STOCK PURCHASE AGREEMENT
DATED AS OF JANUARY 21, 1999
AMONG
IMC GLOBAL INC.,
THE VIGORO CORPORATION, AS SELLER,
AND
R-C DELAWARE ACQUISITION INC., AS PURCHASER
TABLE OF CONTENTS
(not part of this Agreement)
ARTICLE I Purchase and Sale of the Shares; Closing and Manner of Payment............ 1
1.1 Purchase and Sale of the Shares........................................... 1
1.2 Purchase Price............................................................ 1
1.3 Adjustments to the Purchase Price......................................... 2
1.4 Manner of Payment of the Purchase Price................................... 2
1.5 Determination of Final Adjustment Amount.................................. 4
1.6 Disputes Regarding Closing Balance Sheet.................................. 5
1.7 Inventories............................................................... 6
1.8 Manner of Delivery of the Shares.......................................... 6
1.9 Time and Place of Closing................................................. 6
ARTICLE II Representations and Warranties............................................ 6
2.1 General Statement......................................................... 6
2.2 Representations and Warranties of Purchaser............................... 7
2.2.1 Organization....................................................... 7
2.2.2 Power and Authority................................................ 7
2.2.3 Execution and Delivery by Purchaser................................ 7
2.2.4 Authorization...................................................... 7
2.2.5 Conflict........................................................... 7
2.2.6 Finder's Fees...................................................... 8
2.2.7 Solvency........................................................... 8
2.2.8 Securities Law Matters............................................. 8
2.2.9 Necessary Funds.................................................... 8
2.3 Representations and Warranties of IMC Global and Seller................... 9
2.3.1 Organization....................................................... 9
2.3.2 Good Standing...................................................... 9
2.3.3 Power and Authority................................................ 9
2.3.4 Execution and Delivery by Seller and its Affiliates................ 9
2.3.5 Authorization...................................................... 10
2.3.6 Conflict........................................................... 10
2.3.7 Subsidiaries....................................................... 10
2.3.8 Capitalization..................................................... 11
2.3.9 Financial Statements............................................... 11
2.3.10 Absence of Liens................................................... 12
2.3.11 Tax Matters........................................................ 12
2.3.12 Absence of Changes................................................. 13
2.3.13 Contracts.......................................................... 14
2.3.14 Enforceability of Contracts........................................ 16
2.3.15 Permits............................................................ 16
2.3.16 Employee Benefit Plans............................................. 16
2.3.17 List of Employees.................................................. 17
2.3.18 Union Representation and Labor..................................... 17
i
2.3.19 Insurance.......................................................... 18
2.3.20 Litigation and Claims.............................................. 18
2.3.21 Compliance with Law................................................ 18
2.3.22 Environmental Matters.............................................. 19
2.3.23 Real Estate........................................................ 21
2.3.24 Intellectual Property.............................................. 22
2.3.25 Finder's Fees...................................................... 23
2.3.26 Assets............................................................. 24
2.3.27 Product Warranty................................................... 24
2.3.28 Top Customers and Suppliers........................................ 24
2.3.29 No Undisclosed Liabilities......................................... 24
2.3.30 Limitation on Warranties........................................... 25
2.3.31 Definition of Knowledge............................................ 25
ARTICLE III Conduct Prior to the Closing.............................................. 25
3.1 General .................................................................. 25
3.2 Obligations of Seller and IMC Global...................................... 25
3.3 Purchaser's Obligations................................................... 27
3.4 Joint Obligations......................................................... 28
ARTICLE IV Conditions to Closing..................................................... 29
4.1 Conditions to Obligations of IMC Global and Seller........................ 29
4.2 Conditions to Purchaser's Obligations..................................... 29
ARTICLE V Closing................................................................... 30
5.1 Form of Documents......................................................... 30
5.2 Purchaser's Deliveries.................................................... 31
5.3 IMC Global's and Seller's Deliveries...................................... 32
5.4 Other Transactions Occurring at the Closing............................... 32
ARTICLE VI Post-Closing Agreements................................................... 33
6.1 Post-Closing Agreements................................................... 33
6.2 Inspection of Records..................................................... 33
6.3 Confidentiality........................................................... 34
6.4 Use of Trademarks......................................................... 34
6.5 Further Assurances........................................................ 35
6.6 Non-Competition; Non-Solicitation......................................... 35
6.7 Tax Matters............................................................... 36
6.7.1 Tax Sharing Agreement.............................................. 36
6.7.2 Filing of Returns.................................................. 36
6.7.3 Allocations Relating to Taxes...................................... 37
6.7.4 Tax Indemnity...................................................... 38
6.7.5 Refunds and Credits................................................ 38
6.7.6 Section 338(h)(10) Election; Price Allocation...................... 39
6.7.7 Transfer Taxes..................................................... 40
6.7.8 Contest Provisions................................................. 40
ii
6.8 Agreement to Defend and Indemnify......................................... 40
6.9 Employee Benefits......................................................... 41
6.9.1 Future Benefits.................................................... 41
6.9.2 Welfare Benefits................................................... 41
6.9.3 Service Credit..................................................... 41
6.9.4 Specific Assumption of Severance Agreements........................ 42
6.9.5 Assumption of Retirement Plans for Certain Union Employees......... 42
6.9.6 Transfer of Plan Account Balances.................................. 42
6.9.7 Non-Prohibition on Termination of Employment....................... 43
6.10 Registration and Legend................................................... 43
ARTICLE VII Indemnification........................................................... 43
7.1 General................................................................... 43
7.2 Certain Definitions....................................................... 43
7.2.1 "Damages".......................................................... 43
7.2.2 "Environmental Claim............................................... 44
7.2.3 "Indemnified Party"................................................ 44
7.2.4 "Indemnified Party"................................................ 44
7.2.5 "Third Party Claim"................................................ 44
7.3 IMC Global's and Seller's Indemnification Obligations..................... 44
7.4 Survival of IMC Global's and Seller's Indemnification Obligations......... 47
7.5 Limitation on Seller's Indemnification Obligations........................ 47
7.6 Purchaser's Indemnification Covenants..................................... 47
7.7 Indemnification Procedures................................................ 48
7.8 Cooperation on Environmental Claims....................................... 50
7.8.1 Purchaser's Rights to Remedial Action.............................. 50
7.8.2 Seller's Rights to Remedial Action................................. 50
7.8.3 Minimization of Remedial Action Costs and Disruption of Operation.. 51
7.9 Mitigation................................................................ 51
7.10 Indemnification Exclusive Remedy.......................................... 51
ARTICLE VIII Effect of Termination/Proceeding.......................................... 52
8.1 General .................................................................. 52
8.2 Right to Terminate........................................................ 52
8.3 Certain Effects of Termination............................................ 52
8.4 Remedies ................................................................. 53
8.5 Right to Damages.......................................................... 53
8.6 Non-Solicitation.......................................................... 53
ARTICLE IX Miscellaneous............................................................. 54
9.1 Fees ..................................................................... 54
9.2 Publicity ............................................................... 54
9.3 Notices .................................................................. 54
9.4 Entire Agreement; Interpretation.......................................... 55
9.5 Non-Waiver ............................................................... 56
iii
9.6 Counterparts.............................................................. 56
9.7 Severability.............................................................. 56
9.8 Binding Effect; Benefit................................................... 57
9.9 Assignability............................................................. 57
9.10 Governmental Reporting.................................................... 57
9.11 Applicable Law............................................................ 57
9.12 Waiver of Trial by Jury................................................... 57
9.13 Consent to Jurisdiction................................................... 57
9.14 Amendments ............................................................... 57
9.15 Construction.............................................................. 58
iv
TABLE OF DEFINED TERMS
(not part of this Agreement)
Defined Term Where Found
------------ --------------
Adjusted GAAP Principles 1.5(h)
Affiliate 1.5(d)
Agreed Rate 1.4.3
Agreement Preamble
AgriBusiness Recitals
Ancillary Documents 2.3.3
Arbitrating Accountant 1.6(b)
Assets 2.3.10
Business Recitals
CERCLA 2.3.22(a)(ii)
Claim Notice 7.7.1
Closing 1.8
Closing Balance Sheet 1.5
Closing Date 1.8
Code 2.3.11(a)
Commitment Letter 2.2.9
Company Recitals
Company Member 1.5(d)
Company Member Software 2.3.24(e)
Compensation Plans 2.3.16(a)(iii)
Competing Business 6.6.1
Confidentiality Letter 3.3.1
Contaminant 2.3.22(a)(i)
Contract 2.3.14
control 1.5(d)
Court Order 2.2.5(a)
Damages 7.2.1
Dispute 1.6(a)
Dispute Notice 1.6(a)
Dispute Period 1.6(a)
Drop-Dead Date 8.2.2
Employee 6.9.1
Employee Benefit Plans 2.3.16(a)
Encumbrance 2.3.6
Environmental Claim 7.2.7
Environmental Laws 2.3.22(a)(ii)
Environmental Permits 2.3.22(a)(iii)
Environmental Representations and Warranties 2.3.22(g)
ERISA 2.3.16(a)(i)
v
Defined Term Where Found
------------ --------------
Estimated Purchase Price 1.4.1
Executive Severance Agreement 6.9.4
Final Adjustment Amount 1.4.3
Final Indebtedness 1.4.3
Final Target Amount 1.4.3
Final Working Capital 1.4.3
Financial Statements 2.3.9
GAAP 1.5
Guaranties 3.3.3
HSR Condition 8.2.2
Xxxxxx Recitals
IMC Global Preamble
IMC Nitrogen Recitals
IMC Ops 6.9.5
IMC Plan 6.9.6
including 9.15
Indebtedness 1.2
Indemnified Persons 6.8
Indemnified Party 7.2.4 & 7.2.5
Indemnifying Party 7.2.4 & 7.2.5
Intellectual Property 2.3.24
Interim Financial Statement Date 2.3.9
Interim Financial Statements 2.3.9
IRS 2.3.16(b)
X.X. Xxxxxx 2.3.25
Joint Defense Agreement 3.3.2
Knowledge of Seller 2.3.26
Leased Premises 2.3.23(b)
Litigation Condition 7.7.3(a)
Xxxx 6.4
Material Adverse Effect 2.3.2
Material Consents 3.2.2
Modified Aggregate Deemed Sale Price 6.7.6(b)
MSDS Claims 7.2.2
1998 Financials 4.2.7
Owned Premises 2.3.23
Pension Plans 2.3.16(a)(i)
Permits 2.3.15
Permitted Liens 2.3.10
Phosphate Warehousing Agreement 5.4.4
Plan Employee 6.9.6
vi
Defined Term Where Found
------------ --------------
Process Safety Management Claims 7.2.7
Purchaser Preamble
Purchaser Account Plan 6.96
Purchaser Ancillary Documents 2.2.2
Purchaser Indemnitee 7.3
Real Estate 2.3.23
Release 2.3.22(a)(iv)
Remedial Action 2.3.22(a)(v)
Requirements of Law 2.2.5(a)
Return 2.3.11(a)
Xxxxxxx-Xxxxx 3.3.1
Securities Act 2.2.8
Section 338(h)(10) Election 6.7.6(a)
Seller Preamble
Seller Ancillary Documents 2.3.3
Seller Group 6.7.4(a)
Seller Indemnitee 7.6
Seller's Knowledge 2.3.22(vi) &
2.3.26
Shares Recitals
Subsidiaries 2.3.7
Supply Agreement 5.4.3
Target Amount 1.3(a)
Tax 2.3.11(a)
Tax Sharing Agreement 6.7.1
Third Party Claim 7.2.6
Trademarks 2.3.24
Transferred Accounts 6.9.6
Transportation Claims 7.2.7
Unrelated Assets and Liabilities Transfers 3.2.5(e)
Phosphate Warehousing Agreement 5.4.4
Warehousing Agreement 5.4.4
Welfare Plans 2.3.16(a)(ii)
Working Capital 1.3
vii
TABLE OF EXHIBITS
(not part of this Agreement)
Exhibit A - Note Term Sheet
Exhibit B - Material Consents
Exhibit C - 1998 Unaudited Financials
Exhibit D - Form of Opinion Delivered by Purchaser
Exhibit E - Form of Opinion Delivered by Seller
Exhibit F - Form of Release by Company Group Members
Exhibit G - Form of Release by Seller
Exhibit H - Form of Supply Agreement
Exhibit I - Form of Warehousing Agreement for Phosphate
Exhibit J - Form of Warehousing Agreement for Potash
Exhibit K - Execution Severance Agreement
viii
TABLE OF SCHEDULES
(not part of this Agreement)
1.2 Indebtedness
1.3 Working Capital
1.4 Purchase Price Example
2.3.2 Good Standing
2.3.5 Authorization
2.3.6 Conflict
2.3.7 Subsidiaries
2.3.8 Capitalization
2.3.9 Financial Statements
2.3.10 Absence of Liens
2.3.11 Tax Matters
2.3.12 Absence of Changes
2.3.13 Contracts
2.3.16 Employee Benefit Plans
2.3.17 List of Employees
2.3.18 Union Representations and Relations
2.3.19 Insurance
2.3.20 Litigation and Claims
2.3.21 Compliance with Law
2.3.22 Environmental Matters
2.3.23 Real Estate
2.3.24 Intellectual Property
2.3.26 Sufficiency of Assets; Assets of Affiliates; Inventory
2.3.27 Product Warranty
2.3.28 Customers and Suppliers
2.3.29 Undisclosed Liabilities
3.2.5 Conduct Prior To Closing
3.3.3 Letters of Credit; Guarantees
6.4 Use of Trademarks
6.6.1 Restricted Wholesale Crop Production Inputs
6.9.4 Severance Agreements
ix
STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT ("Agreement") is made and entered into as of
January 21, 1999 among IMC GLOBAL INC., a Delaware corporation ("IMC Global"),
THE VIGORO CORPORATION, a Delaware corporation ("Seller"), and R-C DELAWARE
ACQUISITION INC., a Delaware corporation ("Purchaser").
R E C I T A L S
A. Seller owns all of the outstanding capital stock of IMC AgriBusiness
Inc., a Delaware corporation ("AgriBusiness"), Xxxxxx'x Xx Services, Inc., a
Kentucky corporation ("Xxxxxx"), and IMC Nitrogen Inc., a Delaware corporation
("IMC Nitrogen" and, together with Xxxxxx, AgriBusiness and their respective
subsidiaries following consummation of the Unrelated Assets and Liabilities
Transfers, the "Company").
B. The Company is engaged in the manufacture or purchase and sale (through
wholesale and retail channels) of crop production inputs and services (the
"Business").
C. Purchaser desires to purchase all of the outstanding shares of capital
stock of AgriBusiness, Xxxxxx and IMC Nitrogen (collectively, the "Shares"), and
Seller desires to sell the Shares, on the terms and subject to the conditions
herein contained.
A G R E E M E N T S
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
ARTICLE I
Purchase and Sale of the Shares; Closing and Manner of Payment
1.1 Purchase and Sale of the Shares. On the terms and subject to the
conditions contained in this Agreement, at the Closing Seller shall sell, and
Purchaser shall purchase, the Shares free and clear of all Encumbrances.
1.2 Purchase Price. The aggregate purchase price of the Shares shall be
equal to $300,000,000, less the aggregate amount outstanding as of the close of
business on the business day immediately preceding the Closing Date of
Indebtedness of the Company, subject to adjustment pursuant to Section 1.3 (the
"Purchase Price"). As used in this Agreement, "Indebtedness" means, without
duplication, (a) all indebtedness of the Company for borrowed money, (b) all
obligations of the Company evidenced by notes, bonds, debentures or other
similar instruments, (c) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by any of the Company Members (even though the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), (d) all obligations of the Company as
lessee under leases that have been recorded as capital leases in accordance with
GAAP, (e) all obligations of the Company for the deferred purchase price of
property or services (excluding trade payables incurred in the ordinary course
of business), (f) all Indebtedness of the type referred to in clauses (a)
through (e) above guaranteed directly or indirectly in any manner by any of the
Company Members and set forth on Schedule 1.2 to the Disclosure Schedules, (g)
all Indebtedness of the type referred to in clauses (a) through (e) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any lien on property (including,
without limitation, accounts and contract rights) owned by the Company, even
though the Company has not assumed or become liable for the payment of such
Indebtedness, and (h) all accrued but unpaid interest (or interest equivalent)
to the date of determination, and all accrued but unpaid prepayment premiums or
penalties, related to any items of Indebtedness of the type referred to in
clauses (a) through (g) above (unless otherwise reflected in Working Capital).
1.3 Adjustments to the Purchase Price. The Purchase Price shall be:
(a) increased by the amount by which Working Capital as of the close of
business on the day before the Closing Date, as reflected on the Closing Date
Balance Sheet, exceeds the average month-end Working Capital for the 12-month
period ending on December 31, 1998 (the "Final Month-End") (the Working Capital
for each month-end for the 11-month period ended November 30, 1998 being set
forth in Schedule 1.3) (the "Target Amount"); or
(b) reduced by the amount by which the Target Amount exceeds Working
Capital as of the day before the Closing Date, as reflected on the Closing Date
Balance Sheet.
As used herein, "Working Capital" shall mean the amount for the Company equal to
all "current assets" minus all "current liabilities," as such "current
liabilities" and "current assets" are properly accrued and reflected on the
books and records of the Company in accordance with the Adjusted GAAP Principles
(as hereinafter defined).
1.4 Manner of Payment of the Purchase Price.
1.4.1 No less than three business days prior to the Closing Date,
Seller shall deliver to Purchaser in writing a good faith estimate of (w) the
Purchase Price, which estimate shall take into account the adjustments to the
Purchase Price required pursuant to Section 1.3 utilizing the most recent
financial information available (the "Estimated Purchase Price"), (x) the
estimated Indebtedness as of the business day immediately preceding the Closing
Date ("Estimated Indebtedness"), (y) the estimated Target Amount ("Estimated
Target Amount") and (z) the estimated Working Capital as of the Closing Date
("Estimated Working Capital"), together with (a) a statement of the calculation
of the Estimated Purchase Price, Estimated Indebtedness, Estimated Target Amount
and Estimated Working Capital, (b) the financial information used to derive the
Estimated Purchase Price, Estimated Indebtedness, Estimated Target Amount and
Estimated Working Capital and (c) a certificate signed by Seller to the effect
that each of the Estimated Purchase Price, Estimated Indebtedness, Estimated
Target Amount and Estimated Working Capital was determined in good faith in
accordance with the Adjusted GAAP Principles. The Estimated Purchase Price shall
be based upon the foregoing estimate, subject to the consent of Purchaser, such
consent not to be unreasonably withheld or delayed.
2
1.4.2 At the Closing, Purchaser shall (i) deliver a duly executed note
(the "Note"), in form and substance reasonably satisfactory to Seller and
Purchaser containing the terms set forth in the term sheet attached hereto as
Exhibit A, payable to Seller in the aggregate principal amount of $150,000,000
and (ii) pay the Estimated Purchase Price less the aggregate principal amount of
the Note to Seller by wire transfer to such account as Seller shall designate by
written notice delivered to Purchaser not later than three days prior to the
Closing Date.
1.4.3 Following the Closing, the parties shall determine the final
Purchase Price, taking into account the adjustments to the Purchase Price
required pursuant to Section 1.3 and the criteria set forth in Sections 1.5, 1.6
and 1.7. Following the determination of the Final Target Amount, Final Working
Capital and Final Indebtedness, the Purchase Price shall be adjusted as follows:
(a) The Purchase Price shall be increased dollar for dollar by the
amount by which the Estimated Target Amount exceeds the Final Target Amount;
(b) The Purchase Price shall be reduced dollar for dollar by the amount
by which the Final Target Amount exceeds the Estimated Target Amount;
(c) The Purchase Price shall be increased dollar for dollar by the
amount by which the Final Working Capital exceeds the Estimated Working Capital;
(d) The Purchase Price shall be reduced dollar for dollar by the amount
by which the Estimated Working Capital exceeds the Final Working Capital;
(e) The Purchase Price shall be increased dollar for dollar by the
amount by which the Estimated Indebtedness exceeds the Final Indebtedness; and
(f) The Purchase Price shall be reduced dollar for dollar by the amount
by which the Final Indebtedness exceeds the Estimated Indebtedness.
The cumulative net adjustment to the Purchase Price pursuant to (a) through (f)
of this Section 1.4.3, whether positive or negative, is the "Final Adjustment
Amount." Within 5 days after the Closing Balance Sheet becomes final and binding
upon the parties, (i) if the net effect pursuant hereto is an increase in the
Purchase Price, Purchaser shall pay to Seller, by wire transfer of immediately
available funds, an amount in cash equal to such Final Adjustment Amount, and
(ii) if the net effect pursuant hereto is a decrease in the Purchase Price,
Seller shall pay to Purchaser, by wire transfer of immediately available funds,
an amount in cash equal to such Final Adjustment Amount, in either case under
clause (i) or (ii) of this Section 1.4.3, together with interest thereon from
the Closing Date to the date of actual payment at the Agreed Rate.
As used herein, "Final Target Amount", "Final Working Capital" and
"Final Indebtedness" shall mean (a) in the case of the Final Target Amount, the
quotient obtained by dividing the sum of the Working Capital derived from the
audited balance sheet as of the Final Month-End contemplated in Section 4.2.6
(as agreed to by the parties prior to Closing applying the same principles used
to determine the Working Capital Amounts set forth in Schedule 1.3) and the
3
Working Capital for each month-end in the 11-month period set forth in Schedule
1.3 by 12; and (b) in respect of the Final Working Capital and the Final
Indebtedness, the Working Capital and Indebtedness (x) as shown in the Closing
Balance Sheet if no Dispute Notice with respect thereto is duly and timely
delivered pursuant to Section 1.6(a) or (y) if such a Dispute Notice is so
delivered, as agreed by Seller and Purchaser pursuant to Section 1.6 or, in the
absence of such agreement, as shown in the Arbitrating Accountant's calculation
delivered pursuant to Section 1.6.
The "Agreed Rate" shall be equal to 8.5% per annum.
Schedule 1.4 of the Disclosure Schedules contains an example of the
calculation of the Purchase Price as if the transactions contemplated hereby had
been closed on January 1, 1999.
1.5 Determination of Final Adjustment Amount. The Final Working Capital and
the Final Indebtedness shall be determined from a balance sheet of the Business
as of the close of business on the business day immediately preceding the
Closing Date (the "Closing Balance Sheet"). The Closing Balance Sheet shall be
prepared by Purchaser. The Closing Balance Sheet shall be prepared in accordance
with generally accepted accounting principles applied in a manner consistent
with the accounting principles and practices applied in the preparation of the
Financial Statements ("GAAP"); provided, however, that:
(a) the Closing Balance Sheet shall be a balance sheet of the Business;
(b) the Closing Balance Sheet shall contain all normal year-end
adjustments which would be required if the Closing were to occur on the last day
of the Company's fiscal year;
(c) inventories reflected on the Closing Balance Sheet shall be
determined and valued as provided in Section 1.7;
(d) the Closing Balance Sheet shall exclude all cash (other than xxxxx
cash and other miscellaneous amounts) owned by the Company and transferred to
Seller and its Affiliates as part of the internal cash policies of IMC Global
(it being understood that Seller shall remove all such cash prior to the
Closing). As used herein, an "Affiliate" is any person or entity which controls,
is controlled by or is under common control with another person; provided,
however, that no entity that constitutes a part of the Company or any subsidiary
thereof (each, a "Company Member") shall be deemed to be an Affiliate of any
other Company Member. For purposes of the preceding sentence, the term "control"
means the power, direct or indirect, to direct or cause the direction of the
management and policies of a person or entity through voting securities,
contract or otherwise. In the case of Seller, the term Affiliate shall include
IMC Global and those entities in which IMC Global directly or indirectly owns
more than 50% of such entity's equity interests;
(e) all Indebtedness shall be excluded from the calculation of current
liabilities;
(f) any receivables or payables owed by or owed to Seller or its
Affiliates (other than trade payables incurred in the ordinary course of
business with Seller's Affiliates) shall not be reflected in the Closing Balance
Sheet;
4
(g) the Closing Balance Sheet shall reflect the Unrelated Assets and
Liabilities Transfers;
(h) the Closing Balance Sheet shall include the $2,500,000 reserve for
other long-term liabilities for environmental matters included in the Interim
Financial Statements;
(i) Taxes shall not be taken into account;
(j) cash overdrafts shall be treated as a current liability;
(k) the Closing Balance Sheet shall not include any liability for
accrued vacation and, in accordance with the historic practices of the Business,
shall not reflect the equipment leases of the Company as capital leases; and
(l) in addition to the methods historically used by the Business in
determining the reserve for bad debts, individual receivables may be evaluated
on a case-by-case basis to determine collectability and the appropriate reserve
without regard to any standard of materiality under GAAP.
GAAP as so adjusted by the foregoing provisions of this Section 1.5 is referred
to herein as the "Adjusted GAAP Principles." Purchaser shall deliver the Closing
Balance Sheet to be delivered to Seller not later than ninety days after the
Closing Date. Purchaser shall cause the Company to make available to Seller and
its representatives such books, records, other information (including work
papers) and personnel of the Company which Seller may reasonably request in
order to review the Closing Balance Sheet. During preparation of the Closing
Balance Sheet and during the Dispute Period, Purchaser shall make available the
work papers used in the preparation of the Closing Balance Sheet to Seller and
its representatives.
1.6 Disputes Regarding Closing Balance Sheet. Disputes with respect to the
Closing Balance Sheet shall be resolved as follows:
(a) Seller shall have 45 days after receipt of the Closing Balance
Sheet from Purchaser (the "Dispute Period") to dispute any of the elements of or
amounts reflected on the Closing Balance Sheet but only on the basis that such
amounts were not presented in accordance with the Adjusted GAAP Principles (a
"Dispute"). If Seller does not give to Purchaser written notice of a Dispute
within the Dispute Period (a "Dispute Notice"), the Closing Balance Sheet shall
be deemed to have been accepted and agreed to by Seller in the form in which it
was delivered by Purchaser and shall be final and binding upon the parties
hereto. If Seller has a Dispute, Seller shall give Purchaser a Dispute Notice
within the Dispute Period, setting forth in reasonable detail the elements and
amounts with which it disagrees. Within 30 days after delivery of such Dispute
Notice, the parties hereto shall attempt to resolve such Dispute and agree in
writing upon the final content of the disputed Closing Balance Sheet.
(b) If Seller and Purchaser are unable to resolve any Dispute within
the 30-day period after Purchaser's receipt of a Dispute Notice, Purchaser and
Seller shall promptly engage a nationally recognized certified public accounting
firm not engaged by Purchaser, Seller or their
5
respective Affiliates (the "Arbitrating Accountant"). In connection with the
resolution of any Dispute, the Arbitrating Accountant shall have access to all
documents, records, work papers, facilities and personnel necessary to perform
its function as arbitrator. The Arbitrating Accountant's function shall be to
conform the Closing Balance Sheet to the Adjusted GAAP Principles. The
Arbitrating Accountant shall allow Seller and Purchaser to present their
respective positions regarding the Dispute and shall thereafter as promptly as
possible (but not later than 60 days) following the engagement of the
Arbitrating Accountant, provide the parties hereto a written determination of
the Dispute. Such written determination shall be final and binding upon the
parties hereto and judgment may be entered on the award. Purchaser shall pay a
portion of the fees and expenses of the Arbitrating Accountant in an amount
determined by multiplying the total amount of such fees and expenses by a
fraction the numerator of which is the amount awarded to Seller by the
Arbitrating Accountant and the denominator of which is aggregate amount which is
the subject matter of the Dispute, and Seller shall pay the balance of such fees
and expenses. Upon the resolution of all Disputes, the Closing Balance Sheet
shall be revised to reflect such resolution and, as so revised, shall be final
and binding for purposes of this Agreement.
1.7 Inventories. Seller shall coordinate with Purchaser a taking of the
physical inventory at substantially all of the locations of the Business, which
inventory shall be completed as near as practicable to, but not later than one
week before, the Closing. Prior to Closing, the parties shall agree on a value
of such inventory at the lower of cost or market, taking into account
qualitative factors, including salability and obsolescence. Inventories shall be
valued in the Closing Balance Sheet based upon such agreed valuation, as
adjusted to reflect changes from the date of such agreed valuation to the close
of business on the business day immediately preceding the Closing Date.
1.8 Manner of Delivery of the Shares. At the Closing, Seller shall deliver
to Purchaser certificates evidencing the Shares duly endorsed in blank, or
accompanied by valid stock powers duly executed in blank, in proper form for
transfer.
1.9 Time and Place of Closing. The transactions contemplated by this
Agreement and the Ancillary Documents shall be consummated (the "Closing") at
the offices of Sidley & Austin, Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx
00000 on a date and at a time agreed upon by Seller and Purchaser, but in no
event later than the third business day after the conditions set forth in
Article IV have been satisfied or, if permitted by applicable law, waived. The
date on which the Closing occurs in accordance with the preceding sentence is
referred to in this Agreement as the "Closing Date."
ARTICLE II
Representations and Warranties
2.1 General Statement. The parties make the representations and warranties
to each other which are set forth in this Article II. All such representations
and warranties shall survive the Closing to the extent contemplated by Article
VII (and none shall merge into any instrument of conveyance).
6
2.2 Representations and Warranties of Purchaser. Purchaser represents and
warrants to IMC Global and Seller as follows:
2.2.1 Organization. Purchaser is a corporation duly organized, validly
existing and in good standing under the laws of its state of incorporation.
2.2.2 Power and Authority. Purchaser has full corporate power and
authority to execute, deliver and perform its obligations under this Agreement
and the other agreements, instruments, documents and certificates to be executed
and/or delivered pursuant to this Agreement by Purchaser (collectively, the
"Purchaser Ancillary Documents").
2.2.3 Execution and Delivery by Purchaser. The execution and delivery
of this Agreement by Purchaser, the execution and/or delivery of the Purchaser
Ancillary Documents and the performance by Purchaser of its obligations under
this Agreement and the Purchaser Ancillary Documents have been duly authorized
and approved by all requisite corporate action. This Agreement has been duly
executed and delivered by Purchaser and, assuming the valid authorization,
execution and delivery of this Agreement by Seller, constitutes the legal, valid
and binding obligation of Purchaser enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
of general application relating to or affecting creditors' rights and to general
equity principles. Each of the Purchaser Ancillary Documents, upon execution and
delivery by Purchaser and assuming the valid authorization, execution and
delivery thereof by the other party or parties thereto, will be a legal, valid
and binding obligation of Purchaser enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
of general application relating to or affecting creditors' rights and to general
equity principles.
2.2.4 Authorization. Except for (a) filings under the HSR Act, (b)
filings under Environmental Permits as may be necessary to reflect the change of
control of the Company contemplated hereby and (c) such consents,
authorizations, orders, approvals, filings or registrations the failure of which
to be obtained or made would not prevent the consummation of any of the
transactions contemplated hereby, no consent, authorization, order or approval
of, or filing or registration with, any person, including any governmental
authority or other regulatory agency, is required for or in connection with the
execution and delivery of this Agreement by Purchaser, the execution and/or
delivery of the Purchaser Ancillary Documents and the consummation by Purchaser
of the transactions contemplated hereby or thereby.
2.2.5 Conflict.
(a) Assuming the receipt of all necessary consents and approvals and
the filing of all necessary documents as described in Section 2.2.4, neither the
execution and delivery of this Agreement or any of the Purchaser Ancillary
Documents or the consummation of any of the transactions contemplated hereby or
thereby nor compliance with or fulfillment of the terms, conditions and
provisions hereof or thereof will result in a breach of the terms, conditions or
provisions of, or constitute a default (or an event which would, with the
passage of time or the giving of notice or both, constitute a default), an event
of default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under (1) the charter or by-laws of Purchaser,
7
(2) any note, instrument, mortgage, lease, franchise or financial obligation or
any other agreement or instrument to which Purchaser is a party or any of its
properties is subject or by which Purchaser or any of its assets may be bound or
affected, (3) any judgment, order, award or decree of any foreign, federal,
state, local or other court or tribunal and any award in any arbitration
proceeding ("Court Order") to which Purchaser is a party or by which it is bound
or (4) any foreign, federal, state or local laws, statutes, regulations, rules,
codes or ordinances enacted, adopted, issued or promulgated by any governmental
body ("Requirements of Law") affecting Purchaser, other than, in the case of
clauses (2), (3) and (4) above, any such breaches, defaults or rights that,
individually or in the aggregate, would not prevent the consummation of any of
the transactions contemplated hereby.
2.2.6 Finder's Fees. Neither Purchaser nor any of its Affiliates has
dealt with any person, firm or entity entitled to a broker's commission,
finder's fee, investment banker's fee or similar payment for arranging the
transactions contemplated hereby or by the Ancillary Documents or introducing
the parties to each other for which IMC Global or Seller could become liable or
obligated.
2.2.7 Solvency. Assuming the accuracy of Seller's representations and
warranties, immediately after giving effect to the consummation of the
transactions contemplated hereby and by the Ancillary Documents and the
incurrence of any indebtedness herewith or therewith, the assets of the Company
will exceed its liabilities. In connection with the consummation of the
transactions contemplated hereby and by the Ancillary Documents and the
incurrence of any indebtedness herewith or therewith, Purchaser does not intend
that the Company would incur, and does not believe that the Company will incur,
debts that would be beyond the Company's ability to pay as such debts mature.
2.2.8 Securities Law Matters. Purchaser is acquiring the Shares for its
own account for investment and with no present intention of distributing or
reselling the Shares or any part thereof in any transaction which would
constitute a "distribution" within the meaning of the Securities Act of 1933, as
amended (the "Securities Act").
2.2.9 Necessary Funds. Purchaser has received a commitment letter (the
"Commitment Letter") with respect to an aggregate $275 million of debt financing
relating to the transactions contemplated by this Agreement (the "Debt
Financing"). A copy of the Commitment Letter has been delivered to Seller. The
Commitment Letter is in full force and effect in accordance with its terms as of
the date hereof. The proposed stockholders of Purchaser have in the aggregate no
less than $67 million of committed, but undrawn, equity capital that is
available for, and, concurrent with the consummation of the Debt Financing,
shall be contributed to, Purchaser as equity (the "Equity Financing" and,
together with the Debt Financing, the "Financing"). The Financing is sufficient
in amount to enable Buyer to pay the Purchase Price and, based upon information
provided by Purchaser to Seller, to provide for currently anticipated working
capital needs of the Company as of Closing.
2.3 Representations and Warranties of IMC Global and Seller. IMC Global and
Seller jointly and severally represent and warrant to Purchaser that:
8
2.3.1 Organization. Each of the Company Members, Seller and IMC Global
is a corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation.
2.3.2 Good Standing. Each of the Company Members is duly qualified to
transact business and is in good standing as a foreign corporation in the
jurisdictions set forth on Schedule 2.3.2 of the Disclosure Schedule, which
jurisdictions are the only jurisdictions wherein the character of the properties
owned or leased or the nature of the activities conducted by each of them makes
such qualification necessary, except where the failure to so qualify,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. For purposes of this Agreement, "Material Adverse
Effect" means a material adverse effect on the business, properties, assets or
liabilities, results of operations or financial condition of the Company taken
as a whole, other than changes relating to or resulting from (a) the public
disclosure of the transactions contemplated by this Agreement or (b) any
condition or matter described in the Disclosure Schedules that is specifically
identified as potentially involving a Material Adverse Effect.
2.3.3 Power and Authority. Each of IMC Global and Seller has full
corporate power and authority to execute, deliver and perform its obligations
under this Agreement, and each of IMC Global, Seller and their Affiliates has
full corporate power and authority to execute, deliver and perform its
obligations under the other agreements, instruments, documents and certificates
to be executed and/or delivered pursuant to this Agreement by Seller or its
Affiliates, respectively ("Seller Ancillary Documents"; and, together with the
Purchaser Ancillary Documents, the "Ancillary Documents").
2.3.4 Execution and Delivery by Seller and its Affiliates. The
execution and delivery of this Agreement by each of IMC Global and Seller, the
execution and/or delivery of the Seller Ancillary Documents and the performance
by each of IMC Global and Seller of its obligations under this Agreement and the
Seller Ancillary Documents have been duly authorized and approved by all
requisite corporate action. This Agreement has been duly executed and delivered
by each of IMC Global and Seller and, assuming the valid authorization,
execution and delivery of this Agreement by Purchaser, constitutes the legal,
valid and binding obligation of each of IMC Global and Seller enforceable in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or affecting
creditors' rights and to general equity principles. Each of the Seller Ancillary
Documents, upon execution and delivery by IMC Global, Seller or an Affiliate of
Seller, as the case may be, and assuming the valid authorization, execution and
delivery by the other party or parties thereto, will be a legal, valid and
binding obligation of IMC Global, Seller or such Affiliate enforceable in
accordance with its terms, subject to bankruptcy, insolvency, reorganization,
moratorium and similar laws of general application relating to or affecting
creditors' rights and to general equity principles.
2.3.5 Authorization. Except as set forth in Schedule 2.3.5 of the
Disclosure Schedules and except for (a) filings under the HSR Act, (b) filings
under Environmental Permits as may be necessary to reflect the change of control
of the Company contemplated hereby, and (c) such consents, authorizations,
orders, approvals, filings or registrations the failure of which to be obtained
or made would not reasonably be expected to have a Material Adverse Effect or
would not prevent
9
the consummation of any of the transactions contemplated hereby, no consent,
authorization, order or approval of, or filing or registration with, any person,
including any governmental authority or other regulatory agency, is required for
or in connection with the execution and delivery of this Agreement by IMC Global
or Seller, the execution and/or delivery of the Seller Ancillary Documents and
the consummation by IMC Global or Seller and their Affiliates of the
transactions contemplated hereby or thereby.
2.3.6 Conflict. Assuming the receipt of all necessary consents and
approvals and the filing of all necessary documents as described in Section
2.3.5, except as set forth in Schedule 2.3.6 of the Disclosure Schedules,
neither the execution and delivery of this Agreement or any of the Seller
Ancillary Documents or the consummation of any of the transactions contemplated
hereby or thereby nor compliance with or fulfillment of the terms, conditions
and provisions hereof or thereof will result in a breach of the terms,
conditions or provisions of, or constitute a default (or an event which would,
with the passage of time or the giving of notice or both, constitute a default),
an event of default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under, or result in the creation or imposition
of any lien, claim, charge, security interest, mortgage, pledge, easement,
conditional sale or other title retention agreement, defect in title or other
restrictions of a similar kind ("Encumbrance") upon any of the Shares or any of
the assets of the Company, under (1) the charter or by-laws of IMC Global,
Seller or any Company Member, (2) any note, instrument, mortgage, lease,
franchise or financial obligation or any other agreement or instrument to which
IMC Global, Seller or any Company Member is a party or by which IMC Global,
Seller or any Company Member or any of their assets may be bound or affected,
(3) any Court Order to which IMC Global, Seller or any Company Member is a party
or by which IMC Global, Seller or any Company Member is bound, (4) any
Requirements of Law affecting IMC Global, Seller or any Company Member or (5)
any Permits, other than, in the case of clauses (2), (3), (4) and (5) above, any
such breaches, defaults, rights or Encumbrances that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect or
would not prevent the consummation of any of the transactions contemplated
hereby.
2.3.7 Subsidiaries. None of the Company Members, directly or
indirectly, owns any of the stock of, or any other interest in, any other
corporation, partnership or business entity other than the entities listed on
Schedule 2.3.7 of the Disclosure Schedules (collectively, the "Subsidiaries").
2.3.8 Capitalization. The authorized capital of:
(a) AgriBusiness consists of 1,000 shares of common stock, no par
value per share, of which 939.71 shares are issued and outstanding;
(b) Xxxxxx consists of 11,000 shares of common stock, no par
value per share, of which 11,000 shares are issued and outstanding; and
(c) IMC Nitrogen consists of 1,000 shares of common stock, no par
value per share, of which 985 shares are issued and outstanding.
10
Except as described above in this Section 2.3.8 or as set forth in Schedule 2.38
of the Disclosure Schedules, there are no shares of capital stock of
AgriBusiness, Xxxxxx or IMC Nitrogen of any other class authorized, issued or
outstanding. All of the issued and outstanding shares of capital stock of
AgriBusiness, Xxxxxx and IMC Nitrogen have been validly issued, are fully paid
and nonassessable, are owned beneficially and of record by Seller, and were not
issued in violation of the terms of any agreement or other understanding binding
upon Seller. Seller owns all the issued and outstanding shares of capital stock
of AgriBusiness, Xxxxxx and IMC Nitrogen free and clear of all Encumbrances or
restrictions on transfer. None of IMC Global, Seller or any of the Company
Members is a party to any voting trust, proxy or other voting agreement or
understanding with respect to the voting capital stock of any of the Company
Members. There are no outstanding subscriptions, options, warrants, purchase
rights (including preemptive rights), calls, convertible securities or other
agreements or commitments of any character relating to the issued or unissued
capital stock of AgriBusiness, Xxxxxx or IMC Nitrogen obligating any of the
Company Members to issue, sell, transfer or otherwise dispose of any securities
of any kind. The capital stock of the Company Members was issued in compliance
with the applicable federal and state securities laws.
2.3.9 Financial Statements. Schedule 2.3.9 of the Disclosure Schedules
contains copies of the audited balance sheets, statements of earnings and
statements of cash flows (together with any supplementary information thereto)
of the Business as of and for the fiscal years ended December 31, 1995, 1996 and
1997. The financial statements described in the preceding sentence are referred
to herein as the "Financial Statements." Schedule 2.3.9 of the Disclosure
Schedules also contains copies of the unaudited balance sheets, statements of
income and cash flows of the Business, each as of and for the nine-month period
ended September 30, 1998 (the "Interim Financial Statement Date"). The financial
statements described in the preceding sentence are referred to herein as the
"Interim Financial Statements." The Financial Statements and the Interim
Financial Statements are derived from the books and records of the Company and
have been prepared in conformity with GAAP and present fairly in accordance with
GAAP, in all material respects, the financial position of the Business, as of
the dates thereof and the results of operations and cash flows of the Business,
for the periods covered by said statements, except (x) as disclosed in Schedule
2.3.9 of the Disclosure Schedules, (y) in the case of the Interim Financial
Statements, for normal year-end adjustments, none of which are material, and (z)
in the case of the Interim Financial Statements, for the omission of footnote
disclosures required by GAAP.
2.3.10 Absence of Liens. Except for assets disposed of in the ordinary
course of business, the Company has valid title to or a valid leasehold in, or a
contractual or common law right to use, each item of equipment, machinery,
inventory, tools and other tangible personal property reflected on the Interim
Financial Statements and used in the conduct of the Business ("Assets") free and
clear of any Encumbrances, except for the following: (a) liens for Taxes and
other governmental charges and assessments which are not yet due and payable,
(b) liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable, (c) liens incurred or deposits made in the
ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of social security or to secure the
performance of tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and return of money bonds and similar
obligations, and (d) other liens or imperfections on Assets which are not
material in amount
11
or do not materially detract from the value of or materially impair the existing
use of the Assets affected by such lien or imperfection (collectively,
"Permitted Liens").
2.3.11 Tax Matters.
(a) As used in this Agreement the term (i) "Taxes" means all federal,
state, provincial, local, foreign and other income, sales, use, ad valorem,
value added, transfer, withholding, payroll, real property or other taxes, fees,
assessments or similar charges of any kind, together with any interest and any
penalties, with respect thereto; (ii) the term "Tax" means any one of the
foregoing Taxes; (iii) the term "Code" means the Internal Revenue Code of 1986,
as amended; and (iv) the term "Returns" means all returns, declarations,
reports, statements, and other documents required to be filed in respect of
Taxes (the term "Return" meaning any one of the foregoing Returns).
(b) Except as described in Schedule 2.3.11 of the Disclosure Schedules,
(i) there have been filed on a timely basis, all material Returns required to be
filed by or on behalf of each Company Member; (ii) no extension of time within
which to file any such Return has been requested or granted; (iii) there are no
unpaid tax assessments, notifications of intention to examine or waivers of the
applicable statutes of limitation with respect to material Tax liabilities of
any Company Member; and (iv) no Company Member has been notified in writing of
any Return filing obligation or proposed Tax liability by any taxing authority
with which it does not file Returns.
(c) Except as described in Schedule 2.3.11 of the Disclosure Schedules,
(i) with respect to all amounts in respect of Taxes imposed upon any Company
Member, or for which any Company Member is liable to taxing authorities, with
respect to all taxable periods or portions of periods ending on or before the
Closing Date, all applicable Tax laws have been complied with in all material
respects, all amounts required to be paid to taxing authorities as shown on
Returns filed with such authorities on or before the date hereof have been paid,
all amounts required to be paid to taxing authorities after the date hereof and
on or before the Closing Date to be shown on Returns to be filed with such
authorities will timely be paid; (ii) there are no ongoing examinations by any
taxing authority of any Company Member; (iii) there is currently in effect no
consent agreement under section 341(f) of the Code, private ruling concerning
Taxes from any taxing authority, or closing agreement concerning Taxes with any
taxing authority that could affect the Tax liability of any Company Member for
any period after the Closing Date; (iv) no Company Member is required to make
any adjustments under section 481 of the Code (or any comparable provision of
state, local or foreign law) by reason of a change of accounting method; and (v)
none of the Company Members is a partner in any entity considered to be a
partnership for U.S. federal income tax purposes.
(d) Except as described in Schedule 2.3.11 of the Disclosure Schedules,
each Company Member is a member of a selling consolidated group (within the
meaning of section 338(h)(10)(B) of the Code) of which IMC Global is the common
parent.
(e) Except as provided under Treas. Reg. section 1.1502-6 (or any
similar provision of state, local or foreign law) and except as described in
Schedule 2.3.11 of the Disclosure Schedules, no Company Member has any liability
for or any obligation to pay Taxes of any other person as a transferee or
successor, by contract, or otherwise.
12
(f) This Section 2.3.11 contains the exclusive representations and
warranties of Seller and IMC Global with regard to the subject matter addressed
herein.
2.3.12 Absence of Changes. Since the Interim Financial Statement Date
there has been no change, event or circumstance which, individually or in the
aggregate, has had a Material Adverse Effect. Except as set forth on Schedule
2.3.12 of the Disclosure Schedules, since the Interim Financial Statement Date,
the Company has conducted the Business only in the ordinary course. Without
limiting the generality of the foregoing, since the Interim Financial Statement
Date, except for the Unrelated Assets and Liabilities Transfer and except as set
forth in Schedule 2.3.12 of the Disclosure Schedule:
(a) none of the Company Members has made or authorized any additions to
or sold, leased, transferred or assigned any assets or properties, tangible or
intangible, with a fair market value of more than $250,000, except in the
ordinary course of its business;
(b) none of the Company Members has mortgaged, pledged or subjected to
any Encumbrance (except Permitted Liens) any of its assets or properties
(whether tangible or intangible) other than in the ordinary course of its
business;
(c) no party (including any of the Company Members) has accelerated,
terminated, made material modifications to or canceled any agreement referred to
in Section 2.3.13 or any other material agreement, contract, lease, license or
Permit to which any of the Company members is a party or by which any of them is
bound;
(d) none of the Company Members has made or authorized any material
capital expenditures in excess of the budgeted amount for capital expenditures
previously provided by Seller;
(e) none of the Company Members or any of its Affiliates has discharged
or satisfied any Encumbrance or paid any material obligation or material
liability (fixed or contingent) other than in the ordinary course of business;
(f) there has been no change made or authorized in the charter or
bylaws (or similar governing documents) of any of the Company Members and none
of the Company Members has merged with or into or consolidated with any other
entity, or voluntarily or involuntarily dissolved or liquidated or changed or
agreed to change in any manner the rights of its outstanding capital stock;
(g) none of the Company Members has purchased, redeemed, issued, sold
or otherwise acquired or disposed of any of its capital stock or any evidence of
indebtedness or other of its securities, or granted any options, warrants or
other rights to purchase or obtain (including upon conversion, exchange or
exercise) any of its capital stock or any evidence of indebtedness or other of
its securities, or declared any dividend or made any payment or other
distribution on its capital stock (other than cash dividends or distributions);
13
(h) none of the Company Members has granted any increase in the
compensation payable or to become payable to any of its directors or officers,
except for normal annual increases in the ordinary course of business consistent
with past practice, or entered into any other transaction with any of its
directors or officers other than reimbursement of reasonable business expenses
incurred in the ordinary course of business;
(i) none of the Company Members has adopted, amended, modified or
terminated any bonus, profit-sharing, incentive, severance or other plan,
contract or commitment for the benefit of any of its directors and officers or
any other employee or group of employees (or taken any such action with respect
to any other Employee Benefit Plan), except in the ordinary course of its
business;
(j) none of the Company Members has made any change in its method of
accounting;
(k) none of the Company Members has entered into any transactions with
any Affiliate of Seller or its Subsidiaries (other than another Company Member),
except in the ordinary course of business as described in Schedule 2.3.26;
(l) none of the Company Members has changed or modified in any material
respect its existing credit, collection and payment policies, procedures and
practices with respect to accounts receivable and accounts payable;
(m) none of the Company Members has suffered any damage, destruction,
loss or claim, whether or not covered by insurance, in excess of $500,000; and
(n) none of the Company Members has entered into any agreement or
arrangement with respect to, or otherwise committed to, any of the foregoing.
2.3.13 Contracts. Schedule 2.3.13 of the Disclosure Schedules contains
a listing of the following undischarged written (or, to the knowledge of Seller,
oral) contracts, agreements, leases and other instruments to which a Company
Member is a party:
(a) agreements for the employment for any period of time whatsoever, or
in regard to the employment, or restricting the employment, including any
termination, severance or change in control agreements of any employee of any
Company Member who earns more than $75,000 per year;
(b) consulting agreements where the payment thereunder is in excess of
$100,000 per year and which have an unexpired term in excess of one year;
(c) collective bargaining agreements;
(d) contracts or arrangements providing for bonuses, options, deferred
compensation or stock appreciation rights;
14
(e) leases or subleases, either as lessee or sublessee, lessor or
sublessor, of personal property, where the lease or sublease provides for an
annual rent in excess of $100,000 and has an unexpired term in excess of one
year;
(f) service agreements affecting any of the assets of any Company
Member where the charges are reasonably expected to be in excess of $100,000 and
which has an unexpired term as of the Closing Date in excess of one year;
(g) loan agreements, promissory notes, indentures, bonds, security
agreements, guarantees or obligations for borrowed money or other instruments
involving Indebtedness in an amount in excess of $100,000;
(h) any partnership, joint venture or other similar agreement or
arrangement;
(i) any agreement containing any covenant or provision prohibiting any
Company Member from engaging in any line or type of business (except for such
agreements which shall not apply to any Company Member upon Closing) or
competing with any person;
(j) any agreement under which it has advanced or loaned any amount to
any of its directors, officers and employees outside the ordinary course of its
business;
(k) any agreement under which a sale of any of the Real Estate that is
material to the operation of the Business is pending;
(l) any indemnification agreement by any Company Member running to any
person that involves, individually or in the aggregate, a contingent liability
of a Company Member of $100,000 or more, other than in connection with customer
contracts, agreements entered into in the ordinary course of business or with
respect to directors or executive officers of the Company;
(m) any long-term or continuing agreements or arrangements with respect
to discounts or allowances or extended payment terms that provide for the
receipt or expenditure following the Closing Date of more than $500,000, other
than purchase orders and sales orders in the ordinary course of business; or
(n) any other agreements that provide for the receipt or expenditure
following the Closing Date of more than $500,000, other than purchase orders and
sales orders in the ordinary course of business.
2.3.14 Enforceability of Contracts. All agreements, leases, subleases,
licenses and other instruments described in Section 2.3.13 and Schedules 2.3.23
and 2.3.24 (collectively, "Contracts") are valid and in full force and effect,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
of general application relating to or affecting creditors' rights and to general
equity principles. No default (or an event which would, with the passage of time
or the giving of notice or both, constitute a default) by any Company Member has
occurred thereunder and, to Seller's knowledge, no default (or an event which
would, with the passage of time or the giving of notice or both, constitute a
default) by the other contracting parties has occurred thereunder, which
15
default, individually or in the aggregate with other defaults, would reasonably
be expected to have a Material Adverse Effect.
2.3.15 Permits. The Company Members hold, own or possess all licenses,
permits, registrations and government approvals (other than Environmental
Permits, which are exclusively provided for in Section 2.3.22) which are
required in order for them to conduct their respective businesses as conducted
immediately prior to the date of this Agreement where the failure to possess
such Permits, individually or in the aggregate, would reasonably be expected to
have a Material Adverse Effect (collectively, the "Permits"). All Permits have
been duly obtained and are in full force and effect. The Company Members are in
compliance with the terms and conditions of the Permits in all material
respects. There are no proceedings pending or, to the knowledge of Seller,
threatened seeking to revoke, cancel or suspend, or to adversely modify any of
the Permits.
2.3.16 Employee Benefit Plans.
(a) The Disclosure Schedules contain a true and complete list of each
(i) employee pension benefit plan (as defined in Section 3(2) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) (collectively, the
"Pension Plans"), (ii) employee welfare benefit plan (as defined in Section 3(1)
of ERISA) (collectively, the "Welfare Plans") and (iii) bonus, deferred
compensation, and severance plan which does not constitute a Welfare Plan
(collectively, the "Compensation Plans") maintained, contributed to or required
to be contributed to by Seller or the Company for the benefit of employees of
the Company. The Pension Plans, the Welfare Plans and the Compensation Plans
sometimes are referred to herein collectively as the "Employee Benefit Plans".
(b) All Employee Benefit Plans comply in all material respects with
ERISA, the Code (including the requirements of Code section 401(a) to the extent
any Pension Plan is intended to conform to that section) and other Requirements
of Law. A favorable determination as to the qualification under Code section
401(a) of each of the Pension Plans intended to be qualified under such section
has been made by the Internal Revenue Service ("IRS") or a request for a
favorable determination has been or will be filed within the remedial amendment
period applicable thereto.
(c) Neither the Company nor any Affiliate of a Company Member (as
determined under Code Section 414(b), (c), (m) or (o) of the Code) has taken any
action, nor has any event occurred, that has resulted or will likely result in
any liability under Section 302(c) or Title IV of ERISA, including any
withdrawal liability with respect to any "multiemployer plan" as defined in
Section 4001(a) of ERISA, which liability could reasonably be expected to become
a liability of Purchaser or any Affiliate of Purchaser (including, but not
limited to, the Company) following the Closing.
(d) Seller has furnished to Purchaser the most recent actuarial report
with respect to each Employee Benefit Plan that is a defined benefit pension
plan, as defined by Section 3(35) of ERISA. The information supplied to the
actuary by Seller for use in preparing those reports was complete and accurate
in all material respects and Seller has no knowledge that the conclusions
expressed in those reports are incorrect.
16
(e) This Section 2.3.16 contains exclusive representations and
warranties of Seller and IMC Global with respect to employee benefit matters.
The preceding sentence shall, however, not be construed to limit Purchaser's
ability to rely on the relevant provisions of Sections 2.3.9, 2.3.10, 2.3.12(c),
2.3.12(i), 2.3.13(c) or 2.3.20 with respect to employee benefit matters. Seller
has furnished to Purchaser (1) the amount of any contingent withdrawal liability
to which the Company or Purchaser could become subject by reason of a
transaction described in ERISA Section 4204 and (2) the amount of any withdrawal
liability that would be incurred under ERISA Section 4201 et seq. in the event
of a complete withdrawal on the Closing Date from any multiemployer plan, as
defined in ERISA Section 4001(a), to which the Company could reasonably expect
to be required to contribute after Closing, whether by reason of this Agreement
or operation of law.
2.3.17 List of Employees. Schedule 2.3.17 of the Disclosure Schedules
contains a list of all employees of the Company Members as of July 1, 1998,
whose annual salaries exceed $75,000 and said list correctly reflects their
employer, base salaries, dates of employment and positions.
2.3.18 Union Representation and Labor. There is no labor strike,
dispute, slow-down or work stoppage actually pending or, to the knowledge of
Seller, threatened, against or involving any of the Company Members other than
disputes with individual employees in which the liability of the Company Members
is not reasonably expected to exceed $100,000. Except as set forth on Schedule
2.3.18 of the Disclosure Schedules, none of the employees of the Company Members
is covered by any collective bargaining agreement, and no collective bargaining
agreement is currently being negotiated by any of the Company Members. There is
no request for union representation pending or, to Seller's knowledge, overtly
threatened against the business of any Company Member which, individually or in
the aggregate, would reasonably be expected to have a Material Adverse Effect.
Except as set forth in Schedule 2.3.18 of the Disclosure Schedules, no Company
Member has labor negotiations in process with any labor union or other labor
organization relating to the Business. The Company is not, and has not been in
the last three years, engaged in any grievance or unfair labor practice that,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect. There is not, and in the last three years there has
been no, charge pending or, to the knowledge of Seller, threatened against any
of the Company Members alleging unlawful discrimination in employment practices
before any court or agency that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect, and there is no charge
of or proceeding with regard to any unfair labor practice against any of the
Company Members pending before the National Labor Relations Board.
2.3.19 Insurance. Schedule 2.3.19 of the Disclosure Schedules contains
a description of all policies of fire, liability, workers' compensation and
other forms of insurance providing insurance coverage to or for any of the
Company Members, and the name of the owner of each such policy. All such
policies are outstanding and in full force and effect. All premiums with respect
thereto have been paid when due and no notice of cancellation or termination has
been received with respect to any such policy. There is no default with respect
to any provision contained in any such policy, nor has there not been any
failure to give any notice or present any claim under any such policy in a
timely fashion or in the manner or detail required by the policy. Except as set
forth in Schedule 2.3.19 of the Disclosure Schedules, there are no outstanding
claims under such
17
policies. Except as set forth in Schedule 2.3.19 of the Disclosure Schedules,
Seller and the Company Members have not been refused any insurance coverage, nor
has their coverage been limited by any insurance carrier to which it has applied
for insurance or with which it has carried insurance during the last five years,
except where such coverage has been obtained from an alternative source under
commercially reasonable terms. Except as disclosed in Schedule 2.3.19 of the
Disclosure Schedules, on and after May 31, 1998, all products liability and
general liability policies maintained by or for the benefit of the Company
Members have been "occurrence" policies and not "claims made" policies. All such
policies and the coverage provided thereunder will continue to be in full force
and effect through the Closing Date (but, except in the case of coverage under
those policies owned solely by any of the Company Members, if any, the coverage
provided to or for the Company Members thereunder may be canceled as of the
Closing Date).
2.3.20 Litigation and Claims. Except as set forth on Schedule 2.3.20 to
the Disclosure Schedules, there is no litigation, action, suit, claim or
proceeding (including arbitration proceedings) or investigation pending, in law
or in equity, and there are no proceedings, reviews or governmental
investigations before any commission or other administrative authority, pending
or, to Seller's knowledge, threatened and no notice, citation, summons or order
(including arbitration orders or awards) has been served upon and no penalty has
been assessed against the Company, or any of their respective officers,
directors or Affiliates, with respect to or affecting the present or former
operations, business, products, sales practices or financial condition of any
Company Member or with respect to or affecting the Shares or Seller's rights
thereto which, if decided adversely to such member, would reasonably be expected
to have a Material Adverse Effect or prevent the consummation of the
transactions contemplated hereby.
2.3.21 Compliance with Law. Except as set forth on Schedule 2.3.21 to
the Disclosure Schedules, no Company Member is in violation of, or delinquent in
respect to, any Requirements of Law to which the property, assets, personnel or
business activities of the Company are subject. Except as set forth on Schedule
2.3.21 to the Disclosure Schedules, no investigation, review, inquiry or
proceeding by any governmental body with respect to the Company Members is
pending or, to the knowledge of Seller, threatened.
2.3.22 Environmental Matters.
(a) For the purpose of this Agreement:
(i) "Contaminant" means any waste, pollutant, hazardous substance,
contaminant extremely hazardous substance, hazardous material, toxic substance,
or hazardous waste, as such terms are defined under any Environmental Laws,
including, without limitation: (i) asbestos or asbestos-containing material;
(ii) polychlorinated biphenyls; (iii) any radioactive waste or material; or (iv)
any petroleum or petroleum-derived substance or waste;
(ii) "Environmental Laws" means any federal, provincial, state,
local, or foreign law, rule or regulation, ordinance, code, permit, order,
decree, common law or civil code principle or other binding determination of any
governmental authority directed to, addressing or imposing liability or
standards of conduct with respect to:
18
protection of the environment; Releases or threatened Releases of Contaminants
into the environment; occupational and public safety and health; transportation
of goods; or the manufacture, processing, distribution, use, treatment, storage,
disposal, or handling of Contaminants, in each case as in effect as of the date
hereof (including the reauthorization, reissuance, redesignation or renaming
thereof). Environmental Laws include, without limitation, the Clean Air Act, as
amended (42 U.S.C. 7401 et seq.); the Clean Water Act, as amended (33 U.S.C.
1251 et seq.); the Comprehensive Environmental Response, Compensation and
Liability Act of 1980 ("CERCLA"), as amended (42 U.S.C. 9601 et seq.); the
Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C. 6901 et
seq.); the Toxic Substances Control Act, as amended (15 U.S.C. 2601 et seq.);
the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. 136 et seq.);
the Occupational Health and Safety Act, as amended (29 U.S.C. 651 et seq.); the
Hazardous Materials Transportation Act, as amended (49 U.S.C. 1801 et seq.); and
any corresponding state statutes and any regulations adopted by the United
States Environmental Protection Agency, the United States Occupational, Health
and Safety Administration or the United States Department of Transportation or
the states pursuant to any of the above;
(iii) "Environmental Permits" means all material licenses, permits,
registrations, governmental approvals, agreements and consents and other
authorizations which are required under Environmental Laws to operate the
Business as currently conducted;
(iv) "Release" means release, spill, emission, leaking, pumping,
injection, deposit (including the placement of contaminated media on or offsite
for any purpose), disposal, discharge, dispersal, escape, leaching, or migration
into or presence in the environment; and
(v) "Remedial Action" means actions required under CERCLA or any
other Environmental Laws to (i) clean up, remove, treat, remediate, or in any
other way address Contaminants in the environment; (ii) prevent the Release or
threatened Release or minimize the further Release of Contaminants; (iii)
investigate and determine if a remedial response is needed and to design such a
response; or (iv) perform post-remedial investigation, monitoring, operation,
maintenance, and care relating thereto.
(vi) "Seller's knowledge" means, for purposes of this Section, the
actual knowledge as of the date hereof or as of the Closing Date (as the case
may be) of Xxxxx Anfield, Xxxxxxx X. Xxxxxxx, Xxxxxx X. Xxx Xxxxxx, Xxxxxx X.
Xxxxxxx, Xxxxxxx Xxxx. and of Seller's and any Company Group Member's
environmental, health and safety staff.
(b) To Seller's knowledge and except as set forth in Schedule 2.3.22 of
the Disclosure Schedules, (i) the Company Members hold and are in compliance
with all Environmental Permits required under all applicable Environmental Laws
as of the date hereof in connection with the Business, and all of such
Environmental Permits are in full force and effect, except for such permits
which the Company's failure to hold would not reasonably be expected to have a
Material
19
Adverse Effect, and (ii) the Company Members are not and, for the past five
years, have not been in violation of any Environmental Law, except for such
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect and except for such past violations
which have been fully settled, corrected or otherwise resolved.
(c) To Seller's knowledge and except as set forth in Schedule 2.3.22 of
the Disclosure Schedules, no Real Estate or any other property for which Seller
or any Company Member has or may have legal obligations is currently subject to
any pending or threatened investigation by, order from or written agreement with
any governmental entity or third party respecting: (i) any violation of any
Environmental Law; (ii) any Remedial Action; or (iii) any claim of Damage
arising from the Release or threatened Release of a Contaminant into the
environment.
(d) To Seller's knowledge and except as set forth in Schedule 2.3.22 of
the Disclosure Schedules, neither Seller, with respect to the Company, nor any
Company Member is a party to or subject to any pending or threatened judicial or
administrative proceeding, order, judgment, decree, or settlement alleging a
violation of or liability or obligation under any Environmental Law, the
enforcement of which, the compliance with, or the ongoing obligations of which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect, except such orders, judgments, decrees, or settlements
as have been fully resolved according to the terms thereof.
(e) To Seller's knowledge and except as set forth in Schedule 2.3.22 of
the Disclosure Schedules, there have been no Releases or threatened Releases at
any of the Real Property during the periods of time that such Real Property was
owned or operated by Seller or the Company Members, except for such Releases or
threatened Releases which, individually or in the aggregate, have not and would
not reasonably be expected to have a Material Adverse Effect.
(f) To Seller's knowledge and except as set forth in Schedule 2.3.22 of
the Disclosure Schedules, the Real Estate is free from any underground storage
tanks for which Remedial Action or Actions are required by any Environmental
Law, except for such Remedial Actions which, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect.
(g) To Seller's knowledge, Seller has provided Purchaser access to all
environmental reports and data prepared by or on behalf of the Seller or any
Company Member that disclose material environmental conditions or material
violations of Environmental Law at the Real Estate.
(h) Other than post-Closing filings under Environmental Permits that
may be necessary to reflect the change of control of the Company contemplated
hereby, neither the execution and delivery of this Agreement or any of the
Seller Ancillary Documents or the consummation of any of the transactions
contemplated hereby or thereby nor compliance with or fulfillment of the terms,
conditions and provisions hereof or thereof will result in a breach of the
terms, conditions or provisions of, or constitute a default (or an event which
would, with the passage of time or the giving of notice or both, constitute a
default), an event of default or an event creating rights of acceleration,
termination or cancellation or a loss of rights under, or result in the creation
or imposition of any
20
Encumbrance upon any of the Shares or any of the assets of the Company, under
any Environmental Permit, other than any such breaches, defaults, rights or
Encumbrances that, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect or would not prevent the consummation
of any of the transactions contemplated hereby.
(i) This Section 2.3.22 (collectively, the "Environmental
Representations and Warranties") contains the exclusive representations
and warranties of Seller and IMC Global with regard to Environmental
Laws, Environmental Permits and any other environmental matters in this
Agreement.
2.3.23 Real Estate. (a) One or more Company Members owns interests in
real estate identified in Schedule 2.3.23 of the Disclosure Schedules (the
"Owned Premises"). With respect to each such parcel of owned real property:
(i) the applicable Company Member has good and marketable title
to the parcel of real property, free and clear of any Encumbrance,
easement, covenant or other restriction, except for Encumbrances,
easements, covenants and other restrictions of record which do not
affect materially and adversely the current use, occupancy or
marketability of title, of the property subject thereto;
(ii) there are no pending or, to the knowledge of the Seller,
threatened condemnation, expropriation, eminent domain or other similar
proceedings, lawsuits or administrative actions relating to the
property which materially and adversely affect the current use or
occupancy thereof;
(iii) except as set forth in Schedule 2.3.23 of the Disclosure
Schedules, there are no outstanding written or, to the knowledge of
Seller, oral rights, agreements, options or rights of first refusal to
purchase the parcel of real property, or any portion thereof or
interest therein, which have been granted to any other person; and
(iv) to the knowledge of Seller, there are not parties (other
than the respective Company Member) in possession of or holding any
rights to take possession of the parcel of real property, other than
tenants under any leases disclosed in Schedule 2.3.23 of the Disclosure
Schedules who are in possession of space to which they are entitled and
other than any parties holding rights, the exercise of which would not
materially and adversely affect the current use or occupancy of the
real property subject thereto.
(b) One or more Company Members leases or subleases interests in real
estate identified in Schedule 2.3.23 of the Disclosure Schedules (the "Leased
Premises"; and, together with the Owned Premises, the "Real Estate"). With
respect to each such parcel of leased or subleased real property, except as set
forth in Schedule 2.3.23 of the Disclosure Schedules, a Company Member is the
lessee of each of the Leased Premises, and no party other than a Company Member
has any right to possession, occupancy or use of any of the Leased Premises. A
copy of each lease relating to the Leased Premises has been made available to
Purchaser, together with all amendments and
21
modifications thereto and subordination, attornment or non-disturbance
agreements in respect thereof.
2.3.24 Intellectual Property.
(a) Each material (i) trademark, service xxxx, slogan, trade name,
trade dress and the like (collectively, and together with the associated
goodwill of each, "Trademarks") held by the Company exclusively in connection
with the Business, including information regarding each registration and pending
application to register any such Trademarks; (ii) patent on and pending
application to patent any technology or design used exclusively in connection
with the Business; (iii) registration of and application to register any
copyright held by the Company exclusively in connection with the Business; and
(iv) license of rights in Trademarks, patents, copyrights, unpatented
formulations and know-how, whether to or by any Company Member, is listed in
Schedule 2.3.24 of the Disclosure Schedules. The scheduled rights are referred
to herein collectively as the "Intellectual Property."
(b) To Seller's knowledge, the patents, Trademark registrations and
copyright registrations for all Intellectual Property are valid and in full
force, are held of record in the applicable Company Member's name free and clear
of all Encumbrances (other than liens or imperfections which are not material in
amount and do not materially detract from the value of or materially impair the
existing use of the patents, Trademark registrations and copyright registrations
affected by such lien or imperfection), and are not the subject of any
outstanding injunction, judgment, order, decree, ruling or charge, or any
pending or, to Seller's knowledge, threatened action, suit, investigation,
charge, complaint, claim, demand or cancellation or reexamination proceedings or
any other proceeding challenging their extent, validity, legality,
enforceability, use or ownership of the item. All fees or other costs necessary
for maintaining the same in full force and effect, including but not limited to
maintenance fees, annuities and renewal fees, which are due and payable on or
prior to the Closing Date have been paid. A Company Member is the applicant of
record in all patent applications, and applications for Trademark and copyright
registration for all Intellectual Property, and except as set forth in Schedule
2.3.24 of the Disclosure Schedules, to Seller's knowledge, no opposition,
extension of time to oppose, interference, rejection, or refusal to register has
been received in connection with any such application.
(c) Schedule 2.3.24 of the Disclosure Schedules identifies each item of
Intellectual Property that any third party owns (other than Seller) or licenses
(including Seller) as licensee and that any of the Company Members uses pursuant
to license, sublicense, agreement or permission. With respect to each item of
Intellectual Property required to be so identified in the Disclosure Schedules,
none of the Company Members has granted any sublicense or similar right with
respect to the license, sublicense, agreement or permission.
(d) None of the trade secrets, know-how, or other confidential or
proprietary information of the Company Members has been disclosed to any person
unless such disclosure was, in respect of the Business, made pursuant to a
confidentiality agreement, except for any such disclosures which would not
reasonably be expected to have a Material Adverse Effect.
22
(e) The Company Members collectively own, license or have a right to
use all material computer hardware, software and data processing systems used in
connection with the operation of the Business (collectively, the "Company Member
Software") which are listed in Schedule 2.3.24 of the Disclosure Schedules.
There are no material malfunctions with respect to the Company Member Software
as currently used by the Company Members. Except as set forth in Schedule 2.3.24
of the Disclosure Schedules, to the knowledge of Seller, Computer Member
Software owned by the Company Members is capable of accurately processing,
calculating, manipulating, storing, and exchanging date/time data from, into,
and between the twentieth and twenty-first centuries, including, without
limitation, the years 1999 and 2000 and any leap year calculations, provided
that all other information technology used in combination with such Company
Member Software properly exchanges date/time data with such Company Member
Software.
(f) (i) To Seller's knowledge, no other firm, corporation, association
or person claims the right to use on or in connection with similar or closely
related goods and in the United States, any xxxx which is identical or
confusingly similar to any of the Trademarks; (ii) there are no pending or, to
the knowledge of Seller, threatened claims of any third party (other than a
licensor of Intellectual Property to a Company Member) asserting ownership
rights in any of the Intellectual Property; (iii) there are no pending or, to
the knowledge of Seller, threatened claims that the use by any Company Member of
any Intellectual Property infringes any right of any third party; and (iv) to
Seller's knowledge, no third party is infringing any of the rights of any
Company Member in any of the Intellectual Property, in each case, except for
matters not reasonably expected to have a Material Adverse Effect.
(g) This Section 2.3.24 contains the exclusive representations and
warranties of Seller and IMC Global with regard to the subject matter addressed
herein. The preceding sentence shall, however, not be construed to limit
Purchaser's ability to rely on the relevant provisions of Sections 2.3.12(a),
2.3.12(c), 2.3.12(k), 2.3.13(i) or 2.3.13(l).
2.3.25 Finder's Fees. With the exception of X.X. Xxxxxx Securities Inc.
("X.X. Xxxxxx"), neither Seller nor any of their Affiliates nor the Company has
dealt with any person, firm or entity entitled to a broker's commission,
finder's fee, investment banker's fee or similar payment for arranging the
transactions contemplated hereby or by the Ancillary Documents or introducing
the parties to each other for which Purchaser or any Company Member could become
liable or obliged.
2.3.26 Assets
(a) Sufficiency of Assets. Except as set forth in Schedule 2.3.26 of
the Disclosure Schedules, the assets owned or leased by the Company Members or
which the Company Members have a contractual right to use, together with the
Company's Intellectual Property, include all of the assets used in or otherwise
necessary for the conduct of the Business as currently conducted. Except as set
forth in Schedule 2.3.26 of the Disclosure Schedules, the Assets are in good
condition and repair in all material respects, subject to normal wear and tear.
To the knowledge of Seller, no additional assets, including following the
Closing, additional Intellectual Property,
23
accounts receivable or fixed assets, will be necessary in order to operate the
Business on a stand-alone basis as currently operated.
(b) Assets of Affiliates. Schedule 2.3.26 of the Disclosure Schedules
sets forth a description of all services provided by IMC Global, Seller or any
of their Affiliates with respect to the Business utilizing either (i) assets not
included in the Assets or (ii) employees other than the Employees and the manner
in which the costs of providing such services have been allocated to the
Business.
(c) Inventory. The inventory of each of the Company Members is of a
quality and quantity which is usable or saleable in the ordinary course of its
business consistent with the Company Member's past experience and practice,
except to the extent of the reserve for inventory writedown reflected in the
Interim Financial Statements. Since the Interim Financial Statement date, the
inventory of the Company Members has been replenished in a normal and customary
manner consistent with past practices. Except as set forth in Schedule 2.3.26 of
the Disclosure Schedule, no inventory is held on consignment by or for the
Company Members.
2.3.27 Product Warranty. Except as set forth in Schedule 2.3.27 of the
Disclosure Schedules, none of the Company Members has made written (or, to the
knowledge of Seller, oral) warranties with respect to the quality or absence of
defects of its products which it has sold and which are in force as of the date
hereof.
2.3.28 Top Customers and Suppliers. Schedule 2.3.28 of the Disclosure
Schedules sets forth a complete and correct list of the top 10 customers and top
10 suppliers by dollar volume of the Company Members, taken as a whole, during
the fiscal year ended December 31, 1997. Except as set forth in Schedule 2.3.28
of the Disclosure Schedules and except in the ordinary course, to the knowledge
of the Seller none of such customers or suppliers intends to cease doing
business with any of the Company Members or to significantly reduce the general
level of business it is currently doing with the Company Members.
2.3.29 No Undisclosed Liabilities. Except for liabilities and
obligations (a) set forth in the consolidated balance sheet (including notes
thereto) included in the Interim Financial Statements, (b) described or
identified in Schedule 2.3.29 of the Disclosure Schedules, (c) reflected in the
1998 Financials (including Indebtedness) or (d) incurred in the ordinary course
of business since the Interim Financial Statement Date and reflected as a
liability on the books of account of the Company Members, the Company Members
are not subject to any indebtedness, obligation or liability (contingent or
otherwise). Notwithstanding the foregoing, no representation and warranty is
made pursuant to this Section 2.3.29 with respect to any matter that is
specifically addressed by another representation or warranty contained in this
Section 2.3 or any certificate delivered pursuant hereto.
2.3.30 Limitation on Warranties. Each of IMC Global and Seller makes no
representations or warranties except as set forth herein or in any certificate
delivered pursuant hereto. Purchaser acknowledges that it has conducted an
independent investigation of the financial condition, assets, liabilities,
properties and projected operations of the Company (including with respect to
environmental matters) in making its determination as to the propriety of the
transaction
24
contemplated by this Agreement, and in entering into this Agreement, has relied
solely on the results of said investigation and on the representations and
warranties of Seller expressly contained in this Agreement. Seller shall be
deemed to have made a misrepresentation with respect to or breach of the
representations and warranties in this Agreement with respect to any tax matter,
employee benefit matter, environmental matter or intellectual property matter
only if such matter breaches Section 2.3.11 (in the case of tax matters), 2.3.16
(in the case of employee benefit matters), 2.3.22 (in the case of environmental
matters) or 2.3.24 (intellectual property matters) of this Agreement,
respectively (it being understood that the other representations and warranties
in this Agreement shall not apply to such matters).
2.3.31 Definition of Knowledge. Except as otherwise provided herein,
for the purposes of this Agreement, the knowledge of Seller shall be deemed to
be limited to (and the phrases "Seller's knowledge", "knowledge of Seller" or
words of similar import mean) the actual knowledge as of the date hereof or as
of the Closing Date (as the case may be) of, Xxxxxx Xxxxx, Xxxxx Anfield, Xxxxx
Xxxxxx, Xxx Xxxxxx, Xxxx Xxxxxxx, Xxxx Xxxxxx, Xxxxx Xxxxxx, Xxxxxxx Xxxxxxx,
Xxxx Xxxx, Xxx Xxxxxxx, Xxxxxx Xxx Xxxxxx, Xxxx Xxxxx and Xxxxxx Xxxxxxxxxxxx.
ARTICLE III
Conduct Prior to the Closing
3.1 General. IMC Global, Seller and Purchaser shall have the rights and
obligations with respect to the period between the date hereof and the Closing
Date which are set forth in the remainder of this Article III.
3.2 Obligations of Seller and IMC Global. The following are the joint and
several obligations of IMC Global and Seller:
3.2.1 Seller shall cause the Company to give to Purchaser's officers,
employees, and other authorized representatives and financing sources reasonable
access during normal business hours to all of the properties (subject to
Sections 3.3.1 and 3.3.2), books, Returns, contracts, documents, insurance
policies, records and personnel of or with respect to the Company or Seller that
relate to the Business and shall furnish to Purchaser and such persons as
Purchaser shall designate to Seller such documents and copies of documents and
all information as Purchaser or such persons may at any time and from time to
time. In furtherance of the foregoing, Seller shall, and shall cause each of the
Company Members to, provide Purchaser and its financing sources and their
respective agents and representatives with full access to any and all of its
management personnel, accountants, representatives, premises, properties,
contracts, commitments, books, records and other information during regular
Business hours, and shall furnish such financial and operating data,
projections, forecasts, business plans, strategic plans and other data relating
to the Business as Purchaser and its financing sources and its agents and
representatives shall reasonably request; provided, however, that IMC Global and
Seller shall not be required to violate any obligation of confidentiality to
which IMC Global, Seller or any Company Member is subject or to waive any
privilege which any of them may possess in discharging their obligations
pursuant to this Section 3.2.1. Seller shall use its reasonable best efforts to
cause the officers, employees, consultants
25
agents, accountants and attorneys to cooperate fully with Purchaser, its
financing sources, agents and representatives in connection with the financing
of the transactions contemplated hereby, including the preparation of any
offering documents related thereto. Purchaser agrees that such investigation
shall be conducted in such a manner as not to interfere unreasonably with the
operations of the Company, IMC Global or Seller.
3.2.2 IMC Global and Seller shall use reasonable efforts (and Purchaser
shall cooperate with IMC Global and Seller) to cause the Company to obtain the
approvals, authorizations, exemptions, waivers and consents to the consummation
of the transactions contemplated hereby under or with respect to (a) each
contract, lease, agreement, Permit, Environmental Permit, and other instrument
and (b) each foreign, federal, state or local governmental approval, in each
case, which is enumerated in Exhibit B attached hereto (collectively, the
"Material Consents"); provided, however, that such action shall not include any
requirement of IMC Global, Seller, any of their Affiliates or the Company to
expend money, commence or participate in any litigation or offer or grant any
accommodation (financial or otherwise) to any third party.
3.2.3 Seller shall cause the Company to carry on the Business in the
ordinary course of business, except as expressly permitted by this Agreement.
3.2.4 Seller shall give prompt written notice to Purchaser in the event
its representations and warranties are discovered to be untrue as of the time
made or in the event Seller determines that such representations and warranties
shall be untrue as if made at and as of the Closing Date. Except as set forth in
Section 9.4, no disclosure by Seller pursuant to this Section 3.2.4 shall be
deemed to amend or supplement the Disclosure Schedules or to cure any
misrepresentation or breach of warranty.
3.2.5 Without the prior written consent of Purchaser, Seller shall
cause the Company Members not to, other than in the ordinary course of business
or as set forth in Schedule 3.2.4 of the Disclosure Schedules:
(a) amend their respective certificates or articles of
incorporation or by-laws, partnership agreements or other
organizational documents;
(b) make any change in the authorized capital stock of any
Company Member or issue any shares of stock of any class or issue or
become a party to any subscriptions, warrants, rights, options,
convertible securities or other agreements or commitments of any
character relating to the issued or unissued capital stock of any
Company Member, or to other equity securities of any Company Member, or
grant any stock appreciation or similar rights;
(c) institute any material increase or otherwise materially
change the compensation payable to or to become payable to any
employee, officer or agent of any Company Member;
26
(d) incur or commit to incur any capital expenditures not set
forth in Schedule 3.2.4(d) of the Disclosure Schedules or not included
with the Company's capital spending plan for its current fiscal year in
excess of $2,500,000 in the aggregate;
(e) sell, transfer or otherwise dispose of any asset or property
(including sales or transfers to Affiliates), except (i) for sales of
inventory and for transfers of cash in payment of the liabilities of
any Company Member, and (ii) the transactions described on Schedule
3.2.5(e) of the Disclosure Schedules (the "Unrelated Assets and
Liabilities Transfers") which transactions shall occur concurrent with
the Closing through dividend or otherwise;
(f) enter into any lease, contract or commitment which, if taken
prior to the date hereof, would be required to be disclosed in Schedule
2.3.13 of the Disclosure Schedules;
(g) take any action or omit to take any action which will result
in a violation of any applicable law which, if taken prior to the date
hereof, would be required to be disclosed in Schedule 2.3.21 of the
Disclosure Schedules;
(h) prepay any material obligation which, if taken prior to the
date hereof, would be required to be disclosed in Schedule 2.3.12 of
the Disclosure Schedules; or
(i) borrow any money;
(j) take any action to change accounting policies or procedures
(including procedures with respect to revenue recognition, payments of
accounts payable and collection of accounts receivable) except as
required by GAAP; or
(k) enter into any agreement to do any of the foregoing.
3.3 Purchaser's Obligations. The following are the obligations of
Purchaser:
3.3.1 Purchaser shall comply with the obligations of the proposed
stockholder of Purchaser under that certain letter agreement, dated June 8,
1998, between such proposed stockholder and X.X. Xxxxxx, as agent for IMC Global
(the "Confidentiality Letter"), and shall use its reasonable best efforts to
cause Xxxxxxx-Xxxxx, Inc. ("Xxxxxxx-Xxxxx") to comply with Xxxxxxx-Xxxxx'x
obligations under that certain letter agreement, dated June 30, 1998, between
Xxxxxxx-Xxxxx and X.X. Xxxxxx, as agent for IMC Global.
3.3.2 Purchaser shall comply with the obligations of the proposed
stockholder referred to Section 3.3.1 and Xxxxxxx-Xxxxx under that certain
Environmental Joint Defense Agreement dated August 17, 1998 among such proposed
stockholder, Xxxxxxx-Xxxxx and AgriBusiness (the "Joint Defense Agreement"). In
addition, subject to Requirements of Law, Purchaser shall not, without Seller's
written consent, disclose the contents or the existence of any of the Phase I
and Phase II environmental assessments conducted by Purchaser with respect to
the Business to any person other than Seller and its representatives. Purchaser
shall not conduct any such
27
investigation or testing without Seller's specific prior written consent and
without giving Seller or its representatives a reasonable opportunity to be
present at the time of any such investigation or testing.
3.3.3 At or prior to Closing, Purchaser shall (i) obtain letters of
credit in replacement of the letters of credit of Seller or any Affiliate set
forth in Schedule 3.3.3 of the Disclosure Schedules (the "Guaranties"), which
shall be in such form and from such financial institutions satisfactory to the
holder of such Guaranty, and (ii) cause Seller or such Affiliate to be fully
released, as of the Closing Date, in respect of all obligations under such
Guarantees.
3.4 Joint Obligations. The following shall apply with equal force to IMC
Global and Seller, jointly and severally, and to Purchaser:
3.4.1 Subject to the terms and conditions of this Agreement, each of
the parties hereto shall use all reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary, proper
or advisable to consummate the transactions contemplated hereby and by the
Ancillary Documents as soon as practicable. Each of the parties hereto shall use
all reasonable efforts to cause the termination or the reduction of the face
amount of certain letters of credit obtained by or on behalf of one or more
Company Members related to expired insurance policies of the Business.
3.4.2 As promptly as practicable after the date hereof, Purchaser and
Seller shall file with the Federal Trade Commission and the Antitrust Division
of the Department of Justice the notifications and other information required to
be filed under the HSR Act with respect to the transactions contemplated hereby.
Each party warrants that all such filings by it will be, as of the date filed,
true and accurate in all material respects and in material compliance with the
requirements of the HSR Act and any such rules and regulations. Each of
Purchaser and Seller agrees to make available to the other such information as
each of them may reasonably request relative to its business, assets and
property as may be required of each of them to file any additional information
requested by such agencies under the HSR Act.
ARTICLE IV
Conditions to Closing
4.1 Conditions to Obligations of IMC Global and Seller. The obligations of
IMC Global and Seller to close the transactions contemplated hereby and by the
Ancillary Documents is subject to the fulfillment or, if permitted by applicable
law, waiver by IMC Global and Seller of all of the following conditions on or
prior to the Closing Date:
4.1.1 The representations and warranties made by Purchaser shall be
true and correct on the Closing Date as if originally made on and as of the
Closing Date (except to the extent that they expressly relate to an earlier
date), except for changes therein permitted by this Agreement or resulting from
any transaction consented to in writing by Seller or any transaction permitted
by this Agreement and other than breaches of representations and warranties
which are not reasonably expected to have a Material Adverse Effect.
28
4.1.2 There shall not have been any breach by Purchaser in the
performance of any of its covenants and agreements herein which shall not have
been remedied or cured (it being understood that Purchaser shall be given a
reasonable opportunity to remedy or cure any such breach), other than breaches
which are not reasonably expected to have a Material Adverse Effect.
4.1.3 The waiting period under the HSR Act shall have expired or been
terminated, and no injunction or restraining order shall have been issued by any
court of competent jurisdiction and be in effect which restrains or prohibits
any material transaction contemplated hereby.
4.1.4 No action, suit or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation.
4.1.5 Seller and its Affiliates shall have been released from liability
with respect to each of the Guaranties, all in accordance with Section 3.3.3.
4.2 Conditions to Purchaser's Obligations. The obligation of Purchaser to
close the transactions contemplated hereby and by the Ancillary Documents is
subject to the fulfillment or, if permitted by applicable law, waiver by
Purchaser of all of the following conditions on or prior to the Closing Date:
4.2.1 Each of the representations and warranties made in Section 2.3
(i) that is qualified as to materiality shall be true on and as of the Closing
Date with the same effect as though made or given on and as of the Closing Date
and (ii) that is not qualified with respect to materiality shall be true in all
material respects on and as of the Closing Date with the same effect as though
made or given on and as of the Closing Date, except, in any case, for changes
therein specifically permitted by this Agreement or as expressly consented to in
writing by Purchaser or resulting from any transaction permitted by this
Agreement and other than breaches of representations and warranties (except any
representation or warranty in Section 2.3.1, Section 2.3.3, Section 2.3.4 and
Section 2.3.8) that are not, individually or in the aggregate, reasonably
expected to have a Material Adverse Effect.
4.2.2 There shall not have been any breach by Seller in the performance
of any of its covenants and agreements herein which shall not have been remedied
or cured (it being understood that Seller shall be given a reasonable
opportunity to remedy or cure any such breach), other than breaches which are
not reasonably expected to have a Material Adverse Effect (without giving effect
to any limitation as to "materiality" or "Material Adverse Effect" as set forth
therein).
4.2.3 The waiting period under the HSR Act shall have expired or been
terminated, and no injunction or restraining order shall have been issued by any
court of competent jurisdiction and be in effect which restrains or prohibits
any material transaction contemplated hereby.
4.2.4 The Seller or one of the Company Members shall have procured all
Material Consents.
29
4.2.5 No action, suit or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement, (B) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation, (C) affect materially and adversely the right of Purchaser to own
the Company Members' Shares and to control the Company Members, (D) affect
materially and adversely the right of the Company Members (taken as a whole) to
own their assets and to operate their businesses (and no such injunction,
judgment, order, decree, ruling or charge shall be in effect) or (E) otherwise
would reasonably be expected to have a Material Adverse Effect on the Company
Members.
4.2.6 Seller shall have delivered to Purchaser audited consolidated
financial statements for the Business complying with the requirements of
Regulation S-X promulgated under the Securities Act of 1933 as of and for the
12-month period ended December 31, 1998 (the "1998 Financials").
4.2.7 The 1998 Financials shall (i) be generally consistent in all
material respects with the financial statements attached as Exhibit C hereto,
(ii) not reflect any material changes in liabilities, net sales or operating
income before income, taxes, depreciation and amortization from the financial
statements attached as Exhibit C hereto and (ii) not contain any material
disclosures in the footnotes thereto not set forth in (a) the Financial
Statements or (b) disclosed in any of the Schedules hereto.
4.2.8 Purchaser shall have received the Debt Financing contemplated by,
and on substantially the same terms and conditions set forth in, the Commitment
Letter; provided, however, that, if the terms of the Debt Financing are changed
pursuant to the ninth paragraph of the Commitment Letter, such changed terms
shall have been reasonably acceptable to Purchaser; and provided, further, that
this condition shall be unavailable to Purchaser if the Debt Financing is not
received primarily by reason of Purchaser's failure to receive (i) the Equity
Financing or (ii) adequate assurances regarding the future receipt of the Equity
Financing.
ARTICLE V
Closing
5.1 Form of Documents. At the Closing, the parties shall deliver the
documents, and shall perform the acts, which are set forth in this Article V.
5.2 Purchaser's Deliveries. Subject to the fulfillment or waiver of the
conditions set forth in Sections 4.2, Purchaser shall execute and/or deliver to
IMC Global and Seller all of the following:
5.2.1 The Note, duly executed by Purchaser, in the aggregate principal
amount equal to $150,000,000.
5.2.2 The Estimated Purchase Price less the aggregate principal amount
of the Note by wire transfer of immediately available funds.
30
5.2.3 A certified copy of Purchaser's charter and by-laws.
5.2.4 A certificate of good standing of Purchaser, issued not earlier
than twenty 20 days prior to the Closing Date by the Secretary of State of
Delaware.
5.2.5 An incumbency certificate with respect to the officers of
Purchaser executing this Agreement, and any Purchaser Ancillary Document
delivered hereunder, on behalf of Purchaser.
5.2.6 A certified copy of resolutions of Purchaser's board of
directors, authorizing the execution, delivery and performance of this
Agreement, and any other document delivered by Purchaser hereunder.
5.2.7 A closing certificate executed by the President of Purchaser (or
any other authorized officer of Purchaser), on behalf of Purchaser, as to the
matters described in Sections 4.1.1 and 4.1.2 and stating that all documents to
be executed and delivered by Purchaser at the Closing have been executed and
delivered by duly authorized officers of Purchaser.
5.2.8 Documents suitable for filing to change the name of AgriBusiness
and IMC Nitrogen to names that do not contain any reference to "IMC"; provided,
that Seller may, at its option, satisfy this condition by changing the name of
AgriBusiness and IMC Nitrogen to names (which do not contain reference to "IMC")
which shall be provided to Seller by Purchaser at least five days prior to the
Closing Date.
5.2.9 A legal opinion in the form attached hereto as Exhibit D.
5.3 IMC Global's and Seller's Deliveries. Subject to the fulfillment or
waiver of the conditions set forth in Sections 4.1, IMC Global and Seller shall
execute or deliver to Purchaser all of the following:
5.3.1 Certified copies of the charter and by-laws of IMC Global,
Seller, AgriBusiness, Xxxxxx and IMC Nitrogen.
5.3.2 Certificates of good standing of IMC Global, Seller, AgriBusiness
and IMC Nitrogen issued not earlier than 20 days prior to the Closing Date by
the Secretary of State of Delaware, and of Xxxxxx issued not earlier than 20
days prior to the Closing Date by the Secretary of State of Kentucky.
5.3.3 Certificates representing all outstanding shares of stock of
AgriBusiness, Xxxxxx and IMC Nitrogen, in each case duly endorsed in blank or
with duly executed stock powers attached.
5.3.4 A closing certificate executed by the President of IMC Global (or
any other authorized officer of IMC Global), on behalf of IMC Global and Seller,
as to the matters described in Section 4.2.1 and 4.2.2. and stating that all
documents to be executed by Seller or the Company and delivered at the Closing
have been executed and delivered by duly authorized officers of Seller, the
Company or an Affiliate of Seller (as the case may be);
31
5.3.5 The written resignations, effective as of the Closing Date, of
the directors and officers of AgriBusiness, Xxxxxx and IMC Nitrogen.
5.3.6 The minute books and stock records of AgriBusiness, Xxxxxx, IMC
Nitrogen and the Subsidiaries.
5.3.7 A legal opinion in the form attached hereto as Exhibit E.
5.3.8 An incumbency certificate with respect to the officers of Seller
and IMC executing this Agreement, and any Seller Ancillary Document delivered
hereunder, on behalf of Seller or IMC.
5.4 Other Transactions Occurring at the Closing. In addition to the
deliveries to be made at the Closing pursuant to Sections 5.2 and 5.3:
5.4.1 Seller and the Company shall complete the Unrelated Asset and
Liabilities Transfers.
5.4.2 Each Company Member will enter into a release in a form attached
hereto as Exhibit F, whereby such Company Member will irrevocably discharge and
forever release IMC Global, Seller and their respective shareholders, directors,
officers and employees (in their capacities as shareholders, directors, officers
and employees of each of Seller and such Company Member) from any and all
liabilities, obligations, actions, causes of action, claims or other matters,
whether known or unknown, arising or accruing on or prior to the Closing Date,
other than those claims arising from this Agreement or the Ancillary Documents
or reflected on the Closing Balance Sheet.
5.4.3 Seller will enter into a release in a form attached hereto as
Exhibit G, whereby Seller will irrevocably discharge and forever release each
Company Member and their respective shareholders, directors, officers and
employees (in their capacities as shareholders, directors, officers and
employees of each of Seller and such Company Member) from any and all
liabilities, obligations, actions, causes of action, claims or other matters,
whether known or unknown, arising or accruing on or prior to the Closing Date,
other than those claims arising from this Agreement or the Ancillary Documents
or reflected on the Closing Balance Sheet.
5.4.4 The Company, IMC Kalium Ltd. and IMC-Agrico Company will enter
into a Supply Agreement in the form attached as Exhibit H hereto (the "Supply
Agreement).
5.4.5 The Company and IMC-Agrico Company will enter into a Warehousing
Agreement in the form attached as Exhibit I hereto (the "Phosphate Warehousing
Agreement").
5.4.6 The Company and IMC Kalium Ltd. will enter into a Warehousing
Agreement in the form attached as Exhibit J hereto (the "Potash Warehousing
Agreement" and, together with the Phosphate Warehousing Agreement, collectively,
the "Warehousing Agreements" or, individually, a "Warehousing Agreement").
32
ARTICLE VI
Post-Closing Agreements
6.1 Post-Closing Agreements. From and after the Closing, the parties shall
have the respective rights and obligations which are set forth in the remainder
of this Article VI.
6.2 Inspection of Records.
(a) For a period of seven years after the Closing Date, IMC Global,
Seller and their representatives shall have reasonable access to all of the
books and records of the Company to the extent that such access may reasonably
be required by IMC Global and Seller in connection with matters relating to or
affected by the operations of the Company prior to the Closing Date. Such access
shall be afforded by Purchaser upon receipt of reasonable advance notice and
during normal business hours. IMC Global and Seller shall be solely responsible
for any costs or expenses incurred by such party pursuant to this Section
6.2(a). If Purchaser or the Company shall desire to dispose of any of such books
and records prior to the expiration of such seven-year period, Purchaser shall,
prior to such disposition, give IMC Global and Seller a reasonable opportunity,
at Seller' expense, to segregate and remove such books and records as such party
may select.
(b) For a period of seven years after the Closing Date, Purchaser and
its representatives shall have reasonable access to all of the books and records
relating to the Company which IMC Global, Seller or any of their Affiliates may
retain after the Closing Date. Such access shall be afforded by IMC Global,
Seller and their Affiliates upon receipt of reasonable advance notice and during
normal business hours. Purchaser shall be solely responsible for any costs and
expenses incurred by it pursuant to this Section 6.2(b). If IMC Global, Seller
or any of their Affiliates shall desire to dispose of any of such books and
records prior to the expiration of such seven-year period, such persons shall,
prior to such disposition, give Purchaser a reasonable opportunity, at
Purchaser's expense, to segregate and remove such books and records as Purchaser
may select.
6.3 Confidentiality. From and after the Closing, IMC Global and Seller
shall, and shall cause their subsidiaries, employees and agents to, keep
confidential and not disclose to any other person or use for their own benefit
or the benefit of any other person, any information regarding the business and
affairs of the Company Members. The obligation of IMC Global and Seller under
this Section 6.3 shall not apply to information which: (i) is or becomes
generally available to the public without breach of the commitment provided for
in this Section 6.3; (ii) was otherwise available to IMC Global and Seller or
any of their Affiliates on a non-confidential basis; (iii) was independently
developed by IMC Global, Seller or any Affiliate of Seller as demonstrated by
written or other tangible evidence in existence prior to the date hereof (other
than in connection with Seller's ownership and operation of the Business); (iv)
is currently being used by any Affiliate of IMC Global or Seller as demonstrated
by written or other tangible evidence in existence prior to the date hereof
(other than in connection with Seller's ownership and operation of the
Business); or (v) is required to be disclosed by law, order or regulation of a
court or tribunal or government or disclosures necessary to implement the
provisions of this Agreement or to comply with the accounting and Securities
Exchange Commission disclosure obligations or the rules of any stock exchange or
over-the-counter market; provided, however, that, in the case of clause (v)
above, IMC
33
Global and Seller shall provide Purchaser as much advance notice of the
possibility of such disclosure as practical so Purchaser may attempt to stop
such disclosure or obtain a protective order concerning such disclosure.
6.4 Use of Trademarks. IMC Global and Seller are not conveying ownership
rights or granting Purchaser or the Company a license to use any of the
tradenames or trademarks of IMC Global or any Affiliate of IMC Global and, after
the Closing, Purchaser shall not permit the Company or any Affiliate of the
Company to use in any manner the names or marks of IMC Global or any Affiliate
of IMC Global or any word that is similar in sound or appearance to such names
or marks; provided, however, IMC Global grants to Purchaser and each Company
Member for a period of 90 days (180 days in respect of signage) following the
Closing Date, a non-exclusive, non-transferrable, fully-paid and royalty-free
license to use the "IMC" name and logo set forth on Schedule 6.4 of the
Disclosure Schedules (the "Xxxx") in the Business, as such Business is conducted
as of the Closing Date, in connection with the transition of the names used by
the Business to new names. Notwithstanding the foregoing, Purchaser and the
Company shall use reasonable efforts to change all references to the Xxxx used
by the Company as soon as practicable following the Closing Date, and shall make
clear in all correspondence and communications made by Purchaser, the Company
and the Business that the Company is no longer owned by Seller or IMC Global.
Purchaser agrees that the products and services the Company offers in connection
with the Xxxx during the term of the license granted above shall be of a
comparable quality to those currently being offered by Seller and IMC Global in
connection with the Xxxx. Purchaser agrees that Seller's remedies at law for any
breach or threat of breach by Purchaser of the provisions of this Section 6.4
will be inadequate, and that Seller shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Section 6.4 and to
enforce specifically the terms and provisions hereof, in addition to any other
remedy to which Seller may be entitled at law or equity.
6.5 Further Assurances. The parties shall execute such further documents,
and perform such further acts, as may be reasonably necessary to transfer and
convey the Shares to Purchaser, on the terms herein contained, and to otherwise
comply with the terms of this Agreement and consummate the transactions
contemplated hereby and by the Ancillary Documents.
6.6 Non-Competition; Non-Solicitation.
6.6.1 In consideration of the benefits of this Agreement to Seller and
in order to induce Purchaser to enter into this Agreement, each of IMC Global
and Seller, jointly and severally, hereby covenants and agrees that from and
after the Closing and until the third anniversary of the Closing Date, it shall
not, and shall cause its subsidiaries not to, directly or indirectly, as a
partner, stockholder, director, consultant, joint venturer, investor or in any
other capacity, engage in, or own, manage, operate or control, or participate in
the ownership, management, operation or control of, any business or entity which
engages anywhere in the United States of America in (x) the sale of crop
production inputs and services at retail or (y) the sale of the crop production
inputs set forth in Schedule 6.6.1 at wholesale (a "Competing Business");
provided, however, that nothing herein shall prohibit IMC Global, Seller or any
of their subsidiaries from (i) owning not more than 5.0% of any class of
securities of a publicly traded entity in a Competing Business, (ii) acquiring
and following such acquisition, actively engaging in, any business enterprise
partially engaged in a Competing
34
Business, so long as not more than 20% of the fair market value of such
business, as determined in good faith by the Board of Directors of IMC Global
and certified to Purchaser by an officer of IMC Global, is attributable to such
Competing Business, (iii) acquiring, and following such acquisition, actively
engaging in, any business enterprise partially engaged in a Competing Business,
provided that if more than 20% of the fair market value of such business, as
determined in good faith by the Board of Directors of IMC Global and certified
to Purchaser by an officer of IMC Global, is attributable to such Competing
Business, then such business shall divest itself of the subsidiary, division,
group, franchise or segment which engages in such Competing Business as soon as
practicable after the date of such acquisition, and provided, further, that with
respect to any purchase intended to be accounted for as a pooling of interests
under GAAP or treated for federal income tax purposes as a tax-free
reorganization, no such divestiture shall be required until, in the reasonable
opinion of the acquiror, such divestiture would no longer endanger the
accounting of such acquisition as a pooling of interests under GAAP or the
treatment for federal income tax purposes of such acquisition as a tax-free
reorganization, or (iv) engaging in any activity or services of the type
currently being performed by IMC Global, Seller and their Affiliates (other than
any Company Member).
6.6.2 From the date hereof until the third anniversary of the Closing
Date, each of IMC Global and Seller, jointly and severally, shall not, and shall
cause its subsidiaries and representatives not to, without prior written
approval of Purchaser, directly or indirectly, solicit for employment any
current officer, senior manager, general manager, sales or technical employee of
the Company; provided, however, that the foregoing shall not prevent IMC Global,
Seller or any of their Affiliates from hiring any such person (i) who contacts
the IMC Global, Seller or their Affiliates on his or her own initiative without
solicitation from any of IMC Global, Seller or their Affiliates, (ii) in
connection with general employment advertisements published in magazines,
journals, newspapers and other publications that are not targeted at the Company
or any of the Company's employees or (iii) who has been discharged by the
Company prior to any such solicitation.
6.6.3 IMC Global and Seller acknowledge that given the nature of the
Business the covenants contained in this Section 6.6 contain reasonable
limitations as to time, geographic area and scope of activity to be restrained,
and do not impose a greater restraint than is necessary to protect and preserve
for the benefit of Purchaser the goodwill of the company and to protect the
legitimate business interests of the Company. If, however, this Section 6.6 is
determined by any court of competent jurisdiction to be unenforceable by reason
of its extending for too long a period of time or over too large a geographic
area or by reason of its being too extensive in any other respect or for any
other reason it will be interpreted to extend only over the longest period of
time for which it may be enforceable and/or over the largest geographic area as
to which it may be enforceable and/or to the maximum extent in all other aspects
as to which it may be enforceable, all as determined by such court and in such
action.
6.6.4 IMC Global and Seller agree that Purchaser's remedies at law for
any breach or threat of breach by IMC Global or Seller of the provisions of this
Section 6.6 will be inadequate, and that Purchaser shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this Section
6.6 and to enforce specifically the terms and provisions hereof, in addition
35
to any other remedy to which Purchaser may be entitled at law or equity. In the
event of litigation regarding this Section 6.6, the prevailing party in such
litigation shall, in addition to any other remedies that prevailing party may
obtain in such litigation, be entitled to recover from the other party all
reasonable legal fees and out-of-pocket expenses incurred by such party in
enforcing or defending its rights hereunder.
6.7 Tax Matters.
6.7.1 Tax Sharing Agreement. IMC Global, Seller and each Company Member
shall cause any tax sharing agreements, arrangements or practices between any
Company Member and IMC Global or any Affiliate of IMC Global (collectively, the
"Tax Sharing Agreement") to be terminated as of the day before the Closing Date
as it pertains to each Company Member, and the obligations of the parties, IMC
Global and its Affiliates with respect to Taxes shall be governed exclusively by
this Agreement.
6.7.2 Filing of Returns.
(a) For all taxable periods of the Company Members ending on or prior
to the Closing Date, the parties shall cause the Company Members to join in IMC
Global's consolidated federal income Returns and, in jurisdictions requiring or
permitting combined reporting with IMC Global or any of its Affiliates, to join
in combined Returns for such jurisdictions, in accordance with current
practices, and Seller shall cause the Taxes shown on such Returns to be paid.
(b) Seller shall cause the Company Members to file all other Returns
for taxable periods ending on or before the Closing Date and all Returns (other
than income Tax Returns) on which the Unrelated Assets and Liabilities Transfers
are required to be reported, and Seller shall pay all Taxes attributable to such
periods and events. Purchaser shall make available to Seller such books and
records of the Company as are reasonably necessary for Seller to prepare such
Returns. Purchaser shall have the right to review such Returns prior to filing
and Purchaser shall cause an authorized officer of the Company Members to
execute such Returns, provided such Returns have been prepared in accordance
with applicable law.
(c) Purchaser shall cause the Company Members to file all Returns for
their taxable periods ending after the Closing Date. Purchaser shall cause the
Taxes shown on such Returns to be paid, subject to being reimbursed by Seller
for any Taxes attributable to the portion of any Straddle Period which precedes
or includes the Closing Date.
All Returns referred to in this Section 6.7.2 shall be filed in a timely manner
and in proper form. Purchaser shall prepare and provide Seller with copies of
each Return (or the relevant portions thereof) reflecting any obligations of
Seller with respect to any taxable period of any Company Member which begins
before and ends after the Closing Date (a "Straddle Period") at least 30 days
prior to the due date for filing such Return, and Seller shall have the right to
review and to grant or withhold approval of such Returns (which approval shall
not unreasonably be withheld) prior to the filing thereof. Seller shall
reimburse Purchaser for Taxes attributable to the portion of any Straddle Period
that precedes the Closing Date, as determined under the principles set forth in
Section 6.7.3. Seller shall make such reimbursement payment to Purchaser no
later than the date the return for any
36
such Straddle Period is due. Purchaser and Seller shall attempt in good faith
mutually to resolve any disagreements regarding such Returns prior to the due
date for filing thereof. None of Purchaser or any Affiliate of Purchaser shall
(or shall cause or permit any Company Member to) amend, refile or otherwise
modify (or grant an extension of any statute of limitation with respect to) any
Tax Return relating in whole or in part to any Company Member with respect to
any taxable year or period or portion of a period ending on or before the
Closing Date without the prior written consent of Seller, which consent shall
not be unreasonably withheld.
6.7.3 Allocations Relating to Taxes. Taxes shall be allocated between
Seller and Purchaser as follows:
(a) For federal income Tax purposes, the taxable year of the Company
Members shall end as of the close of the Closing Date and, with respect to all
other Taxes, Seller and Purchaser shall, unless prohibited by applicable law,
close the taxable period of the Company Members as of the close of the Closing
Date. Neither Seller nor Purchaser shall take any position inconsistent with the
preceding sentence on any Return.
(b) Any allocation of income or deductions required to determine any
Taxes attributable to the various portions of any taxable period shall be made
by means of an interim closing of the books and records of the Company Members
as of the close of the applicable date, provided that exemptions, allowances,
deductions (including depreciation and amortization deductions), and any Taxes
(such as property, sales or similar Taxes) that are calculated on an annual or
periodic basis shall be allocated pro rata among the days in such taxable
period. Any disagreements regarding the allocations shall be promptly resolved
in an arbitration conducted by the Arbitrating Accountant, whose decision shall
be binding on the parties and whose fees shall be borne equally by Seller and
Purchaser.
(c) Any transaction occurring outside the ordinary course of business
and not caused by Seller or its Affiliates on the Closing Date after the
Closing, except with respect to any Section 338(h)(10) Election, shall be
treated as occurring on the day following the Closing Date. Purchaser shall not,
and shall not permit any Company Member to, engage in any transaction out of the
ordinary course of business or to make any election (other than a Section
338(h)(10) Election) that, after the Closing, would cause additional income to
be realized or recognized for income Tax purposes by any Company Member on the
Closing Date.
6.7.4 Tax Indemnity.
(a) Seller shall pay and shall indemnify and hold Purchaser, the
Company Members and their Affiliates harmless against: (i) any Tax liability of
any Company Member that is attributable to any Tax period or portion of a
Straddle Period ending on or before the Closing Date; (ii) any Tax liability
resulting from the application of Treas. Reg. section 1.1502-6 (or comparable
provision of state, local or foreign law), of IMC Global and the members of its
consolidated return group (collectively, the "Seller Group," which shall not
include any Company Member following the Closing Date), or of any other
consolidated group of which any Company Member was a member prior to the Closing
Date; and (iii) any Tax liability attributable to the Unrelated Assets and
Liabilities Transfers.
37
(b) Purchaser shall pay and shall indemnify and hold Seller and its
Affiliates harmless against any Tax liability of any Company Member that is
attributable to any taxable period or portion of a Straddle Period beginning on
or after the Closing Date or that is attributable to any transaction occurring
outside the ordinary course of business and not caused by Seller or its
Affiliates on the Closing Date after the Closing, other than Taxes arising on
account of any Section 338(h)(10) Election.
(c) This Section 6.7.4 shall be applied in accordance with the
indemnification procedures of Section 7.7 to the extent possible.
6.7.5 Refunds and Credits. Seller shall be entitled to any refunds or
credits of any Taxes of the Company Members allocable to periods ending on or
before the Closing Date. Purchaser shall be entitled to any refunds or credits
of any Taxes of the Company Members for periods beginning after the Closing
Date. Refunds and credits allocable to periods beginning before and ending after
the Closing Date shall be equitably divided between the parties in accordance
with the principles in this Section 6.7.
6.7.6 Section 338(h)(10) Election; Price Allocation. With respect to
the acquisition of the Company Members:
(a) At the election of Purchaser, Purchaser and the Seller Group shall
make an election under Section 338(h)(10) of the Code and the Treasury
Regulations promulgated thereunder (and any comparable election under state,
local or foreign Tax law) for each Company Member designated by Purchaser for
which such election is permissible (a "Section 338(h)(10) Election"). The
parties shall report, in connection with the determination of income, franchise
or other Taxes measured by net income, the transactions being undertaken
pursuant to this Agreement in a manner consistent with each Section 338(h)(10)
Election, if any;
(b) If any Section 338(h)(10) Election is made, the following
procedures shall apply. Purchaser, Seller and the Company shall cooperate fully
with each other in the making of each Section 338(h)(10) Election. In
particular, and not by way of limitation, in order to effect a Section
338(h)(10) Election, Purchaser shall, and Seller shall cause IMC Global to,
jointly execute necessary copies of Internal Revenue Service Form 8023 and all
attachments required to be filed therewith pursuant to applicable Treasury
regulations. Purchaser, no later than 150 days after the Closing Date, shall
provide Seller with a valuation statement reflecting, as of the Closing Date,
the fair market values of all of the assets and the amount of the liabilities
and obligations of each Company Member for which an election has been made, with
a determination of "modified aggregate deemed sale price" (as determined in
accordance with Treas. Reg. section 1.338(h)(10)-1(f)) for the assets of each
affected Company Member and an allocation of the "modified aggregate deemed sale
price" among the assets of each affected Company Member. If a Section 338(h)(10)
Election is not made for a Company Member, Purchaser, no later than 150 days
after the Closing Date, shall provide Seller with a valuation statement
reflecting an allocation of a portion of the Purchase Price to the stock of such
Company Member. Subject to the following provisions of this paragraph (b),
Purchaser shall, and Seller shall cause IMC Global to, file and shall cause
members of their respective affiliated groups (within the meaning of Section
1504 of the Code or any similar
38
group defined under a similar provision of state, local or foreign law) to file,
all Returns and statements, forms and schedules in connection therewith in a
manner consistent with such valuations, determinations and allocations and shall
take no position contrary thereto unless required to do so by applicable Tax
laws. Seller shall have the right to review any appraisal upon which such
valuations are based and to grant or reasonably withhold approval of such
valuations and any such forms and schedules relating to such valuations, prior
to the filing of such Returns, statements, forms and schedules. Any disputes
regarding the valuation statement or the preparation, execution or filing of the
forms and documents required in connection with making any Section 338(h)(10)
Election shall be resolved in an arbitration to be conducted by the Arbitrating
Accountant, whose fees shall be borne equally by Seller and Purchaser. Each of
the parties to this Agreement shall be bound by the decision of the Arbitrating
Accountant rendered in such arbitration. To the extent permitted by state, local
or foreign Tax laws, the principles of this Section 6.7.6(b) shall also apply
with respect to a Section 338(h)(10) Election under state, local or foreign law.
(c) The parties agree that a violation of this Section 6.7.6 is a
proper subject of injunctive relief.
6.7.7 Transfer Taxes. Notwithstanding anything herein to the contrary,
Purchaser and Seller shall each pay, and shall indemnify the other party and its
Affiliates against, fifty percent of any real property transfer Tax, sales Tax,
use Tax, stamp Tax, stock transfer Tax, or other similar Tax imposed on the
transactions contemplated by this Agreement, provided, however, that Seller
shall be solely responsible for and shall indemnify Purchaser and its Affiliates
against all Transfer Taxes attributable to the Unrelated Assets and Liabilities
Transfers.
6.7.8 Contest Provisions. Purchaser shall promptly, but in no event
later than 10 days after receipt, notify Seller in writing upon receipt by
Purchaser, any of its Affiliates, any Company Member or any Subsidiary of notice
of any pending or threatened federal, state, local or foreign Tax audits,
examinations or assessments which might affect the Tax liabilities for which
Seller may be liable pursuant to this Agreement.
Seller shall have the sole right to represent each Company Member and
each Subsidiary's interests in any Tax audit or administrative or court
proceeding relating to taxable periods ending on or before the Closing Date or
otherwise relating to Taxes for which Seller may be liable pursuant to this
Agreement, and to employ counsel of its choice at its expense. In the case of a
period beginning before and ending after the Closing Date, Seller shall be
entitled to participate at its expense in any Tax audit or administrative or
court proceeding relating (in whole or in part) to Taxes attributable to the
portion of such period ending on and including the Closing Date and, with the
written consent of Purchaser and at Seller's sole expense, may assume the entire
control of such audit or proceeding. None of Purchaser, any of its Affiliates,
any Company Member or any Subsidiary may settle any Tax claim for any Taxes for
which Seller may be liable pursuant to this Agreement, without the prior written
consent of Seller, which consent may not be unreasonably withheld.
From the date hereof, Seller shall not make or terminate any Tax
election, settle or compromise any Tax dispute, or enter into any closing
agreement if such action would materially
39
increase the Taxes of any Company Member for any taxable period after the
Closing Date without the prior written consent of Purchaser, which consent may
not be unreasonably withheld.
6.8 Agreement to Defend and Indemnify. Without prejudicing its right to
indemnification under Article VII hereof, Purchaser acknowledges and accepts as
contract rights (and agrees to cause each Company Member to honor in accordance
with their terms) the provisions of each Company Member's charter and/or by-laws
or other organizational documents as in effect on the date hereof with respect
to indemnification of officers, directors, employees and agents of each Company
Member (collectively, "Indemnified Persons") (including provisions relating to
contribution, advancement of expenses and the like), and agrees that, for a
period of six years after the Closing Date, the indemnity provisions of the
charter and by-laws or other organizational documents of each Company Member, to
the extent such Company Member is still in existence, shall not be modified or
amended except as required by law, unless such modification or amendment expands
the rights of the Indemnified Persons to indemnification (including with respect
to contribution, advancement of expenses and the like).
6.9 Employee Benefits.
6.9.1 Future Benefits. During the 180-day period immediately following
the Closing, Purchaser shall cause to be provided to each of the employees who
were employed by the Company immediately prior to the Closing and continue or
terminate employment with the Company or Purchaser or any of their Affiliates
(an "Employee," and collectively, the "Employees") benefits no less favorable in
the aggregate than the benefits (including Employee Benefit Plans, vacation pay,
holiday pay, sick pay, salary continuation, fringe benefits and other benefit
plans or arrangements) that were being provided by the Company to similarly
situated employees during the first calendar quarter of 1997. During the 180-day
period immediately following the Closing, Purchaser shall cause to be provided
to each of the Employees compensation (including base salary, incentive pay and
bonuses) no less favorable in the aggregate than the compensation provided to
the Employee by the Company immediately prior to the Closing Date. During the
one-year period immediately following the Closing, Purchaser shall cause to be
maintained for each Employee whose employment with the Company or Purchaser or
any of their Affiliates is terminated after the Closing (other than the
Employees who are parties to the Severance Agreements listed on Schedule 6.9.4
of the Disclosure Schedule) severance which is no less favorable than under the
severance guidelines of the Company as applied to the class of employees of
which such Employee is a part on the date hereof.
6.9.2 Welfare Benefits. To the extent such claims and liabilities are
reflected on the Closing Balance Sheet, Purchaser shall cause Seller to be
reimbursed for all claims and liabilities under the Welfare Plans maintained by
IMC Global and its Affiliates and attributable to Employees and their spouses
and dependents, which have not been paid as of the Closing Date. Effective on
the Closing Date, Purchaser shall provide group health plan coverage (including
retiree medical benefits, if any) to the Employees and cause Employees and their
dependents to be provided with group health plan coverage without any waiting
period and without any exclusion or limitation with respect to any pre-existing
condition within the meaning of Section 4980B(f)(2)(B)(iv)(1) of the Code.
Purchaser shall be responsible for satisfying COBRA continuation of coverage
rights
40
pursuant to Section 4980B of the Code or Part 6 of Title I of ERISA with respect
to each individual who was an employee of the Company or a spouse or dependent
of any such employee with respect to any qualifying event occurring on or after
the Closing Date.
6.9.3 Service Credit. Purchaser shall cause service with the Company,
Seller or IMC Global or any of their Affiliates (or their respective
predecessors) prior to the Closing Date and not otherwise excluded under the
terms of any of Seller's Employee Benefit Plans to be treated as service for all
benefit plans and arrangements described in Section 6.9.1 for all purposes under
such benefit plans and arrangements, including for purposes of pre-existing
conditions limitations, waiting period and vesting requirements and, to the
extent such amounts are reflected on the Closing Balance Sheet, shall cause all
benefits accrued by any Employee under any Employee Benefit Plan or other
benefit plan or arrangement prior to the Closing Date to be provided to such
Employee; provided, however, that this Section 6.9.3 shall not require credit
for any prior service be given for benefit accrual purposes under any defined
benefit pension plan established on or after the Closing Date or result in a
duplication of benefits.
6.9.4 Specific Assumption of Severance Agreements. Effective on the
Closing, Purchaser expressly and unconditionally assumes and agrees to perform
the obligations under the Severance Agreements listed on Schedule 6.9.4 of the
Disclosure Schedules. Notwithstanding the foregoing, in respect of the Severance
Agreement attached as Exhibit K hereto, as the same exists on the Closing Date
(the "Executive Severance Agreement"), IMC Global and Seller, jointly and
severally, agree to reimburse Purchaser for 50% of any Severance Benefits (as
defined in the Executive Severance Agreement) paid by Purchaser as a result of
the termination by the Executive (as so defined) of such Executive's employment
during the 180 days after the Closing Date.
6.9.5 Assumption of Retirement Plans for Certain Union Employees.
Effective as of the Closing, Purchaser shall assume sponsorship and be
substituted for IMC Global Operations Inc. ("IMC Ops") under Retirement Plan for
Hourly Employees of IMC Ops represented by Local #14981, United Steelworkers of
America at Americus, Georgia; Retirement Plan for Hourly Employees of IMC Ops
represented by Local #233, International Chemical Workers Union (Xxxxxxxx);
Retirement Plan for Hourly Employees of IMC Global Ops at the Mulberry Rainbow
Plant Represented by Local #35, International Chemical Workers Union; Retirement
Plan for Hourly Employees of IMC Global Ops represented by Local #899,
International Chemical Workers Union (Tifton); Retirement Plan for Hourly
Employees of IMC Global Ops represented by Local #774, International Chemical
Workers Union (Tupelo) and shall assume all of IMC Ops' rights, duties and
obligations with respect to such plans.
6.9.6 Transfer of Plan Account Balances. As soon as reasonably
practicable after the Closing Date, Purchaser shall establish one or more
defined contribution plans (the "Purchaser Account Plan") effective as of the
Closing Date. Purchaser Account Plan shall, concurrently with, and to the extent
of, receipt of assets as hereinafter provided, assume the account balances in
the IMC Global Inc. Profit Sharing and Savings Plan and the Savings Plan for
Union Hourly Employees of IMC Ops (collectively, "IMC Plan") as of the date of
transfer of each person ("Plan Employee") who:
41
(a) was at any time a participant in the IMC Plan; and
(b) was employed by the Company on the Closing Date.
As soon as reasonably practicable following the Closing Date, Seller shall cause
the IMC Plan to transfer to the Purchaser Account Plan an aggregate amount equal
to the account balances of Plan Employees valued as of the most recent
accounting date prior to the date of transfer ("Transferred Accounts"). Seller
shall cause the transfer to the Purchaser Account Plan, either in cash, in-kind
assets or a combination of cash and in-kind assets, as agreed to by Seller and
Purchaser. Purchaser shall establish a trust or other funding entity for the
purpose of receiving such assets from the IMC Plan. Such transfers of assets
shall be made only after Purchaser and Seller have supplied each other with
reasonable assurance that the Purchaser Account Plan in Purchaser's case, and
the IMC Plan in Seller's case is a qualified plan meeting the requirements of
Section 401(a) of the Code. Purchaser and Seller shall each ensure that the
transfer set forth above shall comply with provisions of Code Sections 411(d)(6)
and 414(1) and Section 204(h) and 208 of ERISA.
6.9.7 Non-Prohibition on Termination of Employment. Nothing in this
Section 6.9 shall prevent Purchaser, the Company or their Affiliates from
terminating the employment of any Employee at anytime.
6.10 Registration and Legend. Purchaser agrees and understands that the
Shares have not been, and will not be, registered under the Securities Act or
the securities laws of any state and that the Shares may be sold or disposed of
only in one or more transactions registered under the Securities Act and
applicable state securities laws or as to which an exemption from the
registration requirements of the Securities Act and applicable state securities
laws is available. Purchaser acknowledges and agrees that no person has any
right to require Seller to cause the registration of any of the Shares. The
certificates representing the Shares shall contain a legend similar to the
following and other legends necessary or appropriate under applicable state
securities laws:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES
LAWS AND MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS
A REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS WITH RESPECT TO SUCH SHARES IS EFFECTIVE OR UNLESS THE
COMPANY IS IN RECEIPT OF AN OPINION OF COUNSEL SATISFACTORY TO IT TO
THE EFFECT THAT SUCH SHARES MAY BE SOLD WITHOUT REGISTRATION UNDER THE
ACT AND SUCH LAWS.
42
ARTICLE VII
Indemnification
7.1 General. From and after the Closing, the parties shall indemnify each
other as provided in this Article VII. All payments made by Purchaser or Seller,
as the case may be, under this Article VII shall be treated as adjustments to
the Purchase Price for all Tax purposes.
7.2 Certain Definitions. As used in this Agreement, the following terms
shall have the indicated meanings:
7.2.1 "Damages" shall mean all losses, damages (including, with respect
to Environmental Claims, costs of Remedial Actions), awards, fines, penalties,
deficiencies, judgments, costs, expenses and fees (including reasonable
attorneys' fees, accountants' fees, court costs and all other reasonable
expenses incurred in investigating or defending any litigation or proceeding,
commenced or threatened), resulting from, arising out of or incident to any of
the indemnifiable items in this Article VII. Damages, however, shall be net of:
(i) any federal, state, or local income tax benefits actually realized by the
Indemnified Party as a result of the matter for which indemnification is sought
offset by any additional tax burden actually suffered by the Indemnified Party
as a result of the matter giving rise to indemnification; provided that no
Indemnified Party shall be required solely for the purpose of realizing a
benefit to take any tax position that could have an adverse effect on such
Indemnified Party if taken; and provided, further, that the Indemnified Party
shall not be required to disclose its (or its Affiliates) tax returns, work
papers or other information with respect to the preparation of such returns, but
shall be required to disclose the foregoing only to a nationally recognized
accounting firm that agrees to disclose only its conclusions to the Indemnifying
Party that accrues to or is realized by the Indemnified Party in respect of the
matter for which a claim is asserted; (ii) any proceeds received by the
Indemnified Party from any separate indemnification or contribution from or
against any person or entity; and (iii) insurance proceeds or coverage pursuant
to any insurance (including title insurance) held by the Indemnified Party or
its Affiliates and covering the event for which indemnification is sought or
insurance proceeds recovered from any other person or entity by the
Indemnifiable Party (less any costs, expenses, premium increases or taxes
incurred in connection therewith).
7.2.2 "Environmental Claim" shall mean any Third Party Claim arising
under any Environmental Law; provided that Environmental Claims shall not
include any enforcement actions by any government agency following the Closing
Date with respect to, or related to compliance of the Business on or prior to
the Closing Date with "process safety management regulations" (as defined under
29 C.F.R. 1910.119) ("Process Safety Management Claims") or state or federal
laws or regulations concerning the transportation of hazardous materials
("Transportation Claims").
7.2.3 "Indemnified Party" shall mean, with respect to a particular
matter, a party hereto seeking indemnification from another party hereto
pursuant to this Article VII.
7.2.4 "Indemnifying Party" shall mean, with respect to a particular
matter, a party against whom indemnification under this Article VII is sought by
an Indemnified Party.
43
7.2.5 "Third Party Claim" shall mean any claim, action, suit,
proceeding, investigation, judicial or administrative order, or like matter
which is asserted, requested or threatened by, or initiated at the request of, a
person other than the parties hereto and their Affiliates, their successors and
permitted assigns, against any Indemnified Party.
7.3 IMC Global's and Seller's Indemnification Obligations. IMC Global and
Seller shall, jointly and severally, indemnify, defend and hold harmless
Purchaser, each Company Member, the officers, directors, shareholders, employees
and Affiliates thereof and their successors and permitted assigns (each referred
to in this Agreement as a "Purchaser Indemnitee" and, collectively, the
"Purchaser Indemnitees") against and from all Damages sustained or incurred, by
any Purchaser Indemnitee, as a result of or arising out of:
7.3.1 any inaccuracy in or breach of any representation and warranty
made by IMC Global or Seller in Section 2.3 or in any Seller Ancillary Document
(other than the Supply Agreement or any Warehousing Agreement) delivered to
Purchaser in connection herewith (other than any representation and warranty
made with respect to the Environmental Representations and Warranties or Section
2.3.29);
7.3.2 any breach by IMC Global or Seller of, or failure of IMC Global
or Seller to comply with any of the covenants or obligations under this
Agreement or in any Seller Ancillary Document (other than the Supply Agreement
or any Warehousing Agreement) to be performed by IMC Global or Seller;
7.3.3 any inaccuracy in or breach of any of the Environmental
Representations and Warranties, whether made pursuant to this Agreement or in
the certificate delivered to Purchaser pursuant to Section 5.3.4;
7.3.4 any Environmental Claim solely to the extent that such
Environmental Claim is associated with, arises from, or relates to (a)
conditions existing prior to the Closing Date on the Real Estate, (b) conditions
existing prior to the Closing Date on real estate (other than the Real Estate)
formerly owned, leased or operated by any Company Member or any of their
predecessors, (c) the operation of the Business or the operation of the
businesses of any Company Member predecessor prior to the Closing Date or (d)
the offsite disposal, transportation, recycling or Release or threatened Release
of any Contaminants as a result of the Company Members' operations, or those of
their predecessors, before the Closing Date, in each case, including
Environmental Claims for a Release or threatened Release of any Contaminant on,
in, at, to, beneath or from the Real Estate before the Closing Date (whether or
not such Environmental Claim also constitutes a breach of the Environmental
Representations and Warranties); provided that Purchaser's activities (including
communications), other than those activities required by Environmental Law, have
not directly or indirectly triggered or caused to be ripened such Environmental
Claim (it being understood that Purchaser Indemnitees' right to indemnification
under this Section 7.3.4 shall not be nullified or limited by Purchaser
Indemnitees' compliance with Environmental Laws, including the conduct of
investigations, in connection with facility operations, expansion or closure
activities or the sale of the Business or other reasonable, good faith
activities in connection with the operation of the Business in the ordinary
course);
44
7.3.5 any Process Safety Management Claim or Transportation Claim
solely to the extent that (i) Damages from such claim consist of monetary fines
or penalties levied by a government agency and (ii) such claim is associated
with, arises from, or relates to operation of the Business prior to the Closing
Date; or
7.3.6 the assets or liabilities transferred in the Unrelated Asset and
Liability Transfer; or
7.3.7 any inaccuracy in or breach of any representation or warranty
made by IMC Global or Seller in Section 2.3.29 or in respect thereof under the
certificate delivered to Purchaser pursuant to Section 5.3.4.
7.3.8 Notwithstanding the foregoing provisions of this Section 7.3:
(a) IMC Global and Seller shall be required to indemnify and hold
harmless Purchaser Indemnitees pursuant to Sections 7.3.1 and 7.3.2
only to the extent that the aggregate amount of Damages incurred by
Purchaser Indemnitees pursuant to Sections 7.3.1 or 7.3.2 exceeds
$4,000,000 (it being understood that such $4,000,000 shall constitute a
"deductible" for which IMC Global and Seller bear no indemnification
responsibility and that such "deductible" shall be separate from and
independent of any other such "deductible" set forth in this
Agreement).
(b) IMC Global and Seller shall be required to indemnify and hold
harmless Purchaser Indemnitees pursuant to Sections 7.3.3, 7.3.4 and
7.3.5 only to the extent that the aggregate amount of Damages incurred
by Purchaser Indemnitees pursuant to Sections 7.3.3, 7.3.4 or 7.3.5
exceeds $4,500,000 (it being understood that such $4,500,000 shall
constitute a "deductible" for which IMC Global and Seller bear no
indemnification responsibility and that such "deductible" shall be
separate from and independent of any other such deductible set forth in
this Agreement).
(c) IMC Global and Seller shall be required to indemnify and hold
harmless Purchaser Indemnitees pursuant to Section 7.3.7 only to the
extent that Damages incurred by Purchaser Indemnitees related to each
individual claim or series of related claims pursuant to Section 7.3.7
exceeds $100,000 (it being understood that such $100,000 shall
constitute a "deductible" for which IMC Global and Seller bear no
indemnification responsibility and that such "deductible" shall be
separate from and independent of any other such deductible set forth in
this Agreement).
(d) IMC Global and Seller shall be required to indemnify and hold
harmless Purchaser Indemnitees under this Section 7.3 only to the
extent that the aggregate amount required to be paid by IMC Global and
Seller pursuant to this Section 7.3 does not exceed 10% of the Purchase
Price.
(e) Notwithstanding the foregoing the limitations contained in
clauses (a), (b), (c) and (d) of this Section 7.3.8 shall not apply to
any Damages: (i) sustained or incurred by any Purchaser Indemnitee as a
result of or arising out of any breach of any
45
representation or warranty in Section 2.3.1, Section 2.3.3, Section
2.3.4, Section 2.3.8 or Section 2.3.11; (ii) sustained or incurred by
any Purchaser Indemnitee as a result of or arising out of any breach of
or failure to comply with any covenant or obligation in Articles I,
VII, VI or IX or Section 5.4.1; (iii) subject to indemnification
pursuant to Section 7.3.6; or (iv) resulting or arising from an
intentional or willful breach by IMC Global or Seller of any
representation or warranty in Section 2.3 or any covenant under this
Agreement or any Seller Ancillary Agreement (other than the Supply
Agreement or any Warehousing Agreement) which would constitute common
law fraud.
7.4 Survival of IMC Global's and Seller's Indemnification Obligations. The
indemnification provided for in Section 7.3 shall terminate 18 months after the
Closing Date (and no claims shall be made by any Purchaser Indemnitee under this
Section 7.3 thereafter), except that the indemnification by IMC Global and
Seller shall continue as to:
(i) the covenants of IMC Global and Seller set forth in Article I or
Article VI shall survive for the periods of time set forth therein or, if
no period of time is set forth, such covenants shall survive indefinitely;
(ii) claims for indemnification for breaches of representations and
warranties set forth in Section 2.3.1, Section 2.3.3, Section 2.3.4,
Section 2.3.8, Section 2.3.11 and Section 2.3.16 which survive until the
expiration of the applicable statute of limitations;
(iii) claims for indemnification under Sections 7.3.3, 7.3.4(a),
7.3.4(c) and 7.3.5 which shall survive until the fifth anniversary of the
Closing Date;
(iv) claims for indemnification under Sections 7.3.4(b), 7.3.4(d) and
7.3.6 which shall survive indefinitely; and
(v) any Damages of which any Purchaser Indemnitee has notified IMC
Global and Seller in accordance with the requirements of Section 7.7 on or
prior to the date such indemnification would otherwise terminate in
accordance with this Section 7.4, as to which the obligation of IMC Global
and Seller shall continue until the liability of IMC Global and Seller
shall have been determined pursuant to this Article VII, and IMC Global and
Seller shall have reimbursed all Purchaser Indemnitees for the full amount
of such Damages that are payable in accordance with this Article VII.
7.5 Limitation on Seller's Indemnification Obligations. In addition to the
other applicable limitations on Seller's indemnification obligations set forth
elsewhere in this Article VII, Seller shall not be required to indemnify and
hold harmless Purchaser Indemnitees under Section 7.3 to the extent and in the
dollar amount such matter is the subject of a specific reserve set forth in the
Closing Balance Sheet as a current liability. In the event that Seller is
conducting any defense against a Third Party Claim for which Purchaser has
sought indemnification under Section 7.3, expenses incurred by Seller in
connection therewith, including legal costs and expenses, shall constitute
Purchaser Indemnitee Damages for purposes of determining the maximum aggregate
amount to be paid by Seller pursuant to Section 7.3.
46
7.6 Purchaser's Indemnification Covenants. Purchaser shall indemnify,
defend and hold harmless Seller, its Affiliates and their respective officers,
directors, shareholders, employees and successors and assigns (individually, a
"Seller Indemnitee" and, collectively, the "Seller Indemnitees"), against and
from all Damages sustained or incurred by any Seller Indemnitee as a result of
or arising out of or by virtue of:
7.6.1 any inaccuracy in or breach of any representation and warranty
made by Purchaser to Seller herein or in any Purchaser Ancillary Document
delivered (other than the Supply Agreement or any Warehousing Agreement)
delivered to Seller in connection herewith, unless Seller had knowledge of such
inaccuracy or breach as of the Closing Date;
7.6.2 any breach by Purchaser of, or failure by Purchaser to comply
with, any of the covenants or obligations under this Agreement or any Purchaser
Ancillary Document (other than the Supply Agreement or any Warehousing
Agreement) to be performed by Purchaser, unless Seller had knowledge of such
breach or failure as of the Closing Date; or
7.6.3 any Environmental Claim solely to the extent that such
Environmental Claim is associated with, arises from or relates to (a) conditions
arising on the Real Estate on or after the Closing Date, (b) the operation of
the Company on or after the Closing Date or (c) the off-site disposal or Release
of any Contaminants on or after the Closing Date, in each case, including
Environmental Claims for a Release or threatened Release of any Contaminant on,
in, at, to, beneath or from the Real Estate on or after the Closing Date.
7.7 Indemnification Procedures.
7.7.1 An Indemnified Party shall give prompt written notice to the
Indemnifying Party of the assertion of any claim for indemnification (a "Claim
Notice"). Notice shall set forth, with reasonable specificity, the facts and
circumstances of any such claim for indemnification or Third Party Claim and the
grounds for which indemnification is sought and shall include in such Claim
Notice (if then known) the amount or the method of computation of the amount of
such claim, and a reference to the provision of this Agreement or any other
agreement, document or instrument executed hereunder or in connection herewith
upon which such claim is based; provided, however, that a Claim Notice in
respect of any action at law or suit in equity by or against a third Person as
to which indemnification will be sought shall be subject to the provisions of
Sections 7.7.3.
7.7.2 After the giving of any Claim Notice, the amount of
indemnification to which an Indemnified Party shall be entitled under this
Article VII shall be determined: (i) by the written agreement between the
Indemnified Party and the Indemnifying Party; (ii) by a final judgment or decree
of any court of competent jurisdiction; or (iii) by any other means to which the
Indemnified Party and the Indemnifying Party shall agree. The judgment or decree
of a court shall be deemed final when the time for appeal, if any, shall have
expired and no appeal shall have been taken or when all appeals taken shall have
been finally determined. The Indemnified Party shall have the burden of proof in
establishing the amount of Damages suffered by it.
7.7.3 (a) In order for a party to be entitled to any indemnification
provided for under this Agreement in respect of, arising out of or involving a
Third Party Claim, the Indemnified
47
Party must notify the Indemnifying Party in writing, and in reasonable detail,
of the Third Party Claim within 20 days after receipt by such Indemnified Party
of written notice of the Third Party Claim. Thereafter, the Indemnified Party
shall deliver to the Indemnifying Party, within 10 business days after the
Indemnified Party's receipt thereof, copies of all notices and documents
(including court papers) received by the Indemnifying Party relating to the
Third Party Claim. Notwithstanding the foregoing, should a party be physically
served with a complaint with regard to a Third Party Claim, the Indemnified
Party must notify the Indemnifying Party with a copy of the complaint within 10
business days after receipt thereof and shall deliver to the Indemnifying Party
within seven business days after the receipt of such complaint copies of notices
and documents (including court papers) received by the Indemnified Party
relating to the Third Party Claim. Failure to notify the Indemnifying Party
shall not relieve the Indemnifying Party of its indemnity obligation, except to
the extent the Indemnifying Party is actually prejudiced in its defense of the
action by such failure. Subject to attorney-client privilege, the parties hereto
agree to cooperate fully with each other in connection with the defense,
negotiation or settlement of any such legal proceeding, claim or demand. Except
as hereinafter provided in this Section 7.7, the Indemnified Party shall not,
and the Indemnifying Party shall, have the right using counsel reasonably
acceptable to the Indemnified Party to contest, defend, litigate or settle any
such Third Party Claim which involves (and continues to involve) solely monetary
damages; provided that the Indemnifying Party shall have notified the
Indemnified Party in writing of its intention to do so within 90 days of the
Indemnified Party having given notice of the Third Party Claim to the
Indemnifying Party and provided further that (i) the Indemnifying Party
expressly agrees in such notice to the Indemnified Party that, if the Third
Party Claim is adversely determined, the Indemnifying Party shall have an
obligation to indemnify against such Third Party Claim; (ii) the defense of such
Third Party Claim by the Indemnifying Party will not, in the reasonable opinion
of the Indemnified Party, reasonably be likely to have a Material Adverse
Effect; and (iii) the Indemnifying Party shall diligently address the Third
Party Claim (the conditions set forth in clauses (i), (ii) and (iii) being
collectively referred to as the "Litigation Conditions"). The Indemnified Party
shall have the right to participate in, and to be represented by counsel at its
own expense, in any such contest, defense, litigation or settlement conducted by
the Indemnifying Party, provided that the Indemnified Party shall be entitled to
reimbursement therefor if the Indemnifying Party shall lose its right to
contest, defend, litigate and settle the Third Party Claim.
(b) The Indemnifying Party shall not be entitled, or shall lose its
right, to contest, defend, litigate and settle the Third Party Claim if the
Indemnified Party shall give written notice to the Indemnifying Party of any
objection thereto based upon the Litigation Conditions. The Indemnifying Party,
if it shall have assumed the defense of any Third Party Claim as provided in
this Agreement, shall not consent to a settlement of, or the entry of any
judgment arising from, any such Third Party Claim, enter into any compromise or
settlement which commits the Indemnified Party to take, or to forbear to take,
any action or which does not provide for a complete release by such third party
of the Indemnified Party without the prior written consent of the Indemnified
Party (which consent shall not be unreasonably withheld or delayed).
Notwithstanding the foregoing, the Indemnified Party shall have the right to
pay, settle or compromise any such Third Party Claim, provided that, in such
event, the Indemnified Party shall waive any right to indemnity therefor.
48
(c) If an Indemnified Party is entitled to indemnification against a
Third Party Claim, and the Indemnifying Party fails to accept a tender of, or
assume the defense of, a Third Party Claim pursuant to this Section 7.2, or if,
in accordance with Section 7.2.3(b), the Indemnifying Party shall not be
entitled, or shall lose its right, to contest, defend, litigate and settle such
a Third Party Claim or if such Third Party Claim involves equitable or other
non-monetary relief, the Indemnified Party shall have the right to contest,
defend and litigate such Third Party Claim; provided that the Indemnifying Party
shall have the right to participate in, and to be represented by counsel (at its
own expense) in any such contest, defense, litigation or settlement conducted by
the Indemnified Party. The Indemnified Party, if it shall have assumed the
defense of any Third Party Claim as provided in this Agreement, shall not
consent to a settlement of, or the entry of any judgment arising from, any such
Third Party Claim, enter into any compromise or settlement which commits the
Indemnifying Party to take, or to forbear to take, any action (other than the
payment of money) without the prior written consent of the Indemnifying Party
(which consent shall not be unreasonably withheld or delayed).
7.7.4 In any case where an Indemnified Party recovers from third
Persons any amount in respect of a matter with respect to which an Indemnifying
Party has indemnified it pursuant to this Article VII, such Indemnified Party
shall promptly pay over to the Indemnifying Party the amount so recovered (after
deducting therefrom the full amount of the expenses incurred by it in procuring
such recovery), but not in excess of the sum of (i) any amount previously so
paid by the Indemnifying Party to or on behalf of the Indemnified Party in
respect of such matter and (ii) any amount expended by the Indemnifying Party in
pursuing or defending any claim arising out of such matter.
7.8 Cooperation on Environmental Claims.
7.8.1 Purchaser's Rights to Remedial Action. In addition to the
provisions of Section 7.7, if any claim for indemnification is sought against
IMC Global or Seller with respect to any Environmental Claim, the resolution of
which involves or includes Remedial Action at Real Estate owned, leased, or
operated by Purchaser at the time such Remedial Action is to be conducted,
Purchaser may, in its discretion, elect to assume full control over any Remedial
Action in connection with any such claim. Upon such election, Purchaser shall:
(i) after Seller gives reasonable notice, permit representatives of Seller
(including advisors and consultants) to visit and inspect from time to time any
properties to which the Environmental Claim relates; (ii) after Seller gives
reasonable notice, allow Seller to enter on such properties from time to time
for the purpose of conducting such environmental tests as Seller may reasonably
desire with respect to the Environmental Claim; all during normal business hours
and at Seller's expense; and (iii) prior to submission to any government agency,
provide Seller with a reasonable opportunity to review and approve, which
approval shall not be unreasonably withheld, all proposals, reports,
submissions, data, correspondence, or other documents. Purchaser may, at its
discretion, elect to allow Seller to assume full control over Remedial Action
upon providing written notice to Seller of such election and upon providing
Seller with sufficient opportunity to assume such control. In the event that
Purchaser shall refuse to cooperate as set forth in this Section 7.8.1 and
Section 7.8.2 with respect to the taking of a Remedial Action with respect to an
Environmental Claim, Seller shall have no further liability to Purchaser with
respect to the Environmental Claim.
49
7.8.2 Seller's Rights to Remedial Action. If Purchaser elects to allow
Seller to assume full control over Remedial Actions pursuant to Section 7.8.1,
Purchaser shall: (i) provide Seller with access to the Real Estate at all
reasonable times to enable Seller to perform such Remedial Action; provided that
unless required by a final government order, Seller shall not undertake a
Remedial Action or other action in settlement of a claim that would materially
and adversely affect Purchaser's or the Company's operations at the Real Estate
unless consented to by Purchaser; (ii) furnish Seller with such relevant
records, information, reports, studies, data, and cost estimates in Purchaser's
or the Company's possession; and (iii) attend such conferences, proceedings,
hearings, trials, or appeals regarding any Remedial Action or any Environmental
Claim as Seller shall reasonably request with sufficient advance notice. For any
Seller performed Remedial Actions, Seller shall: (i) provide Purchaser with
reasonable advance notice to allow Purchaser to attend any conferences,
proceedings, hearings, trials, or appeals regarding any Remedial Action; and
(ii) prior to submission to any government agency, provide Purchaser with a
reasonable opportunity to review and approve, which approval shall not be
unreasonably withheld, all proposals, reports, submissions, data,
correspondence, or other documents.
7.8.3 Minimization of Remedial Action Costs and Disruption of
Operation. Seller and Purchaser Indemnitees agree to use their best efforts to
minimize costs of Remedial Actions and minimize disruption of operations with
respect to Environmental Claims, and, in deciding among various alternative
courses of remedial action, due consideration shall be given to minimization of
costs and the minimization of interference with the ongoing operations and to
the prompt resolution of the Environmental Claim; provided, however, that if any
Remedial Action subject to indemnification hereunder is reasonably expected to
have a Material Adverse Effect, Seller shall compensate Purchaser and/or the
Company Members therefor. Purchaser will make available its employees at each
site and equipment and other fixed assets purchased hereunder and located at
such site to assist in the remediation work to the extent such employees and
equipment are reasonably capable of doing such work and permitted to do so under
Environmental Law; provided, however, that no such employee shall be required to
assist in the remediation effort if to do so will materially diminish such
employee's availability to perform and be utilized for such employee's normal
job purpose or would otherwise materially interfere with Purchaser's operations.
7.9 Mitigation. Each of the parties agrees to take all reasonable steps
(taking into account the nature of the event or condition, and the other demands
on the time and attention of the officers of each respective party) to mitigate
their respective Damages upon and after becoming aware of any event or condition
which could reasonably be expected to give rise to any Damages that are
indemnifiable hereunder; provided that such mitigation shall not interfere with
or disrupt in any material respect the business or operations of a party.
7.10 Indemnification Exclusive Remedy. Except to the extent remedies cannot
be waived as a matter of law and except for injunctive relief pursuant to
Sections 6.4, 6.6 or 6.7.6(c), if the Closing occurs, indemnification pursuant
to the provisions of this Article VII shall be the exclusive remedy of the
parties for any misrepresentation or breach of any representation, warranty,
agreement or covenant contained herein or in any Ancillary Document (other than
the Supply Agreement or any Warehousing Agreement) (it being understood that,
without limiting the generality of the foregoing, (a) no action in tort or
strict liability may be maintained by any Indemnified Party, (b) the only
50
action which may be asserted by any Indemnified Party with respect to any
Environmental Claim shall be a contract action to enforce, or to recover Damages
pursuant to, this Article VII, and (c) each of IMC, Seller and Purchaser, for
itself and the other Purchaser Indemnitees or Seller Indemnitees, as the case
may be, hereby waives any and all statutory rights, including rights of
contribution or indemnification that any of them might otherwise be entitled to
under any federal, state or local law (including Environmental Laws (including
CERCLA)).
ARTICLE VIII
Effect of Termination/Proceeding
8.1 General. The parties shall have the rights and remedies with respect to
the termination and/or enforcement of this Agreement which are set forth in this
Article VIII.
8.2 Right to Terminate. Anything to the contrary herein notwithstanding,
this Agreement and the transactions contemplated hereby may be terminated at any
time prior to the Closing:
8.2.1 by the mutual written consent of Purchaser and Seller;
8.2.2 by prompt notice given in accordance with Section 9.3, by either
of such parties if the Closing shall not have occurred at or before 11:59 p.m.
on March 31, 1999 (the "Drop-Deal Date"); provided, however, that, by prompt
notice given in accordance with Section 9.3 no later than March 26, 1999, either
of such parties may extend the Drop-Dead Date to April 30, 1999 if the Closing
has not occurred solely as a result of the failure to have been obtained any of
the Material Consents, which failure has not been cured or waived; and provided,
further, that the right to extend the Drop-Dead Date or terminate this Agreement
under this Section 8.2.2 shall not be available to (a) any party whose failure
to fulfill any of its obligations under this Agreement has been the cause of or
resulted in the failure of the Closing to occur on or prior to the aforesaid
date or (b) Purchaser unless the waiting period under the HSR Act applicable to
the transaction set forth herein has expired or been earlier terminated at or
prior to the time of such notice (the "HSR Condition"); or
8.2.3 by Purchaser or Seller if any court of competent jurisdiction in
the United States or other United States governmental body shall have issued a
final and non-appealable order, decree or ruling permanently restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby.
8.3 Certain Effects of Termination. In the event of the termination of this
Agreement by either Seller or Purchaser as provided in Section 8.2:
8.3.1 each party, if so requested by the other party, will return
promptly every document furnished to it by the other party (or any subsidiary,
division, associate or Affiliate of such other party) in connection with the
transactions contemplated hereby, whether so obtained before or after the
execution of this Agreement, and any copies thereof (except for copies of
documents publicly available) which may have been made, and will use reasonable
efforts to cause its representatives and any representatives of financial
institutions and investors and others to whom
51
such documents were furnished promptly to return such documents and any copies
thereof any of them may have made; and
8.3.2 the Confidentiality Letter and the Joint Defense Agreement shall
remain in effect.
This Section 8.3 shall survive any termination of this Agreement.
8.4 Remedies. Notwithstanding any termination right granted in Section 8.2,
in the event of the nonfulfillment of any condition to a party's closing
obligations, in the alternative, such party may elect to do one of the
following:
8.4.1 proceed to close despite the nonfulfillment of any closing
condition, it being understood that consummation of the Closing shall be deemed
a waiver of a breach of any representation, warranty, agreement or covenant or
of such party's rights and remedies with respect thereto to the extent that such
party shall have knowledge of such breach and the Closing shall nonetheless
occur;
8.4.2 decline to close, terminate this Agreement as provided in Section
8.2, and thereafter seek damages to the extent permitted in Section 8.5; or
8.4.3 seek specific performance of the obligations of the other party,
each party hereby agreeing that in the event of any breach by such party of this
Agreement, remedies at law for any such breach will be inadequate, and that such
non-breaching party shall be entitled to enforce specifically the terms and
provisions hereof, in addition to any other remedy to which such non-breaching
party may be entitled at law or equity.
8.5 Right to Damages. If this Agreement is terminated pursuant to
Section 8.2, neither party hereto shall have any claim against the other except
as set forth in Section 8.7 or, if the circumstances giving rise to such
termination were caused by the other party's willful failure to comply with a
material covenant set forth herein, such termination shall not be deemed or
construed as limiting or denying any legal or equitable right or remedy of said
party.
8.6 Non-Solicitation. If this Agreement is terminated, neither
Purchaser nor any of its Affiliates will, for a period of one year thereafter,
without the prior written approval of Seller, directly or indirectly solicit,
induce or attempt to persuade any person who is an employee of the Company on
the date hereof or at any time hereafter that precedes such termination, to
terminate his or her employment with the Company. Purchaser agrees that Seller's
remedies at law for any breach or threat of breach by Seller of the provisions
of this Section 8.6 will be inadequate, and that Seller shall be entitled to an
injunction or injunctions to prevent breaches of the provisions of this Section
8.6 and to enforce specifically the terms and provisions hereof, in addition to
any other remedy to which Purchaser may be entitled at law or in equity. It is
the intent and understanding of each party hereto that if, in any action before
any court or agency legally empowered to enforce this Section 8.6, any term,
restriction, covenant or promise in this Section 8.6 is found to be unreasonable
and for that reason unenforceable, then such term, restriction, covenant or
promise shall be deemed modified to the extent necessary to make it enforceable
by such court or agency.
52
ARTICLE IX
Miscellaneous
9.1 Fees. Seller shall pay all fees and expenses charged by X.X. Xxxxxx.
All filing fees incurred in connection with filings under the HSR Act and any
other applicable antitrust laws and regulations shall be the sole responsibility
of Purchaser. Each party hereto shall bear all fees and expenses incurred by
such party in connection with, relating to or arising out of the negotiation,
preparation, execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, including financial
advisors', attorneys', accountants' and other professional fees and expenses;
provided, however, that Seller shall pay such fees and expenses incurred by any
Company Member prior to the Closing Date.
9.2 Publicity. Except as otherwise required by law or applicable stock
exchange rules, press releases and other publicity concerning this transaction
shall be made only with the prior agreement of Seller and Purchaser (and in any
event, Seller and Purchaser shall use all reasonable efforts to consult and
agree with each other with respect to the content of any such required press
release or other publicity); provided, however, that the foregoing shall not
preclude communications or disclosures necessary to implement the provisions of
this Agreement.
9.3 Notices. All notices required or permitted to be given hereunder shall
be in writing and may be delivered by hand, by facsimile, by nationally
recognized private courier, or by United States mail. Notices delivered by mail
shall be deemed given three business days after being deposited in the United
States mail, postage prepaid, registered or certified mail, return receipt
requested. Notices delivered by hand, by facsimile, or by nationally recognized
private courier shall be deemed given on the first business day following
receipt; provided, however, that a notice delivered by facsimile shall only be
effective if such notice is also delivered by hand, or deposited in the United
States mail, postage prepaid, registered or certified mail, on or before two
business days after its delivery by facsimile. All notices shall be addressed as
follows:
If to Seller:
x/x XXX Xxxxxx Xxx.0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Illinois 60062-6146
Attention: General Counsel
Fax: (000) 000-0000
with a copy to:
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
53
If to Purchaser:
Chief Executive Officer
Xxxxxxx-Xxxxx, Inc.
00 Xxxxxxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Xx.
Fax: (000) 000-0000
and
x/x Xxxxxxxx Xxxxxxx Xxxxxxx
000 Xxxx Xxxxxx, 00xx Xxxxx, Xxxx 4
New York, New York 10043
Attention: Xxxxxx XxXxxxxxxx
Fax: (000) 000-0000
with a copy to:
Dechert Price & Xxxxxx
4000 Xxxx Atlantic Tower
0000 Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx, Esq.
Fax: (000) 000-0000
and/or to such other respective addresses and/or addressees as may be designated
by notice given in accordance with the provisions of this Section 9.3.
9.4 Entire Agreement; Interpretation. This Agreement, the Joint Defense
Agreement, the Ancillary Documents, and the Confidentiality Letter constitute
the entire agreement between the parties and shall be binding upon and inure to
the benefit of the parties hereto and their respective legal representatives,
successors and permitted assigns. Articles, titles and headings to sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement. The
Disclosure Schedules and Exhibits referred to herein shall be construed with and
as an integral part of this Agreement to the same extent as if they were set
forth verbatim herein. Any amendments, or alternative or supplementary
provisions, to this Agreement must be made in writing and duly executed by an
authorized representative or agent of each of the parties hereto. Neither the
specification of any dollar amount in any representation or warranty contained
in this Agreement nor the inclusion of any specific item in the Disclosure
Schedules is intended to imply that such amount, or higher or lower amounts, or
the item so included or other items, are or are not material, and no party shall
use the fact of the setting forth of any such amount or the inclusion or
omission of any such item in any dispute or controversy between the parties as
to whether any obligation, item or matter not described herein or included in
54
the Disclosure Schedules is or is not material for purposes of this Agreement.
Unless this Agreement specifically provides otherwise, neither the specification
of any item or matter in any representation or warranty contained in this
Agreement nor the inclusion of any specific item in the Disclosure Schedules is
intended to imply that such item or matter, or other items or matters, are or
are not in the ordinary course of business, and no party shall use the fact of
the setting forth or the inclusion of any such item or matter in any dispute or
controversy between the parties as to whether any obligation, item or matter not
described herein or included in the Disclosure Schedules is or is not in the
ordinary course of business for purposes of this Agreement. Seller may once not
later than 20 days after the date hereof (or, in the event the Closing shall not
have occurred prior to the date set forth in Section 8.2.2, then once per 30
days thereafter) by notice in accordance with the terms of this Agreement,
supplement or amend the Disclosure Schedules, in order to add information
arising from events after the date hereof. No such supplement or amendment shall
be evidence, in and of itself, that the representations and warranties in the
Agreement are no longer true and correct in accordance with their terms. It is
specifically agreed that the Disclosure Schedules may be so supplemented or
amended to add immaterial, as well as material, items thereto. No such
supplemental or amended Disclosure Schedules shall be deemed to cure any breach
for purposes of Section 4.2. If, however, the Closing occurs, any such
supplement or amendment will be effective to cure and correct for all other
purposes any breach of any representation, warranty, covenant or agreement which
would have existed if Seller had not made such supplement or amendment, and all
references to the Disclosure Schedules which are supplemented or amended as
provided in this Section 9.4 shall for all purposes after the Closing be deemed
to be a reference to the Disclosure Schedules as so supplemented or amended.
9.5 Non-Waiver. The failure in any one or more instances of a party to
insist upon performance of any of the terms, covenants or conditions of this
Agreement, to exercise any right or privilege in this Agreement conferred, or
the waiver by said party of any breach of any of the terms, covenants or
conditions of this Agreement, shall not be construed as a subsequent waiver of
any such terms, covenants, conditions, rights or privileges, but the same shall
continue and remain in full force and effect as if no such forbearance or waiver
had occurred. No waiver shall be effective unless it is in writing and signed by
an authorized representative of the waiving party.
9.6 Counterparts. This Agreement may be executed in multiple counterparts,
each of which shall be deemed to be an original, and all such counterparts shall
constitute but one instrument.
9.7 Severability. The invalidity of any provision of this Agreement or
portion of a provision shall not affect the validity of any other provision of
this Agreement or the remaining portion of the applicable provision.
9.8 Binding Effect; Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties hereto, and their successors and permitted
assigns. Except as set forth in Section 6.8 or in respect of any Purchaser
Indemnitee or Seller Indemnitee which is not a party hereto, nothing in this
Agreement, express or implied, shall confer on any person other than the parties
hereto, and their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement,
including third party beneficiary rights.
55
9.9 Assignability. This Agreement shall not be assignable by Purchaser
without the prior written consent of Seller; provided, however, that Purchaser
may assign its rights hereunder to Xxxxxxx-Xxxxx, any Affiliates of Purchaser,
to any successor to its business, or as collateral security to any person
providing financing to Purchaser to consummate the transactions contemplated
hereunder; provided further, however, that no such assignment shall relieve
Purchaser of its obligations hereunder.
9.10 Governmental Reporting. Anything to the contrary in this Agreement
notwithstanding, nothing in this Agreement shall be construed to mean that a
party hereto or other person must make or file, or cooperate in the making or
filing of, any return or report to any governmental authority in any manner that
such person or such party reasonably believes or reasonably is advised is not in
accordance with law.
9.11 Applicable Law. This Agreement shall be governed and controlled as to
validity, enforcement, interpretation, construction, effect and in all other
respects by the internal laws of the State of New York applicable to contracts
made in that State.
9.12 Waiver of Trial by Jury. Each of the parties hereto waives the right
to a jury trial in connection with any suit, action or proceeding seeking
enforcement of such party's rights under this Agreement.
9.13 Consent to Jurisdiction. This Agreement has been executed and
delivered in and shall be deemed to have been made in Chicago, Illinois. Seller
and Purchaser each agrees to the exclusive jurisdiction of any state or Federal
court within the City of Chicago, with respect to any claim or cause of action
arising under or relating to this Agreement, and waives personal service of any
and all process upon it, and consents that all services of process be made by
hand, by registered mail or certified mail, return receipt requested, directed
to it at its address as set forth in Section 9.3, and service so made shall be
deemed to be completed when received. Seller and Purchaser each waive any
objection based on forum non conveniens and waive any objection to venue of any
action instituted hereunder. Nothing in this paragraph shall affect the right of
Seller or Purchaser to serve legal process in any other manner permitted by law.
9.14 Amendments. This Agreement shall not be modified or amended except
pursuant to an instrument in writing executed and delivered on behalf of each of
the parties hereto.
9.15 Construction. The titles and headings contained in this Agreement are
for convenience of reference only and shall not affect the meaning or
interpretation of this Agreement. The term "including" means "including, without
limitation".
*****
56
IN WITNESS WHEREOF, the parties have executed this Stock Purchase Agreement
on the date first above written.
IMC GLOBAL INC.
By: /s/ Xxxx X. Xxxxx
-------------------------------
Its: Sr. V.P.-Corporate Development
-------------------------------
THE VIGORO CORPORATION
By: /s/ Xxxx X. Xxxxx
-------------------------------
Its: Sr. V.P.-Corporate Development
-------------------------------
R-C DELAWARE ACQUISITION INC.
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
-------------------------------
Its: President
-------------------------------
57
