EXHIBIT 4.27
AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
BETWEEN
BPB U.S. HOLDINGS, INC.
A Delaware Corporation
AND
XXXXX XXXXXX INC.
A California Corporation
Dated as of March 12, 2002
TABLE OF CONTENTS
Section Page
------- ----
Article I SALE AND PURCHASE OF SHARES .......................... 2
1.1 Sale and Purchase of Shares .............................. 2
Article II PURCHASE PRICE AND PAYMENT ........................... 2
2.1 Amount of Purchase Price ................................. 2
2.2 Payment of Preliminary Purchase Price .................... 2
2.3 Post-Closing Adjustment of Preliminary Purchase Price .... 2
Article III CLOSING AND TERMINATION .............................. 5
3.1 Closing Date ............................................. 5
3.2 Termination of Agreement ................................. 5
3.3 Procedure Upon Termination .............................. 5
3.4 Effect of Termination .................................... 6
Article IV REPRESENTATIONS AND WARRANTIES OF THE SELLER ......... 6
4.1 Organization and Good Standing ........................... 6
4.2 Authorization of Agreement ............................... 6
4.3 Capitalization ........................................... 7
4.4 No Subsidiaries .......................................... 7
4.5 Corporate Records ........................................ 7
4.6 Conflicts; Consents of Third Parties ..................... 7
4.7 Ownership and Transfer of Shares ......................... 8
4.8 Financial Statements ..................................... 8
4.9 No Undisclosed Liabilities ............................... 8
4.10 Absence of Certain Developments .......................... 9
4.11 Tax Returns, Payments and Elections ...................... 11
4.12 Real Property ............................................ 13
4.13 Tangible Personal Property ............................... 16
4.14 Intangible Property ...................................... 17
4.15 Material Contracts ....................................... 18
4.16 Employee Benefits ........................................ 18
4.17 Labor .................................................... 20
4.18 Litigation ............................................... 20
4.19 Compliance with Laws; Permits ............................ 21
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Section Page
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4.20 Environmental Matters ......................................... 21
4.21 Insurance ..................................................... 23
4.22 Related Party Transactions .................................... 23
4.23 Customers and Suppliers ....................................... 23
4.24 Product Warranties: Regulatory Compliance Regarding Products .. 23
4.25 Financial Advisors ............................................ 24
4.26 No Other Representations and Warranties ....................... 24
Article V REPRESENTATIONS AND WARRANTIES OF PURCHASER ............... 24
5.1 Organization and Good Standing ................................ 24
5.2 Authorization of Agreement .................................... 24
5.3 Conflicts; Consents of Third Parties .......................... 25
5.4 Litigation .................................................... 25
5.5 Investment Intention .......................................... 25
5.6 Financial Advisors ............................................ 25
5.7 Financial Resources ........................................... 25
Article VI COVENANTS ................................................. 26
6.1 Access to Information; Confidentiality ........................ 26
6.2 Conduct of the Business Pending the Closing ................... 26
6.3 Consents ...................................................... 29
6.4 Filings with Governmental Bodies .............................. 29
6.5 Reasonable Commercial Efforts ................................. 30
6.6 No Solicitation ............................................... 30
6.7 Access to Records ............................................. 30
6.8 Publicity ..................................................... 31
6.9 Settlement of Intercompany Obligations ........................ 31
6.10 Change of Name; Use of Trade Names ............................ 31
6.11 Title Insurance ............................................... 32
6.12 Insurance ..................................................... 32
6.13 Replacement of Seller on Guarantees ........................... 33
6.14 Employee Matters .............................................. 33
6.15 Las Vegas Property ............................................ 35
6.16 Patent Lawsuits ............................................... 39
6.17 Trademark Licenses/Assignments ................................ 40
Article VII CONDITIONS TO CLOSING ..................................... 40
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Section Page
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7.1 Conditions Precedent to Obligations of Purchaser ................. 40
7.2 Conditions Precedent to Obligations of the Seller ................ 41
Article VIII DOCUMENTS TO BE DELIVERED .................................... 42
8.1 Documents to be Delivered by the Seller .......................... 42
8.2 Documents to be Delivered by the Purchaser ....................... 43
Article IX INDEMNIFICATION; TAX MATTERS ................................. 43
9.1 Non-Tax Indemnification .......................................... 43
9.2 Survival of, and Limitations on Indemnification for Breaches of,
Representations and Warranties; Other Indemnification Matters .... 44
9.3 Non-Tax Indemnification Procedures ............................... 46
9.4 Calculation of Losses ............................................ 47
9.5 Certain Other Limitations ........................................ 48
9.6 Tax Matters ...................................................... 48
9.7 Tax Returns ...................................................... 49
9.8 Tax Contests ..................................................... 50
9.9 Assistance and Cooperation ....................................... 51
9.10 Election Under Section 338(h)(10) ................................ 52
Article X MISCELLANEOUS ................................................ 53
10.1 Certain Definitions .............................................. 53
10.2 Expenses ......................................................... 59
10.3 Specific Performance ............................................. 59
10.4 Further Assurances ............................................... 59
10.5 Submission to Jurisdiction; Consent to Service of Process ........ 59
10.6 Entire Agreement; Amendments and Waivers ......................... 59
10.7 Governing Law .................................................... 60
10.8 Table of Contents and Headings ................................... 60
10.9 Notices .......................................................... 60
10.10 Severability ..................................................... 61
10.11 Binding Effect; Assignment ....................................... 61
10.12 Disclosure Generally ............................................. 61
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AMENDED AND RESTATED
STOCK PURCHASE AGREEMENT
AMENDED AND RESTATED STOCK PURCHASE AGREEMENT, dated as of March
12, 2002 (the "Agreement"), between BPB U.S. Holdings, Inc., a Delaware
corporation (the "Purchaser"), and Xxxxx Xxxxxx Inc., a California corporation
(the "Seller").
WITNESSETH:
WHEREAS, the Seller and Purchaser are parties to that certain Stock
Purchase Agreement (including the Exhibits and Schedules thereto), dated as of
March 12, 2002 (the "Initial Agreement");
WHEREAS, each of the Seller and Purchaser desire to amend and
restate the Initial Agreement in its entirety in accordance with the terms
hereof;
WHEREAS, the Seller owns or, at the Closing as hereinafter defined,
will own an aggregate of 1,127 shares of common stock (the "JHG Shares") of
Xxxxx Xxxxxx Gypsum, Inc., a Nevada corporation ("JHG") which JHG Shares
constitute all of the issued and outstanding shares of capital stock of JHG;
WHEREAS, the Seller owns or, at the Closing, will own an aggregate
of 1,000 shares of common stock (the "WMM Shares" and, collectively with the JHG
Shares, the "Shares") of Western Mining and Minerals, Inc., a Nevada corporation
("WMM" and, collectively with JHG, the "Companies"), which WMM Shares constitute
all of the issued and outstanding shares of capital stock of WMM;
WHEREAS, the Seller desires to sell to Purchaser, and Purchaser
desires to purchase from the Seller, the Shares for the purchase price and upon
the terms and conditions hereinafter set forth;
WHEREAS, the Board of Directors of each of the Seller and the
Purchaser has approved the sale and purchase of the Shares upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, as an inducement to the Purchaser to enter into this
Agreement, Xxxxx Xxxxxx Industries, N.V., a corporation organized under the laws
of The Netherlands ("Seller's Parent"), is delivering to the Purchaser herewith
a guarantee of the Seller's performance of its obligations hereunder and as an
inducement to the Seller to enter into this Agreement, BPB plc, a public limited
company incorporated under the laws of England and Wales ("Purchaser's Parent"),
is delivering to the Seller herewith a guarantee of the Purchaser's obligations
hereunder, substantially in the forms of Exhibits A and A-1 (collectively, the
"Guarantees");
WHEREAS, one of the conditions precedent to the Closing under the
Initial Agreement was the receipt of the Xxxxx Consent;
WHEREAS, the parties hereto acknowledge that the Xxxxx Consent has
been received; and
WHEREAS, certain terms used in this Agreement are defined in Section
10.1.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements hereinafter contained, the parties hereby agree as
follows:
ARTICLE I
SALE AND PURCHASE OF SHARES
1.1 Sale and Purchase of Shares. Upon the terms and subject to the
conditions contained herein, on the Closing Date the Seller shall sell, assign,
transfer, convey and deliver to the Purchaser, and the Purchaser shall purchase
from the Seller, the Shares.
ARTICLE II
PURCHASE PRICE AND PAYMENT
2.1 Amount of Purchase Price. The purchase price for the Shares (the
"Purchase Price") shall be an amount equal to:
(a) the Enterprise Value,
(b) less the aggregate amount, if any, of Non-Working Capital
Financial Liabilities, as reflected on the Final Closing Accounts,
(c) plus the amount, if any, by which the Working Capital, as
reflected on the Final Closing Accounts, exceeds $25,000,000 and
(d) less the amount, if any, by which the Working Capital, as
reflected on the Final Closing Accounts, is less than $25,000,000.
(e) The Purchase Price shall be allocated between the JHG Shares and
the WMM Shares in the manner set forth on Schedule 2.3 (as allocated to the JHG
Shares, the "JHG Purchase Price").
2.2 Payment of Preliminary Purchase Price. On the Closing Date, the
Purchaser shall pay to the Seller the Enterprise Value (the "Preliminary
Purchase Price") by wire transfer of immediately available funds into an account
designated by the Seller.
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2.3 Post-Closing Adjustment of Preliminary Purchase Price. The
Purchaser and Seller agree to use commercially reasonable efforts to cooperate
with each other and with each of their respective firms of accountants in order
to facilitate and expedite the preparation and audit of each of the sets of
accounts referred to below.
(a) As soon as practicable, but in any event within forty-five (45)
days following the Closing Date, the Purchaser shall cause the Companies to
prepare and deliver to the Purchaser and the Seller:
(i) draft profit and loss accounts and balance sheets, including
notes thereto, for each of JHG and WMM and JHG and WMM combined. The format of
these accounts should be consistent with the Companies' usual monthly management
accounts reporting package, including footnotes thereto (a copy of the January
2002 reporting package is attached, for illustrative purposes, as Schedule
2.3(a));
(ii) draft trial balances of the Companies, together with
consolidation workings, if appropriate; and
(iii) a draft of the Closing Schedule ("Draft Closing Schedule"), an
example of which is presented in Schedule 2.3, showing the classification of the
balance sheets into Non-Working Capital Financial Liabilities, Working Capital
and other net assets and showing adjustments made for Excluded Assets and
Liabilities and the calculation of the Post-Closing Adjustment to the
Preliminary Purchase Price.
(iv) All financial information in (i) -(iii) above is to be prepared
as at the close of business on the day before the Closing Date and together
constitutes the "Draft Closing Accounts," items (i) and (iii) to be
substantially audited although not yet finally certified by
PricewaterhouseCoopers LLP ("Seller's Accountants").
(b) The Draft Closing Accounts shall be prepared in accordance with
GAAP and with the principles, methods, format and definitions set forth in this
Section 2.3 and in Schedule 2.3. Should there be any conflict between GAAP and
this Section 2.3, this Section 2.3 shall prevail. The Seller shall use
commercially reasonable efforts to cause the Seller's Accountants to have
substantially completed their audit work by the time the Draft Closing Accounts
are delivered pursuant to this Section. Audit materiality is to be set at
$1,000,000. All account balances included in the JHG and WMM trial balances
including Excluded Assets and Liabilities, regardless of materiality, will be
reviewed during the audit to understand the nature and reasonableness of the
balance, and to determine that they are correctly classified for purposes of the
Post-Closing Adjustment of the Preliminary Purchase Price in the Draft Closing
Schedule.
(c) Ernst & Young LLP ("Purchaser's Accountants") shall have the
opportunity to consult with and be involved with the planning of the audit prior
to Closing, and to observe the taking of inventories in connection with the
preparation of the Draft Closing Accounts. Upon delivery of the Draft Closing
Accounts and prior to their certification by the Seller's Accountants, the
Purchaser's Accountants will be provided with access to the work papers,
schedules (including a schedule of all unadjusted differences and errors
identified during the audit) and other documents, prepared by or reviewed by the
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Seller's Accountants in connection with both the preparation of the Draft
Closing Accounts and the March 31, 2002 fiscal year end corporate financial
statements.
(d) After consultation between the Seller's Accountants and the
Purchaser's Accountants, twenty-one (21) days following the delivery of the
Draft Closing Accounts, the Purchaser shall cause the Company to prepare and
deliver to the Purchaser and the Seller, the Closing Accounts (to comprise the
final versions of the documents set out in Section 2.3 (a)(i)-(iii), above, of
which the items described in Section 2.3(a)(i) and (iii) shall be audited and
certified by the Seller's Accountants and shall be prepared in accordance with
the principles, methods, format and methodology set forth in this Section and
Schedule 2.3).
(e) The Purchaser shall have a period of ten (10) days after
delivery of the Closing Accounts to present in writing to the Seller (with a
copy to the Seller's Accountants) any objections involving amounts greater than
$100,000 individually or in aggregate which the Purchaser may have to any of the
matters set forth therein, which objections shall be set forth in reasonable
detail. If no objections are raised within such 10-day period, the Closing
Accounts shall be deemed accepted and approved by the Purchaser and by the
Seller.
If the Purchaser shall raise any objections within the aforesaid
10-day period, the Purchaser and the Seller shall immediately attempt in good
faith to resolve the matter or matters in dispute. If such dispute cannot be
resolved by the Purchaser and the Seller within ten (10) days after the delivery
of the Purchaser's objections, Seller's Accountants and Purchaser's Accountants
shall attempt to resolve the matter or matters in dispute and, if resolved, such
firms shall send a joint notice to the Purchaser and the Seller stating the
manner in which the dispute was resolved, Seller's Accountants shall send to the
Purchaser and the Seller a confirmation of the original Closing Accounts or, if
necessary, revised Closing Accounts prepared in accordance with such resolution,
and Purchaser's Accountants shall send a letter to the Purchaser and the Seller
confirming that such confirmed or revised Closing Accounts are in accordance
with such resolution, whereupon the confirmed or revised Closing Accounts shall
be final and binding on the parties.
If such dispute cannot be resolved by the Purchaser and the Seller
or by such accounting firms within thirty (30) days after the delivery of the
Closing Accounts, then, within thirty (30) days after written notification that
the Seller's Accountants and Purchaser's Accountants were unable to resolve the
dispute, the Chief Executive Officers of each of Purchaser and Seller shall meet
personally in New York, New York (or such other location as they shall mutually
agree upon) to attempt to resolve the dispute. If the Chief Executive Officers
are unable to resolve the dispute, either party may submit the specific matters
in dispute to the Third Accounting Firm, which firm shall make a final and
binding determination as to such matter or matters. The Third Accounting Firm
shall send its written determination to the Purchaser, the Seller, Seller's
Accountants and Purchaser's Accountants. Seller's Accountants shall then send to
the Purchaser and the Seller a confirmation of the original Closing Accounts or,
if necessary, revised Closing Accounts prepared in accordance with such
determination, and Purchaser's Accountants shall send a letter to the Purchaser
and the Seller confirming that such confirmed or revised Closing Accounts are in
accordance with such determination, whereupon the confirmed or revised Closing
Accounts shall be binding on the parties.
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The parties agree to cooperate with each other and each other's
authorized representatives and with the Third Accounting Firm in order that any
and all matters in dispute shall be resolved as soon as practicable.
(f) Within five (5) business days following the Closing Accounts, as
they may have been revised pursuant to subparagraph (e), becoming binding on the
parties in accordance with subparagraph (e) (such accounts, the "Final Closing
Accounts"), either (i) the Purchaser shall pay to the Seller, by wire transfer
of immediately available funds to an account designated by Seller, the amount,
if any, by which the Purchase Price exceeds the Preliminary Purchase Price or
(ii) the Seller shall pay to the Purchaser, by wire transfer of immediately
available funds to an account designated by the Purchaser, the amount, if any,
by which the Preliminary Purchase Price exceeds the Purchase Price, in either
case together with interest on such excess from the Closing Date to the date of
payment at the rate of LIBOR plus 1.5 percent per annum.
(g) The fees and expenses hereunder of Seller's Accountants shall be
paid by the Seller, those of the Purchaser's Accountants shall be paid by the
Purchaser, and those of the Third Accounting Firm shall be paid one-half by the
Purchaser and one-half by the Seller; provided, however, that the Third
Accounting Firm is hereby granted the authority to assess against either the
Purchaser or the Seller all of the Third Accounting Firm's fees and expenses or
such portions thereof as the Third Accounting Firm may deem appropriate if it
finds that any party's position was not presented in good faith, supported by
GAAP, or in accordance with the procedures agreed upon in this Agreement.
ARTICLE III
CLOSING AND TERMINATION
3.1 Closing Date. The closing of the sale and purchase of the Shares
provided for in Section 1.1 hereof (the "Closing") shall take place within five
(5) Business Days of the satisfaction of the conditions set forth in Sections
7.1 and 7.2 hereof (or the waiver thereof by the party entitled to waive any
such condition) at the offices of Xxxxxxx Xxxxxx XxXxxxx Xxxxx, a Law
Corporation, located at 2100 Symphony Towers, 000 X Xxxxxx, Xxx Xxxxx,
Xxxxxxxxxx 00000 (or on such other date and at such other place as the parties
may designate in writing). The date on which the Closing shall be held is
referred to in this Agreement as the "Closing Date".
3.2 Termination of Agreement. This Agreement may be terminated prior
to the Closing as follows:
(a) At the election of the Seller or the Purchaser on or after
November 15, 2002, if the Closing shall not have occurred by the close of
business on such date, provided that the terminating party is not in default of
any of its obligations hereunder;
(b) by mutual written consent of the Seller and the Purchaser; or
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(c) by the Seller or the Purchaser if there shall be in effect a
final nonappealable Order of a Governmental Body of competent jurisdiction
restraining, enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby; it being agreed that the parties hereto shall
promptly appeal any adverse determination which is not nonappealable (and pursue
such appeal with reasonable diligence).
3.3 Procedure Upon Termination. In the event of termination and
abandonment by the Purchaser or the Seller, or both, pursuant to Section 3.2
hereof, written notice thereof shall forthwith be given to the other party or
parties, and this Agreement shall terminate, and the purchase of the Shares
hereunder shall be abandoned, without further action by the Purchaser or the
Seller. If this Agreement is terminated as provided herein, each party shall
redeliver all documents, work papers and other material of any other party
relating to the transactions contemplated hereby, whether so obtained before or
after the execution hereof, to the party furnishing the same.
3.4 Effect of Termination. In the event that this Agreement is
validly terminated as provided herein, then each of the parties shall be
relieved of its duties and obligations arising under this Agreement after the
date of such termination and such termination shall be without liability to the
Purchaser, the Companies or the Seller or any of their Affiliates; provided,
however, that the obligations of the parties set forth in Section 6.1(b) shall
survive any such termination and shall be enforceable hereunder; provided,
further, however, that nothing in this Section 3.4 shall relieve the Purchaser
or the Seller of any liability for a breach of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Purchaser that:
4.1 Organization and Good Standing. Each of the Companies and the
Seller is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation as set forth above and
has all requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now conducted. Each of the Companies
is duly qualified or authorized to do business as a foreign corporation and is
in good standing under the laws of (i) each jurisdiction in which it owns or
leases real property and (ii) each other jurisdiction in which the conduct of
its business or the ownership of its properties requires such qualification or
authorization, except where the failure to be so qualified would not have a
Material Adverse Effect.
4.2 Authorization of Agreement. The Seller has full corporate power,
authority and legal capacity to execute and deliver this Agreement and each
other agreement, document, or instrument or certificate contemplated by this
Agreement or to be executed by the Seller in connection with the consummation of
the transactions contemplated by this Agreement (together with this Agreement,
the "Seller Documents"), and to consummate the transactions contemplated hereby
and thereby. This Agreement has been, and each of the
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Seller Documents will be at or prior to the Closing, duly and validly executed
and delivered by the Seller and (assuming the due authorization, execution and
delivery by the other party or parties hereto and thereto) this Agreement
constitutes, and each of the Seller Documents when so executed and delivered
will constitute, legal, valid and binding obligations of the Seller, enforceable
against the Seller in accordance with their respective terms, subject to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights and remedies generally, and subject, as to
enforceability, to general principles of equity, including principles of
commercial reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity).
4.3 Capitalization.
(a) The authorized capital stock of JHG consists of 10,000 shares of
common stock (the "JHG Common Stock"). As of the date hereof, there are 1,127
shares of JHG Common Stock issued and outstanding, all of which are owned by the
Seller, and 8,873 shares of Common Stock are held by JHG as treasury stock. The
authorized capital stock of WMM consists of 100,000 shares of common stock (the
"WMM Common Stock" and, collectively with the JHG Common Stock, the "Common
Stock"). As of the date hereof, there are 1,000 shares of WMM Common Stock
issued and outstanding, all of which are owned by the Seller, and 99,000 shares
of WMM Common Stock are held by WMM as treasury stock. All of the issued and
outstanding shares of Common Stock were duly authorized for issuance and are
validly issued, fully paid and non-assessable.
(b) There is no existing option, warrant, call, right, commitment or
other agreement of any character to which the Seller or either of the Companies
is a party requiring, and there are no securities of either of the Companies
outstanding which upon conversion or exchange would require, the issuance, sale
or transfer of any additional shares of capital stock or other equity securities
of either of the Companies or other securities convertible into, exchangeable
for or evidencing the right to subscribe for or purchase shares of capital stock
or other equity securities of either of the Companies. Neither the Seller nor
either of the Companies is a party to any voting trust or other voting agreement
with respect to any of the shares of Common Stock or to any agreement relating
to the issuance, sale, redemption, transfer or other disposition of the capital
stock of either of the Companies.
4.4 No Subsidiaries. The Companies have no Subsidiaries.
4.5 Corporate Records.
(a) The Seller has delivered to the Purchaser true, correct and
complete copies of the certificates of incorporation (each certified by the
Secretary of State or other appropriate official of the applicable jurisdiction
of organization) and by-laws (each certified by the secretary, assistant
secretary or other appropriate officer) or comparable organizational documents
of the Companies.
(b) The minute books of each of the Companies previously made
available to the Purchaser contain complete and accurate records of all meetings
and accurately reflect all other corporate action of the stockholders and board
of directors (including committees thereof) of each of the Companies. The stock
certificate books and
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stock transfer ledgers of each of the Companies previously made available to the
Purchaser are true, correct and complete. All stock transfer taxes levied or
payable with respect to all transfers of Common Stock of each of the Companies
prior to the date hereof have been paid and appropriate transfer tax stamps
affixed.
4.6 Conflicts; Consents of Third Parties.
(a) None of the execution and delivery by the Seller of this
Agreement and the Seller Documents, the consummation of the transactions
contemplated hereby or thereby, or compliance by the Seller with any of the
provisions hereof or thereof will (i) conflict with, or result in the breach of,
any provision of the certificate of incorporation or by-laws or comparable
organizational documents of the Seller or either of the Companies; (ii) conflict
with, violate, result in the breach or termination of, or constitute a default
under any Contract, note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which the Seller or either of the Companies is a
party or by which any of them or any of their respective properties or assets is
bound; (iii) violate any statute, rule, regulation, order or decree of any
Governmental Body or authority by which the Seller or either of the Companies is
bound; or (iv) result in the creation of any Lien upon the properties or assets
of the Seller or either of the Companies except, in case of clauses (ii), (iii)
and (iv), for such violations, breaches or defaults as would not, individually
or in the aggregate, have a Material Adverse Effect.
(b) Except as set forth on Schedule 4.6(b), no consent, waiver,
approval, Order, Permit or authorization of, or declaration or filing with, or
notification to, any Person or Governmental Body is required on the part of the
Seller or either of the Companies in connection with the execution and delivery
of this Agreement or the Seller Documents, or the compliance by the Seller or
either of the Companies as the case may be, with any of the provisions hereof or
thereof, except for compliance with the applicable requirements of any
applicable Antitrust Acts and the rules and regulations promulgated thereunder.
4.7 Ownership and Transfer of Shares. The Seller is the record and
beneficial owner of the Shares free and clear of any and all Liens. The Seller
has the power and authority to sell, transfer, assign and deliver the Shares as
provided in this Agreement, and such delivery will convey to the Purchaser good
and marketable title to the Shares, free and clear of any and all Liens.
4.8 Financial Statements. Attached as Schedule 4.8 are true and
correct copies of the separate unaudited balance sheets and income statements of
each of the Companies, prepared in accordance with GAAP (except for income taxes
which are recorded only at the consolidated level) consistently applied for each
of the three years ended March 31, 1999, 2000 and 2001 and for the nine months
ended December 31, 2001 and the ten months ended January 31, 2002 for JHG, and
from the date of acquisition to March 31, 2001 and for the nine months ended
December 31, 2001 and the ten months ended January 31, 2002 for WMM (such
financial statements, including the related notes and schedules thereto, are
referred to herein as the "Financial Statements"). Each of the Financial
Statements, which were part of the consolidated financial statements subject to
audit by Seller's Accountants in the context of its audit of Seller's Parent,
was prepared in the ordinary course of business, has been relied upon in the
conduct of the business of the Companies and is
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accurate in all material respects (subject, in the case of the Financial
Statements covering periods of less than one year, to normal year-end audit
adjustments which were not or will not be, individually or in the aggregate,
material).
For the purposes hereof, the balance sheets of the Companies as at
January 31, 2002 are referred to as the "Balance Sheet" and January 31, 2002 is
referred to as the "Balance Sheet Date".
4.9 No Undisclosed Liabilities. Neither of the Companies has any
indebtedness, obligations or liabilities of any kind (whether accrued, absolute,
contingent or otherwise, and whether due or to become due) that would have been
required to be reflected in, reserved against or otherwise described on the
Balance Sheet or in the notes thereto in accordance with GAAP which was not
fully reflected in, reserved against or otherwise described in the Balance Sheet
or the notes thereto or was not incurred in the ordinary course of business
consistent with past practice since the Balance Sheet Date, except where such
indebtedness, obligations or liabilities would not have a Material Adverse
Effect.
4.10 Absence of Certain Developments. Except as expressly
contemplated by this Agreement or as set forth on Schedule 4.10, since the
Balance Sheet Date:
(a) there has not been any Material Adverse Change nor has there
occurred any event which is reasonably likely to result in a Material Adverse
Change;
(b) there has been no disposal or loss from damage or otherwise of
any fixed asset having a replacement cost of more than $500,000;
(c) there has not been any damage, destruction or loss, whether or
not covered by insurance, with respect to the property and assets of either of
the Companies having a replacement cost of more than $500,000 for any single
loss or $2,000,000 for all such losses and real and personal property of the
Companies has been maintained in the ordinary course of business, consistent
with past practice, and to Seller's Knowledge, no material expenditure is
required to be made by any Person to enable each of the Companies to operate its
business;
(d) (i) there has not been a change in the authorized or issued
capital stock of either of the Companies; (ii) grant of any stock option,
warrant, or other right to purchase shares of capital stock of either of the
Companies; (iii) issuance of any security convertible into the capital stock of
either of the Companies; (iv) grant of any registration rights in respect of the
capital stock of either of the Companies; (v) reclassification, combination,
split, subdivision, purchase, redemption, retirement, issuance, sale, or any
other acquisition or disposition, directly or indirectly, by either of the
Companies of any shares of the capital stock thereof; (vi) amendment of any term
of any outstanding security of either of the Companies; (vii) declaration,
setting aside or payment of any dividend (whether in cash, securities or other
property) or other distribution or payment in respect of the shares of the
capital stock of either of the Companies; or (viii) sale or pledge of any stock
or other equity interests owned by either of the Companies;
9
(e) (i) amendment or other change in the certificate of
incorporation or by-laws or other organizational documents of either of the
Companies; (ii) merger or consolidation by either of the Companies with or into
any other Person; (iii) subdivision or reclassification of any shares of the
capital stock of either of the Companies; or (iv) change or agreement to change
in any manner the rights of the outstanding capital stock of either of the
Companies;
(f) Except as set forth on Schedule 4.10 (f) hereto, or to the
extent either designated as Excluded Assets and Liabilities or disclosed and
accrued on the Balance Sheet, neither of the Companies has awarded (or agreed to
award) any bonuses to employees of the Companies with respect to the fiscal year
ending March 31, 2002 or any period thereafter, or entered into any employment,
deferred compensation, severance or similar agreement (nor amended any such
agreement) or agreed to increase the compensation payable or to become payable
by it to any of the Companies' directors, officers, employees, agents or
representatives or agreed to increase the coverage or benefits available under
any severance pay, termination pay, vacation pay, company awards, salary
continuation for disability, sick leave, deferred compensation, bonus or other
incentive compensation, insurance, pension or other employee benefit plan,
payment or arrangement made to, for or with such directors, officers, employees,
agents or representatives (other than normal increases in the ordinary course of
business consistent with past practice and that in the aggregate have not
resulted in a material increase in the benefits or compensation expense of the
Companies taken as a whole);
(g) there has not been any agreement entered into or amended by
either of the Companies with any labor union or association;
(h) there has not been any change by either of the Companies with
respect to accounting, reserving or investing or Tax reporting principles,
methods or policies;
(i) neither of the Companies has entered into any transaction or
Contract or conducted its business other than in the ordinary course consistent
with past practice including maintaining consistency of average accounts
receivable days, inventory holding days, and accounts payable days;
(j) neither of the Companies has failed to promptly pay and
discharge current liabilities except where disputed in good faith by appropriate
proceedings;
(k) neither of the Companies has made any loans, advances or capital
contributions to, or investments in, any Person or paid any fees or expenses to
the Seller or any Affiliate of the Seller;
(1) neither of the Companies has mortgaged, pledged or subjected to
any Lien any of its assets, or acquired any assets or sold, assigned,
transferred, conveyed, leased or otherwise disposed of any assets of either of
the Companies, except for assets acquired or sold, assigned, transferred,
conveyed, leased or otherwise disposed of in the ordinary course of business
consistent with past practice;
10
(m) neither of the Companies has discharged or satisfied any Lien,
or paid any obligation or liability (fixed or contingent), except in the
ordinary course of business consistent with past practice and which, in the
aggregate, would not be material to the Companies taken as a whole;
(n) neither of the Companies has canceled or compromised any debt or
claim or amended, canceled, terminated, relinquished, waived or released any
Contract or right except in the ordinary course of business consistent with past
practice and which, in the aggregate, would not be material to the Companies
taken as a whole, and neither of the Companies has written-down or determined to
write-down the value of any assets, except in the ordinary course of business
consistent with past practice;
(o) neither of the Companies has made or committed to make any
capital expenditures or capital additions or betterments in excess of $50,000
individually or $175,000 in the aggregate;
(p) neither of the Companies has instituted or settled any material
Legal Proceeding; and
(q) neither the Seller nor the Companies has agreed to do anything
set forth in this Section 4.10.
4.11 Tax Returns, Payments and Elections. Except as set forth in
Schedule 4.11:
(a) Each Company and each Affiliated Group of which such Company is
or has been a member, (i) has timely filed (or there has been timely filed on
its behalf) with the appropriate Governmental Body all material Tax Returns
required to be filed, and all such Tax Returns are true and correct in all
material respects, and (ii) has paid all Taxes material in amount due and
payable or claimed or asserted by any taxing authority to be due from or with
respect to them. With respect to any period for which Tax Returns have not yet
been filed, or for which Taxes are not yet due or owing, each Company has made
due and sufficient current accruals for such Taxes in their books and records in
accordance with GAAP, including without limitation the Financial Statements. The
Companies have made (or there have been made on their behalf) all required
current estimated Tax payments sufficient to avoid any understatement penalties;
(b) No audit report has been issued in the three years prior to the
date of this Agreement (or otherwise with respect to any audit or investigation
in progress) relating to Taxes due from or with respect to either of the
Companies or their income, assets or operations. The Seller has previously
delivered to Purchaser true and complete copies of (i) any audit reports issued
in the three years prior to the date of this Agreement relating to Taxes due
from or with respect to each Company; and (ii) all federal, state, local and
foreign income or franchise Tax Returns of each Company (or, in the case of Tax
Returns filed for an Affiliated Group, the portion of such Tax Returns relating
to each Company) relating to the taxable periods ending in 1998, 1999, 2000 and
2001;
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(c) Except as set forth on Schedule 4.11 (c) no claim has been made
by a taxing authority in a jurisdiction where a Company does not file Tax
Returns to the effect that such Company is or may be subject to taxation by that
jurisdiction;
(d) There are no outstanding waivers in writing or comparable
consents regarding the application of any statute of limitations in respect of
Taxes of either of the Companies;
(e) All deficiencies asserted or assessments made as a result of any
examinations by any taxing authority of the Tax Returns of or including each
Company have been fully paid, and there are no actions, suits, investigations,
audits or claims by any taxing authority in progress relating to either of the
Companies (except for a California Franchise Tax Board audit), nor has either of
the Companies received any written notice from any taxing authority that it
intends to conduct such an audit or investigation. No issue has been raised by
written inquiry of a taxing authority in any current or prior examination which,
by application of the same or similar principles, would reasonably be expected
to result in a proposed deficiency for any subsequent taxable period of the
Companies. Neither of the Companies is subject to any private letter ruling of
the IRS or comparable rulings of other taxing authorities;
(f) There are no Liens for Taxes upon the assets of either of the
Companies, except for Liens arising as a matter of Law relating to current Taxes
not yet due;
(g) All Taxes that each Company has been or are required by law to
withhold or to collect for payment have been duly withheld and collected, and
have been paid over to the appropriate taxing authority;
(h) Neither of the Companies, nor any other Person on behalf of
either of the Companies has (i) agreed to or is required to make any adjustments
pursuant to Section 481 (a) of the Code (or any predecessor provision) or any
similar provision of state, local or foreign Law, or has any Knowledge that the
IRS or any other taxing authority has proposed any such adjustment; or has any
application pending with any taxing authority requesting permission for any
changes in accounting methods that relate to the business or operations of
either of the Companies, (ii) executed or entered into a closing agreement
pursuant to Section 7121 of the Code (or any predecessor provision) or any
similar provision of state, local or foreign Law with respect to either of the
Companies, (iii) filed a consent pursuant to Section 341 (f) of the Code or
agreed to have Section 341 (f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code)
owned by either of the Companies, (iv) extended the time (1) within which to
file any Tax Return, which Tax Return has since not been filed or (2) for the
assessment or collection of Taxes, which Taxes have not since been paid or (v)
granted to any Person any power of attorney that is currently in force with
respect to any Tax matter relating to either of the Companies;
(i) No property owned by either of the Companies is (i) property
required to be treated as being owned by another Person pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as amended
and in effect immediately prior to the enactment of the Tax Reform Act of 1986,
(ii) "tax-exempt use property" within the meaning of Section 168(h)(l) of the
Code, (iii) "tax-exempt bond financed property" within
12
the meaning of Section 168(g) of the Code; (iv) subject to Section 168(g)(l)(A)
of the Code; (v) "limited use property" within the meaning of Rev. Proc. 76-30,
or (vi) subject to any provision of state, local or foreign Law comparable to
any of the provisions listed above;
(j) There are no employment, severance or termination agreements,
other compensation arrangements or Employee Benefit Plans currently in effect
which provide for the payment of any amount (whether in cash or property or the
vesting of property) that would give rise to a payment that is nondeductible by
reason of Section 280G of the Code;
(k) Neither of the Companies (i) is or has been a member of an
Affiliated Group for federal income tax purposes that filed or was required to
file a consolidated Tax Return (other than a group the common parent of which
was Seller), (ii) is or has been a member of an Affiliated Group for state,
local or foreign tax purposes that filed or was required to file an affiliated,
consolidated, combined or unitary Tax Return (other than a group the ultimate
common parent is or was the Seller, Xxxxx Xxxxxx Industries, N.V., Xxxxx Xxxxxx
Industries Limited or Boral Limited), or (iii) has any liability for the Taxes
of any Person under Treasury Regulations Section 1.1502-6 (or any comparable
provision of state, local, or foreign Law)(other than as a member of an
Affiliated Group the common parent of which is the Seller);
(1) Neither of the Companies is a party to, bound by, or obligated
under, any Tax Sharing Agreement;
(m) Neither of the Companies have constituted either a "distributing
corporation" or a "controlled corporation" (within the meaning of Section
355(a)(l)(A) of the Code) in a distribution of stock qualifying for tax-free
treatment under Section 355 of the Code in (A) the two years prior to the date
of this Agreement or (B) a distribution which could otherwise constitute part of
a "plan" or "series of related transactions" (within the meaning of Section
355(e) of the Code) in conjunction with the transactions contemplated by this
Agreement;
(n) Seller and JHG are members of a "selling consolidated group"
within the meaning of Treasury Regulations Section 1.338(h)(10)-l(b)(2);
(o) The Seller is a "United States Person" within the meaning of
Section 7701(a)(30)of the Code;
(p) Neither Company has participated in, or cooperated with, an
international boycott within the meaning of Section 999 of the Code;
(q) There is no taxable income of either of the Companies that will
be reportable in a taxable period beginning after the Closing Date that is
attributable to a transaction (such as an installment sale) that occurred prior
to the Closing;
(r) "Neither of the Companies has, or has had, a permanent
establishment in any foreign country, or has engaged in a trade or business in
any foreign country that subjected it to Tax in such foreign country;
13
(s) Neither of the Companies is a party to any joint venture,
partnership or other arrangement or contract that could be treated as a
partnership for federal income tax purposes; and
(t) For purposes of this Section and Section 9.6, any reference to
either Company shall be deemed to include any Person which merged with or was
liquidated into such Company or any other predecessor thereof.
4.12 Real Property.
(a) Schedule 4.12(a) sets forth a complete list of (i) all real
property and interests in real property owned in fee, including but not limited
to all patented mining claims (the "Patented Mining Claims") by each of the
Companies (individually, an "Owned Property" and collectively, the "Owned
Properties"), (ii) all real property and interests in real property leased,
subleased, or otherwise occupied by each of the Companies as lessee
(individually, a "Real Property Lease" and collectively, the "Real Property
Leases"); (iii) all real property and interests in real property other than
Owned Properties and Real Property Leases as to which each Company has a right
of access or use (individually, an "Easement Property" and collectively, the
"Easement Properties"); (iv) all water rights and interests in water rights or
water rights permits owned by each of the Companies (individually, a "Water
Right" and collectively, the "Water Rights"); and (v) all unpatented mining
claims and unpatented mill site claims owned by each of the Companies
(individually, an "Unpatented Mining Claim" and collectively, the "Unpatented
Mining Claims"). The Owned Properties, Real Property Leases, Easement
Properties, Water Rights, and Unpatented Mining Claims are referred to herein
individually as a "Companies' Property" and collectively as the "Companies'
Properties." The Companies have good, indefeasible, and marketable fee title to
and own the entire interest in all Owned Property and all buildings, structures
and other improvements located thereon, free and clear of all Liens of any
nature whatsoever except Permitted Exceptions. The Companies' Property
constitutes all interests in real property currently used or currently held for
use in connection with the business of the Companies and which are necessary for
the continued operation of the business of the Companies as the business is
currently conducted and as currently proposed to be conducted. The Companies
have a good, marketable, valid and enforceable leasehold interest under each of
the Real Property Leases, and all buildings, structures and other improvements
located thereon to the extent leased pursuant to the Real Property Leases, free
and clear of all Liens of any nature whatsoever except Permitted Exceptions;
provided, however, that except as set forth on Schedule 4.12(a), each Real
Property Lease subject to an underlying mortgage, deed of trust or other
security interest affecting the lessor's or fee owner's interest under the Real
Property Lease shall also be subject to a non-disturbance agreement; and subject
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws affecting creditors' rights and remedies generally and subject, as to
enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Neither of the
Companies has received any notice of any material default or event that with
notice or lapse of time, or both, would constitute a material default by such
Company under any of the Real Property Leases. To the Seller's Knowledge, there
is no default or event that with notice or lapse of time, or both, which would
constitute such a default under any Real Property Lease by any other party to
such lease. The Seller has delivered or will make
14
available to the Purchaser prior to the Closing Date true, correct and complete
copies of all deeds, title reports, title policies (and underlying documents
applicable thereto), title opinion or title analysis letters as to the Patented
Mining Claims and Unpatented Mining Claims, and surveys for the Owned
Properties, Easement Properties, Water Rights and Unpatented Mining Claims.
Seller has delivered or otherwise made available to the Purchaser true, correct
and complete copies of the Real Property Leases, together with all
non-disturbance agreements, amendments, modifications or supplements, if any,
thereto. The Companies have a good, sufficient, and marketable interest in the
Unpatented Mining Claims, free and clear of all Liens of any nature whatsoever
except Permitted Exceptions. The Companies have a good, marketable, valid and
enforceable interest in the Easement Properties and Water Rights, free and clear
of all Liens of any nature whatsoever except Permitted Exceptions. The Companies
have timely paid all fees and complied with all recording and reporting
obligations required by Law in connection with the Water Rights and Unpatented
Mining Claims. Neither of the Companies has received any notice of defect or
challenge to the Unpatented Mining Claims (including, without limitation, the
location, maintenance, or ownership of the Unpatented Mining Claims) or event
that with notice or lapse of time, or both, would constitute such defect or
challenge to the Unpatented Mining Claims.
(b) Except as would not be reasonably likely to have Material
Adverse Effect, the Companies have ail certificates of occupancy and Permits of
any Governmental Body necessary or useful for the current use and operation of
each Companies' Property, and the Companies have fully complied with all
conditions of the Permits applicable to them. No material default or violation,
or event that with the lapse of time or giving of notice or both would become a
material default or violation, has occurred in the due observance of any Permit.
(c) There does not exist any actual or, to the Knowledge of the
Seller, threatened or contemplated condemnation or eminent domain proceedings
that affect any Companies' Property or any part thereof, and the Seller has not
received any notice, oral or written, of the intention of any Governmental Body
or other Person to take or use all or any part thereof.
(d) Neither the Seller nor the Companies have received any notice
from any insurance company that has issued a policy with respect to any
Companies' Property requiring performance of any structural or other repairs or
alterations to such Companies' Property.
(e) Except as set forth on Schedule 4.12(e) hereto, neither of the
Companies owns or holds, or is obligated under or a party to, any Contract,
option, right of first refusal or other arrangement to purchase, acquire, sell,
assign, manage or dispose of any real property or any portion thereof or
interest therein.
(f) Except as set forth on Schedule 4.12(f) hereto and in the
Closing Date Balance Sheet, there are no unpaid commissions or fees due or
payable and no obligation to pay or fund any construction or completion of
improvements under any Real Property Lease.
(g) Except as set forth on Schedule 4.12(g) hereto, there are no
leases or subleases executed by either Company, as lessor, with respect to any
of the Companies'
15
Properties. None of the Real Property Leases is a sublease. Except as set forth
on Schedule 4.12(g) hereto, there are no agreements by which either of the
Companies permits any other Person to use, occupy or otherwise exploit any of
the Companies' Properties.
(h) Each of the Real Property Leases covers the entire estate it
purports to cover, and, upon the consummation of the transactions contemplated
hereby, will entitle Purchaser to the exclusive use, occupancy and possession of
the premises specified therein for the purposes such premises are now being used
in all material respects.
(i) Seller has actual and exclusive possession of the premises
leased pursuant to the Real Property Leases.
(j) All of the buildings, fixtures and improvements included on or
in the Companies' Properties and owned or leased by the Companies are in good
operating condition and repair (subject to normal wear and tear) for the
continued use of the Companies' Properties in the ordinary course of business
consistent with past practices in all material respects.
(k) The current use and occupancy of the Companies' Properties and
the improvements located thereon are not in violation of any material recorded
or unrecorded covenants, conditions, restrictions, reservations, easements or
agreements affecting the Companies' Properties.
(1) No part of any improvement located on the Companies' Properties
which is material to its operation is dependent for its access, operation or
utility on any land, building or other improvements not included in the
Companies' Properties, and all Companies' Properties have sufficient access to
public roads.
(m) All water (including all Water Rights), gas and other utilities
are sufficient to enable the Companies' Properties to continue to be used and
operated in the ordinary course of business consistent with past practices. Said
utilities either enter the Companies' Properties through adjoining public
streets or, if they pass through adjoining private or public land, do so in
accordance with legal, valid and enforceable permanent public or private
easements which will inure to the benefit of Purchaser, its successors and
assigns.
(n) With respect to the Unpatented Mining Claims, and subject to the
paramount title of the United States, to the Seller's Knowledge: (i) the
Unpatented Mining Claims were properly laid out and monumented; (ii) all
required location and validation work was properly performed; (iii) location
notices and certificates were properly recorded and filed with the appropriate
governmental agencies; (iv) all assessment work required to hold the Unpatented
Mining Claims has been timely performed in order to maintain those claims in
good standing through the assessment year ending September 1,2002; (v) all
affidavits of assessment work, notices of intention to hold, evidence of payment
of rental or maintenance fees and other filings required to maintain the claims
in good standing through the assessment year ending September 1, 2002 have been
properly and timely recorded or filed with the appropriate governmental agency;
(vi) there are no conflicting Unpatented Mining Claims; (vii) Seller, the
16
Companies, and/or their predecessors in interest have been in exclusive,
hostile, adverse and continuous possession of each and all of the Unpatented
Mining Claims, claiming ownership thereto as against all the world, subject only
to the paramount title of the United States, since December 14, 2000. Nothing in
this section, however, shall be deemed to be a representation or a warranty that
any of the Unpatented Mining Claims contains a valuable mineral deposit.
(o) Notwithstanding anything to the contrary set forth above in this
Section 4.12 or in the Schedules referred to therein, the parties acknowledge
and agree that the representations, warranties and other statements made by the
Seller above in this Section 4.12 or in the Schedules referred to above in this
Section 4.12 are qualified in their entirety by the following: (i) since the
date of the Xxxxx Agreement, it has been ascertained that the approximately
20-30 acre portion (the "Subject Portion") of the BLM Exchange Property (as
defined in the Xxxxx Agreement) identified on the annexed Schedule 4.12(o)
properly constitutes part of the Essential Plant Property (as defined in the
Xxxxx Agreement); (ii) with the consent and approval of the Purchaser, pursuant
to the Xxxxx Consent the parties to the Xxxxx Agreement have amended the Xxxxx
Agreement and the Ancillary Documents (as defined in the Xxxxx Agreement) to
provide that (A) the Subject Portion is deemed to constitute an integral part of
the Essential Plant Property, (B) the Subject Portion shall be deemed not to
constitute a part of the BLM Acreage (as defined in the Xxxxx Agreement), and
(C) JHG shall ultimately receive as a result of the BLM Exchange (as defined in
the Xxxxx Agreement), and after payment for any acreage in excess of 20 acres of
all amounts described in Section 6.15(a), be entitled to retain for itself and
its successors and assigns, full ownership rights in and to the Subject Portion
(subject to those items referenced in the Xxxxx Consent), in each case
notwithstanding any contrary provisions contained in the Xxxxx Agreement or the
Ancillary Documents, including, without limitation, Section 4 of the Xxxxx
Agreement; and (iii) the BLM has agreed in writing for the benefit of JHG
pursuant to that certain letter dated April 24, 2002 and attached hereto as
Schedule 4.12(o)(iii) (the "BLM Letter") that JHG can continue to use the
portion of the Subject Portion that is referred to in the BLM Letter in
connection with the operation of the Essential Plant Property, all as more fully
specified in the BLM Letter.
4.13 Tangible Personal Property.
(a) Schedule 4.13(a) sets forth all leases of personal property
("Personal Property Leases") involving annual payments in excess of $250,000
relating to personal property used in the business of each Company or to which
either Company is a party or by which the properties or assets of each Company
are bound. The Seller has delivered or otherwise made available to the Purchaser
true, correct and complete copies of the Personal Property Leases, together with
all amendments, modifications or supplements thereto.
(b) Each Company has a valid leasehold interest under each of the
Personal Property Leases under which it is a lessee, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
general principles of equity
17
(regardless of whether enforcement is sought in a proceeding at law or in
equity), and there is no material default under any Personal Property Lease by
the Companies or, to the Knowledge of the Seller, by any other party thereto,
and no event has occurred that with the lapse of time or the giving of notice or
both would constitute a material default thereunder.
(c) The Companies have good and marketable title to all of the items
of tangible personal property reflected in the Balance Sheet (except as sold or
disposed of subsequent to the date thereof in the ordinary course of business
consistent with past practice), free and clear of any and all Liens other than
the Permitted Exceptions. All such items of tangible personal property which,
individually or in the aggregate, are material to the operation of the business
of the Companies are in good condition and in a state of good maintenance and
repair (ordinary wear and tear excepted) and are suitable for the purposes used.
(d) All of the items of tangible personal property used by the
Companies under the Personal Property Leases are in good condition and repair
(ordinary wear and tear excepted) and are suitable for the purposes used.
4.14 Intangible Property. Schedule 4.14 contains a complete and
correct list of each material foreign or domestic patent, trademark, trade name,
service xxxx and copyright owned or used by the Companies as well as all
registrations thereof and pending applications therefor, and each license or
other agreement relating thereto (including licenses to use the patents,
trademarks, tradenames, service marks or copyrights of others, including Seller
and its Affiliates). Except as set forth on Schedule 4.14 or to the extent that
commercially available software is licensed for use by the Companies (provided
that such licenses shall not terminate or be modified by virtue of the Closing),
each of the foregoing is owned by the party shown on such Schedule as owning the
same, free and clear of all mortgages, claims, Liens, security interests,
charges and encumbrances and is in good standing and not the subject of any
challenge. To the Knowledge of Seller, there have been no claims made and
neither the Seller nor the Companies has received any notice or otherwise knows
or has reason to believe that any of the foregoing is invalid or conflicts with
the asserted rights of others. The Companies possess, or have the right to use,
at this time and without termination or modification by virtue of the Closing,
all patents, patent licenses, trade names, trademarks, service marks, brand
marks, brand names, copyrights, know-how, formulate and other proprietary and
trade rights necessary for the conduct of its business as now conducted, not
subject to any restrictions and without any known conflict with the rights of
others and the Companies have not forfeited or otherwise relinquished any such
patent, patent license, trade name, trademark, service xxxx, brand xxxx, brand
name, copyright, know-how, formulate or other proprietary right necessary for
the conduct of its business as conducted on the date hereof. The Companies are
not under any obligation to pay any royalties or similar payments in connection
with any license to the Seller or any Affiliate thereof.
4.15 Material Contracts. (a) Schedule 4.15 sets forth all of the
following Contracts to which each Company is a party or by which it is bound
(collectively, the "Material Contracts"): (i) Contracts with the Seller or its
Affiliates or any current officer or director of either of the Companies; (ii)
Contracts with any labor union or association representing any employee of
either of the Companies; (iii) Contracts pursuant to which any
18
party is required to purchase or sell a stated portion of its requirements or
output from or to another party; (iv) Contracts for the sale of any of the
assets of either of the Companies other than in the ordinary course of business
or for the grant to any person of any preferential rights to purchase any of its
assets, including rights of first refusal; (v) joint venture agreements; (vi)
material Contracts containing covenants of either of the Companies not to
compete in any line of business or with any person in any geographical area or
covenants of any other person not to compete with either of the Companies in any
line of business or in any geographical area; (vii) Contracts relating to the
acquisition by either of the Companies of any operating business or the capital
stock of any other person; (viii) Contracts relating to the borrowing of money;
(ix) Contracts relating to any financial arrangements not reflected in the
Balance Sheet; or (x) any other Contracts, other than Real Property Leases,
which involve the expenditure of more than $1,000,000 in the aggregate or
$500,000 annually or require performance by any party more than one year from
the date hereof. There have been made available to the Purchaser, its Affiliates
and their representatives true and complete copies of all of the Material
Contracts. Except as set forth on Schedule 4.15, all of the Material Contracts
and other agreements are in full force and effect and are the legal, valid and
binding obligation of each Company enforceable against it in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar laws affecting creditors rights and remedies generally and subject,
as to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity). Except as set forth
on Schedule 4.15, neither Company is in default in any material respect under
any Material Contracts, nor, to the Knowledge of the Seller, is any other party
to any Material Contract in default thereunder in any material respect.
(b) To the Knowledge of Seller, as of the date hereof, Republic has
not produced paperboard meeting the quality specifications set forth in the
Republic Agreement in sufficient quantities for the requisite period of time
required to achieve Commercial Production, as such term is defined therein, by
April 1, 2002. The outside date by which Republic is required to-give the
Commencement Notice, as such term is defined therein, has not been extended past
April 1, 2002.
4.16 Employee Benefits.
(a) Schedule 4.16(a) sets forth a complete and correct list of (i)
all "employee benefit plans", as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and (ii) all other
employee benefit arrangements, programs or payroll practices (including, without
limitation, severance pay, vacation pay, company awards, salary continuation,
disability, sick leave, retirement, deferred compensation, bonus or other
incentive compensation, stock purchase, stock option, medical, life insurance
and scholarship arrangements, programs or practices), as to which the Seller or
any Company has any obligation or liability (contingent or otherwise) with
respect to employees of the Companies ("Employee Benefit Plans"). Schedule
4.16(a) clearly identifies, in separate categories, Employee Benefit Plans that
are (i) multiemployer plans (as defined in Section 4001(a)(3) of ERISA)
("Multiemployer Plans") or (ii) sponsored and maintained directly by any of the
Companies and not by Seller ("Company Plans"). None of the Employee Benefit
Plans is subject to Section 4063 and 4064 of ERISA.
19
(b) Except as disclosed on Schedule 4.16(b), each of the Employee
Benefit Plans intended to qualify under Section 401 of the Code ("Qualified
Plans") so qualifies, the trusts maintained thereto are exempt from federal
income taxation under Section 501 of the Code, and nothing has occurred with
respect to the operation of any such plan which could cause the loss of such
qualification or exemption or the imposition of any liability, penalty or tax
under ERISA or the Code.
(c) Except as disclosed on Schedule 4.16(c) separately for any
Multiemployer Plan, none of the Companies would incur any withdrawal liability
(whether or not assessed) under ERISA in the event the Companies and each trade
or business (whether or not incorporated) under common control or treated as a
single employer with any of the Companies pursuant to Sections 414(b) or (c) of
the Code.("ERISA Affiliate") had a complete withdrawal from each Multiemployer
Plan.
(d) True, correct and complete copies of the following documents,
with respect to each of the Employee Benefit Plans (as applicable), have been
delivered to the Purchaser (A) any plans and related trust documents, and all
amendments thereto, (B) the most recent Forms 5500 for the past three years and
schedules thereto, (C) the most recent financial statements and actuarial
valuations for the past three years, (D) the most recent Internal Revenue
Service determination letter, (E) the most recent summary plan descriptions
(including letters or other documents updating such descriptions) and (F)
written descriptions of all non-written agreements relating to the Employee
Benefit Plans.
(e) There are no pending or, to the Knowledge of Seller, threatened
Legal Proceedings against or relating to any of the Employee Benefit Plans, the
assets of any such plans, or the plan administrator or any fiduciary of the
Employee Benefit Plans with respect to the operation of such plans (other than
routine, uncontested benefit claims), and to the Knowledge of the Seller, there
are no facts or circumstances which could form the basis for any such Legal
Proceeding.
(f) Each of the Company Plans has been maintained, administered and
operated, in all material respects, in accordance with its terms and applicable
Law, including ERISA and the Code. All amendments and actions required to bring
each of the Company Plans into conformity in all material respects with all of
the applicable provisions of ERISA, the Code and other applicable Laws have been
made or taken, except to the extent that such amendments or actions are not
required by law to be made or taken until a date after the Closing Date and are
disclosed on Schedule 4.16(f).
(g) None of the Companies has any direct or indirect obligation or
liability arising from or in connection with any "prohibited transaction" within
the meaning of Section 4975 of the Code or Section 406 of ERISA with respect to
any of the Employee Benefit Plans.
(h) Except as disclosed on Schedule 4.16(h), neither the execution
and delivery of this Agreement nor the consummation of the transactions
contemplated hereby will (i) result in any payment becoming due to any employee
of either Company; (ii) satisfy any condition to any payment to any employee of
either Company; (iii) increase any benefits
20
otherwise payable under any Employee Benefit Plan; or (iv) result in the
acceleration of the time of payment or vesting of any such benefits or payments.
(i) No stock or other security issued by either Company forms or has
formed a material part of the assets of any Employee Benefit Plan.
4.17 Labor.
(a) Except as set forth on Schedule 4.17(a), neither Company is
party to any labor or collective bargaining agreement and there are no labor or
collective bargaining agreements which pertain to employees of either Company.
The Seller has delivered or otherwise made available to the Purchaser true,
correct and complete copies of the labor or collective bargaining agreements
listed on Schedule 4.17(a), together with all amendments, modifications or
supplements thereto.
(b) Except as set forth on Schedule 4.17(b). no employees of the
Companies are represented by any labor organization. No labor organization or
group of employees of either Company has made a pending demand for recognition,
and there are no representation proceedings or petitions seeking a
representation proceeding presently pending or, to the Knowledge of the Seller,
threatened to be brought or filed, with the National Labor Relations Board or
other labor relations tribunal. There is no organizing activity involving either
Company pending or, to the Knowledge of the Seller, threatened by any labor
organization or group of employees of either Company.
(c) There are no (i) strikes, work stoppages, slowdowns, lockouts or
arbitrations or (ii) material grievances or other labor disputes pending or, to
the Knowledge of the Seller, threatened against or involving either Company.
There are no material unfair labor practice charges, grievances or complaints
pending or, to the Knowledge of the Seller, threatened by or on behalf of any
employee or group of employees of either Company.
(d) Except for the individuals set forth on Schedule 4.17(d), none
of the employees of the Seller or any of its affiliates (other than the
Companies) performs any services for or otherwise relating to the business or
activities of either Company ("Shared Service Employees").
4.18 Litigation.
(a) Except as set forth in Schedule 4.18, there is no suit, action,
proceeding, investigation, claim or order pending or, to the Knowledge of the
Seller, threatened against either Company or any of the Companies' Property (or
pending or, to the Knowledge of the Seller, threatened, against any of the
officers, directors or key employees of either Company with respect to their
business activities on behalf of such Company), or to which the Seller or the
Companies is otherwise a party before any Governmental Body; nor to the
Knowledge of the Seller is there any reasonable basis for any such action,
proceeding, or investigation. Neither of the Companies is subject to any
judgment, order or decree of any court or Governmental Body. Neither of the
Companies is engaged in any legal action to
21
recover monies due it or for damages sustained by it which, if adversely
determined, would have a Material Adverse Effect.
(b) There is no suit, action, proceeding, investigation, claim or
order pending, or to the Knowledge of Seller, threatened, or to which Seller is
otherwise a party (and to Seller's Knowledge no grounds on which any such action
might be commenced) which might adversely affect the ability of the Seller to
enter into this Agreement or perform its obligations hereunder.
4.19 Compliance with Laws; Permits.
(a) The Companies are in compliance in all material respects with
all Laws applicable to the Companies or to the conduct of the business or
operations of the Companies or the use of their respective properties (including
any leased properties) and assets. Each Company has all governmental Permits and
approvals from state, federal or local authorities which are required for such
Company to operate its business as presently conducted and as proposed to be
conducted, except where the failure to so comply would not result in a Material
Adverse Effect.
(b) Schedule 4.19 lists all material Permits used by each Company in
the conduct of its business or operations. All such Permits are valid and
enforceable, and neither Company is in default thereunder.
4.20 Environmental Matters. Except as set forth on Schedule 4.20
hereto:
(a) There are, and for the past five years have been, no claims,
actions, suits, proceedings or investigations related to Environmental Matters
with respect to the ownership, use, condition or operation of any of the
properties and assets held for use or sale by the Companies or, to the Seller's
Knowledge, any of their respective predecessors, pending in any Governmental
Body (collectively, "Environmental Litigation"), which if adversely determined
would have a Material Adverse Effect. There are no existing, and for the past
five years have been no, violations of federal, state, local or other
governmental laws, regulations, ordinances or orders related to Environmental
Matters by either of the Companies with respect to the ownership, use, condition
or operation of any real property purported to be owned or leased by either of
the Companies or any other assets of either of the Companies, which violations,
individually or in the aggregate, would have a Material Adverse Effect. No
written or oral notice, or other communication from any Governmental Body of any
alleged violation of any ordinance, law, decree, order, code, or governmental
rule or regulation related to Environmental Matters has been filed or
communicated to management of either of the Companies with respect to the use,
ownership, condition, operation, or disposal of any of the properties and assets
of either of the Companies or any property or asset formerly held for use or
sale by either of the Companies, the subject matter of which notice would have a
Material Adverse Effect.
(b) No soil or water in, on, under or emanating from any real
property owned or leased by either of the Companies or any other assets or
premises of either of the Companies has been contaminated by any Hazardous
Substance while or, to the Seller's Knowledge, before such property, assets or
premises were owned, leased, operated or
22
managed, directly or indirectly, by either of the Companies, which contamination
would have a Material Adverse Effect.
(c) All waste containing any Hazardous Substances generated, used,
handled, stored, treated or disposed of by each Company or, to the Seller's
Knowledge, by any of its predecessors has been released or disposed of in
compliance with all applicable requirements under applicable Environmental Laws,
except where the failure to be in such compliance would not result in a Material
Adverse Effect.
(d) Each Company has obtained and is, and has been, in compliance
with all permits, licenses and other authorizations that are required pursuant
to Environmental and Safety Requirements for the occupation of their facilities
and the operation of their business, except where any failure to so obtain or
comply would not have a Material Adverse Effect.
(e) There is not now, nor has there been in the past, on, in or
under any real property owned, leased or operated by either of the Companies or,
to the Seller's Knowledge, any of their predecessors (i) any underground storage
tanks, above-ground storage tanks, dikes or impoundments, (ii) any
asbestos-containing materials, (iii) any polychlorinated biphenyls; or (iv) any
radioactive substances.
(f) The Seller has provided to the Purchaser all environmentally
related audits, studies, reports, analyses, and results of investigations that
have been performed with respect to the currently or previously owned, leased or
operated properties of each Company.
(g) Neither of the Companies has ever sold, rented, leased,
manufactured, produced, processed, provided, or delivered any product, component
part or raw material containing asbestos. Neither of the Companies has any
liability involving asbestos arising out of any injury to a person or property
as a result of the ownership, possession, or use of any equipment, product, or
service sold, rented, leased, manufactured, produced, processed, provided, or
delivered by either of the Companies or their Affiliates or, to the Seller's
Knowledge, any of its predecessors on or prior to the Closing Date. Neither of
the Companies is, to the Seller's Knowledge, a successor to any other Person
with respect to any product liability claims. Neither of the Companies has
assumed contractually or, to the Seller's Knowledge, by operation of law any
liability for products manufactured, sold, or distributed by, or for, any other
Person. Schedule 4.20(g) describes all product liability claims involving
asbestos brought against each Company regardless of whether such claims were
meritorious, groundless, or otherwise. To the Seller's Knowledge, the written
materials supplied to the Purchaser in response to Purchaser's written questions
to Seller, copies of which are contained in Schedule 4.20(g), do not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements contained therein, in light of the circumstances
under which they were made, not misleading.
(h) The representations and warranties contained in this Section
4.20 shall constitute the sole representations and warranties with respect to
Environmental Matters (including, without limitation, matters arising pursuant
to Environmental and Safety Requirements).
23
4.21 Insurance. Schedule 4.21 sets forth a complete and accurate
list of all policies of insurance of any kind or nature covering each Company or
any of its employees, properties or assets, including, without limitation,
policies of life, disability, fire, theft, workers compensation, employee
fidelity and other casualty and liability insurance, as well as all claims
relating to any of the foregoing. To the Seller's Knowledge, all such policies
are in full force and effect, and, to the Seller's Knowledge, there is no
existing default by either of the Companies or event which, with the giving of
notice or lapse of time or both would constitute a default by either of the
Companies thereunder.
4.22 Related Party Transactions.
(a) Except as set forth on Schedule 4.22(a), neither the
Seller nor any of its Affiliates has outstanding any indebtedness or other
similar obligations to either of the Companies. Except as set forth in Schedule
4.22(a), neither the Seller, the Companies, any Affiliate of the Companies or
the Seller nor, to the Seller's Knowledge, any officer, director or employee of
any of them (i) owns any direct or indirect interest of any kind in, or controls
or is a director, officer, employee or partner of, or consultant to, or lender
to or borrower from or has the right to participate in the profits of, any
Person which is (A) a competitor, supplier, customer, landlord, tenant, creditor
or debtor of either of the Companies, (B) engaged in a business related to the
business of the Companies, or (C) a participant in any transaction to which the
Companies is a party or (D) is a party to any Contract with the Companies.
(b) Except for the services set forth in Schedule 4.22(b)(i),
Seller and its Affiliates provide no material services to either of the
Companies. Except as set forth in Schedule 4.22(b)(ii), Seller and its
Affiliates (other than the Companies) do not own any assets (including fixed
assets, inventories and Intellectual Property) that are used exclusively or
primarily in the conduct of either of the Companies' businesses (including the
business of any Subsidiary).
4.23 Customers and Suppliers. Schedule 4.23 sets forth a list of the
twenty (20) largest customers and the twenty (20) largest suppliers of each
Company, as measured by the dollar amount of purchases therefrom or thereby,
during each of the fiscal year ended March 31, 2001 and the nine month period
ended December 31, 2001, showing the approximate total sales by each Company to
each such customer and the approximate total purchases by each Company from each
such supplier, during such period. Except as set forth on Schedule 4.23, since
December 31, 2001, there has not been any adverse change in the business
relationship of either of the Companies with any customer or supplier listed on
Schedule 4.23 except where such adverse change would not have a Material Adverse
Effect.
4.24 Product Warranties: Regulatory Compliance Regarding Products.
Other than as set forth on Schedule 4.24, there are no warranties with respect
to the products or services of the Companies that have been made since January
1, 1999, and except with respect to the dollar amount of Claims specifically
identified in Schedule 4.24, there have not been any Claims (as defined in
Schedule 4.24) for breach of product or service warranties to customers that
have been made against the Companies since January 1, 1999, and there are no
pending or, to the Knowledge of the Seller, threatened Claims with respect to
any such warranty. Since January 1, 1999, no governmental authority regulating
the design,
24
manufacture, marketing, testing or advertising of any of the products
manufactured, sold, distributed or used by the Companies has requested that any
such product be removed from the market, that substantial new product testing be
undertaken as a condition to the continued manufacturing, selling, distribution
or use of any such product or that such product be modified, in each case in any
manner that would reasonably be likely to have a Material Adverse Effect.
4.25 Financial Advisors. Except as set forth on Schedule 4.25, no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for the Seller or the Companies in connection with the transactions
contemplated by this Agreement and no Person is entitled to any fee or
commission or like payment in respect thereof.
4.26 No Other Representations and Warranties. Except for the
representations and warranties contained in this Xxxxxxx 0, xxxx of Seller or
any other Person makes any other express or implied representation or warranty
on behalf of Seller.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser hereby represents and warrants to the Seller that:
5.1 Organization and Good Standing. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware.
5.2 Authorization of Agreement. The Purchaser has full corporate
power and authority to execute and deliver this Agreement and each other
agreement, document, instrument or certificate contemplated by this Agreement or
to be executed by the Purchaser in connection with the consummation of the
transactions contemplated hereby and thereby (the "Purchaser Documents"), and to
consummate the transactions contemplated hereby and thereby. The execution,
delivery and performance by the Purchaser of this Agreement and each Purchaser
Document have been duly authorized by all necessary corporate action on behalf
of the Purchaser. This Agreement has been, and each Purchaser Document will be
at or prior to the Closing, duly executed and delivered by the Purchaser and
(assuming the due authorization, execution and delivery by the other parties
hereto and thereto) this Agreement constitutes, and each Purchaser Document when
so executed and delivered will constitute, legal, valid and binding obligations
of the Purchaser, enforceable against the Purchaser in accordance with their
respective terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
25
5.3 Conflicts; Consents of Third Parties.
(a) Neither of the execution and delivery by the Purchaser of this
Agreement and of the Purchaser Documents, nor the compliance by the Purchaser
with any of the provisions hereof or thereof will (i) conflict with, or result
in the breach of, any provision of the certificate of incorporation or by-laws
of the Purchaser, (ii) conflict with, violate, result in the breach of, or
constitute a default under any Contract, note, bond, mortgage, indenture,
license, agreement or other obligation to which the Purchaser is a party or by
which the Purchaser or its properties or assets are bound or (iii) violate any
statute, rule, regulation, order or decree of any Governmental Body or authority
by which the Purchaser is bound, except, in the case of clauses (ii) and (iii),
for such violations, breaches or defaults as would not, individually or in the
aggregate, have a material adverse effect on the business, properties, results
of operations, conditions (financial or otherwise) of the Purchaser and its
Subsidiaries, taken as a whole.
(b) No consent, waiver, approval, Order, Permit or authorization of,
or declaration or filing with, or notification to, any Person or Governmental
Body is required on the part of the Purchaser in connection with the execution
and delivery of this Agreement or the Purchaser Documents or the compliance by
Purchaser with any of the provisions hereof or thereof, except for compliance
with the applicable requirements of any applicable Antitrust Acts.
5.4 Litigation. There are no Legal Proceedings pending or, to the
Knowledge of the Purchaser, threatened that are reasonably likely to prohibit or
restrain the ability of the Purchaser to enter into this Agreement or consummate
the transactions contemplated hereby.
5.5 Investment Intention. The Purchaser is acquiring the Shares for
its own account, for investment purposes only and not with a view to the
distribution (as such term is used in Section 2(11) of the Securities Act of
1933, as amended (the "Securities Act") thereof. Purchaser understands that the
Shares have not been registered under the Securities Act and cannot be sold
unless subsequently registered under the Securities Act or an exemption from
such registration is available.
5.6 Financial Advisors. Except as set forth on Schedule 5.6, no
Person has acted, directly or indirectly, as a broker, finder or financial
advisor for the Purchaser in connection with the transactions contemplated by
this Agreement and no Person is entitled to any fee or commission or like
payment in respect thereof.
5.7 Financial Resources. The Purchaser has all requisite approvals
and sufficient funds to pay the Purchase Price, to make all other necessary
payments by it in connection with the purchase of the Shares contemplated
hereby, and to pay all of its related fees and expenses on the Closing Date,
which funds will be available at the Closing for all such purposes.
26
ARTICLE VI
COVENANTS
6.1 Access to Information; Confidentiality.
(a) The Seller agrees that, prior to the Closing Date, the Purchaser
shall be entitled, through its officers, employees and representatives
(including, without limitation, its financial advisors, legal advisors and
accountants), to make such investigation of the properties, businesses and
operations of the Companies and such examination of the books, records and
financial condition of the Companies as it reasonably requests and, at its
expense, to make extracts and copies of such books and records. Any such
investigation and examination shall be conducted during regular business hours
and under reasonable circumstances and conditions consistent with the Antitrust
Acts, and the Seller shall cooperate, and shall cause the Companies and their
officers, employees and representatives (including, without limitation, legal
advisors and accountants) to cooperate fully therein. For the avoidance of
doubt, the Purchaser shall not conduct any "Phase II" environmental
investigation of the Companies' properties without the prior written consent of
the Seller. No investigation by the Purchaser prior to or after the date of this
Agreement shall diminish or obviate any of the representations, warranties,
covenants or agreements of the Seller contained in this Agreement or the Seller
Documents.
(b) The Purchaser and the Seller agree that, following the execution
of this Agreement, the Confidentiality Agreement attached as Exhibit B shall
remain in full force and effect. In addition, each party agrees to treat any
information concerning the business and properties of the other that it obtains
in connection with the preparation of submissions to Governmental Bodies
pursuant to this Agreement in the same manner as confidential information is to
be treated pursuant to the provisions of the Confidentiality Agreement.
6.2 Conduct of the Business Pending the Closing.
(a) Except as otherwise expressly contemplated by this Agreement or
with the prior written consent of the Purchaser, prior to the Closing the Seller
shall use its commercially reasonable efforts to, and shall cause the Companies
to:
(i) conduct the businesses of the Companies only in the ordinary
course consistent with past practice;
(ii) use its commercially reasonable efforts to (A) preserve its
present business operations, organization (including, without limitation,
management and the sales force) and goodwill of the Companies and (B) preserve
its present relationship with Persons having business dealings with the
Companies;
(iii) maintain, consistent with past practices, (A) all of the
assets and properties of the Companies in their current condition, ordinary wear
and tear excepted and (B) insurance upon all of the properties and assets of the
Companies in such amounts and of such kinds comparable to that in effect on the
date of this Agreement;
27
(iv) (A) maintain the books, accounts and records of the Companies
in the ordinary course of business consistent with past practices, (B) continue
to collect accounts receivable and pay accounts payable utilizing normal
procedures and without discounting or accelerating payment of such accounts
receivable or deferring accounts payable, and (C) comply with all contractual
and other obligations applicable to the operation of the Companies;
(v) consult with Purchaser prior to engaging in any negotiations
with Republic or its agents or advisors regarding the Republic Agreement;
(vi) consult with Purchaser prior to engaging in any negotiations
with organized labor regarding the Las Vegas union contract and allow Purchaser
to participate in any such negotiations.
(b) Except as set forth on Schedule 6.2(b) or otherwise expressly
contemplated by this Agreement or with the prior written consent of the
Purchaser, the Seller shall not, and shall cause the Companies not to:
(i) declare, set aside, make or pay any dividend or other
distribution in respect of the capital stock of the Companies or repurchase,
redeem or otherwise acquire any outstanding shares of the capital stock or other
securities of, or other ownership interests in, the Companies;
(ii) dispose, destroy or otherwise remove from the Companies any
fixed asset, intangible asset or any other non-working capital asset with an
individual value of $10,000 or $100,000 for all assets in the aggregate required
for the operation of the business of the Companies;
(iii) transfer, issue, sell or dispose of any shares of capital
stock or other securities of the Companies or grant options, warrants, calls or
other rights to purchase or otherwise acquire shares of the capital stock or
other securities of the Companies;
(iv) effect any recapitalization, reclassification, stock split or
like change in the capitalization of the Companies;
(v) amend the certificate of incorporation or by-laws of the
Companies;
(vi) (A) materially increase the annual level of compensation of any
employee of the Companies, (B) increase the annual level of compensation payable
or to become payable by the Companies to any of their respective executive
officers, (C) grant any bonus, benefit or other direct or indirect compensation
to any employee, director or consultant, other than in the ordinary course
consistent with past practice and in such amounts as are fully reserved against
in the Final Closing Accounts, (D) increase the coverage or benefits available
under any (or create any new) severance pay, termination pay, vacation pay,
company awards, salary continuation for disability, sick leave, deferred
compensation, bonus or other incentive compensation, insurance, pension or other
employee benefit plan or arrangement made to, for, or with any of the directors,
officers, employees, agents or representatives of the Companies or otherwise
modify or amend or terminate any
28
such plan or arrangement or (E) enter into any employment, deferred
compensation, severance, consulting, non-competition or similar agreement (or
amend any such agreement) to which either of the Companies is a party or
involving a director, officer or employee of such Company in his or her capacity
as a director, officer or employee of the Companies;
(vii) except for trade payables and for indebtedness for borrowed
money incurred in the ordinary course of business and consistent with past
practice, borrow monies for any reason or draw down on any line of credit or
debt obligation, or become the guarantor, surety, endorser or otherwise liable
for any debt, obligation or liability (contingent or otherwise) of any other
Person;
(viii) subject to any Lien (except for leases that do not materially
impair the use of the property subject thereto in their respective businesses as
presently conducted), any of the properties or assets (whether tangible or
intangible) of the Companies;
(ix) acquire any material properties or assets or sell, assign,
transfer, convey, lease or otherwise dispose of any of the material properties
or assets (except for fair consideration in the ordinary course of business
consistent with past practice) of the Companies;
(x) cancel or compromise any debt or claim or waive or release any
material right of the Companies except in the ordinary course of business
consistent with past practice;
(xi) enter into any commitment for capital expenditures of the
Companies in excess of $175,000 for any individual commitment and $350,000 for
all commitments in the aggregate;
(xii) except as set forth on Schedule 6.2(b)(xii), enter into,
modify or terminate any labor or collective bargaining agreement of the
Companies or, through negotiation or otherwise, make any commitment or incur any
liability to any labor organization with respect to the Companies;
(xiii) introduce any material change with respect to the operation
of the Companies, including any material change in the types, nature,
composition or quality of its products or services, experience any material
change in any contribution of its product lines to its revenues or net income,
or, other than in the ordinary course of business, make any change in product
specifications or prices or terms of distributions of such products;
(xiv) permit the Companies to enter into any transaction or to make
or enter into any Contract which by reason of its size or otherwise is not in
the ordinary course of business consistent with past practice;
(xv) permit the Companies to enter into or agree to enter into any
merger or consolidation with any Person; engage in any new business or invest
in, make a loan, advance or capital contribution to, or otherwise acquire the
securities of any other Person;
29
(xvi) except for transfers of cash pursuant to normal cash
management practices, permit the Companies to make any investments in or loans
to, or pay any fees or expenses to, or enter into or modify any Contract with,
the Seller or any Affiliate of the Seller;
(xvii) extend the time for Republic to achieve Commercial Production
or provide the Commencement Notice in connection with the Republic Agreement or
otherwise amend, supplement or modify the Republic Agreement;
(xviii) amend, supplement or modify the Xxxxx Agreement;
(xix) enter into any (a) gas forward contract or (b) any raw
material supply contract that extends beyond thirty (30) days;
(xx) agree to do anything prohibited by this Section 6.2 or anything
which would make any of the representations and warranties of the Seller in this
Agreement or the Seller Documents untrue or incorrect in any material respect as
of any time through and including the Closing Date.
6.3 Consents. The Seller shall use its reasonable commercial
efforts, and the Purchaser shall cooperate with the Seller, to obtain at the
earliest practicable date all consents and approvals required to consummate the
transactions contemplated by this Agreement, including, without limitation, the
consents and approvals referred to in Section 4.6(b) hereof.
6.4 Filings with Governmental Bodies.
(a) As promptly as practicable after the execution of this
Agreement, each party shall, at its own expense and in cooperation with the
other, file or cause to be filed with the relevant Governmental Bodies any
reports, notifications or other information that may be required under the
Antitrust Acts and shall furnish or cause to be furnished to the other all such
information in its possession as may be reasonably necessary for the completion
of the reports, notifications or submissions to be filed by the other. Each
party agrees to use its best efforts to comply and cause its Affiliates and
Representatives to comply in a full and timely manner with any request from a
Governmental Body for additional information. In this connection, each of the
Purchaser and the Seller will supply the other with copies of all non-privileged
correspondence, filings and communications (or memoranda setting forth the
substance thereof) between the Purchaser, the Seller and their respective
"ultimate parents", on the one hand, and any Governmental Body (or member of its
staff) with respect to this Agreement and the transactions contemplated hereby.
(b) Notwithstanding anything to the contrary contained herein,
nothing in this Agreement will require the Purchasers or any of its Affiliates,
whether pursuant to an order of any Governmental Body or otherwise, to dispose
of any assets, lines of business or equity interests in order to obtain the
consent of any Governmental Body to the transactions contemplated by this
Agreement.
30
6.5 Reasonable Commercial Efforts. Each of the Seller and the
Purchaser shall use its reasonable commercial efforts to (i) take all actions
necessary or appropriate to consummate the transactions contemplated by this
Agreement, including finalizing the terms of a transitional services agreement
in substantially the form of Exhibit C hereto (the "Transitional Services
Agreement") and (ii) cause the fulfillment at the earliest practicable date of
all of the conditions to their respective obligations to consummate the
transactions contemplated by this Agreement.
6.6 No Solicitation.
(a) The Seller will not, and will not cause or permit the Companies
or any of their directors, officers, employees, representatives or agents
(collectively, the "Representatives") to, directly or indirectly, (i) discuss,
negotiate, undertake, authorize, recommend, propose or enter into, either as the
proposed surviving, merged, acquiring or acquired corporation, any transaction
involving a merger, consolidation, business combination, purchase or disposition
of any amount of the assets or capital stock or other equity interest in one or
both of the Companies other than the transactions contemplated by this Agreement
(an "Alternative Seller Transaction"), (ii) facilitate, encourage, solicit or
initiate discussions, negotiations or submissions of proposals or offers in
respect of an Alternative Seller Transaction, (iii) furnish or cause to be
furnished, to any Person, any information concerning the business, operations,
properties or assets of the Companies in connection with an Alternative Seller
Transaction, or (iv) otherwise cooperate in any way with, or assist or
participate in, facilitate or encourage, any effort or attempt by any other
Person to do or seek any of the foregoing. The Seller will forthwith cease, and
cause the Companies, their Affiliates and all Representatives to cease, any of
the foregoing. The Seller will inform the Purchaser in writing immediately
following the receipt by the Seller, the Companies, their Affiliates or any
Representative of any proposal or inquiry in respect of any Alternative Seller
Transaction.
(b) Prior to the Closing, the Purchaser will not, and will not cause
or permit any of its Representatives to, directly or indirectly, (i) discuss,
negotiate, undertake, authorize, recommend, propose or enter into, either as the
proposed surviving, merged, acquiring or acquired corporation, any transaction
involving a merger, consolidation, business combination, purchase or disposition
of any amount of the assets or capital stock or other equity interest in the
Purchaser (other than the transactions contemplated by this Agreement) that
would reasonably be expected to interfere with or delay satisfaction of the
condition contained in Section 7.1(g) of this Agreement (an "Inconsistent
Purchaser Transaction"), (ii) facilitate, encourage, solicit or initiate
discussions, negotiations or submissions of proposals or offers in respect of an
Inconsistent Purchaser Transaction, (iii) furnish or cause to be furnished, to
any Person, any information concerning the business, operations, properties or
assets of the Purchaser in connection with an Inconsistent Purchaser
Transaction, or (iv) otherwise cooperate in any way with, or assist of
participate in, facilitate or encourage, any effort or attempt by any other
Person to do or seek any of the foregoing. The Purchaser will forthwith cease,
and cause its Representatives to cease, any of the foregoing.
6.7 Access to Records. Following the Closing, Purchaser shall, and
shall cause its Affiliates and employees to, upon reasonable request, fully
cooperate with Seller
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and afford to Seller and its respective counsel, accountants and other
authorized Representatives reasonable access during normal business hours to all
books, records, data, facilities, properties and personnel (and permit Seller
and its counsel, accountants and other authorized Representatives to make copies
of such books, records and other data), to the extent that such may be
reasonably requested by the Seller to facilitate (i) the preparation by Seller
of such Tax returns as it may be required to file with respect to the operations
of the Companies or the ownership of and sale of the Shares or in connection
with any audit, amended return, claim for refund or any proceeding with respect
thereto, (ii) the investigation, litigation or final disposition of any claim
which may have been or may be made against Seller or any of its Affiliates in
connection with any of the Companies, (iii) the preparation by Seller of
materials necessary for any audit, examination or proceeding and (iv) for any
other reasonable business purpose. For a period of five years following the
Closing, neither the Purchaser nor the Companies shall destroy or otherwise
dispose of any books and records of the Companies that relate to periods prior
to the Closing. After such five-year period, in the event either the Purchaser
or either of either Companies desires to destroy or otherwise dispose of any
such books and records, it shall give notice of such desire to the Seller, and,
if the Seller so elects by notice to the Purchaser within 30 days after
receiving Purchaser's or a Company's notice, the Seller may obtain such records
and store them at the Seller's sole cost and expense.
6.8 Publicity. The Purchaser and the Seller shall announce the
transactions contemplated by this Agreement pursuant to mutually agreed upon
announcements. Thereafter, prior to the Closing, neither the Seller nor the
Purchaser nor any of their respective Affiliates shall issue any press release
or make any public announcement concerning this Agreement or the transactions
contemplated hereby without obtaining the prior written approval of the other
party, which approval will not be unreasonably withheld or delayed; provided,
however, that any party may make any public disclosure it believes in good
faith, in the opinion of legal counsel, is required by applicable Law or by the
applicable rules of any stock exchange on which the Purchaser's Parent or the
Seller's Parent lists securities (in which case the party intending to make such
release shall use commercially reasonable efforts to consult with the other
party before making the disclosure and to allow the other party to review the
text of the disclosure before it is made).
6.9 Settlement of Intercompany Obligations. One day prior to the
Closing Date, all loans, net borrowings and other advances between one of the
Companies, on the one hand, and the Seller or any of its Affiliates, on the
other hand, including those listed on Schedule 6.9 (the "Affiliate Loans"),
including any accrued and unpaid interest thereon, shall be extinguished by
being repaid or capitalized in full. On or prior to the Closing Date (i) all
management or similar fees owing by the Companies to the Seller or its
Affiliates shall be paid in full; and (ii) any Contracts providing for
management or similar services between the Companies and the Seller or any of
its Affiliates shall have been terminated without any liability on the part of
the Companies.
6.10 Change of Name; Use of Trade Names. Immediately after the
Closing Date, the Purchaser will cause JHG to change its corporate name to such
other corporate name as does not contain the words or phrases "Xxxxx Xxxxxx",
"Xxxxxx", "Hardi", any words or phrases similar thereto, or any other trademark,
trade name, logo or service
32
xxxx currently employed by Seller or any of its Affiliates or the Companies
containing or using such names (collectively, the "Marks"). After the Closing
Date, neither the Purchaser nor the Companies shall have any right, title or
interest in or to, and neither Purchaser nor the Companies shall use, the Marks;
provided, however, that Purchaser and the Companies shall have a period of time,
not to exceed six (6) months after the Closing Date, to sell inventory, replace
stationery and other documents and forms, and to replace or repaint signs,
vehicles and other items, that on the Closing Date bear the Marks, during which
period of time the Companies may use such Marks on inventory, documents, forms
and other items that have not yet been replaced or repainted.
6.11 Title Insurance. The Seller will cooperate with Purchaser in
retaining such title insurance companies and surveyors as are acceptable to the
Purchaser, acting reasonably, for purposes of conducting such searches,
examinations and other work which may be necessary in order for such title
insurance companies to write policies of title insurance (on an ALTA (Form B
1970) title insurance policy or its local equivalent) on the Companies' Property
identified as requiring title insurance on Schedule 6.11, in each case insuring
that such Companies' Property is owned by the Companies in question free and
clear of any and all Liens other than Permitted Exceptions (individually, a
"Title Policy" and collectively, "Title Policies"). Costs and fees associated
with such searches, examinations, surveys and other work and the premiums
associated with obtaining any such title insurance shall be borne equally (i.e.,
on a 50/50 basis) by the Seller and the Purchaser. The Seller will cooperate
with the Purchaser in retaining such law firm or other counsel as is acceptable
to Purchaser, acting reasonably, for the purpose of issuing such updates of any
existing title opinions acceptable to Purchaser in connection with the Patented
Mining Claims and Unpatented Mining Claims set forth on Schedule 6.11
(individually, a "Title Opinion" and collectively, the "Title Opinions"). Each
Title Opinion shall provide, among other things, that each Company has and can
deliver to Purchaser: (a) good, sufficient and marketable title to the
Unpatented Mining Claims, free and clear of all Liens of any nature whatsoever
except Liens set forth on Schedule 6.11 and (b) good, marketable, valid and
enforceable title to the Patented Mining Claims, free and clear of all Liens of
any nature whatsoever except Liens set forth on Schedule 6.11. With respect to
Unpatented Mining Claims, each Title Opinion shall further include the opinion
that the representations and warranties set forth in Sections 4.12(n)(iii) and
4.12(n)(v) are true and correct. All costs and fees, including reasonable
attorneys' fees, associated with such Title Opinion or Title Opinions, shall be
borne equally (i.e., on a 50/50 basis) by the Seller and the Purchaser.
6.12 Insurance.
(a) Generally. The Seller will take all necessary action to enable
the Companies to assert timely claims under all policies of insurance held by or
on behalf of the Seller (with respect to the business of the Companies) or the
Companies for losses that could have been asserted if the sale and transfer
contemplated by this Agreement had not taken place. The Seller shall not take
any action which would deprive the Companies of any insurance coverage in
respect of any period on or prior to the Closing Date under policies of
insurance held by or on behalf of the Seller (with respect to the business of
the Companies), or the Companies.
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(b) Public and Products Liability Insurance. Prior to the Closing,
the Seller will purchase "tail" insurance policies in respect of public and
products liability with one or more insurers, and on terms and conditions, to
which the Purchaser has given its prior written consent. The Seller will pay 50%
of the cost of such "tail" policies; provided, however, that Seller's aggregate
payments hereunder shall not exceed $100,000.
6.13 Replacement of Seller on Guarantees. As soon as practicable
after the Closing; the Purchaser shall, or shall cause an Affiliate of the
Purchaser to, replace Seller, its ultimate parent or any Affiliate of Seller
(other than the Companies) as guarantor on all of the Companies' letters of
credit, performance bonds, reclamation bonds and performance sureties set forth
on Schedule 6.13 such that neither Seller, its ultimate parent nor any Affiliate
of Seller shall have any obligation after the Closing Date with respect to any
such letters of credit, performance bonds, reclamation bonds and performance
sureties.
6.14 Employee Matters.
(a) Employment of Employees. Without the prior written consent of
the Purchaser, none of the employees of the Seller or any of its Affiliates
(other than the Companies) shall be transferred to employment with the
Companies, and none of the employees of the Companies shall have their duties or
responsibilities increased with respect to the business or activities of, or
transferred to employment with, the Seller or any of its Affiliates (other than
the Companies). The Seller shall or shall cause an Affiliate (other than the
Companies) to employ prior to the close of business on the Closing Date each
non-union employee of any Company who was absent from active employment on the
Closing Date due to an approved leave of absence, sickness, short-term
disability or long-term disability (an "Inactive Employee"), and such Inactive
Employees shall be deemed to have transferred their employment from the
Companies to the Seller or any such Affiliate prior to the close of business on
the Closing Date. The Purchaser acknowledges that by purchasing the Shares, it
shall, through the Companies, employ all of the employees of the Companies
(other than Inactive Employees) at the close of business on the Closing Date
(the "Employees"). Each Company shall offer employment to any Inactive Employee
who had been employed by such Company in accordance with the Purchaser's
standard hiring procedures, subject to the following conditions: (i) if such
Inactive Employee is on medical or disability leave, such individual is released
by his or her physician to return to active employment and (ii) such individual
actually reports for work with such Company immediately upon such medical
release or the expiration of an approved leave; provided, however, that the
Company shall not be required to offer employment to any Inactive Employee who
does not apply for such employment within six (6) months after the Closing Date
or, if later, prior to the expiration of any right to employment required by
applicable Law.
(b) Employee Benefit Plans Other Than Company Plans. Effective as of
the close of business on the Closing Date, Seller shall take such action as may
be necessary to cause either of the Companies to cease to be an adopting
employer of any Employee Benefit Plans (other than Company Plans) and the
Companies shall not have any obligation or liability (contingent or otherwise)
with respect to such plans. Seller shall indemnify and hold harmless each of the
Companies and the Purchaser for any and all liabilities (i) arising on or before
the Closing Date under Title IV of ERISA or the Code by reason of the Companies
being under common control or treated as a single employer with the Seller or
any of its
34
Affiliates (other than the Companies), (ii) with respect to employment or
termination of employment on or before the close of business on Closing Date of
any employee of any Company or (iii) under any of the Employee Benefit Plans
(other than the Company Plans), except in each case to the extent accrued on the
Balance Sheet or as set forth in Sections 6.14 (g) or (h) below. Purchaser may,
but is not obligated to, offer employment in its sole discretion to any of the
Shared Service Employees who renders services primarily with respect to the
Companies.
(c) Defined Contribution Plan. At Purchaser's election, Seller shall
either (i) transfer the account balances (including loans to Employees) of
Employees under any of the Employee Benefit Plans which is a defined
contribution retirement plan to a retirement plan qualifying under Section 401
of the Code and designated by the Purchaser (the "Purchaser's DC Plan") or (ii)
permit Employees to make a "direct rollover" of such account balances to the
Purchaser's DC Plan. Seller and Purchaser shall reasonably cooperate in good
faith to effect such transfers or distributions as soon as practicable after the
Closing Date. Seller shall take such action as may be necessary to cause the
account balances of all Employees to be fully vested as of the Closing Date.
(d) Past Service Credit. The Purchaser's employee benefit plans
shall, solely for purposes of vesting and eligibility (and not benefit accrual),
recognize all service of the Employees that was recognized under the
corresponding Employee Benefit Plan. The Purchaser agrees that for purposes of
the Purchaser's employee health plans applicable to the Employees, the Purchaser
will waive any exclusions and conditions based on pre-existing conditions of the
Employees to the same extent that they were not otherwise excluded under
the Employee Benefit Plans. The Purchaser's health plans shall, with respect to
each Employee, credit its deductible, co-payment and out-of-pocket limits for
eligible out-of- pocket expenditures (as provided by the Seller's third-party
administrator) during the calendar year preceding the Closing Date applicable to
such Employee.
(e) Former Employees. Seller shall be solely responsible for
providing (i) severance pay or benefits or similar termination benefits for
individuals who terminated their employment with any Company on or prior to the
close of business on the Closing Date, (ii) COBRA health care continuation
coverage to such individuals and "qualified beneficiaries" who experienced a
"qualifying event" (as those terms are defined in Section 4980B of the Code) on
or prior to the close of business on the Closing Date and (iii) any conversion
rights with respect to any Employee covered by the Seller's Employee Benefit
Plans who terminated employment on or prior to the close of business on the
Closing Date.
(f) Incentive and Deferred Compensation Plans. Seller acknowledges
and agrees it shall be solely responsible for any payments that are due under
the Seller's Key Management Equity Incentive Plan (shadow stock plan), the Xxxxx
Xxxxxx Industries, N.V. 2001 Equity Plan (stock option plan), the Xxxxx Xxxxxx
Group Economic Profit Incentive Plan, the Xxxxx Xxxxxx Group Individual
Performance Incentive Plan and the Xxxxx Xxxxxx (Holdings), Inc. Deferred
Compensation Plan pursuant to the terms of such plans.
(g) Retention Bonuses and Success Fees. Seller shall be solely
responsible for the payment of any retention bonuses pursuant to any
Confidential Key Employee Retention Agreement (the "Retention Agreement")
described on Schedule 6.14(g),
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and Seller hereby confirms that each such agreement expires in its entirety on
March 31, 2002. Seller shall be solely responsible for paying or otherwise
satisfying any success fees provided for in the employment contracts listed on
Schedule 6.14 (h). Nothing in this Section 6.14 shall be construed as extending
the term of any Retention Agreement, and Seller shall not take any action on or
prior to Closing to extend the term of any Retention Agreement without
Purchaser's prior written consent.
(h) Redundancy Payments. If the Purchaser offers employment to the
individual identified in Part A of Schedule 6.14(h) on substantially the same
financial terms as he enjoys as of the date hereof (albeit, at the Purchaser's
option, for a different position than he occupies as of the date hereof) and the
individual accepts such offer of employment, the Purchaser shall be obligated to
pay such severance benefits in accordance with the terms of the applicable
agreement described on Part A Schedule 6.14(h). If the individual does not
accept such offer of employment, the Seller shall pay such severance benefits.
The Purchaser shall be solely responsible to make any redundancy payments that
become payable pursuant to the agreements identified in Part B of Schedule
6.14(h).
(i) Transition Period. For a period of not more than ninety (90)
days following the Closing, at the request of the Purchaser, Seller shall
provide (i) administrative services, including but not limited to, payroll,
accounts receivable, system support ("Shared Services") and/or health and
welfare benefits as provided in the Employee Benefit Plans set forth in Schedule
6.14(i), provided, however, any and all actual costs, insurance premiums,
employer contributions and liabilities for claims incurred as a result of
providing such payroll and other administrative services and/or such health and
welfare benefits on behalf of the Purchaser's employees for claims incurred
following the Closing shall be borne by the Purchaser. Purchaser and Seller
shall cooperate with each other in implementing the requirements of this
section, including but not limited to, the execution and delivery of a
transitional services agreement, if appropriate, simultaneous with the Closing.
6.15 Las Vegas Property. A portion of the Owned Properties that is
currently used for mining and manufacturing operations located in Las Vegas,
Nevada, as more particularly described on Schedule 6.15 attached hereto (the
"Property") is the subject of the Xxxxx Agreement. The Xxxxx Agreement provides
that the Company will sell a portion of the Property (the "Mine Property" and
the "Non-Essential Plant Property" as such premises are described on Schedule
6.15 attached hereto) to Xxxxx and Xxxxx will hold a right of first refusal on
the Essential Plant Property (as defined below). The sale of the Mine Property
and Non-Essential Plant Property is scheduled to close no later than July 10,
2003. The Mine Property, the Non-Essential Plant Property and the Essential
Plant Property collectively comprise the Property, except that, as disclosed in
Section 4.12 hereof, the Subject Portion is not presently a portion of the Owned
Properties.
(a) Reference is made to the parcel comprised of approximately 79.35
acres and identified as Area 13 ("Area 13") on the aerial photograph attached
hereto as Schedule 6.15(a); and to the north approximately one-half of Area 13
comprised of approximately 00.000 xxxxx ("Xxxxx Xxxx 00 Parcel"). Seller shall
use its best efforts to subdivide the North Area 13 Parcel from the remainder of
Area 13 by means of either
36
recording appropriate parcel map(s) or boundary line adjustments and performing,
or causing to be performed, any other appropriate actions to subdivide Area 13
and cause the North Area 13 Parcel to be subject to real property taxation
separate and apart from real property taxation for any other property (the
"Subdivision") and shall consummate such Subdivision on or before the date that
is six (6) months after the Closing Date. The "Essential Plant Property" shall
mean the land preliminarily described on Schedule 6.15(a) attached hereto
containing approximately 194.965 acres including the North Area 13 Parcel) plus
the Subject Portion; provided, however, that the definition of the Essential
Plant Property shall be revised within 120 days after Closing to ensure that it:
(w) includes all real property interests and rights, including all Water Rights
appurtenant to the Property and the right to erect, construct, use, maintain and
remove the existing water pumping facility and pipelines, sewers, drainage,
electric, gas and other utility facilities, easements, access rights, and other
appurtenances necessary or desirable (in Purchaser's sole opinion) for Purchaser
to operate the plant currently existing on the Essential Plant Property or to
reasonably expand such plant; (x) shall be a contiguous parcel (except for Area
6 as shown on Schedule 6.15(a) attached hereto) and there shall be direct access
from a public road to all parts of the Essential Plant Property without crossing
third party properties (other than public roads) or third party easements; (y)
shall be increased to the extent necessary to include all land within a minimum
of 25 meters of all existing plant buildings and operating areas, including,
without limitation, areas used for site access, truck and equipment parking,
plant roads, gypsum storage, waste storage, production and warehousing areas,
and workshops; and (z) is, in all cases, subject to the final approval of
Purchaser, which shall not be unreasonably withheld. Any additional property
contained in area SL-6 on Exhibit "F" to the Xxxxx Agreement contiguous with
and, in the reasonable opinion of Purchaser, useful in connection with, the
Essential Plant Property that is obtained pursuant to the BLM Exchange shall be
added to the Essential Plant Property (but not in excess of the approximately
216.86 acres contained in SL-6). Purchaser agrees to identify such additional
property to Seller within one hundred twenty (120) days after the Closing. JHG
shall receive the Subject Portion (not in excess of 20 acres) at no additional
charge, but any property that Purchaser identifies to be added to the Essential
Plant Property beyond the 194.965 acres identified on Schedule 6.15(a) and the
Subject Portion (not in excess of 20 acres) shall be delivered to JHG
simultaneously with the payment from JHG or Purchaser to Seller of an amount
equal to $17,765.00 per acre (or portion thereof). No portion of the Property
currently identified as Essential Plant Property will be conveyed to BLM (as
defined in the Xxxxx Agreement) in connection with the BLM Exchange (as defined
in the Xxxxx Agreement). The definitions of "Mine Property" and "Non-Essential
Plant Property" shall be adjusted at Closing to conform to any change in the
definition of "Essential Plant Property."
(i) Prior to the Closing Date, Seller shall cause JHG to transfer
the Mine Property and the Non-Essential Plant Property and Xxxx 00 to Seller
(but specifically excluding all Water Rights appurtenant to the Property, a
perpetual easement with respect to certain water pipes and other utilities
located on the Non-Essential Plant Property, which will be retained in favor of
JHG, and all buildings, fixtures, personal property and other improvements
located on the Property, including, without limitation,
37
the mining equipment, existing water pumping facility and pipelines, and rock
conveyor), free and clear of all Liens of any nature whatsoever, except Liens
set forth on Schedule 4.12(a) attached hereto and Permitted Exceptions. At
Closing, or if later, upon completion of the Subdivision, Seller shall grant and
convey the North Area 13 Parcel to JHG pursuant to a Grant, Bargain and Sale
Deed in the form attached as Schedule 6.15(a)(i), free and clear of all Liens of
any nature whatsoever, except the Plant Lease (defined herein), the ROFR, Liens
set forth on Schedule 4.12(a) attached hereto and Permitted Exceptions (the
"Transfer").
(ii) If the Subdivision does not occur prior to the Closing Date, at
Closing, Seller and JHG shall enter into a lease agreement (the "Plant Lease")
for the North Area 13 Parcel for a term of ninety-nine (99) years in the form
attached hereto as Schedule 6.15(a)(ii).
(iii) Seller shall use commercially reasonable efforts to cause the
Subject Portion to be conveyed by the BLM as a separate parcel in connection
with the BLM Exchange. If the BLM conveys the Subject Portion as a separate
parcel, then Seller shall cause the Subject Portion to be conveyed immediately
to JHG. If for any reason, the BLM does not convey the Subject Portion as a
separate parcel, then Seller, at Seller's sole cost and expense, will promptly
cause a Subdivision of the Subject Portion from the remainder of the BLM
Exchange Property and upon such Subdivision shall convey the Subject Portion to
JHG pursuant to a Grant, Bargain and Sale Deed in the form attached as Schedule
6.15(a)(i), free and clear of all monetary Liens and Liens caused or consented
to by Seller. From and after the consummation of the BLM Exchange and pending
such Subdivision and conveyance to JHG, Seller shall lease the Subject Portion
to JHG pursuant to a lease agreement substantially in the same form as the Plant
Lease.
(iv) If for any reason the Transfer does not occur on or before the
date that is six (6) months after the Closing Date, then Purchaser shall have
the option to seek any remedy available at law or in equity, including but not
limited to, specific performance of Seller's obligations under this Section 6.15
in respect of the Subdivision and Transfer, and the right to make such filings
and seek such permits, consents, certificates, approvals and other actions (in
the name of Purchaser or in the name of Seller) as may be, in the opinion of
Purchaser, necessary or desirable to accomplish the Subdivision, and upon the
request of Purchaser, Seller will execute all documents requested in connection
with the foregoing. Seller shall be responsible for all of Purchaser's costs and
expenses, including but not limited to, reasonable attorneys' fees, incurred in
connection with the foregoing. Such remedies shall be cumulative and not
exclusive and shall be in addition to any other remedies which Purchaser may
have under this Agreement or otherwise.
(v) Seller shall own the Mine Property and the Non-Essential Plant
Property (subject to the terms of this Agreement) and Seller shall be entitled
to retain all proceeds from any sale of the Mine Property and the Non-Essential
Plant Property; provided, however, that the North Area 13 Parcel shall not be
deemed to constitute a portion of the Mine Property or the Non-Essential Plant
Property for purposes of the
38
preceding provisions of this sentence; provided, further, that at Closing,
Seller and JHG shall enter into the Agreement Respecting Continued Mining and
Reclamation in the form of Schedule 6.15(a)(iv) (the "Mining Agreement"). The
Mining Agreement shall lease to JHG the Mine Property (except for those portions
of the Mine Property excepted under the terms of the Mining Agreement) together
with all related real property interests, easements, and rights necessary or
desirable (in Purchaser's sole opinion) for Purchaser to conduct mining
operations on and in the Mine Property in a manner consistent with past
practice. If the term of the Mining Agreement ends prior to 18 months after the
Closing Date, then Seller shall pay to JHG a sum calculated at a rate equal to
$160,000 for each thirty (30) day period during the Shortfall Period (as
hereinafter defined), prorated for any partial month (the "Mine Lease Early
Termination Penalty"); provided, however that the Mine Lease Early Termination
Penalty shall not exceed $2.88 million. The "Shortfall Period" shall mean 548
days less the actual number of days constituting the term of the Mining
Agreement, but in any event, the Shortfall Period shall not be less than zero.
(b) After the Closing, JHG (or Purchaser) shall be entitled to
retain all proceeds from any sale or lease of the Essential Plant Property
including all proceeds from any sale or lease of the Subject Portion. If the
Xxxxx Agreement does not close and Seller enters into a sales agreement for the
Mine Property and Non-Essential Plant Property with another purchaser (the
"Subsequent Purchaser"), then, if requested by Seller, Purchaser shall cause JHG
to enter into: (i) an agreement with the Subsequent Purchaser in the same form,
and containing the same terms and conditions, as the ROFR; and (ii) an agreement
with the Subsequent Purchaser to perform such obligations as required of the
Seller under Section 6.5 of the Xxxxx Agreement, subject in any event to the
same terms and conditions set forth in Section 6.5 of the Xxxxx Agreement;
provided, however, that the North Area 13 Parcel shall not be deemed to
constitute a portion of the Mine Property or the Non-Essential Plant Property
for purposes of the preceding provisions of this sentence and the rights of any
Subsequent Purchaser to the BLM Exchange Property shall be subject to the rights
of JHG to the Subject Portion and the Subsequent Purchaser shall confirm so in
writing reasonably satisfactory to JHG and Purchaser if the Subject Portion has
not already been conveyed to JHG or Purchaser.
(c) Seller covenants and agrees that, except as otherwise provided
in or contemplated by this Agreement or where Seller's activities described in
subparagraphs (i), (iii), (iv) and (v) below would not have, or would not
reasonably be expected to have, an adverse impact on the Essential Plant
Property and provided that Purchaser shall receive reasonable prior written
notice from Seller of any such proposed action taken by Seller (regardless of
Seller's determination of the impact of such action), Seller shall not, without
the prior written consent of Purchaser, which consent shall not be unreasonably
withheld or delayed:
(i) (A) supplement, modify or amend the Xxxxx Agreement or (B) apply
for or acquiesce in any change in zoning of or master plan for any portion of
the Property except as shown on the Xxxxx Specific Plan to the extent consistent
with Section 6.15(a) hereof;
39
(ii) determine, modify or amend the definition of Essential Plant
Property pursuant to the Xxxxx Agreement, and Seller agrees that the definition
of Essential Plant Property under the Xxxxx Agreement shall be determined in
accordance with Section 6.15(a) hereof;
(iii) agree to any plan for proceeding to obtain approval from the
Xxxxx County Commission for the transactions contemplated by the Xxxxx
Agreement;
(iv) agree to any BLM Exchange or any Ancillary Document that has or
could reasonably be expected to have, an adverse impact on the Essential Plant
Property (as such terms are defined in the Xxxxx Agreement);
(v) agree to any plan for reclamation of the Property; or
(vi) provide or sell to Xxxxx or any other purchaser of all or a
portion of the Mine Property or Non-Essential Plant Property (including the
Bureau of Land Management) water or water rights in an aggregate amount, or for
a period of time, in excess of the quantity and time period provided under
Section 6.5 of the Xxxxx Agreement, or in any event, in an amount which would
limit JHG's rights or ability to obtain sufficient water for, or which would
otherwise interfere with the mining operations or gypsum wallboard or related
operations at the Property.
(d) Seller covenants and agrees to provide to Purchaser any and all
notices, communications, agreements, and other documents and information
delivered or received by Seller in connection with the Xxxxx Agreement,
including but not limited to any documents referenced in Sections 6.1, 6.2, and
6.7 of the Xxxxx Agreement, the BLM Letter and the BLM Exchange. Seller further
covenants and agrees to provide to Purchaser, upon the execution of the Mining
Agreement, all drill core, geological, geophysical, and engineering data and
maps, logs of drill holes, results of assaying and sampling, and similar data
concerning the Mine Property (or copies thereof) which are in the possession or
control of Seller or its Affiliates.
(e) Seller represents and warrants that, except as otherwise
provided in or contemplated by this Agreement:
(i) each of the representations and warranties set forth in Section
4.12 relating to the Property shall be true and correct as if restated on and as
of the effective date of each of the transactions contemplated by this Section
6.15 and the Xxxxx Agreement, including but not limited to, the Subdivision,
Transfer, BLM Exchange (as defined in the Xxxxx Agreement), Plant Lease, and
Mining Agreement;
(ii) Seller has not entered into any agreement, Contract,
negotiation, or other transaction which will, or is reasonably likely to,
require or cause Purchaser to cease, diminish, relocate, or otherwise restrict
Purchaser's operation of the plant located on the Essential Plant Property;
40
(iii) other than the Xxxxx Agreement (including Exhibits A through F
referenced therein) and the ROFR, there are no other arrangements, agreements or
understandings between Xxxxx and JHG with respect to the Property or any other
matters and there are no Ancillary Documents (as defined in the Xxxxx
Agreement); and
(iv) Seller has delivered to Purchaser a true and complete copy of
the Xxxxx Agreement, including all schedules and exhibits thereto, and the Xxxxx
Agreement is in full force and effect and has not been modified or amended.
(f) Notwithstanding any provision in the Mining Agreement, Seller
shall be responsible for, and shall indemnify and hold Purchaser and the
Companies harmless against, all requirements under Nev. Rev. Stat. Xxx. 512
(Mine Safety), Nev. Rev. Stat. Xxx. 519A (Reclamation), Nev. Rev. Stat. Xxx.
455.010 et seq. (Abatement of Dangerous Conditions), the Federal Mine Safety and
Health Act, 30 U.S.C. Sections 801 et seq., and any related or similar
applicable federal, state, or local laws, and any regulations or standards
promulgated pursuant thereto ("Reclamation Obligations") in connection with the
Mine Property; except, however, that Purchaser shall comply with applicable
Reclamation Obligations with respect to Purchaser's active mining operations
during the term of the Mining Agreement and that Purchaser shall be responsible
for any applicable reclamation required by applicable Reclamation Obligations to
be performed on an ongoing basis during such active mining operations, but only
to the extent required to reclaim Purchaser's own active mining operations.
Seller shall remain at all times responsible for all requirements under
applicable Reclamation Obligations for temporary or permanent reclamation of
inactive, former or abandoned mining areas, including, but not limited to, all
requirements for insurance, surety bonds or other forms of financial assurance
other than that required for the active mining operations and in place as of the
Closing. During the term of the Mining Agreement and the Mining Tail Period (as
defined in the Mining Agreement), Purchaser shall cooperate with Seller's
reclamation activities and Seller shall conduct all reclamation activities in a
manner that does not disrupt or interfere with Purchaser's active mining
operations.
(g) Seller covenants and agrees to pursue diligently and in good
faith, at Seller's sole cost and expense, the BLM Exchange and Seller shall not
modify the BLM Exchange in any manner which results in the Subject Portion not
being conveyed to Seller without the prior written consent of JHG and Purchaser.
Purchaser and Seller will cooperate to cause the rights contained in the BLM
Letter with respect to the Subject Portion to remain in effect until
consummation of the BLM Exchange.
(h) Purchaser has identified to Seller in writing certain objections
to the form of the Xxxxx Specific Plan proposed by Xxxxx under the Xxxxx
Agreement (the "Specific Plan Objections"). Seller agrees to adopt the Specific
Plan Objections as Seller's objections to the Xxxxx Specific Plan and to proffer
them timely as Seller's response to the proposed Xxxxx Specific Plan under the
Xxxxx Agreement. Seller covenants not to waive the Specific Plan Objections and
agrees not to acquiesce or consent to a Xxxxx Specific Plan which does not
satisfy the Specific Objections without Purchaser's prior written consent (which
shall not be unreasonably witheld or delayed).
41
6.16 Patent Lawsuits. In the event that a complaint is filed and
legal action is commenced by the party set forth in item (i) of Schedule 4.14
against JHG alleging infringement of the U.S. Patent identified in item (i) of
Schedule 4.14, Seller will contribute up to $250,000 towards payment of
reasonable legal fees and costs actually incurred by JHG in connection with its
defense in such legal action; provided, however, that Seller disclaims any
express or implied representations or warranties relating to such patent.
6.17 Trademark Licenses/Assignments. As soon as possible after the
Closing Date, the Seller shall use its best efforts to cause Xxxxx Xxxxxx
Research Pty. Ltd., at the Seller's discretion, to assign to and/or enter into a
perpetual, royalty-free (exclusive for the gypsum business in North America)
license with either of the Companies for such trademarks and tradenames as
listed on Schedule 4.14 that do not contain the name "Xxxxxx" (or any derivative
thereof) as Purchaser may request, pursuant to such documentation as is mutually
agreed between Seller and Purchaser.
ARTICLE VII
CONDITIONS TO CLOSING
7.1 Conditions Precedent to Obligations of Purchaser. The obligation
of the Purchaser to consummate the transactions contemplated by this Agreement
is subject to the fulfillment, on or prior to the Closing Date, of each of the
following conditions (any or all of which may be waived by the Purchaser in
whole or in part to the extent permitted by applicable Law):
(a) All representations and warranties of the Seller contained in
Section 4 shall be true and correct when made and at and as of the Closing Date
with the same force and effect as though those representations and warranties
had been made again at and as of that date, except (i) that any such
representations and warranties that are given as of a specified date and relate
solely to a specified date shall be true and correct only as of such date and
(ii) to the extent any breach thereof, individually or when aggregated with all
such breaches, has not had and is not reasonably likely to have a Material
Adverse Effect. For purposes of this Section 7.2(a), the truth or correctness of
any representation or warranty of the Seller set forth in Section 4 shall be
determined without regard to any materiality, "Material Adverse Effect" or
"Knowledge" qualification set forth in such representation or warranty;
(b) The Seller shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date;
(c) The Purchaser shall have been furnished with certificates (dated
the Closing Date and in form and substance reasonably satisfactory to the
Purchaser) executed by an executive officer of the Seller certifying as to the
fulfillment of the conditions specified in Sections 7.1 (a) and 7.1(b) hereof;
42
(d) Certificates representing 100% of the Shares shall have been
validly delivered and transferred to the Purchaser, free and clear of any and
all Liens, and the transfer of such Shares shall have been duly and validly
recorded on the books of the Companies;
(e) All approvals, consents and waivers set forth on or included in
Schedule 7.1(e) shall have been obtained.
(f) Since the date of this Agreement, there shall not have been or
occurred any Material Adverse Change;
(g) The waiting periods specified under the Antitrust Acts with
respect to the transactions contemplated by this Agreement shall have lapsed or
been terminated;
(h) No Legal Proceedings shall have been instituted or threatened by
a Governmental Body, and no Legal Proceedings that are reasonably likely to
succeed on the merits shall have been instituted by a Person other than a
Governmental Body, against the Companies or the Purchaser seeking to restrain or
prohibit or to obtain substantial damages with respect to the consummation of
the transactions contemplated hereby, and there shall not be in effect any Order
by a Governmental Body of competent jurisdiction restraining, enjoining or
otherwise prohibiting the consummation of the transactions contemplated hereby;
(i) The Seller shall have provided the Purchaser with an affidavit
of non-foreign status that complies with Section 1445 of the Code (a "FIRPTA
Affidavit");
(j) The Purchaser shall have received the written resignations of
each director of the Companies;
(k) All Affiliate Loans shall have been repaid to the Companies;
(l) Purchaser shall have obtained the issuance, reissuance or
transfer of all Permits required under all Laws, including all Environmental
Laws, for the Purchaser to conduct the operations of the Companies as of the
Closing Date in all material respects;
(m) Seller and Purchaser shall have entered into the Transitional
Services Agreement, the Mining Agreement and the Plant Lease substantially in
the forms of the exhibits attached hereto;
(n) The Purchaser shall have received the Title Policies and Title
Opinions as set forth in Section 6.11 herein; and
(o) Seller shall have made all conveyances and delivered all deeds,
leases, and other documents required under Sections 6.15 and 4.12 herein.
7.2 Conditions Precedent to Obligations of the Seller. The
obligations of the Seller to consummate the transactions contemplated by this
Agreement are subject to the fulfillment, prior to or on the Closing Date, of
each of the following conditions (any or all of
43
which may be waived by the Seller in whole or in part to the extent permitted by
applicable Law):
(a) All representations and warranties of the Purchaser contained in
Section 5 shall be true and correct when made and at and as of the Closing Date
with the same force and effect as though those representations and warranties
had been made again at and as of that date, except (i) that any such
representations and warranties that are given as of a specified date and relate
solely to a specified date shall be true and correct only as of such date and
(ii) to the extent any breach thereof, individually or when aggregated with all
such breaches, has not had and is not reasonably likely to have a Material
Adverse Effect. For purposes of this Section 7.2(a), the truth or correctness of
any representation or warranty of the Purchaser set forth in Section 5 shall be
determined without regard to any materiality, "Material Adverse Effect" or
"Knowledge" qualification set forth in such representation or warranty;
(b) The Purchaser shall have performed and complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by Purchaser on or prior to the Closing Date;
(c) The Seller shall have been furnished with certificates (dated
the Closing Date and in form and substance reasonably satisfactory to the
Seller) executed by an executive officer of the Purchaser certifying as to the
fulfillment of the conditions specified in Sections 7.2(a) and 7.2(b);
(d) The waiting periods specified under the Antitrust Acts with
respect to the transactions contemplated by this Agreement shall have lapsed or
been terminated;
(e) No Legal Proceedings shall have been instituted or threatened by
a Governmental Body, and no Legal Proceedings that are reasonably likely to
succeed on the merits shall have been instituted by a Person other than a
Governmental Body, against the Seller seeking to restrain or prohibit or to
obtain substantial damages with respect to the consummation of the transactions
contemplated hereby, and there shall not be in effect any Order by a
Governmental Body of competent jurisdiction restraining, enjoining or otherwise
prohibiting the consummation of the transactions contemplated hereby.
ARTICLE VIII
DOCUMENTS TO BE DELIVERED
8.1 Documents to be Delivered by the Seller. At the Closing, the
Seller shall deliver, or cause to be delivered, to the Purchaser the following:
(a) stock certificates representing 100% of the Shares, duly
endorsed in blank or accompanied by stock transfer powers and with all requisite
stock transfer tax stamps attached;
(b) the certificates referred to in Section 7.1(c) hereof;
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(c) copies of all approvals, consents and waivers referred to in
Section 7.1(e) hereof;
(d) written evidence of the repayment to the Companies of all
Affiliate Loans;
(e) written resignations of each of the directors of the Companies;
(f) a duly executed FIRPTA Affidavit for the Seller;
(g) certificates of good standing with respect to each Company
issued by the Secretary of State of the State of Nevada and of each state in
which each Company is qualified to do business as a foreign corporation; and
(h) such other documents as the Purchaser shall reasonably request.
8.2 Documents to be Delivered by the Purchaser. At the Closing, the
Purchaser shall deliver to the Seller the following:
(a) evidence of the wire transfer referred to in Section 2.2(a)
hereof;
(b) the certificates referred to in Section 7.2(c) hereof;
(c) such other documents as the Seller shall reasonably request.
ARTICLE IX
INDEMNIFICATION; TAX MATTERS
9.1 Non-Tax Indemnification.
(a) Subject to Section 9.2 hereof, the Seller hereby agrees to
defend, indemnify and hold the Purchaser, the Companies, and their respective
directors, officers, employees, stockholders, Affiliates, agents, successors and
assigns (collectively, the "Purchaser Indemnified Parties") harmless from and
against:
(i) any and all Losses based upon, attributable to or resulting from
the breach of any representation or warranty of the Seller set forth in Section
4 hereof (other than, for purposes of this Section 9.1(a)(i), the
representations and warranties contained in Section 4.20(g) hereof), or any
representation or warranty contained in any certificate, document or instrument
delivered by or on behalf of the Seller pursuant to this Agreement or the other
Seller Documents;
(ii) any and all Losses based upon, attributable to or resulting
from the breach of any covenant or other agreement on the part of the Seller or
its Affiliates (other than the Companies) under this Agreement or the other
Seller Documents;
45
(iii) any and all Losses based upon, attributable to or resulting
from the Mine Property and the Non-Essential Plant Property other than any such
Losses resulting directly from the mining operations of the Purchaser or its
Affiliates during the term of the Mining Agreement and the Mining Tail Period
(as defined in the Mining Agreement) (provided that the Purchaser's Reclamation
Obligations shall be limited as set forth in Section 6.15(f));
(iv) any and all Losses based upon, attributable to or resulting (x)
from the breach of the representations and warranties contained in Section
4.20(g) or (y) otherwise from allegations of injury to a person or property
damage as a result of the manufacture, sale, distribution, or use of any
product, component, or raw material containing asbestos by the Companies or any
of their predecessors or Affiliates including, but not limited to, Losses in
connection with those cases listed in Schedule 4.20(g);
(v) any and all Losses based upon, attributable to or resulting from
environmental conditions at the Duwamish River, Washington;
(vi) any and all Losses based upon, attributable to or resulting
from the action entitled Xxxxxxx Xxxxx vs. DeQueen and Eastern Railroad Company
et al. (and any other actions based upon, attributable to or resulting from the
same circumstances); and
(vii) any and all Losses based upon, attributable to or resulting
from JHG's loss of the right of possession and use of the Subject Portion.
(b) Subject to Section 9.2, Purchaser hereby agrees to defend,
indemnify and hold the Seller and its Affiliates, agents, successors and assigns
(collectively, the "Seller Indemnified Parties") harmless from and against:
(i) any and all Losses based upon, attributable to or resulting from
the breach of any representation or warranty of the Purchaser set forth in
Section 5 hereof, or any representation or warranty contained in any certificate
delivered by or on behalf of the Purchaser pursuant to this Agreement or the
other Purchaser Documents;
(ii) any and all Losses based upon, attributable to or resulting
from the breach of any covenant or other agreement on the part of the Purchaser
or its Affiliates under this Agreement or the other Purchaser Documents;
(iii) any suit or claim of violation brought against Seller under
WARN for any action taken or failed to be taken by the Purchaser or its
Affiliates; and
(iv) any and all Losses based upon, attributable to or resulting
from the operation of the Companies by the Purchaser or its Affiliates after the
Closing to the extent the Purchaser is not indemnified for such Losses by the
Seller pursuant to this Agreement or the other Seller Documents.
46
9.2 Survival of, and Limitations on Indemnification for Breaches of,
Representations and Warranties; Other Indemnification Matters.
(a) The parties hereby agree that the representations and warranties
contained in this Agreement or in any certificate, document or instrument
delivered in connection with this Agreement or, as the case may be, in
connection with the other Seller Documents or the other Purchaser Documents,
shall survive the execution and delivery of this Agreement, and the Closing
hereunder, regardless of any investigation made by the parties and shall not be
considered waived by a party's consummation of the transactions contemplated by
this Agreement with knowledge of any breach or misrepresentation by the other
party. All such representations and warranties, and all claims or actions with
respect thereto, shall terminate upon expiration of two (2) years after the
Closing Date, except that (i) the representations and warranties contained in
Section 4.7 shall have no expiration date, the representations and warranties
contained in Section 4.11 shall survive for the period of the applicable statute
of limitations and the representations and warranties contained in Section
4.20(g) shall survive until the expiration of thirty (30) years after the
Closing Date. It is understood that in the event notice of any claim for
indemnification under Section 9.1(a) or 9.1(b) shall have been given within the
applicable survival period, the representations and warranties that are the
subject of such indemnification claim shall survive until such time as such
claim is finally resolved. For the avoidance of doubt, no party will be entitled
to indemnification hereunder with respect to a breach of representation or
warranty unless the party seeking indemnification shall have delivered written
notice to the indemnifying party of its claim based upon a breach of any such
representation or warranty prior to the expiration of the survival date
applicable to such representation or warranty.
(b) An indemnifying party shall not have any liability under Section
9.1(a)(i) (except to the extent it relates to a breach of representation or
warranty contained in Sections 4.7 or 4.11) or Section 9.1(b)(i) hereof unless
the aggregate amount of Losses to the indemnified parties finally determined to
arise thereunder exceeds an amount (the "Basket") equal to $5 million (the
"General Basket") and, in such event, the indemnifying party shall be required
to pay the entire amount of such Losses in excess of the General Basket up to an
aggregate amount (the "Cap") equal to $100 million (the "General Cap");
provided, however, that (i) there shall be no Cap with respect to a breach of
any representation or warranty by Seller made in Section 4.11, (ii) the Cap
shall equal the Purchase Price in the case of a breach of representation or
warranty contained in Section 4.7, and (iii) the Cap shall equal $250 million in
the case of a breach of a representation or warranty contained in Section
4.20(g); and further provided that, for purposes of determining a breach of any
representation or warranty, (i) all "materiality" and "Material Adverse Effect"
qualifications shall be disregarded, (ii) all "Knowledge" qualifications set
forth in Section 4.20 shall be disregarded and (iii) except in the case of a
breach of representation or warranty contained in Sections 4.7, 4.11 or 4.20(g),
any individual breach, or series of related breaches, shall be disregarded
unless the Losses therefrom equal or exceed $75,000 (the "De Minimus").
Notwithstanding anything to the contrary contained in the preceding sentence,
Seller shall not have any liability under Section 9.1(a)(i) to the extent it
relates to a breach of representation or warranty contained in Section 4.20(a),
(b), (c), (d), (e) or (f) where neither of the Companies nor their Affiliates
caused or had Knowledge of the condition or circumstances giving rise to
47
the Loss, unless the aggregate amount of Losses to the indemnified parties
finally determined to arise therefrom exceeds a separate $10 million Basket (the
"First Separate Basket").
(c) Seller's indemnification obligations under Sections 9.1(a)(ii)
and (vi) and Purchaser's indemnification obligations under Sections 9.1(b)(ii),
(iii) and (iv) shall not be subject to a De Minimus, Basket or Cap and shall
survive indefinitely. Seller's indemnification obligations under Section
9.1(a)(iii) shall not be subject to a De Minimus or Basket, shall be subject to
a Cap of $50 million and shall survive with respect to any claims for which
notice is given prior to the expiration of ten (10) years after the Closing
Date. Seller's indemnification obligations under Section 9.1(a)(iv) shall not be
subject to a De Minimus, shall (except for the existing asbestos cases set forth
on Schedule 4.20(g), which shall not be subject to any Basket) be subject to a
separate $5 million Basket (the "Second Separate Basket"), shall be subject to a
Cap of $250 million and shall survive with respect to any claims for which
notice is given prior to the expiration of thirty (30) years after the Closing
Date. Seller's indemnification obligations under Section 9.1(a)(v) shall not be
subject to a De Minimus, shall be subject to the General Basket, shall be
subject to a Cap of $34.5 million and shall survive with respect to any claims
for which notice is given prior to the expiration of ten (10) years after the
Closing Date. Seller's indemnification obligations under Section 9.1(a)(vii)
shall not be subject to a De Minimus, shall be subject to the General Basket,
shall be subject to the General Cap and shall survive until such time as JHG has
obtained a Millsite Claim, equivalent perpetual assurance of possession and use
or a fee simple interest in the Subject Portion.
(d) For the avoidance of doubt, any amounts Seller shall be required
to pay hereunder shall be treated cumulatively for purposes of determining
whether the applicable Cap has been met and any amounts (excluding De Minimus
Amounts and amounts applied against the First Separate Basket or Second Separate
Basket) for which a party is not indemnified hereunder shall be treated
cumulatively for purposes of determining whether the General Basket has been
met.
9.3 Non-Tax Indemnification Procedures.
(a) In the event that any Legal Proceedings shall be instituted or
that any claim or demand ("Claim") shall be asserted by any Person entitled to
indemnification hereunder, the indemnified party shall reasonably and promptly
cause written notice of the assertion of any Claim of which it has knowledge
which is covered by this indemnity to be forwarded to the indemnifying party.
The indemnifying party shall have the right, at its sole option and expense, to
be represented by counsel of its choice, which must be reasonably satisfactory
to the indemnified party, and to defend against, negotiate, settle or otherwise
deal with any Claim which relates to any Losses indemnified against hereunder.
If the indemnifying party elects to defend against, negotiate, settle or
otherwise deal with any Claim which relates to any Losses indemnified against
hereunder, it shall within five (5) Business Days (or sooner, if the nature of
the Claim so requires) notify the indemnified party of its intent to do so. If
the indemnifying party elects not to defend against, negotiate, settle or
otherwise deal with any Claim which relates to any Losses indemnified against
hereunder, fails to notify the indemnified party of its election as herein
provided or contests its obligation to indemnify the indemnified party for such
Losses under this Agreement, the
48
indemnified party may defend against, negotiate, settle or otherwise deal with
such Claim. If the indemnified party defends any Claim, then the indemnifying
party shall reimburse the indemnified party for the expenses of defending such
Claim upon submission of periodic bills. If the indemnifying party shall assume
the defense of any Claim, the indemnified party may participate, at his or its
own expense, in the defense of such Claim; provided, however, that such
indemnified party shall be entitled to participate in any such defense with
separate counsel at the expense of the indemnifying party if (i) so requested by
the indemnifying party to participate or (ii) in the reasonable opinion of
counsel to the indemnified party, a conflict or potential conflict exists
between the indemnified party and the indemnifying party that would make such
separate representation advisable; and provided, further, that the indemnifying
party shall not be required to pay for more than one such counsel for all
indemnified parties in connection with any Claim. The parties hereto agree to
cooperate fully with each other in connection with the defense, negotiation or
settlement of any such Claim.
(b) The indemnifying party may not compromise or settle any matter
without the consent of the indemnified party, unless (i) such compromise or
settlement includes no finding or admission of any violation of Law or any
violation of the rights of any person and (ii) the sole relief provided is
monetary damages that are paid in full by the indemnifying party.
(c) After any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent jurisdiction and
the expiration of the time in which to appeal therefrom, or a settlement shall
have been consummated, or the indemnified party and the indemnifying party
shall have arrived at a mutually binding agreement with respect to a Claim
hereunder, the indemnified party shall forward to the indemnifying party notice
of any sums due and owing by the indemnifying party pursuant to this Agreement
with respect to such matter and the indemnifying party shall be required to pay
all of the sums so due and owing to the indemnified party by wire transfer of
immediately available funds within five (5) Business Days after the date of such
notice.
(d) The failure of the indemnified party to give reasonably prompt
notice of any Claim shall not release, waive or otherwise affect the
indemnifying party's obligations with respect thereto except to the extent that
the indemnifying party can demonstrate actual loss and prejudice as a result of
such failure.
9.4 Calculation of Losses.
(a) Final Closing Accounts. The Purchaser will not be entitled to
indemnification from Seller for any Losses to the extent that such Losses have
been reflected as a deduction in the Final Closing Accounts.
(b) Tax Adjustments.
(i) The Purchaser and the Seller agree that any payments made under
this Article 9 shall be treated by the parties hereto for federal, state and
local income Tax purposes (whether foreign or domestic) as a non-taxable
reimbursement or purchase price adjustment, except to the extent that contrary
treatment is required by Law. If, notwithstanding the foregoing treatment by the
parties, any indemnity payment is determined
49
to be taxable to the indemnified party by any taxing authority, the indemnifying
party shall also indemnify the indemnified party for any increase in Tax
liability by reason of receipt of the indemnity payment (including any payment
made under this Section 9.4(b)(i)).
(ii) The amount of any Losses subject to indemnification hereunder
shall be reduced to take into account any Tax benefit actually realized by the
indemnified party as a result of the Loss in respect of the taxable year in
which such Loss is incurred or paid, and with respect to a Tax benefit actually
realized in a year subsequent to the year in which the Loss is incurred or paid,
the indemnified party shall pay to the indemnifying party such Tax benefit when
such benefit is actually realized.
(c) Insurance. The Purchaser will not be entitled to indemnification
from Seller for any Losses unless and until the Purchaser has used its
reasonable commercial efforts to pursue (not including any litigation) all
claims for insurance available from third parties to it and its Affiliates with
respect to such Losses, provided that the Purchaser shall not be required to
pursue any claim for insurance if the submission of any such claim or the
payment by any such third party insurer would require the Purchaser to incur or
accrue any material costs, including without limitation, any legal or
administrative costs, costs of investigation and/or attorneys' fees, would
result in any imposition of or increase in Purchaser's present, retrospective or
future premiums, self-retention amounts or deductibles, or would result in the
inability of the Purchaser to obtain insurance. The amount of any Losses subject
to indemnification hereunder shall be calculated net of any insurance actually
received from third party insurance carriers by the Purchaser or the Companies
with respect to such Losses. In the event Seller or any Person acting on behalf
of Seller makes any payment hereunder with respect to any Losses, the Purchaser
shall assign to such payer (without recourse to the Purchaser) its rights, if
any, against any third party insurance carrier providing coverage with respect
to such Losses.
9.5 Certain Other Limitations. Following the Closing, other than in
the case of fraud, the indemnification provided by Section 9 shall be the sole
and exclusive remedy for the Purchaser and for the Seller with respect to this
Agreement or any of the agreements and/or transactions contemplated hereby or
thereby. No indemnified party shall be entitled to indemnification from any
indemnifying party under this Section 9 in respect of any consequential or
punitive damages except for indemnification for consequential or punitive
damages that are paid by an indemnified party to a third party (i.e. to a Person
that is not an Affiliate of the indemnified party).
9.6 Tax Matters.
(a) The Seller shall be liable for and shall indemnify and hold the
Purchaser Indemnified Parties harmless from and against any and all claims which
arise or result from or otherwise relate to:
(A) any and all Taxes imposed on each Company for any taxable
year or period that ends on or before the Closing Date and for the
portion of any Straddle Period which ends immediately after the
close of business on the Closing Date;
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(B) any and all Taxes imposed on any member of any Affiliated
Group of which either of the Companies is or was a member on or
prior to the Closing Date, by reason of the liability of either of
the Companies pursuant to Treasury Regulation Section 1.1502-6 (or
any predecessor or successor thereof or any analogous or similar
provision under state, local or foreign Law), including without
limitation any liability for Taxes resulting from an "intercompany
transaction" in respect of which gain was deferred pursuant to
Treasury Regulations Section 1.1502-13 (or any predecessor or
successor thereof or any analogous or similar provision under state,
local or foreign Law), that occurred on or before the Closing Date;
(C) any and all Taxes resulting from, arising out of or based
on the Section 338(h)(10) Election made pursuant to this Agreement;
(D) any breach or inaccuracy of any of the representations
contained in Paragraph 4.11 of this Agreement or breach of any
covenant contained in this Agreement with respect to Taxes;
(E) any Tax Sharing Agreement in effect on or prior to the
Closing Date;
(F) any and all Transfer Taxes for which Seller is responsible
under Section 9.6(d); and
(G) all Taxes attributable to the transactions described in
Section 6.15(a) and all Taxes attributable to the Property as
defined in Section 6.15 (other than Taxes attributable to the
Essential Plant Property for periods after the Closing Date or the
date of its Transfer to JHG, if later).
(b) The Purchaser shall be liable for and shall indemnify and hold
the Seller Indemnified Parties harmless from and against any and all claims
which arise or result from or relate to Taxes imposed on each Company: (A) for
any taxable year or period that begins after the Closing Date; and (B) for the
portion of any Straddle Period beginning after the Closing Date.
(c) To the extent permitted by Law or administrative practice, the
taxable year of each Company that includes the Closing Date shall be treated as
closing immediately after the close of business on the Closing Date. For
purposes of Sections 9.6(a) and (b), where it is necessary to apportion between
Seller and Purchaser the Tax liability of each Company for a Straddle Period
(which is not treated under the immediately preceding sentence as closing
immediately after the close of business on the Closing Date), such liability
shall be apportioned between the period deemed to end at the close of business
on the Closing Date (the "Pre-Closing Period") and the period deemed to begin at
the beginning of the day following the Closing Date (the "Post-Closing Period")
on the basis of an interim closing of the books or, in the case of non-income
Taxes not susceptible to such apportionment, on the basis of the number of days
elapsed in the Pre-Closing and Post-Closing Periods.
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(d) Seller shall be liable for and shall pay all Transfer Taxes
resulting from, arising out of or based on the transactions contemplated by this
Agreement (including any such Taxes resulting from, arising out of or based on
the Section 338(h)(10) Election).
(e) Any Tax Sharing Agreement in effect at the Closing Date shall be
terminated as of the Closing Date as to each Company, and no amounts shall be
due from or due to either of the Companies after the Closing Date pursuant to
any Tax Sharing Agreement in effect on or prior to the Closing.
9.7 Tax Returns.
(a) Seller shall prepare, in a manner consistent with prior practice
and in accordance with applicable Law, and file or cause to be filed when due:
(A) all Tax Returns that are required to be filed by or with
respect to each Company on or before the Closing Date; and
(B) all Tax Returns relating to Taxes of an Affiliated Group
of which the Companies were members (other than any group which
includes only the Companies) on or prior to the Closing Date, that
are required to be filed by or with respect to each of the Companies
for taxable years or periods ending on or before the Closing Date.
Seller shall remit (or cause to be remitted) any Taxes due with
respect to such Tax Returns.
(b) Except as otherwise provided in Section 9.7(a), Purchaser shall
file or cause to be filed when due all Tax Returns that are required to be filed
by or with respect to each of the Companies after the Closing Date and Purchaser
shall remit (or cause to be remitted), subject to receiving payment from Seller
in accordance with Section 9.7(c), any Taxes due in respect of such Tax Returns.
(c) Purchaser shall furnish a completed copy of any Tax Returns with
respect to which any Taxes shown due thereon are the responsibility of Seller
pursuant to Section 9.6(a) (including any Tax Return for any Straddle Period) to
Seller for Seller's approval not later than 30 days before the due date for
filing such returns (including extensions thereof), together with a statement
setting forth the amount of Tax for which Seller is responsible pursuant to
Section 9.6(a) (including, but not limited to, the amount that is allocable to
Seller pursuant to Section 9.6(c)) (the "Statement"). Seller shall have the
right to review such Tax Return and the Statement prior to the filing of such
Tax Return. Seller and Purchaser agree to consult and resolve in good faith any
issue arising as a result of the review of such Tax Return and the Statement and
to mutually consent to the filing as promptly as possible of such Tax Return. In
the event the parties are unable to resolve any dispute within ten (10) Business
Days following the delivery of such Tax Return and the Statement, the parties
shall jointly request the Third Accounting Firm to resolve any issue in dispute
as promptly as possible. If the Third Accounting Firm is unable to make a
determination with respect to any disputed issue within five Business Days prior
to the due date (including extensions) for the filing of the Tax Return in
question, then Purchaser may
52
file such Tax Return on the due date (including extensions) therefor without
such determination having been made and without Seller's consent.
Notwithstanding the filing of such Tax Return, the Third Accounting Firm shall
make a determination with respect to any disputed issue, and the amount of Taxes
for which Seller is responsible under Section 9.6(a) (including, but not limited
to, the amount that is allocable to Seller pursuant to Section 9.6(c)), shall be
as determined by the Third Accounting Firm. The fees and expenses of the Third
Accounting Firm shall be paid one-half by Purchaser and one-half by Seller. Not
later than ten (10) Business Days before the due date for the payment of Taxes
with respect to such Tax Return, and notwithstanding any dispute as to the
Statement, Seller shall pay to Purchaser an amount equal to the Taxes shown on
the Statement as being the responsibility of Seller under Section 9.6(a)
(including, but not limited to, any amount that is allocable to Seller pursuant
to Section 9.6(c)); provided, however, that if Seller has disputed the Statement
and if the Third Accounting Firm shall determine that the amount that is the
responsibility of the Seller differs from the amount shown on the Statement as
being the responsibility of Seller, Seller shall pay to the Purchaser, or
Purchaser shall pay to Seller, the amount necessary to reflect the Third
Accounting Firm's determination, together with interest on such amount from the
due date for the payment of Taxes with respect to such Tax Return at the
Settlement Rate. No payment pursuant to this Section 9.7(c) shall excuse Seller
from its indemnification obligations pursuant to Section 9.6(a) if the amount of
Taxes as ultimately determined (on audit or otherwise) for the periods covered
by such Tax Returns that are the responsibility of Seller exceeds the amount of
Seller's payment under this Section 9.7(c).
9.8 Tax Contests.
(a) If a notice of deficiency, proposed adjustment, assessment,
audit, examination or other administrative or court proceeding, suit, dispute or
other claim (a "Tax Claim") shall be delivered, sent, commenced or initiated, in
writing, to or against either the Purchaser Indemnified Parties or the Seller
Indemnified Parties (a "Notified Party") by any taxing authority with respect to
Taxes for which the other party may reasonably be expected to be liable pursuant
to Section 9.6(a), the Notified Party shall reasonably and promptly notify the
other party in writing of such Tax Claim; provided, however, that the failure of
a party to give the other party notice as provided herein shall not relieve such
failing party of its obligations under Section 9.6(a) except to the extent that
the other party is actually and materially prejudiced thereby.
(b) Seller shall have the sole right and obligation to represent the
Companies' interests in any Tax Claim relating exclusively to taxable periods
ending on or before the Closing Date and to employ counsel of its choice at its
expense; provided, however, that if the results of such Tax audit or proceeding
involve an issue that recurs in taxable periods of Purchaser, either of the
Companies or their respective Affiliates ending after the Closing Date or
otherwise could adversely affect Purchaser, either of the Companies or their
respective Affiliates for any taxable period including or ending after the
Closing Date, then (A) Seller and Purchaser shall jointly control the defense
and settlement of any such Tax audit or proceeding and each party shall
cooperate with the other party at its own expense, and (B) there shall be no
settlement or closing or other agreement with respect thereto without the
consent of the other party, which consent shall not be unreasonably withheld. In
the case of a Straddle Period, Purchaser shall have the right to represent the
53
Companies' interests in any Tax Claim and to employ counsel of its choice at its
own expense; provided, however, that Seller shall be entitled to participate at
its expense in any Tax Claim relating to Taxes attributable to the portion of
such Straddle Period which ends immediately after the close of business on the
Closing Date.
9.9 Assistance and Cooperation. After the Closing Date, each of
Seller and Purchaser shall use commercially reasonable efforts to (and shall
cause their respective Affiliates and Representatives to):
(a) timely sign and deliver such certificates or forms as may be
necessary or appropriate to establish an exemption from (or otherwise reduce),
or file Tax Returns or other reports with respect to, Taxes described in Section
9.6(d) (relating to sales, transfer and similar Taxes);
(b) assist the other party in preparing any Tax Returns which such
other party is responsible for preparing and filing in accordance with Section
9.7; and Seller shall deliver to Purchaser (including for purposes of this
sentence, Purchaser's tax advisors), as soon as practicable after Purchaser's
request, such information and data necessary in order to enable Purchaser to
complete and file all Tax Returns it may be required to file with respect to the
activities of Purchaser, and each of the Companies, from and after the Closing
Date;
(c) cooperate fully in preparing for any audits of, or disputes with
taxing authorities regarding, any Tax Returns of each Company and consult with
the other party and its counsel in connection with audits and proceedings
described in Section 9.8 where it is representing the Companies;
(d) make available to one another and to any taxing authority, as
reasonably requested in connection with any Tax Return described in Section 9.7
or any proceeding described in Section 9.8, all information relating to any
Taxes or Tax Returns of the Companies; and
(e) furnish one another with copies of all correspondence received
from any taxing authority in connection with any Tax audit or information
request with respect to any proceedings described in Section 9.8.
9.10 Election Under Section 338(h)(10).
(a) At the Purchaser's request, the Seller and the Purchaser shall
take all actions necessary and appropriate (including timely filing such forms,
Tax Returns, elections, schedules and other documents as may be required), at
each party's cost and expense, to effect and preserve a timely Section
338(h)(10) election in accordance with the requirements of Section 338 of the
Code (and any corresponding elections under state, local or foreign Law) with
respect to Purchaser's acquisition of the JHG Shares (collectively, the "Section
338(h)(10) Election"). The Seller, Purchaser, and Tax Parent shall report the
sale of the JHG Shares pursuant to this Agreement consistently with the Section
338(h)(10) Election and shall take no position contrary thereto or inconsistent
therewith in any Tax Return, any discussion with or proceeding before any taxing
authority, or otherwise. At the Closing, the Seller shall deliver to the
Purchaser five (5) copies of an Internal Revenue Form 8023 ("Election Under
54
Section 338 for Corporations Making Qualified Stock Purchases"), completed as
reasonably agreed by the parties and duly executed by the Tax Parent. Purchaser
shall be responsible for the preparation and filing of all forms and documents
required in connection with the Section 338(h)(10) Election and shall provide
Seller with copies of (A) any necessary corrections, amendments or supplements
to such Form 8023 as reasonably agreed to by the parties or as necessary to
conform the allocation of the JHG Purchase Price (and any other items required
to be treated as additional purchase price for the JHG Shares for Tax purposes)
to the Allocation Statement (as defined in Section 9.10(b)), (B) all attachments
required to be filed therewith pursuant to the applicable Treasury Regulations,
and (C) any comparable forms and attachments with respect to any applicable
state, local or foreign elections being made pursuant to the Section 338(h)(10)
Election (the "Section 338 Forms"). At the request of Purchaser, Seller shall
execute (or cause to be executed) and deliver to Purchaser, within ten (10) days
after a request therefor by Purchaser, such documents or forms as are required
by any Tax laws to complete properly the Section 338(h)(10) Election. Seller and
Purchaser shall cooperate fully with each other and make available to each other
such Tax data and other information as may be reasonably required by Seller and
Purchaser in order to timely file the Section 338(h)(10) Election and any other
required statements or schedules. Seller shall cause the Tax Parent to (A)
promptly execute (or cause to be executed) and deliver to Purchaser any
amendments subsequent to the filing of the Section 338(h)(10) Election to Form
8023 (and any comparable state, local and foreign forms) and attachments which
are required to be filed under applicable Law and are reasonably requested by
Purchaser, (B) comply (and cause its Affiliates to comply) with all of the
requirements of Section 338(h)(10) of the Code and the Treasury Regulations
thereunder, and (C) take no action (and cause its Affiliates to take no action)
inconsistent with the requirements for filing the Section 338(h)(10) Election
under the Code and the applicable Treasury Regulations.
(b) Within fifteen (15) days following the completion of the Final
Closing Accounts, but in no event later than ninety (90) days prior to the due
date for the filing of the Section 338 Forms, Purchaser shall provide to Seller
a proposed statement (the "Allocation Statement") allocating the JHG Purchase
Price (and any other items that are treated as additional purchase price for the
JHG Shares for Tax purposes) among the different items of assets of JHG. Within
fifteen (15) days after the receipt of such Allocation Statement, Seller shall
propose to Purchaser any changes to such Allocation Statement or shall indicate
its concurrence therewith, which concurrence shall not be unreasonably withheld.
The failure by Seller to propose to Purchaser any changes to the Allocation
Statement in writing within fifteen (15) days after the receipt thereof shall be
deemed Seller's agreement and concurrence therewith. Purchaser and Seller shall
allocate the JHG Purchase Price (and any such other items) in connection
therewith in accordance with the Allocation Statement provided by Purchaser to
Seller pursuant to this Section 9.10, and, subject to the requirements of any
applicable Tax Law or election, all Tax Returns and reports filed by Purchaser,
Seller, the Tax Parent and their respective Affiliates shall be prepared
consistently with such allocation. Purchaser and Seller shall endeavor in good
faith to resolve any differences with respect the Allocation Statement within
fifteen (15) days after Purchaser's receipt of notice of objections or suggested
changes from Seller. If any aspect of the Allocation Statement is in dispute as
of the date which is sixty (60) days prior to the date any of the Section 338
Forms are required to be filed, Seller and Purchaser shall then engage the Third
Accounting Firm in accordance with the provisions of Section 9.7 hereof. To the
55
extent the Third Accounting Firm has not resolved such dispute within thirty
(30) days prior to the date such 338 Forms are required to be filed, Purchaser
and Seller shall file (or caused to be filed) such Section 338 Forms, and all
applicable Tax Returns, in a manner consistent with the allocation provided in
the allocation statement (together with any changes thereto mutually agreed to
by Purchaser and Seller at such time). Thereafter, the Allocation Statement
shall be revised in accordance with the determination of the Third Accounting
Firm and Purchaser and Seller shall promptly execute (or cause to be executed)
any amendments subsequent to the filing of the Section 338(h)(10) Election to
the Section 338 Forms to reflect such determination that are permitted to be
filed under applicable Law. Purchaser, Seller and their respective Affiliates
shall not take a position before any Taxing authority or otherwise (including in
any Tax Return) inconsistent with the Allocation Statement unless and to the
extent required to do so pursuant to a determination (as defined in Section
1313(a) of the Code or any similar provision of state, local or foreign Law).
The costs of preparing the Allocation Statement and any supporting materials
(including any appraisals) shall be borne equally by Purchaser and Seller.
ARTICLE X
MISCELLANEOUS
10.1 Certain Definitions.
For purposes of this Agreement, the following terms shall have the
meanings specified in this Section 10.1:
"Affiliate" means, with respect to any Person, any other Person
controlling, controlled by or under common control with such Person.
"Affiliated Group" means any affiliated group within the meaning of
Section 1504 of the Code or any comparable or analogous group under state, local
or foreign Law.
"Antitrust Acts" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976.
"Balance Sheet" shall have the meaning ascribed to such term in
Section 4.8.
"Balance Sheet Date" shall have the meaning ascribed to such term in
Section 4.8.
"Basket" shall have the meaning ascribed to in such term in Section
9.2(b).
"BLM" shall mean the Bureau of Land Management.
"Business Day" means any day of the year on which national banking
institutions in each of New York, London and Sydney are open to the public for
conducting business and are not required or authorized to close.
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"Cap" shall have the meaning ascribed to such term in Section
9.2(b).
"CERCLA" shall mean Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S. C. Section 9601, et
seq.
"Closing Date" shall have the meaning ascribed to such term in
Section 3.1. hereof.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Companies' Property" shall have the meaning ascribed to such term
in Section 4.12(a).
"Confidentiality Agreement" means the Agreement dated March 9, 2001
between BPB plc and X.X. Xxxxxx Securities Inc., as agent for Xxxxx Xxxxxx (USA)
Inc.
"Contract" means any contract, agreement, indenture, note, bond,
loan, instrument, lease, commitment or other arrangement or agreement whether
written or oral.
"Draft Closing Accounts" shall have the meaning ascribed to such
term in Section 2.3.
"Enterprise Value" shall mean US $345 million.
"Environmental Matters" means any and all Losses (including, without
limitation, fees, disbursements and expenses of legal counsel, experts,
engineers and consultants and the costs of investigation and feasibility studies
and Remedial Action) arising from or under any Environmental Law or Order or
Contract with any Governmental Body or other Person.
"Environmental Law" means any applicable federal, state, local, or
foreign law (including common law), statute, code, ordinance, rule, regulation
or other requirement relating to the environment, natural resources, or public
or employee health and safety and includes, but is not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
42 U.S.C. Section 9601 et seq., the Hazardous Materials Transportation Act, 49
U.S.C. Section 1801 et seq., the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. Section 6901 et seq., the Clean Water Act, 33 U.S.C. Section
1251 et seq., the Clean Air Act, 33 U.S.C. Section 2601 et seq., the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et seq., the Federal Insecticide,
Fungicide, and Rodenticide Act, 7 U.S.C. Section 136 et seq., the Oil Pollution
Act of 1990, 33 U.S.C. Section 2701 et seq., and the Occupational Safety and
Health Act, 29 U.S.C. Section 651 et seq., as such laws have been amended or
supplemented, and the regulations promulgated pursuant thereto, and all
analogous state or local statutes.
"Excluded Assets and Liabilities" shall have the meaning ascribed to
such term in Schedule 2.3.
"Final Closing Accounts" shall have the meaning ascribed to such
term in Section 2.3.
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"Financial Statements" shall have the meaning ascribed to such term
in Section 4.8.
"FIRPTA Affidavit" shall have the meaning ascribed to such term in
Section 7.1(k).
"First Separate Basket" shall have the meaning ascribed to such term
in Section 9.2(b).
"GAAP" means generally accepted United States accounting principles
as of the date hereof.
"General Basket" shall have the meaning ascribed to such term in
Section 9.2(b).
"General Cap" shall have the meaning ascribed to such term in
Section 9.2(b).
"Governmental Body" means any government or governmental or
regulatory body thereof, or political subdivision thereof, whether federal,
state, local or foreign, or any agency, instrumentality authority or official
thereof, or any court or arbitrator (public or private).
"Hazardous Substance" means any substance, material or waste that is
regulated by any Governmental Body as hazardous, toxic, a pollutant, a
contaminant, or words with similar meaning and effect including, but not limited
to, petroleum, petroleum products, asbestos, urea formaldehyde and
polychlorinated biphenyls.
"IRS" means the United States Internal Revenue Service.
"Knowledge" means, with respect a Person, the actual knowledge,
after due inquiry, of any of its respective directors of officers (as
distinguished from statutory constructive notice to such Person because an
instrument is recorded in the public records).
"Xxxxx" means WL Homes LLC, d/b/a Xxxx Xxxxx Homes.
"Xxxxx Agreement" means the Purchase and Sale Agreement With Escrow
Instructions, dated as of June 28, 2001, including Exhibits A through F thereto
but no other exhibits, between Xxxxx and JHG, in each case as amended by the
Xxxxx Consent.
"Xxxxx Consent" means the consent included in Schedule 6.15.
"Xxxxx Specific Plan" means the plan included in Schedule
6.15(c)(i).
"Law" means any federal, state, local or foreign law (including
common law), statute, code, ordinance, rule, regulation or other requirement.
58
"Legal Proceeding" means any judicial, administrative or arbitral
actions, suits, proceedings (public or private), claims or governmental
proceedings.
"LIBOR" means six (6) month London Inter Bank Offered Rate for U.S.
deposits as published daily in the Wall Street Journal's Money Rates.
"Lien" means any lien, pledge, mortgage, deed of trust, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction under any shareholder or similar agreement,
encumbrance or any other restriction or limitation whatsoever.
"Losses" means any and all losses, liabilities, obligations,
damages, fines, penalties, judgments, actions, claims, costs and disbursements,
including reasonable attorneys', accountants' and other professionals' fees and
disbursements, sustained, incurred or required to be paid. For the avoidance of
doubt, the term "Losses" shall include Environmental Matters.
"Material Adverse Change" means any event or change that is, or is
reasonably likely to be, materially adverse to the business, properties, results
of operations or financial condition of the Companies taken as a whole.
"Material Adverse Effect" means any effect which has resulted in, or
is reasonably likely to result in, a Material Adverse Change.
"Material Contracts" shall have the meaning ascribed to such terms
in Section 4.15.
"Non-Working Capital Financial Liabilities" shall have the meaning
set forth on Schedule 2.3.
"Order" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award.
"Owned Properties" shall have the meaning ascribed to such term in
Section 4.12.
"Permits" means any approvals, authorizations, consents, licenses,
permits or certificates.
"Permitted Exceptions" means, except for any monetary Liens (which
shall be cured by Seller), (i) statutory liens for current taxes, assessments or
other governmental charges not yet delinquent or the amount or validity of which
is being contested in good faith by appropriate proceedings, provided an
appropriate reserve is established therefor; (ii) mechanics', carriers',
workers', repairers' and similar Liens arising or incurred in the ordinary
course of business that are not material to the business, operations and
financial condition of the property so encumbered or the Company; (iii) zoning,
entitlement and other land use and environmental regulations by any Governmental
Body, provided that such regulations have not been violated to the extent that
such violations amount to a material
59
liquidated amount and would be reasonably expected to, individually or in the
aggregate, materially interfere with the present use of any Companies' Property;
and (iv) such other imperfections in title, charges, easements, restrictions and
encumbrances arising in the ordinary course of business to the extent they are
not a material liquidated amount and do not and would not be reasonably expected
to, individually or in the aggregate, materially interfere with the present use
of any Companies' Property subject thereto or affected thereby.
"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental Body or other entity.
"Personal Property Lease" shall have the meaning ascribed to such
term in Section 4.13.
"Real Property Lease" shall have the meaning ascribed to such term
in Section 4.12.
"Release" means any release, spill, emission, leaking, pumping,
pouring, dumping, emptying, injection, deposit, disposal, discharge, dispersal,
leaching, or migration on or into the indoor or outdoor environment or into or
out of any property.
"Remedial Action" means all actions, including, without limitation,
any capital expenditures, required or voluntarily undertaken to (i) clean up,
remove, treat, or in any other way address any Hazardous Material or other
substance; (ii) prevent the Release or threat of Release, or minimize the
further Release of any Hazardous Material or other substance so it does not
migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; (iii) perform pre-remedial studies and
investigations or post-remedial monitoring and care; or (iv) bring facilities on
any property currently or previously owned, operated or leased by the Companies
and the facilities located and operations conducted thereon into compliance with
all Environmental Laws and Permits.
"Republic" means Republic Paperboard Company, Republic Paperboard
Company, LLC, Republic Group Incorporated or Republic Group LLC.
"Republic Agreement" means the Paperboard Supply Agreement effective
May 14, 1998, by and among Republic and JHG, as amended by First Amendment made
as of June 28, 2001.
"ROFR" means the Right of First Refusal Agreement, dated as of June
29, 2001, between Xxxxx and JHG.
"Second Separate Basket" shall have the meaning ascribed to such
term in Section 9.2(c).
"Straddle Period" means any taxable year or period beginning before
and ending after the Closing Date.
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"Subject Portion" shall have the meaning ascribed to such term in
Section 4.12(o).
"Subsidiary" means any Person of which a majority of the outstanding
voting securities or other voting equity interests are owned, directly or
indirectly, by one or both of the Companies.
"Successor" means, strictly for purposes of the Guarantees, (i) the
surviving, acquiring or ultimate parent entity in the event (x) there shall be a
merger, consolidation, other business combination transaction or reorganization
(a "Transaction") involving a Person as a result of which the holders of the
voting equity securities of the Person immediately prior to such Transaction
hold less than a majority of the voting equity securities of such surviving,
acquiring or ultimate parent entity immediately following such Transaction or
(y) there shall be a sale of at least a majority of the assets of the Person, or
(ii) any other successor within the meaning of applicable Law.
"Tax" or "Taxes" shall mean taxes and governmental impositions of
any kind in the nature of (or similar to) taxes, payable to any federal, state,
local or foreign taxing authority, including but not limited to those on or
measured by or referred to as income, franchise, profits, gross receipts,
capital, ad valorem, custom duties, alternative or add-on minimum taxes,
estimated, environmental, disability, registration, value added, sales, use,
service, real or personal property, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes, and interest, penalties
and additions to tax imposed with respect thereto; and "Tax Returns" shall mean
returns, reports and information statements, including any schedule or
attachment thereto, with respect to Taxes required to be filed with the IRS or
any other governmental or taxing authority or agency, domestic or foreign,
including consolidated, combined and unitary tax returns.
"Tax Parent" shall mean the common parent corporation of the
"selling consolidated group" which includes JHG within the meaning of Treasury
Regulation Section 1.338(h)(10)-1(b)(2).
"Tax Sharing Agreement" means any Tax allocation, indemnity, sharing
or similar contract or arrangement (whether or not written).
"Third Accounting Firm" shall mean KPMG LLP or, if such firm shall
decline to act in such capacity, such other firm of independent public
accountants selected by the Purchaser and the Seller.
"Transfer Tax" means any and all sales, use, stamp, documentary,
filing, recording, transfer, real estate transfer, stock transfer, gross
receipts, registration, duty, securities transactions or similar fees or Taxes
or governmental charges (together with any interest or penalty addition to Tax
or additional amount imposed)as levied by any taxing authority in connection
with the transactions contemplated by this Agreement.
"WARN" means the Worker Adjustment and Retraining Act of 1988.
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"Working Capital" shall have the meaning set forth on Schedule 2.3.
10.2 Expenses. Except as otherwise provided in this Agreement
(including the schedules and exhibits hereto), the Seller and the Purchaser
shall each bear its own expenses incurred in connection with the negotiation and
execution of this Agreement and each other agreement, document and instrument
contemplated by this Agreement and the consummation of the transactions
contemplated hereby and thereby, it being understood that in no event shall the
Companies bear any of such costs and expenses.
10.3 Specific Performance. Each of the Seller and the Purchaser
acknowledges and agrees that the breach of this Agreement would cause
irreparable damage to the non-breaching party and that the non-breaching party
will not have an adequate remedy at law. Therefore, the obligations of the
breaching party under this Agreement, including, without limitation, the
Seller's obligation to sell the Shares to the Purchaser for the Purchase Price,
and the Purchaser's obligation to purchase the Shares from the Seller for the
Purchase Price, shall be enforceable by a decree of specific performance issued
by any court of competent jurisdiction, and appropriate injunctive relief may be
applied for and granted in connection therewith. Such remedies shall, however,
be cumulative and not exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.
10.4 Further Assurances. The Seller and the Purchaser each agrees to
execute and deliver such other documents or agreements and to take such other
action as may be reasonably necessary or desirable for the implementation of
this Agreement and the consummation of the transactions contemplated hereby.
10.5 Submission to Jurisdiction; Consent to Service of Process.
(a) The parties hereby irrevocably submit to the non-exclusive
jurisdiction of any federal or state court located within the State of New York
over any dispute arising out of or relating to this Agreement or any of the
transactions contemplated hereby and each party hereby irrevocably agrees that
all claims in respect of such dispute or any suit, action proceeding related
thereto may be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by applicable Law, any
objection which they may now or hereafter have to the laying of venue of any
such dispute brought in such court or any defense of inconvenient forum for the
maintenance of such dispute. Each of the parties agrees that a judgment in any
such dispute may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by Law.
(b) Each of the parties hereby consents to process being served by
any party to this Agreement in any suit, action or proceeding by the mailing of
a copy thereof in accordance with the provisions of Section 10.9.
10.6 Entire Agreement; Amendments and Waivers. This Agreement and
the Exhibits and Schedules hereto supercede and replace the Initial Agreement
and the Exhibits and Schedules thereto in their entirety, as well as any and all
prior or contemporaneous agreements, understandings, communications, discussions
or negotiations, written or oral. This Agreement (including the schedules and
exhibits hereto), together with
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the Guarantees, the Confidentiality Agreement and, when executed and delivered
by the parties, the Mining Agreement, the Plant Lease and the Transitional
Services Agreement, represents the entire understanding and agreement between
the parties with respect to the subject matter hereof and can be amended,
supplemented or changed, and any provision hereof can be waived, only by written
instrument making specific reference to this Agreement signed by the party
against whom enforcement of any such amendment, supplement, modification or
waiver is sought. No action taken pursuant to this Agreement, including without
limitation, any investigation by or on behalf of any party, shall be deemed to
constitute a waiver by the party taking such action of compliance with any
representation, warranty, covenant or agreement contained herein. The waiver by
any party of a breach of any provision of this Agreement shall not operate or be
construed as a further or continuing waiver of such breach or as a waiver of any
other or subsequent breach. No failure on the part of any party to exercise, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of such right, power or
remedy by such party preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. All remedies hereunder are
cumulative and are not exclusive of any other remedies provided by Law.
10.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of New York.
10.8 Table of Contents and Headings. The table of contents and
section headings of this Agreement are for reference purposes only and are to be
given no effect in the construction or interpretation of this Agreement.
10.9 Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or mailed by certified mail, return receipt requested, to a party
(and shall also be transmitted by facsimile to the Persons receiving copies
thereof) at the following addresses (or to such other address as a party may
have specified by notice given to the other party pursuant to this provision):
If to Seller, to:
Xxxxx Xxxxxx, Inc.
00000 Xx Xxxxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxxxx, Esq.
With a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxxx XxXxxxx Xxxxx
2100 Symphony Towers
000 X Xxxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxx XX, Esq.
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If to Purchaser, to:
BPB U.S. Holdings Inc.
c/o BPB America Inc.
0000 Xxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxx, XX 00000-0000
Attention: Corporate Secretary ,
With a copy (which shall not constitute notice) to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
10.10 Severability. If any provision of this Agreement is invalid or
unenforceable, the balance of this Agreement shall remain in effect.
10.11 Binding Effect; Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any person or entity not a party to this
Agreement except as provided below. No assignment of this Agreement or of any
rights or obligations hereunder may be made by either the Seller or the
Purchaser (by operation of law or otherwise) without the prior written consent
of the other party hereto and any attempted assignment without the required
consent shall be void; provided, however, that the Purchaser may assign this
Agreement and any or all rights or obligations hereunder (including, without
limitation, the Purchaser's rights to purchase the Shares and the Purchaser's
rights to seek indemnification hereunder) to any Affiliate of the Purchaser, and
the Seller may assign this Agreement and any or all rights or obligations
hereunder (including, without limitation, the Seller's rights to seek
indemnification hereunder) to any Affiliate of the Seller, provided, however,
that such assignment shall not relieve Purchaser's Parent or Seller's Parent, as
the case may be, from any of its obligations under its respective Guarantee.
Upon any such permitted assignment, the references in this Agreement to the
Purchaser shall also apply to any such assignee unless the context otherwise
requires.
10.12 Disclosure Generally. If and to the extent any information
required to be furnished in any Schedule is contained in this Agreement or in
any Schedule hereto, such information shall be deemed to be included in all
Schedules in which the information is required to be included. The inclusion of
any information in any Schedule attached shall not be deemed to be an admission
or acknowledgment by Seller, in and of itself, that such information is material
to or outside the ordinary course of the business of the Company or its
Subsidiaries.
THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first written above.
BPB U.S. HOLDINGS, INC.
By: /s/ Xxxxxx Xxxxx
-----------------------------------------
Name: XXXXXX XXXXX
Title: ATTORNEY-IN-FACT
XXXXX XXXXXX INC.
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------
Name: XXXXXXX XXXXXX
Title: CFO
