EXHIBIT 4.17
ASSET PURCHASE AGREEMENT
by and among
IFCO SYSTEMS NORTH AMERICA, INC.,
CERTAIN OF ITS WHOLLY OWNED SUBSIDIARIES,
and
PALLETONE, INC.
WHITE OAK CAPITAL PARTNERS, L.P.
d/b/a THE WHITE OAK COMPANY
Dated as of September 6, 2001
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made as of
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September 6, 2001, by and among PalletOne, Inc., a Delaware corporation
("PalletOne"), White Oak Capital Partners, L.P., a Texas limited partnership
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doing business as The White Oak Company ("White Oak"), IFCO Systems North
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America, Inc., a Delaware corporation ("IFCO NA"), and the wholly owned
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subsidiaries of IFCO NA whose names appear on the signature pages of this
Agreement (the "Subsidiaries"). PalletOne and White Oak are collectively
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referred to herein as "Buyer." The Subsidiaries, together with IFCO NA, are
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collectively referred to herein as "Seller."
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WHEREAS, the Subsidiaries are in the business of manufacturing and
marketing new pallets, recycling pallets (only conducted by certain
Subsidiaries) and conducting lumber milling operations; and
WHEREAS, Seller desires to sell to Buyer the assets owned by Seller and
used exclusively in the operation of the Business (as defined herein), and Buyer
desires to purchase such assets and assume certain liabilities of Seller, upon
the terms and conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements, representations, warranties, provisions and covenants contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each party hereto, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Capitalized terms used in this Agreement shall
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have the following meanings:
"Affiliate" of, or "Affiliated" with, a specified person or entity
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means a person or entity that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
the specified person or entity, as result of equity ownership or the contractual
right to control the board of directors (or if the entity is not a corporation,
the equivalent governing body).
"Agreement" has the meaning set forth in the first paragraph of this
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Agreement.
"Assets" has the meaning set forth in Section 2.1.
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"Assumed Liabilities" has the meaning set forth in Section 2.3.
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"Business" means the manufacture and distribution of new wooden
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pallets, the recycling of wooden pallets, including used pallet retrieval,
repair, remanufacture, and secondary marketing, lumber milling operations, and
the processing and marketing of various wood-based by-products derived from
pallet recycling operations, in each case to the extent such operations are
currently conducted by the Subsidiaries at the Facilities, and any other
activities currently conducted by the Subsidiaries at the Facilities.
"Closing" has the meaning set forth in Section 2.9.
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"Closing Date" has the meaning set forth in Section 2.9.
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"Code" has the meaning set forth in Section 2.2(g).
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"Competitive Business of Buyer" means the business of manufacturing,
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marketing, and distributing pallets constructed of new lumber, and selling new
lumber.
"Competitive Business of Seller" means, collectively, the businesses of
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(a) manufacturing, recycling, repairing, remanufacturing shipping crates, (b)
leasing, cleaning and recycling reusable plastic shipping containers, (c) sales
of new steel and plastic drums and industrial bulk containers, (d)
reconditioning and recycling steel and plastic drums and industrial bulk
containers, (e) recycling, repairing, remanufacturing pallets, using used and/or
new components, (f) used pallet retrieval, sales and distribution, (g) back dock
management services, (h) pallet handling services, (i) sales of new, used,
recycled and/or remanufactured pallets to National or Regional Accounts,
directly or through brokered third party transactions, (j) marketing,
transportation, management and/or distribution services relating to any of the
foregoing, and (k) logistics and/or tracking systems or services relating to any
of the foregoing.
"Contracts" has the meaning set forth in Section 2.1(c).
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"Core Retrieval Facilities" means the Facilities in Butner, North
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Carolina, Mocksville, North Carolina, Xxxxx City, North Carolina, New London,
Wisconsin and Waterloo, Wisconsin.
"DOJ" means the United States Department of Justice.
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"Encumbrances" means all liens, encumbrances, mortgages, pledges,
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security interests, conditional sales agreements, charges, options, rights of
first refusal, reservations, restrictions or other encumbrances or defects in
title.
"Environmental Liabilities" means any cost, damages, expense,
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liability, obligation, or other responsibility (including investigative,
consulting and attorney fees and expenses) arising from or under Environmental
Laws and consisting of or relating to:
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(a) any environmental matters or conditions (including on-site
or off-site contamination, personal injury, property damage or
nuisance, and regulation of chemical substances, wastes or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and
response, investigative, remedial, or inspection costs and expenses
arising under Environmental Law;
(c) financial responsibility under Environmental Laws for
cleanup costs or corrective action, including any investigation,
cleanup, removal, containment, or other remediation or response actions
("Cleanup") required by applicable Environmental Laws (whether or not
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such Cleanup has been required or requested by any Governmental
Authority or any other Person) and for any natural resource damages;
(d) any other compliance, corrective, investigative, or
remedial measures required under Environmental Laws; or
(e) any bodily injury (including illness, disability, and
death, and regardless of when any such bodily injury occurred, was
incurred, or manifested itself), personal injury, property damage
(including trespass, nuisance, wrongful eviction, and deprivation of
the use of real property), or other damage of or to any Person,
including any employee or former employee of Seller or any other Person
for whose conduct Seller or may be held responsible, in any way arising
from or allegedly arising from any Hazardous Activity conducted or
allegedly conducted with respect to the Facilities or the operation of
the Business prior to the Closing Date, or from any Hazardous Substance
that was (i) present or suspected to be present on or before the
Closing Date on or at the Facilities or any other property in which
Seller had an interest (or present or suspected to be present on any
other property, if such Hazardous Substance emanated or allegedly
emanated from any of the Facilities or any other property in which
Seller had an interest and was present or suspected to be present on
any of the Facilities or any other property in which Seller had an
interest on or prior to the Closing Date) or (ii) released or allegedly
released into the environment by Seller or any other Person for whose
conduct Seller is or may be held responsible, at any time on or prior
to the Closing Date.
The terms "removal," "remedial," and "response action,"
include the types of activities covered by or defined in the United States
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
(S) 9601 et seq., as amended ("CERCLA").
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"Environmental Laws" means any Law or agreement with any Governmental
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Authority relating to (a) the protection, preservation or restoration of the
environment (including, without limitation, air, water vapor, surface water,
groundwater, drinking water supply, surface land, subsurface land, plant and
animal life or any other natural resource) or to human health or safety or
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(b) the exposure to, or the use, storage, recycling, treatment, generation,
transportation, processing, handling, labeling, production, release or disposal
of any substance, in each case as amended and as in effect on the Closing Date.
The term "Environmental Law" includes, without limitation, (i) CERCLA, the
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Superfund Amendments and Reauthorization Act, the Federal Water Pollution
Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the
Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous
and Solid Waste Amendments thereto), the Federal Solid Waste Disposal Act, the
Federal Toxic Substances Control Act, the Federal Insecticide Fungicide and
Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, each as
amended and as in effect on the Closing Date, and (ii) any common law or
equitable doctrine (including, without limitation, injunctive relief and tort
doctrines such as negligence, nuisance, trespass and strict liability) that may
impose liability or obligations for injuries or damages due to, or threatened as
a result of, the presence of, effects of or exposure to any substance.
"Equipment" has the meaning set forth in Section 2.1(e).
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"Equipment Leases" means all leases, installment sale contracts or the
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like, for Equipment.
"ERISA" has the meaning set forth in Section 2.2(g).
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"ERISA Affiliate" has the meaning set forth in Section 2.2(f).
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"Excluded Assets" has the meaning set forth in Section 2.2.
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"Facility" or "Facilities" means the facility or facilities (as the
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context requires) owned or leased by Seller located at the addresses set forth
on Schedule 3.4(a) and Schedule 3.4(b).
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"Financial Statements" has the meaning set forth in Section 3.3.
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"Fixtures and Improvements" means all estates, rights, titles and
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interests of Seller in and to all plants, factories, warehouses, storage
facilities, laboratories, buildings, works, structures, fixtures, signage,
landings, construction in progress, improvements, betterments, installations and
additions constructed, erected or located on or attached or affixed to the Real
Property.
"GAAP" means United States generally accepted accounting principles
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applied on a basis consistent with preceding years and throughout the periods
involved.
"Governmental Authority" means any federal, state or local government
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or governmental authority, agency, board, bureau or commission having
jurisdiction over the Business.
"Hazardous Activity" means the distribution, generation, handling,
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importing, management, manufacturing, processing, production, refinement,
release, storage, transfer, transportation, treatment, disposal or use
(including any withdrawal or other use of groundwater) of Hazardous
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Substances or equipment containing Hazardous Substances in, on, under, about, or
from the Facilities or any part thereof into the environment.
"Hazardous Substances" means any pollutants, toxic substances,
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hazardous wastes or hazardous substances defined in or regulated under any
applicable Environmental Law, including, without limitation, asbestos or
asbestos containing material, and polychlorinated biphenyls.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Anti-Trust Improvements Act of
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1976, as amended.
"IFCO" means IFCO Systems N.V., a public limited liability company
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incorporated under the laws of the Netherlands and the ultimate parent
corporation of Seller.
"IFCO NA" means IFCO Systems North America, Inc., a Delaware
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corporation and the parent corporation of the Subsidiaries.
"Indemnified Party" has the meaning set forth in Section 9.3.
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"Indemnifying Party" has the meaning set forth in Section 9.3.
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"Inventory" means all inventories located at the Facilities or held by
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any third party for delivery to the Facilities, including raw materials,
supplies, spare parts, finished goods, and goods in process of any Subsidiary
and relating exclusively to the Business.
"Knowledge" means the following: Seller will be deemed to have
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"knowledge" of a fact or other matter only if any of the following persons has
or had actual awareness of such fact or other matter: Xxx Xxxxxxx, Ed Xxxxx,
Xxxxxxx Nimtsch, Xxxxx Xxxxx or Xxx Xxxxxxx.
"Law" means any applicable federal, state, local or foreign statute,
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law, ordinance, code, regulation or rules of common law now in effect, use or
occupancy restriction or limitation, covenant of record, or zoning or building
law, code or ordinance.
"Leases" means the real property leases and subleases for the
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Facilities.
"Loss" or "Losses" means all liabilities, losses, claims, damages,
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actions, suits, proceedings, demands, assessments, adjustments, fees, costs and
expenses (including reasonable attorneys' fees).
"Material Contracts" has the meaning set forth in Section 3.5(c).
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"National and Regional Account" or "National or Regional Account" means
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those accounts requiring service and/or supply at multiple locations nationally
or regionally, and that Seller is marketing in good faith as a national or
regional single-sourced account.
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"Nonpayment Notice" has the meaning set forth in Section 10.5.2(b).
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"Owned Real Property" has the meaning set forth in Section 3.4(a).
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"Party" or "Parties" means either Buyer or Seller or both of them, as
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the context requires.
"Permits" has the meaning set forth in Section 3.6.
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"Permitted Encumbrances" means (i) Encumbrances brought about solely as
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a result of the Assumed Liabilities, (ii) Encumbrances for Taxes not yet due and
payable, (iii) Encumbrances arising or imposed by Law in the ordinary course of
business (including Encumbrances for obligations not yet due to laborers,
materialmen and the like) that do not detract from the value of the Assets or
interfere with Seller's use thereof in the operation of the Business, (iv) all
leases for real or personal property constituting a part of the Assets, and (v)
all exceptions to title set forth in the final policies of title insurance
contemplated by Section 7.2(q); provided, however, that Permitted Encumbrances
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shall not include any liens in connection with funded indebtedness from a
syndicate of banks led by Bank One, N.A.
"Person" means any individual, corporation (including any non-profit
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corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Authority.
"Plan" has the meaning set forth in Section 2.2(f).
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"Purchase Price" has the meaning set forth in Section 2.5.
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"Real Property" has the meaning set forth in Section 2.1(d).
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"Recycling Facilities" means the Facilities located in the following
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cities:
x. Xxxxxx, North Carolina,
x. Xxxxx City, North Carolina,
c. Mocksville, North Carolina,
d. New London, Wisconsin, and
e. Waterloo, Wisconsin.
"Released Employees" has the meaning set forth in Section 7.2(r).
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"Schedules" means the disclosure schedules referenced herein and
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attached to and made part of this Agreement, as amended from time to time
pursuant to the terms hereof.
"Seller Commission" has the meaning set forth in Section 10.5.1.
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"Taxes" means all taxes, charges, fees, levies or other assessments
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including, without limitation, income, gross receipts, excise, property, sales,
withholding, social security, unemployment, occupation, use, service, license,
payroll, franchise, transfer and recording taxes, fees and charges, imposed by
any Governmental Authority, plus any interest, fines, penalties or additional
amounts attributable thereto.
"Third Person" has the meaning set forth in Section 9.3.
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"Transferred Employees" has the meaning set forth in Section 6.1.
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"Transferred Real Estate" has the meaning set forth in Section 5.10.
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"Vehicles" has the meaning set forth in Section 2.1(p).
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"WARN Act" means the Worker Adjustment and Retraining Notification Act
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of 1988.
1.2 Interpretation. For all purposes of this Agreement, except as
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otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in Section 1.1 and elsewhere in this Agreement
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include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the
meanings ascribed to them in accordance with GAAP; and
(c) the words "herein," "hereof," and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision.
ARTICLE 2
THE PLAN OF ACQUISITION
2.1 The Acquisition of the Assets. Upon the terms and subject to the
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conditions of this Agreement, at the Closing, the Subsidiaries will sell,
convey, transfer, assign and deliver to Buyer, and Buyer will purchase from the
Subsidiaries free and clear of all Encumbrances (other than Permitted
Encumbrances), the following assets (collectively, the "Assets"):
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(a) all of Seller's accounts and notes receivable to the extent
relating exclusively to the Business;
(b) the Inventory;
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(c) the right, title and interest of the Subsidiaries in the
contracts and agreements exclusively in respect of the Business
(the "Contracts");
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(d) fee or leasehold title to all real property, owned or leased by
any Subsidiary and used exclusively in the Business, together
with all improvements, buildings and fixtures located thereon or
therein and all rights and appurtenances pertaining thereto
(collectively, the "Real Property");
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(e) the furniture, fixtures, office equipment, equipment and
machinery (other than Vehicles) used exclusively in the Business
(the "Equipment");
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(f) all of the books, records, papers and instruments located at the
Facilities, and electronic copies of financial, accounting, and
personnel information exclusively relating to the Facilities
which are currently located at IFCO NA's headquarters in Houston,
Texas;
(g) [Intentionally omitted.]
(h) customer lists and sales contacts to the extent relating
exclusively to the Business;
(i) [Intentionally omitted.]
(j) (X) all computer hardware, equipment and software owned, leased
or licensed (i) by or to any Subsidiary and used exclusively in
the Business, (ii) by or to Seller and used exclusively in the
Business or (iii) otherwise listed on Schedule 2.1(j), and (Y),
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all computer printouts, databases and related items relating
exclusively to the Business;
(k) all telephone numbers and fax numbers utilized exclusively in the
Business;
(l) all leases of every kind relating to the Assets located at the
Facilities or relating exclusively to the Business, including,
but not limited to, leases for office equipment, machinery,
automobiles, tractors, trailers, forklifts and loaders but
specifically excluding all Master Lease Agreements (that is, a
lease agreement where Vehicles are leased by IFCO NA and then
subleased or used by one of the Subsidiaries) to the extent
relating to any of the foregoing that are not used exclusively in
the Business;
(m) [Intentionally omitted.]
(n) all deposits with third parties to the extent relating to the
Assets, the Facilities or the Business;
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(o) all of Seller's right, title and interest in and to the following
names (and all variations thereof), all trademarks and logos
related thereto, and all stationary, forms, labels, brochures,
advertising materials and similar items bearing any of the
foregoing:
Ridge Pallets
Sheffield Lumber and Pallet
Xxxxxxxx Xxxxx
New London Pallet
Southern Pallet
Shipshewana Pallet
Xxxxxxx Pallet
Xxxxxxxx Lumber
Such names (and all variations thereof) are referred to as the
"Transferred Business Names."
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(p) all vehicles and rolling stock used exclusively in the Business
(including, without limitation, tractors, trailers, forklifts and
loaders) (collectively, the "Vehicles"); and
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(q) all of the assets and properties, tangible and intangible, real,
personal or mixed, of and pertaining to and used exclusively in
the Business, wherever located, whether known or unknown, and
whether or not on the books and records of the Business,
including by way of example but not of limitation: (A) all of the
assets and properties included in the Financial Statements
(subject to changes in the ordinary course of business since the
date of the latest of the Financial Statements); (B) all of
Seller's right, title and interest under all outstanding
contracts, agreements, licenses, leases and similar documents
pertaining exclusively to the Assets located at the Facilities or
relating exclusively to the Business; and (C) all of Seller's
trademarks, trade names, patents, copyrights, know-how, trade
secrets and applications related exclusively to the Business and
all of Seller's other proprietary and intangible rights relating
to and used exclusively in the Business, and the business and
goodwill of the Business as a going concern.
2.2 Excluded Assets. It is expressly understood and agreed that the
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Assets shall not include, Buyer shall not purchase and Seller shall not sell or
transfer to Buyer, the following assets of Seller (collectively, the "Excluded
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Assets"):
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(a) cash and cash equivalents;
(b) the names "Palex," "IFCO" and "IFCO Systems" and all variations
thereof, all trademarks and logos related thereto and all
stationery, forms, labels, brochures, advertising materials and
similar items bearing any of the foregoing;
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(c) all commitments, contracts, leases, capital leases, notes and
agreements between the Subsidiaries (on the one hand) and IFCO NA
and its Affiliates other than the Subsidiaries (on the other
hand), other than with respect to purchases or sales of
Inventory;
(d) subject to Section 2.1(j), all computer hardware and software
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owned and licensed by IFCO, IFCO NA or any of their Affiliates
(other than the Subsidiaries), except for such computer hardware
and software used exclusively in the Business;
(e) any and all assets of IFCO NA located anywhere other than at the
Facilities and not used exclusively in the Business;
(f) any assets relating to any "employee benefit plan" (as defined in
section 3(3) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA")), cafeteria plan, flexible spending
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arrangement, sick leave and vacation policy, bonus, stock option,
stock purchase, restricted stock, incentive compensation,
deferred compensation, severance, medical, life, disability or
other welfare benefit plan, or any other benefit plans, programs,
agreements, policies, or arrangements and all employment
termination, severance, or other employment contracts or
employment agreements, whether written or oral, sponsored,
established, maintained or contributed to or required to be
contributed to currently, or at any time within the six (6) year
period preceding the date of this Agreement, by Seller or any
trade or business (whether or not incorporated) which is or at
any time within the six (6) year period preceding the date of
this Agreement would have been treated as a "single employer"
with Seller under section 414(b), (c), (m) or (o) of the Internal
Revenue Code of 1986, as amended (the "Code")("ERISA Affiliate")
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for the benefit of any current or former employee and any related
trust or funding medium (the "Plans"), subject to the provisions
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of Article 6; and
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(g) subject to Section 2.1, all assets of Seller and its Affiliates
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that are not used exclusively in the Business.
2.3 Assumption of Liabilities. Subject to the terms and conditions
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set forth herein, at the Closing, Buyer shall assume and agree to timely pay,
honor and discharge the following liabilities, obligations and commitments of
Seller (which are collectively referred to as the "Assumed Liabilities"):
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(a) All trade payables of the Subsidiaries arising in the ordinary
course of business;
(b) Seller's obligations under Contracts entered into in the ordinary
course of business;
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(c) Seller's obligations under Contracts entered into outside the
ordinary course of business except for (i) Contracts with IFCO or
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its Affiliates, (ii) employment agreements or similar agreements
for services, (iii) agreements providing for employee benefits or
other benefits contemplated by the definition of "Plans" in
Section 2.2(f), (iv) Contracts entered into at the direction of
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IFCO or IFCO NA, and (v) loan agreements and related agreements
for money borrowed by IFCO or IFCO NA (including but not limited
to the loan by a bank syndicate led by Bank One, N.A. and IFCO's
Senior Subordinated Notes);
(d) Leases and subleases for the Real Property set forth on Schedule
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2.3(c);
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(e) Leases for personal property relating exclusively to the
Business;
(f) Leases for the Vehicles; and
(g) That certain Promissory Note for $176,502.58 payable by Xxxxxxxx
Lumber Co. to General Electric Capital Corporation, and that
certain Master Security Agreement dated June 29, 2000, by and
between General Electric Capital Corporation, as the secured
party, and Xxxxxxxx Lumber Co., as the Debtor.
provided, however, that such assumption of liabilities as set forth in
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subparagraphs (b), (c) (d) and (e) above shall be only to the extent to be
performed, paid or discharged after the Closing Date, Buyer not assuming (and
not being responsible for) any obligation of Seller under such agreements due or
accruing prior to the Closing Date. Each respective Seller shall be responsible
for paying, performing and discharging all of its liabilities and obligations
other than the Assumed Liabilities.
2.4 Excluded Liabilities. All debts, claims, commitments, liabilities
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and obligations of Seller which are not Assumed Liabilities are "Excluded
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Liabilities." Excluded Liabilities include, but are not limited to, the
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following:
(a) all liabilities for Taxes, including penalties and interest, in
respect of periods prior to the Closing Date;
(b) indebtedness for borrowed money relating to the conduct of the
Business for all periods prior to the Closing Date;
(c) all claims, liabilities and obligations relating to the Excluded
Assets;
(d) payroll obligations (including withholding tax obligations) of
Seller in respect of periods prior to the Closing Date;
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(e) subject to Sections 6.1, 6.3(a) and 6.4(a) with respect to
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accrued vacation, all liabilities, claims, damages, and
obligations of Seller to any current employees or former
employees of Seller arising out of their employment with the
Seller;
(f) defective performance or defaults under any of the Contracts in
respect of periods before the Closing Date other than claims
relating solely to returns of products manufactured or shipped by
Seller prior to the Closing Date and expenses incurred to address
service issues with current customers of the Subsidiaries;
provided, however, that Buyer is not assuming liability for any
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personal injury claims or consequential or exemplary damages
relating to or arising from defective products manufactured, sold
or shipped by Seller prior to the Closing Date, and such shall be
Excluded Liabilities;
(g) any lawsuit, arbitration, audit, hearing, investigation or
litigation against Seller pending prior to the Closing Date;
(h) liabilities and obligations under any Plan;
(i) [Intentionally omitted.]
(j) liabilities and obligations of Seller relating to any violation
or alleged or threatened violation of any Law prior to the
Closing Date;
(k) any Environmental Liabilities, known and unknown, relating to the
operation of the Business prior to Closing;
(l) any claims, liabilities or obligations of Seller that arise out
of the operation of the Business prior to the Closing Date that
are not Assumed Liabilities; and
(m) any liabilities in connection with the fire at the Facility
located in New Boston, Texas, as contemplated by Section 5.22 of
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this Agreement.
2.5 Purchase Price. At the Closing, Buyer shall pay Seller in cash an
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aggregate of $48,250,000, $45,000,000 of which is the purchase price for the
Assets (the "Purchase Price"), and $3,250,000 of which is consideration for the
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agreements set forth in Section 10.1 (the "Non-Compete Payment"). However, in
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order to comply with the bulk sales laws of the various jurisdictions in which
Seller is located or operates, the Purchase Price and the Non-Compete Payment
shall be payable by Buyer directly to the secured creditor(s) of Seller, as
identified by Seller in writing prior to the Closing, by wire transfer in
immediately available funds for credit to the account(s) of Seller.
2.6 Consent of Third Parties. Notwithstanding anything to the
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contrary in this Agreement, this Agreement shall not constitute an agreement to
assign or transfer any Permit, instrument, contract, lease or other agreement or
arrangement or any claim, right or benefit arising thereunder or resulting
therefrom if an assignment or transfer or an attempt to make such an
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assignment or transfer without the consent of the other party or parties thereto
would constitute a breach or violation thereof, and any transfer or assignment
to the Buyer by the Seller of any interest under any such instrument, contract,
lease, license, Permit or other agreement or arrangement that requires the
consent of such third party shall be made subject to such consent or approval
being obtained. Seller shall use its commercially reasonable efforts prior to
the Closing Date to obtain any such consent or approval. In the event any such
consent or approval is not obtained on or prior to the Closing Date, Seller
shall, without additional consideration, continue to use its commercially
reasonable efforts to obtain any such approval or consent after the Closing
Date. Notwithstanding anything contained herein to the contrary, the failure to
obtain such a consent or approval despite otherwise complying with the terms of
this Section 2.6 shall not constitute a breach hereof or a default hereunder.
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2.7 Conveyance Documents.
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(a) At the Closing, Seller shall execute and deliver to Buyer (i) a
completed Xxxx of Sale and Assignment and Assumption Agreement,
in substantially the form attached hereto as Exhibit A (the "Xxxx
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of Sale"), covering all of the Assets and providing for Buyer's
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assumption of the Assumed Liabilities, (ii) a certificate of
title to any Asset covered by a certificate of title, (iii)
special warranty deeds conveying to Buyer fee simple title to the
Owned Real Property, and (iv) such other instruments as shall be
reasonably necessary or appropriate to effect the transfer of the
Assets as contemplated hereby and to otherwise comply with the
purposes and intent of this Agreement.
(b) At the Closing, Buyer shall deliver to Seller (i) the Purchase
Price and Non-Compete Payment, (ii) the Xxxx of Sale duly
executed by Buyer, and (iii) such other documents and instruments
as shall be necessary to effect the assumption of the Assumed
Liabilities and the acquisition of title to the Assets.
2.8 Allocation of Purchase Price. Schedule 2.8 sets forth the
---------------------------- ------------
allocation of the Purchase Price and the Assumed Liabilities (to the extent
included in the sales price for federal income tax purposes) among the Assets.
The Non-Compete Payment shall be allocated as consideration for the
noncompetition agreements set forth in Section 10.1. Buyer and Seller agree that
------------
they shall not take any position or action inconsistent with such allocation in
the filing of any income tax returns.
2.9 Closing. The consummation of the purchase of the Assets and the
-------
other transactions contemplated by this Agreement (the "Closing") shall take
-------
place at the offices of Xxxxxx and Xxxxx, LLP, 000 Xxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx on or before September 25, 2001, or at such other time and date as
Buyer and Seller may mutually agree, which date shall be referred to as the
"Closing Date."
------------
ARTICLE 3
14
REPRESENTATIONS AND WARRANTIES OF SELLER
Each Seller jointly and severally represents and warrants to Buyer as
follows:
3.1 Due Organization and Qualification. Each of IFCO NA and the
----------------------------------
Subsidiaries is an entity duly organized, validly existing and in good standing
under the laws of its jurisdiction of organization or formation, as applicable,
as listed in Schedule 3.1. Each of the Subsidiaries is duly qualified to do
------------
business as a foreign corporation, limited liability company or partnership, as
applicable, under the laws of each state or other jurisdiction in which either
the ownership or use of the Assets, or the nature of the Business, requires
qualification (such jurisdictions are listed on Schedule 3.1). Each of IFCO NA
------------
and the Subsidiaries has the requisite corporate, limited liability company or
partnership power and authority, as applicable, to own, lease and operate the
Assets and to carry on the Business as currently being conducted.
3.2 Authorization; Non-Contravention; Approvals.
-------------------------------------------
(a) Seller has the requisite corporate, limited liability company or
partnership power and authority, as applicable, to enter into this
Agreement and to effect the transactions contemplated hereby. The
execution, delivery and performance of this Agreement have been
approved by all requisite corporate, limited liability company or
partnership action, as applicable, of Seller. This Agreement has been
duly and validly executed and delivered by Seller, and, assuming the
due authorization, execution and delivery hereof by Buyer, constitutes
a valid and binding agreement of Seller, enforceable against Seller in
accordance with its terms, except as that enforceability may be
subject to (i) any applicable bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting or relating to enforcement
of creditors' rights generally and (ii) general equitable principles.
(b) The execution and delivery of this Agreement by Seller does not, and
the consummation by Seller of the transactions contemplated by this
Agreement will not, violate or result in a breach of any provision of,
or constitute a default (or an event which, with notice or lapse of
time or both, would constitute a default) under, (i) the articles or
certificate of incorporation, limited liability company organizational
documents, by-laws or partnership documents, as applicable, of Seller,
(ii) any Law applicable to Seller (other than applicable bulk sales
laws), (iii) any Permit held by Seller necessary for the conduct of
the Business, or (iv) any Material Contract of Seller (other than
consents to assignments set forth on Schedule 3.2(c)).
----------------
(c) Except as set forth on Schedule 3.2(c), Seller is not aware of any
---------------
other consents or approvals of any Governmental Authority that are
necessary for the execution and delivery of this Agreement by Seller
or the consummation by Seller of the transactions contemplated by this
Agreement. Schedule 3.2(c) indicates which
--------------
15
Material Contracts require notice to, or the consent or approval of, a
third party for the execution and delivery of this Agreement by Seller
or the consummation by Seller of the transactions contemplated by this
Agreement.
(d) Except as set forth on Schedule 3.2(d), the execution and delivery of
---------------
this Agreement by Seller does not, and the consummation of the
transactions contemplated hereby will not result in the imposition or
creation of any Encumbrances other than Encumbrances created by Buyer.
3.3 Financial Statements. Seller has delivered to Buyer the following
--------------------
financial statements (collectively, the "Financial Statements"):
--------------------
(a) the unaudited statements of revenue, variable costs, fixed costs and
other income and expense for each Facility for the twelve-month period
ended December 31, 1999 and for the twelve-month period ended December
31, 2000; and
(b) schedules setting forth the balances for the following assets and
liabilities for each Facility as of December 31, 2000: book values of
inventory, accounts receivable, property, plant and equipment, other
assets, trade payables, accrued liabilities and other liabilities for
each Facility.
The Financial Statements fairly present the financial condition and the results
of operations of the Facilities at the respective dates and for the respective
periods referred to in such Financial Statements. The Financial Statements
reflect the consistent application of accounting principles throughout the
periods involved except as disclosed in Schedule 3.3.
------------
3.4 Assets.
------
(a) Schedule 3.4(a) contains a complete and correct list of the Real
---------------
Property owned by Seller and included in the Facilities, setting forth
the complete legal description and address of each parcel of such real
property (the "Owned Real Property").
-------------------
(b) Schedule 3.4(b) contains a complete and correct list of all Leases
---------------
setting forth the address, landlord and tenant for each Lease.
(c) [Intentionally omitted.]
(d) [Intentionally omitted.]
(e) General. Seller has, or as of the Closing will have, good and
-------
marketable title to the Assets, free and clear of Encumbrances (other
than Permitted Encumbrances). The Assets constitute all the assets and
properties that are necessary for the continued
16
conduct of the Business as presently conducted. Since December 31,
2000, Seller has not sold, transferred, leased, distributed or
otherwise disposed of any of the Assets, or agreed to do so, except
for sales or other dispositions made in the ordinary course of
business or as otherwise contemplated or permitted by this Agreement.
(f) Condition of Assets. Except as set forth in Schedule 3.4(f), the
------------------- ---------------
Equipment, the Vehicles, and other tangible personal property
constituting any of the Assets (i) are, to Seller's knowledge, in good
operating condition, order and repair, subject to ordinary wear and
tear, and have been maintained in accordance with the common industry
standards, and (ii) are adequate for the purposes for which they are
now being used and are capable of being used in the Business of Seller
as presently conducted (Buyer acknowledging that certain Equipment and
Vehicles are not currently operating and are in need of repair, but
such Equipment and Vehicles are not a material portion of the total
Equipment or Vehicles being conveyed to Buyer).
(g) Real Property.
-------------
(i) Fee Simple. Except as specifically set forth in Schedule 3.4(g),
---------- ---------------
Seller has, or as of the Closing will have, good, indefeasible
and marketable title in fee simple absolute to the Owned Real
Property and to the Fixtures and Improvements thereon, in each
case free and clear of all Encumbrances (other than Permitted
Encumbrances).
(ii) Ingress and Egress; Eminent Domain. Seller has, and on the
----------------------------------
Closing Date will have, all easements and rights of ingress and
egress necessary for utilities and services and for all
operations of the Business in the manner and to the extent
conducted by it. No portion of the Real Property has been
condemned, taken by right of eminent domain, requisitioned or
otherwise taken by any Governmental Authority; to Seller's
knowledge, no such condemnation, taking by right of eminent
domain, requisition or taking is threatened or contemplated, and
to Seller's knowledge, Seller has not received any notice of any
such action.
(iii) Fixtures and Improvements. None of the Fixtures or Improvements
-------------------------
are in violation of any Law. Each Facility located on the Real
Property currently is served by gas, electricity, telephone,
water, sewage and waste disposal and other utilities adequate to
operate such Facility at its current level of operation, and to
Seller's knowledge, none of the utility companies serving any
such Facility has threatened Seller with any reduction in
service. Such utilities either enter the Real Property through
adjoining public streets or, if they pass through adjoining
private land, do so in accordance with valid, permanent public
or private easements which, following the Closing, will
17
inure to the benefit of Buyer, its successors and assigns. All of
said utilities are installed and operating and all installation
and connection charges have been paid for in full.
(iv) Real Property Taxes. To Seller's knowledge, there are no
-------------------
challenges or appeals pending regarding the amount of the Taxes
on, or the assessed valuation of, the Real Property, and no
special arrangements or agreements exist with any Governmental
Authority with respect thereto. There is no Tax assessment (in
addition to the normal, annual general real estate Tax
assessment) pending or, to Seller's knowledge, threatened with
respect to any portion of the Real Property.
(h) Leased Property. To Seller's knowledge, all real and tangible personal
---------------
property held by Seller under the Leases is held on the date hereof
and will be held on the Closing Date under a valid and binding lease
agreement that is in full force and effect. Except as set forth on
Schedule 3.4(h), Seller is not in default and, to Seller's knowledge,
---------------
no notice of alleged default has been received by Seller under any
such Lease and, to Seller's knowledge, no lessor is in default or
alleged to be in default thereunder.
(i) Inventory. All Inventory, whether or not reflected in the Financial
---------
Statements, consists of a quality and quantity usable and salable in
the ordinary course of business, except for obsolete items and items
of below-standard quality, all of which have been written off or
written down in accordance with GAAP. All Inventory not written off
has been priced in accordance with GAAP.
3.5 Material Customers and Contracts.
--------------------------------
(a) Except as set forth in Schedule 3.5(a), to Seller's knowledge, there
---------------
has not been any adverse change in the business relationship of Seller
with any material customers since April 30, 2001.
(b) Except as set forth in Schedule 3.5(b), to Seller's knowledge, there
---------------
has not been any adverse change in the business relationship of Seller
with any material supplier since April 30, 2001.
(c) Schedule 3.5(c) sets forth an accurate list of all of the following
---------------
executory contracts, commitments and similar agreements (excluding any
oral agreements) that are Assets or Assumed Liabilities (collectively,
the "Material Contracts"):
------------------
(i) all customer contracts in excess of $200,000, individually, or
$750,000 in the aggregate;
18
(ii) contracts with any labor organizations;
(iii) employment agreements;
(iv) leases, installment sales agreements or the like for all Real
Property;
(v) leases, installment sales agreements or the like for all
Equipment with annual rental payment of at least $50,000
individually;
(vi) capitalized leases;
(vii) loan agreements;
(viii) pledge and security agreements;
(ix) indemnity or guaranty agreements;
(x) bonds;
(xi) notes and mortgages;
(xii) joint venture or partnership agreements;
(xiii) options to purchase real or personal property; and
(xiv) agreements relating to the purchase or sale by the Subsidiaries
of assets other than in the ordinary course of business
consistent with past practices.
(d) Except as set forth on Schedule 3.5(d), each Material Contract is in
---------------
full force and effect against Seller, and (to Seller's knowledge)
against the other party thereto, and is valid and enforceable against
Seller, and (to Seller's knowledge) against the other party thereto,
in accordance with its terms.
(e) Except as set forth in Schedule 3.5(e):
---------------
(i) Seller is and has been in material compliance with all
applicable terms and requirements of each Material Contract;
(ii) to Seller's knowledge, each Third Person that has any
obligation or liability under any Material Contract is in
material compliance with all applicable terms and requirements
of such Material Contract; and
19
(iii) Seller has not given to, or to Seller's knowledge received from
any Third Person any written notice regarding any actual or
alleged breach of or default under any Material Contract.
Prior to the date hereof, Seller has made available to Buyer complete and
correct copies of the Material Contracts.
3.6 Permits. Schedule 3.6 contains a list of all licenses, franchises,
------- ------------
permits, transportation authorizations and other governmental authorizations
("Permits") held by Seller that are individually material to the conduct of its
-------
Business. Each Permit is valid and in full force and effect, or Seller would be
able to obtain a valid permit in the ordinary course of business without
incurring costs substantially in excess of application, reinstatement or
reissuance fees. Seller is and has been in material compliance with all of the
terms and requirements of all Permits. To Seller's knowledge, no event has
occurred or circumstance exists that may (with or without notice or lapse of
time) (a) constitute or result directly or indirectly in a violation of or a
failure to comply with any term or requirement of any Permit or (b) result
directly or indirectly in the revocation, withdrawal, suspension, cancellation
or termination of any Permit. To Seller's knowledge, Seller has not received any
written notice from any Governmental Authority or any other Third Person
regarding (x) any actual, alleged, possible or potential violation of or failure
to comply with any term or requirement of any Permit or (y) any actual,
proposed, possible or potential revocation, withdrawal, suspension,
cancellation, termination of or modification to any Permit.
3.7 Environmental Matters. Except as set forth on Schedule 3.7: (a) the
--------------------- ------------
Subsidiaries have complied and are in compliance with all applicable
Environmental Laws, except where the failure to so comply, individually or in
the aggregate, would not have an adverse effect on the value or use of the
Assets; (b) the Subsidiaries have obtained and complied with all necessary
Permits and other approvals required to treat, use, transport, store, dispose of
and otherwise handle Hazardous Substances and made all reports required by
applicable Environmental Laws; (c) there have been no "releases" or threats of
"releases" (as defined in any Environmental Laws) at, from, in or on any Real
Property or offsite transportation disposal facilities except as permitted by
Environmental Laws or where any such action would have no adverse effect on the
value or use of the Assets; (d) there are no pending or, to the knowledge of
Seller, threatened claims, liabilities, or Encumbrances against any Subsidiary,
resulting from or arising under or pursuant to any Environmental Law, with
respect to or affecting any of the Facilities or arising from the use of any
offsite transport or disposal facilities; (e) none of the Subsidiaries nor any
Third Person for whose conduct Seller is or may be held responsible, has
received or given, nor was it required to give, any citation, directive,
inquiry, notice, order, summons, warning or other communication that relates to
Hazardous Substances or any alleged, actual or potential violation or failure to
comply with any Environmental Law; (f) there are no Hazardous Substances present
on or in the environment at the Facilities or, to the Seller's knowledge, at any
geologically or hydrologically adjoining property, including any Hazardous
Substances contained in barrels, above or underground storage tanks, landfills,
land deposits, dumps,
20
equipment (whether moveable or fixed) or other containers, either temporary or
permanent, and deposited or located in land, water, sumps or any other part of
the Facilities or such adjoining property or incorporated into any structure
therein or thereon, other than Hazardous Substances used on the premises and in
the Business that are used, stored, processed and disposed in compliance with
Environmental Laws; and (g) Seller will deliver to Buyer true and complete
copies and results of any reports, studies, analyses, tests or monitoring
possessed or initiated by Seller pertaining to Hazardous Substances in, on or
under or related to the Facilities or offsite transportation disposal facilities
or concerning compliance by Seller or any other Third Person for whose conduct
they are or may be held responsible, with Environmental Laws. Notwithstanding
3.7 anything in this Agreement to the contrary, this Section 3.7 sets forth the
-----------
exclusive representations and warranties of Seller to Buyer with respect to
environmental matters of any kind or nature whatsoever. The inclusion on any
item disclosed in such Schedule 3.7 does not constitute an admission by Seller
------------
that any matters disclosed in such Schedule constitutes a violation of any
Environmental Law.
3.8 Labor and Employee Relations. None of the Subsidiaries is a party to
----------------------------
any collective bargaining agreement involving the Business and there is no
pending or, to the knowledge of Seller, threatened (i) labor dispute, strike or
work stoppage involving the Facilities and any group of their employees nor has
any Facility experienced any labor interruptions over the past two years, or
(ii) claim or proceeding against or directly affecting the Facilities relating
to the alleged violation of any Law relating to any labor relations or
employment matters, including but not limited to any charge or complaint filed
by any employee with the National Labor Relations Board or the Equal Employment
Opportunity Commission.
3.9 Employee Benefit Plans.
----------------------
(a) [Intentionally omitted.]
(b) Seller has heretofore made available to Buyer with respect to each
Plan true and correct copies of all plan documents and other
instruments, including all amendments thereto, (or a description of
each Plan that is not in writing) evidencing each Plan, each trust or
funding arrangement, the most recent Internal Revenue Service
determination letter for each Plan intended to be tax qualified, and
any other material information relating to each Plan as requested by
Buyer.
(c) There are no pending, or to the knowledge of Seller, threatened or
anticipated disputes, law suits, investigations, audits, complaints or
claims (other than routine claims for benefits) by, on behalf of, or
against any Plan or any trusts related thereto, except as individually
or in the aggregate, would not result in any Loss to Buyer or the
imposition of any Encumbrance on the Assets.
(d) Except as set forth in Schedule 3.9(d), none of the Subsidiaries,
---------------
IFCO, IFCO NA, nor any other ERISA Affiliate has at any time within
the six (6) year period preceding the
21
date of this Agreement, sponsored, contributed to, had an obligation
to contribute to or otherwise participated in any Plan that is subject
to Title IV of ERISA or Section 412 of the Code, including any
"multiemployer plan" (as defined in Section 3(37) of ERISA), with
respect to which Buyer would have any Loss or that could result in an
Encumbrance attaching to any Assets.
(e) None of the Subsidiaries, nor IFCO, nor IFCO NA is party to any
agreement with any employee the benefits of which (including, without
limitation, severance benefits) are contingent, or the terms of which
are altered, upon the occurrence of any of the transactions
contemplated by this Agreement.
3.10 Litigation and Compliance with Law.
----------------------------------
(a) Except as set forth in Schedule 3.10(a) there is no claim, action,
----------------
suit, arbitration or other proceeding, pending or, to the knowledge of
Seller, threatened against or affecting Seller in connection with the
Assets or the Business or against or relating to the transactions
contemplated by this Agreement, at law or in equity, or before any
Governmental Authority having jurisdiction over Seller. Except as set
forth in Schedule 3.10(a), there is no order or judgment against (i)
----------------
any Seller that affects the Assets or (ii) or any of the Assets.
(b) Except to the extent set forth on Schedule 3.10(b), none of the
----------------
Subsidiaries are not in violation of any Law applicable to the
Business or the Assets, the violation of which would adversely affect
the value or use of the Assets. To Seller's knowledge, none of the
Subsidiaries has received any written notice from any Governmental
Authority or any other Third Party regarding any actual or threatened
violation of, or failure to comply with, any Law.
3.11 Absence of Changes. Since December 31, 2000, except as set forth in
------------------
Schedule 3.11 and the transactions contemplated by this Agreement, the
-------------
Subsidiaries have conducted the Business in the ordinary course consistent with
past practice and there has not been:
(a) any increase in the compensation payable or to become payable by the
Subsidiaries to their officers, directors, managers, or other
employees other than routine salary increases and bonuses paid in
accordance with their customary payment practices;
(b) any work interruptions, labor grievances or claims filed of any
character adversely affecting the Business or the Assets, taken as a
whole;
(c) any sale, lease, transfer, or other disposition, or any agreement to
sell or transfer, any amount of the Assets, except for sales of
Inventory in the ordinary course of business
22
and disposals of old and obsolete Equipment and Vehicles in the
ordinary course of business;
(d) adoption of, or increase in the payments to or benefits under, any
Plan for or with any employee of the Subsidiaries;
(e) damage to or destruction or loss of any Asset or property of the
Subsidiaries, whether or not covered by insurance, adversely affecting
the properties, assets, business, financial condition of the
Subsidiaries;
(f) entry into, termination of, or receipt of notice of termination of any
Material Contract;
(g) cancellation or waiver of any claims or rights with a value to the
Subsidiaries (in the aggregate) in excess of $150,000;
(h) change in the accounting methods used by Seller with respect to the
Business; or
(i) to Seller's knowledge, any agreement, whether oral or written, to do
any of the foregoing.
3.12 No Undisclosed Liabilities. Except as set forth in Schedule 3.12, and
-------------------------- -------------
except for liabilities or obligations reflected or reserved against in the
Financial Statements and current liabilities incurred in the ordinary course of
business since December 31, 2000, the Subsidiaries have no liabilities or
obligations of any nature that would adversely affect the Business or the
Assets.
3.13 Taxes. Seller or its Affiliates has timely filed or caused to be
-----
timely filed all federal, state and local tax returns for all federal, state and
local Taxes relating to the Assets or the Business, and all such tax returns are
proper, complete and accurate, and all amounts shown as owing thereon have been
paid.
(a) Seller or its Affiliates has paid or caused to be paid all Taxes
relating to the Assets or the Business which have become due.
(b) Seller and Seller's Affiliates have not received or have any knowledge
of any notice of deficiency or assessment with respect to Seller, the
Business of Seller or any of the Assets, or any basis for any of the
foregoing, from any taxing authorities. Seller and Seller's Affiliates
have not been notified by the IRS that the IRS intends to audit the
federal income tax returns of Seller or its Affiliates.
(c) All Taxes that Seller or Seller's Affiliates is or was required by Law
to withhold or collect have been withheld or collected and, to the
extent required, have been paid
23
to the proper Governmental Authority or other person.
3.14 No Adverse Change. Except as disclosed in Schedule 3.14, since
----------------- -------------
December 31, 2000, there has not been any material adverse change in the
business, operations, properties, assets, or condition of the Subsidiaries.
3.15 Books of Account. The books, records and accounts of the Subsidiaries
----------------
maintained with respect to the Assets accurately and fairly reflect, in
reasonable detail, the transactions and the assets and liabilities of Seller
with respect to the Assets. The Subsidiaries have not engaged in any transaction
with respect to the Assets, maintained any bank account for the Assets or used
any of the funds of the Subsidiaries in the conduct of the Business except for
transactions, bank accounts and funds that have been and are reflected in the
normally maintained books and records of the Business.
3.16 Accounts Receivable. Schedule 3.16 sets forth a list and aging of all
------------------- -------------
accounts receivable of the Business as of July 29, 2001, which list is complete,
true and accurate in all respects. All such accounts receivable arose in the
ordinary course of business, have not been previously written off as bad debts,
and are, to the extent still uncollected, subject to exceptions set forth in
Schedule 3.16, collectible in the ordinary course of business, net of reserves
-------------
for doubtful and uncollectible accounts shown in Schedule 3.16 (which reserves
-------------
are in accordance with GAAP). Seller has collected its accounts receivable in
the ordinary course of business, consistent with past practices and has not
pursued any unusual or extraordinary means (i.e., factoring or negotiating
reductions with payors in exchange for accelerated payments, other than
reductions consistent with the standard practice of the Subsidiaries involving
typical discounts for early payment) in collecting its outstanding accounts
receivable prior to the Closing Date.
3.17 Disclosure. No representation or warranty of Seller in this Agreement
----------
and no statement in the Schedules omits to state a fact necessary to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer jointly and severally represents and warrants to Seller as follows:
4.1 Organization. PalletOne is an entity duly organized, validly existing
------------
and in good standing under the laws of the State of Delaware and is duly
authorized and qualified under all applicable Laws, to carry on its business in
the places and in the manner now conducted. White Oak is an entity duly
organized, validly existing and in good standing under the laws of the State of
Texas and is duly authorized and qualified under all applicable Laws, to carry
on its business in the places and in the manner now conducted.
4.2 Authorization; Non-Contravention; Approvals.
-------------------------------------------
24
(a) Buyer has the requisite power and authority to enter into this
Agreement and to effect the transactions contemplated hereby. The
execution, delivery and performance of this Agreement have been
approved by all requisite corporate or limited partnership action, as
applicable, of Buyer. This Agreement has been duly and validly
executed and delivered by Buyer, and, assuming the due authorization,
execution and delivery by Seller, constitutes a valid and binding
agreement of Buyer, enforceable against Buyer in accordance with its
terms, except as that enforceability may be subject to (i) any
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting or relating to enforcement of creditors' rights
generally and (ii) general equitable principles.
(b) The execution and delivery of this Agreement by Buyer does not, and
the consummation by Buyer of the transactions contemplated hereby will
not, violate or result in a breach of any provision of, or constitute
a default (or an event which, with notice or lapse of time or both,
would constitute a default) under (i) the certificate of incorporation
or by-laws, or certificate of limited partnership or limited
partnership agreement, as applicable, of Buyer or (ii) any Law
applicable to Buyer (except as contemplated by Section 5.5).
------------
(c) Except as contemplated in Section 5.5, Buyer is not aware of any
-----------
consents or approvals of, any applicable Governmental Authority that
are necessary for the execution and delivery of this Agreement by
Buyer or the consummation by Buyer of the transactions contemplated by
this Agreement. No consent or approval of any third party other than a
Governmental Authority is necessary for the execution and delivery of
this Agreement by Buyer or the consummation by Buyer of the
transactions contemplated by this Agreement.
4.3 Litigation. There is no claim, action, suit or other proceeding
----------
pending, or, to Buyer's knowledge, threatened, against or affecting Buyer which
(a) would materially impair Buyer's ability to perform its obligations
hereunder, or (b) seeks to prevent the consummation of the transactions
contemplated hereby.
4.4 No Violation of Law. Buyer is in compliance with all applicable Laws
-------------------
and has not been given notice or been charged with any violation of, any
applicable Law, except to the extent any such violation individually or in the
aggregate would not have a material adverse effect on Buyer's ability to perform
its obligations hereunder.
4.5 Xxxx Xxxxx Xxxxxx Filing. Neither the execution of this Agreement nor
------------------------
the consummation of the transactions contemplated hereby requires any filing
under the HSR Act.
ARTICLE 5
CERTAIN COVENANTS
25
5.1 Future Cooperation; Tax Matters. Buyer and Seller shall each deliver
-------------------------------
or cause to be delivered to the other following the Closing such additional
instruments as the other may reasonably request for the purpose of fully
carrying out this Agreement. Buyer and Seller will cooperate in all reasonable
respects with each other in the preparation of all tax returns which include any
portion of the year 2001. In addition, the Parties will provide each other with
access to such of its books and records as may be reasonably requested by the
other in connection with federal, state and local tax matters relating to
periods which include any portion of the year 2001.
5.2 Expenses. Buyer shall pay the fees, expenses and disbursements of
--------
Buyer and its agents, representatives, accountants and counsel incurred in
connection with the execution, delivery and performance of this Agreement and
any amendments hereto and the consummation of the transactions contemplated
hereby. Seller will pay its fees, expenses and disbursements and those of its
agents, representatives, financial advisors, accountants and counsel incurred in
connection with the execution, delivery and performance of this Agreement and
any amendments hereto and the consummation of the transactions contemplated
hereby.
5.3 Prorations. Ad valorem and similar taxes and assessments relating to
----------
the Assets shall be prorated between Seller and Buyer as of the Closing Date
based upon estimates of the amount of such taxes and assessments that are due
and payable on the Assets during the year during which the Closing Date occurs.
As soon as the amount of actual taxes and assessments is known, Seller and Buyer
shall reassess the amounts to be paid by each Party with the result that Seller
shall pay for those taxes and assessments attributable to the time period up to
and including the Closing Date and Buyer shall pay for those taxes and
assessments attributable to the period thereafter. Utilities expenses relating
to the Business shall be prorated between Seller and Buyer for the month of the
Closing based on the number of days in the billing cycle before and after the
Closing. All (i) accrued and unpaid wages, and other payments to employees of
Seller who are associated with the Business and (ii) rental and other payments
under any of the Contracts, leases or subleases constituting the Assumed
Liabilities shall be prorated between Seller and Buyer as of the Closing Date.
If any item cannot be apportioned accurately at the Closing Date or if it is
apportioned incorrectly at the Closing Date or subsequent thereto, such item
shall be apportioned or reapportioned, as the case may be, as soon as
practicable after the Closing Date or the date on which the apportionment error
is discovered, as applicable. Within 90 days (or as soon thereafter as is
practicable) from the Closing Date, Seller or Buyer, as the case may be, shall
pay the other, in immediately available funds, the net amount due Seller or
Buyer, as the case may be, under this Section 5.3 not otherwise paid at the
-----------
Closing.
5.4 Schedules. Seller may revise or supplement the Schedules at any time
---------
on or prior to the Closing Date to reflect information that came into existence
after the date hereof and would have been required to be disclosed on one or
more Schedules if such information was in existence on the date hereof. Such
revisions and supplements, if any, shall not constitute a modification of
Seller's representations and warranties for the purpose of Section 7.2(a), but,
--------------
if Buyer waives the conditions set forth in Section 7.2(a), shall constitute a
--------------
modification of such representations as of
26
the Closing and, as such, shall not form the basis of a claim by Buyer for
breach of a representation or indemnification after the Closing.
5.5 [Intentionally omitted.]
5.6 Press Releases. No press releases or other public announcements
--------------
concerning the transactions contemplated by this Agreement may be made by any
Party without the prior written consent of the other Party, which consent will
not be unreasonably withheld or delayed; provided, however, that nothing in this
-------- -------
provision will prevent a Party from making such releases or announcements as are
necessary for a Party to satisfy its legal obligations or the requirements of
the Nasdaq and the Frankfurt Stock Exchange, but in any such case the affected
Party will promptly notify the other Party, and, to the extent practicable,
provide the other Party with an opportunity to comment on such releases or
announcements.
5.7 Conduct of Business.
-------------------
(a) From the date hereof until the Closing, the Subsidiaries will: (i)
operate the Business only in the ordinary course, (ii) use
commercially reasonable efforts to preserve intact the organization
and Assets of the Business, (iii) continue in full force and effect
all existing insurance policies (or comparable insurance) of or
relating to the Business, and (iv) use commercially reasonable efforts
to preserve each Subsidiary's relationships with its suppliers,
customers, licensors and licensees and others having business dealings
with the Subsidiaries relating to the Business.
(b) Without limiting the generality of Section 5.7(a), or without the
--------------
prior written consent of Buyer, which shall not be unreasonably
withheld, delayed or conditioned, from the date hereof through the
Closing, the Subsidiaries shall not, with respect to the Business:
(i) enter into any material transaction in connection with the
Business outside the ordinary course of business;
(ii) conduct the Business in a manner that materially departs from
the manner in which the Business was being conducted prior to
the date of this Agreement;
(iii) sell, lease, transfer, or otherwise dispose of, any amount of
the Assets, except for sales of Inventory in the ordinary course
of business and disposals of old and obsolete Equipment and
Vehicles in the ordinary course of business;
(iv) cancel, compromise, knowingly waive or release any material right
or claim (or series of related rights and claims) under any
Contracts, outside the
27
ordinary course of business;
(v) other than in the ordinary course of business, make any
material change in the rate of compensation, commission,
bonus or other direct or indirect remuneration payable, or
agree to pay, conditionally or otherwise, any material
bonus, incentive, retention or other compensation,
retirement, welfare, fringe or severance benefit or vacation
pay, to or in respect of any employee of the Business;
(vi) pursue any unusual or extraordinary means (i.e., factoring
or negotiating reductions with payors in exchange for
accelerated payments) in collecting the Subsidiaries'
outstanding accounts receivable;
(vii) agree to do any of the foregoing.
(c) Seller and each ERISA Affiliate that, prior to the Closing Date,
sponsored a group health plan (as defined in Section 5000b of the
Code, Section 607 of ERISA, or both) which provides welfare
benefits to any current or former employee of Seller will
maintain a group health plan after Closing and, solely for the
purposes of applying the Income Tax Regulations described in this
sentence to the transactions contemplated by this Agreement, will
not, in connection with the sale (as such phrase is described in
Section 54.4980B-9, Q&A-8 of the Income Tax Regulations,
including Temporary Regulations, promulgated under the Code, as
those regulations may be amended from time to time (including
corresponding provisions of succeeding regulations), whether or
not such regulations apply to this Agreement) of the Assets as
described in this Agreement, cease to provide coverage under a
group health plan to its employees.
5.8 Access. Subject to reasonable notice, Seller shall afford to
------
Buyer and its accountants, counsel and other agents and representatives full
access during normal business hours throughout the period prior to the Closing
Date to all of the properties, books, contracts, commitments and records of the
Business and, during such period, Seller shall furnish promptly to Buyer and its
representatives in relation to the Business access to all other information
concerning the business, properties and personnel of the Business as Buyer may
reasonably request. Seller shall promptly upon request provide Buyer access to a
true, complete and correct copy of each written agreement or other instrument,
together with all amendments or clarifications thereto, and a true, complete and
correct summary of the terms and conditions of each oral agreement, identified
in the Schedules to this Agreement. In conducting its review of the Business,
Buyer shall conduct itself so as to not unreasonably interfere with the Business
or with the performance of Seller's employees.
5.9 No Shopping. Seller shall not, directly or indirectly, through
-----------
any authorized partner, officer, director, agent or otherwise, (a) solicit,
initiate or encourage submission of proposals or offers from any person or
entity (other than Buyer) relating to any acquisition or purchase of all or a
28
material amount of the Assets or any equity interest in the Subsidiaries (other
than PalEx Texas, L.P.), or any merger, consolidation or business combination
involving the Assets or the Subsidiaries (other than PalEx Texas, L.P. and
mergers, consolidations or business combinations involving IFCO NA or IFCO and
not affecting Buyer's rights under this Agreement or the transactions
contemplated hereby), (b) participate in any discussions or negotiations
regarding, or furnish to any person or entity (other than Buyer) any information
with respect to, any of the foregoing, or (c) otherwise cooperate in any way
with, or assist or participate in, facilitate or encourage, any effort or
attempt by any other person or entity to do or seek any of the foregoing. Seller
shall promptly notify Buyer if Seller receives any such proposal or offer or any
inquiry or contact with respect thereto.
5.10 Title Commitment; Survey. Prior to the Closing, Buyer shall
------------------------
obtain a current commitment for title insurance for each parcel of owned or
leased real property included in the Assets (the "Transferred Real Estate"). The
-----------------------
title commitment shall set forth the state of title to the Transferred Real
Estate, including a list of title exceptions that would appear in an owner's
title policy. The title commitment shall contain the expressed commitment of the
title company to issue a title policy to Buyer for each tract of Transferred
Real Estate in an aggregate amount equal to the value of such real property
together with the Fixtures and Improvements. Buyer shall have the right to
obtain a survey for each tract of the Transferred Real Estate. Seller shall
promptly deliver to Buyer of all existing surveys for such real property in
Seller's possession. Seller shall pay the cost of such title insurance policies
and surveys, not to exceed $175,000, and Buyer shall pay any excess.
5.11 Environmental Audits. Prior to the Closing, Buyer (at its
--------------------
expense) shall cause to be prepared, by an independent environmental consultant
Phase I and environmental audit and compliance reports (the "Environmental
-------------
Audits") covering each parcel of Transferred Real Estate and the operations
------
thereon.
5.12 Commercially Reasonable Efforts. Subject to the terms and
-------------------------------
conditions of this Agreement, each party will use its commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary or desirable under applicable law and the terms of
this Agreement to consummate the transactions contemplated by this Agreement,
including the execution and delivery of any further instruments or documents
which are reasonably requested by a party in order to evidence or facilitate the
consummation of the contemplated transactions.
5.13 Consents. Subject to Section 2.6, Seller shall use commercially
-------- -----------
reasonable efforts to obtain from third parties (where required) consents to the
assignment of the Contracts to be assumed by Buyer set forth on Schedule 5.13.
-------------
5.14 Consents; Cooperation. Seller and Buyer will use their
---------------------
commercially reasonable efforts:
29
(a) to obtain prior to the earlier of the date required (if so
required) or the Closing Date, all authorizations, consents,
orders, permits or approvals of, or notices to, or filings,
registrations or qualifications with, all governmental
authorities and any other person or entity that are required on
their respective parts, for the consummation of the transactions
contemplated by this Agreement; and
(b) to furnish to each other such information and assistance as may
reasonably be requested in connection with the foregoing.
5.15 Communications with Customers and Suppliers. Seller and Buyer
-------------------------------------------
must mutually agree (and shall not unreasonably fail to agree) upon all
communications with suppliers and customers of the Business relating to this
Agreement and the transactions contemplated hereby prior to the Closing Date.
5.16 [Intentionally omitted.]
5.17 [Intentionally omitted.]
5.18 Intercompany Transactions. All intercompany transactions
-------------------------
involving Inventory between any of the Subsidiaries (on the one hand) and IFCO
NA or its Affiliates other than the Subsidiaries (on the other hand) shall be
settled within ten (10) days of such transaction. Buyer is not assuming or
acquiring any intercompany accounts payable or receivable between the
Subsidiaries (on the one hand) and IFCO NA or its Affiliates other than the
Subsidiaries (on the other hand) except those involving Inventory.
5.19 Environmental Audits. Buyer shall be responsible for all
--------------------
environmental remediation expenses after the Closing which are set forth on
Schedule 5.19, including any remediation recommended as a result of the
-------------
additional investigations recommended in Schedule 5.19.
-------------
5.20 Post-Closing Covenants. After the Closing Date:
----------------------
(a) Cooperation; Further Assurances. (i) Seller and Buyer shall
-------------------------------
promptly execute and deliver those instruments, documents and
certificates as Seller or Buyer may reasonably request to more
effectively consummate the transactions contemplated hereby;
(ii) Seller shall as promptly as practical, but in no event
later than five (5) business days after receipt, deliver to
Buyer any mail, packages, notices, copies of service of process
and other similar items received by Seller that relate to the
Assets or the Business, or the Assumed Liabilities or that
otherwise should be delivered to Buyer and all moneys, checks or
other instruments of payment to which Buyer is entitled; (iii)
Seller authorizes Buyer to receive and open all mail and other
communications received by Buyer and to act with respect to such
communications in such manner as Buyer may elect if such
communications relate to the Assets, the Business or the Assumed
Liabilities or, if such communications do not so relate, to
30
forward the same promptly to Seller but in no event less than five (5)
business days after receipt; (iv) Seller shall promptly forward to
Buyer any telephone calls, telecopies and other similar communications
received by Seller that relate to the Assets, the Business or the
Assumed Liabilities; and (v) Buyer shall as promptly as practical, but
in no event later than five (5) business days after receipt, deliver
to Seller any mail, packages, notices, copies of service of process,
and other similar items received by Buyer that relate to the Excluded
Assets, the Excluded Liabilities, or that should otherwise be
delivered to Seller, and all monies, checks or other instruments of
payment to which Seller is entitled; and (vi) Buyer shall promptly
forward to Seller any telephone calls, telecopies, and other similar
communications received by Buyer that relate to the Excluded Assets or
Excluded Liabilities. If an account debtor pays an account receivable
of Buyer, but validly offsets or validly reduces the payment to Buyer
as a result of any services provided by Seller to the account debtor
prior to Closing, such amount shall be included in "Losses" as defined
herein.
(b) Cooperation on Certain Matters. Seller and Buyer shall cooperate
------------------------------
fully, as and to the extent reasonably requested by the other party,
in connection with any audit, litigation, or other proceeding with
respect to Taxes. Such cooperation shall include the retention and
(upon the other party's request) the provision of records and
information which are reasonably relevant to any such matter. Buyer
and Seller agree (i) to retain until the expiration of the applicable
statute of limitations all books and records which are relevant to the
determination of the Tax liabilities pertinent to the Assets relating
to any Tax period prior to the Closing Date and to abide by all record
retention agreements entered into with any Tax authority, and (ii) to
give the other party reasonable written notice prior to destroying or
discarding any such books and records and if the other party so
requests, Buyer or Seller, as the case may be, shall allow the other
party to take possession of such books and records.
(c) Transferred Business Names. Seller shall no longer use the name of any
--------------------------
of the Transferred Business Names.
(d) Seller Access to Transferred Employees. After the Closing Date, Buyer
--------------------------------------
will, without cost or expense to Seller, provide Seller reasonable
access to the Transferred Employees (as defined in Section 6.1) and
-----------
such of Buyer's records that are necessary for Seller's preparation of
Seller's financial statements through the Closing Date including, but
not limited to, the preparation of information for Seller's quarterly
filings and Seller's 2001 tax returns.
(e) Transition Services. For a period of 90 days after the Closing Date
-------------------
(the "Transition Period") Seller, at no additional expense to the
-----------------
Buyer, will maintain (i) the passwords and security clearances of
those Transferred Employees identified on
31
Schedule 5.20(e), (ii) the data communication lines between and
----------------
among the Subsidiaries and Seller's Houston, Texas data
processing center, whether voice, data or both, and any other
access to the Houston data processing center, (iii) Seller's
computer software and hardware including, but not limited to,
Solomon accounting software to the extent reasonably necessary to
allow the Transferred Employees to prepare, provide and assist
with the activities contemplated in Section 5.20(d). During the
---------------
Transition Period, Buyer may request that certain Transferred
Employees be added to or deleted from the list of Transferred
Employees requiring passwords and security clearance in Schedule
--------
5.20(e) in order to more effectively accomplish the activities
-------
specified herein, and Seller will effect such changes to the
extent reasonable.
During the Transition Period, Seller shall (i) maintain Seller's
computer software in operational condition, (ii) assist Buyer and
the Transferred Employees as reasonably necessary in downloading
to Buyer's computer systems any and all records that constitute a
portion of the Assets, and (iii) provide to Buyer and the
Transferred Employees help desk and other support services in
connection with the operation of Seller's computer software for
the purposes set forth herein. Buyer acknowledges and agrees that
Buyer does not intend to use Seller as a computer service bureau
or to use Seller's data processing services for the operation of
the Business following the Closin Date, and that Buyer's access
to Seller's computer systems and software will be limited (x) to
the transfer of information, data or other items that constitute
Assets and (y) to the extent described in Section 5.20(d) and
---------------
Section 5.20(e).
---------------
During the Transition Period, Buyer will reimburse Seller for the
cost of data communications lines in the same amount as such
costs were historically allocated by IFCO NA to the Subsidiaries
prior to the Closing Date.
f) Email. During the Transition Period, and at no cost to Buyer,
-----
Seller will forward to the Transferred Employees, at the
Transferred Employees' email addresses on Buyer's email system
(as provided to Seller by Buyer), all emails addressed to the
Transferred Employees that are received on Seller's email system,
subject to Seller's right to access such emails to filter out and
not forward to the Transferred Employees any emails that are not
personal to the Transferred Employees or related to the Business.
5.21 Sales and Use Tax; Motor Vehicle Tax and Registration Fees. Sales
----------------------------------------------------------
and use tax liability, including motor vehicle tax and registration fees, that
may arise as a result of the sale and transfer of the Assets by and from the
Subsidiaries to Buyer shall be paid by Buyer.
5.22 New Boston Fire. In July 2001, a fire occurred at the Facility
---------------
located in New Boston, Texas (the "New Boston Fire"), which damaged or destroyed
---------------
certain Assets. It is the
32
intention of the parties that the damaged or destroyed Assets be replaced or
repaired. For that purpose, Seller shall assign to Buyer all insurance proceeds
(and rights to collect such proceeds) from the New Boston Fire, less (i) an
amount equal to the amount previously paid by Seller for insured and recoverable
losses from the New Boston Fire, including without limitation to repair or
replace such Assets, and (ii) amounts recovered for Inventory. Seller shall be
responsible for paying the amount of any applicable insurance deductible. Seller
shall remain fully liable for third party claims for property damage (other than
to the Assets) and any personal injury claims. Buyer is undertaking no
obligation or liability with respect to the New Boston Fire, other than to
replace or repair the damaged Assets to Buyer's satisfaction. The parties agree
that any claim that Buyer may have against Seller with respect to liabilities
and obligations arising from the New Boston Fire shall not be subject to the
limitations on indemnification set forth in Section 9.1(e). --------------
5.23 Accrued Bonuses. At the end of October 2001, IFCO NA shall pay a
---------------
bonus to each of the Transferred Employees, calculated through the Closing Date,
in accordance with established formulas.
ARTICLE 6
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
6.1 Employment of Seller's Employees. Effective as of the Closing
--------------------------------
Date, Buyer may, in its sole discretion, offer employment to employees of the
Subsidiaries. Those employees who accept such offers of employment effective as
of the Closing Date shall be referred to herein as the "Transferred Employees."
---------------------
Buyer shall be permitted to offer to the Transferred Employees terms and
conditions of employment determined solely by Buyer. The Subsidiaries shall
remain responsible for wages, salaries and benefits (including vacations) of
employees until they become Transferred Employees, and for all such benefits
earned prior to the Closing Date. Buyer acknowledges and agrees that solely for
purposes of the WARN Act, any person who is an employee of the Subsidiaries
(other than part-time employees as defined under the WARN Act) as of the Closing
Date shall be deemed an employee of Buyer for purposes of the WARN Act on the
Closing Date. With respect to such "deemed" employees, Buyer further agrees and
acknowledges that Buyer will be responsible for all applicable notices and
liabilities arising under the WARN Act, or otherwise, as a result of Buyer's
failure to hire the employees of the Subsidiaries or the termination of the
employment of any Transferred Employee after the Closing.
6.2 Meetings with Employees. At any time before the Closing Date,
-----------------------
upon reasonable written notice to Seller, Buyer shall have the right to meet
with employees of the Subsidiaries to arrange for the transition of ownership of
the Business; provided, however, that such meetings shall be held at times and
-------- -------
dates reasonably satisfactory to the Subsidiaries, and shall be held at such
times and in such manner as not to adversely interfere with the normal business
operations of the Subsidiaries. A representative of Seller shall be entitled to
attend any such meeting.
6.3 Welfare Benefits and COBRA.
--------------------------
33
(a) Effective as of the Closing Date, Buyer shall make enrollment
available to all Transferred Employees and their eligible dependents
without any waiting period in a Buyer plan or plans providing medical
benefits (the "Buyer Medical Plan"), to the extent such individuals
------------------
were covered under Seller's applicable medical plan (the "Seller
------
Medical Plan"). Such Buyer Medical Plan shall waive any restrictions
------------
and limitations for pre-existing conditions for all Transferred
Employees, to the extent such restrictions did not apply to the
Transferred Employees under the Seller Medical Plan on the Closing
Date, and shall give credit to each Transferred Employee for any
deductibles and out-of-pocket expenses paid during the current plan
year by such Transferred Employee under the Seller Medical Plan.
(b) Buyer shall be responsible for medical expenses covered under the
terms of the Buyer Medical Plan incurred by a Transferred Employee
and/or his covered dependents who are enrolled in the Buyer Medical
Plan after the later of (i) the Closing Date or (ii) the date such
person becomes a Transferred Employee. Seller shall be responsible
only for medical expenses covered under the terms of the Seller
Medical Plan incurred by a Transferred Employee and/or his covered
dependents on or prior to the Closing Date (or if later, for the
period prior to the date such person becomes a Transferred Employee)
to the extent coverage is provided under the terms of the Seller
Medical Plan. If a Transferred Employee or a covered dependent of a
Transferred Employee enrolled in the Seller Medical Plan is
hospitalized on the Closing Date, the Seller Medical Plan shall
continue to provide coverage for such person until he or she is
discharged from the hospital, to the extent coverage is provided under
the terms of the Seller Medical Plan.
(c) Seller shall be responsible for compliance with all requirements under
Sections 4980B and 9801of the Code and Section 601, et seq. of ERISA
-- ---
with respect to any (a) Transferred Employee or (b) dependent of such
Transferred Employee, in each case who, on or prior to the Closing
Date, becomes a qualified beneficiary within the meaning of Section
4980B(g)(1) of the Code as the result of any "qualifying event" within
the meaning of Section 4980B(f)(3) of the Code occurring on or prior
to the Closing Date or who, on or prior to the Closing Date, ceases to
be covered under Seller's group health plan. Buyer shall be
responsible for compliance with all requirements under Sections 4980B
and 9801 of the Code and Section 601, et seq. of ERISA with respect to
-- ---
any (a) Transferred Employee or (b) dependent of such Transferred
Employee, in each case who, after the Closing Date, becomes a
qualified beneficiary within the meaning of Section 4980B(g)(1) of the
Code as the result of any "qualifying event" within the meaning of
Section 4980B(f)(3) of the Code occurring after the Closing Date or
who, after the Closing Date, ceases to be covered under Buyer's group
health plan.
6.4 Plans, Benefits and Policies.
----------------------------
34
(a) Effective as of the Closing Date, Buyer shall treat prior service with
Seller as service with Buyer for purposes of determining matching
contribution benefits, if any, vesting and eligibility to participate
in any "employee pension plan" (as defined by Section 3(2) of ERISA),
but not for purposes of benefit accruals; and eligibility and benefit
computation for vacation and severance pay plans; provided, however,
-------- -------
that the foregoing shall not require Buyer to offer any such plans to
Transferred Employees. In addition, Buyer shall honor any vacation
that the Transferred Employees have accrued with Seller and/or the
Subsidiaries; provided, however, that the Transferred Employees shall
-------- -------
not be entitled to receive any payment in lieu of such accrued
vacation.
(b) As of the Closing Date, all Transferred Employees shall cease
participation in the Plans of Seller. Seller shall retain all
liabilities related to its Plans.
(c) After Closing, Buyer and Seller will cooperate with each other and
provide each other such information as is required concerning
Transferred Employees in order to determine whether a Transferred
Employee is entitled to compensation from either party or benefits
under any plan, program or arrangement sponsored or maintained by
either party.
(d) No provision in this Section 6.4 shall create any third-party
-----------
beneficiary rights in any employee or former employee (including any
beneficiary or dependent thereof) of Buyer, Seller or any of its
Affiliates.
6.5 Employment Taxes.
----------------
(a) Subject to Section 2.4 relating to Taxes due arising from all periods
-----------
prior to the Closing Date, Seller and Buyer will (i) treat Buyer as a
"successor employer" and the Seller as a "predecessor," within the
meaning of Sections 3121(a)(1) and 3306(b)(1) of the Code, with
respect to Transferred Employees who are employed by the Buyer for
purposes of Taxes imposed under the United States Federal Unemployment
Tax Act ("FUTA") or the United States Federal Insurance Contributions
----
Act ("FICA") and (ii) cooperate with each other to avoid, to the
----
extent possible, the filing of more than one IRS Form W-2 with respect
to each such Transferred Employee for the calendar year within which
the Closing occurs.
(b) Subject to Section 2.4 relating to Taxes due arising from all periods
-----------
prior to the Closing Date, at the request of Buyer with respect to any
particular applicable Tax law relating to employment, unemployment
insurance, social security, disability, workers' compensation,
payroll, healthcare or other similar Tax other than taxes imposed
under FICA and FUTA, Seller and Buyer will (i) treat Buyer as a
successor employer and Seller as a predecessor employer, within the
meaning of the relevant provisions of such Tax law, with respect to
Transferred Employees who are
35
employed by the Buyer, to the extent permitted by applicable state and
local laws and (ii) cooperate with each other to avoid, to the extent
possible, the filing of more than one individual information reporting
form pursuant to each such Tax law with respect to each such
Transferred Employee for the calendar year within which the Closing
occurs.
6.6 Workers Compensation. From and after the Closing Date, Seller shall
--------------------
remain solely responsible for any and all Plan liabilities to or in respect of
any employee of the Business relating to or arising in connection with any and
all claims for workers' compensation benefits arising in connection with any
occupational injury or disease occurring or existing on or prior to the Closing
Date.
ARTICLE 7
CONDITIONS PRECEDENT
7.1 Conditions to Obligations of All Parties. The obligations of the
----------------------------------------
Parties to consummate the transactions contemplated hereby shall be subject to
the fulfillment on or prior to the Closing Date of the following conditions:
(a) [Intentionally omitted.]
(b) Consummation of the transactions contemplated hereby shall not have
been restrained, enjoined or otherwise prohibited by any applicable
Law. No court or other Governmental Authority shall have determined
any applicable Law to make illegal the consummation of the
transactions contemplated hereby, and no proceeding with respect to
the application of any such applicable Law to such effect shall be
pending.
(c) [Intentionally omitted.]
7.2 Conditions to Obligations of Buyer. The obligation of the Buyer to
----------------------------------
consummate the transactions contemplated hereby shall be subject to fulfillment
(or waiver by the Buyer) on or prior to the Closing Date of the following
conditions:
(a) Representations and Warranties True and Correct. The representations
-----------------------------------------------
and warranties of Seller contained in this Agreement, without giving
effect to any revisions or supplements to the Schedules authorized by
Section 5.4, shall be true and correct in all respects on and as of
-----------
the Closing Date with the same effect as though made on and as of the
Closing Date. Seller shall have duly performed and complied in all
material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it prior to or on the
Closing Date. Seller shall have delivered to the Buyer a certificate,
dated the Closing Date and signed by its duly authorized officers,
certifying the satisfaction of this condition.
36
(b) Certain Deliveries. Seller shall have delivered to Buyer each of
------------------
the agreements, documents and other instruments contemplated by
this Agreement.
(c) No Legal Actions. No action, suit, claim, or proceeding shall
----------------
have been commenced or threatened by any governmental authority
or private party to restrain, enjoin, or hinder, or to seek
damages from Buyer or from the Assets, on account of the
consummation of the transactions contemplated by this Agreement.
(d) Consents. All approvals, consents, waivers and authorizations
--------
that are identified on Schedule 7.2(d) shall have been obtained
---------------
by Seller and shall be in full force and effect.
(e) Permits. To the extent not legally transferable, Buyer shall have
-------
been issued all Permits set forth on Schedule 7.2(e).
---------------
(f) Estoppel Certificates. Seller shall have obtained and delivered
---------------------
to Buyer estoppel certificates from each landlord and lessor of
the Transferred Real Estate set forth on Schedule 7.2(f), in form
---------------
and substance reasonably satisfactory to Buyer. Buyer shall be
responsible for all costs (including any rental increases) as a
result of obtaining such estoppel certificates.
(g) Real Estate Leases. Each landlord for the leases set forth on
------------------
Schedule 7.2(g) shall have consented to the assignment of such
--------------
lease to Buyer. Buyer shall be responsible for all costs
(including any rental increases) as a result of such assignments.
(h) Material Adverse Change. No change having or reasonably expected
-----------------------
to have a material adverse effect shall have occurred in the
Assets or in the condition (financial or otherwise), business or
operations of the Subsidiaries, taken as a whole, since March 31,
2001.
(i) Legal Opinion. Buyer shall have received the opinion of Gardere
-------------
Xxxxx Xxxxxx LLP, dated the Closing Date, in the form set forth
on Exhibit B.
---------
(j) Financing. Buyer shall have obtained financing in the amount
---------
necessary to consummate the transactions contemplated by this
Agreement, with such financing having terms and conditions at
least as favorable to Buyer as set forth on Schedule 7.2(j).
---------------
(k) [Intentionally omitted.]
37
(l) Certificates of Tax Authorities. On or before the Closing Date, Seller
-------------------------------
shall provide to Buyer copies of certificates from the appropriate
taxing authority stating that no Taxes are due to any state or other
taxing authority for which Buyer could have liability to withhold or
pay Taxes with respect to the transfer of the Assets or the Business.
(m) [Intentionally omitted.]
(n) Employees Letters. Buyer shall have received the letters from Seller
-----------------
to the Released Employees as contemplated by Section 10.7.
------------
(o) Other Deliveries. Seller shall have delivered to Buyer:
----------------
(i) certified copies of resolutions of the Board of Directors
and stockholders of each of the Subsidiaries, and
resolutions of the Board of Directors of IFCO NA approving
the transactions contemplated hereby;
(ii) an incumbency certificate for the officers of Seller
executing this Agreement;
(iii) evidence reasonably satisfactory to Buyer of the release of
all liens and security interest on the Assets (other than
Permitted Encumbrances);
(iv) certificates of existence and good standing of each of the
Subsidiaries issued by the appropriate Governmental
Authority of the jurisdiction of their respective
incorporation, organization or formation, as the case may
be, and of each foreign jurisdiction in which each is
qualified to do business; and
(v) a certificate of Seller, dated the Closing Date and sworn to
under penalty of perjury, setting forth the name, address
and federal tax identification number of Seller and stating
that Seller is not a "foreign person" within the meaning of
Section 1445 of the Code, such certificate to be in the form
set forth in the Treasury Regulations thereunder.
(p) Payables. As of the Closing Date, the trade payables of the
--------
Subsidiaries described in clauses (i) and (ii) below shall not exceed
an aggregate of $100,000 as a result of any action or direction of any
person acting on behalf of any Seller or any Affiliate of Seller (other
than persons who are stockholders of Buyer at the Closing):
(i) in the case of trade payables arising in the ordinary course
of business due to vendors offering a discount for early
payment, not older than two business days beyond the
discount period offered by the particular vendor;
38
and
(ii) for all other trade payables arising in the ordinary
course of business, not more than two business days
older than the terms for regular payment offered by
the particular vendor.
(q) Title Commitments and Surveys. Buyer shall have received a
-----------------------------
title commitment and survey with respect to each tract of
owned or leased Transferred Real Estate, as contemplated by
Section 5.10 of this Agreement, in form and substance
------------
acceptable to Buyer in Buyer's sole and absolute discretion.
(r) Releases. Seller shall have released all claims Seller may
--------
have against each existing or former employee of Seller who,
at Closing, will become employees or stockholders of Buyer
(the "Released Employees") through the Closing Date, in form
------------------
attached hereto as Exhibit C.
---------
(s) Multi-Employer Plan Liability. Buyer's potential liability
-----------------------------
for any unfunded liabilities (on a termination basis) and
any withdrawal liability attributable to the plans described
in Schedule 3.9(d) shall not exceed $25,000 as of the
---------------
Closing Date.
7.3 Conditions to Obligations of Seller. The obligation of the
-----------------------------------
Seller to consummate the transactions contemplated hereby shall be subject to
the fulfillment (or waiver by Seller) on or prior to the Closing Date of the
following conditions:
(a) Representations and Warranties True and Correct. The
-----------------------------------------------
representations and warranties of Buyer contained in this
Agreement shall be true and correct in all respects on and
as of the Closing Date with the same effect as though made
on and or of the Closing Date. Buyer shall have duly
performed and complied in all material respects with all
agreements and covenants required by this Agreement to be
performed or complied with by it prior to or on the Closing
Date. Buyer shall have delivered to Seller a certificate,
dated the Closing Date and signed by its duly authorized
officers, certifying the satisfaction of this condition.
(b) Certain Deliveries. Buyer shall have delivered to Seller
------------------
each of the agreements, documents and other instruments
contemplated by this Agreement, as well as the Purchase
Price and Non-Compete Payment.
(d) No Legal Actions. No action, suit, claim, or proceeding
----------------
shall have been commenced or threatened by any governmental
authority or private party to restrain, enjoin, or hinder,
or to seek damages from Seller, on account of the
consummation of the transactions contemplated by this
Agreement.
39
(e) Consents. All approvals, consents, waivers and authorizations
--------
that are identified on Schedule 7.3(d) shall have been obtained
---------------
by Seller and shall be in full force and effect.
(f) Release. Each of the Released Employees, respectively, shall have
-------
(i) voluntarily terminated their employment with Seller (if such
Released Employee is currently an employee of Seller), and (ii)
entered into a release of all claims that they may have against
Seller through the Closing Date, in the form attached hereto as
Exhibit C.
---------
(g) Other Deliveries. Buyer shall have delivered to Seller:
----------------
(i) certified copies of resolutions of the Board of Directors
of Buyer, approving the transactions contemplated hereby;
(ii) an incumbency certificate for the officers of Buyer
executing this Agreement; and
(iii) certificates of existence and good standing of each of the
Buyer issued by the appropriate Governmental Authority of
the jurisdiction of its incorporation.
(h) Management Stockholder's Certificates. On the Closing Date, IFCO
-------------------------------------
NA shall have received from each of Xxxx Xxxxxxx, Xxxxx Xxxxxxxx,
Xxxxx Xxxxxx, Xxxx Xxxxxxxx, Xxxxxx Xxxxxxxx, and Xxxx XxXxxxxx,
an executed Management Stockholder's Certificate, dated as of the
Closing Date, in the form attached as Exhibit D.
---------
40
ARTICLE 8
TERMINATION
8.1 Termination. Subject to the provisions of Sections 8.2, this
----------- ------------
Agreement may be terminated at any time prior to the Closing Date:
(a) by the written agreement of Buyer and Seller;
(b) by either Seller or Buyer by written notice to the other (a
"Termination Notice") if the Closing has failed to occur on or
------------------
before 5:00 p.m. Dallas, Texas time on September 30, 2001 (or such
later date as Seller and Buyer shall mutually agree in writing),
except that neither Buyer nor Seller shall terminate this Agreement
by delivery of a Termination Notice while such Party is in material
breach or default of its obligations hereunder.
(c) by Buyer if Seller fails to fulfill the conditions set forth in
Section 7.2 by the Closing Date;
-----------
(d) by Seller if Buyer fails to fulfill the conditions set forth in
Section 7.3 by the Closing Date; or
-----------
(e) by either Buyer or Seller if Buyer and Seller shall not have
mutually agreed to the contents of the Schedules described in
Article 10 and Article 10.5 within 10 days of the date of this
---------- ------------
Agreement.
8.2 Other Termination. In the event of a termination of this Agreement
-----------------
pursuant to the provisions of Section 8.1, this Agreement shall become void and
-----------
have no effect, without any liability to any Party in respect hereof or of the
transactions contemplated hereby on the part of any Party hereto, or any of its
directors, officers, employees, agents, consultants, representatives, advisors,
stockholders or Affiliates, except for any liability resulting from such Party's
breach of this Agreement, provided, however, that the provisions of Section 5.2
-------- ------- -----------
and Section 11.1 shall survive the termination of the Agreement.
------------
ARTICLE 9
INDEMNIFICATION
Seller and Buyer each make the following covenants:
9.1 Indemnification by Seller; Survival; Right to Indemnification Not
-----------------------------------------------------------------
Affected by Knowledge.
---------------------
41
(a) All representations, warranties, covenants, and obligations in this
Agreement, the Schedules, and any certificate or document delivered
pursuant to this Agreement will survive the Closing. The right to
indemnification, payment of Losses or other remedy based on such
representations, warranties, covenants, and obligations will not be
affected by any investigation conducted with respect to, or any
knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement
or the Closing Date, with respect to the accuracy or inaccuracy of
or compliance with, any such representation, warranty, covenant, or
obligation. The waiver of any condition based on the accuracy of any
representation or warranty, or on the performance of or compliance
with any covenant or obligation, will eliminate the right to
indemnification, payment of Losses, or other remedy based on such
representations, warranties, covenants, and obligations.
(b) Indemnification and Payment of Losses by Seller. Seller will jointly
-----------------------------------------------
and severally indemnify and hold harmless Buyer, and its
representatives, stockholders, controlling persons, and Affiliates
(collectively, the "Indemnified Persons") from and against, and will
-------------------
pay to the Indemnified Persons the amount of, any actual loss,
liability, claim, damage, expense (including costs of investigation
and defense and reasonable attorneys' fees) or diminution of value,
whether or not involving a third-party claim, arising, directly or
indirectly, from or in connection with:
(i) subject to Section 5.4, breach of any representation or
-----------
warranty made by Seller in this Agreement, or any other
certificate or document delivered by Seller pursuant to this
Agreement;
(ii) subject to Section 5.4, breach of any representation or
-----------
warranty made by Seller in this Agreement as if such
representation or warranty were made on and as of the
Closing Date;
(iii) any breach by Seller of any covenant or obligation of Seller
in this Agreement;
(iv) any claims which may be made against Buyer by any Person,
including without limitation any action, arbitration, audit,
hearing, investigation, litigation, or suit against Buyer,
which arise from the conduct of the Business prior to the
Closing Date, other than the Assumed Liabilities;
(v) the Excluded Liabilities;
(vi) Taxes associated with the Assets or the Business arising or
accruing before the Closing Date;
(vii) any claim by any Person for brokerage or finder's fees or
commissions or similar payments based upon any agreement or
agreement alleged to have
42
been made by any such Person with Seller (or any Person
acting on Seller's behalf) in connection with the
transactions contemplated by this Agreement; and
(viii) liens, claims, or damages arising from any violation of
"bulk sales" laws applicable to the transactions
contemplated by this Agreement.
(c) [Intentionally omitted.]
(d) Time Limitations. If the Closing occurs, Seller will have no
----------------
liability (for indemnification or otherwise) with respect to any
representation or warranty (except with respect to the
representations and warranties set forth in Section 3.4(e) (with
--------------
respect to the first sentence only) and Section 3.13), or covenant
------------
or obligation to be performed and complied with prior to the Closing
Date, unless on or before the earlier of (i) the completion of the
financial audit of Buyer for the fiscal year 2002, and (ii) two (2)
years from the Closing Date, Buyer notifies Seller of a claim
specifying the factual basis of that claim in reasonable detail.
With respect to any breach of the representations and warranties set
forth in Section 3.13, Sellers' obligations hereunder shall survive
------------
until the expiration of the applicable periods (including any
extensions) of the respective statutes of limitation applicable to
the payment of the Taxes. With respect to any breach of the
representations and warranties set forth in the first sentence of
Section 3.4(e), Seller's obligations hereunder shall survive
--------------
indefinitely.
(f) Limitations on Amount. Seller will have no liability (for
---------------------
indemnification or otherwise) with respect to the matters described
in Section 9.1(b)(i), Section 9.1(b)(ii), Section 9.1(b)(iv), or
----------------- ------------------ ------------------
Section 9.1(b)(v) until the total of all Losses with respect to such
-----------------
matters exceeds an aggregate of $650,000 and then only for the
amount by which such Losses exceed an aggregate of $650,000;
provided, however, that such limitation shall not apply to any claim
-------- -------
described in Section 9.1(b)(iv) or Section 9.1(b)(v) unless such
------------------ -----------------
claim also constitutes a breach under Section 9.1(b)(i) or Section
----------------- -------
9.1(b)(ii). The aggregate indemnification obligations of Seller
----------
under this Article 9 shall be limited to $24,125,000. However, these
---------
limitations will not apply to any breach involving fraud or
intentional misrepresentation or to the first sentence of Section
-------
3.4(e), and Seller shall be liable for all Losses with respect to
------
any breach involving fraud or international misrepresentation and to
any breach of the first sentence of Section 3.4(e).
--------------
(g) Mitigation Obligation. Except with respect to a breach of Section
--------------------- -------
11.1 hereof, each Person entitled to indemnification hereunder shall
----
take all reasonable steps to mitigate all losses, costs, expenses
and damages after becoming aware of any event which could reasonably
be expected to give rise to any losses, costs, expenses and damages
that are indemnifiable or recoverable hereunder or in connection
therewith.
43
9.2 Indemnification by Buyer. Subject to the provisions of this Article
------------------------ -------
9, Buyer covenants and agrees that it will indemnify, defend, protect and hold
-
harmless Seller and its officers, directors, employees, stockholders, agents,
representatives and Affiliates, at all times from and after the date of this
Agreement from and against all Losses incurred by Seller as a result of or
arising from (a) any breach of the representations and warranties of Buyer set
forth herein, provided that notice of such claim is given in accordance with
Section 12.4 hereof on or before the Expiration Date, (b) any breach of any
------------
covenant or agreement on the part of Buyer under this Agreement, or (c) Buyer's
failure to timely perform or otherwise discharge the Assumed Liabilities.
9.3 Third Person Claims. Promptly after any party hereto (hereinafter
-------------------
the "Indemnified Party") has received notice of or has knowledge of any claim by
-----------------
a person not a party to this Agreement ("Third Person"), or the commencement of
------------
any action or proceeding by a Third Person, which the Indemnified Party believes
in good faith is an indemnifiable claim under this Agreement, the Indemnified
Party shall give to the party obligated to provide indemnification pursuant to
Section 9.1 or Section 9.2 hereof (hereinafter the "Indemnifying Party") written
----------- ----------- ------------------
notice of such claim or the commencement of such action or proceeding; provided,
--------
however, that the Indemnified Party's failure to timely provide such notice
-------
shall not affect its right to indemnification hereunder unless, and only to the
extent that, such failure materially prejudices the Indemnifying Party's ability
to defend such claim. Such notice shall state the nature and the basis of such
claim and a reasonable estimate of the amount thereof or a statement that the
amount of such claim cannot be reasonably estimated. The Indemnifying Party
shall have the right to defend and settle, at its own expense and with counsel
reasonably satisfactory to the Indemnified Party, any such matter so long as the
Indemnifying Party pursues the same diligently and in good faith. If the
Indemnifying Party undertakes to defend or settle, it shall promptly notify the
Indemnified Party of its intention to do so. The Indemnified Party shall
reasonably cooperate with the Indemnifying Party and its counsel in the defense
thereof and in settlement thereof. The Indemnified Party shall furnish the
Indemnifying Party with any books, records and other information reasonably
requested by the Indemnifying Party and in the Indemnified Party's possession or
control. After the Indemnifying Party has notified the Indemnified Party of its
intention to undertake to defend or settle any such asserted liability, and for
so long as the Indemnifying Party diligently pursues such defense in good faith,
the Indemnifying Party shall not be liable for any additional legal expenses
incurred by the Indemnified Party in connection with any defense or settlement
of such asserted liability. The Indemnifying Party shall not settle any such
Third Person claim without the consent of the Indemnified Party unless the
settlement thereof imposes no liability or obligation on, and includes a
complete release from liability of, the Indemnified Party. Subject to the
preceding sentence, if the Indemnifying Party desires to accept a final and
complete settlement of any such Third Person claim and the Indemnified Party
refuses to consent to such settlement, then the Indemnifying Party's liability
under this Section with respect to such Third Person claim shall be limited to
the amount so offered in settlement by said Third Person.
9.4 Insurance Proceeds. In computing the amount of any Losses to which
------------------
a Party shall be entitled to indemnification hereunder, such computation shall
be net of any insurance proceeds
44
which are paid to the indemnified party as a result of such Losses (after
deduction of any applicable costs in collecting such insurance and additional
premiums, if any, results from such loss).
9.5 Exclusive Remedy. Indemnification pursuant to this Article 9 is
---------------- ---------
the sole and exclusive remedy of Buyer and Seller for matters arising out of
this Agreement and the Schedules hereto and the certificates delivered in
connection herewith.
9.6 Special Covenant. During the period in which Buyer has the right
----------------
to assert a claim for indemnity under this Article 9, and for so long as any
---------
claim for such indemnity is pending, IFCO NA shall not (i) dissolve, or (ii)
cease its corporate existence, unless IFCO NA and Buyer have made arrangements
(satisfactory to Buyer) to assure that Buyer may viably assert its rights to
indemnity hereunder.
9.7 Management Stockholder's Certificates. In connection with the
-------------------------------------
execution of this Agreement, IFCO NA has obtained Management Stockholder's
Certificates from certain persons who are (or will become) stockholders of
Buyer, pursuant to which those persons make certifications to IFCO NA. Seller
agrees that such certificates shall not limit or be used as a defense or
mitigation of Buyer's rights to indemnification under Article 9 of this
---------
Agreement.
ARTICLE 10
NON-COMPETITION CONVENANTS
10.1 Seller Covenant. In exchange for the Non-Compete Payment and as a
---------------
material inducement for Buyer to purchase the Assets from Seller, Seller agrees
that for a period of two years from the Closing Date Seller will not, and will
cause its Affiliates not to, directly or indirectly:
(a) except as provided in subsection (b) below, (i) engage in any
--------------
business in competition with a Competitive Business of Buyer with
any customer listed on Schedule 10.1-A, which are current
---------------
customers of the Business that are included in the Assets;
provided, however, that notwithstanding the foregoing or anything
-------- -------
to the contrary contained herein, in no event shall Seller or its
Affiliates be restricted or limited in providing products or
services to customers in its National and Regional Accounts
programs or soliciting or engaging in any business with National
or Regional Accounts, including, without limitation, acting in a
brokerage capacity with respect to sales of new and recycled
pallets to National and Regional Account customers; or (ii) sell
or solicit sales of wooden agricultural harvesting bins or wooden
intermediate bulk containers, in each case for use in the Florida
citrus juice industry, with any customer listed on Schedule 10.1-A
---------------
to the extent such customers are respectively specifically
identified on such schedule as either current wooden agricultural
harvesting bin customers of the Business or wooden intermediate
bulk container customers of the Business;
45
(b) solicit sales of, or sell, new pallets from facilities of Seller
or its Affiliates in Staley, North Carolina, and Pine Mountain
Valley, Georgia; provided, however, that (i) Seller and its
-------- -------
Affiliates may continue to provide new pallets to the existing new
pallet customers of such facilities, which customers are
identified on Schedule 10.1-B, (ii) Seller and its Affiliates may
---------------
solicit and sell new pallets to crating customers of such
facilities, and (iii) Seller and its Affiliates may directly or
indirectly provide new pallets to customers in its National and
Regional Accounts programs; or
(c) directly or indirectly solicit or recruit any person who is then
currently an employee of Buyer or any of its Affiliates for the
purpose or with the intent of enticing such employee away from or
out of the employ of the Buyer or any of its Affiliates.
For a period of two years from the Closing Date, Buyer shall have a
right of first refusal for a reasonable time with respect to any sale of new
pallets that Seller and its Affiliates are permitted to make under this Section
-------
10.1, if such sale is to a facility that is within 250 miles of any of the
----
Facilities.
10.2 Buyer Covenant. As a material inducement for Seller to sell the
--------------
Assets to Buyer and for other good and valuable consideration, Buyer agrees that
for a period of two years from the Closing Date Buyer will not, and will cause
its Affiliates not to, directly or indirectly:
(a) engage in any business that is a Competitive Business of Seller
within 250 miles of any Facility or any facility of Seller, except
(i) as permitted under subsection (e) or (f) below and (ii) that
--------------
after the Closing, the Recycling Facilities may continue to
recycle pallets, market recycled pallets, and provide pallet
retrieval and recycling services; provided, however, that such
-------- -------
recycling products and services shall be provided directly by the
Recycling Facilities and shall not be brokered to or supplied by
any third parties, other than by the third parties identified on
Schedule 10.2-A, to the extent such third parties are and continue
---------------
to broker recycling services;
(b) engage in any business in competition with a Competitive Business
of Seller with any customer listed on Schedule 10.2-B, which are
---------------
current customers of Seller and its Affiliates and Seller's
pipeline of National and Regional Account sales that are not
included in the Assets;
(c) broker for third parties any business that is a Competitive
Business of Seller within the United States or Canada; provided,
--------
however, that Buyer shall be entitled to broker up to 25% of the
-------
revenues from regional (but not national) new pallet accounts (in
other words, a customer by customer determination), if Seller is
provided a first right of refusal for a reasonable time with
respect to such brokered revenues;
46
(d) construct or open any facility that operates a Competitive
Business of Seller within the United States or Canada;
(e) acquire the business, equity or substantially all the assets of
any Person that has more than 25% of its revenues derived from a
business that competes with a Competitive Business of Seller
within the United States or Canada, unless Buyer and its
Affiliates limits such competing business conducted by such
business or Person, or with such assets, to servicing the direct
requirements of the customers of such Person, as such customers
and requirements exist at the time of such acquisition;
(f) solicit or engage in any crating business within the United States
or Canada; provided, however, that, subject to Subsection (e), (i)
-------- ------- --------------
Buyer and its Affiliates may continue to provide wooden crate
products and services to the existing wooden crate customers of
the Facilities identified on Schedule 10.2-F, to the extent such
---------------
products and services do not materially differ from the crating
products and services provided to such customers from 1998 through
the Closing Date, and (ii) Buyer and its Affiliates shall be
entitled to a right of first refusal for a reasonable time with
respect to wooden crate products and services on all the crating
business of Seller and its Affiliates in Wisconsin, Florida,
Maine, Texas, and Indiana, provided Seller and its Affiliates
determine to outsource such business to third parties;
(g) solicit or engage in any pallet or pallet services business with
Xxxxxxxxx or any of its Affiliates, other than the Xxxxxxxxx
Ceiling Tile Division; or
(h) solicit or recruit any person who is then currently an employee of
Seller or any of its Affiliates for the purpose or with the intent
of enticing such employee away from or out of the employ of the
Seller or any of its Affiliates.
Notwithstanding the foregoing, if within two years from the Closing
Date Buyer obtains an agreement (whether written or oral) to collectively
conduct business with all three Xxxxxxxxx Ceiling Tile Division facilities
located in Mobile, Alabama, Pensacola, Florida, and Macon, Georgia, then the
covenant contained in Section 10.2(g) shall be effective for a period of five
---------------
years from the Closing Date.
10.3 Equitable Relief. Because of the difficulty of measuring economic
----------------
losses to Buyer or Seller as a result of a breach of the foregoing respective
covenants, and because of the immediate and irreparable damage that could be
caused to Buyer or Seller, as the case may be, for which it would have no other
adequate remedy, each Seller and Buyer respectively agree that the foregoing
respective covenants may be enforced by Buyer or Seller, as the case may be, by
injunctions, restraining orders and other equitable actions.
10.4 Reasonable Restraint. It is agreed by the parties hereto that the
--------------------
foregoing covenants
47
in this Article 10 impose a reasonable restraint on Seller and Buyer,
----------
respectively, in light of the activities and business of Seller on the date of
the execution of this Agreement and the current plans of Buyer and Seller.
10.5 Severability; Reformation. The covenants in this Article 10 are
------------------------- ----------
severable and separate, and the unenforceability of any specific covenant shall
not affect the continuing validity and enforceability of any other covenant. In
the event any court of competent jurisdiction shall determine that the scope,
time or territorial restrictions set forth in this Article 10 are unreasonable,
----------
then it is the intention of the parties that such restrictions be enforced to
the fullest extent which the court deems reasonable and this Agreement shall
thereby be reformed.
10.6 Material and Independent Covenant. Seller and Buyer acknowledge
---------------------------------
that their respective agreements with the covenants set forth in this Article 10
----------
are material conditions to the other party's agreement to execute and deliver
this Agreement and to consummate the transactions contemplated hereby. All of
the covenants in this Article 10 shall be construed as an agreement independent
----------
of any other provision in this Agreement, and the existence of any claim or
cause of action of Seller or Buyer against the other party or one of its
Affiliates, whether predicated on this Agreement or otherwise, shall not
constitute a defense to the enforcement of such covenants by Buyer or Seller, as
the case may be. It is specifically agreed that the two-year period during which
the agreements and covenants of Seller or Buyer, as the case may be, made in
this Article 10 shall survive shall be computed by excluding from such
----------
computation any time during which such party is in violation of any provision of
this Article 10. Except as may be otherwise expressly provided, the covenants
----------
contained in this Article 10 shall not be affected by any breach of any other
----------
provision hereof by any party hereto.
10.7 Reformation of Restrictive Agreements. The Released Employees
-------------------------------------
are parties to agreements with Seller that prohibit such employees from
competing with Seller and its Affiliates (the "Restrictive Agreements").
----------------------
Simultaneously with the Closing, all such Restrictive Agreements shall be deemed
to be automatically reformed (without any further action by such employees or
the other parties to the Restrictive Agreements), so that actions that are not
prohibited under Section 10.2 of this Agreement shall not be prohibited under
------------
the Restrictive Agreements. It is intended that such employees be third-party
beneficiaries of this Section 10.7. At Closing, Seller shall provide Buyer with
------------
letters (reasonably satisfactory to Buyer) addressed to each of employees,
informing such employees of the effect of this Section 10.7.
------------
ARTICLE 10.5
NATIONAL SALES AND MARKETING COVENANTS
10.5.1 Brokered New Pallet Sales to New Customers. For a period of two
------------------------------------------
years from the Closing Date, Seller and its Affiliates shall receive a 5%
commission on the gross sales price of new pallets (the "Seller Commission")
-----------------
that Seller or its Affiliates purchase from Buyer or its Affiliates for sale to
National or Regional Account customers of Seller, unless Seller and Buyer
specifically otherwise agree in writing as to a particular order. Buyer shall be
entitled to a first
48
right of refusal for a reasonable time with respect to sales of new pallets
being brokered by Seller or its Affiliates at quoted prices for sourcing within
250 miles of any Facility of the Buyer. Without limiting the generality of the
foregoing, if Buyer's pricing of products is not sufficient to provide Seller or
its Affiliate a 5% commission due to the price Seller or its Affiliate is to
charge its National or Regional Account customer, Seller or its Affiliate has
the right to pursue competing new pallet suppliers for such National or Regional
Account customer.
10.5.2 Seller's Terms.
--------------
(a) Unless Seller and Buyer specifically otherwise agree in
writing as to a particular order, Seller's terms for purchases
of new pallets from Buyer in accordance with the provisions of
this Agreement shall be 1%/10, net 30 days after the date of
the invoice.
(b) If (i) Seller fails to pay or remit to Buyer amounts payable
under subsection (a) above within 30 days of the invoice date,
--------------
net of any payables or liabilities of Buyer or its Affiliates
to Seller or its Affiliates, (ii) Seller has not provided
Buyer written notice of a good faith dispute regarding such
payable, (iii) the aggregate of the undisputed amounts payable
to Buyer under subsection (a) exceeds $150,000, (iv) Buyer
--------------
provides written notice to Seller and its Chief Financial
Officer of its failure to receive such payment or remittance
within the applicable time period, which notice shall
specifically identify the late payment or remittance (the
"Nonpayment Notice"), and Seller fails to make, or cause to be
-----------------
made, the payment or remittance identified in the Nonpayment
Notice within 10 days of Seller's and its Chief Financial
Officer's receipt of the Nonpayment Notice, (v) Buyer provides
a second Nonpayment Notice to Seller and its Chief Financial
Officer, and Seller fails to make, or cause to be made, the
identified payments or remittances within 10 days of their
receipt of the second Nonpayment Notice, (vi) Buyer provides a
third Nonpayment Notice to Seller and its Chief Financial
Officer, and Seller fails to make, or cause to be made, the
identified payments or remittances within 10 days of their
receipt of the third Nonpayment Notice, then notwithstanding
anything herein to the contrary, Buyer may sell directly to
the customers of Seller to which the Nonpayment Notice
relates.
10.5.3 Core Purchases.
--------------
(a) For a period of two years from the Closing Date, Seller and
its Affiliates shall provide Buyer a first right of refusal to
purchase pallet cores from National and Regional Account
customers of Seller at market price, as determined and quoted
by Seller and its Affiliates; provided, however, such first
-------- -------
right of refusal shall only apply to the extent (i) Seller or
its Affiliates determine to sell such pallet cores to a third
party and (ii) the source of such pallet cores is within a 250
mile radius of a Core Retrieval Facility.
49
(b) Buyer's payment terms for the pallet cores it purchases in
accordance with this Section 10.5.3 shall be 1%/10, net 30 days
--------------
from date of invoice unless Buyer and Seller specifically agree
otherwise as to a specific order or account.
50
10.5.4 Supply Agreement.
----------------
(a) If Buyer fails to supply new and/or recycled pallets and related
services to any National or Regional Account customer that Buyer
has agreed to provide products or services in accordance with the
terms in effect with such customer, then Seller or its Affiliate
shall provide Buyer written notice of such failure. Seller shall
be entitled to terminate the supply agreement with Buyer, as
contemplated by this Section 10.5.4(a), as to any National or
-----------------
Regional Account customer that complains of the products or
services of Buyer or its Affiliates, unless Buyer has promptly
responded to service complaints to the satisfaction of such
National or Regional Account customer and promptly replaced, at
Buyer's expense, any pallets rejected by such National or
Regional Account customer; provided, however, that (i) Seller
-------- -------
must provide Buyer timely written notice of each such complaint,
and (ii) Seller shall act in good faith if Buyer provides Seller
written notice, within a reasonable time, that the complaints of
such National or Regional Account customer are unjustified or
without merit.
(b) Buyer shall be entitled to terminate the supply agreement
provided for in this Section 10.5.4 as to any National or
--------------
Regional Account customer by written notice to Seller, which
written notice must be provided by Buyer by the later of (i) 60
days from the effective date of the termination and (ii) the
advance notice of termination period described in Seller's
agreement with such National or Regional Account customer.
(c) If Seller is entitled to terminate and terminates, or Buyer
terminates, supplying pallets or services to a facility of any
National or Regional Account customer, then Seller shall be
entitled to replace Buyer as the supplier of pallets or services
at all facilities of such National or Regional Account customer
and its Affiliates.
(d) In connection with supplying new and/or recycled pallets and
related services to customers of Seller, Buyer shall indemnify
Seller and its Affiliates and hold them harmless from and against
any Losses incurred by them as a result of Buyer's products,
services, or presence on the premises of such customers.
(e) Products or services provided to, or required to be provided to,
any customer shall only be provided, or be required to be
provided, as long as the customer for such products or services
is a customer of Seller or its Affiliates.
(f) If Buyer acts in bad faith that results in Seller losing a
National or Regional Account , or if Buyer terminates its supply
of pallets or services to any National or Regional Account
customer without complying with the provisions of Section
-------
10.5.4(b), then Seller shall be entitled to terminate all its
---------
then existing National and Regional Account supply agreements
with Buyer and replace Buyer with a new
51
supplier of its choice.
10.5.5 Force Majeure. Neither Seller nor Buyer will be considered in
-------------
default or breach of, or liable for any delay or failure to perform any
provision of this Article 10.5, if such delay or failure arises directly or
------------
indirectly out of an act of nature, acts of the public enemy, freight embargoes,
strikes, quarantine restrictions, unusually severe weather conditions,
insurrection, riot and other such causes beyond the control of the party
responsible for the delay or failure to perform, provided the affected party
notifies the other party within 15 days following the commencement of the
occurrence.
ARTICLE 11
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
11.1 Confidentiality of Information. With respect to Confidential
------------------------------
Information provided by either Party or their respective Affiliates in
connection with and relative to the transactions contemplated by this Agreement,
the Parties agree to cause (and shall be liable for) their respective officers,
employees, representatives and agents (including, without limitation, their
respective attorneys and accountants) to hold all such Confidential Information
in strict confidence and only to disclose such Confidential Information to such
duly authorized persons as are necessary to effect the transactions contemplated
hereby, and, if requested, to return all originals and copies of any such
Confidential Information to the other Party or its Affiliates (as applicable) in
the event, for any reason, the transactions contemplated hereby are not
consummated. Nothing in this Section 11.1 shall prohibit the use of such
------------
Confidential Information for such governmental filings as are required by law or
governmental regulations or the disclosure of such Confidential Information if
such disclosure is compelled by judicial or administrative process or, in the
opinion of counsel for the Party requesting such disclosure, other requirements
of Law. Nothing in this Section 11.1 shall prohibit either Party from
------------
communicating this Agreement and the transactions contemplated hereby with its
attorneys, accountants, and prospective lenders and other equity participants on
a confidential basis. Each Party agrees that it will not use, and will not
knowingly permit others to use, any Confidential Information of the other Party
in a manner detrimental to the Business, to either Party, to the Parties'
respective Affiliates or to their competitive disadvantage. Each Party and its
respective officers, employees and agents recognize that any breach of this
Section 11.1 would result in irreparable harm to the other Party and its
------------
Affiliates and that therefore the affected Party or its Affiliates shall be
entitled to an injunction to prohibit any such breach by the disclosing Party
and its officers, employees and agents in addition to all of their other legal
and equitable remedies. For the purposes hereof, "Confidential Information"
------------------------
shall mean all information of any kind concerning a Party or any of its
Affiliates obtained, directly or indirectly, from such Party or its Affiliates
in connection with the transactions contemplated by this Agreement except
information (i) ascertainable or obtained from public or published information,
(ii) received from a third party not under an obligation to keep such
information confidential, (iii) which is or becomes known to the public (other
than through a breach of this Agreement) or (iv) which was in the disclosing
Party's possession prior to disclosure thereof to such Party in connection
herewith.
52
11.2 Equitable Relief. Because of the difficulty of measuring economic
----------------
losses as a result of the breach of the foregoing covenant, and because of the
immediate and irreparable damage that would be caused for which the Parties
would have no other adequate remedy, the Parties agree that the foregoing
covenants may be enforced against them by injunctions, restraining orders and
other equitable actions.
ARTICLE 12
MISCELLANEOUS
12.1 No Third Party Beneficiaries. Except as provided in Article 9 with
---------------------------- ---------
respect to indemnification of Indemnified Parties hereunder, and except as
described in Section 10.7, nothing in this Agreement shall confer any rights
------------
upon any person or entity other than the parties hereto and their respective
heirs, successors and permitted assigns.
12.2 Entire Agreement. This Agreement (including the Schedules,
----------------
exhibits and annexes attached hereto) and the documents delivered pursuant
hereto constitute the entire agreement and understanding among Buyer and Seller
and supersede any prior agreement and understanding relating to the subject
matter of this Agreement. This Agreement may be modified or amended only by a
written instrument executed by Buyer and Seller.
12.3 Counterparts. This Agreement may be executed simultaneously in two
------------
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
12.4 Notices. All notices and communications required or permitted
-------
hereunder shall be in writing and may be given by depositing the same in the
United States mail, addressed to the party to be notified, postage prepaid and
registered or certified with return receipt requested, or by delivering the same
in person to an officer or agent of such party, as follows:
(a) If to Seller, addressed to them at:
IFCO Systems North America, Inc.
0000 Xxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Attn: President
With a copy to:
Gardere Xxxxx Xxxxxx LLP
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xxxxxx Xxxxx, Esq.
53
(b) If to Buyer, addressed as follows:
PalletOne, Inc.
c/o The White Oak Company
0000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Xx.
With a copy (which shall not constitute notice) to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxx X. Xxxx, Esq.
or such other address as any party hereto shall specify pursuant
to this Section 12.4 from time to time.
------------
12.5 Governing Law. This Agreement shall be construed in accordance
-------------
with the laws of the State of Texas (without regard to its principles governing
conflicts of laws).
12.6 Survival of Representations and Warranties. The representations
------------------------------------------
and warranties of Seller set forth in Article 3 shall survive the Closing for
---------
the periods set forth in Section 9.1(d), and the representations and warranties
--------------
of Buyer set forth in Article 4 shall survive the Closing indefinitely.
---------
12.7 Exercise of Rights and Remedies. Except as otherwise provided
-------------------------------
herein, no delay of or omission in the exercise of any right, power or remedy
accruing to any Party as a result of any breach or default by any other Party
under this Agreement shall impair any such right, power or remedy, nor shall it
be construed as a waiver of or acquiescence in any such breach or default, or of
any similar breach or default occurring later; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
occurring before or after that waiver.
12.8 Reformation and Severability. In case any provision of this
----------------------------
Agreement shall be invalid, illegal or unenforceable, it shall, to the extent
possible, be modified in such manner as to be valid, legal and enforceable, but
so as to most nearly retain the intent of the parties, and if such modification
is not possible, such provision shall be severed from this Agreement, and in
either case, the validity, legality and enforceability of the remaining
provisions of this Agreement shall not in any way be affected or impaired
thereby.
12.9 Assignment. This Agreement shall not be assignable or otherwise
----------
transferable by any party hereto without the prior written consent of the other
party hereto, provided that Buyer may assign this Agreement to any Affiliate of
--------
Buyer or to any lender to Buyer or any Affiliate
55
thereof as security for obligations to such lender in respect of the financing
arrangements entered into in connection with the transactions contemplated
hereby and any refinancings, extensions, refundings or renewals thereof,
provided, further, that no assignment to any such lender shall in any way affect
-------- -------
the Buyer's obligations or liabilities under this Agreement.
[The remainder of page intentionally left blank.]
56
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first written above.
SELLERS:
IFCO SYSTEMS NORTH AMERICA, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------------
Title: President
------------------------------------
SHIPSHEWANA PALLET CO., INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------------
Title: President
------------------------------------
IFCO SYSTEMS FLORIDA, INC.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------------
Title: President
------------------------------------
PALEX-TEXAS, L.P.
By: PalEx-Texas, Inc.,
its general partner
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Name Xxxxx X. Xxxxxxx
---------------------------------------
Title: President
--------------------------------------
SHEFFIELD LUMBER AND PALLET
COMPANY, INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxx X. Xxxxxxx
--------------------------------------
Title: President
--------------------------------------
SOUTHERN PALLET, INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
--------------------------------------
Title: President
--------------------------------------
NEW LONDON PALLET INC.
By: /s/ Xxxxx X. Xxxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxxx
--------------------------------------
Title: President
--------------------------------------
XXXXXXX PALLET CO., INC.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------------
Title: President
----------------------------------
XXXXXXXX LUMBER CO.
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------------
Title: President
----------------------------------
BUYER:
PALLETONE, INC.
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
--------------------------------------
Xxxxxx X. Xxxxxxx, Xx., President
WHITE OAK CAPITAL PARTNERS, L.P.
d/b/a THE WHITE OAK COMPANY
By: /s/ Xxxxxx X. Xxxxxxx, Xx.
-------------------------------------------
Xxxxxx X. Xxxxxxx, Xx.,
Managing Director
EXHIBIT A
FORM OF XXXX OF SALE
XXXX OF SALE
AND
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Xxxx of Sale and Assignment and Assumption Agreement ("Xxxx of
-------
Sale") is entered into as of September _______, 2001, by and among PalletOne,
----
Inc., a Delaware corporation ("Buyer"), IFCO Systems North America, Inc., a
-----
Delaware corporation ("IFCO NA"), and the wholly owned subsidiaries of IFCO NA
-------
whose names appear on the signature pages of this Agreement (the
"Subsidiaries"). The Subsidiaries, together with IFCO NA, are collectively
------------
referred to herein as "Seller". Capitalized terms used but not defined herein
------
shall have the respective meanings assigned thereto in the Asset Purchase
Agreement, dated as of September 6, 2001 ("Asset Purchase Agreement"), by and
------------------------
among Buyer, Seller and White Oak Capital Partners, L.P., d/b/a The White Oak
Company.
WHEREAS, pursuant to the Asset Purchase Agreement, Seller has agreed to
sell, transfer, convey, assign and deliver to Buyer all of Seller's right, title
and interest in and to the Assets on the terms and conditions set forth therein.
WHEREAS, in accordance with the terms of the Asset Purchase Agreement,
Buyer has agreed to assume certain liabilities of Seller on the terms and
conditions set forth therein.
WHEREAS, this Xxxx of Sale is delivered pursuant to Section 2.7 of the
-----------
Asset Purchase Agreement.
NOW, THEREFORE, in consideration of the transactions pursuant to the
Asset Purchase Agreement, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Sale of Assets. Seller hereby sells, transfers, conveys,
--------------
delivers and assigns to Buyer, its successors and assigns forever, all of the
right, title and interest of Seller in, the Assets.
2. Assumption of Liabilities. Subject to the terms and conditions
-------------------------
set forth in the Asset Purchase Agreement and except for the Excluded
Liabilities, Buyer agrees to timely pay, honor and discharge the Assumed
Liabilities; provided, however, that such assumption of liabilities shall be
-------- -------
only to the extent to be performed, paid or discharged after the Closing Date,
Buyer not assuming (and not being responsible for) any obligation of Seller
under such agreements due or accruing prior to the Closing Date. In no event
shall the claims, liabilities and obligations assumed by Buyer pursuant to this
Xxxx of Sale include any of the Excluded Liabilities. Seller shall be
responsible for paying, performing and discharging all liabilities and
obligations of Seller other than the Assumed Liabilities.
3. Governing Law; Choice of Forum. This Xxxx of Sale shall be
------------------------------
governed by and construed in accordance with the Laws of the State of Texas
(without regard to its conflicts of law doctrines). Any action or proceeding
seeking to enforce any provision of or based on any right arising out of, this
Xxxx of Sale may be brought against any of the parties in the State of Texas,
or, if it
has or can acquire jurisdiction, in the United States District Court for the
Northern District of Texas, and the parties hereto consent to the jurisdiction
of such courts (and of the appropriate appellate courts) in any such action or
proceeding and waives any objection to serve laid therein.
4. Counterparts. This Xxxx of Sale may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and shall become a binding
agreement when one or more of the counterparts have been signed by each of the
parties and delivered to the other party.
5. Headings. The section headings contained in this Xxxx of Sale
--------
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Xxxx of Sale.
6. Further Assurances. From time to time, as and when requested
------------------
by Buyer, Seller shall execute and deliver, at Buyer's expense, those
instruments, documents and certificates as Buyer may reasonably request to more
effectively consummate the transactions contemplated by the Asset Purchase
Agreement.
7. Severability. If any one or more provisions contained in this
------------
Xxxx of Sale shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Xxxx of Sale, but this Xxxx of Sale
shall be construed as if such invalid, illegal, or unenforceable provision had
never been contained herein.
8. Schedules; Exhibits. All Schedules and Exhibits attached to
-------------------
the Asset Purchase Agreement are hereby incorporated in and made a part as if
set forth in full herein.
9. Survival. The parties hereto agree that this Xxxx of Sale is
--------
subject to the terms and conditions of the Asset Purchase Agreement and that,
notwithstanding anything contained herein to the contrary, this Xxxx of Sale
shall not be deemed to limit, enlarge or extinguish any obligation of Buyer or
Seller under the Asset Purchase Agreement, all of which obligations shall
survive the delivery of this Xxxx of Sale in accordance with the terms of the
Asset Purchase Agreement. In case of any conflict between the Asset Purchase
Agreement and this Xxxx of Sale, the Asset Purchase Agreement shall govern.
* * * * * *
IN WITNESS WHEREOF, the parties have executed this Xxxx of Sale as of
September , 2001.
SELLER:
IFCO SYSTEMS NORTH AMERICA, INC.
By:_____________________________________
Name: _________________________________
Title _________________________________
SHIPSHEWANA PALLET CO., INC.
By:_____________________________________
Name: _________________________________
Title: _________________________________
IFCO SYSTEMS FLORIDA, INC.
By:_____________________________________
Name: _________________________________
Title: _________________________________
PALEX-TEXAS, L.P.
By: PalEx-Texas, Inc.,
its general partner
By:_____________________________________
Name: _________________________________
Title: _________________________________
SHEFFIELD LUMBER AND PALLET
COMPANY, INC.
By:_____________________________________
Name: _________________________________
Title: _________________________________
SOUTHERN PALLET, INC.
By:_____________________________________
Name: _________________________________
Title: _________________________________
NEW LONDON PALLET INC.
By:_____________________________________
Name: _________________________________
Title: _________________________________
XXXXXXX PALLET CO., INC.
By:_____________________________________
Name: _________________________________
Title: _________________________________
XXXXXXXX LUMBER CO.
By:_____________________________________
Name: _________________________________
Title: _________________________________
BUYER:
PALLETONE, INC.
By:
______________________________________
__________________________, President
EXHIBIT B
FORM OF OPINION OF GARDERE XXXXX XXXXXX LLP
FORM OF OPINION OF GARDERE XXXXX XXXXXX LLP
1. Each Seller is an existing corporation or limited partnership
in good standing under the laws of the state of its incorporation or formation.
2. Each Seller has the corporate or partnership power and
authority, as applicable, to own or lease its properties and to conduct its
business as currently conducted.
3. Each of IFCO NA and each Subsidiary has all corporate or
partnership power and authority, as applicable, to execute, deliver and perform
its respective obligations under the Transaction Documents.
4. The Transaction Documents have been duly authorized by all
necessary corporate or partnership action on the part of each Seller, and have
been duly executed and delivered by each Seller.
5. IFCO NA is the record owner (directly or indirectly) of 100%
of the equity securities of the Subsidiaries.
6. All corporate or partnership proceedings required to be taken
by Sellers in connection with the transactions contemplated by the Transaction
Documents have been duly taken.
7. The Transaction Documents constitute the legal, valid and
binding obligations of Sellers, and are enforceable against Sellers in
accordance with their respective terms.
8. Neither the execution or delivery by Sellers of the
Transaction Documents, nor the performance of any of the obligations thereunder
or the consummation of any or all of the transactions contemplated thereby, (a)
violates the charter or partnership certificate, as applicable, or the bylaws or
partnership agreement, as applicable, of any Seller, as amended to the date
hereof, (b) to our knowledge, breaches or constitutes a default under any order,
judgment or decree against any Seller or the Assets by any court or
administrative agency or authority having jurisdiction over any Seller or the
Assets, or (c) violates any law or regulation applicable to any Seller. [Counsel
may carve out applicable bulk sales laws in qualifications.]
9. No consent, authorization or approval of, or exemption by, or
filing with, any governmental authority or regulatory body is required in
connection with the execution and delivery by Sellers of the Transaction
Documents or Seller's closing of the transactions contemplated thereby. [Counsel
may carve out HSR in qualifications.]
10. To our knowledge, there is no action, suit or proceeding
pending or overtly threatened against any of the Sellers or the Assets before
any court, arbitrator or governmental agency or authority or arbitration
tribunal that could reasonably be expected to have a material adverse effect on
any of the Sellers or that challenges, or that could reasonably be expected to
have the effect of preventing, delaying, making illegal, or otherwise
interfering with, the Transaction Documents.
[Counsel's opinion will be limited to Texas state and federal law and Delaware
corporate law.]
EXHIBIT C
FORM OF RELEASE
GENERAL RELEASE
---------------
This General Release is delivered in connection with that certain Asset
Purchase Agreement (the "Asset Purchase Agreement") dated as of September 6,
------------------------
2001 among IFCO Systems North America, Inc., certain of its wholly owned
subsidiaries, PalletOne, Inc., and White Oak Capital Partners, L.P. d/b/a The
White Oak Company. Capitalized terms used herein and not otherwise defined shall
have the meanings provided in the Asset Purchase Agreement. This General Release
is one of the releases referred to in Section 7.2(r) and Section 7.3(e) of the
------------- -------------
Asset Purchase Agreement.
For good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged by the undersigned, the undersigned __________ ,
for itself and on behalf of its successors and assigns, or heirs,
administrators, executors and assigns, as applicable ("Releasor"), hereby
--------
generally releases and discharges_________________________ (the "Releasee") and
---------
its successors and assigns, or heirs, administrators, executors and assigns, as
applicable (each a "Released Party"), of and from any and all claims, demands,
--------------
commitments, indebtedness, suits (including but not limited to claims pursuant
to securities laws and claims based on securities fraud), obligations and
liabilities, contingent or otherwise, of every kind and nature, including claims
and causes of action both in law and in equity, which Releasor ever had, now has
or, to the extent arising from or in connection with any act, omission or state
of facts taken or existing prior to the date hereof, against any Released Party,
whether asserted, unasserted, absolute, contingent, known or unknown; provided,
--------
however, that this General Release shall not affect any rights of Releasor
-------
against Released Party which are expressly set forth in the Asset Purchase
Agreement.
The undersigned hereby represents to the Released Parties that (i)
Releasor has not assigned any claim or possible claim against any Released
Party, (ii) Releasor fully intends to release all claims against the Released
Parties including without limitation unknown and contingent claims (other than
those specifically reserved above) which accrued prior to the date hereof, and
(iii) Releasor has consulted with counsel with respect to the execution and
delivery of this General Release and has been fully apprised of the consequences
hereof.
Nothing in this General Release shall be construed to limit or
otherwise affect any rights the undersigned has or may have against the Released
Parties that arise subsequent to the Closing.
This general release shall be governed by and construed in accordance
with the internal laws of the State of Texas.
* * * * *
EXECUTED as of September ____, 2001.
Releasor:
__________________________________
EXHIBIT D
FORM OF MANAGEMENT STOCKHOLDER'S CERTIFICATE
MANAGEMENT STOCKHOLDER'S CERTIFICATE
This Management Stockholder's Certificate, dated as of ________, 2001
(this "Certificate"), is being executed and delivered to IFCO Systems North
America, Inc. ("IFCO NA"), and certain of the wholly owned subsidiaries of IFCO
NA, in connection with the execution and closing of the transactions
contemplated by that certain Asset Purchase Agreement dated as of September 6,
2001, by and among IFCO NA, the Subsidiaries, PalletOne, Inc., and White Oak
Capital Partners, L.P. (the "Agreement"). Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed thereto in the Agreement.
WHEREAS, the undersigned is currently a management level employee of
IFCO NA and/or a Subsidiary; and
WHEREAS, the undersigned is, or as of the Closing is currently
committed to be, a stockholder of Buyer; and
WHEREAS, Seller is requiring the undersigned, and other current members
of management of IFCO NA and/or a Subsidiary who are stockholders in Buyer, to
make the certifications set forth in this Certificate as a precondition to
entering the Agreement and consummating the transactions contemplated thereby.
NOW, THEREFORE, BE IT RESOLVED, in consideration of the foregoing and
for other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the undersigned, intending to be legally bound, hereby
certifies to Seller the following as of the date first written above:
1. The undersigned has reviewed the Agreement.
2. To the actual knowledge of the undersigned, the Seller's representations
and warranties in Article III are true in all material respects; [the
Certificates of those persons other than Xxxx Xxxxxxx and Xxxxx Xxxxxxxx
shall contain the following: provided, however, this certification shall
-------- -------
be limited to the extent of the Business, Assets or Facilities over which
the undersigned has, or has had, managerial authority or responsibility.]
3. The undersigned hereby acknowledges Seller will rely on this Certificate
to execute the Agreement and consummate the transactions contemplated
thereby.
This Certificate shall not limit Buyer's rights to indemnification
under Article IX of the Agreement.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
as of the date first written above.
______________________________
