, except that any
Excluded Taxes attributable to transactions not in the ordinary
57
course of business occurring on the Closing Date before the transfer of the
Shares to Buyer shall be treated as attributable to the Pre-Closing Tax Period.
10.02 INDEMNIFICATION BY SELLERS.
(a) After the Closing, Sellers and Xxxxxxx, jointly and severally, shall
indemnify Buyer and its affiliates and hold them harmless from any liability,
claim, damage or expense (including reasonable legal fees and expenses, except
as otherwise provided in Section 10.06) suffered or incurred by any such
indemnified party (other than those relating to Taxes, which are the subject of
Section 10.01(a), or resulting from a breach of any representation or warranty
set forth in Section 4.01(i) or Section 4.01(j)) to the extent caused
proximately by:
(i) any breach of any representation or warranty of any Seller
contained in this Agreement (other than those set forth in Section 4.01(i)
or Section 4.01(j)) or any certificate delivered pursuant hereto,
(ii) any breach of any covenant or agreement of any Seller contained
in this Agreement,
(iii) any failure to comply with any applicable bulk transfer laws,
except to the extent related to an Assumed Liability,
(iv) the Excluded Liabilities,
(v) the ownership, occupancy or use of any real property (other than
the Canadian Owned Real Property and the Canadian Leased Real Property)
prior to Closing by either Company or any predecessor of either Company,
which real property is not owned, occupied or used by such Company as of
the Closing Date; provided, that such liability, claim, damage or expense
is caused proximately by a violation of, or non-compliance with,
Environmental Laws by such Company,
(vi) any contingent, unmatured or "tail" liability of either Company
primarily relating to any business, operations or assets sold or disposed
of prior to Closing (other than sales and other dispositions of inventory
or other assets in the ordinary course of business) by such Company or any
predecessor of such Company, or
(vii) in the event, and only in the event, that Sellers make an
Indemnity Election pursuant to Exhibit 7.01(i) hereto and subject in all
cases to the terms and conditions of such Exhibit, the failure to receive
the consents contemplated by items 5 through 10 of Exhibit 7.01(i) hereto.
(b) Notwithstanding anything to the contrary contained in this
Agreement, (i) none of Sellers or Xxxxxxx shall have any liability under Section
10.02(a)(i) arising from a breach of any representation or warranty (except for
breaches of Sections 4.01(a)(i), 4.01(c), 4.01(d), 4.01(k) or 4.01(ee), the
fourth sentence of Section 4.01(l) or the first sentence of Section 4.01(b)) or
with respect to Tax liabilities subject to the proviso to Section 10.01(a)
unless the aggregate of all losses, liabilities, claims, damages and expenses
for which Sellers and Xxxxxxx would, but for
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this clause (i), be liable exceeds on a cumulative basis an amount equal to one
and one-half percent (1.5%) of the Purchase Price, at which time Sellers' and
Xxxxxxx'x indemnification shall be for all losses in excess of one percent (1%)
of the Purchase Price (subject to clause (ii) below); (ii) none of Sellers or
Xxxxxxx shall have any liability under Section 10.02(a)(i) arising from a breach
of any representation or warranty (except for breaches of Sections 4.01(a)(i),
4.01(c), 4.01(d), 4.01(k) or 4.01(ee), the fourth sentence of Section 4.01(l) or
the first sentence of Section 4.01(b)) to the extent the aggregate of all
losses, liabilities, claims, damages and expenses for which Sellers and Xxxxxxx
would, but for the provisions of this clause (ii), be liable exceeds on a
cumulative basis an amount equal to fifteen percent (15%) of the Purchase Price;
and (iii) none of Sellers or Xxxxxxx shall have any liability for any liability,
claim, damage or expense to the extent (and in the same amount) such liability,
claim, damage or expense has been included in Final Closing Net Working Capital.
(c) Except as provided in Section 12.11, each of the Buyer Entities
acknowledges and agrees that its sole and exclusive remedy with respect to any
and all claims relating to the subject matter of this Agreement (including
claims for breaches of representations, warranties, covenants and agreements
contained in this Agreement) shall be pursuant to the indemnification provisions
set forth in this Article X. In furtherance of the foregoing, each of the Buyer
Entities hereby waives, to the fullest extent permitted under applicable law,
except with respect to claims based upon intentionally fraudulent breaches of
representations and warranties, any and all rights, claims and causes of action
the Buyer Entities (or their affiliates) may have against Sellers or Xxxxxxx or
any of them relating to the subject matter of this Agreement as a matter of
equity or arising under or based upon any federal, state, local or foreign
statute, law, ordinance, rule or regulation or arising under or based upon
common law or otherwise, except to the extent provided in Section 10.01 and this
Section 10.02.
(d) For purposes of Section 10.01(a)(ii) and this Section 10.02, all
representations and warranties of Sellers and Xxxxxxx in Section 4.01 shall be
read as if all qualifications as to materiality (including each reference to the
defined term "Material Adverse Effect") were deleted therefrom.
10.03 INDEMNIFICATION BY THE BUYER ENTITIES.
(a) After the Closing, the Buyer Entities, jointly and severally, shall,
and shall cause the Companies to, indemnify each Seller and such Seller's
affiliates against and hold them harmless from any liability, claim, damage or
expense (including reasonable legal fees and expenses, except as otherwise
provided in Section 10.06) suffered or incurred by any such indemnified party to
the extent caused proximately by:
(i) any breach of any representation or warranty of any of the Buyer
Entities contained in this Agreement or any certificate delivered pursuant
hereto,
(ii) any breach of any covenant or agreement of any of the Buyer
Entities contained in this Agreement,
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(iii) any obligation or liability to the extent included in Final
Closing Net Working Capital and taken into account in the final
determination of the Purchase Price; or
(iv) without limiting the foregoing, any Assumed Liability;
provided, that with respect to any such liability, claim, damage or
expense that would not have resulted but for a breach of Sellers'
representations and warranties that is covered by Sellers' and Xxxxxxx'x
indemnification obligations under Section 10.01 or 10.02 (as applicable),
the Buyer Entities' indemnification obligations under this clause (iv)
shall not apply to the extent of (but only to the extent of) the
indemnification obligations of Sellers and Xxxxxxx for such breach
pursuant to Section 10.01 or 10.02 (as applicable).
(b) Notwithstanding anything to the contrary contained in this
Agreement, (i) none of the Buyer Entities shall have any liability under Section
10.03(a)(i) arising from a breach of any representation or warranty (except for
breaches of Sections 5.01(a) or 5.01(e)) unless the aggregate of all losses,
liabilities, claims, damages and expenses for which the Buyer Entities would,
but for this clause (i), be liable exceeds on a cumulative basis an amount equal
to one and one-half percent (1.5%) of the Purchase Price, at which time the
Buyer Entities' indemnification shall be for all losses in excess of one percent
(1%) of the Purchase Price (subject to clause (ii) below); and (ii) none of the
Buyer Entities shall have any liability under Section 10.03(a)(i) arising from a
breach of any representation or warranty (except for breaches of Sections
5.01(a) or 5.01(e)) to the extent the aggregate of all losses, liabilities,
claims, damages and expenses for which the Buyer Entities would, but for the
provisions of this clause (ii), be liable exceeds on a cumulative basis an
amount equal to fifteen percent (15%) of the Purchase Price.
(c) Except as provided in Section 12.11, Sellers and Xxxxxxx acknowledge
and agree that their sole and exclusive remedy with respect to any and all
claims relating to the subject matter of this Agreement (including claims for
breaches of representations, warranties, covenants and agreements contained in
this Agreement) shall be pursuant to the indemnification provisions set forth in
this Article X. In furtherance of the foregoing, Sellers and Xxxxxxx hereby
waive, to the fullest extent permitted under applicable law, except with respect
to claims based upon intentionally fraudulent breaches of representations and
warranties, any and all rights, claims and causes of action Sellers and Xxxxxxx
(or their affiliates) may have against any of the Buyer Entities as a matter of
equity or arising under or based upon any federal, state, local or foreign
statute, law, ordinance, rule or regulation or arising under or based upon
common law or otherwise, except to the extent provided in Section 10.01 and this
Section 10.03.
10.04 ADJUSTMENTS.
(a) The amount of any loss, liability, claim, damage, or expense for which
indemnification is provided under this Article X (i) shall be net of any amounts
recovered (regardless of time) or recoverable with diligent effort by the
indemnified party under insurance policies, including title insurance policies,
with respect to such loss, liability, claim, damage, or expense (and the
indemnifying party shall be deemed released from any liability hereunder to the
extent of any such amounts so recovered or recoverable), and (ii) in the case of
indemnification under Section 10.02 or 10.03, shall be (x) increased to take
account of any net Tax cost incurred
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by the indemnified party arising from the receipt of indemnity payments
hereunder and (y) reduced to take account of any actual net reduction in Taxes
realized by the indemnified party as a result of such loss, liability, claim,
damage, or expense giving rise to the indemnification payment. If the
indemnification payment is paid prior to the indemnified party realizing any
actual reduction in Taxes in connection with the loss, liability, claim, damage
or expense, then the indemnified party shall pay the amount of such actual
reduction in cash payments for Taxes (but not in excess of the indemnification
payment or payments actually received with respect to such loss, liability,
claim, damage or expense and only to the extent that such actual reduction in
cash payments for Taxes is realized within two years of making such payment) to
the indemnifying parties. For purposes of (ii) in the preceding sentence, the
indemnified party shall be deemed to have realized an actual net reduction in
Taxes with respect to a taxable year if, and to the extent that, the indemnified
party's cumulative liability for Taxes from the Closing Date through the end of
such Taxable year, calculated by excluding any Tax items attributable to the
loss, liability, claim, damage or expense from all taxable years, exceeds the
indemnified party's actual cumulative liability for Taxes through the end of
such taxable year, calculated by taking into account any Tax items attributable
to the amount of loss, liability, claim, damage or expense for all taxable years
(to the extent permitted by relevant Tax law and treating such Tax items as the
last items claimed for any taxable year). Any indemnity payment made pursuant to
this Article X will be treated as an adjustment to the Purchase Price for Tax
purposes, unless a final determination (which shall include the execution of a
Form 870-AD or successor form) with respect to the indemnified party causes any
such payment not to constitute an adjustment to the Purchase Price for United
States or Canadian federal income Tax purposes.
(b) Notwithstanding anything to the contrary stated herein, if remedial
action is required to correct a situation giving rise to any liability, claim,
damage, or expense for which a party is entitled to indemnification under this
Article X, then the indemnifying party shall not be obligated with respect to
the costs and expenses of such remedial action, (i) in the case of any
contamination or other condition at any Real Property the existence of which
constitutes a breach of any representation or warranty in Section 4.01(u), to
the extent such costs and expenses exceed those that would have been incurred
had Buyer taken only such actions to remediate such contamination or other
condition as are required under applicable law, and (ii) in all other cases, to
the extent such costs and expenses exceed those that would have been incurred
had the indemnified party taken only such actions to correct such situation that
a person of ordinary prudence under like circumstances who was not entitled to
indemnification for the costs and expenses of such remedial action would have
reasonably taken.
10.05 TERMINATION OF INDEMNIFICATION. The obligation to indemnify a party
(a) under Sections 10.01(a)(ii), 10.02(a)(i) and 10.03(a)(i) shall terminate
when the applicable representation or warranty terminates under Section 12.03,
and (b) under the other clauses of Sections 10.01(a), 10.02(a) and 10.03(a)
shall not terminate; provided, however, that such obligation to indemnify shall
not terminate with respect to any item as to which the person to be indemnified
shall have, before the expiration of the applicable period, previously made a
claim by delivering a notice as required under this Article X to the party to be
providing the indemnification.
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10.06 PROCEDURES RELATING TO INDEMNIFICATION OF THIRD PARTY CLAIMS.
(a) In order for a party to be entitled to any indemnification under this
Agreement (other than Tax Claims, which are the subject of Section 10.07)
involving a claim or demand made by any third party against the indemnified
party (a "Third Party Claim"), the indemnified party shall notify the
indemnifying party in writing of the Third Party Claim, and deliver to the
indemnifying party copies of all notices and documents accompanying or
constituting the Third Party Claim, within 10 days after obtaining notice
thereof; provided, however, that failure to give such notification shall not
affect the indemnification provided hereunder, except to the extent the
indemnifying party shall have been actually prejudiced as a result of such
failure. Thereafter, the indemnified party shall deliver to the indemnifying
party, within 10 days after the indemnified party's receipt thereof, copies of
all notices and documents (including court papers) received by the indemnified
party relating to the Third Party Claim; provided, however that failure to
deliver such copies shall not affect the indemnification provided hereunder
except to the extent the indemnifying party shall have been actually prejudiced
as a result of such failure.
(b) If a Third Party Claim is made against an indemnified party, the
indemnifying party will be entitled to assume the defense thereof with counsel
selected by the indemnifying party and reasonably satisfactory to the
indemnified party; provided, that (i) the Third Party Claim involves money
damages and, in the indemnified party's reasonable determination, is not
expected to have a material adverse effect on the business, operations,
properties or financial condition (including the payment of Taxes) of the
business of the indemnified party, and (ii) the indemnifying party conducts the
defense of the Third Party Claim actively and diligently; provided, further,
that in the event the indemnifying party does not have the right, or does not
elect, to assume the defense of a Third Party Claim in accordance with this
Section 10.06(b), then the indemnifying party shall have the right to
participate in the defense of such Third Party Claim at its own expense, it
being understood that the indemnified party shall control the defense of such
claim. Should the indemnifying party so elect to assume the defense of a Third
Party Claim, which election must be made within 10 business days (in the case of
a Third Party Claim with respect to which a complaint has been filed) or 20
business days (in the case of all other Third Party Claims) after the
indemnifying party receives notice of the Third Party Claim from the indemnified
party, the indemnifying party will not be liable to the indemnified party for
legal expenses incurred by the indemnified party in connection with the defense
thereof; provided, however, that if the indemnifying party fails to cure any
failure to reasonably actively and diligently defend such Third Party Claim
within 10 business days after written notice from the indemnified party
specifying such alleged failure, then the indemnified party may assume its own
defense, and the indemnifying party shall be liable for all reasonable costs or
expenses paid or incurred by the indemnified party (subject to the limitations
set forth in this Article X (including Section 10.02(b)) in connection
therewith. If the indemnifying party assumes such defense, the indemnified party
may, but need not, participate in the defense thereof and employ counsel, at its
own expense, separate from the counsel employed by the indemnifying party, it
being understood that the indemnifying party shall control such defense. If the
indemnifying party has not assumed the defense of a Third Party Claim, in
addition to any other Losses for which the indemnifying party may be liable, the
indemnifying party shall be liable for the reasonable fees and expenses of
counsel employed by the indemnified party (subject to the limitations set forth
in this Article X (including Section 10.02(b)). If the indemnifying party
chooses to defend or prosecute any Third
62
Party Claim, the indemnified party shall reasonably cooperate in the defense or
prosecution thereof with reimbursement by the indemnifying party of reasonable
out-of-pocket expenses (but not compensation payments to or with respect to
employees) of the indemnified party incurred in connection therewith. Such
cooperation shall include the retention and (upon the indemnifying party's
request) the provision to the indemnifying party of records and information that
are reasonably relevant to the Third Party Claim, and making employees available
on a mutually convenient basis to provide additional information and explanation
of any material provided hereunder. The indemnifying party, if it shall have
assumed the defense of any Third Party Claim as provided in this Agreement,
shall not, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld, conditioned or delayed) consent to a
settlement of, or the entry of a judgment arising from, any such Third Party
Claim which (i) does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the indemnified party a complete release from
all liability in respect of such Third Party Claim, or (ii) grants any
injunctive or equitable relief. Whether or not the indemnifying party shall have
assumed the defense of any Third Party Claim, the indemnified party shall not
admit any liability with respect to, settle, compromise or discharge the Third
Party Claim without the indemnifying party's prior written consent, which
consent shall not be unreasonably withheld, conditioned or delayed.
10.07 PROCEDURES RELATING TO INDEMNIFICATION OF TAX CLAIMS. If a claim is
made by any taxing authority, which, if successful, might result in an indemnity
payment to Buyer or Sellers under Section 10.01, the indemnified party shall
promptly notify the indemnifying party in writing of such claim (a "Tax Claim").
If notice of a Tax Claim ("Tax Notice") received by the indemnified party after
the Closing Date is not given to the indemnifying party within a sufficient
period of time to allow the indemnifying party to effectively contest such Tax
Claim, the indemnifying party shall not be liable to the indemnified party to
the extent that the indemnifying party's position is actually prejudiced as a
result thereof.
The indemnifying party shall control, at its sole expense, all
proceedings, including selection of counsel reasonably satisfactory to the
indemnified party, taken in connection with any Tax Claim (except as set forth
below) and subject to the consent right of the indemnified party set forth in
the next paragraph of this Section 10.7 and, without limiting the foregoing, may
with the consent of the indemnified party pursue or forego any and all
administrative appeals, proceedings, hearings, and conferences with any taxing
authority with respect thereto and either pay the Tax claimed and xxx for a
refund where applicable law permits such refund suits or contest the Tax Claim
in any permissible manner so long as (i) the indemnifying party notifies the
indemnified Party in writing within fifteen (15) days after the indemnified
party has given notice of the Tax Claim that the indemnifying party will
indemnify the indemnified party from and against the entirety of any adverse
consequences the indemnified party may suffer from, arising out of, relating to,
in the nature of, or caused by the Tax Claim, (ii) any proposed settlement of,
or an adverse judgment with respect to, the Tax Claim will not establish a
precedential custom or practice adverse to the continuing business interests of
the Buyer or the Companies or otherwise have an adverse effect on a Tax position
of the Buyer or the Companies for periods beginning on or after, or including,
the Closing Date, and (iii) the indemnifying party conducts the defense of the
Tax Claim actively and diligently. So long as the indemnifying party is
conducting the defense of the Tax Claim in accordance with the preceding
sentence, the
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indemnified party may retain separate co-counsel at its sole cost and expense
and participate in the defense of the Tax Claim. In the event that any of the
conditions set forth above is or becomes unsatisfied, (i) the indemnified party
may defend against, and consent to the entry of any judgment or enter into any
settlement with respect to, the Tax Claim in any manner it reasonably may deem
appropriate, provided that the indemnified party will not consent to the entry
of any judgment or enter into any settlement without the prior written consent
of the indemnifying party, which consent shall not be unreasonably withheld or
delayed, (ii) the indemnifying party will reimburse the indemnified party
promptly and periodically for the costs of defending against the Tax Claim
(including reasonable attorney's fees and expenses), and (iii) the indemnifying
party will remain responsible for any adverse consequences the indemnified party
may suffer resulting from, arising out of, relating to, or caused by the Tax
Claim. Notwithstanding the foregoing, the U.S. Sellers or Xxxxxxx shall control,
at their sole expense, all proceedings relating to Income Taxes of the U.S.
Sellers. Each of the indemnified party and the indemnifying party and their
respective affiliates shall cooperate in contesting any Tax Claim (with
reimbursement by the indemnifying party of reasonable out-of-pocket expenses
(but not compensation payments to or with respect to employees) of any
indemnified party incurred in connection therewith), which cooperation shall
include the retention and the provision of records and information that are
reasonably relevant to the Tax Claim, and making employees available on a
mutually convenient basis to provide additional information or explanation of
any material provided hereunder or to testify at proceedings relating to the Tax
Claim.
Except as set forth above, in no case shall the indemnified party or the
indemnifying party or their respective affiliates admit any liability with
respect to, or settle, compromise, or discharge, any Tax Claim without prior
written consent of the other party, which shall not be unreasonably withheld or
delayed; provided, that Sellers or Xxxxxxx may admit liability with respect to,
or settle or compromise, any Tax Claim relating to Income Taxes of the U.S.
Sellers without the consent of Buyer.
If a Tax Claim includes Taxes for a Straddle Period, Sellers (if the
claims for Taxes for which Sellers can reasonably be expected to be liable
exceeds the claim for which Buyer can be expected to be liable) or otherwise
Buyer (Sellers, on the one hand, or Buyer, on the other hand, the "Controlling
Party") shall be entitled to conduct the defense of said Tax Claim. In such
case, the other party (the "Non-Controlling Party") shall be entitled to
participate fully (at its expense) in the conduct of such Tax Claim and the
Controlling Party shall not settle such Tax Claim without the consent of such
Non-Controlling Party (which consent shall not be unreasonably withheld, taking
into account for this purpose any precedential custom or practice that may be
established).
10.08 PROCEDURES FOR INDEMNIFICATION--OTHER CLAIMS. A claim for
indemnification for any matter not involving a Third Party Claim or a Tax Claim
may be asserted by notice to the party from whom indemnification is sought.
10.09 NO EFFECT ON OTHER AGREEMENTS. Nothing in this Article X shall be
deemed to limit any party's rights or obligations under the Note Purchase
Agreement, the Buyer Note, the Guaranties, the Transition Services Agreement,
the Supply Agreement, the Baking Mix
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Agreement, the Co-Pack Agreement, the Grant-Back Technology License Agreement,
the Patent License Agreement or the Trademark License Agreement.
ARTICLE XI
TERMINATION
11.01 GROUNDS FOR TERMINATION. Anything contained herein to the contrary
notwithstanding, this Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing Date:
(a) by mutual written consent of Sellers and the Buyer Entities;
(b) by Sellers if any of the conditions set forth in Section 7.02 hereof
shall have become incapable of fulfillment, and shall not have been waived in
writing by Sellers;
(c) by the Buyer Entities if any of the conditions set forth in Section
7.01 hereof shall have become incapable of fulfillment, and shall not have been
waived in writing by Buyer; or
(d) by any party hereto, if the Closing does not occur on or prior to the
date that is 35 days after the date on which the filings under the HSR Act were
made or were required to be made in accordance with Section 6.06;
provided, however, that the party or parties seeking termination pursuant to
clause (b), (c) or (d) is not in breach in any material respect of any of its or
their representations, warranties, covenants or agreements contained in this
Agreement.
11.02 PROCEDURE FOR TERMINATION. In the event of termination by Sellers,
the Buyer Entities or any of them (as applicable) pursuant to this Article XI,
written notice thereof shall forthwith be given to the other party or parties
(as applicable) and the transactions contemplated by this Agreement shall be
terminated, without further action by any party. If the transactions
contemplated by this Agreement are terminated as provided herein:
(a) The Buyer Entities shall return to Sellers all documents and other
material received from or on behalf of Sellers relating to the transactions
contemplated hereby, whether so obtained before or after the execution hereof;
and
(b) all information received by the Buyer Entities shall be treated in
accordance with the Confidentiality Agreement, which shall remain in full force
and effect in accordance with the terms thereof notwithstanding the termination
of this Agreement.
11.03 CONSEQUENCES OF TERMINATION. If this Agreement is terminated and the
transactions contemplated hereby are abandoned as described in this Article XI,
this Agreement shall become void and of no further force and effect, except for
the provisions of (i) the third sentence of Section 5.02(a) hereof relating to a
prohibition on trading in the capital stock of Xxxxxxx, (ii) Section 12.04
hereof relating to certain expenses, (iii) Section 6.04 hereof relating to
publicity, (iv) Sections 4.01(ee) and 5.01(e) hereof relating to finder's fees
and broker's fees
65
and (v) this Article XI. Nothing in this Article XI shall be deemed to release
any party from any liability for any willful and material pre-termination breach
by such party of the terms and provisions of this Agreement, but in the event of
termination, all other liabilities otherwise arising under this Agreement shall
be released.
11.04 SURVIVAL OF CERTAIN INDEMNIFICATION OBLIGATIONS. Notwithstanding any
other provision of this Agreement, if the Buyer Entities have elected the
Lockport Option in accordance with Section 6.18(a) and this Agreement is
subsequently terminated and the transactions contemplated hereby are abandoned
as described in this Article XI:
(a) if this Agreement is terminated (x) by any of the Buyer Entities for
any reason other than failure to satisfy the conditions in Section 7.01, or (y)
by Xxxxxxx or any Seller due to the failure to satisfy the conditions in Section
7.02(a), (e), (f), (h) or (j), the Buyer Entities, jointly and severally, shall
indemnify each Seller and each such Seller's affiliates against and hold them
harmless from any liability, claim, damage or expense (including reasonable
legal fees and expenses) suffered or incurred by any such indemnified party
("Closing Expenses") arising from or related to (i) severance pay obligations to
all persons employed at the Lockport Plant whose employment is terminated by
Sellers in accordance with the Buyer Entities' election of the Lockport Option,
or (ii) obligations incurred by Sellers in connection with the matters described
in Section 6.18(b);
(b) if this Agreement is terminated for failure to satisfy the conditions
in Section 7.01(a), (g), (h), (j) or (k), the Buyer Entities, jointly and
severally, shall indemnify each Seller and each such Seller's affiliates against
and hold them harmless from any Closing Expenses arising from or related to any
obligation committed to by Sellers in connection with the matters described in
Section 6.18(b) prior to termination except to the extent such Closing Expenses
are attributable to the negligent action or omission or willful misconduct on
the part of any Seller in connection with such matters; or
(c) if this Agreement is terminated for failure to satisfy the conditions
in Section 7.01 (other than Section 7.01(a), (g), (h), (j) or (k), which are
covered by Section 11.04(b)) or Section 7.02 (other than Section 7.02(a), (e),
(f), (h) or (j), which are covered by Section 11.04(a)), the Buyer Entities,
jointly and severally, shall indemnify each Seller and each such Seller's
affiliates against and hold them harmless from one-half (1/2) of any Closing
Expenses arising from or related to (i) severance pay obligations to all persons
employed at the Lockport Plant whose employment is terminated by Sellers in
accordance with the Buyer Entities' election of the Lockport Option, or (ii)
obligations committed to by Sellers in connection with the matters described in
Section 6.18(b) prior to termination except to the extent such Closing Expenses
incurred in connection with Section 6.18(b) are attributable to the negligent
action or omission or willful misconduct on the part of any Seller;
provided, that all such indemnification obligations described in this Section
11.04 in connection with the matters described in Section 6.18(b) are in all
events limited by the provisions contained in Exhibit 2.04(g)(i).
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ARTICLE XII
MISCELLANEOUS
12.01 ASSIGNMENT. This Agreement and the rights hereunder shall not be
assignable or transferable (including by operation of law in connection with a
merger or otherwise) by any party without the prior written consent of each
other party hereto, except that Buyer may, without the consent of any other
party, assign all or any part of this Agreement (a) to a wholly-owned subsidiary
of Buyer, (b) to one or more affiliates of Buyer, or (c) Buyer's lenders as
collateral security (whether prior or subsequent to the Closing); provided, that
no such assignment shall relieve Buyer from any, and Buyer shall continue to be
liable and responsible for the performance of all, obligations under this
Agreement, and Buyer shall remain as fully liable hereunder as though no
assignment had been made.
12.02 NO THIRD-PARTY BENEFICIARIES. Except as expressly provided in
Article X and Section 11.04 with respect to affiliates of Buyer and Sellers (as
applicable), this Agreement (including Article VIII) is for the sole benefit of
the parties hereto and their successors and permitted assigns and nothing herein
expressed or implied shall give or be construed to give to any person or entity,
other than the parties hereto and such successors and assigns, any legal or
equitable rights hereunder.
12.03 SURVIVAL OF REPRESENTATIONS. Except as hereinafter provided in this
Section 12.03, the representations and warranties in this Agreement and in any
certificate delivered pursuant hereto shall survive the Closing solely for
purposes of Article X of this Agreement and shall terminate at the close of
business eighteen (18) months following the Closing Date. The representations
and warranties in Sections 4.01(a), 4.01(c), 4.01(d), 4.01(i), 4.01(k), 4.01(r)
and Section 4.01(ee), the first sentence of Section 4.01(b), the fourth sentence
of Section 4.01(l) and Sections 5.01(a) and 5.01(e) shall terminate sixty (60)
days after expiration of the applicable statute of limitations. The
representations and warranties in Section 4.01(j) shall terminate sixty (60)
days after the last day on which any Canadian taxation authority may issue a
notice of assessment or reassessment for the taxation year of the Companies to
which the representations or warranties relate. The representations and
warranties in Section 4.01(u) shall terminate at the close of business six years
following the Closing Date.
12.04 EXPENSES. Whether or not the transactions contemplated hereby are
consummated, and except as otherwise expressly provided in this Agreement, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
or expenses.
12.05 AMENDMENTS AND WAIVER. No amendment to this Agreement shall be
effective unless it shall be in writing and signed by all parties hereto. No
waiver by any party of any term or condition of this Agreement, in any one or
more instances, shall be deemed to be or construed as a waiver of the same or
any other term or condition of this Agreement on any future occasion. A waiver
of any term or condition of this Agreement must be in writing and signed by the
waiving party.
67
12.06 NOTICES. All notices or other communications required or permitted
to be given hereunder shall be in writing and shall be delivered by hand, or
sent by facsimile, or sent, postage prepaid, by United States registered,
certified or express mail, or by reputable overnight courier service, and shall
be deemed given, if delivered by hand, when so delivered, or if sent by
facsimile, when received, or, if sent by mail, three business days after mailing
(two business days in the case of express mail), or, if sent by overnight
courier service, one business day after delivery to such service, as follows:
(i) if to the Buyer Entities (or any of them), to:
Value Creation Partners Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxx, Xxxx 00000
Attention: G. Xxxxx Xxxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Benesch, Friedlander, Xxxxxx & Xxxxxxx LLP
0000 XX Xxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xxxxx X. Xxxx, Esq.
Facsimile No.: (000) 000-0000
(ii) if to Xxxxxxx or Sellers (or any of them), to:
International Multifoods Corporation
c/o The X. X. Xxxxxxx Company
Xxx Xxxxxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000-0000
Attention: General Counsel
Facsimile No.: (000) 000-0000
with a copy to:
Faegre & Xxxxxx LLP
2200 Xxxxx Fargo Center
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx Xxxx
Facsimile No.: (000) 000-0000
68
Any party hereto may change the address to which notices and other
communications are to be delivered or sent by giving the other party or parties
(as applicable) notice in the manner herein set forth.
12.07 COUNTERPARTS. This Agreement may be executed by facsimile and in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when counterparts have been signed by each of the parties
and delivered to each other party.
12.08 ENTIRE AGREEMENT. This Agreement (including the Disclosure Schedule
and the Exhibits attached hereto) and the Confidentiality Agreement contain the
entire agreement and understanding among the parties hereto with respect to the
subject matter hereof and supersede all prior oral or written agreements and
understandings relating to such subject matter.
12.09 SEVERABILITY. If any provision of this Agreement or the application
of any such provision to any person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent jurisdiction,
such invalidity, illegality or unenforceability shall not affect any other
provision hereof.
12.10 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota, without regard to
conflicts-of-law principles.
12.11 EQUITABLE REMEDIES. The parties agree that money damages or other
remedy at law would not be a sufficient or adequate remedy for any breach or
violation of, or default under, this Agreement by them and that in addition to
all other remedies available to them, each of them shall be entitled, to the
fullest extent permitted by law, to an injunction restraining such breach,
violation, or default or threatened breach, violation, or default and to any
other equitable relief, including specific performance, without bond or other
security being required.
12.12 INTERPRETATION. In this Agreement, the Disclosure Schedule, and any
Exhibits attached hereto:
(a) words denoting the singular include the plural and vice versa and
words denoting any gender include all genders;
(b) "including" and "includes" shall be deemed to be followed by the words
"without limitation";
(c) "affiliate" has the meaning set forth in Rule 12b-2 of the General
Rules and Regulations under the Securities Exchange Act of 1934, as amended;
(d) "business day" means any day other than a Saturday, Sunday, or a day
that is a statutory holiday under the laws of the United States or the State of
Minnesota;
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended;
69
(f) "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, including, without limitation, the rules and regulations promulgated
thereunder;
(g) "person" means an individual, partnership, joint venture, corporation,
limited liability company, trust, unincorporated organization, government, or
governmental department or agency or other entity;
(h) "knowledge" as to a party means the actual knowledge of any executive
officer of the party, except that as to Sellers, "knowledge" means the knowledge
of Xxxx Xxxx, Xxxx Xxxxxxxx, Xxxxxx Xxxxxx, Xxxxx Xxxxx, Xxx XxXxxxx and Xxxxxxx
Xxxxxx after reasonable diligence under the circumstances.
(i) (A) "domestic" or "federal" means relating to the United States of
America; provided, that as applied to Xxxxx Xxxx or the Companies, "domestic" or
"federal" means relating to Canada, and (B) "foreign" means relating to any
jurisdiction other than the United States of America or any subdivision thereof;
provided, that as applied to Xxxxx Xxxx or the Companies, "foreign" means
relating to any jurisdiction other than Canada or any subdivision thereof;
(j) the use of headings is for convenience of reference only and shall not
affect the meaning or interpretation of this Agreement, the Disclosure Schedule,
or any Exhibits attached hereto; and
(k) all monetary amounts are expressed in United States dollars and all
payments shall be made in United States dollars, in each case unless expressly
stated otherwise.
12.13 DISCLOSURE SCHEDULE. The Disclosure Schedule has been arranged in a
manner that corresponds to the Sections of this Agreement; provided, that a
disclosure made in any section of the Disclosure Schedule that is sufficient to
reasonably inform Buyer of information required to be disclosed in another
section of the Disclosure Schedule to avoid a misrepresentation under a Section
of this Agreement shall be deemed, for all purposes of this Agreement, to have
been made under such other section of the Disclosure Schedule. However, the mere
listing in the Disclosure Schedule of a document or other item shall not be
deemed adequate to disclose an exception to a representation or warranty made in
this Agreement (unless the representation or warranty has to do with the
existence of the document or other item itself or the mere listing of the
document or item in the Disclosure Schedule otherwise reasonably informs Buyer
of an exception to the representation or warranty). Matters reflected in the
Disclosure Schedule are not necessarily limited to matters required by this
Agreement to be reflected in the Disclosure Schedule. Such additional matters
are set forth for informational purposes and do not necessarily include other
matters of a similar nature.
[Remainder of page left blank intentionally; signature pages follow]
70
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
INTERNATIONAL MULTIFOODS CORPORATION (IMC)
By: /s/ X. X. Xxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President, Co-Chief Executive Officer and
Chief Financial Officer
MULTIFOODS BRANDS, INC.
(MBI)
By: /s/ X. X. Xxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President, Co-Chief Executive Officer and
Chief Financial Officer
FANTASIA CONFECTIONS, INC.
(FCI)
By: /s/ X. X. Xxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President, Co-Chief Executive Officer and
Chief Financial Officer
XXXXX XXXX MULTIFOODS CORPORATION
(Xxxxx Xxxx)
By: /s/ X. X. Xxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
THE X. X. XXXXXXX COMPANY
(Xxxxxxx)
By: /s/ X. X. Xxxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President, Co-Chief Executive Officer and
Chief Financial Officer
S-1
IMCB CORP.
(BUYER)
By: /s/ G. Xxxxx Xxxxxxxx
------------------------------------
Name: G. Xxxxx Xxxxxxxx
Title: President and CEO
VALUE CREATION PARTNERS INC.
(VCP)
By: /s/ Xxxxx X. Xxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: EVP
BEST BRANDS CORP.
(BBC)
By: /s/ G. Xxxxx Xxxxxxxx
------------------------------------
Name: G. Xxxxx Xxxxxxxx
Title: President and CEO
S-2
